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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.”

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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.

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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.

“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.

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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.

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