Gen Z will pay for today’s outlandish government spending, former White House official warns

With Uncle Sam running up federal debt to new records, it’ll be up to Gen Z and their children to foot the bill, experts say.

According to former White House economist Todd Buchholz, “members of Gen Z must also worry about the irresponsible debt levels that baby boomers and Generations X and Y [millennials] are foisting onto their narrow shoulders.”

Buchholz's warning comes at a time when the country's federal debt has hit a staggering $34.7 trillion and continues to grow at roughly $1 trillion every 100 days.

The White House economist says the government had the opportunity to put the nation on a different trajectory years ago but chose not to.

“[T]he fundamental budget problem is too much spending,” Buccholz said. “President Ronald Reagan once joked that the government is like a baby: it has a big appetite at one end, and no sense of responsibility at the other. That quip is as true today as it was a half-century ago.”

According to the Congressional Budget Office, the federal debt is forecast to continue growing indefinitely, reaching 116% of GDP by 2034 and a staggering 155% by 2050.

That’s only debt held by the public—excluding intragovernmental debt the government “owes to itself.”

Higher deficits mean more taxpayer dollars go toward servicing the debt, leaving fewer dollars for government programs.

According to think tank The Heritage Foundation, federal debt already consumes roughly 40% of U.S. personal income taxes.

That means Uncle Sam will inevitably have to find new revenue streams to service this mountain of debt.

Are higher taxes on the way?

While President Biden has vowed not to raise taxes on anyone earning less than $400,000 a year, economists warn that future administrations might not have a choice.

“To stabilize the debt ratio at today’s level, we would need to either raise taxes or lower non-interest spending by 2.2% of GDP,” wrote economist Emily Zhang for the Economic Policy Institute.

“This is eminently doable through tax increases alone.”

Financial advisers are already warning their younger clients that Washington’s debt payment will eventually come due—and will likely fall on their shoulders.

“As an adviser, the national debt is a very concerning issue, especially with younger clients that have a longer time horizon, because the bill is eventually going to come due,” said Kyle Hill, founder of Hill-Top Financial Planning.

Hill said part of his financial planning process is “trying to anticipate future tax rates compared to current tax rates.”

He tells his clients to “plan on higher taxes in the future to pay for all the spending we’ve done and continue to do.”

At Berkshire Hathaway’s last annual shareholder meeting, Warren Buffett seconded the view that higher taxes are the only way out of this deficit-spending cycle.

Whether they do it now or in the future, tax hikes are coming, he warned.