MICHEL MARTIN, Host:
I'm Michel Martin and this is TELL ME MORE from NPR News. Coming up, it's an article of faith that parents are going to try to work hard and sacrifice so they can leave something to their kids. But a new survey shows that that's less and less the case for millionaire baby boomers. We'll hear more about that in just a few minutes. That's this week's Money Coach conversation.
But first, the members of Congress tasked with finding a way to cut the federal deficit convened its first public hearing yesterday. The so-called supercommittee is considering how to slash $1.2 trillion over the next decade and as they take up this task, some people are worried that programs that have been lifelines to the poor, such as Medicaid, could be in jeopardy.
The 12 member panel was created last month as part of a compromise that avoided a threatened government default. We wanted to talk about how things are going, so we've called upon Roben Farzad. He's senior writer for Bloomberg Businessweek. He's been with us before to make sense of the budget and deficit battles in Washington. He's with us from New York.
Welcome back. Thanks for joining us again.
ROBEN FARZAD: Hi. How are you?
MARTIN: Good. Now, we just talked about how the increased poverty rate in this country in our last segment, according to the new census data. I just wanted to play a short clip from congressman, James Clyburn. He's a Democrat from South Carolina - a high ranking Democrat and a member of the supercommittee - and he said that any cuts that come have to protect the poor. Here's what he said.
JAMES CLYBURN: Any solution to our debt problems must be fair. It is just plain wrong to put all the burden of debt and deficit reduction on the elderly, the middle class and the poor.
MARTIN: Now, it may be a foolish question, Roben, but I did have to ask. Is there any consensus on this point? I mean, is that a priority for most members of the committee or not?
FARZAD: There isn't a consensus on it, in fact, and former sacred cows are actually being put in front of the alter for sacrifice. I mean, the hard, cold-eyed numbers say that the number of Medicare and Social Security beneficiaries is going to jump by a third over the next decade. And there just isn't enough money coming in the door to make good on all of the promises that you have to people who are entitled and rightfully grew up thinking that there would be these safety nets for me.
But the economy, in its present shape and form, there's absolutely no way that we can make ends meet with that.
MARTIN: Hasn't the president also said, though, that these programs are unsustainable as they're currently structured? So if there is consensus, is there a consensus that something has to happen or is there not even that?
FARZAD: There is a consensus that everything right now is on an untenable track. You can't have deficits not reduced by at least three, four, five, six trillion dollars over the next 15 years, because right now, the target is to get the debt rate back to the mid-90s level of about 50 percent of GDP and the economy's not growing.
But at the same time, joblessness, food stamp use, the poverty rate are at multi-decade highs, so how do you navigate these tricky waters and make sure that the poor aren't hurt disproportionately? It's very difficult to do, especially when the Democrats have diminishing power going into the election next year.
MARTIN: I don't know how much one can read into this at this stage, but how does the jobs plan factor into the supercommittee's work?
FARZAD: Well, on paper, they should have nothing to do with one another, but in this environment, they're inextricably linked. Because in order to take care of that ledger domain, for example, if you're the president and promising a $475 billion stimulus, you have to cut corners in other places.
And the euphemism that's used for tax increases on the Hill is revenue. We need revenue coming in. In addition to cuts, we have to have certain programs paid for.
In this case, these two programs are inextricably linked because not only do you have the sticker number of $1.5 trillion cut over a 10 year plan, but you have members on both sides of the aisle and also a panel that, last year, came out and said that you should make even bigger cuts, saying that, no, no, no, no, we should go even bigger than this. So if you're looking to cut, slash something on maybe $4 trillion instead of $1.5 trillion. That clearly leaves you less to have out there for the next five years of job stimulus.
MARTIN: I want to just play a short clip from Senator Jon Kyl, who's a Republican from Arizona. He's a member of the Super Committee and he seems to be making the case that the president's jobs plan has to be part of the supercommittee's work, or at least has to be evaluated as part of it. Here's that clip.
JON KYL: First of all, it assumes that the committee members will agree with his stimulus program. I don't think they will, but secondly, that we'll just volunteer to find a way to pay for it. He said it's paid for, but it's only paid for, apparently, if this joint select committee can figure out a way to pay for it. We've got a big enough problem with coming up with $1.5 trillion in savings.
MARTIN: I mean, is that true?
FARZAD: To a certain extent, it is. How much of a favor do you want to do for the president, actually, on political optics alone? I mean, do you want to hand him this thing in a gift-wrapped box and say, here - we'll cordon this part off and you can have this amount of financing for your jobs plan - and, oh, by the way, let's maybe cut two, three, four trillion dollars off of it?
You have one side arguing, no, we need to cut now on the expense portion, which we can control. The other side's saying, no, we need to concentrate more on jobs so we can refill our coffers with tax revenue.
MARTIN: What was the mood? The earlier discussions about raising the debt limit got very contentious, very partisan, and there was a sense - a real sense of just, kind of, despair on both sides, that the system just couldn't work or wasn't working effectively. What's the mood there now? Was it at least civil?
FARZAD: It's civil, sober and actually pessimistic in realizing, gosh, have we really heaped this all on our plate, in a certain way, and been this profligate over the past decade? Because there are so many disparate priorities. And let's not forget all these congressmen have to go home and they have their individual priorities and their bridges and schools and roads promised.
But having said that, I think it is the appropriate tone to strike. I mean, if you had senators reading political talking points yesterday and reading the Gettysburg Address and making a mockery of this, I think that the market would have reacted in a very negative way. At least everybody realizes now, that the status quo is untenable and everybody in Congress realizes they can't kick the can down the road much longer, much past next year.
MARTIN: And finally, what's the next step in the process? We said that the first public hearing was Tuesday and that's what you were telling us about. What's the next step in this process?
FARZAD: More hearings, more back door meetings, more consultations, informal meetings of cross-caucus members sitting together and saying, what can we agree upon? What are the optics of this? Can we have certain tax cuts? Can we have certain revenue increases that affect only a certain part of the population?
Certainly, this whole idea of cutting waste and, you know, filling loopholes appeals to everybody, but in the end, it doesn't provide you anything on the order of trillions of dollars of revenue coming in the door. So this is going to be quite an accounting experiment for people on the Hill who are really used to spending and not cutting in earnest.
MARTIN: Roben Farzad is a senior writer for Bloomberg Businessweek. He joined us from NPR's bureau in New York. Roben, thanks so much for joining us once again.
FARZAD: My pleasure. Transcript provided by NPR, Copyright National Public Radio.