Transcript: Super Committee Sen. Rob Portman’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 Sen. Rob Portman’s (R-OH) Question and Answer Session:

Sen. Rob Portman (R-OH), member of the Joint Select Committee on Deficit Reduction. IMAGE SOURCE: DeficitReduction.gov

Sen. Rob Portman (R-OH):
“Thank you, Mr. Chairman. And thank you to the four patriots who are sitting before us trying to avoid what Erskine Bowles talked about today and in the Budget Committee testimony as the most predictable economic crisis our country has ever faced. I appreciate the discussion today. We talked about a lot of the same issues that this group of 12 has been grappling with – revenues, of course, but also spending.

“I’d like to focus, if I could, on some of the issues that we’ve talked about but maybe with a little different angle. If you wouldn’t mind putting up that Bipartisan Policy Center chart again. Whoever is in charge of the charts, that’s the one that Sen. Domenici asked to be put up earlier. This is the chart that shows that health care spending as a percent of our GDP is set to just about double in the next 25 years. So just take my word for it. Don’t need to see…No, if you guys could put that chart up, I’d appreciate it. Because it’s the backdrop to this question.

“Erskine Bowles said current benefits encourage over-utilization. He talked about some of the things that could be done, including higher co-pays; higher premiums; talked about Part A and Part B being combined; having a single deductible that’s a little higher. He also said that in the Simpson-Bowles proposal that you all recommended reducing health care spending over a 10-year period by $500 billion. I assume, to Sen. Simpson and Mr. Bowles, that that reverts to the GDP plus 1. That’s what that would mean – $500 billion – given this enormous growth or – to use your words – unsustainable growth in health care expenses.

“Let me ask you about a couple of ways to get there that we haven’t talked about yet. One is means testing. Seems to me this is one where Republicans and Democrats alike ought to be able to come together.

“I’ll give you some interesting statistics. The 200 couples retiring today will pay about $119,000 in lifetime Medicare taxes and receive about $357,000 in lifetime Medicare benefits. That’s $119,000 in taxes for $357,000 in benefits. Which goes to the advertisement that you talked about, Al. So that’s about $3 of benefits for every dollar in taxes. If you multiply this by the 77 million retiring baby boomers, it’s not hard to see why we have an unsustainable program.

“Now, we can talk about this in terms of the being sure – as Dr. Rivlin just said – that those at the lower end of the income scale are taken care of. But at the same time, I think it’s difficult to justify giving upper income seniors benefits that’s so far exceed what they paid into the system. Can you all just comment on that? We haven’t talked about that specifically. How do you feel about the needs, particularly on the Part B and Part D premiums?”

 

Former Sen. Alan Simpson (R-WY):

“Well, you have to follow the nomenclature here. You never want to use the word mean in anything especially. You call it affluence testing and then you get juice. That’s what you should do. You’re going to have to start affluence testing some of these benefits. There is no possibility of people who, as I say, literally – and you know them in your own community – use these systems and pay nothing.”

 

Sen. Rob Portman:

“How about co-pays?”

 

Former Sen. Alan Simpson:

“Co-pays have to go up, and you have to affluence test in that.”

 

Sen. Rob Portman:

“With a show of hands, how many of you are for affluence testing?”
[All four panelists raised their hands.]

 

Former Sen. Alan Simpson:

“I do favor that – affluence testing. I always talked about it. Bob Kerrey and I talked about it. Max, remember? Bob Kerrey and I and Danforth and Bradley were all involved in that years ago when we were here. And then we were called ‘un-American,’ ‘cruel,’ ‘evil,’ ‘breaking the contract.’ I can hear the music and the violins in the back already, and it won’t work anymore.”

 

Dr. Alice Rivlin:

“We already do have [that] in the Part B premiums and Part D. We’re certainly in favor of increasing that.”

 

Sen. Rob Portman:

“Erskine, can you talk a little bit about – again – some other ideas. I’m going to put you on the spot here, my friend, because one was raising the age. How do you feel about raising the eligibility age given the statistics on longevity? Eligibility age on Medicare?”

 

Erskine Bowles:

“We actually did not have that in our plan. As I have thought about it since that time, under the Affordable Health Care Act we provide subsidies for people who have really chronic illnesses and for people who have limited incomes so that they can afford health care insurance in the private sector. That didn’t exist before the Affordable Health Care Act. That means that people 65, 66, 67 would still be able to get health care insurance. So as I think about it, I could support raising the eligibility age for Medicare since we have other coverage available through the Affordable Health Care Act.”

 

Sen. Rob Portman:

“Let’s go to tax reform for a second if I could. All of you are talking about broadening the base… in simplifying the code, being able to do so by reducing marginal rates in getting rid of some of the underbrush. One thing we haven’t talked about is corporate reform. As you all know, we have the second highest corporate tax rate among our trading partners. Japan’s slightly higher and they’re intending on taking theirs down. The average of all the developed countries – the OECD countries – is 26%. We’re at 35%. But in fact, we’re not because you have to add state taxes onto that. The average is about 6%, which happens to be Ohio’s rate, so you’re talking about 41%. We do not have a territorial system. We have a worldwide system which also puts us at a disadvantage we’re told by all of our companies. Can I see a show of hands on this? Do you all support getting the corporate rate down to a competitive level? I would define that as 25% to 26% and territoriality. Does everybody agree with that?

[All panelists except for Dr. Alice Rivlin.]

“Oh, Alice! Almost got them, but Alice…”

 

Dr. Alice Rivlin:

“Well, if you’re pinning us down to a rate, I mean we did take the rate down to 28% in ours. Actually, we didn’t do territoriality. The reason was interesting. Simpson-Bowles have strong representation from big multinational corporation on it. They spoke very eloquently for territoriality. Our business representation was more small business. They were not enthusiastic about territoriality. So we left it out.”

 

Erskine Bowles:

“We did. We took the corporate rate to 26%, and we went to a territorial system to pay for it.”

 

Former Sen. Pete Domenici (R-NM):

“I support ours. We didn’t come down as far as them, but 28% is ours. I think the problem we got with the public on that is it’s discussed in isolation by the commentators. They just say we’re lowering taxes on the fat cats, the corporations. But when it’s part of the overall plan, they got a big reduction…”

 

Sen. Rob Portman:

“I’m talking about not lowering the tax. It would be revenue-neutral. So there would be no reduction in the taxation. In fact, you get growth from that, based on all the economic analysis that we’ve seen, which would add more revenue that was not revenue from increasing taxes but revenue from growth and other feedback effects.”

 

Former Sen. Pete Domenici:

“I don’t disagree. I was just giving you an explanation that I’ve heard.”

 

Sen. Rob Portman:

“I appreciate it.

“With regard to balance, because that has come up here. The co-chair talked about balance. You all talked about ratios and balances. What is the right balance? I think, Erskine, you talked about this earlier in terms of where you all were headed and where you ended up. Could you or Sen. Simpson give us a sense of what you believe is the right balance here between revenue that is generated again through tax reform but new revenue on the one hand, and on the other hand reductions in spending. What’s the right balance?”

 

Erskine Bowles:

“We thought it was no less than two-thirds and we worked towards three-quarters coming from spending as opposed to one-quarter or one-third coming from revenue. If you look at the projections for 2020, it had spending at about 25% and revenue at 19%. We didn’t want to see revenue go above 21%. Obviously we want to see if we could drive spending down to where revenue was so we could balance the budget at some point in time.”

 

Sen. Rob Portman:

“Well, that’s interesting. Because you’re right. We’re now at about historical average of about 18.4% on revenue and we’re lower now with the recession. But even under the CBO’s statistics showing that the tax cuts would all continue, we’d get back up to 18% over the next several years.

“One final… Well, I see my time has expired. I want to thank you all for your help today and the help that you’ve given to us up until this point – all of you who made contributions to our efforts and both individually and as part of your groups. We’re going to need your help going forward. Thank you.”

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2 Comments on “Transcript: Super Committee Sen. Rob Portman’s Q&A on previous debt proposals

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