Sen. Durbin, Rep. Hensarling and David Plouffe on "State of the Union"

Sen. Durbin, Rep. Hensarling and David Plouffe on "State of the Union"

By State of the Union - April 10, 2011

CROWLEY: Joining me now here in Washington to discuss this budget deal and the Obama agenda going forward is White House senior adviser David Plouffe. Your maiden voyage here on "State of the Union," thanks for coming, David.

PLOUFFE: Good to be with you, Candy. CROWLEY: The critics of this, largely on your left, including Paul Krugman, have said the economy is not strong enough to sustain these kinds of cuts, $38 billion in this package, $10 billion before, far down $78 billion to be decided (ph) from what the president had originally proposed.

Have you all decided in the White House that the economy is recovered enough to stop pumping federal money into it?

PLOUFFE: Well, the president's approach, Candy, has been -- and he stated this clearly -- we need to take a scalpel, not a machete. You know, all spending is not alike. You've got to sort of go line by line, program by program. And that's what this budget debate came down to.

There's certain things, investments in education, in research and development, that the president was not going to support cuts in those. So we were able to protect those, at the same time bringing about the largest annual spending cut in history.

Look, his budget for next year, which he laid out around the State of the Union, would reduce the deficit by over $1 trillion in the next decade, bring spending to the lowest level since Eisenhower. So the president clearly believes that we can still grow economically with smart deficit reduction. But it's got to be smart. If we're just going to cut student loans, cut HeadStart, cut medical research, we're not going to be the country in terms of the economy that we need to be.

CROWLEY: But spending is spending. Pumping money into the economy is what -- it sort of a Democratic policy, in fact. Republicans will say, leave it to the private sector. The Democrats have said, the government has to step up when private companies step back. So no matter how you slice it or where it is, this is less money going into the economy.

PLOUFFE: Yes, but again, you just can't look at it broadly like that. I mean, we have a responsibility to the American people to look at every allocation here and make a determination, is it working for people? Can we afford it? Is it going to help the economy? And that's what the president did. So again, this is a budget agreement and this is the principle he's going to use bringing forward.

I will say, later this week the president is going to speak about his approach to long-term deficit reduction. Is that approach, which is while we reduce the deficit -- and we have to do it, we've got to do it in a balanced way. Can't be all on the backs of seniors and the middle class. We have got to make sure that we are taking a balanced approach to this that allows us to win the future. And we're not going to win the future in this country unless we invest in education, in research and development, in innovation and infrastructure. So that's going to be his north star in these spending decisions. How do we make sure that it is balanced? That we are investing in the things that are going to allow us to win the future.

But he does believe that to grow economically, to be a strong country, we can't sustain this fiscal situation. And there are some that don't agree with that, but he believes strongly that we do have to engage in serious deficit reduction.

CROWLEY: You talked about not having cuts in education. There are in this -- because we haven't really seen the entire thing -- but there are $13 billion in funding -- in cuts in funding for health care, education, and various labor things. And it's caused some of your critics -- or skeptics, among them Congressman Anthony Weiner, who I know you know -- who tweeted this out after the deal was made and said, "This feels an awful lot like the tax cut deal," when you all agreed to have taxes remain low for higher income people. "I got a bad feeling," he said in this tweet.

Would you like to reassure him about these cuts that are some in education, some in health care?

PLOUFFE: I don't really have any interest in reassuring Anthony Weiner. I think what I want to do is reassure the American people. I think the American people think that tax agreement was the absolute right thing to do. And it's been a huge contributor to the economic growth we've had.

So -- and this right now is a deal that -- listen, we live in divided government. OK, you are going to have to find common ground and move forward on anything. But the president's approach here, which is to make sure -- listen, the Republican congressional proposal would have zeroed out medical research, you know, would have had 800,000 kids dropped off of HeadStart. Would have had huge cuts to the student loan program. Those are things we protected in this deal, and not only protected moving forward, but we're going to make sure they're invested in, because they're so important to making sure that we can succeed economically here in America.

CROWLEY: Let me ask you, you mentioned about a long-term debt approach to the nation's debt, $14 trillion, somewhere around there. Big money. We saw some of that come out in Paul Ryan's approach when he put out a Republican budget. You all widely criticized it. The president is going to give us a specific plan this week when he addresses the subject, or is he simply going to address it in a this is serious business?

PLOUFFE: No, he's going to lay out his approach, which is -- and he said this previously -- but to get the kind of deficit reduction we need to -- first of all, one of the reasons he wants to do it is so we can live within our means so that we then have the ability to invest in things like education and innovation. But obviously you've got to look everywhere. It's got to be a balanced approach. Every corner of the federal government has to be looked at here. CROWLEY: So, Social Security?

PLOUFFE: Well, first of all, he said -- first of all, his health care reform package is going to produce $1 trillion of deficit reduction over the next two decades. That being said, we clearly have to do more. So you are going to have to look at savings you might be able to get in Medicare and Medicaid in the long term. He said Social Security's not a contributor to the short-term deficit problem, but in the process of talking about our fiscal situation and our government, we ought to look if there is a way to strengthen Social Security in the long term that doesn't endanger anybody, you know, who's a current beneficiary, and doesn't slash benefits. So he'll look at that.

Defense spending. Domestic spending. Revenues are going to have to be part of this. Listen, the congressional plan that you referenced...

CROWLEY: Tax increases.

PLOUFFE: Well, the congressional plan that went out, the average millionaire in this country would get a $200,000 tax cut under Paul Ryan's plan. The average senior down the road will pay $6,000 more in health care costs. So that's a choice you're making, by the way. Seniors, the poor, the middle class in the congressional Republican plan are asked to bear most of the burden. If you weren't giving enormous tax cuts to millionaires, you wouldn't have to do that.

So the president has said and it is in his budget, for people making over $250,000, he would favor having the tax cuts eliminated for them, look at some of the other provisions in the tax code that the wealthy are taking advantage of. As he said the other day in Philadelphia...

CROWLEY: Closing loopholes and stuff like that, or some...


CROWLEY: ... actual tax hikes for the rich? Well, is he going to be that specific? I'm trying to -- kind of -- do you have a plan?

PLOUFFE: Yes. He's going to lay out his approach very clearly. I don't think it will be...


CROWLEY: Which is different from a plan.

PLOUFFE: No, no. He's going to be clear about the type of deficit reduction we need in terms of dollar amounts, over what period of years. Again, I don't want to -- he's going to give -- he's going to give remarks on this. But...

CROWLEY: But he's willing to cut Medicare, for instance, you seem to indicate. PLOUFFE: What I will say is listen, actually, the one thing in -- a couple -- there's a couple of things in the congressional Republican plan. One is they leave the Medicare savings from the Affordable Care Act in there. So the president already has been able to get real savings in Medicare. But his approach to Medicare will be this: How do we really preserve the program, not end it? How do we squeeze every dollar out of inefficiencies without putting all the burden on seniors? So, yes, we are going to have to have more health care cost savings in this country. There's no question.


CROWLEY: In Medicare and Medicaid.

PLOUFFE: Yes, you're going to have to look at both of those things, and he'll speak to both of those this week.

CROWLEY: And Social Security?

PLOUFFE: Again, we view Social Security as not a central driver.

CROWLEY: Can you give us a number that you think his plan, if he looks at it or where you're headed, would reduce the overall debt by?

PLOUFFE: I don't want to get ahead of the president. He'll speak to that this week. But he believes we need significant deficit reduction in the coming years, and that's what he's going to speak to this week.

And so here's the thing. The congressional Republican plan, there's a bipartisan group of senators called the gang of six working on something. The president is going to come out.

What's clear is there is going to be some commonality, many differences. We're not going to achieve any deficit reduction in this country, because we have divided government, unless Democrats and Republicans come together on behalf of all Americans to agree to it. So we're going to have to strive to reach common ground.

CROWLEY: I want to play you quickly something that Speaker Boehner said last night. He's talking about you are also going to have to lift the debt ceiling. The U.S. has run out of authority to borrow money is essentially what this means. Speaker Boehner says we have a moral duty to pay our bills. This debt ceiling has to be lifted. He doesn't like the president's approach to it. Take a listen.


BOEHNER: The president says I want you to send me a clean bill. Well, guess what, Mr. President? Not a chance you're going to get a clean bill.

BOEHNER: There will not be an increase in the debt limit without something really, really big attached to it.


CROWLEY: Will the president consider putting attachments on this debt ceiling bill or is he going to demand it be a clean bill?

PLOUFFE: I don't -- those are specifics we're going to get into down the road. I think what's clear is if we're on a process and you've got members of Congress, the administration and clearly the American people want to participate in this, too, to try and reach real deficit reduction. Hopefully that will give people confidence.

But again, the debt limit needs to be increased. It will be. Every leader's spoken to that.

But I think at the same time, we need to be focusing on how do we come together so that we can -- now, as the president focuses on deficit reduction, he's going to make sure that it still preserves our ability to invest in the things that are going to allow us to win the future, like education and innovation.

CROWLEY: David Plouffe, senior adviser to the president, thanks for stopping by.

PLOUFFE: Thanks, Candy.

CROWLEY: Round one of the budget battle may be over but both sides are already drawing the lines for round two as you just heard. Congressional leader Senator Dick Durbin and Congressman Jeb Hensarling are next.


CROWLEY: Joining me now from his home state of Illinois, the number two Democrat in the Senate, Dick Durbin. And in Dallas, Texas, Republican congressman Jeb Hensarling, the number four Republican in the House.

Gentleman, thank you both for being here.

Let me start first with you, Senator Durbin, there is a lot of rattling from the left that the president has basically once again caved in this this budget deal that we now have with a $38.5 billion in cuts and that what he has done specifically will hurt the economy at a time when the federal government still needs to at least keep up spending.

DURBIN: I would say to the folks on the right, as well as my friends on the left, there is a budget reality facing both political parties. We need to dramatically reduce the deficit that we are facing. We are borrowing 40 cents for every dollar we spend.

What we're trying to do as Democrats is to make sure that we don't go too far, and so we fought to make sure that we protected early childhood education, Pell grants for kids from low-income families who want to go to college, medical research grants. these are the things which were essential and at the end of the day we won the battle. But we join with the Republicans in cutting spending. That's going to be part of our responsibility in the years to come.

CROWLEY: Congressman Hensarling, let me ask you because we are hearing from the right, in particular I wanted something that Jeff Flake told "The Hill" newspaper on Friday, saying quote, "a lot of us are quite disappointed with the level of spending cuts. It's not very big."

Where are you on this?

HENSARLING: Well, I share the disappointment of my colleagues. I mean on the one hand this is the single largest year-to-year cut in the federal budget. Frankly, in the history of America in absolute terms. And in inflation adjusted terms, it's the biggest since World War II. Probably for that we all deserve medals, the entire congress.

Relative to the size of the problem, it is not even a rounding error. In that case we probably all deserve to be tarred and feathered. I mean $38 billion of savings. In February the deficit alone was over $200 billion. It is the shortest month of the year.

We have a deficit problem that is spending driven and until we get control of spending, we're going to imperil job creation, and frankly we threaten our children's future.

Senator Durbin, you're right, everybody sort of came to this middle and seems to please neither of their wings but it is something, it is movement and you didn't shut down the government. But there is a lot of complaint out there within your own party that the president did not lead on this, he came in at the last moment, sort of swooped in and said, OK, you guys, get together and do something. And that he caved, that this looks a lot less like a progressive president than a guy who's running for re-election that wants to attract the center.

DURBIN: First, the president has a difficult assignment. He's expected to be part of the negotiations but if it looks like he's leading the negotiations he'll get push-back from Congress, Congress will remind him we have several branches of government. So the president was playing an important role here as a facilitator to bring us to agreement, and it worked. Secondly, I would say to those on the progressive side of the agenda, there are things we need to fight for, make sure we end up with a safety net, a progressive system of taxation that makes certain the most vulnerable people in America still have a fighting chance and middle income working families are not being left behind at the expense of tax cuts for wealthy families. That battle is still being led by the president of the united states.

Now comes the next chapter and it goes to another high-drama moment when we're going to face this debt ceiling. Now instead of risking government shutdown we are risking a second recession. I hope -- and I listened to Speaker Boehner's comments earlier in the program -- I hope he understands clearly that if we default on America's debt with this debt ceiling, It will have a dramatic negative impact on America's economy. It will spin us into a second recession. We don't need that.

Let's work together on a bipartisan basis to avoid it. CROWLEY: Congressman Hensarling, the debt ceiling -- and that is that the U.S. government is now up against the Congressionally approved number of the amount of money that it can borrow. I want to first read you something from Jamie Dimon who, as you know, the CEO at JPMorgan Chase who said of the idea of failing to lift the debt ceiling -- "if anyone wants to push that button which I think would be catastrophic and unpredictable, I think they're crazy."

Do you think absolutely this debt ceiling has to be raised?

HENSARLING: What I do think is, yes, it would be catastrophic to have the nation default upon its debt. But I think in some respects it presents a false premise. Dick says he wants to work with us to spend less. We could put America on the path today to spend less. We don't have to default. So nobody wants America to default on its debts, but let's also remember the classic definition of insanity is doing the same thing over and over again and expecting a different result.

I mean, we've had our nation's first trillion dollar deficit, second trillion dollar deficit, third trillion dollar deficit, highest in the nation's history. At some point you got to quit spending money you don't have.

So Republicans are asking the president -- if I could finish this one point -- we're asking the president one thing. If you want our help to help pay your debt, start to can up the credit cards, work would us to put in place legislation to putting America on a fiscally sustainable path.

CROWLEY: And it does sound like he is going to start talking about long-term deficit reduction in a speech Wednesday, and I want to talk to Senator Durbin about that, because I know you've had some conversations, but let me just follow up, Congressman, not lifting the debt ceiling doesn't mean that the U.S. is any less in debt. It simply means it won't pay its debt. Are you willing to put a clean bill, as the president wants, just lift this debt ceiling and let's deal with the long-term debt and get together with the gang of six and with those people up on the Hill working on long-term deficit.

Will you pass a clean bill or...

HENSARLING: Candy, you say the president is going to make some announcement on Wednesday. I hope he does. But Dick and I served on his fiscal responsibility commission. He introduced a budget that had had zero -- zero recommendations of the fiscal commission in it. House Republicans have put forth their budget. Frankly, we've included a number of their ideas. So it reminds me, I continue to agree with 80% of what the president says, I just disagree with 80% of what he does.

And so I can only say it one more time -- no, we do not want America to default on its debts, but the president is going to have to cut up the credit cards. He's going to have to work with us to cut up the credit cards and put the nation on a fiscally sustainable path, otherwise we're going to continue to lose jobs and we're going to bankrupt our children. It's that simple. At some point you just got to quit spending money you don't have.

CROWLEY: But you're not willing to play chicken with the debt ceiling? Just yes or no, if I could.

HENSARLING: Well, I don't know what you mean by playing chicken. I've said the same thing three times. I do not want America to default on its debt but the president is going to have to start the process of cutting up the credit cards, pure and simple.

CROWLEY: Senator Durbin, let me ask you about the president's plans. He's going to start addressing -- I've got one minute left. Can you tell me what you know about where the president wants to head? We were told by David Plouffe that he will touch on Social Security, Medicare and Medicaid. What else can you tell us?

DURBIN: I can just tell you in the most general terms, I spoke to the president. And he believes as we did with his deficit commission, which I voted for, he believes that we need to address everything, put it owl an the table in a responsible manner.

I respect Paul Ryan and Jeb Hensarling, but their budget proposal leaves gaps when it comes to this discussion. They do not talk about responsibility for those in the highest income categories. They continue to give them lavish tax cuts. They don't talk about spending cuts and savings in the Pentagon. Well we certainly can save money there. Let's put everything together on the table. I think the president will try to approach this in a comprehensive way, take as much as he can take politics out of it and talk about working together.

For four months there have been six senators -- I'm one of them, three Democrats and three Republicans, sitting at a table back and forth hammering this out. We're very close -- not quite there, but very close.

I hope we can help the president find some guidance for the future.

CROWLEY: Senator Dick Durbin, it will be interesting to see if we can take the politics out of this in a presidential cycle. Thanks so much Senator Durbin. Congressman Hensarling thank you as well. We appreciate it.


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