George Kamel - Warren Buffett's Brutal Plan to End America's Debt in 5 Minutes

Starting point is 00:00:05 In case you missed it, billionaire investor Warren Buffett said he could end the national deficit in five minutes. And he explained how to do it in a CNBC interview back in 2011. So there's a good chance you missed it. Fast forward to the current present daytime. A clip from that interview has resurfaced. Elon Musk has entered the chat. And now a U.S. senator is proposing an actual amendment to the Constitution based on Buffett's idea. About time, guys.

Starting point is 00:00:28 Only took you 14 years. That's the government for you. How'd that happen? You know, I guess I just forgot. So, what is his big plan for ending the deficit? How did Elon get involved? And also, what's the deficit again? In today's video, we'll break it all down in simple terms to see if this plan is actually feasible

Starting point is 00:00:44 and how it would affect you and your money. All right, let's start with the basics. What exactly is the deficit? Think of it like this. If your household spent $6,750 this month but only brought in $4,920 this month, you would have a deficit of $1,830.30. That's a little minus sign in front of that. That's basically what the government does, except add about nine zeros to those numbers, and it happens every single year.

Starting point is 00:01:09 Seriously, those are the real numbers. Just add nine zeros to it. The deficit is simply the difference between what the government spends and what it collects in taxes and other revenue. So government spending minus government revenue equals deficit. Simple enough, right? Well, I hope you've got a huge calculator because in 2024, the national deficit was $1.83 trillion. That's a trillion with a T, and a trillion is a $1.2 million is a $1. thousand billions. And that number is so big, it's hard to wrap your head around it. And it's also

Starting point is 00:01:38 hard to know exactly how bad that is unless you have more information. So, the deficit is often talked about as a percentage of GDP. And a reminder, in case you fell asleep in your high school econ class, GDP is gross domestic product, or the total value of everything produced in the country. It's basically the country's total income for the year. So when we look at the deficit as a percentage of GDP, we're basically asking, how big is this deficit compared to the size of our entire economy. Answering that question helps us get a more accurate picture of the whole situation. Because owing someone a thousand bucks when you make 100,000 a year is a lot different than owing someone a thousand bucks when you make 10,000 a year. Same debt, very different impact

Starting point is 00:02:15 on your life and your ability to pay it off. So here's how this played out last year. In fiscal 2024, the U.S. economy generated 28.83 trillion in GDP. Impressive, right? Meanwhile, the federal government spent 6.75 trillion and collected 4.92 trillion in revenue, leaving us with that 1.83 trillion deficit we mentioned earlier. Now, 1.83 trillion divided by 28.83 trillion, multiplied by 100 equal 6.3. So our national deficit was 6.3% of GDP. Still tracking with me? Wake up. Eyes up here. You couldn't handle my undivided attention. Now, to be fair, the U.S. government has been spending more than it collects, for years. In fact, the last time we had a budget surplus was in 2001, 24 years ago, back when Donald Trump's most notable accomplishment was arguably his cameo in Home Alone

Starting point is 00:03:08 too lost in New York. Either that or Little Rascals or Zoolander. Forgot about that one, don't sleep on the Zoolander cameo. It's not easy doing what I do, is it? Anyway, Republicans blame Democrats, Democrats blame Republicans, and meanwhile, the deficit just keeps growing like Trump's IMDB page. But Warren Buffett, billionaire chairman and CEO Berkshire Hathaway said he knows how to fix it. And believe it or not, the Oracle of Omaha's entire plan fits on a single post-it note. Here he is in a 2011 interview with CNBC. You just pass a law that says that anytime there's a deficit of more than 3% of GDP, all sitting members of Congress are ineligible for re-election. Now you've got the incentives

Starting point is 00:03:46 in the right place, right? So it's capable of being done. So let's recap. Buffett's solution to end the deficit in five minutes is to pass a law that says when there's the deficit of more than 3% of GDP, no one in Congress should be re-elected. Now, he probably said this half-chokingly, like when you tell your kids that if they don't clean the rooms, you're going to sell them to the circus. But some people seem to think this idea might actually work. And to be fair, I think that's the plot of the greatest showman. So never say never. But why is Buffett's plan back in the news 14 years later? Well, it all started when Utah Senator Mike Lee reposted the video on Twitter, which I still refuse to call X, asking the public, would you support this? Shortly,

Starting point is 00:04:26 after owner of Twitter, Elon Musk replied, 100%, this is the way. But apparently, Mike Lee wasn't just trolling for engagement. He seems to be serious about this. He wrote, I am drafting a constitutional amendment to oust every member of Congress whenever inflation exceeds 3%. Now remember, Buffett was talking about the deficit, but Lee threw inflation into the mix here. So is he just getting confused or does he actually mean inflation? Well, here's the thing.

Starting point is 00:04:50 Economists have noted a connection between excessive government spending and inflation. The late Nobel Prize-winning economist Milton Friedman said, quote, what produces inflation is too much government spending and too much government creation of money and nothing else? Adding, quote, only Washington can create money. So maybe the senator is tying inflation to the deficit, but my guess is that he's adjusting Buffett's plan to make it about something Americans care more about.

Starting point is 00:05:16 I mean, I don't hear a lot of people talking about the deficit, but try opening TikTok without seeing someone complain about inflation. And that might be why some people love this idea. In theory, it could incentivize Congress to be more fiscally responsible. But I have a feeling some people just want to blame and punish someone else for their financial problems. And not everyone supports this plan. Some would argue this is a terrible idea because you're essentially holding Congress accountable

Starting point is 00:05:38 for things that aren't completely within their control. Like a recession, a pandemic, a war, global markets, supply chains, the comeback of crocs, things nobody could predict. I mean, who could predict that children and adults alike would be wearing crocs in public with no shame? How little shame you ask? Well, what if we got little gibbits we could add into our crock to add a little flair and tell you about our personality? You've told me enough about your personality when you're at crocs in public.

Starting point is 00:06:02 Stop doing it. If you're under five, you get a pass. Over five, get a clue. Get some Velcro Skechers. I don't care. Some hey dudes. Rant, over. Are we done?

Starting point is 00:06:14 Now, there is a chance you would have a complete turnover of Congress nearly every year of this passed, which I have to think would not be ideal, because like them or not, you'd be losing institutional knowledge and experience. It would kind of be like if Subway hired new sandwich artists every single day, and the guy making your seafood sensation sub had no idea where they even keep the sensation. So how likely is this to become law? I'll tell you what I think. But first, I'll tell you what I think should be against the law, and that's data broker selling your info to spammers and scammers. And that's why I use Delete Me, one of the sponsors of today's video. It seems like every other day there's a new scam to watch out for, but Delete Me helps cut the risk by removing your info from

Starting point is 00:06:50 hundreds of data broker websites. And they don't just set it and forget it. There's real data privacy experts that are working behind the scenes all year long to help protect you. You'll even get personalized reports so you know what they removed from where and how much time they've saved you. And with my special link, you can get a discounted plan that comes out to about $9 bucks a month. So to get that deal, go to join delete me.com slash George or click the link in the description below. And while I'm on a rant about things that should be illegal, how about earning 0.03% on your savings? That should be against the law guys. And that's what a lot of people are with in a traditional brick-and-mortar savings account.

Starting point is 00:07:23 And that's why you need to switch over to Laurel Road, one of the sponsors of today's episode. With online bank, Laurel Road, your account balance earns top-tier APY. So you could be earning some sweet interest on that emergency fund and your short-term savings. And best of all, there's no minimum balance required to open an account and your deposits your FDIC insured. And fees, they don't do fees.

Starting point is 00:07:42 They're not worried about fees. You shouldn't be worried about fees. They're not going to ding you with junk fees. So go check them out at Laurelroad.com slash George or click the link in the description. to get started. So how likely is this Musk-endorse version of Warren Buffett's idea to become law? Well, here's the thing. For this to become a constitutional amendment, Congress has to vote for it. That's right. Think about it. Congress would have to vote for an amendment that would likely get them fired. That's like asking turkeys to vote for Thanksgiving. And remember, Buffett's threshold was

Starting point is 00:08:09 3% of GDP. Last year, we hit 6.3%. So by Buffett's rule, every single sitting member of Congress would be out of a job. All 535. them. And inflation last year was at 2.9%. So if we go with Mike Lee's version, these turkeys are barely hanging on by the skin of their wattle. You know the fleshy coruncle flapping on their neck? That's the scientific word. Someone said, caruncle. And they just went for it in the marketing meeting. Gobble, gobble, gobble. Anyway, call it a hunch, but I don't think this is likely to pass in my lifetime or anyone else's. So how does this all affect you and your money? Well, honestly, there's not much you can do about the national deficit

Starting point is 00:08:47 unless you're sitting in Congress or your name rhymes with Ronald Dump and you had a cameo in Home Alone too lost in New York. But you know what you can control? You. Your own financial situation. Your own personal deficit. Say with me now, what happens in your house is more important than what happens in the White House.

Starting point is 00:09:05 Breathe into your pelvis. I would be the worst yoga instructor. You can say that again. And here's the big beautiful thing. Balancing your own budget is way easier than balancing the nation's budget. You don't have to negotiate with 534 other people. You don't have lobbyists breathing down your neck, and you don't have to worry about getting reelected.

Starting point is 00:09:21 You don't even have to know where Subway keeps the sensation. Now, the app that I use to balance my budget is called Every Dollar. And for over a decade now, it's helped me live on lesson I make, giving me a surplus every month instead of a deficit. It's a free download, it's super easy to use, and it does the math for you. So if you want to check it out, click the link in the description, or go to every dollar.com slash George to get started. And if you want to see me walk through step by step how to create your first budget,

Starting point is 00:09:44 Keep watching this next video by clicking here or click the link in the description. That's it for today. If you enjoyed it, hit those like and subscribe buttons and share this video with everyone from the cast of Home Alone too, even the Pigeon Lady. You know what? Especially the Pigeon Lady. Thanks for watching. We'll see you next time.

George Kamel - Warren Buffett's Brutal Plan to End America's Debt in 5 Minutes

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.