HH: Doctor Tom Coburn is a Senator from the great state of Oklahoma, he’s a friend of the program, we love him, but boy, are we mad at you, Senator.
TC: It’s what I’ve heard. Tell me why you’re mad at me.
HH: Because I hate the Gang of Six, and let me tell you why so that you can respond to it. After Obamacare, why would anyone sign onto a deal that has as few specifics as the Gang of Six outline did? Why would we want momentum for a ‘trust us’ promise on the part of the Democrats?
TC: Yeah, there’s no ‘trust us’ promise in it. It’s just all the specifics aren’t out there. Look, somebody had to get things moving. It’s moving. And I don’t know what’s going to come out, but whatever it is has to pass the House, and they’re not going to pass anything. And so whatever is in the Gang of Six, there’s a lot of great stuff in there in terms of real caps and real holding them to spending reductions, the fact is that whatever’s got to come’s got to come through the House. So if you can get things off-center, I’ll tell you, the worst thing that can happen to us is to have, to be downgraded.
HH: Well, I don’t want downgrade, but…
TC: ….because that costs us $3 trillion dollars over the next ten years, and puts us into a deeper hole than we’re in today.
HH: But I think you brought us closer to the impasse. I think that when you threw out Gang of Six, you gave the President a talking point, Senator, that look what’s going on in the Senate, they’re getting close, when in fact, a 37% reduction in discretionary isn’t really a reduction, because there’s no specifics.
TC: Well, we have the specifics. We have a lot of it. But that hasn’t been out there, and there’s a reason it hasn’t been out there, because it’s not all drafted yet. And so I wouldn’t, I would not say you’re wrong to be upset that that deal is out there, but for one reason only, is it steps on a little bit of the cut, cap and balance.
HH: Well you know, I don’t worry about that. That’s not going to pass the Senate. I’m a realist.
TC: That’s right. It’s not.
TC: But people ought to ask why it’s not. Why in the world would sixty Senators not want us to have a balanced budget amendment to control the worst tendencies of the career politicians in this country?
HH: Well, I know one reason, for me, and I want to stay on the Gang of Six, but it crosses over. One reason I’m against cut, cap and balance, and one reason I’m against Gang of Six, is that you guys will savage the Defense budget. Gang of Six calls for, what, $866 billion in Defense cuts, and I ask you, Senator, very pointedly, what would you cut? Would you cut…
TC: No, no, that’s not true. It isn’t true at all. It’s about $600 billion, and it’s $80 billion over the next ten years, and then you’ve got to come in and slowly get this down. There’s $500 billion in health care cuts, there’s another $580-some billion in general government stuff. So when you see all the specifics laid out, it’s not near as bad as it’s been made out to be. Remember, nobody wants compromise. And so this thing’s been butchered, and I’m okay with that. I put out my own plan.
HH: I saw your plan, but your plan’s even harder on Defense.
TC: And you probably don’t like my Defense cuts, either.
HH: Tell me, though, okay, I’ll use the $600 billion number, even though most reports I’ve seen say it’s $866 billion.
TC: Yeah, but they’re reporting off the same thing, and it’s not a quote from a member. It’s what they think they’ve got, and it doesn’t say that in the package that we handed out.
HH: Because no one can read the package. You know, Senator…
TC: That’s because there’s no…until there’s an agreement on the legislative language, I’m not about to say what we’re doing on those issues until I know it’s what we agreed to.
HH: Then how can Lamar Alexander or any of your other colleagues stand up and say we’re for this when nobody knows what’s in it?
TC: Well, you know, other than conversations they might have had with other members. That’s the only way I know.
HH: Now tell me, okay, if $600 billion in Defense, let’s stay focused on that, what would you cut? Would you cut carrier groups?
TC: No, I do a couple of things. Number one is a retired twenty year military person, who gets their health insurance for themselves for a year for $250 dollars. I wouldn’t make that available to them. I’d make them pay a proportion, maybe 25 or 27% like everybody else does in this country. And they were never promised that. They were never promised it.
HH: So you would raise costs…
TC: I would raise the cost for them.
HH: All right.
TC: I would combine the PX’s, with the exchanges.
HH: How much does that save?
TC: It saves $27-28 billion dollars.
HH: $28 billion dollars over ten years by PX-exchange consolidation?
HH: All right.
TC: You see, that’s what I would do. You know, the point is what we’re saying is here is what you’ve got to get, now figure out how you’re going to get it.
HH: But that…
TC: Gordon England just said you could easily take 15% of the people who worked at the Pentagon out. He’s been over there for 11 years.
HH: But you would have to pass a law, you would mandate…
TC: That’s right. But that isn’t going to happen now.
HH: But Senator, you’re telling people that there’s $600 billion dollars of Defense fat, but there’s no way to cut those people, so they go after weapons systems, soldiers, sailors, airmen, Marines and benefits.
TC: Do you think that it’s going to happen with the House being controlled by the Republicans? We’re going to…
HH: But that’s an argument that don’t believe what I say, because I don’t really mean it, because people in the House will stop me. We need candor and detail. The American people deserve that.
TC: Hugh, that’s not fair. I put…nobody has listed what you would cut but me. Nobody in the Congress. Not the President, not anybody in the Republicans. I’ve listed $9 trillion dollars worth of cuts. So you can disagree with them, but you can’t be critical of it until you tell me what you would cut. The fact is…
HH: I can, A) I’m not cutting Defense. Number one…
TC: Wait, if you don’t cut Defense, what you’re saying is the inefficiencies, the waste, the fraud in the Defense department, we ought to hold them harmless, when in fact there’s at least a half a trillion to a trillion dollars worth of waste at the Pentagon over ten years. If you cut a trillion dollars, you would still have us at a level higher than we were at the height of the Iraq surge.
HH: Senator, I can criticize because it’s not so much your plan, your $900 billion dollar plan, it’s the Gang of Six, and the momentum it gave the President to stop serious conversations about next year’s cuts, which he immediately did. And it’s the lack of specificity in the Gang of Six plan which your return to gave new life to. I mean, it was like the second coming when Tom Coburn came back into the room. And so you reinvigorated a head fake on the American people. I don’t think you intended to do it, but you saw the New York Times yesterday and the Hill…
TC: I don’t read the New York Times.
HH: Well, let me relay to you that they treated your coming back as basically the President was going to get what he wanted.
TC: And let me tell you how much meaning that has in the country. For the elites, that means something. For the average American people, what the New York Times says doesn’t mean a thing.
HH: Now let me ask you a couple of other questions while I’ve got you. I want to make sure. If we go back to the pre-Bush tax rates, you know that the dividend rate in California will go to something above 45%?
TC: There’s no plan to go to that. Everything in the Gang of Six plan was to bring rates down to three rates, bring corporate rates down below 29%, the upper rate would be from 23-29%. If you go look at the plan, the lower rates would be from 8-12%.
HH: What’s it say about dividends, though?
TC: Dividends go into your regular rate.
HH: And so the top rate would be 29%, plus California, 39%? So it wouldn’t be a 45% rate, it would be a 40% rate.
TC: Actually, dividends aren’t even mentioned in it. Cap gains would be at 20%.
HH: But dividends are not mentioned?
TC: They’re not mentioned.
HH: So people don’t really know how that’s going to impact…
TC: Well, we don’t know, because we can’t reform the tax code in a group of six people in the dark. We shouldn’t do that. You should reform that in a committee.
HH: But you do want to, you do want to get rid of the mortgage income tax deduction.
TC: No, I don’t. We didn’t say that. There’s $1.1 trillion dollars, Hugh, of tax expenditures per year in the tax code. You can save half of them, and lower the rates to this amount, and generate an additional $850 billion dollars in economic gain off of that, of which we commit that two-thirds of that has to go for additional rate reductions.
HH: And Senator, come back again next week and give me more time, because what I’d love to do is get specific about this, because I think the great bane of that Gang of Six program is that anybody can say something’s in there, because nobody can contradict it, because no one’s got a plan. But I appreciate your candor and coming back as always, Senator Tom Coburn.
End of interview.