Debt panel chairmen warn that inaction would be costly

McClatchy NewspapersNovember 19, 2010 

WASHINGTON — Fending off criticism from the right and the left, the co-chairmen of a special debt-reduction panel warned politicians on Friday that inaction on the soaring national debt would be a job killer on a scale worse than they can imagine.

In a wide-ranging interview with a small group of reporters, Erskine Bowles and his co-chairman, Alan Simpson, said they'd tried to spread the pain across all income classes when they offered their draft debt-reduction proposals last week to members of the National Commission on Fiscal Responsibility and Reform.

That 18-member commission is scheduled to vote by Dec. 1 on proposals to shrink federal budget deficits and tame the skyrocketing national debt, which they say menaces the nation's future prosperity and security.

Some prominent Republicans, such as former House Speaker Newt Gingrich, have called their plan a "job killer," which angers the co-chairmen.

"You know what's a job killer? Doing what we're doing now," said Bowles, who was the White House chief of staff under President Bill Clinton and is the president of the multi-campus University of North Carolina system.

Simpson, an acid-tongued retired Republican senator from Wyoming, said the pair's proposals — ranging from raising taxes to slowing the growth of Medicare spending to raising the retirement age for Social Security — were apolitical.

"I just describe it as an honest plan. There's no other way to describe it," he said.

The two discussed the politics of debt reduction. Here's some of what they said, edited into a question-and-answer format.

Q: Will something finally get done?

A: (Bowles) I think for years and years, politicians have been afraid they'd be punished if they took the tough decisions, if they made choices. And I think the world's changed; I think they're going to be heavily penalized if they don't make these tough choices, if they try to take a walk. And what we try to do is throw a realistic plan out there, and I can tell you the two of us have gotten more "thumbs up" than anything else.

Q: How are you arguing for tough choices?

A: (Bowles) The things we are asking people to do are not popular. They are tough choices just like any organization goes through. I have over 35 percent fewer employees in administration at the university today than when I walked in there five years ago. None of that was easy. I can tell you none of the people there believed it could be done. We're operating just as effectively now, and obviously a lot more efficient. But we had to do it, because the state has to balance its budget; there was no choice. The only incentive for elected people doing this is it has to be done. Staying "as is" is simply not a choice. I can promise you that if we do nothing, if we stay on automatic pilot, the choice will be made for us. The markets will come, they will be swift, they will be severe and this country will never be the same.

Q: How do you build consensus on a panel full of politicians?

A: (Simpson) It took us three months to establish trust within this commission, because the first blast was, "We wouldn't be here if George W. Bush hadn't done what he did." And then the second blast was, "But this president has done four times more than that." So ... we cooled their juices on both sides on that; we said forget it.

Q: Is there trust?

A: (Bowles) You're going to be surprised when you talk to members of the commission ... to find out there's probably more middle ground than you think here in what still is a very partisan town. I know that and Al knows that, because we've talked to them and listened to them for months now. And we also did what Al said. We spent eight months building up trust. ... But there is common ground there, if this town decides it really wants to come together and solve this problem today. It's doable.

Q: Polls suggest the public may not be ready for tough choices.

A: (Bowles) My mama, who is 92, said, "Erskine, I'm really glad you're doing this. ... Your dad would really have liked that; he was really very fiscally responsible." But then she says in the same breath, "Don't mess with my Medicare." And that's how about everybody is: "Don't touch my stuff."

Q: How do you sell the public on sacrifices?

A: (Simpson) This is when you tell the American people one simple thing. You say, look, pal ... for every buck we spend we're borrowing 39 cents. ... And then there's another one about taxes. We've had a tax to support every single war in our history, the Revolutionary War on in. We're fighting two wars with no tax to support it. ... People are war fatigued, but if you are going to fight a war — much less two of them — you ought to have a tax to support it, to let the American people know there is a sacrifice involved, other than the people who are fighting."

Q: Will raising the national debt limit next year force lawmakers to address your issues?

A: (Simpson) I can't wait for the bloodbath in April. It won't matter whether two of us have signed this (report), or 14 or 18. When debt limit time comes, they're going to look around and say, "What in the hell do we do now? ..." And they'll say, "A couple of jerks did something for eight months, and it's laying out there, go look at it. It's written in English, no wizardry in it — go look at it." And I say to people who bitch and snort and pinpoint, I know the game around here_ you know, violin music, pick out one thing and then study it all day, and then drill your teeth. Just go read the damn thing; read it all. Read the whole damn thing, then call us.

Q: What do you make of talk to end the pet projects called earmarks?

A: (Bowles) You all write and you give all these guys up here all this credit for getting rid of $16 billion a year in earmarks. But when you think, those are earmarks that are in the spending bill. There are $1.1 trillion in annual earmarks in the tax bills, and you give them a free ride. It's crazy. It's one of the reasons why our tax rates are so high.

Q: Overhauling the tax code to limit brackets means everyone pays more?

A: (Bowles) The top 400 taxpayers in America pay an average income tax of 16.6 percent. That's less than my assistant.

(Simpson) And how? Because they have used those 200 tax earmarks to rare advantage. Now if you get rid of them all, guess what? You shouldn't cry too hard, because somewhere in the package will be a tax rate of 8 or 14 or 23 percent. And if you can bitch when you're coming down from 35 (the top tax bracket now) to 23 for the top people in America, then I say there's no hope we can get anything done.

Q: What are the odds that your plan gets adopted?

A: (Bowles) Hey, I'm not in the odds business. ... We've got a chance. How good a chance? Who knows?

Q: President Barack Obama seems cool to your draft.

A: (Bowles) He deserves all the credit; this commission is his deal. And he knew the two of us and he knew we were serious about the deficit, that we were deficit hawks ... and he also knew the other people he appointed to the commission were strong on the deficit and getting it down. ... He hasn't tried to hold us back; he has said that if we get to the promised land and we get 14 votes (to recommend changes) he'll try to be as helpful as he possibly can, and he's really tried not to interfere with what we've done, and I think that's the appropriate position. ... We're going to put out what we think is the right thing for the country, and hopefully he will like parts of it. Nobody is going to like all of it.

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