Fiscally Conservative Democrat Rep. Allyson Schwartz Discusses Budget Options

Socially liberal and fiscally conservative, Rep. Allyson Schwartz, D-Penn., leads the centrist New Democratic Coalition, serving as a go-between between House leaders and moderate lawmakers. Gwen Ifill talks to the congresswoman for an update on budget negotiations and finding a solution before Christmas.

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    And we turn again to the budget talks in Washington, as negotiations inched forward.

    Late today, House Speaker John Boehner's office said the Republicans have sent the White House a counterproposal in response to a new plan President Obama offered up privately yesterday.

    A Boehner aide said the GOP is waiting for the president to identify spending cuts, a point the speaker made on the House floor earlier today, while White House Press Secretary Jay Carney called on Republicans to get serious about revenues.


    Where are the president's spending cuts? The longer the White House slow-walks this process, the closer our economy gets to the fiscal cliff.

    Now, if the president doesn't agree with our approach, he's got an obligation to put forward a plan that can pass both chambers of the Congress, because, right now, the American people have to be scratching their heads and wondering, when is the president going to get serious?

  • JAY CARNEY, White House:

    On that question of whether or not we have put forward specific spending cuts, the answer is, we have. And, not only that. We have signed into law a trillion dollars in specific spending cuts.

    So, if you combine what is signed into law with what we proposed vs. the total absence of any specificity from the Republicans for a single dollar in revenue, and I think, in the battle of specificity, the outcome has already been decided.


    And a short time ago, an administration official told us the president and the speaker spoke by phone this evening.

    Now to our series of conversations on this subject and what should be done. We have listened to a range of opinions in recent days, including Erskine Bowles of the Simpson-Bowles commission, Nobel Prize-winning economist Paul Krugman, the CEO of Aetna Insurance, Mark Bertolini, the head of a group that advocates protecting Social Security, Max Richtman, and Republican Sen. Bob Corker.

    Gwen Ifill has our next installment.


    That comes from Allyson Schwartz, a senior Democrat on the House Banking Committee and the vice chair of the Centrist New Democrat Coalition.

    Welcome, Congresswoman.

    We heard earlier today from John Boehner and from Jay Carney at the White House, one saying spending cuts aren't serious coming from the House, and the other saying the White House has put forth all the spending cuts that need to be put off.

    How do you prioritize what should be the focus here, spending cuts or raising revenue?


    Well, most of us know it's got to be both.

    And the fact is that the president put out a really, I think, very sensible plan, a middle ground, where it actually included spending cuts. We have already done a trillion dollars and committed and are, as of Jan. 1, going to be doing another trillion dollars, over a trillion dollars, in cuts. That's $2 trillion.

    That's serious spending cuts over and above what we have done already. And, of course, we do think there has to be some revenue. And then we're going to do — make sure we're doing the right kind of investments so we see economic growth.

    If it's not all three, we're not going to get there. The math doesn't add up. And this has been a real problem.

    If the Republicans don't actually recognize the need for revenues and a balanced approach, then no matter how many spending cuts we do, they're not going to come to the table. We need them to recognize that we have already committed well over $2 trillion in cuts.

    That's serious, given the economic challenges we face. It will have real effects. We're planning to do that. We'd like to do that in a sensible way. And we should. But we need to have the Republicans, John Boehner, as the leader of the Republicans in the House, agree to some hard revenues as well.


    Well, you said there are those three things. Let's walk through them.

    Talking about tax rates, the president has said that the taxes have to go up on the wealthy, defining that as anyone who owes — who earns more than $250,000 a year. Would you be comfortable with raising that floor to, say, $500,000 a year, defining wealthy upwards?


    Well, you know, I have put forward — two years ago, when we were struggling with this same question, I was willing to be flexible on where we made that cut.

    But the fact is that it is two years later. And we're asking for — it's an increase of 4 percent. You're going from 34 to 39 percent essentially for a marginal rate. So, this is everyone gets a tax break for their first $250,000, and this is income above that after deductions. So it really is…


    But if it was possible to make a deal by not having as many people affected by those higher tax breaks, would that sound reasonable to you?


    Well, I think what we would say is, if John Boehner said, look, I know we have to raise this rate, I'm willing to raise rates, I know that we could cut out some deductions on the corporate side, we can get some income in other ways, let's talk about that, then I think a conversation could be had at that table.


    How about reaching an agreement on some of the spending by, for instance, raising the eligibility age for Medicare? Was that something that you can imagine raising real money from?


    Well, I think there — we have to look at these a little bit different.

    We have to look at the budget, which is, of course, nondiscretionary spending, non-defense discretionary and defense spending, the trillion dollars we have already committed.

    The way we start the conversation about Medicare has to be — we haven't yet heard the Republicans really say this — it has to be from our point of view start with the fact that we are going to strengthen and protect and assure that Medicare continues for our current seniors and for future seniors, that we — other conditions, we don't want to cut — we will not cut benefits. We don't want to cut eligibility at either.

    I think it has to be universal, all seniors, and that we do want to protect these important benefits. And then we have the conversation about how we can make sure it's sustainable well into the future.

    As you know, the action we took under the Affordable Care Act extended the life of the Medicare trust fund by seven years.

    So we made some real serious effort there in making sure that we could guarantee Medicare for longer. We have some more work to do. And I think we're willing to have that conversation. But we have to start with a commitment to Medicare.


    Should Democrats be prepared to go over the edge of the cliff if it's necessary to do what you think should be done?


    Well, I think where we are is in — as we say, in a strong position.

    We just came through an election. The president was very clear about protecting the middle class, tax cuts for the middle class, and actually for all Americans. Again, that first $250,000 of income will be — will not see any kind of rate increase. And he won.

    And he was very clear about this, that he was asking just the top 2 percent of Americans to pay a bit more on income above $250,000.

    The truth is, that's the beginning of the conversation. We have work to do on investments, income as well, under an — income. We would like to do work on the corporate side, on the business side as well.


    But as someone who says — who represents, who describes herself as socially liberal, fiscally conservative, do you think your voice is being heard at the table in these negotiations?


    Well, you're right. I was one of just 38 members of Congress really split almost evenly between Republicans and Democrats who did vote for a budget based on sort of a big-picture deficit reduction done in a serious and balanced way with revenue and spending cuts and a long-term plan to bring down our deficit.

    There were just 38 of us who voted for a budget that reflected that, those principles.


    Senator Reid said today on the floor of the Senate that he doesn't think there will be a deal by Christmas. Do you agree with that, from everything you have heard and read?


    Well, I think we're in a very tough moment.

    We do have some time between now and Christmas. And that shouldn't be time that's wasted.

    It should be time that is used to really get some serious work done on, as you reflected, how we avoid the immediate concerns of tax increases going into effect, of the Alternative Minimum Tax going into effect and cuts for physicians who take care of our seniors under immediate. That's important to take care of before the end of the year.

    So, there's real work for us to do before the end of the year. Many of us would love to get it done before Christmas. It would help provide some assurance to both consumers during this holiday shopping season, and also to the investor community, as they begin to plan for next year.

    I have always said let's tackle some of the immediate concerns, again protecting the middle class, making sure that seniors have access to their doctors under Medicare, and setting ourselves on a path to comprehensive tax reform and dealing with some of the high-cost efforts in the very beginning of the new year.

    I think that would be an acceptable outcome. And, sure, let's get it done faster than not, and not keep us here until the end of the year. That would be great. But if we have to stay until New Year's Eve, we will stay until New Year's Eve.


    Rep. Allyson Schwartz, Democrat of Pennsylvania, thank you so much.


    Good to be with you.


    Tomorrow night, we will talk with anti-tax crusader Grover Norquist. And you can watch our earlier interviews on our website.