Former Republican Wyoming Sen. Alan Simpson – co-chair of President Barack Obama’s debt-cutting commission – says arguments over how much spending to cut from the administration’s budget is “madness,” because the upcoming debt crisis is a disaster in the making.
The wrangling “should be disappointing to anybody who is 20, 30, 40 [years old], because this is a disaster,” Simpson Monday told Fox News’ Stuart Varney. “This debt is $14.3 trillion. And they are arguing about whether they cut $100 billion or $120 billion or $68 billion. I mean, it – it is madness.”
Simpson predicted when Congress is confronted with extending the debt ceiling, it will force the administration and congressional lawmakers to agree on significant spending cuts.
“The president, being a very adroit political figure, he will, as it is closer and closer to deadline day – which is the raising of the debt limit, extending the debt limit – and people say, ‘I ain’t going to vote for that until we get spending [down],’ then we will see [real] spending cuts,” he said.
“That is a juggernaut. And, it won’t be just Republicans voting against the debt limit – debt limit extension,” Simpson said. “It will be Democrats like Senate Budget [Committee] Chairman Kent Conrad. I mean, this is – this is it. The games – the fun and games – are over.
“There will be a tipping point when the creditors, half of them from overseas and foreign countries … finally say, ‘hey, you didn’t have the guts to do the big stuff, and now we want some money for our paper,’” he continued. “And, guess who gets [hurt] the most on that one? The little guy that everybody is always talking about in this country.”
Varney asked whether Congress and the administration have waited too long and there will come a point where U.S. debtors refuse to lend any more.
“I don’t know. We will find out. We asked that of ourselves for the 10 months that the members of our group met,” Simpson said. “All I know is, if they continue to mess around – and that is what this is, messing around – and if they don’t do some significant things at the time of the debt-limit extension, I figure, within a year, the guys that hold our paper are going to say, you failed, and we want some money for our paper.
“And, they’re going to say, ‘pay it,’ and the interest rates are going to go up. The bond markets will streak.”
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