Wall Street Week

Interview on Bloomberg’s Wall Street Week

In an appearance on Bloomberg's Wall Street Week, Robert Rubin reflected on one of the most successful fiscal policy initiatives in modern American history—the 1993 Omnibus Budget Reconciliation Act that he helped architect as President Clinton's Director of the National Economic Council. Bob discussed how the incoming Clinton administration identified the federal deficit as "the threshold issue" that needed to be addressed before tackling other priorities, leading to a comprehensive approach that combined tax increases with spending cuts in equal measure. The plan's success stemmed not only from sound economic policy but also from a unique political environment where public concern about fiscal responsibility, exemplified by Ross Perot's deficit-focused presidential campaign that captured 19% of the vote, created the necessary political will for difficult decisions.

Drawing parallels to today's fiscal challenges, Bob warned that current debt levels—now at 100% of GDP, the highest since the post-World War II era—pose even greater risks than those faced in 1993. He noted troubling signs in financial markets, including the ten-year Treasury yield's dramatic rise from 1.5% to 4.5% over two years, while lamenting that unlike in the early 1990s, the political dots between fiscal irresponsibility and economic consequences aren't being connected by either party. Bob emphasized that addressing today's $34 trillion national debt will require the same bipartisan approach to both revenue increases and spending discipline that proved successful three decades ago, though he expressed skepticism about the current political environment's capacity for such comprehensive action.