Former President Bill Clinton said U.S. policymakers shouldn’t slash spending or boost taxes until the economy has more time to mend.
“I don’t like the deficit,” Clinton told Bloomberg Television’s Al Hunt in an interview today in Chicago. “But you can’t balance the budget in a busted economy.”
Clinton said he would suggest waiting two years before implementing the kind of deficit-reduction proposals envisioned by President Barack Obama’s fiscal commission.
“I think it’s crazy for us to be talking about doing this right now,” he said. “I don’t think it’s healthy to have big tax cuts or big tax increases or big spending cuts right now. We need to put America back to work first.”
Politics has distorted the facts of the nation’s debt ceiling during the debate between Obama and congressional Republicans, Clinton said.
“When you vote to raise the debt ceiling, you’re not legitimizing further deficits,” he said. “You’re voting to pay what you owe for what has already been done.”
Obama and congressional leaders remain at odds over how to reduce the deficit and clear the way for an agreement to raise the nation’s borrowing limit, currently capped at $14.3 trillion. The Treasury Department has said it has until Aug. 2 before its ability to pay U.S. debt obligations runs out.
“The Republicans, they think they’ve got the president and the Democrats over a barrel,” Clinton said. Whether they actually do, he said, “depends on whether we stand up to them.”
At a White House news conference yesterday, Obama urged Republicans to set aside their rejection of tax increases as part of a deficit-reduction plan. Democrats are willing to accept some “painful cuts” to favored programs, and Republicans must concede that some taxes may have to be raised, he said.
In December, the Obama commission chaired by onetime Clinton White House Chief of Staff Erskine Bowles and former Senator Alan Simpson, a Wyoming Republican, produced a deficit plan that included higher tax revenue. It recommended devoting $80 billion in new revenue to shrink the deficit in 2015 and $180 billion in 2020 by curbing tax expenditures.
It’s the Economy
Clinton noted that the British government has pushed austerity measures in the face of a sputtering economy.
“If it doesn’t work -- and so far it’s not -- there’s a real chance that their deficit will actually go up because revenues will go down even more than spending will be cut,” he said.
Debating whether to raise the U.S. debt ceiling is less important than agreeing on a long-term plan to lower the deficit, Clinton said.
“Then, we could go back and focus everybody’s attention on how to grow this economy,” he said. “Unless we do that, we’re never going to balance the budget.”
While Clinton expressed support for proposals that would cut tax rates to encourage companies to repatriate profits from overseas, he cautioned what happened the last time that was done, under President George W. Bush.
“Almost none of that money was reinvested in the American economy,” Clinton said.
The former president was in Chicago for his two-day Clinton Global Initiative conference. More than 750 business and government leaders are attending the conference at a Chicago hotel, along with Treasury Secretary Timothy Geithner, Agriculture Secretary Tom Vilsack and Energy Secretary Steven Chu.
The conference marks the first time Clinton has held such a gathering focused solely on the U.S. He established the Clinton Global Initiative in 2005, and the group says that over the years it has received investment commitments worth $63 billion that already have helped 300 million people in 180 countries.
In the interview, Clinton laughed and dismissed as “clever” politics the recent compliments of Mitch McConnell, the Senate Republican leader, who said he was nostalgic for the Clinton administration’s pro-trade and pro-business approach.
“Bill Clinton’s got a leg in the grave -- it’s safe to say something nice about him,” the former president said. “I’ve become kind of a convenient foil. But I get tickled. All these guys that used to say I was the worst thing since Attila the Hun, all of a sudden now they want to build statues to me.”