Business Center - Interview

By:  Kent Conrad
Date: July 15, 2003
Location: Unknown

SHOW: Business Center (5:00 PM ET) - CNBC

HEADLINE: North Dakota Senator Kent Conrad, Democrat, discusses the White House's projections for budget deficits

ANCHORS: SUE HERERA; RON INSANA

BODY:
SUE HERERA, co-anchor:

Well, joining us now is Senator Kent Conrad, the ranking Democrat on the Budget Committee. And he joins us for the Democrat's response to the White House's revised budget.

Senator, thank you for joining us tonight.

Senator KENT CONRAD (Democrat, North Dakota): Good to be with you.

HERERA: I--I used some of your words a little bit earlier, so I didn't mean to pre-empt you, if you will, but you have some serious issues with these particular numbers.

Sen. CONRAD: Well, I really do. Look, two years ago the administration told us over the next decade we were going to have nearly $6 trillion of surpluses. Now we see if we adopt the president's tax cutting plan and spending plan, that instead of surpluses, we'll have over $2 trillion of deficits. If that's not hide the ball, I don't know what it is. And exclude the war cost and the occupation costs in Afghanistan and Iraq, that's just not leveling with people. Look, they know the ongoing cost. It's $4 billion a month. To leave that out of the next year, that's a pretty big thing to just leave on the table. But look, the most important thing is what--what is not being told to you by the administration. Their own numbers reveal that this is the budget sweet spot in this period of time before the baby boomers retire. What their own numbers reveal is in the next decade, when the cost of the government explodes because of the baby boom generation, increased cost for Social Security and Medicare, at that very time the cost of the president's tax cut proposals explode, driving us into deficits much, much larger than these.

RON INSANA, co-anchor:

Senator...

Sen. CONRAD: About three times as big as these.

INSANA: ...I want to come back to the entitlement issue in a minute because what--I think with the stroke of a pen, if--if we raise the retirement age, some of this will go away. But--but we'll deal with that another time. Let me ask you about one other critical element that, as The Washington Post reported on--on the budget deficit today, it pointed out that tax collections have been down for three years in a row because of a weak economy. That has not happened in this country since the Great Depression. So it's not all spending and tax cuts, which are stimulative, it's a weak economy that's also robbing the Treasury of--of--of money.

Sen. CONRAD: But Ron, did you listen to what you just said?

INSANA: I--I usually do.

Sen. CONRAD: One of the reasons revenue is lower is because of tax cuts. Look, revenue is lower for two reasons...

INSANA: Would you raise taxes in a recession, though?

Sen. CONRAD: ...a weak economy and tax cuts.

INSANA: Yeah.

Sen. CONRAD: But again, I think we're missing the point here. This is this year and the next few years. What's being missed is a much bigger story of where this is all headed. And it's headed right off the fiscal cliff. And anybody can see it who takes the time to look. None of this adds up.

HERERA: So what would you like to see done ideally?

Sen. CONRAD: Well, first of all--look, first...

HERERA: Given the uncertainties that are there with Iraq and--and the fight against terrorism?

Sen. CONRAD: First of all, I think you've got to be straight with the American people. This doesn't add up. All this happy talk that in the next few years the deficit's going to be down dramatically hides the reality. You noticed he talked about 2008. He didn't talk about beyond that because 2008 is when the baby boomers start to retire. And beyond that, that's when the cost of the president's tax cuts explode. And then you have a truly unsustainable situation. And you're headed for massive cuts in Social Security and Medicare and most of the rest of government as we know it. That is the course the president has us on. And, look, the roof may not cave in until he's left town, but he is laying the predicate for truly reckless, reckless fiscal policies for this country.

INSANA: Senator, let me ask you, though, if you were president right now and confronting September 11th, a recession, a burst stock market bubble and a weak global economy, would you avoid fiscal stimulus as a means of propping things up just to make sure the budget remained in balance?

Sen. CONRAD: No, Ron, I would have probably had more fiscal stimulus on the front end than the president advocated. You'll recall in all of his plans, he had very weak fiscal stimulus on the front end. It got plussed up as we went through the process. But, look, I think we would have probably been better off to have more fiscal stimulus on the front end but much less in future years when he's forecasting strong economic growth. It's those future years where he is truly pushing this country off the fiscal cliff.

HERERA: All right, Senator, we'll leave it there. Thank you very much for joining us tonight. Senator Kent Conrad of North Dakota.