Conrad Says Crisis May Prod Lawmakers to Cut Debt (Transcript)

Senate Budget Committee Chairman Kent Conrad, a Democrat, said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend, that an economic catastrophe like the debt crisis in Europe or a Middle East conflict may be the only way to spark congressional action this year on a broad reduction of the U.S. deficit.

(This is not a legal transcript. Bloomberg LP cannot guarantee its accuracy.)

AL HUNT: We begin the show with the chairman of the Senate Budget Committee, Senator Kent Conrad of North Dakota. Thank you for being with us, Senator.

SENATOR KENT CONRAD: Good to be with you.

HUNT: Let’s talk about the Obama budget. It really doesn’t come close to the kind of deficit reduction long run that you have been talking about for years. Isn’t the president really ducking the long-term tough issue?

CONRAD: You know, I don’t think so, and here’s why I say that, Al. As you know, I’m a deficit hawk.

HUNT: I do.

CONRAD: I was part of the fiscal commission, part of the Group of Six. But if we put this all in context, when the president came in, the economy was in full-speed reverse, was losing 9 percent on an annual basis, in terms of the gross domestic product. In the most recent quarter, it’s a positive 2.5 percent. Job growth, we were shedding 800,000 private-sector jobs a month. We’re now gaining 250,000.

HUNT: I’ll cede you the short term. I’m asking, though, Kent Conrad, Simpson-Bowles, long-term deficit reduction. The president appointed Simpson-Bowles. He is yet to embrace it. That’s ducking, isn’t it?

CONRAD: Look, in many ways, he did embrace Simpson-Bowles. If you look at this budget proposal, he has not quite as much revenue as we had in our proposal. On Medicare, we had $400 billion of savings. He has $360 billion of savings in Medicare. And -

HUNT: Simpson-Bowles takes debt-to-GDP ratio to 60 percent in 10 years. Obama takes it to 77 percent. That’s not close, even in horseshoes.

CONRAD: Well, remember, part of the test here is the baseline. In fairness to the president, the Simpson-Bowles baseline is a very different baseline than the one he is marking to. And he does have very close to $4 trillion of deficit reduction in this package. We were - we were more -

HUNT: Would you like to see him embrace Simpson-Bowles, just, I mean, absolutely say, “Let’s pass it”?

CONRAD: Of course, things have changed since we did Simpson-Bowles, so you can’t just embrace Simpson-Bowles at this point because so many things have already been adopted that were part of Simpson-Bowles.

What I would really like is to have both sides come together on a bigger package. Frankly, what I tried to sell to Simpson-Bowles was not a $4 trillion package -

HUNT: It was bigger.

CONRAD: I tried to sell $6 trillion, because that would balance the budget in 10 years.

HUNT: You have the luxury of retiring, so you can go out on limbs now. What are the odds that that could happen this year, that finally both sides get together and say, “OK, let’s do the big deal”?

CONRAD: Look, the odds are very long, because this is an election year.

HUNT: Right.

CONRAD: You know, I hear from my Republican friends all the time, Democrats in the Senate haven’t passed a budget in 1,000 days. It’s like they missed the Budget Control Act. The Budget Control Act that passed with overwhelming Republican support that was signed into law by the president is stronger than a budget resolution, because it’s an actual law. And that sets 10 years of spending caps.

So on the discretionary side, the job is largely done. What is left to do is revenue and the entitlement programs. Both of those have to be reformed.

HUNT: And Harry Reid won’t touch entitlements, and the Republicans won’t touch revenues. So that kind of makes it tough.

CONRAD: Well, you know, in fairness, it’s not just Democrats who won’t touch entitlements. Congressman Ryan’s budget last year didn’t touch Social Security, didn’t touch Medicare for the next 10 years. So the truth is, the American people don’t support increasing revenue, don’t support changing Medicare or Social Security, don’t support having savings out of defense. So -

(CROSSTALK)

CONRAD: You know, at the end of the day - and guess what? People who are elected actually pretty well reflect the people’s views in the country.

HUNT: So you’re not an optimist on doing anything this year at all?

CONRAD: Actually, I am.

HUNT: Well, no. You just said the odds were very long.

CONRAD: The odds are very long. I am -

HUNT: But you still think -

CONRAD: I am prepared to go to my colleagues, along with others of the Group of Six, which is now a Group of Eight, and lay out a plan and - and see, give people a chance.

HUNT: Well, what would force that, though? If the odds are long, what would force that? If the politics are bad, the odds are long, what would force your colleagues on both sides of the aisle to do that?

CONRAD: Several possibilities. One, Europe. If Europe tanks and begins to drag us down, it may become an acute situation that requires a response. Second possibility is Israel attacking Iran. That could create a big run-up in oil prices. That could have dramatic economic effects and also require a fuller long- term response by the United States.

HUNT: So a crisis could force - could force action -

CONRAD: Crisis could.

HUNT: Let me ask you a couple other questions. It appears the Republican frontrunner for president right now is none other than Rick Santorum. You served with him in the Congress for quite a while. Give me your take on Rick Santorum.

CONRAD: Well, Rick is somebody that has no doubts about his position and very little interest in the views of those who disagree with him. I think that would be my take on how Senator Santorum conducted himself with his colleagues when he was in the Senate.

HUNT: So pretty unyielding?

CONRAD: Absolutely unyielding. And uncompromising. And unfortunately, you know, my own view of what’s necessary here is the left and the right have to get off their fixed positions if we’re going to get this country back on track.

HUNT: Not popular with his colleagues?

CONRAD: You know, it’s always hard to know how popular one is with one’s colleagues, but I wouldn’t say he was going to win any popularity contest in the Senate.

HUNT: Let me talk about the - about the Senate elections. You’re not running for re-election, but about 70 percent of those - of the seats that are up this are held by Democrats. A lot of people say that makes the odds pretty great Republicans will take control of the Senate, including winning your seat.

CONRAD: Well, I don’t think they’re going to win my seat.

HUNT: You don’t? You think the Democrats will hold that seat?

CONRAD: Heidi Heitkamp, who was the former attorney general and succeeded me as tax commissioner when I was elected to the Senate, is running. And the best polling available shows her ahead. So I think we will hold my seat.

HUNT: Think you’ll hold the Senate?

CONRAD: I think we’ll hold the Senate. I do. Especially if Obama is doing well.

HUNT: Let me ask you this, Senator. You have been - you’ve served nobly for many, many years in Washington, and you know some of the virtues, but also a lot of the problems. Looking at the Senate, if you could change one or two things to make it a more workable institution, what would you change?

CONRAD: Well, there are a whole series of things I’d change. First of all, I would diminish the ability of a handful of people to stop business in its tracks. We’re now in a circumstance in which the filibuster is the norm, rather than the exception, which means you’ve got to have endless, endless delay -

HUNT: So you’d change the filibuster.

CONRAD: - in order to move legislation. I absolutely would change the filibuster.

HUNT: Second thing?

CONRAD: Second thing I would do is I’d have more moderates from both sides -

HUNT: But how can you do that?

CONRAD: - in the Senate of the United States. Well, only the people can do that, and they’ve got to decide. Look, do you really want people who are absolutely unwilling to reconsider their positions in light of changed facts? The facts have changed. The hard reality is, we’re borrowing 40 cents of every dollar we spend. Revenue is the lowest it’s been in 60 years; spending is the highest it’s been in 60 years. Our debt, our gross debt is now 100 percent of our gross domestic product.

Are we going to face up to this? Or are we just going to keep kicking the can down the road and put this country in financial jeopardy?

HUNT: Senator Kent Conrad, before you leave, we’re going to have you back on this show, because you’ve been a great guest. Thank you very much for being with us today.

CONRAD: You bet. Enjoyed it.

***END OF TRANSCRIPT***

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