♪ ("LAST WEEK TONIGHT"
THEME PLAYS) ♪ Moving on.
Our main story tonight concerns the national debt.
The world's most boring twenty-eight trillion dollars. And I know just saying
twenty-eight trillion might sound confusing.
How much is that exactly? Well, to put it one way,
it's 28 trillion dollars. To put it another way it's
twenty-eight million millions. To put it a third way,
it's an absolute fuck-ton of money.
But regardless, the national debt
is a complete obsession in this country. Here in New York,
we even have a debt clock, that counts up in real time.
It actually made headlines a little over a decade ago
when the debt hit 14 digits. REPORTER: The national debt
just passed 10 trillion dollars. So the clock's caretakers
had to squeeze a one and a dollar sign
into the same square. It's pretty scary. It's a
pretty big number. (CHUCKLES) Incomprehensible,
it's too big.
REPORTER: The clock was put up
in 1989, by Helena Durst's
grandfather. When the national debt
was just under three trillion dollars.
Now that the debt has passed the 10 trillion-dollar mark,
Durst likes to recite a poem by her grandfather. "Borrow, borrow, borrow.
Enjoy today, and tomorrow, for tomorrow's going
to be terrible." I'm sorry, but that poem sucks. The rhyme scheme's all over
the place, and if tomorrow is gonna
be terrible, why would you enjoy it? That was clearly the work
of a man almost as good at writing poetry,
as he was at raising children who aren't serial killers. Oh, yeah, the clock was put up
by that Durst family. The bathroom-murder-burp Dursts. So thanks very much
for the dumb clock that doesn't tell time,
you wealthy bathroom-murder burpers.
But the truth is,
our national debt is undeniably big.
And between the trillions in Coronavirus stimulus bills,
and the infrastructure plans Biden unveiled just this week,
it's poised to get even bigger. And Republicans,
in particular, seem outraged by that. This chart showing debt
is not just about the big number.
It's not just about the 30 trillion dollars in debt.
This is about tyranny. History is screaming
this warning at us. Countries that bankrupt
themselves and destroy their economies
simply aren't around very long.
There will be a day
of reckoning. A debt crisis,
and it won't be pretty. Deficits do matter.
How long do you think your family would last
if every month you spent more and more
on the credit card and made the minimum payment?
Not long. Look, I know that all sounds
pretty scary, but for what it's worth,
the national debt is nothing like your
credit card. For start,
we don't have 28 trillion airline miles,
nor do we get letters in the mail everyday
saying we're pre-approved for a brand-new
national debt. Leave us alone,
you fucking parasites. But if we have huge clocks
to measure it, we're considering
an infrastructure bill that can add two trillion to it,
and some are implying that our creditors
could be turning up any day now with a baseball bat
to repossess our bridges and dams
because of it, we thought tonight might be
a good time to talk about
the national debt.
How it works,
how valid concerns about it are, and how we should think about it
moving forward. And let's start
with the basics. Like the difference
between the debt and a deficit.
A country runs a deficit when it spends more money
on things like military, social programs,
and everything else the government does,
then it brings in, mostly through taxes.
Now, to pay for a deficit, the government then
borrows money, thus accruing debt.
So the deficit is a yearly measurement
of how much we're in the red, and the debt is the total amount
that we owe, accumulated over time. And for decades,
in political ads, the debt has been portrayed
as a burden that we're placing
on future generations. Basically making that argument
that we are running up their credit card.
And that one day, the bills gonna come due. You owe the United States
government, in round numbers, -fifty-thousand dollars.
-(CRIES) What would you like
for Christmas? I would like you to fix
the debt so I can have a future.
ALL: I pledge allegiance
to America's debt, and to the Chinese government
that lends us money. NARRATOR: Congress must
stop digging a deep hole of debt that we'll never get out of. Please stop digging. Yeah, pretty dramatic,
right? Crying babies,
exacerbated Santas, and even a child
watching Uncle Sam digging a grave.
And quick piece of advice here, kids,
if you do see a man in any kind of costume
digging a large hole in the middle of the desert,
do not approach him. Do not interfere
with his digging. I'm not saying he should
be doing that, I'm saying you're not the one
who should try to stop him. He's willing to dig a big hole,
he's willing to dig a small one.
Run away and tell an adult. A non-costumed adult. But ads like those
are wildly misleading. For instance,
that "Pledge of Allegiance" ad talked about how much we owe
the Chinese government. That is something you hear
But, for the record,
the majority of government debt
is actually owned by American investors. For example, if you have
a pension, you might own some
of that debt in the form of government bonds,
because, they're a pretty safe
investment. Foreign investors only own
around a third of our debt. And while, yes, it is true,
China does own over a trillion dollars of it,
which is nothing, it's around five percent,
for what it's worth, they're not even our largest
foreign creditor, Japan is. And while the debt
is often talked about as being something
that we're running up with new spending,
the truth is, before the pandemic hit,
most of our debt was the result of long,
steady growth in programs that we long ago committed to,
like Medicare and other entitlements. So we are very much getting
stuff for the money that we're spending.
And that actually brings us to a really important point
here. Going into debt can actually
be a good investment for the country.
Essentially, as economists will tell you,
the key question is: Are you spending money
on the right things? We need to think of the debt,
are you creating money for real economic activity?
Because doing it just to give somebody money,
then, yeah, you got a problem.
But if I'm a private individual,
and I go to the bank and say, "I got this wonderful
new idea, I just need the money
to build my factory," nobody says,
"Oh, that's horrible, you just increased
the money supply." 'Cause we all go, "Yeah,
but there's a factory there. It's a real thing." Right.
Taking on debt to build a factory
that creates jobs and increases economic output
is probably a smart investment. Especially if it's one
that makes this actual pillowcase depicting
a nude Nicolas Cage lounging in a banana peel,
with two giant foxes in the background.
I mean look at this thing. As the description says,
it has an "ophisticated seam," with, "stylish style."
And I am more than happy to co-sign on both
of those claims. And the reason that I am
confident is… You can consider me
a satisfied customer. I feel so much more
ophisticated. The point is,
Republicans love to argue that government should be run
like a business.
But tend to conveniently forget
that some extremely valuable companies
got that way, in part, because they had long periods
where they spent a shitload more than they took in. So, as you can see,
things are a lot more nuanced than simply, "Hey, Uncle Sam,
please stop digging." And it is worth taking
a moment to look at the history of the debate
over the national debt. Because the argument
that Republicans often make is that they are the
responsible ones who want to reduce the debt
and reign in spending. Whereas Democrats
don't give a shit about it and just love recklessly
throwing around money. But that story just doesn't
match up to reality. Take Ronald Reagan.
He spent years complaining that deficits were a sign
that the federal government had simply lost its way. And I think the answer to
curing inflation is a balanced budget.
Now, how do you do that?
I mean– How do you balance the budget? Well, balancing the budget
is like protecting– You don't spend more
than you take in… right. It's like protecting
your virtue, you have to learn to say no. (AUDIENCE LAUGHING, CHEERING) Really?
An applause break for that? Is there anything weirder
than calling someone's virginity their "virtue"?
Because, as far as virtues go,
it is a pretty shitty one. I'm not saying that there is
something inherently wrong with not having sex,
that is a personal choice.
I have frequently not had sex
due to lots of people's personal choices.
But, if that is the best thing about you,
you should probably get some other virtues.
But the key thing to know is that Reagan didn't, in fact,
end up spending his presidency saying no,
because he wasn't really promising not
to spend money so much as promising not to spend it
on certain people. His campaign rhetoric
about, "welfare queens" played into the racist trope
that Black people were fraudulently benefitting
from wasteful government spending.
And, as president, he followed through by making
cuts to basic elements of the social safety net
like food stamps, welfare, and Medicaid.
But he also massively increased defense spending
while cutting taxes, so that the government took in
less money creating large deficits
that wound up tripling the national debt.
Which I guess, in his terms, made Reagan America's hottest
Then, came these two guys.
And between Bush Sr. and Clinton,
they more or less did what Reagan had promised
to do. Cutting spending
and raising taxes enough to achieve budget surpluses
by the end of the '90s. And the debt was briefly
starting to come down, until this lovable little
human rights violation entered the picture.
Because he, immediately, signed a massive tax cut
and launched an expensive war on terror, and then,
signed a second round of tax cuts,
all of which made our national debt explode.
But Republicans, strangely, didn't seem to give a shit.
Until that is, Obama became president.
He inherited a historic recession
and immediately signed a large stimulus bill.
But, afterwards, was met with fervent
opposition to any additional spending,
mainly from Republicans who had suddenly re-found
their hatred for deficits.
And sometimes they expressed it
in truly remarkable ways. Our free stuff today
has been paid for by taking money
from our children and borrowing from China. When that note comes due,
it– And this isn't racist,
so try it– try it anyway,
this isn't racist, but it's gonna be like slavery
when that note is due, right? We are gonna be beholden
to a foreign master. Uh, yeah, no.
That's just not how any of that works.
The debt isn't gonna just suddenly come due
all at once, and being in debt to someone
is not the same as being enslaved by them.
If you think a portion of U.S. Treasury bonds
being owned by foreign investors is anything like slavery,
you know both a very small amount about the financial
system, and a very racist amount
Also, just generally,
even if you preface something that isn't racist
with, "This isn't racist…" It will still sound racist.
I'll show you. If you said, "A lot of people
buy jeans at Old Navy," totally fine.
But if you said, "A lot of people,
and this isn't racist, yeah, try it–
try it anyway, this isn't racist,
but a lot of people buy jeans at Old Navy."
Now, that suddenly sounds like something that's gonna
require about three pages of your Notes app. And the thing is, Republicans putting the brakes
on Obama's recovery spending is now widely considered
to have been a big mistake. Most experts agree
that the federal government didn't spend as much
on stimulus as it should have following the financial crisis, forcing state and local
governments into austerity that delayed the economic
recovery by about four years, and then came this fucking guy.
He campaigned on eliminating
the entire national debt, only to then implement
an absolutely massive tax cut, resulting in huge deficits. Most corporations who benefitted
used the money not on investments
in things like factories but on stock buybacks.
As for individuals… So, we gave more money to people who already had
a lot of it. And despite claiming
that Trump's tax cuts would pay for themselves, they very much did not. In fact, they did so little
to boost the economy, they're protected to cost us
1.9 trillion over a ten-year period,
all of which clearly left some "fiscally responsible"
Republicans who voted for those tax cuts in a pretty awkward position. JONATHAN SWAN: You belong
to a party that has greenlit a historic expansion
of deficits and debt, and it's just a plain fact. TED CRUZ: Do I wish… that it was a higher priority
for the president to rein in spending
and the debt? Yes.
Do you think your colleagues,
the Republican party, -will rediscover its concern
about debt and deficit?
CRUZ: Oh, sure. Sure. -I mean, isn't that
the most cynical, phony thing?
-CRUZ: Oh, I that that there's -an element of it.
-Doesn't that make you
want to puke? You're touching into something that as you know,
I have raged against. I do not like that man,
Ted Cruz. I do not like
his far-right views. I do not like him
in these reeds. I do not like him
when he feeds. I do not like him by a wall. I do not like this shit at all. I do not like him
as Santa's elf. That man Ted Cruz
can fuck himself. That is
a pretty flagrant admission of a double standard there.
Honestly, the only clearer example may
have been when Mick Mulvaney, Trump's former chief of staff,
said… And that is just flat out
admitting the whole game.
But even if you put of that
bad faith hypocrisy aside, we are still left
with the key question, "How much debt is too much?" And the interesting answer
to that is nobody really knows. For many years, we thought that
the best way to measure debt was to compare it
to the gross domestic product. Basically, measuring how much
in total the country owes versus how much it produces
each year. And the economic consensus
was that debt exceeding GDP or even getting close to it was a hard red line
that could not be crossed without risking
a financial crisis. It was something
occasionally expressed in fairly over the top ways, like in this John Stossel clip
in 2011. -(CLOCK TICKING)
-Our government keeps spending. You know we're already
14.5 trillion dollars in debt. But you could say, "So what? Look around,
America's doing pretty well. What the worst
that could happen?" (GRENADE ECHOES) Well, this could happen. These violent protests broke out
once Greece was so deep in debt that Greece had trouble
borrowing more money. Greece spent so much
that by last year, they owed more money than
their entire economy produced. No wonder they're in trouble. We won't reach that level
of debt until, well, oops, pretty soon. We're on a clear track
to a Greek-type crisis. Oh, come on, Stossel.
Cutting to footage of a riot
can make anything seem more dire than might actually be the case.
I'll prove it to you. Regé John-Page is apparently
not appearing on the second season
of Bridgerton. So what? What's the worst
that could happen? (GRENADE ECHOES) JOHN STOSSEL:
Well, this could happen. Oh, shit! Feels pretty scary now,
doesn't it? But the truth
is much more complex because A, his character arc
is mostly wrapped up and the duke doesn't appear
in the rest of the novels. It's really a generational story
of a whole family. Also, you can absolutely
lose the duke. It's actually perfectly
in his character to start something
he doesn't finish.
But it's much more complex when
it comes to our economy, too, because something fascinating
happened around last June. Largely because
of increased borrowing resulting from the first round
of COVID stimulus, our national debt
actually surpassed the size of our GDP.
You know, kinda like Greece. But all those disaster scenarios
that John Stossel's performatively exaggerated
warned us about, none of them happened. It didn't suddenly cost us
a lot more to borrow money due to higher interest rates. We didn't,
as you may have noticed, become Greece.
In fact… And that isn't even a one-off. As our debt has risen
in recent years, interest rates have fallen
to historic lows. So, what is the reason for that? Well, I don't know. I am not an economist
nor do I know much about math, which I know might sound
surprising to you, given that I do have the face
of someone who has a favorite kind
of graphing calculator.
What is shocking though
is that even expert economists can't really explain it either. Here is the former chief
of the IMF basically admitting as much. To be perfectly frank, we do not– at least I do not. I don't want to talk
for the profession. We've had this steady decrease in the interest rates
since the mid-80s, continuing a bit more
in the crisis, but, you know, continuing now, and we have no explanation. Yeah. They don't know. Now, he went on to point out
that they are any number of possibilities.
It may have something to do with aging populations
in advanced economies, China's high saving rate, the general lack
of capital-intensive investment
opportunities, or merely the fact that Richard Campbell
of Omaha, Nebraska, hasn't stepped on a crack
in the sidewalk in over 30 years.
But the point is economists really have
no fucking idea. In fact, the Congressional
Budget Office has now said… So, taken together, all of this
has made many economists start changing the way
that they think about debt, thinking that very basically, so long as our economy grows
at a rate greater than the interest
that we're paying on our debt, we can come out ahead in kind of the same way
that you would come out ahead if you borrowed money
at two percent interest and then invested it somewhere
and got five percent returns.
But the larger point is
this whole field is in a bit of flux right now. Some economists believe that
we should not too complacent, that a debt crisis is still
on the horizon, just not at the tipping point
that we previously thought. Another more radical argument
is that the government can, in fact, create all
the money it needs
to pay for stuff… The point is there is
a good faith debate to be had over how to handle
our national debt over the long term,
but right now, most economists actually agree that with interests rates
at historic lows, the question
shouldn't really be, "How much debt
are we taking on?" as much as "What is the value of what we are getting for it
in return?" And there are certainly
dumb fiscal decisions that we could make
like tax cuts for the rich.
We've tried that
multiple times now, and if they were the magic key to eliminating our debt
long term, we'd probably would have seen
signs of it working by now. But there are smart
financial decisions that more than justify
going into debt like spending
on social programs, infrastructure,
or on an individual level, this Nicolas Cage pillow. It's the second-best investment
I've ever made after, of course, buying
another Nicolas Cage pillow. I was worried that my wife
would get jealous, so this one
is to replace my wife.
And amid the current crisis
that we're in, many experts are less concerned
about our spending too much than spending too little.
And if it turns out that inflation or interest rates
do start to rise, we should absolutely start
cutting deficits, although, not by cutting
government programs that people need but through
taxing people who can afford it. Look, no one credible is saying
that deficits don't matter or that we should borrow
as if the sky is the limit. What they're saying is
the debate shouldn't be about whether debt
is good or bad.
It should be about whether
the investment we are making are worth it or not. And if you are still worried
about debt because you've been told
you are burdening your children and children's
children's future, well, I actually have
some good news for you because those future generations have a special message
just for you. -CHILD: Hello!
-CHILD 2: Hello! CHILD 3: Hey there!
We are your children. -CHILD 4: Your grandchildren.
And your great-grandchildren. CHILD 2: And we have
a message for you. CHILD: Stop using us
to scare people about the national debt! CHILD 3: You idiots clearly
have no idea how it even works. CHILD 4:
Take the stupid debt clock. CHILD: Do you even know
what a clock is? CHILD 3: Clock. Not a clock. CHILD 2: Clock. Not a clock. -CHILD: Clock, not a clock. See?
-CHILD 4: See? CHILD: Also, debt isn't always
a bad thing . Yes, going into debt
to give money back to people who already have
too much of it is stupid. CHILD 3: Like this guy.
Sick flamethrower, bro. CHILD: But you can also use debt
to build new roads and bridges. CHILD 2: Which we'll need
to drive on. CHILD 3: You can use it
to improve schools, which would make us
into a more skilled labor force. CHILD: You can use it to improve
health care so we can be healthier
and more productive. CHILD 4: You can even use it
to buy these pillows, which will become treasured
family heirlooms. CHILD 3:
The important thing about debt
is what you get out of it. CHILD:
And what we get out of it. You see, debt can be a tool
for growth. In fact, the debt to GDP ratio isn't as reliable a metric
as previously assumed. The dataverse doctrine
of the 1970s turned out to be
largely flawed, given the continuing
inverse relationship between rising debt
and low interest, (VOICE BECOMES DISTORTED)
so it follows that the economy's
capacity to accrue debt without suffering massive
adverse consequences is larger than economists
Carmen Reinhart and Ken Rogoff
once theorized. -(NORMAL VOICE) It's so simple.
-CHILD 2: Yep. CHILD:
Easiest thing in the world. CHILD 3: I'm nine years old,
and even I understand that. CHILD 2: And if you're
so concerned about our future, maybe it's worth spending now
on things like preparing for the impacts
on climate change. CHILD: The clock
is really tickin' on that. -CHILD 3: That's not a clock!
-CHILD 2: Come on! ALL CHILDREN: So please. CHILD 2: Believe when we say… CHILD: We're not as scared
of being born into debt… CHILD 2: As we are in being born
into a country that didn't invest
in our future. CHILD: And we're also scared
of that guy digging that hole. CHILD 4: I think that goes
without saying. CHILD: So when it comes
to the debt, your children… -CHILD 2: grandchildren…
And great-grandchildren… CHILD:
All have one message for you. -CHILD 3: Grow…
-CHILD 2: The fuck up!