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COLLEGE REPUBLICAN NATIONAL COMMITTEE! www.crnc.org/petition

Don’t Put I t On Our Tab

The Challenge We FaceWashington holds the future of young adults in its hands. Unsustainable budget deficits and an ever-expanding national debt threaten to dim our once bright future. Unless the government commits itself to making the difficult choices necessary to reduce the size of government, cut spending, and address its untenable entitlement crisis, our generation will suffer the burden of high taxes without the reward of government services.

The past few years have witnesses an incredible surge in youth involvement in politics. With their newfound interest, young adults should not like what they are seeing. In just the past year our generation has witnessed:

• A $1.9 trillion increase in the debt ceiling – the largest one time increase in history

• The federal deficit reach a record $1.56 trillion dollars • The total national debt approach $13 trillion • President Obama release a budget which doubles the debt

in 5 years and triples it in 10• The government’s unfunded entitlement liabilities swell to

$76 trillion

Unfortunately the nature of Washington incentivizes spending money on the here-and-now while pushing problems onto future generations. Though enormous deficits make no sense for the nation, in the current state of politics it makes complete sense. Previous generations of young adults were simply not a large, or active, enough voting bloc to counteract Baby Boomers. Millennials are different in that regard. Our size is enough to command a voice in Washington. Now we must show them we have something to say.

To that end, College Republicans are launching “Don’t Put It On Our Tab,” an issue campaign designed to highlight the negative impact that Washington’s spending is having on our generation. Part education and part action, “Don’t Put It On Our Tab” will inform young adults about our dire fiscal future and provide them an outlet to have their voice heard in Washington. Help us shut off the government spending tap. Help us tell Washington “don’t put it on our tab.”

TABLE OF CONTENTS

2AN UNSUSTAINABLE PATH

4MEDICARE

5MEDICAID

6SOCIAL SECURITY

8OBAMACARE

9A MAP OUT OF THIS MESS

10OBAMA’S ECONOMIC MADNESS

ENTITLEMENT REFORM! SPRING 2010

http://www.crnc.org/petition



An “Unsustainable” Path

Congressional Budget Office director Douglas Elmendorf recently wrote that,

“Under current law, the federal budget is on an unsustainable path, because federal debt will continue to grow much faster than the economy over the long run.”

He also cites the many difficulties we face in charting a different fiscal course. The baby boomer generation is getting older which will drastically increase the cost of health care for the aging population. As they retire our taxpayer-to-entitlement recipient ratio will fall below sustainable levels. To cover the difference annual deficits will spiral upwards. Interest payments on the ballooning debt will consume more and more taxpayer dollars. Over time, the accumulated deficits will force us to increasingly borrow from foreign nations, thus lessening domestic investment and reducing economic growth.

It is a dire future, but it is realistic one for young adults unless something is done to solve the problem. The problem begins and ends with the government’s spending habits. As Elmendorf explains, “almost all of the projected growth in federal spending…stems from the three largest entitlement programs – Medicare, Medicaid, and Social Security.”

Solving the nation’s budget crisis requires reforming these entitlement programs. Left unchecked the cost of Medicare and Medicaid alone will double as a percentage of GDP in the next 25 years. By 2080, when young adults enter retirement age, the government would be spending as much on these two health care programs as it currently spends on all of its programs and services.

Social Security is also standing on shaky financial ground. For the first time in its history the program will pay out more in benefits than it will receive in payroll taxes. This is six years sooner than even the CBO’s most optimistic prediction. Social Security is projected to run deficits for the foreseeable future and will have used up its $2.5 trillion surplus by 2037.





Given these humbling assessments one would expect the government to focus on reform. Instead, the Obama administration added another entitlement to the mix in the form of government run health care. Stripping the reform bill of its balance sheet gimmicks reveals that the bill will cost $2.3 trillion in its first ten years. Like all government programs, that cost estimate should only be expected to go up.

Together this creates an unsustainable future for young adults. Without significant change we will be paying a lifetimes worth of higher taxes only to see reduced benefits. As then-Senator Barack Obama said in 2006,

“Increasing America’s debt weakens us domestically and internationally. Leadership means that “the buck stops here.” Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership.”

He remains right on both counts. If young adults have learned anything it is that we must not rely on an out of touch Washington to realize how they are damaging our future. If our nation is to keep its promise of opportunity for future generations, we must change course quickly The time must be now, and the people must be us.





MedicareMedicare was signed into law by President Lyndon Johnson with the promise that

“[n]o longer will young families see their own incomes, and their own hopes eaten away simply because they are carrying out deep moral obligations to their parents.”

But as Congressman Paul Ryan recently wrote,

“Absent reform, the program will end up delivering exactly what it was created to avoid: it will consume the prosperity of today’s younger generation to finance an unsustainable path of spending.”

The problem is that the program, which covers more than 45 million Americans, is quickly going bankrupt. One of the major causes of their fiscal imbalance has been Medicare’s inability to control costs. The CBO found that total spending per Medicare enrollee grew at 10.6% annually while the privately insured grew at 7.7%. The result of this backwards bottom line is that the trust fund is “projected to be exhausted during 2017.” That is a mere seven years from now.

Sadly most people are resigned to the fact that Medicare will eventually fail. A recently Zogby poll found that 47% of young adults believed Medicare would not be around by the time their children were eligible for benefits; another 33% were unsure. This is simply unacceptable. Moreover, it is why our generation must lead the charge to reform this broken program before it is too late.





Medicaid

As a federal/state partnership program Medicaid is intimately woven throughout all governmental budgets. In fact, Medicaid is the single largest expense category in state fiscal budgets. Thus, rising costs or unsustainable growth not only threatens our federal deficit but could also force states to cut back services or increase taxes. Unlike Medicare and Social Security, Medicaid is funded out of general revenues on an as-needed basis. Although this pay-as-you-go system ensures financial balance any growth in costs necessarily squeezes other parts of the budget.

The latest data from the Center for Medicare and Medicaid Services shows that the government spends $339 billion per year – up from $14 billion in 1980. This incredible growth is projected to continue. Prior to the enormous expansion of the program as a result of health care reform’s passage, CMS estimated that the cost of the program would reach $674 billion in 2017. In growing twice the rate of inflation, Medicaid’s share of the gross domestic product (GDP) was projected to reach more than 3% by 2017.

Cash strapped states are ill equipped to handle such consistent and enormous increases in their budgets. To control costs they must either cap enrollees or cut reimbursement rates. Opting for the latter option has forced more than 30% of all physicians to refuse to accept any new Medicaid patients – which often cost money to treat.

Health care reform will only make these statistics worse. Of the 32 million Americans expected to gain coverage under the law – 20 million will be insured by Medicaid. But can the federal government, and more importantly states, handle the addition to their bottom line? History tells us no.





Social Security

Social Security was created in 1935 to protect workers from falling into poverty in their senior years. Currently, more than 30 million Americans depend on Social Security, with that number expected to balloon with the retirement of the Baby Boomer generation. Without significant reform the program is on the road to insolvency. The CBO predicts that future retirees will face benefit cuts by as much as 24% in less than 30 years.

This is not a future problem. This is a now problem. This year the Social Security system will pay out more in benefits than it receives in payroll taxes – a full 7 years earlier than the CBO predicted. To cover the deficit the program will begin eating into its “trust fund” which currently has a balance of about $2.5 trillion.

Despite the cushion, Social Security’s finances are dire. The latest projects show that its funds will be exhausted by 2040 and its projected budget shortfall over the next 65 years is $20 trillion. Since the founding of this nation, the government, with all of its wars, entitlements, and programs has only managed to amass a $12 trillion dollar debt. But Social Security alone will nearly double 234 years worth of our nation’s spending.

Even the Social Security “trust fund” is an illusion. Although contributions are supposed to be set aside from payroll tax revenues into the trust fund, the reality is much different. As Congressman Ron Paul explained:

“Over decades Congress found itself simply unable to sit on a big pile of money, so it began treating Social Security contributions as general revenues to fund the ever-growing federal government. Today your Social Security account is nothing more than a ledger filled with IOUs.”





In other words, through a slick budgetary move designed to make their bottom line look better, the government takes the Social Security “trust fund,” spends the money to fund government programs, while not counting the borrowed money against the deficit. Yet another example of a Washington culture designed to reward spending money today while ignoring the strain of debt and deficits of tomorrow.

Of course not everyone is willing to admit there is a problem. House Majority Leader Harry Reid, when faced with the Trustees report that showed Social Security beginning to run deficits, stated

“Today’s report confirms that the so-called Social Security crisis exists in only one place — the minds of Republicans. In reality, the program is on solid ground for decades to come.”

Young adults know better. A recent Zogby poll, which asked if people believed that Social Security would be around for you or your children, found that:

Without acknowledging there is a problem and working to fix it our generation runs the risk of losing its ability to retire with a sense of financial stability. We have the most to lose. We must be the ones to act.





Obamacare

Universal health care is the nation’s newest entitlement. Given the unsustainable nature of our existing entitlement structure, and the $76 trillion in unfunded mandates that we must find a way to afford, is it smart to add another one? Regardless, this is the reality that we must face.

President Obama sold the nation on his new entitlement on the idea that it would actually reduce the deficit. Unfortunately, his estimates rely on unrealistic assumptions and budgetary gimmicks designed to hide the bill’s true cost. For instance, the program’s benefits are phased in so that the first 10 years of revenue are used to pay for only six years of spending. In addition, Obama’s bottom line fails to take into account the bill’s numerous “discretionary” spending programs that will costs hundreds of billions of dollars to implement. Removing these gimmicks we find that the reform legislation will cost closer to $2.5 trillion – an impossible burden for an already strained budget.

Of course, if we should learn anything from the explosive growth in Medicaid and Medicare costs, it is that we dramatically underestimate the cost of health programs. For instance, in 1967 it was estimated that Medicare would cost $12 billion by 1990. The trust cost? $98 billion – an 816% increase over the estimate. There is little reason to expect anything different today and the results could be disastrous on future deficits.

Future deficits are not the only way young adults are hurt by this program. The Democrats’ bill mandates that health insurance premiums for older Americans be no more than twice the level for younger Americans. But spending for those aged 60-64 is four to five times greater than those 18-24. In other words, young adults are being forced to overpay for insurance.

Obamacare is bad for the bottom line. Not only does it add another trillion entitlement to a cash strapped nation but it takes money directly out of the wallets of young adults.





A Map Out of the Mess

The debt problem is deep and multi-faceted, a combination of bloated entitlements, an aging population, and an ever-growing bureaucracy. This is the iceberg and we’re headed right for it. But Obama’s agenda does nothing to turn the steering wheel, instead choosing to slam on the accelerator. Fortunately, Wisconsin Congressman Paul Ryan has come up with a plan to put the brakes on out of control government spending. Ryan’s plan, called the Roadmap for America’s Future, is just that – a comprehensive method for righting the balance sheet and making sure that our generation, the future, is put on a path toward financial stability.

The all-encompassing Roadmap, tackles everything from health care reform, Medicare, Medicaid, to the tax code. Among the highlights:

• Freeze all discretionary spending except national defense and veteran’s health care for five years• Simplify the income tax code by creating a two-tiered flat tax – 10% for incomes up to $100,00

and 25% on higher incomes• Lower corporate income taxes, currently the world’s second highest, by replacing them with a

consumption tax of 8.5%• Overhaul Medicare to give seniors premium support through vouchers for private insurance to

draw more people into a competitive market• Index the retirement age for Social Security to today’s life expectancy• Make the tax cuts of 2001 and 2003 permanent

Republicans cannot do it without our help. Young adults are the ones who stand to lose the most if entitlement reform is not enacted. These programs face a future of insolvency. Unless something is done young adults will pay a lifetime worth of higher taxes for reduced benefits. Stand with us in our fight to tell Washington “Don’t Put it On Our Tab.”





Obama’s Economic Madness

Even with the American economy showing slight signs of growth, it’s hard to escape the feeling that our country is stuck in a state of despondency and despair. Yes, the economy is adding jobs, but the gains are not even large enough for the roughly 150,000 new people who join the workforce each year. Yes, the Gross Domestic Product (GDP) is growing, but it is hampered by the threat of government regulation and taxes. There just isn’t the same sense of relief among Americans who previously greeted modest upturns economic upturns as a positive sign that things are on the mend.

Americans have been given reason to doubt. The Obama administration’s economic policy has been one of neglect. Democrats promised this year would be about “jobs. jobs, jobs.” Instead, the private sector lost 7 million of them, while Washington worked towards unpopular health care and financial regulation legislation. With Democrats so out of touch with the hopes and aspirations of the people it governs, it is little wonder that fewer than half of young adults believe in the “American Dream.”

They are right to be concerned. If left unchecked President Obama’s spending policies will add $10 trillion to the national debt over the next decade, on top of the $13 trillion we already owe. It will cost $5.7 trillion over the next decade just to service this mountain of debt, much less pay a single dollar towards principal. These policies will inevitably lead to huge tax increases or runaway inflation. Either of these consequences would drain the economy of the capital that sustains the creation and expansion of businesses and both would remove incentives for entrepreneurialism and hard work.

Adding imprudence to irresponsibility, the President’s policies are creating bloated bureaucracies sustained on the backs of an already struggling private sector. “Too big to fail” companies are seeing that arbitrary status cemented by law. Companies that made the right decisions when times were good are being forced to effectively subsidize competitors that didn’t. Fannie Mae and Freddie Mac, who were largely responsible for the financial collapse, continue be ignored by Washington despite the $145 billion in taxpayer money that the government-backed mortgage giants have received . Given the backward economic thinking it should not come as a surprise that the number of people who have been out of a job for at least 6 months continues to rise – having topped 6.5 million in April. Sadly, structural unemployment threatens to become a long-term reality for the first time in American history. While the Administration seems resigned to this new economic norm, the 26% of America’s young people who are unemployed must take an active stand.

President Obama’s harmful actions on the economy has led us down an economically perilous road; but his inaction on America’s looming entitlements crises is just as risky. The simple fact is that America’s entitlement programs, as they currently stand, are sinking ships that threaten to drag the whole American economy down with them. Social Security, Medicare, Medicaid and other programs will bring in tens of trillions less in revenue than they owe in promised benefits over the coming decades. The total unfunded liability of the three main entitlement programs has reached an unsustainable $76 trillion. In the face of this impossible sum President Obama created another one – universal health care – which will only add to the ever-growing burden on future generations. Rather than solve the problems we have, the President, and the congressional leadership, have shown a commitment to making them worse.

Admittedly, President Obama did not cause the downturn that has racked the American economy for the last two years. However, the mentality that drives his economic policy—an irresponsible approach that sanctions spending well beyond your means and ignoring the consequences--did.





!t shouldn’t surprise anyone that creating government jobs of dubious public benefit paid for by unsustainable public debt has failed to jumpstart the economy or boost economic optimism. Far from starting a new era of growth, the President has laid the groundwork for an era of tortuous decline.

In just a year and a half, President Obama’s economic policy has resulted in massive, unsustainable debt, a broken economy without the means to self-repair, and the same underlying problems that caused the financial crises in the first place. America cannot go on like this. It’s time to tell America’s leaders to stop putting trillions of dollars in new spending on the tab of future generations. And if they don’t respond, we need to elect leaders that believe in responsible, sustainable fiscal policy. It’s time to throw out the mad economic policies that got us into this crisis and sustained it.

America can keep its promise of opportunity and reward for hard work to future generations, but only if young people make their voices heard and work for change. The time must be now and the people must be us.





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