Yes, the U.S. owes itself money

Summary

Marketplace Podcast Summary: "Yes, the U.S. Owes Itself Money"

Released on February 4, 2025

Hosted by Kai Ryssdal, the Marketplace podcast episode titled "Yes, the U.S. Owes Itself Money" delves into a myriad of economic issues shaping the United States and the broader global landscape. From tumultuous oil markets and lending trends to the intricate facets of the national debt and the aftermath of natural disasters, this episode offers a comprehensive analysis aimed at demystifying complex economic phenomena for listeners without specialized backgrounds.

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1. Economic Uncertainty and Oil Market Volatility

The episode opens with Kai Ryssdal emphasizing the overarching theme of uncertainty permeating the current economic climate. Key factors contributing to this uncertainty include ongoing trade and tariff wars, fluctuating interest rates, and potential governmental interventions in financial systems.

Key Highlights:

• Oil Market Balances: Analyst Tom Kloza from Opus outlines that 2025 was initially expected to see a balanced global oil supply and demand. However, this equilibrium is disrupted by geopolitical tensions and policy shifts.

  “2025 was poised to be kind of chill when it came to the balance of global oil supply and demand.” [01:17] – Tom Kloza

• Shifting Demand Dynamics: Joe DeLauro of Bravo Bank points out that major oil consumers like China, the U.S., and the EU are experiencing flattened demand growth. This challenges the longstanding narrative of continuous oil demand increase over decades.

  “The narrative that oil demand is growing for like the past 50 or 70 years is shifted, okay, period.” [01:51] – Elizabeth Troval

• OPEC's Strategic Moves: Mark Finley from Rice University discusses OPEC's strategy to reintroduce more barrels into the market to regain market share after implementing production cuts since 2022.

  “They're trying to regain some market share. The question is, will the market allow them to do so without weakening prices further?” [02:37] – Tom Kloza

• Consumer Impact: Despite the potential for increased oil supply, forecasts by Tom Kloza suggest that 2025 might still favor consumers with trends pointing towards lower oil and gasoline prices.

  “The trend has been pointing towards lower oil and also gasoline prices, which President Trump has said he's wanted.” [03:03] – Tom Kloza

2. Lending Trends: Business Loans vs. Mortgages

Transitioning from oil markets, Ryssdal addresses the state of lending in the economy based on the Federal Reserve's Senior Loan Officer Opinion Survey.

Key Highlights:

• Decline in Mortgage Demand: Lenders are witnessing a decrease in mortgage loan applications, a trend attributed to rising mortgage rates deterring potential homebuyers.

• Steady Business Loan Demand: In contrast, business loan demand remains robust. Brad Bolton, CEO of Community Spirit Bank, explains that businesses continuously seek loans to fund operations and capital expenditures.

  “That's because many of his clients need to borrow to fund their day to day operations.” [03:54] – Justin Ho

• Investment Confidence: Alice Frazier, CEO of the Bank of Charlestown, notes that stabilized economic indicators like cooled inflation and easier labor availability are encouraging businesses to invest and expand.

  “If I'm a maid service company and I need another car and a couple more people, I'm going to make those investments because now I know what my cost of labor is going to be because it's settled down.” [04:57] – Katherine Edwards

• Cautious Optimism: Robert James II from Carver Financial Corporation highlights that while some businesses are eager to invest, others reliant on federal funding remain hesitant due to potential future uncertainties.

  “That’S going to impact their cash flow, which is going to impact their ability to service any debt that they take on.” [05:29] – Elizabeth Troval

3. Labor Market Analysis: The Decline in Hiring Rates

A significant segment of the episode focuses on the labor market, particularly the stagnation in hiring rates despite low unemployment figures.

Key Highlights:

• Flat Hiring Rates: Recent data from the Job Openings and Labor Turnover Survey (JOLTS) indicates that the hiring rate remained flat in December, a trend that labor economist Katherine Edwards describes as "anemic."

  “The unemployment rate is certainly good, but it is not predicting, I would say strength in every other indicator that we have of the labor market.” [07:12] – Katherine Edwards

• Loss of Worker Leverage: Edwards explains that the flat hiring rate diminishes workers' ability to negotiate for higher wages and better conditions, as there are fewer job opportunities available for employees to leverage.

  “The hiring rate measures how many workers are being hired into the labor market.” [07:25] – Katherine Edwards

• Comparative Weakness: She draws parallels between the current decline in hiring and the Great Recession, emphasizing that the present situation mirrors significant labor market weakness.

  “But the power has shifted. And it's not as if we don't know what's going on or if there's some mystery we have to unravel.” [09:00] – Katherine Edwards

• Economic Implications: The stagnation in hiring rates suggests potential long-term impacts on wage growth and economic stability, signaling underlying vulnerabilities in the labor market.

  “The hiring rate measures how many workers are being hired into the labor market.” [07:25] – Katherine Edwards

4. Super Bowl and AI in Advertising

Shifting focus to consumer economics, the podcast explores the intersection of artificial intelligence (AI) and advertising, particularly in the context of the Super Bowl.

Key Highlights:

• AI Advertising Challenges: Mark Finley discusses the backlash that AI-centric commercials can provoke, exemplified by Google's pulled ad where a father uses AI to help his daughter write a letter. Audiences often view such portrayals as dehumanizing.

  “Commercials for AI products can produce as much backlash as buzz.” [12:40] – Mark Finley

• Strategic Deployment: Kevin McTeague from Northwestern underscores the importance of presenting AI in a relatable and non-threatening manner to avoid negative consumer reactions.

  “You've got to be very careful the context in which you present your AI use case. If it's seen as somehow dehumanizing us, then it's going to probably get a negative reaction.” [13:10] – Elizabeth Troval

• Business-to-Business Focus: There's a trend towards showcasing AI applications in small businesses rather than direct consumer use, as this aligns better with audience perceptions and acceptance.

  “Think those Salesforce commercials with Matthew McConaughey.” [13:22] – Mark Finley

5. Understanding U.S. National Debt: Intergovernmental vs. Public Debt

A critical portion of the episode is dedicated to demystifying the U.S. national debt, distinguishing between intra-governmental and public debt, and discussing their implications.

Key Highlights:

• Debt Composition: Elizabeth Troval explains that out of the $36 trillion national debt, approximately 20% (~$7 trillion) comprises intra-governmental holdings, primarily debt owed within different parts of the government, such as Social Security.

  “They're not really debt or securities in the way that we typically think of.” [19:11] – Justin Ho

• Public Debt's Significance: The remaining $29 trillion is held by the public, including financial institutions, pension funds, the Federal Reserve, and foreign entities. This portion directly impacts bond markets and the economy's borrowing costs.

  “Most of that is held domestically by various financial institutions, pension funds. Banks hold a lot of it. It’s considered, of course, a very safe asset.” [19:05] – Dean Baker

• Fiscal Sustainability Concerns: Lawrence Kotlikoff from Boston University warns that the national debt, currently 20% larger than the U.S. economy, is on an unsustainable growth trajectory, raising alarms about long-term fiscal health.

  “The national debt is currently 20% larger than the size of the entire US economy. And he says it is on a growth path that is not sustainable.” [20:00] – Lawrence Kotlikoff

• Foreign Holdings Decline: The proportion of U.S. debt held by foreign entities has decreased from nearly half in 2011 to under a third in 2023, indicating a shift towards domestic consumption of government bonds.

  “The Fed is holding less and less of that debt these days. 30% is held by foreigners.” [19:17] – Justin Ho

• Policy Implications: Experts emphasize that while intra-governmental debt serves as an accounting tool, the focus should remain on managing and reducing public debt to ensure economic stability and fiscal responsibility.

6. Los Angeles Wildfire Cleanup: A Case Study in Recovery

The podcast also touches upon the complexities involved in disaster recovery, using the Eaton and Palisades fires in Los Angeles as a case study.

Key Highlights:

• Immediate Aftermath: Sue Pascoe recounts her evacuation experience, highlighting the emotional and logistical challenges faced by residents immediately following the fires.

  “People need to go in. They need the closure. They need to go in and say, okay, it is gone. There's nothing I've got here. I've got to get started.” [22:26] – Sue Pascoe

• Hazardous Cleanup: Carl Banks from the EPA details the extensive efforts required to remove hazardous materials from fire-damaged properties, involving over 1,000 personnel in hazmat suits.

  “It's EPA's largest response in our history for a wildfire. The only thing that any of us who've been doing this for a couple decades now can compare this to is Katrina.” [23:33] – Carl Banks

• Debris Removal Process: Mark Pastrella of LA County’s Department of Public Works explains the phased approach to debris removal, stressing the importance of property owners enrolling in the Right of Entry Program for efficient cleanup.

  “To sign up, you have to fill out a 12 page form and send it into LA county by the end of March.” [24:34] – Carl Banks

• Long-term Impact: Sue Pascoe shares her concerns over the extended timeline for property restoration, anticipating a year and a half to two years before her home can be fully rebuilt.

  “It's going to be a year and a half to two years at a minimum, if we're lucky.” [25:21] – Sue Pascoe

7. Market Movements and Corporate Updates

In the financial markets segment, Ryssdal provides a brief overview of significant stock movements and corporate news.

Key Highlights:

• Stock Market Gains: Major indices saw substantial gains, with the Dow Industrials, NASDAQ, and S&P 500 all experiencing notable increases. Exxon Mobil's better-than-expected Q4 earnings and oil production growth contributed to a 2.7% share rise, while Chevron's lower-than-expected earnings also saw a 2.6% increase.

  “Exxon Mobil released better than expected Q4 earnings and oil production grew 20%. Shares were up 2.7% today.” [14:48] – Kai Ryssdal

• Spotify's Turnaround: Spotify's shares surged by 13.2% following a notice from the National Music Publishers Association regarding unlicensed songs, coupled with the company's first-ever profit report.

  “Spotify turned it up 13.2% today, reporting its first profit ever.” [14:48] – Kai Ryssdal

8. Lighthearted Ending: Waffle House Surcharge

The episode concludes with a lighter note, mentioning Waffle House's new 50-cent per egg surcharge attributed to bird flu-induced egg shortages.

“What do you get when you multiply 272 million times 50, 50 cents specifically? Well, you get, first of all, $136 million.” [26:08] – Kai Ryssdal

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Conclusion and Key Takeaways

This Marketplace episode adeptly navigates through complex economic landscapes, offering listeners nuanced insights into:

• Oil Market Dynamics: The fragile balance between supply and demand amidst geopolitical tensions and production strategies.

• Lending Trends: The dichotomy between declining mortgage demand and steady business loan growth, reflecting broader economic confidence and challenges.

• Labor Market Shifts: The critical implications of a stagnant hiring rate on worker leverage and wage growth, signaling potential long-term economic vulnerabilities.

• National Debt Complexity: A clear distinction between intra-governmental and public debt, highlighting concerns over fiscal sustainability and the intricate nature of governmental financial obligations.

• Disaster Recovery Efforts: The extensive and prolonged process of rebuilding after natural disasters, underscoring the logistical and emotional toll on affected communities.

• AI in Advertising: The delicate balance companies must maintain when integrating AI into high-visibility advertising, navigating consumer sensitivities and technological advancements.

By dissecting these multifaceted topics with expert interviews and clear explanations, Marketplace equips listeners with a deeper understanding of the economic forces at play, ensuring they remain informed and prepared to navigate an uncertain financial landscape.

Transcript

[Kai Rysdal]

Until further notice, the only economic certainty around here is uncertainty. Stories along those lines on the program today. From American Public Media, this is Marketplace in Los Angeles. I'm Kai Rysdal. It is Tuesday today. This one is the 4th of February. Good as always, Dabiel. Along, everybody. Another trade and tariff war. Uncertain although likely. Interest rate cuts, uncertain, although becoming increasingly unlikely. See also trade and tariffs. Control of the financial plumbing of this economy, as we talked about yesterday, uncertain. And with uncertainty comes volatility, the chosen manifestation of which for us today is crude oil. Reuters reports President Trump is going to crack down on Iranian oil exports. There are the tariffs, tariffs on Canadian oil that are likely or possible or probable. It's uncertain in a month or less. But the oil market and oil prices are complicated. So Marketplace's Elizabeth Troval goes global to get us going.

[Tom Kloza]

2025 was poised to be kind of chill when it came to the balance of global oil supply and demand, says Opus analyst Tom Kloza.

[Elizabeth Troval]

This was supposed to be a year where it would be very, very close on balances.

[Kai Rysdal]

In other words, supply and demand would.

[Elizabeth Troval]

Be pretty much even with maybe a.

[Tom Kloza]

Little bit of extra supply on the demand side. Joe DeLauro with Bravo bank says the biggest consumers of crude, China, the US and the EU have seen demand flattening out.

[Elizabeth Troval]

The narrative that oil demand is growing for like the past 50 or 70 years is shifted, okay, period.

[Tom Kloza]

At the same time, on the supply side, there's plenty of new oil being produced.

[Elizabeth Troval]

You have Guyana, you have Brazil, you have Canada, and you have the US.

[Tom Kloza]

And you can't forget about opec. They're trying to find room in the global market for the additional oil they've been sidelining. Mark Finley is with Rice University.

[Mark Finley]

That group has a plan that they endorsed again just yesterday to begin putting more barrels back into the market on the back of, you know, successive rounds of production cuts that the group has implemented, going all the way back to 2022.

[Tom Kloza]

They're trying to regain some market share. The question is, will the market allow them to do so without weakening prices further? Because when we look at the oil price forecast, Tom Close says 2025 could turn out pretty well for consumers.

[Elizabeth Troval]

You were likely to see the highest prices of the year in the first hundred days and you'd see the lowest.

[Kai Rysdal]

Prices in the last hundred days.

[Tom Kloza]

That's right. The trend has been pointing towards lower oil and also gasoline prices, which President Trump has said he's wanted. All he has to do is leave the market alone. I'm Elizabeth Troval For Marketplace, uncertainty factors.

[Kai Rysdal]

Heavily into how much consumers and businesses are willing to borrow, of course, about which this we got a new read on the state of lending in this economy this week of the Federal Reserve's Senior Loan Officer Opinion Survey. It asks bankers about their lending standards and the loan demand that they are seeing. The upshot is that lenders are generally seeing less demand for mortgages. Not a huge surprise given mortgage rates right now. But they are seeing more demand for business loans. So Marketplace's Justin Ho called a couple of bankers to ask him what's what.

[Justin Ho]

At Community Spirit bank in Red Bay, Alabama, demand for business loans has held fairly steady over the last few years, says CEO Brad Bolton. That's because many of his clients need to borrow to fund their day to day operations.

[Elizabeth Troval]

If a logger or someone in construction, if their bulldozer is worn out, they've just got to buy it.

[Justin Ho]

But recently, Bolten says some customers have been asking about whether interest rates will fall this year because they're trying to figure out when they should borrow more.

[Kai Rysdal]

Do I go ahead and make this.

[Justin Ho]

Purchase now or do I wait six months for that?

[Elizabeth Troval]

Maybe rates will be cheaper.

[Justin Ho]

Bolton says that's a sign that businesses want to borrow. Alice Frazier is the CEO of the bank of Charlestown in West Virginia. She says companies have had several years to figure out how to survive amid high interest rates. As a result, if they've got the.

[Katherine Edwards]

Opportunity to grow their business, I think they're looking to go ahead and invest today and get that new revenue sources going for them.

[Justin Ho]

Fraser says it helps that the economy in many ways is more certain. For instance, inflation has cooled. Labor is easier to find.

[Katherine Edwards]

If I'm a maid service company and I need another car and a couple more people, I'm going to make those investments because now I know what my cost of labor is going to be because it's settled down. I know what the cost of the car is going to be because they're more available.

[Justin Ho]

There's still plenty of uncertainty going around, too. Robert James II is CEO of Carver Financial Corporation, which owns banks in Alabama and Georgia. He says businesses that receive money from the federal government, like healthcare clinics, are hesitant to take out loans because if federal funding freezes or dries up, then.

[Elizabeth Troval]

That'S going to impact their cash flow, which is going to impact their ability to service any debt that they take on.

[Justin Ho]

But James says one thing he's not worried about is his local economy.

[Elizabeth Troval]

There's continual high demand for real estate because we have so much in migration to the Sun Belt. We have strong job creation in our region.

[Justin Ho]

James says that means demand for loans in his region is likely to keep growing. I'm Justin Ho for Marketplace.

[Kai Rysdal]

One might think given all the aforementioned uncertainty, that traders on Wall street would have been a tad reserved today. One would have been wrong. We'll have the details when we do the numbers. Big week for labor market data. This week is the January unemployment report comes to us on Friday. Today it was jolts, the Job Openings and Labor Turnover Survey. Lots of data in there. Of interest to us today is the hiring rate, which was flat in December. If you were with us this past Friday, you heard the Washington Post Heather Long describe the hiring rate in this economy as anemic. Labor economist Catherine Ann Edwards is worried about that same thing. She wrote about it in Bloomberg the other day, so we got her on the phone to explain. Katherine, welcome to the program.

[Katherine Edwards]

Thank you so much for having me.

[Kai Rysdal]

The labor market, as most anybody who is even passingly familiar will tell you, seems pretty good. You differ, I guess.

[Katherine Edwards]

The unemployment rate is certainly good, but it is not predicting, I would say strength in every other indicator that we have of the labor market.

[Kai Rysdal]

You like this thing called the hiring rate. What is it and why do you like it?

[Katherine Edwards]

The hiring rate measures how many workers are being hired into the labor market.

[Kai Rysdal]

Say more about it. Yeah.

[Katherine Edwards]

So it's, I think the number itself probably means nothing to people. If I were to tell you the hiring rate is 3.3. Like it's not flashing across Times Square. Oh, my God.

[Elizabeth Troval]

Right.

[Katherine Edwards]

It's really just the relative movement of hires lets you know whether or not firms are expanding their workforces.

[Kai Rysdal]

So put that into context. Right. One of the things you point out in this piece, and we've said actually through a good part of the pandemic, is, you know, the labor market. A key part of it is in terms of workers having power, is their ability to leave their jobs with confidence that they can get another one.

[Katherine Edwards]

Exactly. And when we were coming out of the pandemic, we called it the great resignation, the great reshuffle. But that was the peak of the hiring rate in the US that so many workers were changing jobs, moving to different jobs, and that's associated with wage growth. If you can't have that outside offer, if you don't have that leverage, not only can you not leave, but you can't kind of bargain for higher wages as easily. That outside offer. Offer is a really important part of you being able to ask for more.

[Kai Rysdal]

Just to that word you used, leverage. It's the headline of this piece, and writers obviously don't get to choose their own headlines. But you say the headline of this piece is the American worker has lost all leverage in the job market. And that's going to strike some people because for a long time, in the beginning of the pandemic, it was the workers have all the leverage. Right. Even as recently as, I don't know, a year, 18 months ago, it was.

[Katherine Edwards]

Certainly a seller's market and one that was very beneficial for a lot of American workers and their families. But their power has shifted. And it's not as if we don't know what's going on or if there's some mystery we have to unravel. The Fed, through raising interest rates, has been trying to weaken the economy in order to relieve the upward pressure on prices. Every economist worth their salt, and I'm sure you had someone on your program say, we're going to have to get the unemployment rate to 6% to really bring prices down. They were all proven wrong. But that's not to say the labor market has been unscathed. And where you see the weakening of the labor market is on the hiring side. That is a weakness in the labor market. It's not a high unemployment rate, but it's not nothing.

[Kai Rysdal]

Right. With the acknowledgement that you're a labor economist and not a media critic, do you suppose we're covering the labor market wrong?

[Katherine Edwards]

Why, Kai, I would never.

[Kai Rysdal]

No, go ahead, please. Welcome to my program, but also tell me I'm doing it wrong.

[Katherine Edwards]

Yeah, yeah, so I made a list. No, I think it's hard to connect all of the pieces of the labor market together and see not just where we're standing, but the direction we're facing. And if the media struggles with it, economists do too. What I think is the truest thing about the economy right now is that nobody feels like we're normal again.

[Kai Rysdal]

Wow. It's been five years and we're still not normal.

[Katherine Edwards]

It's been five years and we're still not normal. We're not hiring like normal, we're not seeing wages like normal, we're not seeing the same type of investment decisions, and at the same time, we're still watching price reports with bated breath. So what I tell people is that on some level, you can imagine the labor market is kind of standing over a cliff with a strong wind at its back. I mean, it hasn't fallen over, but it's not in a good place. And the kind of evidence of its insecurity is just this precipitous decline in hiring. And just to make it clear that I'm not trying to maybe be dramatic, who would ever accuse an economist of that? But in the Great recession, hiring fell 1.3 points. The decline in hiring that we have seen is the exact same.

[Kai Rysdal]

We're going to leave it there. Katherine Edwards, the labor economist and economic policy consultant writing in Bloomberg, most recently in a piece called the American Worker, has lost All Leverage. Katherine, thanks so much. Appreciate your time.

[Katherine Edwards]

Thank you.

[Kai Rysdal]

We're five short days away from the super bowl of American marketing, also known as, I mean, you know, the Super Bowl. As we mentioned the other day, $8 million is the going rate for a 32nd spot this year for companies to put their logos and brands front and center in the zeitgeist and alongside the obligatory beer and car commercials. This year you can expect plenty of ads from big tech for their AI assistants or AI agents or even AI eyewear. But selling artificial intelligence to an audience of more than 125 million people can be tricky. As Marketplace's Matt Levin reports, commercials for.

[Mark Finley]

AI products can produce as much backlash as buzz. Remember this Google Ad where a dad uses AI to help his daughter write a fan letter to an Olympic track star?

[Elizabeth Troval]

And I'm pretty good with words, but this has to be just right. So Gemini, help my daughter write a letter telling Sydney how inspiring she is.

[Mark Finley]

Audiences really dislike the thought of outsourcing a heartfelt letter to a robot. Google ended up pulling the ad from TV. Kevin McTeague is a marketing professor at Northwestern.

[Elizabeth Troval]

You've got to be very careful the context in which you present your AI use case. If it's seen as somehow dehumanizing us, then it's going to probably get a negative reaction.

[Mark Finley]

That may be why Google is planning commercials featuring how small businesses are using Gemini. You can expect to see plenty of business to business AI ads on Sunday. Think those Salesforce commercials with Matthew McConaughey. Girish Malapragada at Indiana University says even if the average super bowl watcher won't ever interact with a Salesforce AI agent, it's just that they want to tag along with some trendy thing going on in technology. There's also the question of whether companies will use AI to actually create their super bowl commercials in the first place. Van Graves at VCU's Brand center says that even with controversies over AI generated commercials, some marketing agencies will dare to experiment.

[Elizabeth Troval]

Don Draper is in our rearview mirror at this point, and this is a way to show that we are on the cutting edge of technology.

[Mark Finley]

Those super bowl commercials. Remember, they're also commercials for Madison Avenue. I'm Matt Levin for Marketplace.

[Kai Rysdal]

Going at But I skipped the commercials in the.

[Sue Pascoe]

Super bowl coming up, our insurance adjuster, when we were looking for a place to rent, said, you know, it's going to be a year and a half to two years at a minimum.

[Kai Rysdal]

The L A fires are over. The waiting obviously is not. First though, let's do the numbers. Dow Industrials grew 134 points today, about 3.10percent 44,005.56 the NASDAQ up 262 points 1.44% 19,654s and P 500 up 43.7 10% 6037 and we were talking about oil earlier. Earlier hello Kai Exxon Mobil released better than expected Q4 earnings and oil production grew 20%. Shares were up 2.7% today. Chevron, though, released lower than expected earnings and oil production stayed flat year over year. Shares nonetheless up 2.6%. The National Music Publishers association sent a notice to Spotify today to take down more than 2500 unlicensed songs. Spotify turned it up 13.2% today, reporting its first profit ever. You are listening to Marketplace.

[Matt Levin]

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[Kai Rysdal]

Now get up to a $15 gift car rebate when you purchase select Super Start batteries exclusively at O'Reilly Auto Parts. Auto Parts. This is Marketplace. I'm Kai Rysdal. You'll be hearing the phrase debt limit or perhaps debt ceiling. They're interchangeable. You'll be hearing them increasingly over the next weeks and months as congressional Republicans decide what political demands they're going to make in return for lifting the amount the federal government can borrow. Fact is, the federal government does owe more than $36 trillion. Even in government spending terms. That is a lot. But to whom all that money is owed? Well, it's quite a story. Here's Marketplace's Sabri Benishour.

[Elizabeth Troval]

Once upon a time in a land here there lived a Social Security system that wasn't broken. It even had a surplus during the.

[Kai Rysdal]

Years from, about, oh, 1980s, 1990s, particularly when the baby boomers were in their peak earning years and hadn't yet retired, that surplus became a little bit larger than usual.

[Elizabeth Troval]

Eugene Sterle is co founder of the Brookings Tax Policy center and author of Beyond Zombie Reclaiming Fiscal Sanity in a Broken Congress. So decades ago, Social Security had this pile of extra money. By law, it could only do one thing with it.

[Kai Rysdal]

Social Security essentially bought government debt.

[Elizabeth Troval]

It lent its extra money to the rest of the government, which immediately spent it. But the government told Social Security, we'll pay you back when there's a rainy day and you need it.

[Kai Rysdal]

That's what's going on now in Social Security. Spending is exceeding revenues.

[Elizabeth Troval]

So the government is now paying Social Security back plus interest. This is intra governmental debt being repaid, debt that one part of the government owes another part. There is a lot that has not been paid back yet.

[Justin Ho]

We have $36 trillion in total governmental debt and about 20% of that, or, you know, more than 7 trillion of that is these intra governmental holdings or intra governmental debt.

[Elizabeth Troval]

Alex Arnon is director of policy analysis at the Penn Wharton Budget Model. This debt is special.

[Justin Ho]

They're not really debt or securities in the way that we typically think of.

[Mark Finley]

These are non marketable securities.

[Justin Ho]

They cannot be bought and sold in the market like other debt.

[Elizabeth Troval]

And because this debt is not out in the wild being traded in bond markets, it doesn't do things that bond markets do. It doesn't affect the cost of borrowing. It doesn't affect the government's ability to borrow. It doesn't influence mortgage rates. Brad Setzer is a senior fellow at the Council on Foreign Relations. The intergovernmental debt is much more an accounting device. The real focus is on debt owed to the public. Stuff that actually has to be financed with treasury bonds or bills in the market. Out of the total $36 trillion the government's on the hook for, it owes 29 trillion to the public at large. Anyone or any organization that holds a government bond. Most of that is held domestically by various financial institutions, pension funds. Banks hold a lot of it. It's considered, of course, a very safe asset. Dean Baker is senior economist at the center for Economic and Policy Research. Some of it's held by the Federal reserve board. About 15% of that's held by the Federal Reserve Board. The Fed bought a lot of US Government debt during COVID and the Great Recession as a way to help out the economy. This debt is considered part of that 29 trillion that's held by the public. But the Fed is holding less and less of that debt these days. 30% is held by foreigners. So this would be foreign banks, foreign insurance companies, and foreign central banks. The share of debt the US Owes abroad has also been shrinking from just under half in 2011 to just under a third in 2023 as more US debt is consumed here. But the breakdown of the US national debt is less important than its size. What's a matter of concern is the overall fiscal sustainability of government. Lawrence Kotlikoff is a professor of economics at Boston University. The national debt is currently 20% larger than the size of the entire US economy. And he says it is on a growth path that is not sustainable. In New York, I'm Sabree Benishore for Marketplace.

[Kai Rysdal]

There's rain in the forecast for Los Angeles this week, which is good news for the fire weary among us. But even with things calm for now, those most affected by the Eaton and Palisades fires start rebuilding quite yet because there are countless truckloads of ash and debris that have to be carted away from all the properties that were damaged or destroyed. And as Marketplace's Kaylee Wells reports, that is a complicated process.

[Carl Banks]

Sue Pascoe left her house in the Pacific Palisades with not much more than a change of clothes. She expected to be back home quickly.

[Sue Pascoe]

We will go out tonight and we'll be back tomorrow. So you throw a few things in through the dog's dishes and, you know, just packed a couple pairs of underwear and that was it.

[Carl Banks]

Everything else she left behind after the smoke cleared. When she visited her property, she found a ceramic duck and a vase. The rest is ash. She says the very first thing that she and her neighbors need to do in this cleanup process is Find acceptance.

[Sue Pascoe]

People need to go in. They need the closure. They need to go in and say, okay, it is gone. There's nothing I've got here. I've got to get started.

[Carl Banks]

These homes burned nearly four weeks ago, but Pasco says some of her neighbors still haven't seen just how bad the damage is yet. She says just waiting in line to get into the neighborhood can take up to three hours.

[Sue Pascoe]

You have to have the police check your ID and make sure you belong.

[Carl Banks]

Her husband had to do that twice to show the insurance adjuster their burned out property.

[Sue Pascoe]

People work, you know they're taking time off for work to do this.

[Carl Banks]

The homes of Pasco and her neighbors are in phase one of FEMA's cleanup process, which is all about removing hazardous.

[Elizabeth Troval]

Waste, because this is a matter of protecting public safety and the environment.

[Carl Banks]

Carl Banks is Deputy Incident commander at the U.S. environmental Protection Agency, which is leading this process of clearing hazardous stuff.

[Elizabeth Troval]

Such as batteries, cleansers, paints, oils, ammunition, that kind of thing.

[Carl Banks]

All told, the EPA is sending out more than 1,000 people in hazmat suits to comb through the wreckage by hand.

[Elizabeth Troval]

He says it's EPA's largest response in our history for a wildfire. The only thing that any of us who've been doing this for a couple decades now can compare this to is Katrina.

[Carl Banks]

As in the 2005 hurricane that destroyed much of the Gulf Coast. President Trump ordered the EPA to finish the process in 30 days. Bank says the agency is doing everything it can to follow those marching orders, but won't give an official end date. Once the EPA has given its blessing to enter a house, phase two can begin.

[Elizabeth Troval]

Phase two is the general debris removal.

[Carl Banks]

Mark Pastrella is the director of LA County's Department of Public Works.

[Elizabeth Troval]

Our role is essentially as an administrator of the program.

[Carl Banks]

Phase two is all the stuff that is not hazardous. Dead trees and cracked house foundations and lots of ashes. The Army Corps of Engineers is in charge of handling that part. It'll do the job free of charge, though it will take any insurance coverage you have for debris removal and you have to sign up through LA County.

[Elizabeth Troval]

We go on that property to do debris removal without your permission, we'd be trespassing. So in order to relieve that, we have a program called the Right of Entry Program that property owners need to enroll in.

[Carl Banks]

To sign up, you have to fill out a 12 page form and send it into LA county by the end of March. You get to be higher up in the line if you convince your neighbors to fill it out fast too, because the Army Corps is prioritizing blocks where it can do lots of properties at once. And then you wait because Banks says the Army Corps expects phase two to take much longer.

[Elizabeth Troval]

80 to 90% of the properties will have their debris removed within a year or less.

[Carl Banks]

And that's just to turn the property into a blank slate. Fire victim Sue Pascoe is expecting to live in her temporary apartment for a while after that.

[Sue Pascoe]

Our insurance adjuster, when we were looking for a place to rent, said, you know, it's going to be a year and a half to two years at a minimum, if we're lucky.

[Carl Banks]

If we're lucky, you can get your property cleared faster, but in that case, you have to pay for it yourself. And the cost of that starts at around $10,000. In Los Angeles, I'm Kaylee Wells for Marketplace.

[Kai Rysdal]

This final note on the way out today, a math pop quiz. What do you get when you multiply 272 million times 50, 50 cents specifically? Well, you get, first of all, $136 million. But you also get Waffle House announcing today it's adding a 50 cent per egg surcharge on each of the aforementioned 272 million eggs it serves every year. It is bird flu induced, mostly that shortage. Our Digital and On Demand team includes Kerry Barber, Jordan Manji, Dylan Mietanin, Janet Wynn, Olga Oxman, Ellen Rothfuss, Virginia K. Smith and Tony Wagner. Francesca Levy is the executive director of Digital and On Demand. And I'm Kyle Rysdal. We will see you tomorrow. Everybody, this is apm. This economy can be complicated. That's why the Marketplace newsletter makes understanding it all simple. Get Smart takes on the week's biggest stories delivered to your inbox every Friday. No jargon, no hype, just economics you can use. Sign up [e-mail] subscribe.