Letter From Our Founder

Debt has become a way of life in America

It’s impossible to talk about debt without numbers. But as our mentor Senator Tom Coburn, MD, taught us, debt is about more than numbers. It’s about people. It’s about freedom.

It’s about one generation answering the call of leadership to take responsibility and make hard choices that create more opportunity and liberty for future generations. Debt is about everything our founders cared about. It’s a barometer of the relationship between the state and individuals and a reminder of our responsibilities to each other.
Unfortunately, too few political leaders are answering the call of stewardship.

At gas pumps and grocery stores, the last two years are teaching Americans the consequences of a failed approach to the national debt and deficit.

A new wave of inflation, caused by Pandemic-era spending layered onto decades of kicking the fiscal can down the road, has sapped purchasing power, leaving far too many citizens with impossible choices between one need and another.
At the same time, efforts to curb inflation threaten to wipe out years of productivity, built wealth, and earning power.

Nevertheless, existing plans from many of our leaders promise little change in our tendency to finance the government with debt, even as growing interest payments look to choke a federal budget that will already struggle for air over the next two decades.
A crisis is on its way. In the best case scenario, Americans will get hounded from the pillar of inflation to the post of recession and back again. The worst case is too chilling even to imagine.

How did we get here, and what can be done about it?

Just over 20 years ago, Republicans and Democrats alike prioritized the concept of a balanced budget in Washington – a common-sense understanding that the Federal Government should spend the same as it brings in every year.

In the decade after Speaker Newt Gingrich, Senate Minority Leader Tom Daschle, and President Bill Clinton hammered out a balanced budget, two wars, an economic downturn, and growth in entitlement programs converged. This led to the first trillion-dollar deficits in our nation’s history around the time of President Obama’s stimulus package.
By 2011, the emergence of the Tea Party brought the national debt front and center amid four consecutive trillion-dollar deficits. Deficit hawks, some motivated more by politics than stewardship, warned of looming catastrophe without a balanced budget. But as the economy recovered and thanks to 2011’s Budget Control Act, the deficit shrank from $1.4 trillion in 2009 to $442 billion in 2015.

At this point, the Republican Party largely moved on to other priorities, talking less and less about the national debt. Inaccurate and overzealous predictions, along with record low interest rates, caused widespread public concern over the nation’s fiscal condition to ultimately fade.

Meanwhile, some continued to sound the alarm. Demographic trends alone, namely the retirement of Baby Boomers, pointed to looming debt concerns. In 2019, the Millennial Debt Foundation (MDF) was formed with Senator Tom Coburn, MD. The creation of the Millennial Debt Commission in early 2020 convened millennial business leaders with prominent members of the House and Senate to pursue a framework for debt stabilization. Around the same time, the Committee for a Responsible Federal Budget decried the coming “era of trillion-dollar deficits.”

But without a Black Swan, it seemed unlikely public debt would take center stage any time soon.

Just weeks before the Millennial Debt Commission was set to meet for the first time, COVID-19 struck. Its mission to call attention to the potential perils of the national debt and offer solutions became timelier than we could have imagined. Record government stimulus and public health efforts ballooned the federal deficit from $984 billion in 2019 to more than $3 trillion in 2020 and nearly that again in 2021.

Experimental fiscal and monetary policy eased the jarring effects of lockdowns, but historic inflation throughout 2022 indicated the policies overheated the economy.

Already entering a period when trillion-dollar deficits were here to stay, America is now faced with $6 trillion more in federal debt, one political party proposing trillions more, and the other trying to regain its credibility on fiscal issues. In Washington, a “tax and spend” party fights with a “tax cut and spend” party. Champions of spending restraint are hard to find. Meanwhile, inflation is soaring and people are suffering. Unlike a decade ago when the national debt was hijacked for political gain, our country now needs a sober consideration of the consequences of debt. A fiscal reckoning will affect all of us.

Preserving the financial standing of our nation for future generations should be a priority for both political parties. Stewardship is an American ideal, not a partisan talking point.

Instead of blindly testing the limits of how much we can possibly borrow, we should debate the obligation one generation has to another, the potential consequences of excessive borrowing, and the ethics of saddling future generations with debt that must inevitably be refinanced.

The most likely consequences of imprudent fiscal policy —inflation followed by a reduction in government services—will disproportionately affect middle and lower income Americans. This is at the heart of the case for generational stewardship, but conservatives have mostly abandoned the tenants of fiscal conservatism. As a result, we’ve got a leadership problem on one of the most monumental challenges of our time.

That’s why we formed the Commission—to bring a new generational voice into the conversation. We recruited prominent millennial business leaders from across the country and a cohort of millennial members of Congress. Over the course of 2020 and 2021, MDF was briefed by current and former elected officials, economists, and policy experts. These meetings were the most significant bipartisan conversations about fiscal policy during the pandemic.

One of the overarching takeaways of the Debt Commission’s meetings was that we’ve got to change the way we define the problem.
Trillions of dollars are incomprehensible. A growing number of economists will argue that the current $30 trillion in debt isn’t the problem, but rather it is the $100 trillion we are on pace to borrow over the next 30 years. For the purposes of understanding the problem of the national debt and the solutions posited in this document, we need to think about the debt in proportion to the size of the U.S. economy, or our gross domestic product (GDP).

Using America’s “debt to GDP” ratio, which recently eclipsed 100%, to quantify our debt will allow us to compare the U.S. to other countries, to other points in history, and will serve as a guiding measurement when formulating goals for the future.

Under current law, the Congressional Budget Office projects the national debt will grow from ~98% of the U.S. economy to more than 185% by 2052. Under CBO’s alternate scenario, debt to GDP could exceed 250%.

The path back to stewardship is not unrealistic.

The recommendations of this commission demonstrate that the path back to stewardship is not unrealistic. Without reform, however, it will become more difficult with every passing year.

With more than $100 trillion set to be added to the debt in the coming decades, we are no longer in a position where balancing budgets, let alone eliminating debt, is feasible. Instead, a patriotic call to stewardship should aim to stabilize the debt, targeting a debt to GDP ratio, and emulating the fiscal measures enacted by other countries to hold Congress accountable to that goal.

While higher inflation has slightly improved the nation’s debt to GDP trajectory, rising interest rates threaten to consume a larger portion of the federal budget annually, leaving less room for the government to provide essential services.

In the pages ahead, the Millennial Debt Commission has proposed ten recommendations to move the debt to GDP baseline from 185% to 128.8%. With the turn of each page you will see America’s fiscal trajectory improve.

To be sure, the reforms we recommend are not all going to be popular on the campaign trail. But as our early advisor, Senator. Tom Coburn, MD, proved throughout his career, the American people will support leaders who place the country’s best interest over their own.

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