Podcast Summary: Tangle – Preview Episode with Isaac Saul and Noah Smith

Episode Information

• Title: PREVIEW - Isaac talks with Noah Smith
• Host: Isaac Saul
• Guest: Noah Smith
• Release Date: August 7, 2025

Introduction

In this preview episode of Tangle, host Isaac Saul engages in a compelling conversation with economist Noah Smith. Known for his incisive economic analyses and willingness to critique his own liberal leanings, Smith provides a nuanced perspective on pressing economic issues, particularly focusing on the national debt, interest rates, and inflation in the current political landscape.

Revisiting Past Views on National Debt

Isaac Saul begins by reflecting on a previous interview conducted in 2021, where Smith expressed a relatively untroubled stance on national debt and deficits.

"[00:58] Isaac Saul: ...we'll have plenty of warning signs if things are getting bad."

Contrastingly, in a recent piece titled "It's Time to Start Panicking about the National Debt" published in March, Smith adopts a more alarmed tone. This shift underscores the evolving economic conditions and their impact on fiscal policy viewpoints.

Shifting Concerns: Interest Rates and Inflation

Smith delves into the primary factors driving his newfound concern over the national debt: interest rates and inflation.

"[06:28] Noah Smith: ...if the Fed doesn't raise real interest rates to quell inflation, inflation pushes up nominal interest rates..."

He explains that rising interest rates increase the government's cost of servicing debt, exacerbating fiscal challenges. This scenario is compounded by the necessity of rolling over existing debt, which becomes more expensive as rates climb.

The Consequences of Sustained Low Interest Rates

Smith critiques the prolonged period of low interest rates, which emboldened successive administrations to accumulate debt without adequate plans for repayment.

"[07:42] Noah Smith: ...interest rates went down and down and down for years... they thought interest rates were never... going up."

This complacency has led to a precarious situation where the current rise in interest rates threatens to destabilize the national debt framework.

Evaluating Fiscal Policies Across Administrations

Tracing the trajectory of U.S. fiscal policy over the past few decades, Smith highlights missed opportunities by both Republican and Democratic administrations to responsibly manage debt.

"[12:30] Noah Smith: ...Obama and the Republican Congress together bear some of the blame for that."

He contrasts the 1990s fiscal discipline under Bill Clinton with the subsequent decades of tax cuts and spending that neglected debt reduction, setting the stage for the current economic challenges.

The Impact of Trump's Reconciliation Bill

Isaac Saul probes into the effects of the recent Trump-led reconciliation bill, questioning whether it alters Smith's assessment of Trump's role in the national debt crisis.

"[11:00] Isaac Saul: ...the reconciliation bill... how you sort of place his role in this."

Smith responds by contextualizing the bill within broader fiscal missteps, asserting that Trump's tax cuts during a period of economic strength further entrenched debt issues.

"[12:30] Noah Smith: ...Trump came in... cutting taxes again... missed the opportunity to do what Bill Clinton did..."

Debating Potential Solutions: Cutting Interest Rates vs. Managing Inflation

The conversation shifts to potential strategies for mitigating debt concerns, specifically the proposition of reducing interest rates to ease debt servicing.

"[16:50] Isaac Saul: So is there a case to be made... if the Fed cuts rates..."

Smith acknowledges that while cutting rates could alleviate debt pressures, it risks igniting inflation, drawing parallels to Turkey's economic predicament.

"[17:13] Noah Smith: ...Turkey reached... 55% inflation."

He emphasizes the delicate balance between managing debt and preventing runaway inflation, highlighting the political unviability of tolerating high inflation rates in the U.S.

Considering a Soft Landing Amid Current Economic Indicators

Isaac Saul raises the topic of a soft landing, where inflation is curtailed without derailing job markets or economic growth. He queries whether the current economic indicators suggest such an outcome has been achieved.

"[22:07] Isaac Saul: ...soft landing territory. How you read the situation, if that feels right to you or not."

Smith reflects on past instances where wage growth kept pace with inflation, mitigating public discontent. However, he notes that recent trends show real wages stagnating, fueling frustration despite decreasing inflation rates.

"[19:48] Noah Smith: ...inflation increases prices... make the debt easier to pay..."

Final Thoughts: Navigating Fiscal Challenges Ahead

As the discussion winds down, both participants acknowledge the complexity of the current economic landscape. Smith underscores the importance of proactive fiscal management to prevent the debt from spiraling out of control, while Saul contemplates the political hurdles in implementing necessary policies.

"[22:01] Isaac Saul: ...cost was such a central part of the 2024 election."

The episode encapsulates a critical examination of U.S. fiscal policies, the interplay between interest rates and debt, and the broader implications for future economic stability.

Conclusion

This preview episode of Tangle offers listeners a thought-provoking dialogue between Isaac Saul and Noah Smith, shedding light on the intricate dynamics of national debt and economic policy. With Smith's informed perspectives and Saul's incisive questioning, the conversation provides valuable insights into the challenges and potential strategies for navigating the nation's fiscal future.

Notable Quotes

• "If you don't pay for it in the bust or in the emergency, when are you going to pay for it?" — Noah Smith [06:28]
• "Interest rates went down and down and down for years... they thought interest rates were never... going up." — Noah Smith [07:42]
• "Trump came in... cutting taxes again... missed the opportunity to do what Bill Clinton did..." — Noah Smith [12:30]
• "Turkey reached... 55% inflation." — Noah Smith [17:13]
• "Inflation increases prices... make the debt easier to pay..." — Noah Smith [19:48]
• "Cost was such a central part of the 2024 election." — Isaac Saul [22:01]

About the Hosts and Contributors

• Isaac Saul: Executive Editor and Founder of Tangle.
• John Law: Executive Producer, handling editing and engineering.
• Ari Weitzman: Managing Editor.
• Will Kaback & Audrey Moorhead: Senior and Associate Editors.
• Music Production: Diet 75 and John Law.

For more insights and exclusive content, visit readtangle.com.