During the campaign President-elect Donald Trump promised to bring jobs back to the U.S. by changing the rules with our global trading partners: What stronger protectionist policies could mean for American workers and the U.S. economy.
Last Friday’s last minute funding deal for the rest of this fiscal year is the first of several bruising and partisan battles ahead. Many say, so far, neither party deserves particularly high marks. President Obama will weigh in later this week with a call for Republicans to work with him on ways to raise revenues and reduce spending on entitlement programs. The House GOP 2012 budget plan includes a fundamental transformation of Medicare, new limits on Medicaid spending, and lower taxes for the nation’s wealthiest. Please join us for an update on the details of Friday’s compromise and the high stakes fights ahead.
- Vin Weber Republican consultant, former member of Congress representing Minnesota's 2nd district (1981-93)
- Janet Hook Congressional correspondent, The Wall Street Journal.
- E.J. Dionne Jr. senior fellow at The Brookings Institution, Washington Post columnist, and author of "Souled Out: Reclaiming Faith and Politics After the Religious Right" and of "Stand Up Fight Back."
MS. DIANE REHMThanks for joining us. I'm Diane Rehm. With an agreement not quite fully in the hand for federal funding through September, Congress faces even thornier budget issues -- the 2012 budget and the federal debt ceiling. Joining me in the studio to talk about specifics of the budget compromise reached last Friday, and the larger budget battles ahead, E.J. Dionne, he's Washington Post columnist, senior fellow at the Brookings Institution. Vin Weber, republican consultant, former member of Congress from Minnesota. And Janet Hook, she's congressional correspondent for the Wall Street Journal. We do invite your calls, questions, comments, 800-433-8850. Send us your e-mail to firstname.lastname@example.org. Feel free to join us on Facebook or send us a tweet. Good morning to all of you.
MR. E.J. DIONNEGood morning, Diane.
MR. VIN WEBERGood morning, Diane.
MS. JANET HOOKGood morning, Diane.
REHMJanet Hook, what do we know about the agreement made at, literally, the 11th hour on Friday?
HOOKWell, given the significance of the budget deal, it's amazing how little we know. When they made the agreement at, literally, the 11th hour before the government was about to shut down, they announced the broad parameters. And those were the -- a compromise to cut spending in the rest -- for the rest of this fiscal year, which is really only six months left, to cut spending nearly $40 billion. That was the compromise between Democrats who had started the year wanting to freeze spending and Republicans who started out wanting to cut about $61 billion.
HOOKAnd, within that, the other most important part of the deal is, what's not in the bill by way of policy riders? The Republicans had had provisions that would cut off funding to the new health care law, to Planned Parenthood Federation -- the family planning programs -- and EPA regulations of greenhouse gases. Those riders all were put aside and with promises that the senate will take votes on separate bills, but they're not in the continuing resolution or the budget bill that will be coming to them for a vote.
REHMWhat about money for D.C., using its own money for abortions, Vin Weber?
WEBERNo, that's not going to happen. The -- one of the pro-life provisions included in the deal is the so-called Dornan Amendment, named after former Congressman Bob Dornan of California, whom we all remember from years past. And it basically prohibits public funding of abortions in the District of Columbia. That was included in the deal. It will become part of the law. There were two or three abortion provisions. The most important one to the pro-life community was actually the Planned Parenthood issue that Janet just discussed. That was taken out. And so, from the pro-life standpoint, they are getting a small victory, not a large victory. Obviously, if you're a pro-choice advocate in the District of Columbia, you look at that somewhat differently.
REHMD.C. got hit, E.J.
DIONNERight. Well, D.C. always gets the end of the stick. When they need to make a compromise, they'll throw D.C. in. I mean, if you're a pro-lifer, what you want is this kind of ban applying nationally. You wanted to win on the Planned Parenthood business. It's worth noting, by the way, none of the money that went to Planned Parenthood, went to abortions. And, actually my sort of favorite speech on this came from Stephen Lynch, a pro-life democrat from Boston, who said, actually, if you cut money from Planned Parenthood, you're going to increase the number of abortions.
DIONNEBut there is a problem here, which is D.C. has home rule, except when it doesn't. And when Congress needs to do something political, they sort of say to the D.C. Council, sorry, you can't do whatever it is you did. So wherever you stand on either the voucher program or abortion, this just overrode the wishes of the elected government of D.C.
REHMSo, as I understand it, lawmakers have yet to vote on this. Is there any doubt that what has been agreed to could actually not go through, Janet?
HOOKI think it would be very unlikely that it would be defeated, if only because there's so -- it was such a hard one -- compromise. And, right now, actually, the momentum is really to move on to the 2012 debate. Now, the interesting thing though is it. What is it? What is in the bill is still open -- up in the air. They -- while they announced the broad parameters of the bill on Friday, they've been actually still writing the bill.
HOOKThey worked all weekend trying to flush out the details 'cause what the leaders set were, you know, the targets for savings, and there's a lot of appropriations staff people working, just to write, line by line, thousands of government programs. So, I suppose, it's conceivable that they could make some decision on a light item that would annoy people, but it's hard to imagine the entire deal falling on that.
REHMYou don't think it's going to fall?
WEBERNo. I mean, Janet's described it accurately.
WEBERBut, I think, this deal is basically done. And the most important point, which Janet just made, is people are moving on to the next battles which are much bigger. The FY12 budget -- Paul Ryan introduced his last week, the President's going to talk about it tomorrow. And, of course, the vote on the debt ceiling, which is a harder political vote for just about everybody up there and has more grave consequences, potentially, than the continuing resolution we've just resolved.
REHMBut before we get to that, does it appear that House Speaker Boehner delivered enough of what the 87 freshman members of Congress wanted?
WEBERYes, I think he did. I think he handled it masterfully. Is he going to get every vote? No. He's going to -- there is going to be some number of freshman Republicans that are going to vote against it. But that's okay. They get to let off steam. They get to cash their own independent vote. He's going to get a solid -- the old rule was you have to have the majority of the majority if you're going to be the leader. He's going to get a solid majority of the Republican majority, and nobody is going to be really angry with him.
DIONNEIf conservatives think this is a defeat, then I don't know what universe they're living in.
WEBERI agree with that.
DIONNEI mean, Boehner got two -- three-fifths or four-fifths of the cuts he wanted, depending on how you want to count them. Now, did the Obama people save some things? Yeah, they saved some things. They knocked out most of the policy riders. It appears they saved programs like Headstart and AmeriCorps and some other priorities that they had. But the -- you know, if you just look at the balance, I think Boehner did very, very well out of this deal.
REHMYou think he did very well?
DIONNEBecause he avoided a shutdown.
REHMHow do you...
DIONNEHe got a lot and avoided a shutdown.
DIONNEBecause, I think, if he -- if the government had shut down, Democrats were in a position to say, Republicans are shutting down the government over these ideological riders. The -- people don't want the government to shut down. Only some people in the Republican Party really want the government to shut down. And so -- but Boehner would've lost the middle. He would've looked very bad, I think, if that had happened. So he pushed the Obama people as far as he could. He had to give up some stuff. The Obama people are saying, well, we negotiated tough at the end. But they had already given up an awful lot before they finally got tough.
REHMBut that's what I know. What about Reid? What about his opportunity there to really rally the base?
DIONNEWell, there is the -- there is no effective Democratic majority in the senate. They have 53 seats, but not all of those 53 are prepared to vote with Harry Reid. Harry Reid has probably the toughest job in the city because...
WEBERAnd on most votes, you need 60 anyway.
DIONNE...and -- right. He has the toughest job in the city. And, I think, just on the House vote, I think one of the interesting things in both sides will be, do more liberals vote no on this deal or do more conservatives vote no on this deal? You have a sense -- I think there will be a lot of no-votes from liberals, at least in the House.
REHMBefore we talk about the President's speech that's coming this Wednesday, give me your take on how President Obama did throughout this negotiation, Vin.
WEBERNot badly, but I think the Republicans on balance, one, if you want to declare a winner, not an overwhelming victory, but they got, as E.J. just said, I think the Speaker got the best of it. I don't think that there were many alternatives. But the President didn't look bad. At the end of the day, we have a deal. The government is going to run. I think the big victory for Republicans -- and I'm going to come back to what E.J. said in a minute, and this is -- does get to your question about how the President's doing. Conservatives don't quite get how much the debate has changed in this country in the last few months.
WEBERAnd it's a victory for them. These cuts that we're enacting in this continuing resolution, admittedly, are a small slice of a small slice of the budget. But it's the first time we've ever actually cut the budget. We never did the time I was in Congress. Conservatives should get that. The budget discussion that we're going to get into now -- with Ryan last week, the President on Wednesday -- is a -- is going to be -- involve a lot of things conservatives are going to have swallow hard on. But at the end of the day, it's going to be about scaling back the size of government. This is a monumental shift in our debate, and it's a conservative victory.
REHMJanet, how did the President do?
HOOKWell, the most noteworthy thing is that, in this particular spending debate, the President wasn't very visible for most of the time. He took a very low profile. Some of his staff people were involved in the negotiations, but it wasn't until the very, very end that Obama stepped in. And he stepped in with a tone that actually some people found a little bit annoying, which is that he was -- it kind of, I'm the grown-up. Members of congress who've been working for weeks and months on this are the children, and they really have to kind of step up and cut a deal.
HOOKSo that he had this kind of above the fray approach to it. I do think that he basically lost a lot of ground for having stepped back because, as it's been said, Obama's position at the beginning of the year is immediate -- deep immediate spending cuts are bad for the economy. That's why he was proposing a spending freeze, and that position vanished very quickly.
DIONNEMuch as it pains me to say so, I broadly agree with Vin, and, I think, that's why a lot of progressives are frustrated with the President right now, that, you know, these were cuts from a budget he had proposed himself. Now, his people are trying to say, we are for some of these cuts. Well, if they're for some of these cuts, why did they propose these other programs in the first place? And, I think, the real test is going to come on Wednesday. This has been played largely on Republican turf.
DIONNEIt seems to me, the first thing the President ought to do is say, I'm not going to negotiate anymore with hostage takers. The whole notion that we are going to threaten -- we're threatened with this government shutdown, that's not in the Constitution. That's not where -- the way we're supposed to do this. Second thing is how strongly does he stand against the Ryan budget? We're going to see that on Wednesday.
REHME.J. Dionne, he's senior fellow at the Brookings Institution, also a Washington Post columnist. Short break, right back.
REHMWelcome back as we talk further about the continuing, ongoing, ever, never-ending budget battles. Here's a question from Jim in Washington, D.C. "Two questions about lack of specifics on the budget. Were all the riders Republican riders?" E.J.
DIONNEWere all the Republican riders repealed? What -- were all the riders buffered by Republicans? Were there any Democrat riders?
REHMWhat -- were all the riders Republican riders?
DIONNEI don't think there were any Democrats.
HOOKYeah, I don't think there were. I mean, there were some that, when they were voted on in the House, got some Democratic support. But I believe they were all (unintelligible).
DIONNEAnd -- but this was a Republican budget created by the Republican House. So that if Democrats had wanted riders, they would've all gone down anyway.
WEBERLet's -- can I take just one second on that? The riders are controversial. Most of them are stripped off. The reason the Republicans could not agree in principal to the concept of a "clean bill," is because their only leverage to do anything on policy for this entire Congress is to attach it to a spending bill. The Republicans, as Speaker Boehner said, control one-half of one-third of the policy making apparatus in Washington. They can not pass a bill on any subject you want to talk about and have it go through the Senate and get signed into law by the president. So they can't give up entirely on the notion that they're going to use the leverage of spending bills to achieve at least some policy objective.
DIONNEBut this is where the shutdown came in, which is that, I don't think the country could've supported a shutdown, they say, on whether you fund Planned Parenthood or not.
DIONNEIt just doesn't make sense...
WEBERI think you're probably right.
DIONNE...to people. And just, you know, I'm critical of the president. If somebody were sitting here from their operation, what they'd say is, look, the situation is not good for us. We save some important programs. There are cuts in there that aren't as harmful as the ones the Republicans originally proposed. I still think that begs the question of -- but these are all in the Obama budget. If they just made a pragmatic case, it would be more credible than for them to turn around now and say, boy, we love this stuff that the Republicans forced us into.
REHMAll right. Janet Hook, what can we expect from the president's speech on Wednesday?
HOOKWell, he's stepping up and offering his view, his strategy about what the long-term budget should look like and how to address the longer term.
REHMAnd what is that going to look like?
HOOKWell, he's talking about -- David Plouffe, his chief adviser spoke on TV over the weekend and said that they expect to propose more cuts in Medicare, Medicaid, addressing some of the long term problems with Social Security, though the president, like most Democrats say, that that's not contributing to the immediate deficit problem, but that it might be part of a broader picture, cuts in defense and tax increases.
HOOKObama's aim in this is to broaden the budget debate as broadly as possible where -- while the Republicans say, no tax increases and much less give on defense, that puts more -- much more pressure on the social programs and the entitlements that Democrats care about the most. So if Obama feels, as the Democrats have seen increasingly in this spending debate, is that the broader the basis of the debate on the budget, the less paying for the programs that they care about the most.
WEBERThat's exactly right. And I'll surprise my Democrat friends by saying, good for the president. That is the debate we should have. We should have a -- the president's fiscal commission, the deficit reduction commission that he reported -- that he appointed, which reported in December, had the broad outlines of an approach to deal with the long-term debt problem in the country. Paul Ryan, in my view, deserves great credit for taking a couple of the most controversial pieces of that -- health care spending, particularly -- and putting it on the table.
WEBERBut it's not the totality of the solution if we're ever going to get to one. And if the president comes out and talks about all of the different levers that we have to pull to get the debt under control, I think that will take the debate to the next level in a very positive way. I'm personally encouraged by the way the president responded to Paul Ryan. Yes, he said strongly, they disagreed with many things in the budget, but he didn't condemn it in the kind of political terms that might've immediately polarized and politicized this debate. So I'm somewhat hopeful that we can move forward with a serious approach to the long term debt issue.
REHMAre you a hopeful, E.J.?
DIONNEI'm not as hopeful. First of all, I don't see how...
WEBERWell, he's hopeful that I'm wrong.
DIONNEI -- well, first of all, I don't see how you can avoid a polarized debate, given that Congressman Ryan's plan is so far to the right, it leaves a middle as big as the state of Alaska. I mean, this is a plan that Ronald Reagan would've shied away from.
WEBERSee, I'm just happy the president didn't say that.
DIONNEThe -- but it's true. And I think one of the -- what's going to be interesting about the -- what the president says, I think this could sort of define the argument for the whole year. How much revenue is he willing to put on the table? Paul Ryan's budget is not a deficit reduction plan. It is a plan to make the world safe for tax cuts because there are $4 billion in cuts in programs in it and $4 billion in tax cuts in it. The rest just comes from his sort of accepting the savings that come from winding down our war.
REHMWhereas, Obama wants to raise taxes.
DIONNERaise -- now, he's going to say, I want to raise taxes on the wealthy. Now, in my view -- and I don't expect Obama to say this -- you need more -- you're going to need more than just what you get from getting rid of that piece of the Bush tax cuts. But where else is he going to cut? Is he going to defend the basic structure of Medicare or not? Because Ryan's plan, it is said, sort of reforms Medicare. No, really, it repeals Medicare. It replaces it with this voucher or premium support plan. Now, there are a lot of arguments about premium support.
DIONNEI can imagine ways in which it might be a plausible idea, but Ryan so cuts the growth rate of the voucher that you're going to get, that over time -- but a long time in the future, seniors are going to pay huge proportions of their income for health care. The other thing about the Ryan budget, it doesn't balance the budgets until 2040. So this is not a balance budget plan. This is a tax cutting plan.
REHMWhat about -- what about defense spending in President Obama's plan?
DIONNEI don't know what he's going to do about defense. I mean, I think that they have been trying to find ways of holding it in and trimming it. It's hard to cut defense a lot when you're in all the wars we're in right now. And so I'm not sure how much he's going to be able to get out of defense.
WEBERThis is a big problem for the Democrats, in my judgment. We're -- if we had a Republican president, all the Democratic leaders in this town would be screaming that they had to have significant cuts in the defense budget. But the defense budget we will be cutting is not a Republican defense budget. It is President Obama's defense budget. When his deficit reduction commission recommended some significant cuts in the defense budget last Dec. 1 when they reported, Secretary Gates -- President Obama's Secretary of Defense described them as "catastrophic."
WEBERSo this is a problem within the Democratic Party. There are -- and interestingly, there are more Republicans willing to talk about cutting the defense budget than you might've seen at any time, really, in my recent memory. Sen. Coburn, one of the most conservative Republican senators, voted for of those cuts on the deficit reduction commission. Haley Barbour, running for president, the governor of Mississippi, former chairman of the RNC, has talked about cutting the defense budget. So the lines, a little bit, are blurring on this issue, but I still think it's a bigger problem (unintelligible).
DIONNECould I just say...
HOOKI -- can I -- I just want to say one thing, though, that the defense budget, I think, in the end, if you're looking at the long-term deficit and debt problem, is as relevant as some of these domestic cuts we've been talking about...
HOOK...a tiny part of the problem. And, really, the debate that Paul Ryan and President Obama are setting up is, what is the big driver of the debt and the deficit? Is it revenues or is it entitlement spending, okay? And so -- or both, and I think that, if anything, Paul Ryan's budget is a good argument for what President Obama may be talking about, which is, it shows how hard it is to balance a budget or get the debt under control without tax increases.
DIONNEI just have to say that if conservatives cared so much about the defense budget -- they raise defense spending year after year after year and cut taxes on the wealthiest people in the country. If they care so much about defense, they should've paid for it. And that's why we're in the hole we're in. We started two wars and cut taxes. We've never done that in our history. It's crazy, and now conservatives want to blame it all on Obama.
WEBERI'm just -- I love hearing E.J. go on like this because this is going to be a debate within the Democratic Party, much more -- the Republicans aren't criticizing the president over defense. Democrats are criticizing the President over defense.
DIONNEActually the Republicans, in this budget deal, increased defense spending net. It -- there's a lot of arguments over which baseline you use. And Obama pushed them back a little bit, but there was still a net increase in defense.
REHMBut how can, considering all these differences, how can the Congress move forward on Paul Ryan's plan this week?
WEBERWell, I -- that's a very good question. I think they're going to vote on it this week, probably on Friday. They're going to vote on the Ryan budget. My guess is that he will get a majority of the House to vote for it. But that's only one step forward. Then we'll have to see what the -- how the Democrats are going to respond. If we're going to get anywhere big on this, a grand deal, at the end of the day the president is going to have to call people together.
WEBERNow -- for those of us old enough to remember it -- that conjures up visions of the Andrews Air Force base deal in the first Bush administration. Republicans don't like what happened there because it resulted in a tax increase. But to get the kind of deal that we're talking about, it would include all of the components -- defense and revenues and Medicare and Medicaid and Social Security. It's probably not going to go through regular order in the Congress. It means the president is going to have to convene some kind of a summit.
HOOKYes. There's one other place where some solutions are being hashed out. And that's this so-called gang of six in the Senate. There's a bipartisan group of senators.
REHMIs it still at work?
HOOKIt is still at work. Actually, it's working quite hard and pretty close to coming up with some kind of long-term proposal, based on the recommendations of the president's deficit commission. How that is going to fit in with the president's speech is another thing. I have the feeling that they're probably not going to be producing their plan, certainly not before the president's speech and probably not before the recess. But they are kind of laying the groundwork. I think the most important thing that that group has done has been to kind of galvanize interests in addressing the problem and kind of making it politically safer for the president to step out.
WEBERAnd the gang...
WEBERAnd the gang of six has been working assiduously to broaden their reach. They may be closer today to being the gang of 30.
DIONNEYou know what's going to be interesting, I think, you've got the Ryan plan way out there on the right. You're going to have this gang of six plan, which I think in my view, will be kind of center right because it'll be -- really be interesting to see how much they're willing to raise in revenue. Congressman Chris Van Hollen, the ranking Democrat on the budget committee has said he's going to put out a proposal. I think that's going to be an interesting proposal, not because it has a chance of passing, but because it's going to define sort of the left end of this debate.
DIONNEAnd it's not going to be that far left. I think Van Hollen is a very pragmatic guy who understands that the Democratic caucus, both in the House, and even more in the Senate, is a complicated place. But you're going to see that plan as a marker on the other end, and then you're going to have these plans sitting before you. And my hunch is the sort of people to the left of Van Hollen are also going to put out a plan. The only good thing about all of this, in my view, is we may have a fundamental debate. And, I think, the president can't just stand back and say, I'm a referee. He can't just stand back and say, this is all about pragmatic decisions. This is about values and choices and what you really think government should and should not do. That's a debate everybody should welcome.
REHMDid he make a mistake in waiting as long as he did to get in?
DIONNEWell, I think he did because, I think, just as Vin said earlier, the framework of the debate, so far, has been set entirely on Republican terms. There's a whole argument, that I still believe, that it isn't a great idea to start all this cutting when the economy is still very fragile. That argument's totally been lost. We're arguing only about, what do you cut? And I think that's -- so, I think, if he had gotten in earlier, he might've changed the frame of the debate.
DIONNEWhat they're going to say is, we entered at exactly the right moment. Just watch what we do. Well, we're watching.
REHMLet me ask you whether Van Hollen's plan, in your view, will be very close to what the president is going to propose.
DIONNEThat is an excellent question. I don't think I -- I don't know the answer to that. I think that, you know, if you look at the House Democrats -- and Janet could tell us more about this -- on all of these budget votes, you've seen a kind of split down the middle. You've got a sort of moderate-liberal-moderate whatever-conservatives-are-left coalition against the liberals. And I'm curious where House Democrats are going to be.
HOOKYeah, I think that it's not clear who's leading the Democratic caucus in the House anymore. Steny Hoyer, the Democratic whip, and Nancy Pelosi, the Democratic leader, have been on the opposite side of many of these key votes.
REHMJanet Hook of the Wall Street Journal. You're listening to the Diane Rehm show. Here is an e-mail from Echo who says, "What is the greater motivation of the Republican House? Is it a legitimate idealism over the spending? Or do they not wish to incur the ire of the Tea Party movement?
WEBERThat's exactly the right question. We'll probably discuss this for a long time. And it gets me to probably the most important thing we should be discussing. There are, of course, a lot of sub dramas going on here. But Paul Ryan and the leadership of the Republican Party are motivated by exactly the same thing as Erskine Bowles and Alan Simpson, the chairman of the president's deficit reduction commission, the fear of a genuine financial collapse because of the size of our debt. Now, you can argue, maybe they're not right about that, or maybe it's further off into the future as I've heard some liberal economists argue. But that is what is motivating them.
WEBERAlan Simpson believes that we will have a collapse within a year if we do not act this year. He also might be wrong. But it would be a mistake to look at Republicans, particularly Speaker Boehner and Chairman Ryan, and say they are motivated by anything more cynical than that. They genuinely believe we must act now.
REHMWhat if that...
WEBERIf that were true, why doesn't he -- why he does he wait till 2030, at best, or 2040 to balance a budget?
WEBERHe asked nothing of people over 55. Guess what? That's a Republican voting constituency. So I don't believe this Ryan budget should be seen. I'm just -- I will say it one more time. This is not a deficit budget. This is a tax cutting budget.
REHMAll right. Now, let me ask you about the debt limit. Janet Hook, there's going to be a, what, after about May 2, nation's debt will begin to rise over the current $14.25 trillion debt ceiling. What happens then?
HOOKWell, Congress has to vote to raise the statutory limit on the debt. And it -- it is a routine kind of budget fiscal matter.
REHMBut it ain't routine this year.
HOOKIt has been in the past. And it is not routine this year. And the treasury secretary has said that there have been some, you know, gimmicks that they can do to avoid actually defaulting on any of the debt until about early July. But, basically, we've got a very small window for Congress to figure out some way to pass this through. The Tea Party is, like, up in arms, not wanting to see the debt limit increased. The Republicans have said over and over again, we will raise -- vote to raise the debt limit, only if we do something really big on the budget. Now, the question is what's the big thing?
HOOKAnd this is what -- one reason why, I think, this debate is very different from the spending debate we've just gone through, where there was a very specific deadline of when the government runs out of money and a very clear sort of set of options for what they needed to do to pass the spending bill and keep the government open -- cut more, cut less. On the debt ceiling, the time that it has -- the action has to be taken is less clear. The solutions, the nature of the problem that the Republicans and Democrats want to address are different. What is doing something big amount to? So this is going to be a debate that the president has a big role in defining what the problems are and what the solutions are.
REHMSo he'll be talking about this on Wednesday as well?
HOOKI believe so. I mean, I think, the framework of the debate is sort of addressing the long-term deficit problem. And, I think, the treasury secretary and a lot of the Democrats think it's inappropriate to tie the debt limit to solving those problems. But the Republicans have made it clear that that is exactly what they intend to do.
REHMJanet Hook, Congressional correspondent for the Wall Street Journal. When we come back, we'll open the phones, take calls from Syracuse, Ind., Ann Arbor, Mich. and elsewhere.
REHMAnd it's time to open the phones, first to Syracuse, Ind. Good morning, Chris, you're on the air.
CHRISYes, my question is, why are the Republicans so hell-bent in privatizing everything? I mean, Medicare has a overhead of, what is it, 1 to 4 percent. That's pretty darn good. Most insurance companies, it's about 30. I fail to understand -- if you talk to most seniors, they love the Medicare program. And most veterans enjoy the VA program and the coverage that they have. It just seems as if they're hell-bent to destroy these 30-year-old programs that are working. I don't hear anything positive about tweaking them for improvement. I just hear profit.
WEBERWell, all of these...
WEBERAll of these programs are working if your only criterion is, are they delivering the benefits that people want? Of course, they are. And they -- you know, my mother is on Medicare. It's a wonderful program. The problem is the costs of Medicare continue to go up.
REHMBut, Vin, here is the question...
WEBERAnd 75 percent of the long-term debt problem of the country is related to health care costs. So...
REHMOkay. But here is the question. How is it possible to believe that for-profit health insurers can deliver better care, a lower premium compared to Medicare?
WEBERThe question is, can private sector competition bring down this health care cost spiral that we're in? And liberals are going to argue that they -- that there's a better way of doing it, but we haven't really seen it yet. You know, the much maligned prescription drug benefit program is coming in actually under cost because it actually encourages private sector competition. If there's a better way of bringing down Medicare costs, we should discuss it in the great debate that E.J. just talked about. But the objective is not to destroy Medicare. The objective is to inject competition as one of the few means we might have of bringing down health care costs.
DIONNEWe -- I -- we experimented with seeing the wonders that private insurance companies could do with Medicare advantage, and they didn't bring down costs. What Congressman Ryan is doing, there are two ways to cut the government's expenses, one is to figure out how to deliver health care for less. And that's what the Obama health plan started doing, and we need to do a lot more of that. The other is to say, okay, we'll just throw more of these costs onto individuals. And, all right, maybe really wealthy individuals can absorb it, but this plan would just gradually shift the risk away from all of us, which is the government, onto individuals, many of them not well off and many of them sick.
DIONNEAnd that is the debate we're going to have. And I want to go back to something that we said earlier. We should have a big broad serious debate about our country's fiscal future. But we should not have it under circumstances when one side is willing to destroy the nation's credit to get what it wants. I think we should say, shut downs are off the table, just sort of not passing the debt limit is off the table, and then let's have a real debate.
REHMAll right. Here's an e-mail from Mark in St. Louis, Mo. He says, "I'm wondering if we could hear E.J. explain to us why exactly the Democrats did not pass a budget before the election when they controlled both Houses in Congress last year? Sure seems like they would've gotten a lot more of what they wanted."
DIONNEA very fair question, I think. There are two problems, one is the Democrats problem, and the other is the system's problem. The Democrats' problem is there was a lot of fear. There was too much fear going into the election. They would've been better off to pass a budget. But the other problem is filibuster abuse in the Senate. Now, I think, they should've just gone ahead and tried to use the reconciliation process, which was made for budgets. They decided not to do that because they wanted to pass a whole lot of other things at the end of the session. But I agree implicitly. The Democrats would've been better off to pass the whole budget last year.
REHM...Mark in Dallas, Texas. Good morning, you're on the air. Mark, are you there? All right, he's not. Let's go to Barbara in Alexandria, Va. Good morning.
BARBARAGood morning. I'd like to pose a question to your panelists regarding the health care bill and Medicare, Medicaid, Medicare Advantage and the TRICARE -- the military's plan. I am on Medicare. I've worked in health care. I'm not so sure the Medicare plan is so great anymore. I am paying out-of-pocket because many physicians are dropping out of the system due to the fact that the reimbursement rate is so low. So I'd like your guests to address the issue of, one, TRICARE, where the premiums are very low -- I think that's the military health care plan is very, very low.
BARBARAAnd they pay a very small amount of money. Medicare, where the deductible has been raised $162, and the Medicare Advantage plan, which is an HMO system, which it gets -- the docs get more money in terms of reimbursement. And would it not be more cost-efficient to let the states and competition prevail? Is Medicare really working? I understand there's not a lot of paperwork involved, but is it really working when you have an aging population and abuse of many patients having to pay out-of-pocket?
REHMAll right. Thanks for your call. Janet.
HOOKWell, I think the caller is pointing to the fact that the entire health care --health insurance system is in turmoil and transition right now. Every health insurance program I know, you know, costs are going up, out-of-pocket costs are going up for people. Last year's health care debate was about expanding access to health care. And it set in motion a process of change, both in Medicare and the private health insurance system, that, at this point, it's kind of hard judge the outcome because it's still in process.
HOOKBut I think that E.J. and Vin have pointed out the fact that this budget debate isn't about the nuts and bolts of Medicare right now. It's about the broader question of what the government's role is in this insurance program. And I do think that the gift of the Ryan budget is that it set it up as a very big debate about whether or not Medicare is sustainable as it exists.
REHMAll right. And here's an e-mail from Sandy in Ann Arbor, Mich., who says, "Once again, the news media seems to put all the attention on the political battle and who won or lost. What about the citizenry? Did we lose? Seems this budget will costs jobs and safety net in ways for people to work their way up in our society. And on balance, will this actually help the debt? Or are you reporting on the politics because this was all just politics?" E.J.
DIONNEWell, I think, we address some of those issues. I said earlier that I thought this budget -- these cuts were not wise right now because of where the economy is. And I do think there are cuts in here that are going to hurt. They're not cuts in programs for the rich. They're cuts in programs for the middle class and the poor. Obama's claims he limited those cuts. We're going to see the details shortly. So, yeah, there is always too much talk of winners and losers. So I don't disagree with that. But we're having a pretty fundamental debate about what we want government to do and where the benefits in our society are going to be.
DIONNEI am constantly amazed that we do not have more discussion of how much wealth and income has shifted to the very, very wealthy in our society over the last 30 years. That should be at the center of our debate. And all of these debates we're having over the budget are really a debate about a health care system that is more expensive than any other health care system in the world. And I'm talking about good health care systems. And if we didn't have a health care cost problem, we wouldn't be having this huge argument that we're having right now.
WEBERWell, there's -- I'm going to make two points. First of all, the caller raises kind of the big macroeconomic debate between the two parties. The Democrats surely believe -- sincerely believe what E.J. just said, that cutting this spending is going to hurt the economy both in very specific areas and in a macroeconomic sense...
WEBER...because they believe in stimulus of the economy by government spending -- demand side stimulus. Republicans simply don't believe that. Republicans believe quite the opposite, that, in this case, you're going to actually strengthen the economy and long-term employment by taking some pressure off of the credit markets long term and short term and reducing the burden of government in the private sector of the economy.
WEBERThis is really not a new debate. This is the -- sort of the age old debate between the two parties. The second point I want to make, though, I actually, at least, somewhat step up to agreeing with E.J. on something. As long as we're not going to deal the big picture of health care, Social Security, revenues, defense and everything else like that, then, yes, we are going to focus on a very narrow slice of the budget and do serious damage to some programs that even I as a Republican think are quite valuable.
REHMWhat about the Bush tax cuts? How much harm or how much good did they do for the overall economy? Janet.
HOOKWell, that's obviously a central question of debate among economists for Republicans and Democrats. The main thing is that it had -- the immediate thing -- the one thing we do know is that it contributed to the deficit and having set them on course to continue for the next two years. President Obama has set up a time for debate on what the impact of those tax cuts has been. And it's now being conducted in a very different context than last year. And, to go back to the earlier caller's question, I also think about whether the Democrats would've been better off voting on the budget before the election. They surely would've been better off voting on the tax cuts before the election.
DIONNEYes, absolutely. I think the question is, were we better off in 2008 than we were in 2001, if I may quote -- paraphrase Ronald Reagan. I think the answer is, clearly, no. These tax cuts did not deliver what they were supposed to deliver. And in terms of our fiscal future, if you repealed all the Bush tax cuts -- and, yes, that includes some of the middle class tax cuts -- you'd raise about $4 trillion, exactly what Paul Ryan gets out of all these cuts for the next -- over the next decade. If you did that, you could buy yourself some time to try to see what we can do about medical costs. Now, I'm for that. Democrats are not endorsing that because they don't want to endorse any tax increases on anyone but the very wealthy.
DIONNEBut, at least, I think, the idea of going back to the Clinton tax rates when, by the way, we had 22 million jobs added when that great socialist Bob Rubin was treasury secretary -- I speak in jest -- we did pretty well with those tax rates. And I don't see why we just don't go back to them. Then we can move on, and you silence the credit markets and figure out what we want to do.
REHMHow much of an increase would that be on the wealthiest Americans?
DIONNEThe most of the Clinton -- most of the Bush cuts, particularly the cuts in capital gains and the cuts and taxes on dividends, overwhelmingly benefited the well-to-do and that -- you know, the other thing you could do is begin treating capital gains the way you treat other income. That could also raise a lot of money. Most of that would come out of the very well-off.
REHMVin Weber, that's precisely the argument.
WEBERIsn't it? Yes. That's exactly the argument and, I believe, precisely the opposite of what E.J. just said, as do most Republicans. And I would say -- I hate to keep quoting them -- but the president's deficit reduction commission, appointed by President Obama, including equal numbers of Democrats and Republicans, also disagrees with that. They do raise revenues in their recommendation, but they recognize that the competitiveness and growth of the American economy requires us not to push up those top rates but, as they recommended -- Democrats and Republicans -- bring them down. Then raise revenues if they want to by broadening the base and plugging loopholes, but bring down both the marginal rate for individuals and the corporates.
DIONNEAnd I just compare the Clinton economy and the Bush economy and ask, why were those tax rates so horrible?
REHME.J. Dionne, Vin Weber. Vin is a Republican consultant, former member of Congress representing Minnesota's 2nd district. Do you want to answer E.J.'s question, Vin?
WEBERAbout the 1990s?
WEBERWell, first of all, I'm not terribly critical of President Clinton's management of the economy. I do think you'd have to look at what's happening in the private sector. The Clinton administration benefited from the dramatic expansion of the technology economy that took place in the 1990s. By the end of the Clinton administration, that was evident because the tech bubble burst. Before it burst, the Clinton administration benefited from all sorts of income tax revenues and capital gains tax revenues that were generated by this enormous expansion of the tech economy throughout the 1990s. It was that tech economy, much more than any specific fiscal policy of the Clinton administration, that gave us the surplus.
DIONNEAnd the problem is Republicans always make the same argument. When the Clinton tax rates were passed, Dick Armey, Newt Gingrich and everyone else said, these are tank the economy. This is going to be a disaster. They were wrong. They are just recapitulating the same arguments all over again, and I don't why we should believe them this time when they were so wrong the last time.
WEBERCould we at least agree, E.J., that there is a difference in the likely impact of raising taxes on a struggling weak economy and raising taxes on a strong and growing economy?
DIONNEI don't want to do anything until the economy is recovered. I'm talking about looking down the road and saying, let's put the Clinton rates in a couple of years from now, and then we can get moving and get the economy moving.
WEBERTill we get (unintelligible) ...
DIONNENo one is...
REHMDo you agree with that?
DIONNEYou're the guys who want to cut -- you can't have it both ways, Vin. You can't say that cutting spending is good now for the economy, even though that takes money out, and that cutting taxes is bad. Go one way or the other.
WEBERWell, we're at least in agreement on some point, that we shouldn't raise taxes on a struggling economy.
DIONNEOr cut spending.
WEBERSo we're not in agreement on that.
REHMOkay. And here's the last question from Ed who says, "In the 2010 midterm election, only a minority of the electorate voted, only a minority of that minority were Tea Party types. So why bother with them?"
DIONNEThat's for Vin. Excellent question.
REHMYeah, exactly, Vin.
WEBERWell, we have a chronic problem in this country in that people don't vote. In an off-year...
WEBER...election, we always get a minority. So the Congress says that we choose, and off-year elections are always chosen, unfortunately, by a minority of the electorate, with some exceptions such as my home state of Minnesota, which always has the highest voter participation rate in the country -- I want to point that out.
DIONNEBecause they have same-day registration.
WEBERYeah, which I'm in favor of, by the way...
WEBER...which is a good thing.
REHMOkay. Final question for all of you, are we going to see a rise in the debt limit? E.J.
DIONNEYes, 'cause we have to. Somehow or other, we'll get there.
HOOKAbsolutely. And the only question is whether we're going to have to do a lot of them, short term, one after the other after the other.
REHMDo you think that's possible?
DIONNEAnything is possible unless the president puts his foot down, which I think he should.
REHMDo you think he will?
DIONNEI'm not fully sure he will, but I hope he will.
WEBERI doubt it. I think we're going to have an argument about this. I think there's going to be conditionality, insisted on by the Republicans, but at the end of the way -- end of the day, we will succeed in doing this just as we succeeded in solving this short-term budget problem.
REHMAnd will the Tea Party members go home?
WEBERWell, this is a broader question. There are about 10 to 20 members of the House Republican caucus that actually have roots in some Tea Party organization.
WEBERThe question is, will the one-third of the caucus that are newly-elected members, regardless of their association with the Tea Party, go along? And some of them will, and some of them won't.
DIONNEI think the challenge is not the Tea Party members, but Republicans who fear primaries from PT parties...
WEBERThat's a better way of putting it.
DIONNE...folks, and that's where the pressure comes from.
REHMOkay. E.J. Dionne, Vin Weber, Janet Hook, great discussion. Thank you all so much.
REHMThanks for listening. I'm Diane Rehm.
ANNOUNCER"The Diane Rehm Show" is produced by Sandra Pinkard, Nancy Robertson, Susan Nabors, Denise Couture, Monique Nazareth and Sarah Ashworth. The engineer is Tobey Schreiner. Dorie Anisman answers the phones. Visit drshow.org for audio archives, transcripts, podcasts and CD sales. Call 202-885-1200 for more information. Our e-mail address is drshow.org. And we're on Facebook and Twitter. This program comes to you from American University in Washington. This is NPR.
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