Leaders of the White House's deficit commission say the U.S. economy will sink into a second recession if lawmakers do not clamp down on entitlements such as Social Security and Medicare.
Erskine Bowles and Alan Simpson, who co-chaired the bipartisan deficit commission last year, warned members of Congress on Tuesday that failing to address bloated entitlement programs and needed tax code reforms could destabilize the nascent economic recovery within two years.
“This problem is going to happen long before my grandchildren grow up,” said Bowles, White House chief of staff to former President Bill Clinton. “This is a problem we are going to have to face up to it maybe two years, maybe a little less, maybe a little more.”
Simpson, a former Republican senator from Wyoming, said he expects a double-dip even sooner.
"Our bankers over there in Asia [will] begin to believe we are not going to be solid on our debt, that we are not going to be able to meet our obligations," said Bowles. U.S. debt now stands at $14.1 trillion. "Just stop and think a minute what happens if they stop buying our debt. What happens to interest rates? What happens to the U.S. economy? The markets will absolutely devastate us if we don’t step up to this problem. The problem is real. The solutions are painful, and we have to act.”