Senator-elect Jeff Flake (R., Ariz.) conceded that new revenue has to be part of the equation for a deal, but reiterated the broader danger to our capital and credit markets if we do not address our debt, in a Wednesday CNBC interview:
DAVID FABER: You know, Senator, you raise an interesting point, of course, talking about the real cliff being when we can no longer borrow at rates we currently are. We are borrowing at the lowest rates we’ve ever seen more or less, and that doesn’t seem to be impeded as we pile up larger and larger amounts of debt. No one knows when that day is coming. I’m curious, is that really what it’s going to take to have us reform our ways?
JEFF FLAKE: It may be. My worry is, Congress tends to act when we’re staring right into the fiscal abyss. The problem is, as you rightly said, we don’t know when that’s going to occur. It will happen when we have a Treasury auction and just have no buyers for our debt. I fear that that puts us in a spiral that really takes, you know, a generation to get out of. That’s what worries me. That’s why I think it behooves us all to get a deal, and (to) get that done before the broader markets react. You can’t just look obviously at the stock market. You can’t just look at the end of the year at this fiscal cliff. That is an artificial deadline. An artificial number. But the broader markets will respond. And it’s going to be at some point. I just hope we can get a deal before that happens.