2: The US Fiscal Crisis: Spending Cuts Are the Only Way Out GUEST NAME: Adam Michel Adam Michel, director of tax policy at the Cato Institute, discusses the US fiscal crisis stemming from large deficits and overwhelming debt. He recalls the 1980s Ronald Rea
The John Batchelor Show
John Batchelor
4.5 • 2.8K Ratings
🗓️ 11 October 2025
⏱️ 8 minutes
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Summary
The US Fiscal Crisis: Spending Cuts Are the Only Way Out
Adam Michel, director of tax policy at the Cato Institute, discusses the US fiscal crisis stemming from large deficits and overwhelming debt. He recalls the 1980s Ronald Reagan tax cut where promised spending cuts never materialized. The deficit is the annual gap between taxes and spending, accumulating into the national debt. Michel identifies a "deficit hawk coalition" split between deficit hawks (agnostic on revenues/spending) and budget hawks (concerned with government size), advocating for spending cuts to solve the crisis. Entitlement programs like Social Security, Medicare, and Medicaid are the root of fiscal problems.
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| 0:00.0 | This is CBSI in the world. I'm John Batchel, and it's a great pleasure to speak to Anna |
| 0:09.2 | Michelle, because my measure is I've been taught by someone who says cut spending, cut spending, |
| 0:16.1 | not taxes. Why? Because it turns out cutting spending is a very good idea. It's a very good idea for everyone. |
| 0:24.6 | It would solve huge problems and limit the reach of the big government. And at the same time, |
| 0:31.5 | we would reward our members of Congress for being responsible. Adam, it seems so straightforward. |
| 0:40.8 | And some reason, I have some reason to believe that everybody in Congress knows what I just said is logical. Why doesn't it happen? |
| 0:46.8 | That's a good question. There's, I think Republicans are very good at talking about the importance |
| 0:52.9 | of tax cuts, that tax cut, lowering taxes let you keep more of your hard-earned money, that they're a supply-side reform that unleashes businesses and lets the American consumer sit in the driver's seat. |
| 1:07.1 | The problem is they're not as good at selling spending cuts, which are a necessary component of tax cuts. |
| 1:14.9 | If we don't keep spending down, taxes have to go up by sort of by mathematical certainty. |
| 1:22.5 | If we keep spending more than we take in, something has to break. |
| 1:26.3 | And so in my view, the way out is to learn to talk about spending cuts in the way that we |
| 1:33.7 | talk about tax cuts. |
| 1:35.4 | Both taxes and spending distort incentives to work and save. |
| 1:40.4 | They crowd out family and community institutions. |
| 1:43.2 | They mess with entrepreneurship, which puts America at the head of every other country around the world. |
| 1:51.7 | And it's not just taxes that impact all of those things, but spending does as well. |
| 1:56.8 | If you look at the one big, beautiful bill that Republicans recently passed, some of the reforms they made, adding work requirements to some welfare programs. |
| 2:06.3 | There's a long pedigree of reforms like that that reduce spending, but also help people get out of poverty. |
| 2:13.3 | After the 1990 welfare reforms, we see the people that were impacted by those reforms doing better. |
| 2:20.7 | They have less food insecurity. |
| 2:23.1 | The children that grew up in those households, they're doing better a generation later. |
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