Transcript: Super Committee testimony by Erskine Bowles, Co-Chair of the National Commission on Fiscal Responsibility and Reform

“I think that we face the most predictable economic crisis in history,” said Erskine Bowles, who served as co-chair of the National Commission on Fiscal Responsibility and Reform. “I know that the fiscal path we are on here in Washington is not sustainable, and I know that each of you know it and you see it because it’s as clear as day.”

Joint Select Committee on Deficit Reduction Hearing: Overview of Previous Debt Proposals on Nov. 1, 2011

Transcript of Testimony by Erskine Bowles, Co-Chair of the National Commission on Fiscal Responsibility and Reform and Former Chief of Staff to President Bill Clinton: 

Erskine Bowles, Co-Chair of the National Commission on Fiscal Responsibility and Reform. IMAGE SOURCE: DeficitReduction.gov

“Thank you, Mr. Chairman. I’m delighted to be here. I’m delighted to be in the company of these three great Americans. I want to thank you for inviting me to come. Both Alan and I thought long and hard about what we wanted to say today. We each submitted something in writing to you, but instead I’d like to just speak to you from a few notes I’ve made.

“I know most of you. I’ve worked closely with almost all of you on both sides of the aisle. I have great respect for each of you individually, but collectively I’m worried you’re going to fail – fail the country.

“When Alan and I first got into this, we thought we were doing it for our 15 grandkids. I have nine and he has six. But the closer we got to the numbers, the more we realized we weren’t doing it for our grandkids. We weren’t even doing it for our kids. We were doing it for us. That’s how dire the situation is today.

“I think that we face the most predictable economic crisis in history. I know that the fiscal path we are on here in Washington is not sustainable, and I know that each of you know it and you see it because it’s as clear as day.

“When Alan and I traveled around the country and we talked to people and asked them, “Why do you think we have these deficits?”  They tell us, “Oh, it’s got to be waste, fraud, and abuse.” “It’s got to be foreign aid.” “Oil company subsidies.” And yes, all of those are a small part of the problem. But the big problem really comes from four sources, and you know it.

“The first is health care. We spend twice as much as any developed country in the world on health care. Unfortunately, if you look at the outcomes, our outcomes don’t match the outlays. We rank somewhere between 25th and 50th in things like infant mortality, life expectancy, preventable death. So the rapid growth of health care and the unsustainable growth of health care is our number one problem.

“The second biggest problem today, I believe, is that we spend in this country more than the next 14 largest countries combined on defense. Admiral [Mike] Mullen, Chairman of the Joint Chiefs of Staff who just stepped down, recently said that our biggest national security problem is these deficits and this debt because it will consume every dollar resource that we have. We believe that we have to make reasonable cuts in defense.

“Third, I believe that we have the most ineffective, inefficient, anti-competitive tax system that man could dream up. What we believe you need to do is broaden the base, simplify the code, eliminate or at least greatly reduce this back-door spending that’s in the tax code, and use that money to bring down rates and reduce the deficit.

“And the fourth cause of the deficit is simply interest on the debt. If there’s one thing I’m familiar with, it’s the power of compound interest. When interest rates go back to normal, this country is going to experience the power of compound interest.

“This is a problem that we can’t grow our way out of. We could have double-digit growth for decades and not solve this problem. And as the chairman said, it’s not a problem that we can solely tax our way out of. Raising taxes doesn’t do a darn thing to change the demographics of a country or change the fact that health care is growing at a faster rate than GDP. And it’s also not a problem that we can solely cut our way out of. I think you have all proven that over the last year.

“That’s why our commission came up with a balanced plan of $4 trillion of deficit reduction over the next decade. We didn’t make the $4 trillion number up because the number 4 bus rode down the street. $4 trillion is not the maximum amount that we need to reduce the deficit. It’s not the ideal amount. It is the minimum amount we need to reduce the deficit in order to stabilize the debt and get it on a downward path as a percent of GDP.

“We based this proposal on six basic principles. Those principles are that we shouldn’t do anything to disrupt a very fragile economic recovery. So we made very light cuts in 2011-12 and did not get spending back to pre-crisis levels until 2013, when we did get it back to pre-crisis levels in real terms.

“Secondly, we didn’t want to do anything that hurt the truly disadvantaged so we didn’t make any big cuts or any cuts in things like food stamps or SSI or worker’s comp. We actually did some things to improve Social Security while making it sustainably solvent.

“Third, we do want to make sure this country is safe and secure. But we have to realize, as Admiral Mullen said, that our biggest national security problem is the deficit.

“Fourth, we thought the president was right – or at least half right – in his State of the Union when he said America must invest in education, infrastructure, and high value-added research if we’re going to be competitive in a knowledge-based global economy. What he left out is we have to do it in a fiscally responsible manner. We live in a world of limited resources – that means choices and priorities.

“Fifth, as I said earlier, we believe we have to revise the tax code, simplify the tax code to broaden the base, to reduce the tax expenditures and use the proceeds to reduce rates and to reduce the deficit.

“And lastly, we have to be serious about spending cuts. We have to cut spending wherever it is – whether it’s in the tax code or the defense budget or non-defense budget or discretionary budget or the entitlement budget.

“I believe if you all go big, if you’re bold, and if you do it in a smart manner, that the American people will support you if you make these big, bold, smart decisions. I hope for the country’s sake, you will.

“Thank you very much.”

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