♪ ("LAST WEEK TONIGHT" THEME PLAYS) ♪ Moving on. Our main story tonight concerns the national debt. The world's most boring twenty-eight trillion dollars. And I know just saying twenty-eight trillion might sound confusing. How much is that exactly? Well, to put it one way, it's 28 trillion dollars. To put it another way it's twenty-eight million millions. To put it a third way, it's an absolute fuck-ton of money. But regardless, the national debt is a complete obsession in this country. Here in New York, we even have a debt clock, that counts up in real time. It actually made headlines a little over a decade ago when the debt hit 14 digits. REPORTER: The national debt just passed 10 trillion dollars. So the clock's caretakers had to squeeze a one and a dollar sign into the same square. It's pretty scary. It's a pretty big number. (CHUCKLES) Incomprehensible, it's too big. REPORTER: The clock was put up in 1989, by Helena Durst's grandfather. When the national debt was just under three trillion dollars. Now that the debt has passed the 10 trillion-dollar mark, Durst likes to recite a poem by her grandfather.

"Borrow, borrow, borrow. Enjoy today, and tomorrow, for tomorrow's going to be terrible." I'm sorry, but that poem sucks. The rhyme scheme's all over the place, and if tomorrow is gonna be terrible, why would you enjoy it? That was clearly the work of a man almost as good at writing poetry, as he was at raising children who aren't serial killers. Oh, yeah, the clock was put up by that Durst family. The bathroom-murder-burp Dursts. So thanks very much for the dumb clock that doesn't tell time, you wealthy bathroom-murder burpers. But the truth is, our national debt is undeniably big. And between the trillions in Coronavirus stimulus bills, and the infrastructure plans Biden unveiled just this week, it's poised to get even bigger. And Republicans, in particular, seem outraged by that. This chart showing debt is not just about the big number. It's not just about the 30 trillion dollars in debt. This is about tyranny. History is screaming this warning at us. Countries that bankrupt themselves and destroy their economies simply aren't around very long.

There will be a day of reckoning. A debt crisis, and it won't be pretty. Deficits do matter. How long do you think your family would last if every month you spent more and more on the credit card and made the minimum payment? Not long. Look, I know that all sounds pretty scary, but for what it's worth, the national debt is nothing like your credit card. For start, we don't have 28 trillion airline miles, nor do we get letters in the mail everyday saying we're pre-approved for a brand-new national debt. Leave us alone, you [ __ ] parasites. But if we have huge clocks to measure it, we're considering an infrastructure bill that can add two trillion to it, and some are implying that our creditors could be turning up any day now with a baseball bat to repossess our bridges and dams because of it, we thought tonight might be a good time to talk about the national debt.

How it works, how valid concerns about it are, and how we should think about it moving forward. And let's start with the basics. Like the difference between the debt and a deficit. A country runs a deficit when it spends more money on things like military, social programs, and everything else the government does, then it brings in, mostly through taxes. Now, to pay for a deficit, the government then borrows money, thus accruing debt. So the deficit is a yearly measurement of how much we're in the red, and the debt is the total amount that we owe, accumulated over time. And for decades, in political ads, the debt has been portrayed as a burden that we're placing on future generations. Basically making that argument that we are running up their credit card. And that one day, the bills gonna come due. You owe the United States government, in round numbers, -fifty-thousand dollars. -(CRIES) What would you like for Christmas? I would like you to fix the debt so I can have a future.

ALL: I pledge allegiance to America's debt, and to the Chinese government that lends us money. NARRATOR: Congress must stop digging a deep hole of debt that we'll never get out of. Please stop digging. Yeah, pretty dramatic, right? Crying babies, exacerbated Santas, and even a child watching Uncle Sam digging a grave. And quick piece of advice here, kids, if you do see a man in any kind of costume digging a large hole in the middle of the desert, do not approach him. Do not interfere with his digging. I'm not saying he should be doing that, I'm saying you're not the one who should try to stop him. He's willing to dig a big hole, he's willing to dig a small one. Run away and tell an adult. A non-costumed adult.

But ads like those are wildly misleading. For instance, that "Pledge of Allegiance" ad talked about how much we owe the Chinese government. That is something you hear a lot. But, for the record, the majority of government debt is actually owned by American investors. For example, if you have a pension, you might own some of that debt in the form of government bonds, because, they're a pretty safe investment. Foreign investors only own around a third of our debt. And while, yes, it is true, China does own over a trillion dollars of it, which is nothing, it's around five percent, for what it's worth, they're not even our largest foreign creditor, Japan is. And while the debt is often talked about as being something that we're running up with new spending, the truth is, before the pandemic hit, most of our debt was the result of long, steady growth in programs that we long ago committed to, like Medicare and other entitlements. So we are very much getting stuff for the money that we're spending.

And that actually brings us to a really important point here. Going into debt can actually be a good investment for the country. Essentially, as economists will tell you, the key question is: Are you spending money on the right things? We need to think of the debt, are you creating money for real economic activity? Because doing it just to give somebody money, then, yeah, you got a problem. But if I'm a private individual, and I go to the bank and say, "I got this wonderful new idea, I just need the money to build my factory," nobody says, "Oh, that's horrible, you just increased the money supply." 'Cause we all go, "Yeah, but there's a factory there. It's a real thing." Right. Taking on debt to build a factory that creates jobs and increases economic output is probably a smart investment. Especially if it's one that makes this actual pillowcase depicting a nude Nicolas Cage lounging in a banana peel, with two giant foxes in the background.

I mean look at this thing. As the description says, it has an "ophisticated seam," with, "stylish style." And I am more than happy to co-sign on both of those claims. And the reason that I am confident is... You can consider me a satisfied customer. I feel so much more ophisticated. The point is, Republicans love to argue that government should be run like a business. But tend to conveniently forget that some extremely valuable companies got that way, in part, because they had long periods where they spent a shitload more than they took in. So, as you can see, things are a lot more nuanced than simply, "Hey, Uncle Sam, please stop digging." And it is worth taking a moment to look at the history of the debate over the national debt.

Because the argument that Republicans often make is that they are the responsible ones who want to reduce the debt and reign in spending. Whereas Democrats don't give a [ __ ] about it and just love recklessly throwing around money. But that story just doesn't match up to reality. Take Ronald Reagan. He spent years complaining that deficits were a sign that the federal government had simply lost its way. And I think the answer to curing inflation is a balanced budget.

Now, how do you do that? I mean-- How do you balance the budget? Well, balancing the budget is like protecting-- You don't spend more than you take in... right. It's like protecting your virtue, you have to learn to say no. (AUDIENCE LAUGHING, CHEERING) Really? An applause break for that? Is there anything weirder than calling someone's virginity their "virtue"? Because, as far as virtues go, it is a pretty shitty one.

I'm not saying that there is something inherently wrong with not having sex, that is a personal choice. I have frequently not had sex due to lots of people's personal choices. But, if that is the best thing about you, you should probably get some other virtues. But the key thing to know is that Reagan didn't, in fact, end up spending his presidency saying no, because he wasn't really promising not to spend money so much as promising not to spend it on certain people. His campaign rhetoric about, "welfare queens" played into the racist trope that Black people were fraudulently benefitting from wasteful government spending.

And, as president, he followed through by making cuts to basic elements of the social safety net like food stamps, welfare, and Medicaid. But he also massively increased defense spending while cutting taxes, so that the government took in less money creating large deficits that wound up tripling the national debt. Which I guess, in his terms, made Reagan America's hottest little [ __ ]. Then, came these two guys. And between Bush Sr. and Clinton, they more or less did what Reagan had promised to do. Cutting spending and raising taxes enough to achieve budget surpluses by the end of the '90s. And the debt was briefly starting to come down, until this lovable little human rights violation entered the picture. Because he, immediately, signed a massive tax cut and launched an expensive war on terror, and then, signed a second round of tax cuts, all of which made our national debt explode. But Republicans, strangely, didn't seem to give a [ __ ]. Until that is, Obama became president. He inherited a historic recession and immediately signed a large stimulus bill.

But, afterwards, was met with fervent opposition to any additional spending, mainly from Republicans who had suddenly re-found their hatred for deficits. And sometimes they expressed it in truly remarkable ways. Our free stuff today has been paid for by taking money from our children and borrowing from China. When that note comes due, it-- And this isn't racist, so try it-- try it anyway, this isn't racist, but it's gonna be like slavery when that note is due, right? We are gonna be beholden to a foreign master. Uh, yeah, no. That's just not how any of that works. The debt isn't gonna just suddenly come due all at once, and being in debt to someone is not the same as being enslaved by them. If you think a portion of U.S. Treasury bonds being owned by foreign investors is anything like slavery, you know both a very small amount about the financial system, and a very racist amount about slavery. Also, just generally, even if you preface something that isn't racist with, "This isn't racist..." It will still sound racist.

I'll show you. If you said, "A lot of people buy jeans at Old Navy," totally fine. But if you said, "A lot of people, and this isn't racist, yeah, try it-- try it anyway, this isn't racist, but a lot of people buy jeans at Old Navy." Now, that suddenly sounds like something that's gonna require about three pages of your Notes app. And the thing is, Republicans putting the brakes on Obama's recovery spending is now widely considered to have been a big mistake.

Most experts agree that the federal government didn't spend as much on stimulus as it should have following the financial crisis, forcing state and local governments into austerity that delayed the economic recovery by about four years, and then came this [ __ ] guy. He campaigned on eliminating the entire national debt, only to then implement an absolutely massive tax cut, resulting in huge deficits. Most corporations who benefitted used the money not on investments in things like factories but on stock buybacks. As for individuals... So, we gave more money to people who already had a lot of it. And despite claiming that Trump's tax cuts would pay for themselves, they very much did not. In fact, they did so little to boost the economy, they're protected to cost us 1.9 trillion over a ten-year period, all of which clearly left some "fiscally responsible" Republicans who voted for those tax cuts in a pretty awkward position.

JONATHAN SWAN: You belong to a party that has greenlit a historic expansion of deficits and debt, and it's just a plain fact. TED CRUZ: Do I wish... that it was a higher priority for the president to rein in spending and the debt? Yes. Do you think your colleagues, the Republican party, -will rediscover its concern about debt and deficit? CRUZ: Oh, sure. Sure. -I mean, isn't that the most cynical, phony thing? -CRUZ: Oh, I that that there's -an element of it. -Doesn't that make you want to puke? You're touching into something that as you know, I have raged against. I do not like that man, Ted Cruz. I do not like his far-right views. I do not like him in these reeds. I do not like him when he feeds. I do not like him by a wall.

I do not like this [ __ ] at all. I do not like him as Santa's elf. That man Ted Cruz can [ __ ] himself. That is a pretty flagrant admission of a double standard there. Honestly, the only clearer example may have been when Mick Mulvaney, Trump's former chief of staff, said... And that is just flat out admitting the whole game. But even if you put of that bad faith hypocrisy aside, we are still left with the key question, "How much debt is too much?" And the interesting answer to that is nobody really knows. For many years, we thought that the best way to measure debt was to compare it to the gross domestic product. Basically, measuring how much in total the country owes versus how much it produces each year. And the economic consensus was that debt exceeding GDP or even getting close to it was a hard red line that could not be crossed without risking a financial crisis. It was something occasionally expressed in fairly over the top ways, like in this John Stossel clip in 2011.

-(CLOCK TICKING) -Our government keeps spending. You know we're already 14.5 trillion dollars in debt. But you could say, "So what? Look around, America's doing pretty well. What the worst that could happen?" (GRENADE ECHOES) Well, this could happen. These violent protests broke out once Greece was so deep in debt that Greece had trouble borrowing more money. Greece spent so much that by last year, they owed more money than their entire economy produced. No wonder they're in trouble. We won't reach that level of debt until, well, oops, pretty soon. We're on a clear track to a Greek-type crisis. Oh, come on, Stossel. Cutting to footage of a riot can make anything seem more dire than might actually be the case. I'll prove it to you. Regé John-Page is apparently not appearing on the second season of Bridgerton. So what? What's the worst that could happen? (GRENADE ECHOES) JOHN STOSSEL: Well, this could happen.

Oh, [ __ ]! Feels pretty scary now, doesn't it? But the truth is much more complex because A, his character arc is mostly wrapped up and the duke doesn't appear in the rest of the novels. It's really a generational story of a whole family. Also, you can absolutely lose the duke. It's actually perfectly in his character to start something he doesn't finish. But it's much more complex when it comes to our economy, too, because something fascinating happened around last June.

Largely because of increased borrowing resulting from the first round of COVID stimulus, our national debt actually surpassed the size of our GDP. You know, kinda like Greece. But all those disaster scenarios that John Stossel's performatively exaggerated voice fluctuations warned us about, none of them happened. It didn't suddenly cost us a lot more to borrow money due to higher interest rates. We didn't, as you may have noticed, become Greece. In fact... And that isn't even a one-off. As our debt has risen in recent years, interest rates have fallen to historic lows. So, what is the reason for that? Well, I don't know.

I am not an economist nor do I know much about math, which I know might sound surprising to you, given that I do have the face of someone who has a favorite kind of graphing calculator. What is shocking though is that even expert economists can't really explain it either. Here is the former chief of the IMF basically admitting as much. To be perfectly frank, we do not-- at least I do not. I don't want to talk for the profession. We've had this steady decrease in the interest rates since the mid-80s, continuing a bit more in the crisis, but, you know, continuing now, and we have no explanation.

Yeah. They don't know. Now, he went on to point out that they are any number of possibilities. It may have something to do with aging populations in advanced economies, China's high saving rate, the general lack of capital-intensive investment opportunities, or merely the fact that Richard Campbell of Omaha, Nebraska, hasn't stepped on a crack in the sidewalk in over 30 years. But the point is economists really have no [ __ ] idea. In fact, the Congressional Budget Office has now said... So, taken together, all of this has made many economists start changing the way that they think about debt, thinking that very basically, so long as our economy grows at a rate greater than the interest that we're paying on our debt, we can come out ahead in kind of the same way that you would come out ahead if you borrowed money at two percent interest and then invested it somewhere and got five percent returns.

But the larger point is this whole field is in a bit of flux right now. Some economists believe that we should not too complacent, that a debt crisis is still on the horizon, just not at the tipping point that we previously thought. Another more radical argument is that the government can, in fact, create all the money it needs to pay for stuff... The point is there is a good faith debate to be had over how to handle our national debt over the long term, but right now, most economists actually agree that with interests rates at historic lows, the question shouldn't really be, "How much debt are we taking on?" as much as "What is the value of what we are getting for it in return?" And there are certainly dumb fiscal decisions that we could make like tax cuts for the rich. We've tried that multiple times now, and if they were the magic key to eliminating our debt long term, we'd probably would have seen signs of it working by now.

But there are smart financial decisions that more than justify going into debt like spending on social programs, infrastructure, or on an individual level, this Nicolas Cage pillow. It's the second-best investment I've ever made after, of course, buying another Nicolas Cage pillow. I was worried that my wife would get jealous, so this one is to replace my wife.

And amid the current crisis that we're in, many experts are less concerned about our spending too much than spending too little. And if it turns out that inflation or interest rates do start to rise, we should absolutely start cutting deficits, although, not by cutting government programs that people need but through taxing people who can afford it. Look, no one credible is saying that deficits don't matter or that we should borrow as if the sky is the limit. What they're saying is the debate shouldn't be about whether debt is good or bad. It should be about whether the investment we are making are worth it or not. And if you are still worried about debt because you've been told you are burdening your children and children's children's future, well, I actually have some good news for you because those future generations have a special message just for you. -CHILD: Hello! -CHILD 2: Hello! CHILD 3: Hey there! We are your children. -CHILD 4: Your grandchildren. -CHILD: And your great-grandchildren. CHILD 2: And we have a message for you. CHILD: Stop using us to scare people about the national debt! CHILD 3: You idiots clearly have no idea how it even works.

CHILD 4: Take the stupid debt clock. CHILD: Do you even know what a clock is? CHILD 3: Clock. Not a clock. CHILD 2: Clock. Not a clock. -CHILD: Clock, not a clock. See? -CHILD 4: See? CHILD: Also, debt isn't always a bad thing . Yes, going into debt to give money back to people who already have too much of it is stupid. CHILD 3: Like this guy. Sick flamethrower, bro. CHILD: But you can also use debt to build new roads and bridges. CHILD 2: Which we'll need to drive on. CHILD 3: You can use it to improve schools, which would make us into a more skilled labor force. CHILD: You can use it to improve health care so we can be healthier and more productive.

CHILD 4: You can even use it to buy these pillows, which will become treasured family heirlooms. CHILD 3: The important thing about debt is what you get out of it. CHILD: And what we get out of it. You see, debt can be a tool for growth. In fact, the debt to GDP ratio isn't as reliable a metric as previously assumed. The dataverse doctrine of the 1970s turned out to be largely flawed, given the continuing inverse relationship between rising debt and low interest, (VOICE BECOMES DISTORTED) so it follows that the economy's capacity to accrue debt without suffering massive adverse consequences is larger than economists Carmen Reinhart and Ken Rogoff once theorized. -(NORMAL VOICE) It's so simple. -CHILD 2: Yep. CHILD: Easiest thing in the world. CHILD 3: I'm nine years old, and even I understand that. CHILD 2: And if you're so concerned about our future, maybe it's worth spending now on things like preparing for the impacts on climate change. CHILD: The clock is really tickin' on that. -CHILD 3: That's not a clock! -CHILD 2: Come on! ALL CHILDREN: So please.

CHILD 2: Believe when we say... CHILD: We're not as scared of being born into debt... CHILD 2: As we are in being born into a country that didn't invest in our future. CHILD: And we're also scared of that guy digging that hole. CHILD 4: I think that goes without saying. CHILD: So when it comes to the debt, your children... -CHILD 2: grandchildren... -CHILD 3: And great-grandchildren... CHILD: All have one message for you. -CHILD 3: Grow... -CHILD 2: The [ __ ] up! .