I don’t know what has motivated Elon Musk’s dire warning regarding the Trump-supported reconciliation bill making its way through Congress. Maybe he is just angry with President Trump because the bill excludes subsidies for electric vehicles. Or, maybe, he simply understands that the proposed spending and debt trajectory embraced by President Trump and the GOP really is an abomination.
Musk’s motivation is irrelevant if his concern is well founded. Count me among those who believe his concern is, indeed, very well founded. All three of the nation’s independent debt rating agencies have now downgraded their assessment of the sustainability of the fiscal path on which we now find ourselves.
The Trump-supported reconciliation bill now wending its way through congress really is the abomination about which Musk is warning. Adding another $2.4 trillion to the nation’s already outrageously bloated debt of $36.2 trillion is breathtakingly irresponsible.
While President Trump and his Republican supporters in Congress may claim Musk’s warning is simply sour grapes given the rupture of his relationship with President Trump, many of our most respected economic thinkers agree with Musk. Jamie Dimon, CEO of JPMorgan, Federal Reserve Chair, Jerome Powell, Hedge Fund Manager, Ray Dalio, and Warren Buffet have all raised the same concerns about which Musk is warning.
Last year, Jamie Dimon warned, “If you look at that 100% debt to GDP by 2035, I think it’s going to be 130%, and it’s a hockey stick. That hockey stick doesn’t start yet but when it starts, markets around the world…there will be a rebellion.”
Earlier this month, Federal Reserve Chief, Jerome Powell voiced the same concern. Listen to him. “It’s probably time, or past time, to get back to an adult conversation among elected officials about getting the federal government back on a sustainable fiscal path,”
Listen to Ray Dalio: “We have a very severe supply and demand problem. Some people think we’ll handle it because we’ve handled it so far. I don’t they understand the mechanics of debt. At some point the U.S. will have to sell a quantity of debt that the world is not going to want to buy. This is an imminent scenario of paramount importance”
Listen to Warren Buffett: “I think the problem of how you control revenue and expenses in the government is one that is never fully solved. And it has really dramatically hurt many civilizations and I don’t think we’re immune from it. We’re operating at a fiscal deficit now that is unsustainable over a very long period of time. We don’t know if that means two years or 20 years because there has never been a country like the United States, but you know that if something can’t go on forever, it will end. Debt also has the aspect of becoming uncontrollable. I wouldn’t want the job of trying to correct what’s going on…I think it’s a job I don’t want, but it’s a job I think should be done, and Congress does not seem good at doing it.
President Trump, of course, has never evidenced any particular aversion to high debt, or even bankruptcy for that matter. Quite the contrary. When he has found himself on the wrong side of debt, as he has on several occasions during his business career, he has simply declared bankruptcy or renegotiated his debt obligations. He let us know that he didn’t consider unsustainable debt to be a big deal when he first ran for President in 2016.
Listen to him: “I’m the king of debt. I’m great with debt. Nobody knows debt better than me,” Trump bragged in an interview that aired on “CBS This Morning” during his first run for President. “I’ve made a fortune by using debt, and if things don’t work out I renegotiate the debt. I mean, that’s a smart thing, not a stupid thing.” That mind set is, of course, true if you’re sitting in Trump Tower on Fifth Avenue in New York. Maybe not so smart if you are sitting on Pennsylvania Avenue in the nation’s capital.
When citizen Trump was asked how he renegotiates debt, he responded, “you go back and you say, “hey guess what, the economy crashed. I‘m going to give you back half (of the debt).”
Now in fairness, when Trump was asked in that 2016 interview if his penchant for relying on bankruptcy to rescue him from financial failure was a concern given his position then as candidate for President of the United States, he made it clear that he was running a business then, “for myself, for my company and for my employees and for my family.” He, of course, understands that bankruptcy is not an option for the United States. The country can never go bankrupt because the country can, and does, print or borrow the money it needs to operate. And it does so with abandon.
Red warning lights are blinking everywhere. Checking with leading organizations that keep tabs on where the nation’s debt is heading under President Trump you find disquieting unanimity.
For example, the Penn Wharton Budget model projects that the Trump-GOP Budget bill, that President Trump refers to as One Big Beautiful Act, and which Elon Musk refers to as an abomination, would add $56.3 trillion to the national debt within ten years. The Budget Lab at Yale comes up with a similar assessment estimating the Trump-GOP budget would add $52.3 trillion to the nation’s debt. The Congressional Budget Office puts the damage at $54.4 trillion, and the Tax Foundation estimates that Trump’s One Big Beautiful Act would add $52.8 trillion to the nation’s debt during the next decade.
The nation’s national debt is a serious matter. Sooner, rather than later, the nation will be well served when our political leaders regard it as such.
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Recent podcasts have featured my commentary on Liz Cheney’s book, “Oath and Honor,” as well as my commentaries regarding:
U.S. Representative Jim Jordan,
Brian Kemp and Those Republicans of Georgia,
The Trump Indictments,
The Fox Corp Settlement,
The CNN Trump Town Hall,
The Hunter Biden plea deal,
The New American Cult of Personality,
and my interviews with William Bratton, Retired Chief of Police in New York City, Los Angeles, and Boston;
Rikki Klieman, Attorney, Network News Analyst, and best-selling author;
John Thoresen, Executive Director, Barbara Sinatra Children’s Center;
Katherine Gehl, co-author of The Politics Industry and founder of the Institute for Political Innovation;
As painful as it may be to most of us, the bill ought to be modified - for example, rather than keeping all of the 2017 tax cuts find a compromise position that supports some tax cuts - especially for middle income earners but removes cuts for high earners. Also a tax on carried interest ought to be added. The SALT limit should not be expanded past $20,000 (the bill has $40k). We must face the deficit. Both parties are complicit - but Biden’s administration took it to extremes.
As painful as it may be to most of us, the bill ought to be modified - for example, rather than keeping all of the 2017 tax cuts find a compromise position that supports some tax cuts - especially for middle income earners but removes cuts for high earners. Also a tax on carried interest ought to be added. The SALT limit should not be expanded past $20,000 (the bill has $40k). We must face the deficit. Both parties are complicit - but Biden’s administration took it to extremes.