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New Congress Kicks Off With Vows to Cut Spending: What’s on the Table?

January 4, 2011 at 3:35 PM EDT
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John Boehner vowed on election night to cut spending, and he takes the speaker of the House gavel with the backing of a GOP majority. Gwen Ifill gets details on what congressional spending cuts could be on the horizon from Diane Lim Rogers of the Concord Coalition and James Horney of the Center for Budget and Policy Priorities.
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GWEN IFILL: The battle of the budget is set to begin in Washington tomorrow, as the 112th Congress begins work and newly empowered Republicans vow to slash government spending.

When Republicans officially take control of the House of Representatives tomorrow, at least one major campaign promise will encounter its first reality test.

Incoming House Speaker John Boehner set the stage for the coming spending debate on election night.

REP. JOHN BOEHNER, R-OHIO: I’m here to tell you tonight that our new majority will be prepared to do things differently, to take a new approach that hasn’t been tried in Washington before by either party. It starts with cutting spending, instead of increasing it…

REP. JOHN BOEHNER: … reducing the size of government, instead of increasing it.

GWEN IFILL
: In the first of what is expected to be a series of budget-cutting maneuvers, the House Republicans have already proposed reducing operating budgets for its House committees and congressional offices. The move would shave a projected $35 million from salaries and other expenses.

Cutting Congress’ budget had been part of the Republicans’ Pledge to America unveiled during the fall campaign.

REP. JEB HENSARLING, R-TEXAS: With this pledge, Republicans will save the American dream, as it drowns in a sea of red ink. We will make it bigger and brighter for the next generation. We will not allow the torch of liberty to be mortgaged.

GWEN IFILL: Today, House leaders said they would introduce a bill a week to fulfill that pledge, with the goal of reducing domestic spending by $100 billion this year.

Incoming leaders have also promised to freeze the size of the federal work force, with the exception of national security. And Eric Cantor, who will become House majority leader, told reporters today everything else is on the table.

After Republicans gained 63 seats in the House and another six in the Senate, some newly elected lawmakers called for even larger cuts, including rolling back spending to pre-2008 levels.

Utah senator-elect Mike Lee told the “NewsHour”‘s Judy Woodruff the Department of Education should be one target.

SEN.-ELECT MIKE LEE, R-UTAH,: We could save about $50 billion a year doing that. Of course, that’s a drop in the bucket compared to what we would need to cut if we were to balance the budget.

And that’s why I say we’re going to have to look at across-the-board cuts, the likes of which we could discern perhaps by looking back to a budget as recent as the 2004 budget.

GWEN IFILL: But House Democrats now facing minority status pushed back today.

Rosa DeLauro of Connecticut said the proposals would cost more than they save.

REP. ROSA DELAURO, D-CONN.: What they have talked about will be ruinous to the economy and to the middle class, cutting education, cutting transportation. All of those pieces which they want to drastically cut will create jobs, will help to lower the deficit. That’s the direction. That’s the forward direction.

GWEN IFILL: Democrats also said another Republican priority, repealing the health care law, would undercut Republican goals by actually adding to the deficit.

Outgoing House Speaker Nancy Pelosi:

REP. NANCY PELOSI, D-CALIF.:
So, to say we’re going to repeal it is just, as has been said by my colleagues, is to do very serious violence to the national debt and deficit. You can’t just say, I like the palatable parts of this, but I don’t want the structural change that is required.

GWEN IFILL: And even a new food safety law expected to be signed by the president today instantly became part of the debate, as Republicans threatened to withhold $1.4 billion in administrative costs.

We turn now to two budget experts who have been studying the spending issue, Diane Lim Rogers, chief economist for the Concord Coalition, a deficit watchdog group that argues for balanced budgets, and James Horney, director of federal fiscal policy at the Center on Budget and Policy Priorities, which opposes cutting the budget too deeply.

Welcome to you both.

DIANE LIMBAUGH ROGERS, Chief Economist, The Concord Coalition: Thank you.

GWEN IFILL: Diane Rogers, I guess I want to start with you. How big a deal should spending be and how big a deal is it going to be on the congressional agenda in the next few weeks?

DIANE LIM ROGERS: Well, I think it depends on whether you’re talking about short term or long term.

Our real problems in terms of the federal budget have to do with our commitment for decades to come. Right now, we’re in a very fragile economy, so it’s not necessarily the time to reduce budget deficits now, but it is a time to spend deficits wisely.

GWEN IFILL: But just about the spending part, we saw, today, members of Congress say they’re going to cut congressional budget staff. We have heard the president even talk about that. Is that the way to begin?

DIANE LIM ROGERS
: Well, certainly, if there’s waste in any of those areas of the budget, it’s a welcome source to cut.

But the problem is that all the areas that look like legitimate waste, they don’t really add up to the kind of money that Congress is talking about cutting. And if you talk about all the exemptions, things that they’re actually taking off the table for these budget cuts, then you’re talking pretty serious percentage cuts in some pretty essential programs.

GWEN IFILL: What do you think, Mr. Horney?

JAMES HORNEY, Director of Federal Fiscal Policy, Center on Budget and Policy Priorities: I think Diane is exactly right. You have to think about two different periods here.

In the short run, we have a very fragile economy. We still have about seven million fewer jobs than we did just a couple of years ago. The economy is growing, but we need to make sure it keeps growing at a rapid rate the next couple of years to dig ourselves out of the hole.

And if we try to cut the deficit too fast, in particular, try to cut spending too fast, it is actually going to undercut the recovery. And that would be very bad for the nation. In the long run, we absolutely have to deal with the deficits that are going to spiral out of control because, primarily, rising health care costs and the aging of the population.

And we really have to take steps that will bring particularly health care costs under control. That’s systemwide, public and private health care costs. And we have to increase revenues in order to get those deficits under control. They’re simply unsustainable in the long run.

GWEN IFILL: Well, you both talk about the long run and the short run, but how do you get to the long run if you don’t start somewhere?

DIANE LIM ROGERS: Well, we’re trying to start somewhere by having — we just had the report of the president’s fiscal commission and a bunch of other groups around town.

And they’re all emphasizing the fact that it’s important to get a plan in place now to commit to a path to fiscal sustainability in the future, even as we’re continuing to do a large amount of deficit spending now. So, that’s how we get from the short term to the long term, is making sure the economy is on solid ground, putting plans in place for, once the recovery is well under way, to get deficits down by reducing spending and raising taxes.

GWEN IFILL: So, what should be on the table and what shouldn’t, in your opinion?

DIANE LIM ROGERS: Everything should be on the table.

So, Congress right now likes to talk about wasteful discretionary spending, because that sounds like the least painful thing to cut, and — but everything, entitlement programs, Social Security, Medicare. We need longer-term reforms for those programs, because they are on unsustainable paths.

We need tax reform, because contrary to what everyone would like to believe, which is that we don’t need more revenue, we really do need more revenue. It’s not just a spending side problem. It’s not just a tax side problem. We need help from all — all fronts.

GWEN IFILL: James Horney, what do you think should be on the table and what shouldn’t?

JAMES HORNEY
: I think everything has to be on the table. We really do have to look at it. Certainly, revenues are part of the solution. We need to raise them, but in an efficient way.

And certainly we have to reduce spending. We need to eliminate where the government is doing things it may not need to do or we don’t need to do as much. And I think that’s one of the things. We start — we have to start having a real national debate about what is it that we want done.

(CROSSTALK)

GWEN IFILL:
So, entitlements should on the table?

JAMES HORNEY: Oh, absolutely.

(CROSSTALK)

GWEN IFILL: Medicare, Medicaid?

JAMES HORNEY: Everything has to be on the table. We really do have to — and particularly Medicare and Medicaid, we do have to get the growth of those programs down.

But the way to do that is by slowing the rate of growth of health care costs systemwide. If we just whack Medicare and Medicaid, without slowing the growth of health care in the private system, you end up with a system where no longer does Medicare and Medicaid make sure that the elderly and the poor have access to adequate care.

But we need to have a national debate where we really talk about what’s important. Unfortunately, in the campaign last year, it was about, let’s cut spending, let’s reduce the size of government. And people were led to believe that, if we just got rid of earmarks, if we got rid of waste, fraud and abuse, that would take care of the problem.

And what we need to do is have a debate and say, look, if you really do want to reduce the government as much as some people say, that means you have got to cut education. You have to cut Head Start. There’s going to be less money for the FBI, various things.

(CROSSTALK)

GWEN IFILL: Is that a good idea?

JAMES HORNEY: Well, it’s a debate we have to have, because…

(CROSSTALK)

GWEN IFILL: But do you think it’s a good idea?

JAMES HORNEY:
I think we can’t cut it as much as people say we should. And I think the American people in fact don’t want to cut those programs.

And I think, when they understand what it is that the government is doing, and the benefits that they derive from it, they will realize that, while we have got to slow the rate of growth of spending, particularly health care, we also have to make sure we have enough revenues to cover enough spending to actually meet the important national needs.

GWEN IFILL: Do Americans have the stomach for those kinds of cuts, Diane Rogers?

DIANE LIM ROGERS
: I actually don’t think they have the stomach for it. I think that a lot of Americans don’t realize everything that the federal government provides to us now.

They don’t realize the tough choices that are ahead, that we can’t just say smaller government in the abstract. That is going to impact their families. Their families receive benefits from these programs. The economy receives general support from government spending. And so I think that people have to start to — to, you know, confront these choices and how they would affect their own individual lives.

GWEN IFILL: Let’s talk about one very specific choice, which the new Republican, incoming Republican leadership have put on the table. And that is returning the budget to 2008 levels. That’s pre-stimulus, pre-all the unpopular bailout spending. Is that — does that make sense?

JAMES HORNEY: Well, first of all, I think that’s a misleading statement, when they say we return it to pre-stimulus, pre-bailout.

Last year, the 2010 appropriations — and that’s what they’re talking about, is the discretionary annual appropriations — they didn’t include any bailout money. That’s not on the discretionary side of the budget. They didn’t include any stimulus money. That was all in fiscal year 2009.

So, they’re suggesting that the budget is currently swollen by bailout and stimulus, and that’s simply not true. The 2010 budget is just meeting the regular needs of the American public.

GWEN IFILL: Is it?

DIANE LIM ROGERS
: It is. I mean, I believe it’s just meeting the needs of the American public.

And the problem with their goal of keeping spending levels down is, they’re exempting large fractions of the budget. So they’re just talking about discretionary spending and they’re talking about taking defense spending and national security spending off the table.

GWEN IFILL: And you think that should be on the table?

DIANE LIM ROGERS: I think everything should be on the table, certainly. There’s waste in defense spending just as much as there’s waste in other parts of the budget.

So, I mean, no part of the federal budget can be exempt from these cuts or these revenue increases, because, simply, we can’t — we have to look everywhere.

GWEN IFILL: In this debate about spending cuts, will there ever be a discussion? Does it naturally lead us to a discussion about raising revenues?

JAMES HORNEY: It absolutely should.

What’s interesting is, we have had several high-level commissions recently, the president’s Commission on Fiscal Responsibility and Reform, a bipartisan Policy Center commission that was headed by former Clinton OMB Director Alice Rivlin and former Senate Republican Budget Chairman Pete Domenici.

And both of those, plus a panel put together by the National Academy of Sciences the year before, looked carefully at this. They all concluded, we need more revenues than the level of revenues we would get under current policies.

GWEN IFILL
: And you agree with this?

DIANE LIM ROGERS: We do a lot of spending through the tax code.

People think of tax cuts as just, universally, they benefit everyone broadly. But we have a lot of special government spending, special interest spending done through the tax code. And we could fill in those gaps, fill in those holes in the tax code, raise more revenue in an economically efficient way.

GWEN IFILL: Reality hits promises.

Diane Rogers, James Horney, thank you both very much.

DIANE LIM ROGERS: Thanks.

JAMES HORNEY
: Thank you.