We Spend More on Interest Than Defense: We’re In A Debt Crisis | Marc Goldwein
Jolene and I have been trying to figure out whether we’re actually in a financial emergency or just in the usual cycle of scary headlines and people yelling on cable news.
Every time you open your phone, it’s another stat, another chart, another “this is unprecedented” warning. After a while, you either spiral or you go numb. Neither feels like a great strategy.
Then we spoke to Marc Goldwein who is Senior Vice President and Senior Policy Director for the Committee for a Responsible Federal Budget. His take was blunt but without the drama of the news. Yes, we’re in the worst financial shape we’ve ever been in, at least in the ways that matter for what comes next.
He pointed to the 10-year and 30-year Treasury yields being the highest they’ve been since the early 2000s. That matters because when interest rates are higher, and debt is already massive, the cost of carrying that debt starts to eat everything else. You can liken it to having a credit card balance you can’t pay down, and then the interest rate jumps. You can keep living your life for a while, but more and more of your money goes to servicing the debt instead of doing anything useful.
Interest payments now exceed national defense spending. That is a wild sentence to say out loud. We’re spending more to pay interest on what we already owe than we’re spending on the thing most politicians love to call “national security.”
Marc also said the national debt is close to its World War II level, but the interest burden is worse. Interest as a share of the economy has roughly doubled. So even if the debt level feels historically familiar, the pressure it creates is not the same. We’re not in a post-war boom moment with a clean runway ahead. We’re trying to run a modern country while carrying a growing bill with no obvious payoff.
So I asked the obvious question. If it’s this bad, why aren’t we fixing it?
It gets a little depressing here, because the answer isn’t that nobody knows what to do. It’s that the incentives are upside down. A whole body of political science research says the same thing: politicians get rewarded for giving people benefits and cutting taxes, and punished for asking people to pay more or accept less. The easy stuff wins elections. The responsible stuff loses them.
It’s also a time-horizon problem. Most politicians are thinking about the next election, not the next decade. The political cost of doing the right thing hits immediately. The benefits of doing the right thing show up later, often after someone else is in office, which means you don’t even get credit. So we keep kicking the can, and then we act surprised when the can turns into a wrecking ball.
It’s slightly unnerving how quietly this can get out of hand. You don’t wake up one day and find the economy on fire. It’s more like interest payments keep rising, the budget gets tighter, and suddenly you have less room to respond. A recession. A war. A natural disaster. A public health crisis. Whatever the next thing is, you’re trying to deal with it while already maxed out.
I don’t have a neat solution here, and Marc didn’t pretend there was one (though he did give plenty of ideas that would go a long way). But I do think there’s a clear takeaway. If we want this to change, we can’t keep rewarding short-term sugar hits and then acting betrayed when the bill shows up. We have to demand leaders who will tell the truth about trade-offs, even when it’s unpopular, and we have to be grown-ups about hearing it.
This isn’t just a politician problem. It’s also a voter problem.
If we don’t face it now, we’re basically choosing to hand future generations a country where more and more of the budget goes to interest, and less and less goes to anything that actually makes life better.
RESOURCES MENTIONED:
Committee For A Responsible Federal Budget: https://www.crfb.org/
Marc's Good for the Soul: https://marthastable.org/
LINKS:
Instagram https://www.instagram.com/wevegottotalk/
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Spotify: https://open.spotify.com/show/0qJVgTvjciUffRmoUienx2
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[00:00:00] nicole: She's conservative and I'm liberal, and yet we've been friends for almost 40 years. Everyone says you shouldn't discuss politics, religion, or money, and we say that's exactly what friends should be talking about. Join us as we tackle the conversations you're having in your head, but are too scared to say out loud.
[00:00:19] Welcome to We've Got to Talk. Welcome, Marc Goldwein.
[00:00:24] Jolene: He is the Senior Vice President and Senior Policy Director for the Committee for a Responsible Federal Budget, which is a nonpartisan organization where he guides and conducts research on a wide array of topics related to fiscal policy and the federal budget.
[00:00:39] Previously, Marc served as Associate Director for the National Commission on Fiscal Responsibility and Reform, AKA the Fiscal Commission, and Senior Budget Analyst on the Joint Select Committee on Deficit Reduction, AKA the Super Committee. He teaches economics at Johns Hopkins University and the University of California DC.
[00:00:58] Marc is the [00:01:00] recipient of the Johns Hopkins University Excellence in Teaching Award, and was featured in the Forbes 30 Under 30 list for law and policy. Welcome, Marc. You're smart.
[00:01:10] nicole: We are, like, so impressed before we've even started. How are you doing today? I'm good. How are you? Thanks, thanks so much for having me.
[00:01:17] Absolutely. why are you in this field, and just we're so fascinated by what brought you here.
[00:01:24] Marc Goldwein: Uh, I work for a group called the Committee for a Responsible Federal Budget. We are a nonpartisan organization in Washington, and that, when I say nonpartisan, I mean actually nonpartisan. If you look at our board, it's some of the top budget minds, like, in the universe.
[00:01:38] Democrats, Republicans, Independents, everything. Uh, we've been around since 1980, and since 1980, we've had a board that has disagreed on all sorts of issues, like what the tax code should look like or size of government, but they're generally in agreement that our debt can't be running out of control. And so I've been with the organization for 19 years now- Oh, wow
[00:01:57] since, uh, since [00:02:00] 2007. I sort of lead our, our research apparatus, and so I'm regularly publishing and, and editing analyses and developing new kinds of policy ideas. I spend a lot of time up on Capitol Hill talking to members of Congress and their staff. Spend a lot of time talking to the media.
[00:02:18] Uh, our goal here is, A, to educate. To educate on fiscal issues, and the cool thing is fiscal issues is almost all issues. It's hard to find a policy topic that doesn't have a budget angle to it. Um, and then to advocate for what we call responsible budgeting, and that doesn't mean a balanced budget every year.
[00:02:36] But what it does mean is, uh, we want Social Security and Medicare to be solvent, um, and we want our long-term debt to be growing at a slow enough pace that, that the economy can keep up with it.
[00:02:47] Jolene: So how come nobody's been listening to you? I mean, here we are, right? Yeah. I mean, we, we talked about the Social Security thing.
[00:02:55] We're, we, we can't wait to, to, to pick your brain on the whole- Mm-hmm, mm-hmm ... debt and [00:03:00] deficit and all that. Oh my gosh, you've been doing this for 19 years, and aren't we in the worst... Do you think that we're in the worst shape we've ever been? fiscally
[00:03:09] Marc Goldwein: Oh, we're, we're, we are absolutely in the worst shape we've ever been.
[00:03:11] If you look at the bond markets, right? Yeah. Um, the 10-year and 30-year treasury yields are sort of the highest they've been since the early 2000s. Multiply that by our debt, right? We now have high interest on high debt. Interest payments are by far the highest they've ever been. We spend more now on interest than we spend on national defense.
[00:03:29] We spend more on interest than we spend on Medicare. Our debt is almost as high as after World War II, and our interest is, like, twice as high as a share of the economy. So we're the worst that we've ever been. Why are we not fixing it? There's, there's actually a very extensive political science literature out there that digs through all the nooks and crannies to basically discover politicians like giving away free stuff, right?
[00:03:52] Mm. It's unpopular to tell people that they have to pay more in taxes. It's unpopular to tell people they get less in government services or fewer [00:04:00] benefits. It's very popular to tell the reverse, and the issue is there's a cost. There's a cost to cutting people's taxes and increasing their spending, but that cost is the future, and politicians are only worried about two, four, maybe six years in- Right
[00:04:14] the future. They're worried about the next election, not the next generation.
[00:04:17] nicole: So, like, whe- when it comes to the s- Social Security solvency issue, we both were, were watching the hearings, it's been an issue since 1983, and yet now everybody's screaming about it.
[00:04:30] Marc Goldwein: the last time we fixed Social Security was back in 1983.
[00:04:33] nicole: Right.
[00:04:33] Marc Goldwein: By the mid-1980s, it was already clear there was gonna be a long-term problem.
[00:04:37] nicole: Okay.
[00:04:37] Marc Goldwein: Um, in the '90s, there was actually an effort to fix it. Um, Bill Clinton and Newt Gingrich actually got together, almost came to a deal. Um, in the early 2000s, George Bush tried to fix it.
[00:04:47] And so there were, there were efforts from Democrats and Republicans in the '90s and 2000s, but then the issue kind of went away, um, at least out of sight, out of mind. It's coming back now for exactly that reason I said, that senators, they [00:05:00] have six-year terms.
[00:05:01] nicole: Right.
[00:05:01] Marc Goldwein: Right? And so it's not their problem-
[00:05:03] nicole: Mm-hmm
[00:05:03] Marc Goldwein: until the six-year window, and guess when insolvency is happening? Oh. 2032, right? Just over six years from now. And so this was, by the way, the first finance committee hearing on Social Security in 15 years, the first one.
[00:05:17] nicole: What? No. No.
[00:05:19] Marc Goldwein: First full committee hearing. It was the first full budget committee hearing, I think, in 12 years.
[00:05:23] I have to check that. Um, but because it wasn't in the six-year window, now suddenly senators are waking up. Ah. The bad news is that means people in the House of Representatives might not wake up for four more years, 'cause they only have two-year terms.
[00:05:35] Jolene: And so the next, next president for sure is gonna have to deal with it.
[00:05:39] Marc Goldwein: The next president is very likely gonna have to deal with it. I don't want to say for sure, because these are just projections. Um, they're not gonna move that much, but we could be at, say, 2033 instead of 2032. Um, but probably the next president is gonna have to deal with it, if not for sure the president after that will.
[00:05:56] Jolene: Oh, wow. Okay, okay Okay Uh, so- So many
[00:05:59] nicole: [00:06:00] questions
[00:06:00] Jolene: I know. All right. So I'm having a conversation with my 25-year-old daughter Mm-hmm ... and I said, "We're having Mark Goldwein on the podcast. We're gonna talk about Social Security." And she's like, "Why? Why do I care? Why do I care about Social Security?" And I'm like, "Oh my gosh, this is exactly the issue."
[00:06:16] 25-year-olds don't care because they're like, "Ah, I'm not really sure what that means." And I'm like, "You know that 6% of your paycheck is going in and your boss is matching it. 12% is going out of your paycheck. So, you know, it... Yeah, you should be concerned about what they're doing with 6% of your money you're not getting because it's going to the government And it may not be there when you need it.
[00:06:41] How would you tell a 25-year-old da- today, like, why they should be concerned about this?
[00:06:46] Marc Goldwein: Yeah. So let me start by telling you kind of, sort of what the situation is they should be concerned about.
[00:06:51] Jolene: Okay.
[00:06:51] Marc Goldwein: And then, and then why, right? So the way Social Security works is the payroll taxes go in. As you said, it's about 12.4% split [00:07:00] between worker and employer.
[00:07:01] Those payroll taxes immediately go to pay benefits for current seniors. The idea is those two should be roughly in balance, right? The amount going in should roughly match the amount going out. When there's a little bit of extra, they put it in a trust fund. Um, when we're a little bit short, we draw from that trust fund.
[00:07:17] But now, we are drawing a lot from that trust fund and an increasing amount because there's more and more people that are of retirement age. We have more and more 65-year-olds, and we don't have more workers. And by 2032, that trust fund is gonna be out. It's gonna have exhausted its reserves. That doesn't mean Social Security disappears, but here's what the law says.
[00:07:38] When the trust fund's out, we can only pay as much as benefits as we're bringing in, and we're only gonna be bringing in enough to cover about 75 to 80% of benefits. The latest projections are that that means everybody would get an immediate 22% cut in their benefits in 2032. Not phased in over 10 years, [00:08:00] not only the high-income people that can afford it.
[00:08:03] Everybody gets a 22% immediate surprise benefit cut. Um, that's in today's dollars, right? If we apply that to today's benefits, it'd be $500 a month per person, right? That's, that's a month of grocery bill for, for a senior couple. So why should your 25-year-old daughter care about it? A, um, because she should care about Social Security being there for her grandparents and her parents.
[00:08:28] B, she should care about it being there for her when she does retire, which isn't gonna be far off. But C, she should care a whole lot about what we do to avoid this cut. Because in all likelihood, politicians aren't gonna allow the 22% cut. Mm-hmm. They're gonna come up with an alternative, and that alternative could be really ugly.
[00:08:48] Um- Oh ... it could be a massive uncoordinated tax increase. It could be deep cuts that aren't very well thought out. It could be more borrowing, um, and guess who's gonna [00:09:00] pay that borrowing ultimately? Your daughter- That 25-year-old ... or her daughter.
[00:09:03] Jolene: Yeah,
[00:09:04] Marc Goldwein: yeah. So there, there are not easy, good choices here, right?
[00:09:07] There are tough choices, and she should care about- which choices we make because they can have profound implications on, on her future and the future of, of her family up and down the generational, uh, pool.
[00:09:20] Jolene: Okay, so then what about a 50-year-old? I mean, would you say anything different to a 50-year-old?
[00:09:24] Marc Goldwein: Uh, what?
[00:09:24] 50-year-olds, you have to be a lot more worried. I mean,
[00:09:28] Jolene: think about
[00:09:28] Marc Goldwein: this. Six years from now- Scared ... um, six years from now, the youngest retirees, 62-year-olds, will be 68, right?
[00:09:36] nicole: Mm-hmm. Mm-hmm.
[00:09:36] Marc Goldwein: A 50-year-old will be 56. That means they'll be six years from their earliest possible retirement, right? So it's gonna affect them.
[00:09:44] You know, a 50-year-old, you don't have as much time to sort of plan and adjust. You still do at 50.
[00:09:49] nicole: Yeah.
[00:09:49] Marc Goldwein: At 60, you really have not much time to plan and adjust. At 25, the world's your oyster, right? Yeah. At 25, um, nobody at 25 has already decided when they're gonna retire. Yeah. So you got [00:10:00] plenty of time to plan and adjust at 25.
[00:10:01] At 50, you have a bit of time. At 60, 65, you have very little time, and this is... That's why we should have solved this 40 years ago. Yeah. Right? Because then everybody could have had time to plan and adjust. Now, even the smartest solutions are gonna come at people a lot faster than, than they need to.
[00:10:19] nicole: You were saying that Clinton and Gingrich almost, almost did it.
[00:10:23] Do you know why they didn't?
[00:10:25] Marc Goldwein: Yeah. I mean, it's sort of an unfortunate, you know, um, an unfortunate set of events, but essentially they had a deal, or they had most of a deal, and then the Lewinsky scandal started, and- Oh ... there was no really any interest. Um, the deal was gonna be bipartisan, so Clinton was gonna lose a lot of Democrats.
[00:10:43] Gingrich had to get a lot of Republicans on board. After the Lewinsky scandal, Republicans just wanted to beat up on Clinton, and Clinton needed all the Democrats he could get, right? So it just changed the total political dynamic.
[00:10:53] nicole: God.
[00:10:53] Marc Goldwein: But I used to work for Erskine Bowles, who was Bill Clinton's Chief of Staff.
[00:10:57] Yes,
[00:10:57] nicole: I was gonna ask you about that.
[00:10:59] Marc Goldwein: And, and, [00:11:00] and he s- he says, and there's books about this, that, like, sort of they had a deal. I'm not saying they had every I dotted and T crossed, but they had, they had a deal, and then the Lewinsky scandal blew it all up.
[00:11:12] Jolene: Wow. Wow. Okay, so then you said Bush. W- H- H-
[00:11:16] Marc Goldwein: W. Bush.
[00:11:17] Okay. George W. Bush tried again. Um, he, he tried really in the beginning. He was going to try in his first term. He appointed a commission, and then 9/11-
[00:11:25] nicole: Was that the Simpson, was that the Simpson-Bowles Commission, or?
[00:11:27] Marc Goldwein: This was, this was before that. Okay. I mean, there was a commission back in 2001.
[00:11:30] nicole: Okay.
[00:11:31] Marc Goldwein: I think it was called the Presidential Commission to Strengthen Social Security or something like that.
[00:11:35] nicole: Okay.
[00:11:36] Marc Goldwein: But his original plan was the commission was gonna make recommendations in 2001, and then in 2002 or 2003, he was gonna start pushing them. And then 9/11 happened, and it sort of became a national security presidency, and then he tried, he did give it a try in his second term in 2005. Um, at this point, even though he had sort of won, um, unified control, there just, there wasn't the mandate, and what he was [00:12:00] proposing, it turned out, wasn't that popular.
[00:12:02] Um, which is part of what he was proposing was to take some Social Security and to put it into private accounts. With the benefit of hindsight, those private accounts would have accumulated- Right ... tremendous amounts of wealth. But they also came with high risk. Yeah. And I think that the sort of political, um, finding was people weren't willing to take, willing to take that risk.
[00:12:22] nicole: When you said that you'd worked with, this was during the hearing, that you'd worked with Senator Crapo on the Simpson-Bowles Commission.
[00:12:28] Yeah.
[00:12:29] And one thing that I found fascinating, Mark, was that- Senator Crapo had said how senators would come up to him and say that they thought the work was really great, but that they hadn't been asked to be part of it.
[00:12:44] And I thought, "Oh my God, is this all ego?" Is this... Like, I feel like sometimes when we're dealing with the government, it's like a bunch of little kids on a playground saying, "Well, you didn't invite me," and so things don't get [00:13:00] done. As I was watching you in that hearing and seeing all the, what I thought fairly bad behavior on the senators arguing and pointing fists, first of all, I'm thinking, "How is, how is Mark doing this?"
[00:13:14] Like, how does he not lose his mind? Because your brain, you seem to have such incredibly clear solutions on how to help, and yet it just seems like everyone is sort of It, they, they, they want the credit versus actually solving anything. Is that a fair assessment or is that just me being a brat?
[00:13:37] Marc Goldwein: I think Congress is closer to middle school than any of us would like to believe.
[00:13:42] nicole: It's what it seems.
[00:13:43] Marc Goldwein: The Simpson-Bowles commission was established in 2010-
[00:13:46] nicole: Okay ...
[00:13:46] Marc Goldwein: under President Obama, and it was a bipartisan commission that was tasked with, and actually succeeded at, coming up with an idea both to fix our long-term debt and to secure Social Security. And we actually came up with plans for [00:14:00] both.
[00:14:00] And Senator Crapo, who was at that hearing, supported it. Senator Warner wasn't on the commission, but he was a sort of supporter from afar. We actually had very broad support. We had almost 60 senators that supported the framework, and so I don't think fundamentally it was this sort of territory issue.
[00:14:17] I'm sure that played into it, but I don't think that was the fundamental issue. Sometimes stuff just doesn't work out.
[00:14:21] nicole: Okay.
[00:14:22] Marc Goldwein: The Simpson-Bowles commission came up with a plan. We had 11 out of 18 in support. We had about 60 senators that support it. Speaker John Boehner and President Barack Obama came together to negotiate a deal based on it.
[00:14:34] They almost succeeded, but they just didn't quite make it. They tried again. They almost succeeded. They didn't quite make it. There's all sorts of political dynamics that played into that, some very middle school-y, some related to elections, some related to people just not willing to make compromises.
[00:14:49] Like, here's, here's the reality. Um, I understand. You know, I'm, I'm a political independent. I totally understand why Republicans don't like taxes. I get it. [00:15:00] I totally understand why Democrats don't want benefit cuts. I get it. But at the end of the day, there is no path to a solution that doesn't involve some kind of compromise, and there were just, were not quite enough people willing to make that compromise, willing to take that leap and say, "I'm willing to give up something that I really don't want in exchange for something better."
[00:15:20] Jolene: Okay. So I guess that leads into my next question then. What do the Republicans want? What are the Democrats proposing? And what are your recommendations?
[00:15:32] Marc Goldwein: Yeah. Great question. So for Republicans, I think you really need to split them into the sort of, um, pre-Trump and post-Trump Republicans because the old way used to be, um, Republicans wanted to solve Social Security mainly by slowing the growth of benefits, and that was very possible because benefits grow faster than inflation every year, new benefits, the growth wages.
[00:15:54] So if we had gone back to, say, 2000 or even 2010, we could have just slowed the growth of benefits. That's [00:16:00] mainly what Republicans wanted to do. Um,
[00:16:02] Jolene: but Democrats- Uh, I, can I interrupt you? What, tell me what that means. Like, are, does, there's an automatic increase every year of 5%- Yeah ... or whatever?
[00:16:09] Marc Goldwein: Here's, here's, here's the way Social Security benefits are calculated.
[00:16:12] Oh,
[00:16:12] Jolene: I love it.
[00:16:12] Marc Goldwein: Um, the Social Security Administration takes all your past wages, and they sort of index them forward- To match present wages. And so if you made, like, the average wage back in 1980, they'll treat it like it was the average wage in 20- in 2025. Okay. And so that has the effect of making it so that every new set of retirees gets larger benefits- Oh
[00:16:34] than the set before them, because they get this wage index.
[00:16:37] Jolene: Right. Okay. Okay.
[00:16:39] Marc Goldwein: Uh, so benefits are growing over time. They're growing in their level, and they're becoming more expensive because we have more and more beneficiaries. Right. Yeah. Right? And so on the benefits side, you could say, okay, we could solve those two problems.
[00:16:50] We could say we're gonna slow the growth of initial benefits, so it's something less than wages, and we're gonna index the retirement age so that, uh, rising life expectancy doesn't cause costs to go up. [00:17:00] So that was sort of a common Republican solution back in 2008, would have been something like slow benefit growth for higher earners, um, mainly, or sort of s- kind of progressively, and raise the retirement age.
[00:17:13] A standard Democratic plan back in 2008 would have been Raise the amount of income subject to the tax max. So it's $185,000- Right ... is the cap on how much you pay- Right ... payroll tax. Raise that, and then maybe make some slight changes in the benefits for higher earners. And so the fight was basically between one side...
[00:17:33] And Republicans were willing to do things like bring in new state and local workers, or expand taxation of benefits. So you basically had one side that wanted to solve it mainly with benefits, but was open to some revenue, and one that wanted to solve it mainly with taxes, but was open to some benefit changes.
[00:17:48] And then President Trump came in, and he said he ran on not touching Social Security at all, and that really changed the dynamics. And so now the most common Republican plan is no plan. Um, that's not to say no. The [00:18:00] most common plan is no plan, or it's cut fraud in the program. Mm-hmm. And I'm, I'm a big proponent of fighting fraud, but there's just very little fraud in the Social Security retirement program.
[00:18:10] It's very difficult. It's not like Tinder. It's very difficult to lie to Social Security Administration about your age.
[00:18:15] nicole: Um,
[00:18:17] Marc Goldwein: so the Republican plan is basically no plan, and the Democratic plan is now raise taxes, raise more taxes, raise even more taxes, and expand benefits. Even though they're already growing, expand them.
[00:18:28] These are not tenable positions. These are... Neither of these are positions that are gonna lead us to, in my opinion, a, a thoughtful solution, or to any kind of solution at all. Um, the solution is gonna have to be some combination of reductions in the growth of benefits and increases in revenue. And, uh, I don't know how much time we have, but there's sort of this common slate of options, 'cause there's only a few levers.
[00:18:51] There's your initial benefit formula, there's your cost of living adjustment, there's your retirement age, there's your tax rate, and there's that tax max. Those are kinda your five major levers.
[00:18:59] Jolene: [00:19:00] Mm-hmm.
[00:19:00] Marc Goldwein: But we've also been spending a lot of time at the Committee for a Responsible Federal Budget trying to come up with some new, more creative ideas that maybe can get past the logjam.
[00:19:08] Jolene: Which are? Which are?
[00:19:10] Marc Goldwein: Yeah. Yeah, good.
[00:19:11] Jolene: I'm glad you asked. Oh my God, absolutely.
[00:19:14] Marc Goldwein: Two examples, and then we can keep going, but one is because those benefits continue to grow with wages, we are now... And because benefits are sort of linked to your past earnings, so the more you earn through the past, the higher, more benefits you get.
[00:19:26] We are now at the point that a very, very, very rich couple retiring this year could collect a combined $100,000 in benefits. $100,000.
[00:19:37] nicole: And they're already rich.
[00:19:38] Marc Goldwein: And they're already rich already. People, the people that are getting it this year probably have, on average they have, like, $60 million. Right?
[00:19:44] There are some poor ones that probably only have $10 million. Um, and- Okay ... there are some that have a billion dollars, right? But, like, on average they have about $60 million. These are the very richest people. And an income support program, a program that FDR created to make sure seniors [00:20:00] didn't fall into poverty- Mm-hmm
[00:20:01] is gonna pay them $100,000. Wow. And so here's our idea. Let's cap it at 100,000. So we're not even saying you don't get the 100,000. We're just saying- That's enough.
[00:20:11] Jolene: Yeah.
[00:20:11] Marc Goldwein: Um, the benefits are not gonna keep growing past $100,000. We call this the six figure limit. There's been a lot of interest in this idea.
[00:20:19] That's one idea we put out.
[00:20:21] Jolene: Okay, wait. That's the be- Have ... What's the number behind that? Like, how much is that gonna save-
[00:20:25] Marc Goldwein: Yeah ... by
[00:20:25] Jolene: doing this?
[00:20:25] Marc Goldwein: So, so here's the thing. This year barely anybody gets $100,000. But because the benefits keep growing- Oh ... the number of people getting it is gonna grow over time.
[00:20:35] Jolene: Okay.
[00:20:35] Marc Goldwein: And so we ran different versions of this, one version that inflation indexes the cap, and a couple versions that freeze it for a few years and then put it back on the wage indexing trajectory. And depending on which one of those you pick, this could close anywhere from 20 to 50% of the solvency gap.
[00:20:53] Jolene: Oh.
[00:20:53] Marc Goldwein: Um-
[00:20:53] Jolene: Oh, okay.
[00:20:54] Marc Goldwein: Could be a lot, right? Not little money. Now, the 50% one comes in part from [00:21:00] sort of freezing it for a while. And so 100, you know, $100,000 in 20 years is gonna be actually a lot less money than 100,000 today. Right. Yeah. So freezing it's sort of a way to kind of phase it down relative to inflation.
[00:21:11] But we're talking about big real money, real, real money from this. And you could design it any way, right? You could design a 1% version. You could design a ... It's very flexible. Um, so this is an idea that's got ... The six figure limit's gotten a lot of interest, and I'd humbly submit that I would not be shocked if this was part of the final deal because the, the politics behind it, right?
[00:21:32] That's great. I think we can all understand that, like, an income support program shouldn't pay people six figures.
[00:21:37] nicole: Right. Yeah.
[00:21:38] Jolene: Right.
[00:21:38] nicole: Right. Duh. Right.
[00:21:39] Marc Goldwein: Now, yeah, now on the revenue side, I think I mentioned this a few times, the most popular idea is just to raise the, the limit on how much the wages are taxed.
[00:21:49] Right now- Right ... right now only your first- The, the cap ... 185,000-
[00:21:52] nicole: Yeah ...
[00:21:52] Marc Goldwein: are taxed. The most popular idea is to raise the limit. That could get you a boatload of money, but it actually comes at a big cost because you're raising the top rate by [00:22:00] 12%, right? And the top rate is already, if you add together the income tax and the Medicare tax, the top rate's already 40%.
[00:22:07] So you're basically putting the top rate above 50% at the federal level. In some states it'd be 60%. That's, that's a big tax. That has big economic effects. It means we have less opportunity to raise revenue for other purposes if you're into that. So I'm not against raising the taxable maximum, but we try to come up with a, a more efficient way to get the same amount of money, and we call this idea the employer compensation tax.
[00:22:32] The basic idea is for workers, you're gonna pay the same 6.2% on the same exact $185,000. Nothing changes for workers. But for the employer- They're now gonna pay a tax on all of their compensation costs, and so that does mean all wages they pay, but it also means healthcare benefits that they're paying.
[00:22:53] It also means retirement benefits, stock options, right? Right now, effectively, they're getting a tax break if [00:23:00] they pay in the form of fringe benefits or if they pay their executives relative to what they're paying for their wage earners. We're saying, "Let's broaden that base so the employers only pay the tax on all their compensation."
[00:23:12] And this also raises a boatload of money. This could close about half the solvency gap, and it's way more efficient than raising the tax max.
[00:23:20] Jolene: Wow.
[00:23:20] nicole: O- okay. That's just two things, but you had ... You have more.
[00:23:25] Marc Goldwein: We do have more.
[00:23:26] nicole: M- oh. Yeah, I could
[00:23:26] Marc Goldwein: go forever.
[00:23:27] nicole: Please. Here's the thing, Mark. This is what we don't understand.
[00:23:30] I was so struck, and I had to ... I was texting with you, basically, as I'm watching this hearing, going, "Why is AARP so mad?" They're just mad, and they just say no- Yeah ... all the time. And then strangely It was Senator Lankford, who's a Republican, that was like, "Why aren't you, why are you asking us not to talk?" I mean, the whole thing was baffling to me.
[00:23:56] And so here you've just given us two incredible ideas [00:24:00] that you just said 50%, 50%, that's 100%, possibly.
[00:24:03] Marc Goldwein: Yeah.
[00:24:03] nicole: Right?
[00:24:04] Marc Goldwein: You could solve it, in theory, with just those two ideas.
[00:24:07] nicole: But you even have more ideas.
[00:24:09] Marc Goldwein: We do. We have ideas to cap the COLA so that the highest earners get the same cost of living adjustment as the pretty high earners.
[00:24:16] We have ideas to reform the way, um, we apply income taxation and benefits so it looks more like, say, a Roth, a Roth IRA or, or like a private pension. We have ideas to link the benefit formula more tightly to work, so it's a better work incentive. We're working on ideas that's not published yet, but to raise the retirement age in a way that protects the people that really can't work longer, that aren't living as long.
[00:24:39] We are working on ideas for expanding coverage, 'cause there's some people, believe it or not, that still aren't covered by Social Security, and ideas to change the indexing. There are literally millions of ideas out there. The problem isn't... Like, I have so much fun generating these ideas, and I'm gonna keep doing it.
[00:24:55] Um, what we say for this project is we're gonna keep running, putting out new ideas until [00:25:00] either we run out of money or Social Security does. Okay? So I... But the problem fundamentally is not ideas. The problem is political will. Uh-huh. And part of the reason political will's so wrong is because special interest groups, like the AARP, and by the way, on the right, like Americans for Tax Reform, Grover Norquist's organization, just wanna say no.
[00:25:19] Uh, the AARP, if you go back to the 1983 example. In 1983, Democrats and Republicans came together. They used a commission, by the way, the Greenspan Commission. They raised the retirement age. They raised the payroll tax rate. They applied, they expanded coverage. They applied benefits to taxation. They came up with sort of a bipartisan package.
[00:25:38] You know who s- opposed essentially every part of that package? The AARP. Bob Ball, who was the Democratic negotiator, he called them a nuisance. Um- Wow. They have said no commissions and no changes in benefits at all. And what that really means is no solution, 'cause there is no solution without there being a compromise.
[00:25:57] And then even on the tax side, they can't [00:26:00] come up with enough ideas to solve it. You know who, you know who makes $185,000 a year and doesn't want their taxes raised? 55-year-olds in AARP, right? So they're even A little bit ambivalent on the revenue options. They, they just, what AARP wants to do, um, just to, just to be a little bit mean but truthful, is sell their members very expensive health insurance plans, um, and use the money to make sure that their members keep getting money to buy those very expensive healthcare plans.
[00:26:29] And I think, even though they don't say it publicly, they wanna borrow to fund Social Security's shortfall. They wanna add it to the debt. They don't say that publicly. That's not their official position, but that's the logical conclusion of what they're advocating for.
[00:26:43] Jolene: Okay. There are solutions. You just, you just gave us a handful.
[00:26:46] What is it gonna- Then you have millions
[00:26:47] nicole: more, you said,
[00:26:48] Jolene: right? It, it... Well, okay, so what's it gonna take for, for this, uh, either the finance committee or, I mean, to go- Yeah ... "Okay, let, like, all right, we better start working on this"?
[00:26:59] Marc Goldwein: Yeah. [00:27:00] I actually, if you go back 20 years, I actually wrote my thesis on the politics of Social Security reform and how we got there in the past.
[00:27:07] Wow. 'Cause there was two major sort of hard Social Security reforms, reforms where we had to take things back rather than give away new things, in 1977 and in 1983. And they had sort of three things in common, three elements in common. One, they happened on the precipice of a crisis. In 1983, the trust fund actually ran out of money.
[00:27:26] It was temporarily borrowing from Medicare. In 1977, we had a benefit formula that was not well-equipped to deal with the sort of stagflation and was causing benefits to, to rise exponentially. So there was a crisis. Um, so it might take us to 2032, or close to it, which is really sad. Um, number two, a commission.
[00:27:45] In 1983 it was the Greenspan Commission. In 1977 it was based on s- one of these advisory councils. And the number three compromise. It's, there's never been a successful Social Security reform where one side got everything they wanted. There's never been a successful partisan Social [00:28:00] Security reform, by the way.
[00:28:00] They've all been bipartisan. They've all, including the expansion ones, all the major changes to Social Security have used some kind of commission or some kind of council or outside advisory board. So I think that's what it's gonna take. Um, if we act now, we still have some time to phase things in. If we wait till 2032, even the best solutions are gonna be painful.
[00:28:20] nicole: There was a bipartisan idea. Is it Dick Durbin? Was it Durbin and, and Kennedy? Is that right?
[00:28:28] Marc Goldwein: Yeah. So Durbin and Cassidy, I think, are the ones we
[00:28:30] nicole: talked about. Ca- Cassidy. Cassidy. I'm sorry. Thank you. Yeah.
[00:28:32] Marc Goldwein: It was a big group, actually, but they were the leads.
[00:28:34] nicole: Okay.
[00:28:34] Marc Goldwein: Um, and Dick Durbin was somebody that I worked with on Simpson-Bowles, by the way.
[00:28:37] nicole: Yeah.
[00:28:37] Marc Goldwein: He signed on to that same Social Security plan that Mike Crapo did that would've fixed it.
[00:28:42] nicole: Yeah. So, so Cassidy and Durbin had an idea. I guess White House had another idea. Somebody else had another idea. And I kept thinking, "Well, why aren't you all just coming together and making the idea together?"
[00:28:56] Number one, why? And number two- The [00:29:00] state of this country and Congress, it seems asinine to not have a commission because we can't talk to each other. We can't get along. We can't... It's all so performative. Wouldn't, wouldn't, if you wanted to solve... Maybe they don't wanna solve it. Are you suggesting that maybe?
[00:29:20] Or am I suggesting that? So,
[00:29:21] Marc Goldwein: so Senator Durbin and Cassidy's idea, I think, is a great one, is essentially to take an existing Social Security commission called the Social Security Advisory Board.
[00:29:29] nicole: Okay.
[00:29:29] Marc Goldwein: Um, the, the Social Security Advisory Board was established as a replacement for these old advisory councils that used to solve the problem.
[00:29:35] nicole: Hmm.
[00:29:36] Marc Goldwein: And basically tell the advisory board, "You need to come up with some ideas, and then we're gonna run it through the whole congressional process. So whatever idea you come up with, we're gonna run it through a committee, we're gonna have amendments, we're gonna have substitutes, we're gonna have votes."
[00:29:48] Congress is still totally involved, right? So, like, the critiques that, like, this is behind closed doors and it's gonna be rushed to the president's desk just doesn't match, and especially doesn't match their proposal, 'cause Congress is involved every step of the process. [00:30:00] AARP opposes this, again, 'cause I think they don't want compromise.
[00:30:03] They wanna get general revenue. Others oppose it, they say, because they would rather do it through regular order. And, um, I don't think I'm breaking any confidences, because this was done in front of cameras, if you watched closely, but after my hearing, one of the members of the committee who opposes it came up to me and said to me, one of the senators, and said, "Look, I agree we've gotta solve this, but we gotta go through regular order.
[00:30:26] We can't use..." W- regular order means, like, through the committee process. We can't use one of these special commissions. And what I said back to them is I said, "Senator, respectfully, if you guys start a serious process in the Finance Committee to solve this, I will be your number one cheerleader. I will send you ideas every week.
[00:30:41] I will c- I will make sure we do positive press releases. I'll be your biggest fan. But this is the first hearing you've had on the topic in 15 years."
[00:30:48] nicole: Exactly.
[00:30:49] Marc Goldwein: Right? You've had your chance to do the regular order without the commission. You haven't done it. Um, so either do something or step back and let somebody else.
[00:30:59] nicole: What was- Wow ... their [00:31:00] response? Did they have a response?
[00:31:02] Marc Goldwein: Uh, the person said, "Nobody's defending the current process as perfect," I believe.
[00:31:07] Jolene: Well, I mean, as we all see, and Nicole and I have joked about this, how, I mean, we are... It, it's truly entertaining to watch C-SPAN now, to watch these- ... congressional hearings, 'cause we're like, "Oh my God, these guys are rude to each other," and I mean, it's-
[00:31:20] it's reality T- it's like, you know, The Real Housewives of DC, only it's- Oh, you should watch British Parliament. Oh.
[00:31:26] nicole: Oh.
[00:31:26] Yes. I bet
[00:31:26] Jolene: that, I bet that's even better. But the fact is, okay, if they can't... If, I mean, the other thing, you know, that, that bugged us, Mark, the people were coming in and out of these committee hear- Oh, yes
[00:31:36] 'cause there's another one across the hall, and, and I'm like, okay, so you're just getting up here, and you're reading so your performative, you know, statement, and you're acting like you're asking a question of M- Mark Goldwein, but y- you're not. You're just kind of making a statement, and you're not even sticking around for the answer.
[00:31:52] You're going right back out the door. Like, it's such a performative process. Like, l- does anything get done?
[00:31:58] Marc Goldwein: That is... I mean, I think what you're pointing [00:32:00] to is sort of an unfortunate reality of the new hearings process, right? Which is a lot of it is a show, and it's not always the members' fault, right? So one of the members that was in and out had another hearing scheduled at the same time, that he's a ranking...
[00:32:13] Like, he was a high you know, senior person on. He had to ask questions elsewhere. So it's not always their fault, but the hearings have become very performative, and the real work, you know, we learn in school, gets, the real work gets done in committees. The real work gets done, like, behind the scenes with the staffs, which is another reason why this idea that, like, we can't have a commission behind closed doors is such a silly argument.
[00:32:33] Like, it's not as if the members of the committee are all writing the legislation- Right ... in public in front of C-SPAN, right? It's just a question of which closed door is the legislation gonna be written behind. The hearings will be open, discussion will be open, but the actual physical writing of the legislation, that's not happening in front of camera regardless of whether it's a commission, a committee, or any other kind of process.
[00:32:54] nicole: Dang. Mark, this might be a really stupid question. Just bear with me, just as a layperson. [00:33:00] Why does AARP have so much influence? Why doesn't everyone just say, "Well, screw them. Let's get this done. We don't care"? Yeah, it's a great
[00:33:08] Marc Goldwein: question. They have a lot of... I mean, I think a few things. One is, um, they have local chapters that do really great work.
[00:33:14] nicole: Okay.
[00:33:14] Marc Goldwein: Um, and so this is a weird thing. It's a very large organization that does a lot of different things, and a lot of what they do at the local level is sort of, like, help seniors to sort of, you know, live as a functioning part of society in all sorts of ways and have community and, like, be able to ha- hold their institutions accountable.
[00:33:32] And so they do, like, a lot of work, great work at the local level that makes them very popular. They also have an incredible amount of money. Mm. And this is the frustrating thing to me, because most of that money comes not from membership dues. It comes from selling very expensive insurance, um- Wow ... to their, to their members- Wow
[00:33:47] um, subsidized by the federal government, either directly subsidized in the case of Medicare Advantage, or indirectly subsidized in the case of these Medigap wraparound plans. We recently did a paper. It's a whole s- side show, [00:34:00] but that these Medigap... People are basically, you pay your Medicare Part B premium, and then you pay a premium that's even larger to the AARP to cover some of your cost-sharing.
[00:34:10] And the insurance company and AARP take a combined 25% off the top. AARP alone is taking 6%. Um, so- Wow ... these are very expensive plans, and that money goes into AARP, right? And so they have a lot of money. They're very popular at a local level, and they have very wide membership, right? There's a lot of seniors, and this is, our single largest growing population is seniors, and so they represent a lot of, a lot of people, and those people, by the way, tend to vote in higher proportion- Sure
[00:34:37] than probably your daughter.
[00:34:38] Jolene: Yeah, yeah.
[00:34:39] Marc Goldwein: People your-
[00:34:39] nicole: Yeah.
[00:34:39] Jolene: Yeah. Yeah. Absolutely. Yeah. Yeah. Okay. We, uh, we could talk to you all day about this, but we gotta talk about the debt and the deficit. I,
[00:34:46] nicole: I was just gonna say
[00:34:46] Jolene: that. I know. I know. Okay. All right. All right. So- Explain to our audience difference between debt and deficit, and why does the debt matter?
[00:34:57] Marc Goldwein: Right. L- yeah, and this is a great transition because [00:35:00] my fear for how we deal with Social Security is that we don't do benefit or revenue changes. What we do is add it to the national credit card and make our debt even worse. And we could maybe afford that if we had no debt and a balanced budget, but we don't.
[00:35:15] Um, so what's the difference between debt and deficit? Deficit is how much we borrow each year, how much additional we borrow. So it's the difference between what the federal government brings in in tax revenue and what it pays out in total outlays, total spending, right? And so this year's deficit is about $2 trillion.
[00:35:31] We're borrowing 2 trillion a year. Go back to 2019, we were borrowing 1 trillion a year. Go back to 2015, we were borrowing half a trillion. Go back to 2004, I don't know if any of you remember this time, but, um, you know, we think of debt as sort of like... Deficits as, like, kind of a conservative issue, like Republicans hate deficits, but back in 2004, the very liberal moveon.org ran a political ad- Oh, yes
[00:35:53] against George W. Bush of children working in a factory because we were having $300 billion deficits, right? That was considered [00:36:00] so large that the far left was concerned about it. God. Now we're at 2 trillion. Wow. It's, that's just per year. That's just per year. Um, the debt, that's how much we, from the accumulation of all of our past deficits, right?
[00:36:13] And what we owe, you probably heard the number 40 trillion. Mm-hmm. That's our gross national debt. The number I prefer to use that doesn't count money we owe ourselves is more like 30, 33 trillion or so. Um, but the number I really like to use is debt to GDP, um, and I'll tell you why in, in a second. But, like, think about your own situation.
[00:36:32] Um, if you were making $2 million a year and you had a $200,000 mortgage, you would not be worried. But if you were making $20,000 a year- ... and you had a $200,000 mortgage, you'd be very worried.
[00:36:44] Jolene: Yes.
[00:36:45] Marc Goldwein: Right?
[00:36:45] Jolene: Yep.
[00:36:45] Marc Goldwein: Yes. It's
[00:36:46] Jolene: the same
[00:36:47] Marc Goldwein: with government. The richer we are, the more debt we can afford. And so what I like to look at is debt to GDP.
[00:36:53] How big is our debt relative to the size of our economy, which is sort of like our capacity to pay? And right now, debt, it, [00:37:00] it recently crossed this Rubicon of 100% of GDP. Debt is now the size of a full year's worth of production. The only time in history it was ever that large before was right after World War II, and I think we had a pretty good excuse back then.
[00:37:13] Jolene: If you were to, to liken this to terms, um, of a household budget, like if you're explaining this to somebody and, and you're trying to make this comparison, what you're saying then is you make $100,000 a year and you are paying $100,000 just on your credit card debt. Is that, I mean, is that the, the debt to GDP ratio?
[00:37:35] That doesn't even include all the things you have to buy.
[00:37:37] Marc Goldwein: Yeah, yeah. It's not quite that. In some ways it's worse. Um- Gosh. You owe $100,000 on your credit card. Cool. Um, so the federal government owes, uh, owes, let's call it 40,000 'cause that's like 40 trillion.
[00:37:49] Jolene: Okay.
[00:37:49] Marc Goldwein: Okay.
[00:37:49] Jolene: All right.
[00:37:50] Marc Goldwein: The federal government owes $40,000 on its credit card.
[00:37:54] It's actually not making $40,000 a year. It's actually making about $8,000 a year. [00:38:00] Um, the 40,000 is how much it could be making if it took everybody's money. There's no sort of household equivalent. GDP is imagine 100% tax rate on everybody. And- Despite that, everyone kept working the same amount, right?
[00:38:17] Which of course we wouldn't. Only idiots work for no pay. So, like, we're, we're 100% taxed, right? So that's the sort of equivalent, right? And so right now, how much we owe is equal to basically taxing 100% of everything in the economy, and that would, as you point out, leave no room for us to actually pay for things like, you know, healthcare and Social Security and national defense.
[00:38:37] And without a military, we definitely wouldn't be able to force people to pay 100% of their- ... income in tax. It's just, it's not a sustainable trajectory. Um, and it's especially not sustainable because of the interest payments. Um, the interest payments this year will be a, will be over a trillion dollars.
[00:38:53] We'll have the numbers soon. We're two days from the an- Well, I don't know when you'll air this, so we probably by the time you air it, we will already have the numbers, but the, [00:39:00] the interest will be over a trillion dollars and rising. So a trillion is more than we spend on national defense. Um, a trillion is more than we spend on the entire non-defense appropriations.
[00:39:11] It's more than we spend on Medicare, or about as much as we spend on Medicare. It's more than we spend on all programs for children and infrastructure combined, right? And so infras- interest is quickly becoming, like, our largest budge- budget item.
[00:39:23] Jolene: So it's
[00:39:24] Marc Goldwein: just- The only thing bigger is Social Security.
[00:39:26] Jolene: Right. Okay.
[00:39:27] Marc Goldwein: The reason that's really scary is how do we pay the interest? We don't raise taxes. Right. Um, we don't cut spending. We borrow to pay the interest, right? And so the interest feeds into higher debt. The debt feeds into higher interest. The interest feeds into higher debt. And when you're in a situation like we are now with interest rates, you know, at 4 or 5%, that can very quickly lead to a debt spiral, where debt doesn't just rise quickly, but it rises out of control, and that's really what I worry about.
[00:39:52] There's lots of consequences to debt we're feeling right now. The high inflation we're feeling, that's partially because of the high deficits going back to, to 2020, [00:40:00] 2021. The high interest rates we're experiencing right now, you know, the reason your mortgage is 7.5% if you're buying a house today, it's partially 'cause of the high debt.
[00:40:08] Um, slow wage growth, that's partially because of high debt. So there's all sorts of reasons debt is actually hurting us today. But my real fear is what happens when the debt starts spinning out of control? Because eventually it will be so high, rising so quickly, that people won't wanna lend us money except for for a very high price.
[00:40:26] Oh. And at that point, there could be a financial crisis. Effectively, people could sell off their outstanding debt, leading banks to fail, uh, leading financial institutions fail, leaving to mortgage foreclosures, leading to something like the financial crisis. Mm-hmm. Except for who's big enough to bail out the US government?
[00:40:42] Jolene: Right.
[00:40:43] Marc Goldwein: No one.
[00:40:43] Jolene: Right. I mean, there's no bank bail- bailout. I mean, there's no government bailout, right? I mean- Right ... e- except for maybe China?
[00:40:50] Marc Goldwein: So China's actually buying less and less of our debt. I'll tell you, there is one bailout possibility, which is the Federal Reserve prints the money. That's not really the Federal Reserve bailing us out.
[00:40:58] That's really everybody bailing us out because [00:41:00] the result would be much higher inflation. So it is possible we could replace a financial crisis with an inflation crisis. I'm not sure that's better.
[00:41:07] nicole: So Mark, I'm assuming that you also have ideas for that.
[00:41:12] Marc Goldwein: Uh, I do. Step one, we fix Social Security, we actually fix half the long-term debt problem.
[00:41:17] When I say long-term debt problem, I don't mean debt goes down to zero. I mean, like, what would it take to keep debt stable at 100% of GDP rather than rising? 'Cause while, while it's not free, we're a very rich country and we clearly can afford 100% of GDP in debt since, you know, we're affording it right now.
[00:41:34] So what would it take to stabilize it? Um, if we were to fix Social Security, that gets us halfway there. Um, the rest of it, I got so many ideas and I think we're gonna run out of time- Yeah ... but I would start with healthcare because healthcare is the largest source of waste, the largest source of fraud, and the largest source of abuse in the federal government by a, by a mile.
[00:41:53] nicole: Hmm.
[00:41:54] Marc Goldwein: Our healthcare system is incredibly wasteful, incredibly inefficient. That's good news. I know that sounds like bad news. It's good news. It [00:42:00] means there's an incredible amount of savings to be had. There's so much we can do to lower healthcare costs that actually will save money for the government, save money for the beneficiaries, and not significantly hurt access or the value of care.
[00:42:13] I'm not promising that there won't, won't be anyone hurt, but, like, it won't significantly change the value or access of care. Um, I'll give you two examples 'cause time is, is a little bit short, but one is the Medicare program right now currently pays hospitals more than private doctor's offices for the exact same service, often twice as much.
[00:42:31] In fact, we pay hospital-owned doctor's offices twice as much as the doctor's office across the street that's privately owned for the same services. So an easy fix, pay the hospitals the same you're paying the private doctor's offices. This'll save us money. It'll reduce sort of consolidation, other problems like that.
[00:42:48] It's a good place to start.
[00:42:49] Jolene: Is anybody against that idea?
[00:42:51] Marc Goldwein: the hospitals.
[00:42:53] Jolene: Oh.
[00:42:53] Marc Goldwein: Look, everyone from Newt Gingrich to Elizabeth Warren supports this. It is very broad support. I've yet to meet a [00:43:00] senator or representative that doesn't think it's at least a good idea in concept. Um, they will have concerns about some of the specifics, but in concept, but the hospitals are against it.
[00:43:08] The hospitals are very powerful.
[00:43:10] nicole: Yeah.
[00:43:10] Marc Goldwein: Um-
[00:43:10] nicole: Clearly.
[00:43:11] Marc Goldwein: But, like, we, we gotta do it. Um, we've done it in little increments already, um, but we haven't done it broadly. We need to do it broadly. So that's number one. Number two, there's... Medicare goes to seniors. You know, there's, there's actually two Medicares.
[00:43:25] There's government-run fee-for-service Medicare. It's called traditional Medicare, and then there's Medicare Advantage- Mm-hmm ... which is basically like a private alternative. It's still paid by the federal government, but it's run by private insurance companies. These private insurance companies can actually be more efficient than traditional Medicare 'cause they can, like, manage your care.
[00:43:42] They can create networks. They can try to drive you towards, um, you know, better choices in a way that traditional Medicare can't, and yet they cost the federal government 10% more. Um, the reason is that while they're more efficient at delivering care, they're especially more efficient at making the federal government think-
[00:43:58] they're costlier than they [00:44:00] really are. Oh. Um, and they do this in a few ways, but the key one is they, they get these risk-adjusted payments, right? 'Cause you... If all their patients were sicker, we should pay 'em more. Yeah. But they make their patient, they make their enrollees look sicker than they really are.
[00:44:12] That's the key thing they do. We also have this bonus program that, like, 80% of them get. It's like a participation trophy at this point, and it's costing us money. I d- I don't know if either of you have ever seen the, the cartoon The Incredibles, um, but- Yeah ... the bad guy wants to make everybody super because if everybody's super, nobody is.
[00:44:30] Right. And that's the Medicare advantage. Oh,
[00:44:32] nicole: wow. Wow. Right?
[00:44:34] So
[00:44:34] Marc Goldwein: these two things, we'll, we will... I could name, again, a million more, but, like, let's focus on healthcare, um, and efficiencies. Then we gotta look to the sort of annual appropriations. What's worked in the past is cap the appropriations levels and then let the appropriators allocate the details.
[00:44:52] We should do that again, put in place caps. We ought to look for other areas of waste in government, especially if there's, um, low-priority spending, if there's fraud, if there's [00:45:00] overlapping programs. Um, I can give you some specifics. Farm subsidies is an area. And then we need more revenue. We are, we are, we're simply not going to solve this, um, entirely on the spending side, nor in my personal opinion should we.
[00:45:14] CRFB takes no position. We're happy to do it however it works, right? My personal opinion is, like, we're an older population and so our government's gonna cost more, and that's okay, but that means we do need more revenue. And the revenue should come first from improving compliance. We have a lot of taxes that go unpaid.
[00:45:31] Second from cutting, um, tax loopholes, um, taxes- Yes ... that sort of should be paid, but, like, like, this is sort of legal avoidance, right? People aren't breaking the law. They're just taking advantage of the rules. Mm-hmm. And then number three, by cutting tax breaks that are distorting economic behavior. Mm-hmm.
[00:45:46] Um, as one example- If I sell my stocks before I die, I pay 20% tax on it, give or take. If I wait till the day after I die and pass it along All that capital gains escapes taxation forever. [00:46:00] This is totally unfair, and it's also really inefficient because if I know that the tax goes away if I hold the stock, I'm just gonna hold the stock until I die, right?
[00:46:08] And so we actually see, like, less trading because people wanna hold these stocks to avoid the tax- to avoid the taxes. And so this is an opportunity to, like, improve fairness, improve progressivity, and also get more efficiency.
[00:46:21] Jolene: Are you in favor of a flat tax?
[00:46:23] Marc Goldwein: I'm in favor of making the existing tax flatter by cutting tax breaks.
[00:46:28] I, I don't think it's sort of a practical matter or to meet our goals that we could, we could solve it with a single rate, but I think we could have fewer rates. But my main concern isn't about the rate differentials. Uh, my main concern is the differences caused by tax breaks, and so the main way I wanna flatten is I wanna treat similar types of income more similarly.
[00:46:46] nicole: Yeah.
[00:46:47] Marc Goldwein: Uh, and so, uh, the One Big Beautiful Bill goes in the opposite direction, for example, with no tax on tips. No tax on tips says that if you work at Wendy's, you pay a higher tax than if you work at Denny's.
[00:46:58] nicole: Right. Hmm.
[00:46:59] Marc Goldwein: That's ridiculous, [00:47:00] right? Yeah. I want to treat the waitress at Denny's the same as the server at Wendy's.
[00:47:05] Um, I wanna treat the person that, um, is in the blue state the same as the person in the red state. I wanna treat the person that rents the same as the person that buys. Hmm. I want to treat the person that, um, negotiates higher wages the same as the person that negotiates more generous healthcare benefits, and the tax code is doing none of these things.
[00:47:22] They're treating them all differently.
[00:47:24] nicole: I saw on that hearing Johnson and the, and the other ... Now I'm, like, spacing out on all the senators' names. Johnson was, like, screaming about the tax code being corrupt, and then Merkley, would it have been? Was it Merkley? Could
[00:47:38] Marc Goldwein: be.
[00:47:39] nicole: It was like- Or the White House? "I agree too, and, like, why don't we work together?"
[00:47:43] And I'm thinking- Yeah ... "What, what, what is happening here?" Like ...
[00:47:47] Marc Goldwein: Um, you know, in the Simpson-Bowles plan, which Senator Crapo and Senator Durbin supported, we actually called for getting rid of most of the tax breaks in the code, using the money not for a flat tax, but to simplify to three rates that would [00:48:00] be much lower than today, and some things would have to go up.
[00:48:02] Capital gains would go up to match the ordinary income, which would go down, but it'd be a lot fewer tax breaks. The concept of this had broad support. Like, you know, Social Security has, like, sort of two special interests, right? There's the senior lobby and there's the anti-tax lobby. The tax code has, like, a million special interests- Yeah
[00:48:18] right? And so one by one- Hmm ... they unraveled this. And so actually, the Simpson-Bowles plan in 2010 made way for Paul Ryan's Better Way plan in 2015, which was, um, could disagree with some specifics, but it was actually, without me getting into details, from an economist perspective, a beautiful work of art that did a lot- Hmm
[00:48:36] of these same things. Lowered the rates, cut the tax breaks, made the code more efficient, and then in 2017, that went through the sausage-making process and became the Tax Cuts and Jobs Act. Hmm. And the Tax Cuts and Jobs Act did at least move directionally towards this in some ways. It, it, um- Limited the state and local tax deduction to $10,000.
[00:48:55] It expanded the standard deduction, which means that fewer people were taking tax breaks. Like, there were way [00:49:00] few people itemizing after the Tax Cuts and Jobs Act than before. And so it went through the sausage-making process, but it did try to go in that direction at least. And then the one big beautiful bill really unraveled a lot of that with all of these new no tax on overtime, no tax on tips, no tax on auto loans, um, Trump accounts, which, um, are a special anathema to me because I had a child that was born in November of 2024, and the $1,000 doesn't start unless you're born in January 2025 or later.
[00:49:27] So I'm especially mad about that one. Oh,
[00:49:29] Jolene: no.
[00:49:29] Marc Goldwein: Right. Um, but- Oh my God ... overall, the tax code is now more complicated than ever.
[00:49:36] nicole: And is that on purpose to, to screw us?
[00:49:40] Marc Goldwein: I think it's 'cause everyone wants their thing.
[00:49:41] nicole: Yeah.
[00:49:42] Marc Goldwein: And I also think that President Trump came up with a good political strategy to promise a bunch of free stuff in the form of no tax ons.
[00:49:50] Right. Um, and it's a good political strategy, but it's a terrible tax strategy and a terrible fiscal strategy.
[00:49:54] Jolene: Yeah. Okay. Mark, you're super smart. You have all these ideas. You have all [00:50:00] these solutions. Mm-hmm. What is the thing that concerns you the most right now? Like, what is not going to get fixed? 'Cause I feel like you're kind of optimistic, right?
[00:50:09] You have all these ideas and these solutions, like, "Okay, this can be fixed." What worries you?
[00:50:16] Marc Goldwein: Two things worry me, and they interact with each other. One is the debt spiral, and I, I kind of mentioned that at a high level. Yeah. And I'm not gonna be able to get into, like, the sophisticated macroeconomics, but what I will explain is, in general, when your interest rate is lower than your economic growth rate, you can always grow your way out of your old debt.
[00:50:35] nicole: Mm-hmm.
[00:50:35] Marc Goldwein: Because look, we look at debt to GDP, and so if you're- if you think of interest as the growth of your debt, and G- and GDP as the growth of your GDP, if your GDP's growing faster than your interest, you can still have debt problems- Yeah ... but at least your old debt you can kind of erode. We are now at the point that interest rates, you know, on average are, like, 5% or more, 5.5%, and I expect the growth rate to be 4%.
[00:50:57] And so very quickly, um, we [00:51:00] call this R versus G. Very quickly, the interest rate is gonna go above the growth rate, and then this debt spiral can start because higher debt pushes up interest rates, and higher interest rates push up interest costs, and higher interest costs push up debt. And so my one concern is the debt spiral.
[00:51:14] And my, my second concern is, um, the broken political system because for people to stop lending at us at favorable rates- Mm-hmm ... two things need to happen. The one is they need to see that our, our current law fiscal outlook is out of control, and they're gonna start seeing that very soon. And number two is they have to believe that future politicians aren't gonna correct it before it's too late.
[00:51:36] nicole: Hmm. '
[00:51:36] Marc Goldwein: Cause so long as they believe it will get corrected- Mm-hmm ... they will keep lending us money, right? Mm-hmm. And so if we're in a debt spiral and we have a broken political system, then we could be in real trouble.
[00:51:47] nicole: Okay. Okay. Before we get into our fun play stuff, we have to have you give our ver- viewers an assignment.
[00:51:54] What can we do? 'Cause one thing about We've Got to Talk is, like, Jolene and I are from [00:52:00] different, different sides, right? But we, and we do not wanna change each other's minds, but we are all about advocating for everyone. We are not just supposed to stay in our teams and not do anything, and what can we do, Mark?
[00:52:15] Marc Goldwein: Do I, do I want to tell a story?
[00:52:16] nicole: Yes. Yes. We love a story. Okay.
[00:52:18] Marc Goldwein: So when I worked in the Simpson-Bowles Commission, before we came out with our recommendations, we got tons of hate mail. "You're trying to feed seniors cat food. You're a stalking horse for a national sales tax." Um, you know, you name it. From the left, from the right-
[00:52:33] everybody hated us. And then we came out with our preliminary recommendations, not even our final ones, our sort of initial ones, and all of a sudden we started getting fan mail. And I- I'd asked an intern, "Let's do a little analysis about what percent is fan mail." And there was one letter she brought up to me 'cause she wasn't sure how to categorize it.
[00:52:49] And it said something like, you know, "Dear Erskine Bowles and Al Simpson, I'm a 60-some-year-old on Social Security, and I have to say I hate," in all caps, "I hate the things you've [00:53:00] recommended. But I also understand," also in all caps, "that we need," also in all caps, "these things to happen to save my country for my kids and my grandkids."
[00:53:08] nicole: Ah. "
[00:53:09] Marc Goldwein: Thank you so much." That's what we need. We need people who are willing to say, "I'm going to sacrifice stuff. I, as a Republican, don't want to pay more taxes, but I understand as part of a solution, you can raise my taxes as part of a solution. Um, I, as a Democrat, I don't want to see changes to my Social Security, but I understand as part of the solution there's gonna have to be changes."
[00:53:30] So what I ask your viewers is, like, your listeners, get educated. You know, check out crfb.org, get involved, but, like, stop asking your members of Congress to dole more things out to you- ... and start telling them what kind of sacrifices you're wi- willing to make, because that's the only way we're gonna get this done, is if they think they're not gonna pay a political price for doing the hard stuff.
[00:53:52] nicole: Ah. That's good. Okay. Okay.
[00:53:54] Jolene: Mark, that's fantastic.
[00:53:55] nicole: That's great. Can you tell, before we get into the good for the soul and stuff, can [00:54:00] you tell everyone how they can find... You said the s- website really fast. Can you say it a little slower? How to find you- Yeah ... how to find your work.
[00:54:09] Marc Goldwein: For those that can't tell from my accent, I'm from Philadelphia.
[00:54:12] Mm-hmm. And so I say everything very fast. Okay? But our, our website is crfb.org.
[00:54:20] nicole: Okay. Okay.
[00:54:21] Marc Goldwein: And I'm Mark Goldwein. You can always just Google me. Okay. Google our organization, get on our mailing list. We have lots of good stuff. We have pieces that are very intricate and analytical, and we have stuff that's, that's sort of for everyone, 101s and cool debt fixer tools.
[00:54:37] We have a, a, a game called The Social Security Reformer, where you actually can make your own Social Security plan, and it shows you exactly what it will do. So check out crfb.org.
[00:54:46] nicole: That's awesome. That's awesome. Committee- All
[00:54:48] Jolene: right ... for Responsible Federal Budget, CRFB. .org
[00:54:57] nicole: So could [00:55:00] you give us a good for the soul, please?
[00:55:03] Marc Goldwein: So there's a charity that I'm involved with called Martha's Table. It's in Washington, DC. What I want folks to do is go on their website, check out this charity. If you live in DC, come volunteer. Um, they, they feed the community. They provide childcare. They provide parental support.
[00:55:20] They help people navigate very difficult government programs. They're just an amazing everything organization. Um, and so my good for the soul is, you know, I, I, I go there sometimes, and I, I hand out food at their, their sort of, their grocery store, and I'm sort of involved in some of their other committees.
[00:55:37] But check out Martha's Table's website and, and come volunteer with me.
[00:55:40] Jolene: Oh, that's,
[00:55:41] nicole: that's really cool. That's great. That's great.
[00:55:46] Okay. Now we're gonna play our Social Security game, which is not a Social Security game. We're gonna play would you rather, and why don't we have Jolene start, [00:56:00] and then you can hit us back.
[00:56:01] Jolene: All right. Mark Goldwein, would you rather win a huge lottery and have to declare it publicly, or win the lottery and have to pay the national debt interest for one minute?
[00:56:18] Do you know how much that is? Do you know how much interest we pay for- Per minute? I,
[00:56:22] Marc Goldwein: I don't. I haven't done that-
[00:56:23] nicole: Jolene is very excited ...
[00:56:26] Jolene: can you tell me? Hell, I don't even know if this is right, but I think the Google told me we're paying $2 million per minute. Oof.
[00:56:37] Marc Goldwein: And
[00:56:38] Jolene: so- So ... so
[00:56:38] Marc Goldwein: how much do I
[00:56:39] Jolene: win in the
[00:56:39] Marc Goldwein: lottery?
[00:56:40] Jolene: So, so it's a huge lottery. I don't know, it's huge. It's like, it's hundreds of millions of dollars.
[00:56:44] nicole: Jolene, he's a numbers guy. Give, give him a number.
[00:56:46] Jolene: Okay. You've just won $987 million. Oh. Well, and, and you're gonna probably take the cash option I'm assuming, so you're gonna get, you know, half of that. Okay, so would you rather declare it publicly, everybody's gonna [00:57:00] know that Mark Olwine- Right ...'s got a ton of money, or win the lottery and you're gonna have to pay the national debt interest for one minute?
[00:57:08] Marc Goldwein: Right. It's a good question. So basically I'm paying $2 million for privacy of the money, which I think if it's $100 million is probably worth it because, um, I'm gonna end up paying far more than that, um, you know, just, just in, um, email scams.
[00:57:26] Jolene: Right. Oh, great point. Right.
[00:57:27] Marc Goldwein: So-
[00:57:28] Jolene: Yeah. Yeah, that's a great point.
[00:57:29] Love it. So I'm gonna
[00:57:30] Marc Goldwein: go with... Plus, plus I get to pay down the national debt a little bit, right?
[00:57:32] Jolene: That is so kind of you. So- Again, you've just asked- So kind ... everybody else to like, like, do something for America. Yeah And, and now... and you've just done it. You've just given $2 million. Okay. All
[00:57:43] Marc Goldwein: right. I'm gonna do that.
[00:57:44] All right. I'm gonna pay $2 million. Nice.
[00:57:46] Jolene: Okay. We appreciate you, Mark. All right. Thank you. Okay. Give us a would you rather.
[00:57:50] Marc Goldwein: Mine's gonna be, um, not fun. Yeah. It's gonna be really the concrete choices that we're gonna have to face, which is- Okay ... so the current r- Social Security retirement age is 67.
[00:57:57] Jolene: Okay.
[00:57:58] Marc Goldwein: Um, would you rather [00:58:00] work an extra three years to 70, um, or would you rather pay an extra point and a half on the payroll tax?
[00:58:08] 12.4, instead you go to 14. So do you wanna pay another 1.5% of your income every year or do you wanna work an extra three years?
[00:58:17] Jolene: I'm, I'm paying the extra. I mean, I'm looking at 70-year-olds and going, "Seriously, don't make them work till they're 70." I mean, there are some great 70-year-olds, but- I was gonna say the opposite.
[00:58:27] Really?
[00:58:28] nicole: Yeah, well pur- f- also Mark, like, I'm an actor. Like I, my... When you start doing math problems, I'm like, "Oh, I'm done." Like I don't... It just like goes over my head. And so I was like, "Oh, I don't know." But I'm thinking, I think having a purpose is really nurturing and- Yeah. And so I'm gonna choose the three years.
[00:58:52] Jolene: Wow.
[00:58:52] Marc Goldwein: And I, I, I will tell you, Nicole, there is, there's some evidence of this. It doesn't translate forever, doesn't go into your 90s, but there's some pretty good evidence that people that delay [00:59:00] their retirement, say, a year longer than they expected, you know, end up physically healthier, mentally healthier- Yeah
[00:59:05] stronger social networks, lower divorce rates 'cause they're not home annoying their spouse all day. Right? Hmm. Okay. Um, and greater satisfaction. It's not true of everyone.
[00:59:15] nicole: Yeah.
[00:59:16] Marc Goldwein: And mark- it doesn't do market work. The same thing applies for, you know, taking care of grandkids, if it's structured- Right ... and regular- Mm-hmm
[00:59:21] for volunteering. Mm-hmm. But there is some pretty good evidence that, um, you know, it is good for the soul to work more.
[00:59:27] nicole: There you go. Hmm.
[00:59:28] Jolene: There you go. Oh, Mark, we have loved having you. Oh my God. This is fantastic. This has been great. Um, we know that our viewers and listeners are going to, uh, be so excited to, to listen to this and, and get this information that I don't think- Yes
[00:59:41] that they've had before. So-
[00:59:42] nicole: Exactly ... we so
[00:59:43] Jolene: appreciate you.
[00:59:44] Marc Goldwein: Well, thank you for having me, and come back anytime. Oh. I'll come back anytime. Oh,
[00:59:47] nicole: absolutely. Oh, we would love it, 'cause we have way more questions, and we wanna hear all those ideas, the millions of them.
[00:59:53] Marc Goldwein: Wonderful.
[00:59:54] nicole: All right, thank you so much. Thank you.
[00:59:55] Uh, like, subscribe, press the thumbs up. Thank you, Mark. [01:00:00] All right. Bye.
[01:00:04] Jolene: We've Got to Talk is produced across the world by the wildly talented, creative,
[01:00:08] nicole: and hilarious team at Bamby Media. Our theme song is Jump Jive Swing by Space Train Unlimited. Thank you so much for listening, and join us every week for another episode of We've Got to Talk
