Appearing together at a Thomson Reuters Newsmaker event on Monday, two federal budget titans, ostensibly from separate sides of the aisle, presented an eerily unified solution to America’s tremendous fiscal problem. The flip side of the coin is that they both expressed deep concern about whether or not America could climb out crisis.
David Stockman, a budget director under Ronald Regan, and Peter Orszag, a budget director under Barack Obama, agreed that in order to reduce the deficit, the United States could competently cut back on defense spending and increase taxes on wealthier citizens.
It’s important to point out that this is just a partial alignment in thinking. Cuts to defense spending have been on the table in one form or another for a long time, and as operations wind down in the Middle East many are expecting a natural reduction in costs. The sequester also took a $500 billion hatchet to the defense budget.
More controversially, the two seem to be on the same page about income tax increases on wealthy citizens. Reuters reports that both men prioritize paying down the national debt, although they disagree about how fast. Stockman would impose sharp changes immediately, where Orszag would stretch out the adjustments over time.
Orszag described Stockman’s approach: “David wants us to flog ourselves to have some brighter future and the problem is that the flogging can do some serious damage to that future.”
For his part, Stockman is critical of a broad range of Presidents, ranging from Franklin Roosevelt to George W. Bush, and doesn’t necessarily represent a mainstream GOP approach to the budget crisis. At the event, Stockman said that “both parties have failed.”
Here’s how the 3 major stock indices traded Tuesday: