November 17, 2009

Right on cue again, we have Born Again Deficit Virgin Judd Gregg with dire warnings about our debt but no acknowledgement of his own party contributing to the mess as our own Jon Perr rightfully pointed out. This is from C-SPAN's Newsmakers Nov. 15, 2009. Despite Gregg's warnings for the United States if we don't get our debt under control, the last thing he thinks we should be doing is to repeal any of those Bush tax cuts for the rich to fix it.

I would like to know just how repealing those tax cuts would "reduce the productivity of the nation". The only thing I've seen reduce our productivity has been our crappy trade laws which have resulted a race to the bottom with industry running to the country with the lowest wages for labor and the least constraints on those who pollute or have the least protections for their workers in place, which has driven jobs out of the United States with our unwillingness to put some protectionist measures in place to secure our workforce. Maybe someone else can explain this man's twisted logic to me, but I sure as hell don't get it.

I hope the Obama administration is enjoying their kick in the teeth from someone that they once considered for a Cabinet position. I think Gregg and his ilk will be happy to see this country continue to spiral into economic ruin as long as they think it will win them elections and they can shift any of the blame for what's happened away from themselves.

Frates: Senator I wanted to ask you. Do you see the cost issue as a political landmine, and if so, how?

Gregg: Well, I think the cost issue is at the essence of what is the biggest problem our nation has confronting us after the threat of terrorism and weapons of mass destruction, and that is the impending fiscal meltdown of our nation. We’re going to take our, we’re taking ourselves down on a road to third class status as a nation. You cannot grow the government from 20% to 26% of our G.D.P. and pass all the debt that’s going to generate—because no matter how much you raise taxes you can’t catch your tail when you get that bit—onto our children, because they can’t pay for those debts.

You know, you get…let me try to put this in context. When the public debt goes from 38% of G.D.P. to 80% of G.D.P., that essentially means that the debt, well the financing of that debt, that is going to exceed the cost of anything else in the government, including military expenditures, national defense. And in fact if we tried to get into the European Union—which we’re not trying to do—but if that’s the proof of industrialized states that set certain standards for what a government does—we could not get into the European Union beginning about 2013 because our public debt would be too high. We’d be over their 60% threshold.

And we’re seeing already international statements from China, from other places that they’re worried about our debt. And they’re the ones who buy the debt. And if they start to worry about our debt what does that mean? Well we’re going to have to raise the price, in other words, we’re going to have to raise the interest that we’re going to pay on that debt in order to get those folks to buy our debt. We’re also seeing the international ratings agencies like Moody’s say “well gee, we don’t know if you stay on this path which is unsustainable, we may have to downgrade your debt”.

All of this leads to an instability in our nation because there are only two things you can do when debt gets so high that you can’t afford to pay it. You basically have to inflate the economy, which means you devalue the dollar and you put in place one of the cruelest takes which is inflation, or you raise tax levels so high that you reduce the productivity of the nation and it becomes a downward spiral where basically as productivity drops you drop your, your revenues drop again. So we’re on an unsustainable path. It’s that simple. And you shouldn’t aggravate that unsustainable path by adding another 3 trillion dollar program on top of it.

Swain: Senator we just learned from AP, our wire story that the White House has now told domestic agencies that their budgets will be frozen or even cut by 5% as it signals a big push to take on the deficit next year. Do you have a reaction to that?

Gregg: If it’s true it’s great. I mean, that’s one step that should absolutely occur. We should freeze discretionary spending, but as Willy Sutton said, and that would be good, but as Willy Sutton said, why, when he asked why do we rob a bank? Because that’s where the money is; the money is in entitlements. The money and the problem is in the fact that we’re facing a 60 trillion dollar unfunded liability already without this new major health care entitlement being put on the books being proposed by the House and the Senate Democratic leadership. Without that even on the books we already are short 60 trillion dollars as we go forward. So those are the challenges we have to face up to and address, but yes, if the administration comes forward with a discretionary freeze of a 5% cut in discretionary spending I will strongly support that effort.

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