An Evening With The Swiss Timothy Geithner
About a week ago I was contacted by Arther Honegger with Swiss TV, inquiring if I would be interested in being filmed for a program that is their version of 60 Minutes. He wanted to interview me as a tea partier, because Franz Zurbrugg (Director General of the Swiss Finance Administration) was coming to Charlotte to lead an economic forum about the US’ financial crises, and Swiss solutions. Yesterday I met with him and filmed a 15-minute interview about the proposed balanced budget amendment, the federal debt, and what prompted me to join the tea party. Following the interview we went to the Renaissance South Park Hotel for the economic forum. Dr. Zurbrugg discussed measures Switzerland has taken in recent years to maintain economic strength, and to limit their national debt. Dr. Jay Bryson, Managing Director and Global Economist for Wells Fargo, spoke about our national debt, deficit, and the steps required to right our economic ship.
I have to tell you, neither speaker was very optimistic. I enjoyed listening to both of them, and gained some valuable takeaways, but the news was rather somber. Unfortunately, I felt very vindicated. For quite a while now myself and other tea partiers have been screaming into the hurricane that our national debt is unsustainable, and that drastic measures must be taken to ensure our economic vitality in the future. Unfortunately, our “doom and gloom” fears are often mocked, belittled, or ridiculed. How many times have we heard that “you just don’t understand economics”? I can tell you, I understand economics enough that I spent 15 minutes having a one-on-one conversation with the Swiss version of Timothy Geithner, and not only did we have a good conversation, he and I were on the same page regarding US debt. Vindication.
Dr. Bryson presented a very bleak picture. Because of the non-discretionary spending obligations (Social Security, Medicare, Medicaid), we are putting ourselves into a position where we will no longer be able to fund infrastructure programs and the like. For those who do not know, we cannot cut non-discretionary spending obligations without fundamentally changing the programs. Even if the administration wanted to cut, say, Social Security, they cannot. The only portion of the federal budget that may be cut is discretionary spending. Unfortunately, with our aging population, we are having to put more and more revenue into the non-discretionary programs, at the expense of other discretionary spending programs.
Dr Bryson said, to paraphrase, that we cannot continue funding these programs and growing their size. We can cut DHS, we can freeze federal salaries, we can freeze discretionary spending. But it won’t matter. If we do not begin having an adult conversation about cutting non-discretionary spending, we will be in trouble.
The problem is, right now everyone thinks things are fine. The economy is coming around. And I’m not saying things will be bad in a year or two. But by 2013, 2014, 2015, we’ll be facing an economic disaster that will make the last recession look like child’s play. A lot of tea partiers want to completely dissolve the DHS, the Dept. Ed, etc, but don’t want to touch Medicare or Social Security. Folks, we could eliminate four or five cabinet departments and still not be near where we need to be. Our situation is that grim. I asked Dr. Zurbrugg how the world views the US economic situation, and he replied, “very cautiously.” We are still the largest economic engine, but we are far more fragile than we think.
Part of the problem is that Americans have a short memory, and are, as Dr. Zurbrugg said, “happy-go-lucky.” There have been ideas presented to Congress that the Budget Committee didn’t even discuss – discuss! – because no one wanted to be the one to make the tough call. They look at projections and think, “oh, those projections are 10-15 years away. We have plenty of time, and can figure it out another day.” All the more reason we need to elect people who take these issues seriously. I mean we’re only talking about the future of our country. The no-kidding, honest to goodness future of our country.
I wish every one of you could have attended the forum last night. It was eye-opening, primarily because of the caliber of economists that were saying these things. Dr Zurbrugg is of the Austrian school; when I asked him his opinion of Keynesian economics, he said, “they don’t work. You can’t spend your way out of a recession, or out of debt.”
Another problem with the US is that we spend when times are bad (with borrowed money), believing that will spur the economy. But then when times are good, we spend more, because we have more to spend. The proper way of doing things would be for government to save when times are good, so that we can spend some of our savings when times are bad. This would keep our economy much more level, rather than having such dramatic economic swings. Part of the problem, Dr. Bryson said, is that we have not felt the pain yet. We think we’ve felt the pain, but we really haven’t. We are headed in the direction of Greece, but we don’t realize it. The thing is, Greece didn’t know it was Greece until it was Greece.
There was much more discussed regarding China, our trillion-dollar deficits, our $13 trillion national debt, economic policy, and the like. The only “good” news was that if China dumped their holdings of our debt, then that would absolutely ruin our economy. However, the world-wide ripple effect would be so enormous, that we trust the Chinese would not do that. Some good news, eh? Then again, China is a nation of savers, and we’re a nation of spenders, so it’s possible they might one day do that, if they feel they’re economically strong enough to withstand the global fallout.
Folks, the situation is more grim than even I had imagined. I always felt like we were facing a dark future, but I hoped that last night I was going to hear brilliant economic minds providing some glimmer of hope, some reassurance that there was a plan to improve our economic strength. Unfortunately, there was no such good news. I’m sorry to end this on a down note, but I really don’t know how else to end it. I am becoming more convinced by the day that the next generation will not have an America like we know it. Heck, I hope they have an America at all.
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