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I just want to highlight the
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CBO projection right so this is the US
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government's debt as a percent of the US
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government's Revenue which you you
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indicate in your book is more important
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than debt to GDP you've got to look at
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the actual Revenue being generated by
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the government and how much debt they
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have and the CBO highlights this
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expansion to 700% meaning the government
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is going to have a debt level that's
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seven times the income it's making every
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year over the next uh I believe this is
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a 10-year chart and you propose a bunch
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of actions that can keep it flat over
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the next 10 years so number one
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is I call it my 3% solution the solution
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is you must cut the deficit which is the
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equivalent of bonds selling down to 3%
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of
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GDP and it's 7 a half% expected that's
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about 900 billion a year yeah roughly
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and that means cutting it as you point
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out by cutting the deficit by more than
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half from where it sits yeah well it's
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yes because it with the continuing the
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uh the tax cuts strum tax cuts that's
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that'll be 7 a half% and you want to get
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it down to three it sounds Draconian but
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we did that kind of change from 1990 1
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till
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1997 and there are three keys to this do
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it soon fast when the time is good when
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the economy is good in other words do it
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now now the Temptation is going to say
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well we're going to ease into this and
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we're going to be there and we're going
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to do it in three years from now but if
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you have a bad economy you you cannot do
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it okay and that's the that's the worst
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so we have the best economy and the
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sooner you do it the more you're going
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to do it so 3%
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solution do it now and recognize that
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you have to De deliver it so if you're
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having let's
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say Cost Cuts in government you have to
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own the number so everybody's got to
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pledge 3% now the the the argument say
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now to get there but you have to own the
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number um so much so that you'd say if
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it's not 3% throw me out of office and
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you can't make it any one
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thing right but you also have to realize
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like if you did it spread out nothing's
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going to be insurmountable but the main
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thing is you take the things you can cut
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from or build from so what can you cut
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from and you look at government
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expenditures roughly 70% of government
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expenditures are you can't cut cut so so
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it comes down to a small percentage that
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you can cut but you you find out how
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much can you cut so the important thing
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is
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3% the other thing about it is to
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realize that if you make those
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moves the bond market will benefit you
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see this and so interest interest rates
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will go down right and interest rates
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going down interest rate expense
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is most important if the federal
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government were to cut spending
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significantly and quickly the market
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would naturally react to lower rates
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that's right I think that is so
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important for everyone to hear if you
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look at my calculations if you get 100
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basis points cut in rates that's
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equivalent to significant cutting in
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spending so he's right but you but if
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you do that without the other parts
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you're going to make it less desirable
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to own these things these bonds and
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because that's that's going to be a
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problem where if you do these things
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together they can support each other so
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in other words fine cut it from spending
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and by the way Ray the longer we wait
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the more interest accumulates because
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it's at a higher rate the more the debt
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accumulates and ultimately this is the
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arithmetic death spiral that you get
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into the longer we wait the more you
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have to cut in the future to get out of
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the hole it's not linear it's a
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nonlinear cutting that's needed So the
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faster you do it the less you have to
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cut I think that is so important let me
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just say that again for any person in
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government listening the faster you cut
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the less you have to cut yes and you can
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do it in a manageable way you know a bit
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here a bit there these bits add up and
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if you don't you're going to have this
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Arc of compounding so let's talk let's
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talk politics for a second is Doge and
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the concept of Doge enough or do we need
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legislative action here there's a
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combination of a question it's not just
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Doge it's a matter
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of less
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regulation productivity
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changes that might come from AI which
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then have translate to
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profits that might be capital gains
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profits they might be
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profits and all of that and
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so but it really you know when I look at
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it it
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looks it looks very tough and and but
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there's also you know Revenue also
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tariffs produce Revenue so but yeah
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people think um on the on the tariffs
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people don't think of taxes as inflation
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but taxes are inflation right because
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you it costs you more
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so the real question as you play with
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the numbers is it's very very difficult
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to know and be precise about how much is
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going to come from uh productivity and
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profit increases from the efficiencies
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gained by Ai and new technologies how
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much going to come from this and that we
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don't honestly know but the important
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thing is we're at the edge and not to
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make it a crapshoot so and to get the if
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the number must be 3% and so you should
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have a clear passage to that 3% number
