The Debt-Ceiling Fight Puts Millennials and Gen Z at Risk

The budget cuts that House Republicans are demanding in their high-stakes debt-ceiling standoff with President Joe Biden sharpen the overlapping generational and racial conflict moving to the center of U.S. politics.

The House GOP’s blueprint would focus its spending cuts on the relatively small slice of the federal budget that funds most of the government’s investments in children and young adults, who are the most racially diverse generations in American history.

Those programs, and other domestic spending funded through the annual congressional-appropriations process, face such large proposed cuts in part because the GOP plan protects constituencies and causes that Republicans have long favored: It rejects any reductions in spending on defense or homeland security, and refuses to raise taxes on the most affluent earners or corporations.

But the burden leans so heavily toward programs that benefit young people, such as Head Start or Pell Grants, also because the Republican proposal, unlike previous GOP debt-reduction plans, exempts from any cuts Social Security and Medicare. Those are the two giant federal programs that support the preponderantly white senior population.

The GOP’s deficit agenda opens a new front in what I’ve called the collision between the brown and the gray—the struggle for control of the nation’s direction between kaleidoscopically diverse younger generations that are becoming the cornerstone of the modern Democratic electoral coalition and older cohorts that remain predominantly white and anchor the Republican base.

The budget fight, in many ways, represents the fiscal equivalent to the battle over cultural issues raging through Republican-controlled states across the country. In those red states, GOP governors and legislators are using statewide power rooted in their dominance of mostly white and Christian nonurban areas to pass laws imposing the conservative social values and grievances of their base on issues including abortion, LGBTQ rights, classroom censorship, book bans, and even the reintroduction of religious instruction into public schools. On all those fronts, red-state Republicans are institutionalizing policies that generally conflict not only with the preferences but even the identity of younger generations who are much more racially diverse, more likely to identify as LGBTQ, and less likely to identify with any organized religion.

The House Republicans’ plan would solidify a similar tilt in the federal budget’s priorities. Because Social Security, Medicare, and the portion of Medicaid that funds long-term care for the elderly are among Washington’s biggest expenditures, the federal budget spends more than six times as much on each senior 65 and older as it does on each child 18 and younger, according to the comprehensive “Kids’ Share” analysis published each year by the nonpartisan Urban Institute. Eugene Steuerle, a senior fellow there who helped create the “Kids’ Share” report, told me, “We are already in some sense asking the young to pay the price” by cutting taxes on today’s workers while increasing spending on seniors, and accumulating more government debt that future generations must pay off.

Spending on children 18 and younger now makes up a little more than 9 percent of the federal budget, according to the study. But that number is artificially inflated by the large social expenditures that Congress authorized during the pandemic. By 2033, the report projects, programs for kids will fall to only about 6 percent of federal spending.

One reason for the decline is that spending on the entitlement programs for the elderly—Social Security, Medicare, and Medicaid—will command more of total spending under the pressure of both increasing health-care costs and the growing senior population. Under current law, in 2033 those programs for seniors will expand to consume almost exactly half of federal spending, the “Kids’ Share” analysis projects.

By protecting those programs for seniors from any cuts, and rejecting any new revenues, while exacting large reductions from programs for kids and young adults, the GOP plan would bend the budget even further from the brown toward the gray. The implication of the plan “is that children will get an even smaller slice of federal spending” than anticipated under current policies, Elaine Maag, an Urban Institute senior fellow and a co-author of the “Kids’ Share” report, told me.

Federal spending on kids is particularly at risk because of how Washington provides it. The federal government does channel substantial assistance to kids through tax benefits, such as the child tax credit, and entitlement programs, including Medicaid and Social Security survivors’ benefits, that are affected less by the GOP proposal. But many of the federal programs that benefit kids and young people are provided through programs that require annual appropriations from Congress, what’s known as domestic discretionary spending. As Maag noted, the programs that help low-income and vulnerable kids are especially likely to be funded as discretionary spending, rather than entitlements or tax credits. “Head Start or child-care subsidies or housing subsidies are all very targeted programs,” she said.

The GOP plan’s principal mechanism for reducing federal spending is to impose overall caps on that discretionary spending. Those caps would cut such spending this year and then hold its growth over the next nine years to just 1 percent annually, which is not enough to keep pace with inflation. Over time, those tightening constraints would result in substantially less spending than currently projected for these programs. If the GOP increased defense spending enough to keep pace with inflation, that would require all other discretionary programs—including those that benefit kids—to be cut by 27 percent this year and by almost half in 2033, according to a recent analysis by the Center on Budget and Policy Priorities, a progressive advocacy group. If the GOP also intends to maintain enough funding for veterans programs (including health care) to match inflation, the required cuts in all other discretionary programs would start at 33 percent next year and rise to almost 60 percent by 2033.

As Sharon Parrott, the president of the Center on Budget and Policy Priorities, told me this week, by demanding general spending caps, the GOP does not have to commit in advance to specific program reductions that might be unpopular with the public. “What they are trying to do is put in place a process that forces large cuts without ever having to say what they are,” Parrott said.

Federal agencies have projected that the cuts required under the Republican spending caps would force 200,000 children out of the Head Start program, end Pell Grants for about 80,000 recipients and cut the grants by about $1,000 annually for the remainder, and slash federal support for Title I schools by an amount that could require them to eliminate about 60,000 teachers or classroom aides. The plan also explicitly repeals the student-loan relief that Biden has instituted for some 40 million borrowers. Its cuts in the Temporary Assistance for Needy Families program, generally known as welfare, could end aid for as many as 1 million children, including about 500,000 already living in poverty, the Center on Budget and Policy Priorities has calculated.

The appropriations bill that a House subcommittee recently approved for agricultural programs offers another preview of what the GOP plan, over time, would mean for the programs that support kids. The bill cut $800 million, or about 12 percent, from the Special Supplemental Nutrition Program for Women, Infants, and Children. Parrott noted that to avoid creating long waiting lists for eligibility, which might stir a more immediate backlash, the committee instead eliminated a pandemic-era program that gave families increased funding through WIC to purchase fruits and vegetables. “They are saying the country can’t possibly afford to make sure that pregnant participants, breast-feeding participants, toddlers, and preschoolers have enough money for fruits and vegetables,” she said.

Parrott doesn’t see the GOP budget as primarily motivated by a desire to favor the old over the young. She notes that the GOP plan would also squeeze some programs that older Americans rely on, for instance by reducing funds for Social Security administration or Meals on Wheels, and imposing work requirements that could deny aid to older, childless adults receiving assistance under the Supplemental Nutrition Assistance Program.

Instead, Parrott, like the Biden administration and congressional Democrats, believes that the GOP budget’s central priority is to protect corporations and the most affluent from higher taxes. “To me, that’s who they are really shielding,” she said.

Yet the GOP’s determination to avoid reductions in Social Security and Medicare, coupled with its refusal to consider new revenue or defense cuts, has exposed kids to even greater risk than the last debt-ceiling standoff. Those negotiations in 2011, between then-President Barack Obama and the new GOP House majority, initially focused on a “grand bargain” that involved cuts in entitlements and tax increases along with reductions in both discretionary domestic and defense spending. Even after that sweeping plan collapsed, the two sides settled on a fallback proposal that raised the debt ceiling while requiring future cuts in both domestic and defense spending.

The House Republicans’ determination to narrow the budget-cutting focus almost entirely to domestic discretionary spending not only means more vulnerability for programs benefiting kids, but also less impact on the overall debt problem they say they want to address. Even some conservative budget experts acknowledge that it’s not possible to truly tame deficits by focusing solely on discretionary spending, which accounts for only about one-sixth of the total federal budget. Brian Riedl, a senior fellow and budget expert at the conservative Manhattan Institute, supports Republican efforts to limit future discretionary spending but views it only as an attempt to “prevent the deficit from getting worse.”

Riedl told me that in his analysis of long-term budget trends, he found it impossible to prevent the federal debt from increasing unsustainably without also raising taxes and significantly slowing the growth in spending on Social Security and Medicare. But, as he acknowledged, the GOP’s willingness to consider reductions in those programs has dwindled as their electoral coalition in the Donald Trump era has evolved to include more older and lower-income whites. “As the Republican electorate grew older and more blue collar, they revealed themselves as more attached to entitlements [for seniors] than previous Republican electorates,” he said.

Trump in 2016 recognized that shift when he rejected previous GOP orthodoxy and instead   opposed cuts in Social Security and Medicare. Trump has maintained that position by publicly warning congressional Republicans against cutting the programs, and attacking Florida Governor Ron DeSantis, who entered the 2024 GOP race yesterday, for supporting such reductions in the past. Biden has also pressured the GOP to preserve Social Security and Medicare.

Though it’s not discussed nearly as much, the GOP’s refusal to consider taxes on high earners also has a stark generational component. With the occasional exception, older Americans generally earn more than younger Americans (the top tenth of people at age 61 earn almost 60 percent more than the top tenth of those age 30). Older generations are especially likely to have accumulated more wealth than younger people, Steuerle noted. As part of the economy’s general trend toward inequality, Steuerle said, older generations today are amassing an even larger share of the nation’s total wealth than in earlier eras.

Refusing to raise taxes on today’s affluent while cutting programs for contemporary young people subjects those younger generations to a double whammy. Not only does it mean that the federal government invests less in their health, nutrition, and education, but it also increases the odds that as adults they will be compelled to pay higher taxes to fund retirement benefits for the growing senior population.

Although Biden also wants to avoid cuts in entitlements for seniors, his call for raising more revenue from the affluent still creates a clear contrast with the GOP. By proposing higher taxes, Biden has been able to devise a budget that protects federal spending on kids and other domestic programs while also reducing the deficit. Biden’s budget proposal achieves greater generational balance than the GOP’s because the president asks today’s affluent earners, who are mostly older, to pay more in taxes to preserve spending that benefits young people. If Biden reaches a deal with congressional Republicans to avoid default, however, their price will inevitably include some form of spending cap that squeezes such programs: the real question is not whether, but how much.

Looming over these choices is the intertwined generational and racial re-sorting of the two parties’ electoral coalitions. As Riedl noted, especially in the Trump era, the GOP has become more dependent on older white people who are either eligible for the federal retirement programs or nearing eligibility. According to a new analysis published by Catalist, a Democratic electoral-targeting firm, white adults older than 45 accounted for just over half of all voters in the 2022 and 2018 midterm elections and just under half in the 2020 and 2016 presidential campaigns. But because those older white Americans have become such a solidly Republican bloc, they contributed about three-fifths of all GOP votes in the presidential years, and fully two-thirds of Republican votes in midterm elections.

Democrats, in turn, are growing more reliant on the diverse younger generations. Catalist found that Democrats have won 60 to 66 percent of Millennials and members of Generation Z combined in each of the past four elections. Those two generations have more than doubled their share of the total vote from 14 percent in 2008 to 31 percent in 2020. Adding in the very youngest members of Generation X, all voters younger than 45 provided almost 40 percent of Democrats’ votes in 2022, Catalist found, far more than their overall share (30 percent) of the electorate.

The inexorable long-term trajectory is for the diverse younger generations to increase their share of the vote while the mostly white older cohorts recede. In 2024, Millennials and Gen Z may, for the first time, cast as many ballots as the Baby Boomers and older generations; by 2028, they will almost certainly surpass the older groups. In the fight over the federal budget and debt ceiling—just as in the struggles over cultural issues unfolding in the states—Republicans appear to be racing to lock into law policies that favor their older, white base before the rising generations acquire the electoral clout to force a different direction.

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