Former Federal Reserve Vice Chair Alice Rivlin called for area citizens to voice their concerns about the federal debt during a round of appearances in Atlanta underscoring a critical need for bipartisan support of widespread policy changes.
During a March 1 luncheon of the Kiwanis Club of Atlanta, Dr. Rivlin and other members of a panel encouraged attendees to be in touch with Sen. Saxby Chambliss of Georgia, a Republican who is heading up with Sen. Mark Warner of Virginia, a Democrat, a small group of senators from both parties seeking solutions for the country’s debt problems.
Current U.S. public debt exceeds $14 trillion and the U.S. gross annual debt has increased by more than $500 billion each year since FY 2003.
Dr. Rivlin, who is a member of the President’ National Commission on Fiscal Responsibility and Reform, was accompanied by David M. Walker, former U.S. comptroller general, who currently heads the Comeback America Initiative, which is proposing a variety of solutions to the country’s debt problems.
Joseph Amos, Wilson H. Taylor Scholar in Health Care and Retirement Policy at the Washington-based think tank, the American Enterprise Institute and Robert Bixby, executive director of the Concord Coaltion, a grassroots initiative dealing with these issues, also participated.
Besides the Kiwanis luncheon, the panelists attended a public forum held at Kennesaw State University and a breakfast of the Atlanta Press Club.
Dr. Rivlin and Mr. Walker diverged slightly in their views about the dependence of the U.S. on China and Japan to continue financing the debt by purchasing U.S. Treasury bonds.
“China and Japan are not the largest holders of U.S. debt,” Mr. Walker said in response to a question from GlobalAtlanta. “The largest holder is the Federal Reserve. Our Federal Reserve will keep interest rates low.”
Mr. Walker added that the Asian countries were not buying 30-year or 10-year bonds, but short-term debt and he did not consider an end to these purchases an immediate cause for concern.
“China and Japan can’t dump their debt,” he added. “But they can reduce their appetite for debt.”
Dr. Rivlin countered that she would be seriously concerned if the U.S. had problems marketing its debt. “I think we are closer to the cliff,” she said. “We could find out that we can’t market our debt and we can’t afford higher interest rates.”
Should there be a flight from U.S. debt, which now bears interest costs of $200 billion a year with projections at more than $800 billion in 10 years if interest rates remain low. Higher rates, which would be necessary to attract buyers, would increase debt pressures enormously.
To learn more about grassroots efforts concerning budget deficits, go to www.concordcoalition.org