Future of Freedom Podcast

Episode: John Tamny & Adam Michel: How Should We Think About America's Debt?

Date: December 22, 2025
Host: Scott Bertram
Guests:

• John Tamny (President, Parkview Institute; Editor, RealClear Markets; Author, "The Deficit Delusion")
• Adam Michel (Director of Tax Policy Studies, Cato Institute; Author, "The Deficit Trap")

Episode Overview

In this episode, host Scott Bertram invites John Tamny and Adam Michel to discuss the meaning, implications, and solutions regarding America’s national debt and deficit. Both present sophisticated, sharply contrasting perspectives: Tamny challenges widespread panic about the debt, questioning conventional wisdom and arguing for radical tax reduction, especially on the wealthy. Michel, while sharing concern over government spending, emphasizes the real need for structural spending cuts and fiscal responsibility, warning of dire economic consequences if left unchecked.

Key Discussion Points & Insights

1. John Tamny: Rethinking Debt Panic

Debt as a Signal of Trust, Not Crisis

• Main Argument: The enormity of US debt is not a sign of impending disaster, but of global confidence in America’s future prosperity (01:14).
• “If that were a crisis, we wouldn't have 38 trillion in debt because no one ever, ever, ever lends out money blithely or with the intent to lose it.” – John Tamny (01:16)
• Comparison: Nations with little debt (Haiti, Russia) lack debt because markets don't trust them, not because of fiscal virtue (02:15).

Interest Payments Are Not a Bug, but a Feature

• Tamny reframes interest payments not as a menace but as a preferable limitation on government action:
  • “Wouldn't we prefer that the vast majority of revenues going into the federal government ... just went to paying off the debt? That sounds to me like the most benign form of government.” (03:38)

Skepticism of Entitlement Reform

• Cutting entitlements won’t shrink government overall; it merely frees up funds for Congress to invent new programs (04:28).
  • “No act of government parsimony ever shrinks the size of government. It just shifts what government spends it on.” (10:58)

The Real Culprit: Over-Taxation and Excess Revenue

• Tamny argues the real problem is that government takes in too much revenue and especially overtaxes the rich, stifling innovation and future growth (07:48):
  • “A tax on Jeff Bezos and Elon Musk and Mark Zuckerberg is a tax on everyone.” (08:12)
  • The lost opportunity: What innovations and cures aren’t being discovered because resources are shifted away from private investment?

Critique of Balanced Budget Talk

• Balanced budgets don’t equal small government. With a $6 trillion government, balance just locks in bloat (09:10).
  • “A balanced budget in the future signals a much, much, much bigger government than the one we have today. What's limited government about that?” (09:38)

Deficit Markets Will Self-Police

• Markets will only lend what they expect the US to be able to pay; as such, debt inherently has discipline built in (13:44).
  • “The debt market will police itself... only allow the United States to borrow what the market is confident we can cover.” – Scott Bertram, summarizing Tamny (13:44)
  • “That is brilliant and it's absolutely right.” – John Tamny (13:58)

2. Adam Michel: Fiscal Discipline and Structural Reform

Deficit Is a Symptom—Spending Is the Disease

• Michel distinguishes between being a “budget hawk” (wants a smaller government) and a “deficit hawk” (only wants solvency) (16:10).
  • Deficit fixation risks justifying higher taxes and an ever-expanding government (16:19).

The Necessity and Challenge of Deep Spending Cuts

• Entitlement programs (Medicare, Medicaid, Social Security) are the long-term drivers of unsustainability (17:49).
  • Cuts should be broad based—including defense, welfare, health, and education—which would both shrink the federal role and make essential services more affordable and accessible.

Are We Locked in a Cycle?

• Michel hopes for a break in the cycle where spending cuts are used just as room for new spending, citing a recent fiscal package (19:41).
  • “If Congress can... expand the types of programs that they are looking at reforming, I think there's a silver lining.” (20:14)

Markets Are Sounding a Warning

• Unlike Tamny, Michel sees market signals as flashes of warning, not confidence (21:20):
  • “The market is very clearly uncomfortable with the level of debt that we've seen. ... we just went through a period of inflation ... that Americans most certainly did not find an enjoyable experience.”
• US debt can be “rolled over until it can’t”—but a crisis inevitably comes (22:10).

Evaluating the Musk/Doge Spending Reform Effort

• Mixed assessment: failure to target big-ticket items, but optimism in the political momentum to slim down government (23:01).

On a Balanced Budget Amendment

• A well-designed balanced budget goal could force Congress to be transparent: higher spending means higher taxes now (24:37).
  • “If you actually pair the higher spending with higher taxes, it becomes a lot less popular. ... we get a much smaller government.” (24:49)

What to Do with Surpluses

• Any surplus should first and foremost be returned to Americans via tax cuts, which foster growth and shrink the debt as a share of GDP (26:22).

External Forces That Could Force Fiscal Change

• Triggers could include Social Security insolvency, expired tax cuts, government funding crises, or finally spooked debt markets (27:45).

Notable Quotes & Memorable Moments

John Tamny

• “To focus on the debt is to miss the point. The real problem is that government takes in way too much tax revenue now... The debt is an effect of that.” (01:16)
• “The fact that the US has 38 trillion in debt is a very strong signal from the world that the world sees our future as incredibly bright.” (02:23)
• “No act of government parsimony ever shrinks the size of government. It just shifts what government spends it on.” (10:58)
• On supply-sider orthodoxy: “You'll never shrink the debt... by increasing the flow of dollars to government, which is what the Laffer Curve proponents have said forever.” (12:48)

Adam Michel

• “Focusing just on the deficit...obscures...the federal government has gotten too big, too burdensome and too intrusive.” (15:05)
• “Deficit hawks...are indifferent between the two [taxes or spending], the end goal is only deficit elimination… this rhetoric pushes policymakers towards the easier solution of taxes or inflation.” (16:24)
• “The market is very clearly uncomfortable with the level of debt that we've seen... we just went through a period of inflation... that is a product of Congress spending beyond its means.” (21:14)
• “A balanced budget goal is important... If you actually pair the higher spending with higher taxes, it becomes a lot less popular. ... [then] we get a much smaller government.” (24:37)
• “This is the 30-40 trillion dollar question... if we knew what that forcing mechanism is, it would...already have forced Congress's hand.” (27:45)

Timeline of Major Segments

| Timestamp | Segment / Topic | |-----------|----------------------------------------------------------| | 00:50 | Introduction of John Tamny | | 01:14 | Tamny: Why the debt isn't a crisis | | 02:15 | Debt as a signal of national trust | | 03:11 | Are interest payments a problem? | | 04:00 | Why entitlement reforms may backfire | | 05:25 | Should we worry about leaving debt to next generations? | | 07:24 | Why too much tax revenue is the core problem | | 08:57 | Why balanced budgets are misleading | | 10:09 | Why spending cuts alone don’t solve the issue | | 11:48 | If revenues drop, will debt grow? | | 13:44 | Debt markets as self-policing mechanism | | 14:24 | Introduction of Adam Michel | | 15:04 | Michel: Why deficits matter — and what they reveal | | 16:10 | Budget hawks vs. deficit hawks explained | | 17:49 | Where and how would Michel cut spending? | | 19:41 | Are cuts just swapped for new spending? | | 20:50 | Michel on market confidence and the risk of debt crisis | | 22:37 | Lessons from Musk’s failed Doge reforms | | 24:17 | Pros and cons of a balanced budget amendment | | 25:59 | What to do with surpluses: pay debt or cut taxes? | | 27:24 | What could externally force change? | | 28:46 | Michel’s closing thoughts and thanks |

Tone & Style

• Both guests are wonky, sharp and serious, but civil and thoughtful—this is a no-dunk, no-interruption, long-form, courteous debate.
• Tamny’s arguments are provocative and counter-mainstream; Michel’s are rigorous and grounded in fiscal conservatism.
• Host Scott Bertram skillfully clarifies, reframes, and challenges each guest to articulate their positions without antagonism.

Summary

This episode offers a rare, in-depth look at two principled but contrasting philosophies about debt, deficits, and the proper role of government finance. Tamny challenges the “debt panic,” arguing that only a radical reduction in taxation (especially of the rich) can prevent government bloat and stagnation, and that markets—not policymakers—will act as the real brakes on federal borrowing. Michel urges that Americans focus less on temporary deficits and more on the deep, structural growth of government spending, warning that complacency in the face of swelling debt risks higher taxes, inflation, and a lost opportunity for genuine economic freedom. Their urgent disagreement makes for a challenging, substantive, and clarifying discussion for anyone concerned about the nation’s fiscal future.