The solid employment data this week — 57,000 jobs added in June — tells us that the economy is not close to a recession and consumer confidence is rising, making inflation the main worry. But the good job news is deceiving. Our nation’s future economic performance is determined by three interconnected factors: the capital employed in production, the quality and efficient use of our work force, and the science and technology that determine what capital and labor can achieve. The Trump administration is undermining our economy on all three.
Start with the ballooning federal budget deficits and national debt, a product of tax cuts combined with large spending increases in areas such as defense — and that was happening even before the war with Iran. The U.S. debt-to-G.D.P. ratio recently surpassed 100 percent, and one forecast suggests it will reach an astonishing 194 percent by 2054. The Yale Budget Lab predicts that 10-year Treasury yields — the interest rate the government has to pay — will increase by 1.4 percentage points over its recent rate of about 4.4 percent by 2054 if you extrapolate the consequences of the One Big Beautiful Bill Act.
Summary
The article argues that strong monthly jobs numbers are hiding deeper long-term damage being done to the American economy. Economist Steven Durlauf contends that economic strength is not determined only by current employment or consumer confidence, but by three underlying foundations: investment capital, the quality of the workforce, and scientific and technological innovation. He argues that Trump administration policies are weakening all three.
First, the article warns that growing federal deficits and debt could eventually undermine business investment and long-term prosperity. According to the author, large tax cuts combined with rising government spending will push interest rates higher over time, making it more expensive for businesses to borrow and invest. He cites economic models projecting that America’s capital stock could shrink significantly in coming decades, leaving the country poorer and more financially fragile despite short-term economic growth.
Second, the article argues that cuts to education and restrictions on student lending are damaging America’s future workforce. The author says reductions in funding for schools, universities, and research institutions will reduce opportunity, especially for lower-income students, while also weakening the country’s ability to develop highly skilled workers. He also defends diversity and inclusion policies, arguing that broader access to education and professional opportunity historically contributed substantially to U.S. economic growth.
Third, the article claims the administration’s policies toward science, research, and immigration threaten America’s technological leadership. It points to cuts and freezes in research funding, political interference in scientific institutions, skepticism toward vaccines and medical research, and declining visas for foreign students and skilled immigrants. The author argues that America’s economic dominance has long depended on attracting global scientific talent and investing heavily in innovation, and warns that countries such as China are increasingly competing successfully in those areas.
The overall argument is that the economy may appear healthy today because employment remains solid, but the policies being pursued are slowly weakening the long-term foundations that support American prosperity, productivity, and global economic leadership.
