Obama's Co-Chair Concurs: We Face Most Predictable Economic Crisis in History In About 2 Years

June 14, 2011 - 11:09 AM

Debt Commission, Al Simpson

Former Sen. Alan Simpson, a Republican, speaks at the annual meeting of the National Governors Association on Sunday, July 11, 2010, in Boston. (AP Photo/Michael Dwyer)

(CNSNews.com) – Former Sen. Alan Simpson (R-Wyo.), co-chairman of President Barack Obama's National Commission on Fiscal Responsibility, said Tuesday that he agreed with his fellow co-chairman, former Clinton Chief of Staff Erskine Bowles, that the United States faces “the most predictable economic crisis in history” within the next two years.

Simpson added that the tipping point "will come when the rating agencies find out we have no plan" to seriously address federal spending and the national debt.

At the Capitol Hill Club on Tuesday, CNSNews asked Simpson, “Erskine Bowles told the Senate Budget Committee that America faces the ‘most predictable economic crisis in history’ because of deficit spending and that this crisis is going to hit in about two years. Do you agree with Mr. Bowles?”

Simpson responded: “Sure. Totally. Every word. We’re linked at the hip. I don't think he went for the milk cow thing the way I did.  But let me tell you, when he speaks about this being the most predictable, he knows.”

“How do you think he did the balanced budget in ’96?" said Simpson.  "He did that by visiting with Trent Lott, Newt Gingrich, Dick Armey. He said, 'You owe me one.' That’s how I got that done. Days and weeks in a room with Newt and Armey to get the balanced budget in ’96."

Simpson went on to further praise Bowles: “Don’t forget this guy is a wizard, and he knows the figures, and nobody can put him in a box and play sharpshooter with him. He’s just a magnificent person and he’s as honest, true as a god.”

Bowles told the Senate Budget Committee in February that the United States was headed toward a financial disaster when the people now purchases U.S. debt--"our bankers over there in Asia," he called them--determined that U.S. debt was no longer a good investment. 

“I'm really concerned,” Bowles testified. “I think we face the most predictable economic crisis in history. A lot of us sitting in this room didn't see this last crisis as it came upon us. But this one is really easy to see. The fiscal path we are on today is simply not sustainable.

 

“This debt and these deficits that we are incurring on an annual basis are like a cancer and they are truly going to destroy this country from within unless we have the common sense to do something about it,” said Bowles.

 

“I used to say that I got into this thing for my grandchildren,” Bowles said. “I have eight grandchildren under five years old. I'll have one more in a week. And my life is wonderful and it is wild. But this problem is going to happen long before my grandchildren grow up.

 

“This problem is going to happen, like the former chairman of the Fed said, or the Moody's said, this is a problem we're going to have to face up,” he said. “It may be two years, you know, maybe a little less, maybe a little more. But if our bankers over there in Asia begin to believe that we're not going to be solid on our debt, that we're not going to be able to meet our obligations, just stop and think for a minute what happens if they just stop buying our debt.

 

“What happens to interest rates?” asked Bowles. “And what happens to the U.S. economy? The markets will absolutely devastate us if we don't step up to this problem. The problem is real, the solutions are painful, and we have to act.”

The fiscal commission co-chaired by Simpson and Bowles was composed of 18 members selected by the President Obama  from both parties, and by the House and Senate leadership. The co-chairs proposed illustrative savings of $200 billion by 2015, as explained on the commission  Web site.

The commission also recommended tax reform and spending cuts, along with proposals to cut funding for National Public Radio and to require veterans to pay for non-combat medical costs, as CNSNews.com reported.

During a breakfast at the Capitol Hill Club, which was sponsored by the Ripon Society, a group of moderate Republicans, Simpson complained that Congress has become dysfunctional.

“[I]t is hard to believe that this place that I loved for 18 years, and got a lot done, is dysfunctional, totally dysfunctional,” Simpson said.

On the commission’s report, Simpson explained that, “Tax reform, three rates, people have been howling: broaden the base, lower the rates, get spending in accord. Well, brothers and sisters, that’s exactly what we’re recommending.”

The retired senator stressed the importance of planning the reduction and management of the government’s debt.

The “real question,” he said is: “Where’s the tipping point?”

“Everybody asks that, ‘Where the hell is the tipping point here?’ I think it will vary within the next 18 months. Erskine thinks it’s a little longer; some say 6 months. But I’ll tell you when it will come: it will come when the rating agencies find out we have no plan whatsoever,” Simpson said.

Simpson concluded: “We need a plan. And it doesn’t have to be big, and we don’t even have to start on it. But we gotta have one.”

The federal government borrowed its debt limit of $14.3 trillion in May, and has until August 2nd to either raise the debt ceiling or potentially default on its debt.