GOP Willingness to Hold Debt Ceiling Hostage is Bad News For Millennials
The Republican-controlled House of Representatives recently passed a continuing resolution that seeks to defund the Affordable Health Care Act, better known as Obamacare. But Democrats are in the majority in the Senate. It is therefore a foregone conclusion that the Senate would vote for another version of the continuing resolution that would not include the defunding measure. If Republicans reject the Senate's version, a government shutdown is likely to ensue.
According to reports, John Boehner and his lieutenants suggested to the Republican caucus that they could adopt another strategy to get the upper hand on the defunding battle. Instead of shutting down the government, the Republican leadership in the House might opt not to raise the debt ceiling. But this option would be even more calamitous than shutting down the government because it would wreck the country's economy and the ripple effect would be felt around the world. This economic devastation would hit the millennial generation particularly hard because it would sharply increase their unemployment rate and worsen their future prospects.
The Wall Street meltdown that occurred in 2008 had a huge impact on the economy. Millions of homes were foreclosed. The unemployment rate spiked because more than 8.7 million jobs were lost. At the height of the Great Recession, the unemployment reached double digits. There was a palpable fear that the country could be plunged into another Great Depression.
In the ensuing years, the economy has rebounded. The stimulus has help put the country on a path to economic recovery. According to the Congressional Budget Office (CBO), the stimulus led to the creation of as many as 3 million jobs. The private sector has generated 7.5 million jobs in 42 consecutive months. The unemployment rate recently dipped to 7.3%. The housing market is coming back. The auto industry has been a success story. The stock market came back strongly.
Despite those improvements, the economic recovery has not been robust enough. and the unemployment outlook is still bleak. Millions of Americans are still out of work. The millennial generation has been one of the groups that have been deeply affected by this lack of jobs, with an unemployment rate estimated at 16%. Because they are at a stage where they need to gain work experience, this shortage of unemployment would have a significant effect on the future earnings of many millennials. Since the future economic growth of the country would depend, in large part, on their spending power, the economy could grow at a much lower rate in the years and decades ahead.
And finally, because the spending power of millennials would play a key role in determining the pace of future economic growth, the government should have been pursuing policies that would make it easier for millennials to find employment. Rather than using their majority in the House of Representative to deals with the slow recovery and its impact on millennials, Republicans have hinted that they might not raise the debt limit, thereby preventing the government from paying the bills that it has incurred. Such action would be even more devastating to the economy than shutting down the government.
Much more could be done by the government to strengthen the economic recovery. Instead of seeking to make the recovery stronger, Republicans have forced the implementation of many policies such as austerity and sequestration that greatly hampered the pace of the recovery. But their openness towards leaving the debt ceiling as-is would wreck the economy. A wrecked economy would result in greater joblessness among millennials and it would probably damage the career prospect of many in that generation.