Barack Obama did an interview with George Stephanopoulos on the debt and and budget talks that are happening now.The transcript is here.
There are probably two big headlines to come out of it.
One is that the two sides are too far apart for a grand bargain.
The other is that Obama says there’s no immediate debt crisis.
The latter is the most controversial because people will say Obama is in denial, but it’s objectively true.
Borrowing costs are very low, and for the next several years, deficits are likely to be at what people call “sustainable” levels (levels that aren’t bigger than nominal GDP growth).
These comments from Obama, for example, are spot on:
Well, the– you know, those are still tough. But the conversations are still takin’ place. And– and part of what– I’m– I’m tryin’ to encourage Congress to think about is yes, we’ve got some big disagreements on the budget. But we’ve made some big cuts. There’s not– in any way– an immediate crisis with respect to– our finances.
The economy is growing. And, you know, there may be disagreements that we can’t bridge right now– when it comes to financial situation. I’m hopeful that we can. But let’s not have this crisis mentality stall all the other progress that needs to be made to help– Americans find jobs, help Americans grow the economy.
I’ll– I’ll give you an example. We should be helping Americans refinance their homes right now. The housing market’s finally recovering. We’ve got an opportunity where ev– every American out there could get up to $3,000 in, basically, found money just by refinancing from high rates to low rates. That’s like a massive tax cut for millions of Americans that would go to businesses, help create the– the climate where pe– employers wanna hire more. The only thing that’s holding us back is Congress hasn’t authorised it yet. Those are the kind of things that we should be able to do and do right away, even if we don’t solve every other– disagreement that we’ve got on.
And here’s what he says about the balanced budget. He says the main way Clinton balanced the budget is fast growth, and that pursuing a balanced budget just for a balanced budget’s sake is pointless.
…Look, balancing the budget in part depends on how fast you grow. You remember– you were in the Clinton administration. The reason that you guys balanced it was a combination of some tax hikes, some spending cuts, and the economy grew. And, so– you know, my goal is not to chase– a balanced budget just for the sake of balance. My goal is how do we grow the economy, put people back to work, and if we do that we’re gonna be bringin’ in more revenue. If we’ve controlled spending and we’ve got a smart entitlement package, then potentially what you have is balance. But it’s not balance on the backs of, you know, the poor, the elderly, students who need student loans, families who’ve got disabled kids. That’s not the right way to balance.
This is all solid stuff: There’s no debt crisis, pursuing a balanced budget just for the sake of a balanced budget is silly, and ultimately what’s needed is growth.
Note that the Democrats will be coming out with a budget plan today, and it won’t get the U.S. to a balanced budget.
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