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John Norris (00:30):
Well, hello again, everybody. This is John Norris with Trading Perspectives. As always, we have our good friend Sam Clement. Sam, say hello.
Sam Clement (00:36):
Hey John, how are you doing?
John Norris (00:37):
Sam, I’m doing fantastically. I’m certainly doing better than anyone trying to get between Elon Musk and Donald Trump right now—especially after people started digging into the contents of the “One Big Beautiful Bill.”
Sam Clement (00:52):
You’ve got members of Congress saying, “Well, I didn’t have a chance to read it,” or “I didn’t read it,” and—
John Norris (00:57):
You’re talking about Ms. Greene, I think.
Sam Clement (00:58):
Her, and some others. But yeah, they’re saying, “Oh, I didn’t even realize that was in there.” And that’s not a new phenomenon. Honestly, I kind of appreciate the honesty from those admitting they didn’t read it.
John Norris (01:15):
Right. From what I understand, you can’t really blame Marjorie Greene for not reading the entire thing. I read that it’s something like 1,038 pages. Anyone claiming to have read every word of every page is either lying—or a massive dork. I mean, seriously, what do you think?
Sam Clement (01:37):
Or some combination of the two.
John Norris (01:39):
Exactly. I imagine in a lot of congressional offices, the member gets the bill—or more likely, the staffers do. They divide it into sections, and everyone gets a part. Either that, or they scan the whole thing into ChatGPT or another AI to spit out an executive summary. These days, it’s probably more the latter, but back when I was coming up, it was the former. Everyone got a section and wrote a summary.
Sam Clement (02:09):
It’s always wild to see how much unrelated stuff ends up in these big bills—especially one literally being called the “One Big Beautiful Bill.” It’s supposed to be all-encompassing, but there are always totally unrelated items thrown in. That’s part of what frustrates people about politics.
John Norris (02:44):
Yeah, I haven’t read all the pork packed into the One Big Beautiful Bill.
Sam Clement (02:50):
Well, you’re not voting on it, so—
John Norris (02:51):
Right. I get a pass. But in the past, I’ve read some of that stuff—like in the Inflation Reduction Act and other stimulus bills. You see things like $10 million here, $10 million there for someone’s pet project in Nova Scotia or somewhere equally random. Just money we, as a country, have no business spending. And I’m sure there’s plenty of that in this one too.
But really, when I read the executive summaries and opinion pieces and see people freaking out—saying this bill is going to blow up the deficit—I think: is that your argument? That this bill, of all things, is going to blow up the deficit? That’s like arguing whether we should shoot the guy with six bullets or eight.
Sam Clement (03:48):
Exactly.
John Norris (03:48):
That’s about where we are. According to Treasury estimates, we’ll collect just under $5.4 trillion this year. That’s a lot of money—a record high, actually. I believe it’s more than the entire economy of any other G7 country. Unfortunately, we’re projected to spend about $7.2 trillion.
Sam Clement (04:12):
That’s amazing. Isn’t it?
John Norris (04:13):
It really is. $7.2 trillion. The federal budget has grown by 45% over the past five years. And honestly, I don’t care what’s in this budget—I don’t even care what the marginal tax rates are. Because at the end of the day, we’ve got to grow the economy a lot faster than we are now, and we have to control spending. Everything else is just noise.
Sam Clement (04:44):
Totally. And the frustrating part is that this goes all the way back to the Doge stuff—and we’ve already talked about it—but it’s the same old promises of trillions in spending cuts…
John Norris (04:59):
Yes.
Sam Clement (05:00):
Okay, not two—let’s do one.
John Norris (05:02):
Where are—
Sam Clement (05:02):
They? We’ll do $100 billion, and then you start cutting Adobe Photoshop contracts, and I’m kind of like, eh…
John Norris (05:08):
That’s not really… it’s going to take a lot.
Sam Clement (05:10):
Exactly. You’d need a billion of those contracts.
John Norris (05:13):
Yeah, I need cuts of at least a billion a pop.
Sam Clement (05:16):
And so, we’ve shifted away from talk about real progress on balancing the budget. There’s been discussion about the CBO being politicized—I don’t fully buy that—but the bigger picture is: we’re just doing more of the same.
Even back before Trump was president—like in 2011, 2012, 2013, and 2014 when Obama was in office—he was questioning why Congress kept extending the debt ceiling. And now we’re doing the same thing.
The frustration is: when you’re not in power, you ask, Why are they doing this? Why are they spending so much? But then, once you’re in power, you just… kick the can down the road.
John Norris (06:08):
Exactly. At best, we’re behaving the same way. At worst, we’re doing the same thing—just not complaining about it anymore.
Sam Clement (06:19):
Right. It’s a cycle. And there are very few members of Congress truly pushing back. I can count the number of vocal Republicans doing so on one hand. There are probably more than five in total, but only a handful actually speak out.
That frustration is building, and I think it’s part of why Elon is now pushing back against Trump. Although, there are probably some other factors involved too.
John Norris (06:49):
Yeah, I’d say there are definitely other things at play.
Sam Clement (06:50):
I know he’s frustrated about the withdrawal of Isaacson’s NASA nomination.
John Norris (06:55):
And probably the lack of progress on EV tax credits.
Sam Clement (06:58):
Right. The Wall Street Journal said pulling Isaacson’s nomination really put a bee in his bonnet.
But the broader point is—Elon had been a vocal advocate for cutting waste and balancing the budget. That’s what Doge was supposedly about. So now, to see a bill get pushed that only inflates the problem? It’s frustrating. And there’s nobody there to stop it.
John Norris (07:27):
Exactly. What was all that January, February, and March talk about—waving chainsaws around and busting up U.S. government spending? If none of that got handled, then what was the point?
Sam Clement (interjection):
Right.
John Norris (07:43):
Maybe some people got what they wanted out of it—I don’t know. But it just seems like we wasted a lot of energy, only to return to doing things the same old way.
What frustrates me is that the budget deficit isn’t a problem—if we don’t want it to be. I did the math for Common Cents this week, and here’s the deal:
If we freeze federal expenditures at $7.2 trillion and keep tax receipts at about 18% of GDP—which is around the current average—we’d only need real GDP growth of 3.1% annually for the next five years. At that point, our budget deficit would drop to just $26 billion.
John Norris (08:39):
Now, sure, we’d have to freeze spending and hit 3.1% growth. That’s tough—we haven’t hit that kind of sustained growth in a long time. But it’s not an outrageous number.
The harder part for most people would be freezing spending. That would cause real economic pain, no question. But could we do it for five years? Maybe.
What if we offset some of the pain—say, by generating $200 billion per year in new tax revenue from other areas? If we did that, we wouldn’t even be talking about the deficit.
But apparently, as a society, we don’t want that. We just want to keep kicking the can down the road. We vote for people who’ll keep doing it, so we don’t have to feel the pain ourselves.
The problem is, the longer we delay it, the worse the pain will be when it finally comes.
Sam Clement (09:40):
Exactly. And I don’t get why, when companies are in tough spots—whether it’s inflation or tariffs—they find ways to protect their margins. They renegotiate supplier contracts, adjust operations… whatever it takes.
So why can’t the federal government do the same? I get that it’s different, but if companies can adapt and survive external pressures—COVID, tariffs, supply shocks—why can’t the government?
If we had to freeze expenditures at today’s levels, fine. Let’s go back and look at contracts, at defense spending. There’s room to negotiate.
John Norris (10:31):
And we’d start cutting headcount, replacing capacity with technology.
Sam Clement (10:37):
Exactly.
John Norris (10:38):
That’s what companies do. There’s no reason the federal government can’t do it too. We could start now—through attrition. As people retire, replace them with systems, automation, better processes.
It’s completely doable. The real question is: do we want to endure five years of pain to fix it? People call it an “austerity plan,” but it’s not really austerity if we’re still spending $7.2 trillion. We’re just freezing spending—not cutting it.
Sam Clement (11:08):
And that would absolutely hit asset prices and the markets. That’s real fiscal tightening.
John Norris (11:18):
Yes.
Sam Clement (11:19):
I mean, we’re not cutting the budget…
John Norris (11:21):
Right.
Sam Clement (11:23):
It’s like when people say inflation is “contracting”—that doesn’t mean prices are falling. It just means things are tightening up.
John Norris (11:32):
Exactly. No doubt about it.
Sam Clement (11:33):
A pretty significant tightening.
John Norris (11:35):
And a lot of companies would get hit hard—especially those that depend heavily on the federal government. But I’ll tell you what would happen: you’d finally see a lot of that “Doge-type” waste get cut.
No one wants to go back to their constituents in State X, Y, or Z and say, “We’re cutting Medicare, Social Security, and Medicaid.” So instead, they’ll find other ways to make room in the budget.
If that means cutting some of the pet projects everyone was yelling about last year, then so be it—they’ll get cut.
Sam Clement (12:12):
And we’re never going to get to a budget surplus. I mean…
John Norris (12:18):
It’s extremely unlikely.
Sam Clement (12:20):
Even from a pure accounting standpoint. A country’s current account and capital account have to balance. We can’t consume more than we produce without borrowing money.
John Norris (12:32):
Exactly.
Sam Clement (12:33):
The dollars have to come from somewhere.
John Norris (12:37):
Right.
Sam Clement (12:37):
So we’re always going to be running a deficit unless something changes. And right now, it’s an unsustainable deficit.
John Norris (12:44):
It’s unsustainable growth. I crunched the numbers again. From Q1 of 2020 to now, the annualized growth rate of federal expenditures has been around 8.1%—nominal, of course, but still huge.
That’s the annual rate of growth in spending. And it’s simply not sustainable. It just isn’t.
Sam Clement (13:11):
So in real terms, what—five percent?
John Norris (13:14):
Yeah, roughly five. Maybe a little more. Over the last five years. Historically, it’s closer to 3.1%.
Sam Clement (13:21):
And we’re growing GDP at what—2% if we’re lucky?
John Norris (13:25):
Exactly. It doesn’t work. It just doesn’t work.
We’ve been spending like crazy, and it feels great going down. I think I’ve used this analogy before—but it’s like giving an ice cream sundae to a diabetic.
That’s exactly what we’ve been doing. And now that it’s time to take the sundae away, everyone’s screaming about it.
What we should really be focused on is how we can unfetter U.S. business. How can we get rid of the unnecessary parts of the federal budget?
Sam Clement (14:04):
Well, we’d have to…
John Norris (14:05):
Exactly. We have to. It’s crazy that this is even controversial.
Sam Clement (14:07):
Because nobody wants to be the one causing the pain. No one wants to be held responsible.
John Norris (14:15):
Nobody wants to be unpopular. No one wants to lose their seat in the next election. So they avoid doing the hard stuff, and they keep riding the gravy train.
Sam Clement (14:25):
And part of the problem is the sheer size of the gap. To close it, we’d have to cut entitlement programs—or renegotiate how they work.
But we can’t just wave a magic wand and reduce the interest expense on the national debt.
John Norris (14:44):
No, we can’t.
Sam Clement (14:46):
Look, I support strong defense spending. But even then, there are absolutely areas where we can make cuts.
John Norris (14:54):
You think?
Sam Clement (14:54):
You see these congressional testimonies… I get that military-grade equipment is different, but when you’re buying bolts and screws that look identical to the ones from Home Depot—and they cost thousands of dollars each—it’s hard to justify.
John Norris (15:08):
Right.
Sam Clement (15:09):
I know there are differences and specifications, but still…
John Norris (15:13):
There’s also some sleight of hand going on. It’s like, “Sure, we agreed to buy this at cost—but you can make up your margin by overcharging us for that other thing.”
That’s been the game for a long time. Remember the $100 hammer and the $500 toilet seat during the Reagan years?
Sam Clement (15:34):
Right—those types of stories. And the one about NASA needing special pens while the Russians just used pencils. I don’t know if that one’s true, but…
John Norris (15:40):
Yeah…
Sam Clement (15:42):
They made it work.
John Norris (15:42):
Exactly. All of that kind of waste—if we’re serious about tackling the budget deficit—it’s got to go.
Sam Clement (15:51):
Everything should be on the table.
John Norris (15:52):
We have to put everything on the table.
If we really care about preserving Social Security’s purchasing power, protecting Medicare and Medicaid, and meeting our debt obligations—then we’ve got to make cuts elsewhere. And some of those cuts will hurt.
Programs like USAID, I hear you. But something’s got to give. These cuts won’t materialize out of thin air.
We simply can’t close the gap between a 2.5% growth rate in the economy and a 5.5% growth rate in federal spending. If we don’t fix that imbalance, we’ll never balance the budget.
Sam Clement (16:34):
And I think part of the problem—
John Norris (16:36):
—it’s only going to get worse.
Sam Clement (16:37):
—is that neither party wants to face the pain that comes with real fiscal reform. They want a scapegoat.
For the Republican Party, that’s often programs like SNAP and Medicaid. They’ll talk about fraud in SNAP—even though the actual fraud rate is relatively low—and every dollar of SNAP generates about $1.50 in economic activity.
But it’s an easy target, so they point to it and say, “Here’s where we can cut,” just so the CBO’s math looks better.
John Norris (17:08):
Look, taking food out of people’s mouths is bad policy. It’s bad economics, and it looks terrible.
There are plenty of other areas to cut before we start messing with things like food assistance. I mean, seriously.
Sam Clement (17:22):
Same goes for WIC—the Women, Infants, and Children program.
John Norris (17:25):
Exactly. There’s a lot of other stuff we could do.
Now, pivoting slightly—on a topic that’s maybe more entertaining—I think we can agree we have to cut spending somewhere and grow the economy if we’re ever going to rein in the deficit.
But let me ask: does it surprise you that the relationship between President Trump and Elon Musk has fallen apart?
Sam Clement (17:51):
Not at all. If anything, I’m surprised it lasted this long. June seems about right for when the fallout was going to happen—it was inevitable, right?
John Norris (18:04):
Two of the most egomaniacal people in the world.
Sam Clement (18:06):
Exactly. There’s no way that partnership was going to last four years without friction.
John Norris (18:10):
I think you’re being generous even suggesting it would last that long. I figured it would crack by the end of Q1. There was no way it was going to hold.
Sam Clement (18:26):
To me, the surprising part is how fast it all unraveled. Maybe it had been simmering in the background and we’re just now seeing it boil over, but from the outside, it feels like the wheels came off last weekend.
John Norris (18:52):
Yep.
Sam Clement (18:53):
He was literally in the Oval Office with his son two weeks ago—
John Norris (18:55):
Right—kid on his shoulders, t-shirt on, parading around.
Sam Clement (18:58):
Wearing a black MAGA hat.
John Norris (18:59):
Yeah—like he owned the place. And now, watching this week’s coverage, you’d think the two of them were about to duel.
Sam Clement (19:09):
It’s not surprising it fell apart—but how quickly it did? That’s the shocker.
You’ve got Musk saying Trump wouldn’t have even been elected without him, and now he’s floating the idea of a new political party that represents the “80 percent.” That’s pretty direct pushback on the administration.
John Norris (19:32):
While we’re on the topic of personalities, let’s talk about Elon and Doge.
I don’t think either of us have a problem with the idea behind Doge—cutting waste, rooting out fat, improving efficiency.
But by the time the dust settled, I don’t think anything meaningful came out of it. Seriously—when you look at the “One Big Beautiful Bill” or whatever the acronym is—nothing of real significance seemed to change.
So, why did we even go through it? And more importantly: how do we get back to efficiency and accountability?
Is there any way we can cut government redundancies in a bipartisan way? Because this has to get under control. I’m curious what you think.
Sam Clement (20:37):
Honestly, I don’t have much hope that will happen.
Take USAID for example—yes, there’s likely a lot of waste in it. But this idea that all foreign aid is useless? That’s shortsighted. If we step back, China steps in. And that has consequences. That’s the conversation we should be having when it comes to global spending.
John Norris (20:55):
There’s a lot of truth to that.
Sam Clement (20:56):
But again, there’s no bipartisan support for anything right now.
John Norris (21:06):
Which is a real shame.
Sam Clement (21:07):
Exactly. So I have very little confidence that any sort of bipartisan task force is going to step in, look at contracts, renegotiate across programs like Medicare and Medicaid, and trim the fat.
It’s just not happening.
John Norris (21:24):
Even something as simple as making sure federal agencies’ computer systems can talk to each other. That alone could drive efficiencies.
But it would require the two parties to set aside politics and say, “Let’s do this for the good of the country.” If we did, the economy would benefit, and everyone would be better off.
But we don’t want to. We just don’t.
It’s in our control—if only we wanted it.
John Norris (22:07):
Alright guys, thank you so much for listening. We always love to hear from you.
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Alright, Sam—anything else you want to add on this very important topic?
Sam Clement (23:01):
That’s all I’ve got.
John Norris (23:02):
That’s all I’ve got today too. Y’all take care.
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