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Republicans Sharpen Knives For Obama's Budget


We're going to talk more about the president's budget proposal with former Michigan Congressman David Stockman. He was also the budget director under former President Ronald Reagan. David Stockman joins us from his office in Greenwich, Connecticut. David Stockman, welcome.

Former Representative DAVID STOCKMAN (Republican, Michigan): Good morning. Glad to be with you.

CORNISH: Last time around, you called President Obama's budget a rank fiscal copout. And I'm wondering what your outlook on President Obama's 2012 budget is, you know, based on what we've been hearing so far?

Mr. STOCKMAN: Well, you know, we don't have the details yet so I can't be unequivocal. But I think it's pretty clear that the fiscal crisis now is so severe and now it's another year later and we're in deeper. Forty cents of every dollar we're spending we're going to borrow from the World Bond Market. And in fact, it's the Federal Reserve that's printing all the money because even China won't buy the debt. That's how severe the problem is.

Now, what is the White House likely to propose? I don't hear anything that's going to make a dent in the problem, and that's really unfortunate. If they want to be left-of-center then there's two big things you have to do. One is you have to have a major structural reduction in defense spending.

CORNISH: Mr. Stockman, let me stop you there for a minute, because both President Obama and the Republicans, specifically in the House, have talked a great deal about cutting spending and cutting what's called...

Mr. STOCKMAN: Discretionary.

CORNISH: ...discretionary spending, which is the spending you do each year that you really have some control over. It doesn't touch the entitlement programs or things like that. And the focus has been if they can stay away from defense, both sides have implied that they want to do that. And I want to get your sense about why the focus on discretionary spending.

Mr. STOCKMAN: It makes sense only to the degree that every area of the budget needs to take a whack because we can't afford, you know, $3.7 trillion of spending when we're only collecting $2.2 trillion in revenue. But they're overdoing it on discretionary. So, if you don't go beyond this small corner of the budget, discretionary spending for a variety of domestic purposes, from education to the National Park Service to the FBI, then you're really not being serious about the gravity of the problem.

And therefore, defense, which is $800 billion, has to be addressed, as does entitlements - Social Security, Medicare - for the better-off retirees. And most importantly, we have to raise more revenue. We simply can't get by on the level of revenue that we have today given the size of government that everyone seems to want. So...

CORNISH: You just brought up two very scary terms, I think, for politicians these days: taxes and entitlements. I mean, which term should which party be more afraid of?

Mr. STOCKMAN: Well, you know, the parties have poisoned those terms, OK? As far back as when I was budget director in the early '80s the Democrats have mounted attack on any effort to look at Social Security, to maybe means test it or reform the program so the cost would grow at a lower rate. And that became the third rail of politics and Republicans have been kind of shuddering in their boots ever since about that.

And then the Republicans turned around and made revenue raising toxic. And have campaigned, you know, from one end of the land to the other on the evil of tax raising, even though anyone with common sense knows that you have to pay your bill sooner or later, and if you're not going to cut spending, which the Republicans have been unwilling to do to date, then you're going to have to step up to the plate and face the music and tell the people, the taxpayers of America, that we have to raise more revenue.

Now, both sides are just ducking the issue. They're copping out and they're lying to the American public, as simply as I can say it.

CORNISH: David Stockman, you've had experience writing budgets in partisan atmospheres. I mean, what are lessons from that experience that could help move this in another direction?

Mr. STOCKMAN: Well, one lesson is that you have to deal with the facts. And in 1981 we had a huge tax reduction - it was the heart of the Reagan program - but as time passed quickly, in '82 and '83, it became clear that we had overdone it - the tax cut was way too big, we didn't cut spending nearly enough to match the tax reduction. So, the president supported - reluctantly - the record shows that historically - but nevertheless supported revenue-raising measures to try to close the gap between and revenue at that time.

And even though he's known as the great tax cutter in history, he actually supported and signed into law about seven or eight different tax increases that in today's terms would amount to about $400 billion a year - a massive amount of revenue recovery from the original tax bill that went too far.

Now, that was at a time when people still had some respect for the facts and there was a, you know, pragmatic mentality even if there was a conservative philosophy. Today, the Republicans, you know, treat tax cutting as some kind of religious catechism, ignore facts entirely and are very responsible for this stalemate that has now developed.

CORNISH: And as you mentioned, and Democrats also essentially doing the same...

Mr. STOCKMAN: On the other, on the...

CORNISH: ...with entitlements.

Mr. STOCKMAN: On the entitlements, yes.

CORNISH: Thank you so much for talking with us.

Mr. STOCKMAN: OK. Thank you.

CORNISH: That's David Stockman. He's the former director of the Office of Management and Budget under President Reagan and a former congressman from Michigan. He spoke to us from his office in Greenwich, Connecticut.

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