>> I WILL HANDLE THE SALAD.
NEIL: I WILL DO A BEELINE THE
PRIME RIB.
THANK YOU VERY MUCH.
LET’S GO TO DOUGLAS HOLTZ EAKIN
AND TAMMY REID, MONEY THAT GOES
IN AND MORE GOING OUT, THE
FORMER CONGRESSIONAL BUDGET
OFFICE DIRECTOR OF AMERICAN
ACTION FORUM.
TO MAKE A PRETTY SERIOUS AND
SOBERING POINT IT IS EASY TO
POINT FINGERS AT THE FED BUT
THE ONLY GAME IN TOWN TRYING TO
BE GOOD AT THIS, SPENDING ON
HEALTH MATTERS, BACK AND FORTH
TO ADDRESS LONG-TERM
ENTITLEMENT REFORM ISN’T
MATERIALIZING SO IT IS UP TO
THOSE GUYS.
>> TRUE.
THE FED IS IN THIS ALONE AND
CHAIRMAN POWELL SAID SO AT
JACKSON HOLE IN AUGUST.
WE HAVE A MANDATE FOR PRICE
STABILITY SO WE WILL DO IT.
GET READY AND HERE IS THE GAME
PLAN BUT CONGRESS AND THE
ADMINISTRATION ARE HELPING.
WE ARE ABOUT INFLATION
REDUCTION BUT WHILE THEY ARE
DOING THAT THEY ARE SPENDING $1
TRILLION SOMEWHERE ELSE, ALL
BORROWS.
ANOTHER HALF $1 TRILLION, THEY
ARE LIGHTING MORE FIRED AS FAST
AS THE FED CAN PUT THEM OUT.
NEIL: WE ARE FOCUSED ON THE
FEDERAL RESERVE RAISING
INTEREST RATES BUT WE DON’T
LOOK AT WHAT THEIR BALANCE
SHEET PRESSURES ARE.
THEY ARE TRYING TO UNLOAD
MORTGAGE-BACKED SECURITIES,
TREASURY SECURITIES.
AND UNFORTUNATELY AS THEY ARE
SHOVELING THAT OUT THE DOOR OR
TRYING TO, MORE EXPENSES ARE
COMING IN, TRILLIONS OF DOLLARS
COURTESY OF NEW SPENDING SO IT
IS LIKE THEY ARE TRYING TO DEAL
WITH THIS IN THE MIDDLE OF A
FINANCIAL AND SPENDING
HURRICANE.
GOOD LUCK.
>> IT IS A TOUGH THING TO POOL
OFF.
I HAVE A LOT OF SYMPATHY FOR
THE FED.
A LOT OF THINGS HAVEN’T WORKED
YET.
THEY HAD THE FOOT ON THE GAS
FOR TWO YEARS AND TAKEN THEIR
FOOT OFF THE GAS BUT YOU HAVE
TO PUMP THE BRAKES.
REMEMBER INTEREST RATES ARE
NEGATIVE, TAKE WHATEVER YOUR
FAVORITE MEASURE OF INFLATION
IS AND STILL DON’T HAVE
POSITIVE INTEREST RATES.
WE HAVEN’T GOTTEN TO NEUTRAL
AND THEN THE RESTRICTIVE RANGE
IS COMING, NO QUESTION ABOUT
THAT AND TRYING TO DO THIS IN A
DELIBERATE AND WELL TELEGRAPHED
FASHION AND ENORMOUS AMOUNT OF
UNCERTAINTY, CHINA, UKRAINE,
WHAT IS LEFT OF THE PANDEMIC
AND CONGRESS AND THE
ADMINISTRATION.
AT PLACE TO BE DOING BUSINESS
AND THE FED IS STRUGGLING TO
STICK TO ITS PLAN AND TO BE
EFFECTIVE IN THE MIDST OF
OFFICE.
NEIL: WHAT PEOPLE LOSE SIGHT
OF, EVEN IF YOU DO NOTHING,
SPENDING IS INCREASING.
THE COST TO CARRY THE DEBT GOES
UP, WE PASSED 31 TRILLION, ALL
THOSE YEARS, WE RAISED INTEREST
RATES FOR ESSENTIALLY 0, NOT
ACROSS THE TIME SPAN FROM 0 TO
4% THERE ABOUT AND THAT IS
ADDING OVERTIME HUNDREDS OF
MILLIONS OF DOLLARS TO THE DEBT
WITHOUT AGGRESSIVE SPENDING AT
ALL.
>> ONE PERCENTAGE POINT
INCREASE IN INTEREST RATE IS $1
TRILLION IN ADDITIONAL SPENDING
OVER 10 YEARS.
WE ARE SEEING THE BUILD GO UP
FAST AND THIS IS THE PRICE YOU
PAY FOR BORROWING SO MUCH IN
THE PAST.
A BIG DEBT LOAD, YOU HAVE TO
SERVICE IT.
AS YOU REFINANCE, IT IS MORE
EXPENSIVE.
UNLESS YOU GET A GRIP ON THE
THINGS CHAD WAS TALKING ABOUT,
70% OF SPENDING YOU HAVE AN
ENORMOUS AMOUNT OF TROUBLE
MAKING IT ADD UP AND THOSE ARE
COMING DUE.
THE MEDICARE TRUST FUND RUNS
OUT OF MONEY WITHIN 5 YEARS,
SOCIAL SECURITY WITHIN TEN.
THESE ARE PROGRAMS AMERICANS
VALUE THAT ARE NOT FINANCIALLY
FIT AND NOW STARTING TO
THREATEN THE ECONOMY ITSELF,
TIME TO GET SERIOUS ABOUT THIS.
EVERYONE ALWAYS SAYS THAT AND I
ALWAYS SAY THAT AND NO ONE DOES
ANYTHING ABOUT IT BUT NUMBERS
ARE ADDING UP AND GETTING
CLOSER AND THE NEXT CONGRESSS
HAVE TO LOOK AT THIS PROBLEM,
LOOK AT THESE NUMBERS AS A
THREAT TO THEIR JOB NOT THE WAY
THEY KEEP THEIR JOB.
NEIL: VERY WELL PUT.