HH: What is most important in the United States right now is not what just happened, but what is going to happen between now and March 1st. Joining me to discuss that is the GOP leader in the United States Senate, Mitch McConnell. Senator McConnell, welcome back and Happy New Year.
MM: Happy New Year to you. Glad to be with you.
HH: Congratulations. I think what you pulled off there was vitally important to the United States, but if I can spend our time looking forward, what is going to happen on the debt ceiling and on entitlement reform next?
MM: Well, the President thinks he can bully us into not talking about spending. And it clearly won’t work. We know, you remember that old story about they asked Willie Sutton why he robbed banks, and he said why the reason was of course that’s where the money is. If you look at our debt and deficit problem in this country, we only vote on annually about 40% of what we spend. The rest of it is interest on the national debt and entitlement programs, very popular, but don’t currently meet the demographics of America. And if we’re going to have programs like Social Security and Medicare and Medicaid there for future generations, those programs have to fit, meet the demographics of our changing society. Until we solve that problem, you can’t fix the country. This revenue that the President got out of very high income people is a drop in the bucket, a drop in the bucket. But the most important thing about what we just did was we got permanent tax relief for 99% of Americans. And the reason permanence is important, if the law sunsets, you have to go back and have the debate all over again. Permanent tax relief, the Bush tax cuts for 99% of Americans, the Class Act, which was one of Ted Kennedy’s kind of last wishes, a new entitlement program, was repealed. And now we’re ready to talk about spending. The tax issue is over. It’s behind us. He campaigned on it. He wanted to raise taxes on rich people. We knew he was going to get that anyway because the law sunsetted. It ended two days ago. But now, the tax issue is over, and we move on to engage on the biggest problem confronting the future, and that’s the overspending.
HH: Another time, I’ll spend some time talking with you about getting a permanent fix to the AMT and an estate tax that makes sense. But looking forward to the debt ceiling, those are the big wins that I thought you pulled out of the hat here. But looking forward to the debt ceiling, are you willing to go through it as Senator Paul described it yesterday on this program, saying he’s willing to go through that debt ceiling if he does not get what he wants out of this deal? Are you, Senator McConnell?
MM: Well hopefully, it won’t be necessary. I mean, the President has said in public that he knows that the current health care and Social Security trajectory is unsustainable. He knows that. And he has said it publicly. What we have been unable to get him to do so far, in multiple conversations, and in various legislative negotiations, is to get him to actually agree to make the changes that are necessary to save the country. So hopefully, it won’t come to the issue of whether or not we have to default. Default is something that I think most people would think would be a bad idea, but it doesn’t mean that the President just kind of willy-nilly gets a debt ceiling increase just because he asks for it. He’s got to earn it. And asking for a debt ceiling increase is certainly related to how much debt we have. So this is the time to engage, and he’s not going to bully us into not talking about spending.
HH: My friends in the House tell me they hope to pass a bill with specific entitlement reforms coupled with a debt ceiling increase by the end of the month. And things like raising the Social Security retirement age, or the Medicare eligibility age, or the chained CPI, all these different things, do you welcome that order of business, which is regular order of business, Senator McConnell?
MM: I’d rather have the regular order of business. These last minute negotiations with whoever is in the White House are not of course anybody’s favorite way to do business. And I hope the House can send over a bill like that. That’s exactly the kind of thing that we need to do. And until we do those kinds of things, we can’t save the country. Look, we’re not going to have the same kind of country for our kids that our parents left behind for us unless we save, this is about saving these programs, saving Medicare, saving Social Security, saving Medicaid. Until they reflect the demographics of our country, they won’t be there. They won’t be there. I mean, Social Security has been in the red for the last two years. It’s spent more than it took in. The trustees of Medicare and Social Security, appointed by Barack Obama, say Medicare’s got about ten years to go before it tanks. So in order to save those programs, we have to act, and act soon.
HH: When the President says he will not negotiate about this, he is of course negotiating in the press. Is the presidency by press conference productive in this situation?
MM: No, it’s not helpful. I mean, the other day, for example, he had a campaign rally type thing right in the middle of the discussions I was having with the Vice President. All it did was make it harder to get Republican votes. Fortunately in the Senate, we got virtually all the Republican votes anyway. But it’s not helpful. I wish they could turn off the campaign. He won. Congratulations. Great victory for you, Mr. President. You’re not running again. Let’s try governing for a while.
HH: Is there mystery about what needs to be done on the entitlement side? I just have been reading about this for so many years. It doesn’t seem to me like we need more supercommittees, or we need lots of CBO estimates. Everybody knows things that have to be done.
MM: Yeah, all we need is the courage to do it. And ironically, divided government is the best time to do it, and I’ll give you the perfect example was when Ronald Reagan and Tip O’Neill raised the age for Social Security back in 1983. I mean, it didn’t take effect immediately. It’s still kicking in, by the way, all these years later. But they did it on a bipartisan basis. The public accepted it. It was not a campaign issue for either side. It was the right thing to do, an adult decision for the future of the program and the country. That’s exactly what we need from President Obama. And I can guarantee you there are plenty of Senate Republicans who would vote for such a proposal. And we’re going to give him an opportunity to do that in connection with his request of us to raise the debt ceiling.
HH: Now there are a lot of Democrats who are looking at a very short time span until they’re back on the ballot. I’m thinking of your colleague, Senator Landrieu in Louisiana, your colleague, Udall from Colorado, a lot of blue Senators from red states. Do you expect they will help you pass entitlement reform as part of a debt ceiling package? Or are they going to try and demagogue this?
MM: Well, I think if the president of the United States comes out for something, Democrats fall in line. I can tell you, Hugh, without fear of contradiction, Democrats in Congress hated what we did the other night. Hated it. Yet because the President said do it, only three Democrats in the Senate voted against it, and only 16 Democrats in the House voted against it. We made 99% of the Bush tax cuts permanent law. They’ve been campaigning against the Bush tax cuts for 12 years. They all fell in line, because the President said I’m going to do this deal. The way to get Democratic votes is to have the only person in American who can sign something into law on board. And that’s the way to line up the Democrats.
HH: Now it is a fact that Bill Clinton has often talked about his welfare reform package as one of his great legacies, even though he was dragged kicking and screaming to that in a divided government.
HH: Are we up for the same situation now where the President doesn’t, speaks about not wanting to do entitlement reform, and has Labor screaming at him not to do it, but that if he does it, it’ll be like the biggest room in the Obama Library.
MM: I think it would be, because it would be widely viewed across America, the financial markets, foreign countries looking at us, the message would be the Americans are not going to become Greece, they are not going to drown in their own entitlements like almost every Western European country. It would be a big win for the President, but look. I don’t mind giving him a win if it’s a win for the country, and it’s something we know on a bipartisan basis ought to be done.
HH: As we get closer to the March 1 deadline, Senator, there will be a temptation to forget the sequester in the Department of Defense. What’s your position on that, because it was avoided by your negotiation for 60 days, but it’s still out there, and we had DOD spokespeople saying this has really got to be fixed soon.
MM: Well, if the fix is not cutting spending, that’s not something I’m in favor of. But it’s not the best way to go about cutting spending. Look, we’re spending $3.5 trillion dollars a year, a trillion dollars more than we’re taking in. We ought to be able to figure a way to cut spending in exactly the same amount that would be done under the sequester, but do it in a more sensible way.
HH: Would that mean the same amount from the Pentagon? Or the same amount total?
MM: Same amount total. We need to reduce spending by what we promised the American people we would reduce spending by a year and a half ago. Doing it this particular way is not the smart way to do it. But you can’t tell me we can’t find this amount of money in a $3.5 trillion dollar expenditure.
HH: And last question, Senator, when do you think we actually do hit that debt limit? The sequester kicks in on March 1, but I think the debt limit comes before that, doesn’t it?
MM: Well, the Treasury Department has a number of what we call tools in their toolbox. I think it’ll come in the next two or three months. And we’ll have this discussion all over again. And hopefully, the House of Representatives, as you suggested earlier in this conversation, will follow what we call the regular order, send us a proposal over to the Senate that deals with all of these issues in a way that cuts spending. And hopefully, we can get the President on board and pass it.
HH: Senator Mitch McConnell, thanks for joining us. Congratulation on getting us off the cliff, I look forward to talking to you early and often in 2013.
End of interview.