Your Turn: Fix The National Debt
NEAL CONAN, host:
This is TALK OF THE NATION. I'm Neal Conan, in Washington.
The president and the congressional leadership continue talks on the budget and still hope to avoid a government shutdown, but this struggle is just a preliminary for what promises to be a much bigger and even more controversial fight over next year's budget.
Almost everyone agrees it's past time to address the huge and mounting federal debt, but beyond that, consensus is hard to find.
We talked with policy experts this week, left, right and center. You may have also heard about the proposal from the House Budget Committee chairman Paul Ryan this week.
Today, it's your turn. What's a practical way to tame the debt? Give us a call, 800-989-8255. Email email@example.com. You can also join the conversation on our website. Go to npr.org. Click on TALK OF THE NATION.
Later in the program, an update on the current budget battle and what happens if there is a government shutdown. But first, we could not ask for better guides to the practical problems of debt reduction. Republican former Senator Alan Simpson served as co-chair of President Obama's debt commission and joins us now from his home in Cody, Wyoming. And Senator Simpson, always nice to have you with us.
Former Senator ALAN SIMPSON (Republican, Wyoming; Co-chair, National Commission on Fiscal Responsibility and Reform): It is. It is. How are you out there?
CONAN: Very well, thanks. And...
Former Sen. SIMPSON: I was fiddling with the phone system here. They were giving me the business. Now, to hell with the business. But anyway, here I am.
CONAN: Okay. Also with us is Senate Budget Committee chairman and another member of the debt commission, Democratic Senator Kent Conrad of North Dakota. Very good of you to be with us today.
Senator KENT CONRAD (Democrat, North Dakota; Member, National Commission on Fiscal Responsibility and Reform): Delighted.
Former Sen. SIMPSON: Not him. Not that guy.
CONAN: That guy.
(Soundbite of laughter)
Former Sen. SIMPSON: He's a good egg. I like him.
CONAN: Well, we're going to find out how well he's been cooked in just a moment. But let me ask you, Kent Conrad, we're having enough agreement at the moment - difficulty at the moment agreeing on billions. What happens, do you think, next year when we're talking trillions?
Sen. CONRAD: You know, in a strange way, it may be actually easier. Here we are having weeks and weeks of discussions on the brink of a government shutdown, fighting over whether it's another $5 billion of cuts in a budget that's $3.7 trillion. It really misses the point entirely.
What Simpson - what Senator Simpson and I were part of was a commission to deal with the long-term debt threat to the country, and we came up with a plan to reduce that debt by $4 trillion with everything on the table, everything under consideration, every part of the budget under scrutiny - spending cuts, additional revenue by broadening the tax base, reforming the tax code, actually bringing tax rates down. And also beginning to reform the entitlement programs that represent 60 percent of federal spending.
So it was a broad-base plan that really would put us on a sustainable course and get America back on track.
CONAN: And Senator Simpson, one of the benefits of the plan or one of the positive aspects of it was that it required compromise from both parties. Yet we had Mr. Ryan, who we mentioned just a moment ago, the chairman of the House Budget Committee, and every Republican member of the House who was the debt commission voted against it. This is a problem.
Former Sen. SIMPSON: Sure it is, but Kent Conrad's been in the trenches, and he brought out things in our year together that were startling. You can get into the defense budget. Good lord, there's enough fluff in there that's not about defending the country and all the hysteria.
You've got to make solvent the Social Security system for 75 years. We're not balancing the budget on the backs of poor, old seniors. I mean, I had more nasty letters from people my age who never put any more than I did into the system who were supposed to live originally three years, and now they're living 14, 15.
We take care of the people who can't work. We take care of the 20 percent of the lowest people in poverty. We take care of the senior seniors. And we do a terrible, hideous thing. We say that we raise the retirement age to 68 by the year 2050, while the life expectancy today is 78.1. I mean, wake up.
(Soundbite of laughter)
CONAN: Well, here's an email question from Chris(ph) in Oklahoma: Could you please briefly explain who the U.S. federal government owes money to, and what are some of the major dangers associated with the amount of debt that we presently owe?
Former Sen. SIMPSON: Tell that to the numbers guy, there, old Conrad. He knows that one.
CONAN: Senator Conrad?
Sen. CONRAD: Well, our debt now is $14 trillion. That's the gross debt of the United States. If we hold a bond auction today to finance the debt for this year, half of those bonds will be purchased by foreign buyers.
Our biggest creditor are now the Chinese. Number two is Japan. So the United States has a circumstance in which our gross debt, that is the debt we owe to the public, as well as the debt that we owe to the trust funds of Social Security and Medicare; that gross debt, which will be by the end of this year $15 trillion, will be 100 percent of the gross domestic product of the United States.
The gross domestic product, of course, is all of the economic activity of the country, and most economists have told us that that's the danger zone. That's the point at which future economic growth is reduced.
And so we can continue running up these massive deficits and piling on the debt. What it will mean is reduced economic opportunity for our people in the future, reduced job opportunity, reduced chances for people to get a college education, to buy a home, to have a car.
That's why these numbers matter. It's not just numbers on a page, as Senator Simpson so well knows.
Former Sen. SIMPSON: And the real thing is when all that happens, who gets hurt the most? The little guy that everybody is continuing to talk about. That's the guy that gets hammered. The guys with the big bucks never get hurt in this process.
I mean, this is unbelievable stuff. This - and when they come, they're going to say: You guys didn't have the guts to do anything. You had a bunch of people stand up and say, well, we got rid of all foreign aid and all waste, fraud and abuse and all earmarks and Nancy Pelosi's airplane and Air Force One and all congressional pensions.
That's six percent of the hole we're in. You can't get there unless you touch Medicare, Medicare, Medicaid, defense. And at that point, I think they're going to hold up that beautiful piece of paper with the treasury note, bill, whatever, and say: We want some cash for this. And then watch out. Money guys panic when they start to lose money.
CONAN: We want to get more listeners involved in the conversation today. They've been very patient while we've been listening to experts all week. And let's see if we can start now. We'll go to Roger(ph). Roger's with us from Newbern in North Carolina.
ROGER (Caller): Hi, good afternoon.
CONAN: Good afternoon.
ROGER: My suggestion is that there be a means test with a sliding scale for some, if not all, of the entitlement programs. That's politically viable and that you are going to be taking care of those who need it the most and helping least, those who can afford to take care of themselves.
CONAN: A means test. In other words, if you're making a lot of money in retirement programs other than Social Security, you might get less Social Security from the Social Security system?
ROGER: Exactly, plus you make it a sliding scale for some of the medical programs. Those who have $100,000 a year in income aren't going to get helped a lot, and those who have $5,000 a year in income get helped a great deal.
CONAN: Senator Conrad, is that something that Congress might back?
Sen. CONRAD: Well, I can't speak for all of Congress, but I can speak for myself and say: Sign me up. I've actually voted for a plan to do that in Medicare, to have it means-tested so that those of us who are the most fortunate really don't need assistance from the government.
But we concentrate our resources on people who really do need it. I think that's kind of the gist of what the caller is proposing, and I think it's a very worthy suggestion.
CONAN: Alan Simpson?
Former Sen. SIMPSON: I think that's - I'm all for that. Senator Bob Kerrey, a Democrat, and I tried to do some of that when we were together in the Senate. We have a new word. Means testing sounds so nasty. We just use affluence testing. It's more appropriate.
(Soundbite of laughter)
CONAN: And why did it fail, Senator Simpson?
Former Sen. SIMPSON: Well, you know, then here comes the AARP saying that it destroys the whole system of whatever. Erskine and I went to their hierarchy, and we said: Are there any patriots in here or just marketers?
The AARP is out there with 38 million members writing, and if you think the savagery has started with our commission now, you ain't seen nothing yet until they gear up the money and the ads and all the stuff. Kent and I have been through this. This is absurd.
And the American people understand one thing, two things. Here they are: If you spend more than you earn, you lose your butt. And if you spend a buck and borrow 40 cents of it, you've got to be stupid. And they know this government is stupid.
CONAN: Roger, thanks very much for the call. When you hear Senator Simpson refer to Erskine, he's referring to Erskine Bowles, who used to work for President Clinton, was the other co-chairman of the debt commission.
Here's an email from Katie in Ann Arbor: At a time we're facing huge deficits, trying to recover from a massive recession, why have the Bush tax cuts been extended? Why aren't we taxing wealthy citizens at the same rate we tax less wealthy workers in this country? Even dollar of my income gets taxed. The same should be true for those wealthy citizens who can most afford to do their part. Whatever happened to everyone doing his or her part?
And Senator Simpson, extending the Bush tax cuts, indeed making them permanent, seems to be part of the Republican, well, doctrine.
Former Sen. SIMPSON: Some Republicans. There are plenty of us who never thought that was common sense. I thought it was absurd when it first started. How do you get a tax cut to help when you're in the midst of this global economy with this tremendous debt, with $4 billion a day being borrowed. I mean, this is absurd.
So I would have never voted for the original tax cuts back in the previous administration. I thought it was absurd then, and it's even more absurd now.
CONAN: Senator Conrad, the president tried to end those at the end of the last year, and, well, Democrats controlled the White House, the Senate and the House of Representatives, and he couldn't do it.
Sen. CONRAD: Well, actually, at the end of last year, the president decided to allow all the tax cuts to be extended for two years. And the reason he did is the best economic advice that he got was that in the midst of an economic downturn, it's not time to raise taxes.
And as you know, while a disproportionate share of those tax cuts went to the wealthiest among us, a large dollar amount of the value of those tax cuts went to the middle class. And the best economic advice the president got was: Do not be raising taxes on the middle class in the midst of an economic downturn.
He did want to be able to end the tax cuts for those earning over $250,000, but he couldn't get agreement on the Republican side of the aisle to do that; and in the Senate, unless you have 60 votes, you can't advance a measure. And of course, Democrats didn't have 60 votes in the United States Senate at that point.
CONAN: That's Kent Conrad, a Democrat from North Dakota. He heads the Senate Budget Committee. Also with us, Republican Senator Alan Simpson from Wyoming, co-chair of the president's debt commission. More of your ideas on how to tame the federal debt when we come back after a short break. Stay with us. I'm Neal Conan. It's the TALK OF THE NATION from NPR News.
(Soundbite of music)
CONAN: This is TALK OF THE NATION from NPR News. I'm Neal Conan.
Congressman Paul Ryan stirred up debate over federal debt this week. His plan would cut about $5 trillion over 10 years. All week we've talked with policy experts - left, right and center - about how to tackle the massive government debt.
Today, it's your turn. What's a practical way to tame the debt? Give us a call, 800-989-8255. Or drop us an email, firstname.lastname@example.org. You can also go to our website to join the conversation. Go to npr.org, and click on TALK OF THE NATION.
Our guests are Alan Simpson, former Republican senator from Wyoming and co-chair of the president's debt commission, and Senator Kent Conrad, a Democrat from North Dakota, chair of the Senate Budget Committee. He served with Alan Simpson on the president's fiscal commission.
And let's see if we can get another caller on. This is David(ph), David with us from Pensacola.
DAVID (Caller): Hi, thanks for taking my call.
DAVID: One of my suggestions, among many, is get rid of these automatic increases that departments get for their budgets. I'm in the Navy, and it seems that every year around August that the naval hospital I work at, they say: Okay, we still have $2 million left that we have to spend or else we won't get the same money we had last year plus our increase.
So get rid of these automatic increases and make the departments justify any increases instead of automatic increases.
CONAN: Senator Conrad, it's a well-known budgeting problem that if there's a surplus before the end of the fiscal year, people want to spend that for fear that if they don't, their next year's budget could be reduced by that amount.
Sen. CONRAD: The fiscal commission proposed that we have savings of $1.7 trillion. And one of the ways we did it is to freeze spending in the short term, actually cut it in 2013 and then only allow it to rise at a rate below the level of inflation to bring about the kind of reform that was just proposed by the listener, really a very good idea, just kind of a common-sense idea.
You don't just keep getting percentage increases on top of previous budgets when you're spending far more than you're taking in. As Senator Simpson so well stated it, we are borrowing 40 cents of every dollar we spend.
The revenue of the United States, as a share of our national income, is the lowest it's been in 60 years. Spending as a share of our national income is the highest it has been in 60 years. That's why we have record deficits and record debt, and if we don't get this under control, we are going to jeopardize the future economic strength of the country.
Virtually every economist of whatever philosophical stripe has told us that, told the commission that. And I do want to say that Senator Simpson and Erskine Bowles provided really magnificent leadership to this commission.
And they're patriots. They said: Look, yes these things are controversial. Yes, people get upset when we acknowledge that we're going to have to cut some spending, we're going to have to raise some revenue.
Neither one of them are particularly popular. But it's got to be done, and our country will be much better off if we get back on course, on track, and I think the American people are smart enough to know that what Senator Simpson was saying, and what Erskine Bowles was saying -who of course served as chief of staff to President Clinton - that they're telling the American people the truth.
CONAN: David, thanks for the call.
Former Sen. SIMPSON: It really - it comes down to those things - Senator Conrad has been involved in this back in his days as a state elected official in North Dakota. This is a simple thing for me. There should be no kudos come to me or Erskine.
We're doing this for 15 reasons. I didn't tell you, Kent, he's got one more grandchild. I have six, and he has nine. And if you don't think that this is a cause that you ought to direct - anyone listening should direct - to their grandchildren and children, then you've missed everything.
This is a selfishness. No one has been asked to sacrifice in this country since World War II except our military, God bless them, and we have never had a war that we didn't have a tax to support it, including the revolution. Today, we have two wars with a toe in the ocean to go for three and no tax to support them. This is absurd.
CONAN: Here's an email we have from Gwynn(ph) in Mountain View, California: Please ask Senator Simpson why he insists on cutting Social Security when it's a separate fund from the budget and is, in fact, not in the red. In fact, it can continue to keep paying well into the 2020s in full and then at least 70 percent after that.
Does he suggest the money we've been paying in to Social Security should be funneled to other government departments and agencies? Why not raise the payroll ceiling and have the wealthy pay into it fairly?
In other words, I think by that last raise the payroll cap, after a certain amount of income, you're no longer required to pay into the Social Security system. But Senator Simpson?
Former Sen. SIMPSON: Yes, well, I know that these people get the same emails from every source, either the Gray Panthers or the Silver Herd Legislators or the AARP or the Committee to Save Everybody.
The payroll cap we raised under our proposal. It goes from $106,800, under our proposal, goes to $190,000. It would have gone to $170,000. We take it to $190,000.
The trust fund of Social Security, if you please can hear this, consists of a huge pile of IOUs. It was never stolen. It was - when it was set up, it was set up because the life expectancy was 63, and that's why they set the retirement at 65.
It was never a retirement system. It had nothing to do with retirement. It was an income supplement, to give a 43 percent replacement rate to the guys who suffered in the Depression.
And now the life expectancy, as I say, is 78. When the money was in there, the law provided that the government would go and say: You've got a ton of money in there. We're going to give you some super, super pieces of paper because we need that money. For what? To build highways, to make America great. And there is $2 trillion, two and a half trillion bucks in there of IOUs.
This year, in May, when there wasn't enough coming in to pay it out -and don't forget the law, it says you will pay only payable benefits -and in the year 2037, the payable benefits will be made and not the schedule ones you read in the little sheet you get from the Social Security information. And you'll get 22 percent less in that check.
And here we are saying - balancing the budget - that somebody stole it. Let me tell you. Here's what happens: It's an intergovernmental transfer. It's not held by the foreigners or the public people that Kent described earlier. It's simply a shifting.
And when it happens, one agency of the government, the Social Security trustees, say: Give us some money. There wasn't enough to do that. And all we have is IOUs. We want some cash. And the government then shovels the cash over, which increase the deficit.
Now, whether you like that or not out there in the world, that's the ways it is.
Sen. CONRAD: Let me just add, if I could, Neal, on that point, that in the commission, none of the savings from Social Security were used for the deficit reduction package. I think this has become a common misunderstanding. But Senator Simpson will back me up on this.
Former Sen. SIMPSON: You bet.
Sen. CONRAD: We used all of the savings from Social Security to extend the solvency of Social Security, so in 27 years, there isn't a 22 percent, across-the-board cut.
So we made changes to Social Security by extending the longevity, as Senator Simpson correctly describes, over many years, add one year. We've changed the inflation adjuster to be more accurate according to the best economic advice in the country. And we used those savings plus the additional revenue that Senator Simpson outlined from extending the wage cap, and took all those savings to strengthen Social Security, to secure its solvency for 75 instead of having it run out of money in 27 years.
CONAN: Let's go next to Dan(ph), Dan with us from Merit Island, also in Florida.
DAN (Caller): Yeah, thank you for taking my call. My question is this: One of the problems we have is our failing competitiveness in manufacturing and many other areas of industry.
And I think that our government has many agencies, including NASA, Department of Energy and so on, that can work as partners and that should work more closely as partners with American industry to actually invest in research, development and productivity. But they won't be able to do that if their budgets are slashed.
CONAN: So you're saying in order to reduce the debt, we should spend more money on research on development.
DAN: Yes because we have to be successful in business and in industry, or we will never be able to pay our bills.
CONAN: Okay. Is that going to help, Senator Simpson?
Former Sen. SIMPSON: Well, we realize the nature of a fragile economy and where we are right now, and we tried to address that in the commission report. We talked about cut and invest. We talked about research and development.
Who would be more interested in that as an educator like Erskine Bowles, and we did handle those things. We did address those things. We described that we must have these things. These things are the critical parts.
But those things - I always say to people: What do you love? And they'll say education, research and development, maybe even homeland security, culture, art.
What do you love? And they'll say - they'll give you something, just say, well, sir or madam, that will be squeezed out because this other stuff is on automatic pilot. Medicare, whatever you call it, is on automatic pilot. We tried to say what would chop away about 430 billion of it and not let it go up over 1 percent GDP a year, that will be tough to do.
Medicaid, stuff - the tax expenditures, one trillion, 100 billion of tax expenditures which are just spending by any other name, we call them tax earmarks, suck it up every year with no oversight whatsoever.
I mean, if the American people can't grasp what we did in a 67-page report with www.fiscalcommission.gov, then there's no hope.
CONAN: Senator Conrad, we promised to let you go at half past the hour. You've been very kind to give us your time today. We know you're very busy, and we all wish you the best of luck avoiding a government shutdown.
Mr. SIMPSON: You're not going to let him leave me here, are you?
CONAN: I'm afraid so, Senator.
(Soundbite of laughter)
Mr. SIMPSON: Oh, God. He's a good one.
Sen. CONRAD: Look, I want to thank you for the time. I want to especially thank Senator Simpson for his leadership.
At the end of the day, this was all about getting America back on track. When you're borrowing 40 cents of every dollar that you spend, that can't continue much longer. I think everybody really does understand that, and it's going to require all of us - those who are the most fortunate among us - but it's really going to require every American to contribute to a solution.
Yeah, we can do this. We can make America so much better for the future, but it's going to require all of us to come together to do a little something now to prevent a catastrophe later. You know, we can do this.
Mr. SIMPSON: Yup. You're a patriot.
CONAN: Senator Conrad, thanks again for your time.
Sen. CONRAD: You bet.
CONAN: Kent Conrad, a Democrat from North Dakota, who chairs the Senate Budget Committee and a member of the president's fiscal commission. Also with us, staying with us is Senator Alan Simpson, former senator from Wyoming and co-chair of the president's National Commission on Fiscal Responsibility and Reform. You're listening to TALK OF THE NATION, which is coming to you from NPR News.
And let's see if we go next to - this is Carmen(ph). Carmen with us from Orlando.
Mr. SIMPSON: Yes.
CARMEN (Caller): Yes. First of all, gentlemen, I wanted to thank you for taking my call. I just wanted to say I'm a U.S. citizen, taxpayer, honorable workingperson. I lost my job in 2008. I have not found employment. I have been - I have a master's degree, and I speak four languages.
I got unemployment, and on my unemployment, I have to pay taxes. Since then, I have been doing small consulting jobs here and there. But what I don't understand is the government continues to squeeze the middle class, and the upper class that is making over 250,000 and up, they're going to get away with not paying their fair share in taxes. And that, to me, is just reprehensible. It's wrong.
And what you're - is going to happen is a class war in this country. Pretty soon, the U.S. is going to be equivalent with all other Third World countries, where you have a rich class and everybody else. And I will take my answer off the air. Thank you.
CONAN: Thank you, Carmen. And, Senator Simpson, I'm sure you saw much of the same thing. I can't tell you how many calls and emails we've gotten saying end the Bush tax cuts for the rich.
Mr. SIMPSON: Well, I - as I say, I wouldn't have - if I had been in the Senate when it first came up under the previous administration, I wouldn't have voted for it. I think it's absurd, especially the - Kent never gave you the figure. The figure of revenue to GDP is 15 percent. It has historically been 19 or 19.1. You can't get there, and you can't get there by giving tax cuts to people over $250,000. I don't - I agree with that totally.
Admiral Mullen, the head of the Joint Chiefs of Staff, said the greatest threat to America's security is the debt. And in The Economist, which is a great magazine, a few weeks ago, it was called the rich versus the rest. And this lady is absolutely correct. There's going to be a class warfare situation here - already is.
The rich will take care of themselves. The money guys who worship money worship money over the United States of America. I've seen that in my lifetime. I know what that is.
I'm ready. I'm a fortunate one. I never took - I was on active duty in the Army. I never took the G.I. loan because I knew that I could afford to do that myself. I did do the G.I. bill. I never took anything I could.
I never got into Medicare until I was 78. When they found out that I had an insurance, which I paid for out of my own pocket, not some cushy one, I have a pension, yes. I put in 8 percent of my salary for 18 years. I'm ready to cut that. I'm ready to do - I'm ready to means test Social Security for myself.
But for heaven's sakes, for a guy that could buy half the county goes -gets an operation at the age of 80 for his heart and walks up and down the street and tells people that it cost 180,000 bucks, but he only had to pay 1,800. That's stupefying.
CONAN: Senator Simpson, we just have a minute or so left, but I did want to ask you, you described a kind of brickbats that you've got. Obviously, earlier this week, Congressman Ryan put out his proposal, and, boy, he's getting his share of criticism too.
How easy is this going to be in the context of a 2012 budget, again, with people talking about trillions of dollars in cuts against the backdrop of a national election? There's going to be a presidential election. Everybody in Congress is going to be up and very skittish. He's been - for example, Congressman Ryan has been criticized for not addressing Social Security and not addressing defense cuts.
Mr. SIMPSON: Yeah. Well, that's - he didn't. He and Hensarling and Camp are very bright, very bright, thoughtful conservatives - and I mean that - along with a very bright thoughtful liberal, Xavier Becerra, who was part of our commission. These are good people. But for heaven's sakes, he didn't vote for it because he said we didn't do enough on Medicare. Well, he did a number pretty well on Medicare. I understand what's he's doing. Give him credit for throwing something in the game.
If you don't like something and you're bitching and whining, throw in an alternative. We call it the Becerra rule, and he stated it clearly in the commission. If you don't like it, put in a plan.
Now, look at Jan Schakowsky, a liberal Democrat from Illinois. I enjoy her. I like her as a person. Now, she put in a plan. I didn't like it, but she had the guts to put in a plan.
Stop the bitching. Stop the whining. Stop criticizing. Have anybody that's saying this is unacceptable - we don't like Ryan. We don't like Bowles. We don't like Simpson. We don't like anybody. We just want you to cut spending and then leave everything else off the table.
CONAN: And I'm going to finish your thought for you, Senator Simpson. Give us a plan.
Mr. SIMPSON: OK.
CONAN: Thank you very much for your time today.
Mr. SIMPSON: Get a plan.
CONAN: This is NPR News.
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