To those on the hill and elsewhere who suggest this growing ‘fiscal cliff’ and ‘debt ceiling’ crisis will all get solved, former Office of Management and Budget (OMB) Director David Stockman tells Bloomberg TV that “they will punt, punt, punt and kick the can with partial solutions driven by eleventh hour crisis-based extensions that will go on for the whole of the next term!” When asked whether this economy will be mired in the doldrums, he rather ominously states “it will be worse, because we will be in recession” and notes that when the lame ducks re-look at the budget numbers with a realistic recession (instead of the current assumption of no recession within 12 years) it will be far worse and in a political environment where ‘we cannot possibly raise taxes – and we cannot possibly cut spending’. With a 78% disapproval rating for the ‘do nothing’ Congress, Stockman is surprised that 16% somehow approve – approve of what? His warning is that unlike in past periods, today “we are completely paralyzed, there is an ideological divide on taxes and entitlement like we’ve never had before” and while he realizes that “the debt problem doesn’t become a debt problem until the market suddenly have a wake up call and realize that if the Fed doesn’t keep printing, it’s game over.”
“The fact that rates are so low is not a reflection of the US as a safe-haven but a bet on the Fed not allowing rates to rise.”
“The perverse low-rate environment simply tells Congress that they can borrow a trillion dollars for 10 billion a year.”
If rates rose then it would break this huge partisan stalemate we have today”
“There is a huge costs to stalemate!”
In a little under six minutes, David factually describes the certainly-not-priced-in dismal reality of the political situation we face in the next few months… must watch…
America has been at the end game ever sense 0-bama became President. Only reason it’s not had more recognition is because of the MSM being owned by 0-bama.
America was in the final minutes BEFORE Obama became President, Common sense.
Yep. Clearly the solution is to cut corporate tax rates, capital gains rates, and tax rates for the top 1% or 2% even further. That will certainly help control the growth of the national debt. Exactly as it has done, every time it’s been tried in the past . . .
@Greg: Clearly 0-bama’s approach is a failure that America can no longer survive. He promised America that if we elected him President and gave him $830 billion he would turn our economy around. He failed to do so yet of course spent the money and added roughly $5 trillion to our national debt in record time!! You must be proud of your black messiah!! No need to blame Bush on this one, that excuse is long since passed. 0-bama didn’t have to endure 9/11 or the war on terror as Bush did.
@Ivan: 0-bama said he could fix it if we gave him $830 billion and elected him President. He failed!!
Hey, that’s what Rush Limbaugh hoped for, isn’t it? Surely he’s so pleased he’s jiggling like a bowl full of jelly.
Of course, it would have been so much better if the skyrocketing unemployment rate hadn’t been reversed by mid-2009, if General Motors had failed instead of recovering, if no one’s unemployment insurance had been extended, if food stamps had been cut, if the U.S. government had defaulted on its debts, and if Osama bin Laden were still enjoying a comfortable retirement in some unknown location.
Then Rush would really have something to jiggle with delight about.
Hey, how about that Ben Bernanke today? I think the message to Congress was something along the lines of Snap the f–k out of it and make some necessary compromises, or we’re all totally screwed. But more politely worded, of course.
Not much chance of that, unfortunately, with an election coming up.
I certainly hope your statement is not allowing a hall pass to the Dems in Congress, Greg. What did Bernanke say the problem was, and suggest? uh… Entitlements are killing us. And that Congress needed to control the deficits. He also said to avoid the tax hike that happens if the Bush tax cuts are not extended. Notice he didn’t mention any particular 2% of the taxpayer demographics.
Now, who is avoiding entitlement reform, and instead loading up more of the nation’s citizenry on Medicaid entitlements by O’healthcare?
Who is predominately refusing to curtail spending?
And who is holding the Bush tax policies hostage over the paltry amount that is but a small percentage of the entire tax revenue of those policies?
I’ll certainly agree that the Republicans are not towering over the Dems in some of these, but they have made the moves and proposals to do just that, and Reid has blocked them at every turn.
@MataHarley, #7:
Nope. But I’m pretty sure they’ll hold the line against any one-sided approach to moving the budget toward balance. Bernanke notwithstanding, it’s going to take both tax increases at every level and spending cuts in nearly every category to actually accomplish that.
Nobody likes the truth, but there it is.
Bernanke and economists disagree with your tax hikes, Greg. Not at this stage in a non recovery.
The Dems are holding the line for political capital… there’s an election coming up. Republicans are trying to push the line for political capital.. there’s an election coming up. Those that want to continue to feed at the government teat will vote for the Dems. Those that want an American economic recovery won’t. Who is there more of? Well, it’s getting darned close to half that are living on government welfare of some sort, not to mention off the taxpayers payroll. But I guess we’ll find out in November.
@Greg:
Economics never was your strong suit, Greg. You can demagogue almost as good as Obama does though, so I have to give you credit for that.
@Common Sense: I know he did. But, let’s not lay all the blame at his feet.
It’s called being intellectually honest-a rare commodity here at Flopping Aces.
Republican Senator Tom Coburn of Oklahoma, Sunday, July 15, speaking sense.