There is no one in the Obama administration like Robert Rubin, who had the ear of President Clinton. Rubin convinced Clinton that the Bond Vigilantes would riot if he pursued policies that would lead to a structural federal deficit, i.e., one that would widen despite a growing economy. So far, the Bond Vigilantes haven’t gone on a rampage despite projections of $10tn in deficits over the next 10 years. So it is no wonder that Obama’s political advisors are acting as though they’ve been handed a blank check by the bond market. However, the longer they ignore the economic advisors, the greater is the likelihood that the blank check will bounce.
So I am at this CAP thing on the deficit where talk of higher taxes was hot and heavy. Both Robert Rubin and Roger Altman both seemed to imply that the financial markets will force action sooner rather than later on the deficit — and that means higher taxes.
I recently had the opportunity to sit down and chat with Jared Bernstein, the chief economic policy adviser for Vice President Joe Biden. Here are some major excerpts of what Bernstein had to say about healthcare reform, the Obama stimulus, the deficit and the future of the American economy.
It was at this point during the president’s Ohio speech to GM workers today that I thought he was going to talk about card check: “And yes, just in case you were wondering …”