I.O.U.S.A - Addison Wiggin [67]
Q: Can you explain to me, what is the American economy and what role does that play in this country and in the world?
Robert Rubin : The term American economy is simply a phrase that captures the full output in our country of goods and services. So in a sense, it ’ s the aggregate standard of living of all of us. Even with the growth that has occurred around the globe over the past several decades, the United States is still the engine of economic growth for the global economy. When we do well, that helps fuel growth around the world; and conversely, when we do badly or when we have diffi culty, that creates or can create economic diffi culty around the world. As a consequence, the fi scal issues, our unsound fi scal conditions, our low savings rate, and our large trade imbalance, which are a threat to our own economy, are also a threat to the global economy. For that reason, there is enormous focus around the world on our unsound, long - term fi scal prospects and an enormous focus on the importance of our reestablishing sound fi scal policy, not just for our sake, but for the sake of the entire global economy.
One of the political problems with the fi scal debate is it does crosscut with ideology, so that some who believe that fi scal c09.indd 137
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138 The
Interviews
conditions are very important say that we have to solve it solely on the spending side and that we should not do anything to increase revenues; in fact, we should even reduce tax rates. And others will look at the same set of facts and say that we shouldn ’ t reduce government expenditure; in fact, we should increase government programs and government expenditure and increase revenues to pay for that. I don ’ t think there ’ s any question that the reality lies in putting aside all ideology and making very practical trade - off judgments based on fact and analysis about the government programs — most of which are very important to our economy, national security, and all the rest — and also about the revenues to pay for them. And I think when you ’ re all fi nished, the conclusion that you ’ re going to reach is that you have to have serious spending discipline, you also have to make room for critical public investment, and we ’ re going to have to have increased revenues. And if we do all that, I think we can thrive for a long, long time economically and socially.
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Peter G. Peterson
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Peter G. Peterson, a fi scal conservative with 60 years of experience in top government and industry positions, co - founded the Concord Coalition with the late Sen. Paul Tsongas (D - MA) and former Sen.
Warren Rudman (R - NH) in 1992. More recently, the former secretary of commerce founded the Peter G. Peterson Foundation and endowed it with $ 1 billion to tackle some of the critical challenges threatening the nation ’ s well - being. Among them: large and growing budget defi cits, dismal national and personal savings rates, and a ballooning national debt that endangers the viability of Social Security, Medicare, and our economy itself.
Q: Tell me about these things that people in Washington refer to as the trust funds. What are they, and are they appropriately named?
Peter Peterson: Social Security trust funds are a misnomer, and in fact they ’ re an oxymoron. They shouldn ’ t be trusted and they ’ re not funded. They were intended originally for the surpluses that were building up as the boomers were working, to be set aside and saved for Social Security. Instead, they were spent for other purposes. As a result, all we have in there is a bunch of liabilities.
Q: Those surpluses have been running now for 20 or 25 years.
What does the future look like for those surpluses?
Peter Peterson: For the next seven or eight or nine years, they ’ ll continue to approach a trillion dollars in total, but in 2017 the boomers will retire in force and at that point the defi cits grow at an extraordinary rate. In other words, we ’ ve got to learn to think in terms of the cash in, cash out, pay - as - you - go system,