President Joe Biden (L) at the White House in Washington, on July 8, 2022; Tesla head Elon Musk (R) talks to the press near Berlin on Sept. 3, 2020. Alex Wong/Getty Images; Maja Hitij/Getty Images
Tesla CEO Elon Musk has sounded the alarm on the Biden administration’s massive deficit spending, warning that unless steps are taken to slow down the growth of America’s national debt, the U.S. dollar will become worthless.
“We need to do something about our national debt or the dollar will be worth nothing,” Mr. Musk said in a post on X.
The billionaire tech mogul was reacting to a post about Gen. H.R. McMaster warning that the world is on the cusp of World War III and calling for a doubling of defense spending to prepare for potential threats.
Mr. Musk has repeatedly advocated for a negotiated end to the conflict in Ukraine to put a halt to the loss of life.
For instance, during a February conversation on X with Sen. Ron Johnson (R-Wis.), Mr. Musk said the Wisconsin Republican was “exactly right” when the lawmaker said that additional U.S. aid to Ukraine had only prolonged a bloody stalemate and that the only way the war ends is through a negotiated settlement.
Besides being an advocate for ending the war in Ukraine, Mr. Musk has been a repeated critic of the U.S. government’s massive deficit spending.
‘Overspending Must Stop’
Mr. Musk has repeatedly criticized the Biden administration’s huge spending bills.
For instance in December 2021, he expressed concern for the “insane” federal deficit and said he would “can” President Joe Biden’s “Build Back Better” bill that cost over $2 trillion and was estimated by the non-profit watchdog Committee for a Responsible Federal Budget to add $160 billion to deficits over ten years.
More recently, Mr. Musk warned that a reckoning would eventually come for America’s ballooning national debt.
“US national debt growth is unsustainable,” Mr. Musk said in a Feb. 12, 2024 post. He was reacting to a post indicating that the interest payments on America’s $34 trillion national debt were already around $1 trillion a year and projected to rise to $3 trillion annually in less than ten years.
In March, Mr. Musk reacted to a post indicating that it took roughly 63 percent of all personal income taxes in February 2024 just to pay the interest on America’s $34 trillion national debt.
“Overspending must stop or America will go bankrupt,” Mr. Musk posted at the time.
Entrepreneur Ed Krassenstein reacted to Mr. Musk’s latest May 4 warning about the need to rein in out-of-control deficit spending by saying in a post that no administration is willing to tackle the national debt problem because the long-term “fix is likely a short term detriment to the economy.”
Mr. Musk replied: “Well, something’s gotta give. We should at least slow down the debt growth.”
‘Higher Taxes Are Likely’
Like Mr. Musk, billionaire investor Warren Buffett has also warned about the “important consequences” of deficit spending. However, the Berkshire Hathaway founder predicted that, when push comes to shove, the government would opt to raise taxes rather than reduce spending.
“I think higher taxes are likely,” Mr. Buffett said on May 4 at Berkshire Hathaway’s annual shareholder meeting in Omaha.
“They may decide that some day they don’t want the fiscal deficit to be this large because that has some important consequences. So they may not want to decrease spending and they may decide they’ll take a larger percentage of what we own, and we’ll pay it,” he said.
Warren Buffett (C), CEO of Berkshire Hathaway, speaks to the press as he arrives at the 2019 annual shareholders meeting in Omaha, Nebraska, May 4, 2019. Johannes Eisele/AFP via Getty Images
Deficit spending in the United States hit $1.7 trillion in 2023, or 6.3 percent of gross domestic product (GDP), according to a recent report from the Congressional Budget Office (CBO). The agency estimated that deficit spending would grow to 8.5 percent of GDP by 2054.
At the same time, CBO projected that America’s debt-to-GDP ratio, which in the 1980s was around 35 percent of GDP, will grow to 166 percent by 2054, while warning that this would pose “significant risks” to America’s fiscal and economic outlook.
Analysts at the University of Pennsylvania estimate that when the debt-to-GDP ratio hits around 200 percent, it will hit the point of no return—when no amount of future tax increases or spending cuts could prevent the government from defaulting on its debt.
“Unlike technical defaults where payments are merely delayed, this default would be much larger and would reverberate across the U.S. and world economies,” they explained.
Under a “best case” scenario, the University of Pennsylvania analysts estimate that the United States has around 20 years to take corrective action before the growing debt spiral spins out of control.
JPMorgan CEO Jamie Dimon has predicted that America’s debt-to-GDP ratio would “hockey stick” upward at some point, meaning rise sharply and become unsustainable after a period of relatively gradual increase.
“It is a cliff. We see the cliff. It’s about 10 years out. We’re going 60 miles an hour,” Mr. Dimon said, speaking on a panel at the Bipartisan Policy Center in Washington at the end of January 2024.
The International Monetary Fund (IMF) has also sounded the alarm on the Biden administration’s fiscal stance, warning that its massive deficit spending and ballooning public debt threaten to stoke inflation and—potentially—even spark financial chaos.
Tom Ozimek
Reporter
Tom Ozimek is a senior reporter for The Epoch Times. He has a broad background in journalism, deposit insurance, marketing and communications, and adult education.
