What do you think? Leave a respectful comment.

The video for this story is not available, but you can still read the transcript below.
No image

Should Congress approve the budget compromise?

Avoiding provisions that sharply divide the two parties, budget negotiators reached a deal to fund the government for two years. Kwame Holman reports on reaction to the deal. Judy Woodruff talks to Steven Rattner of Willett Advisors, Douglas Holtz-Eakin of the American Action Forum and Romina Boccia of the Heritage Foundation.

Read the Full Transcript


    It may not be the legislative equivalent of peace in our time, but the budget deal announced last night provides, at the very least, a time-out for lawmakers battling over fiscal matters.

    NewsHour congressional correspondent Kwame Holman sums up the agreement.

  • REP. PAUL RYAN, R-Wis.:

    By having a budget agreement that doesn't raise taxes, that does reduce the deficit and produces some certainty and prevents government shutdowns, we think is a good agreement.


    After weeks of negotiating with Democrats, House Budget Committee Chairman Paul Ryan had to sell the agreement to members of his own party this morning.


    We know that this budget agreement doesn't come close to achieving what we want to achieve on our ultimate fiscal goals. But, again, if we can get a step in the right direction, we're going to take that step. And that's why we're doing this.


    Ryan and Democrat Patty Murray, chair of the Senate budget panel, announced the agreement late yesterday. Their proposal includes $85 billion in spending cuts and increased revenues. Those include higher fees for airline passengers and greater pension contributions from newly hired federal workers.

    It would also roll back $63 billion in automatic spending reductions that hit defense and domestic programs.

    Some House Republicans said they'd support it, including Pennsylvania's Charlie Dent.


    I think it's a good agreement. It certainly provides for savings. It certainly protects defense, but, most important of all, provides a level of predictability, stability and certainty about how we go about governing in this place.


    The plan avoids provisions that sharply divide the two parties, such as tax increases or cuts to Medicare beneficiaries. Still, there are signs of dissent from both sides of the aisle. And they were on display today here at the Capitol.

    Kansas Republican Tim Huelskamp and other Tea Party conservatives complained deficits actually will be higher for the next three years before the savings kick in.


    It's going to increase the deficits. It's going to raise taxes and fees, and it's not going to address the long-term overspending problem in Washington, which is we need to reform entitlements.


    Some Senate Republicans, including Rand Paul, Marco Rubio and Tom Coburn, also rejected the deal.

    And criticism came from outside conservative groups, but was promptly dismissed by House Speaker John Boehner.


    They're using our members and they're using the American people for their own goals. This is ridiculous. Listen, if you're for more deficit reduction, you're for this agreement.


    Among Democrats, there was disappointment the budget deal doesn't extend long-term unemployment benefits.

  • House Minority Leader Nancy Pelosi:

  • REP. NANCY PELOSI, D-Calif.:

    We would have preferred something quite different. But we do recognize the value of coming to a decision, so that we can go forward with some clarity on other legislation that we want to see.


    The Senate's Democratic majority leader, Harry Reid, said he'd push for an extension of jobless benefits next year. But he called the overall compromise a breath of fresh air.

  • SEN. HARRY REID, D-Nev.:

    In this new agreement, neither side got everything it wanted. But that's how it used to work around here, Mr. President. That's how it worked.


    The agreement could come to a vote in the House as soon as tomorrow.


    And we have three different perspectives on the deal.

    They come from Steven Rattner, who was an economic adviser known as the car czar in the Obama administration. He's a contributing writer for The New York Times and he's chairman of Willett Investors — Advisors. Douglas Holtz-Eakin, he served on the Council of Economic Advisers under George — President George W. Bush and as adviser to John McCain's presidential campaign. He's now president of the American Action Forum, a policy think tank. And Romina Boccia she is a Heritage Foundation fellow on federal budgetary affairs.

    Welcome to you all.

    So, stipulating that none of you thinks this is a perfect deal, let's talk first about whether Congress should approve it.

    And Doug Holtz-Eakin, I'm going to start with you. You are a Republican who thinks that, on balance, this is something Congress should approve. Why?

  • DOUGLAS HOLTZ-EAKIN, American Action Forum:


    The value of this agreement is above and beyond what's in the agreement. It's addition by subtraction. You don't close the government. And there is political value to that and there's governance value. You don't shake the confidence of people when you shut the government and you don't harm the economy.

    And there's some policy value. You don't cut $19 billion from defense and then turn around and put it back over the next two years. Why do a U-turn for no apparent purpose? So, this is not an ideal agreement from either side's perspective. But taking those kinds of bad events off the table is a value that the agreement brings, and I think people should pass it.


    Now, Steve Rattner, you're a Democrat who, as we said, doesn't think it's purpose, but you think on balance Congress should support it, but for different reasons than what we heard from Doug Holtz-Eakin. Why?

  • STEVEN RATTNER, Willett Investors:

    Actually, my reasons aren't that different. I think Doug and I agree on this.

    Well, I would put it maybe slightly differently. I think the advantage of this agreement is that in the short run, it does increase spending by a bit, which is what we need, both because of the weak economy and because it would increase spend on a number of important domestic problems, as well as defense. It sort of provides some deficit reduction in the out-years, but, frankly, I think that is very minimal.

    And it does all the other things Doug said about certainty, avoiding shutdowns, crises. My problem with it — and I think that's probably his problem with it — is that it doesn't go nearly far enough. And it does take the foot off the gas a bit, I believe, with Congress in terms of ever producing the so-called grand bargain that I think many of us believe we truly need.


    And we do want to come back to that.

    But, first, Romina Boccia of the Heritage Foundation, you think this is a mistake. Why?

  • ROMINA BOCCIA, Heritage Foundation:

    Yes. I think it sets a bad precedent.

    They're busting through the spending caps that were agreed upon in a bipartisan fashion in 2011. And, in turn, they're promising more savings down the road. But half of the deficit reduction included in this deal wouldn't occur until after 2022. But the higher deficits happen immediately. So will we ever see the deficit reduction?

    Plus, the deal is full of gimmicks. There aren't any real reforms that help address our debt. I think that Congress needs to go back to the drawing board and do that.


    Doug Holtz-Eakin, how do you respond to that? You have looked at this carefully. She's basically saying, these aren't real cuts.


    It's far from ideal. I don't think anyone should say, oh, this is great, I will vote for it. I think they have to ask the question, is it good enough to vote for?

    And they are going to be people who decide it's not. But if you look inside this agreement, not everything is about budget dollars. Sometimes, it's policy that matters. So we are going to ask new federal employees to make higher contributions for their pensions. That's a sensible thing to ask them to do. It's not a dramatic increase. But those savings will grow over time.

    Those are permanent policy changes. I will take good policy over near-term budget dollars every time.


    What about that, Romina?


    Do we need to trade good policy for higher spending immediately, when they could have saved taxpayer dollars? Those good policies could go towards deficit reduction. We are looking at about a $7 trillion increase in the deficit over the next 10 years. And we have a very high debt that is growing.

    So, more deficit reduction is good, but not in exchange for higher spending. That's a wash.


    Steve Rattner, I'm going to bring you in at this point.

    You — you're familiar with all this. You have looked at this. Why is her argument wrong?


    I don't think her argument is totally wrong. I just disagree with it

    I think that — I think we actually do need more spending at the moment, for the two reasons I said before, both because the economy is weak and because the stuff that's being cut is stuff we shouldn't be cutting. So that's just a fundamental policy disagreement between us as to what should happen over the next couple of years.

    In the out-years, I think all three of us probably agree that there needs to be more fundamental budget reform. There needs to be — we need to address the issue of spending on Medicare and Social Security beyond what the revenues are likely to be. We need to address the fact that you can't hold down domestic spending forever. There are important things like bridges and roads and R&D and education that need to be paid for.

    I'm sure we would disagree about actually what you do about that. But I think we agree that something needs to be done in the long run for the deficit. But, right now, I think this is the right policy for the next couple of years for the reasons I have said.


    Well, what gives you — go ahead.


    So, I think there are two places where I disagree with that.

    I understand the reasoning completely, but the first is on just sort of policy grounds. Not all dollars are created equal. I think it makes no sense to adhere to the budget gaps just because they are there, take $19 billion out of defense, put it right back in. You end up where you started. What did you accomplish? You hurt — you harmed readiness and capabilities. So the policy does matter underneath that.

    And the second is, what — we were never going to get a grand bargain. But what they did do was something I thought was very vital. They figured out what they could agree on. They did not take their eye off the ball. They stuck to trying to get an agreement done. And you got a small agreement. But that, in and of itself, has value.


    Romina Boccia, what about that point that you never were in — I mean, just about everybody would argue, you never were going to get a grand bargain, so why not take something small as a first step, a first installment?


    Well, what we get now is higher spending. So our immediate fiscal situation becomes worse. The deficit goes up immediately for promises of future spending cuts.

    The sequester, in and of itself, was a promise of a future spending cut that came about as a tradeoff for a $2 trillion increase in the debt limit. So now we're just pushing those savings off even further into the future. And then, if you look at the actual cuts, the biggest cut is a Medicare provider cut. There are already very many of those in the Affordable Care Act. And they are unsustainable as they are. We need real reforms.


    Those are — these out-years you're talking about, I guess I find it difficult to understand why a bipartisan agreement that to sequester caps has great virtue, but a bipartisan agreement, as this would be, to have different sequester caps is a sin.

    I mean, this is the same strategy. It says, we want to set targets for the things which are annual discretionary, but, for other things, we want to change the policy, whether it's our policy toward the Pension Benefit Guarantee Corporation and make people pay fees, our policy to retirees, whatever it might be.

    Policy changes matter. They accumulate over the long term. They are the kinds of things we have to start doing more of. This is a tiny baby step in the right direction.


    And you are saying it is worth it because you get those policy changes.

    Steve Rattner, I want to bring you back in on a question we're hearing from a number of Democrats today who are complaining that this is not — this deal doesn't cover expanding long-term unemployment benefits. What about that? You — you are saying Congress should vote for it. You have also told us that you think those are benefits that should be extended.

    How do you square that?


    Because you have to deal a little bit in the art of the possible.

    This is, as Doug has said, I think the best deal we're going to get at this moment. I don't want to be too defeatist about the grand bargain. We have to have a grand bargain at some point. And, yes, I would have liked to have seen extending unemployment insurance in here. We still have a high unemployment rate. The biggest problem we have with unemployment are the long-term unemployed. Taking away their unemployment insurance is not going to make them go back to work. It's simply going it to make them poorer.

    And I do think we have an obligation to them. But I think the judgment the Democrats reached was that they were not going to be the ones that were going to shut down the government over that issue. They would live to fight that another day. And this is all the art of the possible, the art of compromise.

    And the Republicans simply weren't going to do it. I think it's unfortunate. I am on the other side of that. But I think, as we — and Doug and I have both been saying, this is better than nothing, better then another crisis, better than another shutdown.


    And you feel the same way about the tradeoff and the fact that this is not a deal that includes new investments in education and research, other things that Democrats feel strongly about?


    Well, it does include in the short run $65 billion of additional spending divided between domestic programs like the ones you mentioned and defense. And I think that is a good thing.

    I don't think it's enough. I think that that category of spending should be increased, not simply cut by less. But, again, this is the best deal you're going to do at this moment, given that we have divided government, and the alternative of shutdowns and crises and all that is worse.

    My biggest concern about this is that it is a two-year deal, which I think takes the pressure off of Congress for the next two years to do anything substantive. Other people may disagree with that. I hope I'm wrong, but that's — that's the way I perceive this.


    How do the two of you feel about that, that this may be taking pressure off of Congress to do something bigger and more significant in the coming years?


    Well, the leadership has to come from the White House on these large issues.

    And there's no pressure on the White House already. The debt and the deficit were stabilized until 2016. The president is out of office. I saw no effort to make a big grand bargain out of the White House anyway, so nothing has changed on that front.


    What do you…



    The problem that we do have, though, is by taking the pressure off and, in fact, setting a bad precedent that you can get around the spending agreement you agreed to and increase spending now for promises of spending cuts later on.

    Will they do that same thing again in 2016, when they are not happy with the sequestration spending caps? Meanwhile, our deficit and debt problem keeps growing. And those very programs that are causing it are not being addressed. And that just means that the changes that we will have to make eventually if we wait too long will just have to be much bigger and more painful for Americans. And that's unnecessary pain.


    Well, we hear you, all three.

    Romina Boccia, Douglas Holtz-Eakin, Steve Rattner, thank you.


    Thank you.


    Thank you


    Thank you.

The Latest