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Wells Fargo chief economist John Silvia breaks down the reason for Obama's pick for Treasury secretary.
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All the presidential nomination for the next Treasury Secretary taking place in just a few minutes but first let's head over to John some chief economist at Wells Fargo for what Jacqueline means.
To the economy thanks so much for joining us -- asked Euro.
You know here's somebody that comes from the -- in school of economics.
Believes bigger government is better it seems is that your impression of him and and what does that mean in -- Treasury Secretary.
Why I think the president's choosing Jack because of two reasons one.
He knows the foul they've worked together for awhile and then second I think Jack is the budget person he's the finance Crescent annie's -- going to be the best position.
And then and the best position I think the note negotiate what congress.
I don't think it's an issue of financial regulation.
-- I don't think it's an issue of international relations.
I think it is basically Jack is probably going to negotiate.
In favor of continuing.
Significant government spending going fallen only modest cuts and and none of the budget -- overall.
You you talk about negotiating with congress and that is something that.
You know it has been the I guess he's been very tough on -- in the past is is the right way to say it.
Senator Judd Gregg from New Hampshire saying that he was -- -- -- negotiate when they were talking about the debt ceiling that he has positions and he doesn't give much ground although he has a really nice person he added that the end.
He doesn't know like him but.
He is a very tough negotiator is now the time to have someone like that.
When we are trying to build some consensus and and and we have to side -- -- -- very far apart.
On the way ideal what is simply he reflects a president and I think the president has been a tough negotiator.
I certainly when you look at the fiscal cliff deal it does seem that the president won most of that battle so wireless is suspect that Jack simply reflects a president.
And that seems to be the way we're gonna go -- what as somewhere in the financial markets.
That's what I have to taken at face value whether it's good bad overall for the economy over the long run.
It just doesn't seem to be all item one right now what seems to be employment as.
The position of Jack and a presidency -- today defending the spending numbers and be very very cautious about tax cuts yeah.
The senator Jeff Sessions of Alabama is is very fixed on a comment that he needed that Jack -- made a while ago I guess -- they're -- in 2011.
About president Obama's blueprint for the budget and he said we are not adding to the debt anymore.
And there was almost no sort of quantitative way.
To make that be true although they came back afterwards and tried very hard to justify that statement.
I'm senator sessions has said you know was a false statement and that's you know a tough person -- -- out there -- Treasury Secretary when he's making these.
Claims that are mathematically very top to the -- how do you feel about that what we think about that.
Welcome the private sector point of view that -- -- -- thing is a federal government.
Federal government debt is continuing to go up I've driven primarily by entitlements over the long run.
I think yes the way we have to trade and I I just don't see a case being made that based upon the behavior the last three or four years that federal debt is going to be slowing down.
Any time soon we have -- deficits they continue to accumulate.
Driven primarily by entitlement spending that's not gonna change.
So do you think that do you see him doing any trending at any point down the road I mean as some people -- pointed out that he did say at some point it would make sense to raise the Medicare age do you do you think that he believes that would advocates about it all.
I think the president and Jack we'll probably agree to some modification as you say trimming Melissa would folly be that the -- term.
In terms of deep cuts fundamental reform.
Big -- back in terms of I entitlement spending I don't think that's gonna be on the table I think -- trimming trimming at the margins.
So what do you think all of this means going forward what's your outlook for the economy given everything we have going on John.
Well it seems to me -- -- we're looking at you know debt to GDP ratios we're looking at the long term.
It seems that the argument is we're going to try to stabilize debt to GDP.
At some very high level would not gonna be claimed that debt to GDP level down.
As some people would like and I guess the question for us in the private sector is.
Is debt at a certain level relative to GDP it's a bill is -- going to stabilize.
And how much can we depend upon low.
Interest rates for a long period of time to help stabilize that ratio and will look in the global markets except that -- the Chinese and Japanese.
-- willing to accept large fiscal deficits in the United States.
Continuing to be refinanced over time that would have any given interest rates in -- -- -- -- Very very different story than what we traditionally think about in terms of fiscal policy in United States RE -- summit thank you so much.
Thank -- so we.
