The first detour came from those who insist we have a revenue problem. But federal revenues as a share of gross domestic product are roughly at their 50-year average. People are not undertaxed. Washington is overspending.

Attempting to close the gap with higher taxes would create an economic tailspin, evidenced by our own experience when Congress raised taxes, and in other nations that attempted to tax their way to a balanced budget.

The second detour was leaning on the rest of the world. Roughly $9 trillion of federal debt is held abroad today. With dollar assets considered the safest on earth, foreign investors were always willing to finance our irresponsibility. Left alone with our own budget, we would have hit an inflation crisis years ago. The dollar’s status as the global reserve currency keeps buying us time — and we keep wasting it.

In the 19th century, foreign capital poured into America to build railroads and factories. Today, a massive portion is diverted to fund government spending. We once received investments from the world to build an industrial empire. Now we increasingly borrow to build a welfare state.

The third detour was the money printing press. Whenever federal borrowing threatened to push rates high enough to be politically damaging, the Federal Reserve accommodated. For example, in response to COVID-19, Congress spent at a scale no bond market could absorb, and the Fed covered about 87% of the unanticipated shortfall with newly created dollars. This was a classic recipe for inflation. The bill arrived later across the entire economy from the grocery store checkout to the gas pump as prices rose by nearly 30%, and everywhere in between.

Inflation is a tax that nobody voted for but everyone pays. 

This month the detours have begun to run out of road. The Treasury Department has propped up the yen to prevent Japanese investors from dumping federal bonds while also seeking to borrow short-term debt to buy our own long-term debt to keep long-term rates from climbing further. Imagine using your credit card to make your mortgage payment.

This raises a strange point about our politics. Enormous energy and enmity are aimed at billionaires and corporations — at alleged monopoly power and concentrated wealth. But the biggest monopoly in America is the one nobody marches against: the federal government — an institution that controls the money supply, sets the terms of its own borrowing, and faces no competitor. Every household must subscribe to its terms of service whether they want to or not.

Voters keep signing up because the pitch is irresistible. Free healthcare. Free housing. Free college. Subsidies for this industry, credits for that fuel. It is a siren song, and the rocks are always a little further down the coast, safely just past November. We elect short-term politicians. They hand us long-term liabilities. We act surprised.

A generation ago, the debt was abstract, but the benefits seemed immediate. Not now. We spend more servicing the debt than defending the country while mortgage rates sit around 6.7%. Government is competing with families and businesses for credit. The median age of a first-time homebuyer is approaching 40. A generation has been priced out of attaining the American dream. Those who warned about this were laughed at. And now the debt is laughing back.

And yet, spending restraint gets less airtime now than ever before. The president has taken entitlement reform off the table, despite those programs driving most of the spending growth. Meanwhile, the Democratic Socialists of America’s platform would add between $71 trillion to $212 trillion of new spending over the next 10 years, according to the Cato Institute. The DSA would take out a second mortgage on America before declaring it bankrupt.

GOLD AND BITCOIN RISE ON FEARS ABOUT US DEBT

Our leaders believed we could tax or print our way out of this and that the dollar’s privilege would hold forever. They were wrong on all counts. All the detours have circled back to the road they wanted to avoid and placed us between a debt crisis and an inflation crisis.

One road remains untaken. It is unglamorous and hard to message during an election, but it is the only way out. Spend less.