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CNN "State of the Union with Candy Crowley" - Transcript


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On his way out of town Friday, President Obama called the two chairs of the super committee from Air Force One to tell them they needed to make a debt deal soon. That is not breaking news to panel members who have been spinning their wheels for nearly three months.


REP. JEB HENSARLING (R), TEXAS: I'm not giving up hope. And I hope my Democrat colleagues aren't giving up hope until midnight on the 23rd.


CROWLEY: But Wall Street may have given up hope. According to CNBC, half of the investors polled by Citigroup don't expect the committee to reach a deal in time.

Co-chair Jeb Hensarling joins me here in Washington in his first Sunday interview since being appointed to the committee. So we appreciate it. I want to show you one more poll here of people, "do you expect that the committee will reach its goal?" And this is a George Washington University Battleground poll and Politico.

Yes, 21 percent.

No, 69 percent.

So, you going to get this done?

HENSARLING: Well, Candy, I think it is important to note that the committee has both a goal and a duty and in many respects the duty is more important than the goal. The duty is to put forth legislation that actually addresses our long-term structural debt. Now the president himself has said that the drivers of our debt are Medicare, Medicaid and health care. Nothing else comes close.

So to me what we really have to focus on is that duty, and that is to find programs -- find a way to reform Medicare and Medicaid and our health care programs to get good retirement security and health security for our seniors at a cost that doesn't bankrupt our children.

CROWLEY: So you want structural change in those programs.

HENSARLING: Frankly, if we don't find structural change, we will fail in our duty.

Now let me focus on our goal. We have a goal of reaching $1.5 trillion of deficit reduction over ten years, but it is important to note that if that goal, for some reason, we fail in that goal, under law, there is still a $1.2 trillion of deficit reduction that will take place, albeit...

CROWLEY: There's lots of people trying to get around that saying it is too much, particularly the Defense side, to do across the board cuts.

HENSARLING: Well, it is not exactly across the board. Frankly it affects disproportionately national defense in a way that even the secretary of defense says will hollow out the national defense.

CROWLEY: But are you willing to do that.

HENSARLING: Well, hear me out. What I'm willing to do is be committed to ensuring that at least America gets that $1.2 trillion in deficit reduction that congress would have 13 months to do it in a smarter fashion.

But again what we have to focus on is that we have entitlement spending programs that are simultaneously disserving their beneficiaries are forms of rationing and driving the country bankrupt. And unless we deal with that, frankly, we will fail.

CROWLEY: But you can't -- you can't restructure Social Security, Medicare, Medicaid in ten days. You can't do it. People have been trying to restructure -- list the details of it.

You may say, OK, committees, you restructure Social Security and get this much out of it. You can you do that, you can give goals to committees but you can't restructure those things in ten days.

HENSARLING: Well, Candy, a number of plans have already been on the table. I mean Republicans put forth a plan in our House budget -- which by the way would have reduced the deficit by almost $5 trillion over what the president was proposing.

Now Democrats have rejected that plan. But there is a plan with legislative language that the Congressional Budget Office says will actually strengthen and save Medicare.

Well, Democrats rejected that. So we have gone to the Democrats and said, OK, if you don't like our plan, at least put a plan on the table. And if you don't, here's a bipartisan plan we would be willing to negotiate around, and that is the Rivlin-Domenici Medicare plan. And again details would have to be worked out, indeed you are correct, it would have to be through a two-step process.

But this is a plan, bipartisan plan, again led by Alice Rivlin, former Congressional Budget Office director, head of the OMB under President Clinton, that would also include a provision for future seniors to stay in traditional fee-for-service Medicare, but use the power of patient choice and competition to save and strengthen the program. And so we put that on the table as well.

CROWLEY: You do not sound like a man who believes you're going to get a deal in ten days.

HENSARLING: Oh, I wouldn't say that. Listen, it's been a roller coaster ride. I will say this -- I respect my Democrat colleagues. I have an excellent working relationship with Senator Patty Murray.

We haven't given up hope. But if this was easy, the president of the United States and the speaker of the House would have gotten it done themselves.

CROWLEY: So what about the revenue side? I know there's now -- what's on the table inside that committee in terms of revenue from the Republican side? Be they tax increases -- first, give me that figure. Like in terms of actual tax increases, which Democrats have said, look, you got to put some skin here in the game. How much are you all -- how far are you all willing to go in terms of tax increases?

HENSARLING: Well first, Candy, unfortunately it is not my skin, it is the skin of the American people. Tax is already going up by any measurement, nominal terms, real terms as part of the president's health care plan, expiration of tax relief.

And so we believe that, frankly, increasing tax revenues could hurt the economy but within the context of the bipartisan negotiation with Democrats, clearly they are a reality. So we put a half a trillion dollars of revenues on the table. Some of that fees, but 250 of it is what most people call static tax revenue. But that is in the context, Candy, of bringing down marginal rates of tax reform, fundamental tax reform to make the tax code fair, simpler, more competitive to create jobs.

So whatever damage would be done by $250 billion of new taxes, we think would be offset by a system that would help create jobs. And as we're dealing with the debt crisis, we don't want to make the jobs crisis even worse. So that's what has been put on the table.

CROWLEY: But it's something Democrats have rejected, as you know, it's not enough, that it's just a token amount. It brings me back to this feeling that is widely felt, that this committee is not going to be able to do that. And the net result is going to be you're going to shake the world markets.

A lot of people think there would be another downgrade in the U.S. creditworthiness from someone other than S&P which has already downgraded the U.S. credit. Is that something this committee, a burden this committee is willing to take on if you don't reach an agreement?

HENSARLING: Well, first, Candy, I hope I'm never in Washington to where I consider $250 billion the American people's money, to be token.

CROWLEY: As compared to the tax -- I'm sorry, as compared to the spending cuts, it's pretty token, you would have to admit.

CROWLEY: Well, frankly, there are no real spending cuts on the table. Let's make sure we are using the language like the American people do. All we are talking about here is slowing the rate of growth. All of these programs, by an large, are going to continue to grow, but at a pace that would become more sustainable.

Again as I said earlier, yes, we will fail unless we fundamentally do structural reform to what President Obama himself has called the main drivers of our debt -- Medicare, Medicaid and health care. They cannot grow two, three, and four times the rate of the economy.

So here's my point -- if at some point America doesn't take care of it, if we don't take care of it now, yes, we're on borrowed time. We're kicking the can down the road and that's why we should not confuse our duty to do structural reform that not only ensures that my parents -- my dad's 84, my mom's 79 -- that Medicaid's preserved for them, but it is preserved for my children who are 8 and 9 years old. That is the challenge.

CROWLEY: But you are talking tax reform, you are talking structural changes in Social Security, Medicare, and Medicaid. Those are things that you will have to kick down the road in some sense. There's talk now that you're going to have some kind of fall-back position on the committee where you would agree to a revenue level, but then send it to these various committees, to the tax committees, rewrite the tax code with these tack already things in mind.

Is that a possibility? HENSARLING: Well Candy, indeed, yes, there could be a two-step process that would hopefully give us pro-growth tax reform, which by the way, every other bipartisan effort that has said that some revenues have to be raised in this method. That is again broaden the base, historically this is how we both produce jobs and more revenues for the government.

So we Republicans, we want more revenues, we just want to raise it by growing the economy.

And then second of all, again, unless you actually solve the problem, let's not kick the can down the road. Let's solve the problem. And if Democrats don't like the plan that we had in our House Republican budget, why don't we gather around a bipartisan plan and negotiate around the Rivlin-Domenici Medicare plan that would preserve it for future generations and not impose forms of rationing that we're starting to see on our seniors now through the IPAB, the independent payment advisory board that President Obama put in his health care bill.

CROWLEY: Congressman Jeb Hensarling, we have to leave it there. But thank you so much for coming in. We appreciate it.

HENSARLING: Thank you for having me.


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