As they took control of both chambers of Congress and the White House in 2025, Republicans faced a dilemma. They wanted to extend the tax cuts enacted during Donald Trump’s first term, a central priority of both the president and the party’s corporate and donor base. But because the tax extensions would blow a multi-trillion-dollar hole in the ten-year deficit projection, they risked losing the votes of fiscal hawks inside their caucus. 

So, Republicans went hunting for “pay-fors” to lessen the deficit damage. They axed tax credits for EVs and clean energy and decimated funding for Medicaid and SNAP. But in addition to these well-publicized cuts, they radically reduced federal student loan subsidies, including those for graduate students.  

Of course, they didn’t say out loud that they were reducing support for graduate education to finance tax cuts to the wealthy and corporations. Instead, they and conservative think tanks argued for the cuts on other grounds. First, invoking the so-called Bennett Hypothesis—named after the former Education Secretary, William J. Bennett, who articulated the theory—they claimed that federal student aid enables colleges to raise tuition, and that cutting federal funding will therefore force tuition prices down. Second, channeling arguments made by pronatalists at places like the Heritage Foundation, they said that young people, especially women, spend too long in graduate school, delaying marriage and childbearing, and that shrinking higher-education subsidies will boost the fertility rate. 

These arguments point in opposite directions. The first claims that cutting federal loan support will make graduate education cheaper and therefore easier to earn, the other that those cuts will make grad school harder to pursue. Regardless, both converge on the same policy outcome: less federal money for graduate education, more for tax cuts.  

The One Big Beautiful Bill Act (OBBBA), which passed in July, reduces federal higher education spending by roughly $284 billion over a decade, according to the Congressional Budget Office, largely by tightening graduate student lending. It eliminates the Graduate PLUS program, which had allowed students to borrow up to the full cost of attendance for graduate degrees. Instead, the legislation limits future loan amounts based on the type of graduate program: $50,000 per year and $200,000 total for “professional” degrees, $20,500 per year and $100,000 total for all others.  

To avoid a political fight about which degrees count as “professional,” lawmakers added a snippet of ambiguous language from an otherwise unrelated regulation. They directed the Department of Education to clarify the final definitions based on it. In November, a committee empaneled by the department released those definitions as a first step in writing the regulations that will implement the new law. Medicine, dentistry, pharmacy, veterinary medicine, optometry, osteopathic medicine, podiatry, chiropractic, theology, law, and clinical psychology were deemed “professional” and eligible for higher federal loan limits. Nursing, teaching, social work, physical therapy, physician assistant programs, and audiology were not. 

Such regulatory notices usually fly under the public radar, but this one hit a nerve. Roughly four million nurses and more than two million social workers, including teachers and therapists, read the rule the same way: as a declaration that their work does not count as a profession. Their unions and trade associations protested. A prairie fire of anger and ridicule spread on social media. National media outlets covered the controversy. Even The Onion weighed in (“White House Reclassifies Nursing as a Hobby”). 

“None of us anticipated the offense that would be taken by the term ‘professional,’” a member of the department’s rulemaking committee told me. In retrospect, however, it’s not hard to understand the anger. Nursing and social work are overwhelmingly female professions already facing shortages, burnout, and stagnant pay. Getting a raise in these fields often requires a master’s degree, and the Trump administration was putting up roadblocks. Nurses already absorb abuse from hospital administrators and arrogant physicians while doing the unglamorous work of keeping patients alive. To then be downgraded—symbolically and financially—by the federal government was seen as disrespect. “It’s just a smack in the face,” said Susan Pratt, a nurse who is also president of a union representing nurses in Toledo, Ohio. “During the pandemic, the nurses showed up, and this is the thanks we get,” she told the AP.

Public outrage has been so intense that, in December, a bipartisan group of lawmakers asked the Education Department to restore nursing to the list of professional degrees.  

If the new federal graduate school loan regime is proving to be a disaster politically, it is not much better as policy. Robert Kelchen, a higher education policy professor at the University of Tennessee Knoxville (and data editor of the Washington Monthly college rankings), notes that loan limits only make sense if they follow outcomes—either to prevent students from taking on unsustainable debt or to discourage enrollment in programs with poor repayment prospects. By those metrics, nursing stands out for the opposite reason. It has strong debt-to-earnings ratios, strict licensing requirements, sustained labor-market demand, and a clear social return. If taxpayers are going to subsidize any graduate profession, nursing is among the safest investments. 

Capping graduate degree loans at $20,500 annually might sound reasonable to conservative lawmakers trying to fill a self-created budget hole, but it makes less sense if you’re a working nurse or physical therapist entering an expensive, clinically intensive program in a high-cost area without family wealth. Pair that cap with the elimination of Grad PLUS and a tighter income-driven repayment regime, and the math will not work for many prospective nurses and teachers. Some will never apply. Others will turn to private loans. Many will walk away. 

Of course, there are universities charging outrageously high tuition for certain graduate degrees that don’t lead to commensurately high incomes; some of those programs were created precisely to take advantage of unlimited federal graduate student loans. As the Washington Monthly reported in 2024, the worst offenders are often elite schools. For instance, Northwestern University offers a master’s in counseling that saddles average graduates with $153,657 in debt, who go on to earn only $56,897 on average annually five years later. (By comparison, many regional public universities offer the same degree at a fraction of the cost, and their graduates earn more.) Lawmakers could have protected grad students from such predatory programs—and taxpayers from picking up the tab when those students can’t repay the loans—by directing the Education Department to limit graduate loans based on the average earnings of specific degrees or programs. Instead, they rushed through poorly worded legislation that blew up on the launchpad.  

Nor do their intellectual justifications hold up. The Bennett Hypothesis that higher federal student financial aid leads to higher tuition has been heavily studied, and evidence for it is mixed at best. Meanwhile, the pronatalist argument that reducing graduate education loan support will boost the birth rate isn’t looking so good, considering the damage likely to be done to the careers of many who deliver babies for a living.  

In one respect, however, the GOP’s gutting support for graduate education has been a success: it helped deliver the votes for nearly $5 trillion in tax breaks to corporations and the wealthy (and massive federal deficits to boot). Tens of millions of nurses, teachers, social workers, and their families are likely to remember that in the midterms. 

The post The GOP War on Nurses appeared first on Washington Monthly.

The infamous Project 2025 document contains 900-plus pages of ideas for strangling the federal government, many of which Donald Trump’s administration has already implemented. But one huge policy area, accounting for roughly one-quarter of all federal spending, is barely mentioned: Social Security. 

Perhaps that’s because its Heritage Foundation authors knew that Social Security is one of the waning policy points on which the right and left still agree. In 2024, 77 percent of Republicans and 83 percent of Democrats said Social Security benefits should not be reduced in any way. 

Yet how to avoid this is likely to be a major issue in the next presidential election. Already, Social Security’s mounting negative cash flow is adding significantly to the federal government’s overall deficits and need to borrow money from the public but worse is yet to come. In June, the Social Security Administration (SSA) projected that the system’s main trust fund, responsible for financing retirement benefits, will run out of money entirely in little more than seven years, which under current law will force steep, across-the-board benefit cuts. 

Since the SSA’s June forecast, Republican policies have worsened the fiscal outlook for Social Security. Contrary to Trump’s claim that immigrants threaten the program, his clampdown on immigration will cost the trust funds. In 2022, undocumented immigrants contributed an estimated $25.7 billion toward Social Security, according to the Center on Budget and Policy Priorities, while typically collecting no benefits. And then there’s the One Big Beautiful Bill Act, passed by the Republicans in Congress and signed by Trump in July. That bill drains an additional $168 billion in revenue from the main Social Security trust fund by reducing the amount of federal income taxes that affluent Social Security recipients pay on their benefits. Because of this loss of revenue, the nonpartisan Committee for a Responsible Federal Budget estimates, future benefits will have to be cut even more than was already in the cards—to a full 24 percent. This amounts to benefit cuts of about $18,100 for a typical dual-earning couple retiring at the start of 2033. Still deeper cuts will be needed in the future. “Policymakers pledging not to touch Social Security are implicitly endorsing these deep benefit cuts,” the committee concluded in its report.

Despite these Republican policy mistakes and the fiscal challenge created by the anomalously large Baby Boom generation, Social Security’s widening cash flow deficits could be closed, at least on paper, simply by increasing the regressive payroll taxes that currently fund the program. According to a 2024 estimate by the Congressional Budget Office, raising payroll taxes from 12.4 to 16.7 percent would be enough to restore the system to long-term solvency. But among the many other downsides to this option, a tax hike of that size on American workers is hardly likely to attract new voters to the Democratic column. 

Fortunately, there is a better way. The fiscal outlook for Social Security may be precarious but it also presents a huge opportunity. It’s possible to save Social Security without raising taxes on the working class, while also providing the system with the revenues it needs in ways that will make Americans healthier and more productive. Better yet, policy changes are available that would significantly improve benefits for middle- and low-income Americans of all generations without compromising the trust fund’s long-term solvency. Whichever party takes advantage of these opportunities first is likely to enjoy enduring political rewards. 

Debate over the future of Social Security should start by grappling with the huge growth of inequality among the elderly. Back when President Franklin D. Roosevelt signed the Social Security Act into law in 1935, older Americans were generally far worse off than their middle-aged children, but there was very little inequality among the elderly themselves: For nearly everyone, old age was synonymous with need. 

But today, while inequality has increased within all groups, it has done so especially among older Americans. Part of the explanation is the increasing size and relative wealth of America’s professional classes. For decades, college-educated, upwardly mobile Americans have typically enjoyed a widening income premium over other members of their own generation. And after they retire they also typically receive far larger Social Security benefits while also drawing on far greater assets in the form of tax-subsidized 401(k)s and other pension plans. Adding to the affluence of a substantial share of today’s retirees has been the great inflation in property values over the past generation, which leaves many with substantial windfalls in their home equity. Roughly a fifth of today’s older population belongs to this group. 

But for America’s low- and middle-income workers, the picture is far different. For them, stagnant income and downward mobility have too often been the norm since the 1970s—especially for those who lack a college education—and the older they get, the more financial insecurity they experience.

One measure of the financial precarity facing so many Americans as they age comes from the Federal Reserve. According to its last Survey of Consumer Finances, in 2022, 43 percent of households on the threshold of retirement (ages 55 to 64) had no retirement savings. Among those 65 and over, more than half had none. 

Who are these people? Many are downwardly mobile working-class Americans who lost their jobs and their pensions as America’s financial elites shuttered factories and busted unions during the past 40 years. Others saved up tidy nest eggs but lost them when medical debt forced them into bankruptcy, or when unchecked corporate monopolies snuffed out their family farms and small businesses. Still others borrowed heavily to go to college or to vocational school but could never break free of the compounding encumbrance of student debt. Still more were undone by the repeal of usury laws and the vast spread of credit card delinquency, exploding mortgages, payday lenders, and legalized gambling that wiped out the balance sheets of millions of American households following the deregulation of finance that began in the 1970s. 

According to surveys, almost half of all Americans now describe themselves as living “paycheck to paycheck.” According to a study by Bank of America of its own customers, the percentage living paycheck to paycheck tends to rise with age, peaking at nearly 30 percent among the bank’s Baby Boomer customers. 

And so we have come to a moment in which deep dependence on Social Security in old age is widespread and likely to become more so. People over 50 used to make up 11 percent of the homeless population in the early 1990s; now they account for almost 50 percent—making America’s elderly the fastest-growing segment of its unsheltered population. Today, 27 percent of current beneficiaries rely on their Social Security benefits for more than 90 percent of their monthly income. 

Even among those who are fortunate enough to have retirement savings, their nest eggs are often nowhere near sufficient to finance a secure retirement. In 2025, Vanguard, one of the most popular 401(k) plan providers, found that among its clients approaching retirement age fully half had account balances of less than $95,000. How long will a nest egg of that size last? Suppose you retire at age 65 and begin receiving this year’s average Social Security benefit of $1,800 a month. Suppose, too, that you hold your total annual spending—including rent or a mortgage with property taxes and rapidly rising premiums for Medicare coverage plus other routine costs—down to an inflation-adjusted $50,000 a year. Assuming a 3 percent rate of inflation and a 6 percent return on your investments, you will have no savings left by age 85. 

And this is assuming that you won’t be among the 70 percent of Americans who wind up needing some form of long-term nursing home care—a financial sword of Damocles not covered by Medicare. This is also assuming that Medicare itself will be there for you. On our current course, Medicare’s Hospital Insurance Fund will be running a deficit by 2027 and completely exhausted by 2033—thus forcing either an automatic 11 percent cut in Medicare spending or an infusion of new tax revenue. “The precarity of people that have plans is much greater than I think most people realize, and also isn’t really reflected in the expert debate,” says David John, a senior strategic policy adviser at AARP’s Public Policy Institute.

In debating the future of Social Security, it’s also important to learn from the failed reforms of the past. The last time the country faced a Social Security crisis was in 1983, when, thanks to a deep recession and a long history of paying out more in benefits than participants had contributed in taxes, the system was similarly faced with impending insolvency. The bailout deal struck between President Ronald Reagan and Democratic House Speaker Tip O’Neal was widely described at the time by Washington’s power elite as an “artful” compromise between raising taxes and cutting benefits. But while it was an impressive example of bipartisan cooperation by today’s standards, it turned out to be a cynical bargain that failed to ensure that the program would remain solvent beyond the retirement of the first-wave Baby Boomers.

The deal cut the benefits of Americans who were of working age at the time and subsequent generations primarily by raising their retirement age. And it raised taxes—mostly on the same people—by dramatically hiking regressive payroll tax rates and requiring an ever-rising percentage of future retirees to pay income taxes on their benefits. 

A first-order effect of this was to significantly reduce the “money worth” of the deal Social Security offered to successive generations. For example, according to the SSA, a typically one-income couple retiring in 1985 received back lifetime benefits worth 5.4 times more than the present value of the taxes they paid into the system. But thanks mostly to the tax increases and benefit cuts put in place by the 1983 deal, a similar couple retiring in 2014 was entitled to only about three times what they had paid in.

The architects of the 1983 deal insisted that this was the necessary price of saving the system. By cutting benefits and raising taxes, they said, the system would run cash surpluses for many years that would be used to build up the system’s trust fund. In that way, they promised, Social Security could “pre-fund” the cost of the Baby Boomers’ retirement as well as all younger cohorts in the pipeline. 

But this turned out to be a hollow promise. Social Security’s cash flow surpluses weren’t invested in ways that made the next generation more productive and thereby better able to sustain the cost of the system. Instead, they wound up effectively being used to underwrite other government operations, starting with things like the unfunded cost of the Reagan tax cuts and military buildup and the ever-rising cost of paying interest on the national debt. 

For a long time, Social Security’s positive cash flow helped mask the government’s overall increase in debt. Every dollar the Treasury collected from Social Security and used to fund ongoing government activities was supposed to be paid back. But per budget rules, this fact wasn’t accounted for in official measures of the deficit, so the deficits looked much smaller than they actually were, which arguably led to still more borrowing. 

There was a moment late in Bill Clinton’s administration when the country briefly debated whether to put a stop to this pretense. At the time, the government as a whole was running a cash flow surplus, and a debate broke out over what to do with the money. Clinton, in his 1999 State of the Union Address, proposed using roughly two-thirds of the future projected surpluses to shore up the finances of the Social Security trust fund. He also proposed allowing the trustees to earn higher returns by investing at least part of the new money in financial markets, much as state and local pension funds do, rather than just in Treasury notes. And he called for using 11 percent of the projected future surpluses to establish universal savings accounts that would have endowed every American with a vehicle for saving for retirement and other foreseeable needs. 

During the 2000 presidential election, Democratic candidate Al Gore took up these proposals and tried to explain them with an analogy to a “lockbox,” which he said could safely hold money set aside to pay for future benefits. But Gore struggled to get across the urgency and seriousness of the proposal, despite saying “lockbox” seven times in the first debate. A mocking Saturday Night Live skit depicted Gore (played by Darrell Hammond) as explaining, “Now one of the keys to the lockbox would be kept by the president, the other key would be sealed in a small magnetic container and placed under the bumper of the Senate majority leader’s car.”

Gore, of course, lost the election, and the incoming president, George W. Bush, used the projected surpluses as a pretext for enacting giant tax cuts and borrowing to fund the wars in Iraq and Afghanistan. In 2011, Obama, against the wishes of some in his own party, floated a “grand bargain” whereby Democrats would have gone along with a scaling back of Social Security cost-of-living adjustments in return for Republicans agreeing to raise taxes on high earners to reduce the deficit. But Republicans rejected the offer, and so both the national debt and the unfunded liabilities of Social Security’s main trust fund continued to mount. The federal government subsequently continued to borrow heavily to pay for Trump’s first round of massive tax cuts during his first term, and then for the massive stimulus spending enacted under Biden to overcome the economic effects of the COVID-19 crisis. 

Then, finally, the screw turned. The reckoning began in 2021 when a critical mass of Baby Boomers began drawing on the system. Social Security’s cash flow surplus turned into a deficit that year as the system started paying out far more money than it was taking in. By now, that deficit has grown so large that the last of the Treasury notes remaining in its main trust fund will be gone by 2033, rendering the fund insolvent and triggering massive automatic benefit cuts. 

Under that scenario, most middle-class Americans born in the mid-1950s can expect, according to estimates by the Urban Institute, to get back little more in retirement benefits than they paid in during their working years. Gen Xers and Millennials will also be affected, but it’s even worse for younger Americans. For those born between 2001 and 2010, median net lifetime taxes paid into the system will far exceed median net lifetime benefits, according to estimates by the Urban Institute. The median white member of Generation Z is projected to lose more than $200,000 on their investment. The median Black or Hispanic Gen-Zer can expect, under current law, to lose more than $86,000.

The lockbox is empty. 

What if, this time, voters were presented with an opportunity for a truly artful compromise, one that preserved the system’s long-term solvency while making both its taxes and benefits fairer and consistent with the common good? If Democrats want to put forth winning strategies in 2026 and 2028, they should be the ones championing such a course—all while keeping the go-broke date front and center and spotlighting the ways in which Republican policies have added to the crisis. 

A key challenge to any reform will be the tension built into the system between social adequacy and individual equity. From the beginning, Social Security has paid the least to those who need benefits most, and most to those who need benefits least. This pattern reflects the original political logic behind the program. FDR was keen for people to experience Social Security as a form of insurance rather than as a form of welfare. That entailed preserving the illusion that each participant paid for their own benefits, which in turn meant that people’s benefits had to at least partially reflect their previous tax contributions.

It’s a point that still needs to be weighed heavily. Certainly, it would be political folly to go straight up against today’s upper-middle-class retirees, especially when most are already receiving a far lower rate of return from Social Security than they could have earned through very safe, private investments. But there are still many measures that Democrats could take to make Social Security better serve the far greater numbers of middle-class and low-income Americans who face very real threats to their security in old age. 

Starting on the revenue side, one step would be to raise the cap on the amount of an individual’s wage income that can be taxed for Social Security. It’s currently capped at $176,100, and rises gradually under current law. But raising it more quickly could go a long way in closing Social Security’s long-term deficit. For example, just increasing the taxable maximum to $291,000 by 2029 could reduce roughly 19 percent of the trust funds’ shortfall over the next 75 years, while affecting only roughly 6 percent of earners. Such a measure would also help to redress the fact that as the rich have grown richer, more and more of their income has escaped Social Security taxes.

Another progressive reform would be to broaden Social Security’s revenue base to include financial returns, which is how most rich people make most of their money. This could be accomplished by requiring high-income filers to pay Social Security taxes on interest, dividends, royalties, capital gains, and rental income. Such taxes would force the well-to-do to bear a fairer share of the cost of financing an aging society. And, of course, there’s always the option of reversing the massive tax cuts Trump has passed for the wealthiest of the wealthy while preserving the more modest reductions his bills gave to lower- and middle-income groups. 

On the benefit side, Social Security could be made more progressive by modifying benefit formulas so that they offer higher returns to low- and middle-income workers. Cost-of-living adjustments, for example, could be recalculated to give more weight to the out-of-pocket medical and other expenses typically incurred by low- and middle-income elders. Another idea in this vein: Require fewer years of formal employment to qualify for Social Security’s minimum benefit and make the minimum higher. Senator Bernie Sanders and Democrats proposed a bill in 2023, the Social Security Expansion Act, that took up many of these tax and benefit measures. It was projected to balance the program’s budget over the next 75 years but died in committee. 

In short, there are a lot of measures Democrats could propose to save the program while also making both its financing and benefit structure fairer. But there’s also room to go beyond this by expanding the system’s tax base into new realms. These could include the use of carbon taxes, digital data taxes, or taxes on pollutants like the plastics we know are living rent-free in our brains (literally). Revenues raised from such sources could not only finance an equitable expansion of Social Security but also help build true abundance and wellness for the next generation. Wouldn’t it be swell if we saved Social Security by means that discourage socially destructive business practices while also preserving our health and that of the planet?

The idea of today’s Republican Party—aligned with leaders across both oil and tech—getting on board with any of the above may seem laughable. But if Trump plans to keep his “unbreakable commitment to protecting and strengthening” Social Security, he will have to do something credible to keep the trust funds solvent and assure his base that the checks will keep flowing. 

Lawmakers should also take aim at the policy failures around private “defined contribution” pensions and other retirement saving vehicles, which have enjoyed massive tax subsidies. Just between 2022 and 2026, they will cost the U.S. Treasury over $2.1 trillion in forgone revenue. But most of the benefits of these subsidies go to higher-income workers while millions of middle- and lower-income Americans received little or no benefit at all because they a) did not have access to a 401(k) through their employer, b) didn’t have enough income to put into one, or c) both. 

Going forward, we need universal pension plans that target their subsidies to those who most need help in building wealth rather than favoring those who already have wealth. We also need mandatory individual savings plans, like those originally proposed by Clinton, that will help less well-off members of the next generation to safely take advantage of the miracle that is compound interest. A provision of Trump’s “Big Beautiful Bill” endows newborn American children with a $1,000 “baby bond.” Though the provision is limited it derives from an idea originally championed by Democrats for providing ordinary Americans with wealth-producing assets. If properly implemented, it could evolve into a safe and universal savings vehicle that benefits all Americans throughout their lives, and that could serve as an important supplement to Social Security in old age. 

Ultimately, Democrats need an approach that goes beyond any set of purely programmatic fixes. They need to be able to tell voters that they are addressing the root causes behind why so many Americans now face insecurity in old age—many of them traceable directly to policy mistakes that both parties, but especially Republicans, made over the last 40-some years. These include a massive retreat from economic and financial regulation that wiped out the net worth of millions of Americans by enabling the spread of predatory lending in housing and education, and of predatory pricing in health care and pharmaceuticals. They include failed “free trade” policies that hollowed out the country’s industrial base and deeply eroded the bargaining power of most blue-collar workers. And they include the failure to make sufficient public investments in core industries and essential infrastructure that are the building blocks of the American Dream. Democrats can reclaim their party’s identity as a champion of the working class by taking up the cause of Social Security in its broadest and original New Deal meaning, which was to build a political economy by and for the people.

The post How Democrats Can Save Social Security—and Win Elections appeared first on Washington Monthly.

For over 30 years, a tiny federal program called SNAP-Ed quietly made America healthier. Educators led cooking, fitness, and gardening classes, advised families on tight budgets about shopping and meal prep, and showed parents how to decode nutrition labels. The program helped more than 1.8 million participants in 2022 alone, and millions more over the years, to stretch what they had and eat better. In Conway County, Arkansas, SNAP-Ed created a junior high school garden that produced fresh fruits and veggies. Across Southwestern Colorado, Indigenous youth and elders participated in traditional foods workshops. And in New Orleans, seniors learned to cook “Soul Food with a Twist”—healthier takes on their favorite recipes.  

Founded to increase the likelihood that those on SNAP (formerly food stamps but still run by the U.S. Department of Agriculture) make healthy choices with limited funds, SNAP-Ed has cost the USDA less than $10 billion over its lifetime. Last year, it was allocated around $515 million, versus the over $14 billion the food industry spends annually on advertising (more than 80 percent of which promotes fast food, sugary drinks, candy, and unhealthy snacks). 

And it worked. A 2024 report of SNAP-Ed impacts across 23 states found that the individuals it engaged across all age groups increased their fruit, vegetable, and water intake, exercised more regularly, cut down on sugary drinks, and served more healthy meals at home. Further, while course participants may have numbered in the low multi-millions nationally, the report found that SNAP-Ed reached 10.6 million Americans through policy and systems changes that made healthy eating more widely available—worthy endeavors like getting local produce into school cafeterias—and garnered over 260 million views through social media marketing. A 2023 Illinois impact report estimated the program prevented more than 5,000 cases of obesity and 570 cases of food insecurity statewide in a single year, returning as much as $9.50 for every dollar spent by lowering future healthcare costs.  

Nonetheless, Congressional Republicans defunded SNAP-Ed in their One Big Beautiful Bill Act (OBBBA), which President Donald Trump signed with great fanfare on July 4. SNAP, which provides benefits to help low-income Americans purchase food, also faces cuts and new work requirements that critics say will be a nightmare to administer, leading to a big drop-off in recipients. By November 1, the states must begin enforcing the changes, which are expected to reduce or eliminate benefits for around one in 10 SNAP recipients.

SNAP-Ed, titled for its role as SNAP’s petite educational arm, also administered by the USDA, allocated funds to states that tapped local organizations to spend them. And so, on September 30, land-grant universities, Tribal agencies, and nonprofits across the country halted their SNAP-Ed operations, while others are eking out their funding to wind down over the coming months. According to Jean Butel, a community nutrition specialist and former SNAP-Ed director with the University of Hawaiʻi at Mānoa, school garden initiatives supported by their SNAP-Ed program have been paused. In Ohio, Pat Bebo, a SNAP-Ed administrator with Ohio State University Extension (the only SNAP-Ed implementer in the Buckeye State), said that although they plan to stretch their program funds until November 30, they’ve already lost more than half their workforce of around 130.  

“People have found positions…they had to do what they had to do,” she said. All told, around 2,000 nutrition educators nationwide—frequently hired from within the communities they served—are facing unemployment. Also lost will be their decades-long relationships with over 30,000 partner organizations, including schools, nonprofits, and food banks: the network of community touchpoints that made SNAP-Ed a “pillar” of America’s public health infrastructure, in the words of the Journal of Nutrition Education and Behavior.  

Republicans said they eliminated SNAP-Ed because it was ineffective and redundant—claims that proponents, and impact reports, dispute. “Hawaiʻi does not have a nutrition education program with the scale or infrastructure to fill the void SNAP-Ed has left behind,” Butel says.  

After the University of Wisconsin announced it laid off 91 employees who ran FoodWIse, a statewide SNAP-Ed program, due to the cuts, U.S. Senator Tammy Baldwin, Governor Tony Evers, along with U.S. Representatives Gwen Moore and Mark Pocan put out a statement lauding the program: “FoodWIse, and the dedicated staff behind it, have proven to be a good investment that helps tens of thousands of Wisconsinites stay well fed and live a healthy life…we hope Wisconsin’s Congressional Republicans who voted for this are prepared to answer to impacted families.” 

The end of SNAP-Ed exposes the chasm between the White House’s messaging and governance. Even as Health and Human Services Secretary Robert F. Kennedy Jr. voices concern about what Americans put in their bodies, the administration has dismantled SNAP-Ed, which helped low-income Americans eat better.  

Last month’s Make America Healthy Again (MAHA) Strategy Report from the White House iced the cake: proposing little regarding food system regulation and calling for “more research” from agencies whose research the Trump administration has gutted. While it vaguely tasks the USDA with “exploring options” to improve its Expanded Food and Nutrition Education Program, a smaller effort with a more limited purview, the department’s largest, broadest nutrition education initiative, SNAP-Ed, is on its way out. 

SNAP-Ed’s demise is ironic, as the administration’s MAHA efforts are mostly about personal responsibility. As Robert F. Kennedy Jr. and his bevy of be-healthy-buy-what-I’m-selling influencers rail against the corporate food ecosystem, Republicans are targeting individuals. “If someone wants to buy junk food on their own dime, that’s up to them,” reads a press release from Representative Josh Brecheen, an Oklahoma Republican, who reintroduced a bill that would ban soft drinks, candy, ice cream, and prepared desserts from eligible SNAP purchases. “What we’re saying is, don’t ask the taxpayer to pay for it and then also expect the taxpayer to pick up the tab for the resulting health consequences.” 

Framing eating healthy solely as personal responsibility or individual choice allows legislators to shirk the responsibility of fixing America’s broken food system, which heavily subsidizes unhealthy products while doing little to put more nutritious food on Americans’ tables. In the U.S., the cheapest, most heavily marketed, most widely available options are often the worst, resulting in a reality in which over 50 percent of the calories Americans consume come from ultra-processed foods. Among children, it’s over 60 percent.  

Moreover, the nation is famously rife with thousands of “food deserts,” low-income census tracts where residents must travel miles to grocery stores and have limited access to healthy foods. Rising alongside the deserts are “food swamps”: neighborhoods awash with unhealthy options like convenience stores and fast-food restaurants. Low-income, rural, non-white, and Tribal communities are more likely to live in a desert or a swamp, and lower-income individuals are at greater risk of heart disease, cancer, diabetes, and obesity than more affluent Americans.  

Even under these conditions, SNAP-Ed helped people make healthier choices. It encouraged individuals to buy frozen or canned fruits and vegetables if fresh ones weren’t available and educated them on practices like rinsing canned products to remove excess sodium.  

In Hawaii, where 90 percent of food comes from off-island, driving prices up and self-sufficiency down, Butel said SNAP-Ed funding supported sessions showing families how to use SNAP benefits to buy seedlings and grow their own produce. “Without SNAP-Ed, those opportunities are disappearing,” she says. “The long-term risk is that we’ll see greater disparities in nutrition and chronic disease outcomes—especially among the communities that have historically had the least access to healthy, affordable food.” 

This year, Ohio SNAP-Ed also debuted its Mobile Education Nutrition Unit (MENU), a teaching vehicle that would meet people where they shop and gather—particularly in rural communities, further from services and transportation—to provide classes, cooking demos, and food tastings. Now, the MENU, considered a “major asset” per federal guidance, will be sold.  

MAHA’s strategy report notes access and affordability challenges between communities and healthy options. It proposes eliminating zoning restrictions that prevent mobile grocery units and fast-tracking permitting for grocery stores in underserved areas. But it isn’t red tape creating food deserts. It’s chains offering cheaper options.  

In Minnesota, Patricia Olsen, the head of the University of Minnesota Extension’s Family, Health & Wellbeing department—which implemented SNAP-Ed—said their educators advertised for mobile food pantry distributions like the mobile grocers the MAHA report champions. “We worked hand-in-hand,” Olsen said, adding that she’s hearing from contacts in these units today that federal cuts to the Emergency Food Assistance Program, another USDA program that buys food from farmers and sends it to food banks, may mean less mobile distributions as banks across the state have less stock available. “Mobile options helped in those swamps or deserts,” she said. 

SNAP-Ed also helped low-income consumers wade through misinformation, misleading advertising, and confusing labeling. “Big Food is adept at contorting nutrition science to promote its products,” Dhruv Khullar wrote in the New Yorker. Vitamin Water is marketed as a health drink, even though it’s essentially sugar water. Yoplait’s “French-style” yogurt can claim “now with more fruit” because its recipe had little to begin with, and General Mills’ “Blueberry Pomegranate” cereal contains no blueberries or pomegranates.  

SNAP-Ed was a vehicle for valuable consumer information: it taught individuals to read nutrition labels, empowering them to cut through deceptive claims, and supported community initiatives that made locally grown, fresh foods more accessible.  

Choices are shaped by what’s available, what we know, and what we can afford—all of which are influenced by policy and profit, and little of which MAHA’s strategy proposes to change. Despite Kennedy’s make-America-healthy rhetoric, more of the onus will be placed on individual choice, and less money will be available to help individuals choose wisely.

The post SNAP-Ed’s Demise Exposes MAHA’s Hypocrisy appeared first on Washington Monthly.

Reliability is the buzzword in Republican energy policy today. While the White House and its allies tout ‘energy dominance,’ they engage in energy subtraction. MAGA supporters argue that America needs ‘secure’ or ‘reliable’ energy that operates “twenty-four hours a day, seven days a week, 365 days a year.” Energy Secretary Chris Wright blames Biden’s “radical green agenda” for causing “power outages” and “threatening America’s energy security.” Representative Randy Weber, a Texas Republican and vice chairman of Energy and Commerce, warns of an “energy crisis” unless we quickly develop “dispatchable, dependable, reliable energy.” Additionally, Trump often makes unfounded claims about what he calls “the worst form of energy,” wind.  

These claims conflict with decades of grid research. Energy Innovation, a nonpartisan think tank, conducted a meta-analysis of 11 clean energy policy studies and found that renewables, paired with battery storage and expanded transmission, can provide a reliable grid with 80 percent clean electricity. The Department of Energy’s National Renewable Energy Laboratory (NREL) reached the same conclusion in a two-decade review of renewables’ impact on grid reliability. A grid with 80 percent or more of clean power can maintain reliability through greater flexibility, a diverse mix of renewables with storage and clean firm sources like nuclear and geothermal, full use of frequency-stabilizing technology, and expanded transmission. (Alas, the Department of Energy is laying off hundreds of NREL staff.)  

Attacks on renewables are an attempt to reframe the coming affordability crisis as a reliability crisis. The gutting of renewable subsidies in the One Big Beautiful Bill Act ensures that less energy gets connected to the grid at the exact moment that energy demand is rising due to the rapid buildout of AI datacenters. By kneecapping wind and solar production, an ideologically driven energy agenda guarantees higher energy prices. Americans are already starting to feel the pinch.  

The Worst Forms of Energy? 

Not only are wind and solar the fastest and cheapest energy sources to deploy, accounting for over 92 percent of all capacity additions to the grid in 2025, but they can also make the grid more reliable. In recent years, the Texas grid has added nearly 1,000 percent more solar and 700 percent more battery storage, lowering its blackout risk from 12 percent to just .03 percent. 

In other words, renewables are naturally strengthening the grid just as the Trump administration is waging an all-out war against them. This month, Interior Secretary Doug Burgum issued an order that effectively bans wind and solar projects on federal lands, under the specious reasoning that “gargantuan, unreliable, intermittent energy projects hold America back from achieving U.S. Energy Dominance.” 

With electricity demand rising for the first time in decades, the administration and its allies deliberately spread a misleading narrative about grid reliability. They want to shift the blame for rising energy costs from their own disastrous policies to renewables. 

But a modern, smart grid with diverse clean energy can provide everyone with reliable, affordable, and abundant power.  

How Grid Reliability Actually Works 

The real obstacle to clean energy isn’t technology—it’s politics. Increasing solar and wind penetration and improving grid reliability can, and often do, go hand in hand, but only if we let them. To understand why, look at how the grid works. 

The grid is a vast, interconnected network that spans the continent. Power plants (coal, solar, nuclear, etc.) generate electricity. High-voltage transmission lines—the interstate highways of electrons—carry this energy over long distances. Local substations and transformers convert this electricity to safe voltages and distribute it to your home via local utility lines.  

Unlike other industries, electricity cannot be stored. Supply must always match demand across the grid. Grid operators constantly balance electricity production to respond to fluctuations in daily demand and ensure safe operations. If grid voltage or frequency drops too low or spikes too quickly, the system can fail—sometimes suddenly and dramatically, as in the Northeast blackout of 2003, which left over 50 million people without power in Canada and the U.S.  

No grid operator can predict when you plug in your phone, run your dishwasher, or turn up your speakers. But on a system-wide level, consumption patterns emerge—from spikes in the early morning when people wake up to seasonal trends like midsummer heatwaves when air conditioners are blasting.  

Renewables fit neatly into this system. Solar and wind power show similar predictable patterns. Solar peaks during the afternoon and summer, while wind increases at night and blows more consistently in winter. The variability also decreases as renewables grow, helping to smooth out supply fluctuations.  

U.S. grids already demonstrate this capacity. Last year, renewables supplied 100 percent of California’s electricity demand for up to 10 hours a day over nearly 100 days from late winter to early summer. Texas produces more energy from wind and solar than California, with over 40 percent of net utility-scale electricity coming from renewables in the past year. Combined with battery storage, both Texas and California have been able to store excess solar power generated during the day and discharge it when the sun sets and lights turn on. Texas broke a record last month by discharging over 7,000 megawatts of electricity from large-scale batteries, enough to power 1.4 million homes. 

The technology to run a reliable, high-renewables grid is already in some of the country’s largest and most complex energy markets. The only barrier is political. 

Renewables Are Reliable 

True grid reliability—the ability to supply the right amount of power when needed—depends on flexibility, coordination, and planning. Conservatives often equate reliability only with nonintermittent energy sources because it’s an easy talking point (What if the sun doesn’t shine?) that favors always-on ‘baseload’ power fueled by coal.  

But baseload’s role shrinks as renewables scale. Since renewables don’t require fuel, their marginal cost for each additional kilowatt-hour is zero. Even the cheapest baseload power cannot compete with a solar farm on a sunny California afternoon. In fact, the Golden State produces more energy than it can use. Battery storage, increasingly cheap and widespread, absorbs that surplus and delivers it at peak demand. 

Where energy experts express concern about renewables and reliability, it’s less about intermittency and more about what they don’t supply: inertia and reactive power. These two features are vital for grid stability and are naturally provided by spinning coal or gas turbines. Their kinetic energy smooths out sudden frequency shifts, giving grid operators a buffer to respond. They also generate reactive power—the passive current that sustains the grid’s electric and magnetic fields, keeping voltage stable. 

By contrast, solar panels and wind turbines generate direct current that must be inverted into alternating current. That difference changes how they interact with the grid and creates new advantages. Modern electronic inverters can deliver fast frequency response far quicker than traditional turbines. And newer ‘smart’ inverters can now manage reactive power actively—some even let solar panels supply it at night.  

Meanwhile, retiring coal and gas plants don’t need to be scrapped; their turbines can be repurposed into synchronous condensers that provide inertia and reactive power without burning fuel, making them perfect complements to renewable-heavy grids.  

And when solar and wind fall short for longer stretches, a toolbox of solutions exists. From simple yet efficient pumped storage hydropower—pumping water uphill during low demand and releasing it through turbines when needed—to advanced 100-hour ‘iron-air’ batteries, long-duration energy storage technologies can cover days-long gaps in wind and solar output. Additionally, newer ‘clean firm’ technologies like molten-salt nuclear reactors and advanced geothermal can provide reliable, clean baseload and dispatchable power to keep the grid stable.  

Put together, these technologies prove the point: The U.S. can build a grid with 100 percent clean energy. But the administration would rather cling to 19^th-century energy sources.  

The MAGA Rearguard Action on Electricity Prices 

MAGA accusations—like many of their bugbears—are confessions. It is Trump and the GOP’s irrational energy agenda that is actively undermining the stability of the U.S. grid. 

A key to grid reliability is resource adequacy, which involves long-term planning to ensure supply meets growth. Yet, according to the Energy Department’s own (flawed) assessment, the U.S. will face a significant shortfall in electricity generation by 2030. The Department arrives at this conclusion—contradicting the assessments of grid operators and utilities—by largely ignoring the contributions of solar and wind projects. The Trump administration’s policies could bring about the DOE’s apocalyptic energy scenario.  

The One Big Beautiful Bill Act repeals tax credits for wind and solar, guaranteeing higher costs. Trump’s tariffs raise prices from solar panels to gas pipelines. His administrative agencies impose permitting roadblocks to end wind and solar expansion. A recent Interior Department order could effectively stop every American wind project by withholding Federal Aviation Administration permits for turbine height clearances. The move would strand $317 billion of investment and prevent 213 Gigawatts of wind energy from coming online. 

Critics who blame renewables for rising electricity prices ignore the real culprits—natural gas price volatility, uneconomic coal plants, and increasingly severe extreme weather. The Wall Street Journal editorial board, for example, claimed a 40 percent price increase in Texas over the past seven years was due to renewables. This charge confuses correlation with causation. Adjusted for inflation, Texas prices have remained stable, and while electricity costs have risen nationwide, Texas has seen smaller increases than most states. The economics of renewables are simply too good. 

Despite the president’s best efforts, the world is transitioning into the Age of Electricity. A clean, affordable, and reliable grid isn’t just possible. We’re building it. 

The post The Republicans’ Reliability Ruse  appeared first on Washington Monthly.

America could be on the cusp of an economic downturn, thanks to the self—defeating, destructive policies of president Donald Trump. Inflation is rising while the dollar is falling, and Trump’s just-passed One Big Beautiful Bill Act is projected to add a whopping $3.4 trillion to the federal deficit. Add to this the uncertainty caused by Trump’s tariffs and immigration policies, along with his threats to fire Federal Reserve Chairman Jerome Powell.  

The result, says economist Robert Shapiro, is that the United States economy has become dangerously unstable and vulnerable to financial shocks. Shapiro spoke with Senior Editor Anne Kim for the Washington Monthly podcast. This transcript has been edited for length and clarity.  

*** 

Anne Kim: 
You were on the show a few months back, actually at the start of the Trump administration. And in fact, you were one of our very first guests, so thank you very much for returning! 

I want to ask you first about your most recent piece for the Monthly, titled Trump’s Budget Could Break the Economy, which sounds pretty dire. And you conclude that “for once, the deficit hawks are right.” I take it that you haven’t always been one of those deficit hawks in the past, so what has changed in your mind? What is in the “One Big Beautiful Bill Act” that worries you so much? 

Robert Shapiro: 
Deficits that are equivalent to 7% of GDP—that’s what bothers me. For some perspective, in the 1990s, the deficit averaged about 2% of GDP. From 2000 to 2007, it was 1.2% of GDP. Through Trump’s first term, it averaged 3.6% of GDP.  

We are now at double the highest rate we’ve seen in a non—recessionary year in our history since World War II. The problem is that deficits have to be funded by somebody’s savings—they can’t be funded by consumption. American households save about 4 or 4.1% of their total disposable income. Businesses save through retained earnings, which is about 3% or 3.6%, I believe. All annual savings in the U.S. economy comes to 7.7% of GDP, and if the Treasury is claiming 7% of GDP, that means there’s nothing left for business investment, mortgages, car loans, or very little—and interest rates spike.  

However, we don’t only depend on domestic savings. We live in a global economy, and foreign governments and investors invest in our securities and our economy. 

Right now, foreign investors and governments own 33% of our national debt in Treasury securities. They also own 30% of all corporate debt and 27% of all U.S. stocks on all exchanges. So this is how dependent we are on foreign investors. 

It means we are totally dependent on foreign investors to fund business investment, car loans, mortgages, credit card debt—all debt. If those countries Trump is trying to punish with tariffs call his bluff, all they have to do is significantly slow their purchases. That will send interest rates across the board substantially higher, slowing the economy. 

And if they were to stop buying U.S. securities, the U.S. economy would crash because interest rates would skyrocket. That’s where we are. It’s just the numbers. This is not an interpretation. 

Anne Kim: 
Can you explain why slowing sales or an outright stoppage of Treasury securities purchases will cause interest rates to spike? My understanding is that have to pay interest when people borrow money from us. And when people aren’t buying, we have to continue raising interest rates in order to entice more people in with higher yields. Is that what’s going on? 

Robert Shapiro: 
Yes. That is exactly what will go on. If, say, China were to say, “We’re not going to buy any more Treasury securities this year,” then in order to attract other foreign investors, we’d have to raise interest rates to make it worth their while. 

There are other economic consequences —the value of the dollar, for instance. Normally when interest rates go up, the value of the dollar goes up. That has not happened. The value of the dollar has fallen 20% against the trade—weighted currency basket since Trump took office. 

That means foreign investors are losing interest—mainly in investing in corporate paper and stocks. We haven’t seen that fully in the stock market yet, though we did once. Japan, for about a week, said, “We’re not going to invest in the U.S.” in response to tariffs. The stock market lost thousands of points. 

This is not something you take risks with. We are talking about the fundamental stability of the U.S. economy. In the worst—case—but clearly plausible—scenario, we will have our third financial crisis in 18 years. 

Anne Kim: 
I also read somewhere that the interest on the debt alone is more than what we spend on the U.S. military or the federal share of Medicaid. So it’s already an enormous amount of the federal budget and only going to get even bigger. 

Robert Shapiro: 
We pay a trillion dollars a year in interest. And we find ourselves in a period where interest on the debt is compounding at a fast rate, because both the budget deficit and the interest are growing faster than the economy. 

Anne Kim: 
And this is interest going to countries like China, Japan, the UK—whoever holds our debt. 

Robert Shapiro: 
Yes. One—third of that interest is going abroad. We are sending over $300 billion in interest abroad—that’s more than our trade deficit with China. 

Trump doesn’t understand how economies operate. He only wants to hear affirmation of what he already believes. That’s why respected economists and finance people are saying nonsense on TV about tariffs and inflation. 

The only thing that will correct this policy is when the costs become a huge political issue.  

The U.S. has always depended on the kindness of strangers to finance investment and deficits. Maybe foreign countries will give us slack because they don’t want to take enormous losses if the U.S. economy crashes. But Trump is attacking those countries politically and economically, so if they don’t give us slack, we pay a terrible price. The first casualty of spiking interest rates is employment and income. 

So this is not simply about what the yield curve shows. I think everybody is kind of living right now in a fool’s paradise because the deficit hawks have always been wrong before. 

Anne Kim: 
You mentioned the Fed, and I want to ask about that in a bit. But let’s turn to other threats to the economy. We’ve talked about the deficit, we’ve talked about the falling dollar. When you were on the show a few months back, you also talked about some inflationary pressures posed by the tariffs, but also Trump’s immigration policies. So what is your thinking now, six months into the administration? 

Robert Shapiro: 
Well, we had seen inflation steadily move down—and it stopped moving down and has begun to move up. We have not seen the full brunt of the tariffs and inflation for two reasons. 

One is that lots of businesses stockpiled inventories. Half of our imports are inputs for U.S. manufacturing, and the other half are finished goods and services. You can’t stockpile services, but you can stockpile everything else. 

The other reason is that companies—large companies, particularly those dealing in big—ticket items like autos—have been reluctant to raise prices, despite high tariffs on cars and auto parts throughout this period. That’s because of TACO—that is, Trump always changing his mind—because he has gone back and forth so many times on tariffs. 

Companies like Ford or BMW that make cars in the U.S. have been reluctant to alienate customers by raising prices until they see the final lay of the land. But that’s running out. The inventories are running out. And it’s become clear that we will have substantially higher tariffs. 

Before Trump, we had an average 2% tariff rate. We are now at 15 to 20%. 

Anne Kim: 
Right. So for example, the latest so—called “agreement” with Japan sets a baseline of 15%, which the Trump administration is spinning as a victory. But the original tariff rate was a lot lower, right? 

Robert Shapiro: 
Yes, the original tariff rate with Japan was about 3%. So it’s five times higher. We haven’t seen the details yet. The largest—selling auto company in the United States is Toyota, and most of those cars are made in the U.S.—but with parts made in Mexico, Canada, Japan, and elsewhere. We don’t know yet what the new tariff rate will be on those parts. 

And this is not a “deal.” It’s an agreement to continue to negotiate. We haven’t seen the full impact yet. 

As for deportations—we are beginning to see increases in the cost of domestically produced fruits and vegetables. We’re also seeing this in construction. The largest number and share of undocumented immigrants is in construction. Second is personal services. Agriculture is actually fourth or fifth. Some people are being deported, but a lot of other people are staying away from jobs out of fear that ICE will find them. 

And it’s not just unauthorized immigrants—this campaign doesn’t distinguish between authorized and unauthorized. It arrests people based almost entirely on racial profiling. 

Anne Kim: 
He’s also converting authorized immigrants into unauthorized ones by revoking temporary protected status, for instance, and threatening to revoke visas for others. 

Robert Shapiro: 
Right. So we will continue to see some cost—push inflation from employment. Look, we’re still creating net new jobs—but at a significantly slower rate than last year. So we are seeing some impact on employment. 

There are very few things that virtually all economists agree on. The destructiveness of tariffs for both sides is one. It’s the only thing that Adam Smith and Karl Marx agreed on. The only thing that John Maynard Keynes and Friedrich Hayek agreed on. I certainly know that Adam Smith was a supporter of immigration. Why? Because growth equals increases in employment times productivity increases. That’s the formula. 

Smith, Keynes, Hayek, Marx, John Stuart Mill, Milton Friedman—all agreed on that. 

Anne Kim: 
But not Trump. So I want to ask—as if we didn’t have enough nails in this coffin—about one more, and that is the independence of the Fed and the threats to it. Rob, you were a senior official in the Clinton administration. You’ve dealt with presidents and Fed officials. But have you ever seen anything like the threats Trump has leveled against Chairman Powell? 

Robert Shapiro: 
No, we’ve never seen anything like this—except by Trump in his first term, when he attacked Janet Yellen, and later when he attacked Jerome Powell. 

Trump has this notion that if you cut interest rates, growth will increase. That’s true—unless you have significant inflationary pressures and a strong economy. Right now we have a weak economy. 

The first quarter contracted after growing at a 2.8% rate in the last quarter of the last administration. Biden may have gotten some things wrong, but he didn’t get the economy wrong. 

Under those conditions, no Fed chair who cares about their reputation would cut rates. What Trump is doing is making the Fed chair a poisoned chalice for whoever he nominates. The markets are going to assume the Fed won’t be independent. 

He’ll nominate a loyalist—maybe [Treasury Secretary Scott] Bessent, [National Economic Council Director] Kevin Hassett, or someone else we’re not even looking at. And the markets will assume that person won’t be independent.  

I think you’ll get a negative response to virtually anyone he names. You’ll see that response start to kick in as we approach the nomination. The markets will build in the expectation that policy will be inflationary. So even before the Fed does anything, there will be upward pressure on interest rates—and downward pressure on employment and incomes and growth. 

Anne Kim: 
And that brings us back full circle—meaning that foreign investors will have one more reason to lose confidence in the US economy, which will have ripple effects throughout the economy. 

Robert Shapiro: 
Right. It all feeds into the deficit—based pressures on interest rates and the economy. This is an economy that runs on credit. That’s why we’re big. That’s why we’re rich. 

Trump seems to believe that by force of will, he can mold reality. And that’s true in the response of the people around him. He governs by threat and intimidation. 

But it’s the responsibility of mature leadership to step back and say, “I have to govern in the interests of the country based on evidence.” That’s patriotism. 

That’s something Trump—and sadly, those around him—don’t seem to understand or care about. 

Anne Kim: 
I have one final question: Do you think what’s going to happen with the U.S. economy is a slow downturn like a balloon losing air, or are we going to see a crash? 

Robert Shapiro: 
It’s predictable in a general sense. Crashes require shocks. A shock destabilizes the economy because it’s not expected, and so individuals and businesses don’t prepare. A shock creates enormous uncertainty. 

The example I like is the difference between Lehman Brothers and General Motors. They both went bankrupt. One destabilized the global economy. The other didn’t—because we saw it coming and prepared. 

What I’ve been writing about is the potential shock from the difficulty of financing the deficit. If our big foreign lenders lose patience, or need to take a stand for their own political reasons, we could see something like 2008—2009. 

If not, then we get something like 1981—1982: a very serious recession, or a less serious one, followed by years of higher inflation and higher interest rates. 

It’s not only about the severity of the break, but the kind of economy we’ll have afterward. 

Anne Kim: 
Well on that note, thank you, Rob, and we look forward to seeing you again. 

The post An Economic Crisis Is Inevitable appeared first on Washington Monthly.

President Donald Trump is charting a course that may end in the economy’s third meltdown in less than 20 years. Whatever he and his economic courtiers think they’re doing, the waves of unprecedented budget deficits now under his One Big Beautiful Bill Act and his tariff war could trigger a grave economic crisis that will recall the Financial Crisis and the pandemic.

Whether budget deficits matter and how much they matter have been political issues since the government began regularly operating in the red half a century ago. But deficit hawks cried wolf so often while the United States economy outperformed other advanced countries that most people no longer pay serious attention to the deficit. Liberal advocates of the free-lunch approach to government spending and revenues latched on to “Modern Monetary Theory,” a set of baseless claims that deficits never matter because the government can always print the money to cover them. The president and his cowering congressional Republicans have embraced the same Panglossian view to defend their tax cuts and soaring spending for defense and deportations.

The economics of public finance is indifferent to the expedient rationales of both sides. Deficits always have effects. They’re a key weapon for reviving the economy when it’s underwater. They also matter in normal times because market economies run on credit, and since the government can’t go out of business, it’s always first in line for available credit. So, when companies need loans to purchase technologies and other equipment, build factories, or conduct research and development, and when people need loans for a house, an automobile, or winter jackets for the kids, they compete for the credit left over after the Treasury is done borrowing.

Deficits matter in normal times like today, depending on their size as a share of the economy and the funds available. Together, these factors largely determine the interest rates that the Treasury, private companies, and American consumers must pay for credit.

That now poses a serious dilemma for the economy. The Congressional Budget Office (CBO) analyzed Trump’s program as enacted. It calculated that the budget deficit will exceed $2.3 trillion or 7 percent of GDP next year and every year for the next decade.

Lower taxes for wealthy households and profitable companies will be responsible for most of the tsunami of red ink. CBO reports that over the next five years, from 2026 to 2030, Trump’s One Big Beautiful Act will reduce federal taxes on high-income Americans by an average of $504 billion annually and federal taxes on businesses by $130 billion annually. The sweeping law passed without any Democratic votes also harms millions of Americans by cutting Medicaid and ACA funding by an average of $93 billion annually and reducing clean energy subsidies by an average of $45 billion annually. Even so, those painful cuts will offset less than 22 percent of the reduced revenues from people and businesses at the top.

The result of all this Republican borrowing matters greatly, because a deficit of 7 percent of GDP represents 90 percent of all annual private savings. From 2022 to 2024, those savings averaged 7.7 percent of GDP—4.1 percent of GDP in personal savings by Americans, and 3.7 percent of GDP in retained earnings by businesses. On the path set by Trump and ever-compliant congressional Republicans, financing the coming deficits by ourselves would require, in effect, that everyone invest 90 percent of their yearly savings for retirement, college tuitions, or home downpayments and 90 percent of undistributed business earnings in new Treasury securities.

Fortunately, foreign governments and investors have, for several decades, used some of their savings to buy our Treasury securities, stocks, and corporate debt. At last count, they now hold $9.6 trillion or 33 percent of all publicly-held U.S. government debt, $4.5 trillion or 32 percent of all U.S. corporate debt, and $16.9 trillion or 27 percent of U.S. stocks. When Trump and his America First fans blame other nations for “ripping off” the United States, they don’t mention (and probably don’t know) how much their incomes and lifestyles depend on foreign loans and investments.

The outsized deficits coming under Trump’s program will strain those foreign creditors. Our budget deficits were larger during and immediately following the Financial Crisis and the pandemic, but those spikes were anomalies that receded quickly as the economy recovered. In normal times like today, federal red ink has represented a fraction of what we now face, with deficits averaging 2.1 percent of GDP in the 1990s, 1.5 percent of GDP from 2000 to 2007, and 3.8 percent of GDP from 2012 to 2019.

During the financial crisis and the pandemic, the Federal Reserve also kept the cost of public and private borrowing low. At the same time the deficits surged, the Fed pumped waves of new credit into the financial system through unprecedented purchases of trillions of dollars in Treasury securities and corporate bonds. These “quantitative easing” policies were Hail Mary passes that broadly succeeded because the economy was so depressed that inflation remained low despite the extraordinary levels of fiscal and monetary stimulus.

Trump’s impending avalanche of new federal borrowing is not an emergency response to the economy breaking down. Since mid-2022, the Fed has been selling off the loans it purchased under quantitative easing. Trump’s program will exacerbate post-pandemic deficits that have averaged nearly 6 percent from 2022 to 2025. The hunt for the trillions of dollars in savings needed to finance the coming deficits and support business investment, mortgages, and consumer borrowing will inevitably push up interest rates.

That’s one reason Trump regularly attacks the Federal Reserve and his appointed chair, Jerome Powell, for not cutting interest rates. But acceding to Trump’s demands in this environment won’t produce the effects he expects. The Fed directly controls only one interest rate, the “federal funds rate” for overnight loans between banks. It’s likely that when the market faces trillions of dollars in new annual deficit financings, continuing demand for business and consumer credit, and rising inflation, interest rates will increase even if the federal funds rate falls. The resulting slowdown or possible recession will further increase the deficit.

American economic stability in 2026 and onward depends on the willingness of foreign investors and governments to lend us more, year after year, than they ever have before. Their willingness to purchase one-third of our public debt and nearly one-third of our economy has rested on their confidence that the U.S. will remain highly productive, innovative, and stable.

Their confidence will be sorely tested by MAGA running up trillions of dollars in new, annual public debt caused by shrinking tax revenue from the wealthy and corporations and by imposing punishing tariffs on imports from the creditors we need. If they lose patience and reduce their purchases of U.S. Treasury securities—or worse, sell holdings—our interest rates will spike, the stock and bond markets will plummet, and the economy could crash. And this time, more deficit stimulus won’t work, and flooding the system with waves of additional credit won’t work.

Trump is playing chicken with the countries the United States needs to keep its economy going. For once, the deficit hawks are right.

The post Trump’s Budget Could Break the Economy appeared first on Washington Monthly.