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The Billionaire Tax, The Busted Federal Budget, and the Future of the American Experiment

Hoover Institution

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Hoover Institution economist Joshua Rauh examines America’s mounting federal debt and the political obstacles to controlling government spending. Rauh discusses why higher taxes and faster economic growth alone cannot close the budget gap, warns that rising interest costs could lead to an inflationary crisis, and argues for slowing the growth of entitlement spending. The conversation also covers President Trump’s tariff policies, California’s proposed billionaire tax and why it has the potential to drive taxpayers out of the state, and the lessons offered by states such as Texas and Florida.

Related Sources:
The Net Present Value of the Billionaire Tax Act: https://www.hoover.org/research/net-p...
Learn more about what's happening in California: https://www.hoover.org/focus-areas/ca...
Research by Joshua Rauh: https://www.hoover.org/profiles/joshu...

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The opinions expressed are those of the authors and do not necessarily reflect the opinions of the Hoover Institution or Stanford University.

© 2026 by the Board of Trustees of Leland Stanford Junior University.

3 Comments

@chfgypsy 4 hours ago

I wish you had a magic button!!!

@stephenboisvert6703 3 hours ago

America has a historically unique position where our currency is internationally treated like gold while we can simultaneously print as much of it as we want. The most significant effect is that we undervalue the currency domestically. You can see this in things like tech industry wages where a German doing the exact same labor as an American might earn 20% of the American's salary. Apply this reality to things like healthcare and costs are massively inflated because the answer to "what is emergency medical care worth to you" is "whatever you ask for."

So I push back against the idea that the best way to counter high welfare spending is to be more financially frugal in the services offered. Longterm that's going to stifle Americans on a basic environmental/biological level in comparison to other countries. It's the same kind of dynamic that cratered industrial capacity as we outsourced internationally on the free market.

@greedymac37fd383 4 hours ago

anyone who holds the dollar pays for it. It inflates away eventually, unless the inflation reaches escape velocity and the society/currency collapses. There is probably a prevailing theory that the primary world currency reserve owner cannot reach such a societal collapse. So our spending is paid for by the 3rd and 2nd world, as well as by anyone else with us cash correlated assets, which means U.S. citizens as well.