With support lagging among young voters, Hillary Clinton gave a speech earlier this week at Temple University targeted at Millennials, promising them a bright future with high-paying jobs, free college tuition, improved access to paid apprenticeships, and a massive investment in the nation’s infrastructure. However attractive these policies may seem to Millennials, a closer look at Clinton’s policies show they would only end up hurting Millennials in the long run.
Raising the Minimum Wage
Clinton proposes increasing the federal minimum wage to $12 an hour as a way to provide better-paying jobs to Millennials entering the job market. While minimum-wage jobs would undoubtedly pay better, the Congressional Budget Office (CBO) estimates that even a raise of the minimum wage to $10.10 an hour would cause a loss of 500,000 jobs from the economy. Raising the minimum wage to $12 would do more harm than good to those trying to secure their first full-time employment opportunity. A better idea than attempting to make low-wage jobs more livable through raising the minimum wage are policies which benefit the economy as a whole and foster innovation and competition.
Education Spending and Free College Tuition
Millennials are very concerned about the rising cost of college tuition that leave a majority of them with a pile of debt as they try to enter the workforce. In response to this, Clinton promised an education plan that would include tuition-free college at public colleges/universities or community colleges for students whose families had a yearly income of up to $85,000 (rising by $10,000 each year until capped at $125,000 in 2021). Despite its allure, this plan greatly aggravates an issue which should be far more pressing to Millennials; Clinton’s plan would add $45 billion per year to the already unsustainable federal deficit. This does not include the cost of President Obama’s plan for universal pre-school education (that Clinton supports), which would add another $6.6 billion per year.
Another campaign promise Clinton made to Millennials is an increase in federal spending on infrastructure, including large programs to transition to solar energy and improving transportation infrastructure. Clinton’s infrastructure plan would cost a total of $275 billion over ten years. Chris Edwards of the Cato Institute points out that federal spending on infrastructure often leads to waste through inefficiencies, misallocation of investments, and pork-barrel spending (of which the $223 million “bridge to nowhere” is a prime example). Far preferable to massive energy infrastructure investment are plans to reduce burdensome regulations on coal, natural gas, and nuclear power in order to make energy prices more affordable (especially for low-income Americans, for whom increased energy costs function as a regressive tax).
Conspicuously missing from Clinton’s remarks at Temple were specifics on how she would address the growing budget woes of Social Security. CBO has projected that Social Security could go insolvent as soon as 2029, at which point the country, specifically the Millennial generation, would begin to incur massive costs and see reduced benefits.
Clinton likely avoided this discussion because her plan includes increasing the cap on income subject to payroll taxes. This plan would harm employment and represent a tax on the middle class, as both employers and employees pay a 6.2% payroll tax. This means that not only does a payroll tax take money out of the pockets of middle-class Americans, businesses see it as a tax on employing workers. Millennials should prefer plans which would help the economy they are about to dive into rather than harm it.
All in all, Clinton’s spending proposals would cause a net increase of $198 billion per year to the federal budget. Concerns about increases to the size of the federal bureaucracy aside, Millennials should worry about Clinton’s seeming indifference to the national deficit. While she claims her policies will be fully paid for by new taxes, the Tax Policy Center’s analysis shows that her plans will only raise $1.1 trillion in new tax revenue over ten years, for a ten-year deficit of $880 billion. A high national deficit and debt has many negative effects which will only grow worse the longer they are ignored; the CBO estimates the national debt will balloon to over 100% of GDP by 2039.
Such high levels of debt cause a myriad of problems. In 2015 the United States saw about 6 percent of the federal government go to paying interest on the federal debt, money which could go to much better uses or be returned to the taxpayer in the form of tax breaks. Moreover, rising debt can cause increased interest rates, inflation, and the crowding out of investment towards projects which grow the economy as investors finance U.S. debt instead of private enterprises. There is also the potential for debt crises and worse, defaults, which would make any future capital the U.S. government sought come at a much higher interest rate and likely trigger a worldwide recession. A plan which promises to stem the tide of rising government debt is better for Millennials than one that ignores the issue altogether.
Milllennials should demand plans which avoid harmful taxes and spending increases, and instead focus on long-term economic sustainability. Clinton’s plan represents an attempt to kick the can down the road even faster than before, but Millennials are starting to run out of road.