Insights from The Hill’s Invest In America Talk with Representative David Schweikert. Connor Stout, Political Economy Intern, Denison University

President Donald Trump has a history of railing against US economic policy; many of his campaign promises rely on the premise that our economy needs to be fixed. His attempt to fix the US economy through the One Big Beautiful Bill (OBBB) will reportedly increase the deficit by between 3 and 5 trillion dollars. US Representative and Chair of the Joint Economic Committee David Schweikert of Arizona talked with Betty Liu of The Hill (shown in photo, left) on June 4th to address some of the concerns both surrounding the bill and the US economy as a whole.

The Economy:

According to Rep. Schweikert, the most significant factor driving the growth of U.S. sovereign debt is demographics. As the age group of 65 and older grows due to longer life expectancies and the aging of the Baby Boomer generation, it places enormous strain on federal programs like Medicare and Social Security, both of which are major components of the federal budget.

The 65+ population is typically retired, which means they are no longer paying income taxes at previous levels, yet they are drawing more heavily from entitlement programs. Medicare, in particular, sees costs increase dramatically because older individuals generally require more medical care. As health care spending rises and more people qualify for benefits, the government must spend more each year to keep up. This surge in spending contributes to growing budget deficits, which are then financed by borrowing.

As the government borrows more to cover these costs, interest payments on the national debt also rise, compounding the problem. Rep. Schweikert points out that this combination of higher entitlement spending due to aging demographics and increasing interest payments creates a dangerous cycle that accelerates the growth of the national debt.

As interest rates increase, Rep. Schweikert notes that the current economic focus is centered on how much each constituency receives, as the White House attempts to fulfill campaign promises. According to him, this focus distracts from the larger issue: building an economy capable of supporting growing industries and emerging technologies. Addressing that challenge, he argues, is key to fostering long-term economic growth and expansion.

Rep. Schweikert is worried that if term premiums stay high, it will cancel out the benefits of investing in research and development due to the higher interest rates. Rep. Schweikert further projects that, should the current growth of interest rates stay consistent, around 7% of the US economy will be borrowed this year; in just ten years 9% of the US economy will be. The focus on short-term satisfaction as the debt market becomes more crowded is not a good thing for the US economy, according to Rep. Schweikert. 

The Solution:

With all of the problems listed above, what is the solution? How can the economy recover? Rep. Schweikert proposes that the government should announce the modernization of government services along with a reconciliation budget to alleviate concerns in the markets and in the political class. Alongside this modernization in government, Rep. Schweikert called on the C-Suite, businesses, and the US Chamber of Commerce to pull their weight. According to Rep. Schweikert these groups have become rent-seekers over the past seven years, more interested in increasing power than productivity. As these groups have been focusing themselves on only three lines of tax code that affect them rather than working collaboratively on expanding the US economy, a change within that culture would help the economy return to a better state.

My Thoughts:

During the talk, Rep. Schweikert was careful to avoid certain subjects and lines of inquiry, some of which were incredibly important. Early on, Rep. Schweikert avoided the question of why he supported the OBBB. His answer addressed how he was going to offset the resultant tax hikes in his district through Medicaid Advance, Forgotten Funds, and talent-based immigration, but his reasoning for backing a bill that will increase the national deficit by, at minimum 3 trillion dollars, went unsaid. His solutions for the economy were similarly vague. While acknowledging that the White House and the political class have focused on the wrong subjects, constituency-based funding to fulfill campaign promises rather than broad economic investment, his call to arms went to the C-Suite and businesses. For as critical as Rep. Schweikert was of several decisions and trends within government, any solution relating to it was broad. “Modernization” of government programs was part of his proposed solution; what that actually entails was left unsaid. Such a vague term could mean anything from simply updating hardware and increasing the staff to implementing AI programs. Rep. Schweikert was asked to say something that would leave listeners feeling optimistic about the future of the economy, but his talk and his answers left me apprehensive about the future and increasingly doubtful of our ability to halt growing economic problems.