---
title: "Three Ways Trump Is Strangling the Economy"
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published: "2026-07-06T21:00:48+00:00"
modified: "2026-07-06T21:00:48+00:00"
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**Excerpts and last paragraph included read in full at the link**

**[NYT’s oped](https://www.nytimes.com/2026/07/02/opinion/trump-us-economy-capital-jobs.html)/ [via Archive.ph](https://archive.ph/dpHUl)**

**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.

**When the government competes for money by offering higher interest rates, it undercuts long-term capital accumulation by businesses, which is one of the key determinants of overall economic health and broad-based prosperity. While various tax cuts associated with Mr. Trump’s signature domestic policy law have some short-run value by raising profitability, higher interest rates will swamp this effect**. This is what led the researchers at the Penn Wharton Budget Model to conclude that the U.S. capital stock, [now $80.8 trillion](https://archive.ph/o/dpHUl/https://fred.stlouisfed.org/series/RKNANPUSA666NRUG), will decrease by 0.6 percent by 2034 and 8.3 percent by 2054. It means we are getting poorer.

**The United States is approaching a day when interest [rates exceed economic growth rates](https://archive.ph/o/dpHUl/https://siepr.stanford.edu/publications/policy-brief/us-budget-math-looking-dangerous), producing macroeconomic problems ranging from soaring inflation to the deterioration of the dollar as confidence in the American economy evaporates.** Even under the best-case scenario, today’s budgetary decisions handcuff future policymakers. To ignore the dynamic consequences of today’s deficits to spur short-run G.D.P. growth is to whistle past the graveyard of dysfunctional economies of the future.

**Yes, spending cuts are being made, but in the worst way possible: We are slashing investments in education and science. The House Appropriations Committee has recently proposed cuts to the Department of Education budget that will take $2 billion from K-12 education in poor communities**. One consequence of this defunding is the inability to collect data needed to assess education policies. That’s not trimming a bloated bureaucracy; it’s handicapping governments at all levels in finding what policies work best for our children.

**In higher education, revenue reductions for universities have led to thousands of layoffs. At the same time, federal policy is making higher education less affordable.** **Mr. Trump’s budget bill imposed significant caps for parents who take out loans to help their children** attend college, and for graduate students who take out loans themselves.

**The caps also mean that students from lower-income families have fewer opportunities to excel. This math adds up to a less skilled American work force as potential students find it more difficult to attend college or graduate school,** and those who do so will benefit less. Today’s kindergartners, then, are facing a degraded education through college.

**The economies that win the 21st century will be those that maximize the potential of their entire population. This requires careful policy design given the complex, dynamic process by which firms invest capital, and by which society invests in education and allocates workers to jobs. It’s a process that requires investments that make capital and labor most productive.** A society that turns away from science, fails to treat the human capital and skills of its work force as paramount social objectives and does not aspire to attract the most able from around the world is one that courts long-run decline. No amount of short-run economic news, especially when paired with unsustainable government debt, will stop it.