Three Proposals to Shrink the National Debt

Anyone under 30 is officially in the Debt-Paying Generation, because that's essentially what you will do with everything you own and make if we don't get started now on tough cuts and reforms.
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In February, Office of Management and Budget (OMB) Director Jacob Lew told us in The New York Times that "The Easy Cuts Are Behind Us." Lew focused in that op-ed on the tough spending reductions that President Barrack Obama planned to tackle in his proposed budget, and how deep some of those cuts could be. The total savings? $400 billion over ten years. For some scale, this is under one-percent of the expected budget for the next ten years and about one-fourth of the expected $1.6 trillion deficit this year.

To young Americans reading this, answer this question for yourself: Would you expect someone to call you fiscally responsible if you took only two unaffordable vacations this year instead of the three you took last year? Or because you bounced fewer checks this year than last year? Of course not. Yet this is what our president expects us to do.

Over the last few months, Dustin and I have been spreading the word about the debt tsunami about to hit Dustin's generation. If you're under 30 you are in the Debt-Paying Generation, because that's essentially what you will do with everything you own and make if we don't get started now on tough cuts and reforms. $400 billion over ten years? That's a pittance compared to the $125 billion Lew's office estimated was lost to improper payments last year, or the $1 trillion in Medicare and Medicaid fraud that will build between now and 2020. The easy cuts are not behind us, Mr. Lew; they aren't even on the drawing board for most politicians.

The budget President Obama has proposed to our nation is a complete abdication of his responsibilities as president. To take from former Obama fan Andrew Sullivan:

To all those under 30 who worked so hard to get this man elected, know this...He thinks you're fools. Either the US will go into default because of Obama's cowardice, or you will be paying far far more for far far less because this president has no courage when it counts. He let you down. On the critical issue of America's fiscal crisis, he represents no hope and no change. Just the same old Washington politics he once promised to end.

Though Sullivan didn't use the term Debt-Paying Generation, he is sending the same message we are: the debt must go down significantly, and soon, or young Americans will pay the price in the lower standard of living typical of people who have to pay off enormous debts. Yet the president's proposed budget adds over $26 trillion in new debt in the long run, and over $7 trillion by 2021. Despite these numbers, he and Mr. Lew have the gall to claim they are fiscally responsible because the deficit will drop to a little over $600 billion -- about the size of the interest on our national debt. According to Lew:

[This budget proposal] puts the nation on a path toward fiscal sustainability so that by the middle of the decade, the government will no longer be adding to our national debt as a share of the economy and will be paying for what it spends -- and will be able to sustain that for many years afterwards.

In the coming months, Republicans and Democrats are going to engage in the typical waste of time called the "budget process." Names will be called, accusations will be made and both parties will likely fail to make any meaningful progress toward debt reduction. Even the most ferocious debt-cutting efforts by conservative Republicans in Congress will only trim 1/9 of our budget for the next decade.

Advocates of big government (both liberals and some conservatives) are going to denounce our claims as lies or mathematical tricks. Allow us to provide three proposals to shrink the national debt over the next decade:

  • The president's budget proposes to increase the national debt by over $7 trillion, but cut back on spending and raise taxes so that $1.1 trillion is saved. In short, the president will spend nearly $8.5 trillion to save $1.1 trillion

  • The Republican Study Committee (RSC) consists of the most conservative Republicans in the House of Representatives. Their Spending Reduction Act, which aims to cut $2.5 trillion over the next decade, has been vilified by liberals for deep cuts to non-defense and non-entitlement spending. In fact, it only cuts slightly over one-third of the debt President Obama expects to add, and does not even touch the most expensive parts of the federal budget: entitlements and defense, worth over 64% of expenditures currently and expected to grow steeply in coming decades.
  • Just for good measure, let's take some of the most aggressive proposals and add them together. Senator Rand Paul (R-KY) has a one-time $500 billion proposal; the RSC's plan will save $2.5 trillion; and Senator Tom Coburn (R-OK) supported the Debt Commission's proposals, which would have cut $4 trillion in a decade. Assuming optimistically that the Paul and RSC plans do not overlap, this means $7 trillion would be cut in a decade. These radical plans that the left and too many on the right have decried as "too much" would not even balance the next decade's worth of debt, never mind the debt we already have.
  • As you can see, the problems with our spending are not in the Department of Education or foreign aid. Yes, it would be an excellent idea to eliminate the Department of Education, all $90 billion-plus in private-sector subsidies and most of the Department of Agriculture. However, in order to prevent ourselves from looking like Greece, we need at least to reform entitlements. Defense spending also should be on the table. Raising the Social Security age; means-testing Social Security; Medicare payment reform; repeal of ObamaCare; tort reform; and eliminating non-competitive contracts in the Defense Department would go a long way towards blunting the impact of our irresponsible debt on young Americans. It all needs to be well in place before the today's high school seniors graduate college, though -- otherwise we will see just how different Americans are than the Greeks, British and French.

    Bill Beach is the Director of the Center for Data Analysis at The Heritage Foundation. Dustin is a former research assistant in the Center for Data Analysis and a former contributor to several political blogs. They are two of the co-authors of a forthcoming Heritage research paper and related projects about the growing national debt and how it will impact young Americans in the sociological aspects of their lives.

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