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Rep. Schakowsky: Social Security Not Part of Deficit Problem

November 22, 2010 at 12:00 AM EST
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As part of a series of conversations about the country's deficit problems, Judy Woodruff speaks with Democratic Rep. Jan Schakowsky of Illinois about the details of her plan to cut the deficit.
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JUDY WOODRUFF: Finally, the latest in our series of conversations on the country’s debt and deficit problems — that is, here in the U.S.

Tonight: a progressive proposal from Democratic Congresswoman Jan Schakowsky of Illinois. She’s a member of the president’s bipartisan commission. But she released a plan of her own that differs substantially from that of co-chairs Erskine Bowles and Alan Simpson. It would reduce the deficit in 2015 by $441 billion, but wouldn’t make any changes in benefits to Social Security or Medicare.

Instead, her blueprint relies on $132 billion from closing or limiting a variety of corporate tax breaks, $110 billion from cuts to defense spending, and generating more than $150 billion in other new revenues, including taxing capital gains as ordinary income.

Representative Schakowsky joins us now from Chicago. It’s good to see you. Thanks for joining us.

REP. JAN SCHAKOWSKY (D-Ill.): Thank you.

JUDY WOODRUFF: Now, why go off and come up with your own plan? Why not just go along with this bipartisan proposal by your co-chairs?

REP. JAN SCHAKOWSKY: Well, I thought it was important to put forth a proposal that says we don’t have to go after the middle and lower classes in our country in order to pay for deficit and debt that they had nothing to do with creating, and that we yet could take this problem seriously down the road to reduce the deficit and the long-term debt.

I thought the proposal put forward by the co-chairs of the commission actually penalized mainly elderly people and people who have already sacrificed. You know, we talk now about shared sacrifice, but how about shared opportunity? Because, for a very long time, all of the benefits of our economy have flowed to the wealthiest Americans.

And I thought that it was reasonable to do the kinds of revenue increases and the kinds of reasonable cuts that I proposed.

JUDY WOODRUFF: Now, as you say, you mentioned revenue increases. It is the case that you do rely more heavily than they do on tax increases. In fact, two-thirds of your plan would come from higher taxes on corporations, on individuals earning over $100,000 a year.

Why that focus?

REP. JAN SCHAKOWSKY: Well, you know, we have right now the greatest disparity in income from the rich to the poor and middle class than we have had since 1925, right before the Great Depression.

And this kind of income inequality is not good for our economy. And it’s certainly not good for people who have seen their incomes stagnant or falling over the last couple decades. In fact, all of the growth in wealth went during the Bush years to the top — wealthiest people in our economy.

It is not a good situation for us to be, as Nicholas Kristof has called, like a banana republic.

JUDY WOODRUFF: But do you worry, Congresswoman Schakowsky, that with, what is it, over $200 billion in new taxes on corporations and the wealthy, that there could — that that could create a drag on the economy just at the time when it needs a spark and it needs more hiring?

REP. JAN SCHAKOWSKY: What it needs is demand. It needs — the business community, the corporate community needs customers.

The way that we achieve that is by putting money into the pockets of people who are actually going to go out and spend it. That’s why this debate going on right now in the Congress about extending unemployment insurance benefits is so very, very important. The Republicans are talking about tax breaks, yet more tax breaks, for the wealthiest, extending those Bush tax cuts.

And — and that doesn’t do much for really creating jobs or stimulating the economy. But putting money into the pockets of millions of people that are about to lose their unemployment insurance, that actually would be good, not only for those individuals, but for the economy as a whole, because you better believe they’re going to go out and spend that money, and it’s going to help all the small and larger businesses as well.

JUDY WOODRUFF: You — of the one-third of your plan that does go into cutting spending, most of that comes under the heading of the Defense Department. Why is that the focus?

REP. JAN SCHAKOWSKY: That’s right.

Well, actually, my plan for cutting the defense budget is only about 10 percent higher than what the Bowles-Simpson deficit-reducing plan suggested. They talked about $100 billion. I talk about $110 billion. And, mainly, I am directing that at Cold War weapons systems that we don’t need anymore.

Let’s remember, this is all public spending. We could better spend it in a way that puts people to work, but not for weapons systems that we don’t need. Even Secretary Gates has recommended significant cuts — not as high as mine — in the defense budget.

But what I don’t do, I don’t tamper with military pay, which their proposal does in — in cutting it — or freezing it, and — nor military health care, TRICARE, which their proposal does, too, again another slap at the middle class.

I don’t think we need to do that in order to balance our budget. That was the point I was making.

JUDY WOODRUFF: You also don’t touch, as I read it, Medicare. You don’t touch Social Security benefits.

I guess the question is, these — aren’t you going to have to eventually go after these programs, because that’s where we see this unsustainable growth pattern for the next — as far as the eye can see?

REP. JAN SCHAKOWSKY: Well, I do have a proposal to put a public option back on the table, which will lower health care costs, to have the government negotiate with the pharmaceutical companies for lower-cost drugs, like the Veterans Administration does. And, therefore, their costs are a fraction of what seniors are having to pay for.

But to take it out on the elderly, who currently make an average of $18,000 a year — that includes private pension, savings and investments — and to say that they’re the ones that are going to have to pay is, I think, frankly, immoral. And I think that it is not necessary to go that route.

Social Security is not part of the deficit problem. Down the line, in 2037, we’re going to have to do something about it. But I would say, again, that wealthier people who don’t pay into the Social Security trust fund can certainly afford to do so to make Social Security solvent for the next 75 years.

But seniors? The average benefit is $14,000 a year. You know, they’re not — nobody is getting rich.

JUDY WOODRUFF: You mentioned the public option. Of course, that was something that was debated and went off the table early in the health care reform debate. Is it politically realistic to think that that is going to come back on the table, especially after the midterms, where Republicans did so well?

REP. JAN SCHAKOWSKY: Well, again, even in the Bowles-Simpson proposal, they say that it ought to be an option if health care costs don’t — don’t go down.

I say let’s put it in right up front. But I don’t think that it is politically saleable to the American people to say, let’s cut Social Security, Medicare, and Medicaid.

If members of Congress think that, I think they’re going to be sorely mistaken when older voters get a hold of this kind of idea. This is not popular, even among younger voters, that we should cut Social Security and Medicare. This is very unpopular beyond the Beltway, no question about it.

JUDY WOODRUFF: All right, we’re going to have to leave it there. Representative Jan Schakowsky joining us from Chicago — she’s a member of the president’s debt reduction commission. Thanks very much.

REP. JAN SCHAKOWSKY: I appreciate it, Judy.