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>> we will look 50 years into the future on this panel. our large federal debt, persistently high deficits that may be set to increase before they decrease.

>> i would like to start with you phil to scope this problem. a couple of times a year your office puts up for directions for the next 10 years. over 6% gdp this year and 10 years from now. that is a production that comes before a lot of things that come down the pike. there will be a reconciliation bill. your projections are based on 1.9% economic growth this year. there have been significant headcount cuts at irs and there have been tariffs and changes to interest rates as a result. when you add that together can you give us a picture of what we are looking at in terms of budget deficits?

phil: they can get scary quickly. we will do our next update over the summer. extension of the 2017 act expiring provisions, if the volatility knocks a percentage point off gdp growth that gives you another percent. you can start looking at budget deficits of 8% now and then if gdp growth remains weak, picking it much higher. on the positive side the administration is focused on stronger growth. if we are successful over time that would go in the other direction. >> basically 2% growth long run?

>> that's right. we have a balancing out of slower demographics holding down gdp growth. productivity growth is rebounding somewhat from the weak growth of the past decade. >> we had your successor scott bessent here this morning. he is hopeful we will be back to 3% real growth one year from now and is hoping to reduce by a percentage point. do you see a path? what is the case we are looking at shrinking budget deficits? >> that is a potential path. there is a lot of uncertainty over certain issues at the moment but i look back to when paul and i worked on the 2017 tax cuts, the numbers are smaller, it was $1.5 trillion at the time and we said the same thing.

if you can grow the economy 3% instead of 2% you will have a surplus and begin to pay down the debt. at the time, debt to gdp was closer to 125%. i think we are in a much more difficult situation. we were also in a low interest rate environment and we are in a higher interest rate environment now. i think it is critical we begin to lower these leverage ratios. i look back at covid and that was an extraordinary situation where we shut down the economy. the first $2 trillion we needed to spend or we would have a depression and worldwide recession, but the ongoing spending, and part of the problem was this normalized trillion dollars spending was a problem. lastly i would say i think elon and doge coming in and we will see where they end up, the

president appears to be interested in cutting government spending so if we could have some government spending and additional growth, i think we can get a path on the right track but there is a lot of work to do because as you said we are starting from a 6% number. josh: speaker ryan, building on that if there is aspiration in this administration to move these numbers it seems the president does not want to cut medicare or social security, there is an ongoing fight over medicaid, but they are trying to keep it in the waste box but we are not looking at the deep cuts conservatives might not want, they cannot affect spending on interest and interest rates have gone up. i can't look at that budget and say i see a way.

it does not look like there will be significant spending savings. paul: about 10% of the budget they want to cut by 22%. discretionary spending, and appetite to cut that. the budget that came out yesterday proposes a 22.6% cut to that. the current reconciliation bill has 300 billion in spending for immigration, budget stuff. they are having a hard time putting the votes together, but this congress is not what we used to be. i don't think either of the two political parties frankly have any real appetite for entitlement reform which is where the money is. when you're looking at 3/4 of the budget is in mandatory spending, but your interest is high, it is the mandatory entitlement programs driving this debt.

both parties have been taken over by populism, which stands against doing something about that. it was not long ago we would make proposals and pass these bills, but that is not where we are. i do not see an appetite in congress today or the white house to go after the big drivers of our debt, which is the mandatory spending. josh: while i continue doing the rain cloud bit before we talk about solutions, alan, one silver lining one would normally look for in a situation like this with economic turmoil normally you expect when there is crisis there is flight to quality that drives lower interest rates on government debt and may be a stronger dollar. we are seeing the opposite of that right now. why are financial markets reacting in this direction and what should we expect? are we going to get any help on those or just more headwinds?

alan: you have to define what flight to quality means. i think what people have been missing is that we have been very comfortable that everybody looks at the dollar as being strength in the global economy but foreign central banks have not been feeling that for a number of years. i believe the underlying foundation of the dollar and treasury market has been eroding over the last number of years and we better pay attention to it very soon. the easiest sign of that, there are two things. over decades, bottom line is, gold would go up in periods whenever real interest rates went down and they correlated. real estate goes up, gold goes down. it was a very careful thing. over the last three or four years we have had a rise in real interest rates and gold to record highs and think about

where gold might be if speculation was not allowed to move over to bitcoin at the same time. even with that gold has gone up to record highs. less speculation and more driven because foreign central banks have been moving more of their reserves even in a period of a strong dollar and high real interest rates into gold and out of dollars. they are saying is, we know there is no alternative right now to the dollar, but we have to start hedging because we don't know how long we can rely on the dollar being the safety. one other thing we are seeing. if you look at the swift payment system, all transactions amongst countries went through swift. all of a sudden in the last year or two we are seeing china and some bilateral and now multilateral agreements to trade

through another system that allows them to transact in different currencies through a system that is an alternative to swift. they say we are trying to move further away from reliance on the dollar for everything we do. the main point is, we should not sit here and think we have a lot of years to figure out what we are going to do about this deficit, because at some point the markets are saying, we have to hedge against the dollar and it is no longer the safe place to go. josh: what strikes me about all this, this is the situation we are describing before the crisis. 6% of gdp budget deficits are not a deficit rising because of the recession, this is before we might be on the cusp. similarly this distress that adds additional risks the

government does not have to borrow in a more intense way, that is coming at a time we should be in a position of strength. when you look back over the decades, your efforts in washington to get people to focus on this problem, this is not the worst fiscal position we have been in the in the last 30 years, but it feels like the worst combination of fiscal position and political capacity to do anything about it. it should be a good time but it is not. maya: let me drill down on the bad news other panelists have shared. one of the reasons you want fiscal responsibility is to be ready when bad times come along. we are in a good time and yet all the warning lights are blinking really loudly. a fiscal situation itself like phil was talking about, terrible. our debt in four years as a share of gdp will be a record. last time was set after world

war ii. if we do nothing else we will borrow $22 trillion over the decade. interest payments are the single fastest growing the deficit is the highest it has been in a nonemergency period. and social security and medicare will become insolvent in a decade and we have a bunch of politicians promising not to fix it. it is a terrible situation and terrible political environment. i miss the days when paul ryan was in washington talking about this issue and showing people you could talk about reality. but we spent the past decade only talking about fiscal myths like don't worry everything pays for itself. no, it does not. don't worry you can just print more money -- a terrible idea. everyone is running away from the choices of budgeting. i think with the secretary laid out of a 3% target of gdp is exactly the right target. that would take $7.5 trillion in savings over the next 10 years. for perspective the only deficit reduction we have taken was the fiscal responsibility act which

saved $1.5 trillion so this would be many times more and to end on what i think is worst -- our political environment is crummy for doing this because we have people who run on promising not to do anything real. they are not on the level about what it will take, we have to do structural entitlement reform because we waited until the last minute. we need new revenues. they don't have to be stupid. the corporate and individual rate should stay low, but we spend over $20 trillion through the tax code over a decade and we need to broaden that base. but we are so polarized, our two parties in a cage match over who can give away more, so you don't really have this discussion at all in washington these days. it makes us incredibly vulnerable. paul: unfortunately everything maya is saying is correct. what is frustrating as

recovering politicians is, we were more serious before and we have relapsed on our seriousness in dealing with this. what is frustrating is all these problems are within our control is our own country. we see this coming, we know what to do, but we are not fixing this or we will not. it is because our political situation deteriorated even more. before i was speaker i shared the budget committee. 10 years ago i passed a budget off the house floor with 231 votes that cut $6.4 trillion out of the baseline, we raised the retirement age, means tested medicare, foodstamp able-bodied work requirements, etc.. if you took that budgeted today's baseline you would be cutting $11.6 trillion. 10 years ago we had the votes for that.

they will be lucky to get $2 trillion in this reconciliation bill. that will not be net, it will be $1.7 trillion if you're lucky. we have deteriorated fiscally with the ability to take these things on. this is the most protectable economic crisis we have seen in our country. we know treasury auctions may fail, we just don't know when. we know what the fed will do when it happens. you probably know what it will look like when it happens. we could have avoided this, but it does not look like we will. that is what is frustrating. josh: for the audience, there is a qr code, you can scan the code and type in a question and it will appear on the ipad i'm holding and we will take audience questions. one thing i wonder about given what maya and paul described, you have the split will

situation where there is no desire to take this on. we have warnings of long-run risks. it makes me wonder what is the forcing mechanism? the u.s. has done fiscal adjustments in the past. in 2011 there was a major agreement under president obama. paul: and patty murray. josh: 1993, 1990, we used to do this. people used to say there is a big gap and we will fix it. what has to change for that to happen? does anybody have ideas about what forces could bring that to bear in washington? >> i would say a couple different things. let's take social security. it is obviously very difficult for any politician to say they are going to cut social security benefits.

having said that as treasury secretary i had to sign off on the social security report every year. we know the date social security will run out of money. this is effectively an off-balance-sheet liability. at some point in the near future we need to have a bipartisan solution of what we do for social security since neither party wants social security to run out of money. health care costs, i'm optimistic that with ai and other technology we will have savings in health care costs which are a big component. as it relates to treasury auctions it is unfortunately not as simple as the fed stepping in and buying a failed auction. the fed technically can't do that. we are also in an environment

where the fed is downsizing their portfolio and not increasing which puts additional pressure. i think step one is, the administration has to put through the things they want, tax cuts, regulatory relief, their trade agenda. i'm hopeful later in this term there can be a bipartisan focus on costs. some of that can be done now through the republicans controlling the house, senate and presidency and putting in savings and reconciliation. i suggested on the tariff front if you want a 10% tariff across the board, score its, put it in and use that as savings. if you want to downsize certain

expenses, and there are limitations, but there are government expenses that can be cut. i agree with paul. ultimately you have to deal with the other side and the spending. alan: a quick point. if you look at the financial crisis, which i read about. [laughter] consumers said, i can take on more debt on my house as long as my monthly payment is lower. basically the government took over from consumers since then and with a decline in interest rates one thing that allowed this to keep going, in my opinion, is everyone looks at their current monthly payment. we went 17 years where interest expense has been flat. it was flat because you paid off 8%, 6%, 4%. all the higher coupon debt has been paid off. we tripled our debt.

now as we go forward, if interest rates stay where they are supposed to be, our current interest expense goes up. if we have to let interest rates go higher, that squeeze on with the interest expense will be as opposed to just spending itself could be a catalyst to get people in the room. josh: could we put numbers to a couple of those? the social security trust fund exhaustion. as a legal matter, when the trust fund runs out of money, the government is only allowed to send out a fraction or percentage of the social security. as a political matter people expect a patch, but to get people to the table, you have to pass the patch and then argue the terms. when are we looking for that to happen? are we looking for that to happen? phil: when the trust fund is exhausted the system becomes a cash system.

we had that in 2033, and benefit reductions would be 25% to start and go up from there. i agree that is the obvious driving factor. the thing creeping up our interest payments like alan said. it is probably crowding out other priorities. whatever they want to do as tax relief or national security spending, whatever it is. those interest payments are crowding out other things. josh: maya, i see this as a possible political forcing mechanism. i like to look at the 1992 campaign because i think that is the last presidential campaign that had deficit reduction with all three candidates pressing that idea. the focus on why individuals should care about the deficit is

the idea when the government borrows too much money that makes it expensive for you to borrow money, for you to mortgage, companies can get financing to invest. is that a connection that can be drawn for people again? we went with a long period where interest rates were low so it was not central to our politics. i don't see politicians making that argument yet, that we need lower interest rates for your mortgages. maya: it was so much more complicated and people said interest rates are so low borrowing is very -- a sickly free. you don't have to say that twice for a politician to say that is a good plan. we borrowed incredible amounts beyond covid. i think the interest rates are being felt. people are feeling this much more than a few years ago. one thing you will hear from folks in washington is, no one cares about this issue. i don't hear from anybody that it matters to them but they are

a little. folks who understand market say what happened with treasuries was alarming. to watch that with stocks, the dollar and bonds at once was a warning. the way this will change is either out of crisis or leadership. the crisis will certainly come from something in the bond market or if there is a big emergency where usually when we borrowed during an emergency error rates stay low, but if we are out of fiscal space or wing will be more difficult. leadership also happened in the 90's in an odd package of ross perot. someone who wrestled the issue onto the agenda enforced politicians who did not want to talk about it to talk about it. in my weird fiscal circles we say, how do you create a pseudo-crisis to nudge people enough to take this seriously and think about what to do ahead of time? build a break the glass plans to

your radio until waiting until the stupid, self-inflicted crisis of waiting until the last moment. josh: i want to turn to the revenue side in a moment. but to stick with spending cuts if we are talking about entitlement reform, is this the usual menu of options, raise retirement age, adjust benefit formulas? basically you either have a cut across the board, try to make it progressive with folks of means testing, but old age benefits will simply be less generous in future? paul: we have learned a lot about how to run the system since we started them in 1932 an d 1965. there is a lot more we know. in medicare the federal unfit system works well and has far lower cost increases. so we have roadmaps on what to emulate to bring good reforms.

for the scorekeepers if you do something like that you're taking a program, a defined open-ended program, and putting a fixed growth rate on it. then underneath that doing things like you described. raising retirement age, means testing the benefit, subsidizing faced on health and wealth. that model works, they score it well and it gets you out of the woods but it is a combination of newer things we have learned about how better to run these programs using private sector choice and competition along with austere screw turning things. if we step ahead of this, we don't have to do it to current seniors, it can be perspective. anyone in or near retirement today will not have this apply to them it will be to tomorrow's retirees. before when we did it it was 55 and below.

let's say 60 and below. you have time to prepare and politically survive it because you are not taking away from current seniors. we wait until a really bad situation, we may not be able to do that. the last thing i would say, the only game in town is a fiscal commission with teeth. bo simpson was dead before we entered the room in the last meeting because the president and the speaker of the house at the time said we are not doing it, and therefore they did not. a fiscal commission with teeth like the greenspan one requires congress to vote on it, not filibuster. may be a president in his last term looking for a legacy, save the dollar, dodger debt crisis, could do that.

to steve's point it has to be bipartisan. the linchpin is a debt limit deal, a fiscal deal where you have a tight congress and that is christ's of getting that package passed, which is requiring a statutory commission to bring congress something like that. phil: i agree with everything. i see your original question is that entitlement reform does not have to be only austerity. if you can make the system more progressive by increasing benefits at the bottom, decreasing net benefits at the top, the system is progressive now, but the benefits for people at the bottom in terms of dollars are quite meager. we have learned that it is a safety net and may be the bottom of the safety net is not as strong as it could be. josh: that is true as a theoretical matter but i'm

thinking of what is happening in this political environment. one of the presidents key proposals is to exempt social security benefits from taxes, which is a benefit increase for the upper end of the. >> you're cutting those programs if you took that revenue stream away. josh: one of the few examples of congress working together in bipartisan manner was to increase social security benefits. there is a byzantine system if you spent part of your career as a government employee and there were reasonable fairness complaints theythrew a lot of money at all of these people so in theory that can be done but the idea trump would want his last lame-duck period to do this horrible thing everyone in washington hates to do. in defense of the dollar, this administration does not seem like it once a strong dollar.

i see the theory but have a grim feeling about the likelihood of that. >> i did not say it was a great answer, it is the best answer i have. [laughter] maya: we have to tell the truth about social security. it is not rocket science to fix it. many young people think they are not going to get it, so by giving them partial benefits, they are getting above what they think they would get. but if we go along and hit the trust funds, run out of money and start plowing general revenues into it, remember our budget we already give $6 to a senior for every $1 we give to people under 18. so we're increasing the share of our budget to seniors at a time when there are huge needs in terms of cybersecurity, investments, competition, energy, human capital. take your priority.

it is unlikely to be wealthy seniors pensions. that would be the thing we are making a choice about. in that thing you just mentioned, one of the unions leaked my phone number to the seniors about protesting this, so i know they are very scary. i would never want to be a politician that goes against aarp or other groups but we have to tell the truth. this program, we continue to make promises we cannot keep and putting resources there takes them from things that are arguably a higher priority. >> i wanted to make a comment on the dollar because now that i am no longer the treasury secretary i can comment. i believe the administration understands the importance of the dollar being the reserve currency. i think for the foreseeable future, notwithstanding there may be central banks that move into gold. those are on a relative basis.

there really is no alternative currency. the good news is for the foreseeable future we will be the reserve currency. we could not finance these deficits if we were not. with that comes a level of responsibility because we are the reserve currency of the world, but also benefits. on the swift issue the reason people are trying to get away from swift is because of sanctions. again our sanctions are very important foreign policy tool. we always wanted a stable dollar. we did not want a weak dollar or 12 strong overtime. but it is in our interests of a stable dollar and very important to keep the dollar as the reserve currency of the world. if people don't view that, we will have an even bigger problem financing our debt. josh: one more thing to steve.

do you think the desire to main that -- maintain the dollar, is that consistent with the administration's desire to achieve rebalancing in the global economic system? they seem to want to discourage other countries from holding u.s. treasury bonds. sec. mnuchin: no, i don't believe that at all. they absolutely understand that. on trade a lot of these issues were in trump 1.0.they are just stronger . trump has been talking about trade way before he was president. during the first term the economic plan was, tax cuts, regulatory relief and trade. if we look at china trade, there is no question administrations on both parties had a china policy. the more we open up to them, the more they become like us. they did not.

we have did deficits because our markets were open to them and theirs were not open to us. tariffs are used to create a fair and level trading pattern. that is something that is a good thing and i know is the president's objective. paul: i think congress will pass the stable coin legislation in the summer to spread the dollar more widely around the world, digitize the dollar, help buttress it as a local currency. so that is good news. josh: can we talk about the revenue side. we talked about ways to cut spending. do we need tax increases as part of rebalancing? >> we don't, and if we look at corporate taxes, we cut corporate taxes and revenues went way up. we simplify the tax code in certain aspects but we need growth. we need to get to 3% and not 2%

and we need a tax policy. things like expensing which are very pro-growth that point. maya: i will take the other side of this. i agree on the corporate tax rate, that is not the place you want to get revenue. two points. if you look at the current reconciliation bill, the house version, they are assuming growth of $2.6 trillion out of their entire package. outside estimators the range is -$50 billion to $70 trillion. the ones they are extending are much less progrowth. they are assuming a larger multiple than is credible. we have the chance to cut spending. there is a reconciliation bill. the senate put on the table that they would borrow $4.8 trillion

and are asking to save $2 trillion. spending over the ten-year period will be $86 trillion and the house, senate and president are asking for $2 trillion. but they did not like that, so they are asking for $2 billion. nobody has courage or conviction when it comes to the hard things. democrats do not really want to raise revenue except on millionaires and billionaires, 2% of people. we have an issue where there is not any conceivable way to get the $7.5 trillion in savings and spending alone. you have to look at the revenue side which would do the least damage to growth. our tax base has expenditures that are spending programs hidden through the tax code. >> a number of things.

i agree with paul. i tried to go to the obama administration and save the way you should do both simpson is give congress six months which is happened before to say i will give you six months to come up with something better that is bipartisan or else it will become law. if we run into a problem with the dollar i would like to see a bipartisan group come together and say, unless we get in a room and not just argue that we need less of this and more of that, we will never get it done. i happen to believe we need more revenue and growth is not the total answer. we go through how many years of saying, we will grow our way out? corporate taxes are different thing, not really the place to tax. the reality is saying 16% 18% of

gdp in revenue and 23% to 25%. it is just not realistic. some talk about demographics which is the future that already happened. you hear about it so long it seems like no big deal. everybody is aware of the demographic impact of senior citizens growing rapidly. we are not aware of the fact we now have a declining working age population that is significant. we used to have five 18 to 64 -year-olds for every 65 and older, but we are onto 2.75. the main way we taxes through wages and earnings. that is the main 80% of our tax revenue comes from that. if we say this smaller and smaller percentage of the population has to come up with

90% of our revenue we are kidding ourselves and not looking forward. as so many people know, i have said yes we have to change social security and make adjustments, but when you get into means testing it gets tough to prove. i have believed for a long time we are in the only country that does not have a vat. that is a consumption tax though not entirely. if you want to means test retirees, they spend a lot if they have a lot of money. therefore most of that revenue will come from there. can turn around and give more benefits to people at the lower end because it is quote, progressive. we have to think about the new ways we look at both revenue and spending, instead of saying get the revenue from the richer get the spending and that is all. we have to look at both.

phil: i agree with everything just said. to expand on the challenge. the 2017 act was very thoughtful. the progrowth parts are permanent, the corporate rate is permanent and international tax provisions that increased u.s. competitiveness are permanent. then there are base brought in her -- broadeners. mandating the aca, salt, the repatriation. that offsets the drag from the deficit. it is hard to do that again. the progrowth stuff is permanent and you can't extend it. individual rates, there is some incentive, but it is not high-powered as what was made permanent. >> i think the economic damage

from increases on the individual side are not as pronounced. the corporate income tax rate is on the order of 10% gdp. that is where you get the biggest bang for your buck in terms of growth and restructuring. it seems we can get growth in revenue by a shift in the base. a vat or increase in the payroll tax. there are ways to raise revenue that have a bigger impact than raising the corporate rate back to 35%. maya: it was a similar thing, we are getting to the point where, if you cut taxes, the dollar of additional debt is close to doing more damage to the economy than the dollar growth from the tax cut. we have to be really careful to do what you're saying, cut the most progrowth taxes and raise the least progrowth increases. paul: when we wrote that bill

intentionally keeping the business stuff permanent, steve and i were the designers of this because we knew it had to be permanent for business planning and certainty. challenges on individual side, most of our businesses are pass-throughs and file individual taxes. you filing as a person. that is 80% of american businesses. what we did not want to do is drop c corps to 21 and keep s corps at 44%. so we dropped the rate correspondingly and that goes back up so there is progrowth or antigrowth tax policy expiring that we do not want to let expire because it will do a lot of damage to a lot of businesses and expensing stuff is the biggest kicker for growth in this bill.

there is progrowth stuff and collateral damage if we don't get this done. >> and we need the pass-through deduction which is critical. >> tax reform can fix this. you can get a broader base at higher revenues and maximize economic growth through a reformed tax code that is more consumption based by exempting savings from taxation. there are different ways of skinning that cat. we have talked about our border adjustment tax. wouldn't that be nice versus tariffs? you can get to 20% of gdp, not 25%, but not with this code. >> i want to push back on one thing. i pushed back on this when you were doing your bell. i agree you want to be fair to pass-throughs versus c-corps but

the only reason pass-throughs exist is that people did not want to pay a corporate tax and then a tax on dividends. they were not being double taxed. the reason you have the pass-through is to pay your personal tax rate one time. now if you bring the corporate rate down here, i will still only tax you once and you will get a c-corp rate but those getting dividends out of c-corps have to pay a tax again. i lobbied against it. i'm an llc, so i will benefit but i still don't think. they said sorry, investment banks -- could not do it. knocked me out. we do have to think those through. why not give businesses the opportunity to either pay the corporate rate and taxes on distributions, or be a pass-through. by giving them both those are things we have to -- >> we made a run on it in the

bush administration and came up short. >> i'm just saying, one of the other, not both. josh: i want to take questions from the audience. if you have more questions we will put that qr up again. we have one question about the irs. if the government revenue model is based on taxing income, why do we refuse to invest as much as possible in the irs? what is been in the news is a huge headcount reduction ongoing at irs, 100,000 employees. the ballpark of 75,000 employees. there was a big increase in headcount but this is a larger increase ash decrease. -- larger decrease. >> eight years ago the irs needed more money for technology. paul remembers this. it is critical. we have to use technology. we don't need more bodies.

the technology was in the stone ages and needs to be upgraded. the reason the biden administration added all these people to the irs is, there is a way these things are scored. if you add more people you assume you'll collect more taxes, and you can put it through reconciliation. i would argue and maybe we should not be downsizing at exactly the way we're doing it, we did not need all those people. we needed long-term investment in technology to upgrade the irs. particularly with ai, there are ways of doing this today that are much more efficient than just throwing bodies at it. josh: if we have 30% revenue agents and auditors you don't think that has an impact? sec. mnuchin: no, that technology can replace people and the motivation of adding all these people was, when they were scoring this, they could count the revenue. >> it is a tax gap score,

gimmick. >> the headlines about getting rid of everybody, i heard this a few times. my wife's hairdresser said it is great, we don't have to file our taxes. a bunch of people are now saying that. without the technology. isn't it funny people are saying this is great, we don't have to pay taxes? josh: they are going to repeal the tax on tips anyway. phil, i think this is something you did not love dealing with but you were doing that score and i remember you took criticism from democrats that the score was not big enough, they you under must -- that you underestimated the revenue. phil: that was a highlight of my first term as cbo. i think a deputy white house press secretary criticizing me. this cbo does not know anything about the irs. all of our people were former treasury people.

we do that cost estimate, we try to get information from the biden administration treasury. if you get this money, what will you use it on? it was very general. they said technology. we could not get information on exactly what are you going to do? our cost estimate and score for those resources is very general. we assume they will do the highest roi things first and then go down. but it is based on historical studies and we could not get them to say, exactly what are you going to do? what am i supposed to do if they won't tell us what their plans are? josh: we have a question about population growth. is there a role for more population growth, immigration, a high birth rate? those are long-run things in the birth rate is not proven

especially amenable to policy. is there anything we can do to control our destiny in terms of the math that feeds into the budget? >> your long-term models as we will grow at 1.3% over the next 30 years, almost solely because of the lack of population growth and if we change immigration laws and brought in working age populations, worked in such a way it is not depressed people's wages, which you can do with today's technology, their model gets you up and growth. i don't know if it is 3%. say we do entitlement reform and save the dollar and prevent a debt crisis. the only other thing we have to do to get the 3% growth is this. >> we enhanced our modeling to do this. what are the characteristics of immigrants with low education or higher education and bigger growth impacts from higher

education. >> these are score both savings now? >> it would be part of a dynamic score. >> one other thing. it is overhyped right now, but if growth is hours times productivity you get more growth by either hours or productivity. if we invest the right way with public-private partnerships to build out infrastructure ai can write on, we can get a situation that people are afraid of but we could use, you could get a big productivity kick on investment over infrastructure we can build out. china now has dark factories. building cars without one person in the factory. that sounds terrible right now, we don't want to replace all those jobs, but if you have fewer people but kick up the productivity that way, you can actually get the growth you need

and distribute in ways to the people that will be supporting that. we have to think about -- one of the things i said when i became an economist. they said would you have studied economics? no, history. what are the things we have to look at? if we would think more about infrastructure buildout around the productivity boom, it could be a big game changer. josh: several questions about a sovereign wealth fund. those are for countries with lots of oil and budget surplus. is there any role here for a sovereign wealth fund? >> where they serious about that? sec. mnuchin: there can be strategic investments where it makes sense for the u.s. to do.

in a way we do, it is called social security. had we invested in social security in the s&p a long time ago as opposed to investing it in our own bonds, we would not have a problem with social security today. what paul said, if we can get rid of defined benefit plans and change them to defined contribution plans, there is a role for a sovereign wealth plan to manage that money. maya: but it would still be finance all from borrowing, so it is not really a sovereign wealth fund, it is borrowing. >> we have a sovereign wealth fund commit is called the fed. [laughter] maya: you can make arguments for the resources but it would still just be borrowing. >> it would not be the equivalent of a sovereign wealth fund other countries have with limited resources and their objective is to transform the economy. there could be a role.

it is not synonymous with the other. josh: i want to review what we discussed in terms of things that would be part of the way out of the woods. we are supposed to cut social security with the retirement age increase, some increase in -- instead of illuminating taxes, you would reduce benefits for higher income seniors. we are may be going to have more immigration. alan once a vat. a lot of this is politically awful. the absolute opposite of what people are discussing doing in washington renew. >> let me go on the record, i do not want the vat. [laughter] >> a lot of people think the reason why europe amongst a bunch of other things, it is easy to add a vat and continue

to add and spend. i want to clarify, we need to fix social security. i don't think the headline should be that we will cut social security. the headline has to be, we are not cutting social security benefits, at least for the majority of the population. josh: to save money you have to cut something. >> the game is we will not cut current seniors but change things for future generations and save it from insolvency and bankruptcy. the politicians say, if i do that and raise retirement age in 10 years or taper the benefit formula for future generations, the ad is that i am cutting from seniors and i will lose. that is why these things have to be bipartisan. >> one thing about the vat these guys do not like, larry summers, conservatives do not like vat

because they say it is a spending machine democrats say it is regressive. sooner or later they realized the other one is right. >> the problem for republicans, they want the revenue but do not want to give spending cuts. we're just going to give you more revenue. the only way it works is to have them paired together, where you are getting real spending changes, changes to the spending baseline. >> we need more revenue, period, and less spending. if all we do is argue the other one has to get it done and we will be fine, we have to get in a room and say, how can we come together with something we can all agree on is a way to bring this together? we just keep arguing it is your side versus that side. i agree with steve that there is no alternative to the dollar as

a reserve currency but the real question is, how much will it cost us to get the capital to be the reserve currency because if over time we get downgraded again in the u.s. treasuries we could be the reserve currency but if our cost of capital is going like that, it will have a dramatic impact on our economy. we should not take the reserve currency. maya: we have to do something about this fiscal situation. it is weak in our economy, our ability to respond to emergencies, threatening our national security and could lead to a fiscal crisis when we would not be able to fix it on our own terms. we have to do something. the problem with your question, it is unattractive what the solutions are. it is much more fun to be borrowing than fixing it.

the way you fix a fiscal imbalances cut spending and raise taxes, and try to do them in the best way you can. >> where you cut spending and grow the economy. maya: you can do that, but republicans right now do not seem to want to cut spending. let's cut some spending. but they are not showing up to do it. i worry about no willpower to do anything. part of that is because we are out of practice of budgeting and making these choices. we should start bypassing budgets. we have not passed a serious budget in a decade. they are only to unleash reconciliation. we should bring in the 3% deficit goal. it should have to meet that. we should stick with pay-as-you-go. let's do these tax cuts and off set them.

finally, we need a fiscal commission because we are so out of practice with making hard choices. we need something to give politicians political cover to make choices that there is no avoiding, the things we have to do. josh: i think that is a good note to end the panel on. thank you for joining us today. [applause] [captions copyright national cable satellite corp. 2025] [captioning performed by the national captioning institute, which is responsible for its caption content and ac >> "e wall street journal" and a number of others areepting that cameron hamilton, acting director of fema, has bee removed from his position one day after testifying before congress about the role of the organization during natural disasters. eemed to contradict the stration by saying he did not support limiting the agency. homeland security kristi noem fired him today.

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"q&a," former ohio governor john kasich, author of "heaven help us," talks about the work done by religious institutions and people of faith in the united states including combating homelessness, hunger, human trafficking, and other issues. >> i think it is not critical to count the number of times we go to church. but at the same time i think we need to realize that those institutions are sort of like -- when you think about running for office, you need a clubhouse, a political clubhouse to gather. i look at the churches is an opportunity to go in there with ideas changing the world and to be able to find support, some material support, some psychological support. i also believe you can get more things done working with others than just working alone. >>