Transcript: Simpson-Bowles on the “point of no return” to address nation’s debt

Transcript of excerpts from the Politico Playbook Breakfast with Alan Simpson and Erskine Bowles, co-chairs of the National Commission on Fiscal Responsibility and Reform, on sequestration and deficit reduction. The event was held on Feb. 19, 2013 and moderated by Mike Allen, Politico’s White House correspondent.

Mike Allen:
Sen. Simpson, what is the point of no return? We’ve been talking for a long time convincing people that this is a problem that needs to be addressed…When is the tipping point? When will people really feel it? When does something really have to happen?

Alan Simpson:
I think you’ll note how sweet I’ve been in the last few minutes, which is not my trait…Let me tell you if anybody can’t understand what we’re trying to do, and if anybody can’t understand the sequester is just really going to do total disruption because it doesn’t touch the two engines that are driving us into eternity and that is the cost of health care.

It doesn’t matter what you call it – call it a negative, call it a positive – it can’t possibly work. It’s on automatic pilot and it will suck up all the discretionary budget of the U.S.

If anybody can’t understand what we’re trying to do with Social Security to make it solvent for 75 years, then they’re just lost in the swamps because the trustees of the system – go look who they are – wonderful Americans, Democrat and Republican alike – are saying if you don’t do something to restore solvency of this system, which is $900 billion in negative cash flow right now, and you’re going to waddle up to the window in the year 2031 and get a check for 25% less, you’ve got to have rock for brains to not figure that out.

And if you’re 81, then figure this one out. I’ve put in it when I was 15 years old – I put in $5 into Social Security in the Cody Bakery [sp] making those sweet rolls I’m never eating another one in my life. And then I went into the Army and I put in when I was in the Army. You don’t now. And then I practiced law for 18 years and I never put in more than $874 a year, and not one guy my age ever did. And then it went to $2,000 and then it went to $3,000 if you’re self-employed…

When I in ’84 – ’83 when we were messing with this the last time, we found out that the guy that retired got everything back in the first 5 years of the benefit period. For God’s sake, there were 16 people paying into this system when I was a freshman at the University of Wyoming and today there are 3 people paying into this system and 1 taking out. Got that? 16 people paying in – whatever you put in today, I get tomorrow.

And the retirement age was at 65 because life expectancy was 63. And now life expectancy is 78.1 and in 3 years we’ll be 80. Wake up. Forget the emotions, fear, guilt and racism and all that crap that goes with this and use your brain for God’s sake.

Mike Allen:
Mr. Bowles, the point of no return. When can we no longer kick the can?

Erskine Bowles:
You know, I don’t think anybody knows exactly when the tipping point will come but one thing is you will absolutely know it when it hits us.

Mike Allen:
…2 years or 20 years? Or 200 years?

Erskine Bowles:
[Overlapping audio] It certainly could be 2 years. But what we do know is that there’s a great old saying about the economy never moves as fast as you think it will but once it acts, it acts quicker than you’d ever thought was possible.

Today, we’re the best-looking horse in the glue factory. You know, we’ve got the Fed out there keeping interest rates really low. Today, we’re spending $230 billion a year on interest. That in its own right is more than we spend at the Department of Commerce or education or energy or homeland security or interior or justice or state. Actually, it’s more than we spend at all of them combined. And if interest rates were at the same level they were in the 1990s or over the last decade, the first decade of this century, we’d be spending over $600 billion a year on interests. That’s $600 billion that we can’t spend to educate our kids or to build our infrastructure or to do high-value added research on our campuses so that we create the next new thing in this country so the jobs of the future are here – not somewhere else.

Mike Allen:
Sen. Simpson, what did you just write down?

Alan Simpson:
I wrote down the tipping point, which I hadn’t answered that question which is why I did that…Dick Durbin kept asking this question all during our 8 months – where is the tipping point? I can’t tell you where it is but the money guys – Erskine is one of the money guys…

The tipping point comes when the people who have loaned us the money – I mean, we owe $16.4 trillion and what we did last month would take us to $20 trillion in 10 years. Okay? The tipping point is when the people who have loans use the money – half of it is private, maybe your folks or you yourself T-bill and the other half is public and half of that is China. So the tipping point comes when the people who have loaned us the money – one of our presidential aspirants in my party said “Well, just forget the debt.” That’d be a great idea except to the guy that loaned you the money.

So anyway, it’s going to be – we see that you are addicted to debt – you’ve proven that – and you also are people who have a dysfunctional government. We’ll prove that again – only go to sequester. And at that point, they’ll say – you don’t have to have a brain here – “We want more money for our money.” And at that point, inflation will kick up and interest rates will go up and the guy that gets screwed the most is the little guy. The little guy. The middle-class that everybody babbles about day and night is the guy that’s going to get hammered. The money guys will always take care of themselves.

…[Incomprehensible audio] Listen to the distortion, the emotion that stuffs that goes on. We just keep plowing ahead. It’s such fun for me to irritate the AARP and Grover Norquist in equal measure. It makes your life worthwhile…We’re going to be savaged. Anything we do we will be savaged.

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One Comment on “Transcript: Simpson-Bowles on the “point of no return” to address nation’s debt

  1. Pingback: Transcript: Simpson-Bowles announce new blueprint to reduce deficit by $2.4 trillion | What The Folly?!

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