Let's Get Real

Americans are moaning about how tough their lives are. And they want politicians to do something about it. Good luck with that.

Americans are complaining about the job market. Good paying jobs are hard to find and the roll out of artificial intelligence will just make it harder. This is especially true of young adults. Many have already given up, especially young men. They are content to hang out in their mother’s basement (or the spare bedroom of their girlfriend’s apartment) and play video games. Sometimes they seem more attached to their screens than their girlfriend (and definitely more than Mom).

Now that they are old enough to vote (even though science tells us that that their frontal lobes are not fully developed until their mid-to-late twenties) they browse amongst the politicians offering them the most bang for their buck (or actually somebody’s else’s buck because they don’t want to pay anything). The populist politicians on both the left and the right are happy to offer a plethora of handouts, giveaways and even universal basic incomes by the progressive Democrats to counter the effects of a weak economy or lower taxes, tax exemptions and industrial policies by the MAGA Republicans to goose the economy even more. The newly ascendant Democratic Socialists of America propose making everything free while getting rid of wealthy corporations and greedy billionaires (although they are more than a bit vague about how they intend to do that).

But campaign promises are a long way from offering rational policies that will provide a resurgent economy, growing GDP per capita and job opportunities galore. Let’s get real! When have politicians ever been able to deliver on all their campaign promises? They have been dishing out goodies galore ever since the War on Poverty and look where we are. The poverty rate is virtually unchanged. Income inequality is at an all-time high especially for minorities (except those that go to charter schools or those that follow the Sequence, see The Sequence of Life, March 30, 2018) And don’t forget that most Asians don’t follow the neighborhood organizer’s mantra of ever greater dependency on government.

Even the wonderful advances of the New Deal ring hollow when examined in (unemotional) detail. GDP per capita in the United States in 1937 was still below that of 1929. Unemployment, which reached 23.6% when FDR took office, was still at 17.2% in 1939. It took the war economy created to fight the Germans and the Japanese to fully realize America’s industrial strength – not government welfare programs.

So why would anyone in their right mind put their fate, and that of their family and loved ones, into the hands of politicians of any party? It is not just the politicians that are pandering this life of dependency. Citizens, as well, are demanding of their politicians, what can you do for me? Our ancestors knew what they wanted from government. Leave us alone. Let us do our own thing. As Paul Ryan and Les Ford wrote in the WSJ, Americans Are Getting Caught in the Safety Net, (Aug. 20, 2026) “Work is more than income—it’s a source of meaning, and it is central to family well-being.” Dependency is a cancer on the body politic, and these days, that cancer is manifested in the form of public debt.

The current level of government debt from all its giveaways is now at $40 trillion and is rapidly approaching an unsustainable level - if it has not already reached that level with interest costs of over $1 trillion a year, more than we are spending on national defense. Treasury Secretary Bessent's attempt to lower the cost of debt service (by swapping more costly long dated treasuries for less expensive short term debt) was immediately recognized by the market as a diversionary tactic made out of desperation as both the bond and equity markets sold off. Markets are already demanding higher risk premiums on US debt than ever before. Treasuries are no longer a “safe haven” The only winners appear to have been bitcoin and other cryptocurrencies which is a sad commentary on the parlous state of our financial affairs. It is bad enough that the Republicans have no answer to this impending doom with huge deficits projected far into the future. And the progressive response (i.e., higher taxes) will be no help since any taxes raised (with the highly probable outcome that tax revenues will not increase despite higher rates) will be spent on new welfare benefits and entitlements. And even worse, a progressive or socialist administration will be viewed by investors with great suspicion as leftist economists such as Thomas Piketty prefer default over paying interest to wealthy investors (similar to Mr. Trump’s bankruptcies that screwed bond holders in his projects). This will make funding additional deficits much more difficult and expensive.

It might be a cliche to say, “ if you are at the bottom of a deep, deep hole, the first thing you must do is to stop digging.” But our political class appears to have forgotten (or purposefully ignored) this truism. Both the MAGA Movement and the progressives cum socialists still propose multitrillion dollar deficits as far as the eye can see (although for different reasons and appealing to different constituencies). Someone needs to tell these politicos that 1) no amount of tax cuts will stimulate the economy enough to repay the debts incurred by the tax cuts and 2) no amount of tax increases will provide enough revenue to fund all the giveaways they want to hand out. To get out of our hole we need to increase taxes and cut spending, a lot.

Both sides of the aisle will declaim that increasing taxes and cutting spending will disrupt our economy. But a non-ideological look at the real world will tell you that mounting debts are already distorting the economy and holding back growth (other than the frenetic pace of investment in artificial intelligence that may or may not improve things). If we want to rebuild a strong economy (and not one that only exists in White House press briefings) we will have to make sacrifices. I would be willing to pay more taxes if I knew that the proceeds would be used to reduce the enormous public debt  and not frittered away with handouts and subsidies (which is how the debt got enormous in the first place).

Young people in Gen Z and Millennials are moaning that they are the first generations that will not be better off than their parents. But they are also the first generations that are looking for the government to make them better off than their parents instead of making themselves better off. Government is not the answer. Government is the reason their future is constrained.

The future ahead is bleak and that future gets more perilous every year as long as we elect so-called leaders more interested in the next election than the future of our country. There are no easy answers. This is not an either/or situation. We either make painful sacrifices now, even more painful sacrifices in the future or be prepared for the collapse of our economy. But if we make those sacrifices, at least then, our children and grandchildren will have a chance of rebuilding a great and prosperous country. Otherwise???????