Thursday, June 2, 2011

The Gang of Six is our best shot

The Washington Post published an op-ed written by Alan Simpson and Erskine Bowles. In their article, they referred to the Gang of Six as the “last, best hope” for an agreement to reduce the deficit. They said that everyone would have to give up something “to protect the country they love.”

“This is the time for heroes,” they said. “The country is ready for leaders in Washington to put politics aside, pull together — not apart — put national interest ahead of political interests and put the next generation over the next election. Pray for the Gang of Six.”

That sounds pretty dramatic. They both seem to believe that not coming up with a substantial deficit reduction package would be devastating for America. But why? Throughout the Obama administration, the government has been able to borrow money at low interest rates. Thus far, America has not faced a borrowing crisis.

So why does America need to reduce its deficit? Remember, Japan just suffered a devastating earthquake and she needs to spend money to repair herself. As such, Japan has less money to lend to us. That means we need to reduce our budget deficit.

But what happens if we don’t do that? Remember, at the end of 2010, I told Mr. Okumura that it might not be such a bad idea for Japan to focus on her economy. I also told him that if the West made too much trouble then Japan could tell the world the truth.

Given that we seem to have no desire to reduce our deficit, if Japan were to follow my advice, they would now tell the world the truth. Perhaps this is what Alan Simpson and Erskine Bowles are afraid of.

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