Three Conservative Virtues that Democrats Need to Embrace
America Needs Leaders Who Care About Thrift, Growth, and Defense
Democrats excel at criticism. They despise inequality, war, discrimination, autocracy, and environmental destruction. Above all, they dislike Donald Trump (and this week, Joe Biden). They are adept at mobilizing constituencies around issues they oppose, but less consistent in articulating the values that motivate their views. This is especially true for values that sound conservative, like family, religion, or patriotism, even though most Democrats support them.
In the current moment, Democrats need to embrace three virtues that have historically underpinned America’s strength: Thrift, Growth, and Defense. These were once bipartisan virtues. Democrats should reclaim them not simply to broaden their electoral appeal, but also because neglecting them leads to vulnerabilities that no progressive policy can offset.
Thrift: Confront Fiscal Reality
Deficit hawks are a persistent and often opportunistic feature of American politics. Most Americans and nearly all politicians ignore their carping. For a decade, low interest rates and market tolerance of high debt levels meant that those who moaned about unsustainable deficits seemed to be crying wolf.
However, the situation has changed in three ways, and democrats need to update their views accordingly.
More and costlier debt. The federal debt has grown much larger under Trump and Biden. A decade ago, US budget deficits were well under 3% of GDP, and total debt was approximately 75%. Since the economy was growing at two percent annually, the ratio of debt to GDP increased quite slowly. With low interest rates, debt was a minor problem.
Today, federal budget deficits are six percent of GDP or higher, and federal debt has ballooned to $36.6 trillion. This is more than 120% of GDP, meaning that it would take nearly 15 months of America’s economic output to fully repay its creditors. Interest rates on 10-year Treasuries have more than doubled to 4.5 percent, so interest payments are projected to reach $952 billion annually. This exceeds the amount the US spends on defense or Medicare. It’s real money.
So far, nothing terrible has happened — and Ernest Hemingway would have understood why. In his 1926 novel The Sun Also Rises, Bill Gorton asks Scottish war veteran Mike Campbell how he went bankrupt. Mike responds, "Two ways. Gradually, then suddenly."
Debt has operated in this manner throughout history. Mounting debt is not a problem – until it suddenly leads to default, hyperinflation, or deep recession. Notable examples include Venezuela in 2017, Greece in 2012, Iceland in 2008, Argentina several times, especially in 2001, Russia in 1998, and France just before the French Revolution. In each case, unchecked government borrowing led to economic collapse, social unrest, and long-term damage to national prospects.
In each of these cases, countries borrowed faster than they grew. Over the past twenty years, the US economy has grown at an annual rate of about two percent, but debt has increased by more than five percent after accounting for inflation.1 So America has been borrowing more than twice as fast as it has been growing. (Some borrowing was obviously necessary during the Great Recession and the Covid pandemic.)
A focus on trade deficits. The Trump administration is overly focused on trade deficits. By definition, a trade deficit occurs when a country consumes more goods and services than it produces. This means that a country spent more than it saved. Budget deficits subtract from national savings, so Trump’s tariffs cannot lower trade deficits unless the US also saves more by reducing its budget deficit. However, Trump’s budget will massively increase the deficit.2 His tax policy is at odds with his trade policy.
Declining trust in the US. Debt is based on trust. Lenders trust borrowers to repay; borrowers trust lenders not to inflate away the debt by debasing their currency. But the savers of the world increasingly regard Donald Trump as untrustworthy. He has turned on US military allies and embraced its enemies. He has elevated personal corruption to a level associated with banana republics. And the self-professed “King of Debt” has repeatedly abused the trust of his creditors. He declared bankruptcy four times in 1991-92 alone and twice after that.3 Economists may not know how to measure trust, but everyone knows untrustworthiness when they see it. And they see it in Donald Trump.
For these three reasons, federal debt is a much different problem today than it was a decade ago. But Democrats hesitate to recognize this, knowing that the politics of debt reduction are bad and getting worse.
Hypocritical debt politics. Federal borrowing rewards profligate and hypocritical politicians. The party out of power becomes a fiscal Paul Revere, riding the countryside to warn citizens that mounting debt is turning the US into Greece. The party in power gives speeches about budgetary restraint and promptly charges its favorite programs to the national tab. Until Biden, Republicans had become especially adept at preaching fiscal responsibility while cutting taxes and increasing spending.
Before the 1980s, Republicans were hostile to government borrowing. Ronald Reagan changed that by enacting significant tax cuts and increasing military spending, which tripled the national debt. Since then, every president except Bill Clinton has increased the national debt.
George W. Bush cut taxes and borrowed to finance the war in Iraq.
Deficits grew under Obama as the country emerged from the Great Recession.
They continued to rise under Trump’s first administration, when Congress passed the 2017 tax cuts and increased spending.
They grew under Biden as the US continued to subsidize Covid relief, infrastructure spending, student loan forgiveness, and the CHIPS and Inflation Reduction Acts. Under Biden, the national debt increased by $8.4 trillion, from approximately $27.7 trillion when he took office to $36.2 trillion when he left (not all of this increase was due to his decisions).
Trump’s current budget, his “Big Beautiful Bill” that recently passed the House, is projected to add between $2.8 trillion and $3.8 trillion to the national debt over the next decade, according to leading nonpartisan estimates.4 Even Republicans who ran for Congress as deficit hawks have saluted their new free-spending leader.
If Democrats want to maintain economic stability and fund progressive initiatives, they must prioritize fiscal responsibility. This doesn’t mean abandoning social programs, but ensuring that they are funded sustainably. It means campaigning against tax cuts and social benefits for people who do not need them, even if those people are funding Democratic party political action committees.
Growth: Prioritize Labor Productivity
Too often, Democrats define progress as income redistribution. Tax and labor market policies that distribute income fairly are vital, but they rely on a growing economy. The best way to understand this is to compare the performance of the US economy with that of Europe, whose income distribution policies are deeply admired by many Democrats, including myself.
In the early 1990s, US labor productivity per hour was essentially the same as that of the EU. Over the past decade, however, US labor productivity growth has consistently outpaced the European Union.
Since 1995, however, US labor productivity per hour has increased by about 50%, compared to 28% in the euro area.5
US output per hour worked has grown about 17% since 2014, compared with only 5% in the eurozone.6
The US has seen exceptionally robust productivity gains in information and communications (27% growth in the US vs. 7% in the euro area from 2019 to 2023) and professional services (19% vs. 5%).
Democrats should champion policies that enhance labor productivity: investments in infrastructure, education, and research and development. Embracing technological advances, especially artificial intelligence, can drive efficiency and create new industries.
A focus on growth ensures the resources necessary to fund social programs and respond to future challenges. Politically, Democrats have an opportunity to seize leadership on productivity and pay from Republicans, who have slashed research funding, attacked American universities, and sharply cut investments in infrastructure and education. Trump is funding his tax cuts by reducing tomorrow’s wages.
Defense: Rebuild Military Readiness and Alliances
For the first time since the early nineteenth century, the United States is not prepared to win a war against its main military adversary. The US now struggles to equip allies engaged in regional conflicts, such as Ukraine. America needs to strike a balance between the need for thrift and the need to modernize its defensive capabilities, alliances, and production infrastructure. We need to spend much, much smarter on our military.
Nothing illustrates this as clearly as Trump’s feckless US war against the Houthi militia. In April, Trump decided to bomb Houthi missile sites in Yemen that block global shipping access to the Red Sea. According to the New York Times, the Houthis shot down several American MQ-9 Reaper drones. They fired at naval ships in the Red Sea, including an American aircraft carrier. The US strikes burned through $1 billion of munitions in the first month alone, and two $67 million F/A-18 Super Hornets tumbled off America’s flagship aircraft carrier into the Red Sea.
After thirty days, the Pentagon warned that the modest campaign was draining the military of critical munitions, and Trump had had enough. He declared victory, made admiring statements about the Houthis, halted the military campaign, and headed to Qatar to meet with Houthi allies, who presented him with a gilded luxury jet. No discussion of rebuilding our munitions capacity.
Factories win wars. Modern industrial wars are won by a combination of factories and alliances that coordinate military production. The war in Ukraine and the skirmish with the Houthis are a stark reminder that protracted military conflict requires a defense industry capable of manufacturing the munitions, weapons systems, and matériel to replace depleted stockpiles.
The decrepitude of the US military production infrastructure is neither secret nor particularly controversial.
A bipartisan Congressional commission concluded that in a high-intensity conflict, such as one over Taiwan, the US would exhaust its critical munitions in just eight days. Worse, current production rates cannot replenish these stockpiles promptly. The Commission unanimously concluded that “U.S. industrial production is grossly inadequate to provide the equipment, technology, and munitions needed today, let alone given the demands of great power conflict.”7
The Office of Naval Intelligence is sounding the alarm because China builds 200 ships for every one the US produces. These new Chinese ships are not leaky junks with overhanging transoms. As economist Noah Smith reports, their quality is top-of-the-line, and Chinese production simply overwhelms US output.8
Make no mistake: progressives hate every bit of this. They inevitably note that the US spends more on its military than the next ten countries combined. Indeed, the standard progressive definition of “thrift” would entail cuts in defense spending to fund social spending.
Unfortunately, US military spending gets very little bang for its buck. As with healthcare, housing, EV charging networks, and high-speed rail, progressives too often confuse dollars spent with results achieved.
Inflexible American procurement processes cannot adapt quickly to technology changes and rely excessively on five prime defense contractors, who capture far too much of the defense budget.9 Nothing illustrates this more clearly than the impact drones have had on ships, planes, and tanks – cornerstones of America’s military.
Drones. Ukraine has illustrated how drones and precision munitions have disrupted warfighting. Both ships and tanks are seeing their role rapidly redefined.
The role of naval ships is shifting as their vulnerability to drones and missiles increases, especially in high-intensity conflicts against adversaries such as China or Russia. Ships are vulnerable to hypersonic missiles that travel at more than five times the speed of sound and can destroy a $13 billion aircraft carrier. US analysts consider China’s DF-21D and DF-26 hypersonic missiles “carrier killers” and believe that any carrier operating within 1,000 miles of the Chinese mainland is at real risk. It is safe to assume that Donald Trump will not deploy the Seventh Fleet to the Straits of Taiwan, as Truman did to protect the island in 1950.
In addition, aerial drones can now overwhelm ship defenses with swarm tactics or deliver precision strikes. Undersea drones pose a threat to ships and submarines. Ukraine’s use of maritime drones against Russia’s Black Sea Fleet has shown that even relatively unsophisticated platforms can be highly lethal.
Drones have also changed ground warfare. Like ships, tanks are now steel coffins unless they are carefully protected and integrated into a combined arms strategy. Cheap quadcopters with HD video perform surveillance that has eliminated much of the tank’s traditional battlefield stealth. Loitering munitions, such as Switchblade, Lancet, and first-person-view drones, have proven highly effective at destroying tanks from above, where armor is weakest. Anti-tank guided missiles, such as the Javelin, NLAW (next-generation anti-tank weapon), and Spike, target tanks from high angles, thereby bypassing their frontal armor. Armenia learned this the hard way when Azerbaijan used Turkish-supplied drones to eviscerate their tank corps and seize Nagorno-Karabakh. Russia has paid dearly for being slow to learn this lesson in Ukraine. Look for robotic tanks, which are powerful ground drones, to replace conventional armor.
Leadership. The Department of Defense requires leaders with a very different mindset. It needs someone with a proven track record of rapidly scaling defense technology businesses. It demands a leader who can eliminate expensive and dangerously obsolete weapons systems.
There is precisely one American with a track record of doing this, and he would have made an excellent Secretary of Defense. Unfortunately, Donald Trump prefers a Secretary of Defense from central casting, so he appointed Fox News commentator Pete Hegseth to run the Pentagon. A risky but far smarter choice would have been Elon Musk.
Allies. There is no scenario where America alone can build sufficient industrial capacity to compete with China. Their population is too large, their manufacturing infrastructure too developed, and their engineering talent too deep. However, the combination of Europe, India, and Asian countries outside China’s orbit, including Japan and South Korea, gives democracies a fighting chance.
Unfortunately, the US is now regarded, at best, as an erratic ally and, at worst, profoundly unserious and unreliable. The Trump administration has made enemies of countries that once relied on America for support. At a time of diminishing US military capability, this is unbelievably shortsighted. Fixing this should be the subject of a national consensus. Sadly, Congressional conservatives have been willing to block defense spending to advance culture wars. Progressives who once denounced Pax Americana will soon mourn its loss. These conflicts erode US credibility and hinder America’s ability to deter adversaries and maintain global stability.
Thrift, Defense, and Growth fortify progressive ideals. Fiscal responsibility ensures the longevity of social programs. A strong defense safeguards the freedoms that underpin progressive values. Economic growth provides the means to uplift all citizens. For Democrats, integrating these traditional virtues is not just a strategic move—it’s essential for building a resilient and equitable future.
Musical Coda
Once upon a time, you dressed so fine, threw the bums a dime, didn’t you?
US debt has grown from $7.9 trillion in 2005 to $36.6 trillion today, representing a 7.7% nominal growth rate, which would be about 5.4% after adjusting for inflation.
Obama OMB director Peter Orzag makes this point in today’s New York Times. He notes that the US not only needs China to reduce its savings rate and run larger budget deficits to reduce its trade surpluses, but America needs to do the opposite – reduce its budget deficit to cut its trade deficit. Neither of these things is likely; there are also many scenarios in which tariffs exacerbate the problem.
Trump himself has never filed for personal bankruptcy; all filings were business bankruptcies under Chapter 11, which allows companies to restructure and continue operating. Trump declared bankruptcy for the Trump Taj Mahal (1991), the Trump Plaza Hotel and Casino (1992), the Plaza Hotel (1992), the Trump Castle Hotel and Casino (1992), Trump Hotels and Casino Resorts (2004), and Trump Entertainment Resorts (2009).
The Penn Wharton Budget Model estimates an increase in primary deficits of $2.8 trillion from 2025 to 2034. In contrast, the Congressional Budget Office and other analysts project a total debt increase of around $3.3 trillion to $3.8 trillion over the same period.
Important caveat: Some northern and western European countries (e.g., Ireland, Luxembourg, Belgium, Denmark) achieve productivity per hour on par with or even exceeding that of the US; however, the European Union average remains lower due to weaker performance in southern and eastern regions.
I focus here on labor productivity, which is easier to measure than so-called “total factor productivity,” which measures the productivity of capital, technical innovation, and labor. However, TFP is primarily a residual, meaning that productivity not attributable to labor is assumed to represent the productivity of capital. This makes an already tricky measurement less reliable. Measuring TFP does not alter the story concerning the US and the EU.
Likewise, the Center for Strategic and International Studies conducts war games to assess the US's performance in scenarios such as a conflict over Taiwan. In an industrial war, the US would likely lose. Check the CSIS website for details. Or see this Atlantic investigation of America’s crumbling defense infrastructure. You will not sleep well.
Their output in recent decades has been unimpressive, both to the military and to their shareholders. $1,000 invested in Lockheed Martin, RTX (formerly Raytheon), Northrop Grumman, General Dynamics, and Boeing – the five US prime contractors in 2015 would have doubled by today. This represents a return of approximately 7% per year, significantly less than the S&P 500, which returned around 13% per year, including dividends and reinvested earnings.