The budget battle continues, but what lies behind it? Is America's political system fundamentally broken? And what does the ideal budget look like anyway?
Fareed Zakaria says solutions are out there, but they are not ideological ones. Posturing serves nobody's interests. What America needs is a pragmatic approach to getting its fiscal house in order. Here's the conversation:
Amar C. Bakshi: Does this potential shutdown prove our government is broken? If so, what should be done to fix it?
Fareed Zakaria: I think it proves that our political system is broken - the political parties are broken.
It used to be that in Congress you became famous by creating big, bipartisan deals and passing big, bipartisan legislation. There was an understanding that you were solving problems. You were never going to get exactly what you wanted but it’s a country of 300 million people and not everyone agrees with you and it was important to get some progress.
Right now the way you become famous in Congress seems to be to actually not do a deal - to show that you have stood up to the evil forces on the other side.
You can see that most vividly on the Tea Party. The Tea Party’s constituency, or its base, clearly seems to be more interested in them not actually doing a deal than in them doing a deal. This is ultimately puzzling because the Tea Party is real - I give them a lot of credit for raising the issues they have raised.
But they are one segment of the country. Unless they believe that they should have the ability to - by some kind of dictatorial fiat - impose their will on the rest of the country, then they’re going to have to give and that’s the part that seems to be lost here. That’s the part which says, “Okay, you know our preference is for 10; yours is for 50; so how about 25?” And you make a deal and you split the difference that way.
Is this a systemic problem?
Part of it is the political system where you have redistricting, which has meant that you have safer constituencies, which means that the only thing politicians worry about is primary challenges and not general election challenges. Ninety-percent of the House seats are safe in that sense.
You have fund-raising which now comes increasingly from the extremes of the parties rather than from the center. And you have the narrowcasting of media, so that if some Republican were to say something suspiciously moderate sounding, it would be denounced by Rush Limbaugh the next day; then, maybe, there would be a primary challenge the day after that; and then funding may start drying up the day after that.
This is not an imaginary situation. Friends of mine who are in Congress who are Republicans have told me this is precisely what happens and, of course, you see it with Orrin Hatch playing out in real life.
So I think that it’s a really serious, long-term problem that actually dwarfs the short-term gimmickry of the budget shutdown.
What would your plan for the budget look like?
I think that the solution to the budget is actually relatively straightforward, with one caveat. What I would do is this: I would eliminate almost all tax deductions, loopholes and what are called “tax expenditures,” which are effectively giveaways in the tax code that are almost always in return for campaign contributions.
The reason the American tax code is 14,000 pages long is that it is a series of giveaways to campaign contributors. And so if you get rid of that the Simpson-Bowles Commission estimates you can get almost a trillion and a half dollars, or you can reduce rates. I would rather, for now, just keep the money to pay down the debt.
I would put in a value-added tax because there’s simply no way you can sustain Medicare, Medicaid, and Social Security when you’re going to have double the number of people on it in 10 years without some increased revenues.
Once you’ve done those two things I think you have to very significantly restructure American entitlements and cut government spending. I think that for Social Security, the retirement age needs to be raised. You need means testing. You need to index it in a different way than it is indexed now so that you don’t have ever-rising benefits. You need to look at discretionary spending very carefully. You need to cut defense spending. There’s no way around it.
And the caveat?
And then the big caveat I say is healthcare - Medicare in general. That’s the 800-pound gorilla. That’s the one that you really have to get right. And I’ll be honest with you: I don’t know. I don’t think anyone has a silver bullet.
I think that some of the stuff the Obama health plan does is very interesting - cost controls that should be looked at. I think some of the stuff that Paul Ryan talks about, which is effectively forcing the consumer to pay more and therefore to be more cost-conscious, is a good idea.
And why does it have to be one or the other? I think that any expert you talk to will tell you that probably the solution for healthcare will be some combination of a variety of efforts that are geared towards cost controls and that frankly it’ll be a trial-and-error process. We’ll find out what works and then we can do more of one and less of the other.
As I said, it’s a pretty simple set of solutions - that is to say you cannot have revenue at 18-percent of GDP and sustain the kind of government we have had for the last 50 years.
On the other hand you cannot have entitlements grow the way they’re growing. They’ll bankrupt the entire country. So you got to do a little of everything. You’ve got to raise some taxes. You’ve got to cut some spending and you’ve got to cut entitlements.
To try to find some kind of perfect ideological solution in the midst of what is a $1.5 trillion budget seems crazy. You’re going to have to be pragmatic and do a little bit of everything.
How dire is our budget problem?
I think it’s important for people to understand we have a long-term problem. The United States has a long-term economic crisis. It has an unemployment crisis. But it does not have a dire short-term crisis and people shouldn’t panic.
The United States is recovering rather nicely from a very bad recession. It is probably going to grow faster than almost any developed economy in the world this year. It has no trouble borrowing. American borrowing costs have declined over the last three years.
It has probably had the most effective Central Bank in the world over the last three or four years. The Federal Reserve has managed this crisis better than the European Central Bank or the Japanese Central Bank or any other Central Bank that had a crisis to deal with. The [U.S] Treasury has handled its banks much better than the Europeans did. Our stress tests were real. TARP [Troubled Asset Relief Program] is going to turn a profit, if we get lucky.
So you know the reality is that the United States is not in some kind of dire, short-term problem like Greece or Portugal. The U.S. has a significant long-term problem that has to be addressed. But right now I feel as though people think that we are already in the midst of the seventh circle of hell, whereas, in fact, if you look at the financial markets, they’re telling us is that the U.S. economy is surprisingly vibrant.
Do you think confidence could suddenly collapse in the United States and the dollar?
There would have to be some forcing event. Everything about Medicare and Medicaid and Social Security, people know. The markets are not unaware that we have these long-term problems.
They’re also aware that most other countries and most other rich countries also face problems and that we have some advantages. We have huge demographic advantages that other countries don’t. We have the reality of a dollar that is the reserve currency of the world, which is going to persist for some foreseeable time in the future.
I’m not trying to say that this window will last forever. But we have five years, not five months to fix this.
Keep the money to pay down the debt? Not if you want to see the economy show signs of life in your lifetime. Create a VAT? Ha, these people already waste my tax dollars – I absolutely WILL NOT pay a dime more in taxes. Period. They can squeeze VAT out of me on purchases butI will simply deduct it from my Income Tax bottom line. I am sure I am not alone in my sentiment – I waste 51% of my income paying taxes – in my opinion, it should be a flat tax and capped at 20% for families making 250,000 a year or less. The rate should increase sharply from there – an equitable tax structure has to be formed – the corporate loopholes need to be closed – if they want to outsource because of the taxes. charge a HUGE import tariff on their goods when they come back in the country. I am tired of paying for "the elite" and big business and the bankers ... freeze the assets of the FED and then audit them – punish those in charge for treason and absorb the trillions in holdings – that should pay down a chunk of the debt. They have stolen from the people and I personally want my money back. Now.
Considering your bright assessment of American's overall position, it could easily be argued that we don't have a debt problem, not even a long-term debt problem.
The Federal Government is a monetary sovereign with a fiat currency (a currency that is created from nothing - no gold standard, etc...). The DU contries are not sovereign over their currency, they do not issue it themselves. America's States also do not issue their own currency. Nor do households. But if a household COULD issue it's own currencey, if we all had a money making machine in our kitchen, then we could not go broke. We could always pay off any debt of any size. Thus, debt is never the problem. The only constraint on spending is inflation. All this talk of a debt crises is either innocently ill-informed or is some wierd way to scare the people into thinking they must sacrifice now in order to head off a future disaster. However, since inflation is low, the dollar is relatively healthy internationally, there's no need to worry about devistating inflation. Once people (and especially commentators) understand our monetary system perhaps we can begin the more important questions - like where is the best place for a govenment to invest, how do we close the gap between rich and poor, and how do we create jobs, etc....?
I love how you Americans blame your politicians when you are the true problem. This is why you will not last as a country. Look at what I mean on my website at http://www.ve7kfm.com. I have the perfect examples on this site. America sucks! firstname.lastname@example.org
Funny, there is no more pathetic person on the planet than a troll ... go reevaluate your life.
I dont fallow links to site I dont know however I agree with you to a point. Americans are part of the problem. How can we expect our poiltitians fo balance the budget if we cant do the same in our personal lives? But not all americans are like that. In my whole live the most debt ive ever had was $500. And I only took out that loan to improve my credit rating. Im willing to bet there are alot more Americans like me.
Then stay out and STFU. You can generalize and act as if all Americans are the same, or that a country is made only of its flawed gov't (not its people) if you want, but America WAS a great country, still IS, and will continue to be no matter what problems we face. That's why most countries emulate America. So haters, get out and stay out.
Fareed I have to barrow money to see the doctor as it is how is it a good Idea to force me to pay more for medical care?
I agree with many points that Fareed makes, especially the idea that seeing those who disagree with my views is the enemy or at least the opponent is destroying our political discourse. BUT, the press hasn't covered itself with glory in the last decade either. In regard to the US–and the budget is merely one example–there is a false equivalency mentality that says: If I have someone on espousing position A, then I have to find someone to espouse "Not-A"...even if 98% of people, and virtually the entire scholarly community on that topic, agree with position A. And further, that I have to present them as of equal validity. Two of the most egregious examples are: Evolution/vs creationism, and global warming issues. This leads to an assumption that there IS no common wisdom out there; and people become uncertain of everything they hear.
But the second failing is even more important to our budget problem: The failure to explain the science of economics. No one is pointing out that there is a fundamental relationship between supply, demand and price, among other relationships. In some recessions, a lack of materials, for instance may prevent demand for a product from being met; fixing the supply issues will tend to increase demand. In THIS recession, the problem is a lack of demand for product...no employer, if s/he cannot sell what they already have for sale are going to hire more people. Giving money to millionaires will NOT increase jobs. Creating demand, through stimulus is what is needed. The big problem is that we didn't get enough people back to work quickly, through WPA type programs, if necessary, so they would have money to buy things to create demand, and thus lead to more jobs. All that is happening is a reverse Robin Hood narrative that says taking from the poor and giving to millionaires is the solution to our problem. and it is NOT. Come on; schools don't teach economics; so don't any journalists understand this either??? We have lost hundreds of millions of man-years of production that we cannot get back.
Why does everyone talk so "PC" when it comes to making comments about these issues. It's about alleviating financial burdens, correct? Blue collars used to be the back bone of this country, yet there's able bodies living of the free rides that tax money has provided (welfare reform would be really nice). Another cruel fact is how many criminals we house, feed, and give medical attention too. I'm not referring to inmates that are in due to substance abuse problems or petty crimes of the sort but the ones that take the innocence of a child, mutilate woman, or destroy families. Do we really have any use for these individuals. How much federal money is allocated for those people. Also another problem is the illegals working in America and the sending most their money back home to their families, which is a honorable act, the whole wanting better for your family. At the same time if you want to come to America and work then you should go through the right process to do so. That's a lot of lost jobs for are fellow americans and it also it puts a crunch on the pay scale for tradesman jobs. Seems to me that all these things significantly increase the federal debt to income ratio.
Yes, Nicholas, but that is only part of the list. There is also ... loans and grants to foreign governments including those which later proved to be after non-American interests, huge tax breaks for companies that don't need them, bank bailouts, airline bailouts, auto company bailouts, increases in government union pensions, money set aside for political party payouts, funding wars by taking out huge Chinese loans, and printing more money. I know there are others, but you get the idea. BOTH PARTIES AND ALL 3 BRANCHES OF GOVERNMENT ARE AT FAULT.
This might be a good time to send this oversized head figure Fareed Zakaria back to the middle East.
I can't wait for the tea party ANd the republicans to get here way, and the middle class looks around, poor and broke with no jobs and say "what happened"?
It's gonna be hilarious.
I remember in collage we called him Fareed "The Freak" Zakaria. Allah be praised but the boy could pound down the ice tea! And what a good dancer! Fareed the Freak grew up as a batchi boy – so he know how to move the hips like the woman. and now assisting the jihad on the cnn! peace be upon botchi boy Fareed "The Freak" Zakaria!
How about limiting the child tax write offs to 2 or 3 children max. I get pretty irritated with the families with 5 or more children that have the gall to gripe about paying what paltry sum in taxes they do pay. When everyone else has to pay to send there brood to school and feed them their free lunches. Because their parents can't afford to feed that many children.
Obama has always been interested in a bipartisan approach and having a true meeting of the minds. But, since day one of the Obama administration republicans have only been interested in ranting about marxism and bla bla bla. They considered "negotiaion" to be getting theri teabaggerish rants on the evening news. Of course when democrats would forge ahead, republicans would SCREAM about being shut out of the process. You're invited, but, if all you're going to do is snipe and proclaim that no matter what the president says, you're going to oppose any and everything he proposes. In fact, you're just going to oppose him as a human being, period.
Nothing leaves me more dissapointed in people and sad than reading the posts on cnn and Fox...
I just listened to your rah rah speech defending the Ryan budget... are you insane? Because if you're not, then the only other conclusion is that either no one in your family is elderly, or disabled, or you're just rich enough that things like Medicare don't matter in your world.
Fareed, I think you do the budget issue disservice. On your show you applauded that Paul Ryan proposed a budget but did not mention that President Obama had a task force come up with a proposal as well. In fact, Paul served on that committee. Paul's proposal is a libertarian one which you did not also mentioned. This means he and his financial benefactors want to privatize as much as possible so they benefit financially and reduce revenue by giving more tax breaks to the wealthy. If you are going to comment on US issues, you need to give the whole picture instead of distorting it. You are great at international issues but you need to do more research on US ones.
After today's program I have removed GPS from my video recording schedule.
Giving so much time to an old political partisan like Baker brings no information to the current debate. His references to his recent participation in Washington Senate meetings with more old politicians while suggesting that today's problems with the budget have nothing to do with Iraq or Afghanistan is ludicrous. Reminiscing about Reagan when that administration first tripled the debt which set the long term trend we see continued today while suggesting that those polcies would remedy the current situation are both contradictory and inane.
I first turned to GPS for NEW information from NEW minds that had been overlooked by the current media coverage of the discussions both defining and analyzing today's key issues and NEW solutions.
As of this morning it reminds me of a history channel rerun.
Sorry Fareed. You are now part of the problem.
We are Egyptians who have not developed the courage to act.
. In time we will take to the streets and hopefully our military will be sophisticated enough that when the time comes they will help us restore our representation in our future.
Terminally ill patients would be given hospice treatment, if they were arrested on the Mall. Homeless people would be given shelter....if they were arrested on the Mall. Any sick person would be given medical care – if arrested on the Mall. Any child in need of help would be given help – if arrested on the Mall. Any uninsured persons would be given medical care, any homeless person would be given shelter. HUNGRY PEOPLE WOULD BE GIVEN FOOD – PEOPLE WITH NO LEGAL REPRESENTATION, JOBLESS WITH NO PLACE TO GO, MENTALLY ILL INDIVIDUALS WITH NO WAY OF GETTING TREATMENT – CANCER PATIENTS WHO CANNOT AFFORD MEDICATION – ON AND ON – ANY AMERICAN WHO NEEDS ANY BASIC SERVICE WOULD RECEIVE IT – if arrested on the mall!
There will be a revolution with 10 years.
Television is losing its effect on our minds and the military is becoming a sophisticated force more experienced in social issues that the D.C triad of hydrogenous, paid infomercial hosts.
IF every unemployed person, uninsured person, unrepresented person went to D.C. and sat down on the Mall they would be too numerous to be arrested, if arrested they would need to be fed, given medical assistance, legal representation, in short – if we were to protest in D.C. no matter what happened top us we would receive the very services as indicted criminals that our government says we do not deserve as citizens in our own towns.
The logic of this is inescapable. We MUST be accused of breaking the law in order to be treated as we have the right to be treated. Only by being accused of breaking the law can we be fed, receive medical treatment, housing, safety.....only by breaking the law can we bring down the system that treats us like criminals. We must no longer be LIKE criminals, we must become them.
"The logic of this is inescapable."
The logic of this is just stupid. As long as we have free and open elections, which we do, talk of a revolution is just silly. Egypt hasn't had free elections. Libya doesn't have elections. We do.
The only thing that cannot be escaped by this post is the fact that is complete and utter nonsense. Seriously what are you thinking? That idea makes Charles Manson look sane.
Fareed Zakari starts his response to the ‘Systematic Problem’ question with a comment on why redistricting cause politics to be too bipartisan. Most things that FZ and all the commenters address are very real and very serious consequences of politics that is responsible to only the back room participants in the party base.
I saw ‘redistricting’ as a bit of new insight, it’s the cause while everything else is a symptom. However, when I thought about how to fix the redistricting problem I had no idea about ‘how’. In all the 350+ comments only Dave308’s point ‘3) we need to have open primaries’ even came close to addressing that question. Paraphrasing and extending FZ, redistricting with closed primaries means that politicians must always satisfy the party core because only the party core votes in primaries and general elections are unimportant. Change that so that independents can vote in either or both the Democratic or Republican primary and suddenly politicians would have to appeal to more than just the party core to get elected. We govern by checks and balances but we seem to have no check or balance in the redistricting process. If there are no ideas to fix redistricting, could we make district gerrymandering irrelevant by adding a balance for party member’s right to nominate primary candidates with a right for independents to vote in any or all primaries? Obviously we should not allow Republicans to vote in Democratic primaries or vice versa as t would allow sabotaging the other guy’s nomination process. But giving the independents a special power might be a small change that has some element of fairness and could actually accomplish something.
Why USA use his weapon to help the rebel in Libya, but no money for American people?
Trust me, the American people are getting lots of money spent on them.
- "I dont know" "I wasnt there" "Neither of us knows what went on in those negotiations" "Nobody could have seen it coming!" While you're at it why dont you just cover your eyes and wait for the system to crash again. Then you'll have an excuse not to know how it happened or who was behind it. The one who is naive is the guy who pretends he sees nothing and knows nothing. This point is nonarguable because it is a matter of the faith or lack thereof that you have in the NYT and BG. New York Times is a highly reputable news organization (except for a few ink blots like Judith Miller). And again, as I have stated Obama cannot do everything nor should he.
– Yes! Exactly as you said. He got a healthcare reform bill passed that did not go far enough to address the issue of rising premiums. In many ways it is historic. And there are more than enough other Democrats to blame for watering it down. And there is still hope to improve it in the future. The public's reaction was mixed because it did not go far enough. My problem isnt necessarily with the bill in of itself (who can say people with preexisting conditions should be denied care?). What people should worry about is the politics behind what happened because politics influences policy. There are two reasons to be worried:
1.) It is indicative of how Obama operates, which affects what kind policies he will try to push and how hard he will fight for them. Consider the fact that immediately after he got flak (from Lindsey Graham of all people) for showing some support for the workers in Wisconsin (largely by accident). His response was not to put on a comfortable pair of shoes but to back off and pretend like he had nothing to do with it. Why did he back off? Because he is No Drama Obama.
2.) It provides an answer to Fareed's question of Obama's character: he is just a politician rather than a leader. America is facing an enormous unemployment slump, a ballooning debt, and a losing technological competition with China, India, and Brazil. You can say that he is trying the best that he can, but it cannot be avoided America needs leaders not managers to pull it out of the pit of mediocrity.
– Of course he alone does not have the power to force GE to pay up or to change the tax structure. But he also has 0 chance of winning anything at all if he does not make his case before the public. Compromise should not be a dirty word... unless you are the only one compromising. Then it is just caving in for no reason. What Fareed said on Jay Leno the other night rings true here, that one of Obama's weaknesses is that he is too much of a cool kitty. Once again, I do not hate Obama or wish for him to fail. But he should not act so surprised when people get angry at his perceived lack of sympathy to the millions who are right now out of work and struggling to make ends meet.
– Political savvy? What part of political savvy involves offering concessions before the negotiations even begin? And thats also from when the Democrats had power from 2008-2010. As a young voter, I am amazed at how bad the Democrats are playing their politics at this juncture. You mentioned "even when he "plays it safe" he's not safe". Well that should be all the more reason to fight harder! (or, if you like, a reason that playing it safe is pointless, and therefore a liability) There is next to no harm in him fighting back because one, those people arent voting for him anyway so there is no harm in teeing them off a little, and two, they only make up a small sliver of the population. But look, the critical weakness in the Democrats' politics, apart from their compromising, is that they lack a central message, a concrete core set of values that they can readily tell the public they stand for. Here are a few that they could sign on to, as in keep off the negotiating table unless the Republicans offer theirs: education, income equality, Social Security, protecting the environment. Whenever you ask Republicans what they stand for they snap off a quick, simple list that usually includes something like "CUT SPENDING! REDUCE THE DEFICIT! SMALLER GOVERNMENT! JOBS, JOBS, JOBS!" Whenever you ask the Democrats its something like "Uh...jobs?"
"Give the guy some slack."
– And thats another thing. The Democratic electorate should recognize that they are not doing themselves any favors by "cutting him some slack". You dont have to be a Lyndon Johnson or a Ted Kennedy or some firebrand, but if you keep bowing your head and deciding to look the other way and not challenge your leadership, then rest assured your party will never pass priorities that you want and keep kicking you in the teeth.
democracy is dead, capitalism has been deformed from its true definition
it does not matter who is at fault, only because all of this has been
done by many individuals
what does matter is that this Republic (America) is now on a path
much like the Roman Empire... there is no going back
Lot of global tensions is going on at this time. Japan is expected to pull out its money from the global market as they want to revamp their country now. In current scenario anything can happen in the Share market Investors are advised not to panic and stay invested only safe traders and investors should exit their long positions on every high and one can use every decline as an opportunity to enter market again.
My name is Karol MADERA.
Among other things, I am a retired Canadian and radio-amateur, call-sign VE7KFM – but I did NOT post the above comment in my name/call-sign on 9 Apr ‘11....
Since I just tripped across the comment, I reply as of Right.
BTW I often watch your GPS - and Christiane AMANPOUR on Sun. mornings - and have recently seen you on Charlie ROSE, whom I watch ~regularly during the week….
FYI I have every reason to believe that the comment FRAUDulently made in my name/call-sign was posted by Brian CROW [US CB/HAM call-sign K3VR], after I briefly positively opined on one of your segments in a conversation on-air….
Brian CROW is a demonstrated Cyberpath and arguably a very adept Socio/Psychopath - who together with his partner Tom WHATLEY [call-sign N1FM instructively the former N1SOB], who is a BAD, BULLY ex-COP from the cess-pool of South Florida - have been STALKING and HARASSING me and peripheral others on amateur radio, on the WWW and otherwise for over five years.
The object of the impugned comment/exercise, as ~usual, was to give their ANONymous, UNattributed, Cloaked and substantially FRAUDulent website ‘as if mine’ - but N.B. NOT mine - more exposure on the WWW….
For why I aver so strongly about Brian CROW and Tom WHATLEY listen to/peruse:
[audio src="http://members.shaw.ca/ve7kfm/n1fm.mp3" /]
Or, contact me via VE7KFM@Gmail.com
Congratulations tea party on saving the tax increases. Unfortunately, the increases due to the downgrade are monies coming out of folks pockets, just not going to the US Treasury. Brilliant move! Don't be surprised if they think of it as a tax, anyway.
I can only guess it doesn't affect the staunch supports this policy favors. On the down side, I doubt if the corporations are going to spend any of the cash they are hoarding. No new jobs -no new tax revenues. But wait, that is in keeping with the tea parties policy. YEA!
Thanks Guy, that's great praise, much appreciated. :-)
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The Global Public Square is where you can make sense of the world every day with insights and explanations from CNN's Fareed Zakaria, leading journalists at CNN, and other international thinkers. Join GPS editor Jason Miks and get informed about global issues, exposed to unique stories, and engaged with diverse and original perspectives.
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Obama as a foreign policy president?
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