tv Key Capitol Hill Hearings CSPAN December 9, 2013 12:30pm-2:01pm EST
now banks we know are subject to pervasive government supervision and regulation. as a result they really can not, they really can not litigate with their supervisor. the risks of doing that are extraordinary and there is possible retaliation by the supervisor in other areas if the banks take them on. so there's real concern about settlements that occur between
the government and a bank because perhaps that settlement is not the result of each party looking at their options and the evidence of the other side but rather simply the government's overwhelming power. a bank can not really afford to take on the government in this way or take on its supervisor and as a result you wonder, unless there's a lot of information around what actually happened, you wonder whether there is really an arms length kind of settlement. the same question arises where the settlement has occurred and we don't have very much information about the evidence that the government had to create the settlement. and why the, or why the bank agreed to the settlement. there's a lack of transparency
in these cases. and again, because of the fact that the government has so much power with respect to the bank, the lack of transparency raises questions about the rule of law. are we really dealing with a situation in which the government has found something that is extraordinarily troubling and has fined or otherwise created some source of fund that the, has to be paid to the government when the government had always, has always the power to force the institution to settle? so again, those are the kinds of issues that i think, the committee thinks cause "the washington post" economist, "the wall street journal" and other news media to be suspicious
about what happened here between jpmorgan chase and, and the department of justice and the other government agencies both at the federal and at the state level who were involved in the settlement. now the committee also sees some policy issues here that are quite troubling. one is that, of course, much of the cost that is were imposed on jpmorgan chase came because of things that were done by bear stearns and washington mutual two large financial institutions that they acquired at the behest of the government. now it's possible they might have been able in a contractual arrangement to avoid these kinds of costs but this was all done very hastily because of the
circumstances and so it seems unfair in a way for the government to have imposed these losses on jpmorgan for things that the institution did much at the request and to the betterment of the government because of the government's policies here. so that's yet another thing that worries you and in the future will large and healthy financial institutions be willing to take on failing institutions when they might be taxed with the result? so, that's one issue of policy that we have to look at carefully. the committee was also concerned about one other thing that, which is really to me, in particular, and to other members of the committee, particularly troubling. and that is, that the, the charges that were placed against
jpmorgan came after the chairman of the bank started to take on the government's policy in a number of areas. he was critical, i'm talking here of jamie dimon. he was critical of the, of the dodd-frank act and was critical of many other regulatory policies of the government. and, at the same time, he was in a sense, a spokesman for thing industry but an individual who was the chairman of a large bank then following those criticisms, came all of these charges against jpmorgan chase, which had previously been thought to be one of the healthiest and best-managed banks. so, the worry here is that the lesson that the government is, or the message that the government is sending is that, if you criticize the
government's policies in any important respect, there will be retaliation against you of the kind that occurred with jpmorgan. and i'm afraid, i think, other members of the committee are also afraid, that to the extent this is occurring, we have done great damage to our, not only to our economic, to the way our economy functions, that is, with banks having the opportunity, banks and other financial institutions having the opportunities to criticize what the government is suggesting, but, also, to our political system because the public then will not get the kind of feedback about what the government is doing that they can only get from the regulatory, from the regulated industries. so that's, those are the two policy issues that come out of this very, very heavy settlement that the government exacted from jpmorgan chase.
thank you. >> thank you, peter. i mentioned earlier that we had intended a fourth statement but we were not able to complete that in time given the weather conditions. we'll send it to you by email but he wants review part of it before that. >> it's a simple statement. we had technical difficultyings with a missing e copy. it is a comment on a letter by four resolution authorities in four different leading countries to isda, international wall dealer association. changing master agreements to facilitate bank resolution. when they realize if any one of them, fdic, the bank of england, bofa in germany or swiss authorities were to try to resolve one of the their major banks, under the isda master agreement, all of the foreign
counter parties to swap agreements which number as you know in the trillions, would be able to immediately close out their contracts, net it and run. they are not constrained in the way others are by a stay. secondly, they are concerned that if the u.s. were to put a major bank in resolution and shift it to a bridge bank which is what title ii permits, this bank should be very healthy but a change in control under the isda master agreement would give opportunity for the counterparty declare a default and try to act. it would also be true if they exercised a default across clause. all of these things could make it virtually impossible to resolve a large international institutions because they have huge numbers of cross-border
derivatives of these kinds. what the, these resolution authorities ask is to please think about changing its laws to, its master agreements to make all of this possible. it's ironic that isda has been more successful harmonizing international law than any international regulatory body. they have actually gotten their contracts written into law in 45 or so countries. there is an irony however in this because a number of the large banks as you may have heard are bragging that too big to fail is over because there is now a very good resolution plan in place and so nobody is too big to be resolved in an orderly way. who runs isda? the self-same banks that are in fact the major players in derivatives markets. there are others but they certainly control what's going on. so it was our view that the letter could have been tougher still. it could have pointed out if
they really did believe in having a sound resolution structure then they should be quite willing to alter the agreements to facilitate resolution. >> thank you, richard. now open it up to the audience. if you have any questions, let me recognize you. there's a floating mic around. if you state your name and affiliation that would be a good way to begin. back there. >> henry edgar, researcher at nara. i noticed a recent report on television by a financial reporter that the serious issue of systemic risk is now moved to subprime loans from mortgages, to automotive loans. do you have any comments on this? how great of a figure would this be and how serious would it be to be considered systemic risk?
>> i, let me try to answer that. i mean it is very hard to know without knowing what data this report was based on but the notion that auto loans would be a source of systemic risk is quite doubtful in my mind and the size of the individual loans for an auto are so small, and the, the default that is, the number of default that is would have to occur on those loans in order to create this kind of problem would be astronomical. it would have to be a huge percentage of all the auto loans outstanding and finally most auto loans, if i'm correct, are securitized. and that system is incidentally worked extremely well. much better than, if i may editorialize a little bit, much
better than the government's system of securitizing mortgages. the auto loans are, in fact, generally of good quality by the time they get through the process, and so they don't generally fail. there are other factors. auto loans are much smaller than mortgages and so forth and payments each month are much smaller but the point is that system has worked very well without the government's involvement at all. we've had, never had the kind of crash in auto loans that we've had elsewhere. now, there is one other problem and that is that there is a creeping sense that the government is gradually trying to move into more and more areas under the rubric of this idea of systemic risk. and that is what you heard marshall talking about just a moment ago. if you can identify any area of the economy where you think there might be systemic risk, the financial stability
oversight council has the power to designate the participants in that area as systematically important and once they do that, those who have been so designated are subject to regulation by the fed very strictly, stringent regulation is what the dodd-frank act requires for those institution that is are so named. and so gradually the fed will be able to extend its regulatory authority over most of the financial economy. i don't know whether that is what is happening here but it seems to me that every, every financial area ought to be concerned about the power of the fsoc to make those declarations and they are, without any oversight on that question. it would be very hard for the courts to make a judgment that they are unable to make, to
decide whether something is of systemic importance. so, this is an area where all of us i think should be quite cautious. >> thank you, peter. other questions? yes. alex? >> thank you, mr. chairman, alex pollack of aei and i have question for my colleague and friend, peter wallison. peter, you said if a regulated financial entity, say a bank, were to engage in litigation, maybe especially successful litigation with its regulators they would possibly be subject to that retaliation. i would edit and say with certainty that they would certainly be subject to retaliation? do you disagree with mid did? >> no, alex. alex and i usually agree on everything but i had, you understand, i had to deal with
five or six other members of the committee but that is an edit i would certainly accept. another, another one of my colleagues. >> ed pinto, aei. colleague and friend of peter and alex. i would only add the successful cases that i'm aware of financial institutions suing the government were all defunct ones that then sued under the fslic and others after they were basically shut down and shareholders brought suit. they were successful but they were no longer operating so it didn't make any difference. they had nothing to fear but ultimately they were successful but that is the only way they were able to take it on. >> gerald chandler. would you go back to basics and
compare what you've been talking about, having, reserves required, required reserves and so on, to having the government take over? suppose you had a system where the government guaranteed we'll buy everything at 75% of its last transaction value or some other number? how would you decide between having those two systems? >> well, with, with what industry are you talking about? >> banks. okay, i'll clarify my question. banks have securities or something they own. you talked about first and second level types securities and if the bank has a run on the bank and has to sell those and it can't, the purpose of all this is to make sure that it has adequate cash and other things that the first level. the alternate system would be to simply say that the government is a guaranteed buyer and buys everything at some level, 75% or 95%.
>> there is an intermediate step that we do have in place which is the lender of last resort and so before you would go to what is really a bailout pure and simple and then you have to ask whether there is the appetite in congress or in the public to fund such a thing, you do have the possibility that a bank candies count assets at the central bank and these days for almost nothing without having to sell them at distressed prices in the marketplace. so i think we do have a safeguard that would keep us from having to go that far. >> but my question was compare the two systems and how to decide between them? >> well the one system would be incredibly expensive for the public and the other one should be much less so. the banks are subject to much more moral hazard with system where they had 75% guaranties on all the assets. >> i agree with you that there is a visible expense to the
public but there is visible expense having larger reserves and charging higher rates on loans or whatever. if you could identify all the costs on both sides presumably you would take a side that has the lower cost. >> that is not a full accounting of the cost. you have to ask yourself whether the public is paying appropriate costs for liquidity and if it is being subsidized to that extent by the government i would question whether that's true. it is nice to have free liquidity but i'm not sure it's a healthy thing for the economy over the long haul. it is something that is scars and should have a scarcity value. >> if i could interject. how much capital banks ought to hold is the amount of capital they would in a world where you didn't have these guaranties. since you do have the guaranties you have to make an estimate what the right amount of capital is and that's why we have capital regulation. with liquidity our criticism is liquidity is important but it is
also related to the amount of capital you have. if you have a amount of capital you don't need as much liquidity. if you have much liquidity you don't need as much capital. as dick pointed out you have two aspects to it. the one characteristicses of the security and two, the characteristics of the america contest. the regulation focus only on the first, the characteristics of the security and what our state says that at the time commercial paper which in good times when the market's operating well is a liquid asset and in bad times when you have a run on the banks, you have the financial crisis we just experienced commercial paper is not very liquid. >> the question you raise is a very pertinent now. there's, some movement to try to resolve the government guaranty of mortgage loans by having private insurance take the first
fixed percentage of the loss and then after that the government would take the remaining part of the loss. i, at this point i don't have a feel for the relative advantages of that procedure over the existing government guaranty but peter probably does, right? you want to talk about that? >> i don't know how i got into this. this is the so-called corker-warner plan. i don't know how relevant this is to what the question was -- okay. but, but, in any event under the corker-warner plan there would be a 10% amount taken by the private sector before any losses to the government any losses to the taxpayers or to the government entity that is guaranteeing the mortgage-backed security. so that shrug of 10% in there is
protect taxpayers -- "shrek." the problem is, of course unless the mortgage quality is good, unless the mortgages are subject to strong underwriting standards, the losses could be enormous greater than 10%, quite easily. s in the government exists on good underwriting standards and there is no indication the government is insisting on those right now, we will have a situation in which the government will have to subsidize in some way the loss that is are going to be occurring because the quality of the mortgages are so poor. how the government will do that, nobody knows at the moment but that's the danger of having the government in the position it is put in in the corker-warner situation where the government is guaranteeing all-out standing mortgage-backed securities. they then can create all kinds of terrible mortgages,
low-quality mortgages, assume that the private sector will take the first losses but the private sector is going to ask for quite a lot of compensation in order to do that and when they do that, the mortgages will become extremely expensive to the people who the government wants to have these low quality mortgages. and when that happens, the government will then have to find some way to subsidize those low-quality mortgages. so the people who otherwise don't have down payments or good credit scores will not be able to buy homes. that's the problem and i don't think, myself, that congress is really focusing on that yet. >> actually, i'm glad you brought that up. it leads me to a question, mr. wallison. first of all, thank you for your contribution sometime ago of the large volume having to do with
dodd-frank and your copious thoughts on that. , on that subject. i wanted to ask you what has been the result subsequently and how it may have affected any legislation or amendments or thinking as far as banking regulations is concerned? >> none. i don't know. i would say this. that from my perspective, and thank you much for the compliment too. i think you're talking about the book that i put out, "bad history, worst policy, how we got the dodd-frank act." the, i think that the work that i have done and the work that my colleagues have done ed pinto and alex pollack have convinced i think, at least the republicans, and not all in the, either the house or the senate but a substantial number, that there is a real danger here in
having the government involved deeply in the mortgage system. and as long as we have that occurring, i'm afraid that we're going to go back to the same problem that we had before and that is, that low-quality mortgages will pervade our financial system. we will have a, some kind of a bubble and when that bubble collapses, we will have another financial crisis. so the effect that i think my work and pinto's and pollack's has been is successful as far as it goes but unless more people in the united states understand what the danger is, get more information from the media than they have gotten about what happened in the financial crisis, it is going to be extremely difficult to prevent the government from responding to what we called the government
mortgage complex. the muscle here in congress are the realtors, the homebuilders, and the banks and they like programs where the government is guaranteeing mortgage-backed securities and they are pressing congress to institute a new system like that instead of going to a system in which is largely privately operated. so we're having some effect. not as much as i would hope but we're still young. >> tom jennings. former general council of a former bank holding company. another question for mr. wallison if i may on statement 348. i agree with most of what was said there including the amendment by mr. pollack. but with respect to the transparency side of it in the
days following the settlement and the publicity about the settlement, jpmorgan's market cap went up and stayed up for several days after that. without this transparency there, why did this happen? do you have any explanation of that? >> resolution of uncertainty. that would be my answer, the resolution of the uncertainty. the market reilly thought, i think, that it could have been a heck of a lot worse and jpmorgan had now settled almost everything that was likely to happen in the future some that probably made people feel somewhat more confident about the bank and that the fact that the bank could pay a 13 billion-dollars fine and series of fines and still be profitable was similarly impressive.
>> there is with a similar bent in the late '80s when city corps set aside several billions of dollars against potential losses in its portfolio of country loans. that gave it the largest loss ever registered by a u.s. corporation that quarter but its share price went up and the reason was it sort of put a line under the loss it is was willing to take and remobilize part of that portfolio. there was a lot in resolving uncertainty which i think drives people to settle than string out the litigation. >> [inaudible] >> this is a question for another friend, dick hearing. -- herring. on the swap changes you discussed, interesting question. are we to understand that, that the proposal is that the collateral delivered at some
point against the adverse mark-to-market of a swap counterparty would become a preference item as in bankruptcy and would be taken away from the holder of that collateral? is that how to understand this proposal? >> no. i probably explained it badly you about the idea is to avoid a race to seize assets of a bank in resolution while supposedly transformed into a bridge bank that is perfectly solvent and the fine print in the isda contracts actually gives the count party of a swap the right and close out net and grab whatever assets they can to make the difference. >> dick, if they're doing the job right under the isda agreements it is an ongoing collateralization at all times. >> and the -- it would continue to, to do the collateralization.
it is just that, there is an opportunity to cut an run. we saw it with long-term capital most prominently that was the driving pressure but the problem is in order to take, to execute a resolution you need a bit of time and you don't have that time if all the counterparties are simply taking the money and running. >> to add something to it, what we're worried about regulators are concerned about is fire-sale losses and if you have to do this immediately or could do this immediately, then you take the fire-sale losses. you take one day or two-day period where you have the longer period to sell securities, then you reduce the possibilities and probabilities of fire-sale losses. >> at a more basic level, there is an asymmetry in the contracts as between a u.s. counterparty and a foreign counterparty and
the more basic issue that asymmetry should be reversed and how it is reversed is a second question. but it should be the same, should be symmetry. >> question is to -- what we're saving is in the united states the fdic does have the ability to impose a stay. it is one of the sections in that voluminous document. but it can't be applied to foreigners. this is quintessentially foreign international market and so, if you can't, and there could be literally thousands of counterparties to a swap book and so if you can't just assume that you can impose a stay, and actually have to go around and talk to each of those counterparties that takes an enormous time too and may not be successful. . .
>> doesn't the need of the governmo try to find somebody to take over, a healthy candidate to take over a weak financial institution go away because of the liquidation authority which allows them to put a tax on all the healthy institutions ex post facto to pay for liquidation and, as you say, keep them in liquidation and run them as a going operation so they can maximize the value? the government doesn't need help from a jpmorgan in the future, because jpmorgan will be paying 30% of whatever it is out of the
tax. >> actually, i think that is the hope. i think looking back on the crisis one of the worst kinds of decisions that was made was to let very large institutions get larger still. there was -- and it was really subsidized by the government. i sort of differ with some of the things peter said about the nature of those deals. but, um, there is a real difference between liquidation and a bridge bank. even though dodd-frank calls it the order toly liquidation -- orderly liquidation authority, they have no intention of leaving these banks. they want to leave behind a good bank, and that good bank would be able to either be sold as a whole which might be unlikely if it's a very large bank, or carved into pieces that the market would buy. but the idea is to give them time so that they don't have to sell at a fire sale price.
and i don't think that's really taxing everybody for liquidity. there is -- you may be referring to the provision -- >> [inaudible] in terms of the losses -- [inaudible] they can do an ex post facto tax against the healthy banks for civilians. >> well, no, that would be looking ahead. if the bad bank is taken apart, the bad assets and losses are left behind. but looking ahead, if the good bank turns out to be not all that good or it needs to draw on the treasury fund that the fdic has and can't be paid back, you're right. at that point it would fall to the other banks to make up the difference. the idea is to have several layers of support between the loss and the taxpayer. but it's supposed to be a remote possibility. >> let me remind you that this is feasible now because under
the legislation you could form a bridge bank. the dodd-frank act keels with a -- deals with a bank holding company, and it brings a bank holding company resolution into the same process as the bank resolution. also what we're charging is if there are losses, it should be borne by the industry and not by the taxpayer. and what you're doing is basically saying that deposit insurance is paid through the premium for losses that go for the uninsured depositors should be paid for, any losses by the industry, on an ex post basis. >> well, i want to thank you all for coming, braving the weather. wish you all a happy holiday, and we'll see you in february. thank you. [applause] [inaudible conversations]
>> president obama and former presidents carter, bush and clinton along with other world leaders will be in south africa tomorrow for a memorial service for nelson mandela. that bins at 4 a.m. eastern time. earlier today british prime minister david cameron and members of the british house of commons paid tribute to nelson mandela. here's some of the prime minister's statement. >> mandela was the embodiment of that struggle. he did not see himself as a helpless victim of history, he wrote it. we must never forget the evil of
apartheid and its effect on everyday life. separate benches, separate buses, separate schools, even separate pews in church. interracial relationships criminalized, past laws and banning orders, a whole language of segregation that expressed man's inhumanity to man. nelson mandela's struggle was made ever more vital by acts of extreme brewalty on the part of the -- brutality on the part of the south african authorities. his was a journey that spanned six decades through nearly three decades of incarceration through to his negotiations that led to the end of apartheid and his election to the highest office in south africa. it was, as he said, a long walk to freedom. as a prisoner in a cell measuring 7 feet by 8, there must have been times when nelson mandela felt that his fists were beating against a wall that would not be moved, but he never be wavered. as he famously cede at his --
said at his trial, he wanted to live for and achieve the ideal of a democratic and free society. but it was also an ideal for which, as he said very clearly, he was prepared to die. even after long years of imprisonment, he rejected offers for his freedom until they had removed all conditions that would have prevented his struggle for justice. what sustained him throughout all was a belief in human dignity, that no one is naturally superior over anyone else, that each person has inherent worth. as he came so powerfully when he came to speak in this parliament. in the end, the cries of the infant who dies because of hunger or because a machete has slit open its stomach will penetrate the noises of the modern city and its sealed windows to say am i not human too? nelson mandela's cries for justice pierced the conscience of people around the world, and let me pay tribute to members of this house who considered it a part of their life's work not to
rest until the evil of apartheid was ended. mandela knew there were millions across our country who said no to apartheid in ways large and small from mass concerts to quiet shows of solidarity, and there can be no doubt that he had a real warmth of feeling for this country. he visited just months after his release from prison and then again a number of times in the following years including the time when he spoke so memorably in trafalgar square at that great event. mr. speaker, the character of nelson mandela was shown not only in the determination with which he fought, but in the grace with which he won. nearly three decades in prison could so easily have left him bitter. on his release he could have meted out vengeance on those who had done him so much wrong, but perhaps the post remarkable chapter of mandela's story is how he took the opposite path. in victory he did, indeed, choose mall anymorety. indeed, with characteristic generosity, he invited his own
former jailer to come to his presidential inauguration. he employed a young afrikaner woman who became his confidant, and in an image on our minds, he roused his country in the most powerful gesture of reconciliation. his government pursued a very deliberate policy of forgiveness. f.w. declerk and other national party officials were brought into his government of national unity. the truth in reconciliation commission was established to break the spiral of recrimination and violence. these were astonishingly brave moves. be. >> and we are going to turn now to cap old hill. the senate will be returning from its two week break. they'll be in at 2:00 for general speeches, legislative work starts at 4:00, and they'll be working on 2014 defense programs. at 5:00 today judicial nominations for the u.s. circuit court of appeals for d.c., the first nomination taken up since
the senate changed its filibuster rules just before thanksgiving break, and they may also take up a house bill to extend a ban on plastic guns. and we've got more from capitol hill reporter on what the legislative agenda looks like for this week. >> host: joining us now to talk about some of these issues on capitol hill in the week ahead is ian swanson, news editor at "the hill" newspaper. thanks for joining us this morning. >> guest: thanks for having me. >> host: and as "the washington post" stated, we're expecting a budget deal as early as in this week. what could that deal look like? >> guest: well, it's not going to be the grand bargain that really has dominated discussions over the last three, four or five years. negotiators are looking at any tax hikes which have been demanded by democrats. tear also not looking at significant cuts to medicare, medicaid or social security which are areas that the
republicans say need something to be done. instead, they're looking at pretty small things, over whether to have federal employees contribute more to their retirement plans. democrats are trying to keep that number a little bit lower than republicans. they're also looking at things like gaining funds by selling spectrum that's going to be sold to telephone companies, and they're basically looking at a very small kind of budget deal that would replace some of the sequester, the automatic spending cuts that were launched in 2011 as part of a different budget process. >> host: ian, why can't there be something like a grand bar gain right now? >> guest: well, because the two parties can't agree. democrats are not willing to do any cuts to medicare and medicaid, and republicans are not willing to do any tax hikes. and in this case, paul ryan -- the chairman of the house budget committee -- and patty murray -- the chairwoman of the senate budget committee -- basically decided, i think, that they
weren't going to go after the sacred cows of the other party, and they were just going to try to get something that was possible. they decided after looking at all of these failed budget agreements in the past that, look, we're not even going to go there this time. we're going to go for something that's much smaller but doable. >> host: talking with ian swanson of "the hill." even if there's an agreement reached as early as this week, there'll still be a big budget debate early 2014. forecast for us what that'll look like. >> guest: sure. one thing this deal will not do is it will not raise the debt ceiling, and at some point next year they're going to have to do that. now, it's a little difficult to forecast exactly when that's going to be in part because the economy is starting to behave a little more strongly, and as a result, that kind of extends the period of time in which the treasury department can do things that are called extraordinary measures that prevent congress from having to raise the debt ceiling. but at some point congress is going to have to do that. i suppose the earliest it could
possibly be is february, but i think it's much more likely that it's sometime closer to the spring or even the beginning of the summer. be then you're going to get the same debate over, you know, whether we should look at tax hikes, whether we should look at changes to entitlements, and it's still pretty hard to see how tear going to get any kind of agreement on those areas, particularly in an election year. >> host: turning away from the budget with briefly, the house is expected to adjourn for the year on friday, and the senate fairly shortly thereafter. a lot of high profile legislation still hanging in the balance. give us your list on what's likely to make it through before the end of the 113th congress. >> guest: well, i think the only thing that's completely likely to get through is a new defense authorization act. there'll be a lot of interesting debates to watch on that to see what gets included. one thing we'll be watching is to see whether any legislation sanctioning iran gets added to that bill. the administration is doing everything it can to prevent
congress from doing that, but a lot of members are still interested in adding sanctions to iran, sending a signal that they're not crazy about the interim deal the obama administration signed on to. another thing to watch for really quickly is the farm bill. negotiators are still trying to reach an agreement on a farm bill. if they can't get a deal, they're going to have to at least extend existing farm spending, so that's something that could be done. and finally, the senate's here for an extra week, they're going to be looking at a lot of nominations, particularly after the filibuster changes that senate democrats rammed through. among the big nominees are the new chairwoman of the federal reserve, janet yellen. >> host: and one more question for you. a number of articles in the last couple of weeks have suggested this is the most unproductive congress ever. why is this it so hard to get anything done on capitol ill? >> guest: well, it's divided government. you've got the senate run by democrats, the house run by republicans. whenever you have that situation, it's tough to get
anything done. in addition, in the republican conference you have a situation where leadership for a long time now hasn't really been able to completely beat or control their members. they can't count on votes a lot of the time. the conference is rather divided. there's a lot of opposition to president obama within the house republican conference as well which doesn't make compromise easy. so i think we're sort of at a unique time in the history where no one is really able to get along or to agree on any of the big things, and really even a lot of the smaller things. finally, one last point i'd make is that a lot of republicans say they don't think that the measure should be bills passed in terms of whether a congress is productive. theyty that in knot passing bills but in trying to stop regulations and trying to the fight the battle of the health care law as actually being more productive. >> host: we've been talking with ian swanson, news editor for
"the hill." thanks for joining us this morning. >> guest: thanks for having me. >> the wire line world is really the central circulatory system of our economy. it is the veins and the arteries that really connect what is now the information economy in the united states. we're seeing data traffic on our wire line networks increase at the rate of 40% per year, and it's wire line networks that connect all forms of communication whether they originate in the wire line environment or in a wireless environment. so, yeah, i would say america's future is a wire line future. >> the future of the communications industry with u.s. telecom head walter mccormick tonight on "the communicators" at 8 p.m. eastern on c-span2. >> next, house and senate negotiations on a budget compromise. the plan, due by this friday. this is from today's washington journal. >> host: welcome back. we're joined now by bob bixby, executive director of the
concord coalition. thank you for joining us this morning. >> guest: you're welcome. >> host: over the weekend it was reported that negotiators are getting closer to a budget deal. tell us what that's likely to look like and what it means. >> guest: well, it looks like what they're going to try to do is replace about two years' worth of the sequestration cuts which was a lower level of cap that went into effect earlier this year and replace the savings so it wouldn't add to the deficit by increasing some government fees and perhaps requiring a higher contribution from federal workers for their retirement program and maybe about a 65 to $70 billion deal. it wouldn't be a deficit reduction deal, but it would, it would be an agreement on the level of discretionary spending or the appropriations bills for the next one or two years. >> host: and talk to us about
scale. is the a large deal? is it a small deal if how does this kind of fit in our range of options? >> guest: this is not what you would call a grand bargain. it's a small deal. they deliberately set a pretty modest target because they thought something more ambitious wouldn't get done. so in the effort of finding some sort of an agreement for this year, this year's appropriations level and possibly it looks like next year's, they would just target that and see if they could reach an agreement on that, and that's kind of where we're headed. >> host: talking about the prospects for a budget deal this morning with the concord coalition's bob bixby. if you'd like to join our conversation, for republicans the number is 202-585-3881. for democrats, 202-585-3880. and for independents, the number is 202-585-3882. this weekend ohio senator rob portman talked about the
prospects for a government budget deal and to avoid a government shutdown. let's take a listen to what he had to say and then, bob, i'll get your response. >> can you get an extension if it's paid for? can the republicans live with that? >> it's not $25 billion no one was talking about, george, until the last week, so it's an additional cost within this budget agreement. i think the thought always was that would be handled separately, so i'm glad to hear my colleague, dick durbin, say that's not necessarily a sticking point in this, because i think there are different ways to look at it. look, the key is we don't have another government shutdown, that we don't raise taxes at a time when the economy is still weak, and i think we can accomplish that over the next couple days. >> host: bob bixby, your take. >> guest: well, what senator portman was talking about there was the extension of unemployment benefits which are scheduled to expire at the end of the year finish not all unemployment benefits, but the extension of sort of an emergency unemployment benefits.
and that appears not to be part of the budget deal. that would be another $25 billion or so, and if they wanted to do that without adding to the deficit, they'd have to find another $25 billion of savings. so it's probably not going to be part of the budget deal that we're, that we've been reading about over the weekend. >> host: all right. let's start taking some of your calls. first in chicago, illinois, carl is on our line for democrats. >> caller: yes, hello, how are you doing, mr. bixby? >> guest: hi, how are you? >> caller: i'm fine, thank you. i think that people like yourself and the american people need to realize we need to restructure our economic policies. primarily, we're in problems that we have because trickle down pro-growth doesn't work. we need to have more taxation, we need to have some adjustments to these trade agreements so that we can build on our economy from within, help the people that's in the middle and the bottom incomes rise to we can
have more revenue. but it's primarily we can't continue to let business being part of our society outside our society where all we're asking to do is, hey, you just make money, and we're going to help you make money, but you don't owe nothing to society. thank you. >> host: your response? >> guest: well, i think, i think that a couple of points that i'd pick um on there -- pick up on there. i do agree some more revenue is going to be needed. when we do get to the grand bargain at some point, it's probably going to have to involve new revenue, so i agree with you on that. i also agree that economic growth is important. obviously, that would make the budget situation better, and part of the reason the deficit had been so large in the past couple years has been that the economy was doing poorly, and that reduces revenues and raises expenditures. however, that being said, we can't think that the deficit
would be cured by economic growth alone. there are, you know, a lot of important and, you know, large programs in the federal government that are rising faster than the economy primarily medicare and social security, medicaid. some of the things that are getting more expensive because the population is aging, and there are more beneficiaries. so economic growth is important, but we are going to have to at some point do that grand bargain. of it's not going to happen anytime soon, and maybe it will be done incrementally over a number of years, but eventually we're going to have to get to the major entitlement programs and revenues. >> host: why is there a grand bargain so far away? >> guest: well, you know, the issues are just very, very difficult politically. and sub substantively, they reay aren't. you know, the simpson-bowles commission, the domenici-rivlin commission which i served on
came out in pretty similar places. they looked at the health care policy and tax policy and even some social security reform, and they pretty much, you know, put together a package that eventually we're going to have to go there for something like that. but the basic fundamental problem is our entitlement programs cannot be paid for with the stream of revenue that we now have from the current system. so that means you have to either look at reducing the growth of these very popular and important programs, or raise revenue. and neither one of those are popular political, you know, campaign slogans -- [laughter] and they go against the party base of one party or the other. so it requires a little bit of swimming against the grain. >> host: go now to alexandria, virginia. michaela's on our line for independence. >> caller: good morning, i
apologize for my voice, i have a cold. i was hearing cnn, i think it was of friday where the president was talking about the lowest 20th percentile which is the 20% of the poorest in the united states, and then i also remember that i had seen the book "the plutocrats" that came out talking about the highest 20% percentile which is the richest in the united states that control about 85% -- [inaudible] leaving 80% of the population living off 15% of the wealth. so can you comment, please, on that? our economic structure is kind of weird. i don't know how democratic we are. i was reading in the book that it was saying that the highest 20% in countries like sweden control only 35% of the wealth, and there is more be democracy. can you please comment on that? thank you. >> guest: well, my area of
expertise if i have one is more on the federal budget than the structure of the economy, but i think that it is clear that the income inequality, the gap so to speak, has been rising, you know, increasing. and i think this is a real problem that, you know, stagnant wages, income growth not keeping pace as it has in the past is a real problem. i think that, you know, there are federal budget policies that can help address that, but i think that we're going to have to look at, you know, some things beyond the federal budget policy on that although, like i said, i'm not the economist, so i probably shouldn't lay out a prescription for that. >> host: wendell's on our line from democrats from michigan. >> caller: are you talking to me, ma'am? >> host: i am.
>> caller: oh. i called in as an independent, but that's okay. the problem is government itself. they've overspent. i could send some good housewives down there to balance a budget probably in about ten days, but our overpaid politicians, they can't do that. in the meantime, their breaking the middle income, they're sending the jobs overseas, and that's how we don't have, why we don't have any insurance. the good jobs went overseas, and in turn our health insurance went with it. and to think that the young people who don't have a job are somehow going to pay for health care, i got some rocky mountains in my great lakes backyard i'll send down there. thank you. >> host: your response? >> guest: um, you know, we have, you know, rising health care costs are a real problem all the way around, you know, for the federal budget, and, of course, we're going through a restructuring of the to health care system now -- of the health
care system now with the new affordable care act, so we're going to have to see how that plays out, but your first comment is, you know, i agree with it. it is, um, you know, we have a, just a structural imbalance between what we spend and what we take in, and we're not making the political choices that we need to make to close that gap. and it's not like we need to try to balance the budget be this year or next year because the economy is still struggling to get on its feet. but we do need to take, you know, to take account of things that are put out by the congressional budget office and the government accountability office and others that tell us that we're on an unsustainable track, and you can enact policies now that would be phased in over time so when the economy recovers, we would have a more sustainable, balanced approach to federal spending and
revenues. >> host: couple comments from twitter this morning, monty writes: the budget should not be a means to institutionalize indifference to social injustices. and jaden miles writes: in an economy weak in demand, how can a reduction in income for the old and poor stimulate youth? your thoughts on either of those comments. >> guest: well, i think that we have to be, i think they're good comments. we have to think about the difference between short term and long term. you know, i think in the short term when the economy is still weak, you don't want to do things that would, you don't want to cut spending too fast, you don't want to raise revenues. you could harm the economy that way. on the other hand, you have to look ahead and say can we keep doing everything we're doing once the economy recovers, and the answer is no. it just doesn't add up. it's a matter of math that our spending is going to exceed be
revenues by an amount that what happens is you have to borrow money to make up that difference, and you have to pay interest on that money, it's like trying to live off of your credit card. eventually, it becomes unsustainable. so, you know, the point is not that you need to cut somebody's social security benefits in this year to try to balance the budget or next year or the next few years. what you need to do is look at the commitments and how are you going to pay for them and come up with something that over time is going to be sustainable. and that's really what the grand bargain is about. it's not about austerity. people sometimes think, well, this is, you know, why are you trying to push austerity in a bad economic time. and we've really got two problems. we've got a slow economy in the short term which is one problem, we've got an unsustainable long-term track, and you have to
deal with those things simultaneously, but you can have separate remedies for them. some economists talk about it as walking and chewing gum at the same time economically. and, you know, that's really what we need to do is be just cognizant of the fact that, you know, we've got these different problems, and it's easy to con freight them, but you -- conflate them, but you can treat them separately. >> host: next in alabama, sheila is on our line for democrats. >> caller: yes, good morning. good morning. >> guest: good morning, sheila. >> caller: okay. i just have a comment and a question. my first question is why did they cut food stamps? and i know there's a lot of fraud and waste in every program, so instead of cutting these programs, why can't you put in place a program that can help stop the fraud and abuse instead of cutting food stamps? because the majority of the
people that's on there is the disableed, the children and the veterans. why can't you put something in place to stop that? and my comment is everybody is keep talking about president obama, they're blaming president obama for this and that, but the one thing that they have to remember, everybody has to remember that he can't do it alone. he can't do anything by himself. thank you, and i'll hear your comment. >> guest: well, certainly on your last point, that's right. i think that there has to be a bipartisan solution to our budget problems. one of the things that -- a positive aspect about the budget deal that seems to be developing, small though it is, is that it would be an instance in which the democrats and the republicans have agreed on on something and that the white house presumably is okay with. so it may be a short deal, but at least it would be something that had bipartisan support.
on the food stamp question, you know, i think that food stamp costs, you know, went up with the economy. when the economy went down, you know, that raises food stamp expenditures because more people need the assistance. some of that is coming down, but there's really still certainly a need out there, and is one of the things that's being debated on capitol hill is the farm bill and how much food stamps would be cut. there's a big difference between the house plan and the senate plan, and that's one of the issues that's still left for the end of the year to be worked out. so it's not clear right now what the, what the cut would be. part of the cut is, you know, pause people think that -- because people think that there is a lot of fraud and abuse as you said, and part of it is that the economy is improving, and some people perceive less of a
need. there's going to be a debate between the house and the senate, there has been a debate, and they're going to work something out, but they're way tar apart. i mean, i think the house has got a $40 billion over ten years and the senate's more like $10 $10 -- $4 billion over ten years. >> host: what want to go to an e-mail, as long as republicans maintain there won't be a tax increase in the wealthy and the government shutdowns aren't talked about by the media, they'll win the budget talks. it's all about the elections now. can you talk to us about the politics of this budget negotiation? >> guest: well, um, the politics really does complicate budget negotiations. if you, you know, if you go in a room with budget experts or you have the politicians in a room and the cameras aren't on, you can have some very logical debates about these issues. but the campaign be, you know, what happens is politicians tend
to play to their base. and so on the republican side you don't get a lot of votes from the base by saying i think we should compromise with the democrats and include some tax increases in this plan because it's very easy for an opponent to attack you on that side. and say, well, we should never give in on that. and on the democratic side, it's very difficult for a democrat to run and say, well, i think we should look at these long-term commitments for health care and retirement, and maybe we should scale some of them back. you know, that, that's a tough message in the democratic side. so, but what you need to do for a long-term budget deal is compromise on those two things, and that's a skill that seems to be diminishing on capitol hill. there's much more polarization. and, you know, i'm afraid you head into a campaign season, and
it makes all that worse, and it makes it more difficult to achieve a budget deal. >> host: next let's go to eric in texas on our line for democrats. >> caller: hello, how are you doing? >> guest: good. >> caller: i think louis brandeis once wrote that we must make our choice. we may have democracy, or we may have wealth concentrated in the hands of the few, so we can't have both. and my point is all these corporations have the funds to listen to groups like alec and fund them in the tune of hundreds of millions of dollars, but they ain't paying their fair share of taxes. during eisenhower and john f. kennedy, they were paying over 70%, the top ten was paying over 70% in taxes. the only reason they, that corporations find ways to use republicans advocates against taxes because they don't want to fund the social programs that
president roosevelt sponsored to help them get can out of the depression -- get out of the depression. and that's starving the beast. and i think that is absolutely wrong. i mean, it's unethical, and i believe that people need to tow the line, i mean, to organize and vote all republicans out of office because they, they do not have the best interests of the country at hand. and that's all i have to say. >> guest: well, putting aside the partisan preference, let me address one of the issues that you raised which is tax breaks. you know, there are over a trillion dollars worth of tax breaks in our code. exclusions, exemptions, deductions, credits.
the income tax both the individual and corporate side is a, like a piece of swiss cheese. it's got a lot of holes in it. and one of the ideas that has support from both democrats and republicans is to close a number of those loopholes or reduce the size of them so that there's less -- because those are really subsidies. they are really like spending programs that run through the tax code. so it's really a way of subsidizing certain activities through the federal budget. and both the simpson-bowles commission and the domenici-rivlin commission and president obama and governor romney in his campaign all advocated some form of tax simplifications, tax
equalization you might say by closing some of these things and bringing in more revenue. and so one of the disagreements is what to do with that new revenue. if you so-called broaden the base by closing these exemptions and credits and deductions, that broadens the base of taxation. there's more money available to be taxed. and you can actually bring in the same amount of revenue by lowering the rate which a lot of economists think would be a good idea. the question then is what do you do with the extra money. republicans would want it all to go for deaf create reduction, and some democrats say for deficit reduction, and some say for other purposes. i mean, republicans want it all to go -- excuse me, want it all to go to rate reduction can. i misspoke there. republicans would want all the new money to lower the rates even further. democrats say, well, we could
lower the rates, but we should also use it for some deficit reduction or to find other priorities. >> host: we're talking to bob bixby be -- now we're going to brooksfield, missouri. independent line. >> caller: thank you for letting me talk. one of the way they could get more taxes in is starting getting these people back to work. they don't even try that. they just keep on hiring in the government and paying high wages. my daughter works at a rest home for $7.45 an hour as a cook. sometime ago i heard where there was a discrepancy in the white house between the pay that the cooks got. the women got $60,000 a year, the men got $70,000 a year. that's cooking. there's a lot of difference between 60 and 70,000 and $7.45 an hour. but they ought to get these
people back to work, then they'd have the money to pay some of the stuff that they have to pay. thank you. >> guest: we can't just look at the budget in isolation, you do have to look at the economy. and the better the economy does, the better shape the budget will be in. so, but as i mentioned before, we also have to look at the fact that even if the budget, even if we assume that there is a strong economic growth, we still have the situation where the spending is, will exceed the revenues. and so we're going to have to make some policy choices as well as doing everything we can to
improve the economy. >> host: question via e-mail this morning from mike t. in san antonio, texas. he writes: is the spending greater tan it would have been under the original -- than it would have been under the original sequester? >> guest: yes. under this deal the original sequester would have spending the this year at about $967 billion under the discretionary part of the budget. and as i, as i understand the deal -- and it hasn't been announced yet, so we don't really know -- but it would be around a trillion dollars. now, the important thing to keep in mind is that's still below the number that would have been the level under the original budget caps that were agreed to in 2011. there was, you know, the budget -- the debt limit deal in
2011 set pretty tight budget caps through 2023. and this -- 2021. and this so-called sequestration is, in effect, lowering the caps further for a number of reasons. they failed to get a big deal in the supercommittee that met. so this deal, i think what they're trying to do is allow a little bit more spending above that sequestration cap, but it still would be lower than the original cap that they agreed to in the debt limit deal. so it's not as if, you know, they're like jettisoning all restraint. >> host: we've been having this discussion about a deal that, as you noted, has not emerged yet. how likely is that something that comes to fruition before friday? >> guest: i think it's fairly likely that they will get this
deal that we all think we know what's in it, and we haven't seen it. [laughter] i think it's fairly likely they'll get it by friday because they want to go home for the holidays and not disrupt their own plans and their staff's plans. and i think they want to send a signal to the country and the markets that they've got a deal. but, you know, they really have until january 15th because that's when the next shutdown deadline would come when funding for the government agencies runs out if they don't have an agreement in place. so they don't have to do it by december 13th which is the deadline, friday the 13th is the deadline. there's really no penalty for missing ma deadline, but i really do think they want to get it done. >> host: talking with bob bixby of the concord coalition. next kevin is on our line for republicans from kentucky. >> caller: good morning, mr. bixby, how are you? >> guest: good. how are you? >> caller: i'm going doak. i just -- doing okay. i just want to say thank you for
c-span. the deficit cannot be cured by these big spending programs like health care, etc. and in my opinion, it sounds a lot like -- [inaudible] >> guest: i didn't get that, but -- >> host: all right, let us take a question from twitter. please explain why federal government has co-mingled social security and medicare with general budget funded by different systems. >> guest: well, social security is funded by a payroll tax, and part of ped care is funded by the payroll tax. the money is accounted for separately, but it is all part of the federal government. social security is, after all, a federal government program. the tax is a federal tax, and the benefits come out of the treasury. so, you know, it is important to account for it separately since
we have a dedicated payroll tax for that purpose. but it is, you're, ideally -- you know, ideally we should be balancing the -- balance the budget at the moment, but ideally it would be good if we could say social security was completely off budget. and technically speaking, it is off budget. but as i said, it's money that comes into the treasury, and the benefits go out. and it's not, it's not as if beneficiaries, you know, when we talk about the, you know, the payroll tax being insufficient to cover benefits -- which it is right now, the program is running a deficit -- social security is able to receive sufficient funding by cashing in the bonds that it has in the
trust fund, but that is an expense to to the treasury, another part of the government, which has to come up with the pun to cover those bond payments into the social security. so it is, you know, the bottom line is it really is part of the federal budget. we haven't privatetized the system. -- privatized the system. it's not separately outside the system, and the money is accounted for separately and, you know, social security -- the federal government's not going to default on the money that it owes to social security or to the ped care part a trust fund. >> host: next in bucklin, massachusetts, bob is on our line for independents. >> caller: good morning. i'd like to ask mr. bixby what he thinks of the idea as far as helping to reduce some of the social security expenses of, one , means testing the social security plan; two, increasing the social security income tax, which you've mentioned instead
of having it at 110,000, go up to 250,000 and increasing the social security age by one year. thank you. >> guest: i think that sounds like a pretty good plan. i'd vote for it. i think that, you know, like the federal government itself, i think that the long-term problems of social security are going to have to be addressed by some combination of reduced promised benefits and that doesn't necessarily mean reduced absolute benefits and new revenue. so i think that the combination that you mentioned probably is where things will eventually end up once the political system gets around to dealing with it. look at it this way, much easier to phase those -- it's much easier to phase those changes in
over time than to wait until you've got a crisis and have to do it suddenly. so that's why we should be looking at a long-term problem like social security now, because it's a matter of planning for the future. it's not a matter of trying to get savings out of social security to balance the budget this year or anytime soon. it's a matter of looking at that program and saying, you know, the program is already paying out more than it takes in, because my generation -- the big baby boom generation, is beginning to qualify for benefits. and so we get a growing gap between income from payroll tax and the expenditures going out. so if you enact changes now and phase them in over time, you'd have a much better situation for the future. >> on the line from montana, travis on our line for republicans. >> caller: hello, good morning. thank you for taking my questions.
um, one of the questions that i had is i'm a 26-year cna. i've worked in a lot of medical staffing agencies. i know that the federal government gives money to the nursing homes and uses the federal staffing agencies or the medical staffing agencies. one of the things that i was always wondering is, you know, a lot of times my mileage check was more than the check that i got for the services that i provided, and why isn't there more being done about certain general areas that don't have medical help for people that need it? like around here a lot of times when you go to the doctor, you have to go see a physical assistant who has to, of course, respond to their there. but it's -- to their doctor. but it's not that the education for the medical services that it provided, seems to me like next to null. and i was wondering, also, if there was any way that you could
give an earned income credit like for parents who have children for seniors with a -- [inaudible] for family taken care of in home. thank you. >> guest: yeah. the latter is an idea that may be part of -- i can certainly imagine that idea. you know, this society is changing greatly with the demographic shifts, and that will require some changes in government policy, you know, whether it is as we were talking about before some change in the eligibility age of social security or medicare, but also because more families will have a lot of aging boomers like me armed the house to take care of. and an awful hot of families -- awful lot of families understand
the -- i don't want to say the burdens, because it's your father or your mother or somebody that you care about deeply, but as families become caregivers, there may eventually be some federal response to that. one of the most difficult policy issues right now when we talk about all the health care issues is we really haven't addressed long-term care whether that's done institutionally or in the home. and i would, i would be happier if we were with discussing those sort of things in the budgetary context and figuring out what we want to do, what was good policy and how we're going to pay for it. be than worrying about how we were going to replace 20 or 30 billion next year by lifting the aviation security tax. be i mean, those are are small ball issues that we're talking about rather than the more
important, larger issues that you raise. >> host: another e-mail this morning from patricia l.. shelys: how much money would we have if we went back to the interest rate we had 20 years ago and raised the cap on social security? >> guest: went back to the interest rate? well, that would cost the government a great deal of money because, and it's probably not what the e-mailer intended. you know, one thing to keep in mind right now, two parts of that question, the government is borrowing a great deal of money right now at dirt cheap interest rates. and so interest costs to the federal government have been constrained. it's about $200 billion a year, so it's not nothing. that's a lot of money. but you would think with all this borrowing that it would be even more. and one of the reasons is that the interest rates that the government is having to borrow, having to use is very, very
cheap. so if we went back to more traditional interest rates, the federal government would be spending a heck of a lot more money. and one way to look at it is just to look at the cbo projection over the next ten years. we're spending about $220 billion on interest now, and it's projected that will rise to around $800 billion or so depending upon your projections just over the next ten years. and that's assuming that interest rates go back to a more normal level of about 5.5% from around 2 .5 where they are i now. if they went back to higher rates, there'd be, obviously, much, much more expenditure. now, on the social security side, you know, the e-mailer talked about raising the cap which we talked about before, and that would certainly bring in a substantial amount of revenue, certainly enough to cover the short-term shortfall
in social security or close to it, dens on where you would -- depends on where you would set that level. so we could certainly look at that, although you would want to do that as part of a comprehensive deal to make social security permanently solvent. you wouldn't just want to raise the payroll tax to bring in revenue. that would not be the best way to do it because it would hit lower income harder. >> host: and north carolina, joyce is p op our line for democrats. >> caller: yes. what i have to say is something i have thought of. i believe that everything our government uses each and every day should be manufactured by taxpayers right here in the usa. and the products should be well made, they should be -- the government should be able to pressure them at a -- purchase them at a fair price. the employees should be paid a fair salary, and we would have money of our own. and i will say this, i think
here in north carolina we could have our silver factories up and running in six months. we'd be making things for our government. >> guest: idea. >> host: a last call for this segment comes from minersville, pennsylvania. ed's on our line for independents. >> caller: yeah, good morning, mr. bixby. >> guest: hi, ed. >> caller: i want to know why, i mean, this is unpopular i'm going to say amongst the politicians, why aren't we debating whether to put that top tax bracket, you know, back up to 90% where it was with eisenhower or back up to 70% where it was before ronald reagan took over, and we'd have all this money flown in that we could start to, you know, rebuild our binges, our roads, our water system and take care of the needs of this country. the big -- this debt, that number debt started with ronald ray taliban.
they gave too much money back to the wealthy, and this has been going on for the last 30 years. you've got to borrow money to pay the bill withs. >> guest: yeah, about those rates, i mean, people weren't paying that, that was the thing. and so if you look at revenues as a percentage of the economy just sort of, you know, forget about the rates and whatever loopholes that there have been. revenues going back 40 years or more have consistently been somewhere around 17-18% of the economy, 18% of gdp. so, you know, i think that what has changed is, you know, some of the -- the rate structure and there have certainly been things that have changed, but, you know, this terms of the the money that has -- in terms of the money that has come in, it's been fairly consistent as a percentage of the economy.
when it has gotten over 19 and close to 20% is where we have come to where the budget is balanced or even in surplus. which indicates that that 17% of gdp norm is not sufficient as a norm to fund our budget. and so, you know, that leads me to conclude that we're probably going to need to have more revenue. but i wouldn't do it by raising the rates back to 70 or 90%. you know, that becomes confiscatory, and as i said, people were never paying that anyway. there were loopholes that -- it's not a very efficient way to go about doing it. better to close a lot of the loopholes that we have now, and you could bring in the same amount of revenue at even lower rates. i think those are the type of -- but, look, i'm with you in this sense, we need to be debating
these big tax reform issues, and we're not. we need to be debating the big entitlement issues, and we're not. so kudos to congress and chairman murray and ryan if they can pull off this budget deal. but it's a, it's a budget deal to solve of a very short-term crisis scenario rather than to address the really long-term issues that we need to be looking at. >> host: we'll certainly be watching in the days and weeks ahead. bob bixby of the concord coalition, thanks for joining us this morning. >> guest: thank you. >> and on now to the capitol, the senate returning today from a two week break. they'll start with general speeches and legislative business at 4:00 eastern time, they'll be taking up 2014 defense authorization bill and at 5:00 a u.s. circuit court of appeals nomination for the d.c. circuit.
the presiding officer: the senate will come to order. the chaplain, dr. barry black, will lead the senate in prayer. the chaplain: let us pray. eternal father, we thank you for the life and legacy of the man called madiba, nelson mandela, and for the exemplary footprints he left in the sands of time, inspired by his great life, may our lawmakers deal fairly and wisely with the great issues