Macro Musings with David Beckworth Veronique de Rugy on the Impending American Fiscal Crisis
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Dec 22, 2025 
In this discussion, Veronique de Rugy, a Senior Research Fellow at the Mercatus Center, dives into America's fiscal health and the looming debt crisis. She highlights the significant pressures from entitlement programs like Social Security and Medicare. Veronique argues that merely taxing the wealthy won't solve the issues; instead, she advocates for means-testing and practical reforms. They also touch on the evolving mindset regarding trade and immigration, emphasizing the need for better policies to address economic challenges.
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Classical Liberalism Over Anarchism
- Veronique distinguishes classical liberalism from modern libertarianism and emphasizes pragmatic state capacity to uphold rules and markets.
- She argues for a limited but competent state rather than abolitionist or anarchist positions.
Why Spending, Not Taxes, Mattered
- Veronique shifted focus from tax competition to federal spending after recognizing spending was understudied and growing rapidly.
- Federal spending rose from $1.8 trillion to about $7 trillion, motivating her long-term spending research.
From Free Trade To Zero-Sum Politics
- Veronique notes a shift from broad pro-trade consensus to zero-sum thinking on trade, immigration, and tech across the political spectrum.
- She ties this mindset to political polarization and willingness to tolerate cronyism when allies benefit.