Younger workers have high unemployment rates and declining rates of labor force participation, according to a new U.S. Government Accountability Office report released Tuesday. But some brave souls are fighting back against high levels of government spending that threaten to engulf future earnings.
Take 25-year-old Kyle Smith, who’s getting his Master of Science in engineering at the University of Texas. He’s invented a new, 99-cent app, “Debt Bomb,” for the iPhone, iPod Touch or iPad. It calculates how much households would have to pay if taxes covered the entire cost of government spending.
To find out how much you have to pay for Uncle Sam’s spending, go to the Debt Bomb app (debtbombapp.com), and key in your age, income and expected income over the next few years. Out comes your household’s average tax bill to cover Uncle Sam’s annual spending.
Debt Bomb’s assumptions start with the nonpartisan Congressional Budget Office’s projections of deficits over the next decade. Debt Bomb simply raises your assumed taxes to shrink the deficits.
Through the app, you can contact President Obama and your congressional representatives and tell them to cut spending, raise taxes or some combination. You can even tell them which programs to cut.
Alternatively, the app can calculate taxes based on a target of holding the budget deficit to no more than 2 percent of gross domestic product. Smith wants the users of the iGadgets to see the consequences of the government’s largess.
The app shows that the average taxes in 2011 would have been about $13,700 for two married 25-year-olds with no children earning $30,000 a year each in Massachusetts. If the budget were balanced through tax increases, they would owe $18,900, or 38 percent more. If the deficit were on a more sustainable 2 percent path, their average taxes would rise by $4,000, or 29 percent.
The GAO report, titled “Many Experience Challenges Regaining Employment and Face Reduced Retirement Security,” shows that, as tough as older workers have it in today’s labor market, their unemployment rates are lower than those of other age groups. Furthermore, since 2000, the labor force participation rates of workers 55 and over have been rising steadily, whereas the labor force participation rates of workers in all other age groups have been declining.
The biggest decline in labor force participation rates, according to GAO, can be observed for workers ages 16 to 24.
The effect of Obama’s failed economic policies has fallen most heavily on the young. Their unemployment rates and student loan debt loads have risen in tandem — along with federal debt, and the taxes that will be required to foot the bill for the failed stimulus.
Smith told me Tuesday, “Without significant changes to popular programs, the tax increases necessary to put the federal budget on a sustainable path would have to hit middle-class households. The potential tax revenue from the top end of the income spectrum is not substantial enough to solve our fiscal problems. Many just graduating from college are likely to face the indignity of having Uncle Sam’s borrowing costs piled on top of their student loans.”
The unemployment rate in 2011 for newly graduated men and women ages 20 to 24 with Bachelor of Arts degrees was 9 percent, almost twice the 5 percent rate they experienced in 2006, as the recession has discouraged hiring. The economy appears stalled in a rut of 2 percent annual growth, well below the 1947-to-2007 trend line of 3.4 percent a year.
The Debt Bomb app makes it easier to understand how today’s excessive government spending will punish those already seeing their young careers delayed by the slow recovery. Give it a try, and contact your congressional representatives today.
Examiner Columnist Diana Furchtgott-Roth ([email protected]), former chief economist at the U.S. Department of Labor, is a senior fellow at the Manhattan Institute for Policy Research.
