BREAK IN TRANSCRIPT
WALLACE: President Obama unveiled his plan for the budget this week, just as House Republicans were passing a very different blueprint for the federal government. To talk about where the debate goes next, we turn to two key negotiators.
From his home state of Oklahoma, Republican Senator Tom Coburn, known as "Dr. No" for his tough stance on spending. And here in studio, Congressman Chris Van Hollen, the top Democrat on the House Budget Committee, who has just been named to the bipartisan team that will meet with Vice President Biden to work on a budget deal.
All right, gentlemen, we know what you and your parties don't like about each other's plans. I'm going to ask you both, please throw away your talking points and let's try to deal with possible areas of compromise.
I want to start with Medicare first. Senator Coburn, the nonpartisan Congressional Budget Office says under the Ryan plan that seniors are going to end up paying more out-of-pocket 10 years from now when the plan kicks in for their healthcare. What can you do about that?
SEN. TOM COBURN, R-OKLA.: Well, you can't do anything about it. We have an unsustainable program. Until we reconnect payment with purchase, you can't fix it. And that is the whole problem with healthcare costs, is everybody thinks somebody else is paying the bill.
And so if you want, there is no way to fix Medicare unless you drive down costs, and there is no way the government is going to drive down costs without rationing.
So if you want to drive down costs, you need a discerning consumer to do that. And that is true in insurance or Medicare. That's why we are seeing this explosive increase in prices.
WALLACE: Well, all right, that brings me to the question I'm going to ask Chris Van Hollen, and again, no talking points. We're looking to find areas of compromise.
The president says let's leave it to a government panel to come up with hundreds of billions of dollars in cuts, which critics like Tom Coburn say means price controls and rationing. What can you do about that?
REP. CHRIS VAN HOLLEN, D-MD.: What the president has said is first of all, we have to fully enforce and commit ourselves to the Affordable Care Act, because Medicare and Medicaid are participants in the overall healthcare system.
And to the extent that you can drive down costs in the overall healthcare system, which the Affordable Care Act will do, you drive down costs in Medicare. Second--
WALLACE: But if I may, basically you are talking about this government panel, and I mean, it's a panel of doctors and administrators and bureaucrats and all of that, that they're going to come up with these ideas to drive down costs, and a lot of people don't believe it.
VAN HOLLEN: Look, what the Republican plan talks about is having private insurance companies drive down these costs. That has not succeeded.
VAN HOLLEN: The whole reason we created Medicare to begin was because private health insurance market could not provide seniors with affordable health care.
And that's why the Congressional Budget Office, an independent entity, said that if you scrap that plan and you throw seniors in the private insurance market to eat the escalating costs, they will pay $6,000 more in the year 2022 than in the current Medicare system.
WALLACE: I'm not hearing much for a compromise.
VAN HOLLEN: Well, the president -- again --
WALLACE: I mean, I know the president's plan. But is there an area where you can accommodate Senator Coburn's concerns?
VAN HOLLEN: Well, the issue with respect to some changes in Medicare, we actually made some Medicare reforms in the health care bill. And they are included the Republican plan, despite the fact that they demagogued a lot in the last round.
For example, we got rid of overpayment to Medicare advantage plans. Those were the private plans in the Medicare system. They were charging 114 percent of fee for services. Now they want to say we'll go into 100 percent of private insurance markets and not provide the Medicare option.
So, that is a surefire way, not just to see the escalating costs but as their plan does require seniors to eat those costs.
WALLACE: Let's turn to taxes. We certainly didn't seem to get a deal here on Medicare. So, let's see if we can turn to taxes.
The president calls for $1 trillion more revenue, largely through raising taxes on the rich, and Republicans flatly reject that. Let's watch.
(BEGIN VIDEO CLIP)
SPEAKER OF THE HOUSE JOHN BOEHNER, R-OHIO: I think the president heard us loud and clear. If we're going to resolve our differences and do something meaningful, raising taxes will not be part of that.
(END VIDEO CLIP)
WALLACE: Senator Coburn, you are prepared to break with your party on this issue. You say, let's lower rates for everybody, but the way to do that is do away with hundreds of billions of dollars in tax deductions and you can use some of that money to address the deficit and debt.
Are Republican leaders wrong to flatly reject any use of added revenue to deal with the debt?
COBURN: Well, I don't think that's what they've said, Chris.
What the president is proposing is to markedly increase taxes on people above, I think, $250,000. You can take all of their money and you wouldn't -- you could take all the money that they earn above $100,000 and you wouldn't cover our deficit this year.
So, the point is: how do we have a system that's fair, that protects the social safety net, and at the same time will generate economic activity and growth in government revenues? And we saw that this has happened. And what everybody on my side is worried about is, OK, if you agree to this, how are you going to make sure that the spending cuts stay there? And that's the problem.
And so, if, in fact, we develop a way to make sure you can't cheat on the caps, both mandatory and discretionary spending, I'm willing to do what is necessary to solve the very real problem that our country is in.
And you can't just say, no, no, no. What you have to say is no within reason that will create opportunity and solve our problems.
WALLACE: So, you would agree to added revenue, not through raising rates -- in fact, lowering rates -- but doing away with these hundreds of billions of dollars in tax deductions?
COBURN: Well, the added revenue comes -- most of that is going to be revenue neutral. What the added revenue comes from the economic expansion and dynamic effect of lowering rates.
WALLACE: Let me bring in Congressman Van Hollen.
The president is still talking about the Bush tax cuts. But the debt commission and to some degree what Senator Coburn are talking about is transcending that whole plan, lowering rates for everybody, rich and middle class, but doing away with these trillion dollars which is spent every year on tax breaks and using some of that to expand growth, but also added revenue.
Why not do that? Why not do what the president's own debt commission suggested?
VAN HOLLEN: Well, let's be clear. The debt commission has $1.7 trillion of revenues in its plan to get to the deficit reduction.
WALLACE: But it doesn't do it by raising rates. It lowers rates.
VAN HOLLEN: But it assumes in the base number, the revenue that will be generated from lifting the -- taking the top rate back to where it was in the Clinton administration. So, that's assuming that's base.
On top of that, they get about another $1 trillion in revenues the way you say, which is by trying to expand the base. And it's absolutely true that we can get rid of a lot of the junk in the tax code on the corporate side we can do it, and there's also room to do it on the individual side.
And Tom Coburn has been a leader in ethanol subsidies. I happened to agree him and get rid of those. I think we should get rid of the big oil subsidies. But those are ways to raise the revenue.
But this is why the fiscal commission said the Republican House plan was unbalanced, because the fiscal commission plan and Tom was a member of the commission.
WALLACE: The debt commission didn't like what Barack Obama announced either this week.
VAN HOLLEN: But, actually, they did. They released a statement saying it's a balance comprehensive approach. They said the exact opposite of the Republican House plan. No, that's --they said --
WALLACE: Actually, well, I --
COBURN: Let me, let me --
WALLACE: Senator Coburn, what?
COBURN: Chris, the fiscal commission didn't make any statement. Two people who led it did. And the rest of us don't necessarily agree with that.
The fact is you can't criticize Paul Ryan's plan until you have one that accomplishes the same thing. The president's doesn't come close to that.
And so, what we need is not partisan bickering, and not the labeling. What we need is what is good about Paul Ryan's plan that they can live with. What is good about Chris' plan they can live with.
What the country needs to hear from the leaders in Washington is we understand how big the problem is. And that we're willing to lose elections to do what is best for the country. And that's what's not happening now.
WALLACE: Senator Coburn, if I may interrupt, sir. You are a member of the so-called "gang of six." Six bipartisan -- three Democrats, three Republicans senators who are trying to come up with your own plan. How -- what are the chances that you are going to be able to come up with a deal when and how will it differ from both Obama and Ryan?
COBURN: Well, first of all, I'm not going to go into the details of how it will differ. I think there's a good chance that we'll be able to come up with a bipartisan agreement that people can swallow.
Nobody is going to like what we come up with. The left isn't going to like it and the right isn't going to like it. And that's one thing that would be an indicator that is probably the best compromise we're going to be able to get.
So, I think there's a good likelihood that we can get there. It's not a sure thing.
But, look, what's the risk if we don't? You know, we, in fact, are going to be making decisions by ourselves, among ourselves, or other people are going to be telling us what we're going to do.
And I think America is tired of bickering. They understand that we have to make some sacrifice -- and so do the politicians.
WALLACE: Let me break --
COBURN: Everybody in America is ready to do that except the politicians.
WALLACE: Senator, let me break in because we're running out of time here. You talk about the other people. That could be, in many cases, are our creditors. And the big issue over the next couple of months is going to be working out a deal so that you can raise the debt limit.
Now, Congressman Van Hollen, you now say Republicans are playing political games with the debt limit. The fact is, in 2004, you voted one time against raising the debt limit.
The question is: are you willing to agree to spending cuts and to some kind of spending caps to get a deal on the debt limit?
VAN HOLLEN: Well, two things. Number one, we have to make good on the full faith and credit of the United States. Otherwise, we'll have an economic catastrophe. I mean, the chairman of the Federal Reserve, Ben Bernanke, has said that. Every economist on both sides of the aisle have said that. So, we have to do that.
We also have to come together, as Tom said, and put together a serious deficit reduction plan. Linking the two and saying you're only going to vote for the debt ceiling if something particular happens on deficit reduction I think is playing Russian roulette with like the fully loaded revolver.
WALLACE: But wait a minute, President Obama, this week, agreed that that there has to be -- there are going to have to be some spending cuts to get the debt limit increased. VAN HOLLEN: What the president has said is we can have a two- track approach. Yes, we have to have a plan to reduce the deficit, but let's not monkey around with the full faith and credit of the United States.
WALLACE: Are you willing -- so, is the answer to your question, you're not willing to agree to spending cut or structural changes to get a deal on the debt limit?
VAN HOLLEN: I am willing to work out a plan to reduce the deficit. It should not just involve spending cuts, as the fiscal commission has said. And as Tom has said, we need to deal with the revenue piece. Deficits are caused not just by spending, which is a driver, of course, but also by -- when you give folks at the very top a big tax break, which is what happened. They exploded the deficit.
WALLACE: OK. We have less than a minute left. Senator Coburn, you have voted against the debt limit half a dozen times over the years. What are you going to need to agree to raise the debt limit?
COBURN: Well, first of all, people ought to ask themselves what's the debt limit? The debt limit is ridiculous. When was it not raised? So, debt limit doesn't mean we limit our debt. A debt limit just says we're going to pause and borrow more.
And so, what do I need? I need absolutely certainty that we've made the critical changes that are necessary to put this country back where it needs to go. And unless we do that, there's no way I support it.
And the fact is we're going to have a debt crisis with this or soon thereafter if we don't come together. So, it's time to come together.
WALLACE: Senator Coburn, Congressman Van Hollen, we want to thank you both so much for coming in. And we'll stay on top of this, the budget -- the battle of the budget. Thank you, both.
VAN HOLLEN: Good to be with you.
BREAK IN TRANSCRIPT