Have you ever tried to climb a hill while carrying a 50-pound bag of rocks? Well, that's the sort of staggering financial burden that Gen Y-ers are facing as we start our working lives.
What are we looking at? Student loans, obviously. The cost of college has more than tripled in the past 20 years, but federal student grant and loan options haven't kept up. Recent changes at Yale, Harvard, and a host of other elite schools have taken a step in the right direction: offering substantial financial aid to students from families making up to $180,000 a year. But this doesn't change the fact that millions of students are graduating into a weak economy carrying substantial debt.
But we need to think broader—and longer-term—than that. First of all, there's the bottomless pit called Social Security and Medicare. The majority of us are putting about 10% of our salaries toward paying for today's retirees, even though these questionably managed programs will likely provide us with no such relief. (Medicare is projected to go broke in 2020 and Social Security in 2041, according to the most recent trustees' estimates.)
Furthermore, spending on these programs is spiraling out of control—particularly Medicare—so that we have not only inherited the responsibility of caring for our elders today, but possibly paying the staggering additional bill from the growing gap between the cost of the programs and what our contributions cover. The unfunded obligations of Medicare alone during the next 75 years will amount to more than $36 trillion.
It's our current economic turmoil that disturbs me most. I've long taken issue with Fed Chairman Ben Bernanke's strategy of lowering interest rates to stimulate the economy and even have secretly wondered whether a recession might be no bad thing to sober up our debt-loving nation. Put another way, why use jumper cables on the battery when the engine's wiring is shot? There's a price tag attached to these continued efforts to keep our economy sputtering.
I'm told that moves such as continually lowering interest rates and offering bailouts to ailing institutions like Bear Stearns—and ultimately, struggling mortgage holders as well—are necessary to prevent broad panic on Wall Street and avoid a total collapse of the economic structure. Perhaps this is true, and I don't profess to have the economics background or knowledge yet to suggest another solution. However I can't help but wonder whether this is just the next excuse, to be followed by another and another, in our perpetual game of '"Tag. Not it" when it comes to digging ourselves out of the hole we've created.
I don't see a lot of help coming from the Presidential candidates. Our country has more than $9 trillion of total public debt outstanding, and we will be forced to make choices. A strong leader needs to emerge who isn't afraid to convey this intelligently to voters: There is no easy way out.
However, suggesting short-term fixes seems to be a popular campaign method for today's politicians.
John McCain proposes a gas-tax holiday that would suspend the 18.4-cent-a-gallon federal gasoline tax and 24.4-cent diesel tax from Memorial Day to Labor Day, when perhaps we should really be focusing our energies and resources on encouraging the American people to begin making meaningful changes that would get at the root of the problem: our over-reliance on this source of energy in the first place.
In outlining her plan to confront the housing crisis, Hillary Clinton lists "requiring accountability" as one of her top initiatives, but the fine print reveals that this extends to Wall Street alone. She goes on to propose allocating up to $5 billion in immediate assistance to help communities and distressed homeowners weather foreclosures and $1 billion in emergency energy assistance for families facing skyrocketing heating bills.
I'm not saying that Wall Street shouldn't be held responsible for its role in the debacle. What about predatory buyers though? Even if it makes fiscal sense to provide some assistance, shouldn't there at least be a nod to the fact that our legal system stipulates that citizens are—and should be—responsible for reading the terms and conditions of an agreement and then following through on their obligations once they sign a piece of paper?
Even the change-fueled Barack Obama candidacy, which is based on a promise to transcend politics as usual with progressive, bipartisan thinking, is based on broad-brush policies that seem to promise everything to everybody. Retirees will be taken care of, middle-class homeowners will receive a 10% rebate on mortgages, student loan debt will become much more bearable, and credit-card holders will be protected from themselves by no interest on fees and other measures. But where is all this aid coming from? The math just doesn't work out.
Demand Cost-Benefit Analyses
As our nation's leaders continue to dodge and duck any real accountability, we need to step up to the plate and insist on greater fiscal responsibility and better government. We place a lot of emphasis on environmental activism, but it's equally necessary for our generation to become fiscal activists as well. The two topics go hand in hand. Without sound fiscal policy, we won't have the resources or infrastructure necessary to make meaningful and sweeping environmental changes.
Starting now, we need to take a seat at the table and make an impact on economic strategy whenever possible—even if our youth makes us seem presumptuous and our actions premature. We don't have a choice. What we have learned is that it is easy to be fiscally shortsighted when you're a 60- or 70-year-old leader who can't see past your own personal legacy when it comes to applying the brakes on this runaway train.
So how do we get a say in this discussion? Not only through educating ourselves on personal finance, but also on policy matters. We need to demand cost-benefit analyses on programs from politicians who often gloss over these details. For instance, when it comes to discussing the huge costs of Medicare, Obama acknowledges this may be our toughest fiscal challenge. He then notes that strategic investments and waste reduction are two ways he will cut costs. Although he provides specific examples of areas in which we should strategically invest, such as chronic disease management, he fails to provide similarly concrete examples when it comes to discussing the specific cuts—or waste reductions—that might be put on the table. It's easier, and no doubt tempting, simply to tiptoe around the issue.
I'm far from an expert. But I'm trying to educate myself—by reading the fine print—when it comes to candidates' fiscal policies in the upcoming election. And I urge you to do the same. We owe it to ourselves, and our nation, to lead the way in agitating for real and tangible change.