There’s a conundrum around the politics of “affordability.” The issue is that prices are rising while incomes are stagnating, a crushing combination for most people. But there’s little the government can do about either in time for the 2026 midterms, and even the 2028 presidential election. Exacerbating matters, the president and Congress insist on making it worse.  

President Donald Trump famously promised to lower prices “on Day One” in his 2024 campaign. That was bluster, of course, and to be charitable, he meant he would reduce the rate of inflation. Yet he’s dead set against the standard way to do it—keeping interest rates elevated to slow demand. The Federal Reserve hiked interest rates 11 times under Joe Biden, and it worked: inflation slowed from 9 percent to 2.9 percent. 

But cutting rates won’t satisfy voters, because recent inflation hasn’t disappeared from prices. From December 2019, just before the pandemic, to today, overall prices in America rose 25 percent, including 25 percent increases for eggs, pork, milk, cars and trucks; 30 or 31 percent increases for housing, rent, food overall, and bread; 37 percent increases for electricity; and 55 percent increases for beef. The relative bargains—items whose prices increased notably less—have been prescription drugs, up 6 percent; and medical care, gasoline, and potatoes, all up 15 to 17 percent.  

The government can make some purchases more affordable by subsidizing them, as it often does for health care, energy, and food. Yet Trump and Congressional Republicans have taken aim at those subsidies, making healthcare less affordable by cutting Medicaid and Obamacare supports, making food less affordable by cutting SNAP benefits, and making energy less affordable by cutting support for wind and solar energy.  

On top of that, Trump’s mindless tariff policies have increased prices on thousands of products. Inescapably, today’s MAGA government is really MALA, Make America Less Affordable.  

The other half of our affordability conundrum is income, because the median income of Americans, after inflation, has been stuck since 2019. In 2024 dollars, the median household income was $83,260 in 2019, and $83,730 in 2024—and prices for food, housing, rent, and electricity have risen faster than overall inflation.  

To more fully grasp the affordability story, consider that incomes have two major components: earnings from work (“labor income”) and income from assets (“capital income”).  

Typically, people earn more when they become more productive, and over the past five years, productivity has increased at a healthy rate. Those productivity gains depend on businesses investing in new technologies, equipment, and facilities, and workers making the best of those investments. The government does its part by subsidizing both business investment and people’s education and skills. The rise of the American middle class and decades of broad-based upward mobility have rested on wages and salaries rising with productivity.  

But here’s another affordability puzzle: Productivity increased 10.4 percent from 2019 to 2024, or about 2.1 percent per year, but incomes stalled. That’s stronger than the 1.7 percent average annual productivity gains in the 1980s, when incomes rose nicely, and nearly as strong as the 2.4 percent average gains in the 1990s, when incomes grew at the fastest rate in decades.  

In one respect, Americans’ earnings behave as expected—people with more education and skills continue to earn more. In 2024, real median earnings were 24 percent higher for people with advanced degrees than for college graduates, 66 percent higher for college graduates than for high school graduates, and 26 percent higher for high school graduates than for high school dropouts. 

But at every level of education, those real earnings increased from 2019 to 2024 not by 10.4 percent or even half that, but by a total of 0.7 percent for college graduates, 0.5 percent for those with some college but no bachelor’s degree, 1.5 percent for high school graduates and high school dropouts. And for those with advanced or professional degrees, real earnings declined 0.8 percent.  

Weekly Earnings by Education, 2019 to 2024, By Educational Attainment 

At the heart of the affordability problem: productivity gains didn’t translate into higher earnings.  

Why not? Incomes have two major parts: the earnings people receive from working and the interest, dividends, and capital gains they receive from their financial and other assets.  

While most Americans’ earnings after inflation virtually stagnated from 2019 to 2024, capital income after inflation increased nearly 30 percent over the same period. And while earnings in America are distributed unequally, capital income is in a class by itself. 

The Treasury reports that capital income in 2024 totaled $4.5 trillion, and that the bottom 50 percent of Americans received just 2.5 percent of it. But the top 10 percent pocketed 88 percent of that fast-rising capital income, including 52 percent ($2.3 trillion) for the top 1 percent and 32 percent ($1.4 trillion) for the top one-tenth of 1 percent.  

The uncomfortable irony is that most of the capital income came from businesses that increased their labor productivity by an average of 10.4 percent. Yet most of it did not go into people’s earnings but into capital payments to owners and shareholders.  

This is not new. Numerous economic studies have found that labor’s share of all national income—the earnings by working people—declined slowly and fairly steadily since the 1970s, while the shares received as capital income (or transfers, mainly Social Security) increased.  

It becomes the treacherous political problem it is today for the president and Congress when inflation keeps exceeding or matches income growth, and within incomes, gains in earnings slow or stop, while gains in capital income surge.  

And in this context, Trump has compounded his economic malpractice. His tariffs and subsidy cuts not only make America less affordable for most people; they also finance $1 trillion in tax cuts for the sliver of people who collect most of the fast-rising capital income.  

That’s today’s crisis of affordability in a nutshell. I was an architect of Bill Clinton’s economic program for ordinary people that produced the 1990s boom, which included market-based reforms and government investments. Yet when the economy shifts, new politics usually follow. Today’s affordability crisis is tailor-made for populism. Given the hollowness and failures of rightwing populism under Trump, the door is wide open for Democrats to champion populism from the left.  

The post Affordability: How Trump Has Made It Worse appeared first on Washington Monthly.

The government spends the equivalent of about $90,000 per U.S. household per year—yet many Americans don’t see the benefits. Medicare and Medicaid, Social Security and tax subsidies (primarily for wealthy households) swallow up the lion’s share of the federal budget every year, along with interest on the national debt. 

All of this automatic spending means no room in the federal budget for investments in America’s future, argues budget expert Eugene Steuerle, while many Americans are losing out. In 2023, for instance, just nine percent of the federal budget went toward programs for children—while 11 percent was spent on interest on the debt. In 2024, the federal government spent $880 billion for interest on the debt, compared to $80 billion for the Department of Education.  

In his new book, Abandoned: How Republicans and Democrats Deserted the Working Class, the Young and the American Dream, Steuerle blames a broken budget process that rewards short-term fixes and a Congress too polarized to tackle entitlement reform. He also argues that Republicans’ fixation on tax cuts has vastly contributed to inequality, while Democrats’ focus on consumption over investment has meant insufficient attention to helping working class Americans build wealth. The net result, Steuerle says, is a collapse in “fiscal democracy.”  Increasingly, Americans are losing their stake in the federal spending as entitlements and debt consume the entirety—and then some—of the nation’s future budget. 

Steuerle is the Richard B. Fisher chair at the Urban Institute, codirector of the Brookings-Urban Tax Policy Center, and the author of the Substack newsletter The Government We Deserve, in addition to 18 books. 

This transcript has been edited for length and clarity. The full interview is available at Spotify, YouTube and iTunes. 

***

Anne Kim: In your book, you argue that both parties are responsible for destroying opportunity in America. What sins have they committed together and what are the unique sins of each party?

Eugene Steuerle: Essentially, there have been two major dominant policy thrusts for almost a half a century, one by the Democrats and one by the Republicans. For Republicans, it’s largely been centered upon tax cuts. For the Democrats, it’s largely been putting money into retirement and Social Security and healthcare. And as a result of those two thrusts, almost everything else is getting shoved aside. Almost anything that promotes upward mobility really has gotten the short shrift for some time. 

I’m not arguing that either one of those thrusts in and of itself is bad. It’s just that they’ve been so dominant they’ve squeezed out other important options we should be pursuing.

Anne Kim: If I understand your argument,  you’re saying that as a result of Republicans’ prioritization of tax cuts, what’s happened is a widening of inequality, and that has limited mobility. And then on the Democratic side, the emphasis has been largely on consumption versus investment, and that has further squeezed mobility for the groups you lay out in your book, including young people and the working class. Is that roughly correct? 

Eugene Steuerle: That’s exactly right. 

Education is an easy example. We’ve failed on a lot of fronts on education. Quite honestly, to get quality teachers, you have to pay for them. To get quality teachers in early childhood education, you have to pay for them. We pay very little for that. We’ve also neglected for a long time young people who don’t go on to college. We don’t have much of an apprenticeship program in this country. We have to figure out ways to put money into those of efforts. 

I also suggest very strongly that we should be doing a lot more in the way of wage subsidies. All these efforts at picking particular industries we’re going to favor or tariff do very little for the working class. So I argue that we ought to be beefing up a lot the work subsidies we have in this system. I even suggest perhaps something like a universal basic wage—not basic income, because I think that’s a mistake. 

The current earned income credit mainly goes to single mothers with children, whom we want to help, but it’s left out a lot of the people you’ve written about yourself, like young males, young people in general, who feel left out of the system because in fact they’re not eligible for those types of subsidies. And married couples who have two earners, they get phased out of a lot of systems. There’s a huge marriage penalty throughout our subsidies. 

And on the financial side, our pension subsidies mainly go to people who have good incomes because it’s proportional to the amount of money you can put in the system. And housing subsidies like the home mortgage interest deduction have done really nothing to expand home ownership for some time. We could do much more to help first time home buyers and not people like me who already own a home and don’t need the extra subsidies. 

All these things are the items that would promote upward mobility, and they’re the things that are getting squeezed and put aside.

Anne Kim: You’ve begun to answer this question about how current policies are betraying the people who most need the help. But could we talk a little bit more about the ways in which current budget policy and current domestic policy betray the young? You’ve begun to talk about that in terms of what we’re failing in far as education, but what are some other things you point out in your book about how we’re really betraying what we owe future generations because of the way the budget has been set up?

Eugene Steuerle: The young are among those groups who are being squeezed out by these programs. About 20 years ago, almost now, I started a series at the Urban Institute that you’re aware of called KidsShare that tries to track the budget for children. The budget for children is very, very small.

I want to be clear I’m making a relative argument. We spend huge amounts on people my age. A typical elderly couple retiring today gets about $1.3 million in Social Security and Medicare benefits. Millennials are scheduled to get about $2.5 million dollars because ofall the built-in growth in those programs. Well, that’s being done instead of putting money into education for children, or work subsidies for workers, or anything else along those lines. 

It’s this squeezing out of these programs more than an outright rejection of them that’s been happening. The programs for children and workers for the most part don’t really grow over time, whereas programs like healthcare and retirement have all this automatic growth built into them. 

Both political parties in the last election said they really care about the working class. And I’m saying, “Hey, guys and gals, get around to proving it.”

I’m not arguing we shouldn’t have social security. Social Security is probably the most successful program we’ve had in this country. I’m not arguing we shouldn’t have health care, in fact, we need more universal health care. I am arguing we shouldn’t automatically be spending ever larger portions of our economy on health care and on extra years of retirement in preference to other efforts.

Anne Kim: On the solution side, you talk about something you call “fiscal democracy.” What does that mean and how do you suggest going about achieving that?

Eugene Steuerle: One of the measures I’ve developed over time with Tim Roper is an index of “fiscal democracy.” We measure the share of revenues that are left after you take into account what’s called mandated spending—entitlement spending, or the spending that’s automatic.

Social security grows automatically through a variety of factors. Healthcare grows automatically because prices are often set by producers, such as drug companies.

The revenues that are left after you take into account that spending is actually to zero. All revenues are already committed to those items. So if you could think about it this way, everything else in the aggregate is paid for out of deficits, and the mandated spending is still growing faster than our revenues.

So that number, that index of fiscal democracy, is scheduled to go well below zero. Now mind you, in the ’60s, 60 percent or 70 percent of our spending was discretionary. It wasn’t mandated. Congress would go in and decide each year what to do. Even in the Clinton years, the number was closer to maybe 30 percent. 

This lack of fiscal democracy explains to a great extent why Congress over the last couple of decades has been unable to get a hold of the budget. If mandated spending is scheduled to grow faster than revenues, and that’s not sustainable, then the job of Congress is not to decide what to do with the new revenues but to renege on past promises. And reneging on past promises is a clear way to lose the next election. Both parties have been scared to death to lead or even unite to deal with these issues. 

The whole culture war, in my view, has been a replacement for the budget policy that is the main job of government. And by budget policy, I don’t mean just the dollars, I’m talking about administering programs and running programs. That’s the main job of government. We’re fighting over which kids can go to which bathrooms. That’s not a legitimate issue. 

We’re fighting over things where government has limited control as opposed to things they do have control over. We lack fiscal democracy, and I think it’s a threat not just to the economy, it’s a threat to democracy itself because it’s now very hard for each new generation of voters to feel they’ve got control over what happens. 

The Democrats don’t want the Republicans to come in and have another tax cut, but the Republicans don’t want the Democrats to come in and be able to spend more. So they go through this constant battle about trying to stop the other party from doing what it wants, but they are not willing to cut back on what they have done to excess.

Anne Kim: How do you suggest breaking through this short-term thinking? For better for worse, as long as our constitutional system is the way it is, we are trapped with two year cycles in the House and the six year cycles and the four year cycles for the presidency. But you’re talking about changes that require a Congress to think 20, 30, 40 years in the future. How do you reconcile the political realities with the fiscal realities that have to be grappled with at some point?

Eugene Steuerle: This is very difficult right now. I love Senator Daniel Patrick Moynihan’s statement about “defining deviancy down.” I think we’ve actually become more deviant in our policy and our policy discussions, so I don’t see any immediate end to that. I think at some point things crash.

Hopefully, they don’t crash economically. Hopefully, they crash because the public finally decides it really is tired of all this and demands something. So we voters are not totally innocent from what’s going on. We vote for people who often try to mislead us.

I think it’s going to take some real efforts at bipartisanship in Congress and maybe us voters voting for people who can work across the aisle. But I do not have an easy political answer. 

I do think that the way budget people like myself present the data to the public is often misleading. I’ll give you one example. When we do a tax cut, typically, we do a distributional table about the winners: Here’s who got a tax cut. Well, that’s misleading because somebody’s paying for it. 

The people who have to pay the bill down the road—we don’t know how to identify them. So we don’t show them. But the result of that presentation is that it makes it appear that a tax cut or a spending increase does good, and a tax increase and a spending cut does bad.

Anne Kim: We recently reached $38 trillion on the national debt, which is the highest it’s ever been. Both parties have been guilty of arguing that deficits don’t matter. For a brief, Modern Monetary Theory was taking center stage on the left, and the GOP has actually never considered deficits to be that big of a problem starting with Ronald Reagan. What’s your argument that deficits actually do matter and that we’re going to start seeing the impacts of this kind of debt fairly soon?

Eugene Steuerle: In fact, we are starting to see one impact in just the last two or three years, which is that interest costs have been rising as a share of GDP and rising fairly rapidly. 

From 1980 to about 2020, the debt to GDP ratio quadrupled from about 25 percent of GDP to 100 percent of GDP. The Social Security and Medicare Trust Fund imbalances that we’ve long predicted are now within a 10-year cycle. 

I think members of Congress are well aware of these things happening. They just don’t have the wherewithal, in some cases the courage and the processes in place to actually try to deal with it. And we’re having this cultural war that totally sidetracks us. 

Anne Kim: So do you have advice in the short term for politicians who are looking at all of this about anything small that they could do? Assuming that the House comes back into session at some point and Congress is functional—or let’s just say it’s 2026, and there is some balance of power restored to Congress. What’s the first thing that Congress should think about doing to restore the fiscal democracy index to a level that is more sustainable for the nation?

Eugene Steuerle: Well, they could certainly enact budgets that try to start tackling the problem. I fear that the issue is so widespread that the good or the right ways to do it can’t happen in the short run. 

But nonetheless, they could start doing something. Anything that moves a little bit in the right direction is better than something that moves in the wrong direction, like the recent budget bill. 

David Walker, Former Comptroller General and head of the Peterson Foundation always said, “When you’re in a hole, don’t dig deeper.” So that’s a one little thing. 

Something I think that Congress could do that I’ve been arguing for 40 years is to address a lot of the weaknesses of a lot of programs by simply making what I’ll call deficit neutral tradeoffs.

I’ll give you one little example. Congress recently adopted a new charitable deduction that for reasons I won’t fully get into is really fairly badly designed to promote charitable giving.

Well, let’s create a better charitable deduction. If we don’t want to have to fight over the size or the revenue or whether government’s bigger or smaller, let’s just make it more efficient. 

And then finally, if you really want to do something much bigger, you could do things like decide that in Social Security, you’re going to stop wage indexing of benefits as long as the system is out of balance. I would probably stop it only for higher income people, but it’s a part of every Social Security plan that’s out there. There’s no way that Social Security is going to continue to promise higher-income Millennials the benefit it now suggests. 

You could also put much better caps on healthcare spending. There’s almost no part of our federal subsidies for healthcare, which cover about two thirds of all healthcare spending, that’s adequately capped or limited.

Congress is always going to want to do more and more. But if you get the long run in control, it’s a lot easier to deal with the short run. If the long run is out of control, then you just make short-term fixes and you’re still always in the soup.

The post Congress Has Bankrupted America’s Future appeared first on Washington Monthly.

The political stalemate that has closed down much of the federal government for two weeks has emotionally stressed and financially strapped 750,000 federal workers furloughed to date, and another 650,000 working without pay. This is leaving aside the 300,000 federal employees who were fired or took forced buyouts this year. In time, it will also damage thousands of companies and employees that depend on the spending of those workers and thousands of other companies and employees that rely on shuttered federal operations.

The economic costs will depend on how long the standstill lasts. If it’s resolved this week or next and the 1.4 million federal workers receive their back pay as the law requires, the economic costs will be minimal. If it persists into November and is followed by more shutdowns, and President Donald Trump ignores yet another law, the costs to the economy will mount.

In either event, today’s shutdown is the opening act or what boxing fans call the undercard—the bout that precedes the main event. The dispute concerns the Democrats’ drive to use the Continuing Resolution to undo Republicans’ directive in their One Big Beautiful (sic) Bill to slash Obamacare premium subsidies for tens of millions of Americans. But the Continuing Resolution provides only short-term federal funding while Congress struggles with the 2026 federal budget. That’s the main event.

Very soon, the brawl over Trump’s 2026 budget will dwarf today’s skirmish. It’s loaded with political third rails that will be as fearsome to many congressional Republicans as the president’s personal threats to keep them in line. With their narrow majorities, how many GOP representatives and senators will vote for policies their constituents reject?

That looming debate will force virtually all of them to support publicly, one by one, the acutely unpopular tariffs Trump needs for his revenues; vast new funding for his far-reaching and even less popular ICE operations to violently arrest and summarily deport millions of law-abiding immigrants and deploy U.S. soldiers and marines to American cities; and carry out the president’s deep and wildly unpopular cuts to Medicaid and research and treatments for diabetes, Parkinson’s, and cancer. As I wrote in these pages three months ago, voting for the final passage of his 2026 budget will also endorse five years of budget deficits projected to nearly equal all U.S. annual private savings.

Given these multiple landmines, the political insider Simon Rosenberg wrote this week, “Under our current rules, passing a budget requires 60 votes in the Senate, all 53 Republicans and 7 Democrats, and a simple majority in the House. Do we think these guys can somehow strike a deal that 7 Democrats, all Congressional Rs, and Trump can agree to?”

And that’s without considering the likely damage to Trump’s political leverage from the pending release of Jeffrey Epstein files. Securing the votes he needs for his budget will make today’s struggle over the Continuing Resolution seem like child’s play.

So, as we consider the shutdown’s economic costs, bear in mind that the coming fierce fights over the 2026 budget may well lead to one or more additional shutdowns, compounding those costs. And that’s all just a prelude to the far greater economic costs from the disruptive policy changes in that budget.

The shutdown’s costs begin with its impact on the incomes and spending of 1.4 million federal employees furloughed or working without pay. The Federal Reserve has found that 37 percent of American households cannot cover an unexpected, $400 emergency expense without borrowing or selling something of value. Even so, many simply couldn’t raise it. That’s chump change alongside the average $1,662 per week that the shutdown costs the 1.4 million furloughed or unpaid federal civilian workers. That tells us that most people cannot cover their regular bills.

Most furloughed and unpaid federal employees and their families are spending less and/or borrowing more (which will only depress their spending later)—and revenues are falling, or will soon, for tens of thousands of businesses where those families pay for food, utilities, rent or mortgage payments, transportation, clothing, healthcare, entertainment, and more. The impact then ripples further through the economy, as those businesses cut back on orders and payments to thousands of other companies that provide and transport the goods and services those businesses sell or use as inputs.

That’s far from the end of it. Additional costs arise from the shutdown’s impact on the federal activities carried out by the furloughed workers. For example, when the national parks suspend operations, the thousands of businesses that supply and deliver goods and services for the parks and their visitors also forfeit revenues they count on. As the shutdown continues or is soon followed by another, those businesses will cut back their operations, jobs, and purchases from thousands of other companies.

The National Park Service is part of the Department of the Interior, and the current shutdown and furloughs also directly affect operations in ten other departments—Defense, Agriculture, Commerce, Justice, Transportation, Homeland Security, Housing and Urban Development, the Treasury, Transportation, State, and independent agencies including the Environmental Protection Agency, the Small Business Administration, and NASA. Hundreds of thousands of private companies and employees are involved in those suspended operations.

Most businesses will try to wait out the shutdown, assuming it will be brief. But if it persists or is followed by additional shutdowns, the revenues and investments of companies and employees at each level of these multifaceted production and sales chains will bear meaningful costs, triggering additional ripple effects.

The shutdown also has regional effects based on where the furloughed and unpaid federal employees work and live. As a share of employment, the places with the highest percentages of federal workers, as expected, are the District of Columbia, Maryland, and Virginia, closely followed by New Mexico and Hawaii, and then by Alaska, Oklahoma, West Virginia, and Alabama. Since everything today is political, we’ll note that the first five are blue and the next four are red. At the other end, the states least affected by the shutdown are New York, New Jersey, Massachusetts, Minnesota, Michigan, Oregon, and Wisconsin, all blue or purple.

Let’s do the math. The shutdown directly affects spending by 1.6 percent of all working households and 1.4 percent of U.S. consumption and indirectly influences the spending of perhaps 4 percent of households and 3 percent of consumption. I estimate that if the stalemate continues into November and the ripple effects take hold, October’s monthly economic growth could be diminished by three-tenths of 1 percent, a modest and wholly unnecessary cost of polarization in Washington.

Greater economic damage will come once the shutdown ends, and Congress and Trump will batter themselves enough to enact some form of his budget. Every major initiative in it—the mass deportations; the military mobilizations in blue cities; the brutal cuts to Medicaid, Obamacare, food assistance, medical research, and education; and, of course, Trump’s tariffs—will damage the economy. For at least the next year, there will be few happy days here again.

The post The Shutdown Is Only the First Battle in the War Over Trump’s 2026 Budget appeared first on Washington Monthly.

Amid the barrage of scary news, some Americans are trying to think through what might be possible in a post-Trump era. One idea favored by both parties is a fresh version of expanded national service. The Carnegie Corporation, and the indefatigable Alan Khazei, gathered a bipartisan group in New York last week to explore how to move national service from “nice” to “necessary”—from activities that help the poor to workforce readiness and a lifeline for the Anxious (and soon-to-be-unemployed) Generation, a way to get young people out from behind their phones to meet face-to-face, work together for decent pay on vital projects, and turn down the national temperature.

Most people don’t know that we already have national service. It’s called AmeriCorps, and more than 1.4 million Americans have served in it over the last three decades. AmeriCorps is so popular that when President Trump tried to defund it this year, many Republicans at the state and local level (where the decentralized programs are run) joined Democrats to save it.

Even so, the national service movement needs a shot in the arm. Students from elite colleges are no longer clamoring to join Teach For America, and exhortations to serve can sound musty, especially with so many poorly-designed mandatory community service projects in high schools.

Participants in last week’s Carnegie Summit on National Service—including high-ranking former military officers (e.g., former Defense Secretary Lloyd Austin) and Republican governors (e.g., Utah Governor Spencer Cox)—gathered in New York to discuss how to perk up the movement. The preliminary goal is to establish one-year paid “Service Year Fellowships” with a certified non-profit, school, or public agency. Young people between the ages of 17 and 25 would experience a new rite of passage, with a “cultural expectation” that everyone serves.

Carnegie President Louise Richardson suggested that 2028 presidential candidates in both parties “compete creatively” with their national service ideas. That seems doable if the press can start pressing politicians about this with the same consistency they apply to, say, health care plans. Among potential candidates, Maryland Gov. Wes Moore (who says “service can save us”) and Vice President J.D. Vance (a believer, at least in his Hillbilly Elegy days) could set the pace. One can envision a shapeshifting Vance using service to scale back his current nastiness and show, as Vice President George H.W. Bush did when running for president in 1988, that he was “kinder and gentler” than his predecessor. Opportunism in the service of service is no vice.

I’ve been attending “service summits” since the 20th century, and this one was a mix of movement veterans from the 1990s and inspiring young activists, united by a belief that a year of service could help unite—or at least de-polarize—the country. And there’s another agenda now, with a welcome unsentimental edge. Much of the focus this time was on national service as an economic pathway. With Gen X, Gen Z, and Generation Alpha (born after 2010) likely to face searing double-digit unemployment by the end of the decade, thanks to AI, national service might return to its roots as a jobs program in the 1930s, when Franklin D. Roosevelt brought the military and government agencies together to put three million young men to work in the Civilian Conservation Corps.

The politics of national service were daunting then, and they’re more so now. Spencer Cox, a good man and important supporter of the movement, warned that service cannot be “left-coded,” noting that Climate Corps, a small AmeriCorps project, wouldn’t fly in conservative Utah. Mandatory service, unfortunately, won’t fly anywhere.

But the broader economic and cultural context is well-suited to a revival of the service movement. The most sobering statistic I heard at the summit was that AI might soon cost the economy five million entry-level jobs. Employers will find that young people who have had a service year are a step ahead in sharpening their emotional intelligence and learning the good work habits and people skills they will need in the workplace. With only 2 percent of Gen Z possessing the values that employers want, according to a recent survey published to great consternation in the Wall Street Journal, Service Year Fellowships could play an important role in bridging the gap between what young people want (pleasure, helping others) and what companies need (hard work, achievement).

The good news is that national service is powerfully connected to today’s national conversation, even if it’s not yet part of it. Jonathan Reckford, who runs Habitat for Humanity, recalls Protestants and Catholics building houses together during “The Troubles” in Northern Ireland:

“When people work together, they focus on shared values and create the space for conversation.”

It seems as if the only thing both parties can agree on these days is banning cell phone in schools. Jonathan Haidt, author of the bestseller The Anxious Generation, says in speeches that he doesn’t even have to convince parents that their kids need more IRL human connections that ease loneliness and the burgeoning national mental health crisis: “It’s like pushing on an open door.” A year of service might be just what the doctor ordered.

To get there, colleges have to play a more active role, as John King, leading the way as president of SUNY (which has 370,000 students in New York), explained. Papia Debroy of Opportunity@Work introduced me to the concept of “the paper ceiling,” where applicants lose opportunities because they don’t have the right credentials. I was surprised to learn that only 12 percent of today’s college students live on campus; the rest—mostly at state and community colleges—are juggling work and other responsibilities and could use a paid service year as a bridge from school to work.

Ted Mitchell, president of the American Council on Education, described a “false dichotomy between skills training and academic learning,” and explained that Brandeis now has two transcripts—one for academics and one for skills. Wendy Kopp, founder of Teach For America and Teach for All, said that corporate recruiters on campus must be compelled to compete on a more level playing field with those offering service jobs.

Secretary Austin, who sees service in a small-d democratic context (“What strengthens our democracy strengthens our national security”), argued that military recruiters should also present civilian options for those who don’t meet their physical and test-score standards, a much larger group than one might imagine. And the faith community has a natural connection to service. Cox, who says his Mormon mission changed his life, suggested that Charlie Kirk’s assassination “could be a tipping point. People are desperate for something different.”

To get to Khazei’s goal, a million Service Year Fellowships a year by 2030, the non-profit sector needs some re-structuring. Community foundations, many of them extraordinarily well-endowed, should move toward a Rotary Club International model, where thousands of young people are sent abroad on traveling fellowships. These foundations could start underwriting Service Year Fellowships for work at home. Denver Mayor Mike Johnston, in outlining his surprisingly successful efforts to confront homelessness, says he has many job openings (with decent pay) in city support services. Bringing organized labor aboard, especially in heavily-unionized states, will be a challenge, as it was to FDR in establishing the CCC, but not an insurmountable one. And the marketing of national service needs an overhaul, with new strategies for tapping influencers. This, too, would be a good project for a foundation.

Retired Col. Robert Gordon, a former aide to Colin Powell and movement pioneer, laid out the challenges of scaling from the roughly 75,000 AmeriCorps service members to the millions necessary to change the country. But scale we must.

Khazei ended the summit with a quote from Margaret Mead that sounds Pollyannish in these grim times, but is indisputably true if one studies the history of social movements:

“Never doubt that a small group of thoughtful citizens can change the world. It’s the only thing that ever has.”

The post How National Service Can De-Polarize America appeared first on Washington Monthly.

Until this year, America was set to embark on its largest investments in history toward clean and affordable energy and good-paying jobs. Congress included more than $350 billion in tax credits, appropriated grants and loans for domestic clean energy projects and manufacturing as part of the Inflation Reduction Act (IRA). In 2021, Congress passed the Bipartisan Infrastructure Law (BIL), which also appropriated $60 billion to modernize our nation’s energy infrastructure.  

​​​The Trump administration has now tossed that progress out the window. 

​​​​​​​During the first days of the government shutdown, the Department of Energy (DOE) announced it would halt almost $8 billion in electrical grid upgrades and new spending on a range of clean energy technologies, from renewables to carbon capture.  

DOE is also ​​expected to cut tens of billions more in energy infrastructure projects in the coming weeks. This is in addition to the Environmental Protection Agency (EPA) cutting the Solar for All ​​program, which would have provided ​​billions of dollars in clean energy investments that help low-income communities reduce energy costs. Instead, it plans to invest millions in our nation’s oldest coal plants as part of President Donald Trump’s efforts to bring back “​​beautiful” coal.  

The Trump administration’s efforts are both confounding and counterproductive. Ripping funds away from grid infrastructure, manufacturers, and energy producers will ​​delay reliable cheap energy for millions of Americans suffering from high energy prices and shut the U.S. out of a booming international clean energy market.  

Across the country, in both red states and blue states, public and private stakeholders alike have clamored for the clean energy funding appropriated in these bills. When I was a senior official at the ​​Office of Management and Budget (OMB) during President Joe Biden’s administration, ​​we found that most new clean energy IRA and BIL programs were heavily overprescribed. The Trump administration’s rescissions of appropriated and obligated funds are blocking these critical investments just as they are starting to flow into communities.  

While the potential climate benefits of the IRA and the BIL have received significant attention, the economic benefits expected to flow from these two laws have too often been buried in the broader climate battle between the political parties. Both laws promoted energy diversification and technology-neutral solutions. Implementing both laws promised lower energy costs, stronger economic growth, and a challenge to China’s dominance over global clean energy supply chains.

For instance, both the IRA and BIL greatly expanded the DOE’s ​​Loan Programs Office,  providing billions for loan guarantees to diverse clean technologies such as nuclear, microgrids, and natural gas pipelines. The IRA also created technology-neutral energy tax credits, which, for the first time, would have incentivized investments in emissions reductions rather than in specific technologies. In addition, the IRA created a Greenhouse Gas Reduction Fund, which authorized regional energy infrastructure banks to leverage private investments in low- and zero-emission energy technologies for capital-starved communities.   

Even technology-targeted efforts were focused on quickly bringing clean, cheap energy to market and giving U.S. manufacturers a leg-up in global markets. The IRA’s new EPA Solar for All program, for instance, provided​​ funds for states, Tribal governments, and local jurisdictions to support low-income solar projects, while the BIL’s Hydrogen Hubs created new economic development centers in clean hydrogen across the country. 

The Trump administration’s bias against clean energy technologies blinds it to economic reality. In a recent ​​interview with Breitbart, Department of Energy Secretary Chris Wright called investments in renewable energy, transmission line expansions, and battery technologies one of the “greatest malinvestments” in human history. Yet, global investments in these technologies are booming. According to ​​​​International Energy Agency (IEA)’s World Energy Investment report, approximately $2.2 trillion in global investments went toward renewables, nuclear, transmission, storage, low-emissions fuels, efficiency, and electrification. That​​ is a trillion dollars more than a decade ago and a trillion more than the year’s combined oil, gas, and coal investments. The most significant global clean energy investment in 2024 was in solar energy; at $450 billion, that’s double the global investments in coal.   

The largest global investor in both coal and solar is China. Republicans often point to Beijing’s plan to add 94.5 gigawatts of new coal capacity to justify doubling down on coal. But China’s coal investments are part of a broader strategy focused on diversification, stability, and economic opportunity. China has limited domestic natural gas resources, and ​its ​nuclear capacity is about 40 percent lower than U.S. generation. Along with population pressures, global markets, and political volatility in coal-rich Xinjiang, all of these factors shape China’s choices. 

There is still time for Congress and the administration to reverse course, but every day leaves the U.S. further behind. Unlike the Trump administration, China invests in all energy sources while modernizing its energy system. In addition to adding nuclear and coal generation capacity, China is making historic investments in wind, solar, battery storage, grid modernization, and electrification. According to a ​​2025 report by the International Society for Energy Transition Studies and Ember ​​​​​Energy Research (​EMBER), China spent $625 billion on clean energy in 2024 and more than ​​doubled its wind and solar generation capacity over three years to 1,408 gigawatts. Today, ​​hydro, wind, and solar energy comprise 30 percent of China’s energy generation, with more wind and solar than coal. The same ISETS/EMBER report found that China also tripled its energy storage capacity over the past three years, commissioning more battery storage in 2024 than the U.S. and Europe combined. It also ​​invested the equivalent of ​​$600 billion in grid modernization and electrification in 2024 alone. 

These Chinese clean energy investments carry obvious climate benefits. President Xi Jinping  recently announced that China would cut peak greenhouse gas emissions by up to 10 percent in the next decade. That is despite Beijing’s ongoing coal investments, and at a time when most countries fail to meet their greenhouse gas emission targets. State support and larger production scale help Chinese manufacturers reduce costs, cut domestic energy prices, and strengthen their competitive advantage overseas.  

According to the Climate Leadership Council’s analysis of data from a 2024 IEA Energy Technology Perspectives report, Chinese exports of clean energy technologies to emerging markets increased 125 percent over three years, reaching $96 billion by 2023. In comparison, U.S. exports only reached $10 billion. Chinese global dominance is moreover growing, with China’s clean energy exports projected to surpass $340 billion by 2035—on par with 2024 oil export revenues generated by Saudi Arabia and the UAE combined. 
 
Every dollar withheld from modernizing our energy system is a gift to our economic rivals. Shelving Biden-era investments delays much-needed, cheap energy for American households and businesses. It’s time for Congress to intervene. Doing so will reassert U.S. leadership and grow our economy.  

The post Trump’s Opposition to Clean Energy Is Costing You Money appeared first on Washington Monthly.

President Donald Trump has famously challenged traditional free-market conservative dogma in the name of America First. He’s taken a ‘golden share’ in U.S. Steel that grants him control over the company’s decisions; he’s pressured Intel to convert federal grants received through the 2022 CHIPS Act into a 10 percent equity stake for the U.S. government; and he even removed a national security ban on chip sales to China by Nvidia and AMD in exchange for 15 percent of the revenue.

Commentators from The Wall Street Journal to The Atlantic have decried Trump’s economic nationalism as “state capitalism with American characteristics,” comparing Trump’s state interventionism with Xi Jinping’s China.

While China and the U.S. may increasingly share authoritarian traits—the centralization of executive authority and the suppression of free speech are just a couple—they fundamentally differ in their economic strategies. In China, state-managed capitalism advances industrial innovation through top-down strategic policies; in the U.S., a state-directed cronyism leverages executive power to satisfy the whims—and, perhaps, fill the pockets of favored actors.

China’s state-managed capitalism—rooted in decades of industrial policy—has fostered world-leading growth in advanced technologies, energy infrastructure, and manufacturing capacity. Trump’s interventions, by contrast, lack any strategic vision. His administration has turned industrial policy into a personal patronage system—using tariffs, subsidies, and regulatory power not to build national capacity, but to reward allies and punish enemies.

Trump has deployed federal power more than any recent president, but instead of using it for practical purposes, he has turned it into a tool for repression and self-promotion. Unlike China, Trump’s “state capitalism” blunders forward according to the president’s impulses, not the nation’s priorities. A closer comparison would be authoritarian cronyism: unconstitutional, self-enriching, and strategically confused. (For an explanation of how a future administration could refocus Trump’s industrial policies to achieve strategic goals, constitutionally, see Joel Dodge’s recent piece in the Washington Monthly: “Trump’s Industrial Policy: What’s Right and Wrong.”)

Trump’s Cronyism

Zooming in on the realities of Trump’s economic policies reveals their irrationality.

After initially banning the export of AI chips to China for national security reasons, Trump reversed his decision when Nvidia’s CEO personally appealed for leniency. Trump agreed to resume chip exports to China only in exchange for 15 percent of the revenue. 

The move is not only baldly unconstitutional—Article I of the U.S. Constitution states that “No Tax or Duty shall be laid on Articles exported from any State”—it’s self-defeating. The White House’s chip policy places tariffs on imports and fees on exports, making it both expensive to compete internationally and sell at home, all while undermining the U.S. tech industry’s advantage over Chinese competitors.

Trump’s equity stake in Intel follows the same I-need-a-taste playbook. Biden’s 2022 CHIPS Act allocated billions to boost U.S. semiconductor manufacturing, but by 2025, $8.9 billion of those funds had not yet been distributed to Intel. Trump used the unspent funds as leverage, pressuring Intel to give up equity in exchange for money Congress had already approved. 

To be fair, Senator Bernie Sanders, the Vermont Independent, who introduced an amendment to the CHIPS Act in 2022 that would have taken equity in return for government funding, approved, arguing that “the taxpayers of America have a right to a reasonable return” on federal investment. However, it’s unclear how the Trump administration will collect or distribute such returns. With Russ Vought at the Office of Management and Budget, bypassing Congress to direct appropriated funds as the White House pleases, there’s no reason to believe any returns will ever redound to the American taxpayer. This isn’t a socialist scheme to redistribute American wealth, or even the opening salvo to a sovereign wealth fund—it’s just another step in the consolidation of power in Trump’s person.

To what end? Political theater. Trump’s ‘golden share’ in U.S. Steel, which gives the government control over major company decisions, has led to absurd results: a steel mill in Illinois is shutting down production but keeping its workers on the payroll to keep the facility idle. Instead of offering severance pay or job training to help workers move on, the White House simply wants to avoid bad headlines showing American steel mills—MAGA’s cultural icon of America First—laying off blue-collar workers. Meanwhile, for those working outside Trump’s Rust Belt nostalgia photo ops, more than 42,000 manufacturing jobs have been lost since he announced his ‘Liberation Day’ tariffs. 

Trump’s theatrics are already generating massive blowback. Recently, the Department of Homeland Security led its largest-ever immigration raid at Hyundai’s battery plant in Georgia, arresting hundreds of skilled South Korean workers brought in to get the facility up and running quickly. Footage of shackled South Korean businessmen and engineers, which ICE proudly posted online, sparked outrage across the political spectrum in South Korea and now threatens billions in foreign investment. Trump seemed to grasp the misstep, acknowledging that “we have to learn from others how to make [sic].” It may already be too late. One South Korean worker, describing the squalid conditions in ICE detention, said upon his return to South Korea, “I will never visit the United States again.”

From extorting blue-chip companies to arresting foreign engineers, it’s clear that Trump has no strategic priorities. There is no ‘Made in America 2035’ vision. He can hardly commit to a firm policy for more than a few days, let alone years. His heavy-handed transactionalism distorts market decisions as businesses scramble to divine the president’s caprices—and curry his favor. Until industrial strategy becomes a hit on Fox & Friends, the president will unlikely ever think about it.

Actually Successful Industrial Policy

Meanwhile, on the other side of the world, China has become the paradigm of industrial development.

Through decades of interventionist industrial policies, China’s state-managed capitalism has pursued long-term growth and prosperity—and delivered, lifting 800 million people out of poverty over the past 40 years. Since Deng Xiaoping’s reforms in the 1970s, the nation has embraced market mechanisms with a “negotiated receptivity,” borrowing what works from abroad, discarding what doesn’t, and constantly adapting policy to Chinese realities rather than importing Western dogmas wholesale. In contrast to Trump’s phony populism, China has shown what it means to treat economic development as a national project.

Rather than be led down the developmental dead-end of the neoliberal Washington Consensus, China drew lessons from the experiences of Soviet-style public enterprise and East Asian state-led sectoral development. It has cultivated domestic champions, moved steadily up the value-added chain, and invested heavily in technological innovation. China has allowed the state to co-evolve with markets by building experimental, adaptable institutions.

This long-term strategy has already transformed the global economy. The first “China Shock” witnessed the country’s transformation into the world’s factory, displacing long-established American industries like furniture and textiles. The second China Shock is poised to be far more consequential, threatening to overtake the U.S. lead in advanced hi-tech sectors from aviation to robotics to batteries.

This extraordinary leap began in 2015 with the launch of Made in China 2025 (MIC25), an industrial strategy explicitly designed to catapult China from a low-cost assembler of goods to a global leader in advanced technology. Targeting ten priority sectors, including aerospace, biopharma, and clean energy, MIC25 aimed to achieve self-sufficiency in the core components of advanced manufacturing. This included tax incentives and subsidies into private and state R&D, technology transfers traded for market access, joint ventures, foreign acquisitions, licensing high-tech equipment, and even outright cyber and industrial espionage.

The strategy has been largely successful. China has dramatically reduced its dependency on imports and foreign firms by localizing high-tech production and research in exchange for market access. It has also become globally competitive in high-tech sectors like EVs and drones and risen to technological leadership through world-class research and patents.

While the U.S. and European Union have accused China of ‘unfairly’ subsidizing industry, the Head of Research at the China Institute at the University of Alberta, Anton Malkin, argues that MIC25 follows America’s historical playbook for achieving economic dominance: “a system of government-funded research initiatives underlined by strategic and defense priorities that are meant to feed into eventual commercial adaptation by the private sector.”

China’s industrial strategy represents a new Fordist model of production. By vertically integrating supply chains from raw materials to final assembly, Chinese firms hedge against geopolitical and environmental risks while gaining unprecedented control over production. China took the West’s playbook to beat them at their own game.

Authoritarianism Without Chinese Characteristics

This is what the current state-managed capitalism really looks like. China doesn’t just punish companies with tariffs to encourage manufacturing—a so-called ‘strategy’ that is clearly failing—it uses targeted government intervention to develop entire industries, bring in foreign technology, and steadily move up the value chain. Nothing better illustrates the success of China’s approach than the fact that the U.S. and EU are now seeking joint ventures and technology transfers from China—the very tools that built China’s economy. 

If the Trump administration and Xi Jinping’s CCP share anything in common, it’s their authoritarian impulse. The CCP stifles dissent, enforces traditional hierarchies, suppresses labor, restricts movement, and arbitrarily detains minority populations in reeducation camps. The Trump administration attacks First Amendment rights, promotes a return to patriarchy, crushes unions and collective bargaining, and rounds up immigrants and even lawful residents into mass detention centers.

China has successfully combined political repression with a coherent economic plan—much to the dismay of many. In contrast, Trump’s America uses political repression to mask the absence of any real economic vision. Trump’s so-called “state capitalism” is not a serious industrial policy. It resembles China’s authoritarianism but lacks its strategic coherence and economic dynamism. 

The post Industrial Policy, Trump Style appeared first on Washington Monthly.

When Donald Trump returned to the White House last January, one of his earliest declarations was that the United States would begin building ships “very fast, very soon.” But in the eight months since his inauguration, the administration’s actions have not laid the groundwork for a shipbuilding revival. If anything, they have actively undermined the industry’s prospects.  

Unlike many of Trump’s other policy priorities, this one at least addresses a worthy cause. A strong maritime sector underpins everything from trade resilience to military readiness. Merchant ships transport critical cargoes across oceans, transport aid during disasters, and sustain the skilled mariners that the military relies on for sealift in wartime. Yet decades of decline have left American yards with a sliver of the global market, old infrastructure, and a shrinking workforce.  

At first, Trump appeared to recognize the scale of the problem. In March, the administration announced the creation of the Office of Shipbuilding within the National Security Council, billed as the centerpiece of a broader maritime strategy. The following month, an executive order raised hopes for a coordinated industrial policy and a whole-of-government approach. But within months, that effort had collapsed.  

Mike Waltz, the former national security adviser and a central architect of Trump’s shipbuilding executive order, was pushed out for his role in Signalgate, the scandal in which Waltz erroneously added the editor in chief of The Atlantic to a group chat where top administration officials were discussing imminent plans to bomb Yemen. Soon after, Ian Bennitt, the senior director tapped to lead the shipbuilding office, resigned. And because of Trump’s cuts to the NSC, five of seven staffers in the shipbuilding office soon followed. Then, in a clear sign that maritime strategy was no longer a priority, the office was quietly downgraded, moved out of the NSC, and folded into the Office of Management and Budget. 

At the same time, the Maritime Administration, the federal agency most directly responsible for supporting U.S. shipping, remains leaderless. So far, no administrator has been confirmed. Without permanent leadership, MARAD has been unable to set priorities and goals, press for needed resources, or reassure industry stakeholders about the administration’s seriousness.  

A recent Government Accountability Office report underscored the problem, noting that MARAD “cannot determine to what extent [its] programs are effective in growing the U.S. maritime fleet because it has not established measurable goals … or assessed the performance” of its programs. The absence of leadership has prevented the government from exercising its powers to grow maritime capacity.  

That leadership vacuum extends into the training pipeline. The United States currently faces a shortage of thousands of mariners. Nonetheless, the administration has done little to strengthen the maritime pipeline. At the U.S. Merchant Marine Academy in Kings Point, New York, the nation’s primary training ground for sealift officers, conditions have deteriorated. Transportation Secretary Sean Duffy has publicly acknowledged problems ranging from months without hot water in students’ showers to a crumbling library and dorms riddled with mold. But rather than moving swiftly to stabilize the institution, the administration has left the academy without permanent leadership in its top three positions. A school critical to producing the next generation of mariners risks falling further behind, undermining the very workforce any maritime revival depends on. 

Trump-led appropriations bills have also starved maritime capacity. In Trump’s most recent appropriations bill, the Small Shipyard Grant Program, one of the few federal mechanisms for helping grow shipbuilding capacity, received $8.75 million, a record low and less than half of the $21 million it received during the Biden administration.  

For shipyards competing against heavily subsidized foreign rivals, these grants often determine whether they can afford to modernize equipment like cranes and welding machines or fall further behind. Demand for the grants has consistently exceeded supply, with applications surpassing available funds by more than five times. Underfunding the program not only reduces its effectiveness but also signals a retreat at a time when foreign shipyards are receiving significant government support. 

The administration’s erratic policies have also discouraged foreign allies from stepping up to fill the shipbuilding gap. After one of South Korea’s largest shipbuilders, Hanwha Ocean, acquired Philadelphia Shipyard in 2024, Seoul appeared ready to make substantial investments to modernize American yards and train American workers. In fact, during recent bilateral trade negotiations, South Korea signed a nonbinding agreement to direct $150 billion toward U.S. shipbuilding. But Trump quickly undercut the deal. His administration staged a highly publicized immigration raid at a Georgia battery plant operated by South Korean firms, sparking diplomatic tensions and casting significant doubt on the future of the shipbuilding investment. 

Perhaps Trump’s most damaging decisions concern future demand. Historically, American shipyards have thrived during periods of maritime innovation. During World War II, for example, the United States developed oil-powered ships to reduce reliance on British coaling stations. During the early Vietnam War era, the U.S. developed containerization to speed loading and unloading cargo. In the 1960s and ’70s, it developed and built new ship designs, such as the so-called lighter aboard ship, using a new intermodal concept that allowed larger vessels to carry smaller ships on their decks to allow for more efficient cargo transportation. The U.S. also built ships that could carry liquified natural gas. 

A similar opportunity is emerging with “green shipping.” Spurred by the International Maritime Organization’s proposed rules on decarbonization, a wave of orders for cleaner ships is expected in the coming decade. But rather than positioning U.S. yards to compete, Trump is pressuring IMO member nations to scuttle the regulations, eliminating a potential opportunity for the United States to break into the shipbuilding sector. Without new maritime innovation, the U.S. will struggle to enter the current shipbuilding market, on which China has a firm grasp.  

Offshore wind tells a similar story. Under the Biden administration, demand for clean energy spurred U.S. yards to build the specialized vessels the sector requires. For example, a Texas yard completed the nation’s first wind turbine installation vessel, while a Louisiana yard delivered a ship designed to bury the undersea cables that connect offshore farms to the grid. These projects showed how new industries can generate steady work for U.S. shipbuilders. Yet Trump’s rollback of offshore wind programs has abruptly stalled that momentum. With projects canceled or delayed, yards now face shrinking demand for these vessels, casting serious doubt on whether the sector can provide steady work for American builders. 

Trump’s other reckless actions have had significant impacts. For example, the decision to freeze foreign food aid eliminated reliable cargoes for U.S.-flag vessels. That cargo has supplied humanitarian assistance abroad, keeping ships active and mariners employed at home. Instead, critical food aid rotted in warehouses across the United States, while vessels that carried food aid were forced to idle, sidelining mariners. A knock-on effect of sidelining mariners is reducing military readiness. The armed forces depend on commercial mariners and ships to supplement their sealift fleet. As that pool shrinks, so does military readiness. 

Trump’s attempts at revival have been far short of the comprehensive approach needed to revive the maritime industry. He has proposed imposing high fees on Chinese-built and -owned ships calling at U.S. ports. But while these have reduced the Chinese share of the new-build market, they have done little to build domestic capacity. Without consistent demand and supply-side investment from the federal government, the slew of port fees will add little new maritime capacity. The pattern that emerges is one of both neglect and contradiction. The administration has launched offices only to defang them, promised investment only to undercut it, and pointed to growth opportunities only to foreclose them.  

Reviving shipbuilding is achievable. Other advanced economies have sustained competitive industries through predictable investment, robust workforce training, and long-term alignment with global demand trends. China, for example, leveraged decades of government support and industrial planning to become a shipbuilding powerhouse. Trump’s approach has offered the opposite. An industry vital to economic security and national defense lacks clear direction or reliable support. Trump’s declaration that America would soon build ships hasn’t led to action. Instead, his policies have made a revival less likely. 

The post Trump Promised a Shipbuilding Boom. He’s Sinking It Instead appeared first on Washington Monthly.

After 30 years of publication, the U.S. Department of Agriculture abruptly canceled its annual report on the prevalence of hunger in America. The USDA’s press release condemned the report as “politicized,” “subjective, liberal fodder” that did “nothing more than fear monger.” Apparently unaware of its repetitiveness, it called the survey “redundant” and “extraneous.” This announcement is part of a troubling trend by the second Donald Trump administration to suppress crucial data about the impact of Trump’s policies on the economy. (An expected report on consumer spending and inflation has been inexplicably delayed.) But even if Trump hides the data, he cannot hide the damage. Millions of Americans could soon face going hungry due to ballooning costs, a weakening labor market, and catastrophic cuts to food assistance programs.  

Even before Trump’s latest term and the GOP’s “One Big Beautiful Bill Act,” hunger in America has been rising, with millions of Americans reporting difficulties affording food, cutting the size of meals, skipping meals altogether, or losing weight. The USDA’s 2023 report found that 13.5 percent of U.S. households were “food insecure”—up from 10.5 percent in 2020. (The federal government deems a person “food insecure” if their ability to acquire adequate food is limited by a lack of money and other resources.”) More than 50 million people visited a food bank in 2023, according to the nonprofit Feeding America, and demand is growing. For instance, the Arlington Food Assistance Center in relatively affluent suburban Washington, D.C., now serves an average of 3,850 families a week—an 84 percent increase over the last four years.  

The “One Big Beautiful Bill Act,” passed in July, includes provisions to remove people from SNAP (formerly food stamps) or reduce the help they receive. The nonprofit Center on Budget and Policy Priorities predicts that up to 4 million people could lose some or all of their benefits, with dire effects. 

The changes to SNAP include expanded work requirements for “able-bodied” adults, which the Congressional Budget Office (CBO) estimates will cause at least 2.4 million people to drop from the rolls. Under the new rules, which kick in this fall, recipients up to age 64 are now required to work (up from age 59), and veterans, homeless people, and young people aging out of foster care (all of whom had previously been exempted). The law also now denies benefits to legal permanent residents (e.g., green card holders), which the CBO projects will force another 90,000 people to lose aid. 

Yet another provision prevents cost-of-living increases in benefits, further straining needy families. As it is, benefits aren’t enough to cover “modestly priced meals” ($3.41) in 99 percent of U.S. counties, according to the Urban Institute. The average monthly benefit per person in 2024 was just $192—or $6.31 a day.  

Most concerning, however, is a new requirement that states pay up to 15 percent of program costs if “error rates” exceed certain thresholds. While CBO estimates that the federal government could save about $41 billion by 2034, cash-strapped states say they cannot afford this burden. Tennessee, for instance, could see its SNAP costs rise from $56.7 million to $165.3 million, according to the state, while Pennsylvania would have to come up with $660 million. A June letter to Congressional leaders signed by 23 governors warned that states “will need to find millions or even billions of extra dollars in their budgets or be forced to leave the SNAP program entirely (emphasis in the original).”  

Given the law’s work requirements, it’s inevitable that “error” rates will be high. “Errors” are not synonymous with “fraud” and include underpayments and overpayments, according to federal regulations. Maryland, for instance, reported a 13.6 percent error rate in 2024. Still, nearly 5 percentage points of that error rate was due to underpayments to beneficiaries getting less than they were owed. Under the scheme to punish states for these oversights, beneficiaries risk getting even less (or nothing at all) if the state can’t find the money to pay its share of program costs.  

This systematic dismantling of SNAP comes amid economic turmoil for many households, thanks to Trump’s federal layoffs and mishandling of the economy.  

Though the federal government failed to release new job data last week because of the government shutdown, other sources indicate a grim job market. Payroll processor ADP, for instance, said private employment dropped by 32,000 in September, while employment firm Challenger Gray & Christmas said employers cut 54,064 jobs last month. In addition, year-to-date job openings have been the highest since the pandemic, and employers’ hiring plans have been “the weakest since 2009,” the firm said.  

In the Washington, D.C., area, the jobs picture could worsen if the White House follows through on its threat of more mass layoffs with the shutdown. In its 2025 Hunger Report, the Capital Area Food Bank estimates that DOGE-related job cuts earlier this year led to 14,500 firings or layoffs of federal workers and 3,240 layoffs of contractors. At least 11,250 additional workers opted for “fork in the road” separations, which took effect September 30. Many who had resigned early on, hoping to find private-sector work, are having trouble landing new jobs.  

Compounding the misery is inflation, fueled by Trump’s tariffs. According to the Tax Foundation, tariffs will affect 75 percent of U.S. food imports, and the total tax on all goods could add up $1,300 per household in 2026 and $1600 in 2026 (unless the Supreme Court finds them unconstitutional).  

Grocery prices are 29 percent higher than they were pre-pandemic. Beef prices are at record highs, partly due to the 76 percent tariff on Brazilian beef and droughts that have forced ranchers to cull their herds. Coffee prices are up 20.9 percent, apples 9.6 percent, and bananas 6.6 percent.  

The “food-at-home component” of the Consumer Price Index rose 0.6% in August from July, according to the Bureau of Labor Statistics (BLS), which was the biggest month-over-month increase since August 2022. Newer data would likely have shown the same trends if the government’s report hadn’t been postponed. Before the shutdown, BLS announced it would delay its 2024 report on consumer spending to October 30, citing—without irony—the need to “improve data quality.”  

But with or without data, Americans are suffering. An August Associated Press/NORC survey found that 53 percent of Americans say the cost of groceries is “a major source” of stress.  

The Capital Area Food Bank’s report surveyed about 4,000 households in the metro D.C. area and found that 41 percent of households affected by federal jobs and spending cuts were “food insecure” as of May. Forty percent said their household finances had declined, including 36 percent of households earning between $79,000-$179,000 and 28 percent earning more than $180,000. More than half (55 percent) of these households said they were buying “lower cost, less healthy food” to stretch their dollars. 

Ironically, Trump voters will be among the Americans hardest hit by the president’s policies. According to the USDA’s 2023 report, the states with the highest levels of food insecurity were in the South: Arkansas (18.9 percent), Louisiana (16.2 percent), Texas (16.9 percent), and Oklahoma (15.4 percent).  

As many as 25 percent of military families were also food insecure—almost double the civilian rate. According to the nonprofit news organization Investigate Midwest, farming-dependent counties (444 counties) have seen an 11.7 percent increase in food insecurity in the last decade, with an average rate of 14.5 percent.  

Cruelest of all, Trump has undercut a key institution that could stem the tsunami of need unleashed by his policies: the nation’s food banks.  

As part of his spending cuts earlier this year, Trump slashed $500 million from the USDA’s Emergency Food Assistance Program, which provides food banks with domestically produced meat, dairy, eggs, and produce. This spring, according to ProPublica, the administration canceled deliveries of 94 million pounds of food to the nation’s food banks, including 2,300 gallons of milk for the Heart of Alabama Food Bank; 19,000 pounds of pork chops to food banks in Florida; 29,200 pounds of turkey breasts to nonprofits in Nebraska; and 270,000 eggs to pantries in South Carolina. The nonprofit Feeding America, which supports a network of more than 200 food banks nationwide, lost 20 percent of its expected deliveries.  

In addition, Trump also cut $500 million from the USDA’s Local Food Purchase Assistance Cooperative Agreement Program, which helps states, local, and tribal governments buy food from local farmers. One Louisiana food bank told ProPublica that its food packages for clients have shrunk by half because of the cutbacks. “We’re not turning people away with no food. It’s not to that point,” the food bank’s director told ProPublica. “But people are getting less food when they come to us.” 

Meanwhile, GOP Congressional leaders, including Senate Majority Leader John Thune and Senate Majority Whip John Barrasso, were spotted indulging at the lavish Bistro Cacao on Capitol Hill the first night of the government shutdown. As reported by The Daily Beast, “the plush eatery … is known for its velvet drapery, antique lamps, and magret de canard or filet de mignon, both priced at $45 per dish.” Wines can run $750 a bottle, while a glass of Scotch can set you back $60.  

The GOP’s message to hungry Americans couldn’t be clearer: Let them eat cake.  

The post An American Hunger Crisis Is Coming  appeared first on Washington Monthly.

As one of President Joe Biden’s top economic advisers, I frequently made my way out to the White House North Lawn to give interviews to the media about the state of the U.S. economy. Especially as the pandemic-induced recession faded in the rearview mirror, I was out there hundreds of times touting how the unemployment rate was at 50-year lows on the back of remarkably strong job growth. Inflation was falling and inflation-adjusted pay was rising.

And yet in every single interview, I got the same question: So why aren’t people feeling it? Why so much good data amid so many bad vibes?

In fact, the question was not hard to answer. It comes down to one word, a word that defines the dominant economic challenge with which American families have been struggling for years: affordability. Whether it’s housing, child care, health care, groceries, utilities, insurance, or other costs, significant numbers of Americans have found that these and other critical goods and services are either out of reach or so pricey that, after they’ve paid for them, they don’t have enough money left to even think about getting ahead.

This duality between the data and how people experience the economy is the subject of The Mismeasurement of America, by Gene Ludwig, a former comptroller of the currency during the Clinton administration. Focusing on unemployment, wages, inflation, and the growing economic distance between Americans at the top and the bottom of the income scale, Ludwig argues that the problem is that the numbers I was touting were, if not quite wrong, then “profoundly misleading.” He then develops his own set of numbers, which he argues better explain why people have long felt a lot worse about the economy than you’d glean from the government’s top-line statistics. While Ludwig is right that top-line numbers, all of which are broad averages, fail to present a full picture of how the different income classes are faring, that’s not a “mismeasurement” problem. It instead reflects the impossibility of encompassing in just a few numbers something as complex and disparate as the U.S. economy. A better title for his book might have been “The Incomplete Measurement of America.”

Ludwig’s critique of inflation statistics is particularly germane to the affordability crisis. The Consumer Price Index is an overall metric that averages out the changes in prices faced by 90 percent of the population. (The CPI does not include prices in extremely rural areas, farm households, and religious communities, among other exceptions.) Ludwig reasonably worries, however, that the average obscures important differences in inflation between income groups.

The Bureau of Labor Statistics, which publishes the CPI, has itself been looking into this and they find that from 2005 to 2024, prices rose 66 percent for those in the bottom fifth of the income scale but just 57 percent for those at the top. This disparity is a double disadvantage: Such households face both lower incomes and higher prices. Ludwig’s adjusted CPI, which he calls the “True Living Cost,” or TLC, captures this dynamic by significantly up-weighting in the index the goods and services that dominate the consumption basket of less-well-off households, including housing, health care, food, and child care.

While this is the right way to drill down on the affordability challenges facing low- and middle-income families today, Ludwig misses one of the more important positive price developments of our time. For technology goods, like computers and smartphones, the TLC registers large price increases while the CPI registers the opposite. The CPI has it right, reflecting a rare cost decline that’s actively making us better off. The BLS statisticians adjust for the fact that computers and cell phones are remarkably more powerful than they used to be. Decades ago, it would have cost millions of dollars for a computer to do what a $700 laptop can do today. Adjusted for quality, the cost of such technology has fallen sharply over the years, and this decline has improved consumer welfare. Yet the TLC appears to ignore these quality improvements and somehow has technology costs soaring over time.

For another example of how Ludwig offers an overreaching solution to a real measurement challenge, consider unemployment. Ludwig argues that instead of the 4.3 percent unemployment rate for August reported by the BLS, what he calls the TRU—the “True Rate of Unemployment”—is 24.7 percent. Anyone with even a passing familiarity with the history of unemployment in America will realize that Ludwig has either made a mistake or is aggressively redefining unemployment. The last time unemployment was that high was during the Great Depression.

Ludwig’s “unemployment” rate, however, includes a lot of people who are, in fact, working, both part-timers and low earners. His terminology is thus off, as is his critique of the current measurement system, which is clearly, transparently, and consistently measuring what it says it’s measuring. If you looked for a job and you didn’t find one, you’re unemployed. That simple and intuitive definition has revealed important information about labor market conditions for many decades.

But as Ludwig’s adjustments reveal, there were a lot more underemployed and underpaid people in the American labor force in August than 4.3 percent. That doesn’t make the official unemployment rate wrong or misleading. Though Donald Trump, who recently fired the commissioner of the BLS, might claim otherwise, our statistical agencies continue to rigorously churn out valid, reliable numbers. (Trump doesn’t like that they show the tariffs raising prices and cracks forming in the job market, but that’s actually a testament to their accuracy.) But Ludwig’s metric helps to bridge the gap between what the official jobless numbers say and the struggle that many working Americans go through every day.

Extracting from these weedy details, and recognizing that the current system is not mismeasuring America, Ludwig’s book provides an important bridge between good data and bad vibes. As he shows, in an economy where inequality has been on the rise for decades, where millions are underemployed, where poor people’s inflation rises faster than that of the rich, averages increasingly fail to tell the full economic story.

Of course, many authors, most notably Thomas Piketty in Capital in the Twenty-First Century, have made this point before. But by looking at the problem through the lens of jobs, hours worked, wages paid, the costs of housing (and utilities, such as electricity), child care, health care, and so on, Ludwig’s measurements help to shine a light on a policy agenda to address the affordability crisis. His underemployment rate would come down, for example, if we helped involuntary part-timers move to full-time schedules. (Ludwig would correctly note that such a change would not show up in a lower unemployment rate.) An affordability agenda, which Neale Mahoney and I describe in a new brief from the Stanford Institute for Economic Policy Research, would help make it easier for economically stretched families to afford housing (by making it easier and cheaper to build), child care (through targeted subsidies), and health care (reversing coverage cuts, Medicare buy-in) in ways that would directly feed into Ludwig’s alternate cost-of-living measure.

What we should take from this book, then, is not that America is mismeasured. It’s that the gap between what the top-line numbers report and how folks feel about their economic situation is, in part, a function of the increase in economic inequality, of how far they’ve fallen relative to the average. Should we want to better understand how America is really doing, we must dig deeper into the numbers.

The post Measuring the Vibecession appeared first on Washington Monthly.

MAGA Republicans have long criticized the H-1B visa program, which allows U.S. organizations (businesses, non-profits, and government) to enter a lottery for the right to hire high-skilled foreign workers temporarily. Up to 85,000 visas are up for grabs annually. Critics argue the program takes jobs away from American workers, who are purportedly President Donald Trump’s top priority. So, it wasn’t surprising to see him require any organization petitioning to employ an H-1B worker to pay $100,000—a fee few can afford.  

Will this de facto ban on H-1B visas protect American workers? Don’t count on it. Likely the opposite will result: Fewer U.S. jobs and weaker U.S. companies. 

There are shortages of American STEM workers, and a de facto ban on H-1B visas would make several things more likely. First, American tech firms competing in global markets will be more likely to hire persons to work overseas, either as remote workers or via a foreign affiliate. The consequence would be fewer tech jobs in America. Second, because American companies “export” services when U.S.-based workers deal with foreign clients, shifting workers overseas would recategorize these exports, worsening the trade balance that is Trump’s obsession. Indeed, America enjoys a surplus in service exports that would diminish if firms increased their offshoring.  

Finally, if U.S. companies had less access to foreign talent, they would be less competitive than their foreign counterparts, including Chinese companies. As peer-reviewed research shows, the share of workers with H1-B visas in any given state positively correlates with patents issued in that state, controlling for other variables, such as the number of high-tech workers more broadly. Foreign workers contribute to innovation and, by extension, job growth.  

Opponents of the H-1B program base their critique on faulty assumptions. For instance, they argue that employers use the program to undercut American workers’ wages. However, a 2010 peer-reviewed study found that after controlling for the state in which IT professionals work and for job titles, IT professionals with an H-1B earn 2.6 percent more than their American counterparts. That wouldn’t be the case if firms like Apple bypassed American IT professionals in favor of cheaper foreign ones. 

There’s also evidence that H-1B workers boost workers’ wages at their firms.

Research finds that firms that win H-1B visas are more likely to survive long-term than other firms, and that most employees working at these firms experience wage increases. One study found that young college-educated workers, whether foreign- or native-born, experience a 4 to 5 percent wage increase at firms with H-1B visa workers, while young, non-college-educated workers experience a 3 percent wage increase. Moreover, this study found no adverse effect on the employment of native-born workers at the firms. Critics of the H-1B program ignore the shortage of qualified high-caliber workers in America due to the poor quality of the U.S. educational system. H-1B opponents assume that a worker is a worker and that companies can hire an American if they need someone. At the signing ceremony for Trump’s proclamation, Commerce Secretary Howard Lutnick made this point: “If you’re going to train somebody, you’re going to train one of the recent graduates from one of the great universities across our land. Train Americans, stop bringing in people that take our jobs.” Ah, if only it were that simple. 

Compared to other fields, few Americans earn STEM degrees, and many who attempt them don’t finish. In fact, the Department of Education reports that only 41 percent of students who started STEM majors in college in 2009 earned a STEM degree. Part of the reason is likely inadequate high school preparation. By 2016, more high school students in California took ceramics than computer science. Additionally, 15-year-old U.S. students ranked 28th out of 37 OECD countries in math. More recently, the latest scores from the National Assessment of Educational Progress (NAEP)—also known as the “Nation’s Scorecard”—show that only 55 percent of twelfth-graders achieved “basic” proficiency in math.  

As a result, America simply isn’t turning out enough STEM graduates to fill the expected demand. According to the Bureau of Labor Statistics, employment in STEM fields is expected to grow more than double that of non-STEM occupations by 2029. This shortage of homegrown talent is why 45 percent of U.S. STEM employees with a doctorate are foreign-born. 

Even if we could wave a magic wand and improve education—a highly dubious proposition—employers wouldn’t realize the benefits for another two decades, though they need qualified workers now. 

But there is one more factor: The United States does not have a monopoly on aptitude, and workers with high aptitude are, on average, more valuable to employers than workers with less ability. Given the world’s population relative to America’s, the sheer volume of talent outside the United States is larger than inside it. If the president is truly worried about some U.S. companies hiring skilled foreign workers when they could be hiring skilled Americans, a better solution would be for Congress to allow the U.S. Citizenship and Immigration Service to auction off the 85,000 H-1B visa slots available each year to the highest bidders. Organizations needing them will bid up the price and win the auctions. In contrast, organizations that can find skilled American workers to hire for less than the auction price, plus salary and benefits for a foreign worker, will do that instead. To make the process fairer for startups and young firms, as well as for non-profits and universities, Congress could establish two auctions: one for firms under five years old and one for firms five or more years old. It could also establish auctions based on firm size, revenues, or category of organization (non-profit, university, etc.) to ensure a level playing field for competitors.  

It’s time for an honest debate. We can turn inward and protect a relatively small number of American workers, weakening the nation. Alternatively, we can allow U.S. employers to recruit a modest number of the best and brightest from around the world, yielding a more innovative and stronger nation. 

The post Trump’s H-1B Visa Plan Will Backfire appeared first on Washington Monthly.