Here comes austerity

March 24, 2011, 11:39 PM UTC

Don’t think for a second that the Portuguese are going to hog all the belt-tightening fun for themselves.

No, austerity is coming to the United States too, investment banker and Washington insider Roger Altman said Thursday.



Altman (left) with Evercore's Ralph Schlosstein

Altman, who founded the Evercore (EVR) investment bank and was deputy Treasury secretary under Bill Clinton, said on Bloomberg TV that the latest installment in Europe’s debt crisis shouldn’t distract anyone from the need to make tough choices here.

This isn’t a surprising stance for Altman to take. He was calling for tax hikes just minutes after our lazy economic recovery started a few years ago. That hasn’t exactly worked out, thanks to the tax cuts for stimulus deal struck late last year. Perhaps that helps to explain Altman’s impatient tone:

History will show that the United States reacted forcefully, powerfully, and effectively to the credit market collapse and the great recession, and that Europe reacted less forcefully, less effectively, and so forth. That is what the verdict of history will be.

However, we are also, in this country, resisting at this very moment a degree of austerity with which we will need to embrace here. If you look at the latest CBO revision on the long-term deficit outlook, it is not tenable. It is not a sustainable thing. We want to actually get from here to the point in 2021 when the CBO says we have federal debt representing 100% of our GDP. That is levels like Italy and Greece.

We won’t actually to get from here to there.  Either we will solve this proactively, our leaders getting together and negotiating an outcome, which I hope they will.  Or the global financial markets at some point over the next three or four years will intervene and impose a solution for us. One way or the other, the austerity is coming here also.

Somehow, you get the idea the “proactive” solution is not one he’s holding his breath on.

Also on Fortune.com:

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