Jeffrey Sachs: DOGE Cuts Won't Be Enough, We're Going To Need Tax INCREASES, Too

**Jeffrey Sachs** (0:00)
The financial issues of our government are more serious than I would say the mainstream takes them to be, and certainly then the politicians take them to be. We're going to need tax increases sometime in the future, not just spending cuts.

**Adam Taggart** (0:24)
Welcome to Thoughtful Money. I'm its founder and your host, Adam Taggart. There can be little doubt that we're in a material juncture. Deficit spending and the resulting pile of debts and other sovereign liabilities are starting to place real limits on our economic prosperity. In addition to these legacies of the past, the future is fast becoming more uncertain, as many nations, the US in particular, are embarking on new policy directions very different from the status quo of recent decades. So, where's all this heading?
And are our odds for entering a better tomorrow increasing or decreasing? To help us wrestle with these very large and important questions, we have the great privilege of speaking today with Jeffrey Sachs, Professor of Economics at Columbia, bestselling author and global leader in sustainable development. A survey by The Economist ranked Professor Sachs as among the three most influential living economists, and it's an honor to welcome him to this program for the first of hopefully many future appearances. Professor Sachs, thanks so much for joining us today.

**Jeffrey Sachs** (1:26)
It's a pleasure to be with you. Thank you.

**Adam Taggart** (1:28)
Thank you. All right. Well, look, you are kindly making yourself available during a whirlwind world tour. We don't have a lot of time here. I have a ton of questions. I made the mistake of asking my social media followers for questions for you, and of course, I got about 2,000, but we'll try to get through as many as we can at the time we have. If we can, let me kick this off with an intentionally broad question I usually start these conversations with. What's your current assessment of the global economy and financial markets?

**Jeffrey Sachs** (1:57)
When you speak about global economy, not only are we talking about all the varied regions of the world, the different time horizons. There's the short run, what's going to happen next week, next month, next year, what's going to happen to the stock market, and so forth. I spend more of my time thinking about what's going to happen in the next 10 to 20 to 30 years, I have to say. So if I take the longer term perspective, it's a little bit easier, but we can come back in 10 years and continue that discussion. We're in the midst, obviously, of major technological advances. This is the most promising aspect of the world scene, because technological advance is the fundamental engine of long-term economic progress. And we are in, if not a golden age of technological advance, certainly a revolutionary period of massive advances through AI, other digital technologies, and related advances in just about every scientific and technological area. If we harness that right, that's all very good news. But there are obviously major complexities that come along with this. One is the geopolitics has been absolutely turned on its head in recent years. The US. 30 years ago believed at the strategic level, well, we're all alone. We're the sole superpower. Now it's perfectly plain. We are in a multipolar world. And this makes a lot of difference. Ecologically, we have huge environmental crises. Sometimes these are denied because they just complicate the scene, but they're absolutely real, like it or not. And so that is another major factor. We also have, as you said in your introduction and your kind introduction, we also have the range of financial issues which are pretty complicated. The United States has taken on so much public debt in the last 30 years because both our political parties like to give tax cuts and like to make spending increases, even though maybe on somewhat different things, that both parties have been agents of deficits and debt accumulation. So our debt held by the public is about 100 percent of GDP, but it's going to soar in the coming years.
And the government, as typical in the United States, despite very large budget deficits, is on the verge of more tax cuts. These politicians love tax cuts. Their donors want tax cuts, so they give them tax cuts. But whether this ever leads to financial responsibility, that's a big question. We used to think about debt at this level as only possibly the consequence of war, because wars are financed by debt for many reasons. But this is peacetime, relatively speaking, at least, thank God, not global war. And yet during 30 years, the US has just accumulated debt, massively irresponsibly and unsolved until today. So short-term macro is pretty complicated.