Baby Boomers: An Immoral Legacy?
In 1986, Senator Daniel Patrick Moynihan, the longest serving Senator in the history of the State of New York, challenged his fellow Senators about the morality of leaving $2 trillion in federal debt for younger generations to shoulder. Moynihan lamented the absence of such depression era and wartime values as moderation and self denial, which had helped define the Greatest Generation. Instead, he saw a culture developing in the national consciousness consisting of spending today and never worrying about tomorrow.
The Greatest Generation successfully overcame the challenges of the Great Depression and provided the herculean national effort required to destroy the threat of Nazism and fascism during World War II. Having succeeded there, the Greatest Generation gave birth to the Baby Boomers starting in 1945. Over the next 20 years, this group mushroomed into the largest generation in American history. As they came of age, this generation was the beneficiary of a robust economy, a strong educational system and a vibrant democracy. It was axiomatic that every young American could achieve an even better quality of life than his parents.
Today, this upwardly mobile proposition is under siege. Many young people have real doubts about whether they can make out as well as their parents. While the Baby Boomers faced a number of tough issues such as the Vietnam war, the assassinations of President Kennedy, Robert F. Kennedy, Martin Luther King and Malcolm X and the ongoing threat of the Cold War, it is becoming very clear that the younger generations have encountered substantially greater threats and setbacks.
In 2001, the new millennium had barely commenced when the 9/11 terrorist attacks took place. This was by far the largest attack on American soil in history and easily eclipsed Pearl Harbor. The terrorist surprise occurred just as the younger generation was coming of age. In response to the terrorist attack, the U.S. embarked on reprisal wars in Afghanistan and Iraq which have endured for decades and cost over $7 trillion. More importantly, the next generation of young men and women have fought these wars.
Later in the decade in 2008, a financial crisis struck the U.S. economy and caused the largest recession since the Great Depression of the 1930’s. Not only were U.S. financial institutions on the brink of insolvency, many large corporations and small businesses were fighting for survival. Jobs were hard to find and for several years young Americans encountered difficulty starting careers.
Finally, as if 9/11 and the Great Recession were not enough, in early 2020 the deadly novel Coronavirus landed on American shores causing an unprecedented total shutdown of the economy and virtually all activity as the American public sheltered at home under quarantine. No vaccine or therapy exists for this new pathogen which has exhibited both virulence and rapid human to human transmission. Huge fiscal and monetary stimulus responses have been applied by the Federal Reserve and Congress in the hope of cushioning the harsh effects of the shutdown. No one is yet certain that these measures will be enough and the path forward is anything but clear.
Many consequences flow from these major events which have taken place in only the first 20 years of the 21st century. I believe Senator Moynihan would ask if the U.S. had the financial resources to overcome these major challenges. Or, had the policy stewardship of the federal debt by the Congress been wise? His answer would be an emphatic NO. In 1986, the federal debt was $2.1 trillion. Depending on the amount of further debt required for the Coronavirus, the debt level could reach $27-28 trillion in 2020. This level places the United States in the same position it occupied at the end of World War II which is that the total national debt exceeds the annual economic output of the country. Put another way, the debt will be 103% of national GDP.
Intergenerational equity should lie at the core of the American way of life. After all, each generation is a steward of core democratic principles to be left to the next generation intact and perhaps even richer in their application to the American people. Leaving a federal debt inexorably rising towards $30 trillion constitutes a massive breach of the stewardship obligation of the Baby Boomers. As Senator Moynihan warned, decades of political leaders in both the executive and legislative branches have incurred these huge debts and in the process have saddled younger Americans with the weight of a debt overhang which will slow economic growth, inhibit job creation, and reduce government services: all because interest payments on the huge debt crowd out just about everything else in the federal budget. This is particularly true when interest rates rise from their historically low levels today.
In order to solve this problem, a pro-growth, reduced spending balanced approach to the budget and underlying debt will be urgently required. While bi-partisanship is largely absent in Washington today, leaders from both sides of the aisle, in the 1980’s and 90’s tradition of Presidents Reagan, Bush(41) Clinton and members of the Congress such as Senators Moynihan and Simpson and Speaker of the House Tip O’Neill, must join forces to attack this existential threat to the United States. It is past time to come together to examine all areas of the budget and increase revenues and decrease spending in order to place the country on a sustainable path. It is not too late, particularly since many are still in office, for the Baby Boomer generation to lead the U.S. away from the debt precipice and avoid the judgment of Senator Moynihan and history as being immoral custodians of the American dream.