News Article:

Amidst skyrocketing U.S. debt levels, a former White House economist warns that the burden of financial irresponsibility is falling heavily on the shoulders of Generation Z. As young adults grapple with the growing pessimism of ever owning a home, Todd Buchholz highlights the consequences of the debt accumulated by previous generations.

The American economy has been plagued by surging debt levels for decades, reaching alarming milestones in recent years. Notably, the gross federal debt as a percentage of the U.S. GDP has surpassed the level witnessed in the aftermath of World War II. Furthermore, the cost of servicing this debt is projected to overshadow defense spending in the current year.

Leading figures such as Fed Chairman Jerome Powell, JPMorgan Chase CEO Jamie Dimon, Bank of America CEO Brian Moynihan, and BlackRock CEO Larry Fink have all voiced concerns about the state of U.S. debt. However, Buchholz draws attention to the specific challenges faced by Generation Z.

In an op-ed for Project Syndicate, Buchholz emphasizes that while 50% of young adults doubt they will ever afford a home, they are being asked to shoulder the consequences of their grandparents' financial recklessness.

One missed opportunity to improve the debt outlook came in the form of high borrowing costs that have kept young adults out of the housing market. Some scholars also suggest that social media's impact on anxiety plays a role in hindering homeownership for this generation.

Buchholz points out that the Treasury Department, responsible for selling U.S. debt to global bond markets, could have taken advantage of historically low interest rates by issuing longer-term bonds. Instead, the department largely stuck to short-term borrowing, leading to higher costs when rolling over maturing debt.

The former White House economist highlights that while the U.S. disregarded the possibility of acquiring cheaper debt, at least 14 countries and numerous corporations and universities seized the opportunity and issued super-long bonds. Buchholz recommends that the Treasury Department consider flooding the market with super-long bonds when inflation-adjusted yields drop below the historical average of about 1.55%.

Nevertheless, tackling the huge federal deficits that contribute to the surge in U.S. debt requires addressing the underlying issue of excessive spending. Buchholz references President Ronald Reagan's famous quip, likening the government to a baby with a voracious appetite but no sense of responsibility.

As Generation Z grapples with mounting debt, soaring housing prices, and the challenges of entering adulthood during uncertain times, the burden seems insurmountable. The hope for a brighter future lies in revisiting fiscal policies and adopting responsible measures that alleviate the financial strain on the next generation.