I.O.U.S.A - Addison Wiggin [22]
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Chapter 2 The Budget Defi cit 37
Similarly, the members of the House of Representatives did not attend the luncheon at the Capitol Arts Building. They were holed up debating a ban on smoking cigarettes in public areas in the state.
The story was featured in the Concord Monitor and the Manchester Union Leader on February 14, 2007. But the message they were delivering seemed to have been missed, as evident in commentary stated by Isabel Sawhill of the Brookings Institution and Allison Fraser of the Heritage Foundation.
Isabel Sawhill: “ It ’ s not a wolf at the door, ” she said to a reporter from the New Hampshire Union Leader. “ It ’ s termites in the woodwork. ”
Allison Fraser:
“ What we
’ re talking about, the things
that need to occur — either restructuring of entitlements or restructuring the tax structure — are going to affect the middle class. ”
While two local papers covered the story, the exclusion of the Fiscal Wake - Up Tour story from other media points to a larger problem with the media in America. How can the average American be expected to know anything of the budget crisis their country faces when the nightly local (and more often than not, national) news favors stories on the latest socialite to be incarcerated for drunk driving, or, in this case, an engagement proposal gone awry?
The Committee to Save the World
During a brief period in the 1990s, politicians and the media appeared to recognize the challenge and got together to try to fi x the nation ’ s fi nances.
Both the
“ Our federal fi nancial problem is worse today than it was Republicans and in 1992, ” says David Walker, “ but back then the media, busi- Democrats worked ness leaders, and several presidential candidates made fi scal toward balancing responsibility a key issue. The country woke up, recognized the budget in the the challenge, and demanded change. ”
1990s.
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38 The
Mission
Six weeks before the 1994 Congressional election, a group of Republicans released a document called the “ Contract with America. ” The Contract, which was built upon a large amount of text taken from Ronald Reagan ’ s 1985 State of the Union address and ideas that originated at the conservative think tank the Heritage Foundation, detailed the actions the GOP would take if they became the majority in the House for the fi rst time in 40 years. Seen as revolutionary by many, the document laid out major policy changes, including 10 bills to implement major reform in the federal government. Though most of the bills died in the Senate, there were a few notable exceptions, including the Fiscal Responsibility Act.
This Act contained two budgetary reforms: a constitutional balanced budget and a permanent line item veto.
Those on the right saw the Contract as not only a triumph for GOP leaders Newt Gingrich and Tom DeLay, but also as a major stepping - stone for the balanced budget that occurred in 1998 and as a jumping - off point for the ensuing bull market in the U.S. economy. Those on the left often gave credit to then Treasury Secretary Robert Rubin, Deputy Treasury Secretary Larry Summers, and Federal Reserve Chairman Alan Greenspan, aka “ The Committee to Save the World. ”
We interviewed Robert Rubin about the political coalescence that took place during the 1990s. We met Rubin in the corporate offi ces of Citigroup in New York City, where he was presiding over the Citigroup executive committee.
“ Politics of sound fi scal policy are very diffi cult, ” says Rubin, “ because the natural inertia in the political system is toward federal programs, most of which are very useful.
Therefore the inertia is toward spending on the one hand and tax cuts on the other. ”
But, the former Treasury secretary went on to explain, “ in order to have sound