(BEGIN VIDEO CLIP)
BOEHNER: We're not talking about billions here, we should be
talking about cuts in trillions, if we're serious about addressing
America's fiscal problems. With the exception of tax hikes, which in my
opinion will destroy American jobs, everything is on the table.
(END VIDEO CLIP)
AMANPOUR: House Speaker John Boehner throwing down the gauntlet in
negotiations over raising the federal debt ceiling. Here's that debt
clock again. We have got a live picture there in New York and it waits
for no one. Soon, the numbers will crash through the debt ceiling,
exceeding the amount the U.S. is legally allowed to borrow. The stakes
couldn't be higher, so what is the solution?
Joining me now, Doug Holtz-Eakin, who ran the Congressional Budget
Office and served as John McCain's chief economic adviser in 2008.
Nobel prize winning economist Paul Krugman of the New York Times.
Sheila Bair, who is wrapping up her term as chairman of the Federal
Deposit Insurance Corporation. And Roger Altman, a former deputy
treasury secretary in the Clinton administration. Thank you all for
This seems to be a never-ending conversation, but the limit we're
now hitting up against. How is President Obama to respond to the call
for trillions, not billions of dollars in cuts?
KRUGMAN: I think he cannot -- if he gives in on this, he's setting
himself up for repeated blackmail. He's basically saying that I care
about the economy more than the Republicans do, and therefore, every
time they threaten to blow it up -- even though it will hurt all of us
-- I am going to give in.
So I think Obama has got very, very little wiggle room, even though
it's a terrible thing.
AMANPOUR: Lots of economists are saying the Republicans are playing
with fire, that hitting the debt limit, exceeding it is not like
shutting down the government. It could cause a real cascading economic
HOLTZ-EAKIN: I don't think there is any great desire to hit the
debt limit. The key is to recognize the limit is a symptom and that the
fundamental problem is the underlying condition of the U.S. budget.
What you're seeing now are calls for, both from Speaker Boehner and from
the Senate minority leader, Mitch McConnell, for real solutions to the
real problems. It's not about the debt limit. It's making sure that in
the short term you get cuts, in medium term you have an enforceable
path, and that you take care of something in the long term. The
entitlements have to be on the table.
AMANPOUR: So, we do keep hearing this now. There obviously seems
to be the momentum for dealing with entitlements. But how? How does
one deal with Medicare, Medicaid? We already saw Paul Ryan and his plan
for Medicare. They seem to be running away from it now. So how does
one deal with this in a way that's real, rather than just ideological,
if that's possible?
BAIR: Right. Well, I'm a bank regulator, I'm not a budget expert,
as some of these other gentlemen are, but we have been following this
very closely because we are very concerned about the outcome and how it
could impact the financial sector. But I've also worked in Washington a
long time, and it seems to me that if the pain is evenly distributed and
the general population feels that there's fairness in whatever ultimate
outcome is agreed to, I hope, by the administration and the Congress,
then I think it can politically, it can sell.
I do think that both sides have a point. Last November, I published