former President Clinton on the debt ceiling issue

Just in case you thought former President Clinton ever understood the monetary system:

Bill Clinton: Brief Debt Default ‘Might Not Be Calamitous’

“We regret if there has been a misinterpretation of a comment President Clinton made about raising the debt limit. President Clinton did not in any way mean to suggest that a default would not be highly damaging for the economy even for a very short period of time. He inadvertently misspoke. What he meant to say was that if a vote to extend the debt limit failed in advance of a default, that might not be harmful for a couple of days, but that if people thought that we might actually default, that in his words ‘we were literally not going to pay our bills anymore, then they would stop buying our debt.'”

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38 Responses to former President Clinton on the debt ceiling issue

  1. selise says:

    does anyone know Mark Fiore (or know someone who knows him, etc)?

    commenter mzchief just passed me some of his links. the one on the politics of fed govt budgeting and deficit reduction is on point… but i can’t help thinking what a political cartoonist with mark fiore’s talent and reach could do after a tutoring session or two with warren.

    http://www.markfiore.com/political-cartoons/watch-congress-budget-cut-fight-deficit-reduction-debt-republican-democrat-animated-video-mark-fiore-animatio

    http://my.firedoglake.com/selise/2011/05/25/peterson-foundation-2011-fiscal-summit-today-watch-live/#comment-183859

    Reply

    Oliver Reply:

    @selise,

    He’s good & fun – a rare combination these days. Warren should contact him.

    Reply

    WARREN MOSLER Reply:

    try setting it up for me?

    Reply

    selise Reply:

    @Oliver, do you have good contact info? with a very quick look i didn’t find anything other than the std web email contact and maybe something via sfgate.com (which i’m willing to try if there is nothing better. but, i’m only an online pseudonym, so i don’t hold out much hope).

    Reply

    Oliver Reply:

    @selise,

    sorry, haven’t had time to look yet. i’ll try and get to it next week some time.

    oliver

    selise Reply:

    thanks Oliver (@May 29th, 2011 at 10:36 am)!

    Reply

    Oliver Reply:

    @Oliver,

    right, wrote him an email via his website. let’s see what happens.

    Reply

    Crake Reply:

    That first video hits a point that anyone was a decent memory should know. Over the last few decades, Republican think tanks and policy makers have publicly stated that they favored “big” deficits so the debt would be so large they could then “wisely” call for cuts to programs they did not like. They would always equate their fantasy with something like growing a beast until it was so large there was not enough food and it would starve.

    No one remember all those proclamations? Why not bring those comments back side by side with Representative Ryan and his proposals to illustrate what is happening.

    Reply

  2. Peter MN. Todebush says:

    About entitlements; the issue is the ratio of people contributing versus receiving, which is contracting. You cannot fix the mathematics, you have to reform. Take an age, 55 years. Everyone above is grandfathered (defined benefit), everyone below is converted to defined contribution, with leveling the tax consequences and interstate competition. Make contributions tax deductible with rollover provisions into the next year, it becomes an incentive to save. This opens up the market for individuals to select everything with many options, a menu of choices, and it is individually owned, making it portable.

    Reply

    Save America Reply:

    Todebush, I met General Casey and Senator Byrd today at the Russel Senate office. Poor military widows who have lost thier bread winner and have kids can’t get more than 1K a month from Uncle Sam after the ultimate sacrifice. Pathetic, my illiterate grandfather told those guyz decades ago we have to BREED more, and I sure did my part to try and get the population numbers up. None of the people there at the kennedy caucus room were having babies, maybe one, while thier grandfathers had 10 children or more! So the people SERVING the food to General Casey and Senator Byrd couldn’t speak very good english and everyone’s food and drinks orders kept getting screwed up. LOL! Stupid is as stupid does! I tried to tell those boyz about what you say RATIOS, I even offered to take one of the gold star women there to vegas and get married and have lotsa babies, but she said nope, 1 kid was enough! LOL! (sigh)

    Reply

    beowulf Reply:

    @Save America,
    I met General Casey and Senator Byrd today at the Russel Senate office.

    Was it a seance? Bobby Byrd died last year.

    Reply

    Save America Reply:

    Senator Burr, not byrd, oops! :)

    http://surveys.himss.org/checkbox/Survey.aspx?s=7a441d35fa6c456998fb3542a645083b

    Glad u r paying attention. Also talked to Bernie Sanders staff there, told them my favorite bernie moment was a few years ago on kudlow’s CNBC show when the bailouts and tarp was coming. Kudlow was cheering it and Bernie burned Kudlow saying he didn’t realize Larry was such a socialist. LOL! That got larry’s mouth for once. Kudlow on CNBC now with a panel saying any payroll tax holiday will just be eat up with gas price increases, so it is null.

    beowulf Reply:

    @Peter MN. Todebush,
    “About entitlements; the issue is the ratio of people contributing versus receiving, which is contracting. You cannot fix the mathematics, you have to reform.”

    That’s absurd. You’re confusing the Census with the tax base. Even a revenue-constrained govt (like a state or city) would only have that problem if it collected revenue from each resident as a flat sum “poll tax”. Since nobody does that, those with greater taxable incomes (or consumption or property holdings) pay a greater share of the tax burden.

    Reply

    WARREN MOSLER Reply:

    the short answers are productivity and sufficient aggregate demand so that everyone willing and able to work and produce real output can find appropriate jobs.
    that keeps the dependency ratio in check as best as possible

    Reply

    Save America Reply:

    Just attended the TAPS convention, Admiral Mullen and Ben Stein were to attend. Stein was a big sponsor of the event and I wanted to get an autograph of his book – the REAL Stars – talking about our military heroes:

    http://www.youtube.com/watch?v=tB5I-To63to In this video he talks about useless princess shopping machines and the waste of the financial sector next to the real heroes, so there is common ground there for him and warren.

    http://www.taps.org/uploadedFiles/TAPS/EVENTS/SEMINARS/2011/2011SeminarSchedule.pdf

    I told Mullen some of the things that were said here about him and deficits and the greatest threat to the nation, I was advised not to come to this blog anymore. Since uncle sam pays my bills (for now), I must therefore bid you all a sad farewell, especially you Beo :*( The young veteran population is about 27% unemployed, so the payroll tax ideas and others would help out these great people, but you can only lead a horse to water.

    I did not wear my Moslerecon shirt for Mullen’s visit, but I was going to make sure and get a pic wearing it with Stein and talk MMT with him and give him my last copy of 7DIF, he had to cancel at the last minute unfortunately, bueller, bueller? LOL! He pulled a bueller.

    “everyone willing and able to work and produce real output can find appropriate jobs.”

    Warren I think Admiral Mullen would rephrase that as, every soldier willing and able to kill the enemy and produce real body counts can find appropriate jobs in today’s military…..

    beowulf Reply:

    @Save America,
    “I was advised not to come to this blog anymore. Since uncle sam pays my bills (for now), I must therefore bid you all a sad farewell, especially you Beo…”

    Dread nought SA. Mullen is a War Admiral, so he’s being put out to stud.
    President Barack Obama named Army General Martin Dempsey chairman of the Joint Chiefs of Staff and his top military adviser.
    Dempsey, a veteran of the war in Iraq who helped Iraqi troops in their security takeover, would replace Navy Admiral Mike Mullen, whose term ends Sept. 30.

    http://www.bloomberg.com/news/2011-05-30/obama-names-army-s-dempsey-joint-chiefs-chairman-to-succeed-admiral-mullen.html

  3. roger erickson says:

    what about Bill’s quoted discussion with Robert Eisner, where he admits understanding sectoral balances yet says “yes, but this is politics Bob.”

    Does he not remember having discussion with that man? Or was he outright lying all along? Either way, the “statue” of limitations ran out [or were there all along, in his case], and he might have simply been senile throughout.

    What a legacy of that administration. One was a known philander, and the VP a closet abuser who invented the internet. You have to wonder now why Gore acceded to the Bush clan requests so meekly. Someone may have talked, even then.

    With policy wonks like those, who need enemies?

    Reply

    beowulf Reply:

    @roger erickson,

    The politics on this are just so crazy. Oh and Dick Cheney endorsed Paul Ryan plan. E tu, Dick?
    Cheney took a moment to comment on what he called the nation’s “horrendous debt problem,” and offer some high praise for House Budget Committee Chairman Rep. Paul Ryan (R-WI).
    “I worship the ground that Paul Ryan walks on… I think he’s an enormously talented individual and he’s trying to do the right thing. And [he] deserves all the support we can provide him.

    http://tpmdc.talkingpointsmemo.com/2011/05/cheney-i-worship-the-ground-paul-ryan-walks-on-video.php?ref=fpb

    Reply

    awakened sheep Reply:

    @beowulf,
    Cheney as VP said “Deficits don’t matter” (often), now he’s spinning it the other way. It’s all spin and about what is more politically beneficial, not what is really true, necessary, or fundamental.

    Even if a majority of politicians understood MMT I wonder if it would even change the debate, it’s all about exploiting your apponents perceived weakness.

    Reply

    roger erickson Reply:

    @beowulf,

    Ayn Rand must have some distant relatives somewhere in Russia? Let’s just find one, make them president, and quit wasting time on suspense.

    Reply

  4. Kristjan says:

    I remember Clinton repeating: “Save Social Security”.
    Stiglitz was his advisor and Stiglitz probably suggested to save SS.

    Reply

  5. Tom says:

    So, question Warren or others…

    I dont know if theres writing about this anywhere on here, but I wanted to ask:

    Would you say the Bush tax cuts (& his spending) helped avert an even bigger recession as his tax cuts and spending increases really increased the deficit, and therefore added more net financial assets to the non govt sector than would have been without the Bush tax cuts?

    Reply

    ESM Reply:

    @Tom,

    There is little doubt that this is true. The Bush tax cuts were the most fortuitously timed tax cuts in history, kicking in just as the economy was heading into the toilet in the wake of the Sept 11 attacks. They were too small to enable a robust recovery, but they were large enough to soften the recession. The recession turned out to be very mild indeed given the vast destruction in wealth caused by the prior budget surpluses and the bursting of the stock bubble.

    Reply

    Scott Fullwiler Reply:

    @ESM,

    Agree. Not to mention the additional cuts in 2003 in the midst of the “jobless recovery.”

    Reply

    Tom Hickey Reply:

    The war spending clearly was not big enough.

    WARREN MOSLER Reply:

    those were the ones I instigated, not that i approved of the specifics

    Tom Reply:

    @ESM,

    Thanks.

    I’m happy we never found out, but that makes me wonder what things would have been like if they didn’t enact those tax cuts and increase spending on the wars etc.

    I wonder if MMT might have had a better head start if we kept running decent surpluses and yet the economy kept getting worse. Im sure people would have been wondering how the government could be “doing so well” with its budget and yet the economy would have probably tanked.

    Reply

    beowulf Reply:

    @Tom,

    The budget can only balance when the economy is approaching full employment. So running decent surpluses while the economy gets worse is impossible unless we resort to creative accounting. For example, we could cut the deficit by $600 billion if we put public investment spending (per OMB: infrastructure, education, R&D) in a separate capital budget.

    WARREN MOSLER Reply:

    it takes a good economy/private sector credit expansion to run a govt surplus. the problem is sustainability of said private sector credit expansion

    WARREN MOSLER Reply:

    we were rescued by the sub prime expansion phase, and then went back to where we would have been if it hadn’t happened, more or less

    Reply

    WARREN MOSLER Reply:

    agreed! in fact, it was my meeting with Andy Card at the West Wing that set it up

    Reply

    Tom Reply:

    @WARREN MOSLER,

    Did you try and explain the basics of MMT to them when you were promoting a tax cut back then? Did you get any dumbfounded looks?

    Reply

    WARREN MOSLER Reply:

    Card was a quick study (ex GM engineer) and got it right away

    beowulf Reply:

    Quick study yes, long term memory, maybe not so much.

    CARD: Congressman Ryan and the Republicans in Congress have said let’s have an honest debate about reforming government, changing the way we spend, changing our entitlement programs, solving the problem in the short term so that we don’t have a long-term burden that’s going to be placed and change the whole nature of a country.
    I think that Congressman Ryan has done a great service. The President didn’t provide the leadership that he should have provided back in December when Erskine Bowles and Alan Simpson got together and proposed something very, very real and he could have embraced that.

    http://www.cnnstudentnews.cnn.com/TRANSCRIPTS/1104/13/acd.02.html

    Advances Tom’s theory that GOP insiders understand MMT perfectly well, but use it to take advantage of Democrats’ ignorance to advance their policy goals. Andy Card and his brother-in-law Ron Kaufman are tight with Mitt Romney (all three are Bay Staters), so no doubt he didn’t want to ruffle any feathers with Paul Ryan and “the base”. Meanwhile, now Rudy Guliani wants to jump in the pool.
    http://www.foxnews.com/politics/2011/05/24/giuiani-sees-opening-2012-field/

    WARREN MOSLER Reply:

    :(
    Will give him a call thanks

    Matt Franko Reply:

    @Tom,
    Beo,
    Then I’ll bring this up again:

    Title 18 Part I Chapter 47 Section 1001:
    Statements or entries generally

    (a) Except as otherwise provided in this section, whoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully—
    (1) falsifies, conceals, or covers up by any trick, scheme, or device a material fact;
    (2) makes any materially false, fictitious, or fraudulent statement or representation; or
    (3) makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry;
    shall be fined under this title, imprisoned not more than 5 years or, if the offense involves international or domestic terrorism (as defined in section 2331), imprisoned not more than 8 years, or both. ”

    http://www.law.cornell.edu/uscode/718/usc_sec_18_00001001—-000-.html

    Key here is knowingly, are not Card, Laffer, perhaps Cheney, V. Reinhart, Wlaker probably others looking at jail? I dont think you have to be under oath to violate this USC (ie Martha Stewart).

    You cannot yell “fire” in a crowded theater as free speech. We get outraged at these statements and think “there ought to be a law”… and apparently there is a law. People who know different should not be allowed to go around saying this misleading nonsense because it causes the general public to become worried and then govt for instance cuts off medicaid for bone marrow transplants because “we cant afford it” meanwhile all the facilities and personnel are ready to go…

    Cannot these people be thrown in jail?

    beowulf Reply:

    <Matt, I like where your head's at, however while the Martha Stewart law doesn't require the person to be under oath, the statement must be made to an agent (whether an employee or a contractor) of the federal government. I just looked up the prosecution guidelines at DOJ:
    Whether the relationship between the fraudulent statement and the Federal government is sufficient to warrant prosecution, and possible conviction by a jury at trial, will depend on the context of the false statement. Not all false statements violate 18 U.S.C. § 1001. False statements warranting prosecution may be made in at least three ways:
    directly to a Federal agency, such as an application form for employment or a required form;
    to a private person or institution which implements federal programs; and
    in business records that may be subject to Federal government inspection.

    http://www.justice.gov/usao/eousa/foia_reading_room/usam/title9/crm00907.htm

    wh10 Reply:

    that’s unbelievable. why hasn’t it stuck? why hasn’t your influence been more permanent and more pervasive? the obvious answer is the politics, but still… it’s so frustrating to read these amazing stories yet live in a world that by and large doesn’t get it.

    Reply

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