Meet the Press | October 13, 2013
>>> against the back drop of a possible u.s. default, the world financial leaders are in washington this weekend for the international monetary fund 's annual meeting . they serve as the financial watchdog and rescue agency. last night i sat down with the head of the imf , christine lagarde , in this exclusive interview. as we sit here, there is no deal. the american government is barelying toward inin inin inin ining -- barrelling toward default. how concerning is this to you?
>> it's very concerning. i spent the last three days with 300 finance ministers and banks from across the world , and the world was doing better. there was recovery in the u.s. in europe at last. japan was turning the corner. the emerging markets were still growing fast and low-income countries were really showing strong growth. they all came together to talk about the u.s. monetary policy and its impact on emerging market economies and how they should well prepare for that. and then they found out the debt ceiling was the issue. they found out that the government had shut down and that there was no remedy in sight. so it really completely transformed the meeting in the last few days.
>> help me understand from your point of view, managing director of the imf , international monetary fund , where you're providing aid to countries at risk around the globe, but you're also keeping an eye on the u.s. economy , the global economy . obviously there is a credibility issue for the united states here, but help me understand the actual economic shock that would result from us not raising this debt ceiling and being in a position where america can't pay all its bills on time?
>> do you remember 2008 , the beginning of the great recession?
>> well, if there was a combination of the government shutdown for a period of time and, more seriously, more damaging if the debt ceiling was not lifted with a degree of certainty and enough time so that people could sort of have the assurance that the economy was in good standing, that would bring about so much uncertainty, so much risk of disruption that the standing of the u.s. economy would, again, be at risk. that some of the obligations that the first economy in the world has would not be respected. and i think, you know, there was a lot of discussion amongst the finance ministers from all over the world about the technical aspects of it. and you can argue forever as to whether the impact is going to be 2.5, 3%, 5%, how much public spending will have to be cut, how many more people will have to be unemployed. but one thing is certain around the table, it was that if there is that degree of disruption, that lack of certainty, that lack of trust in the u.s. sitti signature, it would mean massive disruption the world over and we would be tipped again into massive rupture. that was that tip at the big table.
>> in 2008 , the great recession, as it's called, this would mean another recession from your point of view?
>> if it wasn't resolved, yes, that's what the risk is.
>> you know, there are some figures in our government and congress, senator rand paul, others who say, you know, this is overstated. the treasury can do things that the concept of default is hyperbole.
>> but creative accounting is not the solution. and markets know that. the counterparts to the united states know that. and when you are the largest economy in the world , when you are the safe heaven in all circumstances, as has been the case, you can't go into that creating accounting business. you have to honor your signature, you have to give certainty to the rest of the world , and you have to make sure that your own economy is consolidating that welcome recovery that we have seen in the last few days because it impacts the entire economy.
>> the result of this budget fight and previous fights has been part of a global debate about whether governments need to cut spending, deal with their entitlement state. you know the american budget is overrun with mandatory spending on entitlement programs like medicare and social security . is austerity the answer? are spending cuts that you hear american conservatives say are so necessary, is that the answer for our economy? or is europe teaching us that that's the wrong answer during a period of slow growth ?
>> you know, when we look at the u.s. economy we say something which is bizarre. we say hurry up but slow down. hurry up because measures have to be taken now to deal with entitlement, as you suggested. because there is a lot of entitlement coming up, and big liabilities coming up as well in terms of interest payment. but we say slow down because the point is not to contract the economy by slashing spending brutally now as recovery is picking up. so the pace of consolidation has to be sensible in order to protect that growth which is generating job and which is helping in all sorts of ways. but hurry up to deal with entitlement that will come up and haunt you in a few years' time. it's a balanced approach.
>> quickly, if we get past this crisis, if the debt ceiling is raised, if the government is reopened, what's your general view of how things are going economically in the united states , and where do you see it going?
>> we see real improvement in the economy. when you look at the housing sector, when you look at the automotive industry , when you look at the deleveraging that has taken place in banks, in corporate, in households, it's a much healthier economy than it was, obviously, back in 2008 - 2009 . a lot of work has been done and the economy is -- i'm almost about to say was, but i hope is really on its way to recovery.
>> sustained recovery?
>> everybody wishes that it is sustained recovery. and if it is healthy because it deals with this hurry up but slow down in terms of fiscal consolidation, if it continues to divvy up the confidence and trust that engages enterprises to invest, yes.
>> janet, as you know, has been nominated for the federal reserve , and it got me thinking about a historic moment for a woman at the federal reserve and the powerful example that you are as a lawyer and as managing director of the imf . both of you now very powerful women in institutions dominated by men. how do you hope to be a role model to women, both of you? how can you both be role models to younger women, particularly?
>> what i can tell you for myself, but i think i can even talk for janet on that one, is it doesn't go to our head. we don't take it seriously. we do our job. we try to do the best we can, and if we can inspire young women , if we can give the message that, yes, girls can do it, that's brilliant. because yes, they can do it.
>> cheryl sandburg, as you know, writes about the concept of leaning in, not taking yourself out of the game before you get to a powerful position as a woman. you wrote the forward for the french version. and you wrote something that struck me, that you want this book to be part of a much wider conversation about how to break down the larger external barriers that women face in business and leadership and society more generally. how do you break those barriers down, from your point of view?
>> you have to be competent. you have to work hard, you have to study, you have tore engaged in what you do. and the barriers that you find on the way? try to rally support of men and women around you, men and women, to break those barriers. and third, don't take yourself too seriously. try to bring a bit of humor in the equation. it helps.
>> as you have said on more than one occasion, smile and grit your teeth a lot.
>> sometimes you have to, right?
>> i've done quite a bit of that.
>> m erks rmerci beau coup.
>>> a knew poll out this week of some jaw-dropping numbers. has the american people agreement in washington finally reached bottom? kathleen parker , judi woodruff, harold ford , jr. and our own chuck todd . back in a