Conrad Says an Economic Crisis May Be Only Way to Prod Lawmakers on Debt

An economic catastrophe like the debt crisis in Europe or a Middle East conflict may be the only way to get congressional action this year on a broad reduction of the U.S. deficit, Senate Budget Committee Chairman Kent Conrad said.

“If Europe tanks and begins to drag us down, it may become an acute situation that requires a response,” Conrad said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend. “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.”

The North Dakota (BEESND) Democrat, who has been in the Senate since 1987, said he blames lawmakers in both political parties -- and the voters who elected them -- for intransigence on tax increases, entitlement cuts and other tough choices that last year quashed an effort to craft a 10-year debt-cutting plan.

He also criticized former Pennsylvania Senator Rick Santorum, who is leading in some polls for the Republican presidential nomination. In the Senate, Santorum showed he is someone with “no doubts about his position and very little interest in the views of those who disagree with him,” Conrad said.

Santorum ‘Unyielding’

“Absolutely unyielding,” he added a moment later. “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.”

Asked about those comments after an event yesterday in Columbus, Ohio, Santorum said he has a record as a “principled conservative” who achieved results.

“If you’re unyielding, you don’t get the things accomplished that we did,” Santorum said. “We got a lot of stuff done, and we got a lot of bipartisan support for doing it.”

Conrad, 63, who is retiring at the end of this year, also predicted Democrats will keep control of the Senate -- and his seat -- in the November elections. The party now governs the chamber with 53 of 100 seats. Of the 33 seats that are up for election in November, 23 are held by Democrats.

Republican Representative Rick Berg is running against former state Attorney General Heidi Heitkamp, a Democrat, to succeed Conrad, who won re-election in 2006 with 69 percent of the vote.

On fiscal matters, Conrad, who served on President Barack Obama’s federal debt commission, basically defended the president’s record on controlling U.S. debt.

Medicare Cuts

Conrad said Obama, in his budget proposal, has embraced Medicare cuts and other key aspects of the proposal drafted by members of the bipartisan commission.

“In many ways, he did embrace Simpson-Bowles,” he said, referring to the panel led by former Senator Alan Simpson, a Wyoming Republican, and Erskine Bowles, a former chief of staff to Democratic President Bill Clinton.

“If you look at this budget proposal, he has not quite as much revenue as we had in our proposal,” Conrad said. “On Medicare, we had $400 billion of savings. He has $360 billion of savings in Medicare.”

Debt held by the public was almost 68 percent of gross domestic product at the end of fiscal 2011 and will rise to 74 percent this year, according to Obama’s budget plan. Obama’s proposal would take debt to 77 percent of GDP by 2022, while the Simpson-Bowles 2010 package of spending reductions and tax increases would cut it to about 66 percent in 10 years.

Changes Needed

Conrad said he sees little chance of balancing the budget until voters elect more centrist lawmakers and the Senate rules on the filibuster -- delaying tactics by legislation opponents that take 60 votes to end -- are changed.

“Only the people can do that, and they’ve got to decide,” he said of the need for more moderates. “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.”

Much of the president’s budget plan repeats proposals that have already been rejected by Republicans, including a 10-year, $3 trillion deficit-reduction package offered to Congress in September. In addition to laying out the president’s priorities, the blueprint is designed to highlight the differences between the two parties’ agendas as the November election approaches.

To contact the reporter on this story: Laura Litvan in Washington at llitvan@bloomberg.net

To contact the editor responsible for this story: Jodi Schneider at jschneider50@bloomberg.net

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