Executive Summary  

• The national debt is fundamentally a generational issue; running large budget deficits to finance tax cuts or spending increases today places an undue burden on younger and future generations.  

• By borrowing more today, policymakers are effectively promising higher taxes and lower spending on future taxpayers and government beneficiaries; at the very least, younger and future generations will see interest become the single-largest government expenditure.  

• The short-and long-term fiscal challenge is driven in part by the growth in entitlement spending, particularly on Social Security and Medicare; both programs face solvency concerns and together account for much of the projected short-and long-term spending growth.  

• Unfortunately, political incentives and the embrace of socialism, especially among younger cohorts, discourage meaningful reform, leading policymakers to avoid making difficult decisions today in favor of continuing policies that shift the burden to future taxpayers.  

• Restoring any sort of fiscal sanity requires bipartisan reforms, market efficiency, and responsible budgeting, including entitlement reform, health care cost reductions, and greater transparency about the true cost of government spending.  

Introduction  

The national debt is fundamentally a generational issue. Running large budget deficits to finance tax cuts or spending increases today places an undue burden on younger and future generations. By borrowing more today, policymakers are effectively promising higher taxes and lower spending on future taxpayers and government beneficiaries. At the very least, younger and future generations will see interest payments on the debt become the single-largest government expenditure – a milestone the Congressional Budget Office (CBO) estimates will be reached by fiscal year (FY) 2048. In other words, we will soon be spending more on servicing the past than making productive investments in the future, which will reduce economic opportunities for younger and future generations.   

The short-and long-term fiscal challenge is driven by the growth in entitlement spending, particularly on Social Security and Medicare. CBO projects that spending on these two programs will comprise half of projected spending growth over the next decade and over two-fifths over the next three decades.   

Unfortunately, political incentives have discouraged meaningful reforms to restore fiscal sustainability. Policymakers avoid making difficult decisions today in favor of continuing policies that shift the burden to future taxpayers. This has eroded confidence in the nation’s fiscal health and contributed to the rise of socialism, especially among younger cohorts.   

Restoring any sort of fiscal sanity requires bipartisan reforms that address entitlement programs and growing health care costs. Younger generations should lead the charge to improve the nation’s fiscal health. Their advocacy could pave the way for long-term solutions to a decades-old problem. Younger generations must become active advocates for policies that create market efficiencies and economic stability today and in the future.  

How We Got Here  

Confidence in the nation’s fiscal health has steadily declined due to concerns over the growing national debt, large annual budget deficits, and growing interest payments to service the debt. At the same time, a rise in the cost of living – including higher prices for housing, food, health care, gasoline, and other essentials – has placed additional financial strain on households and eroded public confidence in the government’s ability to maintain economic stability. For example, the Peterson Foundation found that an average family of four will lose up to $4,000 in 2028, measured in 2019 dollars; 20 years later, the loss will be four times larger.   

Moreover, spending pressures from programs such as Social Security and Medicare have further contributed to concerns about the nation’s fiscal health. Younger generations are watching Social Security and Medicare – programs they pay into – rapidly approach insolvency. Frustrated by years of inflation and high costs, younger generations now begin their careers with a worker-to-retiree ratio of 3-to-1, compared to 42-to-1 when Social Security first started paying benefits. 

Younger generations have become conditioned to believe these programs won’t be around when they reach the age of eligibility. These factors have contributed to growing support for socialism and communism among younger Americans. According to a survey from the CATO institute, 62 percent of Americans aged 18-29 hold a “favorable view” of socialism, and 34 percent say the same about communism.   

The Rise of Socialism  

Since the onset of the COVID-19 pandemic, government spending as a share of gross domestic product (GDP) has remained above its pre-pandemic level. In FY 2025, government spending totaled 23.1 percent of GDP and is projected to tick up to 23.2 percent of GDP this year.  Over the past 90 years, government spending was only higher as a share of GDP during World War II, the Great Recession, and the COVID-19 pandemic – all crises that required an increase in spending to adequately respond to them.  

Greater government intervention means more government spending. Already, federal spending on Medicare and Medicaid is projected to exceed $7 trillion in 30 years. And all mandatory spending will exceed $15 trillion, or nearly 16 percent of GDP. Proponents of socialism don’t believe we’re spending enough; they’re in favor of an expansion of the social safety net, including Medicare for All. Financing these proposals involve increasing taxes on the wealthy to squeeze as much revenue from them as they can.   

While higher tax systems could help improve the nation’s fiscal health, there’s only so much revenue that can realistically be squeezed from taxpayers. Furthermore, the projected growth in spending on the major entitlement programs is too large to be addressed by higher taxes alone. There needs to be substantial entitlement reform to rein in these programs, not expand them. It’s simply impossible to tax our way out of a problem or increase taxes to fund socialist policies. Unfortunately, younger generations tend to view socialism as a solution to the affordability crisis they face. They’re prone to believe it’s the government’s responsibility to care for them, and others should have to pay for it. But if the experience of countries that have embraced socialism tells us anything, or our current government programs, it’s not the answer. Socialism is a recipe for a further downturn in the fiscal situation and market inefficiencies.    

The Need for Fiscal Responsibility  

Policymakers have few political incentives to act fiscally responsible. They often retain their voters by opposing reforms or cuts or by voting in favor of unpaid tax cuts or spending increases. During negotiations over the One Big Beautiful Bill, the Kaiser Family Foundation published a poll that found a majority of respondents opposed major funding cuts to Social Security (84 percent), Medicare (79 percent), and Medicaid (76 percent). From that, the original mandatory spending cuts were watered down in the legislation that was ultimately enacted.   

While these programs comprise the bulk of government spending and subsequent budget deficits, a majority of the public is resistant to reforms and cuts. This has created a never-ending cycle of passing the problem on to the next generation. Social Security and the major health care programs (Medicare, Medicaid, the Children’s Health Insurance Program, and premium tax credits) comprise 63 percent of projected spending growth over the next decade. Considering the rising debt and interest payments to service it, significant entitlement reforms are needed to restore any sort of fiscal sanity. Unfortunately, the appetite to do so is nonexistent amongst policymakers. Right now, it seems policymakers will keep kicking the can down the road, leaving the problem for younger generations to solve.  

There’s also something else to consider. The federal budget is increasingly skewed toward seniors. In fact, every dollar the government spends on children, six dollars go to seniors. In essence, the government is currently facilitating the greatest wealth transfer, not from poor to rich, but from young to old. True fiscal responsibility will not only come from comprehensive reforms to the programs that have caused the nation’s fiscal health to decline, but a balancing of the scale between support for seniors and children in the budget.  

Although private retirement offers a strong replacement to costly government programs, it is too young to offset the immediate insolvency crisis. Therefore, combating market inefficiencies is a primary goal of driving costs down in programs such as Medicare, Medicaid, and the Affordable Care Act. The National Institutes of Health attributes high health care costs to inflated specialist salaries, administrative costs, opaque pricing, and fee-for-service structures.  

The Politics  

Bipartisan cooperation and finding common ground have become virtually non-existent in today’s political environment. For example, every year, policymakers struggle to reach consensus on something as simple as keeping the government’s lights on. They’ve become heavily reliant on continuing resolutions (CR) that fund government today with past spending levels (policymakers have enacted 207 CRs since FY 1997) instead of enacting individual funding bills at levels that reflect current needs.  

The lack of bipartisanship has caused priorities to stagnate and incentivize many policymakers to abandon the sense of bipartisanship and legislative optimism they once had. When Senator Susan Collins (R-ME) introduced an amendment to raise the marginal tax rate on income above $25 million by 2.6 percentage points to 39.6 percent, for example, all but four Democratic senators (including democratic socialists Elizabeth Warren (D-MA) and Bernie Sanders (I-VT)) voted against it. Back in bipartisan times, a centrist Republican proposing a rather democratic policy would have generated more support from Democrats.  

Then there’s the voting public who has a large influence on policymakers’ decisions. Older generations comprise a large share of the electorate. In 2024, people aged 65 plus made up 28 percentage points more of the electorate than people aged 18-24, and nearly 20 percentage points more than people aged 25-44. This very well could explain the position that both Republican and Democrat lawmakers have taken to not undertake significant entitlement reform. Promises to not touch Social Security or Medicare are used by both Republican and Democratic lawmakers. With trillions of dollars projected in debt over the coming years and insolvency around the corner, there’s no doubt Social Security and Medicare will have to be reformed.  

Conclusion  

To return to a strong financial future, the younger generation must become active advocates for policies that create market efficiencies and long-term economic sustainability. The debt has reached massive levels, having considerable macroeconomic and microeconomic effects on the economy. Because of this, the new adults have turned to policies, like socialism, that have driven high costs in the first place. Boosting policies that promote efficient economics while making the necessary cuts and revenue increases are vital to the future fiscal health of our country.