By TCO Insights Team
Fiscal conservatism often feels like it is on the wane. Regardless of the current election cycle, policymakers generally coalesce around one of two options (even if they won’t admit it):
The “Wring Your Hands” Approach: Express deep concern over the fiscal situation, then continue to spend and run up the federal debt to increasingly higher levels.
The “Full Steam Ahead” Approach: Enthusiastically spend and borrow with the mindset that debt is not an impediment to new initiatives
An important question – why is this happening?
Data from the Congressional Budget Office (CBO) helps answer this. First, our society continues to age as the percentage of the population 65 and older steadily climbs. Second, this age group receives a larger share of total federal dollars spent, leaving a smaller portion of the pie for everyone else.
If current trends hold, 50 cents of every federal dollar (excluding interest on debt) will eventually go toward senior citizens, even though they comprise only about 20% of the population. The remaining 50 cents must cover everything else: defense, infrastructure, education, and environmental protection.
A younger person doesn’t have to be a rocket scientist to ask, “Where’s my share?”
We are seeing a rise in proposals that seek to both re-apportion the pie and make it bigger than one might think fiscally possible. These include pushes for free college tuition, student loan forgiveness, and expanded social safety nets—initiatives clearly targeting the under-65 age group.
Woe to fiscal conservatives. Is discipline yesterday’s news? I will continue to explore this topic and what it means for the markets in the future. In the meantime,
“The whole idea of our government is this: If enough people get together and act in concert, they can take something and not pay for it.” — P.J. O’Rourke