A Cauldron of Challenges Sydney Williams
http://www.swtotd.blogspot.com
President Trump has achieved a few goals. Border crossings by illegal migrants have declined by close to ninety percent. Military recruitment is up, with Army recruitment at 15-year highs. DOGE has exposed waste and fraud in many government agencies, and woke ideology is on the run. And, unlike the Biden years, we know who is in charge at the White House.
But in other respects Mr. Trump has been less successful. He is wrong, in my opinion, when he calls for the capitulation of Ukraine, and when he advocates for tariffs – a tax on American consumers. His on-again-off-again tariffs have wreaked havoc with the stock market, weakened the dollar, and caused a pause in the economy. A weak dollar would result in higher interest rates for U.S. Treasuries. While illegal migration poses cultural and dependency risks, globalization and a strong dollar have raised living standards, as the cost of consumables, measured in hours worked, have declined over the decades, due to manufacturing being done where it is most cost efficient, along with technological innovations. Stronger education standards, secure borders, and a tax code that encourages innovation and investment are what is needed, not barriers to free trade. And I fail to understand Mr. Trump’s love affair with cryptocurrencies.
This essay focuses on a few of the challenges we face. (There are, obviously, many others). Shakespeare’s three witches had filled their cauldron with fillets of fenny snakes, eyes of Newts, tongues of dogs, and other such delicacies, but the cauldron of which I write is filled with threats: federal debt and unfunded liabilities at record levels; interest rates that encourage borrowing and discourage savings; public schools that don’t educate; declining birthrates – a world-wide phenomenon; an imperialistic China; a revanchist Russia; a soon-to-be nuclear armed Iran; and, I would argue, an absence of moral judgement.
As a percent of GDP, today’s federal debt exceeds the level reached in 1945 when it peaked at 121.2%. Then, the United States financed a large portion of the Allies needs to fight a global war. Currently, the debt to GDP ratio stands around 122%, and is estimated to rise further, as a projected $1.3 trillion deficit for fiscal 2025 will be added to the current $36.2 trillion in U.S. federal debt. Today, more than half the federal budget is spent on entitlements. None of this debt, of course, includes an estimated $73 trillion in unfunded liabilities, principally from Medicare and Social Security. The reason that deficits continue to increase is simple – we spend more than we take in. Resolution can only lie with higher taxes or reduced spending, or a combination of the two. Reduced spending penalizes recipients of government largesse. Increased taxes inhibit economic growth. Will anyone in Washington address this problem?
Low interest rates encourage consumption and speculation, and they discourage savings. When Treasury rates are only a percent or two above inflation they offer little incentive, apart for foreigners who benefit (or have benefitted) from the strong dollar, which explains why they currently own about one third of all U.S. Treasuries publicly held. If Mr. Trump is successful, in achieving a weaker dollar one can expect foreign investors to fade. If they do, rates will rise, as domestic investors will demand higher returns.
Thomas Jefferson believed that for a society to be self-governed it had to be “educated and free-thinking.” Yet, according to Pacific Research Institute 43% of high school students in the U.S. graduate illiterate and innumerate. A debate between Republicans and Democrats over whether boys can play on girls sports’ teams and use their bathrooms may be worth having, but it should not detract from the fact that not all our children are being taught to read, write and do simple arithmetic. Superintendents and principals need to be able to fire non-performing teachers, without fear of retribution from teachers’ unions.
Attention must be paid to the demographic crisis soon to confront us. Total Fertility Rates (TFR) measure the average number of children a woman is expected to bear in her lifetime. A TFR of 2.1 represents replacement rate. For the last fifty years, the TFR in the U.S. has been below replacement. Today, the TFR in the U.S. stands at 1.76. And during the last fifty years, the average age in the U.S. has risen from 27.6 to 38.5, even as the population increased by better than 50%, or about130 million. A little more than a third of that increase reflects legal immigrants. Additionally, current population numbers include illegal migrants. Nevertheless, births in the U.S. outnumbered deaths by approximately 380,000 in 2023. However, declining birthrates and an aging population pose economic and social risks. In the EU the situation is dire. Deaths outnumber births by more than a million, and the TFR for 2024 is estimated to have been 1.4, with the median age having risen from 31.3 to 42.5 over the past fifty years. Birthrates below replacement, with increasing longevity will have economic consequences, yet politicians and the media seem to care little about what could become a monumental challenge. “Attention must be paid,” as Linda Loman says to her husband in Death of a Salesman.
Overseas, China dominates the Pacific and is making inroads in Africa, Latin America and the Middle East through its Belt & Road initiatives. Putin’s Russia seems determined to restore its Tsarist boundaries, while Iran and North Korea threaten the peace in the Middle East and the Western Pacific. U.S. defense spending, as a percent of the federal budget, has declined from 24.3% in 1980 to 13.5% in 2024. At the same time interest expense in 1980, when the Ten-Year yielded 11.4%, has risen from 8.8% to 13.2%, even as the yield on the Ten-Year has fallen to 4.2%. World peace demands a militarily strong United States.
………………………………………………….
If blame for the challenges cited above were allocated fairly among our two political parties, there would be no one to manage government. Playing to the choir and grabbing headlines is more important than debating controversial subjects. If Diogenes were to wander the streets of Washington searching for an honest politician, he would have better luck looking for a Rainbow Eucalyptus Tree on the Tibetan Plateau.
Perhaps I exaggerate the threats. We have been in tight spots in the past – obviously during the Civil War, but also in the 1960s, when Vietnam and the Civil Rights movement caused bloody protests, campus shootings and assassinations. Nevertheless, today’s divisiveness is disturbing. We need as President a Lincoln-like figure, an individual capable of uniting the diverse strands of our people, a person with humor and possessed of moral certitude based on the Judeo-Christian heritage on which our nation was built.
After all, we are the United States. Surely such an individual must exist…somewhere in this great Country.
Comments are closed.
