Nov 2, 2023
With the U.S. national debt totalling over $33 trillion and the White House calling for billions of dollars more in spending packages, billionaire investor Stanley Druckenmiller is calling for action to offset the costs.
“We are spending like drunken sailors,” he said on CNBC’s Squawk Box.
Don’t miss
- Commercial real estate has outperformed the S&P 500 over 25 years. Here's how to diversify your portfolio without the headache of being a landlord
- Rich young Americans have lost confidence in the stock market — and are betting on these 3 assets instead. Get in now for strong long-term tailwinds
- 'A natural way to diversify': Janet Yellen now says Americans should expect a decline in the USD as the world's reserve currency — 3 ways you can prepare
Druckenmiller went on to explain that the federal government was spending 20% of the country’s GDP prior to the COVID-19 pandemic — but this proportion has since climbed to 25%.
Advertisement
“My father told me ‘if you’re in a hole, stop digging Stan.’”
Druckenmiller proposes the government slash funding to a source of income for millions of U.S. seniors — Social Security. Here’s why and by how much.
Must Read
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and the simple steps to fix it ASAP
- Robert Kiyosaki begs investors not to miss this ‘explosion’ — says this 1 asset will surge 400% in a year
- Vanguard reveals what could be coming for U.S. stocks, and it’s raising alarm bells for retirees. Here’s why and how to protect yourself
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
America has a spending problem
The U.S. has been running a deficit for years — with the federal government spending $1.7 trillion more than it collected in the 2023 fiscal year alone.
And under a deficit, in order to pay for government programs, such as Social Security and emergency relief, the government borrows money, in part, by selling Treasury bonds, bills and other securities. This, of course, adds to the national debt.
In October, President Biden requested nearly $106 billion in funding from Congress, with $61.4 billion going toward Ukraine and $14.3 billion in military aid for Israel, including air and missile defense support.
The U.S. has long provided diplomatic and military support to major trade partner Israel. In a recent deep-dive on the alliance between the two countries, a Vox reporter wrote the relationship has “strategic value as a stabilizing force in the Middle East keeping at bay unrest that would threaten access to the regional oil supply on which America remains dependent.”
“I was actually happy to see the announcement — the support for Ukraine and Israel,” Druckenmiller said during the CNBC interview. “I was waiting to see what the offset was going to be.”
Read more: Thanks to Jeff Bezos, you can now use $100 to cash in on prime real estate — without the headache of being a landlord. Here's how
Advertisement
The former hedge fund manager goes on to say that he was surprised to see the White House announce another $56 billion in emergency spending that includes money for child care, disaster relief and aid for lower-income Americans.
“Child care is not emergency spending,” he says.
But some experts would disagree.
The country is currently on the edge of a “child care cliff”, after the expiration of the Child Care Stabilization Program, which was introduced in 2021.
Think tank The Century Foundation reported that millions of children are at risk of losing their daycare spots and families could lose billions of dollars each year due to reduced hours or leaving the workforce entirely.
Druckenmiller wants cuts to “entitlements”
When asked whether he agreed with the House Republicans’ proposal to fund Israel with $14.3 billion by cutting funding to the IRS, Druckenmiller sidestepped the question.
Advertisement
“I want to go after entitlements. It’s where the money is,” he said.
Druckenmiller believes future seniors will have to face a cut to their Social Security benefits “no matter what.”
“This generation has got to take a cut,” he says. “Right now, current seniors, you’re going to get 100 cents on the dollar. Future seniors looking at five or 10 cents on the dollar, is it not unreasonable for us to go to 85 or 90 cents on the dollar?”
But with inflation prices keeping prices high, Social Security benefits are already insufficient, especially for low-income seniors already hurt by the expiration of extra food stamp aid in March.
In fact, older adults are now the fastest-growing segment of America’s homeless population, according to the Wall Street Journal.
Overall, the benefits make up about a third of a middle-income earner’s average wages, even though Mary Johnson, a Social Security and Medicare policy analyst at The Senior Citizens League, previously told Moneywise over half of older households have no savings to fall back on and rely mainly on their Social Security income in retirement.
To make matters worse, the reserves of the program’s main fund are projected to run out by 2033, meaning retirees would only receive 77% of their full benefits.
Read More: Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
What to read next
- Worried about the economy? Here are the best shock-proof assets for your portfolio. (They’re all outside of the stock market.)
- Rising prices are throwing off Americans' retirement plans — here's how to get your savings back on track
- Jeff Bezos and Oprah Winfrey invest in this asset to keep their wealth safe — you may want to do the same in 2023
You May Also Like
- Turning 50 with $0 saved for retirement? Most people don’t realize they’re actually just entering their prime earning decade. Here are 6 ways to catch up fast
- This 20-year-old lotto winner refused $1M in cash and chose $1,000/week for life. Now she’s getting slammed for it. Which option would you pick?
- Warren Buffett used these 8 repeatable money rules to turn $9,800 into a $150B fortune. Start using them today to get rich (and stay rich)
- Here are 5 easy ways to own multiple properties like Bezos and Beyoncé. You can start with $10 (and no, you don’t have to manage a single thing)
Serah Louis is a reporter with Moneywise.com. She enjoys tackling topical personal finance issues for young people and women and covering the latest in financial news.
