The Democratic senator from Virginia describes the strategy of the bi-partisan “gang of six” that he helped organize to tackle the deficit crisis.
Sen. Mark Warner
Tavis: Mark Warner is serving his first term in the U.S. Senate from Virginia, following his time as the governor of the commonwealth. He is a key member of the Senate Budget Committee who helped organize the bipartisan group known as the gang of six. He joins us tonight from Capitol Hill. Senator, as always, good to have you back on this program, sir.
Sen. Mark Warner: Tavis, thanks for having me back on.
Tavis: I said gang of six – is it gang of six or gang of five?
Warner: Well, it’s kind of indeterminate at this point. We had one of our Republican members said he was going to take a break, but we had about 64 senators a few months ago write us a letter saying, hang in there, guys, we’ve got to have some kind of bipartisan solution to this $14 trillion debt we’re looking at. So we’re still at it.
Tavis: Gang of six or gang of five, by any name, what is the mission now? And beyond mission, really, what is the strategy? How do you farm out, or how do the five or six of you get the others to see it the way you see it to find some common ground? What’s the strategy, Senator?
Warner: Well, Tavis, you hit the nail on the head. We’ve seen the Republicans come up with Mr. Ryan’s budget that disproportionately made most of the cuts out of Medicare and certain other programs. It showed how hard it is to take on this problem if you completely leave off revenues, if you completely keep military spending off the table
We saw the president come up with a proposal that also didn’t get a lot of traction. So what we’ve been saying is that we’ve got this crisis. It’s like we’re in a car heading for a cliff, about to drive over the cliff. If we end up with a – since we’ve got a $14.5 trillion debt, every day we don’t act, $4 billion more is added on to that debt – debt that you and I are going to have to pay off.
We used to say we pass it on to our kids. It’s gotten so large now we’re going to get stuck with the bill as well. So we’re saying can we say to the Democrats all right, some of the entitlement programs, we’ve got to reform them, we’ve got to put them on a sustainable financial basis.
Say to our Republican colleagues all right, guys, spending may be at an all-time high but revenues are at a 60-year low. We’ve got to end up raising revenues as well, and try to start with something bipartisan.
A lot of people privately are saying hang in there, but the challenge is we’ve got to be willing to go against the orthodoxies of both parties to say let’s actually put the country first.
I hope over the next few weeks we can build on this smallish group, get a plan out there, let the arrows fly, but hopefully be a path to get through this financial crisis.
Tavis: I asked a two-part question – mission and strategy. You answered the mission part for me. Going forward, though, what is the strategy of your group? How do you get others to sign up for whatever you’re going to come up with?
Warner: We’ve gotten most of the way there. We’ve been meeting. In Washington we met for about four or five months with no details leaking out. That in itself is an accomplishment. (Laughter) We now feel like it’s time to share some of these ideas with some of the other members who’ve been saying privately hang in there.
We haven’t finished everything. There’s a few issues left to be resolved. I think they are resolvable. But we’ve got to share some of these ideas and basically say to folks if we come out with something or if we move forward, you may not like every part of it, but is the sum of the parts good enough for you to kind of say, “An imperfect product; we’ll move forward.”
Because if we don’t make everybody a little bit mad with this plan, then chances are we won’t have done our job.
Tavis: So how does the Congress do deficit reduction and raising of the debt ceiling at the same time? The Speaker of the House, Mr. Boehner, has acknowledged that the debt ceiling has to be raised, but his party, members of his party are holding out.
We saw that vote the other day, which was a vote to make a loud statement that we all heard, that they want this raising of the debt ceiling, if it’s going to happen, to be tied to deficit reduction. How do you do both simultaneously? Can you do both at the same time?
Warner: Well, I think what Mr. Boehner has done is he’s said we need cuts. Everybody knows we’re going to have to cut back on government spending. I’ve been saying let’s try to make sure it’s not just the small piece of our pie that we’ve been attacking so far.
Every one of the cuts so far, whether they’ve come from Head Start, whether they’ve come from Pell grants, whether they’ve come from education, transportation, energy, they’ve all come from the part of the federal budget that’s basically domestic discretionary spending.
I’ve said let’s put it all out there. Let’s go ahead and look at military spending. Yes, let’s look at some of our entitlement programs. I would say we’ve got to make Medicare sustainable for the next 30, 40 years, not just for the next eight or 10 years, before it kind of gets into financial problems.
I actually believe we’ve got to make Social Security sustainable for 75 years and not have it go into the kind of deep deficit where we’d have to see benefit cuts in 2037. I’ve also said let’s go ahead and look at the revenue side. We’re spending 25 percent of our GDP – highest ever. We’re only collecting 15 percent in terms of revenues.
That gap can’t be sustained. We’ve got to bring up the revenues, bring down the spending, and we’ve got to get our Republican colleagues to say okay, they’ll put everything on the table as well. It’s going to be hard, but I believe it’s so important.
One of the reasons we’re doing this is not just to get through a debt ceiling. The problem if we don’t deal with the debt ceiling is you could have a dramatic spike in interest rates. If you suddenly had 8 percent, 10 percent interest rates, that would even more cut back on job creation. It would mean that the cost of servicing our government right now would go up dramatically.
So we’ve got to not, in effect, play chicken with each other about this debt limit. At the same time, if we put a plan in place, it’ll take a decade-plus to get ourselves out of this hole, but if we put a plan in place I believe it will start to tell those American businesses who are sitting, a lot of them, with a lot of cash on their balance sheet, $2 trillion in cash, that’ll give them the confidence that we’re going to step up and get this fixed and I believe they will start spending that money here in this country, creating jobs.
Tavis: Speaking of confidence, Standard & Poors doesn’t have so much confidence -
Warner: No, I know.
Tavis: – in the country right now, so they lowered their credit rating. Now we are hearing that Moody’s may very well do the same thing if something doesn’t give in Congress in the next few days and weeks. How scared should we be about Moody’s threatening to lower our credit rating?
Warner: Well, Tavis, I think people should be more concerned. I know people’s eyes kind of glaze over when you hear about rating agencies and debt ceilings, but the affect this would have on an everyday American family is if interest rates were suddenly to go up to 8 or 10 percent, if you’re trying to buy a car, if you’re trying to buy a house, if you work for a business that needs to borrow money to expand, all of that cost goes up dramatically.
As well as the cost to run the government. Right now, for every dollar we spend we’re borrowing 40 cents. So we’ve got to go into the marketplace and basically issue Treasury notes, and if that interest rate goes up, the cost of that borrowing goes up.
So this is much more than a political battle, and what I am concerned about is American people are starting to lose their faith that we in Congress will put the country first. I’m a proud Democrat, but we’ve got to check our Democrat hats and Republican hats and put the country first, and put a plan where both sides give a little bit.
I’m hoping that this group I’ve been involved with, with some other senators, might be a path out of it. Because we’ve seen if it’s just a Republican plan it’s not going to go through. We’ve clearly got a lot of folks that if the president comes out with anything, no matter how good, they’re going to be against it.
So if we start from the Senate bipartisan, I think it might be a path out and we need people to rally around.
Tavis: To your point now, how much more difficult is the journey that you’re trying to navigate, given that we’re headed into an election season – a presidential election season, a third of the Senate up for reelection, of course, the House up. How much of this has to do with politics?
Warner: Well, I think a growing amount, and our window is closing. You see, what we’ve been trying to do is not just get a plan that would get us through the debt ceiling vote but would actually put a plan out there that would reform the tax code, that would say okay, we can actually lower tax rates if at the same time we lower tax expenditures or tax loopholes.
We collect $1 trillion a year in income tax a year; we actually spend $1.1 trillion by things like charitable deductions, other tax breaks, some of them very popular, like interest deductions and so forth. But we could actually lower taxes and generate more revenue if we cut back on some of the tax expenditures.
That’s going to take some time to do, and if we don’t get started, all these things will be punted until after the next presidential race. I hope we’ve got 24 months before the bond markets kind of say come on, America, you’ve got to step up and get your act together, but I’m not sure.
So why would we take that risk? The sooner we can get a plan out there, the sooner we can actually do what people have hired us to do, which is put a longer-term plan in place rather than just dealing with this debt ceiling, I think the better the country will be.
Tavis: I’ve got just a few seconds to go here. You mentioned earlier, you used a phrase earlier, Senator Warner, “playing chicken with each other.” You were talking specifically about Democrats and Republicans at that moment. But tell me why I should not believe – disabuse me of the notion, if you can – that the person who’s ultimately going to blink here is President Obama.
He’s done it before on issues that matter to those of us who happen to be progressive. Tell me why I should not believe that in this stare-down with Republicans and the White House, the president isn’t going to give in, he isn’t going to cave on this.
Warner: Well, I hope and pray – I don’t believe this president will give in. I think this president has done a very good job with a very tough set of cards he was dealt with. But it is challenging when you’ve got some folks, as we saw with the government shutdown, that were willing to basically shut down the government over not much of a major issue.
I get afraid with some of these newer members who say they don’t think there’s any down side to the government defaulting on its debt. That just shows a remarkable lack of basic econ 101.
But I think we’ve got to support the president. I think the best way we can support the president is come out with a bipartisan plan and then take some arrows from both sides, but then that will be an ability to move forward.
Tavis: Democratic senator, or as he put it, proud Democratic senator out of Virginia, Mark Warner. Senator, always delighted to have you on. Thanks for sharing your insights.
Warner: Yes, sir, Tavis. Thanks for having me.
[Walmart - Save money. Live better.]
Announcer: Nationwide Insurance proudly supports Tavis Smiley. Tavis and Nationwide Insurance – working to improve financial literacy and the economic empowerment that comes with it. Nationwide is on your side.
And by contributions to your PBS station from viewers like you. Thank you.