Oklahoma Senator Tom Coburn on The Debt Bomb
HH: I’m going to talk about debt in the United States with United States Senator Tom Coburn, or as they say, Doc Coburn. He is the author, along with John Hart, of a brand new book, The Debt Bomb. He is a frequent guest and a welcome one. Senator, welcome back, it’s always a pleasure to have you on the Hugh Hewitt Show.
TC: Hugh, it is great to be with you. How are you?
HH: I’m tremendous, and Happy Easter to you.
TC: Thank you.
HH: I want to begin, though, by saying on Page 294 of The Debt Bomb, you write, “Advice to the media – spend more time covering real issues, and less time covering the horse races.” And I’ve got to ask, given such important stories as whether or not Mitt Romney moves his dog around the right way, or whether President Obama eats dog meat, why in the world should we cover anything like the debt?
TC: (laughing) So you like my advice, huh?
HH: Yeah, I do, but (laughing)
TC: Is that what you’re telling me (laughing)
HH: (laughing) Yeah, I’m just telling you that you can’t expect the media to run off and worry about percentage of GDP as a sign that our deficit is getting out of control.
TC: Well, you know, that brings up a great point, Hugh. One of the things our founders thought in terms of the free press is they would be the ones to keep Americans informed about the things they need to know.
HH: Well, I don’t know that we’re doing that.
TC: And my question is where’d we get off track?
HH: Oh, I think we got off track with television, and the inability to read much. Do you actually know if anyone that you’ve interviewed with yet about The Debt Bomb has read the book?
TC: Yeah, a few have.
HH: Okay, good.
TC: They have, yeah.
HH: I find it very unusual in the journalist class that people actually read it. But I want to go that chart I just mentioned on Pages 22, 23, 24, 25, 26. It is the spending as a percent of GDP. And this is the most important four pages, even though it’s just figures. What’s this tell us, Senator Coburn?
TC: Well, first of all, it tells you that real wages in the United States haven’t gone up. You know, that’s one of the things that it tells you. As a percentage of GDP, we’re heading towards 40%, the government, in terms of spending.
TC: …of GDP. If you look at what happened, if you look back at how the debt impacts our economic growth, right now our debt has lessened our growth in this recovery by a third. That’s a million jobs a year.
HH: But you know, if I look at this and I want to go right to the best argument in response to this, 1943-1944-1945, we spent 46, 50 and 52% of our national, gross domestic product, as a measure of spending. We’re not even close to that, yet. So why should we be worried?
TC: Well, we were in the midst of World War II, number one. Number two is we financed all of that internally. In other words, we didn’t borrow from outside of our country. It was all totally financed internally. And the example for that is Japan. Japan has a greater debt to GDP ratio than we do. The reason they haven’t suffered until theyr’e getting ready to start suffering is because for the first time, they had borrowed all that from Japanese citizens.
HH: Yeah, that’s the answer. But I just wanted other people to understand that. Now if we got back down, what percentage of GDP would you say, Senator Coburn, is sustainable as a deficit?
TC: Well, can I answer it as a different question?
TC: What would the Constitution tell us is our real role? And based on the Constitution and our role as a limited federal government, what should we be? That’s a totally different question, because a third to half of what we’re doing is outside the bounds of the enumerated powers of the Constitution.
HH: And I liked your chapter on Wickard V. Filburn, and how we’ve gone over the banks. But I want people to understand mostly, Senator, is that this is a solvable crisis.
TC: Oh, absolutely. There is not a problem…first of all, Hugh, I would say the problem, number one, is much more serious in its scope…
TC: …and much more urgent than anyone wants to admit. Number two, the cost of inaction is going to be much greater than the cost of action. And doing nothing will betray both parties’ core values, and will trigger massive tax hikes. There is not a problem in here we can’t solve. And we need courageous leadership to be able to solve it, and we need visionary leadership. The wonderful thing about our country is when Americans identify that we have a real problem, and everybody knows it, you know what happens in our country? We come together and solve that problem. But we lack the leadership now, number one, to be honest with the American people about how severe our problem is, and number two, the vision to put forth a way forward that solves these problems, and still keeps our commitments.
HH: Now in terms of that way forward that solves our problems and keeps our commitments, do you have any expectation that President Obama would participate in a second term in formulating that? I know your book, The Debt Bomb, has a lot of targeted criticism at partisanship, but I have to ask this, because this audience doesn’t believe that he will ever engage seriously on the deficit.
TC: Well, he’ll have to, and let me tell you why, because the bond vigilantes will be after us by 2014, 2015 at the latest.
HH: Explain that, please.
TC: What that means is people will start saying we’re not sure America is good on its debt, so the bond vigilantes will actually drive down the price of our debt. They’ll sell short our bonds. That will rise, raise the effective interest rates. To continue to run deficits means that you will see the interest rates go back to historical normal, which is 6%. That adds $650 dollars a year to the cost to run the government. And then every 1% above that is another $160 billion dollars based on the debt we have today.
TC: So it’ll be closer to $180 billion. So you now will have moved to where 30% of the budget of the government is interest rates, interest costs.
HH: Yeah, and in fact, your projected, your fable, I don’t know if it’s a fable, your scenario of a collapse is strikingly possible. And I don’t think people believe that, Senator Coburn. How do you persuade them that really is…John Campbell comes on the show once a week, your colleague from the House, to say yeah, that could happen, we could have exactly what you just talked about. But people don’t believe it.
TC: Well, that’s because politicians have not been honest with the American people, nor treated them like adults to tell them what the real problem is, and that’s because they’ve been complicit in being dishonest through the years saying we can borrow money and spend money that we don’t have on things that we don’t need. You can’t talk both ways. And so therefore, they’re obligated, and they’re bought in that things are okay.
HH: Well, I understand that. I’m going to come back and talk about the Washington insider class that you write about, including Ted Stevens and Grover Norquist and some of the people you…but in terms of making the case, it’s not just the political class. Nobody covers this in the entertainment world. It’s sort of like when massive inflation arrives, and people sit around and they say where did that come from, no one will go to the media and say it was ever projected in any kind of a setting other than, you know, a Meet The Press sort of thing.
HH: So how do you get Hollywood, especially, to believe that the Weimar Republic actually could happen here?
TC: I don’t know the answer to that, Hugh. I don’t know the answer. What I do know is history repeats itself. There’s never been a republic that’s survived as long as we have. All republics have failed. My whole purpose in writing this book is to try to educate as many Americans as I can about what the real problems are, and the fact that we need to act on it now, not put off what needs to be done now, because it’s politically uncomfortable.
HH: Governor Romney’s going to be the nominee of the Republicans. Do you take him seriously on his prescriptions for debt relief?
HH: And have you had a chance to sit down with him and talk with him about…
TC: Not yet, but that is schedules.
HH: And so what is it about his plan that you think is the most important step that’s got to be taken, and the reason that Tom Coburn, which is significant, is supporting Mitt Romney?
TC: Well, first of all, I haven’t looked at the details of his plan. The reason I supported Mitt Romney is because I’ve served with the others in the Republican race. I actually know them. I know when they’re talking out of both sides of their mouth. The one quality he has that they don’t have is he’s actually been in leadership positions and been successful. He’s actually accomplished things outside of the political arena that were very hard to do.
HH: And if he wins, do you expect your colleagues in the Senate, even if they are in the minority, your Democrat colleagues in the Senate, to do what has to be done? The House will pass the Ryan plan. They’re committed. They’re absolutely committed to the Ryan plan. And President Romney would do the same. But will your colleagues across the aisle obstruct it?
TC: It will depend on how well we do in getting out the depth and breadth of the problem, and the urgency with which it needs to be addressed. And it depends on people like you making sure they know what’s at stake, because the cost of not acting will be a severe consequence for our country.
HH: Well, part of that is in The Debt Bomb. But if in fact you get 6, 7, 8, 9 Republican seats, and some conservatives among them, I don’t expect the left to change, Senator Coburn. Do you?
TC: Well, what I would hope is we can make the moral case that we ought to work together to fix the problems of our country. And will that require some compromise in the Senate? Yeah. But that doesn’t mean we can’t get it done.
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HH: Senator, I started this hour by talking about the stories that are dogging the President right now, pardon the pun. But I also wanted to bring up the GSA story, because that does sort of underscore what The Debt Bomb, the culture of Washington, the culture of entitlement, and the culture of government. And it’s only $840,000 dollars, I can’t believe I’m saying that, but it isn’t even, it’s not a tenth of a second of the spending that America does every day. But what’s it tell you about government?
TC: Well, Hugh, you’d be interested to know two and a half years ago, I put a report out on conference spending by the government. It was totally ignored in Washington.
HH: I didn’t know that.
HH: I never saw it.
TC: And we’ll send it, I’ll have John Hart send it to you.
TC: And you can go through it. We outlined where all the…the biggest agency that wastes more money on conferences than anything is the United States Department of Agriculture.
HH: Oh, I’m so glad you didn’t say Department of Defense. I thought you were going to tell us the Department of Defense.
TC: No, look, the Department of Defense can easily save 10% of its budget. There isn’t anybody I’ve ever asked in the military, whether it’s a four star general or a private at a base, there isn’t anybody that says they can’t save at least 10%. So that’s almost a trillion dollars over ten years.
HH: You’ve got to give them some tools, though. You’ve got to give them the right to get rid of the civilians.
TC: No, what you have to do, you know, what our military has to learn to do, first of all, you cannot manage what you cannot measure. And the Pentagon can’t measure anything.
HH: Gordon England, did you know Gordon when he was deputy secretary?
HH: He’s a friend of mine, or an acquaintance from panels and stuff like that, and he has said you can’t fix the Pentagon unless the Congress gives us the right to fire civilian employees.
TC: I agree.
HH: Can’t be done.
TC: I agree.
HH: So is that part of your plan?
TC: Well, I haven’t, I didn’t go that deep. But let me go back and say what you have to do is put people who are very knowledgeable, like Gordon, into positions and make sure that the people that are working for them have real world experience outside government to get things done. And then when they run into a roadblock, have a receptive Congress that says we’re going to do this. Now let me tell you, we’re going to do all these things, because we’re going to be forced to do them.
HH: That’s interesting. All right, one paragraph and two stories. The paragraph’s on Page 42. “Washington is populated with what is essentially a permanent feudal class of media elites, politicians, lobbyists, experts and staffers who are inclined to be self-referential and self-reinforcing insiders. Washington has its own circuit of events, balls and dinners that tend to draw the same insular crowd to every event. Most of these people really are delightful, but they are frequently disconnected from the real world. And a surprising number have never had a real job outside of politics.” Look, from California, let me say amen. And that is not going to make you very popular, Senator Coburn, but that is the gospel truth about D.C., which is why this country’s in a terrible mess. They don’t understand anything.
TC: Oh, and you know, you can put it in one simple sentence. They have absolutely no common sense, because they have no real world experience with which to make critical decisions.
HH: But the two stories involve one fellow I don’t know, Ted Stevens, one I’ve known forever, Grover, and they’re Republicans, which is why I picked them out of the book, is that Ted Stevens, when he stood on the floor of the Senate and engaged you, there’s a Constitutional argument for what he argued about his representing his state that way. But the threat to shut down the Senate was extra-constitutional. And Grover, of course, is taking a political position on tax hikes which is, in his view, necessary to protect us from the left, because the right never insists on winning, Senator.
TC: Well, that’s an interesting point. How well has it worked? The government’s twice the size it was ten years ago. You’ve had Republicans in charge totally for half of that time. Tell me how well it worked?
HH: It worked…okay, I’ll make the argument.
TC: It didn’t work. The spending under Bush, under Republican-controlled Senate and House rose dramatically under Republican control, under the no tax increase pledge.
TC: And here’s the fatal flaw. If you’re going to cut taxes, you need to cut government spending so that you can actually not add to the deficit, because the Bush tax cuts, in essence, was a transfer of wealth from our children to us now.
HH: Now I want to go, then, the reply to that is in the golden era of the balanced budget, when the Republicans first got there in ’96, GDP, percentage of spending to GDP was 34, 33, 33, 32, 33%. Under George W. Bush in the middle of the war, it’s 35, 35, 35%. It explodes in ’09 when the currency collapsed to 42%. It’s there still. And so I don’t think you have to buy into the argument that Bush was the same as Obama…
TC: Oh, I didn’t say they were the same. There’s a total difference. But the point is look, I also make a note in this book. When President Bush called me to congratulate me on winning the Senate, the first thing I said is I can’t wait to help you cut spending. And there was dead silence. In other words, the commitment has to be, if you believe in limited government, Hugh, that means you have to have fidelity to the Constitution, which means you want to make us a limited government, because it’s not only beneficial financially, it’s beneficial in terms of our liberty.
HH: But then let me ask you, and there’s a Constitution 101 course offered right now by Hillsdale, taught by some wonderful originalists, and I think it is true to this principle on which you and I have disagreed many times. It’s been the same principle from the Roman republic to every republic, which is a land-owning, home-owning middle class is what guarantees freedom. And you have often said you’re against the mortgage interest deduction. And we have clashed on this repeatedly. You’re as stubborn as I am on this stuff, and…
TC: Well, no I haven’t…what I’ve said is I voted for a limitation on that for a very good reason, because first of all, the vast majority of it, 75%, goes to the wealthiest people in this country, and it’s not for primary homes.
HH: But that doesn’t, but it does go into the one housing market.
TC: Well, okay, let’s talk about it in another area. I’m not against a mortgage interest deduction. If we want to do that, that’s fine. But we can’t do that and everything else we’re doing, so let’s pick something. In fact, what we have is thousands of yachts in this country.
HH: I’ll go with that. You bet.
TC: …that are using the mortgage interest deduction…
TC: …to pay for the yacht, to lower their taxes to advantage them.
HH: But with just a minute left, I’ll go with that. But the class warfare stuff about second homes and wealthy, that’s not America. The founders did not believe in that. I mean, you can’t grab the founders with one hand and go for the 1% rhetoric on the other.
TC: Okay, here’s the difference. Here’s where I see a critical difference. We have created a tax code where the very well advantaged have put in place advantages for them that the average American can’t get. Now our founders would go for that, and that’s what we’ve done, as we’ve expanded what was originally a very good idea.
HH: Okay, now I want to give you the last minute, because I think people ought to read The Debt Bomb, and I hope you stay on the top of this. But in terms of what happens if President Obama is reelected, Tom Coburn, what do you think happens?
TC: I think we go down the tubes.
HH: And explain, we’ve got 45 seconds. What do you mean by down the tubes?
TC: Well, we have not seen the leadership. We see it moving to a more government-centric controlled government. We see lack of enforcement of rule of law. We see a movement away from the moral case for a free enterprise/capitalistic system. And we see a government that will not step up and admit where its not effective and not efficient. We will continue to spend money on things that we’re not good at, that are not Constitutional, and we will raise taxes and we will markedly decrease our economy.
HH: Senator Tom Coburn, it’s a bracing read as one would expect. The Debt Bomb is linked at Hughhewitt.com. Thank you, Senator.
End of interview.