Ezra Klein: The House took up a version of the Simpson-Bowles plan about two weeks ago. It failed, 382-38. Why should we believe it will do any better in the Senate?
Kent Conrad: I’m hopeful because, as a country, we need to address the fiscal imbalances that we all know are there. This is the only bipartisan plan that has been constructed, other than Domenici-Rivlin, and voted on by members of Congress. It has been followed in large measure by the Group of Six, another bipartisan effort. And it provides, I think, the best building block for confronting the deficit challenges. We also know that at the end of this year we’ll face the end of the Bush tax cuts and the sequester. So we’re moving towards a period in which people are going to have to act.
EK: Have any of your Republican colleagues expressed openness to the legislation?
KC: I’ve heard from some of my Republican colleagues who have called me and said you’re doing exactly what needs to be done but we’re not going to be able to do something like this until after the election. And I think that’s true for many Democrats as well. That’s why I modeled not only the policy after Simpson-Bowles, but the process, too. Simpson-Bowles put the vote of the commission after the 2010 election to try and insulate it from politics as much as possible. That’s what we’re trying to do here by going to mark-up today and laying out the plan but saying clearly that I don’t expect a vote after the election.
EK: And the White House?
KC: I spoke to the head of the Office of Management and Budget yesterday to let him know what I was doing.
EK: The plan you’re introducing is different, in certain ways, than the original Simpson-Bowles plan. Can you give me an overview of those differences?
KC: There are several changes. First, it’s been extended two years, as Simpson-Bowles was written back in 2010. The baseline for revenue has changed. We are using current policy, which means all the Bush tax cuts are included. Third, the Social Security changes aren’t included, because by law, you can’t include that in a budget resolution. Fourth, the discretionary spending savings are the same, but their distribution has changed.
EK: On the revenue side, is your total revenue the same as assumed by Simpson-Bowles? As they got about $800 billion from assuming the expiration of the high-income Bush tax cuts, for a total of a bit over $2 trillion in revenue.
KC: We have the exact policy of Simpson Bowles in revenue. The only difference is the baseline. They used a plausible baseline in which the tax cuts were extended for everyone making up to $250,000, but not for people making over that. We have switched over to a current policy baseline. But our plan raises $2.4 trillion compared to that baseline. We should be swift to say to people, however, that compared to current law, it’s a $1.8 trillion tax cut. And usually, the way these things are measured is current law.
EK: Republicans criticize you and your Senate colleagues for failing to pass a budget resolution for more than 1,000 days now. How do you respond to that charge?
KC: I think my Republican colleagues who say a budget resolution has not been passed in 1000 days are really misleading people. They’re not telling people what was done instead of a budget resolution.
We passed a law, the Budget Control Act, which provided a budget for this year and next year, sets out very clearly that “it is to be considered in the same manner as a budget resolution,” set 10 years of spending caps that save $900 billion, and created a special committee with responsibility to come up with reforms to Medicare and Social Security and our tax system to get our deficit back on track, and if that committee did not come to agreement, imposed another $1.2 trillion in spending cuts.
And that will begin to take effect next year. So, in total, that’s $2.1 trillion in spending cuts, and I think that’s the single biggest spending cut ever passed in the United States. But my Republican friends don’t want to admit that anything has been done to cut spending. And they certainly don’t want to admit we’ve passed a law, which is much stronger than a budget resolution.
EK: You say you don’t want a vote until after the election. But the mark-up begins today. So what happens over these next seven months?
KC: What I hope happens is we kick off a conversation and a negotiation that has us ready for what we’re going to face at the end of this year. I know the Gang of Six or Eight is working to draft adjustments to Simpson-Bowles to update it for the intervening two years, and I hope other groups do the same. And I hope we’re ready to move whenever the time comes.