Warner Says More Stopgap Budgets Could Harm Market (Transcript)
Democratic Senator Mark Warner of Virginia said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend, that accepting House Republicans’ plans for two-week stopgap budget extensions could harm financial markets.
(This is not a legal transcript. Bloomberg LP cannot guarantee its accuracy.)
AL HUNT: We begin the show with Democratic Senator Mark Warner of Virginia, who joins in our studios. Senator, thank you for being with us.
SENATOR MARK WARNER: Al, thanks for having me.
HUNT: You’re deeply involved in all the budget deliberations. The two-week extension of the budget for 2011, Republicans say they’re going to keep passing these short extensions until they get the $61 billion of cuts that they’ve been looking for. Don’t they have the upper hand?
WARNER: Well, to me, Al, that’s a crazy way to run a business. It’d be a crazy way to run the balance of this year in terms of the government, because the effects of these two weeks doesn’t allow not only the effect it has on federal employees, but folks who rely on project funding, folks who rely on kind of the research that goes on in NIH.
And I think that you’re going to see more and more a reluctance we’ve shown, willingness to negotiate here. We need to do that in good faith. But we’ve also got to realize, at the end of the day, you’re not going to solve the deficit when all you’re cutting is the 12 percent of the federal spending that’s around domestic discretionary.
HUNT: Do these short-term extensions have any effect on markets?
WARNER: Well, listen, I think you get through the first one - you know, the market’s been pretty good the last few days. We saw good unemployment numbers. But if we keep kind of loping along on two-week extensions, I think that could have an effect on the markets, absolutely.
HUNT: You do? A bad effect?
HUNT: Let me ask you this. You don’t like the plan, you’ve said, that the Republicans have put forth on this, but at least they have one. John Boehner said Harry Reid and you Democrats don’t have any plan for 2011 at all. Are you going to reveal a 2011 budget?
WARNER: I’m not going to reveal a 2011 budget, but I do know -
HUNT: At some point in the negotiations -
HUNT: - not here, as much as I’d like it.
WARNER: This is something that - you know, the majority leader and others are working on. But I do think the fact is, I hope we get a chance to vote on the House Republican plan, you know, which slashes things like National Institutes of Health funding, which slashes things like construction on our road projects, which takes away money that - for projects where we might be taking a single -
HUNT: But will you offer a specific alternative?
WARNER: - and leverage it four or five times. I think the Democrats absolutely will come out with a different alternative.
HUNT: Let’s talk about the long term.
HUNT: As you say, that’s the real issue. And you’re a central figure in bipartisan deliberations to try to come to grips with this. What are the odds of success right now, would you guess?
WARNER: You know, I would say the odds were pretty low at the beginning of the year. I think they’re going up, because I think more and more people are coming to the recognition that you can’t simply cut your way out of this problem, particularly when you’re only looking at domestic discretionary, that you’ve got to put entitlements, you’ve got to put defense, you’ve got to have a frame for tax reform. Saxby Chambliss and I have said let’s go ahead and take the deficit commission, the so-called Simpson-Bowles commission, and use that as a starting point. And I think there’s a lot of interest.
HUNT: Do you think the odds are, what, better than 50/50 at this stage?
WARNER: Well, in this town, predictions I’ll leave to you, but I’d tell you this -
HUNT: Getting better?
WARNER: - every day that we punt on this, we add $4 billion to our national debt, not our short-term deficit, but our national debt, $4 billion a day. So the choices aren’t going to get any easier.
HUNT: But without getting into the specifics, you’ve said President Obama has to be part of this, yet the White House has ducked entitlements in his budget, they have ducked his own presidential commission, the Simpson-Bowles commission, saying whether they - you know, what they are for and what they are against there. Wouldn’t it be better if he were off the sidelines and involved right now?
WARNER: I think you’ll see the president get more involved as we try to lay out this framework. We’ve got to start with a bipartisan effort, because what you don’t want to start with is a grand plan that then becomes the starting line with some of the - for negotiations with some of our friends in the House.
HUNT: House leaders Kevin McCarthy and John Boehner said this week that in their April budget for 2012 they will propose entitlement cutbacks. Is that a constructive move? And do they also have to move and put taxes on the table, too?
WARNER: I think that is a constructive move, that they’re not going to - they’re going to go ahead and say, “Let’s go to where the money is,” which is around some of the entitlement programs. I think you’ve also got to recognize that, at the end of the day, doing this on one side of the balance sheet alone, doing this simply on the spending side, without looking at the revenue side, even if that revenue side is about lowering rates and at the same time closing down some of our tax expenditures, that’s just spending by any other name.
HUNT: But that raises revenue?
WARNER: Well, that net-net raises revenue, but at the same time lowers rates.
WARNER: You know, that’s what the president’s commission, the Simpson-Bowles commission laid out, because at the end of the day this deficit not only - for your audience, they realize the effect it’ll have on the markets if we don’t get our act together. But at the end of the day, improving our nation’s balance sheet helps us grow the economy. Because at the end of the day, what we most need is a growing economy, and we need the market’s confidence that we will get our act together to do that.
HUNT: Let me talk about Medicare for a second. House Budget Committee Chair Paul Ryan wants to turn it into a voucher system. He said that would save a lot of money. Is that something Mark Warner could consider?
WARNER: I don’t think a voucher program makes a lot of sense around the Medicare issue. I think that, you know, it’s strangely reminiscent of some of the earlier attempts to privatize Social Security. I’m not sure that’s where we ought to be headed.
I do think we’ve got to realize that we can’t spend 16 percent, 17 percent of our GDP on health care and most of our competitors in the world are spending single digits or 10 percent or 11 percent. We’ve got to drive down health care costs, not just in Medicare, but across the board, and that means payment system reform, it means trying to make sure that we avoid some of the duplication, it means using, frankly, a lot of more administrative simplifications.
There are tools out there, but we’ve got to go even further than where we went in the health care bill.
HUNT: You mentioned Social Security. You have said we have to raise the retirement age, that’s the reality. Would you also reduce the annual cost-of-living increase and increase the base upon which -
WARNER: I think the frame of where - and this is just me speaking - this is not by any means the Democrats’ position. But some of this is just math. There were 16 workers for every retiree in 1950. There are 3 workers for every retiree -
HUNT: So you’re going to raise the retirement age?
WARNER: So I think raising - a slow, gradual raising of the retirement age, as they suggested, two years over a 40-year timeframe, anybody that’s viewing that’s less than 35 years old, don’t have to worry a bit. And, frankly, most folks under 35 don’t think they’re going to get Social Security.
But I do think that you’re going to have to raise the cap, in terms of how much is taxable, and I think at some point folks maybe in the absolute top quintile years out could see less increase in benefits than others.
Now, that’s - if we’re going to protect on the bottom end, you know, some of us at the top end might see less benefit increases, not cutting, but less benefit increases.
HUNT: Will corporate tax reform - first of all, what are the possibilities of getting it done this year? And will that be dealt with separately? And will it be part of what you’re talking about?
WARNER: You know, my hope is - and what, again, Senator Chambliss, Republican senator from Georgia, who’s been a great partner - we’ve both been taking some hits. He’s been taking them, too, and he has been wonderful to work with. We believe that you’ve got to do both the entitlements, you’ve got to do the discretionary spending, but you’ve got to go ahead and make America more competitive. That means lowering our corporate tax rates, but it also means you’ve got to do it in a way that actually closes down some of these tax expenditures -
WARNER: We all know corporate tax rate’s at 35 percent, but any major company that’s paying 35 percent ought to be firing their CFO. You know, there’s a lot of companies out there paying mid-20s, some paying single- digits.
HUNT: So you think it could be part of this?
WARNER: I think it could be part of it.
WARNER: I think the chances were slim to start with. I think they’re getting a lot better right now. He and his wife are down taking a few days off trying to make that decision. I think he would be our strongest candidate, and I think he’s somebody that would be a great voice in the Senate.
HUNT: Mark Warner, thank you so much for being with us today. And when we come back, all options on the table for Libya. What can Obama do? And Vice President Biden trying to make a deal. We’ll talk to Bloomberg reporters, next.
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#<610771.1204184.108.40.206.31389.25># -0- Mar/04/2011 21:26 GMT