During a recent town hall, former United Nations Ambassador and current Presidential candidate Nikki Haley claimed, “for the first time we’re paying more in interest payments than we are on our defense budget.”
This statement is true. According to the Congressional Budget Office’s latest baseline, in Fiscal Year (FY) 2024, spending on interest is projected to total $870 billion, while spending on national defense will total $822 billion. This has never been the case before, going back to at least 1940.
In addition to breaching defense spending, interest costs are expected to exceed Medicare spending this year, making interest on the national debt the second largest line item in the FY 2024 federal budget, behind only Social Security.
Committee for a Responsible Federal Budget
Eventually this will mean higher inflation too. I guess there are two possible solutions.
Cut the deficit spending and outstanding debt or raise taxes.
Before we get into the nonsense of stop sending money to other countries or spending on illegal immigrants, let’s look at where the money actually goes – much of that borrow first.
So, what would you like to cut?
QUINNSCOMMENTARY 
Interesting charts – side by side comparisons of federal revenue and spending.
https://thehill.com/opinion/finance/4472428-numbers-dont-lie-spending-is-the-cause-of-our-out-of-control-deficits/
During the years 2010-2023, the article confirms that the average revenue was 16.74% of GDP, while average spending was 22.94% of GDP – that’s Obama, Trump, Biden. Where we are heading – whether American voters re-elect Biden or Trump?
Last week President Biden announces another increase in the federal deficit via “cancelling” student loan debts.
Let’s go Haley, Let’s go Phillips.
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“The least responsible fiscal policy in 40-years.” Dr. Larry Summers–Sec. of Treasury in Clinton admin. He’s talking about the American Rescue Plan of 2021 that helped bring us the 9% inflation the following year.
What we hear from Biden folks is “shrinkflation” and “Putin price hike”. Gas prices since 2021? Checked your auto insurance cost since 2021–homeowners insurance cost? how about egg prices–of course some of the above are lower than when they were off the charts but considerably higher than in 2021.
Assuming we have a strong economy why is the deficit growing by leaps and bounds–maybe reckless policies like transferring student debt to the taxpayer thus adding to the deficit. Something as blatant as this combined with the above paragraph might explain Sleepy Joe’s poor poll performance in the area of the economy.
So NIMBY is the reason folks move? What does that mean? Do you have some example?? Taxes are not the reason? Next you will tell us crime is not a reason to move from Oakland to Austin.
Folks go to Austin and Nashville–you might want to do some research before you just spout off. Houston and Dallas continue to grow by leaps and bounds–didn’t the Dallas Mayor just change party affiliation–towns and cities in TN are experiencing growing populations especially as folks use zoom to work from home. I was just in SC and it is booming for some strange reason? I saw gas at $2.80 a gallon–could be those low state taxes on fuel.
Have some fun at my expense and then report back–GOOGLE U-Haul rentals and see what it costs to rent a van from Tampa to San Francisco–then San Francisco to Tampa and let us know the cost.
So more folks moving back to blue states??? Any evidence??? Use the U-Haul model above and let us know.
G–I enjoy your posts–always enlightening!
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Yes. I care where we were headed. Time to bring about change and get us focused on securing our boarder, safety of our citezens,, restore women sports with women as defined by nature, educate not indoctrinate our youth just to name a few reasons why I care. We do need to change the course of.OUR COUNTRY.
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Sent from my iPhone
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Welcome to the club or read Project 25.
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Thanks for identifying Project 2025. I applied to come out of semi-retirement. When asked what public policy issue I wanted to work on, I said entitlement reform – making Social Security and Medicare sustainable.
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Project 2025 has some batshit crazy stuff, like weaponizing the DOJ to go after political opponents and using the military for domestic enforcement. They should rename it the New Reichstag Enabling Act to better reflect the intent.
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Well, agree with you there. So, if the two idiots who are leading their respective parties today continue and each gets the nomination, it looks like this will be the third straight election where I not only don’t have anyone to vote for, I also can’t vote for one as a protest vote against the other – because that would mean voting for one of the two a**holes. In 2016, I couldn’t vote for either Trump or Clinton, both worse than crap, and couldn’t lodge a protest vote against either one. In 2020, same, couldn’t vote for either Trump or Biden and couldn’t live with myself if I had submitted a protest vote. And, looks like 2024 will be a repeat.
Let’s go Haley. Let’s go Phillips.
However, I do have to suggest that almost all of the US institutions that gave us this unprecedented prosperity have always resided outside the beltway, and that the prosperity they created for us was, in large part, in spite of the beltway idiots.
So, if I understand project 2025, it is all about replacing the beltway idiots with people who don’t believe in the dominating federal government that gave us $34 Trillion in national debt – so, it is a small sacrifice on my part to get one more beltway idiot … out.
Take care,
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Thanks for your response Jack. I don’t really understand your logic there, as Project 2025 is 100 percent associated with Trump and MAGA. And that is the administration that ran our deficit up the most. It reminds of a really good article I read today about how many people, despite having good lives and benefitting the American institutions that gave them this prosperity, just want to blow it all up anyway, sort of a strange nihilism. Here is the link for the article. https://www.theatlantic.com/ideas/archive/2024/02/need-for-chaos-politicsl-science-concept/677536/
You sort of remind me of the retired military fellow from New Hampshire in the article.
“In a much-shared Politico feature from January, the reporter Michael Kruse profiled a 58-year-old New Hampshire voter named Ted Johnson, who voted for Barack Obama in 2008 and 2012, then for Donald Trump in 2016 and 2020. Johnson explained his pivot only with vague, destructive allegories. “Our system needs to be broken,” Johnson said. And only Trump, whom he acknowledged as “a chaos creator,” could deliver the crushing blow. Johnson reportedly works out of his three-bedroom house, which he bought in 2020 for $485,000 and which has appreciated almost 50 percent during Joe Biden’s presidency. He has a job, a family, and, clearly, a formidable financial portfolio. Still, he said he hopes that Trump “breaks the system” to create “a miserable four years for everybody.” We cannot fix the problems in our social institutions; we need to tear them down and start over”
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I won’t be voting for Trump or Biden or Clinton – ever. However, whoever is elected will be my president, and yours too!
The only thing I may have in common with the dude from New Hampshire is my military service – I didn’t vote for Obama nor Trump, and never would, and I don’t share any of his views.
So, again, I have no interest leaving the status quo beltway idiots in place – the fools who are adding $2+ Trillion a year to our national debt.
And, when Project 25 finds out I’m not MAGA, or if Biden wins and his Project 81 finds out I’m not WOKE, I won’t get hired, anyway.
But, I remain willing to return to the beltway (I served in the Pentagon 1972 – 1973). If I do, I’ll do my best for my country (and for you, too).
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Like you, I served in the military also and share the same value of keeping our institutions like the military and civil service apolitical. That is why I oppose Project 2025 so vehemently. I also don’t share woke ideology either. I believe in horseshoe theory, that the dangerous ones are at the extremes and often believe the same things, like how both the far left and far right support cancel culture and would rather burn things down than fix them. The fact that the far left has turned against Biden for being too centrist is a positive sign for me. Only one party has a plan to address the deficit, so I will vote Democrat. The recent turn of the Republican Party to support Putin and China just further cements that choice for me. Democracy is often about selecting
the cleanest shirt left in the dirty clothes hamper. lol
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Appreciate your thoughts.
However, I’ve been a civilian in the federal government, and, I can confirm to you that civil service is anything but apolitical. Those people depend on ever increasing government intrusion for their jobs and careers. Same is true in many states – take a look at Illinois, California, etc. where politicians regularly buy votes of public employee union members.
And, for the federal government, it is a revolving door between Congress, the Administration and K street.
We now have an administrative state that has grown into the fourth branch of government, and we can only hope the Supremes take the current case / opportunity (https://en.wikipedia.org/wiki/Loper_Bright_Enterprises_v._Raimondo) to rid us of Steven’s Chevron Deference and force Congress to do a better job whenever they legislate.
And, it was only until recently that the military was mostly apolitical. Politics in the military ranks was the rare exception in my day and that was during the Vietnam conflict. Today, I have a nephew still serving where his father keeps the family abreast of all the stupidity underway – so much which is not focused on readiness.
The Democrats plan is working. Taxes have increased from about $2 Trillion a year at the turn of the century to $5+ Trillion a year. Unfortunately, the other pat of their plan is increased spending, which has also increased from $2 Trillion a year now to $7 Trillion a year.
That’s the topic here, how to stop deficit spending, the path we are on, where we are headed.
And, as I regularly note, the republicans, President George W Bush adding Medicare Part D with no added funding, Trump, continuing the spending policies of Obama, not much there either.
Again, go Haley! Go Phillips!
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No, there is a third, and it is the most likely option, monetizing the debt – inflating it away. Just print more electronic paper.
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and there is a fourth option, increasing legal immigration to both fix the demographic crisis which threatens medicare and social security, as well as increase our tax base. This is the easiest way.
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No. We don’t have any shortage of workers, just a shortage of people who are willing to give up the dole (citizens, legal residents, and illegal aliens) and start or return to the workplace.
We’ve got illegal immigrant Venezuelans who are perfectly physically capable of work beating up cops, killing people in NYC hotels, carjacking in Arizona and stabbing folks there as well. But the Beltway idiots in charge actually gave a half a million of them permits to work in America. See: https://www.cbsnews.com/news/venezuelan-migrants-thousands-legal-status-work-permits-u-s/
I don’t see them heading off to work everyday – do you?
Do you think there might be a mismatch of skills and positions?
Do you think there might be a language barrier?
Do you think there could be a motivational issue?
I expect many of those Venezuelan teens and young adults expect something different – given their lifelong experience in a socialist society.
That 10 MM (now 11+MM) illegal border crossers, plus another 1.7 – 2 MM known gotaways, sounds like a number approaching 13 million – how many of them are working?
Give me a break.
I am all for an increase in legal immigration. Let’s be selective. Let’s admit people with skills we need. Let’s require everyone be sponsored by a citizen. Let’s require everyone have secured employment before admission. That would be a return to the policies of the early 1920’s when my maternal grandmother and my mom ( a baby of 7 months) came to America, got off the boat at Ellis Island.
And, if we somehow got a whole bunch of immigrants, it might solve the short term funding issue but, the deficit/funding gap would be even greater in about 20 – 25 or so years – in the 2nd half of the 21st Century.
However, neither Trump nor Biden is willing to make those changes and re-implement that disciplined process. The Medicare trust fund assets will be exhausted in less than 5 years, and we are already running $2+ Trillion in annual deficits – part of which is being used to fund Medicare Part B and Part T. Social security trust fund depletion is 8 – 10 years off.
A significant change in immigration policy isn’t likely anytime soon (these guys can’t agree on anything). So, increasing legal immigration isn’t likely to be a viable option for solving the gap in entitlement funding. Doesn’t do much for addressing the 20+ million illegals either (you get that number when you add the most recent batch to those who were already here).
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No one cares where we’re going. Until we get there. Then they’ll care!
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What would you like to cut? That’s clever. You know that every one of these items is a sacred cow to a particular group who will defend it vigorously.
The common refrain is, “we must raise taxes, we can afford it, and the reason we are where we are is because of the last tax cut that benefited the rich”.
I don’t have any answers to that level of thinking.
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No matter how much money you give these folks they will spend it and more–nothing will satisfy them just like folks you want benefits and someone else to pay for them–the more you tax the less you get as evidenced by the the blue states that tax the heck out of folks (income, sales, gas, excise, fees, etc.) and see people move to Florida–AZ–Nevada–Texas and other locales.
Who can be concerned about the deficit when the folks in power pass on billions in student debt to an already bloated deficit?
We need to make some adjustments to get our fair share from those who had an “effective rate” of nothing although the IRS has a form you fill in and send the government a check for all the services it provides folks. The lefties in MA were complaining about that decades ago and when given the opportunity to pay more about 10 people sent along a check. Per usual big hat no cattle. Think: sanctuary/city-state–NOT US!!
Low taxes=economic growth–like right now.
Let’s cut each federal agency by 1% across the board. After all the screaming and yelling the deficit would probably decline.
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So you want to lower taxes even more and increase the deficit? Why not just eliminate taxes entirely then and run the government completely from debt?
With its high property taxes, in many cases Texas has a higher effective tax rate than California. For the most part, I don’t buy into all the Blue State – Red State rhetoric, as each state is unique and we are all Americans. But to be fair, most of the migration from blue states to red states is based on NIMBY housing laws rather than income tax rates. And many of the people moving to red states are moving to blue cities in those states, like Nashville and Austin.
And also, there are many people moving back to blue states because they miss the higher quality of life and public services, not to mention that they don’t have to worry about not being to get IVF treatment or being able to get proper treatment for a miscarriage.
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Our taxes are a historic low. American wealth is at an all time high. There is plenty of scope to raise the tax rate with minimal effects on most Americans. I literally just did my taxes and my effective income tax was zero this past year.
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Not sure about the term “effective tax”. My federal effective tax “rate” was about ten percent of AGI. California state income tax was a joke. About two hundred dollars and change.
I should pay more, IMHO, and most of those above me on the income scale. But I don’t think deficit spending is our biggest problem today, or may be just a symptom of the bigger problem.
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I agree with you, as much as I would like to reduce the deficit, I am much more concerned in the short term about the potential election of an authoritarian nihilist who wants to destroy all the US institutions that gave us this unprecedented prosperity.
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