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Now With Alex
updated 3/25/2013 8:18:26 PM ET 2013-03-26T00:18:26

The NOW panel discusses the country's current debt issues and debates whether or not deficits matter....

On Monday’s NOW with Alex Wagner, the panel recapped this weekend’s Senate budget “vote-a-rama” and what it may mean for  future fiscal fights facing the country. The U.S. is expected to once again bump up against the debt ceiling this summer.

Bloomberg View’s Josh Barro said Republicans were wrong to equate the country’s debts to those of an average family, arguing they more closely resembled those of a company.

“The government is a lot more like a company than it is a household,” Barro said. “A company has debt as part of its permanent capital structure and it can have that debt forever as long as the debt doesn’t get too large relative to the company.”

Republicans have been attacking Senate Democrats “because their budget doesn’t balance over ten years, but the budget shouldn’t balance over ten years,” he argued.

Former Pennsylvania Democratic Governor Ed Rendell agreed on that one point, but disagreed about the urgent need to tackle long-term deficits in the short term as a means of generating job growth.

“Josh is right. It’s not about balanced budgets, it’s about debt as a percentage of GDP,” he said. “If we let that get to 90-95%, we’re going down the tubes fast.” Where he disagreed with Barro, he said, was that he believed meaningful long-term debt reduction now would spur companies to immediately start hiring.

“I don’t see the ties between those two things,” said managing editor of theGrio.com Joy Reid. “Because the federal government reduces its deficit doesn’t mean Walmart’s going to go out and hire a bunch of new people. They’re not connected.”

“That’s the problem with our side!” Rendell said. “I think we have too many people in our party who are flat out debt deniers.”

Video: Are Democrats ready to play ball on the budget?

  1. Closed captioning of: Are Democrats ready to play ball on the budget?

    >>> with vote-a-rama now over, congressional lawmakers are back in their districts for a two-week break after a marathon voting session this weekend. following house passage of the ryan plan, senate democrats responded in kind by passing their own budget , their first in four years, it garnered no republican support and four democratic nays. still, obama's 2012 campaign manager , jim mussina hailed it as progress.

    >> i think the senate passing the budget is a good step, along the lines of the prosals the president has laid out.

    >> much like the paul ryan house plan, the senate blueprint is a statement of priorities. ryan's plan consists entirely of spending cuts, $4.6 trillion of them, 66% of which come from programs for poor and working-class americans. on the other side, democratic plan calls for $100 billion in stimulus and an even ratio in spending cuts to new revenue from closing tax loopholes on higher earners. surprising no one, the senate's balanced approach was rejected wholesale by republicans . in their response to president obama 's weekly address, tea partiyer mike lee tried to explain the gop 's resistance.

    >> to republicans , the budget isn't just about dollars, it's about sense, common case, common sense equals amendment-a-rama, as the senate debated the budget , republicans in the upper chamber went after their least favorite thing in the whole world, obama care. politico noted of the 100 amendments considered, more than 20 were related to health care , medicare or the health reform law. five amendments related to a wok woman's right to choose. marco rubio 's proposal to make it a crime to transport a woman across state lines for an abortion and rand paul suggested that the u.s. should save some money simply by withdrawing from the united nations . but approving the keystone pipe line ? that nonbinding amendment passed. with the support of 62 senators, including 17 democrats .

    >>> with president obama set to release his own budget when lawmakers return in early april, is compromise in the cards? new york's jonathan shay doesn't think so writing parties can't find the middle ground , because the middle ground doesn't exist. hmm, i don't call that optimism, josh.

    >> well i think first most important thing to note about these amendments is none are going to become law. because the budget is not going to become law. what part of the deal from the fiscal cliff deal a few months ago was that the senate democrats had to pass a budget in order to get a debt ceiling increase. they'll pass a budget . the house passed a budget . in theory what they're supposed to do is reconcile the two of them, come up with a compromise and make that budget the law. that's not going to happen, this was the end. this bill is going to die and there's no implication for keystone, excel, abortion or anything else. it's symbolic.

    >> quoting myself, it's a statement of priorities. and the fact that the republicans are still trying to litigate the issue of the affordable care act , still talking about contraception, still talking about a woman's right to choose, it's a testament, those are not winning issues for the republican party . i want to talk to you, josh, you have a great column in bloomberg view, talking about republicans and their deficit amnesia. michael writes in the " daily beast ," the gop is advancing three crucial lies, that we have to balance the budget , that public investment at this point is irresponsible and that if we do slash spending and balance the budget , jobs will come. it's all nonsense, every assertion is the exact opposite of the truth. respond to that, if you will.

    >> i think that's basically right. people on both sides of the aisle talk about balancing the budget as this lofty and important goal. i think it's important to remember that the federal budget has been in deficit for 46 of the last 50 years, so if constant budget deficits are going to ruin the economy they're taking an awful long time about doing so. the real fact about the budget is that the deficit has to be sustainable. but basically the government is a lot more like a company than it is like a household. and a company has debt as part of its permanent capital structure and it can have that debt forever. if the company keeps grog, it can take on more debt. similarly if we run a budget deficit , so long as it is small enough relative to the amount of economy is growing over the long-term that can be sustainable. we have to shrink the budget deficit over time , but not all the way to zero. the democrats are closer to correct on this point where the republicans have been attacking them because their budget doesn't balance over ten years. the budget shouldn't balance over ten years.

    >> i think you hit a key point. it's all about growth. you can grow your way out of deficits. we saw it during the clinton administration . it's also about looking at how far we've come. if you actually look at what we've already done in terms of getting deficit under control, if you look at the budget control act, if you look at the tax increases from the end of last year, and all of the interest savings associated with that, we're actually two-thirds of the way to a grand bargain without the sequester. what we have in this country is not so much a deficit problem as a health care spending problem. inflation and health care spending has been a little bit compressed recently. over the long haul, that's the problem. that's why it's so disappointing that that's still an issue again and again to move forward on health care .

    >> haven't the republicans been successful in a sense, they've gotten washington to essentially only focus on deficit and debt.

    >> joy i want to read a quote from the " washington post " yesterday. president obama now finds himself enacting a broad public policy that he doesn't support and believes will harm the country. president of the economic policy institute said president obama shoulders part of the blame, i think they brought it on themselves to the extent they validated the deficit issue.

    >> we keep having not just republicans , but democrats agree to be on the playing field . where all we're talking about is how do we shrink the debt, how do we attack the deficits. we've gone completely off the plot. when president obama got elected to do was not deal with the deficit and debt. long-term, want to deal with it, don't want to let it get out of control. but our problem is the economy and jobs, that's where the president started. even democrats have managed to get on to this playing field where and the media and the beltway, everyone in washington agrees, we've got to talk about deficits and debt all the time. and it drives me crazy. the other thing that drives me crazy and i don't understand is why do republicans still think that it's okay to still be litigating a woman's right to choose and planned parent hootd and all this other stuff that doesn't help them. i don't even get it at this point i just don't get it.

    >> governor you are very involved with the campaign to fix the debt and i think that there is also a half-truth out there that democrats somehow don't realize that down the road, we acknowledge something needs to happen vis-a-vis the social safety net , whether turning it into a voucher program or block grant to the states, is another matter. there's not a lack of recognition about the path that we are on. the timeline and the heens to the end are i think what is at the heart of the debate.

    >> i think we do have in our party, my party, too many people who are just flat-out debt deniers. the point josh made is the right one. it's not balanced budget , it's debt as percentage of gop . if we let debt get to 90, 9 5%, we're a european nation and we're going down the tubes fast. that's number one. number two, we've got to drive debt down between 70 and 60% of gop . we don't have to do it in the next year or two and simpson - bowles doesn't recommend that. they recommend that the debt reduction gets phased in in the out years to grow the economy and simpson - bowles says we can invest in the short run. it's like everything else, we can do all of these things if we put our mind to it. we can invest in the short run. juice up the economy as joy says, and at the same time we can put things in place, that will have some level of pain for all sides, p ut things in place to reduce the debt to a manageable percentage of gdp. if we don't do that, we're in trouble. josh i've dealt with enough ceos in my role as co-chair of campaign to fix the debt. if we were to do a debt deal that would bring the debt over under control, i think you would see a lot of investment that's not happening right now.

    >> one thing about the simpson - bowles and then i'll throw it to you. other thing that simpson - bowles said it should not disproportionately affect the poor. the paul ryan budget -- what's happened now, i blame to some degree democrats for this the goal posts on the right are the paul ryan budget . the senate democrats ' plan isn't even taken that seriously by the white house because it's too extreme. it's too left. if we're really looking at this in sort of a fair playing field , we should be looking at the house progressive caucuses' budget and the paul ryan budget . if you want to start where, in a sort of like --

    >> and now the criteria.

    >> either side's budget . you should be looking at what's going to get the job done for america. that's the problem. we're all looking for victories, we're going to protect our side, they're going to protect their side. the only way people are going to recover in this country is if we create a climate that's going to lead to growth. your point. and the only way to do that is by controlling our debt.

    >> i don't see the time between these two things. deficits have nothing to do, because the federal government reduced its deficit. that doesn't mean wal matt is going to go out and hire a bunch of people. they're not connected and we're having this conversation over and over .

    >> that's the problem with our side.

    >> i want to get josh in here.

    >> the usual circumstance in which government borrowing is crowding out private investment and holding back growth is that interest rates rise because governments trying to borrow money at the same time that companies are trying to raise capital, it makes capital more expensive and it makes difficult for people to invest. we're not seeing it right now. interest rates are extremely low, not just in the short-term, but also in the long run. we have extremely low, 30-year interest rates what that reflects is there's not a lot of demand for capital in the private sector . the government could be boosting the economy by borrowing and spending the money itself. and in the future, if, if we see interest rates starting to rides, that will be in part an indication of expectations of improved long-run gdp growth that will be the time that we should shrink government budget deficits and get government out of the way.

    >> if the sequestration stays in place by 2023 , our debt will not be reduced, as percentage of gdp, it will be increased. so we have done nothing yet to deal with a very serious long-term problem. guys, if you don't see it, it's what's wrong with progressives.

    >> everybody has got some good points. we need growth right now. we're going to need some debt reduction a little more medium to long-term. alex, i think you made a really important point, is that, because --

    >> you sound surprised.

    >> the goal posts have moved way over here and i think that that's really interesting. and that's a bigger picture issue. because neoconservative economic ideas are so much the heart of the conversation. and that's why the republicans lost. for starters, i'm convinced they had -- we can talk about a lot of reasons for that. but the global economy is such that supplyside economics don't work any more. that penny hasn't completely dropped yet. but it's very much to do with what you're saying, we need to move the conversation back to the middle. we need growth and you can't get there just by kcutting.

    >> the last thing i will say, i do think governor, that the democrats are ready to play ball on this in a way that the republicans have dug in their heels. if you compare just patty murray 's budget to paul ryan , they are very different documents. ron fournier writes in the " national journal " last week. house speaker boehner says the house after increasing taxes by $600 billion last year will not raise taxes, don't believe him. house republicans tell me they're open to exchanging entitlement reform for new taxes. will there be mutiny if that happens?

    >> that's what usually happens is a john boehner stakes out a hard-core right wing position and he folds in the end because they have to get something passed. right now the republicans ' twin obsessions are competing. they have to obsession with got to balance the budget . they're obsessed with it and they're obsessed with going after medicare . they are obsessed with what they're calling entitlement reform. what it means is people back the social safety net . it's paul ryan 's singular obsession, privatize it, shrink it or make elderly poor people pay for their own health care . it depends which one do they want more. i think that republicans would accept some closing of loopholes if they could get at the white whale of medicare and get grandma to pay a little more.

    >> i wonder if his singular obsession, i always thought his singular obsession was p-90 x.

    >> november 7th , 1991 , saw a confession that changed the political and cultural landscape and altered the course of a national health crisis, the impact of magic johnson 's hiv announcement 22 years later when he joins

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