Republican presidential candidate Nikki Haley says she got a call from JP Morgan Chase CEO Jamie Dimon on the national debt level and on cutting federal retirement and medical insurance programs.
Speaking on the CNBC television network Wednesday, Haley implied she got an endorsement from the billionaire bank boss, as well as from billionaire investor Stan Druckenmiller, and was in general agreement with them about slashing federal benefit programs for American workers.
“The idea that a Jamie Dimon or a Stan Druckenmiller would be supportive, we’ll take it … These are men that see what’s happening. They see that in a couple years our interest expenses are going to be higher than our national defense budget. They see what’s in the future,” Haley said.
“Social Security goes bankrupt in 10 years. Medicare goes bankrupt in eight. Anyone that says they’re not going to take on entitlement reform means they’re going to go in and be president and leave the country bankrupt,” she said.
“Entitlements” is a term frequently used by politicians in Washington to refer to Social Security, Medicare, and Medicaid, which are the national retirement, disability and medical insurance programs.
“Yes, we have to do entitlement reform,” Haley said. “For everybody coming into the system like my kids in their twenties, you change it. You say, ‘We’re going to raise the retirement age to reflect life expectancy. We’re no longer going to do cost of living increases, we’re going to do increases based on inflation.’”
The total nominal national debt currently stands at around $33 trillion, or around 120 percent of gross domestic product (GDP), though a significant portion of that is due to the way the Treasury does its accounting.
“The U.S. ‘public debt outstanding’ of $33.2 trillion often cited by media is largely misleading, as it includes $6.8 trillion that the federal government ‘owes itself’ due to trust fund and other accounting. The economics profession has long focused on ‘debt held by the public,’ currently equal to about 98 percent of GDP at $26.3 trillion, for assessing its effects on the economy,” Kent Smetters, a professor at the Wharton School at the University of Pennsylvania, wrote in an October analysis.
“We estimate that the U.S. debt held by the public cannot exceed about 200 percent of GDP even under today’s generally favorable market conditions,” he wrote. “Under current policy, the United States has about 20 years for corrective action after which no amount of future tax increases or spending cuts could avoid the government defaulting on its debt whether explicitly or implicitly.”
The national debt can be diminished either by raising taxes or cutting social spending.
The government spent $1.2 trillion on Social Security in 2022, or about 4.7 percent of GDP, according to the Congressional Budget Office. It spent $747 billion on Medicare and $592 billion on Medicaid.
In total, the government spent $6.3 trillion in 2022 while bringing in $4.9 trillion in revenues, for an annual deficit of $1.4 trillion, or about 5.5 percent of GDP.
While the total U.S. debt stock increased due to social safety spending during the pandemic and is still running above its pre-pandemic trend, the yearly deficit has fallen back toward its pre-pandemic trend.
“From [fiscal year] 2019 to [fiscal year] 2021, spending increased by about 50 percent, largely due to the COVID-19 pandemic,” the Treasury Department notes on its website.