Other Happenings at the Debt Conference
CRFB's debt conference yesterday, titled "The Debt Ceiling, Fiscal Plans, and Market Jitters: Where Do We Go from Here?," featured an all-star cast of 40 of the biggest names in economic and fiscal policy, producing a fascinating discussion on the debt ceiling and our country's long-term outlook. Here's a brief summary of some of the things that were said.
According to an impromptu poll by moderator Steve Liesman of CNBC, about two-thirds of the participants expect the debt ceiling to be raised by the August 2nd deadline given by the Treasury Department. Although Ben Bernanke disapproved of using the debt limit to force action on the deficit, a number of experts felt that the debt ceiling in general and this debt ceiling vote specifically would be an appropriate way to force an agreement on a down-payment of deficit reduction.
However, most attendees were gloomy on the long-term outlook. They felt that any agreement that came out of the debt ceiling increase would likely be too small or not sufficiently focused on the long-term drivers of the debt. In addition, former NEC director Larry Lindsey noted a number of ways in which the status quo may actually understate projected deficits, including an understatement of interest rates and an overstatement of economic growth (although the latter example comes from the President's budget).
Most of the experts also felt that coming to an agreement of the magnitude necessary to set our country on a sound fiscal path would be very difficult to do, considering the political environment. Specifically, former OMB director Franklin Raines and Rep. Peter Welch (D-VT) lamented the polarization of Congress that makes agreements like we had in the 1990s much harder to pull off. And there was the usual criticism about Republican intransigence on taxes and Democratic intransigence on entitlements.
Most notable is what elected officials said during the conference. Rep. Paul Ryan (R-WI), unsurprisingly, plugged the House Republican plan, while Sen. Michael Bennet (D-CO) promoted the work of the Fiscal Commission for the 2-to-1 spending cut to tax increase ratio in its plan (3-to-1 if you include interest savings). When moderator Steve Liesman asked what the other side could offer up to bring them to the table, Ryan wanted Democrats to suggest health care entitlement cuts while Bennet wanted some give on taxes (once again supporting the Fiscal Commission's proportions).
Mark Warner (D-VA) and Mike Crapo (R-ID), members of the Gang of Six, unsurprisingly endorsed a bipartisan approach that touched all areas of the budget, including tax expenditures. Sen. Crapo said he believes the agreement that comes out of the Gang of Six negotiations will be one that has a decent shot at achieving 60 votes in the Senate -- the threshold no other plan as of yet has been capable of reaching.
With so many big names taking part in the debate, the conference produced some very interesting discussion. For an archived video of the entire conference, click here.