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Dear Jack,


The future for our state looks bright. In just the past five years, Mississippi has seen more economic growth than in the entire fifteen years before that combined.

We’re on track to phase out the state income tax entirely, allowing families to keep more of what they earn. Mississippi has attracted a surge of new investment, and for the first time in years, our workforce participation rate is finally heading in the right direction.

Zoom out, and the picture gets even better. Contrary to the endless gloom from the pundits, the American economy has consistently outperformed expectations for decades. Since the late 1990s, the U.S. has delivered strong, steady growth that few forecasters saw coming.

But there is one dark cloud on all our horizons that we cannot forever ignore; US national debt.
That dark cloud is the debt.
As of today, US national debt stands at $38 trillion (with a capital T).

To grasp how enormous a single trillion really is, try this:

* One million seconds ago was just last week, right before Halloween.
* One billion seconds ago was early 1994, when Clinton was president and the internet was dial-up.
* One trillion seconds ago was roughly 30,000 BC, deep in the Stone Age, when humans were still chasing mammoths.


Now here’s the gut-punch: that $38 trillion mountain of debt has roughly doubled in just the past ten years.

Costly foreign wars, mega bailouts, COVID giveaways and all those federal entitlement programs LBJ said would “end poverty”, eventually add up. (Incidentally, living standards for America’s poorest citizens are light-years higher than when those programs launched in the 1960s (indoor plumbing, air conditioning, smartphones, modern medicine), but the number of people dependent on government assistance is larger than ever).

Rather than pay for all that using tax receipts, the US government has borrowed, issuing IOUs. Today we spend more money servicing all those IOUs than we do on defense.
As my fellow Brit, the historian Niall Ferguson, likes to point out, any great power that spends more on debt servicing than on defense risks ceasing to be a great power. That was true of the Romans and the British, the Habsburgs and the Dutch.

What must America do to avoid a similar fate?

When President Trump was first elected, Elon Musk and Vivek Ramaswamy launched the Department of Government Efficiency (DOGE) with an ambitious target: to reduce annual federal spending by $2 trillion.

Because mandatory entitlement programs - Social Security, Medicare, and Medicaid - remained largely untouched, DOGE hasn’t come close to achieving that yet. The federal deficit has barely budged.

Where, one might ask, are all those Tea Party types that railed against federal overspending ten years ago as the debt to GDP ratio went from 90 percent in 2010 to 125 percent today?

If the US cannot rein in the growth of the debt, the only other way to avoid going the way of the Romans is to try to make the GDP part of the equation rise faster. In other words, to try to grow our way out of the debt.

In order to stabilize debt-to-GDP at the current 125 percent of GDP, America will need to achieve real GDP growth of about 4 - 5 percent for the next 10 to 20 years. With the advent of AI and robotics, as Elon Musk suggests, it could be done.

Put it another way; without an AI / Robotics induced growth surge, US debt will hit 150 – 170 percent of GDP by 2050. Mamdani-economics would then become the least of our worries, as inflation and tax rises became inevitable whoever held office.

The older I get, the more I think that there are two fundamental things that the federal government needs to get under control: mass immigration and the deficit. Do that, and states like Mississippi have a bright future. Don’t, and all the good that we might do will only matter at the margins.
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Warmest regards,

Douglas Carswell
President & CEO

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