The last time the budget deficit -- defined as the federal government's spending exceeding government revenues -- was as large as it is now, the United States was coming out of World War II. As a young person in America, like myself, this might seem like a scary prospect. Before us is a massive debt which we did not personally incur, and yet one which we will be spending most of our adult lives repaying. Conservatives focus on this idea as an argument for deficit reduction policies and as an attack against more fiscal spending in the current recession. How can the government think of spending more now and saddling our children with such a large debt? -- goes the popular "generational theft" argument.
This argument seems to lack foresight -- without significant fiscal spending to stimulate the economy, young people are in danger of a much worse kind of "generational theft." As it stands, children in K-12 and young professionals alike are being negatively affected by inaction. The child poverty rate in 2008 was 19% (representing more than one third of all people in poverty), up from 18% in 2007 and projected to reach 26.6% by 2010. The unemployment rate for 16-24 year-olds, those just entering the labor market for the first time, is at 19.1%. Growing up and graduating in a recession leaves deep scars.
Extensive literature explores the detrimental effects of recessions on children, and many of these findings are summed up in EPI's paper "Economic scarring: The long-term effects of the recession." Children from infancy to high school are affected by a parent's job displacement or income loss. Studies link these events to poor school performance, increased stress, decreased likelihood of graduation from high school and college, and lowered wage earnings in the future. The effects of the recession will likely be great enough to overcome any meaningful school reform. Simply growing up in poverty is shown to have long-term negative effects on future earnings which amount to significant GDP losses.
For those attending college (and who are still largely dependent on their parents), family income loss may result in the decision to quit early or even to forget about college altogether due to higher relative costs. Those just graduating are entering one of the worst job markets since the Great Depression. Graduating in a recession has been shown to result in wage loss over a lifetime for young graduates, something that is likely to affect them for many years after beginning employment.
So what should the federal government do for the youth of America? In the short-term, some of the most effective measures the government could take are increased spending on programs that help keep families afloat and children out of poverty, such as unemployment insurance extensions and food stamps through the Supplemental Nutrition Assistance Program (SNAP).
On a broader scale, the government could give a fiscal policy boost to the current economy with significant stimulus spending (aid to states, infrastructure spending, etc). It is more helpful to look at current deficit spending as a means to an end (growth in the economy), instead of as a purely negative entity. Without this spending to encourage growth, we could well end up crawling out of the recession only to find ourselves in a jobless recovery.
What we don't want is a government determined to "wait out" the recession. Saddling us with a large debt is an inevitable consequence of the current economy as well as irresponsible and regressive policy decisions made in a worry-free earlier time (see tax cuts and defense spending). Does the government really want to handicap us further by damaging the tools we need to develop our future employment and wage prospects? Young people are one of the hardest hit segments of the population now, and "waiting out" our current investments and opportunities will affect us for the rest of our lives.