CNBC's Ron Insana asserted on today's "Andrea Mitchell Reports" that the United States does not have a debt problem. "We need more stimulus. We have a growth crisis in this country, not a deficit crisis," argued Insana. He also insisted that Europe, which also has debt problems, should not pursue austerity measures. "I think people might be looking at Europe and saying listen, they need austerity. They don't need austerity either," said Insana.
The business reporter appeared openly disdainful of those who are calling for greater fiscal restraint by the federal government.
"There is a belief among what I'll call faux-conomists out there, some of whom are on the right, some of whom are on the left, that austerity in the United States right now will bring prosperity. That is not the case. We are at a very delicate point in this economic recovery where a fiscal policy that's too tight may weaken the economy, not shore it up," warned Insana, adding that "Everybody is getting a little too austere for this point in the cycle, and I think we're making, we're on the brink of a policy mistake that could prove rather nettlesome for us."
Insana did not comment on the effects that mounting debt might have on the American economy, although he admitted that entitlement spending was a looming problem:
"The real problem is entitlement spending and Social Security, Medicare, for future generations, people under 55."
A transcript follows.
MSNBC
ANDREA MITCHELL REPORTS
08/04/2011
3:44 p.m. EDT
RON INSANA: No, and you know, we did see - we got a private number yesterday from ADP, the payroll processing company that does these estimates of payroll growth, and it showed gains in the private sector of 114,000 which is bigger than they're expecting tomorrow. But, you know, the thing here Andrea is that, and I've made this point here on CNBC, is that there is a belief among what I'll call faux-conomists, out there, some of whom are on the right, some of whom are on the left, that austerity in the United States right now will bring prosperity. That is not the case. We are at a very delicate point in this economic recovery where a fiscal policy that's too tight may weaken the economy, not shore it up, and we'll get a better fix on that tomorrow, particularly if the employment number is bad. You know, you throw 100,000 government workers or more out on their feet in a job market where there are 4.6 applicants in the US for every job available, that's not going to make the unemployment rate go down, and I think people might be looking at Europe and saying listen, they need austerity. They don't need austerity either. We need more stimulus. We have a growth crisis in this country, not a deficit crisis, and they have both in Europe and add to that the fact that China's raising interest rates, India's raising interest rates. Everybody is getting a little too austere for this point in the cycle, and I think we're making, we're on the brink of a policy mistake that could prove rather nettlesome for us.
ANDREA MITCHELL: Interesting Ron, and even the real deficit hawks involved in these debt ceiling talks back-loaded the real cuts. It's only $22 billion in the near term precisely because of those concerns.
INSANA: Listen, Andrea, we both talk to people who know this stuff backwards and forwards. The real problem is entitlement spending and Social Security, Medicare, for future generations, people under 55. They can fix that relatively quickly and relatively painlessly. Cuts in discretionary spending right now in my estimation are a very bad idea and hopefully, we don't get to the point where our austerity on the fiscal side is so severe that the Fed will have to more than make up for it with still easy money policy for as far as the eye can see.
