Paul Volcker on Debt: This is 'the Debate We Need'

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The White House might want to position President Obama as "the adult in the room," but that mantle surely goes to Paul Volcker when he darkens any door. 

And on the day after Obama laid out his vision for reducing the national debt, and hours after Congress passed historic cuts in the middle of a fiscal year, Volcker said, "It's all getting in line for the debate we need."

Volcker said the president's speech set up a conversation that needs to happen. But that was the most positive comment the former Federal Reserve Chairman under Carter and Reagan had about the American political system.

Volcker, who served as chairman of the president's economic recovery advisory board until February, has long been critical of dysfunction — on Wall Street and Capitol Hill. 

"He's a man who tells truth we need to hear,"said Columbia University law professor Richard Gardner said while introducing Volcker. One of the favorites he noted is "it is the job of the federal reverse to take away the punch bowl when the party gets too rambunctious." 

Another oft-quoted Volckerism: "The American political process is about as broken as the financial system." 

Volcker repeated that message again on Thursday night, blaming the extreme influence of money in Washington politics. 

"Much too often, we're reminded that government isn't performing all that well," he said while accepting an award from Columbia's School of International and Public Affairs. "It seems almost at a loss in facing up to the enormous challenges" of the 21st century.

Not all of these challenges, however, are new. Take the federal debt ceiling which Volcker called it "the bane of existence of all treasury officials."

"My first job in the treasury fifty years ago was worrying about what to do with the debt ceiling problem," he recalled. 

"It's a very serious matter, but inevitably, people want to play politics with it up to the very last moment," Volcker said. "We have trillions of dollars of short-term treasury paper around the world, and people wonder enough about our policies now." 

While maneuvering by treasury officials could temporarily cover for political theater that misses the deadline, Volcker asked, "why upset everybody in the world if it lapses, even for just a few days?" 

The 83 year-old also compared the political divisiveness of today to the 1930s. "I can remember the conversations" among grown-ups when he was a kid in New Jersey. "The venom about President Roosevelt at that time, he said "is somewhat similar to what you hear about President Obama.

While Volcker spoke in New York, Obama was in Chicago at his first official fundraiser of of his reelection campaign and repeated his call to make federal debt a central plank of the Democratic platform.

“The speech I gave yesterday was not a partisan shot at the other side. It was an attempt to clarify the choice we have as a country right now,” the president told the gathering. “if we’re progressive, we’ve got to care about the deficit as much as the other side does."