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| Gregg: U.S. could be on path to a 'banana republic' situation |
| 2009-10-20 |
| (CNN) -- A leading fiscal mind on Capitol Hill and a one-time Obama Cabinet pick sounded the alarm Sunday over the projected long-term financial challenges the country faces. "This deficit is driven by us," New Hampshire Republican Sen. Judd Gregg candidly said Sunday on CNN's State of the Union when asked about the federal government's projected $1.42 trillion operating deficit for the 2009 fiscal year. "You talk about systemic risk. The systemic risk today is the Congress of the United States," the Ranking Republican on the Senate Budget Committee told CNN Chief National Correspondent John King, "that we're creating these massive debts which we're passing on to our children. We're going to undermine fundamentally the quality of life for our children by doing this." "Now you can't blame that on [former President] George [W.] Bush," Greg said, noting that using the Obama administration's projections the budget deficit for the next ten years is $1 trillion per year. And Gregg said that during the same ten-year period, public debt as a percentage of gross domestic product would increase from 40 percent - which Gregg called "tolerable but still too high" - up to 80 percent. The figures, Gregg told King, "mean we're basically on the path to a banana-republic-type of financial situation in this country. And you just can't do that. You can't keep running these [federal] programs out [into the future] and not paying for them. And you can't keep throwing debt on top of debt." "Standards of living will drop if we keep this up," Gregg also said. After repeated promises from the White House that the final health care reform bill will be deficit neutral, Gregg said a Democratic plan to avoid otherwise automatic Medicare cuts without having a funding source for the projected expense of $250 billion over the next decade was "gamesmanship." Asked about criticism leveled Sunday by former Republican-turned-Democrat Sen. Arlen Specter of Pennsylvania that Republicans were being obstructionist in the health care reform debate, Gregg replied, "Well, I suppose he has to call us something now that he's left the party." Responding to the Democratic charge that the GOP is "the party of 'no,'" Gregg pointed to Republican health care reform proposals including his own and another co-sponsored by Republican Sens. Tom Coburn and Sen. Richard Burr, as well as a bipartisan proposal put forward by Sens. Ron Wyden (D-OR) and Robert Bennett (R-UT)." Gregg said the versions of health care reform voted out of the Senate Finance Committee and the Senate Health, Education, Labor and Pensions Committee would amount to "a huge expansion of government." "You're talking about taking the government and increasing it by $1-$2 trillion over the next ten years," Gregg said. He added that he thought growing government at that rate would have a "very debilitating effect" on the overall economy and the ability of Americans to get health care in the future. At one point earlier this year, Gregg, who is not seeking re-election to his Senate seat in 2010, was President Obama's choice to head the Commerce Department. But the fiscal hawk removed himself from consideration because of differences with the new administration on several policy issues. |
| Posted by:Fred |
| #6 Sooner the government's borrowing power runs out, the sooner rational policies will have to be implemented. Historically speaking NO Whenever the congress hits any "Spending Limit" they simply raise the limit. You expect Congress to be fiscally responsible? I want some of whatever you're smoking/drinking. |
| Posted by: Redneck Jim 2009-10-20 13:49 |
| #5 When buyers stop showing up for treasury auctions, the printing will continue anyway. The Federal reserve will just hold the treasuries as collateral instead of selling them. This leads to a debasement of the currency. When that can't go on any farther, you get venezuala, or maybe agentina. There are several ways to stop the slide, but implementing costly government programs like national health care make the problem worse. |
| Posted by: flash91 2009-10-20 13:38 |
| #4 Could? |
| Posted by: Procopius2k 2009-10-20 07:47 |
| #3 No bananas and no gas either. The standard of living was bound to take a fall when the easy credit eventually went away and labor markets completed their globalization. But what the administration and Congress are doing aren't the techniques required to make the fall less hard. If anything, they'll prolong the agony. It remains to be seen whether or not this is on purpose or the result of ignorant hubris. These days I lean towards believing it's the former. |
| Posted by: no mo uro 2009-10-20 06:00 |
| #2 "Standards of living will drop if we keep this up," Gregg also said. ....trains will no longer un on time. A gallon of gas will cost $7.00 or about the same as a cup of coffee. A 'temporary' 19.5% European style VAT will be levied to assist the poor. Essentially a 'banana republic' but with no bananas. |
| Posted by: Besoeker 2009-10-20 04:51 |
| #1 Sooner the government's borrowing power runs out, the sooner rational policies will have to be implemented. |
| Posted by: ed 2009-10-20 01:13 |