July 29th, 2011
08:51 AM ET

David Stockman on our quasi-bankrupt country

Editor's Note: David Stockman, a Republican, served as a U.S. representative from Michigan and as the director of the Office of Management and Budget from 1981 to 1985.

By David Stockman – Special to CNN

The crisis lies in the debt, not the ceiling. Kicking the can with a six months' ceiling increase is the worst possible alternative because it allows the politicians of both parties to continue making the Big Fiscal Lie. The Republican "no tax increase" position is preposterous; we are collecting less than 15% of GDP in taxes, the lowest since 1950, and spending 24% of GDP.

Former Rep. David Stockman

More than half of that is national security and Social Security, and the Republicans don't have a plan to cut a dime from either. Likewise, the Democrats are lying when they say Social Security is not part of the fiscal problem.

Benefits will exceed payroll taxes by $50 billion this year alone, and the red ink only gets deeper with time. Social Security should be subject to a stringent means test on the top 15 million affluent retirees, so that there is something left for the 40 million lower-income elderly who are already on the ragged edge.

Finally, the $800 billion defense and security budget is a relic of the Cold War, which ended 20 years ago, and should be cut by $200 billion. We no longer have any industrial state enemies and we have been fired as the world policeman - so it is time to mothball some carrier battle groups, ground some air wings, drastically reduce our troop strength, end the futility of Afghanistan and stop buying multibillion high-tech weapons that we can't afford and don't need.

In the meanwhile, both the Boehner plan and the Reid plan are just big numbers flimflam. Their 10-year discretionary caps can't be enforced and the debt crisis is right now. In the next two years, where it really counts, each would save only $60 billion, or 1%, of the baseline spending of $7.5 trillion. That's a pathetic joke.

We are borrowing $6 billion per day with no end in sight, and rolling the dice in the hope that apparently clueless bond fund managers will continue to buy the debt of a quasi-bankrupt country. One day soon, they won't. But then it will be too late.

Click here for perspectives on the debt ceiling from other luminaries. Also, check out Fareed Zakaria's interview with David Stockman here.

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Topics: Debt Crisis • Economy • Politics • United States

soundoff (23 Responses)
  1. lourdes

    what is this world coming too. why attack the poor with their social security checks, why not go after the rich.

    July 29, 2011 at 9:02 am | Reply
    • j. von hettlingen

      Indeed, the rich shouldn't get away with zero tax! The grievances of the poor should be addressed too!
      David McCullogh was right, when he said that Obama is not in an enviable position. One can liken his tasks to Hercules' laoburs. He can never please everyone, whatever he does, will always hurt some.

      July 29, 2011 at 10:43 am | Reply
    • g999

      The ***real ***attack is the ***war machine***. Ever heard of the military-industrial complex? Thought about the lobbying power of the arms merchants, have you? War is a profit-driven industry. Even 8 y.o. africans have ak's. Try asking yourselves why.

      July 29, 2011 at 9:27 pm | Reply
    • g999

      Attack the poor? Sitting ducks first, I guess.

      July 29, 2011 at 9:29 pm | Reply
    • ncwriter

      I believe if you check, you'd find that there is support on the right for raising taxes IF the debt problem is also dealt with – at least with people I've talked to. The Reid plan plays accounting number tricks again – summing 10 years of cuts against 2 years of raised debt and still coming out behind. Dave Stockton is correct, the problem is a debt problem, it is a deficit problem and I shamefully see the Democrat Party as ignoring the core problem.

      July 30, 2011 at 5:27 am | Reply
    • Strickler

      Well said!!! Not to many republicans or democrats willing to take a stand on the issues other than David Stockman. Only one comment on Social Security. If we leave it alone we should change the name to Well Fare.

      February 14, 2012 at 2:53 pm | Reply
  2. lefty avenger

    We are borrowing $4 Billion dollars a week from China to blow up the middle east for oil baron profit. Endless wars on a credit card to secure wild profits for a few oil barons is not sustainable.

    July 29, 2011 at 11:16 am | Reply
    • ncwriter

      Come on – do you really think think our budget deficit stems from military spending? It comes from putting discretionary spending on top of mandatory spending at a rate that far exceeds what we take in in taxes. Realistically, we cannot take a trillion in taxes from the people, so there must be cuts to reach stability. As I see it, I question what Reid is doing – unless he wants to bring about instability in the wild hope that he will be able to leverage the press into blaming the Republicans for it again. But I'm getting the feeling that Republicans have dug in their heels against that this time and aren't going to just roll over the way they have in the past.

      July 30, 2011 at 5:31 am | Reply
  3. Right Wing and Left Wing Extremists be Damned

    Amen Brother.

    July 29, 2011 at 12:26 pm | Reply
  4. conrad

    Hmmm a Republican with some sense, who would have imagined ... He's need in Congress pronto!

    July 29, 2011 at 1:26 pm | Reply
  5. Onesmallvoice

    It's funny here how nobody mentions the out of control military spending nor all these foreign aid givaways. One excellent idea here is to reduce our military spending from the current $783B to just over $300B in just two years and cut of all aid to Yemen until the government of that worthless Ali Abdullah Saleh falls. Unfortunately, the stupid right-wingers in Congress will have none of that and therein lies the problem!!!

    July 29, 2011 at 3:11 pm | Reply
    • Matt

      Right on the money, Onesmallvoice. The current military spending is so ridiculous as to border on the insane, but that goes blindly on as these right-wing fanatics keep hoping that it wll continue to be unnoticed!

      July 29, 2011 at 4:29 pm | Reply
      • g999

        Ever heard of the military-industrial complex? Thought much about the lobbying power of the arms merchants? War is a profit-driven industry. Even 8 y.o. africans have ak's. Try asking yourselves why.

        July 29, 2011 at 9:25 pm |
    • ncwriter

      And yet doing that doesn't fix the issue. You're left with a weakened military that's probably 1/4 to 1/3 the size it is today (you don't thik they're going to give up toys, do you?) and still a 700 billion dollar deficit. Support we also raise taxes 300 billion and let the jobs be damned for doing it. Where does the other 400 billion come from? What else are you willing to do without.

      July 30, 2011 at 5:36 am | Reply
    • LesLie

      Yes, and why are we not taking care of our own country before others? One in four children in America goes hungry everyday! Who is going to help them? Not to mention, how are we going to educate them? The priorities are all messed up! First things first!

      October 13, 2011 at 10:44 pm | Reply
      • LesLie

        The Leslie comment was in response to One Small Voice!

        October 13, 2011 at 10:50 pm |
  6. MyView5

    We do have industrial enemies. China has built a nuclear submarine base in the South China Sea. It is only a matter of time until the Chinese real estate and bad debt bubble deflates. Economic chaos in China creates conditions for upheaval. Chinese history is not a picture of peaceful progress. Russia is ruled by gangsters that kill journalists. Iran is ruled by religious frauds that intend world conquest. Pakistan supports Al Qaeda. Al Qaeda will attack us as we leave Afghanistan. North Korea is ruled by crazy people that intend to conquer South Korea.

    We have two wars and a government that cut taxes during wartime. You are right that we must increase taxes and dramatically reduce the deficit. But the emphasis must be on economic growth. Defense cuts should be carefully done, as we still face adversaries that are actively hacking our computer systems and preparing to attack us. China's civilian leadership has so far pursued peace, but Chinese history is not a history of effective civilian leadership. It is a history of aggresive warlords. it is important that we have the military strength to deter attack, and the strength to win if we are attacked.

    The key is to grow the economy in a strategic way that brings jobs back to this country, brings oil imports to zero, and relies on exports to create a positive trade balance. One big problem is that we do not have political leaders that understand economics or the need for a national economic strategy. The lack of leadership from the business community is also appalling.

    Of course we need higher taxes. But neither side is proposing higher taxes. There you see the lack of political leadership.

    July 30, 2011 at 12:56 pm | Reply
    • daviss flinch

      Yeah, the Chinese were agressive in the Opium wars, boxer rebellion

      July 30, 2011 at 1:37 pm | Reply
    • daviss flinch

      ah, the Chinese were agressive in the Opium wars, boxer rebellion

      July 30, 2011 at 4:05 pm | Reply
  7. LouAz

    "Something unpleasant is coming when men are anxious to tell the truth.” – Benjamin Disraeli

    July 30, 2011 at 3:24 pm | Reply
  8. Lindsey

    We should have listened to Stockman when he warned us of this during Reagan's presidency. What a shame!

    July 30, 2011 at 6:55 pm | Reply
  9. Rich

    David Stockman for President! Saw him interviewed on Bloomberg today (8-16-11) and agree with his analysis. The Fed is further distorting our economy, severly penalizing savers and creating asset bubbles with its extended zero interest rate policy.

    David what can we do next to promote your views and to bring the Fed back to reality?

    August 16, 2011 at 4:47 pm | Reply
  10. Bob Willett

    When Richard Nixon convinced Congress to removed the Gold Standard in 1972, so we could have inflation and more tax $'s coming in so we could pay for the Viet Nam war. The US owed 600 Billion and was backed by gold in Fort Knox at $35 an ounce to pay our debt. Jimmie Carter got blamed for the double diget inflation, but was it his fault??? When Ronald Reagan took office we owed $900 Billion. His goal was to cut taxes for the rich and bring down Russia and he did. He would not listen to David Stockman, therefore no balance budgets and the debt soared. Reagan wrapped himself in the American Flag and convinced the people that he could do no wrong. The 8 years that he was President and the 4 years of George Bush was the beginning of trillons of dollars of debt that we have and I doubt that our politicans will reduce our debt or even balance the budget.

    February 4, 2012 at 1:27 pm | Reply

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