Achieving Long-Run Fiscal Sustainability: Welcoming Remarks

Julie Stackhouse, senior vice president of Banking Supervision and Regulation at the Federal Reserve Bank of St. Louis, welcomes attendees to “Achieving Long-Run Fiscal Sustainability,” the first Dialogue with the Fed held in 2013 and introduces speaker William Emmons, assistant vice president and economist. As an opening for his presentation, Emmons polled the audience on their opinions of how to reduce the federal budget deficit.

• Part 1: Welcoming Remarks, Julie Stackhouse and Introduction, William Emmons (7:24)
• Part 2: Can the U.S. Avoid a Fiscal Train Wreck? (11:51)
• Part 3: Can We Slow Spending Growth? (12:44)
• Part 4: Why Hasn’t the U.S. Had a Fiscal Crisis Yet? (10:01)
• Part 5: Can We Achieve Long-Run Fiscal Sustainability? (7:38)
• Part 6: To Worry or Not To Worry about a Fiscal Train Wreck? (10:52)
• Part 7: Is Fiscal Sustainability Possible? (5:47)
• Part 8: Question-and-Answer Session with the Audience (15:14)
• Part 9: Question-and-Answer Session with the Audience Continued (9:47)

Transcript:

Julie Stackhouse: Good evening, everyone. Welcome. I'm Julie Stackhouse. I'm a senior vice president here at the Federal Reserve Bank of St. Louis, and it's my pleasure to welcome you tonight to the St. Louis Fed. Now, rumor has it that there's at least a few people that turned down Cardinals tickets to be here tonight. Is that true? I am so impressed. These two guys down here, at least they told me that story. So I don't know if it's true, but they told me that story. So they get extra credit for being here, of which I don't know what you get for getting extra credit but it sounds pretty good.

Well, we are delighted to have you all here tonight. I'm going to do a quick poll in a minute about who you are so we know a little bit. But certainly our topic tonight is one that we can't look very far ahead and not have to think about. So I give you a lot of credit for taking time to educate yourself on what lies ahead from the standpoint of the U.S. fiscal situation and what the implications might be to each of us.

Just a few housekeeping matters. First of all, we will after our presentation tonight—which Bill Emmons, a PhD economist and assistant vice president on our staff, will handle—we'll turn it over to you. We'll have a question-and-answer session. And during that question-and-answer session, you do have in front of you microphones and they have a little on/off button. So if you do have a question, if you could just remember to turn your microphone on. We are simulcasting the presentation tonight, and that will let our audience that's watching virtually hear your question as well. Also, if you do need to use a restroom, they're just right outside the door. Please feel free to walk out. And I think that covers our key housekeeping matters. If not, I'll think of them later and cover them at that point.

So let's go ahead and get started. And here is the first poll question. Oh, that was the other thing. This is your polling device. So if you're wondering, what is that little thing in front of me, think of yourself as being on one of those game shows and you're in the audience and you get to read the question and choose the answer. So feel free to read the question about the industry that you're in, or we do have retired or others so that's perfectly okay. Select your vote and we'll go ahead and see who you are. So the big one was number two, financial activities or government followed by number seven, retired. Oh, if you're retired, raise your hand. Good job. That's awesome. Give yourself a hand for staying educated. I think that's great. Yeah, that's really great to see. And then followed by it looks like number five, professional and business, and then number three, health or education. So quite a diverse group here.

Okay, we love asking this one. Is this your first time inside the Federal Reserve Bank of St. Louis? If it is, select one; if it is not, select two. So 12 percent have not been here before. We have a good return rate from prior programs I guess, so it's great to have you back, and welcome to the 12 percent that haven't been here. I know when you first come in the door and you see the security and the law enforcement, the policemen, it doesn't look like it may be a real inviting place. But I think once you get in and see who we are and how we work, you'll agree that this is really a great institution.

Okay. Well, with that quick polling, I'm going to turn this over to Dr. Emmons and he's going to brief us tonight on how we obtain long-run fiscal sustainability. Bill?

William Emmons: Thank you, Julie. So I'm going to ask you some more questions. And I'd like you to—we're going to come back to this, and we'll compare with what the general public answers. So I'm not going to read everything to you. I'll let you read that yourself. I'm asking you how you think is the best way to approach the fiscal challenges we face as far as you are concerned. All right, that looks like just about everybody has answered. So let's take a look. So the first answer was focus on curbing the growth of federal spending. That's the main thing we need to do while avoiding tax increases of any kind. The second is raise more revenue but keep programs as they are. The third was some combination of spending restraint and higher revenues. And then the fourth, nobody has no opinion, that's good. That's especially good because we're going to not allow you to have no opinion from now on. So we're going to make a note of this and we'll come back. So a fairly substantial number, and this actually does track pretty well with public opinion polls. Most people do seem to believe that some combination of spending restraint and tax increases are most appropriate.

Okay, next question. Now I want to get specific. Do you favor or oppose reduced spending on Medicare? And so you must choose favor or oppose. So 57 percent favor reduced Medicare spending. All right, we'll make a note of that, and we're going to come back and compare that to what the general public responds.

Next question: What about Social Security? Do you think that any approach to solving our fiscal challenges should involve reduced spending on Social Security, whether it's a change in the inflation index or changes in benefits, eligibility, et cetera? Anything that has the effect of reducing spending on Social Security. 58 percent favor some changes that would reduce spending on Social Security.

All right, what about Medicaid? That's the health insurance program for disabled and low income people. All right, 53 percent oppose reduced spending on Medicaid.

What about defense spending, favor or oppose reduced spending on defense? 72 percent favor reduced spending on defense.

All right, last question for a while. We'll come back and ask you a little bit more later. Now, read this carefully. In order to reduce the budget deficit, would you favor or oppose personally paying more in taxes? Okay, 59 percent would like to see their taxes go up. Some people are saying, that's not me.

Okay. So Julie is going to write down our responses, and then we'll come back to this in just a few minutes and see how representative this audience is compared to the general public.