This week on Facing the Future, we go back in for a deeper dive with the voices of our future leaders and how they would address the growing challenge of putting the federal budget on a more sustainable path over the next 30 years. We spoke to college students from all over the country who recently competed in the national finals of the Fiscal Challenge held here in Washington, D.C.
Joining us for analysis of the plans submitted by the student teams was Diane Lim, a familiar voice on this program, known as The Economist Mom on Twitter and former chief economist for The Concord Coalition. She is now policy director of the Democratic staff on the Congressional Select Committee on Economic Disparity and Fairness in Growth. Diane was on the panel of judges for the fiscal challenge.
The students’ specific task was to come up with a plan to stabilize the ratio between our national debt and our gross domestic product (GDP); provide the math to show whether or not their ideas would work; and analyze whether their plans were politically feasible.
The six teams to reach the final round of the Fiscal Challenge were selected from more than 20 teams from colleges and universities across the country.
Lim, who has served as a judge at this competition for a number of years, says she is starting to notice some real differences in how the younger generation of students approaches this challenge.
“The problem has gotten more challenging because you need those really big budgetary items. You need to do something about the big stuff, you can’t just trim around the edges - now more than ever,” said Lim. “We’ve said this for decades, that you can’t just cut waste, fraud and abuse, foreign aid, etc. But now, it’s even more apparent that you can’t even just cut big ticket items in the budget. That doesn’t even look sustainable any more. It’s like, ok we’ve got to do something fundamentally different to our economy to really raise the base - the productivity of the whole economy so that we have more of a revenue base to draw from. I think all of the student teams really recognized that.”
Concord Coalition communications director Av Harris interviewed some of the students from teams competing in the fiscal challenge’s finals as they wrapped up their presentations. Student Zachary Roten was part of a two-person team from American University in Washington, D.C.
“One of the areas we looked at in particular was a carbon tax - that was critical to us,” said Roten. “Regardless of what happens with the deficit and the GDP effects of different proposals, if it’s true what the scientists are saying, the effect of global warming on the GDP will be far worse than any of our other proposals combined. Over 10 years, the carbon tax we proposed would bring in $1 trillion in revenue. The carbon tax serves two points. It discourages a behavior that is detrimental to the common good, which is the production of carbon, while also providing a government revenue source. That’s why we found it such an attractive way of raising revenue, because it’s doubly beneficial to the economy.”
Several teams also submitted carbon tax proposals, such as the team from Muskingum University in Ohio. Muskingum team member Jacob Untied gave an overview of some of his team’s other revenue ideas.
“We chose to go with a VAT - a value added tax on consumption that corporations will have to pay along the way so the burden is not just on the consumer,” said Untied. “Most of Europe has already switched over to the VAT which helps alleviate the burden of a sales tax on consumers. We also proposed eliminating the step-up basis where ultra wealthy families can give wealth derived from unrealized capital gains to the next generation after their death and the beneficiaries can sell those assets based on the new cost so they don’t have to pay taxes on the entire gain…We also propose eliminating itemized deductions on federal income taxes. We are already making a shift as a country to not using those, and it would also simplify returns.”
One of the more complicated fiscal challenges is what to do about Social Security and Medicare, the largest drivers of our national debt. With an aging population, this imbalance is only expected to get worse over time. Student Michael McElroy was one of six team members from the University of Notre Dame in South Bend, Indiana.
“With Medicare, we saw a lot of potential opportunities on the spending side to cut down on some of the excessive expenses,” said McElroy. “We pursued equalizing payments for treatment regardless of the site of care, since hospitals take advantage of this differential pricing system where they can charge more for using hospital outpatient departments vs. regular physician’s offices. So we pursued some of those low hanging fruit policies. Since so many people buy into Medicare Advantage, it really requires a reform to address how much we are spending on that that we don’t have to. The current estimate is that we should be deflating those payments by 16%, and we are only deflating them by around 6% - for political reasons, more or less.”
As someone who has advocated fiscal sustainability for decades, after listening to these students’ presentations I came away hopeful for our younger generation’s commitment to stabilizing our national debt and growing the economy.
Hear more on Facing the Future. I host the program each week on WKXL in Concord N.H., and it is also available via podcast. Join me and my guests as we discuss issues relating to national fiscal policy with budget experts, industry leaders, and elected officials. Past broadcasts are available here. You can subscribe to the podcast on Spotify, Pandora, iTunes, Google Podcasts, Stitcher, or with an RSS feed. Follow Facing the Future on Facebook, and watch videos from past episodes on The Concord Coalition YouTube channel.