The Daily Hatch

WILLIAM W. BEACH
The president wants an economy that’s built to last, as he said repeatedly in tonight’s State of the Union speech. However, among the litany of programs he announced, he promised little action on the driver of economic decay: the blooming debt of governments at all levels, but particularly the government that President Obama runs. Total government debt is chewing away at innovation and economic growth by squeezing credit markets for private borrowers; it is spreading fear and uncertainty among investors about this country’s future; and it is condemning an entire generation to an economic life well below their potential.

If you are under 30 years of age, you belong to the Debt-Paying Generation. This enormous, growing federal debt will have to be repaid across your lifetime. Higher taxes will almost certainly be imposed to pay down this debt, thus reducing your income and increasing your cost of living. You are likely to marry later, as you will have trouble saving up to start a family. If you marry later, you are likely to have fewer children, which further hurts the economy by reducing the future labor force. Higher interest rates from higher federal debt will mean that the Debt-Paying Generation will start their home mortgages later in life, which may mean that they will never own a home. A slower economy means not only slower income growth for the Debt-Paying Generation, but also less savings for retirement, education, and health care.

The real tragedy of the president’s litany of economic-policy changes is its failure to address federal debt. Why? Simple: The failure to reduce debt condemns an entire generation to the least prosperous life in U.S. history relative to the generation that preceded it. That’s not the way to build an economy that lasts.

― William W. Beach is director of the Center for Data Analysis at the Heritage Foundation.