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March 26, 2025 12:13-12:56 - CSPAN
42:57
Washington Journal Shai Akabas
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Appearances
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john mcardle
cspan 04:38
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michael savage
00:07
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Speaker Time Text
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Earlier today, the Director of National Intelligence, Tulsi Gabbert, FBI Director Kash Patel, and CIA Director John Ratcliffe were on Capitol Hill for a second day to testify on global threats.
They also faced questions on the use of a group chat app by senior officials to communicate information about a recent military strike, which was only made public after a journalist was mistakenly added to the conversation.
Watch the House Intelligence Committee hearing in full tonight at 9 Eastern on C-SPAN.
It's also available on C-SPAN Now, our free mobile app, or online at our website, c-SPAN.org.
john mcardle ▲ ● ▼
When fiscal deadlines approach, there's few better people to help explain things than Shaya Kabas.
He's the vice president of the Economic Policy Program at the Bipartisan Policy Center.
And Mr. Kabas, there's a few fiscal issues to discuss, but I want to start on debt limit.
We're approaching a debt limit deadline.
Explain what the term the X date refers to when we're talking about the debt limit.
unidentified
Sure.
Well, thanks very much for having me.
We're back here again.
This is going to be the 13th debt limit episode of the last 14 years, and 13 may be an ominous one to be going into.
We at the Bipartisan Policy Center have long studied this issue and helped educate the public about and policymakers about the implications of not acting on the debt limit.
The debt limit restricts the amount that the United States government can borrow.
That's important because we are running annual deficits and at some point we will need to continue borrowing more than the debt limit in order to continue funding all of our government operations.
We have already actually reached the debt limit at $36.1 trillion.
That happened back in January.
And right now, the Treasury Secretary is using what are called extraordinary measures.
These are basically accounting maneuvers to help the federal government buy itself some additional time before Congress needs to act on the debt limit.
If those run out and the cash that they have in reserve run out, paying all the nation's bills, then we will reach what the Bipartisan Policy Center calls the X state.
That's when the government does not have the resources to meet all of its obligations in full and on time.
That's never happened before.
And if that happens, it could be a severe event for our economy.
It would be unprecedented.
john mcardle ▲ ● ▼
Why is it severe?
Why is it unprecedented?
What happens if we breach the debt limit?
unidentified
The bottom line is we don't know, and that's probably for the best because the results are unlikely to be pretty.
This is very different from a government shutdown, which we've experienced many times before.
We know what that looks like.
That's when the Congress has not appropriated funding for the following year, and the agencies are not able to operate until Congress puts that funding into effect.
And we have what's called sort of a partial shutdown of services or non-essential services shutdown.
That is disruptive, not good for the economy, but it's not an event with global implications in the same way that a breach of the debt limit could be.
If we breach the debt limit, that calls into question our debt.
That calls into question people who are, our ability to pay back people who are lending us money.
We don't want to be known as a borrower who is not making good on our obligations.
If that happens, it would likely mean that financial markets would tank.
It would mean that people are less inclined to lend us money.
Right now, we are the gold standard.
We get the best borrowing rates in the world because we are that reliable borrower.
If we are no longer seen as that, it's going to have effects throughout the economy that we can't necessarily foresee, but could be catastrophic.
john mcardle ▲ ● ▼
Why are we approaching an X date when there are Doge cuts going on, which is said to be reducing government and government spending, tariffs collecting money right now, and we're in tax season?
Isn't this the time when the U.S. government collects all the money for the year?
unidentified
Yeah, it's important to take a step back and understand that we have a huge fiscal problem as a country.
That $36 trillion number is far too big for most Americans to comprehend, but it's a lot of money.
We are paying just an interest on the debt, about $100 million every hour.
So that's $100 million that are not going to fund all the things that the government does that we want it to be doing, Social Security benefits, Medicare, et cetera, et cetera.
That is just going to pay the interest on the money that we have borrowed.
And at some point, it will become a larger and larger drag on the economy.
It will mean that interest rates are going up because of the amount of debt that we have to borrow.
That will be felt by consumers across the economy.
It's already being felt in ways that are more difficult to see, but eventually that will become a challenge that is felt by all and that people can clearly see as a result of the growing debt if we don't get this under control and make the necessary changes to spending and taxes to contain it.
Now, the way that this affects the debt limit is we are running a roughly $2 trillion annual deficit, meaning the gap between what we're taking in and what we're sending out.
We're taking in about $5 trillion a year and we're sending out about $7 trillion a year, roughly a $2 trillion difference.
That means that we are accumulating debt each and every month pretty much.
The exception is in April when we do tend to run cash surplus as a result of the tax season.
So we don't expect the debt limit X date to arrive in April because we'll be taking in more than we're sending out.
But pretty much every other month we're sending out more than we're taking in.
And that eventually means that we will reach a point where we run up against this borrowing limit and Congress needs to act to allow the Treasury to continue borrowing to meet all of our obligations.
john mcardle ▲ ● ▼
Debt limit and fiscal deadlines is our topic.
Shai Kavas of the Bipartisan Policy Center back with us.
C-SPAN viewers know he's happy to take your calls on these topics.
Phone lines, as usual, Democrats 202-748-8,000.
Republicans 202-748-8001.
Independents 202-748-8002.
As folks are calling in, another word that gets tossed around when we're talking about debt limit is the U.S. credit rating.
What is that?
Why is it important?
unidentified
So all countries around the world that issue debt have credit ratings, which evaluates how reliable they are in terms of paying it back.
For the longest time, we had a uniform AAA rating, which is the highest you can be.
There are three main credit rating agencies.
They all had us at that level.
As a result of some of the debt limit impasses in recent years, and as a result of the growing debt and our apparent inability to do anything about it, regardless of whether Democrats are in control or Republicans are in control, we have seen downgrades.
So two of those credit rating agencies have now downgraded us.
And the third has said that we are sort of on watch at times for a downgrade.
That matters because it means that those who are lending us money are going to be less inclined to do so.
It means we will have to pay higher interest rates.
It also matters because there are certain funds, certain pension funds, for example, that can only hold the highest rating security.
And if we are no longer in that company, we can't be considered for those funds.
So the way that this will come back around and people across the country will feel it is if the federal government is paying higher interest on its bonds and bills that are issued, that means that all other consumer products which are based off of those rates will also be higher.
mortgage rates and credit card rates and other rates that consumers pay throughout their daily lives, that will further pinch household budgets that are already feeling the pain from inflation that we've seen in recent years and just from the fact that wages are often difficult to make ends meet in this country and in many others.
john mcardle ▲ ● ▼
So there's a lot of bad things that could happen if we breach the debt limit and we run out of extraordinary measures.
There's bad things that could happen even if we approach that time.
Why do we have a debt limit?
Why is it a good thing?
unidentified
The debt limit's been around for actually more than 100 years.
So this is a long-standing provision that Congress originally put into place to limit the ability put in place to give the executive more authority to borrow because it used to be that Congress had to approve every single issuance that the Treasury made.
So anytime the Treasury wanted to issue debt, the Congress would have to pass legislation to approve that.
That became very cumbersome as we have trillions of dollars going around in the economy.
And so they gave more flexibility by putting a total debt limit on and saying the Treasury Secretary could borrow up until that.
In recent years, the debt limit has served more of a limitation on the Treasury's ability to borrow.
And we keep running up against it because we are running these continuous deficits.
What I think it should remind us of, though, is that broader fiscal challenge.
It's not the right tool to go about addressing it.
We shouldn't be having crisis negotiations over how do we prevent ourselves from defaulting on our obligations.
But unfortunately, the budget process that we have in Congress is broken.
And Congress has been extremely unwilling to make those difficult choices on spending or taxes to get our fiscal house in order.
john mcardle ▲ ● ▼
Do you think the reminder now 13 times is worth the potential pain that could happen here?
unidentified
I don't.
And that's why we at BPC have actually proposed a reform to the debt limit that would effectively de-risk it, take away this market risk, this catastrophic sort of Damocles hanging over the economy.
We would do it by changing the process by which the debt limit is approved.
So basically giving the president authority to request a debt limit extension.
So when we need to borrow more, the president would be granted that authority to request that of Congress.
And it would go through unless Congress overrode that request, meaning it would change the default position, not to be confused with defaulting on our obligations, but the default position to a debt limit extension going through unless Congress proactively said, no, we don't think that there should be more borrowing because Congress is ultimately in charge of spending and taxes and borrowing.
So it's important to keep their prerogative.
But along with this, the president would be required to submit a debt reduction plan.
And that's really important because what it would do is on a regular basis, require Congress to at least have deliberations, have debates over actual policies to reduce the debt that we have accumulated.
john mcardle ▲ ● ▼
So is Doge a debt reduction plan?
unidentified
Doge is a, is very novel from what we have seen in prior administrations where they are going in and making significant changes to government agencies that may ultimately reduce the amount that is spent on them.
I say may for a variety of reasons.
So one is ultimately the spending is Congress's decision.
So if Congress has approved money and there are changes being made at the agency level, unless Congress says we are now going to spend less and allocate you less money, that money is required to be spent.
So we're not necessarily saving money just because changes are being made at the agency level.
Those dollars are already obligated or already appropriated, excuse me.
I expect that there will be some savings that come out of the effort to make the government more efficient and lean.
But the thing to focus on is that the discretionary portion, the portion that goes to those agencies that Congress annually allocates, is a very small proportion of the overall budget.
Most of it is taken up by the entitlement programs, Social Security, Medicare, Medicaid, interest on the debt.
Those programs are either automatically paid, like interest on the debt, or on autopilot, meaning they don't change unless Congress proactively changes them.
They're not something that Congress addresses every year.
So we'll have to see what Doge comes up with, but it's not where most of the money that the government spends is.
john mcardle ▲ ● ▼
Got plenty of calls for you already, and we haven't even gotten to budget reconciliation or renewing tax cuts, so we'll get to those as well.
But let me get to the calls.
Raul in Miami, Republican, good morning.
You're on with Shay Akabas.
unidentified
Yes, good morning.
Yes, I just wanted to comment.
Mr. Akaba suggests that the debt limit should be raised or we're going to have a catastrophe.
His solution, which is to raise the debt limit, is what's leading us to a total catastrophe.
He admits we owe almost $40 trillion.
He admits that it's impossible to pay, but he suggests we should continue this total fraud, which is leading us to national bankruptcy, because there is no way it can be paid back.
And his only solution, and I'm not picking on him personally because it's the Washington mindset, is that we should continue to pay this absurd interest that we're paying, which has now become the largest item in our budget.
I would suggest that we have to realize and we have to renegotiate all these debts we have, even if we get classified as a bad debt credit risk, which we are.
I think we need to face the truth or we're heading for the end.
Thank you.
john mcardle ▲ ● ▼
That's Raul in Florida.
I would just note, I believe interest on the debt is the third largest budget item behind Medicare, Medicaid, and Social Security, but more than defense spending.
But to his point.
unidentified
Yes, and I think it is we need to be gravely concerned about the debt that we have as a country.
And the issue is not the debt limit, but it's the underlying debt that we are accumulating.
So the debt limit is not an effective mechanism to stop us from accumulating debt because the spending has already been done by allocated by Congress.
What we need Congress to do is make different spending decisions or different taxing decisions to close the gap between spending and revenues.
Renegating outstanding debt is something that could be discussed, but what that would likely do is mean that when we need to issue more debt, which we will inevitably need to do because we're running $2 trillion annual deficits, they're going to charge us even more, even higher interest rates because they think there's a chance that there's going to need to be a renegotiation.
So in terms of saving us money in the long term, I question whether that would be the right solution.
But the caller is absolutely right that we need to get this under control, and that's going to require tough decisions on the spending side and the tax side.
john mcardle ▲ ● ▼
Is renewing the 2017 Tax Cuts and Jobs Act the right taxing decision for Congress in the situation that we are in?
unidentified
So the Tax Cuts and Jobs Act in 2017 is going to expire at the end of this year.
And that would mean that tax rates would go up on consumers and businesses all across the country, pretty much across the income distribution, different size businesses.
That would be a disturbing hit to our economy.
And I think it is not the right approach because it would be counter to our desire to have strong economic growth, strong business investment.
But what we do need to do is make sure that we are paying for tax cut extensions that we think need to go into effect.
So we at PPC think that we can do pro-growth, pro-family, pro-business tax reform while also making it fiscally responsible.
That's going to mean considering offsets for those policies that are tough.
They're difficult trade-offs.
All budgeting, all tax policy is an exercise in trade-offs.
We have put out about a dozen or more tax offset options that could help pay for some of the tax cuts that we think are good ideas that Congress wants.
john mcardle ▲ ● ▼
What are some of those tough trade-offs?
unidentified
Yeah, so for example, on the business side, we think that there are some really important provisions that were part of TCGA, the Tax Cuts and Jobs Act, that should be extended.
So incentives for businesses to enhance their research or their investment, their deductions and accelerated schedules that they can write off that allow them to do that.
Those cost a lot of money.
We think that one option that Congress could consider to help pay for that would be by limiting corporations' ability to deduct their state and local taxes.
There are trade-offs there.
We're not saying it's the perfect option and Congress should consider those carefully, but that's one that could help pay for some of the pro-growth policies we think are good ideas on the business side.
There are lots of others on the individual side, so charitable deductions.
I think we all believe charitable contributions are important for our economy and important for various social needs.
But the way that we incentivize them is something that we should look carefully at because that deduction costs us a lot of money.
People who contribute at the lower end of the economic of the income distribution don't get any incentive to do that because it's only if you itemize your deductions.
People who contribute at the higher level get a very, very large incentive to do that.
So could we reallocate some of those incentives in a way that still provides a benefit to everybody who is making those contributions, but redistributes it to some extent and costs less to the federal government?
I think we can.
Those are just a couple of the ways that we've put out there that are options for Congress to consider to help pay for some of the ideas that they want to advance and that we think are also worthwhile.
john mcardle ▲ ● ▼
Upper Marlboro, Maryland, this is Jack Democrat.
Good morning.
unidentified
Hey, good morning, gentlemen.
I noticed your guest didn't mention Medicaid, Medicare, or Social Security when you guys discussed trade-offs, which I think is interesting.
He also didn't mention that prior to the 2017 tax cuts, the SALT tax was available.
So we'd just be reinstating what was already there prior to the 2017 tax cuts.
But I have a couple of questions.
What does your guest think will happen to the deficit if this reconciliation package is passed?
Does it get bigger?
What happens to revenue?
And also, since we are approaching April 2nd, I'm wondering what your guest feels about tariffs and what that will do to our economy.
And if he can just clear up for the listeners, who pays tariffs?
Does the country in which we are levying these tariffs against pay the tariff, or does the American importers who are importing products from these different countries pay those tariffs?
Thanks.
john mcardle ▲ ● ▼
Just a couple topics from Jack there.
Medicare, Medicaid, Social Security, SALT, budget reconciliation, and tariffs.
unidentified
Thanks for those questions, Jack.
And I think there are some interesting topics you raised.
So let me first start on Medicaid, Social Security.
So I did not mention them in my last answer, but I did highlight them earlier in the program.
And I do think that you're absolutely right to put a finger on those as absolutely essential to getting our fiscal house in order.
If we don't make changes to those programs, there is no way that we can close the gap between the spending that we're sending out and the revenues that we're taking in.
We at PPC have a lot of proposals that we have put out there that you can find on our website for those programs.
And those are ones that Congress should be considering right now.
When it comes to the Tax Cuts and Jobs Act and the extension of those tax cuts, estimates from a variety of sources, including the Congressional Budget Office, say that it would cost between $4 and $5 trillion over the next decade to extend those tax cuts if they are unpaid for.
That's a lot of money, adding to the significant deficits that we will already be accumulating.
And I don't think that that is a, we at PPC do not think that that is a good fiscal decision for the country to make.
We do think that many of those tax cuts, as I mentioned, should be extended, but we can do it in a fiscally responsible way that makes the difficult decisions, that shows that we can exercise the difficult trade-offs that are necessary to tackle our growing debt.
Finally, on tariffs, this is a really important and relevant issue, not only from a fiscal standpoint, I think maybe even a little bit secondarily from a fiscal standpoint, but from an economic standpoint.
And we're already seeing effects of the tariff policy across the economy.
Consumers are feeling this.
Businesses are feeling this, particularly the uncertainty associated with them and not knowing which tariffs are going to go on or come off.
And in terms of who pays them, the importer ends up paying those.
They do make it somewhat less likely that we will be getting goods from outside the country versus inside the country because it creates a disparity in there.
And I think tariff policy is reasonable for us to be talking about and is a tool that can be used for various goals.
But I think it's pretty clear that the uncertainty that this is causing across the economy right now is preventing businesses from making some of the investments that they would otherwise like to make and major spending decisions that consumers might want to make.
john mcardle ▲ ● ▼
When you say we at the BPC don't think this is a good idea, who is the bipartisan policy center?
What's the mission?
How are you funded?
unidentified
Yeah, absolutely.
So we at BPC have been around for almost 20 years now, and we were founded with the mission to help bring the two parties together around good policy that benefits the American people.
There are so many forces in politics today working against that cause, pulling the two parties apart, creating divisions in our country.
We are trying to, not alone, because we can't do it alone, but help fight that battle to bring the parties together around good policies.
That doesn't mean that everything we say the two parties like.
That doesn't mean that everything that is bipartisan is good policy.
We're here to try to advise and educate policymakers and the public around what could be good bipartisan policy because we think that is durable policy.
Policy that gets made by one party or the other party is often not the best policy because it doesn't take into account various perspectives.
And it's not durable, as we've seen just in the last couple months.
A lot of the policies that were unilaterally put in place by the prior administration have already been overturned and rolled back.
And we think that a strong economy is better supported by policies that are consistent, stay in place over time, create certainty for businesses and households across the country.
john mcardle ▲ ● ▼
BPC bipartisan policies, bipartisanpolicy.org is where you can find them online.
Pretty easy to get to.
And Shia Kabas and his team is in the economic portion of that website.
You can see all of his latest writings and work on this.
And this is Sean in Duluth, Georgia, Independent.
Sean, thanks for waiting.
Arkansas then.
Let's go to the Democratic line.
Good morning.
unidentified
Yeah, I had a question about the interest on the national debt.
Every couple of months, the Federal Reserve meets and sets a new interest rate.
And a lot of people don't realize it, but that interest rate, the interest on the national debt, is dependent on that interest rate.
So my question would be: if they decided to drop the interest rate from where it is now, which is something like 39, about 4%, down to 1%, wouldn't that automatically cut the interest on the national debt to a lot lesser figure?
That's a really interesting question, and it's a complicated one.
The Federal Reserve makes their interest rate decisions based on a variety of factors, but most of them have to do with the economic conditions of the moment.
So their goal is to create low employment and stable prices.
So preventing the type of high inflation that we have seen over recent years.
Anything outside of that is not really within their mandate.
So it is not their job to help the U.S. control the federal debt.
That is Congress and the executive's job.
So creating interest rate policy at the Fed based on our national debt would likely result in economic outcomes that are suboptimal.
So what I mean by suboptimal, that would lead to higher unemployment or more higher inflation like we have seen in recent years.
And we know the effects that that has had on consumers and businesses across the country.
Again, there are trade-offs there, but what we have decided as a country is that the Federal Reserve should be making its decisions based on our economic and major economic indicators and not based on our federal debt.
We could change that, but I think it would have significant ramifications.
The easier way to control our debt is to make the difficult spending and tax decisions that Congress has prerogative over.
john mcardle ▲ ● ▼
Do you think Congress is ever going to make those difficult decisions?
unidentified
The past 15 years have not been an exercise in confidence on that point.
In the past, we have been able to, as a country, make those on a bipartisan basis.
We had many budget deals in the 80s under President Reagan, in the 90s under Presidents Bush and Clinton, that really did successfully help control the federal budget.
And we actually had balanced budgets.
We had surpluses in the late 1990s.
So we've shown that we can do this as a country.
But we have grown ever more partisan in our politics and particularly in our budgeting.
And topics like Social Security, Medicare, Medicaid, even taxes have really been off limits in terms of closing that gap.
It's hard to make the tough choices about raising people's taxes or cutting people's benefits.
Ultimately, that will lead to better economic outcomes for everyone.
And if we can make those decisions ourselves, instead of ultimately being forced to make them by the markets, when they come and tell us that our debt is growing too fast and is unsustainable, is a much better scenario for everyone across the state.
john mcardle ▲ ● ▼
There were tough political divisions in the 80s and 90s too, though.
Was it the people or was it the politics?
unidentified
You could say it's a little bit of both, but I think the politics have grown ever more divisive.
And we have so many factors from the money in politics to the media ecosystem to other elements.
I'm not an expert in our political divide, but it's pretty clear that members are talking to each other less.
They're working together less than they used to.
I think that's why BPC as an entity, as an institution, is so important.
We run, for example, a program called the American Congressional Exchange that has members of one party fly to the district of a member from the other party to see what the challenges are in their district and then have reciprocal trips back and forth.
We've done, I think, more than 50 of those trips with members of Congress.
That really does help build those relationships and help the members work together.
It's not going to solve this challenge by itself, but it's things like that that can help us try to bridge those difficult divides.
john mcardle ▲ ● ▼
I guess you're never going to have 535 people plus the president decide on a tough fiscal decision.
So when it happened in the 80s and 90s, was it leadership meeting and bringing this to the two bodies and to the White House and coming up with the plan?
How did it work and how many people were involved to make it work?
unidentified
That's the people part of this, and it's equally important, I think.
Presidential leadership is essential to get our fiscal house in order.
There is no way that Congress is going to make the difficult decisions over the objections of the president.
We just know that based on our political system, that is not going to happen.
And if we don't have that presidential leadership, we're not going to be able to tackle the problem.
We've seen that in the past several administrations.
Yes, there have been proposals by the presidents to reduce spending or raise taxes on perhaps some very wealthy people, but they're not the kind of proposals that are likely to garner bipartisan support.
In order to get to a deal, we need a president that is really intent on doing that and making concessions from their own party and reaching across the table to the other.
Something like Social Security, we're going to need that.
We've actually been involved behind the scenes with a lot of members on Congress who want to solve Social Security and make that program solvent and are having active discussions to do so.
But until they see that nod of presidential leadership and a willingness to lead the way, they're not going to stick their necks out and be the ones who are the sacrificial lambs when something's not going to get done anyway.
john mcardle ▲ ● ▼
George in Louisville, Kentucky, Democrat, good morning.
unidentified
Thank you.
I appreciate you taking my call and appreciate having your guest on.
The thing, this is something I've always believed for a long time.
Number one, we've been cutting corporate taxes for 40 years now.
And we have no means of recompensating that revenue.
And we used to have, if you go back in time, we had better roads, better schools, better, so many other things.
But this is something, one thing I believe is that the ratio of highest paid employee to lowest paid employee, if you have a low ratio, they should pay a lower tax.
If they have a higher ratio, that means it's profiting by greater worker productivity and the workers are getting less and they should tax companies like that more.
But setting that aside, this is something I've always believed for a long time.
The GLP since FDR on, they really do not believe in an administrative state that actually serves a public sector Commonwealth functions.
They believe everything should be done by the market.
And they don't believe that if it's not listed in enumerated powers, that it's unconstitutional and they shouldn't have it.
They've done everything they could to understaff, underfund, politically extract, obstruct, legally obstruct whatever to prevent any public sector function from being able to function effectively.
And they want to produce doubt and distrust of any public good or service.
One last thing, I think.
It's like they've got a Pentagon's got trillions it cannot account for.
But the GLP is much more fiscally irresponsible.
They've always ran debts and death, etc.
I think their cries about debts and debts are actually kind of phony.
john mcardle ▲ ● ▼
It's George in Kentucky.
Shaykatis.
unidentified
Yeah, so I think the point about efficiency and waste in government is really important.
This comes back a little bit to the Doge question from earlier, Department of Government Efficiency that the president has set up.
And there are, it is, our government is overdue for a careful inspection at what we are spending our money on and how we can do that more efficiently to achieve the same goals.
We at PPC have put out some proposals that look at things like improper tax payments.
So payments on the, for example, earned income tax credit, a very high proportion of those are not made consistent with the law.
Those are mostly not fraud.
They're errors.
But we should have systems that make the payments that are legally obligated under law and not have about 25% of the payments that go under that program be improper.
Unemployment insurance is another one.
That provided extremely necessary support, especially during the pandemic, to people who had lost their jobs and needed cash assistance.
But we saw lots of fraud associated with that program during the pandemic.
There are investments that we can make that are relatively small that would make those systems more secure, more accurate, and create broader efficiency and savings for the taxpayer on the back end.
That's not going to be the bulk of how we fix our deficit problems because as we've been talking about, most of the money is elsewhere.
But there's no reason that the government shouldn't be working in an efficient manner.
And I think that, frankly, impacts how Americans perceive our government, because if it's perceived to be wasteful and inefficient, then people just don't think that it should be performing any services.
And really, we need the government to be doing a lot of what it does.
john mcardle ▲ ● ▼
Any recommendations for the Pentagon and how to pass an audit?
unidentified
Good question.
The Pentagon budget is very large.
It is one of the largest, it is the largest agency, and it's one of the largest programs when looking at the federal government overall.
Much of that money goes towards the national security of our country.
And I think it is not realistic to believe that we're going to get enough savings from there to make a huge impact on our overall fiscal picture.
But there is a lot of waste and inefficiency in the Pentagon.
I've heard that from many direct sources who are familiar with this.
And part of that is in procurement, that we pay more for all the equipment and machinery and weapons systems that we use than we should because of the way that that system works.
And there's lots of other programs that we maybe shouldn't be spending money on.
I'm not an expert in the DOD's budget, but I do think that a careful look there, particularly consistent with the mindset of government efficiency that has been brought in by this administration, would be appropriate.
And we might find more savings there than any other agency, particularly because it is the largest one.
john mcardle ▲ ● ▼
Norman in Union Bridge, Maryland, Republican, you're on with Shayakavas.
unidentified
Yes, so would I make a comment?
The Federal Reserve should have never been.
Congress was to coin money.
Therefore, there would be no interest.
We've been scammed big time.
And thanks for taking my call.
john mcardle ▲ ● ▼
Thoughts on the abolishing the Federal Reserve?
unidentified
The Federal Reserve serves a very important purpose in our country.
It is an independent central bank, meaning that the decisions we make about interest rate and interest rates and about sort of financial supervision, supervision of our banking system, those are not made on a partisan basis.
They are made independently of the executive and Congress.
And what that has done is it has instilled a level of confidence in the dollar and in our country that we would not otherwise have if those decisions were subject to the whims of the political system.
john mcardle ▲ ● ▼
Do other countries have a Federal Reserve?
unidentified
Most other countries, sort of industrialized countries, do have central banks and act in a fairly similar manner to the Fed that we have in the U.S. David in Fort Myers, Florida, Independent.
john mcardle ▲ ● ▼
Good morning.
unidentified
Yes, good morning.
Thank you for taking my call.
I had a couple comments to make.
First, I've been a contractor, and most of the people, I believe, from the sound of their voice, are generally middle-aged people that probably aren't going to be around in 30 or 40 years when this train wreck, which I believe is going to happen financially, because we have not balanced the budget for a better term.
It's just simply that.
If we were, say, in school and taking an economics class, our country would fail.
The amount now that's paid towards, sorry for a better term, nothing.
They call it interest on the debt.
But if you were a family, you think priorities, okay, we have to pay the rent or the mortgage, might have vehicle payments or insurance.
And that credit card that you're not even coming close to paying the actual principal on would be the next thing in line.
Families would fail.
And part of it is because, again, going back that I'm a contractor, working for people, you have a set price.
Doing government work, they have like a tentative budget.
And then there's additions and additions and additions because the people that are actually signing and approving, I get it that they're in a position of authority to do it, but it's not their money.
And so it's a small version of how the government works, which is put a number in place, and we know the procedure in order to get more money.
And these are the things we have to do in order to actually get it.
So I guess my point is, jumping around, that I think what they're doing, whether it's completely correct or not, needs to be done.
And it's not even for our generation right now, because if you look at the actual debt clock, which you could say has to be bipartisan, I don't know.
You could fact check or do whatever.
The number that there that's now surpassed defense, which is a huge number.
Think of all of defense.
john mcardle ▲ ● ▼
I've got it right here.
It's $1,014 billion in interest on the debt and defense spending just under $900 billion.
unidentified
Right.
So what I'm saying is, but if you look at it and the speed that it scrolls, it is moving basically the fastest of the growing debt.
And what I'm saying is, it's almost, if you see the commercials now that are for vehicles or anything, no money down.
We'll take your trade in no matter what you owe.
It doesn't matter.
They're backloading.
It's not economics 101.
We're not saving like our parents or grandparents did.
If they spent money, if they didn't have all of it, they had most of it.
Now it's no money down.
They're not even looking at what the payments are.
And you can close a stick hand down the road.
john mcardle ▲ ● ▼
David, let me take your point and let Shaikavis jump in.
unidentified
Yeah, and I think it's a terrific point.
The interest that we are paying on the debt went up just in the past four or five years, excuse me, from about 10% of the total revenues that we bring in as a country each year to about 18%.
So that jump is what you're talking about, the growth in the interest costs that we're paying.
So 18% of all the taxes that we pay across the country are going just to service the debt, not for any other purpose.
And that number will continue to grow, particularly if interest rates end up going back up at some point.
The solution to that is to take the opportunities that we have this year in the legislating process, the debt limit, the expiration of the tax cuts at the end of this year, the annual funding, government funding appropriations process that will, the deadline for which is October 1 when the new fiscal year starts.
All of those are opportunities, and this year is an inflection point for us to get our fiscal trajectory on a better path.
We have not been taking those opportunities in recent years, but we need our policymakers to lead and help the American public understand why these tough decisions are necessary.
john mcardle ▲ ● ▼
Time for just a couple more calls.
This is Danny in South Carolina, Republican.
Good morning.
unidentified
Good morning.
It's a shame what they're doing to Social Security.
Make it older people.
Go to the office and get some of them sick.
They don't have their eyes.
It's shame about Trump doing to know people.
Thank you.
john mcardle ▲ ● ▼
Not quite sure I caught what Danny was saying there.
Did you catch any of that?
Let's go to Jim in Butler, Wisconsin.
Democrat, good morning.
unidentified
Good morning.
How are you today?
john mcardle ▲ ● ▼
Doing well.
What's your question or comment for Shaykavas?
unidentified
Okay, here's what we got.
Since Reagan, all Republicans have built up the deficit.
Bill Clinton, I think, was the only one that balanced the budget.
Donald Trump, $8.9 trillion in debt his first term.
Now he wants to raise it and raise it.
What you're going to have to do to save this country is like in World War II.
michael savage ▲ ● ▼
60% of all the money they have in banks for rich people to pay a tax.
unidentified
If they do that, in a 10-year period, you'll wipe out the debt.
john mcardle ▲ ● ▼
Shaykavas.
unidentified
To fix our fiscal challenges, I think it's appropriate to look towards those who can most afford to contribute.
And that goes both on the spending and the tax side of the equation.
When we think about policies that can make progress at BPC, we think: are there tax policies that ask more of those who take in the most, who earn the most, and on the spending side, who least need the support of government programs to have financial stability in their household?
To fix our rising debt problems, it's going to take contributions from across American society because of how large they are.
But we should be looking at tax policies that are progressive, that ask more of those who can afford them.
And the offset options that we have on our website and that we are continuing to develop at BPC are many of them are those that, again, try to redistribute to make sure that we are providing the support to people who need it the most and asking a little bit more of those who can afford to pay.
So just a quick example on Social Security, if you look at the recommendations that we have there, you'll actually see us recommending that there should be larger Social Security benefits for those at the very bottom of the income distribution, many of whom live in poverty in retirement, and somewhat lower or slower growth in Social Security benefits for people who are very well off, who have many other sources of income to support them in retirement.
We can make those difficult, not difficult, we can make those trade-offs and also improve the budget picture at the same time.
john mcardle ▲ ● ▼
One last call, James in Akron, Ohio, Independent.
Good morning.
unidentified
Yes.
There's a couple of things, and we're on the same page with these things.
I'll go to Social Security first.
The Social Security situation is destined to keep people poor.
And what I'm saying is this, it's based on the amount of money that you pay in as to the money that you get.
We look at other countries like Australia and some of the other countries around.
There are people that's getting their form of Social Security are getting a type of a living type of wage in Social Security.
And our people, we get a lower amount because you didn't pay as much in.
So it don't make a difference with that.
And then the other thing, as far as balancing the budget and that in our country, the reason we can't balance the budget is because we operate as a business and when it comes to budgeting.
And they contribute, excuse me, they set up a budget that they think they're going to spend this year.
And if they don't spend it, when it gets close to the end of the year, they spend all the money.
Whereas a small business, they wouldn't spend that additional money.
It would go back into the coffers for the next year so that they could make money.
And so what happens every year, our budget goes up because we continue to spend whatever we projected to do instead of spending what we need.
And then if you need some additional money, go back to the Congress and say, look, we're running short because we had 1,200 more people died or whatever.
And so we need the additional funds.
These are the simple problems.
And one other thing, and let me get this out of the way, is that it's not about the rich paying more in their taxes.
It's about them paying a fair amount, the same amount that the poor people paid for taxes.
If they did that, we would be out of trouble in less than 10 years, as the guy that we were talking about just a few minutes ago.
And the Republicans always say that, whoa, if you taxed, if you took all the money from the wealthy people, we wouldn't have a problem.
Well, it's like anything you have.
You don't pay it off in one week.
You pay it off in a period of time, a car loan or whatever.
And that's how we would pay our taxes now.
john mcardle ▲ ● ▼
Jackavas, give you the final minute and a half or so here.
unidentified
So some of the points that the caller made are actually back to the efficiency theme and making sure that our government is operating in a way that people across the country would want it to operate.
So if there's excess funds at the end of the year, what we should ideally do, if they don't need to be spent, is not spend them.
That seems pretty common sense.
And there are reforms that we can make, both at the executive level and in terms of the congressional budgeting process probably that would help get at some of that waste and inefficiency.
That's working around the edges, as we've talked about, because the other categories of spending are the ones that are driving the budgetary challenges that we have.
The wealthy in our country actually do pay a significantly higher share of their income in taxes than lower-income Americans do.
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