Transcript: Super Committee testimony by former Sen. Pete Domenici on deficit reduction
“Both sides – those who are against any fundamental health entitlement reform and those who oppose any revenue increases – will be equally complicit in bringing the nation closer to fiscal brink,” said former Sen. Pete Domenici (R-NM), Co-Chair of the Bipartisan Policy Center’s Debt Reduction Task Force.
Joint Select Committee on Deficit Reduction Hearing: Overview of Previous Debt Proposals on Nov. 1, 2011 Transcript of Testimony by Former Sen. Pete Domenici (R-NM), Co-Chair of the Bipartisan Policy Center’s Debt Reduction Task Force:
“Thank you, Mr. Chairman. I just wanted to say the reason she asked for that privilege is because we had our discussion with you planned in that order, and so we thank you very much.
“First of all, let me say to the two co-chairs and the members of the committee, thank you for the opportunity to discuss with you today both economic and fiscal challenges our nation faces and our comprehensive plan to stabilize the national debt.
“More than 18 months ago, Dr. Alice Rivlin and I decided that we should continue our decades-long work for a rational federal fiscal policy. Our only stipulation was that everything is on the table. She and I agreed. We then invited 17 other members to join us in what became the Bipartisan Policy Center’s Debt Reduction Task Force. I tell you all of this because I think the history of the men and women that worked on this is very important to show you what kind of Americans we have out there who are worried about the future and will step up to the table and do what’s necessary. The condition of their membership to join us was that they too would agree that everything was on the table. Our task force ranged from Mayor Marc Morial of New Orleans to former Oklahoma Governor Frank Keating. Imagine the difference in the two – some of you know. Yet they agreed, they agreed that we were in trouble, and they agreed that we have to solve the problem. We had liberals, conservatives, think tank budget policymakers, former members of presidential cabinets, people with business and labor experience. Our task force was as diverse a groupof serious American citizens as you could get to address what we all believed is a looming crisis for our nation.
“Last November, we issued our report. It has been much discussed, and you and your staffs have seen it. Our recommendations, after many days, were unanimous. They were controversial, as they should be, because they were also serious. Individually, each of us might have preferred a different mix of solutions, but each compromised to define a set of policies that we could all support.
“Since then, we have seen unemployment continue to exceed 9%, our economy continue to stagnate. At the same time we have endured a damaging fight over the debt ceiling increase. We’ve seen another series of the melodrama on annual appropriations. We’ve seen another year of deficits exceeding $1 trillion, and a debt that had ballooned to over $10 trillion that is the debt held by the public. We’re spending projected to grow faster than revenues. We’ll be forced to borrow more and more every year if we do not change our policies. This fiscal projection is clearly unsustainable. Now everybody has to learn that word, because that’s probably the best word to explain where we are. We are in a America with an unsustainable economic policy, and it will ruin us – sooner or later.
“This unsustainable nature has been so attested by the Federal [Reserve] Chairman Ben Bernanke, head of the International Monetary Commission, President Obama, and almost all fiscal experts have used that word – “unsustainable.” You are here trying to fix the unsustainable and make it sustainable.
“Righting our fiscal house will take three things: renewed economic growth; cutting federal spending, especially entitlements driven in large part by Medicare and Medicaid; and pro-growth fundamental tax reforms that yield significant net new revenue.
“The Medicare proposal that Alice and I present to you today is the only reasonable bipartisan plan to fundamentally reform that program, make it more efficient, and preserve it for future generations.
“We also present to you a comprehensive, pro-growth tax reform that clears out all the special interests that are in the code. We, like our friends who chaired the president’s commission – and I listened carefully to their recommendations today – they recommended a fairer and simpler tax system. We have one similar to it, but I would think that if you look carefully at it, it better solves the problem that we have today.
“Now, let me be blunt. A plan that does not fundamentally restructure Medicare and other health entitlements will fail to adequately address the debt crisis that we face.
“Both sides – those who are against any fundamental health entitlement reform and those who oppose any revenue increases – will be equally complicit in bringing the nation closer to fiscal brink. I hope you heard that. I said it, and it’s not like me. I don’t usually say that about things. But I did say if we don’t do this – those who are for fixing health care and those who are for tax increases and they say we’ll do not one without the other, we will do only one – then the are both complicit in letting America destroy itself, letting this great democracy destroy itself because we don’t want to make tough decisions.
“Additionally, while not currently the largest driver of our deficits, Social Security finances are unstable. We must soon take action to implement some small fixes that will keep the system on solid grounds for generations to come. That can be done. That’s not so difficult. The citizens will understand that.
“What will happen if we continue to try to wriggle around these facts? When the debt ceiling increase battle caused short-term disturbances in the markets, when that happened, I had hopes that the fiscal reality would push the president and the Congress to real fundamental action. Then because of the turmoil in North Africa and European debt problems of the highest order, investors rushed into quality, seen as the American sovereign debt. So instead of seeing higher interest rates for American debt, we have seen much lower interest rates. Instead of the stock market collapse, Dow Jones has been rising and going down steadily on the upside during the last month. That is not normal for the situation we are in, but I just told you why it was. So are those who predict serious, perhaps calamitous, consequences for our fiscal policies – are we wrong? I think not. Right now, to borrow a phrase: “American debt is the best house in a truly terrible neighborhood.” Yes, we have rats, holes in the roof, and grass growing window high, but other houses for global investors to store their money are even worse – and that accounts for us having lower interest rates. However, it won’t always be so. The neighbors might fix their houses or the whole neighborhood might burn. Either way we will pay for our neglect with slower future growth, and that’s the death mail for those in middle America who have been part of America’s prosperity. Future growth and less prosperous country far less able to play a leading role in the world is what we will present to the world if we don’t fix this problem.
“I am told that the Joint Select Committee doesn’t have the time to truly do comprehensive reform. I believe that it can create time through a fast-track mechanism using Section 404 of your enabling legislation, and which we expand upon in the appendix documents in your folder. I can say to you those in your folder from us today – the five or six – will give you a real sense and give you answers to almost every problem you have before you.
“I am told that the wise exchange of short-term political pain for long-term fiscal gain won’t happen. I hope that’s not true. Without substantial new revenues and structural entitlement reform, our fiscal ship is destined to capsize.
“I am told that we need to put these kind of tax and entitlement changes off until 2013 – an odd number non-election year. Well, 2011 is an odd number non-election year, and although I am not making a prediction, we might not get to the next one unscathed. I am saying that we might have the calamity before that event. I know that the JSC has enormous power. What I don’t know is whether or not they will use that power.
“Now, I’ve left one remark that was very important… I’ve left it out here and I want to find it so that we can be sure that you understand that those who say they will not support tax revenues unless they have entitlements – that’s a good position if, in fact, you’re saying, “I will do it if we get both.” But both are complicit if they fail to act because each blames the other. They will both be complicit if they don’t both cooperate in participating in this deficit reduction. Not one – not the tax raisers, not the entitlement cutters – but both will be complicit and will have caused America to suffer what we have described here today.
“I thank you very much.”
- Joint Committee on Deficit Reduction’s website
- Written testimony submitted by former Sen. Pete Domenici (R-NM), Co-Chair of the Bipartisan Policy Center’s Debt Reduction Task Force (PDF)
- Bipartisan Policy Center’s website
- Bipartisan Policy Center: Restoring America’s Future: Reviving the Economy, Cutting Spending and Debt, and Creating a Simple, Pro-Growth Tax System (PDF)
- WhatTheFolly.com: Transcript: Super Committee co-chair Jeb Hensarling’s opening statement on previous debt proposals
- WhatTheFolly.com: Transcript: Super Committee co-chair Sen. Patty Murray’s opening statement on previous debt proposals
- WhatTheFolly.com: Transcript: Super Committee testimony by Erskine Bowles, Co-Chair of the National Commission on Fiscal Responsibility and Reform
- WhatTheFolly.com: Transcript: Super Committee testimony by former Sen. Alan Simpson, Co-Chair of the National Commission on Fiscal Responsibility and Reform
- WhatTheFolly.com: Transcript: Super Committee testimony by Dr. Alice Rivlin on reducing the deficit
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