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In a paper released last year, economists Carmen M. Reinhart, Vincent R. Reinhart, and Kenneth Rogoff documented that periods of "debt overhang" - when accumulated gross debt exceeds 90 percent of a country’s total economic activity for five or more consecutive years - reduce annual economic growth by more than 1 percentage point for decades. Surveying over two dozen debt overhang episodes, Reinhart, Reinhart, and Rogoff, found that the typical episode of sharply reduced growth lasted 23 years. In other words, kids: You're screwed.But this sort of thing is relatively easy to fix compared to the real long-term damage that Obama's reckless spending-and-debt binge will almost certainly cause.
The U.S. economy has been in a debt overhang since the 2008 financial crisis and there's no reason to believe that President Obama is going to do anything soon to reduce the debt-to-GDP ratio. It's fair to say that it's not all his fault. As I never tire of saying, George W. Bush was a big-government disaster, but that can only take you so far. Obama owns the debt every bit as much as he owns the White House for the next four years. And, as the experiences of countries such as Canada and Sweden in recent memory and the United States after World War II attest, there are clear and proven ways to reduce debt-to-GDP and help goose the economy. But because that involves actually changing the status quo and cutting year-over-year spending, Obama is not interested. Indeed, he's even bellyaching about the sequester - which was his idea, by the way. And younger Americans are willing to give him a pass, despite absolutely dismal results under his leadership so far. Does unemployment among 18-to-29 year-olds have to go up to 15 percent (it's already hit 13 percent!) before they get pissed?
The question young people should be asking Obama now is not how much more he might extend their student loan repayments but this: What are you going to do, Mr. President, so that we are not resigned to living in the phantom zone between strong economic growth and sluggish, debt-weakened economic growth?
If you're under 30, look at the chart above and ask yourself whether you'll be lucky enough not to be trapped in that wedge between the blue and red lines? And if you're a parent or grandparent, ask yourself whether your Medicare and Social Security and all the rest is worth consigning your kids to a future of dreams deferred to pay for your benefits. How many of us would prefer to live in a world that's 25 percent poorer than we are right now? Because that's where Obama is leading us.
There's no reason to question The New York Times' finding that folks between 18 and 29 years old are far more likely to believe that government "should do more to solve problems." But until that same group starts recognizing how many problems government is causing - especially for younger people - their future will be far bleaker than they seem to understand.