Hello everybody, and thank you for joining us for today's virtual conversation. My name is Charlie Siegel, and I'm a sophomore at Vanderbilt University, majoring in economics and history, and human and organizational development, with a minor in generative AI. I'm on staff for the Vanderbilt Hustler, where I write the sports section, and most notably, I'm a member of the Dialogue Vanderbilt student advisory board.
Today's conversation is a virtual discussion on the state of the economy ahead of the midterm elections. Joining us for the conversation is Mark Zandi, chief economist of Moody's Analytics, where he directs economic research. Mark has been a long-time trusted advisor to policymakers, an influential and credible source of economic analysis for businesses, journalists, and the public. Mark is the lead director of PolicyMap, a data visualization company. He's also director of the Coleridge Initiative that facilitates the use of data throughout government.
We're also grateful to have Douglas Holtz-Eakin, founder and president of the American Action Forum. Doug has served in a variety of influential policy positions throughout his career, including chief economist of the President's Council of Economic Advisors in 2001 and 2002. Doug was also the director of domestic and economic policy for John McCain's 2008 presidential campaign, and after served as a commissioner on the congressionally chartered Financial Crisis Inquiry Commission.
Gerard Monteiro will also be joining as the moderator for this discussion. Gerard is a senior at Vanderbilt University, majoring in economics and political science, and is also a member of the Dialogue Vanderbilt student advisory board. Thanks to our audience for tuning in, and thank you to our speakers for joining us today.
Awesome. So thank you so much, Charlie, for that introduction, and Mark and Doug, thank you so much for joining us, you know, on this conversation on the economy ahead of the midterms. You know, I myself am an economics major, so I'm really excited to hear about, you know, both of your guys' insights and just learn from your expertise on the topic.
And I think the goal here today is just to really explore how the economy is performing and why, and especially how most households in the United States are experiencing it, and how voters in these households are going to translate their economic concerns into political choices ahead of the midterms in, you know, a few weeks now. And, you know, as we talk about this, and as we're in this conversation, I'd love to, you know, hear response from both of you guys. I know you both have super different and interesting backgrounds. Um, so I'm definitely here, just let you guys go back and forth. You know, it's definitely not a question-and-answer, just whatever pops in your mind. I'm all yours, and I know everybody watching this will be too.
But, you know, just to jump right in. So, looking at the big picture, right? The American economy, and also both of you guys, you know, you guys had a similar conversation here at Vanderbilt about 3 years ago. And, you know, this is before we've seen a lot of major shifts in the economy. So I'm curious, you know, what shifts had you guys seen over the past 3 years since we've had this conversation, and how would you both characterize the state of the economy heading into the midterms, with, you know, both the strong parts, but also what should people be concerned about?
You go ahead, Doug. You want to go first? No, it's all yours, Mark. Okay, well, 3 years ago is a long time. I'm not even sure I remember back 3 years ago, uh, but a lot has changed. I mean, uh, forces that are both headwinds and tailwinds to the economy's growth and performance.
I mean, with regard to the headwinds, uh, that goes to policy, economic policy. So I throw into that mix things like much higher broad-based tariffs, uh, highly restrictive immigration policy, uh, and of course, more recently, the Iran War. Uh, all those things are what, uh, economists call negative supply shocks, and so they lead to less growth and more inflation, and that's what we're observing. So no surprise there. But that's been the biggest change, uh, on the policy, uh, with regard to the headwinds.
Uh, with regard to the tailwinds, uh, that's artificial intelligence, AI. I don't even think that was on the radar screen 3 years ago. I mean, we knew about it, but, you know, nothing. I guess ChatGPT was put on the plane 4 years ago. So, you know, it was coming, but it really wasn't, uh, kind of, uh, at least not on my radar screen. And, you know, there's a lot of angst about it, and we should talk about, you know, all the different potential challenges it poses, but, you know, up to this point in time, it's been a significant boost to economic activity, both through the buildout of the AI infrastructure.
Obviously, the data center is being the poster child for that, but it goes well beyond that. And then the wealth effects being generated by the surge in AI stock prices, which has lifted shareholder wealth. So if you're, you know, in a high-income, well-to-do household and you own AI stocks, you're doing quite well and you're out spending. So, you know, broadly speaking, it feels like the economy's performance today and for the foreseeable future is the product of those 2 crosswinds: the headwinds created by policy, which, you know, maybe kind of think of it in the context of deglobalization. We can talk about that some more, but policy, and the tailwinds of AI, and they're battling basically to a draw, you know.
So the economy's growing about, very close to its potential, which is good, I'll take it, but it feels like a very fragile growth because again, you have these powerful crosswinds that are battling it out. And if AI stumbles or if the policy steps go in the wrong direction, you know, the economy will be in trouble. Uh, but, uh, that's the way I would think about it, and those are the 2 biggest changes in my mind, you know, broad forces changing the economy since we last chatted 3 years ago.
And I think Mark's spot on. I mean, those are the 2 major, uh, themes that should run through any conversation about this. Um, I would add to it the chaotic nature of the policy. Um, you know, starting and stopping on tariffs. They're on, they're huge, they're suspended, they're scaled back, they're put back on, they're ruled illegal, they get refunded, we do new tariffs. Um, it has made it very hard to judge the data because, you know, you announce you're going to do these tariffs, people try to get goods into the U.S. before the tariffs hit.
So you get a big jump in imports and a big rise in inventories, and then you got to figure out how it's going to unwind itself. It's been hard to be an analyst in this environment. And it's had a knock-on effect on the Federal Reserve, the other key policymaking arm, which is they are always trying to sort out, like, where are we relative to what the policy is and may continue to be, while judging these headwinds or tailwinds coming out of AI. So I think the Fed's been in a really difficult environment, to be honest.
I'm disappointed that we are 66 months above the target of 2%. Uh, I have some sympathy for how hard a job it has been, but they really have struggled to get the inflation right down.
That makes a lot of sense. I want to touch a little bit. You know, both of you, you were talking about AI as a tailwind, and I think if we're looking at, you know, if we're looking at the stock market, we're looking at macroeconomic factors or trade or anything like that, yeah, definitely AI is an economic boost, but, you know, most households, kind of like we talked about, aren't seeing this reflected. You know, most households aren't seeing the economic indicators in the stock market, and most Americans, as you guys know, are feeling pretty pessimistic. And I wonder if you could just explain for both me and for everyone else watching: why is there this disconnect between GDP growth and the stock market growing, and we're seeing, you know, these record high numbers, but most Americans are, maybe the purchasing power has deteriorated?
And I was wondering if you had to explain why this exists, and instead what measures we can look at to maybe better capture the economic reality that voters are facing going to the midterms.
Well, let me say a couple things and Mark can add on. Um, so, uh, one of the things that we saw in 2025 is, uh, average hourly earnings, a measure of wages, you can look at other measures, uh, rising faster than inflation. And so real wages were going up, and it wasn't spectacular, but, uh, that's a... and the unemployment rate is fairly low. We've had low unemployment somewhere near 4% for quite some time. And that's a pretty good foundation for labor income, and that's the ability to spend.
But I've been quite concerned this year because each monthly report shows hourly earnings growing more slowly than inflation, so real wages are declining. People are going to work and getting further behind. And so you ask yourself, how does this happen? One thing you can find is that real weekly earnings have gone up in some cases, that just means people are working a lot more to make ends meet. So that's one reason they feel stretched.
Uh, number two, uh, the saving rate, uh, has gone from 6.1% on Liberation Day down to 4, now bounced up a little bit, but people are not saving the way they did before, and that's another way to keep spending but not feel good about yourself. And others have the wealth effect, I get that, but we have seen some incredibly large numbers, like 7% growth in durable goods purchases in the 2nd quarter that I just don't believe are sustainable because the foundations of income growth are very fragile. It's happening, but it's not really robust. And, um, that's why I think the pessimism exists.
Yeah, maybe I'll say kind of roughly the same thing in different words. I mean, when we talk about the economy and answering that 1st question, that's the aggregate. That's kind of down the middle of the distribution, not looking at the distribution. It's, uh, you know, what is going on for the typical part of the economy, the kind of the mean and the median.
But what's happening is that, uh, there are parts of the economy that are doing quite well, and parts of the economy that are doing very... they're struggling. Uh, and again, the net of that shows an economy that's okay, but kind of masks, you know, some significant, uh, vulnerabilities and dislocations. So, you know, a good example of that would be the run-up in AI stock prices, right? I mean, that stock ownership is very narrowly owned. Uh, you know, the folks in the top 20% of the income distribution.
And to be in that, just for context, you have to make over 175K a year. So if you're in that top 20%, they own about, you know, 80, 85% of the stocks, right? So they're sitting pretty. They're fine. They're enjoying the increased wealth. And here's another statistic to just drive that point home. If you go back 4 years ago, and again, I'm going back 4 years because that's when ChatGPT was unveiled and the gun went off on AI, the value of publicly traded stock was 35 trillion. Today, it's 70 trillion dollars.
That's a doubling in 4 years, 35 trillion dollars, all going to that top 20% of the income distribution. So, you know, for them, life is good. But if you don't, if you're in the bottom 80%, and you don't own the stock, and many of those households don't even own a home, uh, you know, they're really focused on their real income. And back to Doug, real wages are falling, you know, meaning wage growth. The job market is soft. It's not at full employment. Wage growth is decelerating. It's nominal wage growth.
And then you throw in the higher rates of inflation due to the headwinds we just talked about, the war and the tariffs which are raising prices and inflation, you get outright declines in real wages, real purchasing power, and they're feeling pretty ugly. So, if I, you know, add it all up, it looks okay. It's fine, but, you know, if you kind of, you know, peel the onion back one layer, take a look. For me, and I'd say even most Americans, the economy is a struggle, and that's why they're upset. This is not working for me.
And, you know, why you can see it in the sentiment surveys, why the University of Michigan survey is about as low as it's ever been. And you can see it in the polling numbers that we're getting.
I mean, on that point, especially when we're talking about AI and this like bifurcation of like wealth and society, you know, going into the midterms, we're seeing a lot of rhetoric from a lot of these AI CEOs about how the wealth will be distributed and the wealth will spread. And, you know, both of you guys are expert economists who have seen shifts in the economy, technological shifts, and, you know, I'm curious, I know a lot of my peers are talking about this too. Do you guys think that there will be, you know, a spread of the wealth?
Do you think we will see like an economic change going ahead, and especially as we're going to the midterms, do you think voters, when they're looking at the economic impacts of AI, do you think that's something that voters should think will trickle down to them? There will be mass economic benefits, or are voters right to be more pessimistic in thinking that these benefits might be more narrowly focused on people that, you know, may be already well off, if that question makes sense?
No, it makes total sense. Doug, should I take a crack at it? Okay, so, um, uh, no, I think that's a reasonable concern. I mean, and here, let me preface this by saying, you know, I will opine about many things, some things I'm confident in, some not so much. This would be the not so much. A lot of moving parts here.
But what I would say is, as an economist, the way I kind of look at what the macro consequences of AI will be, and I include the impacts on the income and wealth distribution in that mix, I look at history and I say, okay, what historically is a good or my best analog to what's happening now? And if I go back and I look at other general purpose technologies, obviously most recently being the internet in the late 90s and 00s, you know, what happens is the technology diffuses slowly enough throughout the economy because it takes time, there's a lot of frictions, and we could talk about... I can tell you firsthand, being part of a large multinational corporation, there's a lot of frictions.
And actually, the technology doesn't even diffuse until new businesses form and optimize around the technology, and that just takes time. So because it's diffusing slowly enough, it allows the economy to adjust. You know, yes, you're going to have a lot of dislocation, a lot of people are going to lose their jobs, no doubt about it, because this is a very significant change in the way we operate, but it's also going to create a lot of other jobs over here, jobs that we can't even think about. I'll give you an example.
I got a call from, uh, a company, a startup, uh, that what it does is it, uh, looks at, uh, a business's use of AI and AI agents, sets up a simulated world that mimics the actual world, and then gauges whether the AI agents are actually doing what they say they're doing. You know, you don't want the AI agents going off doing something that you don't want them doing. And then they give a good seal of approval if they have, or if they've not, they tell you how to remediate the problem.
Okay, you know, 6 months ago, I was like, what the hell are you talking about? You know, I mean, but now this company has 150 employees, half of them sitting in San Francisco, half sitting in the Meatpacking District of New York, and they're cranking it out. So that's what I'm talking about. You get that churn, and it all kind of irons out. I mean, again, it's not... again, under the hood, it's painful for some people who are losing their job. But on the other hand, the economy is advancing, and, you know, everyone ultimately will be in a better place.
So, and the other lesson from looking at those previous technologies is that, uh, there's enough competition, uh, in producing that technology that the benefits of that, you know, diffuse also to other companies and more broadly to the population, and the wealth and income distributions don't become more skewed, that everybody's wealth rises. So I'd say that based on that history, the most likely scenario is in the middle of the distribution of possible outcomes.
And again, it's a very flat distribution because of the uncertainty. It should work out reasonably well, gracefully, again, from a green-eyeshade macro perspective, 30,000-foot level. There's going to be a lot of churn, and a lot of people are going to be dislocated, and we should be really thinking about that and how to, you know, cushion the blow for those folks and make the easier transition to succeed in this new world that we live in. But that's the kind of world I think is most likely going forward. Can it go in other directions? Absolutely, positively, sure. Maybe AI is different in some respects, and we can talk about that, but I think the most likely scenario is one that, you know, should work out in a more reasonably graceful way.
So let me just expand on that with, um, you know, there's another example from history. Uh, earlier, prior to the internet, there was the invention of, uh, information and communication technologies, things like personal digital assistants, personal computers, um, and, uh, companies realized that those made obsolete a whole layer of their middle management, whose only job was to get reports from the retail guys and write, uh, a summary of what was going on and send it up to the C-suite.
They didn't need those guys anymore because you could get all the information right up to the C-suite, and those were all middle-class jobs. Those were people who were not blue-collar. They were white-collar workers, and it was on the cover of Time magazine: 'Middle Class Wipeout.' Um, same kinds of fears that you hear right now. It happened, and people don't even remember it, and we accommodated it, and you can do it internally in firms. Often firms do that in ways that we don't anticipate, that they find other slots for people, often people change jobs, things like that.
So I think Mark has the dynamics right. It doesn't happen all at once, it happens in a diffused fashion, and we accommodated it as an economy. The other thing to remember is that AI is not special. It's a very capital-intensive technology, set of technologies, right, a range of them. Uh, and firms have been buying capital-intensive technologies for a long time, and they buy them slower than they think they might, they use them not as well as we think they might, uh, take two tries to get it right, kinds of things. I mean, that's all standard stuff.
And as a result, the income distribution doesn't dramatically jump overnight. And, um, I think Mark is right, that there will be some changes, but they're not going to be dramatic. There's going to be returns to capital. Some returns to labor are going to change. AI is going to make some people more valuable. I mean, not less. Everyone thinks of it as just replacing workers, but, you know, some researchers are much more valuable with the AI tools to help them do their research. And so, you know, it's the most uncertain impact I think I've ever faced in doing an analysis.
Um, but I think to focus on the outcome, which is the bad one, and to scale it so large, is bad analytics. I don't think that's what's going to happen.
It's just one thing to add, Gerard, you know, there is this very clear, um, break between the way economists think about this and the way the folks in the AI world think about this. Yeah, you know? I mean, uh, you know, Doug and I are cut from the same cloth and think about it in the same way, and we're coming to the conclusion that, well, this is a big deal, but, you know, it's going to take time to get out there, and we're all going to be able to adjust reasonably. But if you listen to the technologists, you go, oh my gosh.
So, and I have to say, you know, it depends on which podcast I listen to, which determines how much I question my own thinking, but, you know, it really does make me nervous that, you know, some very bright people who are, you know, they obviously know this technology better than I know it. I use this all day long. So it's not like I don't know it, but I don't know it like they know it. And I'm not looking at the bleeding-edge frontier models and seeing what they're seeing. So I worry about that.
And then I think to myself, oh, well, you know, they've got big IPOs coming up. So, you know, and they're raising a lot of capital at a very, you know, high rate, and so they got to have vision. They got to have a big vision to attract that capital, both equity and debt. And so I think, okay, then that's the cynic in me. But then I, you know, again, it depends on which podcast I'm listening to, how worried I am about my own kind of thinking, but they're very different kinds of thought processes around, you know, how this is going to play out.
The other thing to remember, Gerard, sorry, we didn't want to turn this into a plebeian garage sale moment, but I mean, um, you know, economists think of stabilizing families' income, right? There are shocks to income. See, people get laid off, they get sick. Um, new technologies now are appearing. The program replaces income. It doesn't matter what the shock is. And so there's a... I hear a lot of stuff that says, well, AI, we're going to need whole new programs to keep people out of poverty.
No, I don't think that's the way to think about it. We want people to be out of poverty now, and we may or may not think our programs are good enough, and, you know, we can have that conversation, but what is the source of your dislocation doesn't change your needs to stay out of poverty. And, you know, I think that's something that's worth reflecting on. We've put a lot of effort into cushioning people from the blows of economic change, and that's already in place.
I think that touched on an interesting point, and also just, uh, this, just to, you know, think about the midterms, right, in a few weeks, but also all these economic factors that are affecting people. And, you know, I do agree with both of you. I think that, you know, economists might see this differently, especially when you're looking at it from more of a macro level, but, you know, both of you guys have a lot of experience with policy, right? Advising policymakers, and I'm curious whether you think it's about AI and displacement or just about, you know, other things in the economics. We're seeing a huge rise in people wanting more, maybe like populist economic policies, right, policies to support people.
And I'm curious if you guys have seen, or your interpretation of, specific policies that might be resonant with voters heading into the midterms, whether it's to cushion the effects of AI or dislocation, or even we're looking at gas prices or tariffs. I'm curious if you guys think that there are any economic policies that are either really resonating with voters going into the midterms, or ones that you think may, just based off of both of your experiences and, you know, decades of advising on economic policy itself.
Well, I will say this, um, there are no new policies under the sun at some level. A lot of this is very clear. So go back to 2007, 2008. I was on the McCain campaign. Mark was very helpful in that effort and knows a lot about it. Um, we had very high world, global oil prices, and we had very high gas prices, uh, in the United States, and, you know, the McCain campaign advocated for a gas tax holiday, uh, in the same way that you're hearing governors and President Trump talk about a gas tax holiday.
And I can say from the bottom of my heart, I was opposed at the time. I'm still opposed. It's not going to help. But it has a populist appeal. We're going to have this gas tax holiday. Gas will be cheaper, life will be good. And so there is this constant reaching for what appear to be solutions, but they're really just political panaceas to get you past the moment. They don't solve the real problem. Anytime you have a high price problem, you need more supply of something. That is the only real solution.
And there's nothing about a gas tax holiday that produces more supply, and so it's not going to solve things. And the same is true for a lot of price controls. We're seeing a resurgence of the use of price controls in all sectors of the economy. Price controls have a long history of failing in the end because they harm the production of supply, and so they undermine the very efforts you need to take to solve an expensive apartments problem or an expensive pharmaceuticals, whatever it might be.
So I am seeing a lot of policies, solutions that are attractive to people, but I'm disappointed because we've seen this movie before, and we don't need to do this again. We need serious solutions.
You know, Doug was my boss on that campaign. He was a great boss. Whenever he disagreed with, he would never say, 'I disagree with you.' I just wouldn't hear from him for a week. It was great. I know. What the hell? You ghosted me. But he was a great... he laid out the policy for McCain's campaign and did bring Senator McCain back, is all I have to say. I miss the man every day. I do.
Um, you know, if we go back to where we started, the headwinds and the tailwinds, the policy should be to reduce the headwinds and maximize the tailwind. Very simple. Uh, let's get rid of these tariffs, that would be kind of straightforward. How about, uh, comprehensive immigration reform? Not 3 million people across the southern border, but not deport a million people. Let's get something reasonable that we all feel comfortable with to get the right skills that we want and need.
By the way, we need skill, all skill levels, people that work in the Central Valley of California, to be caregivers, to run our tech companies, you know? So, and, you know, what about, how about ending this war? You know, that would go a long way. And then on the... Or it's just the longest kinetic peace fire in history. And then on the tailwinds, I desperately think we need guardrails.
I think this idea that we're not going to think about how to regulate this very important industry when no one really understands it and how quickly it's adapting, and the fact that it is so key to national security and to our global standing. You know, this is screaming, we need some bright yellow lines, and we got to get going here, because if we don't, this tailwind is going to turn into a headwind because something's going off the rails. You know, there's going to be a major cyber event.
You know, I worry desperately that some string of five, six credit unions get hacked and it sets off a bank run because everyone's scared to have their money in a small bank. They go running to JPMorgan or money funding. How's the Federal Reserve supposed to respond to that? I mean, I just don't know. Or some kind of terrorist event. So, you know, I think if you buy into the frame, we got the headwinds of deglobalization policy and the tailwinds of AI, you got to get rid of the headwinds and you got to help reinforce to make sure the tailwinds stay on the right track.
And I want to add to the tariff piece, uh, the following. Uh, a lot of people think that sort of trade wars and trade discontent are, uh, a 2026 phenomenon. It's absolutely not true. I worked in the White House in 2001, and we got trade promotion authority for then-President George W. Bush by a single vote in a Republican-controlled House of Representatives. It was controversial then, it has been controversial for a long time.
And there have been many candidates, especially populist right-wing candidates, who have said, 'The problem is foreigners.' They've demagogued them. They said, 'Well, we need tariffs and we need to protect the American worker, we're leaving them a prey to unfair foreign competition.' Pat Buchanan was one such person, and there have been others, and they always threatened, and that was it.
But Mr. Trump actually did it. He said those things, he ran, he got elected, and he ran the experiment. Those Liberation Day tariffs were enormous tariffs, uh, and guess what? People hate them. Like, half the races in the country right now are Democrats saying, 'These tariffs are terrible. We got to get rid of these people and these tariffs.' So the threat was popular. There are sometimes things that are good as an issue but bad as an accomplishment. And I think we've run the experiment on tariffs, and they're not popular. And that's supposed to be different going forward.
Yeah, that's super interesting. And, you know, one thing I'm thinking about too is a lot of these things that we've touched on are right in the present moment, right? We're thinking about these today, but, you know, the midterms are almost a reflection of the past few years. And one thing that I think we've seen that's really affected people in the past is a government shutdown, right? And I'm curious from both of your guys' opinions, you know, the full federal government shutdown around this time last year, and there was a partial shutdown earlier in 2026, and, you know, we had disrupted government services and federal workers, and, you know, a lot of them were out of work and they're contractors, and, you know, I'm curious if you think that there were, if, like, what were the broader economic consequences of these shutdowns and how they might affect consumer confidence today, if at all.
So the typical profile of the macro economy from a government shutdown is, uh, mostly shifting of the timing of economic activity. You shut it down and it stops, and then you start to kind of, the going back up, and the economic activity happens later. And so there's a lot of shifting. There's usually some typical net loss, which is relatively small in a $30 trillion economy. Uh, kind of a blip.
So, um, I think the main channel is not the physical disruptions and the government services that are not delivered as a result, it's the impact on, uh, the psychology in the populace. It's the impact on the confidence in other policies. These guys can't even keep the offices open. Do I trust them to impose tariffs? These shutdowns have eaten away at that kind of confidence. That's dangerous. That's loss of faith in the institutions. And I think we've seen that. And these shutdowns are part and parcel of it. Because everyone knows they shouldn't happen. And so they're just a black mark. And, um, and that's the biggest impact.
You know, Gerard, uh, I argue that, uh, more concerning is, uh, the debt limit. That's the bigger deal. The debt limit, we're going to hit it because we're running these massive deficits. By the way, in a full employment or close to a full employment economy, we've got deficits that are just outrageous. I mean, this is just nonsensical. And but because of those deficits, we're going to hit the debt limit sometime next spring.
And if you ask us back next year about this time, we're going to be, that's going to be the so-called X date. That's the date when the Treasury Department runs out of all the cash it has on hand to pay the bills, and unless the debt limit is increased by legislation, it has to be done by legislation, we're going to breach the X date. Somebody's not going to get paid on time, and that's going to be a really big deal in markets. Uh, that stock market's going down, not up. Bond yields are going up, not down. And that's a much bigger deal.
And I think that's a reasonable scenario because just think about, you know, if the election goes the way the polls are saying, it's going to be divided government. Uh, and nothing is going to get done legislatively, but one thing absolutely positively has to get done, and that is raising the debt limit by the X date, which is going to be this time next year.
So I'm, you know, I'm with Doug on the shutdowns, they're, uh, kind of from a macro perspective, at least first order, they're not that big a deal. But the other thing I'd say is you mix in the implications of shutdowns with debt limit battles, that just paints a picture of an inept government, fracture, or fracture brings to the fore the implications of our fractured politics, and this undermines or weakens our, you know, safe haven status, our reserve currency status. And while that may not be a cliff event, that is certainly corrosive on our economy going forward.
You know, we took 250 years to build up, you know, trust in the United States of America, that when times are tough anywhere on the planet, money comes here because we're money good. You give us your money, you're going to get it back with the interest rate we have to do. But as soon as you lose that trust, and we are trying really hard to lose that trust, and if we breach the debt limit, we will have lost that trust. We're going to pay that. We're never going to get that back. It's going to take 250 years and another Alexander Hamilton to get it back. It's just not going to happen. So, you know, that's the bigger deal with regard to things like the debt limit and the government shutdown.
I mean, I totally agree with you, but I think one thing that I also think about when we talk about the debt or a shutdown is, you know, incentives are almost misaligned a little bit, right? Like, to solve a deficit, there's really two things you can do. You can raise more revenue, you can cut spending, and both of those generally seem to...
No, no, that's not the only way. There's a third way. Grow more strong. Get rid of the tariffs. Get rid of the war. You know, make sure AI sticks in the guardrails. You know, that you get growth. You have comprehensive immigration reform. Yes, that's the secret sauce of the American economy. You let the best and the brightest into the country, let them do their thing, make money, and succeed, and we all benefit from that. So if we do those things, then all the other stuff becomes a lot easier. Not that we don't need to think about our spending and our taxes, I'm all on board with that. But that's not the first thing where my mind goes.
And I think this is really important, Gerard. I think what Mark said is at the centerpiece of why we've seen the rise of populism on the left and the right, and why the wings are controlling the debate right now. Beginning in roughly 2000, we have run large deficits even in full employment. So from a budgetary point of view, we have been not just a little bit negligent, we have been just reckless. And, um, the eye has been on other things.
The focus under George W. Bush, who I worked for, but it was all about winning the Global War on Terror. Um, certainly, uh, the focus in the Obama administration was not on the trend level of economic growth. They had healthcare issues that they thought were a priority. I mean, they basically looked at policy priorities, and at each point they chose against growth. Trump, trade war, you know, same thing. Biden, big social programs. So what we've done is we've taken our eye off the growth ball. And that's the one that Mark just pointed to.
If we had kept the same pace of growth in the 21st century that we had in the 20th century, we'd have GDP per capita that was $15,000 higher for every man, woman, and child. I think there'd be a lot less discontent if they had a cushion in their lives against the shocks we've seen. But we've taken away the cushion because we haven't paid attention to keeping their opportunities vibrant. And we're paying a price for it now, and I don't think we can afford to continue to do that.
I think that makes a lot of sense, but also, you know, voters aren't happy with the economy, right? And everyone, like, in theory, everybody wants economic growth, but you're hearing such different, you know, ways of getting it, such different policies, especially from, like you said, like the fringes of the party. What do you think in your opinion, especially because you guys have both advised on policy, what do you think candidates can realistically do to persuade voters that their economic agenda is going to make a difference when both parties are saying they're blaming the other? Like, how do voters, how can voters actually understand, or how can they try to figure out for themselves what's the true path forward for either growth or a fix or, you know, just to make my life better as a voter?
