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American Action Forum President Douglas Holtz-Eakin on the consequences of not raising the debt ceiling and the need for spending cuts and tax reform.
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Next interview because it's day one -- Fox Business a special series the government is killing my business and our next guest says it's a story we've heard many times before but.
Weaving in the debt ceiling discussion.
To create jobs and growth we take the question to a man who was -- no stranger to Capitol Hill Douglas Holtz Aiken is the president of the American action forum.
He's also the former director of the Congressional Budget Office has crunch the numbers.
And also former member of the Financial Crisis Inquiry Commission -- which was just talking about it let's get to that debt ceiling must we -- it.
Absolutely -- there is no substitute for being a good Steward of the nation's credit rating and the numbers don't add up if you don't -- so this is the some it has to happen it's it's a little.
Untouchable for some people to figure out how it would feel we didn't -- -- what's the worst thing that could happen.
While we have about Saddam 2.3 trillion dollars in revenues so you can pay the debt service people was worry about that -- to pay that this 300 billion.
You have two trillion dollars left and fortunately so security Medicare Medicaid those kind of program they're two point one trillion so.
Well hundred billion dollar haircut on those and then zero for the troops zero for roads here for education.
It's not gonna happen if you were in those meetings.
Where is the wiggle room and I'll ask -- wear both hats first for the Democrats that Republicans -- for the Democrats it's it's up to the President -- explain to them December that they could not both politically and economically raise taxes.
To understand it's still -- six months later they still can't raise cash to remind them and say guys back down on the F I mean he's the president and he considered them look I hope you with your reelection I understand that we wanna raise taxes not gonna happen but it's bad for the economy -- this deal can't happen and you believe he believes that.
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- Well since the the problem is spending it has to be all spends they need to understand that the Defense Department cannot be off limits that there are legitimate cuts there as -- the rest -- -- So defense there how that any kind of tweaking of the tax code where you cut out some incentives for certain industries like farming or oil.
The real tough call there is do you believe -- -- form if you believe you can get attached -- I would think we desperately need one.
You wanna sort of hold on -- all these bad provisions he can use them to lower rates broaden the base.
If you don't think giving -- -- form let's go fix it now some of the the credit ratings agencies say you know we're gonna to downgrade America.
The triple A rating that the US has if we don't raise that debt ceiling.
What would that do what is that.
I mean tell how that would unacceptable I mean there there are two reasons to be downgraded one is the near term problem could raise the debt ceiling the bigger when is the long term problem we don't fix the debt.
And we don't fix the debt we get one of two things would get the good news story where we get stagnation is a nation.
No rising living standards.
We model along in our children inherit an economy that's broken and less prosperous than this one.
Or leave the bad news which is -- financial crisis we look like Greece -- and then -- and up and then we model along and so you know we got to fix it there's no way around.
OK let's get to the government hurting business right now but let's -- that -- -- solutions.
What should be changed it -- -- Sandra Smith talking about how something as simple as you can't fish until 10 in the morning.
Really kind of effects of business.
Completely and what needs to change most vols are national attitude with -- growth for -- -- -- are gonna finish was just an awful lot for ten and it's no big deal.
You know we're we're gonna worry about the National Labor Relations Board -- and take -- of the -- -- will build -- it doesn't matter what they do or.
You know the EPA -- we're worried about Mercury in kids generally -- we also think about growth and so.
At every moment -- -- that the question is this going to cause.
A firm to hire fewer workers if so is it really worth that we've stopped doing that.
We just thought the growth will come on and on what is the number one thing you would get rid of if you were in charge on the part of the debt crisis and he got to get rid of that on number two.
The Health Care Reform is simply bad economic policy it's -- it's a fifth of the economy and it spills over to the other 80% we efforts and you're saying the priority should have been put forth more toward an economic issue verses.
If you health care for Earl to think back to that time.
We're worried about -- we've had a crisis -- congress passed this stimulus bill and checked that box oil bro don't worry about it -- off to do big social engineering for health reform to make any sense.
To that and should.
During boom times back in the early two thousands have been -- more appropriate time when President Bush was president.
To have done something like we missed a big opportunity for ten years we didn't fix some problems Social Security Medicare Medicaid that we knew we had.
And in some cases we went the wrong direction so we lost both.
Time and we lost little ground and then in the crisis we lost a cushion -- -- -- back and look to see you -- -- -- -- and president of the American action forum and for a former director of the Congressional Budget Office thank you so much.
