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Solutions For Bringing Down The National Debt

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Solutions For Bringing Down The National Debt

Economy

Solutions For Bringing Down The National Debt

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REBECCA ROBERTS, host:

This is TALK OF THE NATION. Im Rebecca Roberts, in Washington, sitting in for Neal Conan.

I checked the U.S. Debt Clock before coming here to Studio 3A. The country's national debt stands at more than $12.5 trillion. That's around $41,000 per person, as of right now. The debt clock keeps ticking away. Over the next 10 years, the national debt is expected to double.

No matter where you stand on the political spectrum, most people agree something has to be done to bring that number down and balance the budget. But that's generally where the agreement ends. There's nothing approaching consensus on raising taxes of cutting spending to reach that goal.

One of our guests this hour, former Republican Senator Alan Simpson of Wyoming, faces the challenge of dealing with just such difficult choices. President Obama appointed him and former Clinton White House chief of staff Erskine Bowles to head a bipartisan commission to give recommendations for long-term deficit reduction. Senator Simpson joins us shortly.

And later this hour: what books taunts you, unread, from your bookshelf? Email the book you just couldn't finish to talk@npr.org.

But first, bringing down the national debt. We want to hear from you this hour. What government programs are you willing to give up? Are you willing to have your taxes raised? Our number here is 800-989-8255. Our email address is talk@npr.org. And you can also join the conversation on our Web site. Go to npr.org, and click on TALK OF THE NATION.

We begin with NPR senior news analyst Ted Koppel, who joins us from his home in Maryland. Hi, Ted.

TED KOPPEL: Hello, Rebecca, and the answer is "War and Peace," since I'm not going to get a chance to tell you later in the show.

ROBERTS: You never finished it?

KOPPEL: Never finished it.

ROBERTS: I have a feeling you're not alone.

KOPPEL: I keep trying. No, no, no, and I keep trying.

ROBERTS: Well, someday. So first of all, are raising taxes and cutting spending truly the only options we have here?

KOPPEL: No, they're not the only options. The other option is just to start printing more money. I mean, that's always an option, but that clearly leads to massive inflation. And I think you will hear some people, and perhaps Senator Simpson is among them, who will say that you can also grow your way out of a situation like this.

The problem is, that's exactly what we're trying to do at the moment, grow our way out, and we've got what, roughly 15 million unemployed in this country right now, maybe more than that.

I guess I'm one of the naysayers that Senator Simpson is going to crush, and I always look forward to being crushed by an old friend like him. So let's bring it on.

ROBERTS: Well, let's define our terms quickly, before we welcome Senator Simpson. We've been using deficit and debt interchangeably, but they don't actually mean the same thing. Let's explain the difference.

KOPPEL: Well, I can't explain the difference. I'm sorry. But what I can do is give you a sense of what that deficit really means. You were talking what did you just say, the clock shows $12 trillion?

ROBERTS: Twelve-and-a-half trillion.

KOPPEL: Twelve-and-a-half trillion. We throw these terms around with such abandon that sometimes I think it's useful to help us get our mind around the number. And I told you before the program, when we were chatting earlier today, if you were to imagine a business that began in the year that Christ was born, and imagine that that business proceeds to lose now this is a theoretical enterprise, obviously proceeds to lose a million dollars a day, every day, seven days a week, 365 days a year, and it keeps on doing it and keeps on doing it, it would be another thousand years from now before that business had lost $1 trillion. That's how much money we're talking about.

ROBERTS: It's just a staggering amount of money. And of that $12 trillion, some of it is owed to foreign countries like China. What are the risks associated with that?

KOPPEL: Well, much of it is owed to foreign countries. In fact, you could make the argument I mean, that's not precisely where it went but neither the Bush administration nor the Obama administration has raised one nickel in additional taxes to pay for the two wars that the United States is engaged in right now.

We have currently spent, since the initial attacks on Afghanistan in late 2001 and since the Iraq War began in 2003, the United States has spent about a trillion dollars, which is roughly what the Chinese have lent us by buying U.S. Treasury bonds.

So you can argue, I mean at least in bookkeeping terms, that the Chinese have been financing both of our wars. We also owe the Japanese about a trillion dollars. We owe several countries in the Middle East something approaching a trillion dollars. We have been quite reckless in terms of spending what we don't have.

ROBERTS: So with the scope of the deficit in mind, let's bring on former Senator Alan Simpson. He is the co-chair, with former Clinton White House chief of staff Erskine Bowles, of the National Commission on Fiscal Responsibility and Reform. And we are talking to him from his home in Cody, Wyoming. Welcome to the program.

Mr. ALAN SIMPSON (Former Senator, Republican, Wyoming; Co-chair, National Commission on Fiscal Responsibility and Reform): Do you think I'm going to sit here and listen to Ted Koppel crush me?

(Soundbite of laughter)

Mr. SIMPSON: Let me tell you, I never God, I never was able to crush him. I'd love doing the show with him. He's a very special friend. How are you, Ted?

KOPPEL: I'm just, I'm doing very well, Your Lankiness. How are you doing?

Mr. SIMPSON: Well, I won't think that one night we had the visit with Nina Totenberg was not my finest hour, but you know, when I went to Harvard, she came up and talked. I invited her. She became quite a dear friend. We had a lot of fun with her.

KOPPEL: Our listeners have no idea what you're talking about, but you and Nina were once on "Nightline" and had some disagreements, which carried out onto the curb. That's all I'll say at midnight.

Mr. SIMPSON: In the parking lot with spirited language.

KOPPEL: And words were exchanged.

Mr. SIMPSON: Oh, just terrible. Well, here I am, and I'll bet I'm closer to where you are. When you said grow your way out, boy, that isn't my idea. I don't see how we'll ever grow our way out of this one, but shoot, ask anything you wish.

ROBERTS: Well, what is on the table? Let's start with that. Is there anything that's not on the table in terms of options?

Mr. SIMPSON: This is a suicide mission for a couple of old coots who believe more in their grandchildren than they do in other words, it's not the current election that's important, it's the next generation. So when we were asked to do this by the and Erskine, a very marvelous man, a splendid gentlemen, immediately the cry went out we were stalking horses for taxes. I said, I'm not a stalking horse for taxes. I'm a stalking horse for my grandchildren, and unless we get serious here, everything is on the table.

So of course, you know, they come shrieking, you know, like the hounds of hell and the harpies from the cliff at me, and here, I've dug up my record on taxes, and I'm going to slip it right to them.

An attack unanswered is an attack believed, and I know how Washington works, but I had one of the best records of restrictions on taxes there ever was. But as Ted says, for the first time in our history, we have financed not one war but two without a shred of taxes. You know, I'm not out to get more, but that's a reality.

KOPPEL: Can I ask the question this way, and Rebecca, forgive me for jumping in.

ROBERTS: No, no.

KOPPEL: I am just my great concern is that the level of acrimony here in Washington right now, the level of distrust, and of course, we in the media add to it constantly, there is no such thing as a trusted middle ground anymore. You're either one of them or one of those. How in heaven's name is Congress ever going to get to the point that they will find - the individual congresspeople and senators will ever find the courage: A, to cut beloved programs; or B, to raise taxes to support those beloved programs?

Mr. SIMPSON: I don't know, but you hit it. The coin of the realm in that body for 18 years was trust. I mean, I didn't agree with the lifestyle of another colleague or something, but if we shook hands or said this is it, or I'm with you on that amendment, or when you get to the final vote, I'm with you. It was trust.

And I had that relationship very clearly with Ted Kennedy and members of my own party, clearly, Bob Dole, a magnificent leader, George Mitchell, a marvelous leader on the other side. These were days of trust.

But now to get to your question. I have no idea, but, threaded through the 18-member commission are people like Alice Rivlin, who spoke up during the Clinton administration. And it wasn't the president who sent it to Outer Siberia, it was the staff who heard her mention Social Security needed some attention.

And then you have people like Conrad and Judd Gregg, who were putting together a marvelous legislative package, get 53 votes, and seven of the guys who were co-sponsors voted against it just for one reason, to stick it in old Obama's ear. I mean, that just makes no sense.

ROBERTS: Well, Senator, I guess another way of asking that same question is: If you and your fellow commissioners are able to agree on some recommendations, what does the Congress then do with them? You present them December 1st, and...?

Mr. SIMPSON: Well, both houses have agreed to vote. So I guess that's the best we can ask for. John Boehner and Nancy Pelosi have said we'll drag it up for a vote. Mitch has said he'd do the same - Harry. So I don't know where it'll go. And I have no burning aspiration. I have no illusions of delicious success. I have nothing like that. I'm just saying I'll tell you one thing: On December 1st, the American people know a hell of a lot more where they are than they do now.

KOPPEL: It shouldn't be that much of a surprise to them, do you think, Senator? I mean, you can tell them right now many of the things that are going to have to be done. Programs are going to have to be cut, programs that we all love dearly. Taxes are going to have to be raised.

You know, whether they're raised directly or indirectly, somehow more money has got to be raised, and of course, people have got to be put back to work because when you have this kind of jobless rate, not only can you not raise taxes from the people who have no work, but they have to be supported.

So can you begin to give us a sense of where you think the solutions can be found?

ROBERTS: Yeah, well, let me you remember the Jack Danforth-Bob Kerrey commission. We had hearings. Oh boy, we were just the toast of the town. We dug right into it. We dug talked Social Security, talked entitlements, went all through this. But the economy was rosy, everything was rolling, and it went right down into the tank.

This time around, the game is totally over. What has happened since 2008, the shock effects, you know, all the stuff I needn't even relate to, are out there, but this time, we thought we'd do a sick thing. We thought we'd use only the figures from the actuaries of Social Security and use only the figures from health care, from Medicare and Medicaid, only the actuaries, so that people aren't out finding their own figures. Which is a great sport in Washington, but we'll stick with the actuaries and just keep saying okay, you asked a question, here's a response in 24 hours. This is where we are with this system.

ROBERTS: We're talking about the hard choices the country needs to make to fix ballooning deficits with Ted Koppel and Alan Simpson. And we're taking your calls. What would you sacrifice to rein in the mounting national debt? 800-989-8255. I'm Rebecca Roberts. It's TALK OF THE NATION from NPR News.

(Soundbite of music)

ROBERTS: This is TALK OF THE NATION. Im Rebecca Roberts in Washington.

The federal government is on track to run up the largest deficit in history this fiscal year. President Obama has said that in tough times like these, you have to make hard choices about where to spend and where to save.

So what would you cut? Or maybe you'd raise taxes. Call us with your solution at 800-989-8255. Our email address is talk@npr.org. And you can join the conversation at our Web site. Go to npr.org, and click on TALK OF THE NATION.

Earlier this year, President Obama signed an executive order creating an independent, bipartisan commission to come up with solutions to the problem. They'll hold their first meeting at the end of April. Former Republican Senator Alan Simpson is co-chair of the commission. He's here to talk with us. We're also joined by NPR senior news analyst Ted Koppel.

And we're taking your calls. Let's hear from Mike(ph) in Ionia, Michigan. Mike, welcome to TALK OF THE NATION.

MIKE (Caller): Good afternoon. Yes, a couple of them. Cut defense spending, tax transactions on the stock market and factor in net worth in income taxes.

ROBERTS: Okay, let's get a response from Senator Simpson. Thanks for your call, Mike.

Mr. SIMPSON: I'm sorry, I didn't hear one of the he spoke of income taxes. I didn't I must say I didn't quite hear.

ROBERTS: Cutting defense spending was another of his suggestions.

Mr. SIMPSON: Oh, sure. Well, this is the best one, and I'm waiting for it, is for the person to call in and say look, you just get rid of earmarks and waste, fraud and abuse and foreign aid, and that will begin to solve the problem. That will get you five percent of where you want to be.

The defense budget, yeah, well, I'm sure you've got to deal with it. How about the Defense Department health care plan? Has anyone ever asked you about that one? Check into that one. It's billions and billions of bucks for, you know, kids and uncles of people who have been in the service.

I was in the service. I don't knock it. I love the military. I served for two years in Germany, at the end of the army of occupation, but it's madness what's out there.

And so defense, you bet, you've got to look at it. Oh, nothing is sacred here, and this gentleman is absolutely correct. The every type of tax structure. But there are going to be some kind of messing with the Social Security system, and guess what? Whatever messing is done and whatever messing was proposed for the last 10 years under anybody wouldn't affect anybody over 55. Where do you get your mail? From 70- and 80-year-old people living in gated communities, driving their Lexus to the Perkins Restaurant to get the AARP discount. I mean, it's unbelievable.

ROBERTS: We also have an email from Karen(ph) in Durham, North Carolina, who says: Yes, I'm willing to have my taxes increased. It's ridiculous that we Americans pay so little in taxes. Our educational system is speeding to hell in a hand basket, and dont even get me started on health insurance reform. Other developed countries have much higher taxes, but with that, they provide more-complete health insurance and health care, their children have better day care and education programs. Americans need to grow up and accept that it's not all about entitlement programs, it's about our communal tax dollars providing services we all need and from which we all benefit.

KOPPEL: There is a point to be made about rising taxes, though. There was a period back during, I guess it was the Carter administration, when taxes were up, what, near 70 percent, and it was a disaster. I mean, taxes, there is a tipping point at which taxes can become so high that all growth in the country comes to a grinding halt.

Mr. SIMPSON: That was appalling. That was the Reagan time, and then it came down, and then inflation was 22 percent or 25.

KOPPEL: Right.

Mr. SIMPSON: Those things happened. We forget that.

ROBERTS: Let's take a call from John(ph) in Belleville, Illinois. John, Welcome to TALK OF THE NATION.

JOHN (Caller): Hi. I'd like to ask if this bipartisan commission, as part of its - whatever its study or whatever it's doing, will consider raising the marginal tax rate on the super-rich like those hedge fund billionaires, and that's a B with a boy, who pay themselves, like, multiple billions of dollars a year and pay income tax at the rate of long-term capital gains? So that means they're paying taxes at a lower rate than a secretary or a nurse or just about any average American. So that's my question: Will you consider raising taxes on the super-rich, even though that might affect Mr. Koppel, among others?

(Soundbite of laughter)

Mr. SIMPSON: Well, Ted, you can answer that.

KOPPEL: Well, you know, the heck with mine. Go after those billionaires. No, listen, I'm more than happy to pay higher taxes, but I would like to hear what the senator has to say about...

Mr. SIMPSON: Well, that gentleman has read an article that just recently came out where these hedge fund guys worked out a system long ago that on their gravy that they pick off as it goes by, they pay capital gains tax instead of ordinary income tax. Now, how did that baby ever come about?

Obviously, that kind of thing is going to be on the table. Nothing will be off the table, nothing. But you could confiscate you've got to remember that one percent of the taxpayers pay 30 percent of the taxes. Five percent of the taxpayers pay 55 percent of the taxes, and 43 million people pay no taxes.

So you could get in and just say let's stick it to the whole crew and confiscate everything you got. That'll run the country for about eight months. That's where we are.

ROBERTS: Let's take another call. This is Barbara(ph) in Medford, Oregon. Barbara, welcome to TALK OF THE NATION.

BARBARA (Caller): Oh, hi. I first want to say a kind word to the people of Cody, Wyoming, as when our daughters were going across country from Oregon to Virginia, they broke down in Cody, Wyoming, and some wonderful people helped them out. So I just want to say kudos to you all in Cody.

Mr. SIMPSON: I was raised right here. I spent my life somebody said: Have you lived here all your life? I said not yet. I'm 78 and enjoying it.

BARBARA: We were so grateful that they ran into some kind people. But as a hardworking person who pays taxes, I am so much more willing to pay taxes in a time of war. I think asking for tax cuts right now is unpatriotic, and that's my comment.

Mr. SIMPSON: Well, there we are, and here we are dealing with their they're dealing now with whether to restore or retain or continue the tax cuts of the Bush administration, and that will be a bloodbath, I am sure.

And I don't I don't know where it's going to go, but we as our commission, we can't go back and say who did this because the greatest spender of all presidents of the United States up to this one was George Bush, George W.

So we can't go back and dig through the old laundry. We didn't do it on the Iraq Study Commission. We said: We don't care how we got here. It's what the hell do we do now? Same here. And obviously, you're going to have to it's all here, and the health care thing, bringing 33 million new people into the system, I told the president, I said, I respectfully say I don't see how that where is the saving there?

And he said, well, it's here, and he has a proposal, and it's in the legislation, but it calls for somebody to make a hard choice down the road, and nobody ever makes a hard choice down the road here.

KOPPEL: Rebecca, can I just jump in with one quick question?

ROBERTS: Please do.

KOPPEL: The issue that we haven't dealt with yet and that's going to become more and more tempting as the years go by is just to print our way out of it. You know, you start printing enough money, and all of the sudden, the value of the dollar goes down, and that trillion-dollar debt is only a $750 billion.

How do we ensure that that's not going to happen, Senator?

Mr. SIMPSON: Boy, you know, don't ask this old kid. Somebody they've figured, you know, once they figured the gimmickry, once I never saw a budget, Ted, that came in, other than the opposing party saying immediately dead on arrival, and then to see the absolute gimmickry that was spread in this two-inch-thick volume, just babble, which the average citizen would never grasp. And that's what these budgets are: fiction.

They were fiction for all the 18 years I was there, but printing our way out, I haven't heard anybody really say it, but we'll find out because if people just stick their feet on the line and in the - just sand and say I'm not going to go anywhere, and we need 14 of 18 of us to come out with something, and so that's a protector of the minority, but I haven't any idea. That just makes your heart sink.

ROBERTS: Well, all of the 18 members on this commission, you say you need 14 to agree to include a recommendation in the final report. What is your sense of how easy it's going to be to reach consensus among just the 18 of you?

Mr. SIMPSON: I have no idea, but I do know that I have been on commissions like that that worked, and so when people say you guys, or this is hopeless, you guys are a mess, go back to bed, go home, get some sleep. We did a Select Commission on Immigration and Refugee Policy, did a bill, legal immigration, did an illegal immigration bill, didn't work because we couldn't get a more secure identifier because the right and the left howled. It was a national I.D.

Anytime you get into something like this, we're going to get the flash words. We're going to get the flash words for taxes. We're going to get the flash words of cutting children and the poor and the destitute and the veterans. The shrieking will be as I say, you know, heavy.

But I dont know if we can concur, but I do know one thing, we cannot duck the figures that we come up with. For the first time at least in my charitable understanding we will say, these are from the actuaries and this is where we are and let's give up the, you know, the other business that won't get you anywhere.

KOPPEL: See, Rebecca, I don't think the problem lies in the commission reaching a conclusion. I think these good people are going to be able to reach conclusions, but they also don't have to run for reelection, you know? The senator knows about...

ROBERTS: Well, those ideas, you know, have a pretty serious cause and effect relationship.

Mr. SIMPSON: No but there are 12 of them that do. These are current members of Congress.

KOPPEL: Oh, I'm sorry. Forgive me. I didn't realize.

Mr. SIMPSON: Yes, you see the three, the three-three, the three majority and the three minority in the House and Senate are current, and that's in the executive order. So you have 12 of the 18 who are under the fire. They are current members.

KOPPEL: And do you think we're going to get to a point that, you know, under the current administration, any Republican who wants to be reelected can say anything that agrees with what his Democratic colleagues across the aisle want to do? I mean, it doesn't work that way these days.

Mr. SIMPSON: Not in this situation, although you take and look at Judd Gregg, again. I bring him up because he's a splendid man, and then you bring up Kent Conrad, just another fellow I know very well. These are two good eggs. Judd's going to step away after this election. He is stepping out. Dorgan, the colleague of Conrad, is stepping out. But it's a these guys are going to be there, and one of the great hidden idols behind the big sheet here is reelection.

This is how you stay there and you say, well, we've got a real problem here, folks, but I can tell you one thing: As long as I am here, they're never going to touch Social Security or your benefits. And then the cheers go up and, you know, babble. They...

KOPPEL: Well, that's really what I'm asking. How are you going to get past that? Because, you know, I am sure you will all come up with fine recommendations and they may even work. But how are you going to get Congress and all these poor people who have to get reelected and who know that going out there and saying nasty things to the American public is not the way to do it, and they're going to get clobbered by my colleagues and me, you know, sitting there on the sidelines, throwing tomatoes at them?

Mr. SIMPSON: You know, where the ice cap cracked, Ted, was the Massachusetts election. There wouldn't be any stirrings in the body politic like there are now if they hadn't have suddenly see a guy who just rose from nowhere and won an election in a state as a Republican. And I tell you, people say, wait a minute. Wait a minute. The most sacred thing we have can go down the tubes even if I'm from even I am impervious to opposition.

And let me tell you, there are districts now which are so safe that a guy could be caught sleeping with goats and he could still get elected forever, simply because they've drawn his or her district so tight that nothing can happen to him, and in those districts things are happening. Things are happening. People say, I'm going to run against this jerk. He just keeps talking or she just keeps talking and does nothing. That's, to me, naive - you know me - but I think that works still.

ROBERTS: We are talking about the national deficit with former Senator Alan Simpson and NPR Senior News Analyst Ted Koppel. You're listening to TALK OF THE NATION from NPR News.

Let's take a question from Brian(ph) in Grand Rapids, Michigan. Brian, welcome to TALK OF THE NATION.

BRIAN (Caller): Hi. Thank you. Thank you very much, and guests. I got a comment and a question. It's funny, we mentioned that, you know, if my dad were to die, if he were to leave us debt, we'd never forgive him forget him, but if he left us a fortune, we might spend it and forget him. But my question is, is it possible for some of this debt to be forgiven? Or, can they do a debt swap with another nation?

Mr. SIMPSON: I don't think that China, who savors being a greater America or greater than anybody, is about to forgive any debt. This year, when as I say, we've finish paying for Medicare, Medicaid, Social Security, we will have used up all the revenue in the funnel, all the taxes and revenue. And now we will go to China with a tin cup and ask them to support defense, homeland security, education, all the other discretionary programs.

I would be wonderfully agreeable to thinking somebody would do that for us unless it were some of the people who want to be a new Americas, maybe Japan, maybe China. I mean, this is these people are not going to be charitable.

KOPPEL: Actually, Senator, even if they were of a mind to be, I don't think any country can remain a great power in the eyes of the rest of the world if it doesn't pay off its own debt.

Mr. SIMPSON: Oh, I think that's absolutely true. We would be it we would be an embarrassing thing for us to go out and say, can you help forgive us some debt here? We're, you know, like, Indonesia or some other country. We need some - or Thailand now, or Greece. Think of Greece. Democracy came from the word, Greece. Greece. Demokros(ph). And they're on the ropes.

ROBERTS: And just to wrap up the logistics of this, your panel starts meeting at the end of this month, your report is due December 1st, obviously time to be after the midterm elections, and you hope Congress votes on it but it's not necessarily a binding recommendation.

Mr. SIMPSON: No, no. It's just, you know, our work is completed and we throw it out on December 1st. And I don't think we ever want to sit down after the election and revise whatever we've done in the draft up till then because of trying to, you know, soap it up after whatever happens in November.

ROBERTS: Former Senator Alan Simpson. He's co-chair of the commission to come up with the ways to cut the country's debt. He spoke to us from his home in Cody, Wyoming. Thank you so much.

Mr. SIMPSON: Oh, thank you very much. Thank you, Ted.

KOPPEL: Good to talk to you again, Senator. Thanks.

Mr. SIMPSON: Good to talk to you, too, my friend.

ROBERTS: That's Ted Koppel, NPR Senior News Analyst, who spoke to us from his home in Maryland. Thanks to you.

KOPPEL: Thank you, Rebecca.

ROBERTS: Coming up, what book did you wish you'd made it through but just couldn't? Ted Koppel admits "War and Peace" still mocks him. Our next guest talks about when to give up on a book and when not to. Email the book that you just couldn't finish to us at talk@npr.org. I'm Rebecca Roberts. It's TALK OF THE NATION from NPR News.

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