Gerstner notes inflation falling despite massive government spending from chips act and infrastructure bills.
“And this is remember, we're seeing inflation roll over huge, and we have a chips act and an infrastructure we have massive government spending going on, and we still see inflation rolling over.”
Gerstner calculates federal budget balances in four years with 3-4% revenue growth and modest 5-5-2% annual cost cuts.
“So all that does is get you back to trend line from 2019 As though we increased spending 3% a year from 2019, the budget balances. It's tiny. These are tiny changes in costs.”
Gerstner calculates that 4.9% revenue growth would produce a $450B surplus by 2029.
“If we grew revenues at the same rate that we have for the last twenty years, right, starting next year, which is 4.9% per year CAGR for twenty years, we would end up with a $450,000,000,000 surplus in 2029.”
Gerstner calculates every $300 billion in cuts equals 1% GDP headwind, making $2 trillion cuts impossible without recession.
“The problem is every $300,000,000,000 you cut is a 1% headwind to GDP. So if you cut $2,000,000,000,000 in a single year, you have negative 7% GDP, right? It would throw us into a recession”