I took very seriously the Simpson-Bowles report and its proposals when they first appeared.
They were the first bipartisan -or even non-partisan- serious study and proposal I have read so far on the matter of long-term (50 years) financial management of our country.
They were the first bipartisan -or even non-partisan- serious study and proposal I have read so far on the matter of long-term (50 years) financial management of our country.
Unfortunately, after more than 15 years of being issued, presented and discarded, Simpson-Bowles remains the only serious and comprehensive proposal for fiscal reform. In the intervening years, the 2001 deficit has ballooned from the 5.4 trillion legacy that George W Bush received to the 19 trillion that welcomed Donald J Trump in 2016.
Moreover, measured as a percentage of GDP -as experts Kenneth Roggoff and Carmen Reinhardt found the 90 % debt/GDP as the tipping point at which debt becomes unpayable- is represents a jump from under 60 % to over 100 %, a level that in any other country would put US interest payments in the double-digit ballpark.
Rogoff seems to be more optimistic about the short-term levels of growth that Trump's economy can achieve.
Having said that, the Harvard economist cautions about the challenges ahead if for some of several reasons, trust on the dollar strenght -and the toying with defaulting our sovereign debt (something explicitly banned in our Constitution) instead of doing a harder adjustment on government spending.
Trump -a businessman who called himself "the king of debt"- has flirted with the idea of indirectly defaulting the 19 trillion debt he inherited by repurchasing bonds at a lower price -thereby stiffing bondholders- if necessary.
Trump has not come back to such suggestions, but his seems to be a "supply-side" approach to debt that can leave a serious bubble burst like the one that exploded in 2007-2008.
Moreover, measured as a percentage of GDP -as experts Kenneth Roggoff and Carmen Reinhardt found the 90 % debt/GDP as the tipping point at which debt becomes unpayable- is represents a jump from under 60 % to over 100 %, a level that in any other country would put US interest payments in the double-digit ballpark.
Rogoff seems to be more optimistic about the short-term levels of growth that Trump's economy can achieve.
Having said that, the Harvard economist cautions about the challenges ahead if for some of several reasons, trust on the dollar strenght -and the toying with defaulting our sovereign debt (something explicitly banned in our Constitution) instead of doing a harder adjustment on government spending.
Trump -a businessman who called himself "the king of debt"- has flirted with the idea of indirectly defaulting the 19 trillion debt he inherited by repurchasing bonds at a lower price -thereby stiffing bondholders- if necessary.
Trump has not come back to such suggestions, but his seems to be a "supply-side" approach to debt that can leave a serious bubble burst like the one that exploded in 2007-2008.
The fact that dealing with such levels of mounting debt was ignored for such long period of time without any cry for action is just another example of the dangerous disregard for unpopular facts that characterizes populism and partisan thinking.
An over 100 % debt/GDP ratio (still growing) should raise a red flag for anybody holding US dollars or T bonds and Simpson-Bowles should be revisited. But that is, of course, assuming that hard choices are something that partisans want to discuss in an "election year" (code word for "ever", since all years are election years).
An over 100 % debt/GDP ratio (still growing) should raise a red flag for anybody holding US dollars or T bonds and Simpson-Bowles should be revisited. But that is, of course, assuming that hard choices are something that partisans want to discuss in an "election year" (code word for "ever", since all years are election years).
Although Alan Simpson remains one of the most straight-talking, knowledgeable and respected speakers today, his candor, bipartisanship and expertise is not enough to recapture the attention of the majority of voters distracted by 24/7 multimedia partisan networks, droning surrogate talking heads and tweeter name-calling wars. They remain unaware about the growing quicksand where their finances and those of their children and grandchildren are gradually sinking.
A national debt over 100 % of our GDP is the real "swamp" in Washington, a bipartisan 19 trillion dollar-black hole punched by each new administration.
Given the precipitous growth of fiscal deficits (through either spending or tax cuts) Bowles-Simpson should be a starting point to propose an equally fact-based and professionally elaborated long term proposal.
Here is the access to the full Simpson-Bowles report.
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