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Fareed Zakaria GPS

Ukraine Faces New Russian Attacks After U.S. Pulls Support; Interview With New York Times Senior International Writer Katrin Bennhold; Interview With Dartmouth College Economics Professor Douglas Irwin. Aired 10-11a ET

Aired March 09, 2025 - 10:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[10:00:47]

FAREED ZAKARIA, CNN ANCHOR: This is GPS, the GLOBAL PUBLIC SQUARE. Welcome to all of you in the United States and around the world. I'm Fareed Zakaria, coming to you live.

(BEGIN VIDEOTAPE)

ZAKARIA (voice-over): Today on the program, on the heels of that Oval Office showdown between Presidents Trump and Zelenskyy, the White House this week paused critical military aid and intelligence sharing to Ukraine.

Can Kyiv fight on without it? I will talk to Ukraine's former minister of foreign affairs, Dmytro Kuleba.

Also, how to make Europe great again? Germany's likely next leader says he wants to make the continent independent from the United States. How is he planning to do that? We will explore.

Plus, Trump loves tariffs. That much is clear.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Tariff. Tariffs. Tariffs. It's a beautiful work, isn't it?

ZAKARIA: But have they ever really benefitted America? We will bring you a history lesson.

(END VIDEOTAPE)

ZAKARIA: But first here's "My Take."

Singapore plays its geopolitical cards carefully as a country that tries to maintain good relations with America in a region dominated by China. So it's worth paying attention when its defense minister says that the image of the United States has changed from liberator to great disruptor to a landlord seeking rent.

Its senior minister, Lee Hsien Loong, summed up the challenge the world faces. "The U.S. is no longer prepared to underwrite the global order. This makes the international environment far less orderly and predictable." In a few short weeks, the Trump administration has effected a

revolution in foreign policy. It has largely abandoned a long-standing democratic ally, Ukraine, whose security the U.S. has pledged to uphold since signing the Budapest Memorandum 30 years ago. In fact, it now asks for a big share of Ukraine's mineral wealth, which the administration describes as payback for American support.

Meanwhile, Washington declared a tariff war on its neighbors and closest trading partners Canada and Mexico, and demanded that Denmark sell it Greenland, and Panama hand over the Panama Canal. It has moved to withdraw from the World Health Organization, which the U.S. helped found.

It has tried to shutter most of its foreign aid programs to the world's poor, reversing a tradition of generosity that dates back to World War I. Its tariffs are clear violations of trade rules that Washington itself created and championed for decades.

These remarkable turnarounds are being noticed around the world and will result in a revolution in foreign policy everywhere.

Friedrich Merz, the man who is likely to become Germany's next chancellor, said recently, "My absolute priority will be to strengthen Europe as quickly as possible so that step by step we can really achieve independence from the USA. I never thought I would have to say something like this but after Donald Trump's statements, it is clear that the Americans, at least this part of the Americans, this administration, are largely indifferent to the fate of Europe."

Germany stood at the center of the security system the U.S. built after World War II. For that country to start shaking is a seismic shift. Merz has even raised the idea of France and Britain extending their nuclear umbrella to Germany because he's no longer convinced that the U.S. would defend his country. That American promise was the essence of NATO. But no one in Europe knows if Trump would actually honor it.

People in Taiwan have watched nervously as the Trump administration has turned on Ukraine. And rather than offering support against the predatory intentions of Taiwan's bullying neighbor, Trump has berated Taiwan for not spending enough on its own defense.

[10:05:00]

Many on the island now worry that Trump might make a deal with Beijing that leaves them abandoned like Ukraine.

All these American moves will have an effect. They will begin to usher in a new multipolar world. Major countries like Germany and Japan will inevitably look out for their own security. That could mean for Japan as well as for South Korea nuclear weapons become an attractive option, an insurance policy against aggression.

Under the U.S. security umbrella, the world has seen remarkably little nuclear proliferation. That could change dramatically. Every country will consider how to wean itself off dependence on the U.S. As countries seek independence from the U.S., they might also seek

alternatives to the dominance of the dollar. Europeans who are really the only ones who could mount an alternative might start issuing E.U. bonds which will be the most effective competitor to U.S. Treasury bonds. America's exorbitant privilege of owning the world's reserve currency which has allowed it to run up massive deficits at low cost might erode faster than we could imagine.

All these changes are gifts to Russia and China, whose goal has been to weaken America's power and presence in the world. As one Russia analyst said recently on GPS about Trump's Ukraine policy --

(BEGIN VIDEO CLIP)

ALEXANDER GABUEV, DIRECTOR, CARNEGIE RUSSIA EURASIA CENTER: It's indeed like Easter, Hannukah, Christmas, birthday of Vladimir Putin, and everything is happening on one day.

(END VIDEO CLIP)

ZAKARIA: To those who think it's high time that we change an international system that was so dependent on the U.S., have you weighed the cost and benefits? The United States has spent eight decades building an international system of rules, norms and values, that has produced the longest period of great power peace and global prosperity in human history. Its alliances are the greatest force multiplier for American influence around the world.

And America has been the greatest beneficiary of this system. Even now, decades later, setting the agenda and dominating the world economically, technologically, militarily. As this world unravels, America's privileged position will be also decline, creating a more dangerous and impoverished world and a more isolated, mistrusted and insecure America.

The post-American world is now in plain sight.

Go to CNN.com/Fareed for a link to my "Washington Post" column this week, and let's get started.

Ukraine's President Volodymyr Zelenskyy is heading to Saudi Arabia this week ahead of talks there between Washington and Kyiv. This is the first high-level engagement between the two countries since last week's clash between Trump and Zelenskyy after which the U.S. froze military aid and intelligence sharing with Ukraine.

So what does all this mean for Ukraine's fight against Russia?

Joining me from Kyiv is Dmytro Kuleba, who served as the country's foreign minister between 2020 and 2024.

Dmytro, welcome, and let me ask you first, what is the reaction in Ukraine among, you know, official circles, among people in the country's leadership, about what has happened in the transformation of American policy toward Ukraine? DMYTRO KULEBA, FORMER UKRAINIAN FOREIGN MINISTER: Hi, Fareed. It's

good to be back. Well, there are mixed feelings. There is a great deal of frustration. There is a sense of being abandoned. There is also a feeling of a certain surge in patriotism like we have to come closer to each other, we have to stand united. But overall we are learning how to live without America.

ZAKARIA: And when you say that on the front ranks, in -- you know, on the frontlines, what is the effect, particularly I wonder about the pause in intelligence sharing because I know that that has been crucial. U.S. has satellites all over. It has been able to provide information to Ukrainian troops.

How are Ukrainian troops handling this pause in aid and in information sharing?

KULEBA: Ukraine does not feel immediate effect of the suspension of arms delivery and intel sharing so far.

[10:10:03]

But the longer it takes, I mean, as the world will move on, this -- the impact will be felt more and more. And it will be detrimental. The moment will come when we will run out of Patriot interceptors and we won't be able to intercept Russian ballistic missiles hitting our energy facilities and peaceful cities.

This is how civilians are going to feel the impact. The moment will come when because of the shortage of intel sharing our army will not able to counter Russian actions as efficiently as it used to be. So we have to -- you know, we have to hold up. We hold on. We have to stay strong and seek for solutions to the problems created by the Trump administration.

ZAKARIA: What is your interpretation as to what happened last Friday in the Oval Office? Was this inevitable and was it personal at some level, that Trump and Zelenskyy just don't like each other? What is your sense?

KULEBA: Well, nothing is pre-determined, right? In principle, everything can be handled until certain point. And that was the case in the Oval Office. I don't think both sides were kind of happy, entirely happy with each other but they kept the emotions under control, and they held a sensible conversation. But then there was a moment when things went off the rail and that was a disaster of course.

So -- but whoever, you know, whatever happened in the Oval Office, what really matters is the consequence of what happened, and the immediate consequence that we observed was the suspension of military aid and intel sharing. So now, of course, you know, hats in both (INAUDIBLE) were cooled down, and I would expect that next context, the next conversation will be more diplomatic.

ZAKARIA: And when you say the effect hasn't yet been felt, we are getting reports that the Russians have launched major attacks on Ukrainian, you know, civilian targets, energy targets, that area around Kursk, which is the one part of Russia that Ukraine was able to conquer is now under threat. How precarious is this? How much are Russians on the move and how much are Ukrainians kind of holding the line?

KULEBA: Let me be clear on this. The longer we fight without America's support, the longer Europe is making up its mind on how to provide necessary practical assistance to Ukraine, the more visible consequences of the suspension of deliveries and sharing by the U.S. will become. So today, yes, you see that we are not doing as well as we did in the Kursk Region but we're doing better around the city of Pokrovsk, which was doomed to fall like months ago, right?

So of course there are some immediate effect but they will become visible and people will begin to feel -- to feel them over time. This is why it is so important to adopt necessary decisions now without delaying them.

ZAKARIA: Stay with me, Dmytro.

When we come back, we're going to talk to Dmytro Kuleba, former Ukrainian foreign minister, about whether Europe can fill the gap or is Ukraine really alone.

(COMMERCIAL BREAK)

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ZAKARIA: I'm back with former Ukrainian foreign minister, Dmytro Kuleba, who joins me from Kyiv.

Dmytro, you've written an article in "Foreign Affairs" saying this is now Europe's war. My question to you, though, is in the short run, in the next year, can Europe really do what the United States was doing? Does it have the supply of arms and ammunitions? Does it have the intel capacity to actually step in and replace the United States?

KULEBA: Europe has everything but time, and time becomes a crucial factor now. The sense of urgency is there. The understanding that America is gone is there. All the decisions necessary to actually ramp up production and procurement of weapons were taken. All they have to do is just to start implementing them.

Europe has a mixed record on that. Let's be frank. But under these circumstances, we can only hope and Ukraine will be pushing as hard as it can to make Europe act fast, because it's really like every day counts. It's not an exaggeration.

ZAKARIA: But when you think about this issue, is it -- what is the most urgent thing for Europe to do right now?

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Is it to develop an intelligence capability that it doesn't quite have yet? Is it to ramp up military production? You know, what is the thing that Ukraine needs most urgently from Europe? KULEBA: Unfortunately, two things that Ukraine needs more than

anything else, it's something that Europe will not be able to provide within a short term perspective. And these are Patriot interceptors to shoot down Russian ballistic missiles, and intelligence.

With all my respect to French, British and German intelligence, I highly appreciate their efforts. But, you know, they all -- let's be honest, they all relied on American intelligence for decades, so they cannot -- this is not the capability that you can build in a blink of an eye. It just takes time.

On everything else, especially on hardware, Europe is well-positioned to increase the production of tanks, cannons, artillery rounds, and this kind of -- and other types of military equipment. But again, everything takes time and we are not in a position to drown in any internal discussions anymore.

And this is why it is actually, you know, frustrating hearing the reports from the inside of the European Commission that despite the fact that all the decisions were adopted just a couple of days ago, France and Germany are still fighting each other to identify the best way to implement these decisions.

This is not -- like rearming Europe, defending Europe should be taken outside of the political discourse. This is not an issue where you can spend years, months, weeks and months debating on what to do. Just do it.

ZAKARIA: And you know, Donald Trump says that his goal here is to force a peace and that he, you know, both sides need to act. And he said it's easier actually to deal with Russia than Ukraine. Do you think there's any prospect that all this produces a ceasefire and some kind of peace?

KULEBA: Listen, we hear the word peace very often, but we don't see it around. When I look around, I see daily missile attacks. When I look around, I see daily on the ground offensive. When I look around, I see statements coming from Washington announcing another concession to Russia on Ukraine. I mean, this is not peace. This is the exposure of Ukraine to being destroyed by Russia under the slogan of bringing back peace.

So we have to be very clear with the terms that we are using. We all want peace. Europe wants peace. Ukraine wants peace more than anyone else. But real peace, not a peace that will first destroy Ukraine and then will destroy Europe, while the United States will be making great deals with Russia.

ZAKARIA: Let me ask you finally, Dmytro, you've been around for a long time. We don't have a long time. But very briefly, what is your reaction just as a Ukrainian, as a, you know, as a European to what has happened in America? What this transformation of policy? How do you, you know, do you understand it? What do you think is going on?

KULEBA: Well, America came to Europe 108 years ago amidst the First World War. Right? And for all, for a century, for slightly over a century, Europe forgot how to live without America. Now, it's time to remember these days -- those days. Now it's time to learn how to live not only on the assumption that America will not be in Europe, but also that America may openly bet against Europe.

But the biggest lesson that we all learned, I believe, is that there is no one you can genuinely rely on in this world in a long-term perspective because the moment will come when your interests and the interests of that other that you had relied on will come into conflict, which will push countries to self-sufficiency, to the limit, which is very hard to comprehend at this point. And this will be -- this will be a global trend.

And of course, the only -- this will all result in the growth of China's influence all over the world. It's regrettable to see how America dismantles America-led world, but that's the choice that the people of America made by casting their votes. And we have to learn how to live with it.

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ZAKARIA: Dmytro, as always, a pleasure to have you on.

We will be back.

(COMMERCIAL BREAK)

ZAKARIA: As I mentioned earlier, the likely next German leader, Friedrich Merz, said recently that his number one priority would be to quickly strengthen Europe so that it could achieve independence from the United States.

It's an extraordinary statement from a chancellor-in-waiting, especially one who is an old-school conservative and a traditional Trans-Atlanticist.

[10:30:00]

To understand what Merz is thinking I want to bring in Katrin Bennhold. She is the former Berlin Bureau Chief for "The New York Times," now senior writer for that paper.

Katrin, that is a remarkable statement. Do you think this is widely felt in Germany, that the United States no longer is the guarantor of German security that it has been for eight decades?

KATRIN BENNHOLD, SENIOR INTERNATIONAL WRITER, NEW YORK TIMES: Yes. I think the fallout in particular between President Trump and President Zelenskyy in the White House last week was very clarifying. And I think a lot of people have woken up to this idea that Europe has to go it alone now on security.

And in a funny way because, of course, Europe has been at war for the last three years and arguably since 2014 when Russia invaded Ukraine in Crimea. There should have been perhaps that wakeup call before and a kind of a threat perception that would have surged to a point of, you know, really investing massively in defense. But that moment really only arrived now.

ZAKARIA: And Merz has talked about something else, you know, which is revolutionary, which is for the Germans he is willing to break the ceilings on German debt, these are self-imposed ceilings, and spend really lots of money on defense. Is there again a consensus on this? Because he's going to be running a coalition government, probably with the social democrats. Is there a consensus that Germany can blow through these debt limits in order to spend big on defense?

BENNHOLD: I mean, the early polling we're seeing suggests that, you know, three in four Germans are behind this. And partly it's that it's not only an agreement for the special fund, you know, that will invest, you know, 400 billion Euros in defense, which is really a lot, if you recall, after the invasion, there was this moment when Olaf Scholz stood before the German people and argued in favor of a 100 billion increase in defense, an extraordinary sort of budget for defense at the time. And that already felt like a momentous shift. Now, we're talking about 400 billion.

But on top of that, we're talking about 500 billion in infrastructure investment. And I think it's those two things side by side which have buy-in with the Germans. And it probably took a conservative chancellor to get this done because the social democrats, to their credit, and the greens and others have argued for this, you know, for a long time, and Merz was opposed to it until very recently. So, this is a very big step for Germany and for Europe, because Germany is obviously the biggest economy in Europe.

ZAKARIA: Now, when you look at right wing populists in France and Italy, Giorgia Meloni, the prime minister, Marine Le Pen, the main opposition leader in France, they have both basically been very broadly speaking pro-Ukraine. Le Pen has gone back and forth, but she criticized Trump for his, you know, seeming abandonment of Ukraine. Meloni has been a staunch supporter of Zelenskyy and Ukraine.

What is the AfD's position here? It is the second largest party in Germany. It is Germany's far right party. Is there a danger that were they to do better and better, this whole transformation of German policy gets undone?

BENNHOLD: Yes, I think the real risk and you're talking -- you're basically mentioning this tension right now. We're in this moment -- it's a historic moment. We're basically facing this twin challenge of securing our democracies to external threats. And that's the sort of defense budget that needs, you know, ramping up rapidly across Europe in order to actually, you know, be able to defend our border, right, to an aggressor that is proven to be an aggressor in the recent years.

But beyond that, we have to secure our democracies on the inside. So, we kind of need that democratic resilience. And the AfD and other far right populist forces that have in this conflict sided with Putin, in fact, are a big problem for Germany.

And if I may just add one last thing, and it has been to me a big concern because Friedrich Merz is now negotiating yet another so- called grand coalition, although the parties involved aren't so grand anymore, the Social Democrats and the Christian Democrats are, of course, the traditional two opponents in Germany. And they used to be the sort of, you know, the two alternatives for voters in the postwar decades.

There was only one time in the sort of upheaval of the 1968 moment when a kind of government of national unity created a coalition between these two parties. Imagine Democrats and Republicans, going into government together, right, it's extraordinary.

But under Angela Merkel, we had three out of four terms in this constellation, and it really has eroded the sense among voters in Germany of having a real alternative. And it's one of the reasons, and you see it in the name of this far right party, Alternative for Germany, that the far right has grown strong. So, I fear and I think Friedrich Merz has a lot of work to do on that front, that this constellation risks, you know, reinforcing the AfD even more because it is the de facto opposition party.

[10:35:11]

ZAKARIA: Katrin Bennhold, thank you so much for joining us.

BENNHOLD: Thank you very much.

ZAKARIA: Next on GPS, Trump loves tariffs.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Tariffs are about making America rich again and making America great again.

(END VIDEO CLIP)

ZAKARIA: But what does history tell us about how Trump's tariffs will work? I will explain next.

(COMMERCIAL BREAK)

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ZAKARIA: One could argue that for many Americans, especially those of a certain age, most of what they know about the history of tariffs comes from a movie, the 1986 film "Ferris Bueller's Day Off."

(BEGIN VIDEO CLIP)

BEN STEIN, ACTOR: In 1930, the Republican controlled House of Representatives, in an effort to alleviate the effects of the -- anyone? Anyone? The Great Depression, passed the -- anyone? Anyone? The tariff bill, the Hawley-Smoot Tariff Act, which anyone? Raised or lowered? Raised tariffs in an effort to collect more revenue for the federal government.

(END VIDEO CLIP)

ZAKARIA: The actual history is even more interesting than Ben Stein's character, and those students certainly made it out to be. Here to tell us all about the history of tariffs is Douglas Irwin. He is a professor of economics at Dartmouth. He worked on trade policy in Ronald Reagan's Council of Economic Advisers.

Professor Irwin, welcome. The first question, I guess, I would put to you is give us a sense of what do Trump's proposed tariffs look like in comparison in historical terms? Now, when I say proposed tariffs, I know they switch on and off all the time and who knows where they'll be by tomorrow morning. But I mean, broadly speaking, the numbers he has used, 25 percent against Canada and Mexico, 10 to 20 percent against China, assume that were in that ballpark, what does that look like historically?

DOUGLAS IRWIN, PROFESSOR OF ECONOMICS, DARTMOUTH COLLEGE: Well, if you look at the history of U.S. tariffs, particularly over the last century, it's a true outlier. It would bring them up to levels we haven't seen since 1940s, not quite as high as Smoot-Hawley, in that clip that you just showed, which ultimately reached 60 percent. But it would push things up to about 20 percent. And that's because were hitting two of our largest trading partners, Canada and Mexico, ostensibly with 25 percent tariffs.

ZAKARIA: And it's fair to say, as you say, the chart, when you look at tariffs over the last century, particularly since the end of the World War II, is really one of very significant downward movement. You know, we've moved -- the whole world has moved into a free trade world. And fair to say that it has coincided with massive prosperity around the world?

IRWIN: Absolutely. Not only has U.S. income risen during this period quite dramatically, but particularly around the world. As countries have opened up to trade, and some came later, some came sooner they have experienced tremendous gains in income, massive reduction in poverty, particularly in the 1980s and 90s when there was this Reagan move towards freer trade.

ZAKARIA: It also strikes me, professor, that, you know, Trump sometimes talks about how we could use tariffs to replace the income tax. And, you know, that if you look at the math that is -- that is, you know, kind of impossible if you were to raise tariffs 10 percent on all goods coming into America. I think it would make up five percent or something like that of the federal government's revenues.

Once you have a big welfare state that pays out Social Security, Medicare, Medicaid you can't possibly fund it through tariffs. Am I right? You have to use income taxes.

IRWIN: That's absolutely right. So, there was a period when we could fund the federal government with tariffs alone. But that was before the civil war when government spending was only two or three percent of GDP.

We didn't have a welfare state and transfer payments. We basically just had, you know, funding of national defense and the national debt from the revolutionary war in earlier periods. So, in that case, the tariff was raised about 90 percent of the federal government's revenue and imports were the tax base of the economy.

But after the civil war, as the U.S. economy changed, as we had much greater government spending, and particularly after the introduction of the income tax, the share of revenue derived from the tariff has fallen to very low levels. It's only about two percent now. So, the idea that we could balance the budget or even come close to that by taxing imports more when imports actually are relatively small share of U.S. GDP, a small share of the economy, is very difficult to achieve. So, we unfortunately need income taxes and other taxes to balance our books if that's the way we want to move.

ZAKARIA: And when we put these tariffs on other countries it has become clear, will reciprocate. And then presumably, Trump has said we would reciprocate to that.

So, there's a -- there's a danger here. You end up in a tit for tat world. And in any case, once you put tariffs on, they're hard to take off because now you've created a protected domestic industry that's -- that's used to having no foreign competition or very little foreign competition, right?

[10:45:02]

So, I mean, where this is likely to be a one-way ratchet that just moves tariffs up all over the world, what would be the consequence of that?

IRWIN: Well, I mean, it would be lower standards of living, I think, around the world because you'd be interfering with international trade, which is this conduit for the exchange of ideas, technology, cheaper goods.

And you're absolutely right. When tariffs go up, they can go up very quickly. But bringing them down is a very slow process.

So, for example, you know the clip that you showed about Ferris Bueller talking about the Smoot-Hawley tariffs, which took tariffs to very high levels in the 1930s. It really took us until the 1990s to bring tariffs down to much lower levels. It was a very long, arduous process over many decades, and a lot of international trade negotiations. It wasn't something that happened very quickly.

And so, once we put these tariffs in place, even if future administrations want to expand trade and cooperate more with our trading partners, it's going to be a long road to get back to where we were.

ZAKARIA: Douglas Irwin, thank you so much.

IRWIN: You're most welcome. Thank you.

ZAKARIA: Next on GPS, I'll dig into where DOGE should be focusing if it actually wants to find money that can help cut the deficit.

(COMMERCIAL BREAK)

[10:50:56]

ZAKARIA: And now for the last look. In President Trump's speech this week, he said his administration had, quote, "found hundreds of billions of dollars of fraud," and taken back a lot of that money. But he spent much of his time just reciting an exaggerated list of grants that were not fraud but once he thought were wasteful.

The only example of fraud he gave was a canard from Elon Musk about millions of people with preposterous ages supposedly receiving Social Security. They may be listed in the database, but they are not receiving benefits, which cut off automatically at age 115.

Trump did cite a real government report from 2024, estimating fraud across the whole government at 233 to $521 billion a year, but consider that instead of focusing on fraud, Musk has pushed to shrink the federal workforce, whose total compensation in non-defense roles is about $250 billion. DOGE has also singled out USAID grants and DEI contracts, which account for less than one percent of the nearly $7 trillion federal budget.

Out of control government spending today isn't driven by overstaffing or foreign aid. It is from writing checks to take care of individual Americans. Three point six trillion dollars, 52 percent of the budget, goes to health care programs like Medicare and Medicaid. Income programs like Social Security and disability, and other forms of support like food stamps.

There is fraud in those programs, but it doesn't come from dead people. Take disability payments. The Social Security administration has dedicated investigators and prosecutors to crack down on fraudsters like this man who faked mental illness and lived in a mansion in Palm Beach.

Agents also regularly review whether recipients are still eligible, but fraud does get missed. They just don't have enough resources to catch it all. But for every dollar spent on various such efforts, taxpayers get back two to $8.00.

Outright fraud isn't the only problem. Social security does make overpayments, $11 billion in 2022, much of it due to human error. The inspector general said, better technology and data systems would help prevent this.

In fact, agencies say the two things they most need to tackle fraud are more resources and better data analytics. The first means more staffing and funding, and certainly not what Trump has done. Firing inspectors general en masse. Their job is to look out for waste and fraud.

The data side seems right in Musk's wheelhouse, but his tech wizards haven't actually focused much on improving the government's technology yet. By the way, it's not just Social Security where taxpayer dollars disappear. HHS estimates Medicare and Medicaid made over $100 billion in improper payments in 2023. One example a "Wall Street Journal" investigation found insurers had charged Medicare an extra $50 billion over three years by adding bogus or inflated diagnoses for patients. Of course, most government payments are correct and legal, so a serious conversation about deficit reduction would put the programs themselves on the table. Even unpopular ideas like raising the eligibility age for Social Security and Medicare.

Finally, remember, deficits are not just about spending, but about how much revenue the government takes in as well. Even before we talk about tax increases, in 2022 the IRS missed out on $606 billion that should have been paid in taxes. Democrats have provided more money for enforcement because the return on that investment is so good. But Republicans have fought this, and DOGE hasn't spared the IRS from large layoffs.

[10:55:04]

Meanwhile, Republicans want to blow a hole in the deficit by extending Donald Trump's tax cuts, which will cost to the tune of several trillion dollars over the next 10 years. Elon Musk said last week that without DOGE, America will go bankrupt.

So, if the crisis is so dire, let us not renew the Trump tax cuts, which would return us to Obama era tax rates, during which time the American stock market doubled and the U.S. economy grew faster than any major western country. But when you mention that suddenly the deficit hawks turn into chickens.

Thanks to all of you for being part of my program this week. I will see you next week.

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