Listen to “America’s Looming Doom Loop” on Spreaker.
Riots in France amid rising living costs, political unrest and a national debt shooting through the roof should concern America’s political leaders — at least enough to motivate action to keep the same from happening here.
Economists described the predicament to The New York Times as a “doom loop.”
Here’s how it works.
Government debt grows, raising concerns in financial markets about the government’s ability to repay what it owes. Greater risk means investors demand higher interest rates. Reasonable enough.
Higher borrowing costs squeeze government budgets, leaving less money for public services. But French citizens want more services, not fewer, and certainly don’t want higher taxes to pay for them.
Voter frustration creates a political opportunity.
Enter the populist politician, promising lower taxes, more benefits and none of the difficult trade-offs necessary to balance the books.
Voters like it. They believe it, sometimes naively.
Investors see what’s happening and grow increasingly nervous. Borrowing costs rise further, budgets tighten, politicians make more promises, and the loop repeats.
Again and again.
Eventually, economic reality threatens to impose the discipline that politically motivated leaders refuse to exercise.
You needn’t be a financial oracle to see the parallels with America’s predicament.
Need more convincing?
France’s national statistics agency, INSEE, reported that government debt reached 119% of gross domestic product at the end of the second quarter of 2026.
The International Monetary Fund projects U.S. government debt at nearly 126% of GDP this year.
As for populist promises, American examples abound on both sides of the aisle.
Donald Trump has promised to protect Social Security and Medicare from cuts while championing lower taxes, including no taxes on tips and overtime. Add Trump Accounts for children and now a promise of $5,000 checks for American adults if Republicans retain control of Congress.
Joe Biden championed student loan forgiveness. Kamala Harris promoted expanded child tax credits and housing assistance. Bernie Sanders wants Medicare for All.
Different politicians. Different priorities. But the same fundamental question too often goes unanswered:
How are we going to pay for it?
Populism is alive and well in America, and the numbers are increasingly difficult to ignore.
The federal government just finished fiscal year 2026 with a deficit of nearly $2 trillion. That’s nearly $2 trillion more spent than collected in a single year.
Meanwhile, the country must continually refinance maturing debt, sometimes at substantially higher interest rates, adding to the cost of servicing what we already owe.
And those interest payments compete with everything else Americans expect their government to provide.
Any part of this not sound like doom to you?
France isn’t alone. Britain, Germany and Japan face fiscal pressures of their own, though the circumstances differ.
It’s time for Americans to wake up and accept economic reality.
Everything has a cost.
Government cannot do it all. And the more we demand from populist politicians — and allow them to get away with their sleight of hand — the closer we move toward a reckoning of our own.
To be clear, America isn’t France.
The United States enjoys extraordinary economic advantages, including the dollar’s status as the world’s principal reserve currency and the remarkable depth of the market for U.S. Treasury securities.
Those advantages provide breathing room. They do not provide immunity from economic reality.
We can almost certainly sustain levels of borrowing that would overwhelm many other countries. But that is no excuse to keep testing the limits.
At some point, America may face the same painful choices France is confronting today: higher taxes, fewer benefits, reduced services or some combination of all three.
The longer we postpone those decisions, the more painful they may become.
Better to act now, right the ship and avoid a reckoning imposed upon us by financial markets. That also means electing politicians who have abandoned populist leanings and the falsehoods that come with them.
Will we?