Hey, big spender
Shameful. On July 22, White House and Congressional negotiators agreed to increase federal spending and raise the government’s borrowing limit. This deal for more than $2.7 trillion in spending over two years would suspend the debt ceiling until the end of July 2021. Increasing spending by nearly $50 billion for the next fiscal year, the agreement provides for $320 billion in spending over two years, beyond the limits set in 2011’s sequester that established automatic spending cuts.1 Go figure, wasteful spending that will burden future generations with mountains of debt and further fuel the deficit is the one thing that Republicans and Democrats can agree on.
This deal, which still must pass both chambers of Congress and be signed by President Trump, avoids a fiscal crisis by splashing more red ink on a deficit that has already surged to more than $1 trillion. DC’s general acceptance for operating under massive deficits can be traced back to 2002, when the Bush administration’s economic team met to discuss a second round of tax reductions to follow Bush’s 2001 cuts. When then-Treasury Secretary Paul O’Neill raised concerns that additional tax cuts could cause the US government — already running a $158 billion deficit — to spiral toward a fiscal crisis, Vice President Dick Cheney famously alleged that “Reagan proved deficits don’t matter.”2 It was as if Cheney’s words were delivered on two stone tablets, granting all future governments permission to spend well beyond the nation’s means.
If you believe that debt and deficits don’t matter, I’m sorry, but you are wrong. They may not seem to matter because nothing terrible has happened yet as both debt and deficits have ballooned in recent years. However, just because a person is lucky enough to not blow his brains out in a game of Russian roulette doesn’t mean that the game isn’t dangerous — potentially fatal.
While it might not be possible to determine exactly when this irresponsible behavior will wreak havoc on the world, some fascinating research about generations may provide insight into which generation will most likely solve what might be our nation’s greatest future challenge
Talkin’ ‘bout the generations
Thinking about how massive debt and huge deficits will impact future generations reminds me of one of the most thought-provoking books I have ever read — The Fourth Turning: An American Prophecy — What the Cycles of History Tell us About America’s Next Rendezvous with Destiny by William Strauss and Neil Howe. The authors apply their generational theories to the cycles of history to conclude that the United States may be on the brink of a crisis period they define as the “Fourth Turning.” Strauss and Howe suggest that US history moves in predictable cycles that last roughly 80 years, where different generations (i.e., Baby Boomers, Generation X and Millennials) move through roughly 20-year periods of influence called “turnings.”
Source: Federal Reserve Bank of St. Louis, January 2019.
Each of the four turnings comes with a mood shift that catches people by surprise. For example, the rapid breakdown of globalization in concert with rising nationalist sentiment and the surge in populist leaders around the world has shocked many people in recent years. The turnings follow a familiar rhythm of growth, maturity, decay and — ultimately — destruction. It’s easy to connect them to the four seasons — spring, summer, fall and winter. When the book was published in 1997, Strauss and Howe were forecasting that winter was due to arrive early in the 21st century. Followers of their work have cited such events as 9/11 and the Great Recession as evidence that the Fourth Turning was beginning as predicted. The massive national debt and increasing deficits have become symptoms of this crisis period.
Admittedly, to hold up Strauss and Howe’s research as absolute truth would be a major stretch. But to dismiss it entirely as pseudoscience would be a mistake of equal proportion. Being a skeptic, I have often wondered if they simply looked back at historical periods and laid a creative story on top of them. Everything fits so perfectly. Perhaps too perfectly? Strauss and Howe’s research is well thought out, extensive and makes tremendous intuitive sense. And in what might be the only true test of their theories, there are plausible signs to suggest that America has been either in or on the brink of a Fourth Turning crisis period in the first two decades of this century. Exactly as the authors predicted.
So, ya wanna be a hero, kid?
If we extend Strauss and Howe’s research to its next logical step, it would imply that the Millennial Generation, like the G.I. Generation before them, will likely be the heroes of a Fourth Turning. Generational affiliations aside, human nature dictates that tough problems won’t be addressed until we are staring into the abyss. That’s why today’s global leaders get away with continuing to kick the can down the road. When we do reach the frightening precipice, Strauss and Howe’s work suggests that the Millennials will have the attributes and the good sense to make the tough decisions required to solve the nation’s most challenging problems.
And why not? Millennials came of age during 9/11, the second Gulf War and the Great Recession. They believe in global community. They are self-confident, entrepreneurial, racially diverse, accepting, and technologically savvy. And while they are highly collaborative, they also value autonomy and individualism.
It’s unclear whether America is in the midst of or close to entering the Fourth Turning crisis period. Only time will tell. But wherever we are in the cycle, a fiscal crisis could create more conflict. That might be the push that Millennials need to take charge and bring us back from the brink to a new First Turning high. Something to think about during these long summer days.
1 Andrew Duehren, Kate Davidson and Katherine Lucey, “White House and Congress Near Agreement on Spending Debt Ceiling,” The Wall Street Journal, June 22, 2019.
2 Pat Garofalo, “Six Years After Cheney Said ‘Deficits Don’t Matter,’ The National Debt Hits A 50-Year High,” ThinkProgress, October 2, 2008.