Denver, Colorado–We all know the ship of state is going to hit an economic iceberg called our entitlement state. Social Security and Medicare are going bankrupt. That’s a fact. At the annual RedState Gathering in Denver, University of Colorado Boulder’s Dr. Barry Poulson reiterated the usual problem: there’s been a growth in federal spending and a stagnation of incomes. Right now, our total debt is over 100 percent of GDP. Debt growth, coupled with economic torpor, spells disaster and Dr. Poulson said we have roughly two decades (maybe sooner) to turn this around. Baby boomers aren’t going to be the generation that solves this problem. They’ve failed. It’s now up to Millennials, who don't have the best reputation regarding their contribution (and attitude) in the workforce, something that Compass Colorado’s Kelly Maher, who was on a panel with Poulson, touched upon when it began.
“I found it ironic that we we’re having a panel about Millennials at 8 a.m.,” she said, which drew chuckles from the crowd. Maher said she was an economy junkie, who wanted to be an economist until one of her college professors told her, “Kelly, what you don’t understand is that economics may be right, but politics always wins.”
Well, that's what shifted her from being an economist to winning the fight regarding freedom vs. free stuff. Everyone needs to get involved and start a conversation because the enormity of the economic issue we face with entitlements is biblical—and many people, especially young Americans, are ignorant of that. That means using various mediums to convey that message. Maher said to get on Facebook, Twitter, and Snapchat and use those social media platforms to launch an offensive against the dependency-based politics that seem to be firmly entrenched in Washington.
The time is ticking. Dr. Poulson added that Millennials are going to be the generation that could shoulder the brunt of the economic impact brought on by the unfunded liabilities from these programs that are just unsustainable. Spending and the adoption of fiscal controls must be adopted. Albert Downs of Generation Opportunity, who moderated the panel, said that young people are already seeing the writing on the wall. They’re saving earlier (starting at 22), they’re saving more than old people, and two-thirds know that Social Security will not be there for their retirement. Right now, 79 percent of young people are saving, 50 percent are saving five percent of more of their income, and 53 percent have specific benchmarks related to saving. In contrast, older generations start saving at 35, 37 percent have nothing saved, and only 38 percent have defined goals regarding saving in their financial plans. For young people, that’s great; the program will spend $106 billion more than it takes in through taxes.
On health care reform, Dr. Poulson drew Sweden as example of a socialized country that reformed its health care system, expanded choice, shifted health care decisions to the local level, and economized care. He said that we know what needs to be fixed, but politicians don’t get the message.
Maher said that this gets back to the messaging war of freedom vs. free stuff. She says that the new economy is another way to address the new economic reality regarding entitlement reform. The relationship between workers and firms is changing; more Americans have gone from employees to contractors. The new media consultant is one of the many new positions created from this shift. Taxes being withheld vs. having to pay them quarterly is now showing young Americans where their tax dollars are going. And it’s that change in the workforce in the relationship between government and Millennials that could induce many to ask questions about spending.
How do we implement change?
Well, don’t trust Congress to do the job. That’s one hope Dr. Poulson said everyone should shy away from, as government has promised much and done little regarding curtailing spending (no shocker there). He cited Switzerland, where referendums guide fiscal policy, they have balance budget amendments, and the people have a voice in controlling spending. We don’t have that here, but Article V states that Congress must hold a constitutional convention on amendments if 34 states agree. So, that's one avenue for change.
Maher noted that at a local level, some states, like Colorado, have a Taxpayer Bill Of Rights (TABOR), which states that any tax increase, debt service, or expenditure that will likely increase the financial burden for residents must be voted on by the people. Legislation like this is a great first step, though Maher added that until young people turn out to voice their own economic interests, and don’t follow people like Bernie Sanders, we are not going to prevail.That's a tall order, but it's an assignment we're going to have to do. It could be a smooth path to reform or one that brutally slashes benefits for millions because the house is burning down.