President Barack Obama’s decision to select Jack Lew as Treasury Secretary indicates he’s not going to accept spending reductions, particularly for entitlements, says Manhattan Institute Senior Fellow Diana Furchtgott-Roth.
Interestingly, she praised Lew, currently White House chief of staff, for his abilities in an exclusive interview with Newsmax TV. “Jack Lew could obviously be successful. He’s very competent, very talented, has a lot of experience in government and he even has some private sector experience in New York,” she says.
But on budget issues, Lew has insisted against cutting spending. “His choice suggests that President Obama is going to continue to be intransigent, that he is not going to want to cut entitlements,” says Furchtgott-Roth, who was chief of staff of President George W. Bush’s Council of Economic Advisors.
“It shows that even though President Obama talked about compromise, when it comes to cutting spending he might not be intending to do so.”
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Furchtgott-Roth finds it ironic that Obama, who’s all about forcing the wealthy to pay their fair share of taxes, opposes the idea of means-testing Social Security and Medicare. “Shouldn’t higher income seniors pay their fair share if he’s going to use that argument?”
In the upcoming talks to raise the debt ceiling, Republicans will fight for spending cuts, while Democrats will seek tax increases, she notes. And she expects the fight to go down to the wire.
Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation
“Now, Republicans have an advantage, because before [the fiscal cliff accord] taxes were going to go up automatically.” But now there’s no threat of automatic increases.
“Tax bills burn in the House of Representatives, so it’s much easier for House Speaker John Boehner to say, ‘No tax increases.’ And he is willing, I understand from a senior Republican aide, to even let the defense sequester go through rather than increase taxes again,” Furchtgott-Roth notes.
While some are worried that failure to increase the $16.4 trillion debt ceiling will lead the government to renege on its debt payments, “the whole idea that the United States is going to default on its debt is a joke,” she states.
“What it comes down to realistically is are we going to cut spending or are we not? Are we going to change the path that we’re on, or are we not? No one really believes we’re going to default.”
The real issue is will we go the way of Europe, which has suffered a devastating debt crisis for the last four years, Furchtgott-Roth says. “Are we going to become like Greece, where we have entitlements that are more than we can sustain economically?”
She’s not worried about a downgrade in the U.S. credit rating, which is expected if Congress doesn’t agree to raise the debt ceiling. “We were downgraded before, and it didn’t really stop countries from investing in the United States, because we are sort the best house in a bad neighborhood.”
But we can do better, Furchtgott-Roth says. “We need to clean up our house. We’re not good enough being the best house in a bad neighborhood.”
Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation
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