Doctor Van Skin.
He's an economist and a smart guy, and he's as annoyed as I am that once again Congress has completely abdicated their responsibility to pass budget bills and have just passed another continuing resolution.
Vance, Welcome to the show. Hi many, it's a pleasure with you.
Thank you for having me on, and I am just as upset about the deficit spending as you.
Now, what is your background? Give my listeners a little bit of window of who you are.
Vance.
Yeah, so I worked at the Trump White House. I was the chief economist for the Office of Management and Budget for about a year from June twenty nineteen and May of twenty twenty. I've also worked with a lot of state think tanks and national think tanks across the country and.
Do a lot of other work.
I also have a podcast called Let Fuel Prosper where I talk a lot about these key important issues about fiscal budgeting and monetary policy and a whole bunch of other issues.
So, Vance, if you were part of the Trump administration, then I'm gonna ask you a pointed question, because for me, that was a big area of disappointment, and COVID threw everything into chaos, So we don't know what would have happened had his economic policies been allowed to unfold in a natural way. So I'm going to concede that point. But spending in the Trump administration, even before COVID was
well beyond what I thought it should have been. Is there any hope that in another Trump administration we're going to see And I'm not asking to speak for the Trump campaign, by the way, I'm not doing that, but what are your thoughts about the level of seriousness that debt and deficit spending are seen in that administration?
Well, I also share your concern about how much was being spent during the Trump of years. Of course, it was Congress that spent passes the budgets, but the president could have vetoed them and done more to do that, and we were trying to behind the scenes. We were trying to push it to have lower spending at the end of the day, and you're right, COVID blew that out of the water even more with trillions of dollars, and then Biden administration came in and put that spending
on steroids. So we've run up of another twelve trillion dollars just so the last four plus years as massive, and we're spending at trillion dollars just on that interest payments on the debt alone.
It's just ridiculous.
And so one of the things that I'm still concerned about, though, to your point, Mandy, is that the president hasn't taught much about the budget. I mean, during that last presidential debate or even the first one, I don't even think spending was mentioned at all, or the deficits were mentioned it at all. And this is a huge concern for me that I talk a lot about and I know you do too as well. So this is something we've
got to get control over. And it's both parties. I mean, this is a bipartisan spending crisis, is the way I like to put it. That's been happening for decades now, and we've got to get under control. There are a few, you know, that are out there that will talk a good game, and I think are trying to do good things. Senter Ran Paul had his six penny plan, which would basically cut six percent over the next few years and
balance the budget, but that was rejected today. At the same time, they're spending in the cr bill more and more so, it's a massive spending problem.
Ran Paul.
I lived in Kentucky for three years and I'm a huge and Paul fan, along with Congressman Thomas Massey, who has been very vocally opposed to the continuing resolutions that we're seeing.
Why what I mean, We're.
Just going to have to get to a debt crisis situation before anybody in Congress takes so seriously. That's what I'm afraid of. And what does that look look like for the American people?
Well, unfortunately, I think we're seeing a lot of that now. We saw higher interest rates, right, the interest rates sowar. That's a big part of what you see during a debt crisis. We saw inflation soar because the Federal Reserve printed a lot of that money. I mean their boalance. You went from four trillion to nine trillion. It's still seven trillion. It's way too high.
You know.
The Federal Reserve cut interest rates by fifty basis points last week.
And I think that was a mistake.
I think we're going to fall into the same traps we did during the nineteen seventies whenever they cut interest rates too fast and inflation shot up again. And now we have even a worse situation because you know, Congress is overspending more than they were back then, and so this is going to lead more to increases and ammunition for the Federal Reserve to print money, increase inflation in the economy. And so I'm very concerned about a debt crisis.
And the spending crisis is happening now. A lot of people will blame it on the Trump tax cuts and other revenue issues, but it's not a revenue problem. This is clearly a spending problem, and I think what we've got to do is cut spending today and then restrain
the growth of spending over time. If we do that, we could find a better path forward, not only for the spending situation, but for the economy because all this deficits and debt really matters also to main street and on the economy because interest rates are soaring and people can't afford homes and things of that nature. This is a major problem that's driven by Washington DC.
I have the video on the blog today by Milton Friedman from like the late seventies, maybe nineteen eighty. I'm not sure exactly what the ear is, but he does this kind of like walk through on inflation, and it's really at a fifth grade level. I mean, that's why
I put it on the blog. I'm like, if you have somebody who doesn't understand this, But what it comes down to, what we're seeing right now and we've seen since, especially since COVID, is that the Federal Reserve is enabling the federal government spending by continuing to print money and buying treasury bonds. So they are if the FED doesn't keep printing money, then no one's gonna buy those treasury bonds, and the federal government cannot continue spending, even though.
The Federal Reserve is supposed to be.
A non you know, it's supposed to be a non political entity. So people need to understand that we flooded the money supply, we flooded the country with money. We flooded all the markets with money from the FED, and that's why we are now paying the invisible tax that is inflation. And too many people do not make that connection. And it's super frustrating when I hear people say it's
corporate greed, it's you know, it's whatever. And Milton Friedman actually uses the example of it's not union wages, you know, because people will blame it on union wages driving those are a lagging indicator instead of leaking and leading indicator. So in your in your podcast, what are the kind of things that you explain when it comes to because my big thing is this, somebody texts me. We have a text line and they say things like, you know, back in the nineteen fifties, we had the highest tax
rates on the one percent and we had prosperity. But what really happened in the nineteen fifties is the government contracted all that spending from World War Two and the economy roared. Why is that lesson lost?
Yeah? Yeah, it's a great point.
And Milton Freeman is my favorite economist, so I watch a lot of his youtubes and I talk a lot about these things on my podcast like you will prosper show and try to break it down as simply as possible, because you're right. I mean, the inflation is an inflation tax. We all feel it that the crisis that's out there on spending, we're all feeling it through higher interest rates
today and everything else. And so when people I think we've lost sight of how good we have it, in some sense, today, and some people want to go back to the nineteen fifties or something else. But there's a lot of things that I think America gets right today. The problem is in Washington, DC, they don't understand that's definit spending really matters, and it grows the eyes of government,
which which removes our liberty. The government has no money, nothing is free, and so they take it from us, out of the productive private sector, to redistribute it to someone else. That's all the government spending is. It's not some candy and sort of logic to where the government can stimulate the economy and grow in certain areas. No, what they do is they take it from person A and give it to person B, and there's no growth
in the economy. In fact, it reduces the economy because it reduces the productive purposes that are happening before they tried to redistribute that money. So I think, you know, Milton Freema is exactly right. Too much money chasing too
few goods is what inflation is. And what we see in the last especially four years, is a lot of increasing the money supply driving demand, and then high regulations at high tax and high spending that have stifled the supply side of the economy and contributed to massive amount of inflation. And this is why I think we have an issue to where whether it's Harris or Trump, right now, there could be more inflationary pressures because neither one of them were talking about spending.
And both of them, you know, I hesitate to call them dumb ass ideas, but they've piged out some real dumb ass ideas, both of them. I mean, the Trump tariff situation is not good for consumers. Harris is trying to give away more money, but only the people she chooses, and she, I guess, announced another no interest small business loan program that if you've never if you've ever dealt with government loan programs like the SBA, you already.
Know how cumbersome they are.
Neither of these people are blazing a trail on economics. So what does what does an average citizen do? What do you do if you're worried about this, like I am.
Yeah, oh man, I've been kind of pulling my hair out because you know, one day with Trump will talk about, well, we're gonna exempt taxes on Social Security, then we're going to exempt taxes on tips and the more that you narrow the tax base, the higher that the rates are otherwise going to be, or we're going going to run
massive deficits. Instead, we should have the broadest base possible with the lowest rates, and hopefully a flat income tax rate is ultimately what we need, and cut government spending in the process. But until then, I think, you know, there's going to be a lot more economic uncertainty. I've been writing a lot about this at American's for Tax Reform and American Institute for Economic Research, saying that the economic concertainty that's being brought forth by both of these campaigns.
Even though I do think that the Trump campaign.
Is having a little bit more pro growth policies of course than the Harris administration, they're both leading to more economic uncertainty.
And I'm a free trade guy.
I debated this a lot with Peter Navarro and others within the White House. They didn't see it my way, The presidents didn't see.
It my way.
But I really think that free trade is the way that we will pressure China to change their habits by putting tariffs on them and everything else. It doesn't change their ways because they're a communist country.
They don't care about their people.
But if you start, if you start changing the dynamics of other trading partners, now that influences them because that reduces their power. And I'm hopeful that would be the way we go. But unfortunately we're talking about tariffs all the time.
Well.
I do think that in some ways Trump has a very sort of nineteen fifties view of American manufacturing, right, and I genuinely think he believes we can be the leader in the world in manufacturing. But the reality is is that our standard of living is very high now, right, And that's good, that's great that we have a high
standard of living. So it makes it very difficult, difficult to compete with places that don't, like China, like Mexico, like developing economies where they can make things much cheaper than they can make them here because they pay people forty bucks a month.
So I mean, how is there a way? Though?
I mean, this is something that I think is something that needs to be addressed, and that is, how do you ensure that the United States in an emergency situation can get things done?
How do we build new aircraft carriers?
How do we make steal how do we protect those things that protect our ability to defend ourselves.
This is totally off the beaten track.
I don't know if I'm asking you stuff outside your wheelhouse here.
No, No, it's fine, it's fine.
These are all national security type threats, right, and that I think are legitimate concerns that should be addressed.
And one of the things that I like to point out.
Is that when we point our fingers at someone else like China, we've got three more fingers pointing back at ourselves.
There's more that we should be doing in America.
To reduce the cost of business instead of just blaming other countries, like reducing the corporate income tax rate, which Trump has talked about reducing it to fifteen percent. I would like for it to be zero percent, because businesses don't play pay taxes. People do through the form of higher prices, lower wages, and fewer jobs. We also should be reducing regulations. There's a lot of hoops that we've got to jump jump through in order to get stilled
to the market. There's a lot of jump hoops that we're going to jump through to get food to the market, and so much more that if we remove those obstacles, we ma to be much more competitive and wouldn't have to blame other countries. And one thing I like to note too about manufacturing is that where we're reaching manufacturing highs and output, it's just that the employment has declined over time. And that's not just because of China and other countries through trade.
A lot of it was through.
Automation, yeah, which has made our lives better along the way. Not to say that there wasn't a cost to those people losing their jobs, but there were other jobs that were created in the process, and we had cheaper products that we should you consumers really liked as well. So there's a lot of factors that go into this.
One of the things I think people forget is that trade, free trade, it increases the buying power of people on the lower ends of the socioeconomic spectrum a lot, not a little, a lot.
So when you're.
Talking about the sad part, that is people are going to lose jobs, right, but there are other people, a larger group of people that are going to benefit quite a bit by having that ability to buy something that they want at a very low price.
I mean, it.
Sounds like we're not making progress, but it feel like more people are talking about the debt and deficit, but honestly, and I hate to say this, vance I don't trust Republicans to care about it after the election anymore. I feel like all the grown ups in the room have left on this issue.
Am I two pass mystic?
I don't think so. I'm concerned about it as well. You know, I'm hoping hopefully they will see the writing on the wall and say, hey, you know what, we've got to start doing something different. But we've seen we I mean, this problem has been around for a long time. We've had we've had Republicans in Congress where they had the majority in the House and the Senate and Republican president, and the deficit continue to go up or at least running a deficit overall.
And you know, part of.
It is is that I you know, one of the concerns I have with some Republicans is that they'll say, well, the tax cuts will pay for themselves over.
Time, and and there's.
Some truth to that in the sense that I believe in incentives and.
That people work more and will get more output and everything else.
That's good, But in the short run, there will be deficits if you continue to spend like drunken sailors, and that's what they end up doing. And this populism is really a problem from the new Right to where they want to give a lot of handouts and spending and tax cuts.
Some of them even want to raise taxes.
And the number one thing you don't want to do to bring down a deficit is to raise taxes because then you slow economic growth. Well, we really need is more economic growth, about a full percentage point more than what we're having now two and a half percent. Get it up to three and a half percent, and let's rain in government spending. If you did that and had spending growth one percent, we could balance the budget in eight years. That's too long in my view. I'd love to see the budget cut.
We didn't have to cut anything, just slow the growth and you can have it balanced with eight ears. The sad thing is Viance.
You mentioned Rand Paul's sixpenny plan. It was the one penny plan the first time he put it up. If they had just passed it, then we would be having balanced budgets and we'd be working our way through the national debt, and now it's the sixpenny plan.
Amen.
Vance skin is my guest. You can find him advance skin dot com. I put a link on the blog today. He has a newsletter, he has a podcast. If you're a free market type, you should check it out. Vince, I really appreciate it. Hoping to talk again in the future.
That was good, Mandy, thank you so much.
All right, thank you, sir.
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