One Half Of Simpson-Bowles Goes There: "Krugman Borders On Hysteria"
We have all thought it. We have all muttered it under our breaths (and some of us have even written about it on blogs) but the Keynesian Krusader's borrow-and-spend-our-way-to-growth dogma was bazooka'd by former Senator Alan Simpson yesterday. "I say why don't you read our report and then get back to me", Simpson says of Krugman in a must-watch interview on Bloomberg TV, adding that "Paul Krugman is a great economist, but he ain't the best in the world. This is nuts...I love to read his stuff because it borders on hysteria" Critically, he adds on the growing demographic crisis "This is not 20 years ago, it isn't 10. It is now. You have 10,000 a day coming into the system. The demographics are there. It is all different -- it is not the same". The former Senator goes on to discuss whether US will become the next Europe, how lawmakers will sell cutbacks to the American public, whether policymakers keeping rates low are contributing to the problem, and finally on Simpson-Bowles 2.0. - "The people of America are telling their elected people how it is. Erskin and I go all over the country and tell them we do not do BS or mush, but pull up a chair and we will tell you where the country is, and they are thirsting for that."
Simpson on what he would say in response to Paul Krugman, who argues for more spending for the U.S. to grow out of recession:
"I say why don't you read our report and then get back to me. It is 67 pages talking about taking care of the vulnerable in society. It talks about not moving too fast. We don't talk about putting teeth in the shark until 2013. Paul Krugman is a great economist, but he ain't the best in the world. This is nuts. To have one guy or me or him being the total focus here, but you do not have to have a brain to know that if you owe it 16 trillion dollars when Italy is going down the slope and their debt is $2.6 trillion and ours is $16, and when you spend a buck and borrow 42 cents and when every penny of revenue that came into this country last year with income tax, excise tax and tariffs, went to only three programs. Medicare, Medicaid and Social Security. We have borrowed for the rest of it. Ask Paul how the hell you get through that. This is totally predictable, totally unsustainable. I love to read his stuff because it borders on hysteria. He talks about the lost souls of the past, and he is in there, too. This is not 20 years ago, it isn't 10. It is now. You have 10,000 a day coming into the system. The demographics are there. It is all different -- it is not the same."
On whether the U.S. will become the next Europe:
"No, we will be a great country, but we will not be number one. Our ratings will get hit. We'll get slapped around. Let me tell you what will happen, people who have money, and Paul knows about those and I agree with Paul. The money guys will always take care of themselves. They will always survive. But I will tell you, unless we do something right now, the little guy are the guys that get hurt. If you do nothing, and in kicks inflation and interest rates, then the guy who gets hurt the worst is the one that Krugman and all the rest of them talk about all day long, the little guy. If interest rates go up 1% or 2%, just add trillions to that debt."
On whether interest rates are contributing to the problem, enabling lawmakers to spend:
"I believe that totally. If interest rates were where they were historically, people would pay a lot better attention. No wonder corporations are putting their money aside, as interest rates are as they are. It is like a grasshopper and the ant, but no one remembers that story either."
On how lawmakers should sell cutbacks to the American public:
"I think you should go back and talk to the mayor of Philadelphia who did a beautiful job explaining what he had to do to get Philadelphia bank in the black and out of the red ink. He said here is what we're going to do, and it is going to be shared sacrifice. Everybody will get hit. If you tell people that and be honest with them, and let them bitch and roar and snort, you can make it through there. If you just close it off, draw these lines in the sand, and you have Grover Norquist, a good guy with a hell of a bad idea, who has locked in 95% people in my party, in my Congress, to say you cannot raise 1 cent of revenue, even when you get rid of a tax expenditure, which is revenue or spending by any other name, and you cannot get that done. And the AARP sitting on their butts off while the Social Security people said here is the trustee report. This will run out of bucks in 2033 instead of 2036. They have moved up the drop dead, which will pay out 75% of its money. But it will pay out only payable benefits and scheduled benefit. Tear up the thing you get every month, because they will pay out only payable benefits, so if that isn't fakery and phoniness, I don't know what is."
On Simpson-Bowles 2.0:
"All day around here they talk about Simpson-Bowles. They did not talk about Bowles-Simpson because the acronym there is too bad. It is BS. But Simpson-Bowles, all day long they talk about it in here and it's like a stink bomb in a garden party, it isn't going away. Every person that has spoken has mention it. I am not in it for fame and fortune, but there it is. I will not use an old phrase our football coach at the University of Wyoming, but buckle up your guts."
"The people of America are telling their elected people how it is. Erskin and I go all over the country and tell them we do not do BS or mush, but pull up a chair in we will tell you where the country is, and they are thirsting for that."
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