Bill Clinton’s Solution to Debt Crisis: Punt
Former President Bill Clinton has a fool-proof plan to solve the debt problem: Cut spending and raise taxes . . . but not today.
ABC’s Jake Tapper (“Bill Clinton Network Exclusive: Proposes Debt Impasse Deal, but Fears GOP Too Hamstrung by Ideology“):
Former President Bill Clinton sees a possible way past the bipartisan impasse over raising the debt limit: agree to cut spending AND raise taxes, but do neither until later, after the economy improves.
“If they [the Republicans] said, look, that now is not the time for big tax increases to harm the recovery, they would be right,” Clinton told ABC News in an exclusive interview at the Clinton Global Initiative America conference in Chicago. “But it’s also right to say that now’s not the time for big spending cuts.
“What I’d like to see them do is agree on the outlines of a 10-year plan and agree not to start either the revenue hikes or the spending cuts until we’ve got this recovery underway,” Clinton added. “The confidence that the Republicans say would be given to investors with a budget plan, they’d get whether we started this year or next year or the year after that, for that matter.”
This does indeed help solve the short-term political problem of neither Democrats nor Republicans being able to do what’s necessary without alienating their constituencies. But it doesn’t do anything to solve the immediate crisis, either.
Stephen Green assigns this to the “Department of You Have Got to be Kidding Me” and snarks, “never put off until tomorrow that which can be put off until the day after tomorrow. Even if it can’t be!”
Repeat after me…there is no immediate crisis.
Clinton is dead right on this. It may go against the political chatter of the moment…but that political chatter is fundamentally wrong.
The markets aren’t clamoring for spending (borrowing) cuts. Interest rates remain at stupid low levels. No one is being crowded out of the market. Cutting spending means cutting jobs. Do we really want to cut jobs – government or private sector – right now?
Taxes are low, but have been for a decade. Raising them in a fragile recovery may not be the best idea. Any solution needs to be a balanced mix of spending cuts and revenue increases, but we don’t need to pull the trigger on that solution immediately.
Come to an agreement about structure and a trigger. Then step away.
I was wrong….the immediate crisis is lack of DEMAND.
Neither cutting spending or raising taxes will increase DEMAND.
We need to stop this debt ceiling nonsense and figure out how to increase DEMAND.
And a pox on anyone who even hints at supply-side solutions.
There is no debt crisis. There’s a debt problem, but it’s not a crisis. Unemployment is a crisis.
Unemployment is around 10%, we’ve been postponing infrastructure work and deferring maintenance for years, and interest rates are basically 0%. Why are we not repainting every classroom across America? Why aren’t we replacing sewer lines that are over 50 years old?
Even if we ignore the stimulus effect, with 10% unemployment, this is the time we can get a lot of this work done cheap.
And exactly how will we pay for all that infrastructure work, No. 3? With magical unicorns dropping stacks of money on school districts and transportation departments? Or by sending the umpa lumpas to shake the money trees growing along lollipop lane? Or perhaps we should replace every sewer system in the country and repaint every schoolhouse in the country simply by printing money like Weimar-era Germany did and then by having money parades with money confetti.
Were you literally smoking crack when you wrote that comment?
In any event, it’s not surprising to see Wild Bill vomiting up a non-plan plan. This is after all a man who literally governed by opinion poll.
The solution is quite simple: Raise the debt ceiling to avoid the specter of higher interest rates. Simultaneously engage in massive spending reductions (in real and not merely nominal terms). Leave tax rates alone. Then tackle the unemployment calamity with some common sense reforms, e.g., general tort reform, class action lawsuit reform, medical malpractice reform, expanding nuclear energy, expanding oil drilling, some form of amnesty / safe harbor in connection with immigration reform, repealing Obamacare, more free trade pacts, less environmental regulation. Don’t hold your breath, however.
@Tsar Nicholas: Good idea, Tsar. We’ll build nuclear plants and drill for oil wherever the big companies want, and we’ll wipe out environmental regulations so that they can dump toxic waste into the air and the water, but first we’ll make sure that if/when people are seriously injured or killed, they can’t sue for redress. It’s a perfect Republican scheme — the rich will get a lot richer, and when the poor die off, the rich won’t have to hear them.
I have a fool proof solution to the debt crises… undo everything Bush II did.
It is called an investment in the future Tsar…. You do do understand the concept, don’t you? As to how will we pay for it? It is called “taxes”… and for the record we live in the richest country in the world and if I heard right today, only 1 country pays less tax per GDP… Japan.
Go ahead, tell me how Eisenhower was wrong for investing in the interstate highway system…. go for it. But I won’t listen to how I hurt your fee fees with my loud guffawing.
A ten year transition on tax and spending is exactly right and rational. The house interest deduction, for instance, should be faded out over ten years. Federal gasoline tax should should cover more road maintenance, and a gentle 10 year increase is fair.
And of course cutting domestic spending or increasing tax dramatically, in a sluggish recovery, does hit the brakes.
The slump is still the “immediate crisis.”
That’s it…tort reform…how could we have all missed that solution…it’s so obvious. Jesus god how f’ing stupid…never mind.
I think the United States has been kidnapped long time ago by the big armaments companies that are sucking our money by keeping the mislead idea that some Talibans are coming to terrorice USA. Cut military and armaments spendings and close the two active military theaters and in 5 years we balance almost anything. Lets us not forget that we are the dumber one nation on armaments spending in the world.