I’m back in the District of Columbia and I will try to avoid opening with an update on the weather, tempting though that may be as the skies above me have turned black and we were just issued a tornado warning. I’ll also try to avoid any hackneyed phrases about the gathering storm clouds portending some imminent doom, even though that’s also tempting given how America’s national debt hit an important new high.

Aside from the fact that we kept spending beyond our means, this week we had some more primary elections, President Donald Trump stayed true to himself and kept up the trade uncertainty, and we learned that Harry and Meghan have decided to leave California and return to the United Kingdom (UK).

Gradually … and then suddenly.

As the oft-quoted exchange in Ernest Hemingway’s The Sun Also Rises goes:

“How did you go bankrupt?”

“Two ways. Gradually, and then suddenly.”

I thought about that exchange when news broke this week that the federal national debt of the United States (US) reached $40 trillion, reaching a debt-to-GDP ratio that we have not seen since the end of World War II.Forty trillion dollars is such a large figure that it’s quite hard to get one’s head around just how much debt we have accumulated, but I’ll have a go.

One million seconds is equivalent to 11.6 days. One billion seconds is 31.7 years … but one trillion seconds is 31 700 years. So, 40 trillion seconds comes out at 1.27 million years. Measured a different way: if one were to stack up one-hundred-dollar bills, it would take 400 billion bills to reach $40 trillion, and that stack of bills would be 43.5 million kilometres high, equivalent to 100 times the distance between the Earth and the Moon. So, we’re talking about a lot of debt.

How did we get into this state? Even though it is popular on the Left to point the finger at military spending and tax cuts and its popular on the far reaches of the Right to point to things like international aid, the real driver has been entitlement spending. Like most entitlement programmes, the Social Security programme began modestly with the New Deal in 1935. Similarly, our healthcare programmes, Medicare and Medicaid were limited when launched during Lyndon Johnson’s Great Society in 1965.

These programmes were supposed to be safety nets for those in need or in retirement. Social Security was designed to kick in when Americans retired at age 65, but this was when average life expectancy was around 61 years. The programme took in more than it paid out. Now life expectancy is around 80 years, and the programme is paying out much more than it takes in. The sums just don’t work anymore.

The problem with our welfare state isn’t only actuarial, as the programmes have expanded eligibility and the range of benefits, so has the dependency and the political constituency to leave them untouched and unreformed. In 2012 when Republicans Mitt Romney and Paul Ryan were running against Barack Obama and Joe Biden, they proposed modest reforms that would have, over the long term, ensured the financial sustainability of our welfare programmes. The Democrats ran cynical TV adverts showing Paul Ryan pushing grandma off a cliff. The reality was Ryan’s proposed reforms would have been the only thing to protect health and welfare programmes for grandma. But Obama was re-elected and both Democrats and Republicans learned an important lesson: never touch welfare reform.

Funding for Social Security, Medicare, and Medicaid is on autopilot. This year more than $4.5 trillion of mandatory spending will be directed towards welfare programmes, totally dwarfing the $1.9 trillion of discretionary spending that covers defence, interest on debt, and all the other federal programmes.

The US has a severe spending problem, and our levels of debt are unsustainable. Will, at some point, the bond market react and will the demand for US Treasuries dry up? I have no idea, but perhaps. It seems to me the only thing to do is to face reality, curb spending, reform our welfare programmes, and change the trajectory of our gradual descent into bankruptcy. How anyone will ever get elected on a ticket of telling the voters the truth about our spending problem, I don’t know. Maybe it will take some sort of financial crisis to slap us out of our spending addicted fugue state. But we must reform entitlements and not only to get our finances straight, but also to have fewer people dependent on government programmes.

Having said all that, the situation isn’t quite a dire as many claim. Take, for instance, our national wealth. While our debt is now at $40 trillion, American national wealth is around $180 trillion. At the end of the Second World War, when our debt to GDP ratio was at current levels, the debt to wealth ratio was around 38%, whereas today it’s at around 21%. So measured that way, perhaps we have a bit more of a spending runway … as long as we keep growing our economy and generating wealth.

There are those, mostly on the Left, who want to increase taxes to pay down the debt, but they should remember that higher taxes mean lower growth and therefore less ability to increase wealth and maintain our lifestyles, to say little of our ability to project power and keep bad actors, like Iran, in check.

Florida Votes

As the summer comes to an end we’re also heading towards the end of our primary season. This week the state of Florida held its primary elections and there were some interesting, and surprising results.

First, the governorship of Florida is up for grabs as the state’s current successful Republican governor, Ron DeSantis, cannot run for a third term. Donald Trump backed Byron Donalds, a popular Congressman from southwest Florida, and that endorsement probably helped him secure a victory, though he might have won without Trump’s endorsement. Importantly Donalds beat James Fishback, a Tucker Carlson-backed antisemite who ran an anti-Israel platform, who came in third.

On the Democratic side, a former Republican Congressman, David Jolly handily beat his opponents in a crowded field. His win is important for those of us who care about the rise of socialist candidates within the Democratic Party because he ran on an expressly pro-market and anti-socialist message. In Florida, which is home to many thousands of Cuban and Venezuelan refugees whose experience of the joys of socialism forced them to flee. The state is also home to many former residents of New York, New Jersey, Illinois, and other heavily Democratic states, where the joys of high taxation and heavy regulation led them also to flee.

There hasn’t been a Democratic governor of Florida since 1994 and most polls put Donalds ahead, though anything could happen between now and November. If Donalds does win, he would be the first black governor of Florida, and a potential win would undermine leftist claims that the Republican Party is filled with backward racists.

In the Senate primaries, the incumbent Republican candidate, Ashley Moody won her race, but on the Democratic side there was a major upset. Alex Vindman was the candidate most mainstream Democrats backed, but he lost badly to an upstart socialist, Angie Nixon. Vindman made a name for himself during the first Trump Administration when he exposed the “perfect phone call” made by Trump to President Volodymyr Zelenskyy, in which Trump asked the Ukrainians to investigate Hunter Biden, Joe Biden’s son. His involvement in the first Trump impeachment made Vindman a hero to the Democrats and he raised more than $12 million for his primary battle.

Nixon is a far-left socialist who believes in high taxes and free everything, and, predictably, hates Israel. With a war chest of less than $1 million she beat Vindman 56% to 44%. Nixon is … and I almost shudder when typing these words … a “community organiser.” When put together those two words spell trouble, but while her community organising might have worked for the hard-core voters who come out for the primary, it might not work to her benefit in the general election.

There was generally good news in the primaries for the House of Representatives. Republican Randy Fine, who is a Jew and an outspoken supporter of Israel and opponent of antisemitism trounced Dan Bilzarian, a social media influencer, Jew hater, and Holocaust denier. Among the things Bilzarian said was that Fine was a “fat Jew” and that he “wouldn’t have fit in the fake ovens.” Charming. Well, Bilzarian lost with 18.7% of the vote. I’m delighted he lost, but who are the 18.7% of voters choosing this deranged hatemonger?

Among the Democrats, two mainstream, pro-Israel Jewish candidates Debbie Wasserman-Schultz and Jared Moskowitz both won their races. Notwithstanding the Angie Nixon victory, Florida may be showing that it reflects the majority of normal Americans who care about the economy and national security and who recognise that Israel is a friend and ally.

Another positive outcome is the fact that all of the candidates that have been backed and supported by podcaster Tucker Carlson failed in their bids. It’s hard to know what has happened to Tucker and what has driven him from being a normal conservative/libertarian commentator to a rabid antisemite and clickbait whore, but it’s gratifying to see that those whom he backed, such as James Fishback and Thomas Massie, have crashed and burned.

Oh Canada

Today is a day that ends in the letter “y” and that means it’s a day when Mr Trump is causing more needless problems for trade and our economy. Canada isn’t just our friend and neighbour, it’s a country deeply integrated into our economy. Goods travel back and forth every minute of every day, with companies and individuals taking advantage of their respective comparative advantages in a beautiful system of trade that benefits and enriches us all. Given that of course Trump has to throw a spanner in the works because he has decided that Canada is cheating us … or something … who actually knows what he thinks when it comes to trade.

Since taking office for the second time, Trump has imposed 25% tariffs on various Canadian goods justifying his actions variously on trying to stop the importation of fentanyl, stopping illegal border crossings, or on national security grounds. As I type this we’re heading towards 50% tariffs on around $20 billion of Canadian goods unless negotiators can reach some kind of a deal.

But even if a deal is reached and we don’t suddenly impose 50% tariffs, what’s to say Trump won’t suddenly change his mind and randomly impose some other kind of penalty on trade. Remember that the mercurial Trump had imposed punishing 39% tariffs on Switzerland, but he abruptly lowered that rate to 15% after a Swiss delegation presented him with a personalised gold bar and a Rolex desk clock worth more than $100 000. Perhaps if the Canadians offer Trump a gold-plated barrel filled its premium maple syrup, he’ll play nice. How the most powerful nation on Earth arrived at this head scratching way of conducting trade policy will be something studied for years.

Meanwhile Trump announced plans to reopen the Keystone XL Pipeline, something I wrote about a few weeks ago. President Biden cancelled the Pipeline, jeopardising billions of dollars of foreign investment and setting the tone for his abysmal presidency. Maybe Trump can get the project restarted, but how about, instead of teasing the Canadians with the prospect of increasing oil exports, he just stops with his capricious and damaging trade policy that is hurting both countries, and far more than Biden’s idiotic actions.

Bye Bye Harry and Meghan

Poor old Britain. The country really has been in the doldrums recently, with low economic growth, rising debt, a welfare state that is bursting at the seams, an illegal migrant problem, a military that barely functions, rising Islamism and antisemitism, and general malaise. And we haven’t even begun to discuss the revolving door at 10 Downing Street, with one less impressive prime minister after the other taking up residence.

Hasn’t the UK gone through enough lately? Apparently not: Harry and Meghan, otherwise known as the Duke and Duchess of Sussex, have decided to leave California and return to Blighty. Perhaps it was the threat of a wealth tax in California that forced their hand. Or perhaps it was the realisation that Meghan’s cringeworthy Netflix lifestyle show, With Love, Meghan, is unwatchable

When Meghan and Harry sat down with their neighbour, Oprah Winfrey, for a tell-all interview, they accused the Royal Family of unconscious bias, which I think is a polite way of saying that your family is bigoted. The oblique references to racism and constantly playing the victim might be among the reasons that the Sussexes’ popularity in the UK is in the tank. According to a YouGov poll, only 22% of Britons have a favourable view of Meghan and only 33% think well of Harry. The only member of the Royal family with a lower rating is poor old Andrew, the Royal formerly known as Prince.

Maybe there are some in the UK who are delighted to have the Sussexes back home: republicans. It seems to me that this privileged, spoiled, whiny, entitled couple that are trading off their family name are doing a great job of making the case against the monarchy and the birthright of kings.

Last year there were some halfhearted efforts by some conservative activists to have Harry deported because he may have lied on his immigration forms about past drug use. When asked about this, Trump, who remains a very funny man, nailed it:

“I don’t want to do that. I’ll leave him alone. He’s got enough problems with his wife. She’s terrible.”

When he’s right, he’s right.

With that, have a great weekend!