Reagan Budget Guru: Shut it Down!

[Marcus Bryant]

http://www.thedailybeast.com/blogs-and-stories/2011-04-07/reagan-budget-guru-david-stockman-says-shut-down-the-government/full/#

[Marcus Bryant]

The 64-year-old Stockman, who made millions as an investment banker after serving as a Michigan congressman and then Reagan’s fiscal guru in the early 1980s, makes Debbie Downer sound like a cockeyed optimist. During a conversation punctuated by mirthless laughter, he characterized America’s elected officials as “the fools inside the Beltway,” dismissed House Budget Committee Chairman Paul Ryan, generally celebrated as the GOP’s brightest policy star, as “an earnest young man” who offers discredited ideology over practical solutions, and predicted a long and agonizing epoch in which incomes will fall, the economy will stall and reality’s bite will leave painful tooth marks.

“The real issue now is that the Tea Party needs to shut down the government or shut down Boehner,” Stockman said. “Boehner is as prone to cave as Obama. So how can we have any confidence that Washington is ever going to address anything when you have two guys who love to kick the can down the road?”

Stockman went on: “The Democrats are not doing anything about their guy either. They should be pounding the table—why aren’t we cutting the defense budget by $100 billion a year instead of this embarrassing pinprick [$78 billion over five years] that [Defense Secretary Robert] Gates has come up with? It’s unfortunate, but when you bury yourself in $52 trillion of debt—public, private, business, housing and government—you can’t make it go away. Because all the people who loaned you that money think they have a contract with you to pay it back. So we’re going to go through a massive workout, and during that process I don’t think the economy’s going to grow—it’s going to struggle and suffer. Those are the facts that Washington is unwilling to face.”

[Marcus Bryant]

Stockman took special aim at Chairman Ryan, who this week proposed a politically risky budget that Thursday garnered laurels from The Wall Street Journal for attacking the festering growth of entitlement costs, particularly through Medicare reform.

“I think he has a nice philosophical plan for the fiscal hereafter, two or three decades down the road,” Stockman sniffed. “But it is neither courageous nor relevant when it comes to the fiscal here and now… It’s a fine plan that starts in 2021. We need to deal with revenue, entitlements, defense and discretionaries, and the problem with his plan is it doesn’t address more than one of those appropriately. Discretionaries, yes, but it totally whiffs on the other three—which are much more important.”

Stockman points out that, at current levels, “Social Security and Medicare alone will cost $17.2 trillion over the next 10 years—a startling number. How much does this courageous budget cut from the entitlements over the next 10 years? Zero! None! Nothing! Ryan is taking a nice philosophical stand for the by and by—I call it the fiscal afterlife. But it’s not relevant to the wolf that’s at the door right now, and it’s going to exact huge amounts of political cost and baggage for no gain at all on the fiscal front.”
Also galling to Stockman: “The Republicans have come with a plan to reduce the deficit that involves cutting taxes by $4.2 trillion over the next 10 years. This is the Ryan plan: burying us that much deeper because of this Republican catechism about tax cuts, anytime, anywhere, for any reason.” Stockman said letting the current tax cuts expire, as called for in the next few years, will eventually produce $600 billion in deficit reduction. “The Republicans should just sit on their hands and let it happen.”

[Don't Stop Believin]

Even I stop Believing in OBama. :(

[Marcus Bryant]

Meanwhile, Stockman told me that the abnormally low interest rate on the $14 trillion national debt—currently near zero—is likely to rise to normal levels in coming years by at least 300 basis points, or 3 percent. “This morning the European Central Bank started that process by raising interest rates—a little more enlightened than the Fed. It’s kind of ironic—an increase of 300 basis points, a few quarters or years down the road, increases federal spending by half a trillion dollars. All of the assembled congressmen of every stripe and viewpoint—from Tea Party to left-liberal—could not come up with $500 billion in cuts between them.”

[Marcus Bryant]

The Education of David Stockman (http://www.theatlantic.com/magazine/archive/1981/12/the-education-of-david-stockman/5760/)

[Wild Cobra]

Is this republicans abusing the open records laws again?