By Emma Schoenauer

Every politician wants the economy to grow—as it is the absence of this growth that threatens their reelection. America's elected officials are incentivized to keep the economy booming at all costs, even when it leads to inflation, unsustainable debt, and/or long-term instability. No one wants to be responsible for raising interest rates or slashes essential programs. As a result, the U.S. economy is stuck in a dangerous loop where short-term political gain is prioritized over sound economic management. This loop perpetuates with no end in sight.

This cycle isn’t just economically dangerous—it’s structurally embedded in American politics. Presidents and members of Congress serve terms from 2 to 6 years, with the President being capped at 8 years of service over their two terms. Their window to deliver results is brief, and the surest way to appear effective is to keep the economy booming. The trouble is that the national debt will never go down, and social welfare programs such as social security will become increasingly difficult to finance.

You can see this clearly in the way both parties treat the national debt. Traditionally, democrats are quick to spend on social welfare programs, healthcare, and education while republicans aim to cut taxes and boost defense budgets. What both parties have in common is a willingness to increase the national deficit—$37 trillion and counting with the new One Big Beautiful Bill Act—funding programs designed to deliver benefits to voters today. Long-term costs are easy to ignore. Voters want results today—and politicians have stopped pretending otherwise.

Even when considering monetary policy, where the Federal Reserve, for now, maintains structural independence, the pressure to prioritize short-term market performance is relentless. When the Fed raises rates, elected officials—left and right—groan about slower growth. Higher borrowing costs may be necessary to cool inflation, but few are eager to defend the tradeoffs. It’s politically safer to ignore the economic warning signs and hope that the markets float on wishful thinking.

This misalignment of incentives—between what is advantageous for an incumbent politician’s re-election campaign and what is beneficial for the country’s next decade—has made responsible economic management nearly impossible. The unfortunate truth of American politics is that fiscal restraint, monetary discipline, and structural reform don’t win elections, while promises of generous financing, low taxes, and strong job numbers do.

The effects are piling up. We’ve seen persistent inflation, climbing federal debt interest payments, and a distorted market environment where risk is underpriced and debt is assumed to be painless. While spending grows, the rest of the world is starting to question how much more of the U.S.’s debt it is willing to hold.

None of this is inevitable. It’s the result of a political structure that does not reward long-term thinking. Politicians aren’t evil—they’re rational actors. And the rational strategy in our current political system is to accelerate economic growth as aggressively as possible while their reelection is on the table. Tough calls are left to their successors—or better yet, the Federal Reserve.

This strategy comes at a cost. Consider the danger of rising interest rates on a $37 trillion national debt. Just a one-point increase in average borrowing costs adds hundreds of billions to U.S. annual interest payments. This is money we could be using to fund infrastructure, education, or military readiness. Instead, it’s handed over to our creditors, a growing portion of whom are foreign governments, concerningly including China.

Worse, this cycle discourages meaningful reform. Few politicians want to talk about Social Security or Medicare solvency. Few will defend raising capital gains taxes or limiting corporate subsidies. And no one wants to say out loud that maybe—just maybe—it’s time for the government to slow down their spending. Instead politicians from both sides of the aisle feel an obligation to the party that elected them to pass legislation funding that parties' foundational beliefs.

This isn’t a partisan critique. It’s a structural one. As long as politicians are evaluated on short-term economic conditions, and as long as voters are conditioned to expect quick fixes, our economy will remain caught between real stability and performative growth. We’ll spend big when we feel good, and panic when inflation inevitably returns.

So what can we do? First, we need political leadership willing to level with voters: economic growth is not always the right metric. Sometimes it’s worth slowing things down to restore long-term balance. Second, we need to empower independent institutions—like the Federal Reserve and Congressional Budget Office—to sound the alarm on unsustainable policy, without fear of political retaliation. Finally, we should revisit structural reforms that encourage long-term thinking—like introducing automatic triggers requiring legislative review when debt or deficits exceed set thresholds or requiring that new spending or tax cuts be offset by spending cuts or revenue increases elsewhere, maintaining focus on a balanced budget. These kinds of guardrails will not solve everything, but can make it harder for lawmakers to chase short-term political wins at the expense of long-term economic stability.

Until change is made, the United States will continue on the same path: ballooning the economy until it pops, then blaming the other side when it does. Yet in the end, the consequences won’t fall on the politicians, but the ones who voted for them instead.

Emma Schoenauer is a recent Economics graduate from the University of Notre Dame beginning her career in investment analysis. Over the past four years, she has focused on studying the long-term fundamentals that drive markets and observing how political powers often manipulate them to advance their own agendas. The recent passage of the One Big Beautiful Bill Act particularly ignited her interest in economic policy and inspired her to write this piece.