Transcript: Super Committee Rep. Xavier Becerra’s Q&A on previous debt proposals
Joint Select Committee on Deficit Reduction Hearing: Overview of Previous Debt Proposals on Nov. 1, 2011
Transcript of Rep. Xavier Becerra (D-CA) Question and Answer Session:
Rep. Xavier Becerra (D-CA):
“Thank you, Mr. Chairman. To all of you, thank you very much for your service to this country and for the work you’ve done to give us some templates that we can use to try to resolve this issue for not just the Congress but for our country.
“I enjoy always hearing from the four of you because you’ve shown us you can be big, you can be bold, and you can be balanced and still try to move the country forward. So I thank you for that.
“And as I said to both Alan and Erskine on many occasions, I thank you so much for attacking those sacred cows that too often get in the way of Congress being able to deal with those things that are most important. I honestly think – and I served on that commission with you – as I said before, I thought you put all the elements in place. I would have put the mixture of those elements differently. But I compliment you today as I did back then, and I applaud you for what you did in putting together the template of what could be a solution for the country.
“I think I heard you all say this, but I want to make sure about this. While we’re still suffering through these difficult economic times…And back when we were going through this with the commission – and Director Rivlin, I know that you and Senator Domenici were also going through this as well when you were coming up with your plan – times were tough. Well, they’re still tough. I suspect that all of us back when we were going the work of these two commission thought that the country and the economy would be doing far better. Is it still your premise that we should really concentrate on getting the economy back on track, getting Americans back to work, before we go too heavily into trying to find these savings by making cuts in some of these important investments that we have? And I’ll open it up to anyone to answer.
Dr. Alice Rivlin:
“It’s a timing question, Mr. Becerra. We believe that drastic cuts in spendings right now would be damaging to the economy as would tax increases right now. So we need to let the recovery happen and, indeed, stimulate it with proposals we’ve been talking about. But that doesn’t mean putting off the deficit reduction. One of the best things we could do for the growth of the economy right now is for this committee to legislate long-run reduction in the deficit on the entitlement and the tax side – right now. We can’t wait until after 2013 or some other time to do that. The markets and the public have got to see that it’s going to happen, that we’re serious, and that it is in law. Then it doesn’t have to take effect right away but it’s got to be in the law.”
Rep. Xavier Becerra:
“So get it done, let it play itself out. You have time to take effect long-term as you see the economy begin to recover.”
Dr. Alice Rivlin:
“Right, but don’t wait to legislate it.”
Rep. Xavier Becerra:
“Got it. Got it.
“May I ask a question regarding revenues? You all tackled the issue of revenues. You did it in somewhat different ways but for the most part you did something that I thought was very important. You tried to also show the public that while we will increase real revenues, we would ultimately try to reduce the rates and give people a fairer taxation system. So that while we were still able to generate revenues, which we need, you’re able to also tell the public that they’re going to have a system that works better for them and so that they could understand the simplicity and the fairness of it.
“In both plans, I believe – and we had a little discussion on this – you equalized the taxation for capital gains and dividends to ordinary income. Or in layman’s terms, an asset – an investment in stocks or bonds – would now be taxed at the same rate that an income by a hardworking American would be taxed at so that they would be treated equally. You also found ways to reduce the rates overall for all income groups. You went after – what I know in the Bowles-Simpson Commission – became known as ‘tax earmarks.’ Those tax expenditures, which I believe Sen Simpson you mentioned, totaled over $1 trillion. So you came up with a mix. Again, you tackled some sacred cows and you came up with a mix. Is it still your sense that that type of a mix can work for this committee?”
Former Sen. Pete Domenici (R-NM):
“Sir, I’ll say absolutely. And I would say to my friend, Sen. Kyl, that when he talks about capital gains that you look at my record. I have voted in favor of capital gains for my 36 years in the Senate, but I didn’t have a chance to lower the rates – like we’re lowering them – at the same time that you were looking at capital gains. In this case, that’s what happened. We lowered the rates.
“Now, I heard from the best experts this country could put before me when I was chairing that the best way to effect growth in this country is to lower the rates on all people. That was the best instrument of growth. They didn’t say except for capital gains. They said it’s the best instrument for growth. And we lowered it all substantially. So we put back into the code the instrument of growth, which is the lowering of the rates on middle America and all Americans, which we did in ours and they did in theirs. Theirs is a little stronger in terms of…As Alice explained it, theirs come down lower so you can put back some things. I would tell you tell you we also included in this – and don’t forget we put in this – the medical expenses, which the largest tax expenditure. It’s bigger than homeowner interest rates. We phased that out over a long-term. That’s a very difficult one but we did it in ours, and you should know that that’s part of the reason why we got the rates we got.”
Rep. Xavier Becerra:
“You called the tax expenditures ‘backdoor spending through the tax code.'”
“It is, Congressman. It’s just spending by another name. I was flabbergasted. I was appalled to see that – you know having listened to all the talk about earmarks all these years, which are in the appropriations bill – there are about $16 billion worth of annual earmarks a year. There are $1.1 trillion worth of annual earmarks in the tax code. It is just spending by another name. It’s somebody’s social policy. If you were to eliminate them and use 92% of the proceeds to reduce rates and only 8% of the proceeds to reduce the deficit, you could reduce the deficit by about $100 billion a year. So over a total of a 10-year window of about $1 trillion. You could take rates to 8% up to $70,000, 14% up to $210,000, and have a maximum rate of 23%. You could take the corporate rate to 26%. You could pay for a territorial system so that $1 trillion is captured overseas [and] could be brought back to this country to create jobs over here. I believe that would create dynamic growth in this country and produce revenues far beyond what we have forecast. So I’m very excited about broadening the base and simplifying the code. I think it makes a lot of difference.”
Rev. Xavier Becerra:
“I’d like to focus on a couple more areas of spending. I know that when we talked about spending, you also were willing to tackle the issue of the discretionary side of the budget. The kind of spending that we typically talk about. But most people don’t recognize that 65% of all the spending increases that occurred over the last 10 years came out of just one department – the Department of Defense – mostly because of the war but because of the growth of some of our military projects and contracts and so forth. I know that you tried to tackle that some, and I appreciate the work that you did there.
“With the limited amount of time that I have, I’d like to touch on health care. I appreciate what each of the commissions tried to do on health care. But let me just pose one question. Perhaps you could help us with this. We could do any number of things to try to reduce the cost of Medicare and Medicaid for the American public. But at the end of the day if we do nothing to try to help lower the cost of health care overall – not just within the public sector within Medicare and Medicaid – we will simply have shifted the expense of health care in Medicare and Medicaid to those who use health care through Medicare and Medicaid, to our seniors and our disabled. Because the reality is that today the cost of health care under Medicare is growing slower than the cost of health care in the private insurance market. We went through that in the Bowles-Simpson Commission. How it’s really strange. We’re talking about the crisis in health care. The reality is if you were to get rid of Medicare and send its users over to the private sector – the insurance market – they would actually end up paying more because the cost of private insurance is growing at a faster clip than is Medicare and Medicaid. So the issue is: how do we corral the cost of health care, which include Medicare and Medicaid, so that way we don’t end up just shifting cost from the people – the taxpayers – to the actual beneficiaries – in this case, our seniors who are now retired. So if you can give that some thought, that would be very instructive. I know that the health care reform of last year meant to do that – to try to help corral the cost of the private sector. But if we don’t do something about overall health care costs, simply telling seniors that they’ll end up paying more in Medicare doesn’t help with our health care costs.
“Thank you for your service to this country and your time.”
- Joint Committee on Deficit Reduction’s website
- National Commission on Fiscal Responsibility and Reform’s website
- National Commission on Fiscal Responsibility and Reform: Final Report – The Moment of Truth (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 former Sen. Pete Domenici on deficit reduction
- WhatTheFolly.com: Transcript: Super Committee testimony by Dr. Alice Rivlin on reducing the deficit
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