Billion, next year approaching 1 trillion in one year. That is a shocking number, especially so when the economy is strong and unemployment is low. We have reached a point where deficits are at about the place they were at the height of the Great Recession in 2008 and 2009. We have done that without those kinds of fiscal pressures for dealing with a Great Recession. It is a function of letting spending go without getting it under control. The National Debt has exceeded 23 trillion. How much money is that . Guest it is hard to get your head around that number. There are different ways of thinking about what counts is the National Debt. Some people will say we are approaching 20 trillion dollars because they do not count debt the government owns itself. We are at unprecedented places in terms of deficit and debt. There is no prospect for slowing the growth of that debt at that point. We are looking at deficits that get larger over time. In a moment when we might have some of the physical space to fix that, when the economy is strong, congress and the president do not have interest in doing it. Host the debt per citizen is approaching 70,000. For taxpayers to pay off the debt, it would cost 186,000 per taxpayer. Guest that is right. We are not even talking about paying off the debt. We are talking about how to slow down the growth of the debt. In the last three years, we have not use any of the opportunities we have had to do that and have allowed that to speed up. Host we are not hearing this in the campaign. Why . Guest we are not hearing it in washington. We have a republican president now, a republican senate. They are not doing anymore talking about the deficit than the democrats are. On the campaign trail, democrats are only talking about growing , especiallyams medicare, Social Security. The conversation that used to happen even when we were not doing a good job of controlling spending, there were always some people on capitol hill talking about it. Even that is not really happening. Scene these same republicans were critical under the Obama Presidency but now it appears as if it will double again under the Trump Presidency if he is reelected. Guest we have had a 50 increase in annual teva sits since beginning of the from club annual deficits since beginning of the trump administration. The striking thing is you do not have even a portion of republicans in congress criticizing the republican president for doing that. Spending grew under president george w. Bush. There were republicans unhappy with that who made that clear. Under this president , we have not seen that. The Republican Party is not focused on that. Part of it is the politics of the trump era. Republican members especially in the house, who would have been most likely to complain about spending, have been the ones most loyal to President Trump, whose voters seem to be most loyal to President Trump. The president has not wanted to talk about this question. He is not interested in entitlement reform. You have not had even a portion of republicans in Congress Talking about this. I think it will be hard for them to get back to it under a democratic president without looking hypocritical. And being hypocritical. Carl smith from Bloomberg News writes about Congressional Budget Office productions on debt and deficit. Some commentators worry by running large deficits now the u. S. Is giving up future ability to boost the economy in a downturn. Deficits should be the counter cycle, down in good times, up in bad. This suffers from the same fallacy as the one in favor of raising Interest Rates so they can be lowered later. It would make a recession more likely. If the u. S. Does avoid a recession, it will be in part due to the boost provided by the deficit finance. Guest that is a shortterm way to think about the nature of our fiscal situation. If we cut spending now, that might affect economic spending in the near term. We have strong growth now, low unemployment. If we are going to worry about deficit and debt, this is the time to do something about it. It does not have to be drastic. There are ways of reducing growth rates of entitlement programs and increasing federal enue that could affect could allow us to have that room to respond to future economic crises. The federal government is at levels of spending it would be at at the height of a series economic crisis. If we face such a crisis, it is hard to see where we get physical space to do anything about it. Fiscal space to do anything about it. That is it your argument debt is good, deficit spending during an economic downturn . Guest the Infrastructure Spending in the wake of the Great Recession was not a best spending, but there are things you do that are countercyclical, look unemployment benefits, like increases in the size of the food stamp program. They are responses to the fact that more americans arent economic distress. Are we going to be able to do that without creating pressures on our treasury in those moments of real need and without creating risks of higher Interest Rates and constraining our ability to grow out of the next recession . We have to think in terms of making space for the next crisis. We cannot just think about how to legislate for the next election. This pace of growing deficit and debt is irresponsible at a moment of good economic performance. Karen is joining us in north carolina. We are going into another recession. It is globally happening. It is going to be a no real estate crisis, like it was before. House prices have been soaring. People are overpaying for homes. People are getting mortgages that should not be. They are going backwards. They are lowering Interest Rates before the recession happens. We are going to already have low Interest Rates. Letters going to get from the banks that they owe more money than houses are worth. Call. Thank you for the guest it is hard to know what the next recession looks like or what might be a driver of it. We dont know if there is a housing crisis building. Some of the signs are there. It is true that we will have another recession. I do not think we have eliminated the business cycle. We have had a long period of sustained growth not strong growth. It is reasonable to expect we are going to see a recession. Because federal spending is at the level you would expected to be at the height of a recession, there is less room to respond to that. We are building out debt in ways that are going to turn out to have been extremely responsible. Is 1000 trillion billion dollars. Guest it has become impossible to visualize what federal spending looks like. 4. 5 trillion dollars a year there are not a lot of analogies to the way we normally think about money. Host if you counted one dollar per second, 1 trillion would take you back 31. 7 thousand years ago. Think about that. Lets go to john in new jersey. Good morning. Caller i am trying to point out to people that we have this magical credit card called the fed. Fromovernment can borrow itself, said it don set its own Interest Rates. Guest it can feel that way. It can seem like magic. Part of the reason is the World Economy tends to grade on a curve. The United States is in better shape than most of the developed world. Some of europe is in recession already. The chinese are seeing declining growth. United states is the best place to put your money. For theble to federal government to borrow money at low rates. That could go on. We cannot count on that forever. This borrowing has to be paid back at some point. We are borrowing from our future selves. That means the size of the federal debt we are talking ability toes the have room to spend where it needs to and wants to. Whoever we are borrowing from at whatever rate, this is reducing to capacity in the future make judgments we would like to have. We are not talking about our grandchildren. We are talking about a situation that will affect people now in the workforce. The United States will have less flexibility, less to work with. Debt does matter even though the Federal Reserve is powerful. We cannot pretend this money is coming from nowhere or that there are not interest payments. Addition to your work at aei. Org, are you on social media . Guest i am not on twitter. It is a way to stay sane. On aei onnd me twitter. Host we will go to nancy from pennsylvania. Caller thank you for taking my call. I am interested in the subject. Republican who voted for President Trump the first time and will be voting for him exact time. A second time. The Bush Administration kept the budget for the iraq and afghanistan wars separate from the general budget. When president obama went into office, the Obama Administration made the decision to move the expenses that were on the books budget, whichal obviously would have increased the deficit at that time. Is my recollection correct . Guest military spending is always going to count against the deficit. It is always part of the larger federal budget. It is true that as a matter of the working of the appropriations process on capitol hill spending on the iraq war and some operations in afghanistan was treated separately from the larger defense budget, but that was never kept off the books in terms of counting the size of federal spending overall. Deficits and debt did increase in the bush years, in large part because of the iraq war and afghanistan. Also because there were tax cuts , reduced federal revenues. It did not increase at the level we are seeing now and we did not see deficits and debt at the level we are seeing now until the end of the Bush Administration. It is true that federal spending did increase in those years. Tois not ultimately possible keep different parts of spending off the federal budget, but there are gimmicks and games that we see each year when Congress Sets the budget levels and appropriates for those. All of that money has to be paid back. This is michelle from michigan. With everybody back to work, the middle class back to work, jobs are out there, full taxes,ent, we are paying income taxes. , for for Social Security medicare down the road. We are going full tilt to support those programs. Cut that was just president sng the current term and past by the republicans, pushed through, how how much of that revenue that we are not getting any more from the corporations has affected the deficit or our budget . Budgetthe congressional office, which keeps track of these things, says the tax cut enacted in 2017, largely a Corporate Tax cut and personal income tax cut reduces federal revenue from what it would have been by about 200 billion a year. It will be around that level for the next 10 years. It is a reduction in federal revenue. If you think about the drivers of the deficit, the largest is the Social Security program. Ater that, it is medicare 800 billion a year. Then the defense budget. Medicaid, the federal portion of medicaid, has been about 350 billion a year. If youre talking about a reduction in revenue at 200 billion a year, that is a significant effect on the deficit. Are tracking your tweets. You can follow us cspanwj. Michael says todays politicians are not up to educating the American People on what the true decisions that need to be made. They have learned how to bribe voters with their own money. Guest there is less discussion of budget issues than there normally is in washington. In the through a period obama years when republicans especially were intent on focusing public attention on deficits and debt. That had an effect. They were able to work with the Obama Administration to drive down the growth of federal spending and reduce annual deficits. President trump is not one of those republicans that does not talk about deficits and debt. It has driven a lot of republicans on capitol hill who otherwise might have been worried about it to stop talking about it. We have seen an increase in annual deficits. Nowe is less of a debate than their wives. I agree with that viewer. In the 1980s, a book that may be on the internet came out. This fraudulent system where to the Banking System get the authority to support all these countries and the United States and bankrupt everybody . That is all it is, to bankrupt the global population and control what is going on politically. Who is kidding who . It is a fraud, a scam. 1913, the country that protected every other country and financed every other country is now in deeper debt than any other country. It is a scam. Wake up, america. These people are a fraud. We have an economy that is dependent on the finance sector and banking. We saw that in the course of the financial crisis in 2008 and 2009, when there was a huge bailout of the financial sector. Banking is part of our strength as an economy. It is part of why we are the worlds leading economy. It also comes with costs. David is joining us from baltimore, independent line. Onlyr they say there are two things in life that are sure and that is death and taxes. Say deathfe ground to is more certain than taxes. My personal conclusion after 70 years is the only reason we have money is because god knew he would have to teach us the 10th commandment, thou shalt not covet. Isyou think about it, money only a representation of labor. Somehowearn it or by the sleightofhand almost. We need to think about the day of our deaths more than april 15. Guest i do nothing i can disagree with that last point. We thinke that when about these questions of deficit and debt, the situation can look grim. We are looking at vastly greater debt than we have seen in the past in america and coming at a time when it is hard to explain with reference to world events. In the past, we have seen debt grow around wars and financial crises. We are looking at data growing because of demographic transformation in our society. We spent in a norm is amount of money providing benefits for the elderly. Our society is getting older. Baby boomers are in retirement and entering retirement. We are going to see an increase in federal spending over the coming years. The question is whether we can constrain the growth of that spending. While also allowing us to avoid fiscal disaster. This is doable. We are not on the verge of a collapse of our economy. We are not on the verge of a cataclysm. We have room to make this work, but we have to do that. We have to take it seriously and deal with the political implications. There is a lack of willingness, of courage on the part of togress and the president , take this problem seriously. Host our guest is a graduate of American University earning his graduate from the university of chicago and worked in the george w. Bush ministration. He is part of the domestic policy staff. This headline from Bloomberg News in a quote we had earlier from carl smith saying a trillion dollar deficit may be what the economy needs. This past week, the fed chair, Jerome Powell, responding to the Interest Rate reduction by a quarter percent. He also talked about the debt and deficit. The overall [video clip] the overall economy is growing at a moderate rate, supported by a healthy job market and solid consumer confidence. Business investment and exports remain weak. Manufacturing output has declined. And traderowth abroad developments have been weighing on those sectors. We continue to expect the economy to expand at a moderate rate, reflecting solid household spending. Strong market remains and the employment rate has been near halfcentury lows for a year and a half. The pace of job gains has eased but remained solid. We have expected some slowing. Participation in the labor force by people in their prime working years has been increasing. Wages have been rising for lower paying jobs. Host that assessment from fred chair Jerome Powell fed chair Jerome Powell. Economy, have a robust a stronger economy, reasonably good growth, low unemployment. Yes we have at the same time growing deficits. We have not use this moment to try to get federal spending under control or to get reform of our entitlement system that could allow us to have better control over the growth of deficit and debt in the future. That means we are not prepared for a downturn, for the numbers he is describing to look worse, which they are going to. This would be a time to take some responsible action, to gradually reform our entitlement system and think about the relationship between federal spending and revenue in the future. Two thirds of the budget medicare, medicaid, Social Security. Guest within those, there has been a change over the years. If you looked at the federal budget in the 1960s and 1970s, defense was a greater portion of the budget that it was now. We have seen a growth of the entitlement programs, especially Social Security and medicare, driven by demographic change and changes to the programs. The federal government now is Something Like a provider of benefits to the elderly that also has an army. Host this headline from the 984ngton post hitting billion in 2018, soaring during the trump era, expected to reach 1 trillion next year. On the republican line, from pennsylvania. Thank you caller thank you. I have a mechanics question about funding the government with the fed. To me is since the financial collapse in 2008 the fed started monetizing our debt, which i thought was illegal. It seems to me l