The Friday morning general session of TD Ameritrade’s national conference in San Diego featured a conversation with former U.S. Senator Alan Simpson, R-Wyo., and former White House Chief of Staff Erskine Bowles. Simpson and Bowles were both selected by Vice President Joseph Biden, on behalf of the White House, to serve as co-chairs of the president’s bipartisan National Commission on Fiscal Responsibility and Reform.
As is Simpson’s style, straight talk and folksy wit punctuated his comments.
When discussing congressional earmarks, moderator Skip Schweiss asked both men about the probability that elected officials would lead by example on deficit reduction.
“We have a $1.5 trillion annual problem with the debt,” Simpson responded. “Earmarks account for about $16 billion of that amount. It’s the equivalent of a sparrow’s belch in a cyclone.”
Nonetheless, both men advocated for earmark reform, which made it into the report’s final draft.
The discussion then turned to Social Security, which both Simpson and Bowles said should not be a political issue, but rather a math issue. They noted as the law now reads, if nothing is done to reform the system, by 2037 benefits will be reduced by 22%.
Schweiss noted that House Minority Leader Nancy Pelosi has previously stated that reform will not happen “on the backs of American workers,” and the president himself said in his State of the Union speech that Social Security will not be a priority for his administration.
“He’s the head of your party, you answer that one,” Simpson said, turning to Bowles to general laughter from the audience.
Later in the question and answer session, Simpson added that Social Security is one of the easiest problems to fix.
“It’s a math problem,” he said. “All it will take is the guts to solve it.”
Schweiss then noted in the wake of the tragedy in Tucson, “green sprouts” of bipartisanship are being seen; one example being the seating arrangement at the State of the Union speech, and pleas for a more civil political discourse.
“The mixed seating arrangement at the State of the Union speech was a simple measure, but not a small measure in light of what happened,” Simpson said.
Schweiss then asked about confusion over the actual size of the debt.
“I see two different sets of debt figures written and spoken about,” he said. “The debt ‘held by the public’ and the total debt. Can you clarify these definitions and numbers for us?”
Bowles explained 62% of GDP is held as public debt, but it’s not all of the debt, and if unfunded liabilities are added, the “true debt” figure is actually much higher.
“The real figure is about $13 trillion of debt, against $14 trillion of GDP,” he said. “But the public debt portion is about $8 trillion.”
Schweiss then noted the country’s infrastructure is in need of significant repair and upgrade, but doing so will mean huge expenditures, which would be counteractive to deficit reduction. He asked how the report recommends tackling this problem.
They agreed infrastructure was indeed a problem in need of upgrade, and said the solution is to reduce the deficit in order to free up the necessary funds to tackle the problem, rather than adding it to existing spending.
During the question and answer session, one audience member noted that the discussion did not include anything about Medicare and Medicaid.
“Medicare and Medicaid is a whole other discussion,” Simpson said. “We couldn’t even get our heads around that one.”