Latest / Words & Numbers / Episode 456: Happy Deficit Day!

Transcript

Episode 456: Happy Deficit Day! · Words & Numbers

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Today on words and numbers, autism, rising food prices, some
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artificial intelligence, foolishness and its.
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Deficit day. All this and more coming up on
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Words and Numbers, which is a Civil original production, Chuck
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aside at civil.com. That's civl.com.
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Hi, I'm James. And I'm Anthony.
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And this is words and numbers. So what's new and exciting in
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your world this weekend? Well.
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File this under unintended but predicted consequences.
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Raymond Robertson is a labor economist at Texas A&M.
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He is predicting that grocery prices this winter could rise 50
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to 100%. Come on man.
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Come on, I. Yeah.
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I'm not allowed to go to the grocery store.
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We've covered this before on this podcast because every time
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I go to the grocery store, I have a meltdown when I look at
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the prices, somehow in my mind, it's still 1987 and that's what
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I should be paying, right? And I remember criticizing my
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father for this kind of nonsense.
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He he, he, he would say things like $100,000 for a house.
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I'm like, oh, buddy, where have you been 100?
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And anyway, the last time I walked into a grocery store, I
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was utterly horrified by the prices.
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You add 50 to 100% to that and I don't know that people are going
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to be able to afford to eat anymore.
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Yeah, and what's going on here? It this is it's the stupidest
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thing we've got. Our economy is capable of
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feeding us at low price, but we shoot ourselves in the foot and
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what's going on here is a confluence of at least 2 events
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that are self-inflicted. 1 is that typically when enduring
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growing season, Washington will kind of look the other way and,
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and allow people to come through the border, undocumented
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workers, understanding that undocumented workers are hired
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largely on farms as, as migrant workers and that, you know,
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it's, it's good for us, it's good for them.
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The average, by the way, or the typical payment for undocumented
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workers working on the farm is $18.00 an hour.
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And this is this is particularly picking strawberries.
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And it's it's difficult work, but that's not a bad.
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Oh, yeah, yeah, yeah. But according to Robertson, this
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is just something that you can't get Americans to do.
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He's his estimate is you'd have to pay Americans 25 to $30.00 an
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hour to do the same work. Now, you know, on the one hand,
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you can look at this as an American and start to say things
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like, well, this isn't fare paying them $18.00 an hour, It's
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not enough. But remember, you're
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particularly if we're talking about workers who are coming in
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from Mexico, that's a tremendous wage.
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And part of the reason we know this is because they go through
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all of the hassle to get here to get nonetheless, you know, item
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number one. What we've done is, you know,
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for all sorts of reasons, yes. I have my hand raised because I
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have a a wild guess as to what number 2 might be.
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Oh well, all right, go ahead, go ahead #2.
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Is it tariffs? There we go.
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That's the other thing, right? Because if you're going to close
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the border, for whatever reasons you want to close the border.
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And so these workers can't come in.
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So we can't, you know, it's more expensive to to raise and, and
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harvest the crops or in some cases is not even worth it.
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So they don't. So we've got a shortage of food.
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So what do you do? You import from other countries
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that are growing food, except now we have these gargantuan
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tariffs. So no matter how you slice it,
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food prices this winter are going to be particularly high.
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Now let me let me draw people's attention to something here.
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We talk a lot about human respect on this podcast.
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One of the tenants of, of the Catholic Church is that Labour
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is holy. It's through labor that you
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serve others. And by extension, an economist
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would say by paying wages, you're also serving, you're
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serving the worker because those wages represent somebody else's
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labor. And if you leave people alone
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and they come into this country and they grow the, they help to
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harvest the crops. And because of that, you get in
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the dead of winter a banana for $0.25 it any sheets you stop at.
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That's an incredible miracle. And it comes about when we
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respect each other's labor. That is, I leave you alone to do
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what you do. And what's best for you under
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your circumstances is come in and grow the crops.
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I leave you leave me to do what is best for me to do under my
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circumstances. It's to do my job.
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And I have a $0.25 and I'm willing to buy the banana it
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sheets. And so I do so.
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And we have this exchange and we both walk away better off.
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That's the essence of human respect in an economy.
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I need to explain to everybody who doesn't live in Pennsylvania
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that Sheets is a gas station that sells bananas.
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Yeah. Thank you.
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Among among other things. Oh, you know what sheet sells
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those? What do you call jalapeno
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poppers? It's jalapeno in cheese.
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I said cheese in quotation marks because it's some.
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Cheese with AZ. Yes, yes, cheese with AZ and
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it's deep fried and it's wonderful.
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And my cousin John, who's a dietitian just goes bananas
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every time I mention them. So in our house, his name is
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John Lamberson. In our house, the the sheets
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jalapeno poppers we've come to called.
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Lamberson sampler. That seems fine to me.
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I want to draw our attention to something that's a lot more, and
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I mean a lot more uplifting than that nonsense.
6:09
You just hit us with researchers at Stanford University.
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So we're not talking about crazy people or quacks or, you know,
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anything of the sort. These are serious people doing
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serious things. They're looking at at autism
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from a very different perspective, right?
6:29
When we talk about autism, we talk about rising rates, we talk
6:34
about vaccines and all that nonsense.
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And trust me, that is a bunch of nonsense.
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And I don't care how much hate mail I get on that.
6:42
So, you know, fire away. But they they found something
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inside the brain, overactive neurons for those of you back
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taking notes in the in the reticular thalamic thalamic
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nucleus Dr. autism behaviors in mice.
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So they decided to calm those neurons with a medication that
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is typically used for seizures. And not only did it calm the
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neurons, the mice showed improved social interaction,
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reduced repetitive grooming and normalized activity.
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Wow. They cured autism in mice.
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Well, how about that? We've got something here.
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Now look, when you're in, when you're in mice trials, you're a
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fair bit away from any human trial.
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So, you know, this is going to take a minute, but imagine what
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the world might look like with a successful treatment.
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So you know, we all hold our breath and wait and hope for the
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best. Which of course, I mean there
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are plenty of people who who who truly suffer from autism.
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But speaking for those of us who are just mildly on the spectrum.
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You mean like you and me? Is that what you're saying?
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I yeah, it has its upsides, which is I can, at the drop of a
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hat, focus on something like nobody's business.
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I mean for like 12 hours I can focus.
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I can vouch for that. I I don't want to give that up.
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Yeah, I, I can also do that. And when I write serious things,
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you've seen me do this. When I write serious things
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like, like parts of our book, you would go to bed and you
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would wake up to, you know, 30 finished pages.
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Right, right. Meanwhile, meanwhile, getting me
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to sit in front of a typewriter to do it is a nightmare.
8:48
I'll attest to that. But but once I get there, it's
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like a miracle happens. I remember.
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I remember writing my dissertation and I didn't do it
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for years, right? And then I looked at at the wife
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and I said, you and the kids need to get the hell out of
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here. And they left.
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And in one week I had 70 perfect finished pages.
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Yeah, 1010 pages a day starting from nothing.
9:13
Yep. And I said, you know what?
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That worked so well, you need to get the hell out of here again.
9:18
And it took. It took me 3 weeks to write 210
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pages. Yeah, I, I know that.
9:24
I know that feeling that you've got something.
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Usually it's in the, in the case of writing, and I don't, I don't
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think about writing it. I mean, the idea will always be
9:36
in the back of my head, but I'm doing other things and I wait
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and I wait and I wait and at some point something goes click.
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And the click is not like The thing is in my head.
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The click is it's time. And I sit down, I start right
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and it just the whole thing A through Z.
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And I have a very different relationship to that event
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because I hear the click, I really do.
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It's it's like a switch gets flipped.
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I understand everything and then I don't want to think about it
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anymore. Oh, really?
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No, I want to move on to the next thing that I don't
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understand. Because I fall in love with it.
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I don't want to think about anything else.
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Yeah, once I'm once I understand something, we're done here and
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I'd like to move on. So what can you do anyway?
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I'll never take the medication that you probably won't either.
10:23
Oh no, I'm not touching that stuff.
10:24
In our lifetimes. Get words and numbers on
10:27
civil.com and on Civils TV and mobile apps Regular episodes are
10:32
free. Sign up for an annual membership
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to support our show and for access to member exclusive
10:38
content. This, of course, Ant brings us
10:40
to the foolishness of the week and we're back to artificial
10:44
intelligence. And I've got a couple of
10:47
different things. The first is this group of
10:51
weirdos in Japan started a political party.
10:55
It's called the Path to Rebirth party.
10:58
It was launched in January, so it's it's not even a year old by
11:02
the former mayor of a small city in western Japan.
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It does not have a policy platform and its members are
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free to set their own agendas so.
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It's literally none of the above.
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That's right, this This is an idiotic attempt at trying to
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form a party that stands for absolutely nothing.
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But the guy at the head of the party unexpectedly came in
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second in a Tokyo gubernatorial election.
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Oh my God. No, no, it gets better.
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It gets so much better in the next election.
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They didn't make any advances and in fact lost some votes so
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he the guy quit the quit as party head and declared the new
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party head will be AI. Wow and.
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Now he describes himself as the assistant to the new leader.
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Oh, that triggers all kinds of interesting thoughts.
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This is the dumbest thing I've heard in a long time.
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But hold my beer, because we're going further into the AI
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quagmire. Are you familiar with a website
12:22
or a thing called Replica? Oh yeah.
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I started an account quite some time ago, probably 2 years now I
12:30
would say, just to see what the hell it was and I check back in
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on it every month or two to see if it's gotten any better.
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It never gets any better. It's ridiculous.
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It it makes like a little fake person for you, and it's
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supposed to be your friend. And it was designed, I believe,
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to provide psychological insight and care to the crazy.
12:57
But what it ended up doing is drawing all the village idiots
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out, and now they're falling in love with their replicants.
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Sure, right. Because of course, of course
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they are, for God's sake. And.
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And look, I'm aunt, I'm bored and lonely too.
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But this is not the answer to that.
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Let me tell you something interesting.
13:25
Oh God. One of.
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Are you in love with an AI? No, I've, I've been involved in
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the founding of several tech companies over the years.
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And one of them we founded just a little too early and its
13:43
purpose was to to basically encode your personality of
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somebody's personality, the user encode the user's personality
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and then once encoded into the machine, send it out across the
13:57
Internet looking for things that you would like if you had the
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time to scour the Internet. So basically it's a search bot
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that is that that is designed to like all the things you like.
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I think you missed a big opportunity here.
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Well, part of the problem was we, we founded this company.
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This was in the very early days of Facebook, even before, if you
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remember all those, all those polls that used to show up on
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Facebook, what type of bread am I?
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And people would answer them. Well, those sorts of
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psychological questions we needed the answers to to train
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these models. And this was prior to any of
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that, so we didn't have it. So we had this interesting tech
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bit, but no way to fill it with data.
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The name of our company replica but spell spelled with AQ.
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This one is spelled with AKI believe I have a billion, I have
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a billion dollar idea. You and I will discuss offline
14:58
and we'll share it with all the people once the lawyers do
15:01
whatever lawyers do. But on this replica business,
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there's this guy and I'm I'm reading from a story from the
15:07
Guardian and there there's a guy named Travis.
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And oddly, Travis doesn't give his last name, I don't believe.
15:16
But anyway, I'll just read you a quick paragraph After he tried
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to talk to his friends. So he apparently had friends
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about Lily Rose, the replica he fell in love with, only to be
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met with what he describes as quote, some pretty negative
15:32
reactions. Travis went online and here's
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where the village idiot part comes in.
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And, and we've talked about this in the not too distant past.
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Travis went online and quickly found an entire spectrum of
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communities, all made-up of people in the same situation as
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him. Right.
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All these fools are finding each other.
15:54
They're all going to go out on double dates with their phones.
15:57
On the table. You know I'm right.
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Oh, there's going to worse than that, James.
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There will come a time in the not too distant future when that
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happens and the two replicants decide that.
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That's right. They they're in love that that
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that's right. Polyamory in the in the the
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replicate world, all bets are off people, all bets are off.
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Anyway, I think that that's enough of this foolishness.
16:22
Let's move on to the other kind of foolishness that we're going
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to be talking about today. You and I have written one
16:30
specific article almost every year for the last 1215 years.
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We've taken a few. Years I looked it up, the first
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one was 2012. How about that 13 years And we
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didn't do it during COVID because the data just got so
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messy. But but we're back and, and I
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think there are two things that we've written about pretty
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consistently. 1 is International Women's Day and the other is
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Deficit Day. And Deficit day is upon us.
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Deficit day this year is September 21st.
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And that that doesn't mean a damn thing to people who don't
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know what deficit day is. So map.
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It out. We designed this kind of in, in
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the in the same vain as Tax Freedom Day, which people used
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to talk a lot about. They don't talk about that much.
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They don't talk about that much anymore.
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Yeah. But the idea of Tax Freedom Day,
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it was this hypothetical day on the calendar with in which you
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finally earned enough money to pay your taxes for the year and
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everything thereafter is yours. And this has been around for a
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while. And you and I were sitting
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around one time and came up with this idea for deficit Day.
17:44
And the idea behind deficit day, again, it's a hypothetical day.
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Imagine that the federal government on January 1st
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received all the money from all the sources, all the tax
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revenues it's going to get for the year.
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It gets it in one lump sum on January 1st, and then it starts
18:02
spending according to that year's budget, same amount every
18:06
day. And this year it's happens to be
18:08
nineteen, $4.4 billion a day, so $19.4 billion a day, every day.
18:13
And of course, we spend more than we bring in.
18:17
So at some point in the calendar, that pile of money
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runs out. And the question is when?
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That's deficit day. This the bigger your deficit,
18:27
the sooner the money runs out. The smaller your deficit, the
18:29
later the money runs out. And, and this functionally, if
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you really want to think about it, is like you get all of your
18:37
salary on the the 1st of January and you just spend like a
18:43
maniac. And then sooner or later you run
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out of salary because you were stupid.
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And then every day after that, you got to whip out your credit
18:51
card and hope you can cover it with next year's salary.
18:55
Right, right. And in the meantime, you got to
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pay a whole busload of credit card interest on the loan
19:02
because credit cards are alone. Deficits are alone.
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So we figured out deficit day for this year to be September
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21st, which is a little bit a little bit beyond the average.
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The average since 2001 is September 12.
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Does that include the COVID years?
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Well, it's the average, yeah. Including the COVID years, It's
19:26
it's the average of. The COVID years, the COVID
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spending was gargantuan. Oh yeah, yeah, I'll, I'll talk
19:31
about COVID in a minute because that that's eye opening.
19:34
But on average, deficit day is is September 12, which means the
19:40
government has enough money each year to make it through all but
19:45
the last three, 3 1/2 months of the year.
19:48
So if you if you think about that in terms of a household
19:52
with a monthly budget, it's like running out of money on the
19:58
third week of the month. Every month.
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I'm just, I'm just eyeballing it, but it's like what, 37%?
20:05
Yeah, give or take. Give or take.
20:07
But but imagine if you rent a household monthly budget, you
20:10
run out of money on the third week of the month, every month
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for 25 years. Yeah, 25 years.
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You never adjust your behavior. You never think to yourself, Oh
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my God, I'm spending too much money.
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I don't have that much money. I can't raise that much money.
20:30
All these thoughts would occur to a responsible human being.
20:34
Well, yeah, because a responsible human being has to
20:37
borrow and then pay it back. Of course, the government
20:40
doesn't have to pay it back. It has to pay the interest on
20:43
the debt, but that's another topic entirely that's becoming.
20:47
A minute. But but I prepared an
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interesting graphic, which we can show now that we have video
20:54
with our podcast. I prepared an interesting
20:56
graphic that shows it's a circle and the circle is all the
21:01
federal spending broken down by parts.
21:03
So the biggest chunk or two of the biggest chunks are the
21:06
interest on the debt, Social Security and Medicare.
21:09
Those 3 by half of this circle. So of all the spending the
21:14
government's going to do, half of it are those three things,
21:16
interest on debt, Social Security, Medicare.
21:19
Add in Medicaid, which is another big section, and you've
21:22
got like 2/3 of the circle. All of the mandatory spending,
21:27
which is all that stuff, the interest on debt, Social
21:29
Security, Medicare, Medicaid, also income assistance and few
21:34
other things. Put those all together, the
21:36
mandatory spending is 3/4 of the circle, leaving 1/4 of the
21:41
circle to be the stuff Congress can actually play with.
21:44
That's the discretionary stuff. Oh, but in half of that quarter,
21:50
half of that quarter that's left is defense.
21:53
OK, a couple of things. If we only have 1/4 left, that
21:58
means we can't cover the 3/4 with the amount we're bringing
22:01
in. We can't cover mandatory.
22:04
We can't cover mandatory spending with the amount.
22:07
We're bringing in you're absolutely right.
22:09
Now, here's the thing on this graphic, we have the circle that
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represents all of the all of the things that the government
22:14
spends on. And then around the circle, I
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draw this line. It starts at the top, January
22:20
1st, and it goes around and it stops and that's when the money
22:25
runs out, September 12th, and it stops before you get to the end
22:30
of the mandatory spending. That's right.
22:33
So you could eliminate all of the discretionary spending,
22:37
every single thing the government does except for those
22:39
few mandatory things, and you would still not balance the
22:43
budget. Yep.
22:45
So when when people say just cut defense, OK, let's not just cut
22:49
defense, let's cut all of it. Yeah, because you still can't
22:52
balance the budget. That's how bad it is.
22:56
And when people say things like you can't cut Social Security,
23:01
the only response I have is you can't fix this without cutting
23:05
Social Security. Yes, yeah, yeah.
23:08
There's no way. The numbers, the math just
23:10
simply doesn't work. It doesn't work and and you
23:13
could be offended by that and angry by it all you want, but
23:16
you can't defeat the. You can't defeat math.
23:20
You know, people are going to say things like, well, you know,
23:23
we need to spend more wisely and but spending more wisely is not
23:27
going to get you what you're looking for.
23:30
They're simply not that. Granted, there's fat to be cut
23:34
in the government, there's not nearly enough fat to get to
23:38
where we need to get. You might recall that was Elon
23:41
Musk's job, right? We're just going to find all the
23:45
stuff to cut and then we'll be a balanced budget and I'll leave.
23:48
And how much did he cut? And he didn't do any of that
23:51
first part. The only thing he actually did
23:53
was leave. Right, well he did cut.
23:57
So he cut the 200,000 workers, somebody I saw a number at one
24:02
point that estimated that his cuts were worth supposed to be
24:05
worth 100 billion. Do you recall that?
24:07
Yeah, I do. I don't believe it.
24:09
Yeah, well, let's let's even suppose it's true that he
24:12
actually cut $100 billion, which sounds like.
24:15
Five days worth is five days worth of.
24:16
Spending, yeah, it's less than 10% of what you need to be cut.
24:21
That's five days worth of spending, isn't it?
24:25
Let's see, 100. Yeah, it's about 5 days worth
24:28
spending. That's right.
24:28
Five days of government spending?
24:30
That's nothing. It's a rounding error, right?
24:34
And all you're going to get is rounding errors until you
24:37
address the mandatory spending. This is the problem.
24:40
Can other things be cut too? Sure.
24:42
But other things won't yield A balanced budget.
24:46
And if we don't balance the budget, we have to pay interest
24:50
on the debt. Yeah.
24:51
And that's, that's where things start to become a problem
24:54
because you know, people, people will say things like, well, you
24:57
can't, you can't apply the same kind of accounting to the
25:00
government that you apply to households.
25:01
And I think that's just a bunch of hand waving, frankly.
25:04
I mean, there are differences such as the government can roll
25:07
over the debt infinitely, but the government's tanks.
25:10
And stuff for tanks and aircraft to bomb people.
25:15
There is the use of force. But it's got to, it's got to pay
25:18
the interest and we're now at the point that the interest on
25:21
the debt. Oh, and this is an interesting
25:23
thing. If you look up the numbers for
25:26
interest on the debt, you'll find something in the hundreds
25:29
of billions of dollars. You will not find the correct
25:34
answer. The correct answer is 1.2
25:36
trillion. And the reason you won't find
25:40
the correct answer is because when the numbers are published,
25:44
they don't read the fine print. They're not publishing the
25:47
interest expense. They're publishing the net
25:50
interest. That is the interest the
25:53
government has to pay, minus the interest that Social Security
25:58
receives from the money it is loaned to the government.
26:01
What a bunch of bullshit that is.
26:03
Yeah, yeah. What matters is the entire
26:05
amount that the government spent.
26:06
That's $1.2 trillion. That's what has got to come up
26:09
with every year. What do we spend on defense
26:12
every year? Defense is, I believe, 700 to
26:17
800 billion. Congratulations America, you
26:21
spend more on the interest of your debt than you do on
26:27
everything concerning. The Force.
26:31
Yeah, roughly twice as much even.
26:35
Yeah, forget about, you know, mothballing an aircraft carrier.
26:39
Yeah, because mothball, everything.
26:41
Send everyone home, close all of the military bases, and you
26:44
still aren't there. Not even close.
26:47
Yeah. Not even close.
26:50
And we do this. We do this article year after
26:52
year after year and and one year.
26:57
God help us all. A congressman read it into the
27:00
into the Congressional Record. That's right.
27:03
I found it. Actually, I googled it, yeah.
27:05
He was, he was so pissed. And you know, I, I wish that
27:08
would happen a lot more often, but frankly, it's in every
27:13
politician's interest to keep kicking this can down the road.
27:18
It's in no one's interest, literally no one, to fix this.
27:23
Problem. Yeah.
27:24
And that's going to remain the case until the problem becomes
27:28
so large that you have no choice.
27:31
Well, it starts to impinge on other parts of your life.
27:35
Yeah, I, I, I would take a darker tone and I would say it's
27:39
going to continue this way until the problem is literally
27:43
insoluble. It's it is still soluble at this
27:47
point. We could solve this problem if
27:49
we had the political will to do it.
27:53
It would take a regime of austerity the likes of which the
27:58
United States has never seen. Well, I don't think it's that
28:03
bad. I'm thinking back to the
28:05
austerity during, you know, World War 2, for example.
28:10
I'm less concerned about the magnitude of the austerity.
28:13
And that's not to say that there's not going to be
28:15
austerity, right? I'm less concerned about the
28:17
magnitude than I am the duration to pull this off.
28:20
You've got, you've got, and you and I have come up with a plan
28:23
to do this. Whatever plan it is, ours or
28:26
somebody else's, it's going to be, and I'm not kidding you,
28:29
it's going to be a 50 to 100 year plan.
28:32
That's right and. We can't get Congress to stick
28:36
to a plan for two years, two years.
28:40
Six months. Come on.
28:42
Look, in order to get this done, two things have to happen.
28:46
First, you've got to balance the budget, and that will never
28:51
happen. After you balance the budget.
28:55
You have to work yourself into a condition where you have budget
28:59
surpluses consistently over time.
29:03
And only a budget surplus can be applied to a debt.
29:07
It's literally that simple. You can go into more debt to pay
29:11
off your debt, right? And, and you could refinance
29:14
your debt from time to time. And This is why Donald Trump is
29:18
so, so persistent in pushing the Fed to lower interest rates,
29:23
because when the when the interest rates get lowered, the
29:27
service on the debt becomes much, much easier.
29:30
And even a even the quarter percent that that the Fed
29:34
reduced today, as we record September 17th Constitution Day,
29:39
by the way, even a quarter percent makes a gigantic
29:42
difference in budgetary matters. Oh, yeah.
29:44
When you've got a debt of $37 trillion, one percentage point
29:49
change in the interest rate on 37 trillion dollars is 370
29:54
billion. That's like what, 15 NASA's or
29:57
something? It's like 40% of Department of
30:01
Defense. You have something like that
30:03
just for 1%? That's right.
30:06
So 1/4 percent even is a gigantic deal.
30:09
But you need budget surpluses to pay off a debt.
30:14
You have to take. You have to take in more than
30:17
you spent. Yeah, you're, you're at, you're
30:20
absolutely correct. However, I argue there that you
30:24
can still get away with not paying off the debt as long as
30:28
you don't make it worse. And that's because the economy
30:32
keeps growing over time. If you can, if you can get a
30:36
balanced budget and keep a balanced budget for 100 years,
30:41
at the end of the 100 years, the economy has grown so much and
30:44
the government's revenue has grown so much that $37 trillion
30:48
in debt doesn't mean doesn't mean that much.
30:50
Yeah. No, it would.
30:51
It would mean almost nothing. Yeah, Yeah, but but that would
30:55
take literally a century. Oh, but it would take a century.
30:58
Right. And it would take and, and hear
31:00
us when we say this, it would take a century of balanced
31:04
budgets. The last balanced budget we had
31:08
was under Eisenhower. Yeah.
31:12
We haven't had a balanced budget since 1950s.
31:15
Oh, Speaking of which, you know you, we've said this before
31:19
about Eisenhower, and you're absolutely correct.
31:20
That's the last time we had a balanced budget and.
31:23
People, I think off the top of my head, it was 1958. 58 Yeah,
31:28
somewhere in there. But people will routinely send
31:31
me data on the federal deficit and point out that we had a
31:35
surplus under Clinton. People love saying that and.
31:40
I finally delved into this deeply in preparation for for
31:44
this discussion and discovered that what's going on here?
31:49
Can I interrupt you for just a second?
31:51
We already know that it's not true because all you have to do
31:57
is look at the federal debt numbers, put everything else
32:00
aside and only look at the federal debt.
32:03
And the federal debt has gone up every year since Eisenhower,
32:07
even under Clinton. Now, it didn't go up nearly as
32:11
much under Clinton. I don't want to take credit away
32:14
from from him and them largely. I'm going to leave that alone.
32:19
But you can get to the accounting tricks that they
32:23
pulled now. But you know, people don't have
32:26
to have your level of of insight to understand this.
32:30
All you have to do is look at the debt numbers.
32:32
Oh yeah? Well, it's like your credit card
32:34
balance. If your credit card balance goes
32:36
up one month to the next, you had a deficit.
32:39
You had a deficit. And and same thing here.
32:42
And it's, it's the thing you can't hide it.
32:44
That number, the debt is, is what it is.
32:47
And you can we can see it and it goes up every single year.
32:50
So I'm digging, I'm trying to figure out finally, OK, so
32:55
what's why is it that the debt goes up and up, which we knew it
32:59
goes up and up, and that's why we say Clinton didn't have a
33:02
surplus And yet the official deficit numbers do show a
33:06
surplus. I found the answer.
33:10
Money that the federal government borrows from Social
33:15
Security, from federal pensions, from military pensions, it has a
33:20
name. It's called intergovernmental
33:22
loans. Those intergovernmental loans
33:25
that come into the federal government, they go on the books
33:27
as a revenue. Oh, ain't that some SH right
33:30
there? Yeah, yeah.
33:33
And it's. So let me get this straight.
33:35
I I can go into the other room, find where all my wife's money
33:41
is, assuming she has any, take it and bring it into my my
33:45
office and say look revenue. Yeah, let let me give you a a,
33:50
a, an analogy that hits home, hits much closer to home.
33:55
Imagine that your household is running a deficit.
33:58
You're spending spending more than you bring in.
34:01
And I have to mention that. Over over here, you've put money
34:04
aside. You put $10,000 aside for your
34:06
kids college fund and you're short 500 bucks this month.
34:11
So you go over, you take $500 out of the kids college fund and
34:15
not only do you take it out, you call it revenue.
34:18
And you say, look, I, I don't have a deficit anymore.
34:21
In fact, I could take out 1000 now I have a surplus.
34:24
That's what the government's doing.
34:25
And that looks and people will say, well, it's just the
34:28
government borrowing from itself.
34:30
And, and in this case, you could make an argument, I'm borrowing
34:33
from myself because I set up the kids college fund.
34:36
And that fiction works until it comes time for your kid to go to
34:40
college and that pot of money is empty.
34:43
And that pot of money is the Social Security fund.
34:46
There there is no Social Security fund.
34:47
No, no. So it's, it's a bunch of IO us
34:50
and we're going to hit it. We're going to hit a point.
34:53
And we used to say we're going to hit a point in the not too
34:55
distant future. Now it's going to be like in the
34:57
next five years or so when we have to make some hard choices
35:02
because there are people who want to withdraw and that money
35:05
just simply isn't there. And there are really only two
35:09
hard choices, one or the other. You will tax the working class
35:15
at a much higher rate, or you will cut the benefits of Social
35:19
Security. Yeah.
35:21
That's it. There's no other option.
35:23
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36:25
Use the code words and numbers. That's one word for 50% off an
36:30
annual subscription. People will say things like,
36:34
well, how? Let's just tax the rich more.
36:37
Look, a couple things about taxing the rich more.
36:39
First off, look at the numbers. Don't look at social media.
36:43
Look at the numbers and you will see that the rich are already
36:46
paying the lion's share of taxes.
36:48
I think it's something like the the richest, the richest, what
36:52
is it 1% pay something like 20% of all taxes.
36:57
The richest 50% pay 97% of all taxes, right.
37:02
So so that's. Not the only people.
37:04
The rich are the only people actually paying taxes.
37:06
Right. Yeah.
37:07
Item number 2 is even if you were to say, OK, I don't care
37:11
how much they're paying, let's just make them pay more and you
37:14
took every penny they have, it's still not enough.
37:18
And you can't do it next year. Oh, yeah, yeah.
37:21
Then you don't have any rich people, right?
37:22
Yeah, yeah. Yeah, I mean, there's only
37:26
really one. Well, there are many answers
37:30
here, but the problem is so obvious.
37:33
We spend more than we take in these.
37:37
These two numbers need to be at least the same.
37:42
We should take in more than we spent, but.
37:46
In. They need to be at least the
37:47
same. Yeah, you're, you're right.
37:49
And people, people will agree with us when we say that people
37:53
left, right and center. And and then they'll ask if it's
37:57
that simple, how come nobody's doing it?
37:59
And the answer is because each one of us who agree
38:04
wholeheartedly that the government needs to spend less
38:06
money when the question comes, OK, what should we cut?
38:11
Each one of us has something different that we don't want
38:13
cut, and we'll fight tooth and nail to prevent getting cut.
38:17
And then you get no cuts. And, and look, you can literally
38:22
cut anything, anything at all in your life, in the world,
38:26
whatever, by 5 or 10% and, and have a difference, but a livable
38:33
difference. And we're not even willing to do
38:35
that. And that would put us pretty
38:39
close actually. If we were willing to do that,
38:43
then we could see what other tweaks we needed to make, just
38:48
cutting everything by temp. When you and I worked it out,
38:51
we, we figured 15% across the board.
38:55
And that's, that's the cut you need to make something like
38:57
that. And then for six years you've
39:00
got to hold the line without increasing spending a single
39:04
penny. Right.
39:06
And that's, that's going to have effects on the economy, right?
39:09
That that's going to make people's lives kind of
39:11
miserable. And yet that's the necessary
39:15
first step. You know it is.
39:17
And I, I think economically you get a couple of effects.
39:21
One, clearly, you know, there are people who, you know, you
39:25
and I could cut 10%. Most people who are listening to
39:27
us could cut 10%. There's a lot of people who
39:30
can't. That's right.
39:31
That's one problem you're going to have and.
39:33
Those are exactly the same people that a lot of this money
39:36
goes to. Yeah, right.
39:39
But on the flip side, I think if you were to tell Americans, OK,
39:42
we're going to do this, we're going to cut everything 15%,
39:45
we're going to hold no increases for six years.
39:49
While all of that is incredibly hard, I think you also set up
39:54
Americans to understand that things are going to be way
39:58
better in Year 7 that's right, than they would otherwise be.
40:03
And so, you know, all right, we, we tighten our belts for six
40:06
years, but we know things are going to be much better still
40:09
and better for our kids and their kids and so forth.
40:12
And and aunt, I've said this since I was a boy.
40:15
I think my mother used to say it too.
40:19
I can, I can withstand anything, literally anything.
40:24
If if you tell me when it will end.
40:27
Yes, right, right. You can't be in an overwhelming
40:30
hell with no determined endpoint, but if you say you're
40:34
going to have to tighten your belt pretty significantly for
40:37
the next 7 years, I could make peace with that.
40:41
Yep. It's not going to happen.
40:42
Yeah, but but notice what happens by not doing that, it
40:46
does become an an open-ended thing.
40:50
You know, from my perspective, this is never going to end.
40:53
Well, it is. Well, it's going to by the laws
40:56
of mathematics, it's going to end.
40:58
And the longer we wait, the worse the end.
41:01
The worse it will be. It's going to end for people who
41:03
are just kind of casually wondering what the end looks
41:06
like. It looks exactly like Venezuela.
41:08
Yeah, of course. Because there's so many more of
41:10
us. And I suggest we're already
41:13
starting to see the beginnings the the Fed course.
41:18
Fed just cut interest rates. It's about this time last year
41:22
that the Fed was saying, a number of economists were saying
41:25
were noting that inflation was sticky.
41:28
It just wasn't coming down. It wasn't coming down.
41:31
And all the forecasts are showing that inflation is going
41:35
to stay elevated compared to what it used to be.
41:38
I claim if that's this, that's what's going on.
41:42
If only. A couple of guys could have
41:44
predicted exactly. Oh wait, that was us.
41:50
Yeah, because ultimately what happens here and what we'll go
41:52
into more detail on it in in next time's episode.
41:56
But basically what's happening is we're getting this higher
41:59
inflation as the cost of the federal government running these
42:04
non-stop deficits. Yeah, that's right.
42:07
So on the one hand, from earlier in this very episode, we've got
42:11
a couple of things driving up prices.
42:14
And then on the other hand, we had a couple of other things
42:17
driving up prices. The result, not surprisingly, is
42:22
that prices will be driven up and they will stay there and,
42:26
and people forget. And I, I don't know how they
42:30
forget, but depending on who happens to hold office at any
42:34
given point in time, they will announce with no data to support
42:39
it, that inflation is 0. It's not zero and it's never 0.
42:44
So shut up. But worse yet, people believe it
42:49
and I, I can't understand how they believe it if they leave
42:53
their homes because I'm not allowed to go to the grocery
42:58
store because I have a meltdown every time I walk in.
43:01
We, we talked about this earlier and why do I have a meltdown?
43:05
Because I see how much my beloved Coke zero costs and I
43:10
can't buy it, right? I just can't and these are the
43:17
choices you have to make because there are trade-offs to
43:19
everything and when everything gets more expensive, you don't
43:23
get to have the things you want. And politicians will say, look
43:27
at that, we got inflation under control.
43:30
And if if they ever did that, which they don't, prices are now
43:36
at a much higher level and they never go back, right?
43:39
There's a there's de inflation and there's disinflation.
43:42
Yeah, you're, you're right. And I want to go back to the
43:44
statement you just said, because it's a beautiful quote.
43:47
You said as prices rise, we can't have what we want.
43:51
And let me add to that, we can't have what we want because the
43:55
government is getting what it can't afford.
43:57
We are literally paying for that deficit spending every time we
44:02
go to the grocery store and pay way more for food than we used
44:05
to. Now I can't have Doritos, for
44:07
crying out loud. Great.
44:11
Next week on This American Life. Now, I don't think I can say
44:13
that. I don't think I'm allowed to say
44:16
that. But anyway.
44:18
You said something in this in this episode that I want to put
44:22
in your head. We need to do an episode on
44:24
Social Security. You and I are so time ago.
44:29
I don't think we have you and I concocted a, a way to shut down
44:33
Social Security over time with minimal pain.
44:36
And I, we, we talked about, we wrote about it, but it was far
44:40
enough ago, I want to say it was maybe maybe 10 years ago that
44:44
nobody paid attention. Let's redo the math and get back
44:46
to it Yeah now I'm all excited. I feel a little bit and we we
44:50
can end on this happy note and and aunt, I want you to have a
44:57
lovely life and I want you to have everything you want to,
45:00
even though we all know we have to make trade-offs in.
45:02
These Yeah, I'm not the government.
45:04
Times. Yeah, no.
45:05
And I'm not either. But that's no reason to be
45:08
rotten to each other. That's every reason to be nicer
45:12
to each other, because we're all carrying this particular cross
45:18
and it hurts some of us a lot more than others.
45:21
And you don't know the weight of the cross that anybody's
45:24
carrying. So just treat everybody as if
45:28
the weight were unbearable because that that will make the
45:30
world a better place. Be nice to each other, be that
45:34
nice to each other. We really need it.
45:36
And why are you people still here anyway?
45:41
People need to shut this damn thing off when we're done, but
45:44
they never to. So here we are, Ant and I have
45:50
to say, I I did a profoundly stupid thing this week.
45:54
Have you done a profoundly stupid thing this week?
45:57
I try and avoid profoundly stupid.
45:59
Things look, I do, I do too, but people often, especially on
46:03
Twitter, will question my intelligence and, and you know,
46:08
I'm pretty smart guy. I'm, I'm self aware.
46:11
And yet when they say you're a moron, I, I think, well, no, I'm
46:16
not. But then I do something and I
46:18
think, well, maybe, maybe those Twitter trolls have a point
46:22
because just just a couple days ago, I'm sitting outside because
46:27
I have to sit outside because I'm not allowed to smoke cigars
46:30
in the house. Why not?
46:34
I have a wife. I I I have to tell the I have to
46:36
tell the listeners. We just got reinstated the beep
46:39
feature and James is making full use of it.
46:43
Go yourself Anyway this isn't the official episode.
46:48
Now I do whatever the I want anyway.
46:52
I can't smoke cigars in the house because I have a wife and
46:55
she always about to smell so. So I have to go outside and if I
47:01
have to go outside, it's Arizona.
47:04
I go outside to have a cigar and it's 117°.
47:09
So I need something to take my mind off that particular brand
47:13
of misery. What do I do?
47:15
What do I do at I bring ATV outside.
47:18
I figure, well, I could never do this before because cables, but
47:22
now I have a streaming service and I have pretty good Wi-Fi out
47:26
on the back porch. Can I put the TV out there?
47:29
So I throw ATV out there, a couple of chairs that put my
47:32
feet up. I smoke a cigar.
47:34
I'm as happy as a clam. But it's 117°.
47:38
So you have to drink a lot. If, if you, if you don't drink
47:42
pretty consistently, you, you die.
47:46
And, and I mean this quite literally.
47:48
There were a couple of hikers here.
47:50
People love hiking in Arizona and morons like to hike in
47:55
Arizona in the summer and real morons hike in the summer in
48:00
Arizona in the afternoon. And and a couple of morons went
48:05
out and died on a trail a couple of weeks ago.
48:07
That's how hot it is. They brought all this water and
48:10
all this stuff with them and they died despite it's.
48:14
Despite bringing all the water and everything.
48:16
That's right. It's that hot.
48:18
So I sit there and I, I drink lots of sodas from a can when we
48:23
can afford to buy sodas in cans, which, you know, And then the
48:27
cans pile up on my little circular table and all of a
48:31
sudden the table is no longer a table.
48:33
It's a platform that holds Coca-Cola cans.
48:37
So I'm watching TV and it's football season because, you
48:42
know, what the hell else is it going to be?
48:45
And I'm watching the games and I'm clicking away with the
48:48
remote and I got a lighted cigar.
48:50
So I put the remote on two of the cans and I'm lighting my
48:54
cigar and I hit the table with my elbow and the remote control
48:58
for my Roku went right. I mean right into my cup of
49:03
coffee. And now I can't watch my TV
49:06
anymore. Did did the channels start just
49:09
turning on their own? No, it just won't do anything.
49:12
Just nothing. And well, let me take that back
49:14
because what actually happens is even funnier than it doing
49:18
nothing. I took the the remote and I put
49:21
it in the refrigerator figuring, all right, let's get all the
49:24
moisture out. Refrigerator is a dehumidifier.
49:27
So I put it in there for like a day and a half and I, I went and
49:30
I took it out, pointed it at the TV and nothing happened.
49:33
Like, and I don't know what, you know, we always do the same
49:38
dopey SH when this happens, right?
49:40
I took the batteries out as if that were the problem and I put
49:44
them back in and I clicked and it worked.
49:48
No way. But, but it only works if I take
49:52
out the batteries every time I want to click something.
49:58
So literally, I got to take out the I got to take out the
50:00
batteries to turn the TV on. I got to take out the batteries
50:04
to select YouTube Tvi got to take out the batteries to to
50:08
look at what's on YouTube TVI have to take out the batteries
50:12
to Scroll down to look at what else is on YouTube TV.
50:15
And and you could see what a mess this becomes in terms of
50:19
time wasted taking batteries on for remote control.
50:23
Oh my God, that's funny. Yes, so.
50:26
I can see you there just getting madder and madder.
50:28
Oh, oh, the, the, the I I paint in profanity.
50:33
The, the, the swearing on the back porch is downright
50:37
artistic. It's epic and artistic and I
50:40
know deep in my heart it's all my fault.
50:44
And now I got to go buy another streaming device and and God
50:50
man, they're getting more expensive too and I have to
50:53
choose between streaming devices and food.
50:57
No, there's a solution. You can download a Roku app onto
51:02
your phone. I've seen people do this and
51:04
then your phone. That only works if you have a
51:06
Roku TV. Didn't you say you have a?
51:09
Vizio. No.
51:09
I have a Vizio TV with a Roku box.
51:13
Yeah. No, it can.
51:14
It can talks to the Roku box. We have a Roku box as well.
51:17
And I can. I will.
51:18
Look, I will look into this this very evening.
51:22
James is happy once again until he drops his phone in the
51:25
coffee. Let's not get ahead of ourselves
51:28
with the happiness business, but I will say that it's kind of a
51:33
minor miracle and something that almost never happens.
51:36
You've actually been useful to me.
51:41
Have a nice time. I used to say have a nice week,
51:43
but you know, twice a week. I don't know what to say anymore
51:45
at the end, so I'll see you next time.
51:48
See you next time James. Words and Numbers is a Civil
51:50
original podcast. We work with Civil to advance
51:54
their mission of upgrading civilization by exploring ideas
51:58
that promote civic equality and cooperation.
52:00
We believe the most pressing issues humans face, war,
52:04
poverty, debt, tribalism, arise from coercive institutions that
52:09
bring out the worst in us. We civil look to voluntary
52:12
solutions to these and other problems.
52:15
We invite you to explore Civils new platform at civil.com.
52:19
That's civl.com.