America's Greatest Challenge: $35 TRILLION DEBT CRISIS

All-In Podcast Clips
2 Apr 202424:13

Summary

TLDRThe transcript discusses Biden's proposed budget for 2025, highlighting an 18% increase from 2023 and a projected deficit of 1.78 trillion. It emphasizes the growth in national debt and interest payments, suggesting that addressing entitlements, defense spending, and taxation is critical. The conversation points to the challenges of managing federal spending and the impact on the economy, proposing potential areas for savings and the need for a multi-decade effort to change the dependency on federal spending.

Takeaways

  • ๐Ÿ“ˆ Biden's proposed budget for fiscal 2025 is $7.3 trillion, marking an 18% increase from 2023.
  • ๐Ÿ’ฐ The projected deficit for 2025 is $1.78 trillion, averaging a yearly deficit of $1.6 trillion over the next decade.
  • ๐Ÿ“Š National debt is currently at $34.5 trillion, with interest payments on the debt set to increase significantly.
  • ๐Ÿ”„ The budget highlights a need for conversation on both spending cuts and revenue increases through taxation.
  • ๐Ÿ’ธ Defense spending has grown modestly, while entitlements, interest payments, and non-defense spending have surged.
  • ๐Ÿ’Š Potential savings could come from changes in Medicare reimbursements for chronic disease treatments.
  • ๐Ÿ›ฐ Shifts in defense spending towards unmanned vehicles and cyber initiatives could lead to significant savings.
  • ๐Ÿ“‰ Economic studies suggest that increasing taxation beyond 20% of GDP can lead to negative GDP growth.
  • ๐Ÿšจ The current economic model is heavily dependent on federal spending, with a large portion of the labor force directly employed by or benefiting from the government.
  • ๐Ÿฆ Strategies to address the budget deficit include freezing federal spending and reevaluating entitlement programs.
  • ๐ŸŒ Countries with higher debt-to-GDP ratios have not necessarily faced economic failure, suggesting a complex relationship between debt and economic performance.

Q & A

  • What was the proposed budget for fiscal 2025?

    -The proposed budget for fiscal 2025 was 7.3 trillion dollars.

  • How does the proposed budget for 2025 compare to the budgets from 2005 and 2015 in terms of defense spending?

    -Defense spending has grown modestly during the period from 2005 to 2025, but entitlements, interest payments, and non-defense spending have increased significantly.

  • What is the projected deficit for fiscal 2025?

    -The projected deficit for fiscal 2025 is 1.78 trillion dollars, which is similar to the deficits experienced in 2023 and 2024.

  • What is the current national debt of the United States?

    -The current national debt of the United States is approximately 34.5 trillion dollars.

  • How much interest will the US owe on its debt in the next fiscal year?

    -The US will owe 965 billion dollars in interest on its debt in the next fiscal year, which is 65 billion dollars more than the proposed defense budget.

  • What is the projected average deficit per year over the next decade?

    -The budget projects an average deficit of 1.6 trillion dollars per year over the next decade.

  • What are some potential areas for budget savings?

    -Potential areas for budget savings include changes in Medicare reimbursement for certain drugs, and a shift in defense spending towards unmanned vehicles and cyber defense, which could save between 500 billion to a trillion dollars.

  • What is the concern regarding increasing taxation levels?

    -The concern is that when taxation levels increase north of 20% of GDP, GDP growth can go negative, leading to a spiraling problem where government spending needs to increase to support economic growth, creating a dependency on government spending for economic stimulation.

  • What was the government's spending as a percent of GDP during the Clinton surplus years?

    -During the Clinton surplus years, government spending as a percent of GDP was around 18.8%.

  • How has the spending level changed since the 2008 financial crisis?

    -Since the 2008 financial crisis, spending levels have increased significantly, reaching up to 25-30% of GDP during the COVID-19 pandemic, and while it is starting to come down, it remains higher than the pre-crisis levels.

  • What is the proposed solution to control the budget deficit?

    -One proposed solution is to freeze federal spending at its current levels until the federal net outlays as a percent of GDP decrease to 20%.

  • What is the projected population growth for the United States by the end of the century?

    -By the end of the century, the United States is projected to have a population of around 400 million individuals.

Outlines

00:00

๐Ÿ“Š Fiscal Analysis of Biden's 2025 Proposed Budget

The paragraph discusses the details of President Biden's proposed budget for 2025, highlighting the total amount of $7.3 trillion, an 18% increase from the 2023 projected deficit. It compares this budget with those from 2005 and 2015, noting the modest growth in defense spending, while entitlements, interest payments, and non-defense spending have seen a significant increase. The discussion also touches on the national debt, which stands at 34.5 trillion, and the projected average deficit of 1.6 trillion per year over the next decade. The paragraph emphasizes the need for alternative solutions due to the difficulty in cutting expenses, suggesting a conversation around revenues and taxation.

05:00

๐Ÿ’ฐ Addressing the Dependency on Federal Spending

This paragraph delves into the challenges of addressing federal spending, emphasizing the need to freeze spending rather than increase it. It highlights the increase in spending during the COVID-19 pandemic and suggests that the current spending level is unsustainable. The discussion includes statistics on the number of Americans employed by the federal government and those benefiting from it, suggesting a significant dependency on federal spending. The paragraph also touches on the idea of a dedicated multi-decade effort to unwind this dependency, expressing concern over the shift from a lightweight overseeing organization to a more dominant economic player.

10:02

๐Ÿšจ The Impact of Federal Spending on the Economy

The focus of this paragraph is on the impact of federal spending on the economy, discussing the idea of a ceiling on how much can be extracted from an economy, suggesting a cap on federal spending at 20% of GDP. It explores the concept of an optimal tax code to achieve this target revenue and the historical context of tax rates and government receipts as a percentage of GDP. The paragraph also addresses the issue of special interests influencing federal spending and the lack of productive economic value created by certain types of federal spending, such as defense contracts.

15:03

๐Ÿ“ˆ Economic Dependency and the Future of Social Security

This paragraph examines the economic dependency on federal spending, particularly in areas such as housing, healthcare, and education. It discusses the inflationary effects of government subsidies in these sectors and the need for reform. The conversation turns to the future of Social Security, with suggestions on adjusting retirement age and benefits, and encouraging earlier participation in savings programs like 401(k)s. The paragraph also mentions the distribution of wealth and the potential for individuals to opt-out of Social Security if they do not require it.

20:04

๐ŸŽ Robin Hood's Incentives and Generosity in High Stakes

The final paragraph shifts focus to discuss incentives in financial services, specifically highlighting a promotional offer by Robin Hood. It mentions a gold card promotion and the company's strategy to provide a full suite of financial services. The conversation also includes anecdotes about generosity in high-stakes poker games and the culture of tipping in various settings, emphasizing the human aspect of financial interactions.

Mindmap

Keywords

๐Ÿ’กBudget

A budget is a financial plan that allocates resources for spending, saving, and investing over a specified period. In the context of the video, it refers to the proposed budget for fiscal 2025, highlighting the increase in spending and projected deficit, which is a major point of discussion throughout the transcript.

๐Ÿ’กDeficit

A deficit occurs when a government's expenditures exceed its revenues, resulting in the need to borrow money to cover the shortfall. In the video, the projected deficit of 1.78 trillion is a significant concern, as it indicates the growing national debt and the sustainability of fiscal policies.

๐Ÿ’กNational Debt

National debt is the total amount of money that a government has borrowed, including interest, over the years to finance its operations when tax revenues are insufficient. The transcript mentions the national debt reaching 34.5 trillion, which is a critical issue as it affects the country's financial health and creditworthiness.

๐Ÿ’กEntitlements

Entitlements refer to government-sponsored programs that provide benefits to individuals based on eligibility criteria, such as age, income, or disability. In the video, entitlements are highlighted as a significant area of spending that has grown substantially and contributes to the budget deficit.

๐Ÿ’กInterest Payments

Interest payments are the cost a government pays to service its debt, including the principal and the interest on bonds and other loans. The video script emphasizes the growing interest payments on the national debt, which are expected to surpass 1 trillion, indicating a heavy financial burden on the government.

๐Ÿ’กTaxation

Taxation is the process by which the government collects money from individuals and businesses to fund public services and infrastructure. In the video, taxation is discussed as a potential solution to address the budget deficit, with the speakers debating the optimal tax levels and their impact on economic growth.

๐Ÿ’กGDP

Gross Domestic Product (GDP) is the total monetary or market value of all the goods and services produced within a country's borders in a specific time period. The video discusses the relationship between taxation, spending, and GDP, emphasizing the historical data that suggests a maximum extraction rate of 20% of GDP for federal revenues.

๐Ÿ’กFederal Spending

Federal spending refers to the expenditure by the national government on various programs, services, and initiatives. The transcript highlights the increase in federal spending, particularly in areas like healthcare, education, and defense, and the impact of this spending on the economy and the dependency on government for employment and benefits.

๐Ÿ’กSpecial Interests

Special interests are groups or individuals that seek to influence public policy and decision-making for their own benefit. In the video, the term is used to describe entities that benefit from federal spending and lobby for continued or increased government spending, which the speakers argue contributes to the fiscal challenges faced by the country.

๐Ÿ’กEconomic Growth

Economic growth refers to the increase in the production of goods and services in an economy over time, typically measured by the increase in GDP. The speakers in the video debate how government taxation and spending policies can impact economic growth, with a focus on the balance between stimulating the economy and maintaining fiscal responsibility.

๐Ÿ’กDependency

Dependency in this context refers to the reliance of individuals, businesses, or the economy as a whole on government spending and programs. The video discusses the growing dependency on federal spending and its implications for the labor force, the economy, and the long-term sustainability of such dependency.

Highlights

Biden's proposed budget for 2025 is $7.3 trillion, an 18% increase from 2023.

The 2025 budget projects an average deficit of $1.6 trillion per year over the next decade.

The national debt is currently at $34.5 trillion.

Defense spending has modestly increased, while entitlements, interest payments, and non-defense spending have significantly jumped.

The US will owe $965 billion in interest on its debt next year, which is $65 billion more than the proposed defense budget.

By 2026, the US is projected to surpass $1 trillion in interest owed on its debt.

There is a need to discuss alternatives to address the areas of spending that continue to grow uncontrollably.

The conversation may need to shift towards revenues and taxation to address the budget deficit.

Economic studies show that increasing taxation levels beyond 20% of GDP can lead to negative GDP growth.

Federal spending as a percent of GDP was around 18.8% during the Clinton surplus years.

During the COVID-19 pandemic, federal spending increased to 25-30% of GDP.

There are about 3 million Americans directly employed by the federal government.

Federal spending flowing into the economy is about $3.5 trillion a year.

Approximately 50 million people in the US rely on Social Security.

There are 12 to 20 million people in the US paying more than a 50% tax rate.

Federal spending levels have created a significant dependency on the government for a large portion of the labor force.

The federal government has become the primary customer or employer for much of the labor force in the United States.

There is a need for a multi-decade effort to unwind the deep dependency on federal spending.

Federal receipts as a percent of GDP have historically not gone above 20%.

The US debt to GDP ratio is still relatively reasonable compared to other countries.

The US is the only Western country forecasted to grow at reasonable rates above replacement population.

Transcripts

play00:00

all right so let's break down Biden's

play00:01

proposed budget of

play00:03

2025 proposed budget was 7.3 trillion

play00:07

for fiscal 2025 that starts in October

play00:09

of 2024 it's up 18% from 2023 projected

play00:14

deficit 1.78 trillion which is similar

play00:18

to the deficits we ran in 23 and 24 the

play00:21

budget projects an average deficit of

play00:23

1.6 trillion per year over the next

play00:25

decade national debt as uh freeberg was

play00:28

alluding to is in say it's at 34.5

play00:31

trillion but we made some charts here to

play00:33

go through all of this let's pull up the

play00:35

first chart and this is comparing

play00:38

Biden's proposed budget in 2025 with

play00:41

budgets from 2005 and 2015 defense

play00:44

spending has actually grown pretty

play00:46

modestly during that time but

play00:48

entitlements interest payments and

play00:49

non-defense spending have jumped

play00:51

significantly us will owe 965 billion in

play00:54

interest on its debt next year that's 65

play00:58

billion more than the pros defense

play00:59

budget

play01:00

and in 2026 the US will surpass 1

play01:03

trillion on interest owed on its debt

play01:06

and we'll talk about that more in a

play01:08

minute but let's start here with this

play01:09

first chart anything jump out to you

play01:11

chth here that's notable and worth

play01:15

discussing all the areas that we need to

play01:17

cut we can't even have a conversation

play01:20

about so they'll never get cut and

play01:21

they'll keep

play01:23

growing so I think that we probably need

play01:27

to figure out what the alternatives are

play01:32

so if you can't have a conversation

play01:34

about expenses the only logical place is

play01:37

to have a conversation about revenues

play01:40

and what that means for the government

play01:42

is in

play01:44

taxation and so I don't know Jason what

play01:47

we do

play01:49

here there could be a couple of saving

play01:52

Graces so there are some things

play01:55

happening for example on the Medicare

play01:57

side that could be profoundly disruptive

play02:00

they are now I'm not again I'm just

play02:02

going to put this out there as it's

play02:03

happening I don't know if it's good or

play02:04

bad but they are looking at reimbursing

play02:07

things like wovi and OIC and whatnot if

play02:11

you look at the underlying costs of

play02:13

those kinds of chronic diseases diabetes

play02:16

heart disease

play02:18

Etc and you put a large swwa of the

play02:20

American population on those drugs the

play02:22

reimbursement value of those drugs

play02:24

versus the cost of actually The Chronic

play02:25

Care Management would save you many

play02:28

hundreds of billions of dollars a year

play02:30

so that's something second is on the

play02:33

defense side there's a large portion of

play02:35

that budget that's migrating away from

play02:37

traditional tactical Warfare to things

play02:39

that are unmanned vehicles and cyber and

play02:42

whatnot that could save two or300

play02:44

billion dollars there so there are

play02:46

places where you could save 500 billion

play02:48

to a trillion

play02:50

dollars but I think it's going to be a

play02:53

almost impossible conversation and it'll

play02:55

happen by accident so then the only

play02:58

forced conversation that I think we are

play03:00

going to have as a society is around

play03:01

Taxation and that's really bad

play03:04

for you know a lot of people that don't

play03:07

believe that's the path to generating

play03:09

growth one of the challenges is that

play03:11

there are and and we should reference

play03:13

these in the show notes Nick but there

play03:15

are well researched economic studies

play03:18

that show that when a government tries

play03:20

to increase the taxation level north of

play03:24

20% of GDP of that economy that you

play03:27

actually see GDP growth go negative that

play03:31

there's a certain natural equilibrium on

play03:33

which you can tax the system beyond that

play03:36

level investment dollars go down and

play03:38

growth begins to shrink and that's what

play03:40

triggers the spiraling problem because

play03:42

then the government spending needs to go

play03:44

up to continue to grow and support

play03:45

growth in the economy and it creates

play03:47

this inevitable totally spiral L would

play03:49

you call this the Atlas Shrug the Atlas

play03:51

Shrug effect is investment goes down

play03:53

there's a Fred chart yeah showing

play03:56

percent of GDP that's federal tax

play03:59

receipts and then percent of GDP that's

play04:02

spending exactly and and then the Gap is

play04:04

your deficit okay and freeberg is right

play04:07

that I think in the absolute best

play04:09

economy or best years of the best

play04:12

economy so it's like you know the best

play04:13

year of the Reagan boom and the best

play04:15

year of the Clinton boom when we had the

play04:17

government surplus I think the

play04:18

government was extracting just shy of

play04:21

20% of

play04:23

GDP and in the 70s when marginal tax

play04:26

rates were at 70% so before the rean tax

play04:29

Cuts we were actually extra extracting a

play04:32

lower percentage of GDP so there's only

play04:34

so much blood you can get from a stone

play04:37

if you raise tax rates on a marginal

play04:39

basis high enough the economy performs

play04:41

worse and you actually end up collecting

play04:44

less or people spend a lot more money on

play04:47

lawyers and accountants to basically

play04:48

figure out more structuring schemes to

play04:51

avoid paying taxes so the years in which

play04:54

we've got the highest percentage of

play04:57

Revenue out of the economy are in good

play05:00

economic years where we've had

play05:02

reasonable levels of Taxation as opposed

play05:05

to the highest levels of Taxation and so

play05:07

the problem is with the spending I mean

play05:10

we used to be able to keep spending to

play05:13

somewhere

play05:14

between i' would say in the best years

play05:16

of of the years of the Clinton Surplus I

play05:18

think spending as a percent of GDP was

play05:20

like

play05:22

18.8% it's around

play05:24

20% of GDP goes to federal spending

play05:27

that's that was normal we but then the

play05:30

spending got out of control during covid

play05:31

and it went up to like 25 30% of GDP

play05:34

went to federal spending it's starting

play05:36

to come down but it's still way too big

play05:38

a number anyway my my point is that a

play05:41

starting point for dealing with next

play05:43

year's budget is free spending just

play05:46

freeze spending you know the 18%

play05:48

increase is not a good idea if we want

play05:50

to get this problem under control freeze

play05:52

the spending we can talk about taxation

play05:54

but you're only going to get so much

play05:56

blood from a stone an increased spending

play05:58

is stimulatory and so works well in an

play06:00

election year I would say we took two

play06:03

major crises and we had crisis level

play06:06

spending and then we normalized that

play06:08

spending and allowed it to carry forward

play06:10

starting with the 08 financial crisis

play06:12

with our monetary policy and then being

play06:15

accelerated with covid and and our

play06:18

fiscal policy I'll give you guys I I did

play06:21

some back of the envelope math I'm sure

play06:22

there are economists who have done a

play06:23

better job of this than I there are

play06:26

directly three million Americans that

play06:27

are directly employed by the federal

play06:28

government there's 167 million workers

play06:31

in the US so 3 million are directly

play06:33

employed by the federal government if

play06:35

you take the rest of the federal

play06:36

spending that flows into the economy

play06:38

it's about three and a half trillion a

play06:39

year and assume 30% of that Capital goes

play06:42

to equity holders and businesses that

play06:44

own businesses that benefit from that

play06:45

spending and the rest flows through to

play06:47

labor that's about 133% of GDP flowing

play06:49

through to labor and assuming average

play06:51

annual income that's another roughly

play06:54

4550 million people that are directly

play06:57

benefiting that are directly earning

play06:58

income because of federal spending

play07:00

there's another 50 million people in the

play07:02

US that rely on Social Security and

play07:04

here's another important statistic

play07:06

there's somewhere between 12 and 20

play07:07

million people in the US that pay more

play07:10

than

play07:11

50% tax rate today so those people are

play07:15

effectively working for the federal

play07:17

government because half of their their

play07:18

income goes back to the government so

play07:20

when you add this all up there's there's

play07:22

over 100 120 million people in the US

play07:25

that are directly working for or getting

play07:27

paid by the federal government in the US

play07:30

that is such a significant percentage of

play07:33

our economy that is such a significant

play07:35

dependency on individual income on a

play07:37

federal

play07:38

government it I I don't want to use the

play07:41

term socialism but the the ability for

play07:44

us labor to earn is so largely dependent

play07:48

and largely driven by federal spending

play07:50

at this point it becomes this critical

play07:52

Lynch pin to enabling progression

play07:56

economically to enabling the labor force

play08:00

to continue to participate that the

play08:01

federal government is now the primary

play08:04

customer or employer of most of the

play08:07

labor force in the United States today

play08:10

that is a deeply and profoundly

play08:12

different circumstance than what I think

play08:14

the founding fathers envisioned when the

play08:16

federal government was supposed to be

play08:17

this

play08:18

lightweight overseeing organization of a

play08:21

Federated Republic of states and

play08:23

unfortunately I think we find ourselves

play08:24

in a condition as Jamal points out

play08:26

that's very hard to get out of this is

play08:28

going to require a dedicated multi-

play08:31

deade effort to create a slow unwinding

play08:33

from this deep dependency that our labor

play08:35

force has on federal spending and I I'm

play08:36

just like so shocked that this isn't the

play08:39

the critical problem of our day that

play08:40

we're not all spending time on folks

play08:42

have pointed out that this only goes one

play08:44

way at this point hey Nick can you bring

play08:46

up that first Fred chart this is federal

play08:49

receipts as percent of GDP and it goes

play08:53

all the way back to World War II to

play08:56

freeberg point we've never gone above

play08:58

20% look at that and we've had tax rates

play09:01

as high as 90% I'm saying top marginal

play09:04

tax rates as high as 90% I think after

play09:06

World War II because we're trying to get

play09:08

out of the deficit that was created by

play09:09

the war spending you can't get above 20

play09:12

yeah exactly the economy shrinks no but

play09:15

hold on the the I I gave you this oecd

play09:17

report it says that since 2000 we've

play09:21

been in the mid 20s and the oecd average

play09:25

is 34 in terms of tax to GDP tax to GDP

play09:29

is this this includes state and local

play09:31

then

play09:33

right probably yeah yeah I just showed

play09:36

Federal I think this probably includes

play09:38

state and local which by the way is a

play09:40

whole another BWI because I didn't

play09:42

include those numbers in my employment

play09:43

statistics the US Bureau of Labor

play09:45

Statistics estimates that about 20.2

play09:48

million Americans are employed by local

play09:51

and state governments directly employed

play09:53

by local and state government so again

play09:54

when you add this all up the majority of

play09:56

the US Labor Force is employed by the

play09:59

government or is a beneficiary of the

play10:02

government as the primary customer or is

play10:04

supported by government entitlement

play10:06

programs if you go back to that Fred

play10:07

chart for a second I mean if you if you

play10:09

basically acknowledge the point that 20%

play10:12

is the ceiling on how much we can

play10:14

extract from an Economy based on 80

play10:18

years of data okay with all sorts of

play10:21

differing tax schemes then I think what

play10:23

we should say is that federal spending

play10:26

will be capped at 20% of GDP yeah we

play10:29

should you see what I'm saying like if

play10:30

we can't goove 20% on receipts cap cap

play10:33

federal spending be a constitutional

play10:35

amendment right that's it and then and

play10:38

then on the revenue side we should say

play10:41

what is the best tax code to achieve

play10:45

that 18 19 20% because what we do right

play10:48

now is we just say well just tax the

play10:49

rich but what we've seen is we've been

play10:51

taxing the rich as high as 90% in the

play10:54

past and you didn't get more Revenue so

play10:57

we should be much more scientific about

play10:58

saying well given that our Target is

play11:01

let's say 20% what's the best way to do

play11:03

that and no one really has that

play11:05

conversation no none of the

play11:06

conversations have to do with data or

play11:09

building a a bulletproof system the same

play11:11

thing we could say about immigration

play11:14

where we try to talk about the numbers

play11:16

here of what's a reasonable number of

play11:18

people and tying that to an actual

play11:20

number um and it's pretty obvious we

play11:24

should have one immigration policy when

play11:26

we have 5% unemployment and a different

play11:28

one if we had

play11:29

God forbid 15 or 20% unemployment can we

play11:32

just say TI to the unemployment rate the

play11:36

fundamental structural problem I'm

play11:38

highlighting is that we've created an

play11:39

economy that is so deeply dependent on

play11:42

federal spending that the federal

play11:44

spending levels are what support so many

play11:48

employed and so many companies in the US

play11:50

you're answering your own question

play11:52

that's why I can't stop right I don't

play11:54

think the real economy that creates all

play11:56

the Innovation and all the value and all

play11:58

the the the good paying jobs I think

play12:01

that is separate from the deflationary

play12:03

economy that's the that's the true

play12:04

market based deflationary economy the

play12:06

problem is once we've layered in all of

play12:08

these layers of dependency from federal

play12:11

dollars flowing into businesses or into

play12:13

people's pockets it's very difficult to

play12:15

back out of that I don't call that

play12:17

dependency I call that special interests

play12:19

I think there's a lot of special

play12:20

interests who are basically looting the

play12:22

federal government and taking all this

play12:24

money and then they turn around and use

play12:26

some of it to to donate back to the

play12:28

politicians and Lobby for more spending

play12:30

so what you're calling dependency is

play12:32

really more special interest meaning

play12:34

that I don't think we need to have this

play12:36

level of spending in order to have a

play12:38

successful economy I think it makes our

play12:40

economy less successful yeah it's still

play12:42

stimulatory because sax remember Mitch

play12:44

McConnell when they were talking about

play12:46

supporting Ukraine his primary argument

play12:49

as you remember was that all of these

play12:51

dollars are going to go into defense

play12:52

contractors Pockets which is going to go

play12:53

to employees Pockets which is going to

play12:55

stimulate our economy that's the

play12:57

fundamental thinking

play13:00

know but that's the thinking behind it

play13:01

right I mean that's the political system

play13:03

that okay let me just walk through this

play13:05

real quick if the government prints a

play13:07

bunch of money and hands it to people as

play13:08

stemy check we all understand that

play13:10

creates no economic value it just

play13:12

creates inflation okay now if the

play13:14

government does the same thing but

play13:15

instead of a stimy check pays people to

play13:18

dig holes and fill them back up that's

play13:20

the exact same thing no economic value

play13:22

just inflation now let's say the

play13:24

government pays people to create bombs

play13:27

that create holes in other countries

play13:31

exact same thing no economic value for

play13:32

the country it just creates inflation

play13:34

here why is that because the only thing

play13:36

that creates economic value in the

play13:38

United States is the production of goods

play13:40

and services that people can actually

play13:42

consume and use and that they want and

play13:46

so federal spending on basically make

play13:49

work projects or things that people

play13:50

don't really want or they don't use or

play13:53

even worse bombs that get dropped on

play13:56

poor people in other countries none of

play13:58

that creates any value

play13:59

but I don't think it's a real economic

play14:01

dependency I think it is just a special

play14:03

interest that keeps lobbying for all

play14:04

this St what about housing and health

play14:06

care and education because those are the

play14:08

three biggest line items and it's been

play14:10

inflationary across all three of those

play14:11

line items in the US economy the federal

play14:14

government has stepped in to provide

play14:15

broader access to housing broader access

play14:17

to healthcare and broader access to

play14:19

education and in the process that's why

play14:21

the price goes up yeah you know there's

play14:23

that famous chart showing inflation by

play14:25

category and all the categories where

play14:28

the federal government provid subsidies

play14:29

the prices have gone up and all the C

play14:32

healthare and housing and hous the more

play14:34

the government tries to subsidize it the

play14:36

more the providers realize a second we

play14:38

can charge whatever we want govern

play14:39

there's one customer and they'll always

play14:41

pay one customer that's got to be

play14:43

completely reformed yeah here's a chart

play14:45

of all employees in government and I

play14:49

think this Fred chart includes all

play14:52

employees in government which would

play14:53

include state and local and as you can

play14:55

see we're yeah that's right it's 20

play14:57

million local in state 3 million Federal

play15:00

and then the math I was highlighting was

play15:02

just my back of the envelope math where

play15:04

there's 50 million people that are on

play15:06

Social Security in the US plus if you do

play15:09

the math on how government spending

play15:11

flows into employers into employees

play15:14

pockets it's about another 45 50 million

play15:17

people that benefit from federal

play15:19

spending in the US we're already kind of

play15:21

at a point of maximal dependency if you

play15:23

will yeah I mean if you look at this

play15:25

chart we have had 20,000 people working

play15:30

in government since the late 90s yeah 20

play15:34

million since the late 90s it's it's now

play15:36

hitting a peak and the question is you

play15:38

know how far up does it go from here

play15:40

it's 23 obviously the country is growing

play15:42

as well each year so as a percentage we

play15:45

don't have the percentage but as a

play15:48

percentage of Americans it hasn't grown

play15:50

that dramatically but it certainly feels

play15:53

like this could keep going in the wrong

play15:55

direction the one thing to keep in mind

play15:58

from all the

play16:00

doomsday I would just offer you two data

play16:03

points the first is that our debt to

play16:06

GDP either historically but also in

play16:08

relation to other countries is still

play16:10

relatively reasonable and what that

play16:12

basically shows is we have a lot more

play16:14

debt that we can issue which means that

play16:15

there's a lot more deficits to run not

play16:17

saying that it's right yeah before the

play16:19

great financial crisis it was running at

play16:21

50 60% our debt as a percentage of GDP

play16:25

and to your point jamath it's now at 1.2

play16:28

it's

play16:30

120% other countries have much higher so

play16:33

we have a lot more to run yeah so Nick

play16:34

if you want to just throw that up and so

play16:36

it means that the countries on the right

play16:38

haven't failed they haven't done great

play16:40

necessarily but they haven't failed in

play16:42

the way that we would Define failure and

play16:44

it's not as if the countries on the left

play16:46

are crushing it the way that we would

play16:48

Define crushing it and so it's not clear

play16:51

that there's a real correlation between

play16:53

debt to GDP and the performance over

play16:55

large longitudinal periods of times as a

play16:57

country that's the first thing I'll say

play16:59

the second thing is if you actually look

play17:00

at all of these countries the thing to

play17:02

keep in mind is where are populations

play17:04

growing and shrinking because at a very

play17:07

basic level jcal you you mentioned this

play17:09

earlier but when countries are shrinking

play17:11

there's no fundamental ability to grow

play17:12

GDP and you're just debating how much it

play17:15

shrinks and the interesting thing about

play17:17

the United States is we are the

play17:21

only Western country that is forecasted

play17:25

to grow at reasonable rates above our

play17:28

replacement population and so you know

play17:30

by the end of this Century we'll be

play17:32

around 400 400 odd million individuals

play17:35

and other countries will have been cut

play17:37

in half and so again there's some

play17:40

positive news as well now to your

play17:43

earlier point the problem is politicians

play17:45

will use this as a reason to continue

play17:47

spending because they won't be forced to

play17:50

and that's not a great thing but this is

play17:53

probably why the status quo would go on

play17:55

for a very long

play17:56

time h

play17:59

so grab the bag get your bag figure

play18:02

figure out what your figure out what

play18:04

your thing is I don't know man I just

play18:05

want people like voters to people to

play18:10

just they're not going to get your bag

play18:13

like everybody else problem we have is

play18:15

if okay Nick can you pull up the the

play18:16

Fred spending chart we've talked about

play18:18

this a few times well okay so if you

play18:20

look there there's a huge Spike because

play18:22

of Co because of all that covid stimulus

play18:25

that was air dropped in the economy I

play18:26

think we're now down to about 22% for

play18:29

2023 mhm but that that's a big number

play18:32

you know we talked about how the

play18:34

absolute Max you can extract is 20% so

play18:37

what they should do is just freeze

play18:39

spending until the federal net outlays

play18:43

as a percent of GDP is down to 20% that

play18:46

would be the the simplest thing such an

play18:47

easy solution what's great about it is

play18:50

it takes out the politicians making this

play18:52

partisan hey there is a logical amount

play18:55

of you know taxation we can do before we

play18:59

freeze up the productivity of the

play19:02

country which if you talk to anybody

play19:04

when taxes get high people just start

play19:07

getting into protecting their wealth I

play19:09

think you alluded to that with

play19:10

strategies as opposed to investing the

play19:12

hard part of it is that I mean look I

play19:14

think we should do it you know 20% cap

play19:16

and free spending till we get there the

play19:18

the hard part is that our interest

play19:19

expense keeps growing because as our

play19:21

debt rolls onto more

play19:24

expensive higher interest bonds than our

play19:28

interest expensive is increasing just a

play19:29

few years ago our interest expense was

play19:31

only 300 billion a year now it's over a

play19:33

trillion a year and that's just going to

play19:36

keep growing and growing and then the

play19:37

other thing that's going to grow is all

play19:39

the entitlements related to to

play19:42

demographics so the country's

play19:44

demographics are getting worse and so

play19:46

the inment expenses are going to go up

play19:48

so even holding it to 20% if we could

play19:52

get there is going to take some work the

play19:54

L I don't know if you read Larry Fink's

play19:56

letter from Black Rock it was really

play19:59

good you talked about you mean his 2030

play20:01

business plan JL basically yeah it's his

play20:03

way of extracting value from it but he

play20:05

did make some sing points in it as

play20:07

opposed to just him talking his book of

play20:09

why you should do his retire your

play20:10

retirement savings with black rock is a

play20:12

fair point but just getting the what age

play20:14

do people retire at that discussion we

play20:17

need to have and we we're not having

play20:19

that as a country and then what

play20:20

percentage of benefits do people get at

play20:22

different how do we incentivize people

play20:24

to stay in the workforce well at a

play20:26

minimum don't you agree we should just

play20:27

allow people to out of Social Security

play20:30

and in a simple way of saying I don't

play20:33

need it and I'll take care of myself use

play20:35

these proceeds for somebody else that

play20:37

could use it that who has a better need

play20:40

for absolutely yeah I mean and then

play20:42

getting people to participate in the

play20:44

401ks you know at an earlier age and

play20:47

defaulting those to on as of defaulting

play20:49

them to off there's a lot of small

play20:50

behavioral things we could do in this

play20:52

country to get people saving

play20:54

earlier wow I uh I saw that Robin Hood

play20:58

was running a scheme where if you moved

play20:59

your Roth IRA they gave you 3% cash back

play21:03

and I thought is there an upper bound

play21:05

limit on what on how much you could move

play21:08

over because I wonder if I could I think

play21:09

you have to keep your money in there for

play21:10

five years yeah but that's okay I'm just

play21:13

wondering like will they really write

play21:14

like a hundred million check if you

play21:17

MoveOn Robin Hood just sent me something

play21:20

so we had a portfolio company called X1

play21:22

which was making a new like credit card

play21:25

and credit card app it was like awesome

play21:27

I don't know if you guys used it

play21:29

anyway they got acquired by Robin Hood

play21:31

and so the guys here just sent me their

play21:33

new Robin Hood gold card card yeah this

play21:37

thing is the heaviest card here just

play21:39

listen to it drop hold on me tell my

play21:41

micone don't cut yourself don't cut your

play21:42

toe

play21:44

off apparently it's got $1,100 worth of

play21:47

gold in it I have coming myself and i'

play21:50

I'm proud to say I've sold no shares of

play21:52

my Robin Hood I keep all my Robin Hood

play21:54

shares if my if I move my Roth iral

play21:56

they'll have to give me the whole

play21:57

building you give you a goldplated

play21:59

building actually they they sent it to

play22:01

me in a uh Louis Vuitton with a Louis

play22:04

Vuitton wallet this is like unbelievable

play22:07

yes it's got and look they got a

play22:09

$50,000 got a $50,000 ad on the got like

play22:13

a little LV wallet there oh I like there

play22:16

you have it folks send to Louis Vuitton

play22:18

wallet get a free $50,000 ad on the Pod

play22:21

sign up now for your Robin Hood gold

play22:24

yeah but what is it a credit card yeah

play22:25

it's a credit card it's a credit card

play22:27

yeah their their their whole plan was

play22:28

was always to provide the full Suite of

play22:30

services do you guys carry credit cards

play22:33

and

play22:34

money do you have any money my wallet

play22:36

but I always carry money you have money

play22:39

I always carry money yeah like to tip

play22:41

tip people or something always have some

play22:43

cashish never you always got to have a

play22:45

couple of hyy just in case it's a really

play22:48

bad habit you got to keep a couple of

play22:50

hyy in the bag you put the 100 on the

play22:52

outside J account there's a bunch of

play22:54

ones no we don't do that you get caught

play22:57

doing that in Brooklyn you get your ass

play22:59

on the outside no no no no you what we

play23:02

do is we get rid of the ones the fives

play23:04

and the tens you just get rid of those

play23:05

you don't even keep them in circulation

play23:07

that's that's the best line um I get

play23:10

cash when I go to Vegas but that's the

play23:12

time the best line ever was this woman

play23:14

comes up to Sammy Davis Jr and she says

play23:17

hey uh C can you um can you can you

play23:21

break uh you know this whatever amount

play23:24

of money and he just pulls out a hundred

play23:26

and gives her a hundred and

play23:29

she says no no can can you make change

play23:30

he says that is change baby that is

play23:33

change that's what he considered change

play23:35

was the hundy there was a story out of

play23:36

juu so you know Triton poker yes okay

play23:40

I'm not gonna say who it is but there's

play23:41

a guy that was playing the high stakes

play23:43

cash game and apparently so he lost like

play23:46

eight million bucks okay he tipped out

play23:51

450k in 25K chips to like the staff and

play23:55

like the person giving him a massage and

play23:57

stuff so it apparently became a

play23:58

free-for-all trying to get into this

play24:00

game where everybody was like are we

play24:01

pulling tips are we pulling tips and

play24:03

they were like no we're not pulling

play24:05

tips just Flags he was tipping off Flags

play24:08

wow that is incredibly incredibly

play24:11

generous

Rate This
โ˜…
โ˜…
โ˜…
โ˜…
โ˜…

5.0 / 5 (0 votes)

Related Tags
BudgetAnalysisNationalDebtDeficitTrendsFederalSpendingTaxationImpactEconomicGrowthPolicyReformGovernmentDependencyFiscalResponsibilityEconomicChallenges