May 16th, 2011
04:24 PM ET

Two former Treasury Secretaries say raise debt ceiling

With news today that the U.S. has hit its debt ceiling, I thought back on my GPS interview last month with two former Secretaries of the Treasury - Robert Rubin who served under President Bill Clinton and Paul O'Neill who served under President George W. Bush.  Both former Treasury Secretaries agree that raising the debt ceiling is essential - and should be done separate from budget negotiations.  They believe it's reckless to play politics with this issue.

Here's the transcript (beginning at 6:55 in the video above):

Fareed Zakaria: Let's take the next crisis that people are talking about - the debt ceiling. You had to deal with this when you were Secretary of Treasury. Do you think that it is irresponsible for Congress to try to attach any conditions to the debt ceiling?

Robert Rubin: I thought in 1995, when we managed the last really serious confrontation around the debt ceiling, and I feel it even more strongly today, which is the debt ceiling should never be part of the budget negotiations. It's an anachronism.

We have a very, very serious fiscal problem. Our fiscal position is unsustainable. It is deeply dangerous. We need to deal with it. We need to deal with it effectively, while at the same time promoting public investment for competitiveness.

But that should be a totally separate matter from the debt ceiling, and we should pass the debt ceiling without any conditions while, at the same time, engaging in a serious budget negotiations.

I think an impasse or serious threats with respect to default are highly irresponsible. I think they can do great damage to confidence in our political system and also potentially to our markets. And the idea of default itself seems to me should be absolutely unthinkable.

Fareed Zakaria: Paul, would you agree on the debt ceiling?

Paul O'Neill: Absolutely. You know, when I was Secretary, and we were heading into this kind of a crisis about raising the debt ceiling, I signaled people in the Congress that I was not going to do the tricks that Treasury Secretaries had been doing to give them a little bit more running room.

This is really kind of ridiculous. Right now, we've got $14.6 trillion worth of acknowledged debt. We actually have $75 trillion worth of unfunded liabilities. But, in order to get by the next election, say beyond November of 2012, they need to raise the debt ceiling by at least $2 trillion.

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Topics: Economy • Global • United States

soundoff (8 Responses)
  1. RAJ

    Diorderly minds of governing political authority will never listen to the advise of expert on economy. Political candidates were urging for a job in politics on promise of serving people honestly. Same candidate when get elected on party basis, they are more loyal to there party's set ideology rather than serving USA honestly and due diligently. Clash in ideology between Republican party and Democratic party have demaged the progress of USA and still both parties are engaged in doing the same thing till this country will sink fully. We alwasy say, God bless America, but how God can bless America when minds of Repulican politicians and Democrates politicians are in disorder because they are prisoner of coditioned set ideology of there party. Free mind out of unconditioned thinking can only be creative and progrtessive. Free and intelligent mind can understand something deeply, something seriously and act intelligently, spontaneiously and bring required change.

    May 16, 2011 at 5:00 pm | Reply
  2. james2

    Barack Obama and the Democratic Party only have themselves to blame if they give in to Republican demands in exchange for raising the debt ceiling (of course, notwithstanding who is really taking America hostage here). But there is another important culprit and that is the American voter. If the American people STILL vote for the Republicans, after they have taken the American people hostage twice and even if the debt ceiling were not to be raised, then they deserve to have their economy crash again. Crash again and never return from whence it came. Dammit, Americans (especially Democrats) need to get their political fight back. Tar these guys and run them out of town! This may sound silly and humiliating, but Paul Krugman rightly points out that the bigger loss would be credibility in the American political system ( Despite the financial crash and the recent downgrade from S&P, people are still investing in American bonds at low interest rates. What does it say about your capability as a leader if you allow one of three houses (including the Presidency) of the government dictate what gets passed and what does not? Fareed was talking about investing in America simply because there were no better alternatives. Well the BRICs are looking like a pretty good choice now aren't they?

    May 16, 2011 at 5:17 pm | Reply
    • j. von hettlingen

      The problem you have in America is the absence of a third and good party as a resonable alternative. The Tea Party can't be taken seriously. The ideological feud between the GOP and the DP is so unbridgeable that they hardly reach any consensus. The GOP doesn't miss any opportunity to – basically – try to destroy the Democrats in order to win next year.

      May 17, 2011 at 3:44 am | Reply
  3. waynebernard

    The discussion on raising the U.S. debt limit is laughable when compared with the outstanding liabilities (debt) of the entitlement programs including Medicare, Medicaid and Social Security. When those liabilities are included in the debt, it could add up to $120 trillion to the total, resulting in a debt-to-GDP ratio of 900 percent.

    Here is an article discussing this looming fiscal nightmare:

    May 16, 2011 at 6:07 pm | Reply
  4. Onesmallvoice

    What we need to do is to cut out the needless military spending on useless hardware and to get out from under all these useless and unnecessary wars. What gets me is that most people are just to ignorant to realize that. We also need to reform medicare by eliminating fraud and legalizing euthanasia. However,unfortunately these things won't be done through the ignorance of the people and the self-serving politicians in Washington,sadly enough.

    May 16, 2011 at 8:25 pm | Reply
  5. khawar

    Whats the use, weather the debt ceiling is raised or not, its not going to make any positive mark on social security or medi care..

    May 16, 2011 at 9:50 pm | Reply
  6. RealityCheck4US

    I do not believe most Americans understand the dire consequences of having such a large number for US debt. I saw this video that is lighthearted, but a serious message on US National Debt titled "America Not For Sale" . I believe Americans should wake up or be sorry. There is no such thing as never ending spending. There are dire consequences to such actions.

    May 17, 2011 at 8:03 am | Reply
  7. Bill, Bloomington Il

    This continued war on the middle class by the dems is only going to continue if the debt ceiling is raised. While the Reps have never supported the middle class I am tired of the dems claiming they do and where do all these entitlements come from? The middle class because most liberals will tell you the rich dont pay enough taxes. So again where does all the entitlement money come from? Cant be the rich.

    May 17, 2011 at 2:27 pm | Reply

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