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Schumer Warns of Approaching 'Fiscal Cliff'

Action must be taken to avoid automatic, across-the-board budget cuts, Senator says.

 

Sen. Charles Schumer touted the resilience of the U.S. economy after years of financial crisis, foreclosures and high employment at the Brooklyn Chamber of Commerce's annual dinner Wednesday.

But Schumer, D-N.Y., also had a warning to give.

"The government better solve this fiscal problem, because it is real," he told the packed dining room at Steiner Studios. "I've told my colleagues, particularly some of my more liberal colleagues, that we are like a blindfolded man walking towards a cliff. If we keep walking in that direction, we will fall off."

Schumer's grave pronouncement on the so-called "fiscal cliff"—a worse-case scenario that would entail deep, across-the-board cuts to balance the federal budget—was a dark spot in an otherwise optimistic assessment of the current state of the national and local economy.

"America always solves its problems," he said. "We always do. It hasn't changed. Anyone who doubts America will remain the greatest country in the world hasn't read history and I think is overly pessimistic."

But the prospect of a debt crisis such as the one buffeting much of Europe was enough to sober a crowd composed of business executives and elected officials from across the borough.

"You can argue whether we're 500 yards from the cliff or 50 yards from it," he said. "But you can't argue that we're going to have to change our direction or eventually we'll hit it."

Schumer's tough talk on coming budget negotiations expected to take place between Republican and Democrats after the election was punctuated by his grim retelling of another crisis occurring on a dark night in October 2008.

As the 3rd ranking Democrat in the Senate, Schumer was in a room with then New York Fed director Timothy Geithner, then-Treasury Secretary Hank Paulson and Federal Reserve chair Ben Bernanke when Bernanke told him that worldwide financial system was on the brink of catastrophe.

"It was one of the most profound and frightening moments in my 37 years in government," Schumer said.

But Schumer had words of hope that the bipartisan response to the financial meltdown could be replicated for yet another looming economic crisis.

"We did rally to the cause ... both Democrats and Republicans," he said. "We can do it again."

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