The Mar-A-Lago Accord: Trump’s Plan for the National Debt
Weekly Investment Update | By Brian Schreiner
There is bipartisan recognition that the $36.5 trillion federal deficit represents an impending crisis. Federal Reserve Chair Jerome Powell has said several times that the debt is on an "unsustainable path" and has urged politicians to change its trajectory. Others agree.
Peter Orszag, who served as Director of the Office of Management and Budget from 2008 to 2011, described the national deficits as "serious and ultimately unsustainable.”
David Walker, the U.S. Comptroller General from 1998 to 2008, compared the U.S. government's fiscal trajectory to that of the declining Roman Empire, emphasizing the unsustainable nature of federal deficits and commitments.
Janet Yellen, Treasury Secretary under President Biden has consistently highlighted the urgency of addressing the national debt. In December 2024, she warned Congress that "extraordinary measures" would be necessary to prevent the U.S. from hitting its debt ceiling, underscoring the critical nature of the situation.
Last Thursday, on the MacroVoices podcast Jim Bianco explained, “The Mar-A-Lago Accord,” which represents a bold strategy to restructure U.S. debt and stabilize the global financial system. Bianco said several times in the interview that the U.S. has a real debt crisis and that something has to be done and that, due to the overwhelming nature of the problem, it’s going to take “bold and brash thinking.”
Bianco didn’t say he fully supported the plan, but I think he’s right - it’s the kind of outside-the-box thinking that would be necessary to make any real progress.
It’s a three-pronged plan and the main pillars are ideas that are likely the work of Stephen Miran and Zoltan Pozsar, both of whom have worked on Wall Street and in the Federal Government and now have the ear of Scott Bessent, the new Treasury Secretary.
The first prong is Tariffs. Trump sees tariffs as both a negotiation tool (e.g., pressuring Mexico and Canada) and a revenue source. He has even proposed an "External Revenue Service" to collect tariffs instead of relying solely on income taxes.
The second prong is the U.S. sovereign wealth fund, which Trump just established. The proposed plan would monetize U.S. assets, including gold reserves and bitcoin. The U.S. may have as much as $800-$900 billion in gold and about $12 billion in bitcoin from fraud seizures.
The third and most controversial part of the plan challenges the U.S.'s post-WWII global security arrangement. For 80 years, the U.S. Navy has protected global trade without direct compensation, in exchange for geopolitical alignment with the West. Trump wants allies, especially NATO countries, to start paying for this security.
Trump’s proposal includes requiring NATO countries to spend 5% of their GDP on defense and potentially swapping their U.S. Treasury debt for 100-year, zero-interest bonds. If they refuse, the U.S. might withdraw security guarantees and/or retaliate with tariffs. The Federal Reserve could provide liquidity to these countries by offering loans against these bonds.
The Mar-A-Lago Accord reflects Trump’s populist economic philosophy; shifting costs away from middle-class Americans while pursuing policies like making his tax cuts permanent and eliminating tax exemptions for sports teams. His broader economic vision, influenced by figures like Miran, Pozsar, and Bessent, is starting to take shape through policies like the sovereign wealth fund. But the Accord isn’t without risks both of the known and unknown variety. α
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Interesting things I came across this week…
How Much Gold Exists for Every Person on Earth? (Visual Capitalist)
Peter Zeihan: Global Economic Growth; or Should I Say Decline (YouTube)
Household Debt Passes $18 Trillion, a Record High (Advisor Perspectives)
14 states sue Musk & Trump, calling Musk’s role unconstitutional (The Hill)
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