Transcript: Super Committee Rep. Chris Van Hollen’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. Chris Van Hollen’s (D-MD) Question and Answer Session: 

Rep. Chris Van Hollen (D-MD), member of the Joint Select Committee on Deficit Reduction. IMAGE SOURCE: DeficitReduction.gov

Rep. Chris Van Hollen (D-MD): 

“Thank you, Mr. Chairman. I want to join my colleagues in thanking all of you for your terrific service to our country in many different capacities.

“Mr. Bowles, thank you for recognizing the actions that Congress has already taken to date, including passage of the Budget Control Act has already achieved projected savings of close to $1 trillion in discretionary funds, which isn’t far from the targets that all of you set in your work. The major difference being you actually had a higher part of that coming from the defense cuts, is that not the case?”

 

Erskine Bowles: 

“We actually divided ours between security and non-security.”

 

Rep. Chris Van Hollen: 

“Right, so you were about $1.2 trillion in discretionary; half of that is $600 billion. I think the figures will show that your proposals took more than has been taken to date from the defense side of the equation.

“I think many of us view your general approaches here as balanced approaches, balanced frameworks. So I want to put the discretionary piece to the side for a minute because we’ve come close to achieving – in some cases, overachieving – your targets.

“In Simpson-Bowles, as you’ve mentioned, Mr. Bowles, you had $500 billion gross cuts in Medicare and Medicaid. You actually took some savings out of that net – it was around $400 billion. But on the revenue, I just want people to understand because what you had in both your plans was what us budget geeks called genuine CBO-Joint Tax Committee – scorable revenue. As you mentioned, Mr. Bowles, your baseline assumed, as part of your deficit projections, that we would have about $800, which is equivalent to about the amount of money that would be generated from allowing the rates for the folks at the very top to lapse, correct?”

 

Erskine Bowles: 

“That’s absolutely correct.”

 

Rep. Chris Van Hollen:

“And then on top of that, you had proposals, through tax reform and the other things that you talked about, generate another about $1.2 trillion, is that right?”

 

Erskine Bowles: 

“Right. That’s exactly right.”

 

Rep. Chris Van Hollen:

“So again, on the Budget Committee when we’re comparing that to what we call the current policy baselines compared to CBO, that’s about $2.1 trillion, $2.2 trillion tax cut compared to current law. Excuse me, revenue increase compared to current law. It’s a tax break. Looking at your testimony, Dr. Rivlin and Sen. Domenici, you come in at about the same place – $2.2 trillion under the current law baseline, correct?”

 

Dr. Alice Rivlin: 

“Right.”

 

Rep. Chris Van Hollen:

“So let me just ask the one of the questions with respect to tax reform: I take it from looking at both of your reports that you would want tax reform to be done in a way that maintains the – at least the – current progressivity of the tax code, is that correct?”

 

Erskine Bowles: 

“Yes.”

 

Former Sen. Pete Domenici (R-NM): 

“We worked very hard to do that in ours.”

 

Rep. Chris Van Hollen:

“Thank you.”

 

Dr. Alice Rivlin: 

“Ours is actually slightly more progressive than the current.”

 

Rep. Chris Van Hollen:

“Right. So at least the current progressivity of the tax code. Now, you both in your written testimonies suggested that we may want to do two-step processes: down payment and then something else. Dr. Rivlin and Sen. Domenici, you specifically say as part of that down payment you would include about $450 billion of what you call ‘tax expenditure’ savings. I assume therefore that you see that as something that you could do for deficit reduction purposes not necessarily at the same time as tax reform. I think if I look at the ones you’ve picked out, you think they could be what we call ‘rifle shots,’ is that right?”

 

Dr. Alice Rivlin: 

“Right, but it should be consistent. With our notion is if you have a tax reform idea, you move some of it forward.”

 

Rep. Chris Van Hollen:

“That’s right. But, again, on net your tax reforms might generate $2.2 trillion under the current policy baseline, correct?”

 

Dr. Alice Rivlin: 

“Right.”

 

Rep. Chris Van Hollen:

“Okay. Let me talk a minute about jobs and the economy, because the Congressional Budget has said that about a little over one-third of our current deficit today is as a result of the fact that we have a very weak economy. We’re not operating at full potential. So I think all of us agree that we need to get the economy moving again. Dr. Rivlin, you pointed out that your plan with Senator Domenici had about $680 billion in payroll tax relief. I think you said the other day at one of the Sunday shows that you would ‘go bigger than the president’s job plan.’ Do you believe that something like that is necessary at this time?”

 

Dr. Alice Rivlin: 

“Yes, I think we’re in danger of slipping into stagnation, and we should do something about it.”

 

Rep. Chris Van Hollen:

“Mr. Bowles, would you agree that it would be a bad idea this coming year to have every working American see an increase in their payroll tax relative to last year?”

 

Erskine Bowles: 

“Yeah. All the payroll tax was in the president’s proposal, I think, it was about $247 billion out of a $447 billion. It’s hard for me as a fiscal conservative to say this, but I could support a continuation of the payroll tax deductions for another year for employees. It’s very hard for me to understand how an approximately $600 deduction for the employer on a temporary basis is going to be enough to get them to hire a full-time permanent $30,000 a year employee. So I don’t think I would support the payroll tax deduction for the employer. I could see supporting it for the employee if we could pay for it.”

 

Rep. Chris Van Hollen:

“Okay. Thank you.”

 

Former Sen. Pete Domenici: 

“On our end, I’m for what we told you before, but I wouldn’t argue if you followed his [Erskine Bowles’] suggestion. As I see it, it’s still alive. What he’s talking about, it’s certainly better than nothing.”

 

Rep. Chris Van Hollen:

“Got it. Thank you, Sen. Domenici.

“On health care, Dr. Rivlin, you’ve testified many times in front of the Budget Committee and stated that you thought that the Affordable Care Act introduced a number of very important innovations. I agree with you in that we need to do more in terms of modernizing the Medicare system to focus more on the value of care and quality of care versus the quantity of care. I do have a question with respect to your version of the premium support plan – the most recent one. If you are confident in the market forces driving down the prices, and if you’re argument is that Medicare is driving those market forces, then why would you need a fail-safe mechanism? In other words, why would you need to say if you don’t achieve the goal we want in savings, you have to have GDP plus 1? If it’s not keep track with the market, isn’t that just a cost transfer to Medicare beneficiaries?”

 

Dr. Alice Rivlin: 

“Well, I think we’re not absolutely certain about how the markets will work. We have seen, even in the limited market that is Medicare Advantage, that in some places they work well and come in under the fee-for-service, and in other places they don’t. We think this is a much more robust plan than Medicare Advantage.

“The reason that you want the fail-safe is so the Congress will absolutely know what they’re going to spend going forward on Medicare. It’s not going to grow faster than this. It’s a defined contribution. We think that’s very useful. As for the cost-shifting, there might be some cost-shifting. But then you can arrange it so that it is not cost-shifting onto the lower-income people. It is means-tested, as we said before. It’s cost-shifting on to people who can better afford it.”

 

Rep. Chris Van Hollen:

“I think, again, if we’re confident that the market forces were going to work the way intended, then I don’t think there’d be a need for a back-up. I do know that members of Congress and folks who are on the federal employees’ health benefit plan, for example. They bid – different plans bid, and there’s a defined support mechanism that’s set in law – 72% to 28% – so I’m not sure why we would be proposing something different for Medicare beneficiaries…

“Let me just close, Mr. Chairman, by saying we asked actually CBO to look at some of these ideas, including one where we just had competition among the managed care plans and another one where we threw in the premium support – it wasn’t the second lowest bidder – it’s more along the lines of what some other the Breaux plan did which is market places. And just having competition among the managed care plans, they said it came out with a score of about $9 billion between 2014 and 2021. Adding in this other mechanism took you up to a total of about $25 billion. So it’s pretty clear, at least from these numbers, and we can look at them, that we’re going to need to do other things. This is not a panacea, at least according to CBO’s numbers, for dealing with the Medicare challenge. That we need to look at a lot of these other innovative ideas that are out there, including some of the things that have been talked about today. Thank you, Mr. Chairman.”

 

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