On Monday, a former top adviser to President Donald Trump denounced the Republican’s economic policies for increasing America’s national debt — and an economist who advised a budget-balancing Democratic president agreed with him.
“This isn’t apocalyptic,” posted Anthony Scaramucci, who briefly served as Trump’s communications director in 2017, on X. “It’s just math. 10-year treasury at 6 percent. $40 trillion in debt. Do the math. That’s $2.4 trillion in annual interest payments. Larger than the entire Social Security disbursement.”
He added, “You cannot sustain that.”
Scaramucci then urged Americans to go back to the tax rates in effect during President Bill Clinton’s presidency, speculating that deficit spending could be reduced by trillions if they did so.
“No Republican is going to do that,” Scaramucci said. “Trump isn’t going to do that. And when Trump leaves office, he will be personally responsible for 42 percent of all the national debt in American history.”
AlterNet spoke with one of the architects of President Bill Clinton’s economic policies, his Undersecretary of Commerce for Economic Affairs Dr. Robert J. Shapiro. He played a critical role in developing the programs that balanced the budget and allowed Clinton to preside over four budget surpluses during his administration.
“I can’t verify the numbers, but first, it is correct that the 10-year Treasury yield is higher than it’s been in decades,” Shapiro told AlterNet. “And whether it’s 6 percent today or 5.8 percent, it’s not very relevant. The rising yield on 10-year Treasuries is a signal that global investors’ confidence in the U.S. economy and the U.S. government has declined. And consequently, they’re saying, “If you want us to lend you money, we have less confidence in you, and consequently you’re going to have to pay us more. And indeed, you’re going to have to pay us more than you’ve paid us for the last 20 years.”
Shapiro broke down the key differences between Clintonomics and Trumponomics.
“The fact is, the Clinton tax rates, both the corporate tax rate and the personal tax rate, were substantially higher,” Shapiro told AlterNet. “Bill Clinton balanced the budget in large part by tax changes and economic growth that increased federal revenues by more than 50 percent over eight years. That’s how he balanced the budget. That and restraining defense spending.”
Ultimately, though, Shapiro agreed with Scaramucci’s broader point — namely, that America’s growing national debt is making outside investors wary about putting money into this country.
“Global confidence in the stability of the American economy and American sovereign debt is one of the most fundamental factors in the stability of the entire global economy,” Shapiro told AlterNet. “And the erratic and uninformed and destructive economic policies of the Trump administration have shaken that confidence, and the consequences are very far-reaching.”
Speaking with AlterNet in September, Scaramucci praised Clinton’s pay-as-you-go policies and willingness to raise taxes on the wealthy, although he had unrelated criticisms of Clintonomics.
“I’m simply saying, in the doctrine-of-unintended-consequences category, in the second term he’s pushing for more home ownership, okay?” Scaramucci told AlterNet. “Andrew Cuomo is his HUD secretary. I don’t know if you remember that. They would like families to own their homes, and so they’re pushing for broader credit applications with the money-center banks, which they get.” He argued that these policies ultimately contributed to America’s subprime housing crisis.
Also during a September interview with AlterNet, President Joe Biden’s Social Security Commissioner Martin O’Malley argued that Trump and his administration are planning on privatizing Social Security on the pretext that it will help reduce the debt, even though (as he argued in October) the program could be solvent until 2032 simply by raising rates on those who make at least $184,500 annually.
“Well, his policies — as contained in the ‘big, ugly bill’ — accelerated the depletion date of the baby boomer surplus by a year. And he’s said many times in the past that he wants to eliminate the payroll tax,” O’Malley told AlterNet at the time.
He added, “Let me put it this way. His policies have certainly accelerated the depletion date by a year. At the end of President [Joe] Biden’s administration, that date had actually been pushed further into the future by a year. So there you go — a net swing of two years. That’s what his policies have done to make the situation more imminent and worse.”
O’Malley concluded, “Having said that, the damage he’s done to the trust fund and the damage he’s done to customer service at the agency and its operations are both solvable problems — but he doesn’t appear to be in a mode to solve them. He appears to be in a mode of wanting to privatize Social Security.”