Speaker 1: Doctor Van Skin.
Speaker 2: He's an economist and a smart guy, and he's as
Speaker 2: annoyed as I am that once again Congress has completely
Speaker 2: abdicated their responsibility to pass budget bills and have just
Speaker 2: passed another continuing resolution.
Speaker 1: Vance, Welcome to the show. Hi many, it's a pleasure
Speaker 1: with you.
Speaker 3: Thank you for having me on, and I am just
Speaker 3: as upset about the deficit spending as you.
Speaker 2: Now, what is your background? Give my listeners a little
Speaker 2: bit of window of who you are.
Speaker 1: Vance.
Speaker 3: Yeah, so I worked at the Trump White House. I
Speaker 3: was the chief economist for the Office of Management and
Speaker 3: Budget for about a year from June twenty nineteen and
Speaker 3: May of twenty twenty. I've also worked with a lot
Speaker 3: of state think tanks and national think tanks across the
Speaker 3: country and.
Speaker 1: Do a lot of other work.
Speaker 3: I also have a podcast called Let Fuel Prosper where
Speaker 3: I talk a lot about these key important issues about
Speaker 3: fiscal budgeting and monetary policy and a whole bunch of
Speaker 3: other issues.
Speaker 2: So, Vance, if you were part of the Trump administration,
Speaker 2: then I'm gonna ask you a pointed question, because for me,
Speaker 2: that was a big area of disappointment, and COVID threw
Speaker 2: everything into chaos, So we don't know what would have
Speaker 2: happened had his economic policies been allowed to unfold in
Speaker 2: a natural way. So I'm going to concede that point.
Speaker 2: But spending in the Trump administration, even before COVID was
Speaker 2: well beyond what I thought it should have been. Is
Speaker 2: there any hope that in another Trump administration we're going
Speaker 2: to see And I'm not asking to speak for the
Speaker 2: Trump campaign, by the way, I'm not doing that, but
Speaker 2: what are your thoughts about the level of seriousness that
Speaker 2: debt and deficit spending are seen in that administration?
Speaker 3: Well, I also share your concern about how much was
Speaker 3: being spent during the Trump of years. Of course, it
Speaker 3: was Congress that spent passes the budgets, but the president
Speaker 3: could have vetoed them and done more to do that,
Speaker 3: and we were trying to behind the scenes. We were
Speaker 3: trying to push it to have lower spending at the
Speaker 3: end of the day, and you're right, COVID blew that
Speaker 3: out of the water even more with trillions of dollars,
Speaker 3: and then Biden administration came in and put that spending
Speaker 3: on steroids. So we've run up of another twelve trillion
Speaker 3: dollars just so the last four plus years as massive,
Speaker 3: and we're spending at trillion dollars just on that interest
Speaker 3: payments on the debt alone.
Speaker 1: It's just ridiculous.
Speaker 3: And so one of the things that I'm still concerned about, though,
Speaker 3: to your point, Mandy, is that the president hasn't taught
Speaker 3: much about the budget. I mean, during that last presidential
Speaker 3: debate or even the first one, I don't even think
Speaker 3: spending was mentioned at all, or the deficits were mentioned
Speaker 3: it at all. And this is a huge concern for
Speaker 3: me that I talk a lot about and I know
Speaker 3: you do too as well. So this is something we've
Speaker 3: got to get control over. And it's both parties. I mean,
Speaker 3: this is a bipartisan spending crisis, is the way I
Speaker 3: like to put it. That's been happening for decades now,
Speaker 3: and we've got to get under control. There are a few,
Speaker 3: you know, that are out there that will talk a
Speaker 3: good game, and I think are trying to do good things.
Speaker 3: Senter Ran Paul had his six penny plan, which would
Speaker 3: basically cut six percent over the next few years and
Speaker 3: balance the budget, but that was rejected today. At the
Speaker 3: same time, they're spending in the cr bill more and
Speaker 3: more so, it's a massive spending problem.
Speaker 1: Ran Paul.
Speaker 2: I lived in Kentucky for three years and I'm a
Speaker 2: huge and Paul fan, along with Congressman Thomas Massey, who
Speaker 2: has been very vocally opposed to the continuing resolutions that
Speaker 2: we're seeing.
Speaker 1: Why what I mean, We're.
Speaker 2: Just going to have to get to a debt crisis
Speaker 2: situation before anybody in Congress takes so seriously. That's what
Speaker 2: I'm afraid of. And what does that look look like
Speaker 2: for the American people?
Speaker 3: Well, unfortunately, I think we're seeing a lot of that now.
Speaker 3: We saw higher interest rates, right, the interest rates sowar.
Speaker 3: That's a big part of what you see during a
Speaker 3: debt crisis. We saw inflation soar because the Federal Reserve
Speaker 3: printed a lot of that money. I mean their boalance.
Speaker 3: You went from four trillion to nine trillion. It's still
Speaker 3: seven trillion. It's way too high.
Speaker 1: You know.
Speaker 3: The Federal Reserve cut interest rates by fifty basis points
Speaker 3: last week.
Speaker 1: And I think that was a mistake.
Speaker 3: I think we're going to fall into the same traps
Speaker 3: we did during the nineteen seventies whenever they cut interest
Speaker 3: rates too fast and inflation shot up again. And now
Speaker 3: we have even a worse situation because you know, Congress
Speaker 3: is overspending more than they were back then, and so
Speaker 3: this is going to lead more to increases and ammunition
Speaker 3: for the Federal Reserve to print money, increase inflation in
Speaker 3: the economy. And so I'm very concerned about a debt crisis.
Speaker 3: And the spending crisis is happening now. A lot of
Speaker 3: people will blame it on the Trump tax cuts and
Speaker 3: other revenue issues, but it's not a revenue problem. This
Speaker 3: is clearly a spending problem, and I think what we've
Speaker 3: got to do is cut spending today and then restrain
Speaker 3: the growth of spending over time. If we do that,
Speaker 3: we could find a better path forward, not only for
Speaker 3: the spending situation, but for the economy because all this
Speaker 3: deficits and debt really matters also to main street and
Speaker 3: on the economy because interest rates are soaring and people
Speaker 3: can't afford homes and things of that nature. This is
Speaker 3: a major problem that's driven by Washington DC.
Speaker 2: I have the video on the blog today by Milton
Speaker 2: Friedman from like the late seventies, maybe nineteen eighty. I'm
Speaker 2: not sure exactly what the ear is, but he does
Speaker 2: this kind of like walk through on inflation, and it's
Speaker 2: really at a fifth grade level. I mean, that's why
Speaker 2: I put it on the blog. I'm like, if you
Speaker 2: have somebody who doesn't understand this, But what it comes
Speaker 2: down to, what we're seeing right now and we've seen since,
Speaker 2: especially since COVID, is that the Federal Reserve is enabling
Speaker 2: the federal government spending by continuing to print money and
Speaker 2: buying treasury bonds. So they are if the FED doesn't
Speaker 2: keep printing money, then no one's gonna buy those treasury bonds,
Speaker 2: and the federal government cannot continue spending, even though.
Speaker 1: The Federal Reserve is supposed to be.
Speaker 2: A non you know, it's supposed to be a non
Speaker 2: political entity. So people need to understand that we flooded
Speaker 2: the money supply, we flooded the country with money. We
Speaker 2: flooded all the markets with money from the FED, and
Speaker 2: that's why we are now paying the invisible tax that
Speaker 2: is inflation. And too many people do not make that connection.
Speaker 2: And it's super frustrating when I hear people say it's
Speaker 2: corporate greed, it's you know, it's whatever. And Milton Friedman
Speaker 2: actually uses the example of it's not union wages, you know,
Speaker 2: because people will blame it on union wages driving those
Speaker 2: are a lagging indicator instead of leaking and leading indicator.
Speaker 2: So in your in your podcast, what are the kind
Speaker 2: of things that you explain when it comes to because
Speaker 2: my big thing is this, somebody texts me. We have
Speaker 2: a text line and they say things like, you know,
Speaker 2: back in the nineteen fifties, we had the highest tax
Speaker 2: rates on the one percent and we had prosperity. But
Speaker 2: what really happened in the nineteen fifties is the government
Speaker 2: contracted all that spending from World War Two and the
Speaker 2: economy roared. Why is that lesson lost?
Speaker 1: Yeah? Yeah, it's a great point.
Speaker 3: And Milton Freeman is my favorite economist, so I watch
Speaker 3: a lot of his youtubes and I talk a lot
Speaker 3: about these things on my podcast like you will prosper
Speaker 3: show and try to break it down as simply as possible,
Speaker 3: because you're right. I mean, the inflation is an inflation tax.
Speaker 3: We all feel it that the crisis that's out there
Speaker 3: on spending, we're all feeling it through higher interest rates
Speaker 3: today and everything else. And so when people I think
Speaker 3: we've lost sight of how good we have it, in
Speaker 3: some sense, today, and some people want to go back
Speaker 3: to the nineteen fifties or something else. But there's a
Speaker 3: lot of things that I think America gets right today.
Speaker 3: The problem is in Washington, DC, they don't understand that's
Speaker 3: definit spending really matters, and it grows the eyes of government,
Speaker 3: which which removes our liberty. The government has no money,
Speaker 3: nothing is free, and so they take it from us,
Speaker 3: out of the productive private sector, to redistribute it to
Speaker 3: someone else. That's all the government spending is. It's not
Speaker 3: some candy and sort of logic to where the government
Speaker 3: can stimulate the economy and grow in certain areas. No,
Speaker 3: what they do is they take it from person A
Speaker 3: and give it to person B, and there's no growth
Speaker 3: in the economy. In fact, it reduces the economy because
Speaker 3: it reduces the productive purposes that are happening before they
Speaker 3: tried to redistribute that money. So I think, you know,
Speaker 3: Milton Freema is exactly right. Too much money chasing too
Speaker 3: few goods is what inflation is. And what we see
Speaker 3: in the last especially four years, is a lot of
Speaker 3: increasing the money supply driving demand, and then high regulations
Speaker 3: at high tax and high spending that have stifled the
Speaker 3: supply side of the economy and contributed to massive amount
Speaker 3: of inflation. And this is why I think we have
Speaker 3: an issue to where whether it's Harris or Trump, right now,
Speaker 3: there could be more inflationary pressures because neither one of
Speaker 3: them were talking about spending.
Speaker 2: And both of them, you know, I hesitate to call
Speaker 2: them dumb ass ideas, but they've piged out some real
Speaker 2: dumb ass ideas, both of them. I mean, the Trump
Speaker 2: tariff situation is not good for consumers. Harris is trying
Speaker 2: to give away more money, but only the people she chooses,
Speaker 2: and she, I guess, announced another no interest small business
Speaker 2: loan program that if you've never if you've ever dealt
Speaker 2: with government loan programs like the SBA, you already.
Speaker 1: Know how cumbersome they are.
Speaker 2: Neither of these people are blazing a trail on economics.
Speaker 2: So what does what does an average citizen do? What
Speaker 2: do you do if you're worried about this, like I am.
Speaker 3: Yeah, oh man, I've been kind of pulling my hair
Speaker 3: out because you know, one day with Trump will talk about, well,
Speaker 3: we're gonna exempt taxes on Social Security, then we're going
Speaker 3: to exempt taxes on tips and the more that you
Speaker 3: narrow the tax base, the higher that the rates are
Speaker 3: otherwise going to be, or we're going going to run
Speaker 3: massive deficits. Instead, we should have the broadest base possible
Speaker 3: with the lowest rates, and hopefully a flat income tax
Speaker 3: rate is ultimately what we need, and cut government spending
Speaker 3: in the process. But until then, I think, you know,
Speaker 3: there's going to be a lot more economic uncertainty. I've
Speaker 3: been writing a lot about this at American's for Tax
Speaker 3: Reform and American Institute for Economic Research, saying that the
Speaker 3: economic concertainty that's being brought forth by both of these campaigns.
Speaker 1: Even though I do think that the Trump campaign.
Speaker 3: Is having a little bit more pro growth policies of
Speaker 3: course than the Harris administration, they're both leading to more
Speaker 3: economic uncertainty.
Speaker 1: And I'm a free trade guy.
Speaker 3: I debated this a lot with Peter Navarro and others
Speaker 3: within the White House. They didn't see it my way,
Speaker 3: The presidents didn't see.
Speaker 1: It my way.
Speaker 3: But I really think that free trade is the way
Speaker 3: that we will pressure China to change their habits by
Speaker 3: putting tariffs on them and everything else. It doesn't change
Speaker 3: their ways because they're a communist country.
Speaker 1: They don't care about their people.
Speaker 3: But if you start, if you start changing the dynamics
Speaker 3: of other trading partners, now that influences them because that
Speaker 3: reduces their power. And I'm hopeful that would be the
Speaker 3: way we go. But unfortunately we're talking about tariffs all
Speaker 3: the time.
Speaker 1: Well.
Speaker 2: I do think that in some ways Trump has a
Speaker 2: very sort of nineteen fifties view of American manufacturing, right,
Speaker 2: and I genuinely think he believes we can be the
Speaker 2: leader in the world in manufacturing. But the reality is
Speaker 2: is that our standard of living is very high now, right,
Speaker 2: And that's good, that's great that we have a high
Speaker 2: standard of living. So it makes it very difficult, difficult
Speaker 2: to compete with places that don't, like China, like Mexico,
Speaker 2: like developing economies where they can make things much cheaper
Speaker 2: than they can make them here because they pay people
Speaker 2: forty bucks a month.
Speaker 1: So I mean, how is there a way? Though?
Speaker 2: I mean, this is something that I think is something
Speaker 2: that needs to be addressed, and that is, how do
Speaker 2: you ensure that the United States in an emergency situation
Speaker 2: can get things done?
Speaker 1: How do we build new aircraft carriers?
Speaker 2: How do we make steal how do we protect those
Speaker 2: things that protect our ability to defend ourselves.
Speaker 1: This is totally off the beaten track.
Speaker 2: I don't know if I'm asking you stuff outside your
Speaker 2: wheelhouse here.
Speaker 1: No, No, it's fine, it's fine.
Speaker 3: These are all national security type threats, right, and that
Speaker 3: I think are legitimate concerns that should be addressed.
Speaker 1: And one of the things that I like to point out.
Speaker 3: Is that when we point our fingers at someone else
Speaker 3: like China, we've got three more fingers pointing back at ourselves.
Speaker 1: There's more that we should be doing in America.
Speaker 3: To reduce the cost of business instead of just blaming
Speaker 3: other countries, like reducing the corporate income tax rate, which
Speaker 3: Trump has talked about reducing it to fifteen percent. I
Speaker 3: would like for it to be zero percent, because businesses
Speaker 3: don't play pay taxes. People do through the form of
Speaker 3: higher prices, lower wages, and fewer jobs. We also should
Speaker 3: be reducing regulations. There's a lot of hoops that we've
Speaker 3: got to jump jump through in order to get stilled
Speaker 3: to the market. There's a lot of jump hoops that
Speaker 3: we're going to jump through to get food to the market,
Speaker 3: and so much more that if we remove those obstacles,
Speaker 3: we ma to be much more competitive and wouldn't have
Speaker 3: to blame other countries. And one thing I like to
Speaker 3: note too about manufacturing is that where we're reaching manufacturing
Speaker 3: highs and output, it's just that the employment has declined
Speaker 3: over time. And that's not just because of China and
Speaker 3: other countries through trade.
Speaker 1: A lot of it was through.
Speaker 3: Automation, yeah, which has made our lives better along the way.
Speaker 3: Not to say that there wasn't a cost to those
Speaker 3: people losing their jobs, but there were other jobs that
Speaker 3: were created in the process, and we had cheaper products
Speaker 3: that we should you consumers really liked as well. So
Speaker 3: there's a lot of factors that go into this.
Speaker 2: One of the things I think people forget is that trade,
Speaker 2: free trade, it increases the buying power of people on
Speaker 2: the lower ends of the socioeconomic spectrum a lot, not
Speaker 2: a little, a lot.
Speaker 1: So when you're.
Speaker 2: Talking about the sad part, that is people are going
Speaker 2: to lose jobs, right, but there are other people, a
Speaker 2: larger group of people that are going to benefit quite
Speaker 2: a bit by having that ability to buy something that
Speaker 2: they want at a very low price.
Speaker 1: I mean, it.
Speaker 2: Sounds like we're not making progress, but it feel like
Speaker 2: more people are talking about the debt and deficit, but honestly,
Speaker 2: and I hate to say this, vance I don't trust
Speaker 2: Republicans to care about it after the election anymore. I
Speaker 2: feel like all the grown ups in the room have
Speaker 2: left on this issue.
Speaker 1: Am I two pass mystic?
Speaker 3: I don't think so. I'm concerned about it as well.
Speaker 3: You know, I'm hoping hopefully they will see the writing
Speaker 3: on the wall and say, hey, you know what, we've
Speaker 3: got to start doing something different. But we've seen we
Speaker 3: I mean, this problem has been around for a long time.
Speaker 3: We've had we've had Republicans in Congress where they had
Speaker 3: the majority in the House and the Senate and Republican president,
Speaker 3: and the deficit continue to go up or at least
Speaker 3: running a deficit overall.
Speaker 1: And you know, part of.
Speaker 3: It is is that I you know, one of the
Speaker 3: concerns I have with some Republicans is that they'll say, well,
Speaker 3: the tax cuts will pay for themselves over.
Speaker 1: Time, and and there's.
Speaker 3: Some truth to that in the sense that I believe
Speaker 3: in incentives and.
Speaker 1: That people work more and will get more output and
Speaker 1: everything else.
Speaker 3: That's good, But in the short run, there will be
Speaker 3: deficits if you continue to spend like drunken sailors, and
Speaker 3: that's what they end up doing. And this populism is
Speaker 3: really a problem from the new Right to where they
Speaker 3: want to give a lot of handouts and spending and
Speaker 3: tax cuts.
Speaker 1: Some of them even want to raise taxes.
Speaker 3: And the number one thing you don't want to do
Speaker 3: to bring down a deficit is to raise taxes because
Speaker 3: then you slow economic growth. Well, we really need is
Speaker 3: more economic growth, about a full percentage point more than
Speaker 3: what we're having now two and a half percent. Get
Speaker 3: it up to three and a half percent, and let's
Speaker 3: rain in government spending. If you did that and had
Speaker 3: spending growth one percent, we could balance the budget in
Speaker 3: eight years. That's too long in my view. I'd love
Speaker 3: to see the budget cut.
Speaker 1: We didn't have to cut anything, just slow the growth
Speaker 1: and you can have it balanced with eight ears. The
Speaker 1: sad thing is Viance.
Speaker 2: You mentioned Rand Paul's sixpenny plan. It was the one
Speaker 2: penny plan the first time he put it up. If
Speaker 2: they had just passed it, then we would be having
Speaker 2: balanced budgets and we'd be working our way through the
Speaker 2: national debt, and now it's the sixpenny plan.
Speaker 1: Amen.
Speaker 2: Vance skin is my guest. You can find him advance
Speaker 2: skin dot com. I put a link on the blog today.
Speaker 2: He has a newsletter, he has a podcast. If you're
Speaker 2: a free market type, you should check it out. Vince,
Speaker 2: I really appreciate it. Hoping to talk again in the future.
Speaker 1: That was good, Mandy, thank you so much.
Speaker 2: All right, thank you, sir.
Speaker 1: Her