I don’t think that the US has five to seven years left before it will experience the greatest financial collapse in history.
The US is heading for a debt-driven “financial meltdown” within five to seven years, according to Judd Gregg, the outgoing Republican senator for New Hampshire.
In a robust and at times testy video interview for the Financial Times’s View from DC series, Mr Gregg also complimented China for showing rising alarm about the US’s mounting levels of public debt.
“We have had China say that they are looking for other places to put their reserves and that is probably a smart decision on their part,” said Mr Gregg, who will not seek re-election in November. “So the warning signs are pretty clear and the path is unsustainable and, at this point, unless we take different actions, unavoidable.”
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But the senator, who was the most high-profile Republican invited by Barack Obama, the president, to join his administration last year, an offer Mr Gregg accepted and then turned down, said he doubted that the two parties would get together to tackle it.
Last month 16 Republicans and 37 Democrats voted to establish a fiscal commission – seven votes short of what was needed to prevent a filibuster.
Mr Gregg also played down prospects for the non-statutory fiscal commission that Mr Obama set up by executive order last week. “It was just an edict that came from a Democratic president,” he said, adding, that “it’s the only game in town right now”.
Mr Gregg also disputed non-partisan economic studies that showed last year’s $787bn (€585bn, £520bn) stimulus cushioned the impact of the recession. “The facts are wrong,” he said. “I can understand how a Keynesian would make that argument. I find them absurd on their face.”
Mr Gregg also disputed studies that showed the large tax cuts pushed through by George W. Bush, then president, in 2001 and 2003 had added to the US fiscal deficit.
“They were actually paying for themselves,” he said. “If you look at the numbers, they did.”
Mr Gregg also elaborated on why he changed his mind last January on accepting a post in Mr Obama’s cabinet.
“The euphoria of the time made me want to try to help,” he said. “But the practical reality of the situation settled in after a couple of weeks. It would be hard for a hardline fiscal conservative to serve in this administration.”
Mr Gregg declined to criticise the “Tea Party Movement”, which commentators believe is dragging the Republican party to the right. He said the “real opposition” to the fiscal commission came from the Wall Street Journal’s editorial page and Grover Norquist’s Americans for Tax Reform group, an anti-tax advocacy group.
By Edward Luce in Washington
Published: February 25 2010 22:30 | Last updated: February 25 2010 22:30
Source: The Financial Times