ROBERT E. RUBIN

An unusual feature of the American governmental budgeting process is that Congress has passed a law limiting the amount of debt that the United States can maintain. When there is deficit financing, the law limiting the debt has to be changed periodically as the nation approaches the debt limit. Partisan politicians often take advantage of the fact that the debt limit must be passed and hold the passage hostage to obtaining something they want. The reality is that when Congress passed the previous budgets, they determined what the debt would have to be later. So they have already voted to exceed the budget ceiling. But the requirement of doing it in a second forum allows more pressure to be placed on the administration and the other party’s Congress members. While this process is ongoing, many people in the world are worried and often terrorized by the prospect of the debt ceiling not being passed, in which case the United States would have to default on its obligations—not pay interest, contractors, retirements, salaries, etc. Hence the admonition that the debt ceiling should never be a part of the budget negotiating process by most responsible statesmen and women. But the mist partisan of the politicians want to play politics with the debt ceiling precisely because the stakes are so high and they can get both headlines and leverage.

See Denniston for an earlier variant of this quip: {599546}

The threat to which Rubin was referring was the fact that the United States, the largest dues payer to those organizations were in arrears on their dues—financially strapping the organizations. The reason for the arrears was a combination of 3 forces. There was conservative dissatisfaction with many of the policies and decisions of these international bodies. There was an effort to produce badly needed reform in those organizations, ranging from lack of transparency to toleration of massive corruption that was strongly resisted. Last, the United Nations was culturally very different from what Americans are used to with the diplomatic niceties taking precedence over candor and “telling it like it is, first class travel and accommodations for United Nations staff and consultants, sumptuous offices in many countries including America, and a civil service not based on merit but with quotas of nationality.

The traditional conservative tax principle has always been that low tax rates are needed to produce economic expansion and in general this had been so until Clinton and Rubin combined higher tax rates with great fiscal discipline of government spending and low interest rates, not only produced a great economic expansion but eliminated the Reagan deficit and left office with a huge projected surplus.

This is why tax reform is so difficult in a democracy. Almost everyone is generally in favor of tax reform so long as he/she will not be a loser. So there is initial enthusiasm until details are proposed and then the potential losers push back. If the proposed reform is substantial enough, the losers are usually a large enough proportion of the electorate and lobbying effort to block or water down the reform.

Lawrence Summers, and Alan Greenspan, and the Secretary had come to recommend their plan to maintain the stability of Mexico. It worked, and was one of the many great financial successes of the Clinton administration.

See Denniston for an earlier variant of this quip: {599546}

The last 5 years of the 1990s were the last of the Clinton administration where he was the principle architect of economic policies for that period. While this statement was somewhat self serving, the economic and fiscal performance of the Clinton years were astoundingly superior to those before and after.

America has one of the lowest personal savings rate in the entire world.

The traditional conservative tax principle has always been that low tax rates are needed to produce economic expansion and in general this had been so until Clinton and Rubin combined higher tax rates with great fiscal discipline of government spending and low interest rates, not only produced a great economic expansion but eliminated the Reagan deficit and left office with a huge projected surplus.

The threat to which Rubin was referring was the fact that the United States, the largest dues payer to those organizations were in arrears on their dues—financially strapping the organizations. The reason for the arrears was a combination of 3 forces. There was conservative dissatisfaction with many of the policies and decisions of these international bodies. There was an effort to produce badly needed reform in those organizations, ranging from lack of transparency to toleration of massive corruption that was strongly resisted. Last, the United Nations was culturally very different from what Americans are used to with the diplomatic niceties taking precedence over candor and “telling it like it is, first class travel and accommodations for United Nations staff and consultants, sumptuous offices in many countries including America, and a civil service not based on merit but with quotas of nationality.

An unusual feature of the American governmental budgeting process is that Congress has passed a law limiting the amount of debt that the United States can maintain. When there is deficit financing, the law limiting the debt has to be changed periodically as the nation approaches the debt limit. Partisan politicians often take advantage of the fact that the debt limit must be passed and hold the passage hostage to obtaining something they want. The reality is that when Congress passed the previous budgets, they determined what the debt would have to be later. So they have already voted to exceed the budget ceiling. But the requirement of doing it in a second forum allows more pressure to be placed on the administration and the other party’s Congress members. While this process is ongoing, many people in the world are worried and often terrorized by the prospect of the debt ceiling not being passed, in which case the United States would have to default on its obligations—not pay interest, contractors, retirements, salaries, etc. Hence the admonition that the debt ceiling should never be a part of the budget negotiating process by most responsible statesmen and women. But the mist partisan of the politicians want to play politics with the debt ceiling precisely because the stakes are so high and they can get both headlines and leverage.

While that has been true, too often in history the correction took a long time coming and when the bubble finally burst, the pain and economic suffering that has occurred as a result has dislocated most of the country for years.