Money bytes

tmc: Deficit. Big word coming from our bestie in the White House.  “Gotta cut down the deficit.”  “Can’t hand it off to our kids.”  “Gotta trim all this waste and pay off the deficit.”  It’s a steady and automatic chorus.  Every Republican president since I can remember talks about the deficit in these terms.  So what is it exactly?

Money Guy: Not my bestie! No way Kemosabe—and I hope not yours! But, the mechanics are pretty straight forward, the deficit is when there’s less money coming in (revenue from collecting taxes) than going out (government spending). It’s really that simple. And, just so you know, that rhetoric is all bullshit. Under the first Trump presidency, the deficit increased by 317% and as of the end of March, the deficit is 15% greater than it was at the same time a year ago! A lot of Americans think that Democrats spend money like drunken sailors and that Republicans are more fiscally responsible. This is just not the case, all four Republican presidents since 1980 increased the federal deficit during their time in office. Furthermore, the last time we had a surplus was in 2001, under Bill Clinton.  

Now, how to cut the deficit, you ask? That’s also quite simple: you can either increase revenue (taxes) or decrease spending. The best solution? Do both! 

 Regarding increasing revenues, I don’t want to pay more in taxes than I should—not one dime—and I have really good CPAs to make sure of that. But, I don’t mind if corporations pay their fair share—or something at all. Let’s take Tesla, your boy Elon’s baby. Tesla didn’t pay any federal income taxes for the year 2024! Zero. Nada. Not one fucking penny! Yet they reported $2.3 billion in U.S. income! I (just one American citizen) paid more in federal income taxes last year than the 8th largest company in the fucking world! Is that right? Fuck no it isn’t right! And to really rub it in, the Muskrat’s net worth increased by $150 billion last year! 

Regarding spending, Space Karen and your bestie, Trump, created the Department of Government Efficiency or DOGE to maximize productivity of the federal government and reduce wasteful spending, allegedly. We could easily dedicate an entire blog or two to DOGE, but for the first five months of the 2025 fiscal year, federal spending is up 13% vs. the same period last year. Huh, I wonder if there were ulterior motives?

tmc: Plus there’s all kinds of deficits, right? National deficit, trade deficit, other deficits. And is national debt synonymous with national deficit or is that its own money byte?  What exactly are these?

 Money guy: Yep, there are multiple “deficits”. The terms “national deficit”, “federal deficit” and “U.S. deficit” have the same meaning and are used interchangeably by the U.S. Treasury.

The “trade deficit” is simply when the amount by which the cost of a country’s imports exceeds the value of its exports. Having a trade deficit isn’t necessarily a bad thing—the reality is that many goods can be manufactured less expensively abroad than in the U.S. and this is a good thing for consumers and shareholders. Like the well-known economist, Dave Chapelle, said about Nikes: “I wanna wear the motherfuckers, I don’t want to make them!”. 

When the government’s spending (outflows) exceed its revenue (inflows) and thereby runs a deficit, they borrow money by selling Treasury bonds, bills and other securities. It’s the same when individuals use credit cards to purchase goods when they don’t have enough money in their bank accounts to buy them. The accumulation of this borrowing, along with the associated interest owed to investors who purchased these securities is known as the “national debt”. Many folks use “national deficit” and “national debt” interchangeably, and while they’re related, they are very different. 

tmc: But just as importantly, why do I give a shit?  Why does anyone give a shit?  

Money guy: Now this is the $64MM question!  I’m not sure. No really, I’m not. As long as the government can print money and continue to borrow, does it really even matter? You’d think that the chickens have to eventually come home to roost, but I’ve heard that argument for decades. And you know what, the fucking chickens are still out there somewhere!

tmc: I guess the way I look at it, Brother, is we’re a debtor nation.  We spend more in our homes than what comes in.  It’s why everybody has credit cards.  It doesn’t seem, anyway, to impede us. We live beyond our means and guess what–we do it happily too.  I’m even guessing that when I go tits up, all my debt has to be paid off before my cub gets the rest?  Sounds like a pretty well-oiled machine to me. 

I really don’t want to think about your tits, bro. Fuck, why did you put that fucking image in my brain! But, yes, we are a country obsessed with spending. Consumer spending accounts for around 70% of Gross Domestic Product or GDP! Seventy fucking percent! As a percentage of GDP (and in gross total spending), the good ol’ Red, White & Blue leads the world. Everyone wants the 55” flat screen TV, the McMansion, the new car, to keep us with the Joneses and so on. Conversely, the average American only saves around 4% of their disposable income, which isn’t nearly enough to build up adequate emergency funds, save for college educations and retirements.