Jessica Riedl

this shit would be a bit much for news anchors in Pyongyang

It's a lazy gimmick to think we can keep cutting taxes and expanding spending and just pay for it by forcing the Fed to make government borrowing nearly free.

Politicians need to stop looking for easy, fake solutions and make the tough decisions on deficits. (/F)

Overall, fiscal dominance is a dangerous consequence to soaring debt - it paralyzes the Federal Reserve and kills its ability to slow inflation and stabilize the economy. We saw this after World War II.

If we want lower interest rates on the debt, back in the 2010s the Treasury missed the opportunitiy to lock more of its debt into 2-3% rates for 30 years. Some of us were screaming back then to do this.

In fact, inflationary cuts in the fed funds rate may raise - not lower - long-term interest rates.

Thus, I estimate even a *full-point* cut in the Fed funds rate would save maybe $44 billion next year. White House OMB data shows even less savings. That's out of a $7T budget.

$9 trillion of the federal debt will roll over in the next year, plus $2 trillion in new borrowing equals $11 trillion subject to new interest rates.

Also, the market determines the interest rate paid by the Treasury on its debt, and the Fed Funds rate has limited impact there.

First, yes, interest costs are burying the budget.
2021 - $352 billion
2025 - $1 trillion (approx)
2035 - $2 trillion (projected)

Interest has soared past Medicaid, defense, and Medicare to become the second-biggest item in the federal budget.

Trump Can’t Fix the Deficit by Attacking the Federal Reserve The president claims lower interest rates would save us $1 trillion annually. He’s wrong.

NEW from me. Trump wants to take over the Federal Reserve and lower interest rates in part because he believes it will cut federal budget interest costs by "$1 Trillion per year."

In @thedispatchmedia.bsky.social, I show that fiscal dominance would NOT reduce interest costs very much. 🧵

Trump campaigned on a trade war and immigration crackdown. And farm-heavy counties still gave him 78% of the vote.

Sorry guys, you voted for this. Enjoy the consequences!

(And before you shout "easy, just the tax rich!", watch the video below. It can save some money, but nearly enough).

bsky.app/profile/jess...

America has a longer leash than France and the U.K. because were a huge, powerful economy and the world's reserve currency. But eventually, the laws of math and economics always win, and the chaos of France and Britain will head our way unless we get out ahead and reform.

Third, the last hope was that the resulting budget deficits could at least be funded with low interest rates.

Instead, interest costs have tripled to $1 trillion and are the 2nd largest budget item after Social Security - and may double again within a decade. So even more debt.

Second, retiring boomers and low fertility rates (and likely immigration limits) are strangling long-term economic growth by limiting the number of workers.

It means all growth must come from labor productivity, which itself is not great.

Which brings us to the U.S., and our deficits headed towards $4 trillion within a decade and as high as 250% of GDP within three decades.

First, the demographic challenge is raising senior benefit costs while limiting taxpaying workers.

Surging debt recently collapsed the French government, which also had its debt downgraded.

Same issues:
- Aging population and low fertility rates slow economic economic growth & tax revenues.
- Senior benefit costs soar.
- Resulting deficits worsened by rising interest rates.

The U.K. is in deep trouble, and after last year's tax hikes were plowed into new spending, the deficit continued growing amid calls for even larger tax hikes.

All 3 countries face:
1) Aging population and low fertility - which along with productivity slows econ growth.
2) It also means deficits from soaring old-age spending & slowing tax revenues.
3) Interest rates steeply rising on these growing deficits

Opinion | Britain and France’s debt crises are bad. America’s will be worse. Washington’s fiscal failings mirror Europe’s economic mess.

NEW from me. In the @washingtonpost.com.

I examine the emerging debt crises that are destabilizing the British and French governments - and how America faces similar economic & fiscal challenges on an even deeper level. 🧵 www.washingtonpost.com/opinions/202...

MAGA Twitter is really a sight to behold right now. One cis white male tragically murdered another, and somehow the *transgender community* is responsible and must be stripped of their constitutional rights.

It is just dangerous ugliness from unhinged, fanatical bigots.

This political era is all about vengeance & escalation. Impose maximum suffering on the other side. They started the war, and they are evil, sick, and must be destroyed. Civility & grace is for losers & wimps. Real leaders fight - no apologies, no mercy.

We desperately need de-escalators.

The Limits of Taxing the Rich Executive Summary Budget deficits have risen to nearly 6% of GDP and are projected to rise to 10% of GDP over three decades. If Congress continues to

And for anyone who really wants to explore further, here is my 2023 study walking through all the modeling and data in excruciating detail. manhattan.institute/article/the-...

Here's what would happen if we seized all the wealth from America's 800 billionaires Don't comfort yourself with wishful thinking that millionaires and billionaires could take the entire burden of the deficit off our hands.

Here's the article version. It explains that taxing the rich can surely be *part* of a broad deficit reduction deal - and even suggests policies - but we still must fix SocSec & Medicare and probably raise middle class taxes too. The budget math is unforgiving.
reason.com/video/2025/0...

YouTube video by ReasonTV The Uselessness of Taxing the Rich

NEW from me. My new video for @reason.com says fine, tax the rich, but recognize that it cannot eliminate more than a small fraction of the soaring budget deficits. And no, those old 91% tax rates and the European tax systems do not prove otherwise.

www.youtube.com/watch?v=o0x1...

senior fellow at the Manhattan Institute, former chief economist to Senator Rob Portman (R-OH) & director of budget and spending policy for Marco Rubio’s 2016 presidential campaign👇🏽

Shattering the Separation of Powers Presidential impoundment Is dangerous and unconstitutional.

Thus, giving Trump unlimited impoundment power would be extraordinarily dangerous - Congress and the courts must step in.

(Excuse any typos in this thread, I had surgery this morning and am a bit foggy). thedispatch.com/article/trum...

Finally, impoundment may not fix deficits. Presidents like to reward their voters, not cut them. DOGE just targeted low-cost cultural totems that MAGA hates.

Moreover, a president could acquire corresponding power to unilaterally *add* spending in this post-constitutional world.

Second, the chaos. Imagine a president gutting Social Security because he was heckled at an AARP event. Or declaring that districts electing Democrats next year will lose all govt. benefits. Presidential elections would become elect-your-4year-dictator exercises for much of govt.

From law to economics: Why shouldn't a president have impoundment powers? We have $2 trillion deficits and a lot of waste.

First, because it essentially removes Congressional representation from the operation of govt programs, giving the president near-dictatorial powers over them.

The White House's legal case is that impoundment is legal because:
1) As chief executive, the president has wide discretion over which laws to follow or ignore.
2) Trump was elected with a mandate to cut spending, which supercedes any legal limits.

Both arguments are absurd.

Yet Trump promised to aggressively impound, and DOGE and several agencies have done so. They even took down a public spending database to hide what they were doing from Congress and the public. The courts forced them to restore it online.