In the following article, former Senator Alan Simpson (R-Wyoming) and one of the Chairmen of the Simpson-Bowles commission that President Obama did not listen to, says that neither candidate or party will address the approaching financial crisis. He is so right. We will hear sound bites but not legislation will be instituted. Instead, both parties are going to push the string as long as they can until they have used up every bit of capital they can put their hands on and then the world will come down on their heads. Only then will they find the guts to make the decisions that should be made now.
To make any moves now to prevent the catastrophe will be politically disastrous as the other party will claim their opposition is attacking poor people. In reality, it will be the poor people who will be hurt worst by a crisis. According to Simpson, “Where you talk about the most vulnerable in society and the odd thing is those are the people who are going to be hurt the worst by not doing anything.”
This article is good but also bad. It is frustrating to see that we know what we need to do but due to politics, we cannot or will not.
Maybe it is time to look for that "cave in the Adirondacks!" However, we would prefer something more nearby to which we could escape when the "s" hits the fan! Any ideas?
Conservative Tom
To make any moves now to prevent the catastrophe will be politically disastrous as the other party will claim their opposition is attacking poor people. In reality, it will be the poor people who will be hurt worst by a crisis. According to Simpson, “Where you talk about the most vulnerable in society and the odd thing is those are the people who are going to be hurt the worst by not doing anything.”
This article is good but also bad. It is frustrating to see that we know what we need to do but due to politics, we cannot or will not.
Maybe it is time to look for that "cave in the Adirondacks!" However, we would prefer something more nearby to which we could escape when the "s" hits the fan! Any ideas?
Conservative Tom
Fiscal Commissioner on Debt Crisis: 'You Better Get Yourself a Cave in the Adirondacks'
Former Sen. Alan Simpson (R-Wyo.) and Erskine Bowles, co-chairmen of the president's fiscal commission, at the National Press Clun in Washington, D.C. (AP photo)
(CNSNews.com) – Former Sen. Alan Simpson (R-Wyo.) said Tuesday the first presidential debate will “be the biggest tap dance since Fred Astaire,” and that neither political party in Washington is willing to tackle the country’s fiscal problems.
"You better get yourself a cave in the Adirondacks," he mirthfully said when asked what would happen if politicians did not deal with the debt.
Simpson, who along with Erksine Bowles co-chaired the National Commission on Fiscal Responsibility and Reform, appeared at George Washington University for an event on the upcoming election and the approaching fiscal cliff.
After the event CNSNews.com asked Simpson what he expects to see during the first debate on Wednesday evening.
“I think it’ll be the biggest tap dance since Fred Astaire,” he said. “There’ll be marvelous dancing and oh, it’ll be a joy.”
CNSNews.com then asked, “You mentioned that the debt, that would be one of the big things that you would like to see out of the debate, why do you think there hasn’t been much discussion about this $16 trillion debt in this election?”
“It’s because it’s too sensitive, and when you have people say these people are more interested in the debt than they are human beings, and on and on it goes,” Simpson said. “Where you talk about the most vulnerable in society and the odd thing is those are the people who are going to be hurt the worst by not doing anything.”
When asked which candidate he believes would better approach the debt and deficit, Simpson said neither President Obama or his challenger Mitt Romney would fix the problems.
“If they were going to deal with it, they would’ve done it,” he said. “I mean there’s a campaign going on, and neither one of them are dealing with it in any positive way that gets anywhere. They both talk about it, and they both like Bowles-Simpson and you get into specifics, and they’re gone.
“So they’re not going to deal with it – it doesn’t matter which candidate or candidate for Senate or the House,” Simpson said. “They’re not going to deal with these issues because they will get eaten by rats, by the AARP [American Association of Retired Persons] and Grover Norquist and the realtors.
"everybody out there got hit. We hit everybody,” he said of his deficit plan. “And that’s the only way this can work, and when you have 105 groups out there to rip up anything you do, then they’re not going to do anything. They’re not going to touch it.”
CNSNews.com then asked, “What happens if nothing is done?”
“Well, you better get yourself a cave in the Adirondacks and learn how to eat watery gruel and herbs and berries,” he said. “No, I tell you what’ll happen. The markets will shoot the hole through us.”
“And at that point – and you don’t want it to happen, and I don’t – and they don’t care about Democrats or Republicans or presidents. They care about their money,” Simpson added. “And they’ll say if any country is stupid enough to borrow $16 trillion bucks in the hole, then we’re just stupid enough—smart enough, maybe—to loan you some more money.
“And when they do that, then our country will take a real hit, and inflation will go up and interest rates will go up, and you and your young people your age will be the ones most affected, while the seniors and the money guys, most of them, will take good care of themselves,” he said.
The Simpson-Bowles National Commission on Fiscal Responsibility and Reform, appointed by President Obama, proposed a six-part plan to “put our nation back on a path to fiscal health, promote economic growth, and protect the most vulnerable among us.”
Taken as a whole, the plan, which was released in December 2010, would have achieved nearly $4 trillion in deficit reduction through 2020, more than any effort in the nation’s history.
Logic 101: You can't solve a problem if you don't understand what is causing it. Go here and look at this pretty colored graph….
ReplyDeletehttp://www.washingtonpost.com/blogs/ezra-klein/wp/2012/08/28/republican-national-convention-the-one-graph-you-need-to-see-before-watching/
It shows the causes of the debt up to 2019. The Bush tax cuts account for the lion's share along with the economic recession that began in 2008. The wars are in third place, but they will end by 2014. So the way out of the deficit hole is to end the Bush tax cuts and grow the economy by investing the increased tax revenue into job creation via infrastructure, public/private partnerships, job training, and so forth. As you know, I would also cut military spending down to reasonable size necessary for national defense.
Simpson-Bowles plan is balanced with about equal amounts of tax increases and spending cuts to total the $4 trillion reduction in 10 years. Half of the spending cuts have already been done, but no revenue. Alan Greenspan has said the best thing to do on the revenue side is just let all the Bush tax cuts expire on schedule. I agree. In itself, as Krugman says, that would dampen consumer demand and slow the economic recovery, but I think that could be offset by some economic investments in infrastructure, education, energy, etc. to reduce unemployment, which then increases tax revenue and reduces mandatory spending associated with the economic recession.
--David
I have not had time to look at the article, however, part of Simpson Bowles was the ending of home mortgage deductions and charitable deductions. The first will kill the home ownership in this country and the second will put a significant amount of chartities out of business. Neither of those are good.
DeleteGovernment spending on "infrastructure, education, energy..." will not do anything to get us out of this mess that we are in. It did not work in the Great Depression and it will not work in the Great Recession.
Dampening consumer demand is the last thing you want to do as the economy is 70% consumer spending. That is killing the weak economy. Exactly the wrong medicine.
Our debt is already above 100% of GDP and if we cut consumer spending it could go to 110% to 150% of GDP which really means bankruptcy.
The only way we got out of the Great Depression was military spending on WWII. Am I saying that we need to do that--no. However, I really do not have an answer as we are taking in $1 trillion less than we are spending. If we stopped all millitary spending, cancelled every government agency, and the income stayed the same, we then could pay our bills and have a balanced budget.
Our problem is that Social Security, Medicare and other "guaranteed programs" take up such a big part of the budget and they are untouchable.
We can nibble around the edges, but not attack the real problem.
The answer is to confiscate Americans IRAs, 401ks, 403bs, 457s and place them in the social security system to fund it. Without doing that, we have no future.
Annual Real GDP Growth Rates
ReplyDelete1930 1931 1932 1933 1934 1935 1936 1937
-8.6 -6.5 -13.1 -1.3 10.9 8.9 13.0 5.1
1938 1939 1940 1941 1942 1943 1944 1945
-3.4 8.1 8.8 17.1 18.5 16.4 8.1 -1.1
This is the data showing annual real GDP growth rates from 1930 to 1945. Not many people understand this. The economy was in free fall during the Hoover administration. Then, during the early years of the Roosevelt administration the spending on infrastructure took the real GDP growth rate from -13.1 in 1932 to +13 in 1936. That is a phenomenal turnaround in a short time.
The mistake was that they decided the problem was solved at that point and ended the Keynesian economic policy. Growth immediately declined in 1937 and then went back into recession by 1938. As you say, government spending for WWII brought us out of that second recession.
--David