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发帖数: 11530 | 1 Financial Crisis Coming If U.S. Doesn't Deal With Long-Term Debt, Says Pete
Peterson
Posted Feb 07, 2011 12:14pm EST by Daniel Gross in Newsmakers
Peter G. Peterson, co-founder of the Blackstone Group, has long warned about
the threat that high deficits pose to the nation. In a stream of books, op-
eds, and articles, he has pushed for reform of entitlements and the tax code.
In recent years, Peterson, who served as Commerce Secretary in the Nixon
Administration, has stepped up his anti-deficit activities. He started a
foundation to address fiscal issues and helped fund a documentary film on
the national debt, I.O.U.S.A. Last month, the foundation announced grants to
six institutions – conservative, centrist, liberal – to prepare their own
deficit-reduction plans.
At 85, this longtime deficit pessimist is somewhat optimistic. “There’s
been amazing progress in the last two years on recognition of the problem,”
he tells me and Aaron Task in the accompanying video. Peterson's foundation
recently conducted a survey of former economic officials – Treasury
Secretaries, White House economic advisers, central bank officials – and
asked whether they believed the fiscal situation was sustainable, and how
strongly they felt about it. The result: “100 percent of the former
officials said it is unsustainable and felt very strongly about it.”
As Peterson noted: “I spent five years of my life in the market research
business, and I had never seen” this type of unanimous response.
Deficit Talk vs. Action
Of course, former officials often prove to be more reasonable and focused on
long-term issues than current officials. And that would seem to be
precisely the problem. The first action Washington took after last November
’s election was to make the deficit larger – with Republicans and
Democrats signing off on a deal to extend the Bush-era tax cuts and
temporarily reduce the Social Security payroll tax. With both parties now
invested in the performance of the economy through the 2012 election, there
’s little appetite for swift austerity measures.
Peterson says that’s OK. “If you look like all you care about is doing
something about the deficit now, you look like you’re totally unaware of
the short term problems the economy has,” he said.
The optimal approach: “Have a reasonable stimulus program but link it to a
long-term plan” that goes into effect as the economy covers, he says. For
as scary as the current numbers are – a projected fiscal 2011 deficit of
about $1.5 trillion – “the real problem is the long-term debt.”
According to studies conducted by the Peterson Foundation, by 2020 interest
will be the largest line item in the federal budget if we don't change
course.
The Grand Bargain
A study by the Peterson Institute for International Economies found that in
2035, interest costs will account for about 13 percent of gross domestic
product in advanced nations, including the U.S. That dwarfs the chunk of GDP
now spent on items like research and development and infrastructure. “It
has become very popular to talk about winning the future, and the investment
economy,” Peterson said. ”But the melancholy question nobody wants to
talk about, is where we get the resources to invest?”
The solution lies in a grand bargain that includes reductions in
entitlements and spending, and increases in revenues. “I strongly believe
everything must be on the table, both for fairness and political reasons,”
he says.
Peterson notes that tax expenditures – items like the mortgage interest
deduction and other breaks and loopholes – total up to $1.1 trillion a year
. What’s more, the U.S. spends half of all the money spent on defense in
the world – more than the next 14 countries combined. Peterson has little
patience for ideologues on either end of the spectrum who say that long-term
deficits can be closed solely by spending reductions, or solely by tax
increases. “If you try to do it with spending only, the numbers are so
draconian that they are really beyond anybody’s capacity to imagine,” he
says.
Now that a consensus exists on the general scope of the problem, the next
phase is to come up with solutions. To try to bridge the partisan divide
that has prevented agreements in recent years, the Peterson Foundation has
given grants to six organizations, from the Heritage Foundation on the right
to the Progressive Policy Institute on the left, and asked them to come up
with plans that they will discuss at a summit.
Of course, convincing former policymakers and think tanks to work on and
propose solutions is less than half the battle. In the end, elected
officials have to come together on a plan that will upset a lot of
entrenched interested and big chunks of the electorate. What makes him
believe that an agreement is within reach?
“There are two broad theories,” Peterson said. “One is that with the
right level of concern and bipartisan support and presidential leadership
you’ll be able to put a package together. The other is that it will take a
crisis.”
While recent experience has shown that governments don’t act decisively on
fiscal matters until markets force them too, Peterson is putting his mouth,
and his money, on the political system’s ability to appreciate the severity
of the issue on its own. “Just trust me, you don’t want a crisis on this.
”
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