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Holtz-Eakin: Obama Needs to Focus on Debt Problem

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    Former CBO director Douglas Holtz-Eakin weighs in on the nation's debt problem.

  • Duration 3:41
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That you talked about Alan Krueger -- his interview one of the other things that he said.

Out of the White House is they would like to see no drama surrounding the debt ceiling negotiations that are coming up they feel like the economy would be in better shape if we didn't have that he drama.

But then he aforementioned speaker Boehner added this 72% of Americans agree any increase in the nation's debt limit must be accompanied.

By spending cuts and reforms of a greater amount that's the principle I laid -- -- -- before the economic club of New York.

Last year may have twenty eleven no more than a year ago and I've repeated a number of times since.

He says the debates already -- -- bring in Douglas Holtz Aiken.

Former CBO director currently president of the American action forum it sounds like Doug we'll have plenty of drama in this debate don't you think.

I think there's going to be a lot of drama in this debate but the way ticket from out of it is for the president to get ahead of this.

And actually proposes spending cuts and take some leadership role that's that would -- to that question about whether we accompany a debt ceiling increase with some.

Debt reduction.

That by the way is the typical way things happen of the last fourteen that -- increases eleven have been accompanied with some sort of -- -- -- control so that's business as usual with.

The president wants to avoid drama and continue what we've always done things.

He should get ahead of this let me ask you about the debt ceiling.

A little bit because I think -- that actually pretty HD topic because we talk all the time about free markets here.

We're talking a moment about interest rates going up and what -- that might have.

The Federal Reserve in the stock market after today's jobs report.

And everything else -- we really believed in free markets when we just not have a debt ceiling would we say.

What the market will tell us -- we've reached our borrowing limit because you know won't be able to borrow more money interest rates shoot up why -- we needed -- it went.

As a lot of first principles we don't it's an artifact of -- the division in the United States and congressional executive powers out of congress must have a say in the overall.

Issuance of debt and that's been not the case about a hundred years.

But markets in the -- are going to rule it's not going to matter with the deaths in this too high or too low what's gonna matters whether the dentist who hired hello.

We already have evidence that is too high historically.

Countries and our level of that grow more slowly and have a higher chance of getting in trouble and it's projected to levels that are simply unsustainable so right now that's not -- doubt and that's the problem and that's what the president needs to focus -- Right do we create this drama every time we have to raise this debt ceiling and our point here it's been we talked.

We talked about this a number of times in recent months that yet they'll get their act together in Washington when they're forced -- when interest rates start to go up.

It all seriousness and really shoot up a symbol of what now we really -- everybody knows we have to cut spending at some point -- there's any debate about that but when interest rates shoot up to a level.

That hurts us yet then they'll cut spending but in the meantime this debt limit negotiation comes up every so often just creates all this.

Nonsense and drama with the played out we know the gonna raise the debt limit at the end of all this they always do.

-- And and they should quite frankly I but I think your points on the mark which is somewhere between January.

And now August of this year is imperative.

That this country take a different course with this entitlement spending programs those which are driving the large debt accumulation.

All of them the rating agencies have said so they said look the numbers I add up to something that's unsustainable -- USC's to get its fiscal house in order -- if the politics are such that they can't get it done.

We're gonna downgrade the US that's the leading edge of the market signal this as you're in trouble that's the big story right now -- the jobs report today by the way before we let you -- just -- here.

I mean that that the job growth this was about as exciting as my -- you know yes there but no one should aspire to look great -- thank you very much is always.

Douglas -- taken out of Washington the mark.

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