especially the Republican side, to pass the debt limit, don't trifle
with it and certainly don't trifle with default. And I think that's
HOLTZ-EAKIN: And the last thing I'd say -- and this is important to
recognize -- that nine out of 10 Americans oppose just a pure increase
in the debt limit.
So let's face it. This is a political exercise. They can't just
raise the debt limit. That's politically absolutely unacceptable. They
need to both raise it and fix the problem.
AMANPOUR: And you also heard Speaker Boehner saying that everything
is on the table except -- except taxes.
Has that battle basically, Sheila, been completely won now or
settled; it's just not going to happen?
BAIR: Well, I think that's a good question. I think probably
everything should be on the table.
I think there's a difference between tax -- raising tax rates and
tackling tax expenditures, and I think there is the potential for a very
broad bipartisan consensus on tackling, getting rid of most of these tax
expenditures which are very destroying for the economy and were -- some
of them were a driver of the crisis.
For instance, the mortgage interest deduction heavily subsidized
leverage, a lot of leverage with home borrowers. He favorable treatment
we give debt over equity financing also encouraged leverage with
There's a tremendous amount of potential revenue that could be
raised through tackling tax expenditures and it seems to me where the
most likely place for a bipartisan consensus is. But tax revenues do
need to go up. I think that needs to be part of the solution.
AMANPOUR: And this week, President Obama said to the Democrats,
don't draw any lines in the sand; be flexible on this.
AMANPOUR: On not particularly this issue, but in general.
KRUGMAN: Yeah, and there's a problem because, if you're playing the
responsible adult in the room and the other guy is willing to blow up
the room if he doesn't get exactly what he wants, that puts you in a bad
I think there has to be some lines in the sand. There have to be --
you know, we're not going to dismantle the New Deal and the Great
Society in a couple of weeks because the Republicans refuse to raise the
AMANPOUR: What would each one -- I want to go around the table and
ask you, what would each of you want to see coming out of these debt
ceiling talks that are going on right now?
What is the best-case scenario?
ALTMAN: Well, I think it will have to be, as Doug said, a serious
agreement to cut the deficit, or a downpayment, as the administration is
talking about, negotiated beforehand, and then pass the debt limit
increase in effect in exchange for that.
So there will have to be a serious budget agreement. It will just
be a downpayment. It won't solve the entire $4 trillion 10-year
problem. But if it's not serious and pretty large, then I don't think
it will get the votes to pass the debt limit.
BAIR: I guess I would like to see even more than that and have a
long-term plan. Four trillion over 10 years, I think, was a good
number. I think the Bowles-Simpson plan wasn't perfect, but it was a
good -- a good framework, a good example of how the pain could be evenly
But I agree, some short-term downpayment and some meaningful time
sequencing to get this done, I think, is necessary for credibility.
KRUGMAN: I actually -- I think it may be necessary to take this up