US Prepares for global capital rule
Experts warn deficit could result in new crisis
By Edward Luce in Washington
Published: April 28 2010 00:11 | Last updated: April 28 2010 00:11
<SCRIPT language=javascript type=text/javascript>function floatContent(){var paraNum = "3"paraNum = paraNum - 1;var tb = document.getElementById('floating-con');var nl = document.getElementById('floating-target');if(tb.getElementsByTagName("div").length> 0){if (nl.getElementsByTagName("p").length>= paraNum){nl.insertBefore(tb,nl.getElementsByTagName("p")[paraNum]);}else {if (nl.getElementsByTagName("p").length == 3){nl.insertBefore(tb,nl.getElementsByTagName("p")[2]);}else {nl.insertBefore(tb,nl.getElementsByTagName("p")[0]);}}}}</SCRIPT>Strong majorities of former Republican and Democratic economic officials forecast the US will suffer another severe economic crisis unless it takes steps to rein in the country?s structural fiscal deficits, according to the Peterson Foundation, a non-partisan body.
The survey, which questioned officials from eight former US administrations, coincided with the first day?s hearing of Barack Obama?s bipartisan fiscal commission, which will publish its proposals in December, shortly after the mid-term congressional elections.
More than three-quarters of Republicans and Democrats who were surveyed predicted another big crisis within the next decade in the absence of tough measures to reverse America?s deteriorating fiscal outlook.
In contrast to the views of many sitting lawmakers, a strong majority also agreed that any solution would require both tax increases and spending cuts.
?For years folks in Washington deferred politically difficult decisions and avoided telling hard truths about the nature of the problem,? said Mr Obama yesterday.
?This is going to require people of both parties to come together and take a hard look at the growing [fiscal] gap.?
Few observers believe that the 18-member commission, which is co-chaired by Alan Simpson, a former Republican senator, and Erskine Bowles, a former chief of staff to Bill Clinton, the former US president, will come up with meaningful proposals, given the requirement that it produce 14 votes in favour of any recommendation.
Any attempt to reduce long-term deficits, which are driven principally by America?s entitlement programmes, namely Medicare, Medicaid and Social Security, would require Democrats and Republicans to climb down from long-cherished positions.
On Tuesday, Mr Simpson rejected charges by fellow Republicans that the commission was a ?stalking horse for higher taxes?. He said: ?We are stalking horses for our grandchildren. I have six. He [Mr Bowles] has seven.? He added: ?I was in the Senate for 18 years and the cry to me was always: ?Al, bring the bacon home?. Well, the pig has died.?
Political analysts believe that it will be very difficult to get bipartisan consensus before the onset of another economic crisis.
?When America is in crisis it acts,? said Bill Schneider, a political scientist at George Mason University.
?But the fiscal problem is a bit like global warming. Unless, or until, disaster happens, it is very doubtful the political system will do anything about it,? he added.
Experts warn deficit could result in new crisis
By Edward Luce in Washington
Published: April 28 2010 00:11 | Last updated: April 28 2010 00:11
<SCRIPT language=javascript type=text/javascript>function floatContent(){var paraNum = "3"paraNum = paraNum - 1;var tb = document.getElementById('floating-con');var nl = document.getElementById('floating-target');if(tb.getElementsByTagName("div").length> 0){if (nl.getElementsByTagName("p").length>= paraNum){nl.insertBefore(tb,nl.getElementsByTagName("p")[paraNum]);}else {if (nl.getElementsByTagName("p").length == 3){nl.insertBefore(tb,nl.getElementsByTagName("p")[2]);}else {nl.insertBefore(tb,nl.getElementsByTagName("p")[0]);}}}}</SCRIPT>Strong majorities of former Republican and Democratic economic officials forecast the US will suffer another severe economic crisis unless it takes steps to rein in the country?s structural fiscal deficits, according to the Peterson Foundation, a non-partisan body.
The survey, which questioned officials from eight former US administrations, coincided with the first day?s hearing of Barack Obama?s bipartisan fiscal commission, which will publish its proposals in December, shortly after the mid-term congressional elections.
More than three-quarters of Republicans and Democrats who were surveyed predicted another big crisis within the next decade in the absence of tough measures to reverse America?s deteriorating fiscal outlook.
In contrast to the views of many sitting lawmakers, a strong majority also agreed that any solution would require both tax increases and spending cuts.
?For years folks in Washington deferred politically difficult decisions and avoided telling hard truths about the nature of the problem,? said Mr Obama yesterday.
?This is going to require people of both parties to come together and take a hard look at the growing [fiscal] gap.?
Few observers believe that the 18-member commission, which is co-chaired by Alan Simpson, a former Republican senator, and Erskine Bowles, a former chief of staff to Bill Clinton, the former US president, will come up with meaningful proposals, given the requirement that it produce 14 votes in favour of any recommendation.
Any attempt to reduce long-term deficits, which are driven principally by America?s entitlement programmes, namely Medicare, Medicaid and Social Security, would require Democrats and Republicans to climb down from long-cherished positions.
On Tuesday, Mr Simpson rejected charges by fellow Republicans that the commission was a ?stalking horse for higher taxes?. He said: ?We are stalking horses for our grandchildren. I have six. He [Mr Bowles] has seven.? He added: ?I was in the Senate for 18 years and the cry to me was always: ?Al, bring the bacon home?. Well, the pig has died.?
Political analysts believe that it will be very difficult to get bipartisan consensus before the onset of another economic crisis.
?When America is in crisis it acts,? said Bill Schneider, a political scientist at George Mason University.
?But the fiscal problem is a bit like global warming. Unless, or until, disaster happens, it is very doubtful the political system will do anything about it,? he added.
