The Bright Future of Mississippi and Economic Concerns
The outlook for Mississippi seems positive. Over the past five years, the state has achieved more economic growth than in the previous 15 combined. We’re moving towards completely phasing out state income taxes, which will allow families to keep more of what they earn. Plus, there’s a noticeable increase in new investments and for the first time in a long while, the labor force participation rate is showing signs of improvement.
Looking at the bigger picture, despite the constant skepticism from experts, the American economy has consistently exceeded expectations for many years. Since the late 1990s, the U.S. economy has experienced steady growth, though surprisingly few analysts predicted this trajectory.
Yet, there’s a significant concern that looms over us, and it concerns the national debt.
Currently, the U.S. national debt has reached an astonishing $38 trillion.
To grasp how monumental a trillion is, consider these comparisons:
- A million seconds ago was just last week, before Halloween.
- One billion seconds ago was back in early 1994, during President Clinton’s term with dial-up Internet.
- One trillion seconds ago dates back to around 30,000 BC, a time when humans were still hunting mammoths.
It’s quite alarming to realize that the national debt has nearly doubled over the past ten years.
The accumulation of costs from foreign wars, substantial bailouts, COVID relief payments, and entitlement programs meant to alleviate poverty have all contributed to this figure. Interestingly, the standard of living for the poorest Americans has improved significantly since these programs began in the 1960s—think indoor plumbing, air conditioning, and modern healthcare. Yet, the dependency on government support has never been greater.
Instead of funding these expenses through tax revenues, the U.S. government has opted to borrow money, leading to more funds being allocated to managing debt than to defense.
As the historian Niall Ferguson often points out, when a great power spends more on servicing debt than on defense, it risks losing its status as a leading power. This has been observed with historical empires such as the Romans and the British.
What can the U.S. do to prevent a similar downfall?
When Trump first took office, Elon Musk and Vivek Ramaswamy initiated the Department of Government Efficiency (DOGE) aiming to cut federal spending by $2 trillion annually. However, they still haven’t made significant progress, as essential entitlement programs remain largely untouched, and the federal budget deficit has barely improved.
One might wonder where the Tea Party supporters are, the ones who opposed government overspending a decade ago when the debt-to-GDP ratio climbed from 90 percent in 2010 to 125 percent today.
If the U.S. doesn’t manage the growing debt, the only option to avoid a fate like Rome’s is to increase GDP growth rates. Essentially, we need to grow more to offset the debt.
To stabilize the current debt-to-GDP ratio of 125 percent, the U.S. would need to aim for real GDP growth of about 4 to 5 percent over the next decade or two. The advancements in AI and robotics might make this achievable, as Elon Musk has suggested.
On the flip side, without gains from AI and robotics, the U.S. debt could soar to between 150 and 170 percent of GDP by 2050. Economic issues will become a broader concern, with inflation and tax hikes likely occurring regardless of who is in office.
As I reflect more on this, I increasingly believe there are two critical areas the federal government must address: mass immigration and budget deficits. If managed effectively, states like Mississippi could indeed have a promising future. But if we fail, even well-intentioned actions might yield little impact.
