Transcript: Super Committee Sen. John Kerry’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. John Kerry’s (D-MA) Question and Answer Session: 

Sen. John Kerry (D-MA), member of the Joint Committee on Deficit Reduction. IMAGE SOURCE: DeficitReduction.gov

Sen. John Kerry (D-MA):

“Thank you very much, Mr. Co-Chair. First of all, I want to thank each of you for your extraordinary service not just in this effort, which is important, but over the years. We are particularly appreciative to this contribution to the dialogue. I hope it would be a contribution to more than a dialogue but to a result from this committee. I just want to spend a few moments on some of the context that brings us here.

“Mr. Bowles, you opened up with a comment that caught my attention. Two comments. One, you said, ‘This is the most predictable economic crisis in history that we’re looking at coming at us’ – even as you peg the minimum figure $4 trillion, which is what you think we ought to do. But then you said you’re worried that ‘You’re going to fail.’ I want you to speak to that for a moment.”

 

Erskine Bowles: 

“You all have done a great job of stopping the leaks coming out of your committee for an extended period of time. But over recent days, I’ve been able to put together some of the proposals that you all are considering. I’ve also listened to some of the back-and-forth that has been in the press. I’ve heard people talk about simply settling for $1.2 trillion worth of deficit reduction – maybe $1.5 trillion but more of the talks point to $1.2 trillion – doing it across-the-board, which is never the smart way to control any of your budgets in any way, shape, form, or fashion. I’ve even heard talk that if you end up doing $600 billion out of defense, doing $600 billion out of non-defense that the day after the sequester takes place that you’ll have people in the House and the Senate working to get around the sequester. I think that would be disastrous. I think people would look at this country and say, ‘You guys can’t govern.’ I think people would look at it and say, ‘You know what? They’re really not going to stand up to their long-term fiscal problems. This is not going to be a powerful country in the future.’ And they would think we were well on our way of becoming a second-rate power. I think it would be a disaster.”

 

Sen. John Kerry:

“So I want to build on that a little bit. We all know the figure that we should head in order to stabilize the debt, which is the mission and ought to be the mission of the Congress, is $4 trillion. What is the impact in the marketplace? What would the impact be on a discounting of our debt, a write-down, if we hit a $1.2 trillion or $1.5 trillion? Aren’t we going to be back here almost immediately with the very same issues sitting on the table?”

 

Erskine Bowles: 

“You could lose a $1.2 trillion to $1.5 trillion by an increase in interest rates back to the normal rate very quickly. You wouldn’t be accomplishing very much if you did that. Plus, you know, the effect it would have on how people look at this country would be really devastating. I can tell you that when we went through this whole debt, default fiasco before August, I can tell you that globally countries lost a lot of respect for America, and they lost confidence in us that we would really stand up and address our long-term problems.”

 

Sen. John Kerry: 

“Now, Pete, I’m sorry that Al had to leave, but you and I had the great pleasure of working together on a number of different issues. I trust your judgment. While we’re not wearing partisan hats hopefully here, you are a Republican. I would like you to share with us of your perception as a long-time legislator. When in your memory has a committee in Congress ever have the right to put together a proposal that would be voted on by expedited procedure in both houses of Congress with 51-vote majority without amendment?”

 

Former Sen. Pete Domenici (R-NM):

“The answer is never. But I would tell you, when we passed, effectively in the Senate, the bill that created the Budget Committee, it was an Impoundment Budget Act, as you recall. It was to impound – to de-authorize the authority of the president to impound and at the same time to create a Budget Committee. Sen. Robert Byrd, the expert extraordinary on the Senate, spent weeks on end trying to figure out a way that you could assure the passage of bills that pertain to budget and not destroy the filibuster rule. In the end, he quietly gave in. The Budget Act, if you go look at it, it’s a thick bill. But nonetheless if you read it and do what I did, I decided that it meant that I could take a reconciliation bill to the floor of the Senate and it not be filibustered. I defeated Robert Byrd, because his own writing said he had found a way without changing the rules of the Senate to get around filibuster and give authority to a committee. So we gave the Budget Committee to act without filibuster. But nothing as powerful as this committee.”

 

Sen. John Kerry: 

“What would be the implication – I’d like to ask all three of you to answer this to some degree. Director Rivlin, you’ve headed up the CBO; you’ve headed up the OMB as well. What would be the implications, in your mind, of the United States of America not meeting with – what everyone understands – as the financial challenge facing us: stabilizing the debt and getting on a long-term fiscal path? How would the world view us, particularly given the fragility of Europe right now and their efforts on Greece, Italy, Spain, and etc.?”

 

Dr. Alice Rivlin: 

“I think it could be devastating. I agree with Erskine and would be even stronger. I think we could face a long period of stagnant growth [and] another recession, which would be worse than the one we are slowly climbing out of. It’s very hard to predict when this might happen or what the course might be. But certainly in the last few months, we have seen dramatically in Europe that the sovereign debt of quite solid-seeming countries can go down very fast. That could happen to us. We could just lose the confidence of our trading partners and ourselves. I think the problem is if we are seen by our own citizens as not being able to face up to problems and resolve them, [then] we’re in deep trouble.”

 

Sen. John Kerry: 

“And importantly, I think it’s been put on the table here clearly today…And I’m sort of trying reiterate this because I think it’s important. It is possible to put revenue on the table to the tune of $1 trillion plus whatever with tax reform, is it not? You do not have to raise the tax rates. In fact, you could do the tax reform with specific instructions to the tax committees to hold the rates down, lower the rates, get a lower range, broaden base, correct?”

 

Dr. Alice Rivlin: 

“Right.”

 

Sen. Domenici: 

“Well, we actually went out way to get some experts together – the best experts in this town and I think we know who they are – and asked them: does that Section 404 give that kind of authority that you just alluded to direct to the committees that they perform the following and report it back? And that bill would carry with it in the Senate the same prerogatives that the original bill carried when you were created.”

 

Sen. John Kerry: 

“Pete, you and I met and we talked about your concept with respect to health care reform. I appreciate your contribution to that, and I’ve been trying to work through how we might be able to do some of those things. There are some issues, I think, about how you guarantee the coordination of the lowest health care plan and still get coverage in certain areas. But I don’t want to get stuck on that for the moment. What I want to do is deal with the bigger issue here. I assume all of you would agree that you could do structural reform in Medicare and the entitlements that is not necessarily just the premium support approach, is that accurate? Director Rivlin?”

 

Dr. Alice Rivlin: 

“Oh certainly. There are several approaches. We like that one.”

 

Sen. John Kerry: 

“For instance, the age thing that Sen. Portman asked about. That’s structural reform, isn’t it?”

 

Dr. Alice Rivlin: 

“I actually wouldn’t think of raising the age as structural reform.”

 

Sen. John Kerry: 

“What would you think of? Give us some thought about structural reforms that you think would conceivably alter it, whether it’s dual eligible Part A, Part B. Are there other components? Or how about this: that you begin to move the entire system off of fee-for-service where possible – where it works, you leave it – but you move it to a value-based payment system?”

 

Dr. Alice Rivlin: 

“Yes, and that’s roughly what we’re proposing.”

 

Erskine Bowles: 

“Sen. Kerry, I have a lot of opinions about health care. I think the current system doesn’t make any sense – to pay twice as much as any other developed country for health care and have our results rank somewhere between 25th and 50th. We’ve got 50 million roughly people who don’t have health care insurance.

“I just ran the public health care system in North Carolina and reports to the president of the university. If you don’t think those 50 million people get health care, you’re crazy. They get health care; they just get it through the emergency room at five to seven times the cost of being at the doctor’s office. That cost doesn’t disappear; it just gets cost shifted to those of us who have health care insurance and in the form of higher taxes.

“We have got to have real structural reform in health care. I believe all people ought to have health care, but I don’t think anybody should get on the government’s check book or the taxpayers’ check book. A ‘Cadillac’ plan? I don’t think anybody ought to get first all over coverage because I think that we ought to make sure people have skin in the game.

“If you’re going to have everybody have coverage, you got to have everybody have a medical home. And if everybody is going to have a medical home, then you darn well make sure that education institutions like mine are producing more primary care doctors and more nurse practitioners and more physician’s assistants and not so many specialists.

“I think if you want everybody to have prescription drugs, then I don’t know why in the world you wouldn’t have Medicare negotiate with the drug companies for the prescription drugs that taxpayers are going to pay for. And I don’t know why anybody who is getting drugs from the taxpayers ought not to have generic drugs.

“If you don’t think at hospitals doctors practice defensive medicine, you’re absolutely crazy. They do. So we got to have some kind of real tort reform.

“And you’re absolutely right. We got to pay for quality not quantity. At the end of the day, nobody likes this, but without talking about death panels and that kind of crazy stuff, you’re going to have to do something about the end of life scenario.

“Those kinds of things have to be done if you’re going to be  really addressing health care.”

Sen. John Kerry: 

“Well, I thank you all.”

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