A Map for Finding Our Fiscal Way

Friday, December 07, 2012

President Barack Obama meets with Erskine Bowles and Alan Simpson, co-chairs of the Fiscal Commission, in the Oval Office, April 14, 2011. President Barack Obama meets with Erskine Bowles and Alan Simpson, co-chairs of the Fiscal Commission, in the Oval Office, April 14, 2011. (White House)

There are likely many images that spring to mind when you start considering the "fiscal cliff," that will bring tax increases and automatic spending cuts next year, if Democrats and Republicans are unable to negotiate a deal to reduce the deficit.

For the dean of Columbia Business School, Glenn Hubbard, the looming austerity crisis brings back memories of summer vacations in Ogunquit, Maine and a scenic coastal walk along a narrow path on a cliff. Hubbard says there is a safe way down the rocky path to reach the beach below, but you just need to find the right way to get there.

Hubbard was the chairman of the Council of Economic Advisers under President George W. Bush, and he explains why our system was set up to create a "fiscal cliff" in the first place.

"None of these fiscal problems, as large as they are, are beyond our grasp," Hubbard says. "Our dysfunction is less about economics than it is about politics."

"Currently, our leaders talk about taxes and spending as if they're different subjects, and of course, at the end of the day, they have to come together," Hubbard explains. Because of this disconnect, the math simply isn't adding up. "If we want to keep current levels of spending, we would have to raise taxes, and by the way we would have to raise taxes on everyone," he says. "All of the tax increases that the president has proposed on upper income households are about 1 percent of GDP. We're many times that off."

In addition to increasing taxes, Glenn Hubbard advises serious reform of entitlement programs. Though it is important for lower income Americans to have access to Social Security and health care, Hubbard does not see a reason to extend these benefits to the wealthy. "We need to accept the proposition that upper income people should be getting less," he says.


Glenn Hubbard

Produced by:

Elizabeth Ross

Comments [7]


The President and others will swear on a Bible to honor the US Constitution which is about limitations on the Federal government.
That founding document outlines what the government will do and how big that government should be.
Do they teach that at Columbia Business School?

Why didn't the Democrat controlled Congress raise taxes in 2010 like they were supposed to in order to the pay for the trillions they spent?

Dec. 07 2012 08:22 PM
Chris Jonsson from Dallas,TX

Dear English teacher mind, beware. Glenn Hubbard and his people want to cut funding for public education by giving vouchers for charter schools and church schools, crushing teachers' unions, and eliminating the liberal arts. Pragmatism will vanish so the public doesn't question what their government and big business is doing. Your job might be outsourced to an internet private education company possibly overseas. Your Social Security and medicare will be reduced in order for the wealthy and corporations to avoid paying more taxes. The reasoning is that you are helping to reduce the national debt. Did you cause the national debt? No. Why should you have sacrifice again to pay for it? Let the billionaires bring back money from their off shore bank accounts and pay the taxes they owe. Let the CEOs getting gigantic bonuses give half of them to pay for government services and to rebuild the infrastructure they use. Question what you hear.

Dec. 07 2012 07:37 PM
Donna from Bloomfield

I've had many different jobs without a college degree. When I was a contractor at a pharma company they couldn't hire me without a college degree to do the job I was already doing. I needed 30 credits, I got them in 28 days doing Clepp tests. I had a relatively broad base of knowledge, so I studied a little and wrote the tests. Total cost around $300.00. Best thing I ever did. I work in a well paying industry, but it requires a college degree. I was 45 years old when I got it, I didn't think it would make a difference, but as I left the building after I passed the last test, I cried. My boss was blown away and hired me on the spot.

Dec. 07 2012 03:55 PM
Judith from Brooklyn

FALSE! The problem is not entitlement spending. It is too unfunded wars and the Bush tax cuts. When the premise is false, the subsequent analysis falls apart.

Dec. 07 2012 03:19 PM
Larry Fisher from Brooklyn, N.Y.

This country plays five finger fillet ( the knife game of open hand on table and hitting between the fingers with a sharp object) with its artificial deadlines "Fiscal Cliffs" and avoidance of obvious economic concerns.

There is a reason why the simple obvious questions like "How much tax do we need to collect to do the business of Government?" never gets asked.

I think Government creates "Fiscal Cliffs" in order to seem like the situation is in a panic and that economic policies are out of control and cannot be "put on the table" and discussed sensibly. "Action needs to be taken immediately," instead of discussed


Government creates a whirlwind of perception in order to get the most tax dollars out of people, without them understanding what it goes for.

It is hard to raise rates on the rich because they take it personally, "How dare you raise my rates, don't you know who I am?" and they are willing to pay lawyers a lot of money not to pay the tax hike.

You can always raise rates on the poor because they respond,"Damn it!" and then pay it and go into debt, but the Government can only squeeze so much money out of them

Our economy is a simple math equation of a see-saw that never gets balanced; because what we need, or what Government tells us we need exceeds what we are willing to pay.

So, we can all jump off the Fiscal Cliff, it is a hologram on "The Starship Enterprise.

Dec. 07 2012 12:57 PM
Chris Jonsson from Dallas,TX

Glenn Hubbard has the GOP talking points down regarding how to solve the budget problems. On the one hand he says the wealthy should not receive Social Security and Medicare because they don't need it but their Social Security and Medicare payments would not be enough to balance the budget. The wealthy must their far share in taxes to balance the budget. Leave Social Security and Medicare alone. Most of the money in SS and MC is paid in by people who earn a salary. The money paid in is their retirement money. That's the deal. It was not set up to pay for unnecessary wars or to cover losses tax loopholes used by billionaires and corporations. The middle class have already given at the office. Cough it up CEOs.

Dec. 07 2012 12:39 PM
Kay Merkel Boruff from Dallas KERA

Glenn Hubbard, your comments make sense to my "English teacher" mind. Hmmm, wonder if anyone from DC is listening?

Dec. 07 2012 12:21 PM

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