There is among a lot of people a consensus as to what the ingredients of a progrowth fiscal policy are. It will be a fiscal policy that yes, did give more confidence in the long run that we have a path on entitlement spending and revenues and were not pushing off unbearable burdens to the next generation. That is very important. Its also part of a progrowth projobs fiscal strategy ensure that you can invest in the things that are important to growth and productivity. If you could hit every single fiscal goal that you wanted and your tiny percentages of your students could read or perform well in school, nobody would say that your Economic Growth strategy was working. On the other hand, if some of those thing are going well and you have a completely unsustainable future, thats not so great either. You have to think about this as part an over all progrowth, projobs strategy. Also, theres no question that right now we still need to give this recovery more momentum. We cannot possibly be satisfied with the levels of projected growth when we are still coming back from the worst recession since the great depression. We have too many long term unemployed americans. We have too many middle class families who are doing better, working harder but still are not where they should be or they deserve to be. We need stronger growth. We need to give this recovery more momentum. Its not hard to think about how you would design a progrowth fiscal strategy. You would make sure that right now, you werent overly contracting the economy. Chris van hollen asked the Congressional Budget Office recently how much the sequester will cost us in jobs next year. They answered, this is c. B. O. , 900,000. Really, we can afford to have fiscal policy that our independent scorekeeper think its costing us 70,000 to 80,000 jobs a month. Its worse than that. Thats not static. The economy is about momentum. We can have an check Growth Strategy where we had a more projobs, prorecoverry fiscal policy right now that included this did not have harmful sequester. We could have more savings that were both on the revenue and entitlement side that were long term and hundred in work in the future. We can make sure they are long term. The amazing Biomedical Research that comes from n. I. H. The efforts we make sure Young Children from poor family have a chance to fair start when they go to kindergarten. I have not had any Business Leader come tell me they think the United States needs to invest less in infrastructure. None. A progrowth fiscal policy has president obama has it is one that has as a component a strategy to have balance long term fiscal discipline, deal with entitlements. Also allowing us to do the investments that are in the critical ingredients of Economic Growth and competitiveness that everyone whos not operating from a ideological or political frame is important. The president is headed towards brooklyn to go to the ibm ptech school. Here is the type of thing we should be talking about. These new tech, Alternative High School that allow young people who may not have been on a college path to start in ninth grade on a carrier path have a high school degree, a technical degree perhaps to be turned by education enough they this go on to a four year higher education. These are important serious things. You go to the business round table or the Business Council meeting and they are talking about these things. Because they go to the skills gap theyre trying to fill. Too often here, we are just in world of abstract numbers, metrics and even when were talking about how to deal with the economy. Were not asking ourselves we talk about whether were cutting spending as opposed to cutting unnecessary spend. We forget that frame that everything we do needs to be measured against the ultimate goal are we encouraging a prosperous middle class. It is relevant to the budget conference that youre going to see today. Even if you do not have the big grand bargain, if you were to have a medium deal or small deal, those deals could have permanent loophole closers and permanent mandatory savings that would help our permanent long term fiscal situation. At the same time, they would allow more room right now for investment important for growth in the long term and short term. It will be a positive thing if we use this moment to push forward a progrowth, projobs fiscal policy. Make sure they make sense not just for hitting a persons particular metric but whether they make sense as a progrowth fiscal policy that will be good for the middle class, good for economic security, good for our long term competitiveness. I think its a very important reminder as we go forward. The second thing i think we need to do is we just have to put an end to the selfinflicted wounds. I became n. E. C. Director in january. It was quite an interesting time. We had a very bad election in november, if you were the Obama White House or democrats. After that, we have been in a very tough situation. Yet, we had i had been privileged to be part of working out of a compromised deal in the lame duck that probably didnt make anybody entirely happy. Didnt make us or any democrats happy because we extended some of the tax relief at the top. We did it in a context where we extended long term unemployment, middle class tax relief and a payroll tax cut. We surprised market and growth lifted up a half percent almost everywhere. The beginning of 2011, we are looking at three percent growth. I understand things happened right after that, i barely remembered where the bathroom was when you had both the developments in the mideast raising gas prices. You had the unprecedented Natural Disaster in japan that had a much deeper and more harmful effect on the Global Economy and the Global Supply chain than anyone expected. Those are the things you cant prevent. Those are the external factors even the european Financial Difficulties that you have to deal with. What you dont expect is that youre going to manufacture your own domestic crisis to inflict wounds on your own economy as you are trying to recover from the great recession. Unfortunately, that is what has happened. The question is why . Its not because we had divided government. Its not because we had great differences, philosophical differences in how to do a long term fiscal plan. It is because we started seeing in 2011 really for the first time ever, a serious use of a threat against our own economy and against the potential for default as a budget tactic. That is what hurt us. Its not having divided government, its not having difficult budget negotiation, it was the practice of threatening the default of the United States as a negotiating tactic. I think its very important for people to understand that single fact. Sometimes i read descriptions of the president s position it often seem to be about would the president negotiate. Willing to negotiate. Theres no question that this president has been willing to negotiate and compromise on budget issues. Lets be honest, most of the flak he received from his own supporters when they thought he was too willing to negotiate or compromise. But the president does believe in divided government that everyone has to give a little. That compromise cant be a dirty word. If youre going to move forward, nobody will get a hundred percent of what they want. What the president was doing was taking a stand against using the threat of default put it this way, he was taking a stand against sanctioning anyone using the threat of default as a tactic in budget negotiations. I cant express how important it is that this issue be resolved in the right way and soon. It is very important that we as a country decide in these next couple months, that the era of anyone threatening the default of the United States economy is over. I think we need to come together Business Community, democrats, republicans and decide theres going to be many ways were going to battle with each other on our priorities. But the era of threatening default is over. Now, people will say, really, the president can really take that hard of a stand. Hes so determined not to sanction that type of negotiation that hell stand firm no matter what. What if you get to the 11th hour or 11 59 on a critical evening. The reason why the president did and was willing to stand firm was that he believed in his entire economic and Strategic Team believed complete unified administration position. That if the president made concessions at the last minute, even for the purpose of preventing a crisis that it would increase not decrease the chances of default. It would increase the chances we would undermine our full faith and credit. Not decrease it. Its just logic. If after all of that the Lesson Learned had been yes, you put a gun to the American Economy and you get your way, then why would people not continue to try that tactic for the rest of the Obama Presidency . If its used by the Minority Party against the Obama Presidency, why in the world would you not expect pay back. Why would you not expect a Democratic House of representatives would not do the same thing to a republican president later. Saying theyre not going to sign the debt limit unless theres background checks or higher minimum wage. This was a very important struggle for the future of sane economic and fiscal policy in our country. Clearly, weve now seen twice where we have been willing at the end this year to extend the debt limit without concessions or somebody being paid to agree to not default the country. It is very important that this end now. Let me give some reasons why. First of all, you have to start with the fact that we had a very wise secretary of treasury alexander hamilton. When you read him, you really do have great admiration for his foresight that if he could establish that the United States of america had impeccable credit that future generations would benefit. The actions he took at a time when that was not such a conventional wisdom underring, showed a great foresight. He gave us a great gift that we have maintained for over 200 years. Think we should look at it this way. I think that we should consider it a precious asset possessed by all the American People, our credit standing over 200 years is a precious asset that is owned by the entire American People. That has allowed us to that allowed generations of our businesses and e ntrepreneurs to invest in their future at lower cost. It has helped lead us to reserve currency. It has helped lead the world into believing that treasury debt is the safest most risk free financial obligation in the world. Thats established over 200 years through world wars and all the things weve been through. We should not play around with damaging that brand, that precious asset. My deep worry is that if this happens another time, we will hurt. We will do lasting damage to that brand. In 2011, theres no question it had a very harmful effect on the economy. We had a couple Companies Come in and talk to the president over the year later where they talked about the impact on consumer spending, Consumer Confidence at their company during the financial crisis as being matched only by 9 11 and pearl harbor. Thats not a great thing. We saw the harm it did in the short term. We have lived through the harm that this Government Shutdown a second threat of default has done to our economy. Jason furman and jim stock estimated cost us hundreds of thousands of dollars. Theres no question we will take a hit in growth. I am most worried about what it means for about the threat of lasting damage. Think about just some of the specktor, some of the things that happened. Fidelity, j. P. Morgan, blackrock. Kind of high brand names, decided they couldnt hold treasury bills that had maturities in early november. Well, is that going to tank our economy . No it is that the sign you want to send to the rest was world that your own brand name top Financial Institutions have decided that they are so unsure of their own government that theyre not willing to even for a short period of time, theyre not willing to hold short term treasury debt. Its not the signal that we want to send. I think that i heard so many more received so many more emails from people saying, we did a contingency plan in 2011, we never thought wed have to do it again. Now we have to go through another contingency plan for the fall. The message is, it was bad this happened in 2011. It was more harmful to confidence in our Financial System that it happened a second time in just a little over two years. I worry that three strikes and youre out that a third strike within three years will start to do some of the lasting damage. Let me just give you a couple of quotes we pulled. This was larry fink ceo of blackrock. Quote, many Foreign Investors are rethinking their approach to investing in u. S. Debt. Even a marginal change in the willingness of government pension funds, Insurance Companies and other institutions around the world to buy america bonds will incrementally raise Interest Rates and drive up the cost of financing our deficits. Student loans are tied to treasuries, ultimately mortgages are. If Interest Rates go up permanently, a little because people are rethinking their approach to investing in our debt, that will do lasting damage ironically to the damage but to middle class families as well. Again, this isnt because theres lack of faith in the United States economy or the power of our entrepreneurs and motivators. Its simply about the practice of threatening default in our budget battles. Bill gross, the worlds view of the u. S. Has been damaged. Mahamed elarian. International Financial System is based on the assumption that the core of the system will act predictably and rationally. If this assumption proves falsely which will materialize from a congressional refusal to live the debt ceiling, the rug will be pulled out from the underpinnings of the daily Financial System. This is a very serious issue. I really do believe it is not a partisan issue. I think this is about the brand and the benefits that we as a country enjoy from the precious asset of our credit standing over 200 years. I think we just need to decide the era of threatening default by anyone for any reason has to be over. What you will hear is, well, two things. This is the way its always been. One and two, people have to give up leverage. I want to contest both of those. I think i made myself a little bit of history buff on all paths debt limit increases. Yes, there have been times not often where the debt limit has got mucked up in another issue or two. May be once or twice. There have been times where the debt limit was perhaps used as a deadline to encourage budget negotiations. There has never been before this a organized long term effort by a faction of a Political Party to use the threat of default as a key element of their political or economic strategy. That has not happened before. Lets remember, the House Republican leadership bill actually in their last budget, put in a prioritization bill. They were putting in their bill, heres how you should manage the default of the United States. This is unprecedented in the sense of being a sustained and serious effort to use the debt limit and the threat of default as a key element. The idea you need this for a leverage, we take in our civics class as junior or high schools, our governmental system gives enormous leverage to the Minority Party. Barack obama wants to pass Immigration Reform. He wants to have a strong infrastructure bill. Hes offered a deal, compromised that would combine long term Corporate Tax reform and infrastructure investment, a progrowth projobs grand bargain. He has many priorities he wants. None of them in our system can get through without the cooperation of the republicans in the United States congress. That is the leverage that is given to Minority Party in our government. That is the leverage that is given even if you control even one house. In 1997 when we did the balanced budget agreement, i was one of the negotiators, we just had the white house and they had both houses of congress. But of course we had leverage over each other. If they wanted the medicare saving, they wanted, they wanted to lower the capital gains, they had to get bill clinton to change his position. If we were going to get the Childrens Health initiative, the hope scholarship investment on education, we had to get their cooperation. That is the mutual leverage that we leads to compromise. You do not need the threat of defaulting your country for leverage. That is more of a super leverage. That perhaps designed to nullify election results. It is not to give that up, does not take away the normal leverage you have to force the president or the other house to work with you in a spirit of compromise to make sure something passes includes the priorities from both the democrat and the Republican Party. Thats what we need to get back to. Not asking anyone to give up thei