SAN ANTONIO – A former Cabinet official and leading bank advisor told attendees today at PCSU Financial Service's 2011 Conference that the serious fiscal problems facing the U.S. meant that a bid to roll back the cap on debit interchange is almost sure to fail.
"In light of the problems I have described, I think any political move that has any measure of controversy whatsoever will face a very high threshold, " said Peter Orszag, former director of the Office of Management and Budget and current vice chairman of the Institutional Clients Group at Citigroup Inc.
Orszag attributed his skepticism to what he called political inertia about many aspects of the legislative process which he predicted would remain in place until policy makers are able to confront the next three looming economic and fiscal challenges facing the U.S.
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He called these the immediate crisis, the 2015 crisis and the 2050 crisis. The immediate crisis is what to do about this year's and next year's federal budgets. The 2015 crisis is what do about the fact that even if the near-term budgets are fixed, the combined savings will not drop the deficit enough and the 2050 crisis he described as being primarily about healthcare, in particular Medicaid.
He also said the nation's political polarization impacts all of them, but it particularly infests the immediate crisis, because, he said, that is primarily a social policy crisis masquerading as a fiscal problem.
"Even when there is relative agreement about the amounts that could be cut [from the federal budget]" he said, "the existence of those riders about different social issues complicate the situation and make solving it very difficult."
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