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Former Bain Capital managing director Ed Conrad on the government being blamed for the deficit and economy.
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Numbers Americans are taking the blame game to Washington the latest Gallup poll reveals 77%.
Believe politics are hurting the nation.
That -- is former managing director at Bain Capital and visiting scholar at the American Enterprise Institute he is here now.
Well we're unhappy with the bombs that we elected on her up -- riot the proceeds -- holiday that would give the crazy represented as they're clueless they would let me.
What we we get what we'll lots do we not so everywhere does the cycle end of complaining and the -- -- that the fighting the lack of action that just you know you wait the last minute to do everything -- -- certainly two opposing points of view one for lower spending one for higher taxes and then they have no reconciliation.
Here I think the issue though is.
It's not so much that were blaming Washington it's it's who's to blame and then who gets blamed.
And I think the situation is such that you have these mandatory increases and spending which have driven spending up from twenty to 24% of GDP.
There's been a silent 30% increase in spending.
-- and so you don't have bills being passed that are covered in the media that race spending to get the attention of the public.
And so the Republicans when they have to try to cut spending or rein in spending they would have to pass the bill.
To do -- they don't have the votes to do it.
And so they have no other negotiating leverage -- to bring this to a had.
And when they try to bring into it had -- blamed for creating the crisis but the crisis is really being created.
By 30% increase in spending.
Which is raise though one point one trillion dollar deficit we only raise one point one trillion dollars in taxes every year.
So who you need a massive across the board increase and in taxes if you don't cut spending in the president has been.
Unwilling to cut spending -- so.
-- enabled which -- gonna talk about I think a little bit -- minute by a market that has very low interest rates which enables the government to keep borrowing money yet had you know at a very affordable rates up what.
Happens next and what's even more importantly from a guy with your background what should -- be rooting for to happen next do we want this big grand bargain that might at a time when the economy's already.
Not in the best shape -- slows down a little bit more the cut spending that much raise taxes as much say Simpson Bowles talked about.
Well I think we don't see that there's there's.
Enormous risk of damage from letting debt grow as percentage GDP but people don't really -- risk -- -- see the damage after it's materialized so.
Do I think a grand bargain would be valuable.
Yes I do but I certainly don't expect one at all because I think that the president has a very strong negotiating position which is he has the votes to prevent a bill that would cut spending.
And so he doesn't need to cut spending and I think he genuinely believes.
That more spending is beneficial would be to the US and so he's willing to run up the spending even if he can't collect the taxes.
Because he recognizes that eventually.
We will have to pay for the spending will have to raise -- after.
The -- should they eventually is that -- need your average American feels some sort of pain.
From who -- longer term interest rates skyrocketing in some way I I go back to the payroll tax cut the two year temporary you know as one year than -- year yes temporary payroll tax.
Cut where I am not the -- Talk to -- people who are angry.
That there on paycheck is now a little bit less -- calls.
This payroll tax cut expired -- okay you want it lowered will then you're gonna have to give up some of the benefit because it got posted it doesn't pay for your Social Security benefit yes -- -- -- -- and give something up that.
You're gonna raise the red -- -- -- to.
No well over here 751080.
-- and then NATO wool love white a net see it's it until they they don't wanna feel pain in any way shape or form.
I think the president has been the great beneficiary being able raise spending 30% but nobody recognizes the cost.
You know four point increase in spending as a percent of GDP that has a big impact on GDP to driving down wages for example.
Household incomes have fallen over the last couple years since you don't they have not recovered.
Who got no recovery.
So our households really feeling the pain yes but they don't.
They don't connect it.
To the increase in government spending that has occurred many of them aren't even aware of the increasing government spending -- this has -- as long as the public doesn't recognize the cost.
I think that puts the president in very strong position and as soon as they do have to recognize the cost whether it's inflation lower wages higher taxes or reduce benefits I think they're gonna push.
That a lot harder than they have so far yeah.
And it's abducted have you on thanks for coming on today and thanks to my colleagues have mentioned -- book here before we are wrap up the author of unintended consequences so they don't have -- --
