The cost of the college student life is by no means cheap. Next year, CC students will pay $57,162 in tuition, a five percent jump from this year, in addition to the costs of block breaks, ski passes, and day-to-day amenities. What students of the millennial generation are not seeing in our monthly bills just yet are the exponentially increasing costs of social benefit programs for the baby boomers.
These social benefit programs, like Medicare, Medicaid, Social Security, and public pension, were designed in the aftermath of the Great Depression to allow Americans to retire without financial woes. The workforce generation is taxed to fund the programs, which they, in turn, expect to receive when they retire.
The millennial generation is increasingly proving to be an unfortunate anomaly in this system: with a large baby boom population gearing up for retirement, careless spending in non-surplus years, and a outstanding debt pushing $17 trillion, the cost the millennials are expected to pay for social programs is significantly higher than ever before.
Neil Grossman, a prominent financial analyst, has combated and proposed a solution to this problem plaguing college-age and eventually primary school-age people in his new ebook “Generation WTF: How millennials can stop the mushrooming costs of Social Security, Medicaid, and Medicare.”
In his book, he explains how generations prior to the millennials, in particular the baby boomers, paid their taxes, but those taxes were not nearly high enough for economically social programs to remain sustainable in the long term.
“I started arguing with my father about this issue in the mid-80s,” said Grossman. “We have built-up debts to enormous proportions and they are just starting to appear. Now that the baby boomers are starting to retire, the budgets going to promises [of social programs] that were never fully funded in the first place.”
The effects, Grossman says, are disastrous. By adding a substantial amount to the bills of a generation who is already faced with student debt and a 12.5 percent unemployment rate, the government is ensuring less productivity, economic growth, and global competitiveness. Eventually, those effects will build up.
How much exactly will the individual of the millennial generation pay to cancel the debt and continue to fund social programs? Based on Grossman’s calculations, it’s not as simple as a percentage-based tax rate.
If every person in the United States paid their share of the national debt, each person would be in debt $55,000. Less than half of the population accounts for the workforce, meaning less than half pay taxes. Taxpaying participation rate among this group is about half. That ups the bill per person to $200,000.
The $17 trillion estimate for the debt, though, is greatly conservative according to Grossman, Professor of Economics at Boston University Dr. Laurence Kotlikoff, and the like. Taking into account the variability of the debt estimate and that everyone over the age of 55 is excluded from such taxation, the millennials’ bill is about $1 million each.
“Younger people, in acknowledging this, should be saying on a societal basis to the government and the baby boomers, ‘You can’t leave us an overhang that is the equivalent of an avalanche that will bury us,’” said Grossman.
Professor of International Political Economy Mark Blyth from Brown University confidently disagreed with Grossman’s projections, and, in accordance with his research on austerity, argued that the private sector is the source of the debt consequently falling on millennials.
“He is using what we call an infinite horizon projection which is a projection all the way out x number of years based on the current size of the economy. By the time that you get to retirement, the economy will have grown so much that all infinite horizon projections will be gone,” said Blyth.
Grossman had no problem standing behind his position in response to Blyth, saying rather that government is the root of the problem, for they are “the worst allocator of resources.”
He does not, though, leave millennials without an outline for a plan of action.
“First of all, get a voice. Actively communicate to your peers and encourage them to look, listen, hear and understand what is going on,” said Grossman. “Second, use that as a platform to start a group, even nationwide, to become for actively involved in saying no to politicians that are expanding these programs. It’s amazing how self-motivated your generation is, in part because of the Internet.”
In considering Grossman’s outline, CC senior Eliza Carter agreed with his proposition and advanced it one step further.
“If his [Grossman’s] goal is to come together to reform Social Security, I’m an idealist, and I think we can do it,” said Carter. “It’s more now that we need to make this an opportunity to show who we are in terms of social opportunities and make something coming out of left field that is wholly ours.”