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Budget fight begins in mill Vice President Biden -- key lawmakers are diving headfirst into a series of critical budget negotiations this week.
As the August 2 debt ceiling deadline grows -- come to.
-- the year -- not a gang of seven with time -- deals running out Alice -- a member of president Obama's debt commission says DC must settle this immediately.
Or risk -- severe potential blow to the markets and economic recovery she joins us right now and a Fox Business exclusive all right Alison.
It Big Ten Geithner and the administration push this off any further -- we really looking at an August 2 deadline yet.
And I hope we don't let it run out to August 2 and find out.
It would be a very.
Fairly dire circumstance if the US government defaulted and stop paying its bills we don't want to live in a country like that.
We want to live in a country that pays its bills what may have differences about what.
The programs ought to be and what taxes ought to -- but once we roughed up bills we got to -- -- -- make of the fact that an investment company in China.
And a credit rating agency in Germany -- all ready downgraded the US debt.
Oh I think they have are recognizing what lots of us have known for a long time.
That the US government budget is on an unsustainable track we -- programmed that now.
To borrow more and more every year and that's not sustainable we can't do that nobody's gonna -- -- that much money.
And where we're in trouble we got to solve this problem and in my opinion we need a bipartisan long run solution it's got -- involved.
Slowing the growth of entitlements.
Raising more revenues from a reform tax system.
And slowing the growth of other spending as well but.
That's a large order it's not all going to be worked out by August 2.
But we've got to get a framework for solving -- problem agreed on so that we can get past this debt ceiling thing.
And get the big problem solved.
How would you put together that framework here -- Well as you mentioned I served on the president's commission we had -- a good framework and and it involved the things I just talked about.
Capping discretionary spending both defense and domestic.
Reforming entitlement programs so they aren't growing as fast that's Medicare Medicaid.
But he Social Security on a firm basis and reforming the tax code.
So that you can raise more revenue from a simpler tax code.
With broader base and lower rates.
But -- those are all the barrels plausible I stand up those are all very broad strokes that's certainly we -- we.
We -- just coming to this you know this epiphany now and we say boy we only have five weeks before August 2 and he's -- thing to do we know we needed to do -- things for years and we haven't done.
We don't need to do it all by August 2 but we need to agree on how we're going to eight to -- get there.
One possibility is a limited set of agreements substantive agreements that will cut future death -- yet.
Probably mostly including.
Caps on discretionary spending.
Plus they -- change in budget process.
That will force the congress and the president to come to grips with this program with this problem.
Quite soon I don't think we can afford to wait until after the next election.
Yeah I mean we've got to do it in the next year -- so.
There weren't street is -- you know a lot of Wall Street likes gridlock in Washington they don't like Atlanta has that.
Deal with you know deficit issues certainly didn't work for gridlock to not work for California.
But what make of this statement from the president today that the debt is -- a concrete impediment.
To economic growth is -- making these statements kinda late in the game didn't we know this and why isn't saying this now.
We've -- this for a long time it's not the first time he's talked about it.
But I agree the president's got to make -- And more forceful entry and broker a deal.
Between his own party and the Republicans that'll get us -- on to a more sustainable track.
That's absolutely necessary and what would the market we can survive -- -- that happen.
Would the market's reaction -- how do you think the market will react.
If we did not get an agreement on -- in the debt -- -- I think is that would be a worldwide market catastrophe.
If if it were as some people imagine.
Just a couple of days you know will have -- soon.
We just have to cross that Jesus got the -- and then it's all done.
The reaction might be -- But if it were clear that the US government was got a default on its debt not pay its bills.
And not pay interest on its death I think -- have a market rout.
Alice in the right be satisfied at all with any form of tax increases to increase the revenue side here do we need to increase the revenue side.
Absolutely we get.
We cannot do it all on the spending side.
My friend Paul Ryan and I think has just illustrated that.
He put forward a budget framework that did all of the deficit reduction on the spending side.
Then you have to do such draconian cuts.
That it's politically unfeasible.
We really need more revenue revenues now as a percent of GDP of the lowest they've been since 1958.
Or something every now here but a long time ago.
Alice what what would the market -- be could you quantify it if there was no debt deal on the debt ceiling.
No I couldn't quantify it would never been in this situation.
But that would certainly be a plunge in the stock market but more important there would -- the bond market would go crazy.
-- have much higher interest rates on all kinds of bonds.
Just the simple fact the world isn't going to go on lending has increasing amounts of money forever.
Especially for indicating that we're defaulting on those obligations -- certainly cannot -- -- yeah -- -- and seeing excellent.
It's not -- confidence -- you've got to be kidding it would be a huge debacle.
-- thank you very much -- Alice Rivlin former member of president Obama's definition in current.
Senior fellow at.
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