It’s the part no one wants to say out loud. Not on TV, not in campaign speeches, not in the flashy Fed statements. But it’s right there in the numbers, year after year. The more Washington spends, the weaker the economy becomes.
The logic is brutal in its simplicity. When the federal government floods the system with money, the long-term result is not prosperity. It’s stagnation. Most economists agree the U.S. government’s fiscal multiplier is negative. That’s not a theory. It means that for every dollar borrowed and spent by the government, the economy shrinks a little over time. It is the opposite of investment. It is economic cannibalism.
And yet, the spending never stops. The Treasury is currently dumping historic volumes of bonds into the market just to keep up with existing obligations. Trillions are needed, not over decades, but every single year. This year, the deficit is projected at $1.9 trillion, even with tax receipts topping $5 trillion. The spending is now on autopilot. Debt service alone will soon surpass military spending.
Bond markets get the headlines, but the deeper threat is growth erosion. Every new round of issuance tightens the noose. It siphons off capital that could have been productively deployed in the private sector. Infrastructure? Barely touched. Innovation? Starved. Instead, the bulk is consumed by entitlements, interest payments, and bloated administrative machinery that moves at the speed of bureaucracy.
Inflation may appear subdued in some quarters, but real growth is quietly suffocating. Productivity gains are shrinking. Business formation rates have stalled. The labor force is thinning. And under all of it, Washington is pressing down with one hand and borrowing with the other.
The market watches the auctions, the rate decisions, the balance sheet unwinds. But almost no one is talking about what happens when that spending actively drags the country backward. This is not stimulus. It’s self-sabotage. And the longer it continues, the harder the climb back will be.