(1) The BPC’s Debt Reduction Task Force plan was presented at the Peter G. Peterson Foundation’s Second Annual Fiscal Summit last month. Experts from think tanks represented at the summit were able to highlight areas of common ground on spending and entitlement reform. Do you have optimism that Congress can do the same?
My sense of optimism is fading. The Medicare debate has been poisoned, both sides want nothing to do with Social Security reform, significant tax reform looks dead for this entire Congress, and the meetings convened under the aegis of Vice President Biden seem destined to produce no significant reform of entitlements at all. The media has been full of predictions that the Biden group will produce more than $1 trillion in savings over a 10-year period. When one realizes that the total indebtedness of the United States will be about $23 trillion at the end of that decade, one understands how insignificant that $1 trillion really is. Right now, our best guess is that the debt ceiling will pass sometime this year, coupled with a little more than $1 trillion in “spending cuts” and an attempt to force more stringent fiscal behavior on Congress in the future.
My hope is that the BPC’s Save-As-You-Go proposal, which is being considered in Congress, makes it into the final package that passes alongside the debt ceiling increase, in order to force policymakers to finally address entitlement and tax reform.
(2) Washington has been criticized for placing too much focus on deficits and the debt, rather than working to reduce unemployment. Can you explain how the BPC’s plan addresses job growth?
Our plan recognized last year what the economic numbers so far this year tell us: the economy would continue to move very slowly, job creation would be inadequate, and that the spending from the $787 billion stimulus bill passed in 2009 fading out would create both debt and economic growth problems. Our solution then was simply a one-year holiday for both employees and employer from the FICA taxes. Most workers in our country pay more in FICA taxes than they do in income taxes. Such a holiday from payroll taxes would immediately allow small businesses, especially, and workers some breathing room.
If the economy continues to grow at less than 3 percent a year, job creation will fall far short of what is needed to create net new jobs, and federal and state revenues estimates will prove overly-optimistic. You cannot solve the debt problem with revenues and spending cuts alone; you must have vigorous economic growth.
(3) Much has been written of late on the differences between the Medicare plans of President Obama and House Budget Committee Chairman Paul Ryan. How does the BPC’s model bridge the gap and offer a workable solution?
The BPC plan builds on the recommendations of the 1999 National Bipartisan Commission on the Future of Medicare. Our plan would transition Medicare from its present fee-for-service system to a premium support model. Our proposed Medicare Exchange would allow beneficiaries to choose to either stay in the present traditional Medicare system or opt to receive an annual amount from the federal government which could be used to find better coverage in the private medical insurance market. The premium support money would increase by the rate of growth in the underlying economy plus 1 percent. So, the program is voluntary, but does emphasize market competition to incentivize the creation of innovative benefit designs to help keep premiums down.
(4) Earlier in the year, there was some bipartisan momentum toward crafting legislation on corporate tax reform. Has any progress been made?
While rumors abound that some form of change in the corporate tax rate may occur this calendar yet, I am skeptical. It is hard to imagine that a tax bill that comes to the Senate floor, even if was crafted to only touch corporate income tax rates, wouldn’t face literally thousands of amendments and consume weeks and weeks of floor time. We recommend reduction of corporate income tax rates, but we make it part of an overall tax reform plan that simplifies and “flattens” the present tax, primarily by closing virtually all of the loopholes in the present tax code.
(5) You are a diehard Washington Capitals fan. The current team, albeit excellent regular season performances, has struggled to succeed in the playoffs. If you were the general manager for one day, what would you do?
- Take the Captaincy away from Ovechkin.
- Find another GM who wants to give Alexander Semin a new home and new inspiration.
- Find out what the defense really needs to be effective, even if that means offering Mike Green in exchange for someone of the caliber of a younger Chris Pronger.
- Hope that someone can step up in the locker room to get a maximum effort every night, especially emphasizing defense by the forwards.