Tom Keene Talks to David A. Stockman

Tom talks with David A. Stockman, director of the Office of Management and Budget under President Ronald Reagan, about the aftermath of the debt deal

Can we handle being downgraded from AAA to AA+?
I have no confidence in S&P or Moody’s. Unfortunately, when you look at Republicans saying no tax increases when taxes account for only 15 percent of GDP, and when you look at Democrats saying no cuts to entitlements when government spending is 24 percent of GDP, that sounds like a banana republic, and we don’t deserve a high rating.

We’re going to have a super committee in Congress that is going to bring fiscal responsibility. Do you buy it?
I don’t buy it at all.

Then what is the Stockman prescription?
Reform Social Security first and foremost. Of the 55 million people on it, 40 million have no other source of income, so we shouldn’t tamper with their benefits. But there are 2, 5, 10 million people at the top who are quite affluent, who need to be means-tested or have their benefits eliminated entirely. Then there’s defense. We’re in a different world today. We don’t have industrial enemies, and we have been fired as the world’s policeman. Why do we have a defense budget at roughly $800 billion—bigger in real terms by 35 percent than it was when Ronald Reagan was fighting the Evil Empire and they had 8,000 warheads pointed at us?

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