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Art Laffer, Laffer Associates founder and chairman, on the growing U.S. debt and how it impacts America’s strength and national security.
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Former leaders of national security experts on our nation's debt gallery today in Washington to discuss the impact of America's debt crisis.
On national security here to weigh in -- average eminent founder of Laffer associates and a former economic advisor.
To President Reagan that was that us a story today was that is that the debt is could actually hurt our our our.
Our operations overseas.
Well in general yes I sure -- I mean the economy is our best defense of anything.
A strong economy with full employment producing lots of goods is the best retarded against any type of attack or any type of threat anywhere and the national debt precludes us by the way from having flexibility Cheryl.
To really do things we need to do in times of war imagine if we had a national debt.
In 1940 at the levels we have it now we would not have been able to carry out World War II armament build up I mean it really would have been bad.
You know art OK look what this all goes back -- and this is -- -- -- -- sick castration which are talking about part of the fiscal -- the the end of the year we had a super committee.
They -- that what they were supposed to do they they knew at the time this is congress they knew that if they didn't make the cuts at the time -- was -- -- this was gonna happen and guess what it's happening.
And -- -- no -- see this coming.
Well I think they sought coming I didn't think they believe that would happen.
And I really didn't believe it would happen either but the -- -- ration is not the right way to run a government.
You can't.
Do defense spending this way and treat items in the budget equally some are more important than others and this is not the one you wanna cut.
Are even Mike Mullen former George is -- and he said look this is a major national security.
The -- With the situation the Middle East now do you think that fit that congress can come back or someone can come back and maybe rethink the fact that we should be cutting half.
The cut we should be cutting half of the defense -- right now basically.
Yeah I think Mike -- is totally correct.
By the -- is a phenomenal person.
And I wish we still had him as chairman.
But you know yes seven I think they have to come back and really rethink defense.
I -- here look at all the Middle East look at all the issues we have facing us in the Middle East and not only in the Middle East and in Russia and China in the rest the world.
We have extended our defense procedures -- way beyond.
Our resource base and.
I think that we need to rethink our defense spending.
But even more so Sheryl we really need to rethink getting economy growing again to provide the prosperity.
That really can give us the types of defense that we need.
Outlook hasn't yet is -- the start.
One I want -- -- commodities and ask is can I I was -- the economic quite -- but you know last week I mean you have Bernanke basic give us you know quantitative easing in Fannie on.
-- curious what you made of that move I mean he seems to be more than anyone so concerned.
About keeping that money -- -- you know that the printing of the money flowing.
Did you agree with the decision last week.
No I don't I think it's really silly I think it's foolish.
There was a great piece in the Wall Street Journal by John Taylor and George -- and John cogan and a few others.
That really outlined why Bernanke's done a foolish job and it hasn't worked have you noticed the prosperity coming back from the US.
It hasn't -- we've had three quantitative easing is and one Operation Twist and we're still on the rotten shape.
Bernanke has done nothing to make today's economy better and he's done a lot to make future economies a lot worse.
Well are one of the things -- that he has done and then this could be a positive sign is that keeping.
Interest rates low other thanking his us -- -- to spark you know a rebound in the housing market which which -- Somewhat gotten better over the last three months if you look at the data.
At the same time.
How does that tell you like okay -- -- The -- -- jobs are being created I mean we we -- had a job creation I mean the Fed can't print jobs what what could he know you on the employment side.
Lower low interest rates obviously have not brought the housing market back we've had low interest -- for what five years now.
And the housing market hasn't -- much better I think that's happening is just a few of the old houses are wearing out so finally we get a couple of new ones built but.
We're way way way below the levels we should be -- There's no boom in the housing market there's no boom of the economy and are no jobs and Bernanke hasn't been successful but what we have done Cheryl.
As we have build up a huge national debt.
That we're gonna have to deal -- in the future and what we have done it we've brought brought about huge.
Monetary base bank reserves are way up.
Which we're gonna have to siphon off at some time in the future and that's when you're gonna start seeing the problems coming back.
In big time -- have a job and I want hello negative if you have a job in my monoline that's just -- think -- -- I don't know Lorena.
What -- they don't make loans -- anyway those that regulators and they're saying you're sub are whatever it is you know how they do it Cheryl by the way I want to compliment you and your last sex segment.
It was really good you did a great job and Pat Caddell.
And Rich Lowry are phenomenal guests Soledad I really enjoyed it does -- grade -- -- thank you very much appreciate it good to have.
