“If you look at it, what if I were to tell you there was a Republican president, but a better version, and you had two thirds Republican majorities in both houses of Congress, and you had a deficit to GDP of two, not 4.5, and you had a debt to GDP lower than The United States”
Druckenmiller notes the US is running a trillion dollar deficit at full employment alongside negative real rates globally.
“We're running a trillion dollar deficit at full employment. Apparently, we're gonna have some sort of green stimulus in Europe, and we have negative real rates everywhere and negative absolute rates a lot of places.”
Druckenmiller says US debt is 31 trillion officially but 200 trillion when including promised entitlement payments.
“But if you did your accounting like any corporation and you assume those payments are going be made, yeah, the present value is probably around $200,000,000,000,000.”
Druckenmiller cites CBO projecting entitlements and interest will exceed all tax revenue by 2050.
“The CBO's estimate, not mine, interest expense is 27% of outlays by 2050 and just entitlements and interest expense, just those two things alone, no defense, no running the government, no money for the disadvantaged will be a 117% of taxes by 2050”
Druckenmiller states closing the fiscal gap requires raising all taxes 40 percent or cutting all spending 36 percent forever.
“To actually pay for the entitlements we promised in the future, you'd have to raise all taxes 40% today forever or cut all spending 36 today forever.”