>> THREE MONTHS INTO THE WAR WITH IRAN THE U. S. BORROWING COSTS ARE AT THEIR HIGHEST SINCE 2007 WITH AMERICAN TAXPAYERS HAVING TO FORK OUT ALIENS OF DOLLARS IN INTEREST.

THIS IS THE NATIONAL DEBT SURPASSED THE SIZE OF THE U. S. ECONOMY IN LATE MARCH.

WHAT DOES THIS SPELL FOR THE COUNTRY'S FINANCIAL FUTURE?

MIAMI GUINNESS IS THE RESPONSIBLE FOR THE FEDERAL BUDGET AND SHE SPEAKS TO WALTER ISAACSON ABOUT WHAT POLICYMAKERS CAN DO TO REALLY IN THIS CRISIS.

>> THANK YOU, WELCOME TO THE SHOW.

>> SO NICE TO JOIN YOU.

>> WE'VE JUST HIT A MILESTONE, OUR DEBT IS $39 TRILLION AND THE MILESTONE IS, THAT'S AS MUCH AS OUR ENTIRE GDP, OUR GROSS DOMESTIC PRODUCT.

HOW MUCH OF A MILESTONE IS THAT AND WHAT'S THE SIGNIFICANCE?

>> WE'RE HITTING A LOT OF PHYSICAL RECORDS WHEN IT COMES TO OUR DEBT AND NONE OF THEM ARE GOOD.

DEBT AS A SHARE OF THE ECONOMY HITTING 100% OF GDP IS SOMETHING THAT HAS RARELY HAPPENED IN THIS COUNTRY, ONLY TWICE BEFORE, ONCE BRIEFLY DURING COVID AND RIGHT AFTER WORLD WAR II.

IT'S AN INAUSPICIOUS SITUATION WHERE WE ARE NOW RUNNING A DEBT THAT IS LARGER THAN THE ENTIRE ECONOMY PRODUCES IN A YEAR, AND THE PROBLEM IS WE ARE PROJECTED TO RACE RIGHT PAST THAT AND BORROW MORE WITH OUR DEBT AS A SHARE OF GDP GROWING.

THERE'S NOTHING MAGICAL ABOUT 100%, IT'S NOT LIKE THAT'S A TIPPING POINT.

IT'S ONE OF THE MANY SPEED BUMPS OR REMINDERS THAT THE FISCAL POLICIES OF THE COUNTRY ARE REALLY UNSOUND AND WE NEED TO MAKE CHANGES TO GET IT BACK INTO A TERRITORY WHERE THERE ARE FEWER THINGS TO WORRY ABOUT.

THIS IS A BIG WARNING SIGN.

>> THE PROBLEM IS THAT MARKETS AND NATIONAL DEBT ARE ON DIFFERENT TIME FRAMES.

IF YOU LOOK AT THE NATIONAL DEBT, WE SEE PROJECTIONS OF IT GROWING INDEFINITELY.

MARKETS ARE SHORT-TERM ORIENTED, AND SOME OF THE THINGS THAT MAKE THE DEBT WORSE CAN FEED MARKETS, BECAUSE THEY LIKE FISCAL STIMULUS, THEY LIKE BIG TAX CUTS, THEY LIKE NEW SPENDING PROGRAMS BECAUSE THOSE JUICE THE ECONOMY IN THE SHORT RUN, THEY CAN HELP YOU THIS YEAR, YEAR AND A HALF, BUT THEY MAKE THINGS WORSE IN THE LONG RUN, THE MORE YOU BORROW THE MORE IT SLOWS DOWN THE ECONOMY, BUT THE MARKET IS VERY SHORT- TERM ORIENTED FOCUSING ON THOSE THINGS, AND THAT'S WHY MARKETS DON'T TEND TO PREDICT WHEN THERE WILL BE SOME KIND OF FISCAL EMERGENCY.

WHAT WE DO SEE IS ONGOING NERVOUSNESS IN THE MARKETS AND WITH INTEREST RATES AS INTEREST RATES ARE GRADUALLY GETTING PUSHED UPWARDS , FOR A LOT OF REASONS, CERTAINLY ONE OF THEM IS ALL OF THE EXCESSIVE BORROWING IN OUR ECONOMY RIGHT NOW PUTS UPWARD PRESSURE ON THOSE INTEREST RATES AND WE'RE SEEING THAT.

>> THE INTEREST RATES GOING UP, PEOPLE HAVING A SHORT-TERM VIEW, BUT ESPECIALLY TRUE FOR THE LONG BONDS, 30 YEAR TREASURIES.

IS THAT A SIGNAL BECAUSE OF THE DEFICIT?

>> A LOT IS GOING ON IN OUR ECONOMY AND OUR WORLD RIGHT NOW BUT ABSOLUTELY.

THE DEFICIT IS ONE OF THE THINGS AFFECTING THE PUSHING UP OF THE 10 YEAR THAT WE'RE SEEING IN MARKETS RIGHT NOW.

ONE THING MARKETS DON'T LIKE IS UNCERTAINTY, THIS IS A WORLD FILLED WITH UNCERTAINTY RIGHT NOW, CLEARLY ON THE GLOBAL STAGE IN TERMS OF GEOPOLITICAL RISKS, WHAT'S GOING ON WITH OIL, BUT, ALSO, WE ARE SEEING PEOPLE WORRYING ABOUT THE DEBT IN THE U. S. AND AROUND THE WORLD BECAUSE THERE ARE A NUMBER OF THINGS FACTORING INTO THIS.

OUR PLANS ARE TO CONTINUE BORROWING AT LEAST $2 TRILLION A YEAR, A LOT OF POLICIES ARE ON THE HORIZON THAT ARE LIKELY TO PUSH THAT UP EVEN MORE, AND POPULISM, THE FACT THAT THE POLITICAL PARTY NOW COMPETE WITH EACH OTHER TO SEE WHO CAN GIVE AWAY MORE TO WIN VOTERS SUPPORT RATHER THAN TAKING A LONGER VIEW, WE'VE GOT TO DO SOMETHING TO GET THE DEBT UNDER CONTROL AND WE'RE GOING TO PUT IN A PLAN, ALL OF THOSE ARE WORRYING MARKETS WHERE THEY SEE THAT WE ARE GOING TO HAVE INFLATION OVER THE LONGER RUN, HIGHER INTEREST RATES, ALL OF THOSE THINGS THAT SLOW ECONOMIC GROWTH, AND YOU CAN SEE THE FISCAL UNDERPINNINGS OF THE SITUATION CONTRIBUTED TO THAT ON A REGULAR BASIS THESE DAYS.

>> YOU TALK ABOUT THE RISE OF POPULISM BUT I CAN REMEMBER WHEN POPULISM MEANT BEING AGAINST RUNAWAY FEDERAL SPENDING, BEING AGAINST HAVING TOO MUCH DEBT, WHEN DID THAT CHANGE?

>> IT'S BEEN A HUGE SHIFT, FOR SO LONG THERE HAVE BEEN TWO PARTIES, THEY DISAGREE WITH EACH OTHER, BUT ROUTINELY WHEN THE FISCAL SITUATION WOULD GET OUT OF CONTROL AT MUCH LOWER LEVELS THAN WE HAVE TODAY, BOTH PARTIES WOULD COME TOGETHER, ACKNOWLEDGE THE PROBLEM AND PUT IN PLACE REFORMS THAT WOULD GRADUALLY BRING THOSE BORROWING TRAJECTORIES DOWN.

THAT'S SOMETHING WE DON'T SEE ANYMORE, AND THE GROWTH OF PARTISANSHIP AND POPULISM HAS LED TO A LOT OF BIG SHIFTS IN OUR COUNTRY RIGHT NOW.

BUT ONE OF THEM IS THAT ALMOST EVERY ELECTION IT FEELS LIKE EXISTENTIAL THREAT, BOTH PARTIES ARE JUSTIFYING ALMOST ANYTHING BECAUSE THEY FEEL LIKE THEY NEED TO WIN AT ALL COSTS.

ONE OF THE SHIFT HAS BEEN, OKAY, I'M GOING TO GIVE BIG TAX CUTS AND NEW SPENDING PROGRAMS.

IT USED TO BE THAT THERE WAS THE GENERALIZATION THE DEMOCRATS LIKED SPENDING AND REPUBLICANS LIKED TAX CUTS, BOTH OF THOSE WILL MAKE THE FISCAL SITUATION WORTH IF THEY AREN'T PAID FOR.

BUT IT'S SHIFTED WHERE BOTH REPUBLICANS AND DEMOCRATS PREFER TAX CUTS, THEY MIGHT LOOK DIFFERENT BUT THEY BOTH LIKE TAX CUTS, AND NEW SPENDING PROGRAMS, AND PROMISES NOT TO FIX THE THINGS WE NEED TO FIX, SOCIAL SECURITY AND MEDICARE.

YOU HAVE AN UNHOLY ALLIANCE BETWEEN THE PARTIES OF DOING THE THINGS THAT WILL MAKE THE FISCAL SITUATION WORSE, ALL IN DEFENSE OF WINNING ELECTIONS, BUT NONE OF THE ADULTS IN THE ROOM HAVE COME FORWARD TO SAY, OKAY, THIS MILESTONE OF DEBT AS 100% OF GDP OR THE FACT THAT SOCIAL SECURITY IS GOING TO BE INSOLVENT IN SIX YEARS, MEAN THAT WE NEED TO MAKE CHANGES.

YOU'RE NOT HEARING THOSE VOICES, NOT SEEING THAT KIND OF LEADERSHIP.

>> BOTH PARTIES SEEM TO BE ON A RACE TO CUT TAXES AND DO MORE SPENDING.

YOU SAID THE ADULTS IN THE ROOM AREN'T THERE TO SAY NO.

WHAT CAN WE DO TO STOP THIS?

>> NONE OF THE SOLUTIONS ARE THINGS WE'RE NOT FAMILIAR WITH, I WOULD SAY THE PLACE WE NEED TO START IS BY FIXING SOCIAL SECURITY.

IT WILL BE INSOLVENT IN LESS THAN SEVEN YEARS AND WHEN THAT HAPPENS IF WE HAVEN'T MADE CHANGES THERE WILL BE ACROSS THE BOARD BENEFIT CUTS OF 24% FOR EVERY PARTICIPANT.

THAT'S UNCONSCIONABLE, NOBODY THINKS THAT'S A GOOD IDEA.

WE KNOW THE THINGS WE NEED TO LOOK AT THE PICS SOCIAL SECURITY, THESE ARE THE THINGS POLITICIANS WON'T TALK ABOUT BUT WE NEED TO GRADUALLY RAISE THE RETIREMENT AGE FOR YOUNGER PEOPLE WHO ARE LIVING LONGER, WE NEED TO TALK ABOUT WHETHER MEANS TESTING WHERE WE REDUCE THE BENEFITS FROM WHAT THEY'RE PROMISED TO BE FOR PEOPLE WHO DON'T NEED THEM AS MUCH SO THAT WE CAN PROTECT THEM FOR PEOPLE WHO DO.

THERE'S A CAP ON PAYROLL TAXES WE SHOULD TALK ABOUT LIFTING THAT THE TAXES GO ALL THE WAY UP THE INCOME LEVEL, AND THE PROGRAM WOULD BE MORE FUNDED.

THERE'S DIFFERENT COMBINATIONS OF THOSE THINGS, BUT WE NEED TO BE TALKING ABOUT THEM.

AT THE SAME TIME, WE HAVE TO LOOK AT THE PLACES WE CAN GENERATE SAVINGS.

I WOULD SAY LOOK AT DEFENSE PROCUREMENT, THERE IS SAVINGS TO BE HAD.

LOOK AT OUR HEALTHCARE SYSTEM WHICH IS JUST FILLED WITH INEFFICIENCIES THROUGH THE HOSPITALS, THE INSURERS, PRESCRIPTION DRUGS, ALL OF THOSE INDUSTRIES ARE ACTUALLY FIGHTING AGAINST THE CHANGES THAT WE COULD IMPLEMENT, MANY OF WHICH ARE BIPARTISAN WE SUPPORTED, TO HELP MAKE SAVINGS AND HEALTHCARE.

FINALLY, YOU HAVE TO LOOK AT REVENUE, EVERYBODY WHO TALKS ABOUT NO NEW TAXES IS LOOKING AT THE NUMBERS.

WE HAVE TO FIGURE OUT A WAY TO GENERATE REVENUE THAT CAN COME FROM ECONOMIC GROWTH BUT THAT WON'T DO IT ON ITS OWN.

WE SHOULD LOOK AT $25 TRILLION IN LOST REVENUE DUE TO TAX BREAKS.

OVER A DECADE, THOSE CREDITS, DEDUCTIONS, EXEMPTIONS, EXCLUSIONS.

THE LIST IS LONG, $7 TRILLION YOUR BUDGET WHERE WE CAN GENERATE SAVINGS , IT'S THAT THEY'RE NOT POLITICALLY EASY TO TALK ABOUT AND WE NEED TO CREATE AN ENVIRONMENT WHERE POLITICIANS ARE ABLE TO BE MORE HONEST ABOUT THE RISKS OF THESE DEFICITS, AND THE REALITIES OF WHAT IT WOULD TAKE TO FIX THEM.

>> WE JUST HIT THIS RATHER SHOCKING MILESTONE, OF HAVING OUR TOTAL NATIONAL DEBT EQUAL OUR GDP FOR ONE YEAR, AND YET, CORRECT ME IF I'M WRONG, IT SEEMS THE DEFICIT IS GOING TO GO UP 16% THIS COMING YEAR.

THAT'S WHAT THE TRUMP ADMINISTRATION PREDICTS.

IS THAT RIGHT?

IS THAT ADDING TO THIS PROBLEM, IN A SURPRISING WAY?

>> DEFICITS ARE LIKELY TO CONTINUE TO GROW FOR A NUMBER OF REASONS.

ONE, THERE IS NEW SPENDING ON THE INVASION, THE GEOPOLITICAL SITUATION THAT WE SEE AROUND THE WORLD, THE SITUATION THAT THE U. S. IS IN, THAT IS GOING TO COST A LOT.

TWO, TARIFF REVENUE WHICH WAS BRINGING IN HAS BEEN DECLARED UNCONSTITUTIONAL BY THE SUPREME COURT.

WE'LL BE GENERATING LESS IN REVENUE THAN WE'D BEEN HOPING FOR.

AND NOW WE'RE LIKELY TO SEE A NUMBER OF RECONCILIATION BILLS COMING OUT OF CONGRESS WHICH, MY DEEP CONCERN IS THEY WILL BORROW MORE , NOT LESS.

RECONCILIATION IS A PROCESS THAT USED TO BE USED TO REDUCE DEFICITS, WE SHOULD GO BACK TO THAT.

THE RECONCILIATION BILL THAT WE JUST SAW THAT MOVED TAX CUTS FORWARD, THOSE THAT HAVE MOVED SPENDING PROGRAMS, THEY HAVE NOT IMPROVED THE FISCAL SITUATION.

THAT WOULD BE A GREAT THING THAT WE COULD RETURN TO BUT THE PRESSURE IS THAT WE WILL GENERATE MORE BORROWING THAN PLANNED THROUGH ADDITIONAL SPENDING THAT WE'RE SEEING RIGHT NOW, AND THE LOSS OF THE TERRACE --TARIFF REVENUE.

THESE DEFICITS ARE LIKELY TO BE 2 TRILLION OR MORE FOR ALL THE COMING YEARS, IT'S ANOTHER REMINDER, JUST LIKE THAT AT 100% OF GDP THAT CHANGES HAVE TO BE MADE.

>> SOMETHING YOU SAID STRUCK ME, WHICH IS THAT THE TARIFF REVENUES, GOING AWAY, MAKE THIS PROBLEM WORSE.

COULD THIS PROBLEM BE SOLVED BY HIGHER TARIFFS, OR DOES THAT HAVE KNOCK ON EFFECTS THAT WOULD BE BAD?

>> TARIFFS WOULD NOT GENERATE NEARLY ENOUGH MONEY TO GENERATE THE SAVINGS WE NEED TO BRING THE FISCAL SITUATION BACK UNDER CONTROL.

IT CERTAINLY WOULD BE AN IMPORTANT STEP.

TARIFFS DO HAVE NEGATIVE NEGATIVE ECONOMIC CONSEQUENCES, THAT'S ONE OF THE THINGS YOU HAVE TO THINK ABOUT WHEN PUTTING POLICIES IN PLACE.

WHO DO THEY AFFECT, HOW DO THEY AFFECT THE BUDGET, HOW THEY AFFECT THE ECONOMY?

TARIFFS WOULD NOT BE A FIRST CHOICE FOR REVENUE BUT YOU COULD REPLACE THEM WITH DIFFERENT KINDS OF CONSUMPTION WHICH COULD BE GOOD INCENTIVIZING SAVINGS AND INVESTMENT AND OTHER THINGS.

SO, IF YOU LOOK AT THE FISCAL TARGET, A REASONABLE FISCAL TARGET WOULD BE TO BRING OUR DEFICIT FROM 6% OF GDP, WHERE IT IS NOW, TO 3% OF GDP IN A DECADE.

CUT IT IN HALF AS A SHARE OF GDP OVER 10 YEARS.

THAT REQUIRES $10 TRILLION IN SAVINGS.

I DON'T WANT TO DIMINISH THE IMPORTANCE OF THE LEVEL OF CHANGES WE HAVE TO MAKE TO GET THERE.

EVEN THAT IS SHORT OF BALANCING THE BUDGET.

IF YOU LOOK AT THE GOAL OF SAVING $10 TRILLION, TARIFFS COULD GENERATE TRILLIONS OF DOLLARS BUT THEY COULDN'T DO IT ON THEIR OWN, WE'RE GOING TO HAVE TO LOOK AT ALL PARTS OF THE FEDERAL BUDGET.

>> YOU'VE BEEN SAYING WE'RE NOT VERY GOOD AT DISCIPLINING OURSELVES THESE DAYS, EITHER PARTY.

IS THERE SOME OUTSIDE FORCE THAT CAN DISCIPLINE US, SUCH AS REALLY BAD RISING INTEREST RATES OR INFLATION OR THE MARKET?

>> IT'S SO SAD THAT IT WILL HAVE TO BE SOMETHING LIKE THAT.

ONE OF OUR BOARD MEMBERS SAID WE'RE GOING TO FIX THIS PROBLEM, THE QUESTION IS WHETHER IT WILL COME FROM LEADERSHIP OR CRISIS.

IT IS BECOMING INCREASINGLY LIKELY THAT THERE WILL BE SOME KIND OF CRISIS THAT THIS IS FORCED UPON US BY BOND MARKETS GETTING SKITTISH, BY FOREIGNERS NOT WANTING TO LEND TO THE U. S. , BY INTEREST RATES CONTINUING TO GROW OR ANOTHER BOUT OF HIGH INFLATION.

ALL OF THOSE THINGS WOULD BE IMPROVED AND AVOIDED IF WE GOT OUR DEFICITS AND DEBT UNDER CONTROL NOW.

THERE'S ANOTHER OUTSIDE FORCE THAT I'M STARTING TO SEE MORE SIGNS OF, WHICH IS, YOUNGER PEOPLE WHO ARE REALLY CONCERNED ABOUT THEIR FUTURE.

THEY HAVE THE PRESSURE OF WHAT DOES A. I. MEAN FOR JOBS, HOW IS HIRING OUT OF COLLEGE, BUT ON TOP OF THIS WE KNOW THAT SOCIAL SECURITY WILL BE INSOLVENT IN SIX YEARS.

ALL OF THE PLANS ARE GOING TO PROTECT RETIREES, YOUNGER PEOPLE REALIZE I'M GOING TO HAVE TO FIX THAT ALONG WITH INHERITING TENS OF TRILLIONS OF NATIONAL DEBT.

I THINK WE'RE GOING TO SEE YOUNG PEOPLE STARTING TO SEE THIS BORROWING SO WE CAN GO ON A SPENDING SPREE AS A COUNTRY TODAY AND PUSH THE BILLS TO YOUNGER PEOPLE IN THE FUTURE, THAT'S NOT FAIR.

>> LET ME PUSH BACK ON THAT.

DO YOU HAVE ANY SIGNS THAT YOUNGER PEOPLE ARE SAYING THAT?

>> I DO, WE'VE BEEN HEARING A LOT RECENTLY AND YOUNGER PEOPLE STARTING TO SAY THAT , UNFORTUNATELY YOU SEE IT ON SOCIAL MEDIA WHICH IS NOT MY FAVORITE PLACE TO HANG OUT, BUT THERE HAVE BEEN SIGNS OF THAT.

BEEN ORGANIZATIONS THAT ARE STARTING TO COME UP THAT ARE THINKING ABOUT THIS, AND A LOT OF YOUNGER MEMBERS TALK MORE ABOUT THESE ISSUES THAT WE NEED TO THINK ABOUT THE FUTURE, IN THE LONG RUN.

I WILL SAY, I DON'T THINK 20- YEAR-OLDS ARE GOING HOME AND TALKING ABOUT THE FISCAL SITUATION THE COUNTRY IS THEIR NUMBER 1 ISSUE, THEY'RE WORRIED ABOUT THE HIGH COST OF STUDENT DEBT, THE INABILITY TO BORROW AND GET A MORTGAGE, BUT WHAT IS LINKED IS THE MORE WE'RE BORROWING TODAY IS ALL PUSHING THOSE COSTS TO BE HIGHER, PART OF THE SUPPORTABILITY CHALLENGE WE HAVE IS THAT BORROWING TODAY IS PUSHING UP INTEREST RATES AND PRICES, MANY OF WHICH ARE AFFECTING YOUNGER PEOPLE.

WE HAVE STARTED TO HEAR MORE FROM PEOPLE WHO ARE STARTING TO WORRY ABOUT THAT ON AN INTERGENERATIONAL ANGLE.

>> WHAT ABOUT THE IDEA THAT ARTIFICIAL INTELLIGENCE, A. I. , WILL INCREASE PRODUCTIVITY SO MUCH WE CAN GROW OUR WAY OUT OF THIS?

>> WE'VE LISTENED FOR YEARS FOR ALL SORTS OF FISCAL MYTHS OR THE FREE LUNCH PROMISES, DON'T WORRY, YOU DON'T NEED TO DO ANYTHING HARD, THIS IS GOING TO GET FIXED.

USED TO BE THE UNTRUE ARGUMENT THAT TAX CUTS PAY FOR THEMSELVES.

NO, THEY DON'T.

THERE WERE OTHER THEORIES, WE SHOULD JUST PRINT MONEY, WE SAW WHAT HAPPENS WHEN YOU PRINT TOO MUCH MONEY, THAT LEADS TO INFLATION.

WE'VE SEEN THAT HERE AND AROUND THE WORLD.

A. I. IS GOING TO DO TREMENDOUS THINGS AND WE HAVE NO ABILITY TO PREDICT EXACTLY WHAT IT IS.

BUT THERE ARE NO CREDIBLE ESTIMATES OUT THERE THAT ARE CALLING FOR A. I. PRODUCTIVITY LEVELS THAT WILL BE SO HIGH THAT IT WOULD FIX THIS, INCLUDING THE ADDITIONAL COST THAT WILL GO ALONG WITH IT.

A. I. IS GOING TO INCREASE PRODUCTIVITY, WE'VE SEEN THE EFFECTS AND WAYS THAT WILL BE ABLE TO, BUT IT WILL ALSO CAUSE JOB DISLOCATION OR JOB TRANSITIONS, IT WILL CAUSE LARGER AMOUNTS OF DISINFORMATION WHICH IS COSTLY, CYBER PROTECTIONS WILL HAVE TO GROW, ENERGY COSTS WHICH MAY GROW UP AND BE INFLATIONARY, ALL THE OTHER TANGENTIAL THINGS AS WE'RE GETTING USED TO THE WORLD WE'RE LIVING IN IS GOING TO HAVE TRANSITION IF NOT PERMANENT COST.

THAT WILL TAKE AWAY FROM THE GAINS.

WE WILL SEE PRODUCTIVITY GROWTH BUT WE WILL ALSO SEE NEW COSTS.

WE SHOULD NOT BE BANKING ON SOMETHING WE DON'T EVEN UNDERSTAND TO FIX OUR WAY OUT OF THIS.

WE ARE INCREDIBLY LUCKY IN THAT WE ARE THE RESERVE CURRENCY.

PEOPLE HAVE ALWAYS WANTED TO BUY OUR DEBT.

THAT GIVES US A HUGE PRIVILEGE AND THE TIME TO FIX THIS ON OUR OWN TERMS.

BUT IF WE'RE CLINGING TO FALSE PROMISES AND POLITICIANS LOVE THE DON'T WORRY, WE DON'T HAVE TO DO ANYTHING HARD, KIND OF VIEWPOINT, WE COULD END UP IN A WORLD OF PAIN BECAUSE WE DIDN'T TAKE THE REASONABLE MEASURES NOW AHEAD OF TIME TO FIX THIS.

>> SO WE HAVE 39 TRILLION IN DEBT, 100% OF OUR GDP.

WE HAVE TO PAY INTEREST ON THAT DEBT.

I THINK, 20% OF THE BUDGET, NOW IS JUST GOING TO INTEREST PAYMENTS, AND THAT'S MORE THAN EDUCATION, TRANSPORTATION, RESEARCH AND DEVELOPMENT COMBINED.

WHAT DOES IT SAY ABOUT OUR COUNTRY WHEN WE SPEND MORE PAYING FOR PAST BORROWING THAN WE DO FOR OUR SERVICES?

>> THIS IS ONE OF THE MOST TROUBLING SIGNS THAT WE'RE SEEING, THAT WE ARE SPENDING $1 TRILLION ON INTEREST PAYMENTS A YEAR.

SOME OF WHICH , A GOOD DEAL OF WHICH IS LEAVING OUR ECONOMY AND GOING ABROAD TO FOREIGNERS WHO HAVE LENT TO US.

INTEREST PAYMENTS ARE LARGER THAN NATIONAL DEFENSE, THERE HAS BEEN A STUDY THAT SHOWED NO COUNTRY EVER REMAIN A SUPERPOWER WHEN IT WAS SPENDING MORE ON INTEREST PAYMENTS THE NATIONAL DEFENSE.

IT'S MORE THAN WE SPENT AT THE FEDERAL LEVEL ON ALL SPENDING FOR CHILDREN.

TALK ABOUT FOCUSING ON CONSUMPTION FROM THE PAST INSTEAD OF INVESTMENT IN THE FUTURE.

REALLY TROUBLING AND ON TOP OF ALL OF THAT, INTEREST PAYMENTS ARE THE SINGLE FASTEST GROWING PART OF OUR FEDERAL BUDGET.

IT'S THE ONE THING WE DON'T CONTROL.

WE CAN TO BRING THEM DOWN UNLESS WE BRING THE DEFICITS DOWN AND THAT BRINGS THOSE INTEREST RATES DOWN.

THIS IS SOMETHING THAT IS THE RESULT OF PEOPLE SAYING, DEFICITS, DON'T WORRY ABOUT THEM, AND NOW THAT'S CATCHING UP WITH US IN THESE INTEREST PAYMENTS THAT ARE SQUEEZING OUT THE OTHER IMPORTANT PRIORITIES OF THE BUDGET, AND I WOULD SAY AT A TIME WHERE IT'S INCREDIBLY IMPORTANT TO HAVE A FLEXIBLE BUDGET.

WE KNOW RISKS AROUND THE WORLD ARE GROWING, WE KNOW THAT'S EXPENSIVE, WE KNOW THAT A. I. , WHETHER IT'S THE GREATEST THING THAT EVER HAPPENED OR A TERRIBLE DYSTOPIAN THING OR MOST LIKELY SOMETHING IN BETWEEN IS GOING TO HAVE TRANSITION COSTS WHILE WE FIGURE OUT HOW TO ADAPT TO IT.

THAT'S GOING TO REQUIRE PARTNERING WITH THE FEDERAL GOVERNMENT, BUT WE DON'T HAVE THE PHYSICAL FLEXIBILITY IN OUR BUDGET BECAUSE WE'VE MADE SO MANY PROVINCES AND WE OWE SO MUCH IN INTEREST PAYMENTS RIGHT NOW , SO IT'S GOING TO HAVE A PROFOUND EFFECT AS INTEREST KEEPS US FROM HAVING THE BUDGET THAT WE NEED FOR THE MODERN MOMENT.

>> THANK YOU SO MUCH FOR JOINING US.

>> THANK YOU.