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Debt-pocalypse Now!

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    Steve Forbes gives his take on what happens if we don’t meet the August 2nd debt deadline.

  • Duration 6:50
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Tonight on the docket falling down the rabbit all the twists and turns back and forth in this ongoing debt debate.

Has given the new meaning to political theater.

But what happens if no deficit reduction deal becomes law what then -- the -- fall -- Armageddon 2011 come to pass.

As many big government types of warned.

I think not and let's get one thing straight with some creativity.

And a heavy dose of fiscal conservatism.

And constitutional Fidelity there's simply no need to go deeper into debt in order to pay back some of the big government's debts.

But in the midst of chaos it's unlikely that lawmakers other than Tea Party lawmakers.

Will agree with that.

Apparently big government bankers don't understand -- that -- -- various CEOs of the US banks.

Recently sent letters to Capitol Hill pressuring DC to hurry up and make a deal.

Well big bankers and this is that I show came and government shouldn't act in -- simply because.

It's days away from a political deadline the banks want the government to borrow more money because that makes more money for the banks.

Here to discuss as my next guest words magazine editor in chief Steve -- Steve it's a pleasure welcome back.

Value -- judge what what is the worst case scenario.

As you see it if the government to either does nothing or if the government raise taxes -- one of the views that you would say would be extreme and irresponsible.

Well the government's not going to be able to raise taxes thanks to the House of Representatives and sticking to to -- line which is a huge huge win.

They've go August 2 would come and go in the world we're not come to an end.

But come September when bills are coming due on the government can't pay him.

That's when you're gonna get a real crisis.

Now in the meantime there's a lot that can and should be done we've got a lot of gold -- itself -- two point six trillion dollars in the Social Security trust fund.

Which is empty with non marketable securities make them marketable doesn't violate the debt ceiling.

But you could pay Social Security for 45 years and have at the two trillion and that's the Federal Reserve all of that's really -- I think.

Well what they should do there -- -- been proposals on it is the Fed should -- realized capital gains on it turned over to the treasury.

That gets interest on those bonds.

Make prepayments on those are -- -- it can be done to get the government through the next few weeks is.

This mean that Steve Forbes agrees with me that the the -- libertarians in the house should oppose the Boehner plan.

And vote not to raise the debt ceiling because now is the most opportune time to shrink the government back into the confines of the constitution something that I know you want done as well as I want.

Down but I also know the constitution's.

-- designed to make things you want don't get -- done instantly we only control one house in the and the government.

We need to control the senate and the executive branch to get real reform like Reagan did in 1980.

So in the meantime -- -- don't control the wheels of government.

Get which can from the house and set the stage for the public debate -- 2012 republic we'll survive through 2012.

Then we get the radical change in 2013.

You are ran for the Republican nomination for president if you were doing so now.

Would you be -- would you would you be willing to say that you would not ask that the debt ceiling be raised in the -- president Forbes at.

Would run the government.

Within them that revenues that the government.

-- I would dip by the time I left office we had to have a balance and surplus not the raising taxes.

But getting America truly moving again growing again like with a flat tax.

Like with the dollar is good as gold against the government can't keep trashing uses doing today.

Getting rid of obamacare and getting -- health care plan with the patient in control not bureaucrats.

And getting rid of Dodd-Frank and getting real reform in the banking sector is the problem on the fiscal side on the monetary satirist call on that almost that goes to Washington wants to grow the government the Barrick -- waters -- -- Steve Forbes -- -- -- -- -- -- well.

This is where the EPA could do useful work -- about the air and Warner in Washington makes do such a fact.

At -- and so and turn terms of the country understands it and we saw this 1980.

Reagan did some very tough things He did -- both on the monetary side and on the fiscal side.

And not only -- to get American wrong again He won the Cold War which people said that the time.

It was impossible so big things can be done with real statesman who knows sometimes you have to Bob and -- but -- always keep your eye focused on the big can we cut uniformly across the board by which I mean military and entitled.

It's as well as the other know what crazy stuff like Atlantis across the board is a pot.

What you do is you reform Medicaid and Medicare.

You reform Social Security positive ways for example Medicaid why not do is Paul Ryan suggests a block grant that to the state to state of Washington.

Bipartisan support in that state to do something different on Medicaid.

Why -- Rhode Island of all places did it.

So you come up for what we had welfare reform Wisconsin showed how you do what -- -- adopted nationwide -- do you fear as July that we have become modern welfare state.

And that the government should not be in the business of paying for people's health even for their care in their liege.

Well unfortunately up part of that debate was lost decades ago the question is how do you deal with younger people should get a different mindset there's a new generations come along.

That's why you have personal accounts for Social Security for younger people where they opponent not the Washington politicians they know they -- that they're gonna no tolerance for Washington trying to fool around with it.

On Medicare you can do the same thing we start the account and an early age she outflank the status if you do a frontal assault should going to be like a World War I trench warfare.

And for example reforming the tax -- flat tax have to lobbies in Washington would lose their job you could make -- tax return about the size of this piece of Paper yes flat tax but you got to make sure it's the right flat tax you know the Obama Darth beta version is line one what did you make mine to send -- in right -- that's not.

All right all right last question who really like amongst the announced or or.

Likely to announce Republican candidates for the nomination and 2012.

I'm still looking over the field I am -- disappointed some of the candidates.

Wish run didn't run.

But I want to see how well they perform under the glare of the pressure of the public square.

And so maybe Chris -- -- had about hospital but He may still end up in it even though it doesn't want to do what was see a governor Perry Rick Perry does.

There and maybe others in I want to say I'm Michelle Bachman holds up under the pressure -- -- -- -- the the -- straw poll in Iowa this August.

How she handled the pressure Ronald Reagan could show He could not only give a good speech.

He also knew how to govern involves how to persuade the public Steve Forbes it's a pleasure thanks thank you just joining us there is.

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