Public policy surrounding Social Security, the national debt crisis, rising health care costs and tax reform are up for debate, and now is the time for the younger generation to make its voice heard, said Phil Smith, national field director for bipartisan advocacy group The Concord Coalition. During a trip to the Tippie College of […]
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Public policy surrounding Social Security, the national debt crisis, rising health care costs and tax reform are up for debate, and now is the time for the younger generation to make its voice heard, said Phil Smith, national field director for bipartisan advocacy group The Concord Coalition.
During a trip to the Tippie College of Business March 27-28, the coalition — with a mission of educating and leading a more well-informed discourse surrounding fiscal policy — ran an interactive simulation on day one and hosted a panel of economics experts the following day.
“When you look at these federal budget issues, they disproportionately affect younger people and the decisions are being disproportionately made by more seasoned people,” said Mr. Smith. “Decisions are being made in the next few years that will drastically affect the lives of young people in college right now. Young people need to know about this, they need to get involved and they really need to get educated on these issues.”
The Arlington, Virginia-based organization was founded in 1992 by Republican Sen. Warren Rudman, Democratic Sen. Paul Tsongas and former U.S. Secretary of Commerce Peter Peterson. The trio, interested in moving past political gridlock, was concerned about how the country could solve budget deficits and pay down outstanding debts, said UI economics professor Anne Villamil, one of the event's panelists.
“You’ll often hear from Republicans, ‘if we just cut taxes we’ll grow our way out of it,’” she said. “We’ve done it and it hasn’t happened. And you will often hear from Democrats that if we just tax the rich, we’re going to be fine. That’s not true either. As is usually the case, the truth lies somewhere in between.”
Fix the debt crisis? It's complicated
The federal debt is nearing $31.5 trillion, with the U.S. Department of the Treasury engaging in short-term accounting measures to “delay the inevitable” before the debt limit is reached this summer, Ms. Villamil said.
According to a Congressional Budget Office (CBO) report in February, the country’s inability to make payments will result in the U.S. running out of cash between July and September unless the debt ceiling is raised, a measure Congress has approved 78 times since 1960.
Projections from the CBO also show the U.S. will have to annually pay $1 trillion in interest payments within 10 years.
“It’s daunting when you look at the national debt,” said Mr. Smith, noting it’s hard for anyone to truly conceptualize how big of a number it is. “The bad news is ... you’re just looking at the rearview mirror. The even bigger challenges are in front of us. Figuring out how to have a sustainable, long-term federal budget is a huge challenge.”
As Ms. Villamil said during a CBJ keynote address at the Economic Forecast Luncheon in January, the U.S. faced a similar crisis in 2011 before last-minute negotiations prevented the U.S. from defaulting on its debt.
Defaulting, although an extremely unlikely course of action by the government, would be an “unmitigated catastrophe” for the economy and is an irresponsible bargaining chip to be weaponized by any member of Congress, she said.
But even assuming an agreement is reached before the country defaults on its debt, critical decisions must be made if the debt is to be cut in the long-term. For programs like Social Security and Medicare, the country’s changing demographics make change necessary, said Mr. Smith and Ms. Villamil.
“They’re on unsustainable tracks right now,” said Mr. Smith, adding automatic cuts will happen even if the program doesn’t get overhauled in the next few years. “Young people are not going to get the same type of Social Security as their grandparents are getting right now.”
“People are living longer,” explained Ms. Villamil. “As they live longer, they incur more health care expenses. There have been amazing improvements in technologies, but they are expensive.”
It’s a nuanced problem with no easy solution. People already on Social Security feel strongly about preserving it, while younger people acknowledge the system needs changing but don’t agree on how. Changing tax rates and raising the age of retirement are just two options legislators are considering, she added.
Rising health care costs face the same problem, but the debt crisis means the country is not bringing in enough revenue as well.
“Young people need to have a say in how we’re going to be taxed,” said Mr. Smith. “We have borrowed money to fund temporary tax cuts...and spending initiatives over the past few years. We spent a lot of money during the pandemic. We can’t afford year in and year out to spend the massive amounts of money that we did during the emergency.”
He added the 2017 tax cuts were a “missed opportunity” to have true tax reform and make the tax code more efficient and less complicated, instead of solely cutting taxes.
Concord Coalition brings advocacy spirit
To help in the educational process, Ms. Villamil was among the professors responsible for bringing the Concord Coalition to Iowa City.
She previously ran the coalition’s simulation in her economics classes, where students work together in teams as members of Congress learning the tradeoffs to funding or cutting programs, and the effect it has on the federal budget. Like real life, all decisions must be approved by majority approval, making the simulation more realistic and difficult than simply balancing the budget by oneself.
“I was amazed at that exercise because students are so engaged and feel they learn so much from it,” she said. The coalition ran the simulation in the Pappajohn Business Building on March 27.
“One of the most common misconceptions is that people think we spend an insane amount of money on foreign aid when in reality, we spend about 1% of our budget on foreign aid,” said Mr. Smith.
The next day, an expert panel spoke to the audience live and virtually. It included Ms. Villamil; Steve Robinson, chief economist for the Concord Coalition; and University of Iowa professor of accounting Ramji Balakrishnan.
In addition to traveling to college campuses, the organization educates legislators in Washington on the effects their policies will have on the debt. They don’t lobby, Mr. Smith said, but he added people would be surprised how often Congress needs to be educated as much as average citizens.
“Whatever size government we decide on, we need to pay for it,” he said.
Other elected officials, like Alabama representative Sanford Bishop, embrace the Concord's lessons so much that he is running a virtual simulation at a town hall to keep his district’s voters educated on the tradeoffs associated with the national debt.
But the event’s biggest message is that young people need to get involved if they want to see these programs change in a way that will benefit them. He suggests taking part in the political process, communicating with members of Congress or volunteering with organizations like the Concord.
“There are so many people who are asleep in their lives,” he said. “I just want to say ‘wake up.’ There are lots of ways to be engaged.”