In a New York Times Opinion piece, two of my favorite journalists and thinkers, Thomas B. Edsall and George Washington University Professor Steven Pearlstein, debated whether Congress’s weakness stemmed from members’ lack of bravery or from its affective partisanship. Drawing on the views of many other experts, they largely concluded that the fault lies with both camps.

I want to expand that discussion and delve more into the historical causes of this Congressional weakness. That history reveals two reforms essential for strengthening Congress. The first involves restoring fiscal democracy and loosening the straitjacket that past Congresses have laced tightly on current and future ones. The second requires strengthening the office of the presidency, which cannot be done without addressing how successful White House efforts to control information, largely for partisan purposes, have wrapped huge chains around the Executive Branch’s ability to speak truth to both power and the public. The first of these multi-decade developments defies the Constitutional framers’ intent to empower each new Congress to adapt to the needs of its own time. The second saps, rather than strengthens, the ability of the president, the only person elected nationwide, to represent the nation, rather than partisan or regional interests.

I will address the first issue in this note and the second in a follow-up note.

The decline of fiscal democracy

By the end of the Great Depression and World War II, all developed nations had built up large governments. In the United States, taxes as a share of national income rose to a level that has essentially been maintained since. Then defense spending declined, gradually but significantly, for approximately three decades, like a roller coaster on its downhill journey, with lower peaks for Korea, Vietnam, and some Cold War spending. For instance, defense spending declined from 14 percent of GDP at the end of the Korean conflict to a range of 3-5 percent in the years since 1990. A 10-percentage-point drop in defense spending as a share of GDP would allow roughly $3 trillion this year alone to be shifted toward domestic spending without raising taxes.

Other fortuitous circumstances in the early decades after World War II gave members of Congress even more money to allocate—or give away, as if costless—as new domestic spending increases or tax cuts. Both high economic growth and significant automatic income tax increases due to inflation and real growth, known as “bracket creep,” added to revenues that could be spent or returned to taxpayers as tax reductions. Perhaps most importantly, most spending needed to be appropriated; past Congresses had not yet mandated by law what are sometimes called entitlements that set out how future Congresses should allocate spending.

In those years, labeled by the French “Les Trente Glorieuses” (or the “glorious thirty years”) and by what historian Elliot Brownlee and I have labeled the “Era of Easy Finance,” domestic spending expanded in leaps and bounds, even as Congressional tax legislation almost exclusively focused on tax cuts, not increases. Congress could appear to give away huge swaths of money without legislating that the public pay more through tax increases or benefit cuts. Even modest increases in the Social Security and Medicare Hospital Insurance taxes for early generations of taxpayers were far exceeded by the benefits promised them; only their children and grandchildren would pay any newly legislated higher tax rate over their entire lifetimes.

You cannot understand what has happened to Congress since the mid-1970s without recognizing the impact, even to this day, of the unsustainable expectations and habits that built up during the Easy-Financing Era of Les Trente Glorieuses.

Not only did money appear to grow in Fort Knox vaults, but these older Congresses increasingly created permanent spending and tax-subsidy programs that “mandated” future payments, even if those future Congresses never assembled. These past Congresses scheduled the largest of these mandatory programs, in healthcare and Social Security, to grow forever at rates faster than either national income or revenues, making a day of reckoning inevitable.

From roughly the late 1970s to the mid-1990s, Republicans, noting their long-term lack of control of the House of Representatives—they held it only four years between 1933 and 1975 and none for the following forty years—increasingly decided they were being played as stooges who lost elections by being deficit hawks who raised taxes to pay for both new and built-in spending increases. Reinforced by extreme supply-side theory, which suggested that tax cuts largely paid for themselves through higher economic growth, they decided they, too, wanted to be Santa and become the preeminent party of tax cuts.

They also adopted a “No New Tax Pledge” and, through efforts by groups like the Club for Growth, threatened to “primary” anyone who agreed to any tax increase, even if it was in the form of a reduction in a tax subsidy. (The Club for Growth continued this divide-and-conquer technique by targeting Indiana Republicans who recently voted against partisan gerrymandering.) In 1995, Republicans began their own reign of control over the House, holding it for 24 of the 32 following years until 2027. Overcoming decades of lax party control by both parties, Newt Gingrich (R-GA) demanded that Republicans running for Congress in 1994 take a pledge to support his “Contract With America” platform and, as Speaker of the House in 1995, consolidated power in his own office and away from House committees. This began a long line of efforts by both parties to insist on party unanimity in voting.

Of course, no history is entirely linear. One exception to this bipartisan agreement to continue to “give away” money came between about 1982 and 1993, when Congress enacted several significant deficit-reduction packages. These arose partly in reaction to large deficits following the Reagan tax cuts of 1981, the impending inability of Social Security by 1983 to pay current benefits without legislative action, and, at the time, some fear of lower government bond ratings. Also, the 1981 tax cuts had created the first massive peacetime deficit increase that wouldn’t be covered by the sources formerly available during the Era of Easy Financing. That is, with mandated spending compounding faster than national income on an ever-larger base, revenue growth from an expanding economy could no longer easily pay for any new spending or tax giveaways.

Still, the pressures then were a mere shadow of what they are now. In addition to the reduction in deficit spending due to legislative efforts during 1982-97, there was additional economic growth as baby boomers entered their productive earning years, and increased capital gains realizations swelled revenues. To top it off, this was a period of much legislative stalemate, with little in the way of major new spending increases or tax cuts. Not surprisingly, much of the improvement in the fiscal situation came from reductions in appropriations as a share of GDP. Appropriations, unlike the big mandated programs, had no built-in increase, so Congress didn’t even need to “cut” them from a zero growth path to reduce the share of national income and revenues devoted to them.

In the 21^st century, those gains quickly evaporated. Early on, President George W. Bush enacted significant tax cuts, while defense spending increased due to 9-11. By the end of the first decade, Baby Boomers began moving from their peak earning years into retirement, swelling the ranks of Social Security and Medicare recipients. Then, during the major crises of The Great Recession and COVID-19, Congress enacted huge increases in the deficit unlike any seen in prior domestic crises. While the Federal Reserve lowered and kept interest rates low for much of this century, especially during crises, the swelling debt has now led to much higher interest costs as rates have rebounded toward a more historical normal level. And I know I am being repetitive, but the growth rates of the major entitlements kept compounding on ever higher bases.

A “Fiscal Democracy Index” I developed with Tim Roeper measures the share of revenues remaining after accounting for the mandatory spending and interest costs imposed by past Congresses on current ones. In the early to mid-1960s, the index stood at over 60 percent. Today, the fiscal democracy index has fallen to zero and is headed well below zero. In effect, more than all revenues today, tomorrow, and forevermore, is scheduled to go to mandated programs and interest on the debt. Social Security and Medicare, along with many elected officials, effectively tell future retirees that they are entitled to these ever-higher scheduled benefits. Of course, staying on that schedule means that the trust funds that cover Social Security and one part of Medicare will soon run out of money.

Consider what this means for Congress. Throughout most of the nation’s history, when economic growth generated additional revenue that hadn’t been pre-committed, the job of the president and Congress was to give away money through spending increases and tax cuts. Only then could they ensure that budget surpluses did not stagnate the economy. Bipartisan legislation was easy; there was money that literally had to be given away, and members often didn’t mind compromising and taking credit for increasing spending and cutting taxes.

Today, Congress’s budget job is just the opposite: to renege on these past promises and reduce the deficits, not surpluses, that would otherwise occur. Yet any member of Congress who tries to lead the way toward raising taxes and cutting spending, especially in the absence of presidential leadership, faces a significant risk of losing the next election. In many ways, members of Congress are trapped in a classic prisoner’s dilemma. Simply put, if you lead, you lose, whether in a primary or general election.

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This history makes clear that restoring a functional Congress requires restoring fiscal democracy. To achieve this goal, a much higher share of the revenues generated by economic growth must remain uncommitted, so future Congresses can respond better to the needs and opportunities of their times. Each Congress must be allowed to brag about what new things it has achieved, rather than on which promises it has reneged. The economic gains from fiscal democracy reinforce the political gains, since excessive attempts to control an uncertain future, by leaving little or no room to respond to new needs and opportunities, are doomed to fail.

Next time: Why today’s weakened presidency also leads to a dysfunctional Congress. For much more detailed information, see my recent book listed below.

Source: Author’s estimates based on Congressional Budget Office, The Distribution of Income, 2022.

Government policy for more than 85 years has successfully increased the income and healthcare of elderly Americans, so much so that they are not only less likely to be poor but, by many measures, have reversed roles with the nonelderly population and become the highest-income age group in the U.S. economy. Congressional Budget Office data show that in 1979, 30 percent of people in elderly households were likely to fall into the lowest income quintile (the bottom 20 percent) of the income distribution. That is, they were more likely than average to be lower income. By 2022, that probability had fallen to 11 percent. (See graph above.)

By contrast, nonelderly households with children saw their probability of falling within the bottom 20 percent of households increase from 21 percent to 25 percent. Nonelderly households without children saw an increase from 12 to 18 percent. Keep in mind that when measuring in relative terms, gains in relative status for some must be matched by losses for others. Also, keep in mind that the CBO measure of total income includes health insurance provided by government and employers, which has increasingly become a significant part of each household’s “income.”

Should policy direct these trends to persist?

Unfortunately, for many permanent spending and tax subsidy programs, the U.S. Congress has decided it can never declare success. In this case, it has scheduled the relative status of now-richer older Americans to continue increasing relative to that of now-poorer working-age households, both with and without children. It has scheduled this outcome in various ways, including by requiring benefits for the elderly to increase automatically as wages, life expectancy, and the availability of new, often expensive, health goods and services rise.

But even that’s not the end of the story. Someone has to pay for those gains. In addition to the automatic benefit increases, the decline in birth and immigration rates has dramatically reduced the number of workers whose taxes primarily support each retiree. That alone requires workers to set aside a larger share of their earnings to maintain a given level of benefit transfers to retirees. Congress may delay this effect by borrowing more, but that only adds to costs borne by tomorrow’s workers.

Unlike the graph above, the graph below focuses on the poorest 40 percent of the population and shows the trend from 1979 to 2022. Individuals in elderly-headed households saw their probability of falling into the lower-income groups decline from 55 percent to 30 percent. In contrast, individuals in households with children saw their probability increase from 42 percent to 46 percent, and nonelderly, childless households saw their probability increase from 27 percent to 36 percent.

Source: Author’s estimates based on Congressional Budget Office, The Distribution of Income, 2022.

Comparison to What A Hypothetical Model Would Predict

In two previous notes, here and here, I explained how growth in Social Security and Medicare benefits, along with increased costs to workers from a decline in the worker-to-retiree ratio, can, over time, make the elderly richer than the workers making those transfers. For instance, if the benefits paid to an average retiree are designed to equal 80 percent of the earnings of the average worker, and there are only two worker-taxpayers, then each worker must pay, on average, 40 percent of earnings to cover those costs. Left with only 60 percent of earnings after these payroll taxes, the average retiree ends up richer than the average worker.

Of course, that hypothetical calculation relies on simplified assumptions. It ignores many other factors, such as the structure of the tax system, capital income and taxes, the extent to which some elderly people pay income taxes on their Social Security benefits to support the system, the size of the household, and the extent of deficit financing. Still, it is remarkable that the real-world figures in the graphs presented here on the income of the three major age groups—elderly, households with children, and childless nonelderly households—demonstrate the exact trend the hypothetical model would predict.

Conclusion

Principles of equity and efficiency compel competent government at every period to shift its resources toward society’s greatest needs and opportunities. This requirement for good government holds regardless of whether government itself is large or small. At every margin, its lawmakers ideally would assess what it can do best with each dollar. As it undertakes Social Security and Medicare reform, Congress and agencies, such as the Congressional Budget Office, should formally compare the long-term effects of any proposed reform on the relative status of all age groups.

Otherwise, it is almost impossible to determine efficiently or fairly the appropriate level of transfers for the elderly, paid for largely by nonelderly households, with and without children.

Put another way, neither political party can address the disaffection of the young and working class without asking whether it is time to allocate an increasing share of the government’s growing resources to expand their opportunities and meet their needs.

In my Government We Deserve column, I sometimes recommend, write with, and engage other authors. Here, I would like to cross-post a recent Substack post by Journallist Phil Moeller, who writes Aging In America. He has worked for newspapers in Charlotte, Chicago, Louisville, Baltimore, and Hartford; he has written for U.S News & World Report, Money, and the PBS NewsHour. Phil is the primary author of Simon & Schuster’s Get What’s Yours bestselling books about Medicare and Social Security. This April 13, 2026, post reveals how the affordability of health care tops the list of concerns of senior citizens.

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A recent Gallup Poll finds 61 percent of Americans worried more about healthcare than anything else these days. (see figure above). The 10-percentage point gap between concerns about health and the economy is large by polling standards and will continue to shape 2026 mid-term election races. The poll was taken in the early stages of the Iran war, so it’s likely some concerns have changed.

Not surprisingly in today’s sharply divided political climate, Democrats are far more worried about healthcare than are Republicans.

“Republicans and Democrats worry about sharply different things,” Gallup reports, “with illegal immigration the chief concern of Republicans, at 55%, followed by federal spending and the budget deficit (47%), drug use (42%), and crime and violence (41%).”

“By contrast, Democrats’ top concerns are healthcare (80%), income/wealth distribution (77%) and the economy (69%).”

Share Aging in America

The public concerns about these issues have been similar for years, the pollster says, but healthcare has become a relatively more serious concern of late. Gallup does not say why, but higher health insurance premiums, the rising cost of care, and difficulty finding acceptable care surely play a role.

Affordability has become a hot button. On April 10, the government reported a surge in March consumer prices – 3.3 percent higher than a year ago. The increase was caused chiefly by the Iran war. But healthcare costs were 3.7 percent higher than a year ago and are still a problem.

On the same day, the University of Michigan’s monthly consumer sentiment survey for April hit its lowest level in the program’ 70-year history, the Wall Street Journal reported (gift link):

“The darker economic mood was widespread across people of different ages, income levels and political affiliations, said Joanne Hsu, the survey’s director. ‘Many consumers blame the Iran conflict for unfavorable changes to the economy,’ she said.

“Hsu added that if this week’s cease-fire holds and allows gas prices to moderate, spirits could rebound. ‘Economic expectations will likely improve after consumers gain confidence that the supply disruptions stemming from the Iran conflict have ended and gas prices have moderated,’” she said.

For seniors and disabled people on Medicare, there is another storm cloud forming.

The Centers for Medicare & Medicaid Services (CMS) continues to toy with automatically enrolling new Medicare users in private Medicare Advantage (MA) insurance plans rather than letting first-time enrollees choose traditional Medicare plans.

Such a proposal was included in Project 2025. In late March, the STAT news service reported that the proposal is being considered by CMS. The full article is behind a paywall. Here are the first two paragraphs:

“President Trump’s Medicare director said . . . his team is considering a policy that would automatically enroll Medicare beneficiaries into Medicare Advantage plans, a controversial idea that was touted in the conservative Project 2025 policy blueprint.

“Chris Klomp [CMS director of Medicare] said the Centers for Medicare and Medicaid Services is mulling the feasibility of models that would either automatically enroll beneficiaries into the private form of Medicare or accountable care organizations, such as those that participate in the Medicare Shared Savings Program. Individuals could still opt into a different insurance arrangement. Right now, people who don’t make a choice are covered by traditional Medicare.”

Although people could opt out of MA into traditional Medicare, the Center for Medicare Advocacy (CMA) said a bill has been introduced in the House “that would change the default enrollment to MA, with an opportunity to opt-out, and would mandate that once people are enrolled in an MA plan, they would be unable to disenroll or switch plans for three years. The Center for Medicare Advocacy strongly opposes such administrative and legislative efforts and urges policymakers to both strengthen and keep traditional Medicare as the default.”

Stay safe, be kind, and don’t look away. Please raise your voice to end illegal actions by federal and state officials.

On Tuesday, June 2, the U.S. Treasury released a statement claiming that “American families and workers overwhelmingly benefited from the Working Families Tax Cuts, receiving the largest share of the historic tax relief delivered this past filing season.” As evidence, it noted that “97% of filers received a tax cut this past filing season.” It especially bragged about provisions such as “No Tax on Tips,” “No Tax on Overtime,” and other deductions that discriminate in favor of select groups of taxpayers.

In point of fact, the tax cuts discussed in this release provide a smaller reduction in taxes, relative to their after-tax income, for middle-class working families than for high-income taxpayers. The release further extolled how it violated a fundamental principle of tax policy centered on equal justice. To add to the confusion, it joined an effort to rebrand the bill, titled by Congress as the One Big Beautiful Bill Act (OBBBA), as “the Working Families Tax Cuts.” Congress enacted no bill with that title.

The distribution of tax benefits

In their recent post on Tax Vox, my colleagues at the Tax Policy Center, Benjamin R. Page and Renu Zaretsky, examine the claims made by Treasury. The Treasury release highlights the benefits of OBBBA for taxpayers who have filed their 2025 tax returns, but it ignores the major provisions that will not be implemented until 2026. In the bill as a whole, for instance, the top 5 percent of tax returns will receive over 35 percent of the tax cuts (see figure above).

Also, the calculation of tax reductions excludes losses in Medicaid and other OBBBA-related outlays, which are largely borne by low-income households.

How about the claim that 97 percent of taxpayers benefited from the tax bill? That calculation gives a middle-income taxpayer receiving a $100 tax cut the same weight as a high-income taxpayer receiving a $30,000 cut. That is equivalent to saying you gave all your family members a Christmas present, even though you gave one a candy bar and another a new home. Also note that the calculation includes only tax returns, thus excluding from the denominator of “tax returns” those households that do not file tax returns.

Thus, as Page and Zaretsky state in the title of their article outlining these issues, the “2025 tax bill was not targeted toward low-income families.”

Unequal Justice

Equal justice under the law, proclaimed and engraved in stone on the main western pediment of the United States Supreme Court Building in Washington, D.C., has broad application. In the justice system itself, it means that, barring extenuating circumstances, equal crimes should receive equal punishment. Often defined as horizontal equity in tax policy, equal justice also means that equals should be taxed equally, and those with equal ability to pay should pay the same amount of tax. In the income tax, it means that those with equal incomes should pay the same amount of income tax, except in extenuating circumstances, such as high medical expenses, which reduce the ability to pay.

Many of the provisions praised in the Treasury release, such as the reduced tax on tips, benefit only select groups of households and violate that fundamental principle of tax policy. A waiter in a restaurant earning $40,000 a year should not pay significantly less tax than a retail store clerk earning the same amount. These selective instances of favoritism in OBBBA move the tax system in the exact opposite direction of the reforms incorporated into the Tax Reform Act of 1986, which President Ronald Reagan supported and Congress passed overwhelmingly with bipartisan consensus.

Finally, as with most bills that pretend to offer giveaways to almost everyone, the payors are ignored. Future taxpayers must pay to cover the cost of the additional debt incurred to fund those cuts. There is no free lunch that transfers money to almost 100 percent of households.

Figure illustration created with AI assistance based on an author concept

There’s a lot of market chatter these days about interest rates, with nominal rates on some Treasury securities hitting a 20-year high and the President’s insistence that the Board of Governors of the Federal Reserve System lower interest rates, along with his appointment of Kevin Warsh, a recent convert to lower interest rates, as its Chair.

Here is an attempt to help sort through some of that noise, along with details that often don’t make it into newspaper coverage of these events.

Summary

• Real rates have returned to historic levels, which were more prevalent before this century, but the increase largely occurred in the months preceding President Trump’s latest election.

• It is the combination of failing to bring current inflation under control and real rate increases that has led to new, higher nominal (real + inflation) rates.

• Medium- and longer-term bonds were a poor way to diversify one’s portfolio for many years after the Great Recession. Now, just the opposite holds: stock earnings-to-price ratios have fallen nearly to the level of the real rate of return on Treasury securities.

• The market value of household assets still sits in an enormous bubble, with many ramifications yet to be felt for overleveraged purchases, housing ownership, and consumer demand, and, in the absence of a bubble burst, low future returns for holdings of almost real assets.

• Federal Reserve governors may resolve some future debates over looser or tighter monetary policy politically with a two-step process: stimulative interest-rate cuts and contractionary asset sales from the Fed’s large portfolio.

• As for the federal debt, lurking behind everything else is the recent removal of the mask of affordability from the long-term interest cost of accumulating debt at an unsustainable rate.

Further Details

Real interest rates. Real rates on 10-year Treasury Inflation-Protected Securities (TIPS) (next graph) remained near zero from the end of the Great Recession through the end of the COVID-19 era. Then, starting in the second half of 2023, they rose rapidly to a range of 1.5 percent to 2.5 percent (Figure 1). Recently, they settled at a bit over 2.0 percent, though 30-year TIPS are now approaching 3.0 percent.

Figure 1

Expected Inflation. Whether due to tariffs, the war with Iran, or other underlying factors, the recent rise in the nominal rate for traditional (not inflation-indexed) bonds mainly reflects the expectation that today’s higher inflation rates will persist for a while rather than fall to the Federal Reserve’s stated goal of 2.0 percent. Nonetheless, the rise in the real rate, combined with the FED’s inability to bring the inflation rate back toward its 2.0 percent target, leads to comparisons such as the nominal rate now peaking at a level not seen since 2007. Figure 2 shows investors’ expectations for the inflation rate, as determined by the difference between the nominal and real rates in equally timed purchases of traditional and Treasury-indexed bonds with the same 10-year maturity.

Figure 2

Stock returns are hovering near bond returns. Typically, the earnings-to-price ratio on stocks is considered a rough estimate of the real return on those assets. One might have expected the rise in the real return on TIPS (item (1) above) to have led to a reshuffling of portfolios toward TIPS, yet we don’t seem to have witnessed that development. Figure 3 shows earnings levels for the S&P 500 divided by its price level, and, using Robert Shiller’s CAPE measure, the average inflation-adjusted earnings level over the past ten years compared to the current price level. Put simply, the real rate of return on inflation-indexed bonds is nearly as high as the earnings-to-price level of stocks.

Years ago, I tried to convince several portfolio managers that buying longer-term bonds when the real rate was near or below zero was a risky bet, because both inflation and higher real rates increased the risk that the investment’s value would fall. While longer-term bonds indeed proved to be a poor means of diversifying an investment portfolio over much of the period since the Great Recession of 2008-9, that is no longer true, at least for TIPS, as stock ownership has become increasingly risky.

Figure 3

Market value of household assets. Since about 1990, the market value of assets has risen much faster than national income (see chart below). This gigantic bubble could easily burst, but even if it doesn’t, it portends lower rates on almost all assets, not just stocks. I’ve tracked this issue for some time, and what makes these last decades especially unique is that the excess valuation extends across almost all real asset types, from stocks to real estate. That is an aberration. Traditionally, as a share of national income, housing and stock prices have tended to be negatively correlated (e.g., the 70s stock market bust was a housing price boom). I’ve long believed that very low global interest rates have been a major cause of this bubble across asset classes, reinforced by large increases in international financial and investment flows. The evidence is still out on how all this will play out for both your portfolios and monetary and fiscal policy responses.

Figure 4

Upcoming Federal Reserve Debates. In theory, the Fed is supposed to focus only on inflation and employment. But it cannot ignore how financial market reactions to its decisions will affect those two variables. Right now, I doubt the Fed will lower interest rates much while inflation remains so high. Still, I can see possible future compromises between doves and hawks as they address how to manage both interest rates and the large portfolio of assets accumulated largely due to the Great Recession and COVID-19. For instance, at some point in the future, it may experiment with a stimulative lowering of interest rates and a contractionary sale of those other assets (I’m noting, not advocating, this.)

The fiscal mask of affordability on the nation’s debt has been removed. Budget accounting, like most household accounting, is largely on a cash basis. As interest rates fell from the early 1980s through the COVID-19 era, Congress quadrupled the nation’s debt relative to GDP, even as nominal interest rates fell by three-quarters. As a result, the cash-flow cost of interest as a share of GDP didn’t change much. Then, for much of this century, after-inflation interest rates hovered around zero, again pretending that borrowing might be costless.

Now, both of those covers have blown away. As nominal and real interest rates have risen and older debt is rolled over into new securities, both cash flow and real interest costs are increasing faster than the debt itself. That is, these higher rates apply to the debt that must roll over, not just the new debt.

America may not be in full decline, but our government has surely scheduled it.

A recent New York Times article highlighted China’s growing view of the United States as a nation in decline. A Chinese report titled “Thank Trump” emphasized the impact of “tariffs, attacks on allies, anti-immigration policies and assaults on the American political establishment.” Certainly, few nations in the world now believe they can trust us or our word.

Still, there are many reasons to ignore the self-serving side of this Chinese propaganda. We’re still extraordinarily productive. As a recent Wall Street Journal article demonstrated, the U.S. has maintained its share of world GDP in the 21st century even as its share of the world population has declined. And I still believe in the basic goodness of our people. Whatever the cost to our nation of Trump’s autocratic fumblings, I would rely even less on China’s extraordinary autocracy as a path to some cherished future.

A major problem is that the decline didn’t begin and, without major reform, won’t end with Trump. About fourteen years ago, well before any Trump presidency, I testified before the Senate Finance Committee on what I called a Budget for a Declining Nation. Why the budget? It is through those spending, tax, and tax subsidy policies that the government performs most of its functions. Even much of its regulatory efforts derive from the rules adopted to implement those budgetary choices.

Forget political posturing and rhetoric. Budget choices reveal the nation’s preferences. By their fruits, not their outward clothing, shall you know them. Today’s federal budgets reflect even more than those in 2012 many of the same dominant choices. Social Security, health care, and federal debt continue their upward spirals, setting aside all other spending priorities except for temporarily addressing some crises that we pay for through ever more debt. Under President Trump’s recent budget proposals, more than 100 percent of real revenue growth would go to pay for the rising costs of Social Security, Medicare, and interest on the debt. Along with other health programs, those have been the nation’s ever-increasing spending priorities for decades. Of course, rising debt can temporarily pay for some other items, such as an increase in defense spending, but that only adds to interest costs down the road and further squeezes everything else.

Just as Social Security and healthcare have dominated the growth in (non-interest) ending policy for decades, the corresponding dramatic shift in tax policy has been to cut tax rates on capital income, roughly speaking, in half—through cuts in individual income tax rates, corporate tax rates, estate taxes, and taxes on dividends, and through Congressional unwillingness to attack new forms of sheltering, such as the conversion of largely taxable dividend payouts to largely untaxable stock buybacks.

In my 2012 testimony, long before the largely election-generated attention to the plight of the working class, I outlined how our budget had increasingly abandoned programs that promote upward mobility—well, at least for most people. The tax code does contain several programs that promote upward mobility, but not for those most in need of a helpful boost for their saving, work, and learning—for those, not increased consumption, are the measures of upward mobility. Many of the largest mobility-related tax subsidies are skewed toward those in higher income tax brackets—that is, those with upper-middle- or higher-income who have generally done OK in recent years.

In a sense, the nation does favor upward mobility…for the wealthy. Spending and tax policy together have long neglected programs that would promote opportunity for most of the population.

Those who read this column will know that I lay out much of this in my latest book, Abandoned: How Republicans and Democrats Have Deserted the Working Class, the Young, and the American Dream.

However, you don’t need to read that book or agree with anything I’ve said so far to confront the obvious long-term question of what, for the future, would be the most effective ways to promote the nation’s success? Or at least to define success. How would you establish new long-term priorities? Our existing multi-decade priorities for the same types of spending certainly cannot continue, if for no other reason than that those programs schedule cost growth to rise faster than GDP essentially forever. On the tax side, the current priorities lead us to become ever more dependent on the wealthy to finance capital formation and our consumption. Do you find those formulas for future success, or do you want something more?

Relying on binary thinking—that a better world depends on the success of one political party—isn’t much of an answer. Believe that, and you will have been asleep longer than Rip Van Winkle.

Our nation’s decline is hardly inevitable. Our current problems pale in comparison to those of our ancestors at the time of Bunker Hill, Gettysburg, Pearl Harbor, the Great Depression, Jim Crow, or Watergate. The big difference right now: we have a budget that literally schedules decline, and we refuse to admit, much less tackle, that problem.

Sometimes we flatter ourselves that these budgetary bad habits remain external to us. Yet, by slow civic osmosis, they cross the membrane between what we can do and what we can’t do, between actions and words we used to condemn and now tolerate, and eventually between what we tolerate and what we practice.

The US debt problem stems from a long-running failure to keep federal spending and revenues in closer balance with the economy’s growth. The unsustainability of that pattern becomes especially apparent when receipts, outlays, and debt are shown relative to our income (i.e., as a share of gross domestic product, or GDP) (Figure 1).

The year 1974 provides a useful base for examining the modern growth in federal debt. The debt-to-GDP ratio hit its post-World War II low then, having fallen from over 100 percent to less than 25 percent of GDP over almost three decades. But then it took off. (Figure 2).

These trends become even clearer when calculated on a per capita basis (in 2026 inflation-adjusted dollars). In 1974, Congress collected an average of $6,414 from each person and paid out $6,564 in cash, goods, services, and interest. Thus, the federal budget was nearly balanced—despite the end of the postwar economic boom, a low point in the Dow Jones Industrial Average, the first oil shock, and a major peak in 1970s inflation. Just over half a century later, in 2025, the federal government collected $15,555 and paid out $20,831 per capita. (Figure 3).

Meanwhile, real federal debt per capita climbed from around $8,400 to $89,700. The debt grows much faster than outlays or receipts because borrowing to cover past deficits keeps adding to the debt. Under current law, debt per capita will rise to about $128,000 by 2036 (Figure 4). At an average household size of 2.5, that would equal about $320,000.

By 2025, on a per-capita basis, Congress had increased real revenues by 143 percent, outlays by 217 percent, and federal debt by 971 percent (lead figure at the top).

Federal receipts and outlays went in opposite directions as a share of GDP

Comparing the 1974 to 2000 period with this century, 2001 to 2025, average receipts fell by about 1.2 percent of GDP, while outlays per capita increased by about 1.2 percent. As a result, average annual deficits in the 21st century nearly doubled, from roughly 2.7 to 5 percent of GDP.

Many factors affected the level of receipts. Over both the 1974-2000 and 2001-2025 periods, Congress enacted many tax cuts, while the development of new tax shelters helped lower effective tax rates. On the flip side, Congress enacted some tax increases, usually on a smaller scale. As nominal incomes rose, however, many taxpayers were pushed into higher tax brackets, increasing individual income tax collections. Indexing for inflation limited this “bracket creep” to real income growth after 1984. Meanwhile, the growth in the share of total income earned by those already in higher-income tax brackets helped offset the decline in average tax rates.

On the other side of the budget, outlays as a share of GDP increased from 1974 until the early 1980s, then tended to decline for most of the rest of the 20th century. In the 21st century, they have risen again, mainly due to longstanding congressional mandates that Social Security and healthcare grow automatically faster than the economy. Congress often did limit appropriations for discretionary spending, so it fell as a share of GDP. But high automatic growth in mandatory spending kept building on an ever-larger base.

In this century, extraordinary and unprecedented fiscal deficits after two major crises, the Great Recession and COVID-19, prompted a sharp temporary rise in federal debt as a share of GDP (Figure 2). Congress, however, did little to cover the costs of these efforts—including interest costs on that extra debt.

By the time of the post-COVID-19 era from 2023 to 2025, deficits average about 6 percent of GDP, an all-time high for peacetime years with low unemployment. Those deficits will stay at that level on average through 2026 to 2036, under current law, as estimated by CBO in early 2026. Even these numbers exclude the unknown cost of the increase in defense spending due to the war with Iran.

Because the gap between spending and receipts has widened to unprecedented levels, CBO projects interest costs on the debt to keep escalating, and the debt-to-GDP ratio to rise well above 100 percent.

The basic failure of modern fiscal policy

These numbers show that the central fiscal story of the past 50 years is not simply about a choice between bigger government, defined by spending increases, and smaller government, defined by tax cuts. In a sense, we got a lot of both, but mainly a huge increase in debt. Of course, as we move forward, automatic spending increases are enormous, not the least because of rising interest costs.

These numbers point almost unequivocally to the fundamental failure of modern fiscal policy: For decades, policymakers have approved spending growth, tax cuts, and crisis responses without fully funding them. The result: Some generations have enjoyed the benefits, while future generations find themselves paying a bill that increasingly preempts other uses of their tax dollars.

**This column is largely reproduced from Tax Vox, April 30, 2026.

In a previous column, I raised the core question that Congress and the President cannot avoid, even if only indirectly, when undertaking Social Security, Medicare, and broad fiscal reform. The question: how much should the young transfer to the old? The answer determines the structural foundation of our federal government’s dominant social policy and a majority of its domestic outlays—that is, outlays other than defense, international affairs, and interest. The choices made in previous Social Security and Medicare reforms in 1935, 1938, 1965, 1972, 1977, and 1983 have had profound effects—in my view, largely but not always for the good—for decades and, in some cases, close to a century. Regardless, the choices Congress will soon make will continue to dramatically affect the economy, politics, and how future generations will structure their lives of work and leisure across their lifespans.

Past Social Security reformers have long considered this issue when proposing to “replace” a portion of a typical older person’s income with reference to what a typical younger person earns (more on this below). Unfortunately, that approach is now less wrong than incomplete. In deriving their formulas for what they called “replacement rates,” those reformers failed to account for multiple layers of transfers from workers to beneficiaries and for the effect of taxes on workers’ net incomes after those transfers.

Here, I want to lay out how to address, more comprehensively and explicitly, the overriding question of what both the old and the young would expect under any reform. This note will get a bit technical and wonky. The main issue I want to convey, however, is simple. Future reformers should retain the notion that desirable outcomes for the old in each generation should relate to the level of well-being attained by the young. However, for a variety of reasons—including the declining support that the federal government has been providing to the young and the working class—future reformers can no longer ignore that this is a two-way street. They must also address how the well-being of the young relates to that of the old.

Social Security’s Long-Time Answer to the Appropriate Level of Transfer

Social Security has long provided a partial answer to the question of how much to transfer from the young to the old. Since the 1970s, Congress has set the benefit for an average person retiring at the “full” retirement age (today, 67; for most of the past, 65) at approximately 40 percent of the economy’s “average” wage. While that rate is typically called a “replacement rate,” the formula more precisely relates a typical new beneficiary’s benefit at full retirement age to a measure of average earnings in the economy. This Social Security design allows the annual benefit for a typical member of a new cohort of retirees to be “wage-indexed,” so it grows from cohort to cohort at roughly the same rate as the average wage in the economy. Thus, if average wages grow 30 percent in inflation-adjusted dollars from one generation to the next, so will the average annual benefit.

There are many bells and whistles to this calculation. For example, for workers with lower lifetime earnings, the rate increases, while for those with above-average lifetime earnings, it decreases. See the chart below. Among the many items not shown in the chart, the rate increases on average for workers who have spouses and survivors; the lifetime replacement rate grows faster than the annual replacement rate because younger cohorts receive more years of benefits than older ones; and the “wage” is measured based on cash income and excludes other forms of compensation.

Source: Copied from Timothy Taylor, When Social Security Went Haywire, based on Andrew Biggs and the Social Security Trustees Report.

Adjusting the Effective Replacement Rate for Taxes Paid and Number of Taxpayers

What I want to raise here is how to use the same type of relative comparison when setting objectives for a future reform, while accounting for two previously ignored factors. First, the tax rate required of the young increases when their numbers decline relative to the number of people the government designates as eligible for “old age” (as well as disability) support. This factor, called the worker-to-beneficiary ratio, declines both when the birth rate falls and when the government provides more years of support as people live longer.

Consider a society that once had four workers for every person receiving support. If the level of support averages 40 percent of the average wage, then in a pure, flat-rate, pay-as-you-go payroll tax system like Social Security, each worker would need to contribute 10 percent of their earnings to support each beneficiary. That number appears on the left side of the lowest line on the chart at the top of this essay.

Note that the beneficiary’s income is not simply 40 percent ($40 for every $100) of the worker’s earnings, but 44 percent ($40 out of $90) of each worker’s after-payroll-tax earnings. Let’s call the 44 percent rate the “effective replacement rate.” The difference between 40 percent and 44 percent might not seem large, as it did in Social Security’s early years. But stick with me.

Consider next how our society continually increases the number of beneficiaries relative to the number of taxpayers. In the United States, people live longer, retire earlier, and a larger share of each cohort is likely to live until retirement eligibility—all of which has to be paid for somehow. If people retired with the same remaining life expectancy as in 1940, when Social Security first paid benefits, they would retire at about age 78 rather than at about 65 today.

Meanwhile, the fertility rate has fallen sharply, further reducing the number of workers available to support each beneficiary.

As a result of these demographic shifts, about one-third of the adult population now becomes eligible for Social Security benefits for about one-third of their adult lives. And these fractions keep increasing.

Most projections, therefore, show Social Security’s worker-to-beneficiary ratio falling from about 4-to-1 in the early 1960s to 2.7-to-1 today, 2.3-to-1 in about 20 years, and closer to 2-to-1 within another few decades.

If the desired replacement rate remains at 40 percent in a simple pay-as-you-go payroll tax system, each worker would now need to contribute $20 for every $100 earned. (This can again be seen in the chart at the top by holding the replacement rate at 40 percent and then moving from the 4-1 to the 2-to-1 worker-to-beneficiary ratio.) As a consequence, the worker’s after-tax income would fall to $80, and the effective replacement rate would be 50 percent.

Now consider what happens with other programs, such as Medicare and Medicaid long-term care, stacked on top of Social Security. These programs are also significantly financed by burdens on workers, whether through the Social Security tax, other taxes, or deficits left to future taxpayers. Suppose this also entails an additional 40 percent “replacement rate.”

Then, if two workers again support each beneficiary, each worker on average must contribute 40 percent of their earnings to achieve an 80 percent subsidy rate for the retiree relative to the worker’s before-tax wages. (See the top line in the top chart and move to higher replacement rates.) Since that tax rate leaves the worker with only 60 percent of earnings, the effective income of a typical older person in this simple example now rises to 133 percent of the average worker’s wage.

Now, there are several ways both the current and a reformed system might address these issues. It can raise taxes on older people or on capital income, not just on workers’ earnings. It can adjust the retirement age so that people don’t continually receive more years of support as they age. It can do a better job of encouraging people to stay in the workforce, thereby raising tax revenues. It can increase tax rates or expand the tax base for workers in various ways. It can also run larger deficits, a strategy employed especially by recent presidents and Congresses. Of course, these deficits only add to the interest costs borne mainly by tomorrow’s workers, further exacerbating the longer-term problem. And, to be clear, most of these adjustments would still involve transferring from the young to the old.

Attempting to make each of these adjustments fairly and efficiently would require more elaborate calculations and discussions than I provide here. However, if reformers follow past practices and try to stack up spending and tax reforms one at a time in each program to hit separate budgetary targets, they will almost assuredly fail to answer the explicit question of how much they require the young to provide to the old.

Including the Tax Rate in the Calculation of an Effective Replacement Rate

I promised up front that I would show a way to address more rigorously the question of how much the young should provide to the old. I am not proposing an idealized size for that transfer, but simply a way—as the original notion of a “replacement rate” did—to consider the choices.

What I have demonstrated so far is that it makes no sense to calculate a replacement rate independently of the taxes required to fund it and of the income and well-being of the workers paying those taxes.

Suppose that reformers decide that the replacement rate—or, more precisely, the benefits for a typical retiree—should equal 80 percent of an average-income worker’s after-tax income, not 80 percent of that worker’s earnings. Then the required tax rate per worker, when the worker-to-beneficiary ratio is 2-to-1, would be 29 percent, not 40 percent. In that case, the beneficiary would receive the equivalent of 58 percent of a worker’s after-tax earnings, and each worker would have left 71 percent of their earnings (that is, 58% for a retiree, divided by 71% remaining for a worker, equals 80 percent).

The graph below compares the tax rate required to achieve an effective replacement rate, which accounts for taxes paid by workers, with a replacement rate that doesn’t account for taxes paid by workers. It does this for various replacement rates when the worker-to-beneficiary ratio falls to 2-to-1.

Do you think even a 29 percent tax rate is too high? If so, consider other reforms. For instance, suppose reformers remove many of the ways that Social Security discourages work, so the worker-to-beneficiary ratio stabilizes at 2.5. The bottom line in the chart above would fall further, and the required tax rate at an effective replacement rate of 80 percent would be about 24 percent.

As noted, I am not trying to specify which reforms to undertake. I am merely claiming that reformers should set targets based largely on the needs and abilities of the entire population over time. To the best of my knowledge, no recent Social Security reform proposal designed to date does that. To be honest with the public—and to help justify why reform must address unsustainable current policies, reformers should measure and make explicit how much more they think we should — and can — continue to provide from the young to the old under different future economic and demographic conditions. One way to do that is to take into account the tax rate required for all transfer programs when calculating “effective replacement rates” for people Social Security defines as “old” and in need of support. The existing measure of replacement rate cannot suffice. More broadly, the Social Security Administration and the Congressional Budget Office should include in their assessment of any proposed or adopted reform a comprehensive comparison of effects on the well-being of young and old alike.

Note: Among my forthcoming notes will be an examination of how, largely due to the factors discussed here, the young are already more likely than the old to fall into lower-income classes. I will also show how close some of the hypothetical numbers shown here are to the real world.

Original Woodblocks for Printing and Cartoon, The Gerry-Mander,” Boston Gazette, March 26, 1812, attributed to Elkanah Tisdal

The latest headlines proclaim that Democrats in Virginia may have outmaneuvered Republicans in Texas, Ohio, and elsewhere by “gerrymandering” Congressional boundaries for upcoming elections. The shared goal: to tilt the next House of Representatives election toward one party. In Virginia, for instance, the vote in the next Congressional election might split 55 percent to 45 percent between the two parties; however, Democrats might still win more than 90 percent of the seats. Thus, they might win 10 rather than 6 of the 11 Congressional seats they now hold.

Mind you, the term “gerrymander” came from a Boston Gazette newspaper report on the signing by Governor Gerry of Massachusetts of a redistricting bill that contained a district that looked like a “salamander.”

So, here we have it. Governors in several U.S. states proudly proclaim to their party faithful that “I have effectively disenfranchised large portions of voters in my own state to favor you, my own party members…er, I mean, the nation.” I suggest they have indirectly disenfranchised voters in other states as well. But there is a way out of this mess.

Let’s be clear. The Democrats in Virginia and California feel they were merely responding to Republican gerrymandering efforts, promoted by President Trump, in Texas and elsewhere. “If you can play dirty,” so to speak, “so can we.” Moreover, the timing of these map-rigging efforts by Democrats and Republicans alike is outside the traditional process, established by the Constitution, for redrawing boundaries every ten years after completion of the Census, when the number of seats in each state might change.

Whatever the validity of claims of parity or equity, both parties are engaged in a negative-sum game in which the nation loses. Period. And the losses are likely to increase over time and across states.

Where are the statespersons and civic leaders who might figure out how to promote an alternative? Wouldn’t it be better for a politician to brag about preventing a duel rather than winning one that left both parties wounded? Wouldn’t it be better to be known for favoring the fair-mappers over the map-riggers?

The solution is not as difficult as it might at first appear. The problem doesn’t really fit the conditions of a “classic prisoner’s dilemma.” Without going into detail, that dilemma assumes conditions under which one is always better off screwing another party or taking advantage of the other’s goodwill, because each can sneak off and, unbeknownst to the other, betray any potential or real mutual bargain they could make. In today’s gerrymandering situation, however, it is clear immediately what the other party is doing. The more appropriate analogy, therefore, is closer to one of assured mutual destruction. Though not a pretty situation, the threat of immediate reprisal often keeps the peace. Think about it, however: our politicians, instead, have voted for mutual destruction.

Here’s what I would do if I were a Governor and truly sought a more democratic nation. I would approach governors in other states and propose a pact: “Let’s sit down and agree to adopt a common bipartisan (or, ideally, nonpartisan) set of redistricting rules and procedures that pull the nation out of this mess and prevent voter disenfranchisement in my state and yours.” Ideally, the effort would be universal, but that is not required. Governor Newsom (D., CA) could call out Governor Abbott (R., TX) and make a two-way bargain. Governor Dewine (R., OH) could challenge Governor Spanberger (D., VA). And, yes, it won’t be perfect, but it will be a lot better than more salamanders.

In fact, they could and should try to extend the pact beyond the current situation and into the decennial redrawing of boundaries.

Among the winners, by the way, would be many voters throughout the country, not just in their own state. Consider the many Republican voters in Indiana who joined Democrats in rejecting an effort by Republican legislators there to redraw the boundaries. If you, like those Indiana Republican voters, align with a party in power in any state that still adheres to a more non- or bipartisan approach to drawing boundaries, you, too, are being played like a sucker. When those map-rigging states gain power, your state loses relative power by playing fair. Does your Governor stand up for your own rights and protest how you have been disenfranchised? I suggest you ask them.

Hey, if I were considering running for President or had other higher aspirations—I’m looking at you, Governors Newsome and Abbott—I would run as fast as possible to be the first to put forward such a challenge. The public is desperate for candidates who can occasionally put forward and achieve principled, nonpartisan goals.

Who knows? Perhaps a successful effort here could set a precedent for a bit more bipartisanship, something required at some level if Democrats win a majority of seats in at least one House of Congress at the end of this year.

Social Security has always mainly been a transfer system, in which most or all workers’ payroll taxes immediately pay for benefits to retirees. The same is true for Medicare, though it also relies significantly on income taxes, which workers largely pay. With the Social Security and Medicare trust funds now holding close to zero assets, it’s clear that any prior buildup of trust fund assets, such as during the peak working years of the baby boomers, was temporary and very small relative to the unfunded promises made.

Today, both systems face a significant shortfall in revenues needed to pay current beneficiaries at existing rates, not to mention future beneficiaries at higher rates. These shortfalls, which will increase over the coming decades, mainly stem from how Congress has scheduled these systems to take an ever-larger share of the nation’s income—almost indefinitely. Now, on the verge of a crisis, everyone agrees that reform is necessary. However, no reform proposal for Social Security (much less for Medicare) has addressed how large this transfer from younger to older generations should be.

Consider: for the first time in the nation’s history and, with rare exception, in the history of civilization,

• People under age 65 are much more likely than older individuals to be in poverty or in lower-income groups.

• The government considers people ‘old” (eligible for what it calls “Old Age Insurance” under Social Security) at age 62, when a man now has an average life expectancy of over twenty years, a woman about a quarter century, and the longer-living of a couple about three decades. As healthcare continues improving, those numbers of years keep rising, and the Old Age Insurance program further evolves into a Middle and Old Age Insurance program.

• The total fertility rate for the country has long remained well below replacement level, and there is little evidence of when, or if, this decline might reverse or even stabilize.

• As a result of longer lifespans and fewer children, the Social Security worker-to-beneficiary ratio has fallen from about 4-1 in the early 1960s to 3-1 in 2009, then to 2.7-1 today, and is expected to decrease to around 2-1 (1.6-1 under pessimistic assumptions) within the next fifty years.

Congress never designed Social Security to adjust to these changes fully. Without first examining how its fundamental structures and myths must adapt to this new reality, creating a rational and effective reform becomes nearly impossible. I keep getting approached by people about my assessment of different Social Security reform proposals. While I can comment on parts, I have no idea how much these proposals would shift resources from young to old, and frankly, I don’t think their advocates do either.

Why does every Social Security reform proposal I have seen avoid addressing these issues? As with many policy areas, we can easily fall into a time warp, thinking that a few tweaks will let us keep doing things mostly the same as before. We also assume we can always fix what is already a patchwork garment by clever sewing through the tears. When it comes to Social Security, reformers have long viewed it as an actuarial challenge: raising enough money to pay a set level of benefits for 75 years. Then, reformers add one tax fix here and one benefit fix there, mostly based on the current structure, to meet that actuarial objective. Naturally, Democrats focus on boosting benefit growth, while Republicans try to limit tax increases. But neither side clearly states the goals they want to achieve for both the elderly and the young.

Sometimes, moving to a new house is necessary when many features of the old one are no longer structurally sound. That’s not a bad thing. We can recreate the best parts of what we had, but now in a home that can better adapt to a changing environment.

To build the best possible future structure, reformers must openly confront the fact that yesterday’s architects built today’s system on assumptions that are no longer valid or never were. Among these flawed assumptions are:

• That Congress must sustain a budget that consistently prioritizes older generations with increasingly higher transfers, no matter what other societal needs emerge.

• That one can set an ideal “annual replacement rate” without considering how lifetime benefits increase as people live longer and any decline in the number of taxpayers available to fund that benefit.

• That spousal and survivor benefits can (or ever could) be built fairly and efficiently around the stereotype of a male breadwinner who needs to contribute nothing additional to garner additional benefits for any spouses and survivors, and

• That continually providing more years of retirement support is progressive, but in reality, it disproportionately benefits the wealthier and those who live longer.

Beyond Social Security, Congress created Medicare with few budget limits on its growth at a time when total national health care costs were about 6 percent of GDP, compared to 18 percent today. Along the way, Congress effectively transferred its appropriations power to you and me once we become eligible for services and demand more services, and to providers who can often set prices for what the government must pay.

Hidebound to old economic, cultural, and demographic assumptions, Congress and presidents also continue to treat the jerryrigged combination of Social Security, Medicare, Medicaid, long-term care, Supplemental Security Income for the elderly poor, and pension subsidies as separate issues, as if the effectiveness of one bears no connection to the others. Likewise, they often handle decisions within each program—such as retirement age and funding for long-term care—as independent, when, in fact, at any given level of cost and progressivity, increasing resources for one goal decreases what is available for others.

There’s a similar dilemma with taxes. Reformers often treat each decision about what taxpayers should pay to support each system as separate. Then, within each system, they further obscure true costs by mixing multiple revenue sources. For example, with Medicare, Congress hides the costs from the public and itself by relying on multiple revenue sources, including payroll taxes, two sets of higher premiums for higher-income beneficiaries, income taxes, taxation of Social Security benefits, and borrowing.

All this confusion about how Congress distributes benefits and taxes has led me to conclude that only an elderly, not just Social Security, reform can address these issues efficiently and fairly.

Either way, we still face the core question of what constitutes a reasonable amount of net transfers (transfers minus taxes) from the young to support the old. Only after addressing that can we better analyze how to allocate those transfers \across benefit and tax programs.

Although this might seem like an abstract exercise, one practical approach is to compare the relative well-being of each age group over time. After all, all transfer programs largely attempt to meet the needs of different groups. I also suggest that Social Security reformers originally adopted this perspective, though quite imperfectly, when they built the current system around the idea of a replacement wage. In reality, it wasn’t a genuine replacement wage but rather a method of transferring to a typical retiree an amount equal to about 40 percent of a typical worker’s wages.

I will elaborate in an upcoming column. For now, I ask you to agree that you can’t design elderly or Social Security reform effectively without a way to assess how much the young should transfer to the old. Otherwise, Congress won’t understand what it is creating when it finally decides to stack dozens of tax and benefit parameter changes separately to hit some actuarial target. It won’t realize the extent to which it is driving and pre-ordaining broad social and cultural changes for both young and old over time. Finally, recognize that a fair and efficient solution today, when the old are generally wealthier than the young, will almost certainly differ from a past when the young were much wealthier than the old.

Under 31 U.S. Code Section 1105, the president must submit a budget for all spending and taxes to Congress by the first Monday in February each year, while another law requires a ten-year accounting for many budget items. On April 3, the Executive Office of the President and the Office of Management and Budget responded to this requirement by submitting a nano-budget or budget-lite.

The purpose of a government budget is to reflect the preferences of the nation or, at least, its elected officials, within the unavoidable constraints imposed by limited resources and the requirement to pay for expenditures in one way or another. The President’s budget is by far the most incomplete and misleading submission since Code Section 1105 modernized budget reporting laws in 1982 to give the nation a clearer understanding of its financial direction and the new policies supported by the President.

That incompleteness was intentional, serving to conceal problems and the consequences of the unsustainable budget we already have. A budget lite omits the numbers, assumptions, and distribution details that enable evaluation. Like the attack on the scientific method, it removes the evidence that can help increase knowledge and improve results. As Concord Action* (info@concordaction.org) states: “When the White House delivers only partial proposals, lawmakers and the public lack the comprehensive framework needed to make informed trade-offs between competing priorities, or to even know if the president’s proposal would reduce the debt, raise the debt, or keep the budget on its unsustainable path.”

Government by executive whim, of course, is inherently incompatible with detailed planning, programming, and budgeting. It also neglects the authority granted by the Constitution to Congress.

The budget document offers no ten-year accounting and provides very limited data on the three-quarters of spending that is mandated and doesn’t require annual appropriations. As I have previously mentioned, presenting a ten-year budget plan would force the president to identify who will pay higher taxes or lose benefits to cover the shortfall in Social Security and Medicare revenues needed to maintain current retirees' benefit levels within a few years. Rest assured, you will not see a ten-year budget submission during this presidential term as long as the president keeps his promise not to touch Social Security. Let someone else, this Administration implies, address who will be the losers from dealing with a set of unsustainable promises for rapidly increasing spending with no matching revenues.

As identified by the Committee for a Responsible Federal Budget (CRFB),* the document wishes away enormous amounts of additional borrowing necessary to cover the significant and growing gap between outlays and revenues. It achieves this by assuming a substantial increase in revenue due to an unusually high rate of economic growth. CRFB’s estimates show debt as a percent of GDP rising from 100 percent in 2025 to about 125 percent in 2036 under the president’s budget. It also shows little change resulting from the combination of proposals in that budget. However, with the very optimistic economic assumptions, debt could fall to about 94 percent in 2036.

While the President’s budget assumes an average real GDP growth rate of 3.0 percent, there has been only one year since 2005 when it was higher, and that was during the COVID-19 recovery, with only one other year reaching 3.0 percent.

The budget proposes a significant boost in defense spending. Still, it largely overlooks the effects of the ongoing global arms race and the intentional weakening of institutions like NATO and the Voice of America, which supported the Pax Americana established after World War II. The president now turns to them to support his Iranian strategy. The budget also presumes that further cuts in non-defense discretionary spending as a share of GDP—the part of the budget that has already been decreasing over the past few decades—can fund a substantial share of the defense increases.

Meanwhile, the initial release of the budget includes fact sheets to justify proposed cuts and increases, heavily using language associated with cultural warfare, with terms like “weaponized” and “woke” to justify proposed cuts in domestic programs, “drifting crime epidemic,” “invasion,” and “dangerous” to justify aggressive rounding up both undocumented and sometimes documented immigrants, and “dominance” to promote mineral production and “scam” for efforts to develop alternative energy sources.

Now, let’s be clear: many games have always been played within these budgets. Past presidents and political appointees often proposed poorly designed plans and sometimes exaggerated the extent of extraordinary growth that would result if Congress agreed to the President’s agenda. However, OMB has long been one of the most professional agencies, providing honest and unbiased numbers, even when those numbers are made consistent with politically motivated assumptions.

That’s a tough job. Politicians often get frustrated and upset when told that their figures behind their promises and guesses don’t add up. Many political appointees don’t appreciate a civil servant informing them about the costs and unforeseen effects of the actions they support. Still, that exchange with honest and straightforward budget offices has been one of the great, underappreciated strengths of our federal government.

By providing a budget-lite, the Administration does not force OMB to lie with the numbers. It simply prevents it from sharing most of what it knows. At some point, I’ll try to explain how this weakening of budget, economic, and tax offices across the Executive Branch—a process in motion for quite a while—has become a major obstacle to effectively reforming almost anything.

I know, I know. Good budget policy-making is boring. But I wonder how long some people will continue to think that cultural and foreign war-making is more fun.

*Full disclosure: I serve on the board of the Committee for a Responsible Federal Budget and engage frequently with the Concord Coalition, including in this interview.

The Treasury Department recently took over the management of the student loan program from the Department of Education. In continuing its dismantling of the Department of Education, the Trump Administration blamed the Biden Administration for its efforts at loan forgiveness. In reality, the program has faced problems that were easy to foresee from the very beginning and have persisted through every Administration, both Democratic and Republican. Its basic structure and design have contributed to widespread management glitches.

But that’s not even the main issue. Congress, in its wisdom, created a program that caused a significant decline in young people’s net worth. Additionally, the program contributes to delays in household formation, marriage, and childbearing.

A simple solution has long been available: let the progressive individual income tax perform its basic role of collecting revenue from those who are successful and who have benefited from past government investment. And use national service or work-service scholarships as an alternative way to repay some government loans.

The Management Problem

Many people, especially those who see little or no return on their investments, struggle to pay off their student debt. As one example, Black individuals—who are less likely to either attend or graduate from college—carry more debt than white households well into middle age. Even if they do graduate, Black students owe nearly three times as much debt as white students four years after graduation. Simply forgiving some students’ debts while maintaining the basic program structure isn’t a solution to the broader management problem. In many ways, it adds to the problem, as individuals realize that paying off their debt only penalizes them; better to wait for forgiveness.

Decline in the net worth of the young

While the question of how to manage student debt occasionally rises to national attention, few reports link the sharp increase in student debt with the slowdown in wealth accumulation among younger people. For example, although the net worth of those aged 20 to 47 roughly doubled between 1983 and 2022, the wealth of older individuals tended to multiply three, four, or five times.

Student debt is one factor behind this growing gap. Net worth equals assets minus liabilities. The much higher debt incurred by recent generations leaves them with a much lower net worth growth rate than that achieved by older generations.

Of course, if the extra student debt had contributed more to their human capital and knowledge, those hard-to-measure assets might have offset the increased debt costs. However, there is little evidence that this debt has significantly increased human capital among recent college students compared to those in the past. Essentially, turning a relatively affordable higher education system into one accessible through much higher student debt wasn’t really an education policy. It mainly served to shift costs onto young people.

Many analysts mistakenly focus only on whether a college education is worth the cost of a student loan. For many people, it certainly is. However, the question I am raising concerns the overall effect of replacing direct support from the state and federal governments with loans. Adding everything together, it seems this shift mainly led to a decline in net worth for young people, due to minimal gains in “human capital” (knowledge) and a significant increase in financial liabilities.

Behavioral responses to the student debt: less college, delayed household formation

The threat of a debt overhang likely has contributed to declines in college enrollment and in the associated effort to build knowledge and human capital. After peaking at around 70 percent in 2009, the proportion of recent high school graduates enrolled in college fell to 62 percent by 2022.

Student debt further delays household formation, marriage, and childbearing, which together postpone homeownership. Among 18–29-year-olds, about 40 percent lived with parents in 1900, 50 percent during the Great Depression, 30 percent near the end of the 20^th century, and now close to 50 percent again.

Mind you, I am not claiming that the increase in student debt solely causes the correlations examined here. I am simply expanding on one aspect of a broader argument I make elsewhere: that public policy over recent decades has largely abandoned the young, the working class, and the American dream.

Better ways forward

Much of the debate over student loans is misguided. When the government funds business research and investment, it anticipates earning a return from a growing asset base through taxes later on the profits of successful companies. Attempting to collect loan repayments, especially from those who didn’t finish college, moves in the opposite direction. It leaves the least successful with the largest debts.

Legislators have much simpler ways than acting as loan collectors to recover benefits from those who profit from government investments in education. The main method is the income tax, which, with some exceptions, progressively taxes most high earners. There is no need to create complicated recapture systems for every government program.

Also deserving of support are initiatives to provide national service and work options to help repay student debt. Of course, as Richard Reeves and Belle Sawhill point out, and as those involved in an experimental work-service scholarship program at Cornell University note, the benefits to broader society go far beyond simply making student debt less burdensome.

For whatever it’s worth, I don’t know a single college-educated person of my generation who doesn’t believe that recent generations of students have been shortchanged compared to us.

Over the past few years, I’ve had the opportunity to review several Social Security reform proposals. When I’m asked for my opinion, I find myself in a difficult position. On one hand, I’m glad to see some people have come forward proposing benefit cuts and tax hikes to improve the system’s balance. However, every proposal I’ve encountered so far lacks a clear long-term vision for what our support system for the elderly should look like relative to other programs and the tax system that underpins them.

In a sense, Social Security reform requires performing a type of triage that includes a complete diagnosis of Social Security, a way to prioritize it relative to other programs, and a recognition of resource constraints. Social Security is one patient. Other programs supporting the elderly and non-elderly are the other patients.

The flaw in the reform process so far, at least as I see it, sometimes lies in proponents’ efforts to meet partisan goals. At other times, reformers jump directly into designing bipartisan compromises without first clearly defining the program’s objectives and the best ways to achieve them. Universal principles like equal treatment of equals (or equal justice) and efficiency, which are neither liberal nor conservative nor partisan, are rarely applied thoroughly to parts of reform plans.

Below, I outline four triage decisions that I believe can help lay a foundation for building the best possible Social Security system as part of a broader reform of elderly programs. They leave many choices unresolved, but, like a triage system, provide some guidance on how to prioritize.

Balance Between Social Security and Other Programs for the Elderly

Presumably, a major goal of Social Security, as Franklin Roosevelt emphasized, is protection against “poverty-ridden old age.” Another goal might be to provide a comfortable retirement, however that is defined. However, one cannot assess how well Social Security achieves either goal without considering the elderly programs as a whole.

Consider the connection between Social Security and health care provided through Medicare and Medicaid. Medicare benefits, which are growing faster per beneficiary than Social Security, will soon become the main source of lifetime support for most people. Think about all the links between cash and health care supports that make it hard to reform each one separately.

On the elderly benefit side…

• Controlling Medicare cost growth makes it easier to sustain higher Social Security benefits.

• As baby boomers begin entering their 80s and 90s, the demand for long-term care will grow. To determine whether Social Security cash benefits are sufficient, one must understand how much healthcare costs will be covered by Medicare and Medicaid. Conversely, to determine how much additional support is needed for long-term care, one must know the amount of available Social Security cash benefits that can help pay for those costs.

On the tax side…

• The level of benefits in Social Security and Medicare depends on the amount of revenues that fund them. The Social Security tax deducted from our paychecks is already shared between both programs. Both rely heavily on the same tax base.
  
  

• Sources of revenue other than payroll taxes will increasingly cover most of today’s Medicare costs and, likely, larger portions of Social Security. In the latter case, Congress may do so indirectly through methods such as one-time transfers of large sums, “loans” from general revenues, and additional income taxes on Social Security benefits. Medicare already obscures its true costs by drawing from multiple revenue sources. Doing so for Social Security independently would make it even harder to rationalize and reform our tax system.

Beyond Social Security and healthcare, many other government programs assist the elderly, including Supplemental Security Income for low-income seniors; SNAP (formerly Food Stamps); and tax subsidies for private retirement plans. Congress needs to give similar consideration to how these programs function as substitutes or complements to Social Security and to how they integrate into a comprehensive reform of elderly programs.

Level of Future Lifetime Benefits

Reform must address the rate at which lifetime benefits increase for the elderly. Focusing solely on future annual benefit levels often overlooks this issue. It avoids the critical question of whether more years of retirement at a lower annual benefit are preferable to using the same dollars to fund fewer years at higher annual levels. Choosing more years of retirement also reduces the number of workers who provide the revenue supporting each retiree.

Lifetime Social Security and Medicare benefits will exceed $1.3 million (in 2026 dollars) for average-income couples who retired in 2020 at age 65. When adjusted for inflation, this amount is twice what a similar couple received in the late 1970s. That figure is expected to double again to about $2.6 million for a millennial couple now aged 30 to 35. Roughly extrapolating, the total would surpass $4 million by the time my youngest grandchildren turn 65. If they earn above-average incomes, they could receive $5 to $6 million. Reform needs to decide how much emphasis to place on this kind of growth and whether it should remain the federal government’s dominant policy priority.

As I mentioned, give credit to reformers for engaging the discussion. Many agree to limit benefit growth. However, I challenge you to ask proponents whether they truly understand the lifetime benefits they are proposing, let alone what principles and goals have led them to choose that number.

Level of Eternal Promises

Eternal promises are inherently inefficient without crystal balls that can divine the future. They become more problematic when they contain requirements for eternal growth. For more than fifty years and into the indefinite future, Congress has scheduled both Social Security and Medicare benefits per capita to increase automatically faster than our per capita national income. That situation persists under the current law.

While I agree that some long-term commitments are necessary—such as providing retirees with certainty about their future annual benefits—I question whether Social Security and Medicare should be granted such automatic priority in the budget over items like education, children, worker supports, defense, or other government obligations.

More specifically, Social Security reform must be considered within the larger debate about how much mandated spending—expenditures that do not require new appropriations over time—should dominate the budget. High levels of mandated spending weaken fiscal democracy, in which options compete fairly, and each generation has a strong say in how the revenues they contribute are allocated. Our current lack of fiscal democracy creates a problematic political situation that compels elected officials to break previous promises to pursue new policies—one of the main reasons for Congressional weakness today.

Recall when the 1983 reformers established the modern structure of today’s Social Security system. For decades, the unrealistic promises they made then have complicated every attempt to improve the system’s sustainability, causing delays until just a few years hence, when the trust funds prove unable even to meet obligations to current retirees.

Balance of Benefits and Taxes Between Young and Old

When Congress first enacted modern programs serving the elderly, it transferred money from the wealthier, younger population to the much poorer, older population. Today, in many ways, the relative well-being of older people compared to younger people has reversed. CBO estimates that, in 2022, 11 percent of people in families with a head over age 65 were in the bottom quintile of the income distribution, largely due to Social Security and Medicare transfers, compared with 25 percent of individuals in families with children and 18 percent of non-elderly families without children.

To make matters worse for the future, the increase in Social Security, Medicare, and interest costs alone is set to swallow all revenue growth. Meanwhile, rising deficits fund every other spending program and add to our unsustainable national debt. The working class, the young, and programs that support their upward mobility have been among the biggest losers over recent decades and will continue to be so under the current law.

Again, this is not just a benefit issue. The higher the rate of benefit growth for the elderly, the more that new taxes are required to cover those costs. And the higher the priority given to using new taxes for Social Security and Medicare, the harder it becomes to use those taxes to address the nation’s deficits and programs for the non-elderly.

***

In summary, Social Security reform should be part of a broader overhaul of policies for the elderly. This broader reform should include all programs that support older adults, identify and evaluate the appropriate level of future lifetime benefits to mandate, restore fiscal democracy by limiting the scope of eternal promises, and leave more decision-making authority to future elected officials. Overall, reform must also consider how much can and should be transferred from younger to older generations, taking into account the economy’s evolution, its future workforce, and the after-tax income available to those whose taxes fund these transfers.

In last year’s One Big Beautiful Bill Act (OBBBA), Congress added at least $4.1 trillion to federal deficits over the next decade, but it is only one of many factors expected to push federal debt to more than $56 trillion, or roughly 120 percent of GDP in 2036.

As debt continues to increase, there are genuine concerns about what this trajectory means for the economy and household finances—especially the burden of rising interest costs. Although short-term fiscal policies have sometimes helped limit the severity of past downturns, there is little evidence that fiscal policy as a whole, including failure to pay for those interventions, has boosted long-term growth; if anything, the evidence points the other way.

It’s past time for policymakers to take a hard look at spending and revenues. Through higher debt and interest payments on that debt, delay only increases burdens on future generations and makes eventual adjustments more difficult.

The long-term pattern

The modern upward trend in federal debt began in 1974, when the federal debt-to- GDP ratio hit its lowest point since World War II. Since then, this debt ratio has generally grown, except for a brief decline from the mid-1990s to the early 2000s. That dip resulted from various pieces of legislation supporting deficit reduction and a mix of temporary, favorable conditions, such as baby boomers entering their most productive years and a revenue-boosting stock market boom. After that period, the debt ratio increased sharply, soon surpassing World War II levels.

After World War II, US policymakers faced a fiscal policy challenge that was the exact opposite of today’s. They had to increase spending and cut taxes so that projected surpluses under current law—or revenues significantly in excess of small amounts of mandatory or committed spending—would not hinder economic growth.

Today, massive deficits arise even in the best of times. In fiscal year 2019 and from 2022 to 2025—years surrounding the COVID-19 pandemic—the unemployment rate hovered around 4.1 percent, yet the annual deficit still approached $1 trillion in 2019 and hit approximately $1.8 trillion in 2025—a level it is expected to approximately maintain in 2026. Debt has been rising significantly faster than GDP, a situation that virtually all economists, even those who might once have thought otherwise, consider unsustainable.

While some worry that reducing the federal deficit causes a consistently shrinking economy, a quick look at the numbers suggests the opposite. In the period from 1946 to 1974 (the first period shown in the graph), the debt-to-GDP ratio decreased by about 3 percentage points per year on average; however, since the early 2000s, it has increased by roughly 3 percentage points per year. In contrast, GDP grew at its fastest rate—an average of 3 to 4 percent—during that first postwar period and about 2.2 percent in the first quarter of the 21st century. Even after adjusting for slower population growth, annual real GDP per capita growth has dropped by nearly 1 percentage point in this century compared to the period from 1946 to 1974.

In addition, the economy grew more rapidly during the first post-World War II period, and the distribution of market income and wealth became more equal rather than less. Today, they trend in the opposite direction.

Rapidly rising debt, greater wealth and market income inequality, and slower growth together define our modern condition. Fiscal policy, especially one where Congress refuses to pay for its spending, plays a major role on all three fronts.

The future looks even more alarming. Just sticking with the current law—meaning Congress and the President don’t engage in any more net giveaways—will maintain that debt-to-GDP growth rate of nearly 3 percentage points each year. Debt is expected to exceed $56 trillion by 2036. As a share of GDP, it would rise by roughly 20 percentage points between 2025 and 2036, reaching 120 percent.

What renders the future of debt growth particularly troubling is that two major crises this century—the Great Recession and COVID-19—were met with more fiscal stimulus than any prior non-war emergency. But Congress never provided offsetting funding for those fiscal responses, and those unfunded measures have contributed significantly to debt growth this century.

Where will policymakers go from here?

Projections based on current law indicate that dramatic debt growth will continue even without a major crisis. Total revenues will remain well below total spending, and the growth in the costs of Social Security, Medicare, and interest on the debt alone will exceed all growth in revenues, which derive largely from economic growth.

It’s literally impossible for debt to grow forever faster than income, whether in a household or a nation. At some point, policymakers must drastically rebalance spending and revenues. The longer they wait, the more drastic that rebalancing will have to be, and the greater the negative impact on economic growth and our capacity to allocate our resources to modern needs and opportunities.

*This column is largely reproduced from Tax Vox, February 13, 2026

In the first year after a new political party takes over the White House, it makes extraordinary efforts to push forward its agenda and the interests of its supporters... “gettin’ while the gettin’ is good.” Especially in recent decades, with many instances of divided control over the White House, Senate, and House, each new President and their party often propose—and succeed in later getting enacted—some of their most significant domestic policy changes during that first year: tax cuts (Reagan, 1981), budget reform (Clinton, 1993), tax cuts (W. Bush, 2001), Obamacare and the “Stimulus Act” (Obama, 2009), tax cuts (Trump 45, 2017), American Rescue Plan and Inflation Reduction Act (Biden, 2021), and tax cuts & extraordinary executive actions (Trump 47, 2025). The victorious party’s demand that “it’s now our turn,” the public’s desire for “something different,” and the precedent set by past presidential turnovers make the choices made that first year particularly crucial.

Let’s look ahead to early 2029. If the Democrats regain control of the White House, what should their agenda be? Is it a continuation of the Biden agenda? I don’t think so; that didn’t work out very well. How about expanding healthcare and Social Security, the main focus, at least if you look at the numbers, for every Democratic President since World War II? Unfortunately, as early as 2032, Social Security and Medicare will be unable to pay beneficiaries the same amount they received in prior years. Therefore, simply adding benefits beyond current unsustainable obligations isn’t an option. Even if Democrats want to avoid addressing those required tax increases or benefit cuts, for the first time since 1983, they can’t.

At least, attention to those trust fund problems has already been set in motion. I suggest that the most pressing issues our elected officials should address by 2029, if not before, are not just these budget issues but all the many other challenges that are constitutional (“con”- together; “statuere” – cause to stand) in the sense that they require procedures that future White Houses and Congresses could not easily breach. I place a bracket around the letter “c” because of my own uncertainty about what each reform requires, such as a Constitutional amendment, legislation, a different legislative process, or simply stronger social or cultural norms under which we agree to abide.

After being knocked off the wall like Humpty Dumpty, with their leaders often violating laws, standards, and protocols maintained for decades, departments and agencies such as Justice, FBI, Health and Human Services, Immigration and Customs Enforcement, and the Agency for International Development can’t be put back together the same way. They, too, need some way to be reconstituted with a “regular order” that both the public and their employees can trust.

Solutions that future Presidents can easily overturn are not enough. Indeed, the republic faces a major risk that many Republicans will see whatever future actions Democrats take as merely another cycle of retribution, which then must be met with yet another cycle of retribution, and so on.

You can already see how this problem can multiply by watching Democrats in states like New York and Virginia trying to emulate Republicans in states like Texas by designing complex patterns of representation. These efforts effectively take democratic representation away from large portions of their populations, as when a 45 percent minority in a state gets only 15 percent of that state’s Congressional representatives.

Long-term constitutional reforms almost always need bipartisan support. Still, new Presidents rarely choose to limit their own power and the benefits they can give to themselves and their friends when they take office. But we can see the long-term effects. For instance, disregarding long-term consequences, they increasingly centralized authority and controlled the flow of information from the Executive Branch within the White House, laying the foundation for many of today’s excesses.

So many standards built up over decades have been flaunted that it’s hard to know where to begin. Here are just a few areas that need to be tackled:

• Privacy protections for government-collected information on individuals where no prosecution is considered justified.

• Limits on and penalties for illegal actions that threaten, weaken, and harm“enemies” regardless of later court declarations of illegality.

• The excessive number and often the lack of qualification of political appointees

• Civil service protections and reforms.

• Enforcement of Constitutional limits on presidential emoluments

• The President’s authority to issue pardons.

• Apportionment of Congressional districts within the states, at least in years other than required under the once-a-decade Constitutional mandate.

• Application of laws impartially across state and other jurisdictional boundaries, not based on retribution for how each state or locality previously voted.

• Allowance for individuals to pursue civil suits against a political appointee who lies about them or otherwise violates their rights.

• The maintenance of bipartisan and nonpartisan boards and offices.

• Budget practices that restrict how much current officials can predetermine what future voters and their elected representatives must do.

• Trustworthiness of America’s treaties and commitments.

Recognizing issues that need attention is, in many ways, the easy part; proposing a solution that doesn’t create more problems than it solves is much harder. For example, see this debate about some proposals to limit the President’s power to grant pardons.

Chaos reigns now. In such primal states, it’s difficult to predict how evolution will unfold. I certainly don’t have, nor do I trust anyone else to have, more than a glimpse or two of what future fair and efficient processes might entail. For now, I only assert that we must not wait on the political dynamics at the start of a new Administration to begin figuring out what the best constitutional approaches should be.

Source: Author’s estimates based on CBO Distribution of Household Income in 2021.

The Wall Street Journal recently published a story about the concentration of wealth among the super-rich and their ability to avoid taxes. It claimed that the economy is especially dependent on “rich households, whose spending is tied to the performance of the stock market.” Paul Krugman responded to the piece by highlighting the extraordinary concentration of wealth among the very wealthy, especially at the very top. For example, he cites research by Gabriel Zucman and colleagues showing that the one-in-a-million people at the very top of the wealth distribution now hold nearly 2 percent of our society’s net worth. He also correctly notes that the average tax rate from all sources for the rich isn’t much different from, and often lower than, that of much of the middle class. This tax story is not new: for decades, colleagues and I (see here, here, and here) have pointed out how the rich realize only a tiny portion of their income—often 2 percent or less—despite likely earning at least 6 to 10 percent annually, and usually much more (after all, that’s how many got rich).

Reading the WSJ and Krugman articles, one might think the main issues raised by the wealth distribution involve how to treat the rich, their spending, and the taxes they pay. However, our government has long promoted not just “wealth for the wealthy” but also “consumption for the masses,” while overlooking wealth building for large parts of the population, including the human capital that is the main source of income for most families.

The reliance on the wealthy is not on their spending, as the Wall Street Journal suggests. Just as the wealthy accrue most income as capital gains and recognize only a small fraction of it as taxable, they also consume a much smaller portion of their income than other wealth classes. You can spend a lot on new assets, even islands, but how much can you really consume if your wealth surpasses a hundred million, let alone a billion, dollars?

Where dependence on the wealthy has increased, therefore, is through the savings they accumulate from their higher levels of wealth and income. Their ever-increasing shares of the nation’s savings and investment then further contribute to wealth inequality.

At the same time, much of the population has become increasingly reliant on the government to support their consumption. In the graph above, I used CBO data to compare growth from 1979 to 2021 in real, inflation-adjusted market incomes (such as wages, dividends, and interest) and total income across five income groups. The change in total income adds to market income the change in net transfers, or transfers minus taxes. Transfers include Social Security, healthcare, food benefits, unemployment compensation, and other supports. (Note: while 2021 was an unusual year because of COVID-19 and the government response to it, I found quite similar trends, though of a somewhat smaller magnitude, before the COVID-19 period began.

The groups are ranked by market income, from the poorest 20 percent of the population (the lowest quintile) to the wealthiest 20 percent (the highest quintile). If market incomes, transfers, and taxes had all increased proportionally across all groups—that is, if the share of each had remained constant—every bar in this graph would have been the same length. Total income, market income, and net transfers (transfers less taxes) for all groups would have grown at the same rate.

As you can see, however, the rate of growth in market income is much, much higher for the top quintile than for all other quintiles. Not surprisingly, increases in market income inequality are positively associated with increases in market wealth inequality. However, the story of growing market wealth and income inequality remains incomplete without acknowledging the extraordinary increase in reliance of most income groups on net government transfers for much of their income growth. The graph shows how intertwined the two are.

It’s hard to believe that these trends in market income inequality and dependence on government are sustainable. Two additional complications add to these threats. First, in recent decades, both political parties have increasingly tried to subsidize both the wealthy and the non-wealthy through extra borrowing, leaving our national debt hanging like a Damocles sword over everyone, rich and poor alike. In a sense, the growth in net transfers for the bottom 80 percent of the population hasn’t just been funded by higher taxes on the highest income quintile but by ever more debt passed on to future generations. In fact, the average net tax rate (tax minus transfer rate) for the highest income quintile declined from 1979 to 2021. The higher-income group does shoulder a larger share of the total tax burden, but mainly because they have a much bigger share of income.

Second, probably because of extremely low borrowing costs for many years, wealth valuations like the value of a house or stock have grown significantly faster than income since about 1990. That wealth bubble has also likely added to market wealth inequality. At least in relative terms, it seems the middle and lower-upper wealth classes have found it easier to use those excess valuation gains to consume, for instance, by spending down housing gains when moving. In contrast, the wealthy have found it advantageous to use low borrowing costs to leverage their wealth accumulation further.

I realize I’ve presented a lot of information in this brief space. I discuss it in much more detail here. There is a straightforward economic takeaway: the rise in wealth and market-income inequality, on the one hand, and the ever-increasing reliance on government, on the other, reinforce each other, are unsustainable, and must be addressed in parallel with our unsustainable budget situation.

For now, I’ll let you speculate on the political takeaway. It’s also not pretty.

While federal legislators have often promoted investment in equipment and other business capital, evidence indicates they have increasingly reduced the portion of national income allocated to the larger, more significant stock of the nation’s capital: the knowledge and skills of the people, often called “human capital.” In all types of capital accounts—financial, real, or human—net investment equals gross investment in new capital minus what is known as depreciation, or the decline in value of existing capital due to obsolescence and other factors. The federal government has especially been encouraging faster depreciation and obsolescence of U.S. human capital for some time, only intensifying this effort in the last year.

Unlike financial and real capital, there are no markets to assess the overall value of human capital. However, as I explain here, the market income of individuals, represented by wages, along with dividends, interest, and other forms of capital income, provides at least a way to gauge the market return from all types of capital, including human. Data on the limited growth in market incomes over recent decades, except near the top of the income distribution, suggest that there are limited gains in human capital for much of the population.

I recognize this discussion is somewhat abstract. I want people to see how rising market income inequality, excluding government transfers, reflects not only the gains of the wealthy but also limited improvements in ownership of financial, physical, and human capital for most others.

Below, I provide more concrete evidence of how the government has been undervaluing the U.S. stock of human capital: declining investment in education and children; treating larger portions of the population like “one-hoss shays,” which suddenly depreciate rapidly and fall apart when they reach their early-to-mid 60s; and more recently, undermining business competitiveness through tariffs, defunding research, and restricting the number of highly skilled and creative immigrants entering the country.

The Evidence

Education and Children

Since 2007, my colleagues at the Urban Institute and the Tax Policy Center have been tracking spending on children in a Kids’ Share publication. Over recent decades, this spending has remained relatively modest at the federal level and has decreased significantly as a share of domestic spending. About 400,000 classrooms lack a certified or qualified teacher. And, one of my pet peeves, this wealthy nation still refuses to provide more universal access to early childhood education with well-paid teachers.

Meanwhile, as student loans in higher education have replaced other forms of direct support, they have contributed to reducing both college participation and young people’s net worth by significantly increasing their financial debt without providing educational gains.

Regardless of the level of inputs, data from the National Assessment of Educational Progress show that high school seniors’ math and reading scores have dropped to their lowest levels in over 20 years. Absenteeism remains consistently high. Meanwhile, college attendance rates have declined significantly, especially among men, as new students face high costs and limited financial aid. Our overall educational achievement today is far below that of other countries.

Treating people like one-hoss shays that suddenly fall apart.

Most investments, such as in housing, plants, or equipment, are assumed to depreciate or lose value over time as they age and need more repairs. Retirement policies, however, define older people as almost instantly becoming unproductive even as, over time, they have become healthier. Like “one-hoss shays,” they are believed to work well until one day they suddenly fall apart and should simply be discarded as useless, at least within formal markets. Social Security, for example, tells us we are all officially “old” at age 62, but not a day before. When the program started, lives were shorter, and work was more physical; it defined people as “old” (eligible for Old-Age Assistance) at age 65.

As a result of this attitude, our government retirement systems, supported by many private and public employee retirement plans, have encouraged individuals to retire completely rather than gradually from the workforce, partly through rules that penalize later retirement and obscure phased-retirement options. Anyone over age 65 who remains employed with an employer that offers health insurance loses thousands, possibly up to $10,000 per person, in Medicare subsidies. Meanwhile, through a mechanism known as an “earnings test,” Social Security begins reducing benefits when earnings exceed a modest amount. Although higher benefits later compensate for this reduction, many people see the benefit cut as a form of tax. Additionally, the Social Security Administration makes it quite complicated and non-transparent for individuals to take partial retirement.

Despite this, because of longer lifespans and earlier retirements, people now retire about 13 more years than they did in 1940, when Social Security first began providing benefits. A typical couple will have at least one person living to around age 90, roughly three decades after benefits become available at age 62. While many have found ways to stay productive outside the workplace, many have not. But there’s no end in sight. Medical advances continue to extend the length of retirement, especially for those with higher lifetime earnings.

Reducing competitiveness

Efforts to protect U.S. industry through tariffs often create a dependency that makes protected businesses less competitive. Moreover, one industry’s gain is often another’s loss, since many domestic production lines rely on tariffed inputs from abroad. The latest reports on China indicate that it is increasingly surpassing us in producing better and cheaper products.

This isn’t an argument against policies that make strategic investments, consider defense needs, subsidize research, and react to anti-competitive practices abroad. It is about the government arbitrarily choosing winners and losers based on whim and the efforts of lobbyists, campaign contributors, and members of Congress seeking a share of the subsidy pie for their constituents.

Meanwhile, in Science, Monica Hersher and Jeffrey Mervis explain that the federal government has lost 10,000 STEM Ph. D.s in less than a year since President Trump took office. During the same period, the number of international students attending U.S. colleges has dropped by 17 percent. (Thanks to Catherine Rampell for finding and sharing these statistics.) Even harder to measure are the long-run negative effects of the attack on research grants. Secretary of Health and Human Services Robert F. Kennedy’s hesitation to review evidence on certain vaccines is just one of the latest examples of the broader attack on knowledge itself.

***

Given these findings, it is hard to avoid the conclusion that we have increasingly relied on the investments and sacrifices of our ancestors rather than on our own efforts. Declines in K-12 educational achievement, lower participation in higher education, the retirement of larger portions of the adult population on average for nearly one-third of their lives, and policies that weaken industry through tariffs and federal actions targeting science and knowledge creation all reflect a nation that increasingly “depreciates its human capital” and no longer prioritizes the well-being of future generations.

Social Security’s upcoming insolvency—its failure without new legislation to pay annual benefits upon which recipients have come to rely—is no accident. It has always been part of the plan. It’s one more way current and past politicians attempt to force future politicians to maximize future benefits.

Politicians enjoy leaving lasting legacies. Large and impressive buildings and statues are one way, but once constructed, many of the costs are already paid. The bigger arena where elected officials seek to create permanent legacies is through the country’s spending and tax programs.

In its budget process, Congress designates programs that require no annual appropriation as mandated programs. The largest of these tend to have permanent or ongoing mandates to both continue and grow steadily over time. For decades, Congress has left Social Security, Medicare, and many healthcare programs on autopilot and expanding faster than the nation’s gross domestic product (GDP) or income. Current law requires that they continue doing so indefinitely. In fact, they alone, along with interest, now account for more than 100 percent of projected future inflation-adjusted spending growth and over 125 percent of revenue growth.

The overlooked and less acknowledged part of this story is that Congress designed these programs to fail financially. Regarding the Social Security trust fund, our elected officials have been aware of this issue for decades but have failed to act (see the chart above). In fact, they have often tinkered with this unsustainable program, making it even more unsustainable. In 2024, for instance, they increased benefits but not revenues by granting many state and local government employees who had for years avoided paying any Social Security tax a very high rate of return on what modest tax they may have paid.

Let’s be clear. Social Security, our nation’s largest program, is a significant success story. Successful on average, that is, not at many margins, and not in how it is increasingly transferring from a younger, poorer population to an older, wealthier one.

How Social Security Reformers Scheduled Failure

In 1983, Congress enacted a Social Security reform that it projected would have enough funds for the next 75 years—until about 2058—before the trust funds would be depleted. At the scheduled depletion point, benefit payments would exceed revenues, mainly from payroll taxes. Essentially, a modest buildup of trust funds paid in during the baby boomers’ peak earning years, along with interest credited to those funds, would gradually but increasingly be spent down. In the later years, benefits would increasingly surpass incoming revenues until the trust funds were exhausted. After the 75^th year, Congress would need either to raise taxes or cut existing benefit levels.

Note that in 1983, Congress could have designed the programto avoid this inherent problem, but it chose not to. Instead, it left the issue for future Congresses.

Congress has also consistently failed to address a related issue: how conditions, especially demographic ones, could change. For example, it could have designed Social Security so that the number of years of benefits would remain constant even as people lived longer. It could have made other adjustments to account for changes in the birth rate and the number of workers paying taxes into the system. Again, it didn’t.

Just a few years after the 1983 agreement, the Social Security actuaries significantly adjusted the projected exhaustion date of the trust funds. Today, the estimated date is 2034, nearly a quarter of a century earlier than projected in 1983. Still, Congress and previous presidents have taken no action.

Why Did Congress Schedule And Then Refuse To Address Failure?

Elected officials like giveaways such as benefit increases and tax cuts. They dislike benefit reductions and tax hikes. They also like to enact temporary giveaways with expiration dates that future Congresses would feel forced to override. For those following the press, debates in 2025 over sustaining higher temporary benefit levels for marketplace health insurance exchange subsidies and lower temporary tax levels first enacted in 2017 are only two examples. Successive Congresses usually continue most, if not all, such giveaways.

The same logic appealed to the 1983 reformers. Many wanted to maximize future benefits, or at least minimize the taxes needed to pay for whatever benefits were promised. Everyone also understood that future Congresses would be especially unlikely to cut benefits already being paid to recipients below the previous year’s levels. That means that the closer reform is delayed to the date of exhaustion, the more that any future Congress must focus on increasing taxes or borrowing from general revenues. It would be forced politically to phase any benefit cut in gradually for future retirees, while protecting existing retirees. Consider a gradual increase in the retirement age. Had it started 10 years ago, that age would be higher now. Delaying the date of enactment preserves the retirement age for those who reach it during the delay.

Will The Next Reform Schedule Failure?

That the next reform will again schedule failure is highly probable. So far, many proposals still play the 75-year insolvency game the same way it was played in 1983. Under current projections, the bad years at the end of that period will require much higher benefits as a share of GDP than in the early years. That is, insolvency, with outlays projected to exceed revenues, will again occur near the end of the 75 years. More importantly, most (all?) recent major proposals to date fail to include adjustments over time to prevent insolvency in the face of unpredictable economic and demographic changes. Some proposals even provide only short-term revenues that simply push out the date of insolvency and sustain an even higher level of benefits on which beneficiaries have come to rely. Congress has long used this latter strategy for the Medicare trust fund.

For anyone who becomes engaged in future Social Security (and Medicare) reform, my advice is straightforward. Agree up front that no reform can deliberately schedule failure.

President Trump recently announced his intention to strip approximately 50,000 federal employees in “policy-related” positions of their civil service protections. He wants to convert them to Schedule F employees, whom any president can fire at will. Like Don Moynihan, one of the most informative writers on this subject, I see the politicization of public service as an extraordinary threat to the functioning of government. It disregards competence, skills, and merit as the basis for hiring, retaining, and promoting. Multiple layers of political appointees also block information flows within government, preventing the most informed from breaking through with even the best of ideas.

Here, I want to add how this move by the President poses a significant threat to the integrity of many professions engaged in both government and the private sector. Economics, my own field, is especially at risk, since many economists work in government in “policy-related” roles, want to work in government at least occasionally, or do contract work for the government. Much of their training and many of their jobs focus on evaluating the pros and cons of various policies. Silencing them, removing them, or replacing them with charlatans leaves us with a government that operates on whim rather than in pursuit of knowledge. Yet knowledge about policy often advances only through critical thinking that weighs costs against benefits and exposes the illogic of various ideas and propositions—information that many politicians don’t like to hear.

It’s not even clear how many types of jobs the President might treat as “policy-related.” President Trump fired the head of the Bureau of Labor Statistics after claiming that she had rigged a standard statistical report on employment “to make ME [him] look bad.” I worked for many years in the Treasury’s Office of Tax Analysis (OTA) within the Office of Tax Policy, whose strength and reputation mainly depended on its professionalism. While OTA usually has only one economist in a political position, often a former civil servant or academic, it has several dozen economists studying tax policy.

How do standards of integrity, critical thinking, and professionalism advance? In 2021, Jonathan Rauch wrote a brilliant book, The Constitution of Knowledge, about the “institutional and communitarian foundations of collective inquiry.” Concerned especially about the spread of disinformation, which was then mostly right-wing, and a cancel culture of conformity, then mainly left-wing, he highlighted how societies advance through networks of groups such as scientists, journalists, and lawyers who develop and operate under various norms, values, rules, and practices. He compared their “constitution of knowledge” to a political constitution, each functioning within processes and boundaries— the former to challenge and broaden our understanding of reality, and the latter to shape our ideas of good government.

Given today’s extreme binary and tribal thinking on political issues, from debates over mainstream media versus Fox News to scientists versus COVID-19 vs shot skeptics, you might think that many American professions lack integrity standards.

If so, you are mistaken. I know many people who have made great sacrifices to maintain high standards of integrity in their fields. However, you would be right to notice that personal and professional motivations often conflict. Economists, for example, share many traits with most workers. They need to be paid for their work. To influence policy, they must be heard. To gain political appointments, they need the support of those who make the appointments. And so on.

You can see where I am going. Economists, who spend much of their lives studying how others respond to incentives, face a wide range of incentives that influence their own behavior. The incentives for personal survival, profit, fame, and success often conflict with broader ethical and professional ones. Most, I believe, try to apply the professional tools they’ve learned effectively and with as little bias as possible. Some compromise more than others. Even then, much is beyond their control. When and how they use those tools are often limited by those who pay, listen to, and appoint them.

But that’s true for most of us. Few workers can accept pay from an employer and openly criticize that employer in public. Most workers understand that the product or service they help produce or sell might not always be the very best, but they convince themselves they are doing the best they can within those limits. Your Chevy salesperson doesn’t encourage customers to buy a Toyota, even if the Toyota has a higher rating on Consumer Reports. I have a good friend who didn’t last long selling admission to a nursing home because she always wanted to help the customer find the best nursing home for their situation.

Consider President Trump’s nomination of Kevin Warsh as the new head of the Federal Reserve’s Board of Governors. A variety of economists and writers on economics have entered the debate over whether his views are based on his analysis or on the incentives he faced to take stances favored by the Republican Party over time. If the latter, how would that influence the Fed’s independence? Paul Krugman has been especially skeptical, while Jeffrey Brown at the University of Illinois is quite optimistic (personal correspondence). Oren Cass, Jason Furman, and Natasha Sarin seem to hold a lukewarm to positive view of his appointment.

Based on these and other assessments of Warsh, I don’t see him as an outlier compared to many high-level appointments in recent administrations or some other Fed chairs. However, imagine if our concern about integrity and capability multiplies from an already extensive number of political positions to tens of thousands more. Then consider the likely continuing scenario in which the Democratic and Republican parties engage in widespread hiring and firing as political power shifts, with each side accusing the other of further retribution at each stage.

The negative consequences go far beyond good governance. They weaken the integrity of experts and professionals while destroying public trust in the professions themselves. Meanwhile, hundreds of thousands of young people hoping to serve in government see that partisanship and political connections, rather than ability, become their main routes to power.

Rauch emphasizes “constitution-like” norms and practices shared by both professions and government as a key way to develop knowledge and advance society. In the medium term, I hope we can revive a traditional public administration debate about how to build on these private and public “norms,” whether legal or social, so they complement each other in strengthening public service. For example, how much better could the civil service, bipartisan or nonpartisan boards, and Congressional, not just Executive Branch, agencies be made to function?

For now, we need to limit movement in the opposite direction and address the serious harm caused by aligning success for so many public servants with a specific political party, clique, individual, or ideology.

Today, we are living in the middle of a massive wealth bubble. In my column today, I will explore the history of this bubble so far, how it connects to the current exceptionally high stock and real estate prices, and how this multi-decade bubble has left most people alive today with little exposure to normal or traditional market risks. In upcoming columns, I will examine possible causes and how this wealth bubble relates to wealth inequality. And no, I don’t have a clear way to tell you how to time your investments or fully diversify them to escape some overall investment risk that spreads across so many asset markets.

Today’s financial stories are probably familiar to you. The stock market reaches new highs, with a few stocks driving the gains, while recent dips are linked to events such as real or threatened military actions in Venezuela and Greenland. Many young adults cannot afford homes, and policy experts say a new “affordability” policy agenda, focused mainly on deregulation, will help address this issue. The Federal Reserve Board cuts interest rates to support higher employment, but President Trump says they should be cut further and has tried to reduce or eliminate the Board’s independence.

Although these headlines, typically linked to some newsworthy current event, abound, most writers and pundits treat them as separate from each other and, more importantly, from a larger, longer-term pattern of wealth bubbling. A bigger story about the stock and real estate markets, as well as the debate over the Federal Reserve’s proper policy, is that we have not fully understood why this bubble has formed over recent decades or what might happen if it continues to swell, stays at current levels, or bursts.

In 2019, I published a study in the Journal of Business titled The Third Postwar Wealth Bubble. It identified three successive postwar peaks in the nation’s ratio of household (and nonprofit) net worth to GDP in 1999, 2006, and 2019, with uncertainty about whether 2019 represented an ultimate peak or just another point on the way upward. Think of these peaks as intermittent bubbles within a larger, long-term bubble, or like peaks on the uphill side of a roller coaster. Each peak occurred just before a major economic disruption: the Dot-Com stock market crash in 2000, the Great Recession in 2007-9, and the COVID-19 crisis in 2020-2021. Data since 2019 shows still higher ratios and leaves unclear when the bubble identified in 2019 will peak.

Are we prepared for a downward slide on whatever peak that roller coaster may attain?

It’s common for markets to become frothy and then slightly collapse during economic crises. However, that’s not what I consider a peak here. What makes these peaks distinctive is that they consistently reach new highs compared to earlier post-World War II levels of market value relative to GDP, as asset prices grow faster than the national income. Additionally, it’s notable how quickly asset prices rebounded after a crisis. During the COVID-19 crisis, the decline in market value of all household assets was minimal and temporary.

Equally noteworthy, any temporary lows reached near the times of those crises never fell below the highest net worth-to-GDP ratio in each year from 1947 to 1996. More precisely, during that earlier period, the ratio remained relatively stable, ranging from 3.4 to 4.0, with an average of 3.7. One reason it stayed stable was that growth in market value relative to GDP was negatively correlated across asset types. The 1970s were good for homes, bad for stocks. The 1980s were good for stocks, bad for homes. This half-century of stability illustrates what you might expect: that wealth values tend to increase roughly in line with investment and the nation’s income. After all, the growth in income, as measured by GDP, primarily results from increases in the nation’s wealth, which, in turn, grows alongside investment.

Let’s define the increases in wealth values exceeding the growth rate of the economy as WIPE (wealth inflation price excess). If wealth values were to grow with GDP, they would increase with both real growth and the price inflation of goods and services, as measured by the GDP deflator. The WIPE amount represents the excess over those normal increases.

Now, compare the average of 3.7 during the 1947-1996 period with the ratio of 5.8 estimated for the third quarter of 2025 (the latest available data). If wealth valuations were to return to their average relationship to GDP in the 1947-to-1996 period, a household with average wealth would see the value of its portfolio of home, stock, and other assets decline by 36 percent. In simple terms, WIPE added about $66 trillion in wealth valuations, or $1/2 million per household, to what many people likely perceive as a higher level of sustainable consumption.

I use the word “perceive” cautiously. Does this increase in wealth valuation mean that we are wealthier? There is little to no evidence. Think of how real estate prices have risen quite dramatically. Just because that house across the street now sells for $500,000, compared to only a short while ago when it sold for $300,000, doesn’t mean it will provide more benefits to its owners unless there has been significant new construction. The previous owners might be able to spend more by cashing out, but new owners will have less money available to buy other things because of the higher house price. Similarly, when the price-earnings ratio of a stock market index fund increases from 20 to 25, it doesn’t mean corporations have become more profitable. The earnings-to-price ratio has fallen from 5% to 4%, and the investor’s rate of return has fallen.

Since this bubble started around the mid-1990s, almost every adult under 50 has no experience with more typical market downturns. Even some of their less impressive investments over the past three decades have performed reasonably well. I worry about how many investors have become overly optimistic and are gambling badly, believing not only that this bubble will never burst but that it extends to more fringe purchases like crypto and heavily leveraged assets.

Yet to come: What are some possible causes of these bubbles, and have they affected wealth inequality? HINT: Whatever their overall merit, actions by the Federal Reserve have also indirectly supported wealth accumulation, mainly by those with significant wealth.