Bernanke: Government Borrowing Is Unsustainable

Jun 15, 2011
Originally published on June 15, 2011 6:46 am
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RENEE MONTAGNE, Host:

This is MORNING EDITION from NPR News. I'm Renee Montagne.

STEVE INSKEEP, Host:

NPR's Andrea Seabrook was in the room yesterday, for a meeting where experts argued the fiscal situation is worse than you think.

ANDREA SEABROOK: The annual conference of the Committee for a Responsible Federal Budget, showed its gravitas from the start. A rare statement from Federal Reserve Chairman, Ben Bernanke.

BEN BERNANKE: Perhaps the most important thing for people to understand about the federal budget is that maintaining the status quo is not an option.

SEABROOK: No one, said Bernanke, will lend money to a government with endlessly rising debt and stagnant income. Vast change is imperative. Bernanke said this change...

BERNANKE: Could take place through a careful and deliberative process that weighs priorities, and gives individuals and firms adequate time to adjust to changes in government programs and tax policies.

SEABROOK: If that's too wonky an explanation for you, try this.

ALAN SIMPSON: Here's where we are: If you spend more than you earn you lose your butt. And if you spend a buck and borrow 41 cents, you got to be stupid.

SEABROOK: That's Alan Simpson, a former Republican Senator, and one of the co- chairs of the recent Commission on Fiscal Responsibility and Reform. The "Simpson-Bowles Report," as it's called, was the first comprehensive fiscal plan for the U.S. government to be put on the table. And negotiating it, says Simpson, was agonizing.

SIMPSON: This is a stink bomb in the garden party.

SEABROOK: What America faces, said Simpson, is the erosion of the economy. A lower standard of living for adults now, and for their children, later. So the commission put forth a broad and bold plan which includes tax increases, spending cuts, and erasing all tax deductions for businesses and banks, for homeowners and parents.

SIMPSON: We have felt that we have achieved an astounding success. We have effectively pissed off everybody in America.

(SOUNDBITE OF LAUGHTER)

SEABROOK: A more partisan speech came from House Republican Budget Committee Chairman, Paul Ryan.

PAUL RYAN: To govern is to actually put an idea on the table. And that's precisely what we did in the House of Representatives.

SEABROOK: The Ryan budget fundamentally changes Medicare and Medicaid, without raising any taxes. Every Democrat voted nay, and all but four House Republicans voted yea - which led this Democrat to announce...

MICHAEL BENNET: I'm mystified by the conversation that's going on in Washington. Mystified.

SEABROOK: Senator Michael Bennet of Colorado. The budget problem is sweeping and universal, yet Washington is still engaged in tooth-and-claw partisanship. Bennet says, for many Americans, this debate will test whether government can work at all.

BENNET: They want to know that we're all in it together. So this Washington language that's pitting one group against another group is of no interest. They want to know that we all have something to contribute to solving the problem. And they want it, emphatically, to be bipartisan.

SEABROOK: Andrea Seabrook, NPR News, Washington. Transcript provided by NPR, Copyright NPR.