Regarding the National Debt - The Disease is too much tax revenue

What this episode covers

00:08 A lot of people would tell you that the national debt is a symptom. 00:15 Not the disease. 00:19 The disease is too much tax revenue. 00:24 They have more tax revenue coming in right now than they've ever had before. 00:30 And this enables both the spending and the borrowing. 00:35 and on this account the entitlement state did not produce the debt abundant revenue made the entitlement state possible in the first place and if you curb the revenue you curb the appetite 00:51 and the debt follows. 00:55 For me, you sitting here, looking at how badly they do when it comes to actually taking care of the taxes, tax money coming through there, uh it's a very provocative argument. 01:11 and it has the virtue of looking forward. 01:18 where most fiscal commentary stops. 01:23 And I'm not trying to, uh you know, I'm not trying to bang up against this or anything. I'm trying to jog beside it. 01:35 Whatever the root cause, the arithmetic downstream is the same and the compound interest does not wait for the philosophical debate to be resolved. 01:45 The national debt crossed $39 trillion in March 2026, adding roughly $7.2 billion per day. Interest expense now exceeds $1 trillion annually. That's more than the defense budget and Medicaid individually, and it ranks third among all federal expenditure categories behind only Social Security and Medicare. 02:11 The CBO projects dealt by the public rising from 100 % to 120 % of GDP by 2036, with cumulative deficits of $23.1 trillion over the decade. 02:25 Right now every American household carries an implied share of approximately $288,000 and rising borrowed without your consent to fund programs that you don't even use. 02:44 The driver of the spending side is entitlement growth that neither party has shown the coverage to reform. Social Security outlays grow from $1.6 trillion to $2.7 trillion by 2036. Health care programs from $1.9 to $3.1 trillion. Mandatory spending, entitlements, plus interest already consume more than two-thirds of federal outlays. 03:07 Discretionary cuts, including Doge's genuine efficiency push, cannot close that gap. 03:14 Analysts estimate Doge savings in the range of $1.4 billion to $7 billion, less than half of the percent of the annual deficit. That's not waste disposal. That's just rearranging the deck chairs. 03:29 Whether those programs exist because revenue made them possible or because a political class manufactured the revenue demand to sustain them. 03:39 It doesn't change the fact that the obligations are real. 03:45 And the market signal question should get a direct answer. Treasury borrows easily. Bid to cover ratios remain healthy. No crisis has materialized despite decades of warnings. All of this is true. And anybody that's making any fiscal argument should reckon with it honestly rather than waving it away. But the absence of a verdict is not the same as indifference. 04:15 premium on the 10-year Treasury turn positive and climbed above 0.7 percentage points as fiscal uncertainty grew. 04:25 Federal Reserve's own research uh points out a heightened concern about future federal deficits as a primary driver of elevated, far-forward rates even after 175 basis points of Fed rate cuts failed to drag long yields lower. 04:44 The markets are whispering and Washington, well, their hearing aids or the batteries have died in those. The market has not declared crisis in part because the rules keep changing. No balanced budget measurement, baseline budgeting that inflates agency spending regardless of performance, a debt ceiling that reliably ends in suspension. The CBO's own projection still assumes Social Security pays full benefits 05:13 after its trust fund depletes around 2032, hiding a major future spending shock in the official forecast. 05:22 In private equity, we call that a going concern issue dressed up in clean audit language. 05:31 The game is not that the markets are blind to what's happening. The rules ha ...

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