Senator Ron Johnson on the Senate showdown over Trump's Big Beautiful Bill | All-In Interview
In this All-In episode, Senator Ron Johnson and the hosts explore the mechanics of the U.S. federal budget process, focusing on the budget reconciliation tool that allows the Senate to pass certain spending legislation with a simple majority. The discussion examines how this process affects mandatory spending programs like Social Security, Medicare, and Medicaid, while highlighting current projections that show the U.S. adding $22 trillion to its debt over the next decade.
The conversation delves into the challenges of addressing federal spending growth, which has increased from $4.4 trillion in 2019 to $7.3 trillion in 2023. Johnson shares insights about Congress's resistance to spending reforms and discusses potential consequences of continued deficit spending, including the decreasing value of the dollar and the possibility of a "debt-death spiral" as interest rates and borrowing costs rise.
This is a preview of the Shortform summary of the May 25, 2025 episode of the All-In with Chamath, Jason, Sacks & Friedberg
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1-Page Summary
The Budget Reconciliation Process and Its Limitations
David Friedberg introduces the budget reconciliation process, a parliamentary tool that allows the Senate to pass budget legislation with a simple majority, bypassing the filibuster. Ron Johnson explains that while this process is limited to mandatory spending programs, it lacks mechanisms to control spending on these programs, which include Social Security, Medicare, and Medicaid.
Current US Fiscal Crisis: Deficit and Debt Levels
According to Ron Johnson, Congressional Budget Office projections show the US federal government will add $22 trillion to the debt over the next decade, with annual deficits averaging $2.2 trillion. He warns that the national debt could reach an unsustainable $65 trillion by 2035. Federal spending has grown dramatically, rising from $4.4 trillion in 2019 to $7.3 trillion in 2023, driven by mandatory allocations, COVID-19 relief, and various policy initiatives.
Challenges In Curbing Federal Spending
Senator Johnson criticizes Congress's lack of political will to address spending issues, noting that members are resistant to returning to pre-pandemic spending levels. He reveals that despite Senate leadership support, efforts to initiate a thorough budget review process have been met with excuses and bipartisan resistance. Johnson suggests that even allies like Senators Rand Paul, Mike Lee, and Rick Scott have different thresholds for accepting changes.
Impact of Rising Deficit and Debt
David Friedberg and Ron Johnson discuss concerns about a potential "debt-death spiral" where rising interest rates and deficits lead to more borrowing and escalating debt. Chamath Palihapitiya adds that negative reactions from the bond market could further pressure America's fiscal situation. Johnson points out that the dollar's value has already decreased significantly since 2019, with a dollar now worth about 80 cents, emphasizing the urgent need for deficit reduction to prevent economic instability.
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Counterarguments
- The budget reconciliation process, while limited to mandatory spending, could be seen as a necessary tool for overcoming partisan gridlock and ensuring that critical budgetary decisions can be made in a timely manner.
- Some economists argue that a certain level of debt is manageable and can be a tool for economic growth, especially if the spending is on investments that lead to higher productivity and growth.
- The increase in federal spending could be viewed as a necessary response to the unprecedented challenges posed by the COVID-19 pandemic, aiming to stabilize the economy and support individuals and businesses.
- There is a debate over whether returning to pre-pandemic spending levels is feasible or desirable, given the ongoing needs for investment in infrastructure, healthcare, and other areas.
- Some policymakers and economists argue that focusing solely on spending cuts to address deficits ignores the potential role of revenue increases through tax reforms.
- The concept of a "debt-death spiral" is contested by some economists who point out that countries with their own sovereign currency, like the US, have more leeway in managing their debt.
- The depreciation of the dollar's value can also be seen as a natural fluctuation in currency markets and not solely a result of deficit spending.
- There are arguments that deficit reduction efforts should be balanced with the need to maintain economic growth and not lead to austerity measures that could harm the economy and vulnerable populations.
Actionables
- You can educate yourself on the national debt and its implications by using interactive online debt clocks and calculators to visualize how changes in spending and revenue affect the overall fiscal picture. For example, use a tool that allows you to adjust variables like spending cuts or tax increases to see how they could potentially reduce the deficit, giving you a clearer understanding of the scale of fiscal policy changes needed.
- Start a personal finance blog or social media account where you track and analyze your own spending habits in relation to the government's, drawing parallels between personal budgeting and national fiscal responsibility. This could involve setting personal budget goals, tracking progress, and reflecting on the challenges of cutting spending or increasing savings, which mirrors the national conversation on spending and debt.
- Engage with your local community by organizing informal discussion groups to talk about the impact of national financial decisions on personal finance, encouraging a grassroots understanding of economic policies. These discussions could lead to community-driven initiatives, such as letter-writing campaigns to representatives, advocating for fiscal responsibility based on informed citizen perspectives.
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The Budget Reconciliation Process and Its Limitations
David Friedberg introduces the topic by speaking about the latest legislative developments related to the budget reconciliation process.
Budget Reconciliation Enables Senate to Pass Budget With Simple Majority, Bypassing Filibuster
Friedberg reports that the House has passed the reconciliation bill, which is expected to proceed to the Senate with minor changes before reaching President Trump for signing. One critical aspect of the reconciliation process that helps expedite legislation in the Senate is its capacity to circumvent the filibuster. This parliamentary tool allows the Senate to pass a budget with a straightforward majority.
Reconciliation Is Limited To Mandatory, Not Discretionary, Spending
Ron Johnson underscores that reconciliation is a process specifically designed to address mandatory spending. Discretionary spending, which comprises about a quarter of the budget, remains untouched by reconciliation. As Johnson puts it, "anything that's mandatory has got to be done through reconciliation." This process allows legislation to be passed with just 50 votes, enabling the Senate to reconcile with the budget while also avoiding the filibuster.
Reconciliation Enables Major Legislation but Lacks Spending Control Mechanism
Desp ...
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The Budget Reconciliation Process and Its Limitations
Additional Materials
Counterarguments
- The reconciliation process, while bypassing the filibuster, can be seen as undermining the traditional Senate practice of requiring a supermajority for significant legislation, potentially leading to more partisan and less stable policymaking.
- Limiting reconciliation to mandatory spending might overlook the importance of addressing discretionary spending, which also contributes significantly to the federal budget and can be an area for potential savings and reform.
- The ability to pass legislation with just 50 votes plus the Vice President's tie-breaking vote may not always ensure thorough debate and consideration of minority viewpoints, which are essential f ...
Actionables
- You can become more informed about the budget process by tracking a reconciliation bill in real-time. Follow a specific bill as it moves through Congress, using a government tracking website like Congress.gov. This will give you a hands-on understanding of the reconciliation process and its impact on legislation.
- Engage in community discussions to explore the effects of mandatory spending on local services. Start a conversation with your local community center or online forums to discuss how federal spending on programs like Social Security, Medicare, and Medicaid influences local services and taxes. This can help you understand the broader implications of federal budget decisions on your community.
- Use budget simulation tools to better grasp the complexities of ...
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Current US Fiscal Crisis: Deficit and Debt Levels
Ron Johnson discusses the worrying projection of the United States federal deficit and debt, stressing the grave economic implications for the future.
US Federal Government to Add $22 Trillion To Debt Over 10 Years, With $2.2 Trillion Average Annual Deficits
National Debt May Reach Unsustainable $65 Trillion By 2035, Risking Severe Economic Consequences
Ron Johnson cites projections from the Congressional Budget Office (CBO) indicating a 10-year deficit of $22 trillion, amounting to an average annual deficit of $2.2 trillion. He contrasts this to previous administrations, noting that the Obama administration had about a $900 billion yearly deficit while Trump’s was around $800 billion before the pandemic; under Biden, however, the average deficit has escalated to almost $1.9 trillion yearly. Johnson warns that this rate of deficit spending is unsustainable. He suggests the actual national debt could exceed the CBO’s projection, potentially reaching around $62 or $63 trillion by 2035, risking severe economic ramifications.
Federal Spending Growth Accelerates, Rising From $4.4 Trillion in 2019 to $7.3 Trillion in 2023
Spending Growth Driven by Mandatory Allocations, COVID-19 Relief, and Policy Initiatives, With Little Oversight or Accountability
Ron Johnson indicates that the federal budget has surged from $4.4 trillion in 2019 to a projected $7 trillion per year, expressing concern over the rapid increase in federal spending driven by mandatory allocations, COVID-19 relief efforts, and various policy initiatives. Moreover, he criticizes the appropriations process, ...
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Current US Fiscal Crisis: Deficit and Debt Levels
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Counterarguments
- The projections of the Congressional Budget Office (CBO) are based on current law and do not account for future policy changes that could reduce the deficit.
- Deficits can sometimes be a necessary fiscal policy tool, especially during economic downturns, to stimulate growth and prevent deeper recessions.
- Comparing deficits across administrations without context can be misleading, as economic conditions, legislative priorities, and unforeseen events like the COVID-19 pandemic significantly impact federal spending and revenue.
- High levels of national debt do not automatically lead to economic crisis; factors such as debt affordability, interest rates, and the debt's structure are also important.
- Some economists argue that a certain level of government spending is necessary to address long-term investments in infrastructure, education, and research that can lead to economic growth.
- The use of continuing resolutions can be seen as a pragmatic response to political gridlock, ensuring that government services continue to operate despite di ...
Actionables
- You can scrutinize your personal or household budget with the same rigor as a line-by-line examination of the federal budget. Start by categorizing your expenses into 'mandatory' and 'discretionary' just like the federal budget. For each category, go through each expense and ask yourself if it's essential or if there's a cheaper alternative. This could mean switching to a less expensive grocery store, canceling unused subscriptions, or negotiating bills like insurance or internet services.
- Develop a personal 'continuing resolution' for your finances to avoid overspending. Set a baseline budget that covers your essential expenses and commit to maintaining this level of spending for a set period, such as three to six months. During this time, any additional income goes into savings or paying down debt, rather than increasing your spending. This mirrors the government's use of continuing resolutions to maintain funding at current levels and can help you stabilize your financial situation.
- Advocate for fiscal responsibility by starting a community group focused on financial literacy and budget accountabil ...
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Challenges In Curbing Federal Spending and Political Will Lacking
Senator Johnson voices his frustrations about Congress's inability and unwillingness to address the issue of federal spending, citing political inertia and a broken budget process.
Lack of Political Will in Congress to Address Spending Problem
Senator Claims Congress Members Are "Big Spenders" Unwilling to Cut Spending and Deficit
Senator Ron Johnson criticizes members of Congress for lacking the political will to cut spending, as they are viewed as "big spenders." When he suggests reducing spending to pre-pandemic levels, he is met with pushback and told that it's unrealistic, reflecting a reluctance to make necessary cuts. Johnson points out that the federal spending is set to increase significantly, and he voices his opposition to funding what he refers to as the deep state at the level favored by the Biden administration.
Johnson also acknowledges the lack of public pressure that contributes to Congress's unwillingness to reduce spending, as well as the fear of political backlash, such as accusations of cutting Medicaid for disabled children.
Broken Budget Process in Congress: Members Use Gimmicks to Claim Responsibility Without Real Cuts
Johnson discusses the failure of various budget-controlling measures, such as the Budget Act and the Budget Control Act, indicating that Congress lacks a genuine process to analyze and eliminate wasteful spending. He argues that members are averse to returning to lower baseline budgets or scrutinizing spending in detail.
Johnson reveals his intention to force a debate on the considerable current spending levels, particularly in light of the projected average deficit and the overall national debt. He proposes a comprehensive budget review process with involvement from Senators, House members, and members of the administration to scrutinize spending across all departments.
Senator Suggests Reviewing Federal Budget to Cut Waste, Faces Bipartisan Resistance
Senator Johnson indicates that, despite Senate leadership's support, there has been no effort to initiate a thorough review process, with excuses such as lack of time being put forward by the Office of Management and Budget (OMB). He stresses that even with his commitment to ensuring fiscal responsibility, he cannot tackle th ...
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Challenges In Curbing Federal Spending and Political Will Lacking
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Counterarguments
- Congress members may argue that maintaining or increasing spending is necessary to support essential services and investments in infrastructure, education, healthcare, and national security.
- Some may contend that cutting spending to pre-pandemic levels ignores the ongoing economic challenges and recovery needs stemming from the pandemic.
- It could be argued that the increase in federal spending is partly due to mandatory spending on entitlement programs like Social Security and Medicare, which are difficult to cut without affecting vulnerable populations.
- There may be a belief that investments in certain programs will lead to long-term savings or economic growth, offsetting the immediate costs.
- Critics might suggest that the fear of political backlash is a legitimate concern for elected officials who must balance fiscal responsibility with the needs and preferences of their constituents.
- Some may argue that the budget process is complex and that what appears as gimmicks are sometimes necessary compromises or budgetary tools to navigate the legislative process.
- The Office of Management and Budget (OMB) might defend the lack of time for a comprehensive review by pointing to the vast scope of federal spending and the need for careful analysis to avoid unintended consequences.
- There could be a perspective that focusing solely on spending cuts overlooks the revenue side of the budget equation, where tax policy changes could also address deficits.
- Opponents of spending cuts might argue that austerity measures can have negative economic impacts, such as reducing consumer spending and increasing unempl ...
Actionables
- You can start tracking your personal spending to identify areas where you might be overspending, similar to how a comprehensive budget review could reveal unnecessary government spending. Use a simple spreadsheet or budgeting app to categorize your expenses and set goals to reduce spending in specific areas each month. For example, if you notice you're spending a lot on dining out, challenge yourself to cook more meals at home for the next 30 days and track the savings.
- Engage with your local community by starting a fiscal responsibility book club or discussion group to raise awareness about the importance of budgeting and reducing wasteful spending. This grassroots approach can mirror the public pressure needed to influence larger entities. Choose books or articles on personal finance, government spending, or economic theory, and meet monthly to discuss how these concepts can be applied both personally and in the broader community.
- Advocate for fisca ...
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Impact of Rising Deficit and Debt
The podcast discusses the concerns regarding America's fiscal path, highlighting the implications of a rising national debt and deficit on interest rates, the US dollar's value, and the potential for a financial crisis. Experts and a senator weigh in on the urgency of deficit reduction and the risks of economic instability.
Rising National Debt May Increase Interest Rates, Raising Debt Servicing Costs and Worsening the Fiscal Crisis
David Friedberg and Ron Johnson express concerns about the United States entering a "debt-death spiral" with increasing interest rates and deficit, leading to more borrowing and escalating debt. Friedberg indicates that the interest rate on federal debt assumed by the CBO is historically at an average of 3.6%, but points out that the 30-year rate is trading above 5%, implying higher interest expenses for the federal government.
Johnson advocates returning to more reasonable levels of spending to prevent a ramp-up of interest costs and comments that bond markets would likely react positively to such a move. This implies a connection between high levels of national debt and potential rises in interest rates, which could increase the costs of servicing that debt.
Chamath Palihapitiya also expresses concern that negative reaction from the bond market due to the current fiscal situation could pressure America further. The implication is clear: rising debt levels and interest rates may undermine confidence in the US dollar and the government's borrowing ability, potentially risking a financial crisis.
Senator Warns Of Unsustainable Fiscal Path Threatening Us Dollar Value
Senator Ron Johnson indicates that the debt trajectory paints a concerning picture, suggesting that if things do not change, the fiscal situation could worsen. He explains that massive debts and spending are reasons why the dollar's value has decreased, with $1 held in 2019 now only worth about 80 cents, emphasizing the need for urgent deficit reduction to prevent economic instability.
Johnson expresses concern about the vast wealth of America amid rising government spending, which has grown significantly since 1930. He implies that this growth in government spending could lead to a loss of freedoms, degradation of societal values, and ultimately, an economic downturn that could th ...
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Impact of Rising Deficit and Debt
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Counterarguments
- The relationship between national debt and interest rates is complex, and higher debt does not automatically lead to higher interest rates; Japan, for instance, has high debt but low interest rates.
- Deficit spending can be beneficial during economic downturns or recessions to stimulate growth and employment.
- The "debt-death spiral" may be an oversimplification, as countries with their own currency, like the US, can manage debt differently than households or businesses.
- The value of the US dollar is influenced by many factors, not just national debt levels, including trade balances, monetary policy, and global demand for safe assets.
- Reducing government spending could have negative short-term impacts on economic growth, especially if cuts affect essential services or investments in infrastructure and education.
- Some economists argue that moderate inflation can be a sign of a growing economy and that deflation is a greater risk to economic stability.
- The idea that government borrowing takes capital out of the private sector, known as "crowding out," is debated, especially in times of low private investment when government spending can "crowd in" private investment.
- The asser ...
Actionables
- You can diversify your investment portfolio to hedge against potential inflation and currency devaluation by including assets that typically perform well during inflationary periods, such as precious metals, real estate, or Treasury Inflation-Protected Securities (TIPS). By doing so, you're not just relying on the value of the dollar but also investing in assets that may appreciate or maintain value if inflation rises.
- Consider reducing personal debt, especially high-interest debt, to avoid the impact of rising interest rates on your finances. As interest rates increase, so does the cost of servicing debt. By paying off debts now, you can save on future interest payments and reduce financial vulnerability.
- Educate yourself on basic economic principles and the impact of national fiscal policies o ...
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