America's Debt Is A Symptom—Not The Disease
A Tale of Two Subway Stations
TikTok’s comparisons of grimy New York City platforms with gleaming Moscow or Shanghai stations are less about aesthetics than capacity to deliver public goods. They hint at three structural problems that precede—and ultimately produce—America’s $34 trillion federal debt.
@holvek #moscow #newyork #subway #💀 ♬ оригинальный звук - ADZXRY
Problem #1: Resources Flow to Low‑Productivity Services
The care‑giving boom in New York City
Between 2018 and mid‑2023, service hours in New York’s Consumer‑Directed Personal Assistance Program (CDPAP) more than doubled, even as traditional agency hours fell 19%. This is a program that basically pays people $20 to $28 per hour to do errands for their elderly relatives—in some cases, on a fulltime basis.
The program now accounts for roughly one in eight private‑sector paychecks in the city. Home‑health employment jumped another 57,000 jobs last year alone—10 % Y/Y.
These wages are largely reimbursed by Medicaid, which the Federal Government back‑stops with borrowed dollars. The multiplier effect on tangible output is negligible: most of the spending shows up as consumption, not capital formation.
Problem #2: Tradables Hollow‑Out
- Tradables share of 2023 GDP (manufacturing + mining + agriculture):
• United States ≈ 19 %
• China ≈ 46 %
• Russia ≈ 37 %
Trade balance, 2023:
• United States: −$1.1 T goods & services deficit
• China: +$800 B surplus
• Russia: +$235 B surplusThe U.S. goods‑and‑services gap widened to $140 B in March 2025, the largest monthly shortfall on record.
Borrowing to fund imported tradables is a double drag: it swells federal debt and diverts purchasing power abroad instead of into domestic plant, equipment, and infrastructure.
Problem #3: Cost Disease in Public Works
Where did the $1.2 T Infrastructure Bill money go?
Two‑plus years after passage, federal dashboards tout thousands of projects, but most are still in design or permitting stages. Even the DOE’s own progress report frames wins primarily in job‑creation terms, not shovel‑in‑ground completions.
A vivid contrast:
| Project | Incident | Re‑build timetable |
| Francis Scott Key Bridge (Baltimore) | Containership strike, Mar 2024 | Geotech surveys Jan 2025; full reopening target 2028 |
| Crimean Bridge (Russia) | Truck bomb, Oct 2022 | One lane reopened in 3 months; full rail traffic restored in 9 months |
Different political systems aside, the delta illustrates America’s permitting maze, fragmented ownership, and litigation risk—factors that drive borrowing needs higher because every mile of highway or foot of rail costs several‑fold more than in peer countries.
Problem #4: Public‑Order Premium
Data blind spot and funding incentives
Washington has floated tying transit grants to crime‑rate benchmarks, but for years the FBI’s switch to NIBRS left 30 %‑plus of agencies unable to report full data. Early 2025 guidance from the Trump administration’s DOJ directs all state CLEOs to resume legacy summary reporting alongside NIBRS until compliance exceeds 95 %. Reliable numbers reopen the door to performance‑tied federal transit money—but Congress still needs to mandate it.
How These Feed the Debt Loop
Low‑productivity domestic spending → weak real growth per borrowed dollar.
Trade‑deficit leakage → debt‑financed consumption rather than domestic investment.
High unit‑cost infrastructure → more borrowing per unit of tangible capital.
Public‑order premium → higher operating costs & capital flight from cities.
Net interest is now the fastest‑growing budget line, crowding out discretionary investment while public spaces fray.
Partial Fixes Already in the One Big Beautiful Bill Act (OBBB)
The draft OBBB nods toward the right diagnosis—making bonus depreciation permanent (§ 111001) and tightening Medicaid attendant rules (Subtitle E)—but ducks the permitting morass and the accountability gap in transit funding. Until those last two are fixed, America will keep borrowing a premium price for sub‑premium public goods.
What Would Treat the Disease, Not Just the Symptom
| Lever | Practical first step | |
| Raise tradables share | Neutral expensing for all structures; fast‑track energy‑intensive manufacturing permits; consider strategic tariffs or a border‑adjustable levy—e.g., the Trump Administration’s 10 % baseline tariff on manufactured imports and 60 % Section 301 duty on Chinese EVs, alongside a draft carbon border adjustment framework to level the cost gap with high‑subsidy trading partners. | |
| Triage transfer programs | Sunset pass‑through home‑care models unless tied to outcomes; re‑validate disability rolls. | |
| Slash infrastructure unit‑costs | One‑agency permitting clock; benchmark budgets to OECD medians; claw back overruns. | |
| Restore public order | Condition transit grants on crime‑rate benchmarks now that national data collection is back on track. | |
| Restrict high‑corruption inflows | Tighten visa/green‑card issuance from nations scoring poorly on the Transparency International CPI, and ramp post‑arrival audits of federally reimbursed providers to curb Medicaid & welfare fraud (e.g., the $1 B Miami led by Cuban‑American physicians and the Somali $250 M "Feeding Our Future" scheme in Minnesota. |
Implications for Investors
| Path | Potential outperformers |
| Status quo (rising debt & financial repression) | Bitcoin proxy trades; gold & hard‑asset hedges. We added to one bitcoin proxy, Semler Scientific (SMLR) yesterday. |
| Pivot to productive economy | New‑nuclear beneficiaries; advanced‑manufacturing REITs; on‑shoring enablers (chips & fab equipment). We exited a trade in one new-nuclear company last week, Oklo (OKLO) for a 385% gain, and we opened trades on a couple of picks & shovels plays on the new nuclear boom last month. |
Diversifying across both buckets lets a portfolio participate whether Washington sticks to the current trajectory or executes bona‑fide reform.
Take‑away: Debt is the thermometer, not the fever. Until the U.S. re‑routes capital from low‑yield consumption into high‑yield production—and demands accountability for every infrastructure and safety dollar—borrowing will keep climbing no matter how loud the fiscal hawks squawk.
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Wednesday Afternoon Update
Shares of the nuclear company I mentioned above, Oklo, exploded higher today on news that the company would be selected to provide power for Eielson Air Force Base in Alaska.
Oklo was one of Portfolio Armor's top ten names again last week, but I didn't place a new trade on it because I was concerned it had run too far. Looks like I was wrong and Portfolio Armor's algorithm was right.
