Former Chairman of the FDIC William Isaac warned in a recent interview that if the U.S. cannot curb its spending, the nation could find itself in the midst of another recession.
“The problem is we’re spending too much,” Isaac said, according to Money News. “We could have another recession, and, the best case probably would be stagnation — that we just continue to move sideways as we have been doing for the past three years.”
Isaac said that reforms along the lines of changes recommended by the Simpson-Bowles Commission, which was tasked in 2010 with developing ways to reduce government debt, are necessary to prevent another economic downturn. The commission recommended spending cuts, entitlement reform and tax increases, none of which Congress ever acted on.
“The sooner we do it, the better off we’re going to be and the faster this economy’s going to get turned around, because confidence will be restored,” Isaac said, Money News reports. “If we don’t do that, we’re in for a 2013 that’s not going to be very pleasant.”
Additionally, Isaac said that Jack Lew, who is set to replace outgoing Treasury Secretary Timothy Geithner, faces political polarization as one of his chief challenges in the coming year.
“I think what we need right now is somebody who can come in and try to bridge the gap between the Republicans and the Democrats on the left and the right so we can try to get some of the public’s business done,” Isaac said, according to Money News. “I think that’s going to be…probably the biggest challenge for Jack Lew is to find a way to approach these issues in a bipartisan way so we can get some agreement and not have this stalemate that we seem to have on issues that should be easily resolved if people of goodwill would sit down and talk to each other.”