We were in a seminar room at the Chinese Executive Leadership Academy in Shanghai. It’s kind of an executive MBA center where rising Communist Party leaders come for training. I was there two weeks ago speaking about the future of capitalism. Since China holds more than $1.1 trillion of U.S. debt, the group was keen to learn when they could expect the United States to get its fiscal house in order.
I gave them the answer I generally give these days when asked that same question at home. Given Republicans’ denial about the need for taxes to rise as we double the number of seniors on Social Security and Medicare, and Democrats’ denial about the need to slow the growth of these huge programs as part of an overall fix, I explained, “We probably won’t get serious about taking these steps until our Chinese creditors tell us we have to.”
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