Simpson, Bowles discuss economic climate

>>> now, two of the nation's leading voices on fiscal responsibility , former republican senator alan simpson and former clinton chief of staff erskine bowles . welcome to you both. mr. bowles , let me start with you. you heard leader mcconnell . he said the question of revenue is now over. they have done this fiscal cliff deal, and there's no more concern among republicans about raising more revenue. how do you respond to that?

>> well look, i think he's right about a lot of stuff. first of all, we've done all the easy stuff. all of the hard decisions lay ahead of us. we have got to reform the tax code to make it more globally competitive. we have got to reduce this entitlement spending, particularly as it relates to health care . we've got to slow the rate of health care to the rate of growth of the economy or it will eat the rest of the budget alive. and we've got to make social security sustainably solvent. if we do these things, we can go a long ways to stabilizing the debt and keeping it on a downward path as a percentage of gdp. but it's got to be growth. it's got to have some revenue. but the big part going forward has got to be spending cuts.

>> senator simpson , you called this fiscal cliff deal that was just passed, that doesn't deal with spending, a missed opportunity. why?

>> well, the sad part of it is that the mountain roared and gave birth to a mouse. this thing isn't going to do anything really. erskine is so correct. erskine and i have been working on -- and don't forget, in our commission we've got five democrats, including dick durbin , five republicans, including tom coburn , and one independent -- how do you do any better than that? and the president ignored it, and the congress has ignored it, because they won't do the big stuff. and the big stuff has to get done. this other stuff is nothing. and as erskine says so beautifully, we're the healthiest horse in the glue factory right now. the trajectory of debt, deficit, and interest right now, the trajectory of debt, deficit, and interest will match any of the piig countries -- portugal, italy, spain -- match it, but, of course, we're lots bigger. and let me tell you, we know everybody out there in the congress knows exactly what we have to do. and when erskine and i travelled around for that whole year, we knew they were in congress, because i could see their button, i didn't know any of them, and they said, save us from ourselves. how's that for courage?

>> well, but mr. bowles , i asked the president last week, there's so much frustration out there. there's a pox on both houses. and he and other democrats reject this idea that there is some sort of equivalency in intransigeance in washington. and this is how the president responded to laying the blame at the feet of republicans. let me play this and have you respond.

>> the offers that i have made to them have been so fair that a lot of democrats get mad at me. i mean, i offered to make some significant changes to our entitlement programs in order to reduce the deficit. i offered not only $1 trillion in -- over $1 trillion in spending cuts over the next 10 years, but these changes would result in even more savings in the next 10 years. and would solve our deficit problem for a decade.

>> mr. bowles , you heard leader mcconnell and his views about the president not leading. had republicans conceded the point on revenue earlier, say, in 2011 , could we have had a broader agreement along the lines that you think is necessary?

>> oh, we definitely could have had. i think it was, as you said in your opening part, this was the magic moment . this was our opportunity to do something really big, to bring down this deficit and put our fiscal house in order. yes, the president has taken some steps forward on entitlement programs . but has he done enough? absolutely not. and has the speaker shown the flexibility he needs to show in order for us to broaden the base and simplify the code and reform our tax structure, or to be specific about which ones of the entitlements he would actually reduce? no. what we've got to do is both of us have got to get out of our comfort zone , both sides, and we've got to come together and make the tough decisions it takes to bring down this deficit. we believe it can be done. i think the american people want it done. and now's the time to do it.

>> let me ask you specifically about medicare , and i'll start with you, mr. bowles , and then get senator simpson 's reaction. the president again, when i asked him specifically what he would do on medicare , had this response. watch. would you commit to that first year of your second term, getting significant reform done, telling congress we've got to do the first year?

>> david, i want to be very clear. you are not only going to cut your way to prosperity. one of the fallacies, i think, that has been promoted is this notion that deficit reaction is only a matter of cutting programs that are really important to seniors, students, and so forth. that has to be part of the mix. but what i ran on and what the american people elected me to do was to put forward a balanced approach, to make sure that there's shared sacrifice.

>> so to both of you, mr. bowles first, what would you specifically call on the president to do on medicare that he's been unwilling to do heretofore?

>> first of all, david, if you look at the combination of what was done in the budget control act, the cuts there, and in this cliff deal, it's about half of what we need to do in order to fix our debt problem. we've got about $1.6 trillion in spending we've got to do and about $1.6 billion of revenue we've got to get by broadening the base and simplifying the code and wiping out this back door spending in the tax code . what would i do on health care ?

>> on medicare specifically.

>> we're going to have to reduce health care spending in medicare by $500 billion to $600 billion over the next ten years. you have to do it in some of the ways that mitch mcconnell talked about. you're going to have to look at some kind of cost sharing, some kind of means testing. you're going to have to look at age. you're going to have to look at lowering the price we pay the drug companies for drugs. look at paying for quality instead of quantity. you're going to have to have some kind of tort reform . and we've got to do something about the whole end of life scenario without talking about death panels. we do these kinds of things, we can bring down the cost of health care .

>> senator simpson , tactics and strategy are part of this. to achieve goals, you heard leader mcconnell , he is not ruling out a government shutdown. he wouldn't do that in the interview. he also wouldn't back away from a comment he made in 2011 , which is using the debt ceiling, holding it ransom, even though our credit rating suffered as a result, to force spending cuts. what do you think of those strategies or tactics?

>> i'll tell you what i think. i've been on a lot of commissions, and a lot of them worked. i was on the iraq study group . i did other things. the issue is, what happened in the past, that doesn't matter a whip, or who said what. it's what the hell do you do now? and right now, i can't imagine a worse place for mitch mcconnell . he apparently can't deal with reid, and that's a sad thing. i know them both. but let me tell you, when i was in the u.s. senate , the work was done between howard baker and robert bird , and bob dole , and george mitchell , and tom daschle , and now apparently poor mitch is caught in a situation where he has to go to the vice president, who is a good egg. i've known joe for 40 years. think of that. you can't do the work of the senate because the leaders won't work together. they don't like each other. that's the saddest thing of all. forget who said what.

>> so what breaks this impasse? you're looking at the next two years. the president is talking about immigration and gun control and energy and all the rest, but he's locked in trench warfare with republicans over the budget.

>> look, that's going to happen. it is happening. but if the american people can't understand -- i love that they say, well, the polls showed you should tax the rich. well, great, i'm ready for that. but they also said that 75% of them said cut spending. if anybody can't get that, and if you can't cut, forget the word "cut." you stabilize, do something with health care . stabilize social security . for god's sake, there are 16 people paying into that, and one taking out when i was a freshman at the university of wyoming . now there are three people paying into that baby and one taking out, and the life expectancy is 78.1 instead of 60. what the hell? who's kidding who?

>> all right. senator alan simpson , and erskine bowles . simpson - bowles . thank you both very much this morning.