On this blog, I discuss important national issues, often dealing with economic and fiscal matters.  Lately, I have been discussing fundamental U.S. strength and its importance to world affairs.

Now, as we approach the November midterm elections, the political environment has become even more caustic than usual.  Trump’s frequent sleaziness, vindictiveness, and avarice (greed) cause an even more pronounced “Trump Derangement Syndrome” amongst the Democrats.  Trump didn’t cause political polarization, but he is certainly making it worse.

But consider Trump’s many policy initiatives since he first became President in January 2017.  Some of them are quite favorable.  Consider:

• Appointments to the Supreme Court in his first term. Neil Gorsuch, Brett Cavenaugh, and Amy Barrett were all excellent choices.

  

• Closing the border in his second term. Biden’s open border policy was a disaster that needed to be turned around.  Our country needs more immigrants to reduce our labor shortage, but they need to be admitted legally.

  

• Business tax reduction. The One Big Beautiful Bill grows the economy by encouraging more corporate investment.  Faster economic growth is beneficial to all Americans, especially by speeding up the creation of new jobs.
• A lighter hand on business regulation. This, again, enables businesses to grow faster.  This is especially important for artificial intelligence, which is becoming one of the main drivers economic growth.

But Trump has also adopted harmful policies.  Consider:

• Arbitrary and capricious tariffs. A few selective tariffs may be justified for national security reasons, but, in general, tariffs drive up prices and are therefore inflationary.  Maximum free trade has always been the best long-range policy.
• Lack of concern about our huge, and rapidly growing, national debt. This is the biggest threat to our continued world hegemony.  It is also a long-term driver of inflation, which adversely affects lower-income people, who probably don’t have a financial cushion to rely on.
• Attempts to undermine Federal Reserve independence. Our central bank needs to be independent of political influence, to be better able to focus on a stable currency.

Conclusion.  Trump’s rotten personal behavior degrades our whole political process.  But he has implemented a number of good policies along with some bad ones.  This will be affect the way that many people vote.  After all, voting generally involves a binary choice, with both good and bad on each side.

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On this blog, I discuss important national issues, often concerning fiscal and economic matters.  Most recently, I have been discussing overall U.S. strength, economic and military, and U.S. indispensability as the leader of the free world.

But there is a significant threat to continued U.S. world hegemony, and this is what I will address today.  First of all, I list several factors which are not serious problems at the present time.  Consider:

• The U.S. and its allies totally dominate the world economy. The U.S. economy, at $30 trillion, is half again as large as the Chinese economy, the second largest in the world, at $19 trillion.  Furthermore, the U.S. and its allies swamp out the economies of China and its autocratic allies (see chart below).
• Militarily, again the U.S. and its major allies greatly outspend China and its major allies (see chart below).
• With respect to Artificial Intelligence, the emerging engine of economic growth, again, the U.S. totally dominates private investment in A.I. (see chart below).  We also currently have a large lead in the production of computer chips. Furthermore, A.I. is likely to eventually subvert communism because of its inherently open features.

  

But the U.S. does have a very serious problem which must be addressed in the near future: our very large and rapidly growing national debt.  U.S. debt now stands at $39 trillion and is growing at the unsustainable rate of $2 trillion per year.  Tax revenue amounts to about $5 trillion per year but the U.S. is spending $7 trillion per year.  The biggest single measure that must be adopted to greatly shrink our annual deficit spending is entitlement reform: especially for Social Security and Medicare.  They must be made much more self-supporting than they are at the present time

A somewhat mitigating factor regarding the debt issue, is the fact that many other countries also have debt problems (see chart below).  In fact, the U.S. is 9^th overall worldwide in terms of national debt, as a percentage of GDP, at 126%.  China ranks 16^th highest with its debt at 107% of GDP.

How is the debt issue likely to play out?  At some point, our debt may become unattractive to investors, or at least cause interest rates to rise, which is already happening to a certain extent.  But whose debt will investors turn to instead?  This is not clear with so much debt outstanding around the world.

Conclusion.  The U.S. is the dominant world hegemon at the present time and this is very important in preserving democracy and world peace.  But massive growth of U.S. debt threatens this rosy scenario.  The U.S. needs to come to its senses, debt-wise, the sooner, the better, before its worldwide dominance is seriously threatened by a less attractive and perhaps autocratic, as opposed to democratic, rival.

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On this blog, I discuss important national issues, often focusing on fiscal and economic matters.  Lately, I have been documenting why I think the U.S. is such a strong country.  This is for several main reasons:  our brilliant constitutional republican form of government, our strong free enterprise economic system, plus favorable circumstances such as our bicoastal geography and relatively large population.
Today, I discuss why our great strength as a nation is so important for world peace and stability.  After all, we do have autocratic adversaries such as China, Russia, Iran, and North Korea, among others.
Of course, we have many democratic allies, not only in Europe, but also in Asia, such as Japan, South Korea, Australia, and the Philippines. Furthermore, India is leaning our way because of its animosity with China.  But consider:

• China. U.S. GDP at about $30 trillion annually is half again as large as China’s at about $20 trillion.  Furthermore, China’s economy is in bad shape because of its overdependence on exports to keep growing.  This means that it wants good relations with the U.S. to have access to our large markets.
• Russia is being badly hurt by the Ukraine war, among other things. Ukraine’s superior drone technology is allowing it to seriously disrupt the Russian economy.
• The Iranian situation, with the blocked Strait of Hormuz to global shipping, is a mess, but not a big threat to world peace.  China imports most of its oil and so needs access to world markets.  But China has not actively taken Iran’s side because it also needs good relations with the U.S.
• North Korea has nuclear weapons but is very unlikely to use them against U.S. territory. If it did, they would almost surely be intercepted and destroyed by our missile defense system.
• Artificial Intelligence. The U.S. dominates the AI race because of our size, our superior economic system, and our overall dominance in technology.  Although our continued lead is not guaranteed, it can be maintained by following smart policies.

Conclusion.  The U.S. has many democratic allies around the world.  They are very important in the long-term battle against autocracy, but the free world still needs leadership, which only the U.S. can provide.  This is why the U.S. is so crucial to maintaining democracy, and therefore peace, around the world.

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June 28, 2026
On this blog, I discuss important national issues, often focused on economic and fiscal issues.  Lately, I have been making the case that the U.S. is a very strong country,  despite the current problems we have that we are very concerned about.  Today I want to elaborate on this point of view.

To summarize the previous discussion, we are a very strong country primarily because of our brilliant constitution, dating back to 1787, our well-established free-enterprise economic system, and also fortunate circumstances such as our bicoastal geography and relatively large population.

I now refer to a recent Wall Street Journal editorial, which discusses the so-called  “four i’s” problem:  inflation, Iran, Israel, and ineptitude, that goes back many years.

• President Jimmy Carter. In the late 1970’s, Mr. Carter had to deal not only with inflation, but also with the Iranian hostage crisis, which was not resolved until the day he left office in January 1981.  He was not responsible for the high rate of inflation during the late seventies, and, in fact, dealt with it firmly by appointing Paul Volcker as Federal Reserve Chair in August, 1979.  But Carter still has a reputation for ineptness because of the way he handled the Iranian hostage crisis.
• President Joe Biden. Biden did, in fact, trip off our recent bout of inflation with the $1.9 trillion American Rescue Plan, signed in March 2021.  He also had no success in negotiating with Iran about nuclear weapons safeguards.  He is, correctly, in my view, considered a poor, inept president.
• President Donald Trump.  Now, Mr. Trump is also faced with the “four I’s” problem.  He is trying hard to limit Iran’s nuclear weapons capabilities, but the closing of the Strait of Hormuz has raised the price of oil significantly, and therefore raised the rate of inflation (the CPI is currently 4.2%).  Trump has many personal shortcomings (he can be mean-spirited, vindictive, narcissistic, and bullyish, among other things).  For example, he is now feuding with Senate Republicans, among his potentially strongest supporters.  In other words, his questionable character often makes implementing his (many beneficial) policies more difficult than necessary.

Conclusion.  We are a very strong country, both economically and militarily, and are likely to maintain our great strength for many years to come, regardless of who our leaders are.  Presidents come and go, some good, some bad.  Presidents Carter and Biden were considered poor overall.  It is too early to rate Trump (he has over two years to go).  But his overall success is not assured at this point.

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On this blog, I discuss important national issues, often focusing on economic and fiscal matters.  Lately, I have explained why I think the U.S. is such a strong country, describing various components of this strength. Today, I describe another aspect of our strength: the relative weakness of our autocratic adversaries (China, Russia, Iran, and North Korea).  Consider:

• China needs an economic relationship with the U.S. It has the second-largest economy in the world, but it can’t absorb the sheer amount of goods it produces.  Therefore, it relies overwhelmingly on exports and cannot afford hostile relations with the U.S.  It is therefore unlikely to try to take Taiwan by force.

However, to some extent, “Chinese leaders no longer seem to view U.S. pressure on trade and technology as grave threats demanding compromise.”  The U.S. can counteract this Chinese hubris with a combination of deterrence and the restoration of human connections.

In addition, “AI is bound to subvert communism.”  “China seeks to control it, but the idea of freedom is baked into its training on all human knowledge.”

• Russia. The war in Ukraine is greatly weakening the Russian economy.  Inflation is rampant, and gas shortages are increasing.  “A pressure campaign using sanctions and enforcement could compel Putin to reach a meaningful peace.”
• Iran is gradually being forced to agree to permanent nuclear disarmament and to keep the Strait of Hormuz open to international traffic.
• North Korea is a nuisance but not a real threat to world peace. If it were to fire nuclear missiles at the U.S., they would almost surely be destroyed by our missile defense system.

Conclusion.  The U.S. has several autocratic adversaries (China, Russia, Iran, and North Korea).   However, their relative economic and military weaknesses mean that they are not a big threat to overall U.S. hegemony.  Even our strongest rival, China, has sufficiently big economic problems that it can’t afford hostile relations with the U.S.

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On this blog, I discuss important national issues, often concerning economic and fiscal matters.  Recently, I have been discussing why the U.S. is such a strong country.  Fundamentally, we are a constitutional republic with a dynamic free market economy.  We also have favorable circumstances, such as a bicoastal geography and a large population.  Furthermore, we have a thriving democratic tradition.

But there is much more as well.  Today, I discuss our long tradition of upward mobility.  Consider:

• Preparation for economic success. This is available to everyone.  Graduate from high school.  Acquire a useful skill either in a trade or else an academic skill by going to college.  Establish your career path before starting a family.  Be prepared when opportunity knocks!
• The expanding middle class. The middle class is growing steadily (see chart below).  More and more households are moving from the lower-middle class into the core-middle class and then into the upper-middle class.
• The world’s wealthiest people are largely American innovators. They have made the United States by far the wealthiest country in the world. All Americans benefit by living in such a prosperous country.
• The world’s wealthiest companies are mostly American. They are American technology companies. that, again, greatly benefit their home country, where they are located, and find most of their employees.
• The U.S. has dominated in Nobel Prize winners.  Roughly 40% of Nobel Prize winners over the years have been American.

Conclusion.  One reason we are such a strong country is that we have so many (economically and professionally) successful people as well as very large companies.  The great success they have generated benefits all Americans, rich, poor, and middle class, alike. But all Americans can take advantage of the golden opportunities for success this country offers.

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On this blog, I discuss important national issues, often concerning fiscal and economic matters.  Recently, I argued that the U.S. is a very strong country, noting our constitutional republican form of government, favorable geographic circumstances, and free enterprise economic system, among other valuable characteristics.

Today, I elaborate on the importance of our strong democratic tradition.  Consider:

• Free and fair elections. This is the essence of democracy.  The people have the final say at the ballot box, and Americans can be confident that their votes are processed and counted accurately.  In the national elections of November 2020, there were some COVID-related irregularities, especially the delayed counting of mail-in votes, but these problems have now been largely resolved at the state and county level, where elections are regulated and conducted.
  Furthermore, our system of decentralized election procedures is the best guarantee of election integrity.  The possibility and effect of tampering with elections by outside malevolent parties is greatly minimized this way.
• Dissatisfaction with incumbents. There is especially much complaining today that President Trump is too authoritarian.  He does, for sure, often push to expand the limits of presidential authority.  But he is frequently restrained by the courts, and he does abide by judicial rulings, even when he appeals decisions he doesn’t like.
  Competition between the two political parties leads to better government over time.  When one party makes a major mistake, the other side picks up popular support.
• The main source of our national strength is our long-standing institutions (constitution, favorable geography, free enterprise economic system, etc.) rather than the quality of our national leadership, which can change greatly from one election to the next. We have had good presidents and poor presidents over the years.  But the fundamental strength of our country continues unabated by the personal failings of particular leaders.

Conclusion.  Democratic procedures are not a guarantee of national strength and success, but they are certainly needed for a country to thrive in the long run.  Our free and fair election system is one of the great strengths of our country.

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On this blog, I discuss important national issues, often about fiscal and economic matters.  Most recently, I made the case that the U.S. is a very strong country for a variety of reasons: constitutionally, economically, and militarily.

Today, I take a step back and look at the U.S. from the view of Ray Dalio’s Cyclic Theory of History,  which explores how empires form, grow, and decline over long periods of time.  According to Dalio, there are three different factors (orders) that cause these cycles to occur: the monetary order, the domestic political order, and the international world order.  Let’s take each in turn:

• The Monetary Order. The U.S. now has a national debt of $39 trillion.  It is collecting approximately $5 trillion a year in taxes and spending $7 trillion a year, thus adding $2 trillion a year to an already excessively large debt.  This is a huge problem of fiscal irresponsibility and cannot continue much longer without tripping off a new, and very serious, financial crisis.  The only way to rein in this excessive federal spending is to make major reforms to entitlement programs such as Social Security, Medicare, and Medicaid.  This is very hard to do for members of Congress who have to run for reelection.
• The Domestic Political Order. The U.S. is highly polarized politically, not only in Congress but at the state level as well.  There are currently 25 (red) states in which Republicans have control of both legislative branches with either large supermajorities or else hold the governorship as well, and 15 (blue) states controlled by the Democrats in this way (see chart below).  This means that in 40 out of 50 states, one party can enact controversial policies largely on its own.  Note, furthermore, that the red states are gaining population overall while the blue states are losing population.  This will likely have a big effect on redistricting after the 2030 census.  I view this polarization as unfortunate but not necessarily destabilizing for the U.S.

  

• The International World Order. The U.S. is much stronger than its autocratic adversaries: China, Russia, Iran, and North Korea.  China has an export-dependent economy and needs a favorable trade arrangement with the U.S. to prosper.  Russia is in economic decline because of its disastrous invasion of Ukraine. Iran will have to reach a deal soon with the U.S. to avoid the collapse of its oil-based export economy.   North Korea is a nuisance but not a serious threat to our national security.  In other words, the international world order is favorable to the U.S. for the foreseeable future.

Conclusion.  Of Ray Dalio’s three major controlling orders, the first one, the monetary order, looks bad for the U.S., the second one, the domestic political order, is disturbing but not really a crisis, and the third one, the international world order, leans in our favor, for the foreseeable future.  We may have to deal with a new financial crisis over our massive and rapidly growing debt in the near future. This will be painful for many Americans, but will probably not significantly affect our overall national strength.

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On this blog, I discuss important national issues, often about fiscal and economic matters.  Today, I take a step back to discuss the more basic question of why the U.S. is such a strong country, and therefore has so much clout in world affairs.

Consider:

• We are a constitutional republic. The U.S. Constitution, dating back to 1787, is a brilliant document, promoting liberty and justice for all.  We have three branches of government, the Legislative, Executive, and Judicial, with multiple checks and balances between them.  All powers not specifically given to the federal government are reserved for the states, which keeps most functions of government decentralized and, therefore, less threatening to our liberty. The Bill of Rights, comprising the first ten amendments to the Constitution, clearly lays out our many fundamental guarantees of personal freedom.
• Favorable circumstances. We have a bicoastal geography with friendly neighbors on the north and south.  This makes it much easier to defend our homeland, if we are ever attacked.  Our relatively large population, the third largest in the world, after India and China, provides sufficient manpower for our many innovative endeavors.
• A Free enterprise economic system. A free enterprise, market economy has historically been proven, over and over again, to be by far the most successful form of commerce devised by humankind.  We now know without a doubt that socialism (and communism) is the road to serfdom.
• The American Dream is alive and well.  In particular, the American Middle Class is expanding such that its size is growing with respect to the size of the other income classes. In other words, we have more middle class, and fewer poor, people on an ever-increasing basis.
• The American Economy is the envy of the world and is growing steadily bigger and better. Eight of the ten largest companies in the world are American (technology giants).
• We are sufficiently militarily strong to not only defend ourselves but to keep the world safe for democracy as well. This is important because we do have autocratic adversaries such as China, Russia, Iran, and North Korea.  But we have many democratic allies around the world.  Democracies are almost always able to resolve their disputes peacefully and seldom go to war with each other.
• Of course, there are occasional severe challenges to our great overall success. The Civil War challenged whether “any nation so conceived and so dedicated can long endure.”  The Great Depression in the 1930s was likewise a huge challenge to our economic system.  The unconventional current presidency of Donald Trump is another challenge.  But our system is now almost 250 years old and is so solid that it should easily survive and prosper from current crises as well as it did from past ones.

Conclusion.  The United States is very strong economically and militarily.  Furthermore, we have a very solid democratic tradition embedded in our brilliant constitutional republican form of government.  We are the envy of the world and should continue to prosper for many years to come.

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On this blog, I discuss important national issues, often, but not always, relating to economic or fiscal matters.  Sometimes this means presidential policies, good or bad.

Today, I discuss the changing nature of the U.S. middle class.  First, some definitions from the American Enterprise Institute (AEI).  To be specific, for a household size of three, we divide income classes into five groups: the Poor (under $40,000), the Lower-middle class ($40,000 – $67,000), the Core-middle class ($67,000 – $133,000), the Upper-middle class ($133,000 – $400,000), and the Rich (above $400,000).  Other household sizes have appropriately different cutoffs.  Incomes are stated in 2024 dollars, and adjusted for inflation.

Consider:

• First, examine an overall graph of the five income groups, from 1979 – 2024 (see below). Note how each group is changing over time with the biggest growth by far appearing in the Upper-middle class.

  

• Now look at the percentage changes for each group in 1979, 2001 and 2024 (see below). Clearly, the size of the Poor group and the Lower-Middle Class group are shrinking greatly, the size of the Core-Middle Class group is slightly shrinking, and the size of the Upper-Middle Class is expanding greatly.

  

• Finally, look at the percentage change in family income by percentile over the same time period (see below). Yes, the higher the percentile, the faster the family income is growing.  But all percentile groups are growing in earned income, except for the very bottom group.

  

Conclusion.  What is happening overall in a general sense (see middle graph), is that there are fewer households in the bottom two income groups and a huge increase in the number of households in the fourth highest group.  In sum, the number of households below the Core-middle class fell from 54% of the total to 35% of the total.  The overall Middle class grew from 70% of the total to 78% of the total, a significant jump.  In other words, the middle class is expanding in size (and at the upper end).  This is a very beneficial shift for American society overall.

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