Introduction:
The event, “Mortgaging the Future: The Millennials’ Declining Share of the Economic Pie,” was organized to discuss the national debt, income inequality, and the impact on millennials. The event was held at Notre Dame, where attendees were reminded of their moral and intellectual obligation to assess financial handling in light of the option for the poor and vulnerable.

Speakers and Panelists:
Speaker: Alex Kocha, student body president, introduced the event and emphasized the importance of responsible and informed civic engagement. Mr. Scott Malpass, Chief Investment Officer at Notre Dame, welcomed the audience and introduced the panelists. Mr. Jimmy Dunn, senior managing principal of Sandler O’Neill and Partners, co-founded Sandler in 1988 and is a Notre Dame graduate. Mr. Stan Druckenmiller, legendary investor and philanthropist, founded Duquesne Capital Management and served as a managing director at Soros Fund Management.

Key Points:
The United States national debt is close to $17 trillion, and the country ranks third in income inequality among advanced economies. The government shutdown and impending debt ceiling fight highlight the financial hardships faced by millennials. The panel aimed to contextualize national issues, engage in intellectual discussion, and generate ideas for moving forward as a country. Notre Dame has a special obligation to assess financial handling in light of an option for the poor and vulnerable. The university’s mission statement emphasizes constructive and critical engagement with the whole of human culture.

Conclusion:
The event brought together distinguished panelists to discuss the implications of national debt and income inequality for the future, particularly for millennials. The speakers highlighted the importance of leadership, determination, and integrity in facing financial challenges. The audience was encouraged to engage in responsible and informed civic engagement to address these complex issues.

Introduction:
The speaker discusses the importance of the upcoming presentation by Stan Druck, an expert on Social Security. The speaker emphasizes the urgency of addressing Social Security issues and stresses that the system is unsustainable in its current form.

The Need for Humility in Politics:
The speaker criticizes the lack of humility among politicians, particularly those in power. He cites the last election and the three winners (the President, Harry Reid, and John Boehner) as examples of people who could benefit from more humility.

The Unsustainability of the Social Security System:
The speaker highlights the absurdity of the current Social Security system, where he, as a wealthier person, will receive a significant monthly payment despite having benefited greatly from being a US citizen. He emphasizes that the math of the system does not work and that there is a 10-year window to address the issue.

The Responsibility of the Younger Generation:
The speaker acknowledges the burden that younger generations will face in supporting the current Social Security system. He suggests that the younger generation will have to pay him $7,000 a month when he retires, highlighting the skewed dynamics of the system.

Call to Action:
The speaker emphasizes the importance of taking action to address the Social Security issue. He stresses that the current system is unsustainable and that reforms are necessary to ensure its long-term viability.

Audience Address: A passionate appeal to Notre Dame University students to be actively engaged in generational equity issues, not just as Democrats or Republicans. Speaker Introduction: Stan Druckenmiller, a successful investment manager and philanthropist, shares his dual focus on making money and giving it away to make a difference. Involvement in Harlem’s Child Zone: Druckenmiller’s experience with the Harlem Children’s Zone inspired him to address generational equity issues, motivated by the need to ensure their future success. Sequester and Societal Impacts: Druckenmiller expressed frustration with the political battle over the sequester, highlighting the unfairness of protecting senior entitlements while cutting programs that benefit younger generations. Touring Colleges: Druckenmiller’s decision to tour colleges was prompted by student and group requests, and his energy has been sustained by the positive response he has received. Generational Equity Focus: The core topic of the presentation is generational equity, emphasizing that seniors have been receiving an increasing share of the economic pie over the last 30-40 years, independent of demographics. Demographic Shift and Baby Boom Impact: The baby boom generation is aging, resulting in a significant increase in the number of seniors. The baby boom generation started having babies in 1947, and 65 years later, in 2012, there will be a significant surge of new seniors. Political Implications: Druckenmiller expresses frustration with the lack of genuine conversation in Washington and the unfairness towards younger generations. Appeal to Student Action: Druckenmiller hopes to inspire students to care about generational equity issues, as they face a clear and present danger to their future well-being.

Growth of Entitlement Programs:
Federal government spending on entitlements has increased significantly over the last four decades. In 1960, entitlements accounted for about 28% of federal budget outlays, whereas today they comprise 68%.

Benefits Distribution:
The majority of entitlement spending has been directed towards the elderly population (aged 65+). Per capita spending on the elderly has increased from $9,000 to $40,000, while spending on children remains below $5,000.

Poverty Rates:
Poverty rates among the elderly have decreased from 30% to 9% during the same period. On the other hand, child poverty rates have increased from 20% to 23%.

International Comparison:
Among the top 35 economic countries, the U.S. ranks 34th in terms of child poverty rates, ahead only of Latvia.

Changing Spending Patterns:
The elderly population has experienced a dramatic increase in spending capacity relative to the younger generations. In 1960, the average 90-year-old spent less than the average 40-year-old. In 2011, the average 90-year-old spends more than double what the average 40-year-old spends.

Generational Wealth:
Net worth comparisons show that the current generation of 30-year-olds has a lower net worth than the 30-year-olds in 1983. In contrast, the net worth of 75-year-olds has increased significantly since 1983.

Government Spending Projections:
Government spending is projected to increase by $1 trillion over the next 10 years. $875 billion of this increase will go to Social Security, Medicare, and Medicaid. Only $6 billion will go to children during the same period.

Aging Population:
The elderly population is expected to grow significantly in the coming years. This is due to the post-World War II baby boom, when birth rates averaged over three children per woman. As a result, there will be a greater need for government spending on elderly-related programs, such as Social Security and Medicare.

Implications:
The aging population will put a strain on the budget, as more money will be needed to support elderly-related programs. This could lead to cuts in other areas of government spending, such as education or infrastructure. Alternatively, taxes may need to be raised to generate additional revenue.

Demographic Shift:
For the next 20 years, 11,000 people daily will turn 65, significantly increasing the senior population. By 2030, the average age in the US will exceed Florida’s current elderly population.

Economic Imbalance:
The elderly population (64+) will surge by 102% in the next 30-40 years. Conversely, the working-age population (18-64) will only grow by 17%. This demographic shift will strain the ratio of elderly to working-age population, resulting in fewer workers supporting more retirees.

Government Debt and Revenue Gap:
The current $16 trillion national debt is misleading. Government expenditures, particularly entitlements, vastly outpace revenues. Including future promised obligations, the real debt amounts to $205 trillion, not $16 trillion.

Intergenerational Injustice:
The average 65-year-old currently receives $327,000 more from the system than they contributed. Future generations, including the unborn, will bear the burden of this imbalanced system.

Unjust Subsidy for Seniors:
Current seniors receive an unfair subsidy of $700,000 compared to future seniors. Entitlements have been left untouched in budget cuts, while programs like Head Start and NIH grants have been reduced.

Notre Dame’s Responsibility:
Notre Dame students have a social conscience and a desire to give back. The looming debt crisis will disproportionately affect vulnerable populations.

The Urgency of the Debt Problem:
Public leaders should be held accountable to address the significant financial difficulties the US faces. Failure to address the debt problem will have severe consequences, similar to accumulating credit card debt with high interest rates.

Compounding Effect:
The current $205 trillion debt could be eliminated by raising taxes by 55% or cutting spending by 36%. Waiting to address the issue would require even more drastic measures, as the required tax increase would rise to 65% and spending cuts to 41% after 20 years.

Government Spending Priorities:
An increasing portion of government outlays is spent on transfer payments to individuals (red line). Government investment in infrastructure, education, and research and development (blue line) has declined.

Government Investment and its Benefits:
Government investment has brought significant progress to the country, including the interstate highway system, GPS, and the internet. These investments were crucial and could not have been achieved solely by the private sector. Government investment through the Human Genome Project and NIH grants has also led to advancements in medical research.

Shift in Government Spending:
In the past, government investment accounted for 30% of government outlays, similar to transfer payments. Currently, investment has reduced to 15% while transfer payments have increased to 68%.

Seniors and Shared Sacrifice:
The argument that seniors are struggling is not accurate; they are generally doing well. Balancing the budget should involve shared sacrifice among all groups, including seniors. The AARP, with its significant membership, should use its power to make their voices heard and advocate for their needs.

Economic Pie and Tax Incentives:
Economic choices impact the size of the economic pie, not just its division. Taxation affects people’s incentives to save, work, and invest. Higher taxation on saving reduces the incentive to save, potentially shrinking the economic pie.

Potential GDP Impact:
A hypothetical scenario shows that without increased taxation, potential GDP could grow significantly over time. Introducing taxes to finance transfer schemes leads to a gap between potential and actual GDP, causing the pie to shrink. This effect is compounded when considering after-tax income, resulting in a substantial reduction in per capita income.

Remarkable Presentations and Comments:
The speaker acknowledges the impressive presentation given by Stan Druckenmiller. The speaker expresses skepticism about a claim made during the presentation. The speaker acknowledges the speaker’s generosity in giving away money.

Audience Participation:
Microphones are set up for audience members to ask questions and engage in a discussion with the speakers. Participants are encouraged to queue up behind the microphones to ask questions or make comments.

Question on Sustainability:
A discussion is initiated questioning the unsustainable nature of current budgetary policies and the eventual outcome of such policies.

Market Participants’ Perspective:
Market participants generally believe that the current budgetary path is unsustainable and will eventually lead to a severe negative outcome.

Time Horizons:
Market participants have varying time horizons, ranging from 18 months to 18 hours or even minutes, affecting their perceptions and actions.

Potential Outcomes:
The general assumption among market participants is that the current situation will end badly.

Resolution in the Short Term:
In the immediate future, a resolution is expected through last-minute agreements to avoid default, potentially involving some form of extension.

Entitlement Problem:
Addressing the entitlement problem is unlikely to be a part of the immediate resolution, despite discussions and proposals from politicians like Paul Ryan.

Entitlements Spending:
Entitlement spending, particularly on Social Security and Medicare, is a significant and growing problem in the U.S. The projected increase in entitlement spending over the next 10 years is $785 billion. This growth in spending is unsustainable and will lead to serious financial problems if not addressed.

Defense Spending:
Defense spending is often cited as a potential area for cuts to address the budget deficit. However, defense spending is relatively small compared to entitlement spending and would not be sufficient to solve the problem.

Tea Party Movement:
The Tea Party movement arose in response to concerns about government spending and debt. While the Tea Party has been controversial, it has raised awareness of fiscal issues and helped to bring attention to the problem of entitlement spending.

Importance of Young People’s Involvement:
Young people have a significant stake in the future of the country and should be concerned about the long-term consequences of unsustainable entitlement spending. They have the power to effect change by holding politicians accountable and demanding solutions to the problem. Young people should prioritize addressing entitlement spending over other social issues, as it has far-reaching implications for their future economic security.

Raising the Retirement Age:
Raising the retirement age has been proposed as a solution to address the long-term solvency of Social Security and Medicare. However, there is resistance to this proposal, as it would require current retirees and those nearing retirement to bear the brunt of the burden.

Opposing Views on the Affordable Care Act (ACA):
Some panelists expressed concerns about the ACA’s impact on Medicare growth, while others believe it has helped control costs. There is no clear consensus on the effectiveness of the ACA in addressing entitlement spending, and further analysis is needed.

The ACA will lead to a redistribution of wealth from young, healthy people to older, less healthy people. ACA’s elimination of premium variation based on age and health status will cause rates to rise for healthy young people while decreasing them for older individuals.

Long-Term Budget Crisis
The US is currently projected to have a budget crisis in the future due to rising entitlement spending. This crisis could be exacerbated if interest rates rise, which would make it more expensive to service the debt.

Federal Reserve’s Role
The Federal Reserve’s quantitative easing policies are keeping interest rates artificially low, which is masking the true extent of the budget crisis. If the Fed were to reverse course and raise interest rates, it could trigger a budget crisis.

Responsible Monetary Policy
In the face of large-scale changes in fiscal policy, responsible monetary policy should aim to avoid exacerbating the problem. The Fed’s current policies are doing the opposite, and are likely to make the long-term budget crisis worse.

Quantitative Easing:
Stan Druckenmiller criticizes the Federal Reserve’s quantitative easing (QE) policy, describing it as an extreme measure typically reserved for dysfunctional economies. He questions its necessity in the current economic climate and argues that it’s ineffective and leads to unintended consequences.

Targeting Asset Prices:
QE targets asset prices, benefiting the wealthy and elderly who own assets, while the average person sees no increase in income.

Canceling Market Signals:
QE distorts market signals, preventing political actors from responding to real economic issues.

Fiat Currency Alternatives:
Druckenmiller suggests that the market will eventually find an alternative to the current fiat currency system, whether it be the renminbi, the euro, gold, or another currency. He believes that a responsible monetary policy by the Federal Reserve is the best solution, but acknowledges that this is unlikely to happen.

* Assessing Poverty in America:
* The current poverty threshold, established in the 1960s, may not accurately reflect the true extent of poverty today.
* The proportion of a person’s budget spent on food has significantly decreased since the 1960s.
* Changing the poverty threshold to include more people would raise concerns about skyrocketing poverty statistics and impact the reputation of politicians.

* The Role of Political Parties:
* The Republican Party has lost its way regarding economic issues, while the Democratic Party has jeopardized the future by not addressing policies that affect poverty and social issues.
* The current system of entitlements cannot be solved by working through entitlements.

* Investment in Children and Education:
* Investment in children and education has been declining, and this trend needs to be reversed.
* Transferring money from transfer payments to investments in education, R&D, and other areas is crucial for the future.

* De-Concentration of Asset Ownership:
* Encouraging millennials to become asset owners through investment and saving is important for addressing the wealth transfer from the middle class and poor to the wealthy.
* Combating fear among millennials about investing in the stock market is essential.

* Specific Policy Suggestions:
* Means testing Social Security and Medicare to ensure that benefits are targeted to those who need them most.
* Normalizing capital gains and dividends to normal income tax rates, while lowering the corporate rate to zero.
* Implementing tort reform and introducing choice and skin in the game into the healthcare system to reduce costs.

* Addressing Student Loan Debt and Unemployment:
* Tackling the high levels of student loan debt and unemployment among young people is essential for their economic success.
* Current policies, such as those implemented by the Federal Reserve, may not adequately address the needs of younger generations.

Federal Government’s Role in Economic Prosperity:
Stan Druckenmiller suggests that the federal government should normalize capital gains and dividends with regular income tax rates and reduce corporate taxes to zero. This would stimulate economic growth and potentially shift some wealth from older generations to younger generations.

Balancing the Budget:
Druckenmiller emphasizes the need to balance the budget, reminiscing about President Clinton’s pledge to address the issue during his term. He believes that a balanced budget is crucial for long-term economic health.

Fiscal Gap and Demographic Challenges:
Druckenmiller highlights the tolerance of debt markets, acknowledging that they can withstand certain levels of debt before a sudden collapse. He stresses that the United States has a severe fiscal gap due to aging demographics and the rising cost of entitlements. While the situation is worse in countries like Japan due to demographics, the fiscal gap is not as significant.

Millennials’ Role in Shaping the Future:
Mark Gianfalo and Sean Long, student leaders, express their concerns about the future economic outlook for college graduates. They emphasize the importance of millennials recognizing their potential in shaping the national conversation and facing the challenges of debt and deficits.

Challenges to Millennials:
Millennials face significant challenges, including high student loan debt and the potential depletion of the Social Security Trust Fund. They are called upon to be active participants in facing these challenges and engaging in the national conversation to create a fairer and more sustainable future.

Conclusion:
The student leaders urge millennials to step out of their comfort zones, stay informed, and advocate for a future that ensures fairness and opportunities for their generation and those to come.