Roundtable I: Budget Battles

Today was a good step. He seemed very sincere in trying to get engaged in the process. Will obama's charm offensive revive the grand bargain and finally break the budget stalemate? Senator ron johnson... See More

Today was a good step. He seemed very sincere in trying to get engaged in the process. Will obama's charm offensive revive the grand bargain and finally break the budget stalemate? Senator ron johnson was there and joins our powerhouse roundtable with the inside story. Then -- I have supported both, both the path to legalization or a path to citizenship. Let's wait and see if jeb bush changes his line again. A double take from jeb bush. How will it shape a possible presidential race. Jeb bush is here and we'll ask him. Plus -- I will speak as long as it takes. Rand paul takes over the senate. And sheryl sandberg shakes hands for leaning in. We take on all the week's politics right now. Hello again. Could this be the week washington got back on track? That's the question buzzing through the capital after the president picked up the phone, picked up the tab and spent more quality time with rank and file republicans than at any other point in his presidency. First reviews have been encouraging and in his saturday address president obama showed some tempered optimism. Making progress on these issues won't be easy. In the months ahead there will be more contentious debate and honest disagreement between principal people who want what's best for this country but i still believe that compromise is possible. I still believe we can come together to do big things and i know there are leaders on the other side of the aisle who share that belief. House speaker john boehner, a bit more skeptical. I think it's a sign, a hopeful sign, and I'm hopeful that something will come out of it, but if the president continues to insist on tax hikes, I don't think we're going to get very far. One of those there wednesday night here on our powerhouse roundtable senator ron johnson. Good morning, george. Also thchairwoman of the debbie wasserman shultz, congresswoman of florida and george will, paul krugman of princeton and "the new york times" and white house correspondent for bloomberg, julianna goldman. Welcome to all of you. Let me ask you, senator, what happened there? Well, it was a very honest, frank, pretty complete discussion of, you know, the problems we face in this nation. President obama opened it up really prioritizing the problems, certainly making the point that it's health care, it's medicare. You know, from my standpoint, the input I provided to him, if we're going to get to an agreement, this is a good first step and have to start meeting with people and developing relationships and spend a fair amount of time figuring out what we agree on first, you know, so many times we're talking about different numbers and first have to agree on the numbers, the facts. One interesting point he made, the problem with medicare, he said, is about a dollar of every -- basically americans paying a dollar, but they get more than $3 out in benefits. He said people don't understand that and think that money is theirs. The point I made to him, mr. President, you are in a unique position to be able to make sure the american people understand that. We're not going to be able to solve these very difficult problems unless we start laying the groundwork and prepare the american people for the solutions. Will this lead to negotiation? I certainly hope so. You know, I got a call from his chief of staff over the weekend to talk about what we need to do in terms of developing the process, so, you know, we'll -- I'll certainly give the president the benefit of the doubt. The other side is not going to go away. If we're going to solve these problems, it'll have to be done in a bipartisan process and I think most republicans are more than willing to work with the president. We heard from house speaker john boehner, george will. Revenue is still the big issue. Senator johnson's leader, mitch McConnell says the revenue question is settled, settled in the fiscal cliff, so no more revenues. I don't know what you compromise about. The charm offensive, one night dining together at the jefferson hotel follows a long period in which the president has said republicans don't just have bad policies, they're bad people that have bad policies. Right. And it's hard to undo that in a night. He needs five senators, that's basically what he needs to do. You need five justices to get something done in the supreme court. He needs five republicans to come over to get to 60 with the 55 democrats. I think it's unlikely. Go ahead. He needs five more than that. He has to bring the house along, as well. So this has got to be a bicameral, this has got to be a robust process and, again, you have to take that first step and the president did that I think republicans reciprocated. If the president lays out more far-reaching entitlement reforms on medicare, for example, will democrats in the house follow him? Well, I think what needs to happen, the president is going to come up to capitol hill this week and meet with both republican and democratic caucuses and conferences and continue the dialogue. I mean, unfortunately, what we've had thus far is a paralyzed republican leadership, particularly in the house, who's not been able to act, not felt at all that they have enough leeway because of the extremism in the republican conference to do anything with the president so reaching out to the rank and file is extremely important. Building those relationships and building up some of that trust because, you know, it's really hard to make tough decisions and reach consensus when there is such a trust gap. You're as skeptical as george will. I'm really skeptical because this is not -- this is not about bad personal relations. People are perfectly capable of being polite to each other, being nice, having a nice dinner. This is about a fundamental difference in visions of what america should be. It's both. One party really wants to take down the safety net we have. One party really wants two privatize medicare, wants to roll back, want to try to privatize social security back in 2005. The other party wants it extended, wants obama care to go in place. It would do more if it could. That's not something you'll resolve with a few dinners. Both sides understand what a grand bargain looks like. Republicans are going to have to give on revenues. Democrats are going to have to give on entitlements. There is a case for optimism if the president trying to build on trust wants these lunches, these dinners, don't become news events we're covering but if republicans see the president moving forward, putting medicare savings on the table that doesn't just hit providers, but also hits beneficiaries, as well, and also going out and selling it to give republicans some cover, then there could be a sense that you could get some senate republicans to help bring the house along. After the first -- yes, let's begin the process right here, right now. Is it conceivable that your caucus, you're from florida, which is full of old people known as -- known as god's anti-chamber for a good reason. Now, now. I beg to differ. Is it conceivable that your caucus would consider with any concessions from the republicans raising the age of eligibility for medicare? Look, the only way we've made he progress in careening from crisis to crisis in the last several years is because of democratic votes in the house of representatives. The republicans have been able to get absolutely nothing done with their majority. They need the majority of our members to actually sit down, be willing to make political sacrifice, actually spend some political capital. We supported $1.2 trillion in the spending cuts, the cuts only approach the debt ceiling deal in the summer of 2011. We did that because it was important to not let the country go over and jeopardize the full faith and credit of the united states. We need the republicans to realize that they have -- can I just -- can I say something? Is the condition of any republican support that you have to go for really terrible policies? Because raising the medicare age is a terrible policy. It raises medical costs and does very little to improve the budget. It introduces a lot of hardship. Means testing is better. I don't particularly like it but a better policy. Even I don't like the business about changing, you know, the price index for social security but that's not as bad -- the -- of all the things -- we'll let the senator go. To say the republicans haven't done anything is false. The house has actually passed budgets, you know, with proposals to try and save medicare, bipartisan proposals, quite honestly, the senate hasn't passed a budget in over four years. Listen, unless we do something, these programs are going broke. It drives me nuts. When I hear people say social security is solvent till 2035, there will be $5.1 trillion more in benefits than they're bringing in people. George will's question. If the president went along with means testing, medicare beneficiaries more far reaching. You did a little already and adjusting consumer price index for social security recipients, would you as a senator be open to more revenues? Listen, if you're taking a look at an entitlement reform package actually bringing in revenue for those entitlement reforms, I might look at that but the fact of the matter is, the fact of the matter is we already have a trillion dollars in middle income tax increases hitting us in obama care. They're hidden, but it's middle class. That's not true. It's certainly true, as well as another 600 billion but we have $1.6 trillion worth of tax increases hitting us in the next ten years. That's going to harm economic growth and, george, the best way of getting out of this situation is economic growth. First of all, that is completely untrue. There are not -- it's completely true. What is true is that the president in his grand bargain, which is still on the table, which republicans could take him up on right now, has $360 billion more in savings than to medicare. Let's look at what entitlement reform is necessary to reduce the deficit. It isn't social security. Social security solvency has to be dealt with. It could be dealt with separately because there is that many years of solvency left in social security, so let's not hit the middle class first. Let's make sure that we take a balanced approach to deficit reduction, and, no, the republican leadership cannot dig in and say that we are done with revenue because we are not. We got $600 billion. The speaker himself in his proposal in the grand bargain discussion they had with the president had a trillion dollars in revenue, and so there is -- there is another about $600 billion left. Go ahead. -- That we could do in revenue. This question -- let's start with the facts but we've just run aground right there. We cannot agree -- my point. Made my point. We've got to agree on the facts and figures. The facts are false -- they're not false. The social security thing, social security is -- it has a dedicated revenue base. It has a trust fund based on the dedicated revenue base. You can't change the rules midstream and say, oh, suddenly -- here's the problem with the trust fund. Here's the problem with the trust fund. The federal government owns u.S. Treasury bonds. It's the same thing because if you have $20, you spend it, and, by the way the money is spent. You write a note for $20, stick it in your pocket and you have 20 bucks. No, you don't. You have to sell it on the open market. It is a fiction. It doesn't -- then value -- you want to think of social security as not just bei part of the government then there's no such as a social security problem. It's just part of the general budget. You cannot say on the one hand social security is -- it's promised -- on the other hand, we're going to restrict it to only operating off -- or pay -- all right. George will. It's important to realize that the facts that are being brought out are, in fact, nonfacts and how do -- they're absolute facts. Well, as pat moynihan famously said, "everyone i entitled to their own opinion but not their own facts," and we're going to start this negotiation from two sides that can't agree on the most basic thing. I want to -- the first -- we will have a lot more week. Hold on one second. We're going to have a lot more information on the table this week and budgets put forward in both the house and senate democrats, led by paul ryan and jon karl has more on that. Reporter: This one which again includes the fundamental changes to medicare may actually be more controversial than his last one because this time ryan is promising to balance the budget in ten years. His last budget didn't balance UNTIL WAY OUT INTO THE 2030s, And he's doing it entirely with spending cuts. In fact, I am told he will leave the spending levels under the sequester in place for the next ten years. Meanwhile, the senate is going to do something that they haven't done in four years, they're actually going to release a budget. Patty murray is not promising to balance the budget but is promising to undo the sequester with a mix of tax increases and spending cuts found elsewhere. George? Julianna goldman, nothing from the white house until probably april. No white house budget till april but paul ryan now able to get to balancing 10 years instead of 30 in large part because the economy has been doing better. Yeah, because he's counting the revenues from the fiscal cliff deal, $600 billion also savings from the affordable care act, as well, but this is an important week for budget talks. The battle lines really are being drawn here, and we are going to see just how far apart both sides are. I think one of the questions for the white house, and this is why they started the charm offensive last week, start softening the field here is how they're going espond to the ryan budget. They say that they're going to respectfully point out the differences that they have, but the devil will be in the details of how respectful they're going to be. Nobody wants to see a replay of when the president famously gave his budget speech in 2011 and hammered paul ryan sitting in the front row th and so it'll be a test of whether the civility will continue. So, george will, we're going to have everything on the table probably by the end of the week, but my guess is that everyone in both the house and senate will still be hanging back till the summer to wait and see what happens when the sequester starts to kick in and then when we face this next deadline the government running out of its borrowing authority sometime this summer. The republicans like the sequester so far, but so far they like the sequester, and when senator murray begins by saying we're going to end the sequester, she's saying we're going to end the one thing republicans think they've won in the last year in washington. Are they going to like it in june? No, because this is -- people talk. The sequester is mostly falling on discretionary spending and discretionary spending is easy to cut until you start to see the consequences, and it will build and not just white house tours but air traffic delays and a lot of things that people actually value. In some ways -- some of my liberal friends are actually also in a way welcoming the sequester because they think that as the effects kick in, it will remind people why we need a government to do their job. 60% of the budget is off the budget. It's on automatic pilot. If you ran a business that way, and basically said, health care, don't worry, spend whatever, the same with retirement, you'd be bankrupt in no time. The fact of the matter is the federal government is bankrupt. The only reason it's not functionally bankrupt is because we can print money, and that's what we're doing. That is the only thing -- can I say something about the state of the budget. There's a remarkable document almost nobody noticed that came out yesterday from the congressional budget office said it's projecting a deficit of $845 billion this year of which only half is what they call automatic stabilizers. Low revenue because of depressed economy and unemployment benefits and with a fully recovered economy the budget deficit would be down to about $420 billion, which is, in fact, a level that is consistent with a stable debt position. It is -- out of the way and -- adjusted -- it is back to what it was in 2006. Back to what it was during the height of the housing bubble so we have, in fact, already brought the budget under control and nobody noticed. For the next ten years. What cbo has also said is that -- if the sequester remains, we'll lose 750,000 jobs, evidence that a cuts only approach like the sequester particularly one that is indisdiscriminate takes a meat ax approach instead of responsible approach with balance that closes tax loopholes that only benefit the wealthy and reduce the deficit. Make sure we talk about entitlement reform which, yes, i would be willing to support that if we have a balanced approach and the only one who, unfortunately, right now are on the side of cuts only is the tea party extremists in the republican party in the house and the senate. Sequestration is a lose/lose for both sides. For republicans to the extent that they're seen as uncompromising to a fault, this is just going to hurt the brand even more. For the president, we're seeing robust job growth, great trends in the economy right now and the sequester shoe has yet to drop. And to the extent that it starts shedding 750,000 jobs a year to push the economy back, that's bad for the president too. Will this -- f the questions that we saw this robust jobs report this week. Is this -- is this going to actually make the sequester less -- george, I dhink the sequester is going to be -- i don't think the problem is going to be it hits the economy though it will hit the economy and it's a real shame because it looks like finally the engine is really catching and just at the moment the engine is catching somebody is, you know, pulling the plug. Exactly. At what point do we restrain the growth in government? At what point? Spending grow has been exceptionally low under obama. We just need to say that. What percent of our economy in terms of government -- can I say something about your adjective about the robust growth? Yes. If the workforce participation rate were as high today as it was just 12 months ago, the unemployment rate would be 8.3%. If the workforce participation rate were as high today as it was when mr. Obama was inaugurated, it would be over 10 - government jobs weren't cut, the rate -- we are still 3.1 million jobs below the high point in 2007 and the fact is, the average, the average growth after 13 quarters post-world war ii I recession or recovery is over 18%. Under ronald reagan, 18%, under obama, 7% because of all the regulations. Our friends on the other side of the aisle, unfortunately, like the senator continue to root for our economy to not do well. Absolutely not. That's absolutely false. The fact is we've -- excuse me, we've had 37 straight months of job growth in the private sector, 4 of the last 5 months have been 200,000 plus jobs a month. Look, I want to start where we began, which is that there is a trust deficit between the two sides. I am someone -- big difference is -- yes, yes. So let's agree to numbers first. No, no, no, what we need to do -- hold on. Excuse me. Hold on. Hold on. We have to take a break. Finish your thought. There is a trust deficit, and the way in my experience in 20 years as a legislator that you down and continue to talk. I'm a lot more likely to reach consensus and agree on the facts when I have spent some time getting to know and working with the other side, and we've got to make sure that continues. The gulf is still wide. We have to take a quick break.