Manhattan Institute senior fellow Diana Furchtgott-Roth, former chief economist of the U.S. Department of Labor, and one of the authors of IWF's book Lean Together, recently delivered some lousy news to the class of 2015: You're in big trouble.
That was part of the headline on a Wall Street Journal op-ed that recapitulated the key ideas in her new book, Disinherited: How Washington Is Betraying America's Young, coauthored with Jared Meyer and published in May by Encounter Books.
“This is the book you absolutely need to read if you are a millennial or if you care about one! Arm yourself with the numbers Washington would rather you didn’t focus on,” said Elaine L. Chao, who as Secretary of Labor tapped Furchtgott-Roth to be the department's chief economist.
The theme of the book is that “this is the first generation of young Americans that our government systematically disfavors.” Unless there are dramatic reforms, millennials will not only be expected to keep ObamaCare solvent by paying higher premiums than their elders, but will also be heavily taxed throughout their working lives to pay for astronomical levels of government spending.
The explicit federal deficit is $18 trillion, but it is nearly $200 trillion higher when total liabilities are included. Much of this spending is targeted at helping older generations whose members are generally more affluent than those just starting out in life. Added to that, young people were hardest hit by the recession and now have the lowest workforce participation since records have been kept on this in 1948.
Furchtgott-Roth says she was inspired to write the book because of the injustice of asking younger Americans to shoulder the debts of a nation that habitually overspends. "It isn't just that the young have to pay higher taxes to pay for the deficit the government is incurring," she said. "Many are disadvantaged right from the beginning with low educational attainment and college loan debt. They have to pay higher health insurance premiums and then we ask them to pay our national credit card debt. It is immensely unfair."
The higher ObamaCare premiums for younger people are a case in point. "What they were trying to do is keep the premiums lower for older people," Furchtgott-Roth said, "because older people vote. They did not want them to get sticker shock. They know that younger people don't vote as much so they stuck them with the sticker shock."
John Tamny wrote in a review in Forbes that "'Disinherited' makes clear what others have been all too reluctant to utter: It’s not Millennials who fit the caricature of being entitled and unfocused, but the aging Baby Boomers who are leaving their debts and broken public systems as their legacy. A read of Disinherited may offer a clue into why Millennials aren’t totally jazzed about what’s ahead."
Furchtgott-Roth explains, "The current situation is in part an accident of demographics. When Social Security was put in place, life expectancy was about sixty-seven years old. Neither FDR nor LBJ collected Social Security because they died before they reached sixty-five. It's wonderful that life expectancy is increasing, but you can't expect a program put in place in the 1930s to live into the twenty-first century without needing some changes."
Furchtgott-Roth believes that Social Security should be reformed. "Social Security can definitely be saved," she said. "I would suggest raising the retirement age slowly, keeping current benefits for those fifty-five and older, and changing the indexing system to one based on price indexing rather than wage indexing. In that way costs will rise more slowly." She is a fan of the U.K. system which reviews the pension program at intervals and then makes changes through Acts of Parliament.
If you know Diana, you know that she is not only a fan of the U.K.'s pension reviews but that she has U.K. family roots. She was born in England and came to the U.S. at the age of nine, when her father, Gabriel Roth, an economist and expert on market-based roads, took a job in Washington. "I grew up with economics over the dinner table," she recalled, "and economics was just a very interesting subject to my siblings and me. I knew I wanted to be an economist from a very early age. I took a high school economics seminar, and I majored in economics in college."
Furchtgott-Roth graduated from Swarthmore and then studied economics at Brasenose College at Oxford University (Prime Minister David Cameron's alma mater). She has served as an economist in the White House under Presidents Ronald Reagan, George H.W. Bush, and George W. Bush. She was Chief Economist for the Labor Department from 2003 to 2005. Now, in addition to her position as senior fellow and director of Economics21.org at the Manhattan Institute, she is a columnist for MarketWatch and Tax Notes. She also writes for numerous other publications.
It is fair to say that the Elaine L. Chao Department of Labor in which Furchtgott-Roth served saw its job differently from the way President Obama's two Labor secretaries have viewed it. Furchtgott-Roth said that in the Chao Labor Department the goal was to make it as easy as possible for employers to hire workers by cutting out as much red tape and as many wasteful programs as possible.
She also opposes mandatory paid family leave for women. "I would say any mandatory programs hurt women's professional advancement," said the mother of six, "because mandatory paid leave makes it more expensive to hire them. Women are generally able to work it out with their employers right now. Participation of women in the workforce is higher in the United States than in certain European countries that do have mandatory leave."
In returning to the subject of Millennials and their educational opportunities, Furchtgott-Roth does not believe that just spending more money on education–a solution touted by progressives–will solve our problems. "It's not a matter of spending more money but of allocating money more effectively," she says. She is high on a new Nevada program that lets tax money follow children to the schools their parents select for them. "It's a way of getting children out of failing schools," she said.
She believes strongly in charter schools, including the Success Academy Charter Schools, originally Harlem Success Academy, run by Eva Moskowitz. They were rescued by New York Governor Mario Cuomo when New York Mayor Bill de Blasio threatened to close them down. "If charter schools offer poor education, they gradually go out of business and are shut down. It is very difficult to close a failing public school."
She doesn't believe in college loan debt forgiveness either, because the government then gets stuck with the debt. Instead, the government should get out of the student loan business. Colleges know that as they raise tuition the Federal government will increase loans, without consideration of a student’s grades, potential major, or likelihood of employment. Young people should be encouraged to make less expensive choices such as going to a community college for two years or explore different lending programs such as Upstart which will pay for college for a percentage of income.
Diana is married to Harold Furchtgott-Roth, a senior fellow at the Hudson Institute and founder of Furchtgott-Roth Economic Enterprises. They met when Harold Furchtgott was matchmaking for two friends, one of whom invited Diana to come along and meet Harold. "The two friends didn’t hit off but Harold and I ended up getting married." They have six children, ranging in age from seventeen to twenty-six. "One child changes your life," she said with a laugh, "and with six, you just put more plates on the table and shout louder." The kids grew up without TV in the house “because with six children you have your own reality show and you don’t need any other form of entertainment.”
Lean Together was not Diana's first project with the Independent Women's Forum. Indeed, IWF published her first book, Women's Figures, An Illustrated Guide to the Economic Progress of Women in America, co-written with former IWF fellow Christine Stolba Rosen. The project was the brainchild of an IWF founder, Barbara Ledeen, who picked the title.
"Barbara suggested I write Women's Figures in the 1990s," she recalled. "I said, 'Well, no one believes in the glass ceiling, no one believes in the gender wage gap or the pink ghetto, Barbara, and so there is no point in writing this book.' Barbara said, 'No, Diana, really there are people who believe in these things.'
"In Women's Figures we constructed graphs and diagrams showing women's progress. We had an appendix in the back with all the data in the graphs, and people could see how women were progressing in the workforce. This was put down to refute the idea that women are victims who suffer from a wage gap that is caused by discrimination." Women's earnings, she stresses, are affected by their choices of college majors, the professions they pursue, and their hours of work, rather than widespread gender discrimination. A second edition of Women's Figures was published in 2012 and Furchtgott-Roth can foresee a third edition.
Indeed, Furchtgott-Roth has in part made a career of using sound analysis and facts to show the path for greater women’s progress, and has exemplified that story in her own life.