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What happens when there's a debt crisis?
00:00:02
Why haven't we had one yet? You said we
00:00:04
probably should have had one. I don't
00:00:05
know why we haven't, but we're going to
00:00:06
get one if we keep doing this. I said,
00:00:08
what will the effect of that be? You
00:00:09
said massive instability in the society.
00:00:12
What do you mean? Like what will that
00:00:14
look like? Maybe it would awaken people
00:00:17
to the threat if they knew what would
00:00:19
happen in a debt crisis. Well, so if
00:00:22
you're living on different transfer
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payments or different types of welfare
00:00:26
benefits, you know, you may not get
00:00:28
those. M we you know you can't borrow
00:00:31
more money so you're going to have to
00:00:32
take what money we spend on other
00:00:34
government programs and we'll have to
00:00:35
service our debt. You have to pay it off
00:00:37
unless we want to go into full default.
00:00:39
Um and that's where you just say to
00:00:41
Japan and China and Germany and everyone
00:00:44
else who's bought those bonds like we're
00:00:45
not paying. Yeah. Which means you'll
00:00:47
never float more debt. So you you can't
00:00:51
you know other than print more money
00:00:53
which then creates even more
00:00:55
hyperinflation. So now people can't
00:00:56
afford anything. I mean, has anyone ever
00:00:58
defaulted? Any country ever defaulted on
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debt and just said, "We're not paying.
00:01:01
Come and come and get it." Oh, I'm sure
00:01:03
they have. I'm not. But that's not
00:01:05
common. Like, I think it happens enough.
00:01:07
But what always happens is, you know,
00:01:09
company countries like the US go there
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and we help them restructure their debt.
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I think that's happened numerous times,
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but no one's going to come and help us
00:01:18
restructure our debt. No, nobody can. We
00:01:20
are the again we will lose our position
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of the world's reserve currency and
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we'll lose our ability to print dollars
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that people accept. I mean it's it's
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it's a mar mar mar mar mar mar mar mar
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mar mar mar mar mar mar mar mar mar mar
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mar mar mar marvelous thing that uh we
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just print dollars we can send them
00:01:32
overseas and people will produce
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products and ship them over here high
00:01:36
quality products are pretty low cost. I
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think it's one of the reasons we've been
00:01:38
able to keep inflation in check
00:01:41
producing all these massive deficits
00:01:42
over the last couple decades is we do
00:01:44
import a lot of products. You know,
00:01:46
we've got, you know, billions of people
00:01:48
either un or undermployed around the
00:01:50
world. We provide the capital. You know,
00:01:53
they produce the factories, they produce
00:01:54
the goods, and then we we just give
00:01:57
them, you know, paper. It's it's fiat
00:01:59
currency. You know, we print it. We keep
00:02:01
printing it, and it's been working out
00:02:03
pretty well. At some point in time, that
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that gravy train might stop.
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And then, I mean, then you have like a
00:02:09
total collapse of the current system.
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Yeah. Again, I I can't I can't predict.
00:02:15
I'm trying to avoid it. Uh it will be
00:02:18
painful. Uh you know, and and who who
00:02:21
really suffers are people at the lower
00:02:22
end of the income spectrum that have no
00:02:25
no safety net. They don't have any kind
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of hard assets that will inflate with
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inflation. They're they're just they
00:02:30
just be destitute.
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A lot of them. Yeah.
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in a country that has no kind of
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organizing principle or national
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identity where people are not as united
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as they were in say 1929. I I had my
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comm staff put together a video. Uh I
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asked them to find all these Republican
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leaders that have you know talked about
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balancing the budget. Uh you know we we
00:02:53
we have a spending problem. It starts
00:02:54
out with President Trump saying in the
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State of the Union we're I'm going to do
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something we haven't done 24 years
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balance federal budget. Then every
00:03:02
Republican leader some form of we don't
00:03:05
have a revenue problem, we have a
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spending problem. In those clips, we
00:03:09
have Elon Musk saying if if we don't fix
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this, there won't be money left over for
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anything. And I think that's a pretty
00:03:17
accurate statement. Does this bill get
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us closer to fixing it? No. It
00:03:20
exacerbates the problem. How can that
00:03:23
be? Because we're not serious about
00:03:25
returning to a reasonable prepandemic
00:03:26
level spending. We we've picked a number
00:03:28
out of the air. 1.5 trillion. It's
00:03:30
totally out of context. There's, you
00:03:32
know, it's not really related to the the
00:03:34
moment. It's it's it's missing the
00:03:36
moment. Can I ask you like who came up
00:03:39
with that number? Like whose lie is
00:03:41
that?
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Uh I think my best guess is
00:03:49
conservatives in the House, who I love,
00:03:52
uh didn't want to be blamed if this
00:03:54
thing failed. So they said, "Well,
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listen, in order to in order for us to
00:03:58
accept a $5 trillion increase in the
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debt ceiling, we've got to get at least
00:04:02
$1.5 trillion in savings spending cuts."
00:04:05
I don't think they were looking at the
00:04:06
big picture. They I think they just
00:04:08
pulled a big I I criticized them at the
00:04:11
time privately. I said, "Listen, you set
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the bar way too low, you guys. This is
00:04:15
completely inadequate. They set the bar
00:04:17
way too low that it should have been
00:04:19
easy to meet it, quite honestly. But
00:04:22
even that was
00:04:23
difficult be because they didn't go
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through what I would consider the right
00:04:27
kind of process. So maybe we can shift
00:04:29
in terms of what we have to do, what I'm
00:04:31
trying to accomplish here in my digging
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my heels
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in kind of shown us what we can do here.
00:04:38
We've never had a process to control
00:04:41
spending the federal government. We
00:04:42
don't have a balanced budget
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requirement. I I didn't realize this.
00:04:45
Just found out. Do you know they
00:04:47
established the appropriation committees
00:04:49
because the authorizing committees were
00:04:51
big spenders? So the appropriation
00:04:53
committees were supposed to be the
00:04:54
control on the big spenders. Well, that
00:04:56
didn't work. Uh the budget control act
00:04:59
of 1974 didn't work. Simpson BS didn't
00:05:01
work. The budget control act didn't
00:05:03
work. It did for three years, but then
00:05:05
we weasled our way around it. So what
00:05:08
process could possibly work to control
00:05:10
spending? Well, first of all, you have
00:05:12
to know the numbers. You have to
00:05:14
understand, you know, what what a deep
00:05:16
hole we're in and have a commitment to
00:05:19
to address it. But Doge has pretty well
00:05:22
shown us how to do it. I come from the
00:05:23
private sector. I I think we pro I
00:05:25
probably spent more
00:05:27
time either analyzing my department head
00:05:30
budgets or my own overall company budget
00:05:32
than Congress in total spends analyzing
00:05:35
the 7,000 billion budget of the federal
00:05:38
government. So Doge has shown us if you
00:05:41
go line by line, contract by contract,
00:05:44
you will discover and uncover spending
00:05:47
that if the American public saw it,
00:05:50
they'd be outraged by it. If you
00:05:52
eliminated it, my guess is most
00:05:54
Americans wouldn't even know it's
00:05:57
eliminated. About the only people that
00:05:58
would know would be the grifters. Yeah.
00:06:01
Who have been sucking down the waste,
00:06:02
fraud, and abuse, the NGO community. So
00:06:04
So you have you have to go step by step.
00:06:05
So that's why I've always been
00:06:07
supportive of a multiplestep
00:06:08
reconciliation process here. I I was
00:06:10
always recommending three steps. First
00:06:12
step, give President Trump the the
00:06:14
funding on the border, defense, bank,
00:06:18
$850 billion of real savings, not make
00:06:20
believe, you know, now. Uh and Lindsey
00:06:23
Graham agreed to this $85.5 billion each
00:06:26
year for four years to pay for the four
00:06:29
years worth of spending. And then extend
00:06:32
that out 10 years, that gives you 850.
00:06:34
That's more than half of what the House
00:06:36
budget reconciliation supposedly gives
00:06:38
us. Second step, I would just extend
00:06:40
current tax law. So, a new report, which
00:06:42
you may not have seen cuz it was
00:06:43
suppressed, shows the abortion pill is
00:06:46
10 times more dangerous than the FDA
00:06:49
claims. Not just dangerous to the baby
00:06:50
that it kills, but to the women who take
00:06:52
it. 11% of women who take the pill
00:06:55
experience quote serious adverse
00:06:57
effects. Why is this still on the
00:06:59
market? Huh? because it's abortion
00:07:02
related and our leaders love abortion.
00:07:04
It'd be easy to turn that figure into a
00:07:06
rant about abortion. But there's another
00:07:08
angle to this debate that's not talked
00:07:11
about enough. And that's what a blessing
00:07:14
babies are. People scoff about children
00:07:17
like they're some kind of plague, but in
00:07:18
reality, the exact opposite is true. On
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your deathbed, you will care only about
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00:07:56
If we would have been smart enough in
00:07:57
2017 had somebody like Chairman Crapo
00:08:00
who really came up with this idea of
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let's just use current policy for taxes
00:08:04
then we can make this stuff permanent.
00:08:06
You should never pass in my mind a tax
00:08:08
tax law that automatically expires just
00:08:11
creates all these fiscal cliffs. It puts
00:08:14
all kinds of uncertaint uncertainty in
00:08:16
the economy. Why do they do that?
00:08:17
Because because we so this gets into
00:08:20
real budget wonkery, but for spending to
00:08:23
score it, you use current policy, which
00:08:25
means if a spending program ends, if you
00:08:28
want to extend it, you just you score it
00:08:31
based on, oh, it was going to be
00:08:32
extended anyway, so it doesn't cost
00:08:33
anything. For taxes though, we use
00:08:36
current law. So if if the tax cuts are
00:08:40
ending and you want to extend them,
00:08:41
well, you you're scoring that on the
00:08:43
fact that they are going to end. So now
00:08:44
to extend him, it's going to be a
00:08:46
trillion dollar score. So then you got
00:08:48
to pay for it and it's hard to pay for
00:08:49
it. And so that's how it was all scored
00:08:51
back in 2017 where we would just use
00:08:54
current policy. If we use current policy
00:08:57
now, we can just extend current tax law
00:08:59
and there's no score. So that's that's
00:09:01
really what we're doing now. But we have
00:09:03
to recognize when you're comparing to
00:09:05
the CBO budget, CBO budgets is assuming
00:09:08
it does taxes do increase and bring in
00:09:12
about another $4 trillion worth of
00:09:13
revenue. So that's why I say the $22
00:09:15
trillion in in projected deficits is
00:09:18
probably a rosy scenario. I mean it
00:09:20
seems like the core problems are just so
00:09:22
familiar. One is short-term
00:09:24
thinking and the second is the misplaced
00:09:27
belief that you can see what the future
00:09:28
will be and both of those are like silly
00:09:32
and unwise. Maybe are we bumping up
00:09:34
against the inherent limits of the
00:09:35
system? Well, I I would say we're
00:09:39
missing
00:09:41
the focusing on the right
00:09:44
thing. We have to focus on spending.
00:09:48
And and the reason I say that is
00:09:49
spending is pretty certain. Again, you
00:09:52
who knows what revenue you're going to
00:09:53
bring in. It's hard to predict. Spending
00:09:56
that's that's pretty easy
00:09:57
to, you know, predict what that's going
00:10:00
to be. Plus, I personally voted for
00:10:03
President Trump because I wanted him to
00:10:05
defeat the deep state. Yeah. Uh you
00:10:07
don't defeat the deep state by
00:10:08
continuing to fund it at Biden's levels.
00:10:10
Yeah, I know. So again, you when you
00:10:13
start talking about the controlling the
00:10:14
deficit, well, you can control the
00:10:15
deficit by tariff revenue or selling the
00:10:18
gold card, but that keeps funding the
00:10:20
deep state. You have to focus on
00:10:22
spending. And we've we've just gone
00:10:26
through an unprecedented level of
00:10:28
increased spending other than World War
00:10:30
II. And just quick aside on that, we
00:10:33
entered World War II spending 11.7% of
00:10:36
our economy of our GDP on federal
00:10:38
government. 11.7 that got ramped up to
00:10:41
41% during the war. But by 1948, because
00:10:45
we had responsible leaders, you know,
00:10:46
the greatest generation, that actually
00:10:48
went down to 11.4% of GDP. And we
00:10:51
returned to pre-war levels. massive
00:10:53
recession, too. I mean, the the you
00:10:55
know, the war is over. Let's return to a
00:10:58
reasonable pre-war level spending. We
00:11:00
didn't do that during the pandemic. And
00:11:02
and that's what we have to have to focus
00:11:04
on do. It's such a reasonable thing to
00:11:06
do. It should have been done in 2021. We
00:11:08
didn't do it for four years, but now
00:11:10
we're just pretty well accepting that
00:11:11
we're we're accepting the fact that
00:11:13
Obamacare, now called Medicaid
00:11:15
expansion, is putting at risk Medicare
00:11:17
for the the truly vulnerable, even
00:11:19
though we all ran on repealing and
00:11:20
replacing that. and obviously failed in
00:11:22
the first Trump term, but now we're all
00:11:24
okay with it. Now we're not going to
00:11:25
touch that cuz they renamed it. Are you
00:11:29
are you kidding me? Well, this this is
00:11:30
but this is how it works. Like in 20
00:11:32
years, we'll be like, "Well, of course
00:11:33
you have to protect trans kids." You
00:11:35
know, what seems crazy at first becomes
00:11:38
accepted and then it becomes the hill to
00:11:39
die on. It's just like your expectations
00:11:42
change, right?
00:11:45
So again, I'm I'm trying to
00:11:47
force the discussion over the real
00:11:50
numbers. Okay. And and again, 1.5
00:11:54
trillion in abstract seems like a lot,
00:11:57
but we've really ramped up from two from
00:12:00
2019 to this year. That's over 10 years.
00:12:03
That's $29 trillion of increased
00:12:05
spending over 10 years. 29 trillion. And
00:12:08
we're talking about cutting out 1.5 of
00:12:10
that. Yeah. It's a joke. It's a joke. Um
00:12:14
because people don't want to cut it out.
00:12:15
And so I guess that's my question. And
00:12:17
you said that the problem with democracy
00:12:19
is once the majority figures out they
00:12:21
can just steal money then you know then
00:12:24
you're just like headed to the cliff and
00:12:25
there's no pulling back. Are we there?
00:12:27
Well, again they're they're not stealing
00:12:28
it. They just don't realize that how
00:12:30
it's financed is by printing money and
00:12:33
they can't afford things. They're taking
00:12:35
other people's
00:12:36
money called theft. Yeah. They they try
00:12:38
and tax it but we're not taxing anywhere
00:12:41
near enough. Right. No. Right. So we're
00:12:43
going to have to borrow $2.2 $2 trillion
00:12:45
for the next 10 years every year. Two
00:12:47
point at least. That's effectively a tax
00:12:49
because it devalues the money in your
00:12:51
pocket. So you're basically paying 10
00:12:53
bucks for a Big Mac and a Coke. So yeah,
00:12:55
inflation is a silent tax. It's it's
00:12:56
it's really nasty.
00:12:59
Do you have any hope?
00:13:02
I'm not the world's greatest optimist.
00:13:08
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00:13:09
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