The fiscal cliff remains a hot topic, one likely to come up at Wednesday’s first presidential debate between Barack Obama and Mitt Romney.
Former Wyoming Sen. Alan Simpson, a Republican and the co-chairman of Obama’s bipartisan deficit commission, and Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities and a former adviser to Vice President Joe Biden, discussed Tuesday what Americans can expect from the debate, and what are the consequences if the budget issue remains unsolved by the end of 2012.
Former Sen. Alan Simpson and Jared Bernstein, an economic advisor of Vice President Joseph Biden, agreed that both parties need to compromise on budget issues.
Q: If you were the moderators at the debate, what would you be asking the candidates?
AS: Make them talk about the debt. Ask them what they’re going to do with the $16 trillion debt. The first three questions of the six will be on the economy.
Q: What do you think is the most important thing for Americans who will be voting to get from the debate?
AS: What they’re going to do about the future. What they’re going to do about the $16 trillion debt when nobody understands what a trillion is. You can’t use a chart. You can’t use anything, and you can’t talk about tax revenue because we’ve had less revenue coming to this country since the Korean War. It’s madness.
JB: I would like to ask Gov. Romney, do you really believe that we could achieve a sustainable budget in this country without new tax revenues from someone, and can we truly have a government that has a capability to diagnose our problems and accurately provide solutions when the vast majority of the members of Congress have sounded never ever increased taxes? That’s just on the budget side, and on the economy, I’ll ask what are your rear measures to bring down the unemployment rate?
Q: What can people do to get to a solution of the budget issue?
JB: I think they should be moved by one word, and that word is compromise. If you go back to when members of the Congress who can come together and solve problems, and that’s you have to give some from your side and take some from the other side. If you send people to Washington whose job is not working with the other side, we will continue to be stuck.
Q: If we head off the fiscal cliff, how bad will that be?
JB: I think if we do go over the fiscal cliff and there are enough grownups in the room to quickly get together to come up with a path with retroactive tax changes, then I don’t think we’re necessary facing a recession. We could be facing a credit downgrading again.
Q: What are the three things people should watch out for in the following debate to find out which candidate has a serious plan?
JB: Any sustainable budget plan has to include both new revenues and spending. It has to be both. They have a concrete plan that sounds right to you in terms of lowering the unemployment rate that has been stuck in north of 8 percent. And three, they will work on your side to resolve the problems instead of deepening them.
AS: Jared was so correct. Let me tell you, if you can’t compromise an issue without compromising yourself, you should never be in any legislative body and you should never get married.
Q: If we don’t fix this thing, what happens?
AS: I don’t think it does much to us except for the rating agency. But when the market responds, politicians will respond. People won’t know anything about it. You borrowed $16 trillion and you’re not paying it back. At that point, interest rates will kick up and inflation will kick in and the people of America especially the middle guys will be worse than anyone. That time will come. I don’t know if it’s four years, four months or four days, and no politician will be able to describe when that’ll come.
Q: Is it possible that the government will shut down like what happened in 1996?
AS: If they did that, they’re all fools. That’s madness. They shut the government down and no trash will go out? They’re not going to do that. If some money is not coming in we will go borrow more. That’s what they’ve been doing. Just keep borrowing more, and they will loan it to us because we’re a big country.
Q: Who’s going to pay it off for us?
AS: The younger generation is, and you’re going to pay it off your nose. You’re really going to get hammered, and these senior citizen groups like the AARP (American Association of Retired Persons) don’t care.
Q: Can we fix this?
JB: One message for today is that there are more fixing going on than you think.
AS: That’s true. We have 47 U.S. senators working with their staff and about 150 house representatives from both parties. You can’t do this by yourself. They’re talking, and we’ll see how it goes.