October 16, 2013
Host: Ted Simons
Debt Ceiling/Government Shutdown
- Congress continues to work on a deal to avoid the deadline to raise the debt ceiling and end the government shutdown. Economists Brian Cary of Salt River Project and Alan Maguire of the Maguire Company will discuss the impacts of the political drama in Washington.
- Brian Cary - Economist, Salt River Project
- Alan Maguire - Economist, The Maguire Company
| Keywords: economy
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Ted Simons: Good evening. Welcome to "Arizona Horizon." I'm Ted Simons. Congress continues to work on a deal that would avoid the deadline on raising the debt ceiling and end the government shutdown. Economists Brian Cary of Salt River Project and Alan Maguire of the Maguire Company are here to discuss the economic impact of the political drama in Washington. Good to have you both here. Thank you so much for joining us. We should note, before we get started now, that the Senate -- we're taping this at 5:30 -- that the Senate has as of our taping just moments ago passed the bill and it looks as though the House will be ready to vote. With that in mind, we're almost there -- let's get the parameters, the definitions. What is the debt ceiling?
Brian Cary: Well, the debt ceiling is the legal limit for the amount of debt that the United States can have outstanding at any time. It's a big number. It's in the neighborhood of $16 to 17 trillion, which is the total of one year's annual output of the whole U.S. economy.
Ted Simons: And raising the debt ceiling means borrowing to find that money, correct?
Brian Cary: Yeah, and in simple terms, we're still running a deficit. We're spending more money than we're taking in over time. There are ebbs and flows in the cash flow but sooner or later you have to raise the legal limit that gives the Treasury the authority to issue new securities to refinance the debt to make interest payments and issue new securities.
Ted Simons: And again, as a general issue here, why is raising that debt ceiling so important?
Alan Maguire: It's important because we're, as Brian said, running a deficit. That means we have to borrow money every year to pay all of our bills. That's the real challenge. It's important also because the reason we're having this fight right now is because we have sort of broken the historical appropriations process. It used to be we had a lot of little decisions on the budget process. Now we wrapped them all up into one big C.R., so it's an all or nothing vote. The minority party, regardless of who the president is, the minority party in the Congress typically uses that debt ceiling vote as a lever they can pull on to try to impact the spending pattern.
Ted Simons: They use it as a lever, but has this – it seems like threatening to not raise the limit is somewhat of a recent phenomenon.
Alan Maguire: Oh, 20-plus years. As the appropriations process has evolved, it's become more and more of a big deal, but it's been around for a number of years.
Ted Simons: Let's say this deal that they’re working on right now, the Senate has passed it, the House, as we’re speaking, is working on it. What happens if the ceiling isn't raised? Do we default on a drop-dead date?
Brian Cary: Probably not. What would ordinarily happen -- we have smart money managers in Washington, believe it or not, like most big companies and small companies do. We have rearranged the furniture a little bit in terms of paying the bills. The first thing we would do wouldn’t necessarily be to refuse to make interest payments. We would make good on the debt and do things that we’ve already seen that are typically happening during the government shutdown, maybe delay spending on some other obligations, lay people off. A variety of measures which in the shore run could allow them to kick the can a little bit farther. But in the end, have to be able to have that authority raised or the risk of default magnifies.
Ted Simons: Again, the default, the risk is there but if something were to blow up here later on this evening, we don't necessarily default tomorrow, do we?
Alan Maguire: You would hope not because the Treasury Secretary has the authority and he has the obligation to pay the interest on the debt first. To give you some perspective about, annual cash coming into the U.S. treasury is about $2.5 or 2.6 trillion a year. Interest on the debt is about $250 billion. So there's about ten times more cash coming into the treasury for all purposes than needs to go back out for interest payments. If you had a $3,000 a month income and a $300 a month mortgage and you ran short, you probably would pay your mortgage first, not do something else.
Ted Simons: With that in mind, if something bad happens again, and we're looking at this again in January and February as far as kicking the can down the road, these are short term solutions here, we could have the same argument in a few months, but if the debt ceiling is not raised, impact on the U.S. economy, impact on the U.S. market, world economy, world markets. What would likely happen?
Brian Cary: Well, anyone can speculate. Not to be a scare monger or anything like that, it would be a pretty grim situation. I think we would see some implications before an actual default would take place. Ultimately, the faith and credit of the United States is a matter of faith. That's what makes the economy go. If there were a sell-off of U.S. securities that would reduce their value, that has huge implications for collateral on loans throughout the entire financial system. That's kind of what happened in a different way back in 2008, where people lacked confidence and faith to make transactions. You're not going to loan money to somebody unless you think you'll get it back. Once that confidence is shattered it's very difficult to restore. Literally what would happen is, yes, a default. That would wreck the value of U.S. securities. That's why I think the saner heads are prevailing. They realize that the results of that would be cataclysmic.
Ted Simons: And we're hearing again from those who say – I’m hearing the debt limit is not that big a deal, that a default would not be that big a deal, that this is scare mongering by some. You agree with that? Does that make any sense?
Alan Maguire: Couple things might help. To pick up on what Brian said, U.S. bonds are the zero risk investment in the world. The entire financial markets worldwide trigger off U.S. debt. It's the full faith and credit of the United States government, the largest economy in the world. It’s where everything builds up from. The funny thing is almost all the statements are true in the right context. But what you really want to think about is the word default should never be used in connection with U.S. government securities. That's just a stupid thing to do. We may not pay all of our bills but we would always pay those bills. That's one of the things that is so upsetting to people. We're raising the rhetoric instead of calming it. We should be calming the rhetoric down. America spent 230 years building up its credit rating. It's the best in the world. Alexander Hamilton in 1789 creating U.S. debt for Revolutionary obligations. That’s how long we’ve been working on this, and we’re going to throw it all away on some Tuesday afternoon? That would be nuts.
Ted Simons: So is the world's reserve currency, the anchor for everything out there, does it take a hit even with the threat, even with the talk, even with now just a few months before we may go through all this again, does it take a hit? If it does, where does everyone go? Where is there more faith, more credit?
Brian Cary: That’s a good question. That's one reason why we have seen the financial markets hold up pretty well. Today the Chinese market was off a little bit. Most every other market in the world was reacting positively to the news of a prospective agreement. But, we can’t go on like this forever. If we compromise, if we create cynicism or doubt about the United States being able to manage its own affairs, then smart money might eventually look elsewhere. So far, it's the safe place to be.
Ted Simons: Real quickly, will smart money look elsewhere?
Alan Maguire: Right now there's no place else to go. It took 100 years for the center of the financial world to move from London to New York and America. That doesn't happen quickly. We still have the best rule of law in the world.
Ted Simons: Gentlemen, good to have you both here. Thanks for joining us.
- In the 1960s, The Rascals had number one hits like “Groovin,” “People Got to Be Free” and “A Beautiful Morning.” Now, the four original members of the Rascals will appear in a week long engagement at the Orpheum Theatre in Phoenix for a hybrid rock 'n' roll concert, Broadway show, theatrical experience and multimedia extravaganza called “Once Upon A Dream Starring the Rascals.” All four original band members, Felix Cavaliere, Eddie Brigati, Dino Danelli and Gene Cornish, will join Ted Simons to talk about their music, their show and their lives.
Category: The Arts
- Felix Cavaliere - Band Member, The Rascals
- Eddie Brigati - - Band Member, The Rascals
- Dino Danelli - Band Member, The Rascals
- Gene Cornish - - Band Member, The Rascals
| Keywords: musicians
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Ted Simons: In the 1960s The Rascals had major hits with “Good Lovin',” “Beautiful Day,” and “People Got to be Free.” Four original members of The Rascals are in town for an extended engagement at the Phoenix Orpheum Theatre, a hybrid show that we will talk about in just a second. First, let us introduce you to the original Rascals. Gentlemen, good to have you here. Let’s go on down the line here. Felix Cavaliere, good to have you here. We got -- where is Eddie? Eddie Brigati right there. Dino Danelli is right here. Good to have you. With guitar, Gene Cornish.
Gene Cornish: How are you doing?
Ted Simons: I’m doing well. How are you doing?
Gene Cornish: Great, sir.
Ted Simons: You're in town. Have any band in one spot for a week is unusual. This show is unusual. Felix, talk to us about this.
Felix Cavaliere: We're unusual people. Basically what happened is Mr. Van Zandt, Steve Van Zandt from Bruce Springsteen's band, had an idea. He not only wanted to put a group that hadn’t been together for years together, he wanted to do a different type of event. So it's a new hybrid type of show, a multi-media show.
Ted Simons: Basically, what, you guys play and there’s video and things?
Dino Danelli: We do our songs, but it's not a concert in the way a concert usually works. It stops and starts, then stops. Lots of multi-media things going on, screens all around us. We, ourselves, narrate the whole show. We have filmed actors playing us at pivotal times in our career. Young actors play us when we're like 21.
Felix Cavaliere: And lights. Phenomenal lights.
Ted Simons: Phenomenal lighting. Gene?
Gene Cornish: Marc Brickman did the lighting. We play 29 songs on stage. Other than the intermission, we're basically on for over two hours on stage.
Ted Simons: For over two hours, but you're not always on. You have the video, you got other things going on, correct?
Eddie Brigati: Interspersed with interviews that we did come up on this big screen. I look a thousand times bigger than I actually am.
Unidentifiable Speaker: And better.
Ted Simons: And better. Let's talk about what got you guys -- have you been back together – it doesn’t seem like you’ve been back together for long, the original members.
Felix Cavaliere: About 15, 20 minutes. [laughter]
Gene Cornish: Nine months.
Ted Simons: Nine months. How did this come about?
Gene Cornish: I'll make it as quick as possible. We did a benefit honoring Steve Van Zandt and Maureen Van Zandt about two and a half years ago. It went so well we did an hour show. We just asked Stevie to come up with an original idea, and we’d be interested in doing it. He came up with a script based on our interviews, our words, our story.
Ted Simons: Was it tough to get back together after all these -- How long had you been apart?
Dino Danelli: Well, we have been apart 40 years.
Eddie Brigati: 43 years.
Ted Simons: Only 43 years.
Ted Simons: Was it difficult to get back together?
Eddie Brigati: Our grandchildren talked us back into it.
Ted Simons: There you go.
Eddie Brigati: Yeah, no, yeah, no.
Unidentifiable Speaker: The interesting thing is if there was no talking, just music, it was easy, easy as pie.
Ted Simons: Now the fact that you guys -- you broke up in the early 70's, didn't you?
Unidentifiable Speaker: 70’s, yes.
Ted Simons: 1970?
Unidentifiable Speaker: Don't rub it in. [laughter]
Ted Simons: I’m going to rub it in a little bit because I want to find out. Is that what happened back in 1970 part of the show?
Dino Danelli: Yes. It's touched on at the end the show. We have our young actors explain the whole thing. I don't want to give too much away. If you come see the show, they explain what happened. It was no one thing that happened. An accumulation of a lot of things that just told us all it was time to move on in those days.
Eddie Brigati: But, the track record, we had a wonderful run. We did seven albums in five years, over half a million miles, maybe 1,000 show concerts. We never lost contact with the audience. We were a little exhausted maybe.
Ted Simons: Maybe.
Unidentifiable Speaker: Tumultuous times.
Felix Cavaliere: It was the beginning. It wasn't anything like it is now. I remember I had a talk with John Mellencamp one time. He said you guys blazed the trail. We used to follow elephants and horses. Seriously.
Eddie Brigati: Gene still does.
Felix Cavaliere: He follows them for a different reason. [laughter]
Ted Simons: Weren't there shows in which there were six, seven, eight acts on the bill and you played two, three, four songs?
Felix Cavaliere: That was kind of just as it was turning from that. Those were the days when Murray the K, they used to do shows -- but they were kind of changing because rock 'n' roll was becoming very powerful. People were generating more income so the shows were one and two acts.
Ted Simons: When this was all happening, did you know it was happening? Could you stop and smell a couple of roses or were things moving so fast?
Dino Danelli: We were young and it was moving like lightning. We were in a blur. Like I said, we were so prolific, doing a lot. We were working all the time. Touring, recording, writing.
Ted Simons: When it was over in 1970, at least that aspect, you continued with your careers in different forms and things, but when it was over, was there a let-down? Was it relief? What happened there back in 1970?
Unidentifiable Speaker: I decided to make some babies. [laughter]
Ted Simons: Family happened.
Felix Cavaliere: It was a good time to have a family, raise kids. It was different. The music changed at that point in time, that disco stuff came in.
Ted Simons: I wanted to ask you about that. You guys have been referred to and are still referred to as blue-eyed soul. Okay. Gene’s pointing to his eye. I know you like blue-eyed soul. Do you think -- did you like that label or was that a little-- ?
Dino Danelli: I never thought one way or another about it. Just another label.
Ted Simons: Yeah. And as far as writing these songs, which had kind of a soulful influence to them along with rock 'n' roll, my favorite song, “Beautiful Morning.” That song to me is -- my favorite, your best. How did you guys write this? Give us the process of writing this.
Felix Cavaliere: You said before, did you have time to smell the roses? That's one the best times that we have ever had was when that song was written because we had a number one record at the time. New woman in my life. We were in Hawaii. It couldn't get much better than that. The joy of that experience is what that song started off as.
Ted Simons: Was it just basically waking up -- you co-wrote the song. Did you basically wake up, look out and go-- because I think of that song a lot when it's a beautiful morning.
Eddie Brigati: Gene started dating. [laughter] I had this thing like what would it be like if it could be Gene dating.
Gene Cornish: Dating me.
Gene Cornish: I have heard many times from our wonderful honored Vietnam Vets that they would play “Beautiful Morning” instead of “Reveille” in some of the camps. That’s very touching, and very, very gratifying that we can contribute a little smile to their faces.
Ted Simons: Can you show us that song? Is it easy to go there?
¶ it's a beautiful morning ¶¶ ¶ I think I'll go outside for a while ¶¶ ¶ just smile ¶¶
Gene Cornish: There you go.
Ted Simons: That is fantastic. You still got it. My goodness. You all still got it.
Unidentifiable Speaker: Amen.
Unidentifiable Speaker: We better still got it.
Ted Simons: Do you look at some of the songs and go, I wonder why we did this? I wonder why we put a bridge there. I wonder why we had—do you ever do that at all?
Dino Danelli: I never do. I never look back at all.
Ted Simons: What about you, Felix?
Felix Cavaliere: I mean, the hardest thing is to know when the song is done. To leave it. Don't do any more to it.
Gene Cornish: You can overdo it.
Felix Cavaliere: So we had a great team. We made great music with great fun with great people. It was done, you go home and try another one. Start another one.
Ted Simons: You mentioned the Vietnam Vets. The fact of me saying “Beautiful Morning” literally sticks in my mind half the time I see a beautiful morning. The fact you've connected with people, what does that mean? Do you ever sit down, just stare at a beautiful morning and go, I changed some lives here?
Eddie Brigati: In general Steven gave us I think the greatest compliment. He said our work never went dark. The whole thing expresses that. It was a tumultuous time, Vietnam, our leaders were being assassinated. We were young enough to reach past that. It shows, this performance shows that we were consistent and we never even – “People Got to be Free” wasn't a protest song. It was more of a suggestion about something.
Gene Cornish: Inspirational the way -- I didn't write it so I can look at it from over here. It's an inspirational song that still holds up today. We inspire people with our show. When people leave our show they feel uplifted, they feel happy, they feel the joy maybe they remembered back in the day.
Ted Simons: I wanted to ask about that as well. In those times protest songs, folk songs, angry songs, loud, harder songs were coming. You're “Groovin'” on an afternoon, “Beautiful Morning,” birds were singing. There you go. Did you ever notice that you were doing this and the other crowd was doing that?
Felix Cavaliere: Oh, yes. It has to do with your personality, your outlook on life. Basically, it's a happy world. If you're not happy, well, you can listen to some of the people that are unhappy. We were happy. I was a happy guy. We wrote happy songs.
Ted Simons: As far as “Groovin'” is concerned --
Felix Cavaliere: Love song.
Ted Simons: Were you sitting in a park? Where did you write that song?
Felix Cavaliere: Basically it was a song about – like the fact that we work on Fridays and Saturdays.
Eddie Brigati: Hotel 14.
Felix Cavaliere: The only time you can be around somebody you love is Sunday afternoon.
Gene Cornish: One day off a week.
Ted Simons: Can you pluck out a few of the “Groovin'” here?
¶ groovin' ¶ on a Sunday afternoon ¶¶ ¶ and really you couldn't get away too soon ¶¶
Gene Cornish: $5 for more.
Ted Simons: That is -- yeah. Absolutely fantastic. Now, you got the show going. What kind of response are you getting? Some folks, they go to a show they expect four people standing there doing their thing. A lot of things going on in this show. This is a multi-media extravaganza. What are you hearing?
Dino Danelli: It’s been great so far. Every show from show one to now, tonight, every one has been fabulous. Every audience has been great. So intense, you know. They laugh, they cry, go through the whole gamut of reactions and feelings. We bring out all of that in their lives. It's amazing. We're on stage, in silhouette a lot. We can see their faces.
Ted Simons: Interesting.
Dino Danelli: And watch them react to what they are seeing and hearing and it's wonderful.
Ted Simons: When you talk about inspiration, again we’re talking about the Vietnam Vet story is amazing, and just the average Joe, when Bruce Springsteen got big, you know, when these bands -- John Mellencamps of the world, especially east coast bands, New York and New Jersey bands, when they got big, J. Geils Band, did you say I can see a little bit of us in them?
Felix Cavaliere: Sure, which is great because it’s all a big continuation of music from the beginning, that’s what it is. That’s fine. There's nothing wrong with that.
Eddie Brigati: Extended history. My brother was a member of Joey Dee and The Starliters at the Peppermint Twist. I followed him, and he sings a lot of background, he designed a lot of our harmonies. It's like a continual east coast melting pot.
Ted Simons: Yeah. I can see -- I think of J. Geils, Springsteen especially. The stage presentation. Do we see, is there animation going on in this presentation?
Felix Cavaliere: The gentlemen that did the lightshow here used to be Bruce's guy. He used to work for U-2 and Pink Floyd. The light show is amazing. This is state of the art.
Ted Simons: Must be good for you to be in one spot for a little bit of time as opposed to traveling like back in the old days.
Gene Cornish: Whenever we play four, five shows, what happens is we allow people to Facebook us, to video, use the cameras, whatever. They in turn during the show will be Facebooking friends at home, so it's word of mouth as well as advertising.
Ted Simons: Well, it sounds like a fantastic show. Good to have you guys here. Everyone is very excited about this. You guys, it's important that you're excited about it. You have to really believe in what you're doing these days.
Gene Cornish: Believe in each other and the music.
Ted Simons: And the music. You should believe in the music. Congratulations on a great career and for impacting people's lives in a positive way. You got something to play us out with?
Here we go. ¶ I was feeling so bad ¶¶ ¶ I asked my family doctor just what I had ¶¶ ¶ I said doctor, doctor, Mr. M.D., can you tell me what is ailing me ¶¶ ¶ he said, yeah, yeah, yeah ¶¶ ¶ yeah, yeah, yeah, yeah, yeah --
Ted Simons: There you go. Gentlemen, thank you so much for being here. We really do appreciate it. That's it for now. You have a great evening.