Slate Money – “The National Debt Question” (August 9, 2025)

Podcast Host: Felix Salmon (Slate)
Co-hosts: Emily Peck (Axios), Elizabeth Spiers (New York Times)
Special Guest: Mary Childs (Planet Money, author of The Bond King)

Overview

This episode dives into the rapidly shifting concerns about America’s national debt, the structure and stability of the Treasury bond market, political weaponization of fiscal responsibility, the reliability of US economic statistics, and headline business stories including Elon Musk’s Tesla pay package and the American Eagle/Sydney Sweeney controversy. With special guest Mary Childs, the panel unpacks complex financial ideas—including why “this time might be different” for US debt—and explores the wider implications these economic changes have on politics and trust in institutions.

Key Discussion Points & Insights

1. Is the US National Debt Suddenly a Crisis? (03:06–32:15)

Mary Childs’s Harper’s Piece Summary

• Felix introduces Mary’s new Harper’s article, asking whether “the fiscal deficit [is] something we should care about all of a sudden?”
• Mary’s Core Thesis: “This time is different, and I’ll tell you why.” (03:30, Mary)
  • For years, low interest rates, robust economic growth, and strong global demand for Treasuries made US deficits manageable.
  • Now, that’s changed:
    • Interest expenses have soared: “We now pay more in interest expense than we do on defense, which... is a little crazy.” (04:15, Mary)
    • Debt-to-GDP ratio: “Our debt-to-GDP ratio at that time, [in the Greek crisis,] it was... 120%. ... That’s what y’all are today, actually.” (04:50, Mary)
• Comparing the US to Japan: Japan’s debt-to-GDP is much higher, but crucial differences include demography, central bank involvement, and Japan long having manipulated rates down via large-scale bond buying (05:49–07:29).

Politics and Debt Anxiety

• The conversation turns to political football:
  • “It really seems quite political now that everyone... suddenly cares now that Donald Trump is president...” (08:56, Emily)
  • The rhetoric around deficits tracks partisan advantage, not economic fundamentals.

Deficit Alarm vs. Historical Complacency

• Felix: “Debt ceiling standoffs are terrifying because it’s a repeat game... [but] if you play a game an infinite number of times, at some point you’re going to lose.” (10:16, Felix)
• Mary: Markets have been complacent, but “the debt numbers go up... have you looked at a chart lately? It’s crazy. It just goes straight up.” (11:41, Mary) Wile E. Coyote analogy for the lag between excess and consequences.

Why the US Isn’t (Yet) Greece

• US has monetary sovereignty: “Greece could not afford to service its debt... because [it] didn’t have the ability to print euros...” (14:05, Felix)
• But: “We have enjoyed... a suspended reality... where the US government is considered risk-free. And I’m sorry, but that is funny. You know, that’s not true. Everything has risks. There’s no such thing as risk-free.” (15:25, Mary)

What is the Actual Crisis?

• Felix wants precision: The classic “slow-building interest burden” is less likely to trigger disaster than a “big unexpected shock... some kind of fuck up with the debt ceiling.” (11:41, Felix)
• Mary identifies multiple points of fragility: market structure, volumes, and interest cost relative to the economy’s ability to pay (16:40).

Market Structure & Plumbing Risks

• The panel discusses “Liberation Day” (April 2) as an inflection point for investor psychology about US debt.
• The US remains “the best house in a bad neighborhood,” with no real alternative to Treasuries (12:57–13:41).
• However, with no fallback asset, if confidence collapses, chaos could be severe: “If something does go wrong, there’s no natural contender...that seems even more chaotic.” (13:41, Emily)

Political Weaponization of Deficit Panic

• Emily raises concern that deficit panic provides cover for spending cuts targeting poor and vulnerable populations, often justified by “There’s no money.”:
  • “You foment fiscal panic. And then that really opens the door for a lot of scary stuff that... the White House is now moving into place, like entitlement cuts especially.” (18:14, Emily)
• Tax increases on the rich are the obvious but politically impossible solution.

Nuance vs. Weaponization

• Mary laments the impossibility of good-faith debate:
  • “The second you talk about [debt], it gets... weaponized... which becomes a blunt instrument used in ways you didn’t intend it.” (19:47, Mary)

The Hedge Fund “Basis Trade” & Market Fragility

• Mary explains the so-called “basis trade,” where hedge funds arbitrage tiny price differences between cash Treasuries and their derivatives, enabled by leverage and “outsourcing” of government bond holding:
  • “We have outsourced holding of Treasuries to hedge funds and we’re just hoping that they’re going to stay in a good mood.” (28:11, Mary)
  • The Fed can “cure” things if there’s trouble—perhaps by bailing out hedge funds directly, which is politically toxic but structurally viable.

2. The Reliability of US Economic Statistics (34:23–47:28)

Trump’s Attack on Data Integrity

• News of the Week: Trump’s plan to fire the head of the Bureau of Labor Statistics (BLS) after an unwelcome jobs report; broad condemnation from economists and professional bodies.
• Felix: “You’re making the reliable statistics less reliable. And that’s going to reduce faith in... and then the minute you start using that word like reduce faith in everyone kind of, they stop listening at that point....” (34:23, Felix)

Plunging Data Quality

• Survey response rates at the BLS and comparable agencies are falling globally, reducing data precision:
  • “The gold is less gold than it used to be.” (37:20, Mary)
• Chronic underfunding is harming data gathering:
  • “Spending on the agencies has decreased... The BLS is underfunded. Like, let’s sell more Treasuries and give them more money and get better data.” (39:32, Emily)

Statistics and Trust in Markets

• Mary highlights US “soft power” via genuinely open, trusted data:
  • “We underappreciate in this country... the extent to which our capital markets are as deep and liquid as they are... because people do trust our institutions and our open data.” (40:00, Mary)
• Erosion of that trust means “everything costs more. That’s just friction.” (41:03, Mary)

A Walk Toward Politicized Data?

• Debate: Has the US crossed from mere data quality issues to actual political manipulation of economic statistics?
• Emily: “We’re on the road. It’s happening. I’m not saying right now... anyone at the BLS is... making up numbers. That’s... not saying that. No.” (42:22, Emily)
• Felix: The BLS statistical output is resilient to manipulation, but Trump’s move creates “an incentive structure for that to happen.” (44:47, Felix)
• Elizabeth points out that subtle methodology tweaks (e.g., for inflation) can move the needle over time.

3. Elon Musk’s Tesla Pay Package (48:04–53:06)

• Tesla’s board (via a two-person “special committee”) proposes a $30 billion pay package for Elon Musk—intended to compensate him if a prior $58 billion package remains legally frozen.
• Felix pokes fun at the rationale: “Let’s pay him $30 billion. And bish bosh, that happened so great.” (48:20, Felix)
• Emily: “He is a flight risk. Right? That’s why they did this, because they want to make sure Elon pays attention to the company he is in charge of.” (48:50, Emily)
• Felix: “Realistically, he’s not a flight risk. We have to be very clear about this. ... All the money he has to play with is due to... Tesla stock... If he quits his job, Tesla stock would go through the floor.” (49:12, Felix)
• Mary: “No one ever does this. ... There are no conditions on this pay package. ... They’re like, just show up to work.” (48:41, Mary)
• Elizabeth: “There are apparently no conditions on this pay package where... could you for maybe 12 months or so, restrain yourself and not do unhinged things...” (49:56, Elizabeth)
• The board expects the previous award (from 2018) to be reinstated, and if that happens, Musk receives $58 billion not subject to income tax. If the new package is paid, it is taxable, so “he should seek to lose it.” (51:26, Felix/Mary)

4. Meme Stocks and the American Eagle/Sydney Sweeney Controversy (58:34–62:44)

• American Eagle’s stock surges 24% after a culture war controversy involving Sydney Sweeney’s double entendre ad (“genes/jeans”), amplified by support from President Trump.
  • Emily: “Apparently it’s one of the rare times that the president has truth[ed] or tweeted about a company and the stock has gone up. In previous cases, it has gone down.” (60:38, Emily)
• Felix: “It is a kind of amazing story... I’m quite sure that when they put this ad campaign together... they were not expecting to dominate the discourse about, you know, eugenics. And yet this is what happened.” (61:02, Felix)
• Elizabeth: “Does that kind of count as meme stock behavior? Even if it isn’t, say, a meme stock? Because there’s no underlying [fundamentals].” (60:47, Elizabeth)
• Mary: “It’s not a useful machine. ... A lot of people make a lot of money off of it, but I don’t think it’s a societally productive machine.” (61:52, Mary)

5. Market Numbers & Notable Trends (53:11–64:18)

Mary’s Number:

• $1.7 Trillion – the estimated size of the private credit market, which is moving toward public trading (63:13, Mary)

Elizabeth’s Number:

• 212,000 – estimated number of women (over age 20) who have left the US labor force recently, possibly due to return-to-office mandates and care-related burdens (55:18, Elizabeth)

Felix’s Number:

• $250 – the new fee for a US tourist visa, with rumors of $5,000–$15,000 bonds for certain applicants; part of Trump’s apparent war on tourism (56:34, Felix)

Emily’s Number:

• 24% – the surge in American Eagle’s stock price after Trump’s “truth” post supporting Sydney Sweeney and the brand (58:34, Emily)

Notable Quotes & Moments

• Mary Childs (on the “this time is different” debt thesis):
  “We now pay more in interest expense than we do on defense, which... you don't have to be a defense head to think that's a little crazy.” (04:15)

• Felix Salmon (on US debt and the bond market):
  “The market has learned to shrug off [debt ceiling brinkmanship]. The market… you don’t really think of them as super complacent, but with debt ceiling political brinkmanship, as S&P put it, it’s just like, ‘Yeah, they’ll figure it out. Call me when it’s a thing.’” (12:42)

• Emily Peck (on fiscal panic and political weaponization):
  “You foment fiscal panic. And then that really opens the door for a lot of scary stuff that… the White House is now moving into place, like entitlement cuts especially...” (18:14)

• Mary Childs (on nuance vs. politics):
  “It’s impossible to have this conversation because the second you talk about it, it gets weaponized and twisted... and becomes a blunt instrument used in ways you didn’t intend it.” (19:47)

• Felix Salmon (on quality and trust in measurement):
  “Certain countries, including the United States, have historically had really good national accounts, really reliable statistics, and that has helped them in innumerable ways. ... It’s part of the soft power that has helped cement US hegemony...” (35:59)

Tone & Style

The episode is lively, irreverent, and rich with colorful metaphors (“Wile E. Coyote over the cliff”, “outsourced holding of Treasuries to hedge funds”), but always comes back to serious implications. The hosts and guest strike a careful balance between policy wonkery, skepticism about political narratives, and a clear-eyed view of risk, all while maintaining a conversational, accessible approach.

Key Timestamps

• 03:06 – Start of the US debt/deficit discussion with Mary’s Harper’s article
• 05:49 – Japan vs. US debt, implications for the global bond market
• 08:56 – Political dynamics: who cares about deficits and when?
• 11:41 – Debt ceiling brinkmanship as an existential risk
• 15:25 – “Risk-free” bonds and the myth of credit risk absence
• 28:11 – Hedge fund “basis trade” and market structure
• 34:23 – Trump’s attack on statistical agencies and the fallout
• 40:00 – The role of trustworthy data in American economic dominance
• 48:04 – Elon Musk’s new $30B Tesla pay package
• 58:34 – American Eagle, Sydney Sweeney, and the stock’s meme-fueled spike

Conclusion

This episode deftly weaves urgent financial anxieties about American debt, the politicization of fiscal policy, fragile market plumbing, breakdowns of trust in public data, and the bizarre intersection of meme culture with financial markets. Listeners come away with a textured understanding of why today’s debt stress might be different, how politics both distort and weaponize economic debate, and why the “plumbing” of markets (literal and metaphorical) matters so much beneath the surface. The Slate Money team’s mix of humor and insight makes complex macroeconomics engaging and—thanks to Mary Childs’s star turn—remarkably clear.