Steve Forbes said on Sunday that getting American banks lending is much more important than the current economic stimulus bill.
Forbes appeared on “Meet the Press” on NBC with David Gregory.
Forbes said that Japan used eight different stimulus packages in the 1990s and couldn’t solve their economic problems without solving the bank lending dilemma.
“And that’s why they have a high debt and still a stagnant economy,” Forbes said.
“The banks are like the heart of the financial system,” Forbes said. “You can have a strong head and strong muscles but without the heart you have nothing.”
Erin Burnett of CNBC said the “New American Economy” will provide a lower standard of living to most Americans.
“And that means likely a lower standard of living. So you may return to vigorous growth, but likely that debt-fueled expansion, you’re not going to have that. And that’s a tough message to tell people, your standard of living is going to be lower for a long time.”
David Gregory pointed out a Heritage Foundation release this week that said: “The combination of current law programs plus the stimulus–and without any additional borrowings for additional financial market interventions or other new spending–suggests at least another $1.6 trillion of new government debt, bringing the total of publicly traded federal debt to $9.9 trillion by the end of 2010…[and] the debt-to-GDP ratio will have reached 67.9 percent for a two-year increase of 23 percentage” points.
Forbes said, “You’ve got to …. and I hope the Senate will do this, is work more on the tax side; like, say, having the payroll tax for two years. That lowers the price of hiring people, also…. Payroll tax holiday. That way people get more money and it’s cheaper to hire labor. Reduce the capital gains levee for a couple of years, positive things like that. And then get back–again, the banking system, Japan did not fix their banking system, which is why they stagnated. We have to fix ours, starting by one of the most boring subjects in the world but devastating banks today, get rid of this mark-to-market accounting, which is destroying banks.”
Read the Meet The Press transcript:
Steve Forbes, Chairman and CEO of Forbes Media, participates in a plenary session the Annual Meeting of the World Economic Forum, WEF, in Davos, Switzerland, Thursday, Jan. 29, 2009.(AP Photo/Keystone, Alessandro Della Bella)