Feb. 22 (Bloomberg) -- Wisconsin Governor Scott Walker said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend, that Congress should reduce the budget deficit by paring back spending on Social Security and Medicare instead of relying on across-the-board spending cuts scheduled to begin on March 1.
(This is not a legal transcript. Bloomberg LP cannot guarantee its accuracy.)
AL HUNT: We begin the show with Wisconsin Governor Scott Walker, who’s also the vice chairman of the Republican Governors Association. Governor, thank you for being with us.
SCOTT WALKER: Good to be back.
HUNT: The budget sequester takes place in less than a week. What’s the impact on Wisconsin?
WALKER: It’s significant in every state, but us being a state that doesn’t have a whole lot of military bases or other functions like that, it doesn’t have quite the impact that, say, a Virginia, just across the Potomac here, would be. But it’s significant.
Obviously, we’re concerned, but we’re also concerned about any alternative to that might have a negative impact on not just our nation, but particularly my state’s economy, and so we’re watching very closely.
HUNT: What would you like to see Congress do instead of the sequester? Should they -- should any package include, say, Medicare cuts or Social Security or more revenue?
WALKER: Well, I think, long term, there’s got to be some sort of entitlement reform. It’s what we’re talking about in our states. Long term, if there’s going to be meaningful deficit reduction, you’ve got to tackle in some way reforms in our entitlements. We’ve already had -
HUNT: If you did that, would you be willing to go along with any more revenues, too?
WALKER: Well, I mean, they already had a big push on it. One of my concerns -- and we saw what happened already -- that the Wall Street Journal just last week was talking about spending being down because of the payroll tax increase. I’m very concerned -- I mentioned it to the president and others -- even in December that anything that takes more money out of the economy could have a negative impact on revenues.
HUNT: So no revenues, in other words?
WALKER: Yeah, I just -- I get long term why that’s part of the discussion, but in the short term, we’re still having a fragile recovery.
HUNT: Well, let me get that right, that you don’t want any revenues in the short term, but maybe in the long term as part of a package that included entitlements?
WALKER: Well, we look at it all. But I think the biggest concern right now is do no harm. We’ve got a slow, but steady improvement in the economy. We see it in my state and other states. The last thing we need is to slow that down, to put a wet blanket on it.
HUNT: So maybe postpone any sequesters for a couple years?
WALKER: Oh, I think you -- you’ve still got to start tackling some of these entitlement reforms now. There’s no doubt about that. I don’t think that has a negative impact on the economy. Politically, it may be a challenge for some folks in this town, but it’s something that has to be done.
HUNT: Governor, you have talked about the need for Republicans to be more relevant. Now, we know what that means on the state level, with you and other Republican governors. What does it mean in Washington? What should the Washington -- the Republicans here in Washington do to be more relevant? Is it P.R. or is it substance?
WALKER: Well, I think in talking about things. Well, one, they’ve got to stay focused on issues that are -- that are relevant. But I think even when they talk about things like the sequester, even using terms like that, the fiscal cliff, the debt ceiling, all those things are things that are a big deal here in our nation’s capital, but when I talk to moms and dads and grandmas and grandpas across the country, particularly in my state, that’s not what they’re talking about.
To me, when you talk about entitlement reform, particularly things that affect some of the big issues out there, people say, oh, politically, there’s damage to that, I say, I don’t believe that, because what I know with my parents, with their grandkids, my two sons and my two nieces, what do most grandparents care the most about? It’s not Social Security. It’s not Medicare or Medicaid. It’s their grandchildren.
HUNT: Are there any policy changes you’d like to see from congressional Republicans that they -- any new ideas?
WALKER: Well, I think the other big thing that needs to be talked about -- we talk a lot about frugality. Obviously, the fiscal problems in this state -- or in this country are tremendous, but I think one of the challenges -- we don’t talk enough about growth.
What positive vision, what optimistic vision do we have that’s going to help the country grow, particularly when it comes to entrepreneurs? When we talk about new growth, new start-ups, expanding businesses, not big corporations, but companies, entrepreneurs like those that we’ve had generations ago, what is going to happen that’s going to change to make it easier for them to create jobs -
HUNT: Does that suggest more tax cuts?
WALKER: Well, I think tax cuts are a part of it. I think streamlining the regulatory process so what we enforce is about common sense, not about excessive bureaucratic red tape. I certainly see it in the EPA, but we see it in other federal agencies.
For a lot of entrepreneurs, a lot of young people starting out with new big, bold ideas, one of their biggest challenges isn’t just the tax code, because a lot of them don’t have a taxable liability for years. It’s complying with all the regulations at the state, the local, and certainly at the federal level. Make it easier for people to be entrepreneurs, we’d be better off, and that’s where the net new jobs are going to come from.
HUNT: Governor, you talked about entitlements a moment ago, which are the fastest-growing part of the federal budget. On the other hand, discretionary domestic spending is now at the lowest levels, the percentage of the economy, since the Eisenhower administration. Have we cut enough out of discretionary? And should we stop cutting that and focus on the others?
WALKER: Well, I still think it’s a big area. When I did our reforms, you know, two years ago in my state government, I had about a $3.6 billion budget deficit. We knew that the vast --the majority of our budget was aid to local governments, so it’s not apples-to-apples, but it’s a similar scenario to what we face here.
HUNT: Should we still be cutting health research or education or law enforcement or Border Patrol?
WALKER: Well, that’s -- I guess that’s where I’m getting. My point is that the entitlements are really a big area.
HUNT: I see.
WALKER: You’ve got to slow that down. You can keep, you know, working on the edges, but in the end, if you don’t address these big issues, you’re going to have less and less available for these other areas, and they really aren’t the driving force. They aren’t the virus that eats up more and more on the budget.
HUNT: So you should not go after the -- not go after discretionary, but go after entitlements? Is that a fair summation?
WALKER: Well, yeah, I mean, I think there’s always room to look at -- and I found it in state governments, the same thing’s true in the federal government -- there’s always room to look at any level of federal government spending, because I think there’s plenty examples we can find of waste in the federal government. But that alone isn’t going to be enough to get our nation back on good fiscal standing. You’ve got to look at the big issues on top of it.
HUNT: Governor, you mentioned Medicaid a moment ago. As you know, a number of your Republican colleagues, Governor Scott in Florida, Governor Kasich in Ohio, Governor Snyder in Michigan, and others have decided even though they oppose Obamacare to participate in the federally funded expansion of Medicaid. You chose not to. Critics say that is going to cost your state some money and some poor people won’t be covered.
WALKER: Well, a couple different things. You know, some governors early on said no, maybe some would say from a knee-jerk standpoint. Others, like the ones you mentioned, said yes. We chose a different option, as Wisconsin often has in the past. We chose a different path. In fact, last week, the Wall Street Journal editorialized about how this maybe was a better path than some of the others across the country.
Our plan will allow us to reduce the number of uninsured in my state by 224,580. At the same time, I reduce the number of people on Medicaid by 87,000 and move them into the private market and the exchanges and add 82,000 people who previously who live in poverty weren’t covered, because of a cap my predecessor put on that. Why? Because I believe that Medicaid should be for what it was designed for, which is covering people living in poverty, but it shouldn’t be a permanent entitlement. It shouldn’t be something where we permanently have people dependent on the government.
HUNT: You mentioned 224,000, and if you participate in the program, that would have been 252,000, according to some data, so that’s more.
WALKER: Right -- well, but it’s -- but it’s a slight difference. And in return, we’re able to move more people off of Medicaid onto the expansion plan that would have only been a slight fraction more -
HUNT: And you don’t think poor people are going to get hurt?
WALKER: No, actually, I think they’ll benefit, because in the end, there will be fewer people that are uninsured today. There will be fewer people on Medicaid. It means more people will move into the private insurance market and exchanges. And for someone just living above poverty in my state, it means they’ll be eligible for a premium of just $19 -- as little as $19 a month.
HUNT: Final question. Karl Rove has praised you as one of America’s most remarkable political talents. Do you think his Conservative Victory Fund plans, which is basically to try to defeat what he thinks are unelectable Republicans in primaries, places like Iowa, is that a good idea?
WALKER: Well, I think the better idea, the big idea that I’m trying to push to my Republican friends across the country is to stop being focused on the other side and what’s wrong with them, but being optimistic, being relevant, and ultimately being courageous and being willing to act on it.
HUNT: So would you like to see Karl Rove redirect his energies from what he said he’s going to do?
WALKER: Well, I think the idea is, instead of not --instead of trying to push candidates out, what we should be doing is finding candidates who embrace those ideas, who offer a positive, optimistic, relevant alternative to what we’re getting out of the White House and out of Democrats elsewhere around the country -
HUNT: And that’s the advice you’d give Mr. Rove?
HUNT: OK. Governor Walker, thank you so much for being with us. And Go Pack next fall.
WALKER: Amen to that.
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