Alan Simpson Confirms Reality: "All The Things You Love Will Not Come To Pass"

Tyler Durden's picture

Conjuring images of Jack Nicholson in 'A Few Good Men', Alan Simpson laid out the sad and terrible truth that none of us or our politicians can handle in a very direct and sincere interview with Bloomberg TV's Deirdre Bolton. "Medicare costs stand to squeeze out the rest of domestic government spending," Simpson said, "it is on automatic pilot. It will use up every resource in the government." Simpson also said that the current path of debt, deficit and interest is “totally unsustainable” confirming once again the facade that his 18 years in Washington proved to him that he "never saw any projection of any economist ever come true." From Paul Ryan's plan to the 'simple math' of CBO budget projections, and whether older Americans should be afraid, Simpson pulls no punches as he sums up American society thus: "we don't care about our money, all we want is more money for our money."



Simpson on Paul Ryan and whether older Americans should be worried about his plan to rework Medicare:

"Don't worry about that generation. Worry about yours. Let's get serious here. These old cats are taking care of themselves. Nothing that has ever been suggested here, whether it is Simpson-Bowles or the gang of six or the gang of eight has a thing to do with butchering up old people at this time. You either get on a path of solvency. I mean, what is the purpose of this whining and moaning about social security where if you do nothing, you will wobble up to the window to get your check in 2033 and it will be 23% less. Medicare is on automatic pilot. It has no cost containment procedures in it until about 10-years out and then we’ll ignore them. Anybody with a brain has to figure that you have a situation where 1,000, 10,000 people turning 65. You have obesity. You have one person that weighs more than the other two. You have Diabetes A and B. You’ve got to do something with tort reform. You’ve got to do something with doctors and hospitals. Come on. And the guy who can get an operation to buy your building does not even get a bill for $200,000 with a heart operation. Let’s get serious."

On those who say that Ryan’s plan will trickle down and hurt the people that will need support the most.

"If they read the report that was signed on to by five Democrats, five Republicans, one Independent, 11 of the 18 of us, 60%, which Durbin said, ‘I do not like this at all. I hate it like the devil hates holy water.’ Let me tell you, ladies and gentlemen. Either you start to do something now, or pay me now or pay me later. This country is on a trajectory of debt, deficit and interest that is totally unsustainable, unconscionable and totally predictable. If everybody wants to talk about old people and the kiddies and use the stuff that Dave Axelrod will shower on the American people while Obama’s plan, pretty sweet -- have a go at it. It is your country."

On whether Simpson-Bowles accounted for the slowing economy:

"We put in there that we recognize the nature of a fragile recovery. It’s all in there. I always say to people, when everything else fails, read the damn thing. It’s 67 pages in English. It talks about shared sacrifice and skin in the game and going broke. There is no mystery to what it is. Don’t forget, the president asked for $4 trillion. Are they hammering him? No. He said, I want to take $4 trillion in 12 years. Simpson-Bowles wants to do $4 trillion in 10. So grab hold, no specifics at all. The reason they hammer away is because we were solidly specific. We talked about the tax code, which is $1 trillion which is used by only about 10% of the American people. The little guy has never heard of the stuff in there. It goes to the wealthiest people and the smoothest cats that have the best lobbyists to stick it in there with no oversight ever."

On Ryan’s plan and its call for huge cuts on almost every piece of domestic spending:

"If you want to go into that stuff, we will never get anywhere. It does not make any difference. Let me tell you. Medicare is on automatic pilot. It will use up every resource of the government and squeeze out all the things you mentioned. They will be completely squeezed out. The discretionary budget will be borrowed. We are borrowing $3.6 billion per day. For every dollar we spend, we are borrowing 41 cents. We owe $16 trillion and no one understands what that is. If you want to get to the old playbook out and use infrastructure, airplanes and all that stuff, that is great. You will not even see it because of what will happen with Medicare. You will not even perceive it. It will not come to pass. All the things you love will not come to pass."

On the CBO’s budget projections:

"I have always said if you torture statistics long enough they will eventually confess. I was in Washington for 18 years and never saw any projection of any of economist ever come true in 18 years. The next year, greater growth will be this -- never happened. This will happen -- GDP. All you have to do is use the math. We don’t use Powerpoint. We do not use graphs. All use is your head. If you want to go into all of the horror stories using emotion, fear, guilt, racism, class warfare, you can kiss it off. It is your country."

On whether it’s possible to reach a compromise that is good for society:

"I hope so. You see, the thing is, the people that will control this debate do not have anything to do with the things to you and I are talking about right now. The people who will control this are ‘the markets.’ And the markets will say, and they have every reason to say it, the chaos between Election Day on November 6 and December 31 where there will be $5 to $7 trillion washing around ready to go somewhere. If you go too far one way, you end up recession. You have to do some balance and all you have to do is a plan. We have it in legislative language. It is circulating among a very good group of Democrats and Republicans. You do a plan and the markets will lay off of you. If you don't, they will say very simply, ok. We do not care about Republicans. We do not care about Democrats or Obama, or Romney, or Biden, or Ryan. We care about our money and we want more money for our money. And they will ask for more interest. 1% of interest will knock this country on its face. Where is everybody? I mean, it is absolutely nuts. When it happens, interest rates will kick up. The guy who gets hurt the worst -- the little guy. The little guy that everybody talks about day and night. What goofy, goofy hypocrisy."

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SilverTree's picture

I love you Deirdre.

old naughty's picture

"You want the truth", America?

"You can't handle the truth."

economics9698's picture

The 2.43 IQ points less bitch has too much makeup on.

AlaricBalth's picture

Even the FRB-St. Louis takes a few barbs at the infamous Congressional Budget Office.
"How Good Are the Governments Deficit and Debt Projections and Should We Care"

One chart of note is Figure 5: Government Expenditures as Percent of GDP. Mandatory expenditures have gone vertical.

Element's picture

Every US budget document produced is a fraud, an obvious wall of lies.

The simple horrific truth is this:  THERE IS NO US BUDGET

They literally don't know and don't even care to know what a 'budget' is, what a budget is used for, why it's necessary to have a real one.  These parasitic clowns in Washington have actually convinced themselves that it doesn't matter if you have no real budget, that it's better to just have a continuum of lies so great, that almost no one would dare to call them on it.

And these "Budget Papers" released every quarter and FY and all that 'planning' and the pseudo-hot 'academic' and political 'discussions' surrounding it, conveyed by the dopey MSM of usual-suspects - these things are only meant to disguise that greater underlaying fact, the USA has no actual functioning budget process today.

It only has an "Office of Budget" that's supposed to manage the public perception of the scale and sheer absurdity of the lie, and to attempt to discourage people looking too closely and finally reeling-back in horror, upon realising that there's no actual budget somewhere in there. There's just these public release documents that purport to represent a real budget.

And that's all that's been happening in Washington, all these years.  This is what trickie-dickie's, "We're all Keynesians now", in combo with fractional-reserve fiat has amounted to.  No real budgeting occurs--nor will occur.

And as we can increasingly see, they're not even any good at hiding it any more, which is what the Office of Budget's actual purpose and area of primary concern and responsibility are.

Can it get any more pathetic? ... why yes! ... yes it can!!

Zwelgje's picture

I wonder if Romney is going to attack Obama on this the coming month.


smlbizman's picture

as a self employed indivual who has about 15% of my labor confiscated for ss..please tell me how this is an entitlement to me....give me my fucking money back and than call it what you want...

Anusocracy's picture

Well, the libertarians had a plan to end SS in the early 90s.

They wanted to sell the 1.2 million square miles of land and most of the buildings the federal government 'owns'.

The proceeds would have been used to buy out, set up annuities, or cut free everyone from Social Security.

The benefit would have been more money in workers' pockets and hopefully, smaller government.


dannyboy's picture

Don't worry everyone, Paul Ryan will save you. Here look:

If you are a lobbyist that is. Backed by the finest corporatists America has to offer. As for everyone else, well.. you can go fuck yourself for all he cares.

Messianic's picture

Because Barack Obama HATES lobbyists and corporatists and really, really cares about the little people. Just like he cared about Indiana pensioners during the GM bankruptcy proceedings.

GeezerGeek's picture

Like you now, I was self-employed from 1991 to 1998. I hated being in the position of immediately giving 43% to the Feds each time I made a dollar (15% FICA, 28% marginal income tax rate). I, too, have wished that I could keep what I earned and take care of myself. The voters never elected people who would let me do as I wished with my earnings.

That said, I am now retired. After nearly 50 years of having my earnings taken from me, I WANT MINE! Work your tail off and keep paying those SS and Medicare taxes so I can go sit on the baech every sunny day.

OK, I'm not really serious about that attitude I put on in the second paragraph. Not totally, anyway. Given ZIRP, however, the SS checks come in handy. I feel bad for all you working folks, really I do. We're all screwed because we're all in the same sinking boat. The only difference is, some of us are in the bow and others are in the stern. It's just a matter of which end sinks first, since only the elite get the life jackets.


economics9698's picture

How about this economist plan;

1.  Hard money.

2.  100% fractional reserve banking.

3.  Constitutional amendment limiting the federal government to 10% of the GDP.

4.  End all federal entitlement programs.

5.  Establish a nation bank restricted to weights and measures.


Prosperity never seen in the history of mankind unleashed.

ForTheWorld's picture

Now, when you say "100% fractional reserve banking", do you mean that we ONLY use fractional reserve banking, or are you suggesting that banks cannot loan more than they have in deposits (as opposed to the current 10x or 30x or whatever they currently do), which wouldn't be fractional reserve banking.

I do think your plan would work, but I can't see it working for the current US population, let alone the planet. Also, the prosperity you talk of wouldn't be able to continue for long if the economy still using finite resources.

economics9698's picture

100%^ fractional reserve means the bank cannot loan out money without the depositors consent.  When the depositor consents then the 100 ounces of silver are now available to the borrower to use as desired.

ForTheWorld's picture

Oh I get what you're saying. I'd never even considered a situation where borrowers seek permission from depositors. It makes sense in a beautifully simplistic way.

ForTheWorld's picture

I have come across an issue I have with 100% fractional reserve banking using precious metals. It leads me to think that 100% fractional reserve banking isn't possible with precious metals and interest being payable, because of the requirement for the total supply of those metals to constantly increase at a rate that is greater than or equal to the maxiumum interest paid by borrowers. The reason that I say this is because if you're going to pay interest on precious metals in precious metals, then you'll need extra precious metals to do so. Wouldn't paying interest, and subsequently adding to the gold supply, be a form of currency dilution?

This process wouldn't be too dissimilar from what central banks do when they print more money, only they can do it far quicker and with less cost than a metals mine can. This would then make the miners the central banks (seeing as though they produce the metals), and then we're back to square one again with one player, or a few key players controlling supply for the currency (or currencies).

Once all the metals deemed fit for use have been minted, what then happens when more metal is required due to an increasing population? Does the value of each coin (measured by weight I would assume) go up? What about the effect of increasing populations on the money supply?

I also question this:

" a free market economy, the production of goods and services constantly increases. This has been the normal situation ever since 1800."

The way I see things, the situation described above cannot continue unabated on a planet of finite resources. The only way this sort of growth could continue is if we started mining asteroids and meteorites for all the metals contained in them. This then would also cause the price of precious metals to drop (although not by a great deal when you factor in the cost of mining asteroids, which would be astronomical).

I read the whole article in the link you posted, and it's certainly good in theory, but I just think that there's some things that haven't been considered (from my point of view of course).

economics9698's picture


The purpose of hard money is to restrict the money supply.  The cost of mining gold or silver will be similar to any product in the ground.  If the price of oil is very high oil shale becomes profitable, if not then it is not mined.  Gold would work the same.

The value of the metal would go up and down depending on supply and demand.  When more is needed the price would go up but…

You are missing the most important function of a limited supply of money.

That is the relationship between savers and investor, consumers and capital owners.

With a limited supply when the economy is booming the demand for money increases and more is put in circulation.  With more money in circulation and less in the bank interest rates increase.

This is a signal to capital owners, car companies, mining companies, that now is NOT a good time to build that new plant.  The capital owners will wait for interest rates to come down.

This is vitally important to understand in the efficient allocation of resources between consumers and producers. 

When the economy slows down consumers become fearful and save their money.  With 100% fractional reserve banking they will be willing to lend the money out for a decent 3%, 4% rate of return.

This lowering of the interest rate is a signal to the capital owners that NOW is a good time to invest. 

Can you see how a properly functioning economy would work with metals?

There is a constant allocation of resources between consumers and capital owners.  Savers win under this system and saving for retirement is simple and strait forward.


They would go down as long as productivity went up. 

But would not manufacturers not produce with lower prices?

Do computer companies not produce with lower prices?

Producers do not care about prices they care about profits.

Fiat simply allows those receiving the cash first, Wall Street, Washington, to outbid and misallocate resources in their favor.

Fiat also is very cheap to manufacture and the reason we will have this global collapse soon.  Metals make it expensive to manufacture new money and that is what we want.




ForTheWorld's picture

I do understand most of what you're saying, even about an economy functioning with hard money, and perhaps it's just semantics, but to me, a limited money supply wouldn't have ANY extra money injected into it - thus, there's a limit to it. If you can mine gold and silver, then there's no current, tangible limit to how much can be put into the supply. Thus, there is no current, defineable limit. That's my concern. Then there's what whole tungsten issue. If someone can game the system, they will.

I will read that sound money PDF see what I can learn.

Central Bankster's picture

As the economy grows in a rigid money supply system it creates deflation. Ie money buys more goods for cheaper but wages also fall as producers must become leaner to be more profitable. So you are correct about what would happen but are mistaken about the reason. Interest rates signal demand for money in a fixed or rigid money supply economy.

savagegoose's picture

from what i see on kitco, gold leases for 0.51% a year\

whats a bank account doing.\

ForTheWorld's picture

In Australia, anywhere from 3.5% up to 6% depending on the bank. I don't know of anywhere in Australia (at the moment) that will provide a return on precious metal leasing.

savagegoose's picture

yeah im in australia , ubank as a demand deposit account of %5.7 ,  but i was speaking to an american audience, and no if i had enought cash to lease gold, i wouldnt be handing ot over to no stinking bank.

geeze if i lived in america i dunno what i would do.

but the idea of a deposit account attracting 0.2% or gold attracting 0.5%, in an ideal wolrd, the .5% would have my cash

Dr Benway's picture

You can get an indirect return (free storage) if you buy unallocated gold at Perth Mint or such.


Not that I would do that. If you are going to own gold, why trade away the key advantage of it?

Turin Turambar's picture

It's 100 per cent reserve banking. There is nothing fractional about it! Sheesh, it's not that hard people.

Also, don't forget the genius of Thomas Jefferson. He regretted that the constitution did not have an amendment that prevented the government from borrowing!

Totentänzerlied's picture

"3.  Constitutional amendment limiting the federal government to 10% of the GDP."

LOL, then they'll just say: "GDP is $100 trillion, what? we're lying? what are YOU gonna do about it?"

We've done or had most of that before - if it had any permanence, would we be here today?

More laws = the ultimate can kick. This is just rolling back the clock to circa 1912. It's a start, but it only took us 100 years to get here from there.

Anusocracy's picture

I prefer to restrict government to those who want it.

Let the rest of us be free.

BooMushroom's picture

I'd be happy if they would write the budget as percentages of revenues collected the prior month, so long as all the percentages added up to about 95%.

Stuck on Zero's picture

Your mode of conveyance, take your pick, the Hindenburg or the Titannic.


Daily Bail's picture

I published an angry letter to Alan Simpson once.

It's not that I don't support massive cuts to spending.  It was more of a timing issue for me.

Profanity warning:

Open Letter To Alan Simpson & Erskine Bowles Chairmen Of The U.S. Deficit Commission
adeptish's picture

Loved the letter, 2 down votes though?

God help us...

brewing's picture

simpson-christie 2016.  need two realists to take control...

HelluvaEngineer's picture

Homer Simpson?  Awesome.  Although I think he should run with Dwayne Elizondo Mountain Dew Herbert Comacho.

brewing's picture

homer simpson makes the fucks we have to choose from look like moe and curly...

Hedgetard55's picture

Simpson sounds like he has had a stroke. Is that English? Yes his points are valid, but man can he please put two comprehensible sentences together?

steelhead23's picture

Yeah, Simpson is inarticulate here, but you know, I sense a quiet rage inside the man - outrage actually - that his former colleagues spend more energy, much more energy, politickin than leading the damned country.  Damn, I feel a stroke coming on.

tbone654's picture

Dumb it down for me Alan...  I'm sure he's a very bright man, but his communication style keeps me thinking he's saying something like:  "Do you walk to work, or carry a bag lunch?"

govttrader's picture

well thats 5 minutes of my life i won't be getting back...

francis_sawyer's picture

says the MF who relentlessly shills his own blog on ZH...

sessinpo's picture

And apparently to all the down arrows, the other part of your life was wasted.

Atlantis Consigliore's picture

buy gold buy platinum,  the dollar is finished,   knock off the euro first,  next month greece gone...

Catullus's picture

Duh.  Price controls on health care with doctors that take state-controlled medical plans.  Duh.

roadsnbridges's picture

Ah, what doctors?  You mean PA's?

Getting Old Sucks's picture

What's the matter with PA's?  DIL is a PA and that saves me a doctor's visit now and then.  Problem is that I have a good insurance plan so only saving the crooks.  However, it's faster and more convenient than doctor appointment.

Just editing to say that if the pussies in this country would stop running to the doctor every time they get a pain somewhere, they'll find that it usually clears up on it's own.  If it doesn't, you're probably gonna die anyway if you go to a hospital, LOL.


Ponzi_Scheme's picture

Does that mean I can get interest on my savings again ?.

LMAOLORI's picture



Long Cash that day is coming many are probably too young to remember the 20% money market accounts of the 1980's

Oldballplayer's picture

If I had the energy I would look up all of the crap that happened on his watch. He seems like a nice fellow, but he was part of the problem.