NEIL CAVUTO, HOST OF “YOUR WORLD”: All right, we go again, stocks continue their slide despite the signing of the debt deal, maybe because of it. Hard to say, but the Dow is down 6 percent just since Tuesday.
Alan Simpson is the former debt commission co-chair.
Senator, are you surprised?
ALAN SIMPSON, FORMER CO-CHAIRMAN, NATIONAL COMMISSION ON FISCAL RESPONSIBILITY AND REFORM: Well, not really, Neil.
It seems to me that they didn’t go further enough. We did avoid the cliff, and that’s fine and that’s a good sign. But I’ve often said that the global markets don’t care about Republicans or Democrats or the president. They care about their money.
And when they see us tumble around to the edge of the abyss and just mess around and do this, and then -- which it doesn’t even match either the commission or the president, which was $4 trillion in 12 years for him, $4 trillion, 10, for us, it just -- they’re going to take it out on us.
CAVUTO: But they were taking it out across everyone...
CAVUTO: ... and on everyone. And I’m wondering whether there’s just a global repudiation of -- of their leaders. You know what I mean? Like, financial markets are saying those in charge in their countries, from -- from Italy -- and it kills me to say this as an Italian-American, Senator - - but all the way here to the United States, that there’s no faith.
SIMPSON: Well, Berlusconi is not exactly the titan of morality in industry.
CAVUTO: All right, you be careful there, young man. But go ahead.
SIMPSON: But, anyway, think of Italy. I mean there they are. And their bonds are racketing up past 6 percent. And finally they’re looking at Italy. And Italy is always -- but you can’t -- it is a global, global economy.
It’s so different from anything we’ve ever had in our whole history. And all of these countries have this trajectory of debt, deficit, and interest, which it is unconscionable and unsustainable.
CAVUTO: Alan, how different or maybe would it have been a factor if we had a deal that was at least $4 trillion over 10 years and it was real, in other words, the cuts weren’t in the outer years, they were immediate, or it looked like we really were getting our keisters together here?
Would that have produced any different results? Would the world have looked at us as maybe leading the world out of this abyss, or what?
SIMPSON: If the world had looked at the 67-page report -- and it’s not about Simpson or Bowles -- it was about five good Democrats, five good Republicans and one independent putting together a thing in 67 pages where everybody had skin in the game.
You can’t get this done unless everybody has skin in the game. The president didn’t really dip -- dabble with defense or Social Security reform. Paul Ryan, a splendid thing, he hit the mastodon in the kitchen. He went after Medicare. That’s where the – that’s where it is...
CAVUTO: Right. Right.
SIMPSON: ... on automatic pilot.
But he didn’t really touch Social Security reform. Unless you do touch them all and everybody with skin in the game, it will fail.
CAVUTO: Now, Senator, the -- the question has been raised and among those who even opposed the nominal cuts that we got in the deal this past week in Washington, the argument was now is not the time to be cutting anything. In fact, now is the time to be priming the pump, Dennis Kucinich telling me that’s what we really should be doing, and not holding back here.
When I reminded a lot of folks, well, you don’t have to worry because the cuts up front are not that onerous, I think $28 billion in the first year in a $2.1 trillion 10-year commitment, so not to worry.
But, nevertheless, what do you make of that argument that cuts of any sort in an environment like this aren’t wise?
SIMPSON: Well, we – that’s exactly what we put in the report. We just said that the teeth finally get bared in the year 2013 or 2012 and do the heavy lifting then, so that we don’t hurt a fragile -- then, we called it a fragile recovery.
Now you know we’re just being battered. What I’m fascinated, how the boys and girls that play with the money are batting their eyes like a frog in a hailstorm because they don’t understand the usual template. Well, the usual template happens to be taking place in Ireland and Greece and Italy and Spain and Portugal. That’s where they’re lost in the swamps.
CAVUTO: We got indications out of the White House today, Senator that Tim Geithner will probably be asked to stay on, that the president really likes the guy. He’s the guy who shepherded us through a lot of this whole post-meltdown issues and he’s gonna stay.
And there had been rumors prior that your co-author of this debt commission report, Erskine Bowles, was going to replace him. That does not appear to be the case right now.
Any thoughts on that?
SIMPSON: Yes. I would say that, knowing my chum Erskine Bowles, he would have answered the call to any president under normal circumstances.
But after sitting through what he and I sat through and have watched take place after 10 months or a year-and-a-half, why come into a Cabinet and deal with a dysfunctional government? That’s -- that’s my hunch about my friend.
CAVUTO: All right.
Senator, thank you very much, Alan Simpson, on the phone with us now, the co-author of the president’s debt commission report.
For or against the report, it was the first serious effort at looking at this long-term debt and doing something about it. So, you can kick it and, as many politicians did, just shunt it to the side of the road, but it was the only real plan out there. So, if anyone’s got a better one, have at it, as they say. No one really did. OK.
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