A recent high school graduation ceremony featured rhetoric of overcoming past obstacles and enthusiasm for future challenges. Tones were predictably optimistic and encouraging – what everyone expected and wanted to hear. In leaving high school, though, a practical-based understanding of what’s truly ahead seems lacking. With that, this message of current realities and future choices is the constructive narrative in need of delivery.
First, current realities. To the Class of 2012, time to get real. Your parents and grandparents have seen American living standards improve tremendously in their lifetimes. You, sadly, are unlikely to be as fortunate. The lifestyle to which many people have grown accustomed is becoming unsustainable. People have for too long lived beyond their means. They now too often depend on government as a solution. Government has no money except for what it takes from productive Americans. The numbers of productive Americans are diminishing. Those who remain feel “tapped out” with a growing sense of resentment toward government’s endless pursuit of their hard-earned dollars becoming increasingly evident.
Class of 2012 – you are inheriting this situation. This is no longer an “it won’t affect me” environment. Widespread consequences are coming. Here are four key issues in your future:
U.S. national debt reaches $16 trillion later this year. At its current $15.7 trillion level, this amounts to $50,000+ debt per citizen, $138,000+ per taxpayer. These amounts will continue growing as long as our federal government needlessly spends more money than it takes in.
Overwhelming debt and bad financial policies are causing certain countries throughout the world to be viewed as undesirably risky – both as trading partners or for other business/political relationships. This downgraded status diminishes economic opportunity, a country’s citizens see their potential for prosperity dramatically impacted. The U.S. is well on the road to becoming such a country in your lifetime.
In their current forms, Medicare and Medicaid cannot be maintained. Medicare is a federal program that guarantees health insurance access for older Americans (65+) and for younger people categorized as disabled. Medicaid is a state and federal cooperative program that provides medical coverage for eligible individuals and families with low incomes and resources.
An aging population, lifestyle behaviors (obesity, substance abuse, tobacco/alcohol use, etc.) and advancements in medical technologies are common, but not all, factors contributing to rising costs. Any productive reform of these programs will require concessions from current and future participants. When the time comes that real, hard-hitting change is forced, you, your parents and your grandparents will likely sacrifice benefits for the long-term economic health of this country. This will be necessary to preserve any hope for you – Class of 2012 – or those who follow to achieve your own American Dream.
Student loan debt now exceeds $1 trillion. Average student debt load tops $25,000, but six-figure balances are not uncommon. While significant debt can be accumulated at public or private schools, long-term financial burdens increase all the more for students pursuing low-earning potential degrees at pricier private colleges. That Social Work degree may sound lofty and noble, but how often does $50,000 to $100,000 of private school-generated debt paid off over decades truly qualify as an exercise in fiscal responsibility or good judgment? In fairness, though, let’s apply that same standard to pursuits of any degree from any school – regardless the financing source.
Higher education will undoubtedly see significant reforms in the years ahead. That said, the impact of decisions the Class of 2012 makes today will be felt for potentially decades to come. This long-term student debt is and will continue to impact our overall American economy. Post-college years were once a time when adults began establishing themselves through buying homes, upgrading cars, saving/investing for the future. Excessive student loans thwart much of that activity. Besides a step backward in an individual’s quest for an enhanced lifestyle, it diminishes the flow of money that helps keep an economy vibrant and healthy. This isn’t a popular talking point of the average high school counselor or college financial aid officer, but again, it’s reality.
Adding to federal debt, Texas’ $322.3 billion of local government debt brings its own set of problematic issues. This 2011 figure equates to $12,500+ local government debt per resident, $50,000+ for a family of four. It includes $192.7 billion in principal (60%) and $129.6 billion in interest (40%). Public school districts hold $108.2 billion of this debt with cities following at nearly $98 billion. Other entities rounding out Texas’ accumulated debt load include counties, water districts, community colleges, health/hospital districts and others.
Taxing entities should be closely watched in debt load discussions as citing principal-only figures is a commonly used tactic to downplay true numbers. School districts promote new debt with impassioned pleas of action “for the children.” The better question soon becomes what are we doing to the children? Is strapping them with a legacy and lifetime of unmanageable debt compassionate? Fiscally responsible? Financial and public policy analysts increasingly predict a coming wave of defaults by many of these entities – another development that again will alter lives within our society.
So Class of 2012, one of your biggest realities: you are head-over-heels in debt! But while current (and future) realities are disturbing, opportunities exist. They start based on your choices.
One choice – decide to get engaged. The issues discussed above are political in nature. The days of “politics have nothing to do with me” are long gone. Every one of the four issues noted are political – how they are handled will have major impact on your (and your family’s) long-term welfare. It’s not about being a Democrat or a Republican, liberal or conservative – it’s about being an educated citizen who pays attention and gets involved with what’s going on so as to optimize opportunity that productive Americans have historically enjoyed.
Another choice – live within your means. Today’s parents and grandparents have not done overly well in this capacity. It’s time for a cultural shift back to a pay-as-you-go mentality that embraces self-sufficiency, saving and thrift. Financial juggling is far more stressful and hazardous to a person’s health than any by-product of fiscal austerity.
And one last choice – say “no” to government debt. We cannot spend our way to prosperity, we can’t continue on this path. Americans have less money now to pursue the American Dream. Our country is headed in the wrong direction and without a change of course, future generations will have even more limited opportunity to pursue that Dream. This isn’t about partisan politics – it’s about policies and where we as a country want to go.
It’s time for a turnaround of current policies – and the Class of 2012 is a great place to start!