Week In Politics: Debt Ceiling

Robert Siegel is joined by Katrina vanden Heuvel, the editor of The Nation, and Yuval Levin, editor of National Affairs, to discuss this week's political debate over the debt ceiling.

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MICHELE NORRIS, host: From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.

ROBERT SIEGEL, host: And I'm Robert Siegel.

On Fridays, we typically hear about the week's major political developments from E.J. Dionne and David Brooks. This Friday's different. First, E.J. and David are both enjoying hard-earned vacations. And second, the week feels like it's just getting started. The Congress will be in business over the weekend.

So joining us now are, first from New York, Katrina vanden Heuvel, the editor of The Nation. And here in Washington, Yuval Levin, editor of National Affairs. Welcome to both of you.

KATRINA VANDEN HEUVEL: Thank you.

YUVAL LEVIN: Thank you.

SIEGEL: And let's start with your appraisals of what's happening in Washington this week. When you consider the Boehner plan, the Reid plan, what President Obama has had to say them, is the country - first, Katrina vanden Heuvel - is it changing course on deficit spending? Is it grasping a nettle, ducking the hard ones? What do you say?

HEUVEL: What I think is we're witnessing a Washington out of touch with the real economy in this country. We have a jobs crisis, not a debt crisis. And what's so notable about the current plans on the table is how far removed they are from the opinions of most Americans. By overwhelming majorities, Robert, Americans want Social Security and Medicare and Medicaid protected. And the most popular opinions on deficit reduction are raising revenues, raising taxes on millionaires, billionaires.

So I think there's a sense of this country moving in the wrong direction, because this - Washington has been so out of touch. To me, that is the lesson of this past week and that every plan before Congress, and all of these dueling plans - you need a libretto, even political junkies, let alone ordinary Americans need a libretto to follow to follow this astonishingly reckless nightmare inside the Capitol.

SIEGEL: Let's turn to Yuval Levin. You've written that the federal budget is on a trajectory of spending that's powered so much by Medicare and Medicaid that sometime in mid-century, the federal government would become a health insurance plan, with some side jobs like the Navy and the Army.

Well, do you see any change in that? Has anything moved this week?

LEVIN: Yeah. Well, on that front, unfortunately, no. The missing ingredient from all the talk of deficit reduction this week has been entitlement reform, which has been left entirely off the table. And therefore, tax reform has also been left off the table. But I think this week, we are making toward some deficit reduction and we certainly are looking at a dramatic debt problem in the coming years, a debt problem that's worrying our creditors, that's worrying anyone who is looking at the future of the country's prosperity.

Including the future, of course, of those most in need and those without jobs. And we have to begin to get control of our spending and our deficit and debts. We're going to begin to, I think. Where this is headed is toward a solution that involves statutory spending caps. There's basically agreement on that now. The Reid and Boehner bills both have them, and that is a very good way to begin to control discretionary spending, which is a small part of the problem but an important one.

So I think substantively, we're actually making some significant progress, even if politically it all looks rather ugly.

SIEGEL: This week, the whole discussion has been about spending, as you both said, and not about entitlement spending, for that matter. And everyone remarks on how the spending amounts, the trillions that are being offered in cuts, really aren't that different. When he gets down to taxes or, for that matter, when it gets to entitlement, do you see any capacity - given how tough it's been after you've taken the two toughest questions for the two parties off the table?

Katrina, any hope that this group can reach agreement on a more serious package?

HEUVEL: But here's the problem, Robert. The way all of this is framed - this toughness and courage - means taking on programs that provide security and dignity for millions of people. Let's just start with reality. Reality is that domestic spending adjusted for inflation and population has not risen since 2000. Tax cuts, unfunded wars, rising health care costs and recession have racked up the deficit. Social Security should not even be part of this discussion because Social Security is in surplus, has contributed nothing to the deficit.

And to what Yuval said, I mean, Medicare actually does a better job controlling costs than the private insurance industry. Yes, health care costs are the leading source of long-term debt projections. The president is right but that's because our health care system is broken. We need to reset the debate in this country because the real deficit we have is the public investment deficit in the short-term.

The best deficit reduction plan is to put people back to work and to boost demand and growth. The GDP figures out today, lousy growth figures, 1.3 percent. We must do better if we're going to have recovery, let alone prosperity.

SIEGEL: Yuval Levin?

LEVIN: Well, I think this is the beginning of the proper conversation to have, which is a conversation about our long-term debt problems that do center on the health care question. And unfortunately, Medicare doesn't offer a model for controlling health care costs. The structure of Medicare, the way it pays physicians, the way it pays providers is the chief driver of our growing health care costs. And so, in order to control those costs in the future, and to save Medicare for those who need it, we're going to have to change Medicare in such a way that it begins to use some market forces to control costs. That is not going to happen as a result of these debt limit conversations.

There was, I think, an opportunity for a beginning on that front as part of these conversations. It looked for a while like that might happen. But in the end, Senate Democrats were not willing to consider entitlement reforms. And, frankly, Senate Democrats were not willing to consider tax increases. And so, we ended up with a smaller deal, but one that I think does make some important starts on controlling our deficit spending. I think it's important to see that for all that - there is back and forth, for all the debate about the different bills, the bills really aren't all that different.

All of them basically center on 10 years of discretionary spending caps, real spending caps for the first time since 1991. And the caps put in place back in the '90s really worked. And the caps of the sort that we're looking at now have a real chance of working, as well. It's the first real opportunity to control deficit spending that we've seen in a while.

SIEGEL: Katrina vanden Heuvel, is that another way of saying that the Democratic Party and President Obama have moved very far to the center, if not to the right?

HEUVEL: You know, I think President Obama has been playing in the field of cuts, the field of Republican dreams. I think the Republican Party, if it wasn't as extremist and had not moved as far recklessly right, had a conservative dream team plan. David Brooks of The New York Times spoke of that. I do think that what the president has failed to educate the country on is resetting a debate where, in the short-term, we need to have sustained investment and new vision for this economy, rebuilding it, infrastructure and all of those good things, education; to rebuild the middle-class and to help the working poor, the elderly, rise into the economy.

Instead, the obsession with the kind of fiscalization(ph) of the discussion, I do fear that too much of the Democratic Party is buying into an elite consensus, that debt and deficit, spending reductions are the way forward. I think that is wrong. I think it's bad policy, bad politics, bad judgment and a misreading of the 2010 election, which was not about spending as much as about jobs and the economy. I keep coming back to that because it is so clear this Washington, the establishment is out of touch.

SIEGEL: Katrina vanden Heuvel...

HEUVEL: Thank you.

SIEGEL: ...editor of The Nation in New York. And, Yuval Levin, editor of National Affairs in the studio here in Washington. Thanks to both of you.

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