March 11 (Bloomberg) -- Senator Jeff Sessions, an Alabama Republican, said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend, that there’s not much room for compromise on the House plan to cut $61 billion in government spending this year.
(This is not a legal transcript. Bloomberg LP cannot guarantee its accuracy.)
AL HUNT: And we begin the show with Senator Jeff Sessions of Alabama. Thank you for being with us, Senator.
SENATOR JEFF SESSIONS: Thank you, Al.
HUNT: You and six of your colleagues have vowed to block any legislation in the Senate until the deficit is reduce in a, quote, “meaningful way.” The continuing resolution expires next Friday. What specifically has to - what’s meaningful? As big as the House cuts? How long a time?
SESSIONS: To me, that’s the House cut level. It’s the number they’ve come up with. It’s defensible. It’s significant. When you realize it reduces the baseline and that over 10 years will save $860 billion in debt that we won’t have on the books, it’s significant. And at the same time, it’s not too much. It amounts to less than 2 percent of the total budget, less than 6 percent -
HUNT: Would you say the Senate has to come close to that to be acceptable to you?
SESSIONS: I do. I really believe it needs to.
HUNT: - 60 versus 61.
SESSIONS: I guess perfection is not - but I’m not here to negotiate with myself. I really think that’s a good number. And I think we should fight for it. You know, Erskine Bowles testified just a few days ago before the budget committee, and he said we were headed to a debt crisis in about two years. Alan Simpson said one. We need to take some steps now. This is the only bill that’s really before us that provides us an opportunity to change the trajectory we’re on.
HUNT: As you know, Goldman Sachs says that that bill would result in a 2 percent reduction in economic growth this year. Fed Chairman Ben Bernanke said it would result in the loss of 200,000 jobs. Is cutting spending so important that - even if it means temporarily losing some jobs?
SESSIONS: I don’t believe those numbers are defensible. I know John Taylor, a superb economist, has debunked them totally. You know, other -
HUNT: So you just don’t believe Bernanke or Goldman Sachs on this?
SESSIONS: Well, it - I can’t imagine it would, because you’re talking about a reduction of - well, first of all, only about - a small fraction of that reduction will even take place immediately. This deals with outlays, which will - some of which will be three years from now. So it all won’t impact just this year. I think they miscalculated in that.
HUNT: You know these issues so well, so you know the current fight for all the (inaudible) is really small ball compared to the long-term problem. It’s only 12 percent of the budget. There’s a bipartisan gang of six, which you’re very familiar with in the Senate, trying to put together some kind of a longer-term deal or bargain. The Senate rejected both the House and the Democrats’ proposals. Do you think the odds for their success has been enhanced? Or has it been decreased by the last couple days?
SESSIONS: I think in the last couple of days, they’ve been strengthened for several reasons. First, you had 10 Democrats defect from the Harry Reid Democratic proposal, because they thought it spent too much. Maybe one thought it didn’t spend enough. But - so I think that’s significant. Second, we’ve had more clarity in the warnings from people like Erskine Bowles and Alan Simpson -
HUNT: So you think - you’ve been a little pessimistic, but you think now they have a shot to at least put something out there to start with?
SESSIONS: I do. I think the momentum for containing spending is growing, because the crisis is more real than a lot of us like to admit. We have people who are in denial. The president’s budget was very disappointing.
HUNT: But you - there’s no doubt of that -
SESSIONS: But this has the - on the question of entitlements, that’s what that group is dealing with.
SESSIONS: The president has got to - to step into the game.
HUNT: Because we had a Bloomberg poll this week that showed by 76 percent to 22 percent - no surprise to you, I suspect - people are against cutting Medicare, don’t cut Social Security. What Medicare and Social Security entitlements could you address and cut back?
SESSIONS: Well, if you started now on Social Security, you could keep that program sound for the rest of its life without dramatic changes. So the sooner you start, the better.
HUNT: How about Medicare?
SESSIONS: Medicare is more problematic.
HUNT: Do you think you can do it this year?
SESSIONS: Well, we could make improvements. And we could save a lot of money. Social Security will not save a lot of money over the next 10 years if it’s reformed.
SESSIONS: Medicare is a bigger problem, and I’m a bit surprised we’re not focusing more on that, although a lot of people think it’s more achievable to do Social Security.
HUNT: You mentioned Simpson-Bowles. They - and as you say, Alan Greenspan - have talked about the debt cataclysm that we face. But they also say we need to raise taxes. Simpson-Bowles says one-third of their deficit reduction comes from taxes. Greenspan says let all the Bush tax cuts expire. I know you don’t agree with that. But if the Democrats would be willing to consider entitlements, are you willing to consider putting taxes on the table?
SESSIONS: Well, we’ve got to work together to do something about entitlements, but we should not ignore the impact of surging spending on discretionary spending. Under the president’s leadership, we’ve increased discretionary spending 23 percent. So reducing that back to 2008 levels would be a huge step forward.
And taxes, they’ll be a bitter pill for me, but we have got to get this country on the right path.
HUNT: So if - if the other side’s willing to really be serious about entitlements and other spending, you - as bitter as it would be - would at least be willing to put taxes on the table?
SESSIONS: Well, I’d have to challenge it, but I would look it.
HUNT: Senator, which institution has more political and economic power in America today, labor unions or corporations?
SESSIONS: I don’t know. I hadn’t thought about that. I’d say, in one sense, the unions are more coherent, more effective in selecting their agenda and promoting them. Businesses have often conflicting agendas as to what they favor. But there are some things that they unite on.
HUNT: You are also on the Armed Services Committee, a senior member of that. Some of your colleagues, like John McCain, have called for the U.S. and allies to initiate a no-fly zone in Libya. Secretary Gates says, hey, that’s a problem, that’s problematic. What if anything should the U.S. do to help stop Qaddafi? And do you think Qaddafi is winning this thing now?
SESSIONS: I’m worried about it. And I think about the Bay of Pigs, where Castro’s just few airplanes was able to devastate the Cuban freedom fighters on the beaches, just a few aircraft, and that’s all he has, pretty decrepit, also. They could be knocked out of the air pretty quickly with American airpower.
HUNT: Should we do that?
SESSIONS: Well, it’s a serious step. I haven’t called for it. I know Senator Kerry has called for it; Senator McCain has called for it. Some have said no and expressed concern. So this is a very delicate situation.
HUNT: Do you think -
SESSIONS: I’ve been reluctant, since I don’t feel like I’ve probably studied the intelligence to know whether we could make a positive difference or not with that.
HUNT: But do you have a sense whether the administration is responding forcefully enough?
SESSIONS: I don’t think they are. It seems to me they’re being driven by other events around the whole Middle Eastern rim, that the French now, Sarkozy is more aggressive and has a clearer message than President Obama. He has supported the ouster of Qaddafi, but seems to have no plan to help the freedom fighters or the rebels to be successful.
And then but, of course, who are these rebels? And who really would be the people that took control? These are complicated issues, there’s no doubt about it.
HUNT: Thank you for talking to us about it. Senator Sessions, thank you so much for being with us. And when we come back, we’ll talk to Bloomberg reporters about the union showdown in Wisconsin and Obama and oil prices.
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