Fmr. Reagan budget director predicts next economic crisis


Stockman is here pushing his pushing his new book, The Great Deformation: The Corruption of Capitalism in America. He is also warning of another financial meltdown -- one he says is already in the making.

Thursday Speaker of the House John Boehner once again went after the president's budget.

"The president got his tax hikes in January and we don't need to be raising taxes on the American people," said Boehner.

But Reagan's former budget director says the Republicans have got it wrong.

"'You don't have to pay your bills, just cut taxes and sit back and wait for the budget to balance itself.' For 30 years since then, that hasn't worked, it can't work, our economy now is in bad shape, it's not growing," said Stockman.

And now Stockman says taxes must be raised not only on the rich, but also on the middle class in order to reduce the deficit.

"In order to overcome this legacy of 'deficits don't matter' led by Republicans who are supposed to be the conservative political party," said Stockman.

For Republicans who revere Reagan's presidency, what Stockman is saying sounds like heresy. Stockman says he never was a true believer.

"I basically was drummed out of the supply-side church by the high priests who were running it, Art Laffer and all those guys, who basically believe in economic magic," said Stockman.

And Stockman is just as hard on the progressives who say, 'don't touch my social security.' He says the president should step up.

"He should've been telling the wealthy retirees, the affluent retirees, that we're going to cut back your social security entirely. Not just a little, 1 or 2 percent on the COLA [cost-of-living adjustment], but eliminate it or cut it back substantially because we can't afford to pay the $800 billion a year that social security is costing," said Stockman.

Stockman says it'll take an economic crisis to move the political parties to break free from Wall Street's control and that crisis he predicts will be the collapse of the bond market. He told me he's keeping his money in cash.

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