The Math is Cold
Numbers do not lie. Politicians do. As of the November 18, 2025, opening bell, the United States federal debt stands at $35.2 trillion. The cost of servicing this debt has eclipsed the national defense budget. Against this fiscal carnage, Steve Forbes has resurrected a supply side blueprint centered on a 17 percent flat tax and a return to gold linked currency. This is not a policy debate. It is a mathematical confrontation with a collapsing status quo.
The November Inflation Shock
Yesterday, November 17, the Commerce Department reported a stagnation in discretionary retail spending that caught markets off guard. Consumer exhaustion is no longer a theory. The October CPI report released last week confirmed a headline inflation rate of 3.4 percent. This marks a 20 basis point increase from the previous month. The narrative of a soft landing is disintegrating under the weight of sticky service sector costs and rising energy prices. Brent Crude spiked to $88 per barrel on November 16 following renewed tensions in the Strait of Hormuz, further squeezing the American household.
Comparative Economic Indicators
| Economic Metric | November 2024 | November 2025 | Variance |
|---|---|---|---|
| Headline CPI (YoY) | 3.2% | 3.4% | +6.25% |
| 10-Year Treasury Yield | 4.25% | 4.85% | +14.1% |
| Spot Gold (USD/oz) | $2,050 | $2,750 | +34.1% |
| Federal Debt (Trillions) | $33.8 | $35.2 | +4.1% |
The Velocity of Money and the Seventeen Percent Solution
Wages are stalling. Real earnings, when adjusted for the 3.4 percent inflation floor, have turned negative for the third consecutive quarter. The Forbes proposal argues that the current graduated tax code acts as a brake on capital velocity. By implementing a 17 percent flat tax with generous personal exemptions, the plan seeks to bypass the $2 trillion annual regulatory compliance cost. However, critics point to the immediate revenue gap. A shift to a 17 percent rate would create a projected $1.2 trillion short term deficit hole. Forbes counters that the resulting 4 percent GDP growth would bridge this gap within 36 months. The market is skeptical. The Treasury yield analysis from Reuters shows the 10-Year yield hitting 4.85 percent, signaling that bond vigilantes are already pricing in a prolonged fiscal imbalance.
Visualizing the Divergence: CPI vs Wage Growth
Red Bars: CPI % Change | Green Bars: Wage Growth % Change (Q4 2024 to Q3 2025)
The Gold Standard as a Volatility Hedge
Gold is the ultimate whistleblower. Trading at $2,750 per ounce, the precious metal has outperformed every major asset class in 2025. The Forbes camp advocates for a dollar linked to gold to prevent the Federal Reserve from engaging in further currency debasement. Since January, the M2 money supply has shown signs of re-acceleration. This expansion is necessary to fund the interest on the $35.2 trillion debt, but it systematically devalues the purchasing power of the middle class. Forbes suggests that a gold anchor would force fiscal discipline on Congress, a move that is gaining traction among the populist wing of the Republican Party as the 2026 midterms loom. Without such an anchor, the dollar index continues to face pressure from the BRICS+ expansion, which as of November 2025, has successfully moved 22 percent of bilateral trade away from the greenback per the latest Bloomberg currency tracking data.
The 2026 Midterm Tactical Shift
Republicans are weaponizing these metrics. The strategy for the 2026 cycle is no longer about social grievances. It is about the cost of eggs, gasoline, and mortgage rates. With the average 30 year fixed mortgage sitting at 7.2 percent, the housing market is effectively frozen. The Forbes doctrine provides a ready made platform for candidates to argue for a total system reset. If the GOP can successfully frame the 17 percent flat tax as a direct stimulus to the worker rather than a corporate giveaway, they may avoid the typical midterm slump. However, the data suggests a narrow path. Any policy that fails to address the $1.1 trillion in annual interest payments risks a credit rating downgrade from Moody’s, which has kept the U.S. on a negative outlook since late 2024.
Forward Looking Projections
The immediate milestone to watch is January 15, 2026. This is the projected date for the next Congressional Budget Office baseline update. If the 2026 deficit projection exceeds $2.2 trillion, the Forbes plan will transition from a theoretical alternative to a political necessity. Investors should monitor the spread between the 2-Year and 10-Year Treasuries. A deepening inversion by the year end will confirm that the market expects a recession regardless of which economic strategy is deployed. The data is clear. The current fiscal trajectory is unsustainable. Whether the Forbes 17 percent solution is the cure or a catalyst for further volatility remains the central question for 2026.
