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Simpson and Bowles: Era of ‘Deficit Denials’ Is Over

December 1, 2010 at 5:22 PM EDT
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Fiscal commission co-chairs Alan Simpson and Erskine Bowles have revised and trimmed a deficit proposal in an effort to win bipartisan support. But will it move beyond the proposal stage? The chairmen talk to Judy Woodruff about the controversial cost-cutting proposals, from defense to Social Security.
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JUDY WOODRUFF: Ever since the co-chairs of the president’s deficit commission released their plan last month, it’s been a struggle to find enough support.

The proposal would reduce the national debt and cut $3.8 trillion from annual deficits between now and 2020. But doing so would require some big changes, including caps on discretionary spending and a near freeze on the Pentagon budget, cuts in Medicare payments and raising the Social Security retirement age to 68 by 2050, simplifying tax rates, but also raising other taxes and limiting the scope of tax breaks, such as the mortgage interest deduction and employer-provided health insurance.

During a meeting of the commission today, the plan was backed by the chairman and the senior Republican on the Senate Budget Committee. But several members said they could not support it.

Well, we talk to the co-chairs about this now. That’s former Senator Alan Simpson, a Republican from Wyoming, and Erskine Bowles, who was President Clinton’s chief of staff.

Gentlemen, it’s good to have you both back with us.

ERSKINE BOWLES, co-chairman, National Commission on Fiscal Responsibility And Reform: Thank you, Judy.

ALAN SIMPSON, co-chairman, National Commission on Fiscal Responsibility And Reform: Thank you.

JUDY WOODRUFF: Let me start with you, Senator Simpson.

You have put your recommendation out there. Do you think you are going to get the 14 votes on this commission that you need to get this conveyed to Congress?

ALAN SIMPSON: We really don’t know. Tomorrow, we will be, what, riding the trapline, as we say, and see where we are.

But I think Erskine and I are very pleased that we had not just the people you expressed and addressed, but we have Democrats and Republicans alike, and an independent. Only one person vividly voted against it. And that’s fine. That person, Jan Schakowsky, has added to the debate. She put in her own program.

I have never been a numbers guy. This baby will never go away. It’s an indigestible lump.

JUDY WOODRUFF: Erskine Bowles, if you don’t get the 14 votes, will this have been a wasted exercise?

ERSKINE BOWLES: It will be anything but a wasted exercise.

The path we’re on is unsustainable. I think this is the moment of truth. The American people get it. When Alan and I go through airports, we get nothing but thumbs up. When I’m at home in North Carolina, people say tell me, Erskine, don’t weak out on this. Stay tough. We have got to get this budget down.

The American people are way ahead of the politicians up here.

JUDY WOODRUFF: Even if you can’t get it enacted into law?

ERSKINE BOWLES: Yes. Well, Paul Ryan, who is head of the Budget Committee in the House, has already said 85 percent of what we recommend will be in his budget.

And, as you know, the head of the Senate Budget Committee and the ranking member voted for it today. I think we have made enormous progress. I think the era of these deficit denials is over.

JUDY WOODRUFF: Well, Senator Simpson, how do you address, though, the criticism of somebody like Paul Ryan, a budget expert in the House, a fellow Republican of yours? I mean, he says this plan doesn’t sufficiently — it — it — he says it doesn’t address health care, that it’s too embracing of the Obama health care plan.

ALAN SIMPSON: Well, I think he feels strongly about that, and he also feels that, when you get rid of the tax exclusion for employers who pay their employees’ health insurance, that the employer is going to look around and say, where do I go now? I got — I don’t get this deduction. And he’s going to — they’re going to go to Obamacare.

And that disturbs Paul. But I’m not worried about that at all. Paul is going to take 85 percent of this product we did today and work it into the U.S. House of Representatives budget. How can you beat a deal like that? It doesn’t matter whether he votes for it or not.

JUDY WOODRUFF: Well, likewise, you both mentioned Jan Schakowsky, Congresswoman Schakowsky.

Erskine Bowles, what about that? I mean, she’s a fellow Democrat. She is saying the cuts in discretionary programs, especially for senior citizens, are just too much.

ERSKINE BOWLES: Yes. Jan to date is the only Democrat who has said they’re going to vote against it. And I’m fine with that, because she has her own proposal. At least she recognizes, clearly, that we can’t continue to build you up these deficits we have.

I think you will see a lot more Democrats vote for it. We had seven votes today. Three Democrats, three Republicans, and an independent all voted for it. I’m very pleased with where we are. We have got some more work to do, but I guarantee you we’re taking a step in the right direction.

JUDY WOODRUFF: Senator Simpson, coming back to this question of tax cuts, your party, the Republican Party, for them, tax cuts, which is the opposite of what you’re talking about in this plan, are the Holy Grail. I mean, we saw that today with what Senator Mitch McConnell was saying on the floor of the Senate with regard to the — extending the Bush era tax cuts.

What you are asking for is much more than that. What makes you think you are going to turn that attitude around?

ALAN SIMPSON: I don’t understand that logic.

What we do is get rid of $1 trillion—$100 billion tax expenditures which we call tax earmarks. Every year, that’s what it is. The majority go to the top 1 percent income people in the United States. Four hundred people, the wealthiest people in the United States, pay only 16 percent income tax.

And all we’re saying is, we’re going to get rid of that. And guess what, guys? We’re going to give you a tax rate of 8 percent up to $70,000, and 13 percent, 14 percent up to $210,000, and anything over 23 — 23 percent over everything that you earn.

Now, if a guy can’t figure that as being — if that’s a tax increase, I’m on the moon, and not in the Russell Rotunda.

ERSKINE BOWLES: And we take the corporate rate down to 26 percent, which — and put in a territorial system, which makes America one of the best places to start and grow a business.

I think, if you did dynamic scoring, you would see that this is going to create jobs and it’s going to create more revenue than anybody can imagine. But we’re bringing rates down. What we’re doing is reforming the tax code, not talking about taking taxes up or down.

JUDY WOODRUFF: And by dynamic scoring, you’re talking about a different way of accounting.

But my question is, if that — if — if what you’re saying is truly coming up with a different tax code, why don’t we see more Republicans embracing it?

ERSKINE BOWLES: Well, I think you will see a lot of Republicans embrace it. I think what they like is the fact that we do take rates down.

And we take this $1.1 trillion, we use a trillion of it to reduce tax rates. We do take $100 billion a year and use it to reduce the deficit. Maybe some of them don’t like that, but nobody argues with the fact that we’re really taking rates down.

JUDY WOODRUFF: Senator Simpson, what do you say to — to others? We are now hearing voices on the outside saying, wait a minute. Yes, there is a deficit, yes, there is a debt problem, but it’s being hyped, that, in a few years, once the economy comes back strong, we’re not going to have the deficit we face now.

ALAN SIMPSON: Well, I will tell them to kind of sober up, and the fact that the tectonic plate has shifted in America. Lots of things have happened in the last two years.

You have got people sitting at their dining room table with their head in their hands looking around, lost their jobs, got foreclosed. And they’re saying there is one group that hasn’t chipped in on this anguish, and it’s the federal government. Time for them to cough up.

Let me tell you, if people are going to sit around and believe that this doesn’t happen, they know where Greece — they don’t — maybe not know about it, Greece, Spain, Ireland, Portugal, Italy all on the screen with the same trajectory of debt, deficit and interest. Ignore that, you could go off the cliff in days, not weeks, not the slippery slope.

ERSKINE BOWLES: Judy, it’s a fact we could have double-digit growth for the next couple of decades, and not grow our way out of this problem. The only way we get out of this problem is make some really tough choices. That’s what we have recommended.

JUDY WOODRUFF: Erskine Bowles, we have been talking a lot about the Republicans here, but what about President Obama? He appointed the two of you. He put this commission together.

What’s his responsibility going forward? How much does this depend on his leadership, his selling this? Because he hasn’t done that yet.

ERSKINE BOWLES: It depends a lot on it.

But this — you have to give him a lot of credit. He’s the one that appointed us. He knew he was appointed two real deficit hawks to head this commission. He also will see that we got five out of the six members that he appointed, they voted for this report already.

He was — he’s been great so far. He stayed out of it, which he should have done. But he did say — when somebody started attacking us from the Democratic Party, he said: Look, let’s don’t do that. Let’s give this a chance to come out, because I think these guys are going to make a very serious proposal.

He’s not going to like everything in this. I don’t like everything. Alan doesn’t like everything. If Tom Coburn votes for it, he’s not going to like everything. But he will find this — that we’re on the right kind of path, that this is the path you have got to get on if you’re going to reduce this debt.

JUDY WOODRUFF: Senator Simpson, a final word. Are you seeing the leadership from President Obama that is needed, in your view?

ALAN SIMPSON: Well, I have been accused of being a Republican toady covering the president’s fanny…

(LAUGHTER)

so he can destroy the Republican Party. So, I’m used to that. And Erskine, he’s even more evil than I am with his party.

(LAUGHTER)

I would just say, I don’t know where the president was going — will go with this, but I will tell you one thing. The only people that will get this — get us out of this black pit are legislators, members of the House and Senate, and nobody else.

JUDY WOODRUFF: On that note, we will thank you both. Senator Alan Simpson, Erskine Bowles, gentlemen, thank you.

ERSKINE BOWLES: Thank you, Judy.

ALAN SIMPSON: Thank you, Judy.