Washington Wednesday: Debt and the deficit

NICK EICHER, HOST: It’s Wednesday the 22nd of February, 2023. Glad to have you along for today’s edition of The World and Everything in It. Good morning, I’m Nick Eicher.

MYRNA BROWN, HOST: And I’m Myrna Brown. First up today: Washington Wednesday. Today, a conversation about Washington’s favorite pastime: spending money.

Taking a peek at the online U.S. debt clock, I can tell you that in the roughly 30 seconds since this segment started, the national debt rose about three-quarters of a million dollars—30 seconds.

At the moment, it stands at more than $31.5 trillion. We’re very close to hitting the legal maximum and the debate now is over whether to raise the so-called debt ceiling.

EICHER: GOP leaders say Washington has to rein in its overspending before agreeing to borrow even more.

Democrats say Republicans are playing a dangerous game, putting America at risk of defaulting on its debt, a situation that would have dire consequences. They are demanding that Republicans agree to raise the debt ceiling with no preconditions.

The two sides have until sometime this summer to hash it out before the threat of default becomes real.

BROWN: One man who understands this issue very well is former Sen. Alan Simpson. He represented Wyoming on Capitol Hill for nearly two decades.

And in 2010, he co-chaired a panel to study Washington’s debt problem, widely known as the “Simpson-Bowles Commission.” And Alan Simpson joins us now.

Senator, good morning!

ALAN SIMPSON, GUEST: Good morning.

BROWN: Well, sir, the formal title of the 2010 panel, was the Bipartisan National Commission on Fiscal Responsibility and Reform. 13 years later, are we seeing any fiscal responsibility or reform?

SIMPSON: No, because both parties have chosen to just spend it up and sleep in the streets. I mean, you don't have to blame this on the Republicans or the Democrats. You had George Bush, push it along. Along came Obama, he pushed it along. And that's unsustainable. And the things that are being hurt will be social security and the Medicare trust fund. And they've all vowed under oath that they wouldn't touch any of that. Well, gang, you can't get there without touching that stuff. And when we turned in our report, we got five Democrats and five Republicans, and one independent. And everybody said, Boy, that's just great. We love you, and pat you on the back. And then nobody touched it because we hit everybody. We hit the defense budget. We hit everything, everything in the government. And that's not a good thing to do when you're running for reelection.

BROWN: You mentioned the report. So, give us just a very brief refresher of the key findings of the Simpson-Bowles commission. What were the main things you tried to convey to our nation's leaders at that time?

SIMPSON: Well, the basic thing is you can forget politics and forget science, and all the other things and go back to math. Anyone out there can understand where we are with the debt and the deficit. The deficits are things where you can just say, well, you know, we can make that up. But the debt is all consuming in the interest on the debt is extraordinary. So we hit everybody. It was called the moment of truth and it was a very fine little folio telling you exactly what you have to do to restore solvency to Social Security, or the Medicare trust fund. They borrowed it. They put IOUs in there to build the federal highways. All those things are gone and the thing is that in the year 2034, please hear this, the Social Security Administration will pay out 23% less, and you can whine and moan about it all you want and you're gonna say wait, I have something in my hand says scheduled benefit. I got that when I was 55. And where is it? And the old Franklin Roosevelt and the gang were pretty smart. They said, look, if the scheduled benefit is not there, you're going to receive only the payable benefit. And when we started in 2010, there was less money coming in to cover the going out. And now, of course, it's increased. And in 2034, you're gonna get a check for 23% less and then in the '28, that's not far away, the Medicare Trust Fund will take a real hit. And it's not able to tell whether that's going to be 10% or 20% or what, but those are the two principal trust funds. And I think people at that time will look around and say, who was here back in 2023 or '24, when they all said, we're not going to touch anything.

BROWN: Now, let me throw out this number—and I know you've heard it—$31 trillion. Of course, that's the national debt, now over $31 trillion. But sometimes it's hard to see how that affects the average person at the kitchen table. So, why should we care how much money Washington spends or how large the national debt grows? I mean, how will it affect our listeners personally?

SIMPSON: Well, if you're a creditor out there listening to the audience, and you say, just forget this stuff, we get more money. And that's probably what will happen. They'll say, the Social Security fund is not able to pay except up to 23% less, and so we'll have to get that money from the general fund. But the interest on the $41 trillion is extraordinary. And I say go back to math and use your brain and your common sense. The old coots will destroy the system. There won't be anything for your great grandchildren or your grandchildren. How could there be? And so they're selfish.

BROWN: How do you see the current battle over the debt ceiling playing out? I mean, do you think Republicans will succeed in forcing some reduction in the overspending?

SIMPSON: Well, I know when I was there and I was a member and served as Bob Dole's assistant leader in the Senate, and we were always trying to figure, how do you hang this one around the Democrats? And the Democrats would come into power and say, how do we hang the debt limit over the Republicans, because both parties know they have to do it or else we just lose our status as one of the principle currencies of the world. We're hooked. And so always it came down to the last time and suddenly, somebody would come over from the other side and say, this is nuts. So you'll pick up a few Republicans who pass the debt limit extension or pick up a few. But those days are few and far between now because the job is to marginalize or make the other party go over the cliff. And if they go over the cliff, well, we'll be the only party. I think what we have with Republicans nowadays, they're demanding purity. The only people I ever knew in my lifetime who demanded purity and ideological stress were Mao Zedong, Joseph Stalin, and Adolf Hitler. And the Democrats are facing the same problem. Why would a young person want to join the Republican Party or even the Democrat Party ,if you're going to just say here's what we have to believe, and you can't deviate from this? Well, George Washington, go look at his farewell address, you people out there and see what he said about political parties. He said they can come and could be very destructive for this nation. Well, Merry Christmas.

BROWN: Senator Alan Simpson represented Wyoming in the U.S. Senate for nearly two decades. And honored to speak with you today, sir, thank you.

SIMPSON: Thank you. You've been very courteous and thank you very much.

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