I.O.U.S.A - Addison Wiggin [64]
8/26/08 6:59:30 PM
132 The
Interviews
large measure, but not totally because of entitlements and because of inadequate revenues and large trade defi cits and a very low savings rate — if we stay on that fi nancial road, that could very seriously threaten our economy, job creation, and standard of living in this country.
On the other hand, we have enormous strengths. The United States economy has enormous strengths and we could have very good economic conditions in this country for a long, long time to come. But we have got to change, dramatically change, the path we are on with respect to fi nancial conditions. This includes addressing our long - term fi scal defi cits, which is a question of government spending, including entitlements — plus having adequate revenues, and you ’ re going to have to act on both sides.
We ’ re going to have to have public investment, we ’ re going to have to address our large trade imbalances, and in some fair measure, I think you can do that through addressing your fi scal issues. We are also going to have to aim toward a higher savings rate which, once again, in part can be addressed through having the kinds of surpluses we should have had during a period of good growth, and having sound fi scal conditions over time instead of having large defi cits.
Q: It seems very diffi cult for a politician, especially a presidential candidate, to run on that ticket. Do you have any comments about that?
Robert Rubin : The politics of this are extremely diffi cult because basically, in order to accomplish sound fi scal conditions, you have to both constrain spending and also have adequate revenues.
And the whole thrust of the political system is to want to spend on federal programs — most of which may be very good on their own merits, you just have to be able to afford them — and to have tax cuts. One of the political problems is that it is very diffi cult to explain all this in ways that people can relate to and that has political resonance.
In 1992, during the presidential campaign, one reason I believe that the restoration of the fi scal discipline became such an c09.indd 132
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Rubin 133
important and powerful political issue was because by that time we ’ d had, roughly speaking, 3 years of political diffi culty; we ’ d had 12 years of unsound fi scal conditions, and the American people associated the economic diffi culties of those roughly 3 years with the unsound fi scal conditions, with the defi cits, and I think rightly associated the two. In a very real political way, I think the defi cit became the symbol for all of their concerns about our economy at that time, and so the major candidates were all focused in varying degrees. Particularly President Clinton was very much focused, but as you may remember, Paul Tsongas had run at that point in the primaries, Perot had run at that point as an independent, and they had all talked a great deal about restoring fi scal discipline.
Q: Do you see that the economic environment now or the fi scal condition is similar now to 1992? Do you see similarities between 1993 and possibly ’ 09, or ’ 92 and ’ 08?
Robert Rubin : With respect to reestablishing fi scal discipline and putting in place sound fi scal policy, you have a very different environment today than President Clinton faced — or then Governor Clinton faced in the 1992 presidential election because we ’ ve had strong GDP growth. That ’ s on the one hand. On the other hand, we ’ ve had, roughly speaking, stagnant median real wages; we ’ ve had large increases in inequality; and we ’ ve had a seeming increase in economic dislocation. Most Americans do not feel comfortable or are very concerned, economically. But it is not a similar kind of economic circumstance to those we had in the three years leading into the ’ 92 election. And as a consequence, I think fi scal issues will not play a large role in the ’ 08 campaign.
I think they should, if the judgments were made with respect