Sen. Johnson Grills WH Budget Director: "We've Made All These Promises And We Don't Have A Way to Pay For Them"

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SEN. RON JOHNSON (R-WI): From 2009 to last fiscal year, can you also confirm that we've actually increased revenue to the federal government by $916 billion per year?

SHAUN DONOVAN, WHITE HOUSE BUDGET DIRECTOR: I don't have that number.

JOHNSON: It went from $2.1 trillion to $3 trillion. Over $900 billion. $874 billion of that was due to meager economic growth. Only $42 billion was due to that fiscal cliff tax deal. So, I'm just trying to point out that economic growth really does provide the revenue that Senator Warner was talking about. We need to concentrate on that.

To personalize this, it's important for us to point out why debt is such a problem. If you're a family in debt over your head, it's kind of hard to grow your personal economy, isn't it? Because the debt collectors are knocking on the door and anything past subsistence spending is really spent to service the debt, isn't that correct?

DONOVAN: I guess I would say if you're not investing in education and other critical things for your family --

JOHNSON: But if you're in debt you don't even have the money to invest in that as Senator Graham was talking about because so much of your income is being spent just servicing the debt. Isn't that what happens with a family? And same thing is true on a national basis.

Let me just ask you one other thing. If you're going to solve a problem, isn't the first step to solve a problem admitting you have one? And then properly defining it? Would you agree with that?

DONOVAN: I guess I would say our budget does take on the key drivers of long-term debt--

JOHNSON: I'm not talking about that. I'm just talking about solving the problem. You've got to admit you have one and properly define it, correct?

Let's go to the charts. I would think that we don't have just a ten-year budget window problem although I realize what your budget is confined to. We have a 30-year demographic problem and you talked about that. The baby boom generation, where we've retired 10,000 people today, we've made all these promises and we don't really have a pay to pay for them.

And by the way, I have to challenge Senator Sanders. We want to save Social Security and Medicare. That's our goal. We want to save it, make it sustainable for future generations. But this is a chart of the CBO's alternate fiscal scenario in terms of deficits over the next 30 years. Does this look pretty accurate to you?

About $9 trillion, you're saying $8 trillion the first ten years, which is the budget window we're talking about now. Then $31 trillion in the next decade. $87 trillion in the third decade for a whopping total of $126 trillion in deficits over the next 30 years. That's pretty accurate, according to CBO's alternate fiscal scenario, correct?

DONOVAN: I think that's before our policy, which as I said earlier, not just over the ten-year window, but the 25-year window would stabilize debt as a share of GDP, which is again, this doesn't measure it as a share of the economy. CBO says the right way to measure it is as a share of the economy.

JOHNSON: So, now, if you take a look at that $126 trillion. That's comprised of about $15 trillion of deficits in Social Security, about $35 trillion in deficits to the Medicare problem and then $71 trillion of interest on the debt. Okay? So, again, talking about or responding to what Senator Graham was talking about, interest starts dwarfing all the other problems.

Let me go to the next chart here. I realize these are projections, so, we really have to kind of compare you know, how likely is this and all I really have to go on is on history. So what we've done is we just taken total federal spending over the last 30 years, compared to this 30 year alternate fiscal scenario just for reasonableness. So entitlements over the last 30 years, we we've spent about 7.9% of GDP on entitlements, we're looking at about $13.3 trillion.

And by the way, when I was working with Sylvia Burwell, White House figures were about $14 trillion. Defense, over the last 30 years, about 4.1%, the alternate fiscal scenario is 3.5. All other spending, 6.4% over the last 30 years, alternate fiscal scenario 6%. Then of course, interest is implied. To me, if anything, the alternate fiscal scenario might be understating the size of the problem.

My question to you: in your budget deliberations, are you looking at the 30-year problem? And if you are, what has the president included in his budget to address the long-term unsustainability of both Social Security and Medicare because those are what drives the debts which does produce $71 trillion of interest payments.

DONOVAN: So, three key things that I think we could all agree are really driving these deficits and debt over the long-term. Health care costs, lack of enough workers as we talked about earlier relative to the number of retirees that we have, and having adequate revenue. And all of these key things that we attack in our budget, the impacts grow over time, and so, whether it's the capital gains reforms and others that grow substantially in the second decade and beyond, immigration reform, which grows from $160 billion of deficit reduction in the first decade to $700 billion in the second decade and more beyond that, or many of the health care changes, the $400 billion in the first decade grows to a trillion dollars in the second decade, so, we are absolutely focused on making smart choices that would grow and impact over time with a focus on the deficit.

JOHNSON: You're talking about a trillion and we're looking at a $126 trillion.

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