The United States is rapidly recovering from the Covid-19 pandemic, as evidenced by the steadily decreasing rate of new daily infections. In fact, we have probably already reached herd immunity, meaning that the percentage of those infected plus those vaccinated is approaching (or exceeding) 70%.
- Our exploding national debt, at an all-time high and growing rapidly. Although a few national leaders will talk about it from time to time, virtually no one with sufficient authority is willing to propose the painful course of action (curtailing spending or raising taxes or both) necessary to address it. Eventually, it will lead to a new fiscal crisis and, the longer this takes to happen, the worse it will be when it does.
- Inflation. It was 4.2% in April, on a yearly basis. Neither the Biden Administration nor the Federal Reserve are taking inflation seriously. The $1.9 trillion American Rescue Plan is a deficit spending blowout. Especially its extra $300 per week in unemployment benefits is worsening the employment shortage and therefore also the supply bottlenecks, both of which lead to higher prices. The Fed has promised low-interest rates until 2023 and says it is too early to unwind its bond- buying. The return of out-of-control inflation will nevertheless force the Fed to raise interest rates, which will in turn speed up the coming of the next debt crisis.
- Our racialized, identity politics. Everyone understands that there are racial disparities in American society. African-Americans have the fewest financial assets, fare the worst in school, have the hardest time finding work, live the shortest lives and spend the most time in jail. Democrats say that their aim is to ensure that all races share equally in economic growth and get a fair shake in the justice system. Republicans say that Democrats are abandoning equality of opportunity for equality of results, i.e. equity. This is a very difficult problem with no obvious solution. It is what “wokeness” is all about.
- The rise of China is our biggest international challenge. China’s economy will soon be larger than ours. But we have many strengths in the coming struggle. Working closely with our democratic allies in Asia will help greatly to “contain” China.
- Global warming and the cost of healthcare are also big problems but of lesser urgency, see here and here. Of course, the need for healthcare entitlement reform is a major part of the debt problem.
Conclusion. The U.S. has challenging problems to address. The hardest one by far is to fix the debt. The current flare-up of inflation is a vivid reminder of how urgent the debt problem is. Our highly polarized politics is made worse by the perceived racism in American society. Nevertheless, I am (mostly) optimistic about America’s future! Stay tuned!