I rather enjoyed the NewsHour’s interview with former Treasury Secretary Robert Rubin last night, in part because Rubin is such an affable personality and capable of speaking about policy matters in an engaging way. One of the most striking moments came in his criticism on the current administration’s and Congress’s fiscal policy:
PAUL SOLMAN: So when you talk about the ’90s, when you were in the administration, as a period of a virtuous circle, where lower deficits led to more confidence, lower interest rates and so forth, you were concerned about this famous vicious circle, I take it, of higher interest rates, lower confidence and so forth?
ROBERT RUBIN: Yes, I’m very concerned about it, Paul. I think the probability that the course that we are now on, the fiscal course that we are now on is going to lead to serious trouble is exceedingly high.
PAUL SOLMAN: 70 percent? 80 percent?
ROBERT RUBIN: No, I think it’s probably materially higher than that unless it’s repaired, but the trouble is the repair of it is going to be very difficult. Alan Greenspan said about a week or two ago that our future depended on fixing it.
OK, repeating the claim that the current fiscal policy is disastrous may get tedious blogging. But amid all the exortations from the centrist Democrats that we should be keeping in middle-class tax cuts in order to win the presidential election, the stakes we’re talking about are important. The Democrats illusion that we can have more stuff - prescription drug benefits, increased homeland security funding, funding into education and energy research - without taxes being raised over and above what they would need to be for fiscal security is dishonest.
And to answer those who would find Rubin alarmist, I’d feel a lot more comfortable if the only answers we were getting from the Republicans weren’t a) we’ll grow our way out of the deficit (even when/if the economy grows, a significant deficit will remain); or b) if Rubinomics were to have a say we wouldn’t have given the stimulative tax cuts anyway. Quad erat demonstrandum.
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