The politics of tackling the deficit
TEXT OF INTERVIEW
Steve Chiotakis: This week, we’ll likely get more details about a bipartisan commission looking at the country’s rising deficits. President Obama has made it a priority to try to reign them in. Yet even getting a group together has been consumed by politics. Fortune Magazine’s Allan Sloan is with us this morning to talk about the huge deficits. Good morning Allan.
Allan Sloan: Good morning, Steve.
Chiotakis: When was the last time we got rid of federal budget deficits, and how did that happen?
Sloan: It was in the Clinton days, and what happened was that revenues came in much higher than people expected. The defense budget was starting to shrink, the guys in Clinton’s shop actually knew something about markets, and finally, there was gridlock in Washington, because Republicans controlled Congress and didn’t get to cut taxes, but they didn’t let the Democrats increase spending, so things took care of themselves.
Chiotakis: OK, so today, we have gridlock in Washington. But what do we do about the enormous deficits before us right now?
Sloan: Well gridlock now is not working to our advantage. Because there, things were fundamentally OK. Now, things are not fundamentally OK, and we’re going to have to cut spending a lot — which I doubt we’ll do — or increase revenues a lot with __ a national sales tax or something like that in order to make everything balance. And gridlock here is not our friend.
Chiotakis: How do you get those items through?
Sloan: Well, you’d like to think that maybe when push comes to shove, the people in Washington really are patriots and care about something other than getting themselves elected, and will engage in shared sacrifice, which will be hitting poeple like me by reducing our Social Security benefits, by putting in this tax, by curbing spending, and by acting like we’re a country instead of a collection of warring tribes.
Chiotakis: Alas Allan, they are politicians, though, in Washington, and there’s a lot of posturing going on over the deficit. I mean why should everyday Americans care about this?
Sloan: Because we and are children have to pay the bill for this, and one day if we are not careful we’re going to end up like Greece, whose problem is it owes a lot of money and in a currency it can’t print. One day, if we are not careful, people in the rest of the world will not take dollars, they’ll make us borrow euros or yuan or something that looks like a real currency, and it’s going to be really, really ugly.
Chiotakis: Fortune Magazine’s Allan Sloan with us this morning. Allan, thanks.
Sloan: You’re welcome, Steve.
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