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JIM LEHRER: Now, to our own debate among four of the most central of the central players, the Republicans who chair the Senate and House Budget Committees, Sen. Pete Domenici of New Mexico, Congresman John Kasich of Ohio, and two key Democrats on their respective committees, Congressman Martin Sabo of Minnesota, Sen. Christopher Dodd of Connecticut, who also serves as chairman of the Democratic National Committee. Sen. Domenici, in general terms, describe what you think this budget would accomplish.
SEN. PETE DOMENICI, (R) New Mexico: (Capitol Hill) Well, for the first time in 30 years, the United States government would say we have a plan that will–where by we will not spend any more money than we take in. It will say $4.9 trillion debt and growing is enough. Secondly, it will say to our children in the future, your standard of living can come up, interest rates can come down,so that, so that the economy can grow, and there’s more jobs.
And to all Americans, from seniors to little children, we can say, this plan provides a real future for everyone, and everyone is sacrificing some. It will also say to hard-working Americans,since we got this done, we’re going to give you a tax credit to help you with the economies of raising your children. That’s what the $500 tax credit is.
90 percent of this tax cut will got to Americans who earn $100,000 or less, at least in the Senate bill. So in a nutshell, it provides a blueprint for a bright future. And as we see it, seniors will be adequately taken care of in Medicare, except the wealthy seniors will pay substantially more,because average Americans are paying their premiums, and they ought to pay more for themselves. Summarizing, a fair and equitable blueprint, America’s economic future wherein we are not taking away the legacy of our children by putting taxes on them that they haven’t voted for.
JIM LEHRER: Sen. Dodd, give us your summary, sir.
SEN. CHRISTOPHER DODD, (D) Connecticut: (Capitol Hill) Well, this is a clear strategy, in my view, of decline. The issue is not whether or not we ought to balance the budget, but is there aright way and a wrong way to do it?
And this proposal before us,some 2,000 pages, drafted and done without a single hearing in the United States Senate, only one hearing in the House of Representatives, written in the back rooms, not the hearing rooms of the Congress of the United States, creates the single largest transfer of wealth in the history of the United States. Despite what my colleague from New Mexico has said, this bill involves a tax break that goes to the top income earners of this country while simultaneously increasing taxes for a majority of Americans.
In fact, those earning $30,000 or less will have, on the average, a $352 tax increase under this proposal. $270 billion in cuts in Medicare, where that number comes from we still haven’t been able to find out. No one has suggested that Medicare needs that level of cuts in order to put the trust fund in solid shape. $11 billion in cuts in education–the very, the very investments we need to be making in order to grow our economy are attacked brutally in this, in this budget proposal,on health, on education, on the needs of working people in this country who need to stay off the poverty rolls, stay off public assistance, this will drive millions of Americans back into those situations.
It’s been the stagnation of salaries and wages over the last dozen years that has created so much anxiety in this country.
This budget revisits the very mistakes that were made a decade ago. It’s a budget proposal primarily designed to provide a tax break, rather than to really deal with deficit reduction. In fact, the woman who heads up the Congressional Budget Office,the hand-picked appointee of the Republican Party, has said that this budget proposal will actually leave us with a $93 billion budget deficit at the end of it. So I think this is wrong-headed,takes us in the wrong direction, and ought to be changed before we make it the law of the land.
JIM LEHRER: Congressman Kasich, are they talking about the same bill?
REP. KASICH: Sen. Dodd is undecided there, Jim.
JIM LEHRER: Right. Are they talking about the same bill, Congressman?
REP. JOHN KASICH, Chairman, Budget Committee: (Capitol Hill) Well,if somebody landed in a spaceship, just listening to those two describe, there couldn’t be more stark differences. Look, I think we’re going to have some of this hot rhetoric right now. I, of course, come down on the side decisively as Sen. Domenici. Since 1989, I have been fighting my own Republican President and I’ve been fighting Democrats, and all I have argued since 1989, all alone on the floor with as few as 30 other people supporting my efforts to, to get fiscal responsibility, is to slow the growth in federal spending. Kwame really had it actually wrong in a number of the statistics he laid out at the beginning of the program.
JIM LEHRER: Which ones?
REP. KASICH: Well, he said, for example, Medicare is being cut by $270 billion. Medicare spending is going to go from $950 billion to $1.6 trillion. If it grew by the $1.8 trillion that some argue it ought to grow by, it would go bankrupt. That isn’t a cut. We’re slowing the increase in programs. In fact, federal spending, Jim,over the last seven years totaled $9 1/2 trillion, and over the next seven years by providing tax relief to Americans and balancing the budget, federal spending will go up by almost $3 trillion. Now in Washington, they call slowing spending by a trillion. Some people want it to go up $4 trillion. We’re just going to let it go up $3 trillion. They say, well, that’s revolutionary, you want to save $1 trillion. In main street in America, they wouldn’t call that a revolution; I’m not sure they’d call that an evolution.
All we are simply doing is slowing the growth in federal spending in order to balance the budget and save the next generation and to have lower interest rates, and as Chairman Greenspan has said, if you can balance the budget over seven years, we will unleash a prosperity that you can’t chart. And so I think it makes total common sense to slow the growth. In regard to tax cuts, look, the administration in 1993 raised taxes by $250 billion over five years. We haven’t even eliminated all of those. We’ve just–we have just cancelled part of the administration’s tax cuts, two parts of our plan. Capital gains reductions, the administration will support ‘em. You’ve got to have an incentive for people to take risks. And secondly, the family tax credit, they’ll end up supporting that as well. Our effort to provide tax cuts does not take away from our effort to balance the budget. We will balance the budget by simply slowing the growth of many of these programs. And you know what, Jim? It’s about time we made the hard choices, and we were able to deal with the sacred cows in the federal government. I think people will reward us for this.
JIM LEHRER: Congressman Sabo, would you reward Congressman Kasich and his Republican colleagues for what they have drawn?
REP. MARTIN SABO, (D) Minnesota: (Capitol Hill) Most certainly not. Sen. Dodd probably understated the case. This is a massive transfer of resources in the country from people who are struggling to get ahead, to the most affluent. If you’re rich in this country, you’ll be better off under this proposal. If you’re working hard and a low income worker, if you’re trying to send your kid to college, you’re worse off. The reality is we can balance the budget without the kind of draconian cuts the Republicans are proposing in Medicare and Medicaid. We don’t have to be cutting Head Start programs. We don’t have to be cutting the earned income tax credit for hard working low income Americans. That’s just simply–it’s simply something we shouldn’t be doing. That’s their priority. We can balance the budget without doing the types of things that they’re proposing in this budget.
JIM LEHRER: So you’re suggesting that the Republicans have another agenda besides simply balancing the budget in seven years?
REP. SABO: Absolutely. Over the last 20 years in this country we’ve had a dramatic shift in where income flows. The very top, the top 1 percent, has grown immensely in the amount of income they’re receiving. They’re the ones who are going to receive the biggest reward from the tax cut in the Republican proposal.
JIM LEHRER: Sen. Domenici, how do you respond to that general charge?
SEN. DOMENICI: Jim Lehrer, let me just tell you–
JIM LEHRER: Okay.
SEN. DOMENICI: You know, it’s very, very difficult when such charges as these are made about this package. Now let me tell you what I believe is happening. Of the $245 billion, at most, at most 10 percent is going to be people over $100,000. If my arithmetic is right, that’s $24 million at most is going to people over $100,000. If we’re transferring wealth, we’re transferring it to middleclass Americans mostly who have children and jobs and need help. Secondly–
JIM LEHRER: Let’s stop right there, and all right, Sen. Dodd, you heard what he said.
SEN. DOMENICI: Now, let me add one point.
JIM LEHRER: Okay.
SEN. DOMENICI: Because he wants to talk about transfer of wealth. Let me just give you the next one.
SEN. DODD: But let me just–let me point out here, Ronald Reagan called the earned income tax credit the best hedge against falling back into poverty. This bill takes $40 billion away from those people. That is a tax increase on the average of $352 for people in that income category. Now, that’s a fact. Those people are going to pay that much more in taxes than they would, if you eliminated that provision of the bill.
SEN. DOMENICI: That’s not true either. That’s not true, and the Joint Tax Committee said it today. The $500 tax credit for families with children gives them back, most of them, all but 5 percent get back more than they lose under the earned income tax credit, so that’s a false argument. But my last one is this.
JIM LEHRER: Sure.
SEN. DOMENICI: If only $24 billion of this goes to affluent Americans, what is the rest of the deficit reduction for? You know who it transfers? It transfer for future generations. It says, we’re tired of making them pay our bills, we’re going to get the budget in balance, so it’s a transfer to the, to a legacy for a future for children, rather than that they pay our bills. That’s forgotten.
JIM LEHRER: Sen. Dodd.
SEN. DODD: Well, you know, here you’re taking 180,000 children off Head Start, and we’re going to talk about 4.4 children–4.4 million children that will be denied Medicaid assistance under this proposal, including up to 12 million people–
SEN. DOMENICI: That is not true.
SEN. DODD: Most of them are working people–
SEN. DOMENICI: That is not true.
SEN. DODD: –that are going to cut under this program.
SEN. DOMENICI: That is not true.
SEN. DODD: And you’re talking about $11 billion in higher education assistance. These are the very children my colleague in New Mexico is talking about. They’re the ones who are targeted in this bill.
JIM LEHRER: Congressman Kasich, is that–does that not constitute a transference, in your judgment?
REP. KASICH: Look, let me give you some numbers.
JIM LEHRER: All right.
REP. KASICH: Medicaid spending is going to go from $444 billion to $773 billion. You know what that is? That’s an increase. Now, in this city, it may not be an increase, but all over America to go from $444 billion to $773 [billion] is an increase, and guess what? Thirty of the governors in this country believe that if we get rid of the rules and the regulations dictated by Washington, they will be able to serve the poor populations of their states far better than what they do with all the programs being dictated out of this city. Medicare–we’re going to go from $950 billion in spending to $1.6 trillion in spending over the next seven years, $950 billion to $1.6 trillion, Jim. That is not a cut anywhere, except in Washington, D.C.
JIM LEHRER: Is that a cut to Congressman Sabo?
REP. KASICH: Let me–let me–I’ve got one more number. Welfare–
JIM LEHRER: One more number.
REP. KASICH: We’re going to go in welfare from $498 [billion] to $838 [billion], $838 billion. The earned income tax credit is going to go up 40 percent. Listen, when you’re going to increase federal spending by $3 trillion, that’s how these programs go up. Now, what the Democrat liberals want is they want spending to go up $4 trillion. If it goes up $4 trillion, folks–
JIM LEHRER: Is that–
REP. KASICH: –the country’s going bankrupt.
JIM LEHRER: Is that what you Democrats–
REP. KASICH: It’s just that simple.
JIM LEHRER: Is that what you Democrats want, Congressman Sabo?
REP. SABO: No, no. But we want people treated fairly. The fact is–and John uses numbers, but they’re over a long span or period of time. Reality is when you deal with Medicare, more people are turning 65. So you have a growing population. You’re dealing with the population which is most fragile as it relates to health care. Health care costs are going up. The system needs to be reformed. We need to control the cost. But we don’t need to go the depth of the cuts the Republicans are proposing to balance the budget. The same with Medicaid. Their proposal is either going to deprive millions of Americans of health care or transfer significant costs to state and local taxpayers. Those options are clear, and, and as Democrats we’re saying, let’s moderate those cuts, let’s balance the budget, but let’s do it in a reasonable way, let’s not destroy our health care system for the elderly and vulnerable in our country.
REP. KASICH: Jim, if you take Medicare–let’s just try to stick on one thing, Medicare–the average Medicare recipient is going to have 4700 bucks behind them this year. In the private sector, non-Medicare, they got $1900. So $4700 for our seniors, and guess what? That’s going to grow to $6800 by the year 2002. We have over twice as many health care dollars behind our senior citizens under our plan at a growth rate that’s almost 3 percent higher than the private sector. And, you know, by doing that, we’re going to enhance the program, we’re going to save the program. It isn’t going to go broke. Those are facts. Those are not–those are not fantasy. Those are facts.
JIM LEHRER: Are those facts?
REP. SABO: John, you’re trying to compare health care costs of people who are twenty, thirty years old with people over age sixty-five.
REP. KASICH: Right. But that’s why–
REP. SABO: It’s hardly–that’s comparing apples and oranges.
REP. KASICH: But that’s why the average senior citizen–
JIM LEHRER: Let me ask Sen. Dodd a question.
REP. KASICH: –$4800, rather than $1900.
JIM LEHRER: I have a question for Sen. Dodd. Sen. Dodd, if this, if this bill is finally enacted into law, the President signs it, if it–we’ll get to that in a minute–but let’s say some version of this, close to this, becomes law, what do you think the impact on the country would be?
SEN. DODD: I think it really retards the one thing that you’ve got to have in order to maintain deficit reduction, that’s growth. That ought to be what we’re talking about.
JIM LEHRER: Now, where does it stop growth?
SEN. DODD: It stops growth, in effect, because the very things you’ve got to have–education, you’ve got to have young people that are growing up with proper health and nutrition, you’ve got to be able to–one of the major costs of inflation is health care. Mr. Kasich talks all the time about this, this cutting growth. The fact of the matter is that they tied the growth to inflation generally in the economy. The reports this morning indicate that in catastrophic health care it’s gone up 30 percent. That’s far above whatever the average rate of inflation is in this country. We’re not talking about just general inflationary growth, but the inflationary growth in the area of health care. That is much, much higher. We’re talking here about two to three thousand dollars increased in out-of-pocket expenses for people over the age of 65. The median income is $17,000, unless you’re a woman over the age of 65 ,and then it’s $8500. That may not seem like a lot of money to John Kasich–
JIM LEHRER: Sure.
SEN. DODD: –and to others, but if you’re a person living in that income range, that’s a lot of money. That retards your ability to grow.
JIM LEHRER: Sen. Domenici, is this an argument about numbers,sir, or–
SEN. DOMENICI: No.
JIM LEHRER: –this an argument about philosophy?
SEN. DOMENICI: This is an argument about philosophy and substance,and anyone that thinks reducing the budget so that it’s only growing at 3 percent instead of 5 is going to cause diminished growth in America just isn’t asking people that know. Everybody says this is going to be a growth budget because interest rates are going to come down, investment will go up.
JIM LEHRER: Why? Why will that happen?
SEN. DOMENICI: Because just almost automatically when you get a deficit going down this much, the long-term interest rates will come down. It’s predicted by most to come down 1 1/2 percent, by some 2 percent. That’s an enormous add-on for growth and prosperity. But let me make one last point. What you said about education,as if the United States government’s commitment to education is a major one, the United States government’s commitment to public education grades, grades kindergarten through twelve, is $23 billion out of a national expenditure of $400 billion. What we have done in the Senate-passed appropriation bill is cut education $400 million for a grand total cut of 1/10 of 1 percent. That’s 1996.
SEN. DODD: You’re forgetting higher education.
SEN. DOMENICI: Well, I said kindergarten through twelve.
SEN. DODD: Well, we’re talking about college too.
SEN. DOMENICI: And if you want college, you have added about $12 to a college–
JIM LEHRER: I want to ask Congressman Sabo the same question I just asked you, Sen. Domenici. Is this about philosophy more than it is about numbers?
REP. SABO: It’s about both. Philosophy eventually gets translated to numbers–
JIM LEHRER: Sure.
REP. SABO: –and decisions about programs.
JIM LEHRER: Sure.
REP. SABO: And I think that this Republican plan really reflects a value that’s going to reward the most affluent people in our country. I think that’s unfortunate.
JIM LEHRER: Now, why would–you think that is what is behind this whole plan, is to reward people who have money and hurt people who don’t?
REP. SABO: I think a good deal of it is motivated by that. Some of it’s motivated by balancing the budget, which I think we should do. But then when you get to the particulars, the people who have prospered the most is, our income structure has changed, are the ones who are going to be rewarded the most under the Republican proposal.
JIM LEHRER: Congressman Kasich, that’s a serious charge.
REP. KASICH: Well, I think this is a time of hot rhetoric. What I will say is that we complain about the tax code. The Democrats had the majority in this town for 40 years. We’ve had it for nine months, and we are, in fact, closing loopholes on large corporations. We’re, we’re taking on some of the subsidies that don’t make sense up here but, Jim, let me tell you, this is philosophical. This is about power, money, and influence. And the people in this town have had too much of the American people’s power, too much of their money, and they’ve had too much influence over them. This is about bringing the pendulum back, Jim. This is about common sense. This is about saying that Americans should be empowered in their communities, that they ought to get more of their power back, that they ought to get more of their money back, and they ought to get more of their influence back. And you want to know something? They agree with this program. Everywhere I go, they agree with it.
JIM LEHRER: Speaking of power, Sen. Dodd, there’s no question, is there, about what Kwame said in his report, that this is going to pass eventually, right?
SEN. DODD: Well, I think it is, but I was pleased to see with Sen. Specter and a few others are raising some serious concerns about it. You know, they talk about influence. We went through 24 days of hearing on Whitewater, 10 days of hearings on Waco, 11 days of hearings on Ruby Ridge. Now, I’m not arguing they want to look at those. When we provide a hearing for them for conspiracy theorists and for people who are involved in some of those bizarre behaviors in this country in Waco, and not a single day of hearings, not one. When it comes to a $270 billion cut in Medicare, which is–
SEN. DOMENICI: That’s not true either.
SEN. DODD: –that is really–that’s influence beyond which I’ve ever seen.
JIM LEHRER: Sen. Domenici, you’re going to win it, though, right?
SEN. DOMENICI: Yeah. We’re going to win it. They raised taxes the highest amount in history, and they had two hearings in the Senate Budget Committee; we’ve had twenty-two on this package.
JIM LEHRER: Okay. We–
SEN. DOMENICI: There have been plenty of opportunities for us to get it right.
JIM LEHRER: And we’re going to have plenty of other opportunities to talk about this. Thank you all four very much.