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Domenici & Rivlin Discuss Their Budget Proposal

By The NewsHour, The NewsHour - November 17, 2010

JIM LEHRER: Now: the continuing debate over deficits and the debt. Judy Woodruff backgrounds the story and then hears from two more leading voices.

JUDY WOODRUFF: For the second time in as many weeks, a pair of leading budget watchdogs warned, the U.S. is heading down a death spiral if drastic changes are not made to the country's finances.

Today, the recommendations came from the Bipartisan Policy Center and were led by two people with vast budget experience. Former Senator Pete Domenici, a Republican, and Alice Rivlin, a Democrat who once served as White House budget director and head of the Congressional Budget Office.

Their recommendations call for a mix of changes in taxes and spending over the next several years, including a Social Security payroll tax holiday next year, cutting and simplifying individual and corporate tax rates, creating a new 6.5 percent national sales tax, and big cuts in spending, including a four-year freeze on domestic programs, a five-year freeze on defense.

Last week, the co-chairs of a presidential commission put out their blueprint. And, last night, former Senator Alan Simpson and former White House Chief of Staff Erskine Bowles discussed the magnitude of the problem with PBS' Charlie Rose.

ERSKINE BOWLES, co-chairman, National Commission on Fiscal Responsibility And Reform: We fought two wars. We put in a new prescription drug benefit in. So we've got a lot of things that have created this.

Plus, we had this horrendous economic recession. And we've had to spend some money to get out of there. So, it's easy to see how we got here. What we have to talk about is, how can we end it? How can we get out of it?

ALAN SIMPSON, co-chairman, National Commission on Fiscal Responsibility And Reform: And if you tell people every dollar that's spent by this country, we're borrowing plus 41 cents -- I think it's 39 now, but whatever -- I mean, that's something any American can understand.

They understand that at the bar stool in Buffalo, Wyoming. You cannot -- every buck we spend, we're borrowing 40 -- 40 cents. This is madness.

ERSKINE BOWLES: We can't tax our way out of it. You know, we -- people who want to do just taxes, you'd have to raise the maximum marginal rate to 80 percent. You'd have to raise the corporate rate to 70 percent. You'd have to raise the capital gain rate to 50 percent, if you're just going to do taxes.

We can't cut our way out of it. People say, oh, well, let's just -- let's just cut the budget.

If you just rely on deficit reduction through cutting, and you want to exclude Social Security and Medicare and defense and, of course, interest, then you'd have to cut everything else by about 60 percent to 65 percent.

JUDY WOODRUFF: But some of the proposals have met with fierce resistance on Capitol Hill. For his part, President Obama has said tough decisions will have to be made.

And for more about their proposal and other ideas being discussed, we are joined now by former Budget Director Alice Rivlin and former Senator Pete Domenici.

It's good to have you both with us. Thanks very much.

PETE DOMENICI (R), Former U.S. Senator: Thank you. Thank you very much.

ALICE RIVLIN, former director, Congressional Budget Office: Good to be here.

JUDY WOODRUFF: Now, let me just start by saying, with all due respect, you have done a lot of work here over the last year, but why not leave this up to the presidentially appointed commission?

Alice Rivlin, you're a member of that commission. It's already created waves. It's dramatic. Why not leave it up to them?

ALICE RIVLIN: Well, we're not taking over for them. We're just offering our ideas.

We got a group together. And this started before there was a presidential commission -- that the senator and I agreed to co-chair this group. We got 19 people from across the country, former governors and senators and mayors and some budget experts, and created this plan.

So, we think it's a very good answer, not only to how do we get out of the recession, but how do we solve this big debt problem. And we're offering it in hopes that it will be taken seriously.

JUDY WOODRUFF: Senator...

PETE DOMENICI: But, Judy, we have got to understand that the president's commission doesn't have a plan. We have a plan. Ours is completed. There's consensus. Everybody on it was: It's a plan. I sign on.

JUDY WOODRUFF: Of your task force?

PETE DOMENICI: Of our task force.

JUDY WOODRUFF: Part of the Bipartisan Policy Center.

PETE DOMENICI: Bipartisan -- yes, Bipartisan -- and so we started it, and we have to finish it.

And it's terrific. It's the best plan ever seen. And I'm hopeful that Erskine Bowles and Simpson do something, but, as of now, they have a series of ideas, many of which are the same as ours or similar. And we have an obligation now to get ours out there. And, frankly, I'm going to repeat myself, but to both get the recession out from under us and get ourselves moving again with a growth-oriented country that has a future, our plan is just a terrific plan.

JUDY WOODRUFF: Well, let me -- let's talk about some of the specifics.

I mean, one way your plan, Alice Rivlin, would differ from this commission, the Simpson-Bowles plan, is that you would suspend the Social Security payroll taxes for a year. That's good for people, in that they wouldn't have to pay the taxes. It would add to the deficit by $650 billion.

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