National Commission on Fiscal Responsibility and Reform


Uploaded by whitehouse on 01.12.2010

Transcript:
Senator Simpson: Good morning. Thank you.
Well, we'll proceed.
Several members yet to come.
I shall not transgress too much on your time or your patience,
but first a word about this very good and great man beside me,
even though we are of the other faith.
He's a person I trust implicitly, a man of his word,
a friend, and a patriot.
When my old pal Joe Biden called in January and said, "Al,
I've got a real deal for you," I said -- I chuckled and I said,
"Forget it."
And he called back, because I feel when the President of the
United States asks a citizen to lend their services,
you step up, in the overused term of the day,
especially in athletics.
And then when I asked who would be my co-chair,
they said Erskine Bowles, and I signed on.
And let me just say it's been a great treat.
But let me say this to my 12 legislative colleagues,
a cautionary tale, I have been where you are.
I feel your pain, in the words of a former president,
and the heat --
(laughter)
The heat is on you.
This one is on you.
And poised outside of this chamber are the denizens of
darkness, I think the workers of the dark,
in the words of Harry Potter.
Those are the groups waiting out there in temples around the city
to shred this baby to bits.
And they're ready.
They've been waiting for a long time to chew this one to pieces.
To tell you to do this or don't do this or there may be less
cash in your Christmas stocking at your next election,
or a black lump of coal, and they're geared up to
destroy this work.
That's how the city works.
It works on negatives and not positives.
So, that I share with you.
And I know about this because I've been there.
I know the feeling.
And in the role of leadership that I held,
I had to hold my nose and voted a damn bad one or two
a time or two.
Unfortunately, my friend Richard Durbin holds the role I had,
Assistant Majority Leader, then slipping,
of course to Assistant Minority Leader,
which of course he's hoping does not occur, I know.
Nevertheless, these groups consist often of zealots.
A zealot is one who, having forgotten his purpose,
redoubles his efforts.
There are many of them here.
Now, these groups have hauled up their artillery and fired
some heavy shells at this old infantryman here and
my colleague, and they will pull out all of the stops
with massive expenditures of media and advertising,
and these ads will be dramatic, powerful, and heart wrenching.
But try to pay them no heed, because these purveyors of
doom have been lurking here for many years.
They're like the man behind the curtain in the Wizard of Oz.
But they get paid big money to lobby and get you all worked up.
And so they will have a list, and you can pick one.
Just run through a few: shredding the safety net,
disarming America, hurting the poor, helping the poor,
punishing seniors, coddling seniors, helping the rich,
hurting the rich, stunting growth, cheating veterans,
killing jobs.
No cutting enough or too much.
Raising taxes or not raising taxes enough.
Or cutting taxes or cutting too much.
And the list goes on and on and on.
These are tough times requiring tough decisions.
And indeed, tough votes.
It took us many weeks here to establish trust in this
Commission, among ourselves, and I trust you all,
each and every one of you.
I don't agree with you, for sure,
but trust is the shimmering coin of the realm in legislating,
and it's been very tarnished in recent years in this place.
Erskine and I will not and have not pleaded with you
to support this plan.
We sincerely hope you will, but that is solely your choice.
I have been and I have seen on so many of these commissions
in the past who come up with decisions and directives and
solutions that are absolutely toothless exercises,
that are pure mush or watery gruel.
Not for us. Not this time.
Whether we get two votes or 18, this baby ain't going away.
Oh, sure, it may be buried in an unmarked grave soon,
but when the votes for the budget and to extend the debt
limit, and the debate on that comes up in the spring,
this cadaver will rise from the crypt.
And you or some of your colleagues will say in the
face of the new faces who will be saying I'm not voting to
increase the debt limit unless I get some spending cuts and a lot
more, and the leadership of both parties will say,
but we have to do this or the full faith and credit of the
U.S. will be imperiled.
Well, we may even have to close down the government.
And some sincere new member, honestly, will say,
that's why I came here.
That's what's out there.
And the spending cuts will be presented by them and they will
be ones that have been selected at random that have no basis in
debate or discussion what we may have discussed here
in these past months.
And the members will be goaded to support those, not ones,
as I say have been worked through the process here and
thoughtfully debated, whether you agreed with them or not,
and I think that will be a chaotic time,
and even a bloodbath.
And I think Americans deserve better,
and this plan is a better way.
It's an amalgam, a partial consensus in some ways,
at least a plan, at least it's a start,
and so you may have noted that Jan Schakowsky and I
have not always concurred.
We haven't.
(laughter)
She is the canary in the coalmine for my activities,
and let me tell you, I admire her.
She had the courage to lay out an alternate plan of how
to get there.
So did Andy.
I don't agree with it all, but she laid it out, and so did he.
If we can come to the fact, don't reject, reflect,
would be a good thing in this town.
Don't reject, reflect.
Then we'll have a place for it in the appendix of this report.
Just relax, just three more handwritten pages,
you're looking, in fact, jabbed my arm.
Now, the final note.
Things in this world have dramatically shifted,
shifted on this planet that we all survive on.
Things are very different than they were two to three
years ago.
We all know the figures and we all know the math.
And the fact really is, this is it.
No more fun and games, smoke and mirrors, alchemy, trickery,
cunning, CYA, demagoguery, and making promises we can't
possibly keep.
And as Erskine often said, debt denial has gone the
way of the dodo bird.
Now these are not normal times for normal non-solutions.
That's what they do here, non-solutions.
So I remember so well when I was anguishing over a tough Senate
vote I had to cast and they wouldn't let me vote maybe,
so I would pick out a piece or two of the bill and say, with,
of course, an accompanying CYA press release, of course,
that if only section 2B or paragraph 4 had been left
out of this marvelous bill I would have voted for it.
But because, and it was because it was a very good bill,
I just couldn't do that to my constituents
on paragraph whatever.
Now I don't think my constituents or yours
will let me or you get away with that any more.
They've wised up, they're mad.
They're tired of the bluster and the blather and the ego and the
BS that has worked so often for all of us, including me,
a master at it.
So yes, the times have changed and we will never be the same.
The tectonic plates of the old politics have shifted.
They know what debt and deficit is and interest.
They have done in their own homes,
as they ponder their plight around their own kitchen table,
often with head in their hands, and they say everyone
has taken a hit.
No, wait a minute.
All of us took a hit but one.
The federal government.
And all of its massive minions have been spared
in this recession.
And we have seen the figures, and we don't know a lot about
Greece and Ireland and Spain and Portugal and Italy,
but we do know something, that if you stay this way,
something bad will happen.
And these deeply concerned straight thinking and straight
talking folks, they know their country is on the
same trajectory.
And so do we.
And they know, too, that it won't be Bowles or Simpson who
will dig them out of this black pit, it will be,
it will be your colleagues, your legislative colleagues.
Only you, no one else.
Not the President, or my pal Joe Biden,
or anyone else can right this listing ship.
Only you 12 and your successors and 523 of your other colleagues
in both parties will have to do this Herculean task.
Nobody else.
Do what you need to do, do what you must do,
guided by your own conscience and principles and a shred of
patriotism, and whichever way you go,
share it with us in the report on the appendix.
Tell us why you don't like it and voted no,
and tell us why you don't like it and voted yes.
Because that's, that's a wonderful alternative.
Those are the only ways out.
Those are honest ways.
So I admire and respect you all, and you need not explain
or comment on your final vote, whichever way, come this Friday.
We have listened, visited, negotiated, debated,
and discussed all of these issues for us,
and I think we've done, all of us have done our level best,
and then some.
And I want to render deepest thanks for your energy,
your time and your talent, and those same attributes
of your fine staffs.
And so God bless you, and I then yield to the numbers guy.
(laughter)
Fog them up, will you?
Senator Bowles: I love being the numbers guy.
Senator Simpson: I do, too.
Senator Bowles: Is this on?
Senator Simpson: Yes.
Senator Bowles: I think it's on now. Thank you. Thank you, Al.
My daddy used to say that true friends are hard to find,
they're even harder to make, and if I've gotten nothing else
out of this last eight months, I've gotten a real friend in
Al Simpson, and that's a rarity.
And I'm grateful.
As you all know, we put our Chairman's mark out a couple
of weeks ago, seems like years ago now,
may have got a little more attention than I thought it
might, but it probably deserved it.
You know, we, in that Chairman's mark we take $4 billion out of
the deficit over the next nine years.
We cut the deficit in half by 2015,
and by three-quarters in 2020.
We take the deficit to GDP down to about 2.2% of GDP in 2015.
The President asked us to get to 3%,
and we get it down to 1.2% in 2020.
And I think we can all be proud of that.
I can tell you, Al said that as he travels through airports
he gets more thumbs up than he does other digits.
I can tell you from my viewpoint,
I usually go to the liquor store when I leave here.
But I'm going, when I go to the grocery store,
here's what people in North Carolina tell me, 100%,
I don't care who they are, they say stay strong.
Don't wimp out on this, Erskine, stay at it,
get that deficit down.
And I think that's what we will do, regardless of the vote.
You all have been great, I have never been involved in a more
nonpartisan -- this is not bipartisan,
this has been nonpartisan.
I've spent more time in Tom Coburn's conference room than
I have my own house, I think, in the last eight months.
And he has become my friend and my doctor in this time period.
All of you have been as polite about this document as you can.
There are some things you like, there are some
things you dislike.
I think Senator Durbin said it best,
he said there were some things in this original draft that the
devil would hate more than holy water.
And you know, that's probably as much as somebody
can dislike something.
But everybody has said, including the folks at
the White House, this is a serious proposal.
It was a good starting point, and I want to thank you all
for treating it as such.
No matter what happens, I think this little Commission of 18
people that have been meeting for the last eight to nine
months has succeeded.
We have fundamentally changed the debate in America,
all you've got to do is look around this room and
you can see that.
We put the debt issue on the map,
and I think we owe an enormous debt of gratitude to Senators
Gregg and Conrad.
We would not be here without those two.
They have been phenomenal.
They wanted this to be a legislative process,
we couldn't get a legislative process,
they got this Commission, and this Commission has brought this
enormous issue to the attention of America.
So I thank the two of you, you are the captains.
(applause)
Now, I don't know if we can agree on a plan.
I'm an optimist, I always have been, maybe we'll get two votes,
I know we're going to get two votes.
Senator Simpson: I know for sure.
Senator Bowles: Maybe we'll get five, maybe we'll get 14.
Nothing would surprise me in this.
But I know the world is moving in our direction for better or
for worse, because of what you see going on around the world
just today, if you read today's newspapers.
But I do know there's no turning back now.
The era of debt denial and the denial of its
consequences are over.
Each of you, I think, can take enormous pride in that.
Together I think we have started an adult conversation that will
dominate the debate until the elected leadership here in
Washington does something real.
And I can tell you, as a state employee,
the states have been doing something real.
We've had to balance our budgets, and it has meant very,
very painful cuts for us at the University.
Municipalities all over the country have, businesses are,
and every family does it sitting around their kitchen table.
So I think Washington is going to get on board.
I think it's impossible to sweep our country's vast debt problem
under the carpet any more, and I'm glad of that.
Now, you know, we've gotten some nice editorials about this from
organizations as diverse as "The Wall Street Journal" and "New
York Times," "The New Republic" and "The National Review,"
and as wide reaching as my hometown "Charlotte Observer,"
to "The Kansas City Star," to "The Louisville Journal,"
to "The Tacoma Daily Tribune."
And I could go on and on.
But my point is, Al and I didn't get in this to get nice
editorials, we got in it to do something real and to do
something that would really make a difference for this country,
and would make us competitive again.
I think the American people want us to do something real.
I think they want us to make the tough decisions,
and none of these decisions are easy.
The problem is real, the solutions are all painful,
and there's no easy way out.
I think for many years elected officials have been worried they
would be punished if they made the tough decisions.
I think for all of us, we're going to be penalized if we play
politics, which none of you have, not one of you,
if we duck the tough calls or if we take a walk on this enormous
problem we face.
Al and I are not going to wimp out,
I think you can see from our 2.0 presentation you have today.
For us it's go big or go home.
We're going home anyway, right?
Senator Simpson: You bet. That's right.
Senator Bowles: Yeah. We want a serious proposal we can be proud of.
We're not interested in 14 votes for a whitewash.
This problem is just too plain big and too important
for our country.
The plan that you now have in front of you is one that Al and
I are proud of.
We believe it will keep our nation from falling into the
abyss created by promises that are greater than our nation can
keep, and created by way, way, way too much leverage.
I have lived in a world where there's such a thing
as reverse leverage.
I have lived in a world of compound interest rates,
and I can tell you, you can't beat it.
It is really tough, and it will bring you down,
it will bring you down fast.
I want to go through the plan.
Since we haven't done that publicly,
I'll do it in about ten minutes, so I apologize for having you
all sit through that.
Then we want to hear what each of you think.
None of you got the plan 'til late yesterday or
early this morning.
I didn't get it any sooner than you have.
I, while I have helped write the final plan,
I haven't read through the final plan myself even yet.
So we're not going to ask you to vote today on something you
haven't thoroughly reviewed.
I think a couple of members stayed up and have thoroughly
reviewed it, and I'm glad they have,
and they may want to express their opinion.
But we want to have your response by Friday,
and hear where each of you stand on the plan.
Rest assured, I don't expect any of you to like every aspect
of this plan.
I don't like every aspect of this plan,
and each of you know it, whether you're Democrats or Republicans.
To vote for this plan, each of us will have to tolerate
revisions we opposed or previously opposed in order
to reach a principled compromise.
We will have to put our differences aside to forge
a plan because our nation will certainly be lost if
we don't have one.
We do not pretend in this exercise to have
all the answers.
We have tried to offer an aggressive, fair, balanced,
and bipartisan proposal that is assuredly as serious as
the problems we face in this nation today.
The plan is built around some basic principles,
and I'll take maybe ten minutes to describe the plan and then
we'll hear from each of you.
This has not been a bean-counting exercise for us,
this is about America being competitive in
this global economy.
It's about pulling together, not pulling apart,
and the principles are pretty simple: We don't want to do
anything that disrupts a really fragile economic recovery.
We want to protect the truly disadvantaged.
We want to keep America safe and secure,
while acknowledging that may require us
to change our missions.
We don't want to hollow out this country while we fix
our balance sheet.
Therefore, if we're going to be competitive in what is a
knowledge-based global economy, we're going to have to make sure
we continue to make smart investments in education,
infrastructure, and high-value-added research.
We've got to reform the tax code.
There are $1.1 trillion worth of tax earmarks in this tax code.
We'd argue about $16 billion worth of earmarks
in the spending bills.
These tax earmarks are just spending by another name,
and basically, they benefit people like me.
If we eliminate these tax earmarks, 1.1 trillion a year,
we can bring the rates way, way down, to areas like 8%,
14%, and 23%.
We can reduce the corporate rate,
and make America one of the best places to start and grow a
business, and we can broaden the base, simplify the code,
and we can do a lot to get America moving forward again.
We think there should be a ceiling on revenues of 21%.
We think we ought to cut spending wherever it is,
whether it's in the defense budget, non-defense,
or if you want to call it security and non-security,
entitlements, or in the tax code, and believe me,
there is spending in the tax code.
And lastly, separate from deficit reduction,
we want to keep Social Security solvent for the next 75 years,
and today it is not.
Our plan reduces the deficit by $4 trillion over the next nine
years, approximately.
It cuts the deficit in half in 2015,
and by three-quarters in 2020, taking the deficit to GDP ratio
down to 2.3% in 2015, which is more than the President asked
us to do, and it takes it down to 1.2% in 2020.
Our discretionary budget over the next nine years
takes $1.7 trillion out of the discretionary budget.
In the year 2015, which we've been asked to focus on,
it reduces the discretionary budget by $172 billion.
We put forward over $200 billion in specific cuts,
paid for this $172 billion worth of spending cuts,
so if anybody wants to know where the specifics are,
we've got them.
We divide the budget between security and non-security,
and we put a firewall between them.
There's only one reason we do that.
We want to make sure the spending cuts are on both
sides of the ledger.
We budget for the first time $11 billion a year for disaster
spending because we're gonna have disasters in this country.
And where did we come up with the $11 billion?
We came up from it because that's the average of the
last ten years, taking out the high and low.
We tightened the provisions, the definition of what can be called
a disaster, so everything doesn't get glumped in there.
We tightened the provisions for what can be called an emergency.
We do the same thing for the OCO,
which is the wars that we're fighting.
We tightened the provisions significantly for what can go
into that budget, and we require a 60 vote point of order in
order to make sure that all of these recommendations we
make will be very difficult not to occur.
On the tax side, we did, we are recommending the zero plan,
which I think we've gotten good response from both
Democrats and Republicans.
We're not the Ways and Means Committee, we're not Finance,
our plan says to develop a plan that meets several principles.
Those principles are to broaden the base, lower the rates,
simplify the code, and reduce the deficit.
We eliminate all tax expenditures,
we take the rates to 8, 14 and 23 with the breakpoints being
$70,000 and $210,000, and in no case do we want to see the rate
go above 29%.
We reduce the deficit by $80 billion in 2015,
and by $180 billion in 2020.
And Congress can choose to add back key provisions as it
relates to the earned income tax credit, the child tax credit,
the home mortgage deduction, retirement, health,
charitable deductions, recognizing that each
add back raises rates.
They're not for free.
We ask the tax policy center to develop a distributional
analysis of an illustrated -- illustrative tax plan that adds
back a 12% credit on home mortgages up to $500,000,
a 12% credit on charitable contributions above 2% of
adjusted gross income, that caps the employee health care
exclusion in 2014, and phases it out by 2038, and a few others.
The rates under that scenario, as an example, go from 8,
14 and 23 to 12, 22, and 28, and it maintains or
improves progressivity.
I'm not asking you to approve the addbacks,
I'm just asking you to recognize that they do have a cost.
Health care.
We take two positions on health care.
We look at it in the short term and the long term.
In the short term we want to make sure that we raise
the funds to pay for what you all call the Doc Fix,
which now amounts to $267 billion and is financed through
the deficit, and to repeal the Class Act which will cost us
about $76 billion to do, because you have pay -- people paying in
over the first five years and then benefits dwarfing what is
paid in in a very big, unfunded mandate in the out years.
We pay for those with $400 billion or more than
$400 billion worth of cuts.
In Medicare, we make some cuts as it relates to fraud.
We do have more cost sharing, we do restrict first dollar
coverage, so everybody's got some skin in the game.
We extend the Medicaid drug payment to dual eligibles and
we reduce the excess payment to hospitals for medical education.
Those add up to about $298 billion.
We also cut the payments for bad debt and accelerate the home
health savings provision.
In Medicaid, we eliminate state gaming of Medicaid tax gimmicks,
which we see done in my state and about every other state.
We also take the dual eligibles go to Medicaid managed care and
we reduce the administrative costs.
Those save us about $78 billion.
Other savings that we have come from malpractice reform.
We pilot a premium support plan in the FEHB,
and the doctors actually pay a little bit more.
And those save about $47 billion.
I'm almost through.
Other long-term health care changes that we propose:
The new affordable care plan says that it will control the
growth of health care at the rate of GDP plus one.
We hope that's true.
If it doesn't, we put in a global cap at GDP plus 1% to
include all federal health care spending, Medicare, Medicaid,
CHIPS, the exclusions, the FEHB, Tricare for Life,
the exchange subsidiary, all federal health care spending.
And we say, look, if what you have out there doesn't work,
America must take more drastic steps because we have to control
the rate of increase and in the cost of health care and get it
down to GDP plus 1.
Therefore, we would recommend that if that happens,
that the Congress look at the premium support plan
like the Ryan-Rivlin Plan for Medicare, that we consider
block granting Medicaid.
We have a robust public option where we have more cost sharing
and sharing of benefit design, strengthening the I-pad where we
give CMS the authority to be more active purchasers
of health care using coverage and reimbursement policy to
encourage higher value services.
In other words, boy, you're gonna have to do something
really tough if what we say works doesn't work.
Other mandatory changes we have put forth in our plan that
reduce the deficit relate to the federal workforce retirement
plans, where we do such things as use the High 5 rather than
the High 3.
We reduce AG subsidies, we eliminate in-school
subsidies in the federal student loan program.
We give the Pension Benefit Guarantee Board authority to
increase premiums so we can get that darn thing out of deficit.
We eliminate payments for abandoned mines.
That made Al particularly happy.
We extend the FCC Spectrum authority.
We index mandatory user fees to inflation.
We reinstate, or excuse me, we restructure the Power Marketing
Administration to charge market rates.
We require TVA to improve transmission surcharges,
and we give the Post Office greater management authority
so that we don't have these deficits of about $8.5 billion
off budget, and that would include considering doing such
things as eliminating Saturday delivery,
and closing post offices in this time of electronic mail.
On Social Security, and then I will be done,
and we'll open it up to you all.
We do two things that make our job more difficult in meeting
the requirement to reduce the, to bring the thing,
bring Social Security into 75 year solvency.
We raise the minimum payment that someone can get to $125%
of poverty, and we want to take care of, again,
our principal of taking care of the truly disadvantaged,
and we were also told by every expert that you have to take
care of the older, old people between 82 and 86.
And so between 82 and 86, everybody gets a 1% bump
up per year.
Obviously, that makes our job more difficult because
that adds cost.
To meet that cost we put in progressivity payments that hit
the upper 50%, and the current breakpoints are at 90% of wages,
32% at 15, we changed those breakpoints to 90,
30%, 10, and 5.
And again, protect the bottom 50%.
We do have longevity in our report.
As you all know, currently the Social Security age goes
to 67 in 2027.
We take it to 68 40 years from now,
and to 69 65 years from now.
I hope that gives people time to get prepared for it.
We do put in a hardship exemption because we
also take up the early retirement age to 63 and 64,
40 and 65 years from now.
And because we do that, some people are in really tough
back-breaking physically demanding jobs and have to
retire at 62, and we acknowledge that, and so we pay for this.
We have a hardship exemption that takes care of the 20% of
people who have those kind of jobs in the U.S.
We go to the chain CPI from the regular CPI,
because it more accurately reflects inflation.
We bring in new state and local workers,
and instead of taxing somewhere between 83 and 86% of wages and
capping it there, we go back to the original 90% of wages.
What does that mean?
Today the cap is $106,800; in 2020 it goes to $168,000,
and our plan takes it to $190,000 from $168,000 in 2020.
That is our plan.
I thank you for indulging my going through it,
and I'll now open it for comments,
and we'll start with Senator Conrad.
Senator Conrad: First of all, I want to thank you our co-chairs.
You've done your duty, you've been brave,
you've shown courage, and most of all,
you've put before us a plan that I think is critically important
for the nation.
I also want to thank my partner Senator Judd Gregg,
who is ranking Republican on the Budget Committee,
and he and I several years ago came up with the notion that we
absolutely needed a commission to come forward with a plan,
and Senator Gregg is going to be very much missed in the United
States Senate, certainly going to be missed by me.
And I thank him for his leadership.
I thank every member of this Commission,
whether you decide to support this effort or oppose it.
I think every member has demonstrated a real commitment
to the work of this Commission, and has brought a perspective
that was important, and I deeply appreciate that as well.
And certainly the staff, who has worked so extraordinarily hard,
led by Bruce Reed, but I want to thank every member of the staff,
because I know you have worked weekends,
you have worked nights, you have worked long hours,
and I think you have demonstrated real commitment
to the country that should be recognized and applauded.
(applause)
To me, this is a defining moment.
I have had a chance to read the plan,
in fact I've now read it three times,
late last night and twice more this morning.
I really believe we are at a critical juncture.
We are borrowing 40 cents of every dollar that we spend in
this country.
Our revenue as a share of our national income is the lowest
it's been in 60 years.
Our spending is the highest it's been in 60 years,
as a share of our national income.
That is not sustainable.
We are headed for a fiscal cliff.
America is in danger.
And we can either look the other way,
hope somebody else does something, or we can act.
This Commission has been given a very serious responsibility.
And our obligation was to work, to come together,
to produce a plan that would bring America back
from the brink.
And while there are things in this plan I dislike intensely,
and I do, there are also things in this plan I think are grand
slam home runs for the American economy and for the future
competitive position of our country.
So, we're now at a time when we have to decide.
I understand not necessarily at this moment or today,
because other members have not yet had a chance to
fully review the plan.
I must say I believe I have, and I am prepared
to make a decision.
And I am prepared to support this plan, and to support it
strongly, because I don't see another alternative.
I just don't.
This is the work of Democrats and Republicans,
people appointed by the leadership of the House
and the Senate, Republican and Democrat, people appointed by
the President of the United States, 18 Americans who have
been given a heavy responsibility.
And I think they've responded in a serious way.
As I look at this plan just briefly,
I think one of the most important things it does
is restore the solvency of Social Security,
75 year solvency of Social Security,
and it does not take the savings and apply them to the deficit.
The deficit reduction, some $4 trillion over the next ten
years, is done separately.
This plan also, I believe, one of the most important things
calls for fundamental thoroughgoing tax reform.
Lower the rates, wipe out some of the tax expenditures that
have been, really have run out of control.
To help make America more competitive,
to make the tax system more fair.
I think those are critically important components,
and it will also generate more revenue.
In fact, I believe it will generate more
revenue than any forecast.
Because when you reduce the option and the opportunity to
game the tax system, and I used to be a tax commissioner,
you're going to generate more revenue.
I believe that.
So, I said earlier there are things I don't like.
I'll withhold talking about those because every one of
us could go through page after page and find things
we really don't like.
Let me just conclude by saying I think this is a critically
important moment, and whether or not we get 14 votes -- and I
very much hope we do -- I think this is going to provide a
guidepost for decisions that must be made.
And the sooner they're made, the better for this country.
I've followed events as I know all the Commissioners have over
the last weeks in Europe.
If that doesn't sober us all, seeing first Greece,
then Ireland, now Portugal, possibly Spain.
If we fail to act now, our country could find itself in
a circumstance in which we have to take Draconian action at the
worst possible time, in the midst of a crisis.
I pray to God that we have the wisdom to act before that point.
And I thank the Chairs and I thank the Commissioners.
Senator Bowles: Thank you, sir. Senator Gregg.
Senator Gregg: Well, let me join with everyone else in this Commission thanking
you, the Chairmen, and your extraordinary staff for what
you've done.
First in the way you've managed these meetings.
It has been intense, and constant,
and it's been thorough, informative, and substantive.
And I congratulate you for your leadership.
It's been a tremendous benefit for this nation.
I also want to thank the folks who have been on the Commission.
I mean, this is a pretty talented group of people.
I mean, I don't want to say that about myself,
but excepting myself, and maybe Ken.
It's a pretty talented --
(laughter)
The time and commitment has been extraordinary,
and the thought process and the ideas brought to the table have
been exceptional.
As I look at this, this is about America's greatness.
We are the most exceptional nation,
and the world's looking at us, and they're saying how could
such an exceptional nation have gotten in such trouble?
How could we be on a path which is essentially going to drive us
into some form of bankruptcy?
It will be an unusual form of bankruptcy,
but it will be a form of bankruptcy because our debt will
be unsustainable and our capacity to pay the interest on
that debt will threaten the value of our currency and the
lifestyle of every American.
This is about Main Street.
But it's about where we go as a country.
We as the people who are charged with the governance have a
responsibility to not let that happen.
And you can't deny the facts.
We are on a course which because of the demographic shift in this
culture, where we go from 35 million retired people to 70
million retired people over the next five to seven years,
and for other reasons which will generate a little bit of
a debate around this table, our government is growing at a rate
that is simply unaffordable and unsustainable,
and the inevitable fact is that if it continues on this course,
prosperity for Americans will be jeopardized and we will be the
first generation in the history of this country to pass a less
prosperous and secure nation on to our children.
And that is antithetical to the American culture.
The American culture demands that the next generation have
more opportunity and be more secure than
the prior generation.
That's just the essence of what America is about.
And so this really is about America's greatness.
Now, this product is not perfect, nor is it global.
It doesn't even solve the problem.
It just allows us to put in place a glide path,
and not a glide path, but a pathway that says to the
American -- says to Americans and the world,
we are serious about doing something about the problem.
The problem will still be there even if everything in this
proposal were adopted because we'd still have a debt to GDP
ratio of between 60 and 70% by 2020,
which is way above our historical position, which was,
which should be no more than 40% if we're going
to be really solvent.
But it is a package which does make a definitive step in the
right direction, because it does significantly reduce the deficit
and the debt, and it does bend the increase in debt in the out
years, and it does bring down the deficit.
And it addresses glaring problems with our fiscal policy.
Now, on the spending side of the ledger,
on the discretionary side, I think republicans are going to
be pretty comfortable with this, I hope.
I mean, it goes down to 2008 baseline by 2013.
That's rather dramatic action, and there's going to be a lot
of folks who are going to be upset about programmatic
cuts and changes.
The tax policy becomes, I think, the big issue for those of us on
our side of the aisle, because there is a lot of tax policy
in this bill that generates revenue,
and how the revenue is used is the issue.
I have always found that unconscionable that we debate
constantly about raising rates.
Why do we debate about raising rates?
That's not the issue in tax policy.
What we should be debating about is reducing rates and how you
reduce rates in a way that generates economic growth.
And so this proposal in this bill, the essence of it,
the core of it, almost all the revenues in this bill,
with the exception of the Social Security,
which is held in a separate account,
is driven by a tax policy which take us out of this box of
debating whether or not we're going to raise rates and into
what I think is the proper playing field,
which is how you get rates down dramatically and allow money to
be invested for the purposes of creating prosperity and economic
activity rather than to be invested for the purposes
of avoiding taxes.
And the Zero Plan is the ultimate on steroids
Reagan-Bradley tax reform.
I was on the Ways and Means Committee in '86 when we did
Reagan-Bradley, and it took a lot of heavy lifting to
eliminate that stuff and get those rates down to 28,
top rate down to 28%.
This takes that approach and puts it in overdrive.
I happen to think if we did the Zero Plan,
the explosion in economic activity in this country
would be extraordinary.
And the tax numbers in this bill would be almost irrelevant.
And that's why Senator Crapo has insisted,
because I think he sees that also,
that to the extent that happens, rates continue to go down.
But the fact is this is where the debate should be,
in my opinion.
It shouldn't be on whether we take the rates from 35% to 39%
or 39% to 42%.
It should be on whether we take the rates from 35% to 21% and
get in the process of better tax law that delivers a more
effective use of dollars for capital formation in
this country.
So I think as republicans, even though there's going
to be heartburn about where these proceeds go,
because they are going to be a lot of proceeds,
it is the right debate.
Social Security, as Senator Conrad says,
and it has been an honor and privilege to work with
Senator Conrad.
As chairman of the budget committee,
it was even a bigger honor to work with him when he was the
ranking member on the budget committee.
(laughter)
As he has driven, really, the effort here to try to recognize
the regular order can't handle this issue and that we have to
step outside, which is why this commission was created.
But, Social Security has been set off here and made solvent
for 75 years, and you can tinker with the ways it was done,
but there are only four or five moving parts in Social Security,
and everybody knows we got to address it.
But the issue of spending, restraint,
and tax policy in this bill, I think,
is moving dramatically in the right direction.
The only issue remains healthcare.
There is healthcare initiative in here,
but we've been through the healthcare debate,
we're going to have to revisit it at some point.
This commission, I think, made the right decision in not going
to the core of the healthcare debate,
but doing some substantive things which will significantly
impact healthcare.
In the end, whether this commission gets 14, 10,
or 16 votes, I think this document becomes the memo that
controls the meeting, to use Henry Kissinger's words.
And in the end, today, we've reached the point where it's
time to govern.
It's that simple.
We either as a nation govern or we risk losing our greatness.
And this is a template for beginning that governance,
and I congratulate you for it, and I intend to support it.
Thank you.
Speaker: Thank you, sir.
We'll go to the order of Senator Durbin, Mr. Cote, Miss Rivlin,
and Congresswoman Schakowsky, and then we'll go to
Mr. Hensarling, and Mr. Ryan, and Mr. Becerra.
Speaker: I apologize for maybe stepping out of line.
I have to run to a senate judiciary committee to make
a quorum, and they just gave me a note on it.
So, thank you for giving me a chance to say a word.
First, thanks to you, Erskine and Alan, as well as Bruce,
for the extraordinary job that you did.
I made this point at an earlier meeting.
I can't think of a major effort on Capitol Hill that has been so
thinly but so well staffed, and I congratulate you for gathering
together some of the most extraordinary minds in our
country to produce this product, which is honest and addresses
the challenge you were given as chairs of this commission.
We talked a little bit this morning that your entire effort
could have gone unnoticed, and this report could have gathered
dust somewhere and never been referred to,
but the opposite occurred because of your hard work
and because of the fact that you put us to work.
I want to thank my colleagues.
Judd Gregg, I'm going to miss you.
I got to say it publicly.
Even though we've debated a lot of issues,
you're a great leader in the senate,
and I'm glad that you inspired us to sit together at this
table, even though many of us questioning why we volunteered
for this root canal, we need to be here.
And Kent Conrad, I want to say the same.
The two of you together, I know I was kind of sitting by the
side lines in a plane as you were hatching this idea during a
trip that we took together, and I thank you both for bringing us
to this moment.
To the public members here, thank you for being
part of this.
We all go to work at this ZIP Code everyday,
but you've come in here and really added to this
conversation and this dialogue.
And I want to just say a few general things.
I saw this first time this morning,
and clearly am not going to make a commitment at this moment,
but want to study it very carefully,
because there are so many moving parts and important decisions.
We often draw the analogy of our responsibility to an American
family facing an economic crisis.
What would they do?
Well, we talked about sitting down at the kitchen table,
and I think people still do that -- I hope they do --
and making hard choices.
But, clearly, when they're making hard budget choices for
their family, they usually don't include cutting off
the insulin for grandma.
They usually don't include cutting off
medicine for a child.
There are certain things which a family will go to the absolute
furthest lengths possible to protect,
and many of us feel that's what we need to do here.
We believe that any crisis America faces will require
shared sacrifice, but the most vulnerable in our country cannot
sacrifice the same as those of us who are physically and
economically fitter and in better shape to do so,
and that is the standard I use as a progressive.
I believe that we have to look at the bottom line and see where
the most vulnerable in America, the elderly, the poor,
our children, how they fair under this.
And we have to do everything in our power to protect them at the
expense of the rest of us, and that's why some of the debates
over taxes leave me struggling to understand.
I understand, Judd Gregg, when you talk about lower
tax rates and the economic engine they can create,
but we've had times of great economic expansion in this
country when our tax rates were substantially higher
than they are today.
So, I'm not sure that I buy the premise.
I know you believe it and most republicans do,
but when it comes to shared sacrifice,
I believe those who have been blessed in our society should
pay more and expect to sacrifice more than those who have not.
As I look through this plan, there are several things that
concern me.
First let me say the good things.
Thank you for what you did on these tax expenditures.
I've been in congress and around congress for 29 years.
We've never had this conversation.
We have never put everything on the table and said, now,
what's important?
We just incrementally year after year made modifications in tax
code that most people never read or understand and think that it
really doesn't have any impact.
It does.
It's $1.1 trillion a year coming out of the treasury because of
deductions and credits.
And it is fair for us to step back and say,
if you eliminated all of them and reduced rates,
would America be better off, would families be better off?
I think that's a fair question, and I'm glad you raised it.
And I think you did it in a honest way.
Give us choices.
And we have to make the choices.
And we need to save money in the process.
I think that's fair.
Secondly, I was around when we reformed Social Security in 1983
or 84, whichever year it was, and bought dramatically years
ahead, 20, 30, 40, 50 years, of solvency for Social Security
with some painful choices.
I'm going to say something now that is heretical on the left,
and they won't like me for saying it,
but what you have suggested in increasing the Social Security
retirement age is acceptable to me.
To raise it one year over 40 years is hardly radical.
To raise it two years over 65 years is not radical.
And providing, as you have, for two things,
those in manual labor who need to retire at an earlier age
because they're warn out and can't continue working and to
provide extra help for those older people on Social Security
who need a helping hand more than others.
These things are sensible, and we've got to accept sensible
alternatives to move forward on the left and on the right.
Let me say there are two or three things in here that I
think you've missed the mark on, and I'll just lay them out
on the table.
Speaker: Your time has expired.
(laughter)
Speaker: I expected that.
First, let me say this: I happen to believe as an appropriation
subcommittee chair that what is written in here is not correct.
You argue that eliminating earmarks saves $16 billion.
That reflects a fundamental misunderstanding of how the
appropriations process works.
As a subcommittee chair, I am given a mark,
a 302B mark, X dollars.
They say you can appropriate up to that mark and not beyond it.
Within that mark, I take literally one half of 1% and
have congressionally directed spending,
but it's within the mark.
So if you're putting a cap on the overall spending,
the mark in the appropriation subcommittee will receive is
already established.
And if within that mark their earmarks are not earmarks,
they're still going to appropriate to the mark.
So there's no $16 billion of savings by eliminating earmarks.
That, to me, is part of the mythology which is going on
in the country.
And I've been through those chapters of mythology that
involved term limits, and no tax pledges,
and balance budget amendments, and all the rest,
and this is the issue du jour, and I'm sorry that you included
it, because I don't think that it really reflects honestly what
earmarks are all about.
Secondly, medical malpractice.
And I'll say a word about it because it's something I did for
a living before I came to this place.
I am glad that you eliminated caps.
I was prepared to make an impassion plea to
eliminate them.
But the changes that you made here,
for example on joint several liability are esoteric to most
of the people following this, but your changes have been
analyzed to increase the cost of medical care.
I know you didn't want to.
You wanted to do just the opposite.
But they increased the cost of medical care,
and there are studies to establish that.
The third point I want to make is the FEHBP change,
the Federal Employees Health Benefit Program change,
which allows Congressman Ryan, I believe is the one who came
up with the proposal, of a voucher system,
or at least capping the amount that the government
pays for health insurance for federal employees.
We discussed this morning why they have been selected.
I don't think it is a fair selection.
I will just say this: As I look at the proposals on healthcare
here, we are hastening the day when the only option left will
be a public option, because we are saying we are going to
limit the deductions for health insurance premiums,
and we are going to limit the amount of money the federal
government pays for federal employees,
and the question is whether the private sector will then
reduce costs.
I don't believe they will, and we will find ourselves
at a point where we have no alternative.
I happen to embrace a public option as an option.
Others don't.
But I think this calls for a change in the private sector,
which they have not demonstrated at any point they're willing to make.
I am going to study this carefully and closely.
I know the decision time will be very shortly.
But I thank you for your honest and good effort.
Speaker: Thank you, Dick. Thanks very much.
Speaker: We'll go now to Mr. Cote, then Director Rivlin,
and then Miss Schakowsky, then Ryan, Hensarling,
Becerra, Spratt and Fudge.
Speaker: In our first meeting about seven months ago,
I mentioned that in my travels around the world,
and I travel a fair amount, as you know,
my observation has been that successful countries were able
to act with collective purpose and with a political will to
get things done.
We have a serious national debt problem,
and it has global implications.
We're being watched by countries with similar problems looking
for a model, and more importantly, we're being
watched by countries who consider us passed our prime,
because we can no longer rally as Americans to
accomplish the tough things.
We've come to a point where we'd rather revel in our discordant
pluralism than act with collective purpose as Americans.
As a country, we need to stop the demagoguing where everyone
just runs to their neutral corner and yells and screams
at the other guys.
American public is smarter than that.
Yet, I don't believe anybody is really giving them the facts.
And we need to be capable as a government of having
a more nuanced, thoughtful conversation amongst ourselves
and with the public.
The facts are that we had a net national debt before the
recession of $6 trillion, and today it's 9 trillion.
45% of our debt is held outside the United States,
with about 1 trillion of that money loaned to us by China.
Over the next 10 years, even with optimistic economic and
cost assumptions, that debt grows to 20 trillion in 2020.
Ten years from now, our interest bill alone will be a trillion
dollars a year.
Now, we believe that generally that millions are a lot and some
of us deal with billions in our work lives,
but a trillion is difficult to grasp.
So, to put it into perspective, if you had spent a million
dollars a day since Jesus Christ was born 2,010 years ago,
you would still not have spent a trillion dollars,
and that will be our annual interest bill.
The American public is on to the right issue but for some
of the wrong reasons.
Many want to point to the "Bush tax cuts" or the stimulus
or earmarks as "the" issue.
Now, while important, these are all side shows,
as we accumulate $20 trillion in debt over the next 10 years.
The big issue is that my generation,
the baby boomer generation, is retiring.
And as we move through Social Security, Medicare,
and Medicaid, we will crush the system.
The commission has proposed about $2-1/2 trillion in
spending cuts and a trillion in tax increases cumulatively
over the next 10 years.
On spending, that's about a 5% reduction over what was
planned to be spent.
It still increases about 4% a year for 10 years.
Similarly, on taxes, the $1 trillion is about 3%
more than what was planned.
That is hardly revolutionary.
Yet, I've never seen such hyperbole as that which
accompanies every piece of taxes or spending.
And for the 12 politicians on this commission,
I honestly don't know how you get your jobs done with
the kind of yelling and screaming that goes on about these things.
But this is a job that needs to get done.
These difficult political decisions will get made one of
two ways: The first is we can do it thoughtfully and proactively.
The second is we can wait for the bond market to force
it upon us.
And that will be decidedly harder,
more abrupt and unpleasant.
We can ask Greece and Ireland what that's like,
and soon Italy, Spain and Portugal.
Now, many people have a hard time relating to what the bond
market is or why they should be concerned.
So think about it this way: About 4 trillion of our debt
today, about 45%, is money loaned to us by
foreign countries with a trillion dollars of
it loaned to us by China.
What happens when they don't want to loan us any more money?
Where do we go? What do we do?
What happens when the bank, in this case foreign countries like
China, doesn't want to loan you any more money?
We've benefited a lot in this time from being viewed as the
world's reserve currency, the safe haven, if you will.
What happens when we're not viewed that way anymore?
When we have to raise the price we pay -- in other words,
interest -- to attract the loans we need from foreign countries?
When the interest rates Americans have to pay for homes,
schooling, and car loans go up for the same reasons,
thereby hurting the very people that we think we're protecting.
Finance is not an exciting subject,
but this goes to the core of our own economic
and homeland security.
And when that decline does come, it doesn't come in small,
monthly doses giving us 20 months to adjust.
It happens overnight when the herd runs against you and fear
grips the market.
The American public deserves better.
I don't like everything that's in this proposal,
and in reality, I don't think it's big enough.
And it goes nowhere near far enough to sort out our most
pressing spending issue, Medicare and Medicaid.
But I do know we need to start somewhere.
There's plenty of blame to go around on how we got here.
There's also plenty of opportunity to work together
and demonstrate the political will some countries in the
world believe we no longer have.
There does come a time when we have to act with collective
purpose to do with what's right for the country.
We have to come together, democrats and republicans,
old and young, business and labor,
stop arguing and start agreeing.
This is one of those issues.
We can't let the perfect be the enemy of the good.
This is a time for us to pull together, not pull apart.
While I'm not enamored of everything in the co-chair's
proposal, and I do wish it went further,
I do believe this is a time for us to pull
together as a country.
Erskine and Alan, I do think you guys have done one hell
of a job working with Bruce and his team and all of us as
commissioned members to develop a realistic and doable plan.
I also know we don't officially vote until Friday,
but I wanted to let you know today that I'm with you.
Speaker: Thank you.
Speaker: I'm your third vote!
So, thanks for everything you've done.
(laughter)
Speaker: I've gotten five now. Thank you very much.
I'm thrilled to hear that.
Director Rivlin?
Director Rivlin: I, too, want to commend our co-chairs and this fabulous
staff for having done all this work and put together
a really serious plan.
Serious is a word that we've heard a lot this morning,
but that's what it is.
And I think it's a serious plan to address what I regard as a
clear and urgent threat to the prosperity of the U.S.
economy going forward.
If we have a debt crisis, and we could have fairly quickly,
and as Dave Cote has said, when these things happen,
they happen fast, and you can't stop it.
We don't want to put ourselves in the position where this could happen.
We need to take action.
And I share with my fellow democrats and republicans that
the feeling that we have to protect low income people and
low wage earners and the vulnerable,
but we also have to think, what happens to them if we have
another economic catastrophe.
The best thing we can do for the most vulnerable people in
America in is to have a prosperous high growth
economy and not another crisis.
Those I believe are the choices that we face.
Now, everybody has said there's a lot of pain here.
There is, but there is a lot of opportunity.
I really think the question is not, can we bear the pain,
but can we seize the opportunity,
the opportunity to reform the tax system in a way that would
give us a fairer, more pro growth and more progressive tax
system, the opportunity to take some steps and not complete ones
toward a more efficient healthcare system,
and the opportunity to direct spending,
both domestic and defense, into higher priorities.
Can we seize those opportunities, and I think this plan moves us
in that direction.
We could have a higher growth, more efficient economy,
and a more efficient, fairer public sector if we do many
of these things.
That said, like everybody, this wasn't my favorite
set of options.
I've tweaked it here, tweaked it there.
So I am going to vote for it, but I'm also going to give you
a little list of things I would have liked to have seen in it.
I would have like to have seen some up front stimulus,
because I think we really need to get out -- be sure we're
getting out of this recession.
I would have shifted the balance away from so many
spending cuts and toward a little more revenue.
I'm a little nervous about the timing of this
large discretionary spending cut in 2013.
But, that said, this is a very serious plan for dealing with an
eminent catastrophe, and I hope it starts the congress on a path
toward a solution before it's too late.
Thank you.
Speaker: Thank you, ma'am, and thank you for your plan too.
It was very helpful to us.
Congresswomen Schakowsky?
Congresswoman Schakowsky: I want to tell you what an honor it's been for me to be on this
commission and to thank the co-chairs.
And while we have disagreed on a number of things,
there certainly are a number of things in this plan with which
I do agree that I hope despite the fact that I can't support
it will be voting no that can point us in the right direction.
The fact that we have examined for perhaps the first time,
as Senator Durbin said, the tax expenditures,
the fact that -- and I was actually somewhat surprised that
defense cuts were on the table.
I think there was pretty much of a consensus around that.
And so I think that there is enough that all do agree on,
despite what the vote will be, that makes what we have done
very constructive in moving forward.
I agree with the principles that were laid out,
and I do agree that we are on an unsustainable fiscal path.
And that can be defined though in a couple of ways.
One, of course, is the deficit and the debt.
I laid out a plan myself where we can reach primary budget
balance by 2015, but the other way I think that we can measure
unsustainability is the growing disparity in income
in the United States of America, which I think is
equally a problem that we face, a problem for our democracy,
as well as our economy.
And I don't feel that this proposal addresses these dual
problems of debt and in equality in the proper way.
I agree with Alice Rivlin that we need to have much
more significant investment right now.
When we get our economy moving, we are also
decreasing the deficit.
There will be more people working.
There will be more people buying.
And I think there is somewhat of a different perception of what
really does spur economic growth.
To me, it is the question of demand.
Having money in people's pockets,
jobs that they have and unemployment insurance benefits
that will make sure that they can go out and actually
be customers, spend money, that that's what will drive
expansion of business and small business and large, as well.
But the top 1% of Americans owns 34% of America's private
net worth right now.
And the bottom 90% owns just 29%.
That means that the top 1% controlled 24% of America's
income in 2007.
It was 34% now and 24% in 2007.
So we are seeing a rapid expansion of growth among
the wealthy, a transfer of wealth to those at the top.
The top 10% controls more than 70% of America's total net worth
in this country.
Only one in five working Americans enjoy guaranteed
pension benefits.
Those young people who are worried about Social Security
being there shouldn't, but they should worry that they're going
to have some sort of pension.
Those are rapidly disappearing, meaning there will be more
focus, more need for robust Social Security,
Social Security security in the future.
We talk about shared sacrifice.
I think these numbers indicate that sacrifice, in fact,
has not been shared.
That some people have lost and others have significantly gained
over the last several years.
So we're not starting at the same point when we say we need
to share the sacrifice.
Among those who are -- we have right now more than 37 million
Americans, including 13 million children, living in poverty,
and most of those poor people have jobs.
So these are working poor in the United States of America.
The elderly, who I have said before have an average income,
including everything, private pensions, and investments,
and savings of $18,000 a year, to say that we're going to
reduce our deficit and our debt by asking Medicare beneficiaries
to pay more for their healthcare, I think,
is absolutely unconscionable, to have more money come out of the
already 30% of their out of pocket income going to
healthcare costs I think is absolutely the wrong way to go
when we do have other options.
I put on the table not as a "if all else fails" but a public
option to reduce healthcare costs.
I said Medicare should negotiate for lower prescription drug
prices, just as the Veterans Administration does,
meaning that drugs are a fraction of the cost over
what Medicare beneficiaries pay.
There is very little control here of these expanding costs,
I think as senator Durbin pointed out,
in the private sector.
Social Security, let's underscore that you agree,
the co-chairs agree, and I agree,
are not part of the deficit problem and are not being
considered for paying down the long-term debt that we're
looking for solvency.
But the chief actuary of Social Security has pointed out that
the combination of the proposals that you've made mean that
someone who makes $43,000 over their lifetime depending on when
they retire can lose more than 20% of the benefits that they
would get under the current Social Security formulas.
The changing, the cost of living adjustment for the elderly,
recalculating the COLA, means a significant cut in benefits,
because the elderly's expenses are skewed in a different way
than the rest of the population, more toward healthcare.
So I proposed a different way of achieving 75 year solvency
that doesn't hurt the elderly.
When we talk about cuts in discretionary funding,
although you don't totally spell them out,
and also cap how much comes from revenue,
which I think is an arbitrary and I really don't understand
why we do that as the debt commission,
as a fiscal responsibility commission, means, I think,
inevitably that we're going to see programs cut that help to
address the problem of those people who have not been part
of the party that the wealthiest Americans have benefited from
over the years.
And so I cannot for the reasons of equity, of our democracy,
of our fiscal path in terms of real live people
support this proposal.
Thank you.
Speaker: Thank you, ma'am.
Again, I want to thank you for presenting an alternative plan,
which you do support, which does address this, you know, crisis,
because you realize it's a crisis we have to address.
So thank you very much for your constructive approach.
Speaker: Indeed.
Speaker: Congressman Ryan?
Can I add before you start for reason that Congressman Camp and
Senator Baucus are not here is they are discussing taxes
as we speak.
Congressman Ryan: Well, first off, I want to thank Alan and Erskine.
You guys have done a tremendous job with a very difficult
challenge, and you got a lot thrown in your lap.
And Bruce, you and your staff, skeleton staff,
some of us have been in budgets for a long time,
you guys have done a great job.
I want to just take a digression for a second.
I think this is the last time I'll be sitting at a table with
my friend John Spratt, and you're a great guy, John,
and it's been a real privilege to serve in congress with you.
We haven't agreed on everything, but you had my respect,
and I just want to say thank you for what you've
done for our country.
Thank you.
(applause)
I believe this commission has been a success.
Those who refuse to confront the challenges facing us,
they have nowhere else to hide.
If they labeled various proposals as too draconian
or austere, well, they're going to have to come up with their
own right now.
So, if anything, this has been successful,
because it has helped us move this conversation to more toward
the adult level that it needed to go to.
So regardless of what happens, regardless of whether you get
these 14 votes or not, you should go home proud of what
you've done to advance this debate and put ideas
on the table.
We have a choice, which is, are we going to confront
this and leave the next generation better off or not?
We're going to have different opinions about how to do that,
but you've done a lot to advance that debate.
Let me go -- and I'll try to be brief.
Let me go through what I do like about this,
because I think it's important to say some positive things.
I do like the fact that we're seeming to get some consensus
on taxes, on not revenue levels, but on rates.
Lower rates with a broader tax base leads to economic
growth and job creation in international competitiveness.
If anything, I think that the concept that tax reform ought
to be merged with budget reform is something that
is incredibly important.
The best way to deal with this problem, in my opinion,
is spending control and reform and economic growth.
And economic growth comes from a more competitive tax system,
a broader tax base and lower rates,
and to that you have done a great job in
advancing this debate.
I like the budget process reforms.
There are some really good budget process reforms in this
bill, not as many as Jeb and I and others have put out there,
but some great budget process reforms,
particularly what we call our belts and suspenders approach
to discretionary caps.
I think that's pretty good.
Social Security, I don't like every single idea in the Social
Security reform, but you have really advanced the
ball and gotten us toward a better conversation on making
Social Security solvent.
And Jan is right, this does not contribute toward deficit
reduction, but solvency to Social Security,
which is really important.
If we don't do anything, when we run out of IOU's,
everybody gets a 22% across the board benefit cut.
That ought to be avoided.
There is discretionary savings in here.
Albeit, it's not as many as I would like,
not occurring as soon as I would like,
but you're moving the ball forward on the fact that we
can't keep growing discretionary spending like we have under both
parties leadership around here.
So what I want to basically say is there are some ideas in here
that I think are worth copying, and borrowing,
and putting into this next year's budget,
which I fully intended to do.
What are my concerns?
My primary concern with this plan is healthcare.
I do not believe that this sufficiently fixes
the healthcare problem.
And guess what?
Our debt problem is the healthcare problem.
GAO just gave us a new number a week or two ago that says we
have a $88.6 trillion unfunded liability primarily stemming
from our federal healthcare programs.
This doesn't sufficiently address that, in my opinion.
I think Senator Durbin probably said it right.
We are hastening the day when the only option is
the public option.
I think you're right, and I think this advances that
possibility and likelihood.
That's one of the reasons why I have a problem with it.
Let me go to taxes or, more importantly, baselines.
As you know, when we look at spending cutting and revenue
increases from any reform in Washington,
you have to do so relative to a baseline.
Now, baseline conversations can get really esoteric,
they can get very confusing, but it really
actually kind of matters.
It's important to understand what baseline is being used.
And so we stayed up pretty late last night going through
these numbers.
It's my understanding the baseline you're using in rough
terms follows the president's budget both in revenues and
in spending.
The president's budget increases revenues by
not extending all tax relief.
I think that's something everybody knows about.
We think that leads to a tax increase of about $983 billion.
He also increases base defense and non-defense spending and
does not propose to offset the dock fix,
which leads to an increase in spending.
Now, to be clear, this is another way of looking at these
issues, but using this baseline and excluding debt service,
this proposal cuts spending by about $2 for every $1 in revenue
increases under a baseline that I would consider more plausible,
a CBO based current policy baseline,
these numbers would roughly be reversed.
About $2 in tax increases for $1 in spending cuts is how we
look at these numbers.
I would like to share this with your staff,
and maybe we can go through these before Friday,
but it's important to note, I think,
that we've got to grow this economy,
and we've got to get a good down payment on taxes and spending,
on spending, excuse me, now, and you really can't
fix this problem.
You're just delaying if you don't really tackle healthcare.
And I understand the position you all were put in.
You're the president's appointees to create this
commission, and he just passed through a healthcare law that
I'm sure you weren't going to want to undo.
And I understand that.
But that doesn't mean that those of us who have a problem with
that law want to sign up for something that we think
advances that law, and that's why
some of us has some concerns.
But let me finish on a positive note.
You are to be commended. This is a serious effort.
It's a serious proposal. It has advanced the debate.
And I really appreciate you for the contributions that you and
all my (inaudible) made.
Thank you.
Speaker: Thank you. Thank you, Paul.
Speaker: Thank you. You have been extremely constructive,
and I've become a real admirer, as I think you know.
So thank you for all your help.
I think, if I turn back my page, it's Congressman Hensarling,
and then Congressman Becerra, and then Congressman Spratt,
and then Miss Fudge.
Congressman Hensarling: Well, thank you, Erskine, by placing me after Paul.
I suppose you could have effectively hit the replay
button, but having said that, I'm going to nonetheless take
the privilege of saying much of what he said.
First I want to add my voice of praise to our two co-chairs.
I think that this effort in some respects has been challenged by
the design of this commission.
I think juxtaposed against the recent debate over national
healthcare, it has been challenged by timing.
It has certainly not been challenged by leadership.
We have had exceptional leadership at this effort.
Both of you are to be commended.
The thing I like the most about your plan is it is a plan.
And frankly, they're not a lot of them out there
to address the crisis.
As we continue to use the word unsustainable in describing our
nation's fiscal path, unsustainable is understated,
and I think we all know that.
When the chairman of the joint chiefs of staff says that our
greatest threat to our national security is our
debt, it should be a sobering wakeup call to every American.
And so, again, I applaud you for simply putting a
plan on the table.
And frankly, I think any American who understands the
crisis has a responsibility to sign up for some plan,
to be in favor of something.
I have come to this table being one of the few and proud to
support Paul's roadmap for America's future.
I have supported a spending limit amendment to the
constitution and a number of proposals,
some of which actually ended up in your proposal from the
Spending Deficit and Debt Control Act that Paul and
I have worked on.
So, again, I think there has been challenges to the
commission and, I think, Erskine, if I recall right,
you said that this was part of an adult conversation,
and I do agree it is one of the few adult conversations about
this crisis I have been able to participate in.
I would like to say, and again I didn't meet to echo Paul in
all regards, I had this comment already in my notes,
but the other adult conversations about this
national crisis that I have participated in have been
led by Chairman John Spratt of South Carolina.
Chairman Spratt is a man who has rarely,
rarely have I acquiesced, he has not commanded my acquiescence,
but he has always, always commanded my respect.
Now, he has been a very important voice in this
national debate.
And as he exits congress, I hope and pray he does not
exit the national debate on our nation's fiscal future.
I believe that ultimately as we look at our nation's deficit,
the deficit is the symptom, spending is the disease.
As I look at the plan, and I will try to be brief,
I'll talk a little bit about what I see is the good,
what I see about as the bad.
I believe an important part of this debate is the recognition
that by broadening the tax base and lowering rates,
we can promote economic growth, we can promote jobs.
Bringing down the corporate tax rate to something I believe
close to the median of the EU is a very important part
of this debate.
I know we don't employ dynamic scoring,
and I know we cannot grow our way out of this crisis,
but I believe if we did employ dynamic scoring,
this alone would be a not insignificant part ultimately
of the solution.
And I want to applaud you for that.
Now, with respect to Social Security, personally,
I believe in personal carve-out accounts.
I want to use the power of compound interest to grow
our way out of this.
That is not in this plan, but having said that,
I would be more than satisfied to at least save Social Security
for the next couple of generations,
including my eight-year-old-daughter,
my seven-year-old son, and support the proposals that
you have included in this plan.
And so I have been picketed before for my views on trying
to save current entitlement programs for future generations.
I won't say I'm happy to do if again, but I'm prepared to,
certainly, do it again.
I continue to have concern about the tax portion of this,
concern in a couple of different ways.
Number one, clearly, I don't favor any tax increase.
I don't think we have a taxing problem.
And, in fact, as we all know under CBO's,
either their baseline or their alternative scenario,
taxes will increase as a percentage of GDP.
That's given.
Number one, taxes are already going up.
That's number one.
Number two, ultimately, even though you put a revenue cap,
we don't have a global expense cap here,
and the cost of government is what it spends,
not what it taxes.
And I would say that is one of my greatest reservations of the
plan something that I'd hope we could have achieved.
And so, you know, ultimately I'm not sure that we're going
to solve the problem that way.
And the third challenge I think you have on the tax increases is
history is my guide.
You know, if I believe that the increased revenue would actually
be used for deficit reduction, you know,
I might reluctantly come to the table in a global agreement.
But when I look at Teffer in '82,
when I look at Andrews Air Force base in '90,
it just seems to me that somehow the spending restraint never
quite materializes and yet the increased revenues do
and it seems like the increased revenues simply
chase more spending.
So personally I believe to either quote or paraphrase
Winston Churchill who said Americans can usually be
counted on to do the right thing once they've exhausted
every other possibility.
Again, until we have the backstop of constitutional
amendment or somehow put an enforceable spending cap on,
I'm not sure the right things get done.
And if taxes are going to be put on the table,
I believe health care is going to have to be put on the table.
There's a lot of expertise at this table.
I've studied these issues as a member for eight years,
I've studied it as a Senate staffer for seven years.
I can't come to any other conclusion that if health
care is not on the table, you're not fixing the problem.
And I do not believe health care is here.
Now, I understand again the timing has been poor.
There are those on the other side of the aisle who feel
very passionately that what we passed in Congress is part
of the solution.
There are those of us who feel very,
very strongly it is part of the problem.
And I believe that also when you juxtapose what you're doing
on the tax expenditure side, which otherwise is very good,
I would agree with Senator Durbin who is no longer here
you are hastening more people into the public option something
that many of us on this side of the aisle do not relish.
So ultimately, I believe we must reform current entitlement
programs for future generations, grandfather the grandparents.
I'm willing to put defense on the table.
But again, and I don't want to see any tax increases,
but if they're on the table, health care has got to be
on the table.
And I just, and you know, and I'll just end on this note,
and I think I am paraphrasing to some extent Senator Gregg,
but we are on the verge of being the first generation
in America's history to destroy the American dream.
I do not believe the American dream is a shiny new Cadillac.
I do not believe the American dream is homeownership.
I believe the American dream is leaving your children with
greater freedom, greater opportunity and a higher
standard of living than you enjoyed.
And every generation in our country has always kept faith
with the American dream.
I don't know if this is the grand bargain, but if it isn't,
the grand bargain should come soon.
And I would remind all I don't know if this is going to get 16
votes, 14 votes, 12 votes, 10 votes and I have lost count
of how many votes you have around the table,
and I don't know you're going to get my vote,
I would say this: Nothing prevents our Congressional
leaders in this Congress or the next from bringing this
plan to the floor.
There is nothing magical about the 14 votes.
Fine, you get a nice little sill on the cover, I suppose.
But nothing prevents them from bringing this plan to the floor.
Nothing prevents them from bringing Revlin Dominici to
the floor, or roadmap to the floor.
Personally I would like to see this plan come to the floor.
It may come to the floor without my vote but we must advance the
debate and I hope that we seize the moment.
And I thank you.
Senator Bowles: Thank you, very much.
You have been very thoughtful and extraordinarily helpful
and you have been positive and you have been supportive and I
deeply appreciate it.
We'll go to Congressman Becerra and then congressman Spratt,
Ms. Fudge and Mr. Stern.
Congressman Becerra: Let me to begin by saying first to Alan and to Erskine thank you
for doing what many people bet you could not do and that is to
keep 18 Commissioners with very diverse views together to this
point so that we would be discussing a plan which although
the two of you put it together, certainly a number of the
members at this table may find themselves prepared to vote for.
And so I think that may be this story of this Commission's life
that somehow the two of you found a way to keep all of
us working together.
And I applaud you for that.
Let me also thank each and every one of our Commission
colleagues who participated.
This could have easily collapsed immediately,
before we got to this point certainly,
had we all decided to run to the media and start talking
about what we liked and didn't like or to undercut your efforts
as Chair.
So I think to each of my colleagues on this Commission
I say thank you for helping make this a constructive effort.
Perhaps the second bit of news if I were writing the front page
of my newspaper after the headline where Erskine and Alan
kept us all together and working and actually saw us to the point
of having a plan presented is that you were serious.
You put taboos on the table.
Sacred cows are in your plan.
And I think, if nothing else, we have layed before the American
public a template that gives people an opportunity to start
discussing what we have to do to try to get our fiscal
house in order.
I started the first time we met by saying that to me,
we have to somehow get to the point of understanding how it
is that we went from surpluses as far as the eye could see ten
years ago to deficits as far as the eye could see today.
Something happened, dramatically happened in these ten years that
caused us to go from an economy that was just churning to an
economy that's in the hospital.
Some of it we know is cyclical.
It's part of the structural process we go through in our
economy and so you have to acknowledge that a good portion
of this is due to the fact that we have ups and downs.
And right now we're in a down that's become very deep.
But part of it's because as I think you say in the beginning
of your report, and if I can just quote it,
since the last time our budget was balanced in 2001 -- and
I'm reading from page 10, the looming fiscal crisis,
the second paragraph -- since the last time our budget was
balanced in 2001, the federal debt has increased dramatically,
rising from 33% of GDP, to 62% of GDP in 2010.
The escalation was driven in large part by two wars -- which,
by the way, I always emphasize were never paid for and so we
borrowed money to pay for those two wars and continue to borrow
for those two wars.
But the sentence again reads, the escalation was driven in
large part by two wars and a slew of fiscally irresponsible
policies along with a deep economic downturn.
To me the resolution of our fiscal crisis into the future
depends on making sure that we no longer get involved in
activities that we're not willing to pay for and that
we're not irresponsible.
Because we were humming along creating surpluses,
creating millions of jobs for Americans and now we're not.
And so to me I want to attack those problems.
What caused, what were the sacred cows that had us partying
for some, while others were left to clean up the mess.
I believe this plan identified some of those sacred cows.
And I believe that for those reasons it's worth considering
where this plan takes us.
And so let me just briefly then tell you what I think are the
absolute positives of this plan.
As I said, you put those taboos on the table.
You create firewalls.
Firewalls are critical because we know what happens in this
place, everyone poaches and the best poachers are
the most influential.
The special interests that have tons of money,
know how to poach best and they know how to succeed.
So when it comes to making cuts we may all have benevolent
motives but at the end of the day,
it's the strongest of the poachers who prevails.
And so invariably what gets cut is not necessarily the
most important place to start creating responsibility.
Secondly, you did something that I think few people were willing
to do and you identified these tax earmarks.
If we want to talk about spending,
you can't just talk about it on the appropriations side because
quite honestly our spending on the tax side dwarfs anything we
do on the appropriations side.
Indeed, we had this conversation,
we've heard this conversation about spending earmarks,
appropriations earmarks.
$16 billion in a year.
A tax earmark spending in our budget is 70 times greater than
appropriations earmarks.
It would take us 70 years of having eliminated appropriations
earmarks to equal one year of spending through the tax code
on just the earmarks.
And so I applaud you for having raised that.
But let me tell you where I do have some concerns with
the plan and I have to think these through.
While you took on the earmarks, I think you
did it very anemically.
If over the last ten years we've averaged some $11 trillion in
tax giveaways, tax earmarks, and if your plan over the
next ten years takes care of a $4 trillion problem,
we had almost three times the amount of money that you have
in your plan in cuts available through tax earmarks over the
last ten years.
To me, you punted. We punted.
If you really want to take on the special interests,
the poachers, you would have taken on the biggest poachers.
There are no school kids that I know of who forced us to spend
money on textbooks.
We do it because it's an investment.
But there are a whole bunch of folks who have tax breaks in the
tax code because they spent tons of money to make sure
they got to poach.
The fact that this plan only dedicates about 10% of those
earmarks that you have identified in the tax
code to help resolve the deficit is to me saying that for the
last ten years where some $11 trillion went out through
tax earmarks that we're only going to ask for a
small percentage of that to help now deal with the
deficits that we face.
That to me is anemic and as I said I think this commission
would punt if it would allow that to occur.
Secondly, I think on the issue of the appropriations spending,
as I said, the firewalls are so important,
but if they're not real we're going to end up making cuts that
are devastating to middle class America and once again the folks
who party for a decade will not have to clean up their mess.
And so I believe it's time the Department of Defense
was on the table.
Maybe perhaps for the first time we're going to ask the
Department of Defense to be audited and be able to account
for itself as a result of an audit so we can figure
out where the waste and the fraud is, but we have to be
serious about that.
And finally I will say that given the serious way that the
Chair's addressed this problem, that I want to make sure that I
give a serious response to your efforts on Social Security.
I have a father who worked all his live with his hands.
He got about a 6th grade education so he did everything
from canning tomatoes to fixing the brakes on railroad cars to
cleaning the hulls of ships in the LA ports to picking every
crop you can think of up and down the states of California,
Oregon and Washington.
And then spending the bulk of his time doing road construction
during the heyday of our freeway construction.
When he retired, and he retired in his 50s because we forced him
to, he already showed the effects of all that
physical labor.
As Mr. Schakowski said, if we're going to make this a
plan that works for America it's because it invests in Americans,
those who work very hard.
Social Security to me is not a problem in terms of the fiscal
crisis we face.
Today Social Security has trillions of dollars in surplus.
Trillions.
There is no aspect of the federal government,
the operating side of the federal budget,
that has anything near a dollar in surplus.
And so to say we must take on Social Security I think is a
-- should be a dead herring.
It doesn't really work here.
Absolutely we have to deal with the long-term solvency,
but I guarantee you if we could talk about the federal
government's operating budget being something we have to
resolve because in 30 years the federal government is
going to have a deficit, we wouldn't be sitting here.
Social Security is in surplus and it won't have a problem
for at least 25 to 30 years.
We have to resolve it so it doesn't become a big problem
in 25 or 30 years.
But to say you have to do it now is, I think,
is to market disservice to someone like my father
who worked very hard and payed in all this time to
Social Security.
So I will look very closely at anything that's done on
Social Security.
But I'm not interested in cutting the benefits of a
man who never made more than about $22,000 in a
year working with his hands simply because we have to take
care of the fiscal mess that was caused by a lot
of poachers in this economy.
And so I don't know if anyone could have done a better job
than Erskine and Alan in keeping us at this table.
As you can see I have some concerns.
But I don't want to leave the table because I started
off that very first day saying everything must be on the table.
And I know one thing: Alan and Erskine,
you left everything on the table and for that I'm going to stay
at the table.
We'll see what happens on Friday,
but I intend to stay at the table because you did me the
valuable service of letting my father know that you left
everything on the table.
Senator Bowles: Thank you.
You and I worked on immigration stuff together and you always
kept your word with me.
Senator Sampson: And you've been great.
And I hope you end up being a great leader of our party.
So thank you, sir.
I now go to my Congressman and my friend, my lifelong friend,
a person who I can tell 'ya while lots of us in the Clinton
Administration got credit for the balanced budget in 1997,
it would not have happened without the leadership of
Chairman Spratt.
So Chairman Spratt, thank you for all you have done.
Chairman Spratt: Thank you, Mr. Chairman.
I don't believe that -- is it working? Okay.
First of all, to our co-chairs, I would like to echo what
everyone else has said.
We wouldn't be here where we are about to do something of
high significance but for their tremendous efforts.
Secondly, to the staff and their output,
you made a huge contribution to this.
And to my two friends Paul Ryan and Jeb Hensarling,
I'll misdoing battle with you over the budget this year.
(laughter)
I wish you had said those things before November the 1st.
(laughter)
We showed that you can have comity and you can have civility
and you have constructive debate without necessarily being coming
to a conclusion on all the same points.
We've proved it can be done.
Nevertheless, we never did sit down and make a search for
common ground and come up with a budget that was truly
a deficit reduction budget.
This is an opportunity that may not pass again soon.
And indeed if it fails here today I'm not sure what its
destiny is likely to be.
I would like to make one thing clear.
Most of my points have already been made several times but I
think it bears repeating that the illustrative,
that the cuts that are outlined in this proposal many million of
expenditure in the area of tax expenditures are illustrative.
This committee, Commission, call it what you will,
has no authority to pass any particular law.
Even to put it in process of being passed.
But it does lay down an agreement.
It does lay down a proposal.
And to those who would say, well, let's great,
but how would you do it, they come forward with policy-based
arguments, changes in law that would accomplish the bottom-line
results that they claim.
I've been concerned about certain aspects of the budget
but if it's to succeed, and Erskine knows this from 1997,
we worked together hand-in-glove on that particular agreement,
it has to be perceived and in Congress and in the country as
balanced, fair and equitable.
I had a problem with discretionary spending
to start with.
I think it's right to put multi-tier caps.
I think it's right to have firewalls.
But if you ask anyone who knows the subject well,
he or she would likely say to you the real source of this
problem is two fold: One is the revenues, tax cuts;
and the other is mandatory spending.
Yet the reduction in discretionary spending,
as I understand it, I'm not quite sure where it stands right
now with the latest draft, but in previous drafts the reduction
in discretionary spending was two times the reduction
in mandatory spending even though mandatory is part
of the problem.
And revenues, I remarked before that it's a little odd that
we're on the threshold of passing a renewal of the
'01-'03 tax cuts which has an impact revenue,
impact I believe about $4 trillion.
And this package over which we're laboring to give birth
to has about the same impact.
If we did nothing on the tax cuts you'd have about the same
bottom line effect as we've gotten,
as we've achieved through all of the proposals that are made
in this particular agreement and that has to strike you as ironic.
But I go back to my initial point which is to emphasize that
this agreement doesn't go from here to the House or the floor,
floor of the House or the floor of the Senate.
It goes through the committees of jurisdiction and they will
decide what policies are implemented in order to achieve
the bottom line results that are essential to achieving the
overall results of this package.
If we only make here illustrative ideas that are
feasible, it can be done and that have policy-based reasons
for being changed, and given that,
what we're looking at here is a great opportunity.
I won't declare my colors until I've read it all,
but this is an opportunity, this is a process.
If it fails I don't think we'll revisit for some time to come.
I think it's extremely important that we continue the process.
I think they've given us a baseline upon which to
build and build constructively.
And I think we should keep this process moving forward.
Thank you, Mr. Chairman.
Senator Bowles: Thank you, Chairman Spratt.
You're the greatest.
We're going to Ms. Fudge, Mr. Stern,
Dr. Coburn and then Senator Crapo.
Ms. Fudge: Well, first of all, let me add my thanks to Erskine and Alan
and the staff for incredible leadership.
And being the first time to serve on a commission and as
probably the only one on the Commission with no political
affiliation, it's been quite an interesting experience.
I came to this with no ideology, no ideological perspective on
how to address the issue other than as a citizen with children
and grandchildren concerned about the future.
And it was clear to me that all of you have the
same feelings as well.
There are a couple of things that I would just
like to highlight.
As we've developed this framework -- and I do believe
it's a framework, whether we get 14 votes or not,
I believe discussing with my colleagues that many of the
things that have been listed here will indeed be addressed,
if not all of them -- but it's important as we chart a future
of growth for our country that we put into perspective the
importance of how much we look in the rearview mirror
historically and how much we look to the future.
And I think that's what we have tried to do with this document
is to understand clearly the demographic trends;
to understand clearly the need for greater global
competitiveness because we are, indeed, slipping;
to understand the need for continued focus on education
and the need to develop a talent base here in this country that
can compete globally; and more importantly,
to get back to a position of economic growth.
And we can all differ on whether we think this is the right
approach to get there, but let me say this: I deeply support
what we're trying to do in terms of tax reform.
From a business standpoint, we have been hamstrung by
the tax laws that we currently have in place relative to our
global competitors.
I also think it is time to look at Social Security,
not just for the next 20 or 30 years,
but for where we're going to be longer term.
And if we don't take the action now,
then we don't put ourselves in a position to address the
issue longer term.
Which brings me to the final point.
I do believe the time is now.
I would hope that as we move forward that we don't find
ourselves caught up in a process which takes us years to
implement many of these things that if we take action now,
and that's been reinforced by many of the people who came
before the Commission during the course of our deliberations,
the importance of taking action now can put us on a path for a
more strong future over the long-term than if we wait and
discuss and the years go by and we find ourselves in a place we
don't want to be.
And I think several of my colleagues have reinforced the
point which I strongly believe and we've seen it play out that
once the ball starts rolling in the wrong direction,
it moves with rapid speed in a way that we can't
then impact it.
We have the opportunity now to impact our future.
And if we wait to act on certain things,
we risk putting that ability to shape our
future in great jeopardy.
So I for one support this.
Do I agree with everything in it?
No.
But have I had a chance to read it and review it and say,
you know, I'm about 80% there, and that to me is more than
enough to agree that this is the framework for us
to move forward.
And I thank you for your work and I would particularly like to
thank Senators Conrad and Gregg because I think it really has
been your impetus and focus to making this Commission in
helping us come together that has brought us to this point.
Thank you.
Senator Bowles: Thank you, ma'am, and I think that's absolutely true.
Mr. Stern.
Andrew Stern: I said at the first meeting that I do love this country and
I happen to think, like the two Congressmen man here said,
that it really is a gift.
And it's been a gift for me and my grandfather Louis the Butcher
if he were still alive to imagine me sitting at the
table with all of these congressmen and senators.
It's been an enormous honor and opportunity.
And I just want to say to people everywhere,
including my own community, if this process did anything for me
it made me appreciate what a dangerous and precarious
situation we face as a nation and our inability to act and
our waiting to act will only make the situation a lot worse.
To this I just want to say that I don't normally get a chance to
sit at a table with so many Republicans,
and I acknowledge that Jeb and Paul are appropriately
on my right.
(laughter)
But to them and to Dave and to Ann, I mean,
I think this was a unique process where I really got
to understand and learn that the people really are serious about
getting something done and a lot of the caricatures and
stereotypes and I appreciate the environment you set,
Alan and Erskine, that I think made this a somewhat different
process than most people have a chance to experience in
Washington, D.C. I think Paul Ryan said it right: No matter
what happens the Commission has been a success.
We focused the views of the nation on a
very serious problem.
A very sobering problem.
It actually got me as Allen Simpson said to actually have
to write my own plan because I agree strongly with Jeb that in
the end this is about plans.
It's not about ideas, it's not about what
your favorite things are.
And I tried to write and I will soon let it out,
but a plan that really fits within the framework of the
co-chairs in terms of the $4 trillion cuts,
the same kind of discretionary spending,
many of the same tax things.
But I just want to end and people can read it and it will
sort of give you a sense of, you know,
a lot of agreement I have and a couple of things that obviously
I think of differently.
I just want to end by saying this: I think the problem in
Washington too often is that we're historians
and not futurists.
And unfortunately as I said in the first meeting we are at a
very different moment of economic history.
This is the third economic revolution.
Where the industrial took 300 years and the agriculture took
3,000, it has only taken 30 years and we are now witnessing
what a global economy is and having to act in ways that we're
not familiar with in our country to make strong, swift,
decisive and fast decisions.
And I just want to just put on the table some things that I
don't think are necessarily part,
all or part of this report but what I think really goes to the
whole question of jobs, economic growth and competitiveness in
the long run.
One is the tax system and I think you hit the sweet spot or
the right spot, you know, about tax expenditures and about
lowering rates and about sort of cleaning this mess up so that
American people don't have to hire tax accounts and Dave
doesn't have to sit with all kinds of experts every time he
makes a business decision to try to figure out how to arbitrage
the taxes, that's now how we should do business in America or
what our CEO's should be needing to spend time on.
Two, when it comes to health care I appreciate we want to
go back and look at the Obama and the Congress's decision
on health care.
I think we have to go forward because I think we now know a
series of things.
One, which I always like to say we're the only nation on earth
if we want to be competitive that still puts the price of our
health care on the cost of our products and competes against
nations around the world that don't.
That is a stupid economic and competitive plan.
Two, the problem we have in health care is not going to
be fixed, I believe, by patching up a system we have.
It needs fundamental restructuring.
I know Paul Ryan has one set of ideas.
I think in Germany and Switzerland and other
countries around the world there are other sets of ideas.
But we are at a moment of restructuring,
not just trying to patch up a plan that now costs us 5% more
of GDP than any other country on earth.
We cannot afford 5% more GDP and compete in a global economy.
And how we deal with that, that will be a great debate but we
need to deal with it and we need to deal with it soon.
Fourth, I want to say that for all the discussion about
competitiveness and about lowering corporate tax rates I
do want to acknowledge that most countries around the world also
have an additional way to help their competitiveness and that
is to have some kind of consumption tax.
And if you look throughout Europe and other places,
they lower tax rates, and so could we.
If we did it -- Michael Grass talks about eliminating a
hundred million tax returns.
But we need to think about taxes that help our exports and defer
or hurt our imports.
And right now, we have a tax system that doesn't really help
us, but a system around the world that helps everyone else.
And finally, I would say that we don't have any
pool of investment.
And I really appreciate what the co-chairs have done as they cut
and invest, as they know that's not my methodology of doing it.
But I think in the end, the PAYGO system never allows us to
amass enough capital for the big investments this country needs
to do because you have to gore someone else to get your money.
And if we can't figure out a way to find the capital to invest in
broadband and infrastructure and water that we never get to or we
have to push it into a stimulus bill or some other way,
that is not a reasoned way for a country to make decisions about
it's long-term investments.
So I admire what you've done.
I've written my own attempt to try to get to the same place.
But I do think we need to tackle some of the biggest
issues facing ourselves.
And my last challenge is this.
There is no reason, I think as Congressman Hensarling said,
that the President of the United States,
that the leaders of the House and the Senate cannot put a
plan on the floor of their bodies this year.
And we should keep voting and debating and amending until we
have a plan, because it can't wait any longer.
Speaker: Thank you. I think if there were two people who I came up
here with a caricature of, it was Andy Stern and Dr. Coburn.
And I couldn't have been wronger on both.
You couldn't have been more constructive.
And I thank you for that.
And Dr. Coburn has not only become my doctor but he has
become my friend.
And nobody's staff has been more helpful to us
than Dr. Coburn's staff.
And he has pursued this with logic each and every step.
So thank you for all you've done.
We'll go to you, Dr. Coburn.
Dr. Coburn: Alan and Erskine, I'd like to thank you for your efforts.
I'd also like to recognize Joelle Cannon on my staff who's
spent a lot of sleepless nights working with your staff who've
spent a lot of sleepless nights trying to develop a product.
You know, as a physician, I'm trained to find the real
problem, what's the real problem.
Not the symptoms, but what do the symptoms and science lead me
to as, what is the real disease?
And the real disease is we've abandoned the concepts
of our founders.
We've created reliance instead of depending on self-reliance.
We've created government programs that are unaffordable.
We've abandoned limited government.
We've abandoned the enumerated powers.
And now we're in trouble, and nobody's looking at
what the real problem is.
And the real problem is us.
Alexander Tyler said all republics fail.
The average age of the world's republics is 200 years.
And they all fail because eventually the populous learns
that they can vote on something from the public treasury.
And they all fail over fiscal issues.
They're not conquered from without before they
rot from within.
And we're rotting.
We're rotting as we sit here and speak today.
In 2004, I had the privilege of reading a book by Peter Peterson.
I want to give him credit.
He talked about where we are today long before anybody was
talking about it.
He wrote the book in 2002.
It's called "Running on Empty."
And it wasn't a partisan book, but it raised the level of
awareness of several of us to what was happening.
And if you don't think we're in trouble,
think about the following numbers.
Next year, $36 trillion has to be funded in the world.
There's $23 trillion available to fund it.
That's what the borrowing is going to be for governments all
across this world.
What do you think is going to happen to interest rates?
What's going to happen to the cost of not living within your
economic means?
It's going to be disastrous for us.
And the threat isn't coming in four or five years.
It's coming in one or two.
We have a fed that's monetizing our debt,
and all of our trading partners are reacting to it negatively in
the hopes that we can stimulate our economy when the real
problem is, is we have way too much government and not enough
of the thing that made America great, which is independence,
personal responsibility, and self-reliance.
And we've created dependency.
And one great example is 1 in 19 Americans today get SSDI or SSI.
That's 1 in 19 Americans are disabled.
And when the law says you're only disabled if there's no job
in the economy you can perform and we don't address that issue
in this plan, the SSDI is going to be broke in eight years --
seven years.
And we're adding more, and they're getting ready to add
two new categories to disability in the next
month without Congressional oversight or anything else.
We are out of control as a government.
We have abandoned the principles that made America exceptional,
which wasn't the government.
It was the people.
It was us relying on ourself; not saying,
I can take a pass and depend on the government.
And that says nothing about not wanting to make sure things are
there for those who truly need our help.
A compassionate response to those that cannot fix their
situation any other way, we ought to be there to help them.
But that's not what we've created in our country.
And there are a lot of things that I think
have been accomplished through this commission.
There's a lot of knowledge that's been gained by a
lot of people.
We've totally disregard the long-term problems that we
have with healthcare.
I agree with Paul and Jeff.
Paul's road map is a way to solve that problem.
Nobody -- nobody has come forward with another solution,
because nobody has the courage to come forward and say we can't
have what we think we have today and still have a future.
And Paul has had the courage -- and those that have supported
what he's done -- to come forward and say,
if in fact we want to solve the problems,
everybody has to sacrifice, which means you cannot be
comfortable with the status quo.
The real problems for our nation are going to come
forward in two years.
We have a Treasury Department that's still borrowing
short-term money with the false idea that they're going to save
interest costs rather than buying us some time
by extending our debt terms.
Because they're sacrificing the good for the short term,
what looks good in the short term,
for the very real problems for the long-term.
So we have the administration doing the same thing the
politicians do.
Don't do the tough right hard thing, do what looks good.
This plan is a plan.
The people have worked on it, have struggled to try
to build a consensus.
I have heartaches with tons of it.
But I know we have to go forward.
This isn't the first.
If we pass this plan by the Congress, two years from now,
we're going to be coming back making a more difficult one.
This is just the down payment on what are some very real,
difficult sacrifices that everybody in this country
is going to have to make.
And if you really think about what built our country and
what's the heritage of our country, it is sacrifice.
What Jeb talked about, creating the real freedom,
the real opportunity as it goes forward.
It's not about owning a house.
It's about having the potential to own a house.
So my questions really come down is, will we come together and
put something out, even though probably 50% of it I'm not happy
with as a down payment to make a statement that says this problem
is so real, Tom Coburn can't have what he wants.
And I can't.
And I'm going to have to sacrifice and my family's
going to sacrifice.
But I want to make sure my grandchildren have some of the
same opportunities and freedom that I've experienced.
The potential for us to re-embrace the real character
and success of America only will come if we embrace the
principles that our founders embraced when they started this.
When Benjamin Franklin was asked -- you've all heard this -- what
did you do, he said, I gave you a republic if you can keep it.
Well, I think we ought to be cheating history.
History says we're not going to make it.
And the way we cheat history is for all of
us to give up something.
Everybody at this table, give up something,
and then say the way forward for America is everybody to start
sacrificing so we create a future that is honoring the
tremendous sacrifices that came before us.
Speaker: And I share the view.
You've given me -- I didn't know who you were.
All I know is that you were a man of integrity and honesty
and directness and you're real.
Speaker: All I can tell you is I hope everybody sees that,
because I couldn't have more respect than I do for you.
Thank you for the guidance and the wisdom you've given me.
Senator Crapo.
Senator Crapo: Thank you very much. Am I the wrap-up speaker?
Speaker: (inaudible)
(laughter)
Senator Crapo: Don't you wish.
I'm not going to tell you whether that is the case today.
I, as many others have said, am going to continue to study this
for a day or so to be sure.
But the fact that I'm not going to give my decision today and
the fact that I'm the wrap-up speaker doesn't mean that I'm
not going to tell you what I think of what I see here and of
the process.
And I first want to go back to comments that have been made by
many with regard to Erskine and Alan.
I didn't know either of you well.
I had probably met you in social occasions,
but really during this commission deliberation
is where I came to know both of you.
And I have developed a great respect and friendship and
admiration for you, and, frankly,
for all of the other members of the commission.
A number of the others of you, I did not know well.
Others I did know very well because of the mechanicians
of Congress and how we work together here.
But I just have to make the first comment that I think I've
heard from all of you, that the relationships that we've built
on this commission have been a very big part of
the success of it.
And I personally have great respect and admiration for each
of the commission members.
I also want to add to that, the other Idahoan on the commission,
our executive director, Bruce Reed,
and he has been outstanding in his efforts to help bring us
together and to deliver a work product for us
as we've made demands.
Now, having said that, I do share a lot of the opinions
that have been expressed at the table by other members
of the commission.
And I won't go over all of those,
but I want to just kind of, as many of have done,
talk about the positives and some of the concerns
that I have.
As with everybody here, I've got a lot of heartburn about this.
There are also some things in here that are really,
really important to me and that, I think, to the American people.
And let me just go through those a little bit.
At the outset of this process, I was very concerned that this
commission would take too small or too limited a view
of our task.
There has been plenty of discussion here at the table
that I won't go over about the threat that we face and
about how we are on an unsustainable course.
And I will repeat what someone else said,
that we are understating it.
If we do not clearly spell out, in our minds and for the
American people, what the alternative of inaction is --
and in fact for those who Alan mentioned who will be attacking
whatever happens here from this commission or any other plans
that are brought forward -- I think it's important that
America understands those attacks and understands the
discourse and the debate that will take place on this issue in
the context of what the status quo is and whether the status
quo is better or worst than what is being proposed in this or
other plans and proposals.
And frankly, when a clear understanding of what we are
facing is achieved, I think a better perspective on this
proposal is achieved.
That being said, I was concerned as this process started out,
very concerned that we would have too limited a view and that
we would not really take the opportunity to make the bold
steps that need to be made and come forward with a bold
comprehensive plan that will help get us on the pathway to
achieving the American dream as has been described here and to
making it so that this generation can pass on to the
next generation the opportunity for a greater standard of living
and for greater freedoms and for the ability to live their lives
in this country with the freedom that they deserve.
In terms of the strengths of this proposal that I see,
one of the key strengths is that it does recognize that
spending is the problem.
It also, I think very fortunately,
recognizes that on the revenue side the issue is reform of our tax code.
That is one of the most significant,
big parts of this plan, as I see it.
I've said to many of you in other meetings that if we as a
country set out to create a tax code that was more inefficient,
more unfair, more costly to comply with,
or more anti-competitive in terms of making us less
competitive with the rest of the economies of the world,
we probably couldn't do much worst a job than what we've
got with our current tax code.
And yet in Congress, we continue to have the debates which we are
having right now in other rooms in the Capitol building about
whether to raise or lower the rates.
What we ought to be talking about is what kind of a tax
code should we have.
And this proposal puts that on the table and moves the debate
into the arena of how should we structure our tax code,
which is a key part of how do we make our economy dynamic
and strong and build back the strength that we need to build,
if we are going to deliver that American dream option in
a strengthened position to the next generation.
I think that that's very, very important.
Erskine, I think you said that you didn't think we should
hallow out our country while we were fixing out our fiscal
problems, and I agree with that.
On the revenue side of the picture,
I think that is one of the key things that we must focus on.
We must reform the tax code.
In addition, as I've thought about the areas where I have
problems -- and, as you might guess,
they are similar to the issues that Jeb and Paul and Tom have
raised -- it struck me as I was thinking about it that in most
of those areas my concerns are with what is not in the plan as
opposed to what is in the plan.
Not all of them but some of them, and in fact most of them.
I agree -- I think it was David that said that he thought the
plan ought to go further.
And frankly, on the spending side, I think it should.
It doesn't two far enough to get us where we need to go.
And we need to have a more robust effort to address
the spending issues.
But the plan does take very strong steps on the
spending side.
As you know, Erskine, I have continuously harped about the
fact that process is critical.
You can control the outcome with process.
Or you can assure that you can't achieve the outcome if you don't
have adequate process protections in place.
And although there are some good process protections in here,
I would like to see them strengthened so that we
can have even a stronger guarantee that the path
that this plan sets out is one that is followed.
I appreciate though the fact that,
added to the reform just recently has been one of the
requests that I made, that if we do in fact see a dynamic impact
on our economy as a result of the tax reform and the spending
reform and the other efforts of this panel,
then those increases in revenue, as they are plugged into the
fiscal picture of our Congress and our country,
are to be used for deficit reduction or rate relief
in our tax policy as opposed to more spending.
And I appreciate that reform being put into this package.
That's one of those kinds of things that,
just an example of one of the things that was put in that I
thought wasn't in there when the first proposal was put out.
I agree with the concerns about the limited nature of reform in
the healthcare arena, which is probably the biggest arena on
the spending side that we need to be reforming.
And so I have concerns that we have not achieved what we need
to achieve there, and we need to move forward.
And where does all of this bring me?
There are others.
I want to mention one other before I go on,
and that is -- as I believe Jeb mentioned -- I've, from day one,
believed that we should have some kind of an enforceable
global spending cap.
We've got a global revenue cap, and although it's a little
higher than I think it should be, it's at least a cap.
Right now the cap is 99 or 100%.
This is at least moving it dramatically in the
right direction.
And if you put in there the protections that if a dynamic
economy does build out of what we were trying to do here,
that the revenue is pushed into deficit reduction or rate
relief, then that improves the circumstance there.
But we need a global spending cap.
So as I evaluate this plan -- like I said,
I'm not sure where I come down now because there is a lot of
heartburn in here with me and there's a lot of very positive
steps here that I think this country needs to be
engaging in quickly.
But as I look at it, I don't see anything that
stops Congress from engaging in more healthcare reform.
I don't see anything in the plan that says that we can't add some
stronger process protections.
And I don't see anything in the plan that says that we can't
engage in further reform of the spending and further control and
further reduction of the spending excesses in Congress.
And so the question that I have is,
are we putting into place a system that will at least get
us heavily down the road in the right direction and allow the
process in Congress to fill it out and strengthen it as
we move forward?
Or are we putting into place a system that really doesn't
get there and sees the tax increases occur but the spending
reductions not occur or the kinds of problems that have been
referenced with earlier reforms?
And those are the kinds of serious questions that I have.
Frankly, if we can get rate reduction out of dynamic growth
in the economy, we may be able to dramatically change the ratio.
In fact, I think we will dramatically change the ratio of
how much of the solution is coming from where it should be,
which is the spending, versus revenue increases.
And so I know that I've just sort of gone across the
waterfront here on some of the issues,
but I believe that these kinds of issues and this kind of
thought process is what we ought to all go through as we evaluate
whether we should vote to send this plan forward to Congress.
Remember, I mean this plan right now is a concept plan.
It's got some good detail, but Congress is going to have to put
a lot of structure to this as the proposals are termed
from this stage into legislative language.
And my hope is that some of my heartburn can be addressed in
that process.
And it's a question.
You know, I really do struggle with whether we are going to
give life to a process that can put us on the right path,
moving in the right direction, and give us the opportunity to
strengthen it or whether it's a process that will end up putting
into place the mechanisms for the kind of failures that I
think some of the other efforts have faced in the past.
And that will be my decision.
That will be the basis on which I make my decision as I further
review all of the provisions that you've got in here.
But again, I want to thank you for the effort.
It has been an outstanding work product to this point.
And nobody could have done it better.
Speaker: Thank you so much, Senator.
Senator Conrad and I were down here shaking our heads
at everything you said.
And we were nodding in agreement.
We hope this is a start.
It's not a final step by any stretch of the imagination.
We've got some heavy lifting ahead of us,
especially you all who are elected representatives.
And I hope, for one, that you are a leader in that process.
Shoot, I've only been down the Snake River.
I don't know a lot about Idaho, but I know a leader when I see,
and you are one.
Thank you all so much for being a part of this.
Al's got a few words that he wants to say,
but I just want to make sure that you know that we're going
to try to get together Friday.
If that's not possible with people,
then we'll look for you all to let us know by 11:00 on Friday
where you stand on this.
Senator Gregg?
Senator Gregg: I just want to note that I have a long-standing
family commitment.
Speaker: He does. Senator Gregg has a long-standing family commitment
where he can't, but he's always --
Speaker: I wouldn't miss your wife's 60th birthday.
Go ahead. No, you don't do that.
Speaker: Her 39th birthday.
Speaker: We wouldn't be here without you and Senator Conrad,
and I so thank you very much for your strong
support and leadership.
I also want to thank Bruce Reed, as you all have done,
and our team.
Last night, I got an e-mail from Bruce at 3:38,
the night before last at 2:58, and the night before
that at 2:38.
Bruce Reed has been a great leader,
and anything smart I've said came out of his brain.
Speaker: I don't believe all of that.
Let me tell you, the roses are being thrown around,
and it's nice.
We don't want to whiff them until we see what happens or
it won't matter.
But you two, thank you, both of you.
You just stuck -- and it was tough for you to face
that defeat in the Senate.
And you rose above that and got down here and are mashing
your teeth like -- I don't know if you guys can do it.
We tried in the Senate, didn't work.
But you stuck, and it worked.
And Bruce, you're just a husk of your former self.
You have walking pneumonia, but you can go sleep somewhere.
But let me say to Mike, I can assure you that this is a big
un-digestible lump, and there's nothing in here that should
cause you concern about being watered down.
This baby is stuck in the craw of America,
and it won't go away.
It's indigestible, absolutely indigestible.
So you should feel confident.
It was crafted that way, because I got as much pain as Tom.
I come from a state filled with oil and gas and coal.
I may have to divert my flight.
I may have to creep through Montana,
through Baucus Country to get home.
When I get home, say, you messed with the depletion allowance,
you messed with tight gas.
You messed with fossil fuel.
You messed with energy subsidies.
What the hell were you doing?
I'll say, lowering your tax rate, Jack,
what's your next problem?
I'll just stuff it right back in them, which I've always enjoyed.
(laughter)
Speaker: On that, we will adjourn. Thank you very much.