IT IS IMPACTING OUR ECONOMIC
GROWTH BECAUSE IF YOU HAVE TO
PAY THAT DEBT, OBVIOUSLY, MONEY
GOING TO THAT, THAT COULD HAVE
BEEN GOING TO A MYRIAD OF OTHER
USES ROBBING THE ECONOMY OF A
PICKUP, AND NOW OF COURSE THE
CONGRESSIONAL BUDGET OFFICE
SAYING IT IS GOING TO DO THAT,
BUT AGAIN THEY'RE LUCY GOOSEY
WHAT THE OVERALL IMPACT WILL
BE, THERE IS NO WAY TO QUANTIFY
THIS.
THE FORMER CHAIRMAN OF THE
PRESIDENT BUSH'S COUNCIL OF
ECONOMIC ADVISERS, ED LAZEAR.
WHAT THEY ARE SAYING IS
AFFECTING THE FED.
>> I SAW YOU THIS MORNING, I
HOPE YOU'RE GETTING OVERTIME
PAY FOR THE SECOND SHOW.
THAT'S A SEPARATE ISSUE, BOY,
AM I ON IT.
IT'S INTERESTING THAT THIS DEBT
IS GROWING AND GROWING
EXPONENTIALLY, DOESN'T TAKE A
LOT WHEN IT GO GROWS A
TRILLION A YEAR, WE'RE DODGING
A BULLET, YOUR ARGUMENT IS NOT
FOR LONG, RIGHT?
>> THAT'S RIGHT.
IF YOU LOOK AT EITHER THE
CONGRESSIONAL BUDGET OFFICE'S
NUMBERS OR OFFICE OF MANAGEMENT
AND BUDGET, THE WHITE HOUSE'S
NUMBERS, EVERYBODY KNOWS WE'RE
THOSE NUMBERS START TO HURT US
EVEN IN THE SHORT RUN BECAUSE
THEY PUT PRESSURE ON OTHER
PARTS OF THE BUDGET, BUT LET'S
TALK ABOUT THE LONG RUN FOR A
MOMENT.
IF YOU USE THESE NUMBERS AND
SAY WHERE ARE WE GOING TO BE IN
20 YEARS OR SO?
WE'RE TALKING ABOUT DEFICIT
RATES OF UPWARDS OF 8 TO 10%.
YOU ARE CAN'T DO THAT FOR A
THEY ACT RESPONSIBLY AFTER THE
FACT, THEY HAVE THIS ENORMOUS
DEBT SERVICE TO DEAL WITH AND
THAT PUTS HUGE PRESSURE ON
BUDGETS AND HUGE PRESSURE ON
INTEREST RATES AND ON THE
ABILITY TO INVEST.
SO THAT'S GOING TO BE A BIG
PROBLEM FOR US IN THE LONG RUN.
NEIL: YOU KNOW, WE'RE TALKING
WHERE RIGHT NOW THEY'RE TRYING
TO DEAL WITH PUBLIC WORKERS'
PENSIONS AND GETTING A SMALL
FRACTION OF THAT MONEY INTO
401(k)-TYPE PLANS OR DEFINED
CONTRIBUTION OR BENEFIT PLANS
AND GREETED WITH A HOLY UPROAR
SO GOOD LUCK WITH THAT.
GRANDFATHERING IT IN, WE CAN'T
DO IT.
LEARNED THAT WITH PAUL RYAN
WHEN HE WANTED TO SHAVE THE
GROWTH, THE GROWTH OF MEDICARE
SPENDING, THROWING GRANNY OFF A
CLIFF.
WHERE IS THE WILL, WHERE IS THE
WAY TO FIX THIS?
>> WELL, I'D SAY TWO THINGS,
FIRST OF ALL IN TERMS OF THE
STATE BUDGETS, ONE OF THE
BETWEEN THE FEDERAL GOVERNMENT
SPENDING AND THE STATE BUDGET
SPENDING.
SO HAVE A COUPLE OF COLLEAGUES
AT HOOVER WHO A FEW YEARS BACK
DID A STUDY AND FOUND FOR EVERY
DOLLAR THAT THE FEDERAL
GOVERNMENT TRANSFERRED TO THE
STATES, THE STATES ESSENTIALLY
SUBSTITUTED AND USED THAT MONEY
FOR THEIR PURPOSES.
SO IT'S NOT VERY EASY TO GET
CONTROL OF THIS THING.
THAT WE'RE GOING TO NEED SOME
KIND OF LEGISLATION THAT PUTS A
CONTROL ON SPENDING GROWTH.
NOT A BALANCED BUDGET
AMENDMENT.
THE BALANCED BUDGET DOESN'T DO
BUDGET AND SPEND AT 20% OF GDP.
BUDGET FOR THAT GIVEN YEAR.
AFTER YEAR OF BUDGET DEFICITS
GO AHEAD.
THAT IT MEANS IS THAT IF YOU'RE
THAT YOU ARE TAXING AT A VERY
HIGH RATE.
WE KNOW HIGH TAXES HAVE ADVERSE
CONSEQUENCES FOR GROWTH IN
TERMS OF CAPITAL EXPENDITURE
AND LABOR MARKET ACTIVITY.
THE AMOUNT THAT PEOPLE ARE
WILLING TO WORK.
ALL OF THOSE THINGS ARE IN THE
LONG RUN, NOT A GOOD THING, NOW
YOU KNOW, THE FORTUNATE
SITUATION THAT WE HAVE RIGHT
NOW IS THE ECONOMY IS PRETTY
STRONG.
WE HAD A STRONG GDP NUMBER.
THE MARKET IS FORECASTING 3 TO
3.5% GROWTH FOR NEXT YEAR, THAT
LOOKS GOOD.
THE LABOR MARKET IS STRONG.
STILL GROWING JOBS AT A
ALL GOOD THINGS WE CAN BUILD
ON.
THE PROBLEM IS, AS YOU POINTED
CONTROL SO YOU DON'T FACE THE
PROBLEMS OTHER COUNTRIES HAVE
FACED IN THE LONG RUN, THAT
MEANS DEALING WITH IT THROUGH
WHAT WE NEED DO IS CAP THE
GROWTH, NOT THE LEVEL BUT CAP
THE GROWTH IN EXPENDITURES SO
DOWN THE ROAD.
NEIL: GOOD LUCK ON THAT, MY
FRIEND.
BOTH PARTIES HAVE TO HOLD HANDS
AND JUMP OFF THE CLIFF TOGETHER
AND DON'T SEEM TO SHOW ANY ZEAL
FOR THAT.