He's right. When politicians make little cuts in the rate of spending growth, every interest group mobilizes to protect its little piece of the pie. That's why you must cut government like you take off a Band-Aid: quickly and all at once.
It's not hard to balance the budget. On my show, we made enough cuts to create a $237 billion surplus. I cut whole departments, like Education and Commerce. I cut two-thirds of the Defense Department (which still leaves it much bigger than China's). I indexed Medicare, Medicaid and Social Security to inflation, raised the retirement age, and took away benefits for rich people. But I don't have to run for office. Congressmen do, and they can't even manage to cut ridiculous tax breaks like those for ethanol.
Obama predicted disaster if the debt ceiling wasn't raised. Some predict disaster if the ratings agencies downgrade Treasury bonds. I'm dubious. In 1995, President Clinton and Republican Congress couldn't agree on a budget, so the government shut down twice, the second time for three weeks.
Did the economy grind to a halt? No. During the first shutdown, the stock market went up. During the second, it dropped then recovered.
The alarmists screamed that the fight over the debt ceiling would discourage lenders. Wrong. Ten-year Treasury bonds sold for a measly 3 percent interest (versus 15 percent in 1981).
I wasn't worried that Congress would fail to raise the debt ceiling. But I am worried that Congress will keep spending.
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