On NBC's Meet The Press Sunday morning, former Federal Reserve Chairman Alan Greenspan and former Treasury Secretary Henry Paulson discussed the current economic morass and what exactly might help change the situation.
Paulson and Greenspan agreed that the single factor that could jump-start the economy is unknown, since it will probably come from "innovation," defined by Greenspan as:
Innovation by definition is not forecastable, so we don't know where the jobs are coming from. We don't know how this market is exactly in terms of dynamics going to move forward. But we know that this process is under way, and there's every reason to believe that it will continue to do so.
Both men also were asked by host David Gregory about the situation with the U.S.'s escalating debt, and what problems might ensue from that. Both said Washington was essentially dysfunctional, or more accurately, irresponsible, in not doing anything serious to begin addressing the problem.
MR. PAULSON: Oh, I, I just have no doubt that it is by far the most serious long-term challenge we, as a nation, face. All these other issues are—economic issues are minor compared to that, that the, that—and it's a generational issue, because it, it's—there's no way we're going to, to deal effectively with, with the deficit without reforming the entitlement programs—Medicare, Medicaid, Social Security. And it, it doesn't have to be a, a crisis. This is something that can be handled. But one of the things I, I, I talk about in my book and one of the lessons that just hit me right between the eyes, being in Washington, is it's very, very difficult to get Congress to act on anything that's big and difficult and controversial if there's not an immediate crisis. And so this—so what it's going to take to, to, to get leaders on both sides to come together and deal with this, I, I think is a huge question.
Greenspan then said that taxes need to be raised (something that seems both Republicans and President Obama are obviously reluctant to do). Can Obama begin to seriously balance the budget without raising taxes, even on people making less than $250,000 a year? We'll write more about this tomorrow.
This article appears in Feb 3-9, 2010.