Politics
Bidenomics hasn’t yanked at the fundamental double-root cause of our economic dysfunction.
The American economy seems to be on a tear. In February, it added 275,000 jobs, another unexpectedly high count even as unemployment inched up to 3.9 percent. Fourth-quarter 2023 GDP growth clocked in at 3.2 percent, after a 4.9 percent expansion in the third quarter. Also last month, the Dow Jones Average hit 39,000. The White House touts these developments as proof Bidenomics is working.
Nothing is really new here—the political class beams over upbeat economic indicators with some regularity. Previous administrations have done the same. But boasting about the latest data distracts Americans from the serious damage being caused by the “twin deficits”: the massive federal budget and merchandise trade shortfalls, each hitting trillion-dollar records in the last few years, per the chart below. These deficits used to be scrutinized and written about regularly but no longer in our spend-now, don’t-worry economy.
Federal expenditures of trillions of dollars that the country doesn’t have—the national debt has soared to an astonishing $34 trillion from $5 trillion in 2000—may create the impression of good times. But it’s an illusion. We are clearly living far beyond our means—and stealing growth from future generations while saddling them with repayment obligations. The unprecedented, and unsustainable, trajectory of the twin deficits threatens our superpower status, the dollar as the reserve currency, our living standards, and the viability of most federal programs, particularly the two most relied on by Americans: Social Security and Medicare.
More than a few Republicans seem eager to gore Social Security by reducing benefits and raising the retirement age; others are calling to “save” the program by allowing all workers to invest in the federal Thrift Savings Plan. Whatever their intention, these conservatives argue that Social Security benefits are