good evening thank you very much for
coming for those of you who don’t know me my name is Olivia Madison and I have
the honor of chairing the presidential installation committee in my other life
I’m Dean of the library again I’d like to thank you all for coming to this
evenings lecture by Erskine Bowles clearly the topic that Mr Bowles will be
addressing personally touches everyone in this room whether it’s I would state
students faculty staff community citizens invited families and guests of
President and mrs. Leath the issues touched the entire nation this evening’s
lecture is sponsored by the university committee on lectures and the
presidential installation committee as part of the celebratory events that
surround the installation of our president dr. Steven Leath I also wish to specifically thank Pat
Miller director and Molly Hummers coordinator of the lectures program they
do a fantastic job and I cannot believe how many people came here University lectures program is a jewel
in our crown it has a long tradition of sporting speakers who dress timely
issues facing Iowa the United States and the world and tonight is no exception
well Mr Bowles reason for being here at Iowa State is to formally introduce dr.
Lee that his installation tomorrow morning which I hope all of you are
coming to yes yes right I need to get one last add-in for that immediately
following Mr Bowles is dressed there’ll be time for a few questions and
observations from the audience and we have some valiant individuals who will
have mics so that everyone can hear your questions or observations it is now my
honor to turn the podium over to prison I’m president Steven Leath who will
introduce our symbols good evening folks it does my heart good
to see this many people turnout on an evening lecture but I see this has been
a trend at Iowa State big spoon another reason I’m proud to be president here
and I’m really proud to introduce tonight’s speaker Erskine is a great
friend he’s been a mentor he’s been a colleague he’s been a leader for this
country so it’s almost difficult for me to know where to start to describe
Erskine but most of all I want to thank Erskine for being here in Iowa to be
part of my installation celebration I’m really honored that he has decided to
come he’s a fascinating multi-talented guy you’ll find he’s very engaging very
thoughtful and I think the subject of tonight’s talk is something that’s
really resonating with all Americans right now what does this country do
about his debt Erskine is a native North Carolinian he’s from Greensboro North
Carolina so you may have here are some North Carolina expressions when we
worked for him we called him Erskine isms I don’t know if he knows that but
he’s a graduate of UNC Chapel Hill he also has a Vance degree from Columbia
University and he holds eight honorary degrees he served in the US Coast Guard
he’s been an investment banker and an entrepreneur and even a dedicated public
servant he served this nation at the highest levels administrator of the
Small Business Administration as deputy chief of staff and chief of staff to the
White House under President Clinton and more recently he served the world as the
United States deputy special envoy to coordinate the global response to the
devastating tsunami struck Southeast Asia in 2004 he’s also been a university
president leading the 17 campus University of North Carolina system from
2005 to 2011 and he served the state of North Carolina and many other capacities
including heading to rural economic development initiatives
he’s been very much involved in charitable organizations doing community
service organizations especially the juvenile
diabetes foundation the Carolinas Medical Center and helping sufferers of
ALS and is most of recent activity which leads to this lecture tonight for
everyone is a service in 2000 sorted in 2010 and continues at the request of
President Barack Obama as co-chair with former senator Alan Simpson of the
National Committee on fiscal responsibility and reform which is a
bipartisan effort to study the debt and reach a balanced budget you know rich
guy has experience in this area too he not only has a solid background in
business in finance but he has a previous track record of working in a
bipartisan manner to address the nation’s public budget problems he did
it before and he did it very successfully as President Clinton’s
chief of staff he was the White House’s primary negotiator in the effort that
produced organizations last balanced budgets he did earthscan walk the aisles and he
negotiated with a congress that really was in the other party to bring this
balanced budget to the nation it’s something I think we all look forward to
seeing again someday the budget Commission led by Erskine
center send him said X has actually produced a plan to reduce the nation’s
deficit by four trillion dollars over the next decade but unfortunately it’s a
plan right now it’s stalled and we’re really all anticipating what it’s going
to tell us about the plan why it’s stalled and what the future is for this
country so Erskine please come forward thank you thank you you’ll all be happy to know
this is my whole speech right here and yes I tried to get Harrison Barnes and
Marcus Paige to come up here with me tonight
probably shouldn’t start that way there are a couple of things I thought about
when Stephen was going through that introduction the first was you know that
was my first rule in politics and that’s always be introduced by a person you
appointed into high office remember that your father
the second was it reminded me of when my Uncle Sam back in Greensboro North
Carolina passed away and when he passed away the obituaries richer of the
Greensburg Daily News called up my aunt to ask about him and you know she kind
of went on and on talking about all these things he had done like Steve did
for me but after a few minutes the obituary editor said now miss Bowles you
do know that we now charge yes we charge five dollars of work for every word in
the obituaries you know she said oh no no what I didn’t
know that she said in that case just put it in there Sam died it’s a true story I
studied the funny part and he said Oh miss Hodes we’d like to
do that you see we have this five word minimums she said oh my goodness she
said in that case put in there say I’m died Cadillac for sale you see they asked me put us covered it
here tonight I knew this was gonna be my fun night he said he said asking what is
what’s it like to be you know CEO of a president of a university
I said well Steve it’s a little bit like being CEO of a cemetery I said you got
lots of people underneath you but ain’t nobody listening the other thing I thought about what he
was talking about in 1997 when we did balance the federal budget for the first
time in a generation President Clinton did bring me back to Washington to
negotiate that on his behalf and to get that done I had to spend months and
months and months locked up in conference rooms with Newt Gingrich and
I’m telling you what you all owe me a lot of that now the topic they gave me to talk about
tonight is is tough and so that’s the end of most of the humor but I can tell
you when the president called Alan Simpson who by the way I think is an
American treasure he is you should platform he’s I learned a
tremendous amount from him he’s smart he’s quick he’s solid he’s got great
values and he’s a good human being but when the president asked Alan and Ida
had just commissioned up we both thought we were doing this for our grandkids
ours his six and and my nine but the more we looked at the numbers the more
we came to realize that we weren’t doing it for our grandkids we weren’t even
doing it for our kids we were doing it for us I can tell you that if we don’t
get these politicians in Washington to wake up and put partisanship aside and
pull together rather than pull apart we face the most predictable economic
crisis in history but fortunately for all of us it’s also the most avoidable
economic crisis in history but the math is clear the physical path that this
nation is on today is simply not sustainable these deficits these
deficits of over a trillion dollars a year are like a cancer and they’re a
cancer that I promise you is going to destroy this country from it within if
we don’t wake up and decide we’re gonna deal with it let me just give you one
mathematical example that I think will make it clear to all of you
if you take all of the revenue that came into the country last year every single
dollar 100% of it was spent on our mandatory spending and interest on the
debt mandatory spending is principally the money we spend on the entitlements
for Medicaid Medicare and Social Security so what does that mean that
means every dollar we spent last year not 20 years ago not 20 years from now
but right now every single dollar we spent last year on these two wars
national security homeland security education infrastructure evaluated
research every single dollar was borrowed and half of it was borrowed
from foreign countries that is crazy that’s a formula for failure in
anybody’s book none of your companies could be run that way this university
couldn’t be run that way and every time that Allen and I go talk to a group like
this they always look at me and the first question is asking why why would
we do this this is crazy what are we spending all this money on and Allen
always turn it around and we say well you tell us and I swear to goodness
people always say the the same three or four things I used to say four things
but I didn’t want to get in one of those Rick Perry deals but but yeah people people say oh I’ll
tell you what we spend this money on waste fraud and abuse somebody else to
say foreign aid somebody else says Nancy Pelosi’s airplane all subsidies you
could take all of those things and put them in a thimble compared to where our
real challenges are we have five principal challenges that this nation
faces and any politician from the right over left who comes to you and doesn’t
talk about these issues is not being honest with you the biggest challenge we
face is health care we spend twice as much as any other country in the world
on health care and that’s true whatever you talk about it on a per capita basis
or as a percent of GDP and any of you here that don’t think
those 40 million people who don’t have health care insurance don’t get health
care you’re crazy but you get health care they just get into the emergency
room at seven to eight times have cost envy in the doctor’s office and you know
who pays for it you do you pay for it in higher taxes and higher insurance
premiums in 1981 we spent 10 percent of the federal budget on health care today
we spend 25 percent of a budget on health care and if we do nothing by the
year 2020 we’ll be spending a third of the budget on health care and it won’t
be long before we’ll be a country if you can just take care of a couple old coots
like me and Al and buy a few tanks health care is number one
number two is defense we spend more on national defense in this country than
the next 15 largest countries combined think about that I said the next 15
largest countries combined that includes of Russia and China I personally think
that America is bearing a disproportionate responsibility today
for global world peace and I think that America cannot afford to be the world’s
policeman and I believe Admiral Mullen who was President Bush and President
Obama’s chairman of the Joint Chiefs of Staff got it right when he was asked he
was asked what’s our greatest national security problem today
he didn’t say these terrorists he said it’s Fizi deficits because they
will consume every dollar of resource that we have let me just give you one
example of how crazy gives today we here in America we have a treaty with Taiwan
that will protect Taiwan if they are invaded by the Chinese there’s just one
problem with that we’ll have to borrow the money from China to do it it’s crazy
so that’s number two number three is our income tax code we have the most
inefficient ineffective globally any competitive tax code that man could
dream up you couldn’t design a stupider one I promise you any class
here at Iowa State couldn’t design an income tax code that made more sense
people ask me all the time how can we possibly have nominal income tax rates
that are so high and net such relatively little amount of money from our income
tax we take in 1.3 trillion dollars a year in income taxes both corporate and
individual we spend three point six trillion a year so how do we end up
taking in so little and the reason is we have 1.1 trillion
remember we only take in 1.3 we have 1.1 trillion dollars worth of spending in
the tax code spending that a lot of us in this room including me like it’s
these deductions and credits what we said in our commission let’s try
something different let’s broaden the base let’s simplify
the code and let’s try something let’s get rid of all of that backdoor spending
in the tax code let’s just wipe it out and start at zero what could we do well
if you took 92 percent of the money and used it to reduce income tax rates and
eight percent of the money and used it to reduce the deficit eight percent is
about a hundred billion dollars a year over ten years that’s one trillion
dollars and if you remember from Steve’s introduction we wanted to reduce the
deficit by four trillion a year one trillion from revenue three trillion
from spending reductions so we’re going to use 8 percent of this money to reform
the tax code and to reduce the deficit and we’re going to use 92 percent of the
money to reduce in tax rates well what would happen to your
income taxes we could take income tax rates to 8% up to $70,000 a year 14
percent up to two hundred and ten thousand dollars a year and have a
maximum marginal income tax rate of 23% we could take the corporate rate to
twenty six percent and therefore be globally competitive and we could
actually pay for what’s called a territorial system so that that 1.5
trillion but today is captured overseas could be brought back to the US to
create jobs over here now we think a system like that makes sense some of my
friends who are Democrats say Oh working if you allow those corporations to bring
that money back here although use it for is dividends and to buy back stock and I
say hooray that’s like great that money will be
circulating in this country rather than staying overseas and creating jobs over
there so we think that’s a smarter income tax code we think that will
create dynamic growth in real jobs in this country the fourth biggest
challenge we face is not one that we ever thought about in terms of deficit
reduction but it does have an impact and that’s Social Security Social Security
over the next decade is nine hundred billion dollars cash negative what we
want to do with Social Security is make it sustainably solvent so a promise
that’s been made to you all will actually come true because today if we
do nothing and we just kind of have the ostrich theory and stick our heads in
the sand Social Security under current law we’ll go broke in 2033
and when you waddle up to the window to get your Social Security check
it’ll be 25% less under current law with no changes than what’s for scheduled
payment so what we want to do was to restructure Social Security so it would
be sustainably solvent and we did a couple of things actually in there that
actually cost money and that was kind of hard to do as a
deficit reduction Commission but one of our key principles and our our plan was
to make sure that we took care of a truly disadvantaged so we actually
raised the minimum payment to a hundred and twenty five percent of poverty and
we gave everyone between 81 and 86 a 1% per year
annual bump up because every Republican and Democrat economists that came to see
us said that’s when most people’s private pension plans run out and both
of those cost money and yes we are the guys that recommended raising the
retirement age we recommend recommended raising in one year forty years from now
we want to give you all time to get ready and one more year sixty-five years
from now when my grandkids will be eligible and you wouldn’t believe the
hate mail and the death threats of works but I’m telling you you know who we have
to fix it this this guy Roosevelt he was a very very very smart guy when he put
in Social Security average life expectancy was 63
you’ve got Social Security in 65 that is a very smart guy today you get average life expectancy is
78 you get into 62 we have an arithmetic problem we felt we should set up to it
admit it and fix it and make it sustainably solving fifth challenge last
one I’ll mention tonight is our old friend compound interest something that
all of us have had to deal with something that you all will deal with
you know when you start paying back this debt to your bar and to go to college
but today this nation spends two hundred and fifty billion dollars a year on
interest payments and that’s it today’s really low interest rates if interest
rates were at their median level that they were in the 1990s or in the first
decade of this year we’d be spending six hundred and fifty billion dollars a year
on interests it’s more than we spend on defense but even at two hundred and
fifty billion dollars a year just to make you kind of put it relative we’re
spending more on interest today than we spend at the Department of Commerce education energy homeland security
justice interior and state combined and if we do nothing in that old ostrich
Theory we’ll be spending over a trillion dollars a year in interest cost alone in
2020 think about that a trillion dollars a year that’s doubly bad for you guys
you know it’s a trillion dollars we can’t spend on education so trillion
dollars we can’t in on infrastructure it’s a trillion
dollars we can’t spend here at Iowa State to do high value-added research to
create the next new thing in this country and it’s doubly bad because it
is a trillion dollars will spend principally in Asia to educate their
kids to build their infrastructure to create the next new thing over there so
the jobs of the future are they are not here we can’t do that we can’t and when
the politicians come to you I know they’ve been here all winter long god I
don’t know how you stand it but when they come back asking you for
your vote and if any of them tell you oh don’t worry about this Duff we’re gonna
grow our way out of this problem you can’t solely grow your way out of
this problem we could have double-digit growth for
decades and that alone wouldn’t solve this problem
it’d help but it wouldn’t solve a problem and any of my Democrat friends
who come to you and say don’t worry about this we’re gonna tax our way out
of this problem we can’t solely tax our way out of this
problem raising taxes doesn’t do a Dern thing to change the demographics of this
country or to change the fact that health care is growing at a faster rate
than GDP and as fiscally conservative as I am you know I can’t come here and tell
you that we can solely cut our way out of this problem
we can’t cut our way out of this problem without disrupting what I believe is
still a very very fragile economic recovery or without hurting the truly
disadvantaged or without cutting education and infrastructure and
research so deeply that America is not going to be able to compete effectively
in what is today truly a knowledge-based global economy so what our Commission
tried to do was to put forth a reasonable responsible bipartisan plan
that would reduce the federal deficit by four trillion dollars a year and we just
didn’t make up that four trillion dollar number because the number for bus passes
on the street four trillion is not the the maximum amount we need to reduce the
deficit over the next decade it’s not the ideal amount believe you me it is
the minimum amount we have to reduce the
deficit over the next decade to stabilize the debt and get it on a
downward path as a percent of GDP we got a trillion of it from reforming
the tax code and three trillion from real spending cuts we got a majority of
Republicans on our Commission to vote for it we got a majority of Democrats
and a supermajority of a commission and the the breadth of viewpoints of people
who voted YES was really amazing we had six sitting US senators on our
Commission three Republicans and three Democrats all three Republicans voted
yes and two out of the three Democrats did and it was everybody from dick
Durbin the liberal senator from Illinois voting YES to Tom Coburn the
conservative senator from Oklahoma voting yes and they did it because they
thought it was the responsible thing to do the right thing to do for the country
Durbin you said honestly he said there things in here but I hate worse than the
devil hates holy water he said but we got to do this I think it’s the right
thing to do and the reason I was so glad that Steve
gave me a chance to talk to you all is I want you all to think about this you
know I just finished six years at the University of North Carolina and so I’ll
give you an analogy from a campus I bought about just walking over here with
Jerry there was this Nobel Prize winning scientist I think his name was Ernest
Rutherford he won the Nobel Prize in Chemistry and you know his Nobel Prize
winning project running out of money and he turned to
his team and said hey we’re running out of money now we’ve got to start thinking well that’s what America is we’re
running out of money now we’ve got to start thinking we got a big choices we
got to make tough choices we got to make these hard political choices and the
time is drawing nigh at the end of this year we face what people are calling
this fiscal cliff we have over seven trillion dollars of
economic events that are going to hit America right in the gut at the end of
this year to come from the expiration of the Bush tax cuts at expiration of the
payroll tax cut the expiration of the patch that goes over the alternative
minimum tax so it doesn’t hit the middle class we got this mindless senseless
cuts that are in this coming from this sequester which came about because of
the failed supercommittee where nobody could reach agreement and you know very
across-the-board cuts and any of you who run a business note that’s a smart way
to cut any budget is not across the board you know you want to look at those
things that you really need to cut well if we reach this fiscal cliff and
nothing happens the economic effects next year will be devastating economic
growth will be slowed by at least 2% which means we’re back into recession
two million people will lose their jobs unemployment nationwide will be above 9% it’s crazy and we don’t have to do it
you know while the rest of America is having a a very fragile economic
recovery in Washington they’re having an election I think Hubert Humphrey was
right at least this is what I became to believe the longer I stayed in
Washington he described Washington as 26 square miles surrounded by reality I think going over this fiscal cliff is
crazy and yet if you talk to Republicans and Democrats both sides you know both
of them are talking about doing it thinking that if we go over you know we
can reach agreement really quickly and if we go over you know I’m gonna have a
better negotiating position well I’m telling you if we go over and we don’t
reach agreement what we’ve done is bet to country and that’s the risk nobody
should take so what Al and I and the members of our Commission have been
doing over the last year he’s really working to give us a chance to get
something done during the lame-duck session of Congress you’d think that
they would be working night and day in Congress to do something about this you
know be seven trillion dollars worth of economic events that are gonna happen in
December it’s not a maybe they’re gonna happen but they’re doing nothing zero if
this was your company your University you’ve had your guys working night and
day on it but they’re all waiting for the election
well if we wait to the election it’ll be too late to get anything done during the
lame-duck and for sure we’ll go over this fiscal cliff so Al and I have been
taking this little 67 page report that we wrote and we’ve been it’s in plain
English you all can read it it’s called the moment of truth it’s right up on the
web it’s easy to understand and we’ve been putting it in legislative language
and now it’s 650 pages it is crazy it’s 650 pages and we’ve been taking it
around and meeting with various members of the Senate and the house and trying
to build up support for it and today we have about 47 members of the Senate 24
Republicans 23 Democrats and about a hundred and fifty members of a House
again about an equal number of Republicans and Democrats who’ve agreed
that you know this is a good approach not perfect but good and you know that’s
progress it’s not 60 which you have to have in the sentence not 218 you have to
have in the house but it’s progress we’ve also formed a CEO fiscal
Leadership Council where we have a couple of hundred fortune 500 CEOs and
lots of owners of businesses like the ones that you all run small businesses
who have been willing to join this council to encourage members of Congress
to put partisanship aside and to pull together rather than pull apart and we
also have a social media campaign which you can get to by going to fix the debt
dot-org fix the debt how clever and our hopes are to get a couple of million
people to this petition that again encourages the
members of Congress to do just what I’ve said we’ve got about a couple hundred
thousand and signed it but most people have had ever signed any petition in
history is 1.3 million so we’re trying to beat debt I know the people in this
room will help us we went to Maidan to graduation speech at American University
of the other day and I talked about this and a bunch of kids forum you know they
they formed this group well you know we always talk about my generation you
should be mad at me because we kicked the can down the road so they formed a
group called the can kicks back and it’s spreading around campuses and I hope you
have one here at Iowa State but I believe that if we can get these guys to
put the politics aside and pull together that they can come up with a framework
of a plan that reduces the budget deficit by four trillion dollars I think
we can have it make it substitute I think we can have real clarity I think
we can have a down payment a timeline I’d like to get this thing done by July
4th of next year and I think we can have a failsafe provision in there that will
make them have to do something if they fail I think we can make it so that we
can reform the tax code by broadening your base and simplifying the code I
think we can slow the rate of growth of health care to the rate of growth of the
economy I think we can make Social Security solvent and I think we can
phase this plan in over a long enough period of time where we don’t disrupt a
very fragile economic recovery we don’t hurt the truly disadvantaged and we’re
able to have enough money to invest in education and infrastructure and
research and I believe if we do that the future of America is very very bright
and we’re going to be able to compete with the best and brightest wherever
they are and I believe if we don’t America is well on its way to becoming a
second-rate power let’s don’t let that happen thank you very much thank you thank you okay this is our I’m glad to take any
questions that you want anywhere not me yeah what we’re trying to get we’re
trying to get to Mike do you sounds like star wars yes ma’am watches yell I can
hear you and I’ll repeat it Oh got it okay all right some of us know
that social security insurance program is a separate trust fund supported by
payroll taxes and is not part of the federal budget which is supported by
general revenues by law any surplus in that fund must be invested in US
Treasury bonds this money is then used for non social security purposes like
wars tax cuts AG supports you name it so this is a debt that the Treasury owes
the Social Security trust fund and by law there is a promise that they will
send that money to Social Security when it’s needed to cover benefits so I get
really angry when I hear you talk about Social Security as part of a debt
reduction plan I I don’t know why you’re doing that actually aren’t the bonds
that are in aren’t the bond or the money invested in Treasury bonds equal to what
we get from China same thing isn’t it so why is this considered part of the debt
Social Security has a problem but it has nothing to do with the debt probably a good thing I think I was very
careful to save it when I discussed social security as a problem it wasn’t
because of the deficit Social Security is nine hundred billion dollars cash
negative I didn’t make that up over the next decade
that is a fact that’s arithmetic and again if we do nothing and these kids go
to collect their social security in the year 2033 this is coming from the Social
Security trustees and again this is easy to do because it’s a defined benefit I
mean we know exactly what you’re going to be do the what they’re going to be
able to give you is 25 percent less the scheduled payment you are right it’s
what you are owed but under law they can only pay you what’s available and what’s
available will only be 25 percent lesson it will skewed down after that you know
you’re right there’s about two trillion dollars in the Social Security trust
fund the problem is when I want my Social Security payment you know I want
money and so I go and you know I’m do X amount of dollars every month and I go
and ask for it and the government goes to the Social Security trust fund but
there are only these io u–‘s in there and so they have to go borrow the money
because there’s no money in the general fund because the general fund doesn’t
have any money today and so they have to go borrow from the third party so
whether you like it or not you know it is part of a debt it’s the debt owed to
you but unfortunately there’s nothing better so it has to go ahead and borrow
from the third party hey how can you get elected if you
follow the but we like to call it the simpson-bowles plan instead of a
bowles-simpson plan because everything in Washington’s known by its initials
and if a guy was so busy being cute I forgot
your question it is hard let me tell you why it’s hard you know all of the
members everybody here understands the arithmetic everybody understands the
economics everybody understands we have a real problem that we’ve made promises
we simply can’t keep and we even have to raise revenue or we have to cut spending
or do some combination of both in order to meet these future needs that we
promised so everybody gets it but hey if I’m running for office and I come to you
and say I’m gonna raise your taxes and cut your benefits now vote for me that’s
really a hard seal you know so that’s why you don’t see the politicians
standing up and telling you what the facts are you know because it’s pull you
know the problems are real the solutions are painful there is no easy way out and
they’re afraid but if they tell you the truth you won’t reelect them and for
most of these politicians who have a very Republican or Democrats you know
they are worried about getting reelected and oh by the way if you’re a Republican
and you’re running you know the elections are no longer in November
barring the primaries because of the way the districts are all divided up and if
you’re a Republican and you’re running for office and you tell people that
you’re willing to be flexible on this and you might consider you know raising
some revenue they’ll run somebody against you in the primary and they’ll
beat you and if you’re a Democrat and you say that you’re gonna cut Medicare
and Medicaid and you’re gonna you know reform Social Security you know she’s
gonna vote against you and you know you don’t have a chance and so that’s why
it’s difficult for these politicians to face up to these facts and what I’m
asking you to do is to know what the reality is and be willing to force these
guys to tell you the truth and don’t vote for them and don’t give them your
money unless they’re willing to do something about this problem because if
we don’t we face the most predictable economic crisis in history had a
question back here yeah okay thank you for your over here rational and balanced
talk it’s too bad that you have left Washington so I’m curious your thoughts
and the Commission’s thoughts about the affordable care act because there’s lots
of rhetoric on both sides and how you actually think that that would
potentially control federal spending on health care that’s a good question and
to get health care is the biggest problem let me just tell you where the
playing field is and then I’ll tell you what we think right or wrong the
Democrats believe that the cuts they’ve already made to Medicare and Medicaid
and the pilot programs they’ve set up in the Affordable Health Care Act or
Obamacare whatever you want to call it that those are enough to slow the rate
of growth of health care to GDP plus one we didn’t believe that we came to the
conclusion that you have to make additional cuts and so we recommended
about 485 billion dollars of additional cuts to various healthcare programs over
the next decade if with the hopes that that would slow the rate of growth of
health care to GDP plus one people like Congressman Paul Ryan who I
personally like a lot I think he’s smart I think he’s straightforward
I think he’s honest but people like Paul believed and voted against our plan that
that wasn’t enough to slow the rate of growth of health care to GDP plus one so
they made two recommendations one was to block grant Medicaid to the states on
the theory that one size doesn’t fit all and that if each individual
given control of of a Medicaid budget that they can cover more people at lower
cost we thought that was an enormous change and therefore we felt it made
more sense instead of taking it to all 50 states at one we we should test it
and we should test it in ten states and we should test it in a rural state an
urban State a small state a large state and see if it worked
see if the theory was right it’s now being tested in Rhode Island and it’s
actually working pretty well I know Washington state has asked for a
waiver we’ll see how it works there but again that was a theory and it’s a we
thought it was kind of a big risk to take because if you look at your state
budget and the states now have responsibility for half of Medicare it’s
just eating a state budget alive it’s one of the reasons why you have to cut
back on education in other areas so again we thought boy if they get
responsibility for the whole Medicaid and you know and it comes with a
provision that you know it’s not going to be increased by more than inflation
and since health care costs are growing faster than inflation wow that could
really be a bad thing for the state but we’ll see you know that’s that’s the
argument the second thing they recommended was to take Medicare to what
they called a premium support plan but basically it’s no different than a lot
of companies have done it’s just changing it from a defined benefit plan
to a defined contribution plan and in a defined contribution plan instead of
guaranteeing you that you have X number of benefits that you can count on they
guarantee you X number of dollars and they let it grow at the rate of
inflation or over let it grow to rate of the economy and if in fact health care
costs increase at a faster rate then you have to take fewer benefits or you have
to pay more money and that’s what would happen with Medicare if in fact you went
with a defined contribution plan as opposed to it
benefit plan what we decided in our commission was we came to the belief
that that everybody ought to have health care insurance but we we had two really
big caveats to that one is we felt everybody ought to have some skin in the
game and we felt that if you all but the taxpayers were going to pay for
everybody to have health care insurance that we shouldn’t pay for anybody to
have a Cadillac plan you know that we ought to pay for everybody have a pretty
darn good Chevrolet and we took Parts A and B of Medicaid and we combined them
Medicare excuse me we combined them and we put in a $500 deductible and then you
paid 20% up to five thousand five hundred dollars five percent up to
seventy five hundred dollars and then everything else would be covered and if
you do that you save really hundreds of billions of dollars a year but if
everybody is going to have health care insurance then everybody needs a medical
home and if everybody is going to be provided a medical home then by golly
you need more primary care physicians more nurse practitioners more
physician’s assistants and therefore universities like mine and the
University of Iowa they need to be incentivized to produce
those kind of Doc’s as opposed to specialists we decided that if you’re
going to make sure everybody has access to prescription drugs and by god it
ought to be what do you call them generic drugs rather than name-brand
drugs and oh by the way again if you’ve a taxpayer’s they’re going to pay for
then we ought to have the right to negotiate the price of those
prescription drugs why should we pay 40% more for the same
drugs in the Medicare program as we pay for those same drugs at the Veterans
Administration it’s crazy you all are paying for this is very
controversial at least with people in my party but again you know I think in you
know in North Carolina the public hospitals all reports of a president of
the University seven lots of time and with this subject but anybody here who
doesn’t think that doctors and hospitals practice defensive medicine you’re crazy
they do they have to and so we said look we ought to have real malpractice reform
and we’ve got to have some real tort reform to bring down the cost of health
care we said that we ought to start paying for quality rather than quantity
and therefore you need things like accountable care organizations and we’ve
got to do something about this whole into life scenario without talking about
defendants and if we do things like this we can really get to cost of health care
under control that was our plan yes sir we got a question back here just two
questions quickly first off in regards to health care where I’m sorry given
that say other Western countries like say everything from everyone from Japan
to Canada to France to Germany to any number of other European countries run
their health care systems in some form of universal health care system and they
managed to have significant low significantly lower amounts of GDP spent
on health care why would you the Commission excuse me why did the
Commission not suggest such an approach instead of what you just outlined and as
a more broad question what exactly brought about the 1 to 3 ratio with
regards to increases in revenue and spending cuts or was it purely just the
political considerations you mentioned a few minutes ago or were there more
broader considerations that the committee focused upon thank you
dadgum I went to Carolina I can’t remember two questions it was that was
an engineer I could do better just off all the healthcare we did recommend
universal coverage that’s what our plan is it’s just in it’s not a single-payer
plan that you might want but we did recommend universal coverage and again
don’t forget everybody does get health care they you know those that don’t have
health care insurance get into the emergency room and the cost is already
in the system that’s why if you look at the data you know we do pay twice as
much as any other country only eighty five percent of our people are covered
you know yet we’re paying twice as much as any other company country for health
care so again that’s why we believe universal coverage makes sense on the
three to one a couple of reasons for that which I hope will make sense to you
if you look at projections for 2020 you have spending at twenty four percent and
revenue at 19 percent we’ve all the only the only times we’ve ever balanced the
budget in the last 50 years I think they’re four times that we’ve done it
revenues have always been around just right under 21 percent of GDP and I
didn’t want to see personally more than one-third of closure of that gap we had
between twenty four percent and nineteen percent come from revenue and I didn’t
believe based on the economic analysis that we did that you could take more
than 21 percent out of the economy without doing some harm to the economy
but again it’s going to be really hard to to hold spending to 21 percent of GDP
we got it in our plan spending by the year 2020 down to
below 22% and we had revenue at 21% so we had a 1% deficit and we could get the
debt to GDP ratio down to 67% if you looked at congressman Ryan’s plan he got
spending to 20% of GDP revenue to 19% of GDP he also had the same 1% deficit and
he got the debt to GDP ratio down to 62% the president wasn’t his plan was 23
percent of GDP for spending and I think revenue was around 20 percent so he had
a three percent deficit and he got the debt to GDP ratio down to 76 percent did
stabilize a debt but in his planning starts to go up in the outer years which
was unacceptable so again that was we felt that was where the budget had been
balanced in the past the reason it’s hard is demographics of a country have
changed so rapidly and you’ve got more people that are retiring people my age
who you know are becoming eligible for the entitlement programs and so again
it’s with the change in the demographic it’s gonna be very hard to get spending
down to 21 percent but I believe it can be done better question over here that’s
the same ladies already asking one know she was behind me Oh I would like to offer a friendly
suggestion to help reduce the debt and that is taxing stock trades which could
raise about a one and a half trillion dollars over a decade I understand you
and your committee never seriously considered a financial speculation tax
would you explain yeah actually we did we did consider it and we couldn’t get
enough votes on the Commission to do it it’s not a bad idea
you know it’s a good way to generate revenue and I personally wouldn’t be
opposed to it you know one of the things we looked at as an example just to show
you the things we considered we considered a value-added tax I would you
know myself I would a lot rather you know if you can make it so it’s not so
regressive and I believe you can economically you know I’d a lot rather
tax consumption that I would wages or capital it would help our exports a lot
if we had a value-added tax instead of an income tax and you know we had a lot
of discussion about it because you could really take the income tax rate really
low if you had a value-added tax but to Republicans on our commission you know
made a really good point that I hadn’t considered before but I think they were
right and you know nobody would keep the income tax where it is today and have a
value-added tax you take the income tax really low and have a pretty low
value-added taxes and that would would be a new form of revenue for the country
but the Republicans said that if you if you had a value-added tax and an income
tax that those would be two engines of revenue and the Congress wouldn’t be
able to help themselves they would drive them both and I think you’re right I
mean I really do and I hadn’t thought of that myself so again we looked at lots
of different forms of revenue and we had some forms of revenue and very but some
people didn’t like as an example one of the things in our plan is we said look
we’re now spending X amount more on on transportation than we take
and the gap could be filled by a 15-percent of 15 cents per gallon gas
tax and we said hey look we ought to either cut back the amount we’re
spending or we ought to raise the revenue but we shouldn’t do you know
both we shouldn’t spend more than we take in and so we said look it’s an
option you know either cut your spending or raise your revenue
but do one of the other and if you don’t like a gas tax
you know let’s look at your 1 and 1/2 cent you know tax on securities traits
like we got to have a revenue yes sir this will be my last question probably probably going at the same time
the question was what can we do to address the dead and keep a strong
recovery going one of the things that you know people talk about our plan
because of a plan we put in as it turns out is pretty similar to the plan they
did in the UK and you know they’ve had terrible economic results in the UK and
people were worried you know that if they you know if we had too much
austerity in the u.s. then that would in its own right drive us into recession
and really hurt the economic recovery in the UK what they did is they also did $1
for $3 and I think you know very similar to what we did they did theirs after
ours they also put their cost-benefit analysis on all government programs they
raise the retirement age you know they kept them out they would spend on health
care and they did it all in order to get to a balanced budget within five years
and what we clearly saw is that was too much too quickly
and if we did that we felt it really could lead to a recession so what we did
is we felt it should be phased in and have you know we got to start on it now
but we got to do progressively more as we go out and we’ve got to have really
good failsafe provisions so that we actually do this and so by facing it in
over a longer period of time you can not disrupt a very fragile economic recovery
and you can have enough resources to really reduce the debt get it down to a
reasonable level and then you can control the debt as we go forward and
have enough money to invest so that your future is very bright thank you very
much for coming tonight folks thank you very much for coming our
skin and we’ll be around for a little while and a reception next door and then
we’ll have to head out after that because we’ve got a big day tomorrow
we’ll be here for a little bit and there’s a reception for everyone on the
side of the room here thank you qumy qumy qumy qumy qumy qumy