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U.S. Department of State

Diplomacy in Action

Economic Policy of the Obama Administration

Laura Tyson, former Clinton Administration Chair of the Council of Economic Advisors
Charlotte, NC
September 5, 2012

 Democratic National Convention

 11:00 a.m.


Ms. Tyson:  Good morning everyone.


I’ve had the great honor of working for President Obama in two capacities.  One is his first President’s Economic Recovery Advisory Board; and two, the Jobs Council, the President’s Council on Jobs and Competitiveness.  So I have a pretty good sense of the economic policy that he has been assiduously pursuing.


One of the main goals of this meeting, the convention, and of the campaign is to make sure that voters understand that there is a real choice, and of course the choice is very clear on the economy.  I think the very best words that I’ve heard to describe the choice is a strategy that builds the economy from the middle out versus from the top down.  We’ve tried top down policies in the past, they haven’t worked.  We have a middle class that has suffered significantly over the past decade, even when the economy was ostensibly in recovery, and we really have to build our policies to address that question.


President Obama has been involved in dealing with an economic crisis that was the greatest crisis since the Great Depression.  Of course when he came into office, and I remember this very clearly because I was serving as one of the outside advisors to the campaign.  I remember looking at those job numbers.  I remember looking at the 800,000 jobs a month decline and realizing that finance, housing, autos, major sectors of the U.S. economy were collapsing or on the verge of collapsing.


President Obama took immediate action to deal with the crisis, reverse the trends.  The evidence is that the trends have been reversed, the housing market has stabilized, the financial market has stabilized, the auto sector has come back significantly to be now, GM is now the world leader in autos once again.  We’ve had 29 consecutive months of private sector job growth, 4.5 million private sector jobs.


For me, since I’ve worked a lot on manufacturing in my life one of the really signature numbers here is the strength of the manufacturing job comeback, so we’ve have 528,000 manufacturing jobs created.  That significantly has been driven by the auto industry and the policies that were taken to essentially help rebuild the auto industry.  So we have had a very strong manufacturing resurgence in jobs. 


But that doesn’t mean there isn’t a lot left to be done so it’s very important to continue the work.


Last fall, in September, just about a year ago now, the President put before the Congress an American Jobs Act.  The American Jobs Act was judged by outside economists to be a set of policies including continued payroll tax relief, infrastructure spending, support to states to hire more teachers, firefighters, et cetera.  That package was estimated to be worth about two million jobs to the U.S. economy.  The Congress ended up passing less than half of that legislation.  They left a million jobs on the table.  A million jobs.


So the President has been focused on the issue of jobs and growth from the very beginning and continues to put before the Congress proposals.  Proposals on, for example, a ten percent tax credit to small businesses who increase their wage bill -- either their employees or their wages -- over the past year.  Again, that just sits with the Congress.  The Congress isn’t doing anything.  The Republicans are blocking that.


Of course it’s not enough to restore growth in the United States.  We have to worry about the issue of rebuilding.  We have to focus on education.  We have to focus on infrastructure.  We have to focus on research for future growth.  But we also have to deal with the deficit.  Here I would just say the President has been very clear.  He’s put out a plan, $4 trillion of deficit reduction over the next decade.  A balanced plan, $2.50 of spending cuts for every $1 of revenue increases.  The revenue increases come from essentially an increase in the level of taxation at the top two percent of the income distribution, plus some corporate tax reform, although much of the revenue in the corporate tax area would go to lower the corporate tax rate -- something that the President views and most economists view as very important to the health of the U.S. economy.


I’m going to end here by just saying -- because I really want to hear your questions -- that on every single issue I’ve mentioned, Governor Romney has very different views.  He would implement immediate spending cuts in the economy.  He has said an additional five percent next year.  He has said inconsistent things.  He’s said I worry about the fiscal cliff, says Romney, but on the other hand I want to have some additional emergency spending cuts to help create jobs in the U.S. economy.


He has a deficit reduction plan, I use the plan a little bit with asterisks, which starts with a $5 trillion tax cut.  I don’t think a deficit reduction plan can start with a $5 trillion tax cut.  I think you start with deficit reduction and you think about the balanced approach of revenues and spending cuts.


In order to begin to finance the $5 trillion of tax cuts he’s got to do two things.  We’ve now seen evidence in the past few weeks, non-partisan evidence from the Tax Policy Center and from other outside economists, his tax plan he says would be paid for by tax reform.  Well, if you look behind that, the tax reform cannot save enough at the top to support a tax cut at the top that he is championing.  So the middle class would have to pay for some of the tax cut at the top.  That’s one part of his problem.


The second part of his problem is in order to try to get $5 trillion in tax cuts and meaningful deficit reduction, he has got to slam slash significant spending in all areas.  If he’s going to actually put a floor on defense spending and say defense spending will not fall below four percent of GDP. If he says, as he has said, I’m not going to cut Medicare or Social Security for the next ten years, although I might seriously eliminate it through a voucher but I’m not going to cut Medicare right now.  When you add that all up he’s saying I am going to do significant deficit reduction over the next ten years with 50 percent of the budget off the table and a $5 trillion tax cut.  It doesn’t add up.  The numbers don’t work.


And so the contrast is, the CBO has taken President Obama’s detailed deficit reduction plan for ten years and said yeah, it stabilizes the debt, yes, it brings non-defense discretionary spending to the lowest share of the economy since President Eisenhower.  It works.  There is no way that the CBO can add up the numbers on the Romney plan, it’s not detailed enough.  But if you look at individual parts of it you see it doesn’t add up.


When the CBO, and this is where I’ll stop, did the analysis of the Ryan Plan, basically they just accepted this notion that Ryan said, “I assert that”, “I assert that these will be the cuts in spending.”  I’m not going to tell you what they are, I’m not going to tell you how we’ll do them, I’m not going to tell you what will be cut, except Medicaid.  I’ll cut Medicaid by block granting.  I’ll cut $800 billion from Medicaid which is just about the price tag of extending the Bush tax cuts for the top two percent, so that’s a really interesting and revealing contrast, right?  If you cut $800 billion from Medicaid over the next ten years, and you repeal ObamaCare.  That means probably 50 million additional Americans without health insurance, another very defining difference.


Let me stop there.  That gives you some sense of where I think the big contrast, big choice issues are, but I’m happy to answer questions about any aspect of the economy.


Question:  Of course the unemployment is the most important issue of this year.  I would like to know, is there something that Obama can do besides the Jobs Act that is in Congress? Can he use executive order?  And do you expect that he will speak about this problem in his speech tomorrow?


Ms. Tyson:  I certainly think that jobs, job creation, and I want to say good job creation, have been at the top of the agenda.  I’m sure the President will speak about it in his remarks. 


I emphasize that we entered, the President came into office at a time when jobs were slipping at 800,000 a month.  We were facing the biggest decline in jobs since the Great Depression.  We have crawled back continually through the last 29 months, month after month after month of private sector job growth.  So now you get to the 4.5 million.  So you have to say the trend is positive, but we have a long way to go.  The President has said that.  That’s why he put out the Jobs Act.  That would have been two million by, again, the independent outside estimates. 


I think the President will continue to say look, I have an agenda for both short term or near term job creation.  Whether it’s the small business tax cut I mentioned or an increase in infrastructure spending or an effort to get tax relief to small businesses.  The President has been very focused on small businesses.  He’s cut small business taxes 19 times in a lot of ways, and he has continued to say let us do more. 


At the same time the President has to talk about, and he will talk about, the longer term job creation issue.  The longer term job creation issue is essentially as the economy continues to recover, number one, don’t slam it with spending cuts that would actually push it back into recession.  Don’t force it over a fiscal cliff.  Don’t contract dramatically at the wrong time.  But at the same time recognizing as the economy recovers we’ve got to invest more in education, job training, research, infrastructure.  Areas where the government through its policies can help create jobs.


I want to emphasize here aid to the states.  It’s a small part of what the President said in the American Jobs Act, but it’s actually very important.  One of the distinct features about this recovery is that private sector job growth since the recovery started officially in June 2009, is actually stronger than private sector job growth was for the comparable period coming out of the 2001 recession.  So if you actually just look at private sector job growth, this recovery has actually been stronger than recovery following the recession in 2001.


What has been holding back the pace of job creation is public sector employment.  Public sector employment usually comes back in a recovery.  It is not this time.  It’s continuing to contract.  The problem is significantly at the state and local government area, with help from the federal government such as the help that the President suggests.  That is a helpful, near term job creation area.


Romney makes fun of such policies.  He literally says that such a policy would throw flames on the fire of the economy.  It’s so clear, if you look at the Congressional Budget Office estimates of what are the most powerful near term job creators, federal aid to states is right at the top, and payroll tax relief is at the top.  These are things the President has championed.  The Republicans have stood against him.  He managed to get part of it through.  But if he could get the rest of it through along with a longer term deficit reduction package, that’s the way to think about jobs in the near term and the long term.


Question:  I would like to draw your attention to the speeches which were made last night when Mitt Romney was said to be a pioneer of outsourcing.  Can you tell us in this highly globalized world, can the U.S. economy life without outsourcing?


Ms. Tyson:  It’s a good question.


I think that first of all I want to start with some very good news in terms of the U.S. economy’s longer term outlook.  We have, because of our investments in alternative energy, because of the explosion of natural gas as an alternative energy, because of our declining dependence on oil, because that means relatively speaking our energy price environment, our energy cost environment is improving, we have that.  We have the continued productivity advances of the U.S. work force, and we’ve had basically very modest wage growth.  So in terms of labor cost advantage as a place to do business we look more attractive now.


So the President has had, he had a big conference last year on insourcing, the fact that U.S. companies are beginning, because the energy price environment and the labor cost environment are more attractive, they’re beginning to say at the margins we’ll keep some jobs in the U.S. or we’ll bring some jobs back. 


So the first thing is the improving cost environment.


The second thing is the President has said we should not have in our tax policy policies which actually reduce taxes to help companies move abroad, but then actually we also have taxes which make it less attractive for them to bring the jobs home.  Why are we doing that?  We need to reform the corporate tax code so it’s neither an incentive or a help to send jobs abroad, nor is it a disincentive to bring jobs home.


The third thing I want to say is the President, the Jobs Council really focused on this.  The Jobs Council said other countries around the world are doing a lot to promote foreign direct investment.  A lot of what they do is essentially selling foreign direct investment.  Organizing trade missions, foreign direct investment missions, acting as a coordinator between business and government.  The U.S. government should do more of that at the federal level.  The President has set up a new group within the Commerce Department and now the State Department is also doing this, sort of upgrading its economic counselor so they focus much more on foreign direct investment flow inside to the United States.


So I actually think it is important to recognize that insourcing, outsourcing, supply chain complexity, supply chain disaggregation, is here to stay.  The challenge for the U.S. is to make the U.S. a very attractive place to do business so the U.S. companies decide to stay, bring back, and foreign companies continue to move here.  And we shouldn’t do anything, as I said, in a biased way to influence outsourcing or insourcing by our tax codes.  We have to change our corporate tax code.  The President has embraced that.


Question:  I have two questions.  What do you expect from President Clinton’s speech tonight?  And what President Obama’s going to do if on Friday after his speech the unemployment rate is not on his side?


Ms. Tyson:  Those are good questions.


I think I’ve heard President Clinton talk about the Obama administration’s economic policies before, and I think what he’s going to emphasize is that really, the agenda that the President has been following and proposes to follow going forward is really very similar to the agenda that the Clinton administration put together in the first economic plan, 1993, and then carried through.  That plan is investments in key areas on which growth and competitiveness depend.  Education being important, research, infrastructure.  But a very serious and balanced approach to deficit reduction which is long term, gradual, includes both revenue increases at the top and spending cuts.


One of the things that I think he will emphasize is that he was, and I remember because I was there, severely attacked by the Republicans for raising taxes at the top of the income distribution.  No Republicans voted for his budget.  Al Gore had to be the deciding vote in the Senate.  There were all sorts of estimates of how many jobs would be destroyed by that.  And of course under President Clinton we had 23 million private sector jobs added.


Now I want to say -- Think about this.  There is a tax increase at the top.  Job creation is extremely strong.


President Bush tax cuts, job creation is extremely weak.  The rate of growth of investment, the rate of growth of jobs, the rate of growth of GDP under George Bush from 2001 to 2007 was significantly slower than under President Clinton.   So just think about that simple issue.


I think he will talk about the need for a balanced approach to deficit reduction, significant investments, continued emphasis on another signature Clinton initiative area was on trade, and I think that the Obama administration having completed the three major trade agreements including the South Korea Trade Agreement, now champion the TPP, the TransPacific Partnership, actively using the WTO for effective trade enforcement cases, has a really important record on trade.  So these are things I’m guessing the President will talk about.  But it will start with where President Clinton starts and where President Obama starts, which is the need for good jobs for the middle class.  That is really what both Presidents have been about.


There are a number of things to say about the unemployment rate.  First, as a professional economist, everyone will note that these numbers vary from month to month, that there are imperfect seasonality effects.  I don’t even know what the effects of weather were in the month of August, but they may have been significant.  So first of all, we shouldn’t read too much in a single number, but the politics of that -- Maybe the politicians won’t listen to the economists when we say that.


I think we have to say that the President, again, I anticipate the continuation of private sector job growth, so we’re not going to see a decline in private sector employment.  The question is going to be if you look at the one number, the unemployment rate, what happens to that.  I think the right emphasis here has to be continued private sector job growth.  Not at a rate that we’re satisfied with.  We want stronger growth.  But we have put out a series of policies to get stronger growth and we’ve been blocked by the Republicans.  And they haven’t put out any policies.


I challenge you to come up with a single policy that you heard at the Republican Convention that would affect the pace of job creation in the near term.  In fact I would say anything you heard would actually impair, endanger job creation in early 2013.


Question:  As much as President Obama seems to be doing just great in terms of the likeability factor, he’s still trailing Mitt Romney in terms of who is best qualified or suited to deal with the economic situation.  Do you feel that there is something that you still need to do in terms of improving your message as far as the economic question is concerned?


Ms. Tyson:  I guess the answer is we really have to continue to work on messaging because I think the evidence is completely inconsistent with that perception.


Just look at the performance of Massachusetts under Governor Romney.  He won’t talk about Massachusetts very much.  He doesn’t like to reflect the fact that he once was a high-ranking government official.  Massachusetts did worse than the nation in terms of things like median income growth, in terms of things like employment.  So he doesn’t have a record in the part of his life which is a public sector part of his life, and he doesn’t have a set of policies which suggests what he would do to increase job creation going forward.


So I don’t understand the perception and I do think it’s our challenge to do as much as we can to improve people’s understanding of the choice.  I believe the choice on jobs and on long-term deficit reduction and on growth is absolutely clear.  It’s absolutely clear, but we’ve got to do something to make sure in the next few weeks to the extent that that perception is still out there, that we change it.


I think that President Clinton’s speech tonight and President Obama’s speech tomorrow night will help a lot in that regard.  As I said, I felt we had resounding silence in terms of policy initiatives coming from Romney and Ryan in their convention.  So the American people who are thinking, anyone who thinks that, says what did I hear?  I didn’t hear anything that tells me what they would do. I think in contrast you’re going to hear and you have heard from this administration, this is what we would do.  This is how we would do it.  This is evidence that it’s working.


Question:  I want to ask a question about President Obama’s vision for the future economic relationship with China, especially in the issue of the currency.  He didn’t label China as a currency manipulator in the first term.  Will he continue to do that in the second term?


And thinking about the foreign investment from China.  It’s a big trend now.  So far there’s some complaint about how difficult it is for Chinese companies to make investment in the United States.


Can you comment on those two issues?


Ms. Tyson:  Sure.  The Obama administration has continued, as you know, a very important initiative of having an ongoing high level bilateral economic dialogue with China.  And on that dialogue list are many things.  I tend to focus most significantly on market access issues in both countries. 


So when we sit down with China and talk to them about our concerns about foreign investment in China or our concerns about say the indigenous innovation effort, that I think is the most important set of things we do and the Chinese talked to us about their concerns.


So I would say you have to put the currency issue within a whole constellation of other issues.


We also talk about macroeconomics on our country and their country in China.


So I would say I feel the administration has followed the correct course in terms of its actions on the currency question.  In the meantime, of course, on real inflation adjusted terms, the Chinese currency has continued to appreciate.  And of course now the Chinese economy is slowing down significantly as well.


In discussing this issue as we go forward, I think we have to discuss it within the context of all of the trade and investment relations with China and I think they will continue to do that.  But I support the position they’ve taken so far and I think that’s the position they should continue to take.  That’s my position.  I’m not making a prediction about what they’re going to do, but that’s my sense.


Marie Harf:  I’d make a couple of quick points on that as well.  I think that’s right.  And I think this is one of those areas where the contrast with Mitt Romney is really, really clear.  That he’s pledged on day one of his presidency to designate China a currency manipulator, which has gotten him criticized by everyone from the Chamber of Commerce saying it’s unnecessary to conservative media outlets in the United States, people that aren’t supporters of the President generally, certainly, but have said that would be an unnecessarily hostile action and that it wouldn’t be good policy.


Again, this is an election with a choice.  On this issue he has made his policy clear, and again our policy, we feel it strikes the right balance.


Ms. Tyson:  So on foreign investment in China, let me say I think this is, again, the administration; I was really struck by this.  What a powerful message came from the business community to the President through the Jobs Council on the importance of foreign direct investment in the United States.  The President is completely on board with that and he’s completely on board with the fact that we should continue to follow in the United States non-discriminatory, non-preferential policies to foreign investors, and that we should continue to follow the well contained but well motivated and defined [SIFIUS] approval process for foreign direct investments in the United States.


Really when you sit down and look at, there has been a significant increase in both the volume and value of Chinese foreign investment in the United States.  We do have a couple of previous past high profile cases which Chinese investors worry about, and I think the federal government under President Obama’s leadership and a lot of state governments around the United States now are really working to say that is just, that perception is wrong.  We welcome Chinese foreign direct investment and we will work with you.


Question:  There has been heavy criticism by Democrats to the Ryan/Romney plan on Social Security and Medicaid, especially for this idea of increasing the retirement age, creating vouchers, and sending the Medicaid to the states.  As a professional economist, what is it that you would do with Social Security to really have available funding not only for --


Ms. Tyson:  Social Security or for health?


Question:  Specifically Social Security, so that there are funds available not only for this generation but for the 20-something that are coming up.


Ms. Tyson:  The reason I asked Social Security or health is because I actually think as most of my professional colleagues outside of government think, that the real issue in entitlements to the United States is not Social Security, it’s actually health.  And that you could actually -- We’ve had numerous commissions over the years that have come up with bipartisan solutions for what to do with Social Security including some additional means testing at the top, including perhaps some additional revenues to get through the demographic bulge.  We have a demographic bulge problem. 


If we have a real serious effort -- If we had not taken -- I just really want to recall this because it’s so much a lost opportunity.  We had a budgetary surplus in 2000 and 2001, and many economists were saying what we should do with this is take it and replenish the Social Security Trust Fund which we had been running down when we’d been running deficits.  So we had an opportunity to make a capital investment in the Social Security Trust Fund.


I think we should think about those kinds of ways to handle Social Security.  I’m totally opposed to privatization.  One of the wonderful things about the Ryan history is you can say okay, he’s for deficit reduction but he supported a privatization plan which would have added $2 trillion up front to the deficit because we have to do a transition.


So I think there are things one can do in the Social Security area, but I think personally the major difference is health.  I really do.  Medicaid, there’s no evidence -- Medicaid is not a cost containment policy.  The problem in entitlements in health is cost containment.  How do you slow the rate of growth of costs?


Shifting to the states is not cost containment, it’s just cost shifting.  So it’s going to go from the federal government to the states and it will go from the states to the beneficiaries, and maybe we’ll see 50 million people without health insurance if we also repeal ObamaCare.


What about vouchers?  I was on President Clinton’s Medicare Commission in 1998.  We actually looked seriously at premium support and there were two Clinton officials on that commission that came very close, and I was one of them, to voting for premium support.  And you know what?  At the end of the day we said no.  We didn’t say no because President Clinton told us to say no.  We said no because you know what?  This isn’t going to work.  This isn’t going to work.  There is no evidence that competition among private insurers slows the rate of growth of health care costs.  Actually it’s the opposite.  It’s the opposite.  And since 1998 all of the evidence has come in to confirm that concern.  The CBO has said repeatedly now, no evidence competition among insurance companies -- They just pass rising prices on to the beneficiary.  There are no cost containment effects.


So I think cost containment, which starts in all of the innovations in ObamaCare and which feeds in through Medicare and Medicaid is the major way the U.S. will solve its entitlement problem. I do not actually see Social Security as a major part of the problem.  I think with a few tweaks here and there you could get 75 years to the Trust Fund and you’d be set.


Question:  How big or how decisive of a factor is this negative perception of Obama’s economic policy as far as the presidential election is concerned?


Ms. Tyson:  You have to ask people who actually do -- I am an economist, I’m not a pollster.  I’m not someone who can really -- As I said, my answer to your question initially was I can’t understand why people believe this.  I’m very worried about one thing which is people need to pay attention to the evidence and there are a lot of shall we say misleading comments being made.


One of the most dramatic that’s been up in the past few weeks is that the President actually has taken away the work requirement for welfare.  It’s just absolutely not true.  In fact what he said to the states, I’ll give you more flexibility but only if you successfully and in an evidentiary way bring work up and enforce the work requirement.  That’s what he said.


So I am worried that there are assertions about economic policy and economic reality.  So if I say that independent economists said the President’s Jobs Act would have created two million jobs and the Republican opposition left more than a million on the table, that actually has been supported by outside analysts.  But if you start saying things like well I won’t let the campaign be driven by fact checkers, I as a fact-driven person don’t know what to do with that.  I don’t know what to do with that.


I heard some criticism recently, this is not about the administration, but I was in an interview where someone criticized Ben Bernanke for citing evidence to support his policies 43 times.  I said what’s the matter with that?  We’re looking for evidence to support something that works.


The word stimulus doesn’t come up very much anymore, but if you look at the independent assessments of stimulus, yes, it worked.  Government spending does create jobs, and it creates jobs more powerfully than tax relief does.  That’s what the CBO says over and over and over again.  If you have some suggestions about how to get evidence-based messaging out, I’d be happy to hear them.


Ms. Harf:  A few points about the politics.  I think that’s one of the reasons that this convention and what we’re focusing on in the speeches is so important.  What you heard last night, what you’re going to be hearing tonight, and certainly what you’ll hear tomorrow night from the President and the Vice President.


Last week in Tampa what we heard from the Republicans wasn’t a way to move the country forward, wasn’t a way to focus on the middle class, was a lot of trying to tear down their opponents, often by taking some really liberal leaps with the facts.  And you’re hearing a very different message from us here in Charlotte.  I think the American people want to hear that, want to hear us talking about the way to keep building the economy from the middle out. They want to talk about what we’ve accomplished, but how much more work we have to do and how we’re going to do that in a way that’s fair and that helps all Americans and it doesn’t just help those at the top.


So the vision, our vision for the country could not be more different than Mitt Romney’s, and I think if anything their convention last week compared to our convention this week has crystallized that difference.  I think the American people are listening and they’re watching.  I do think that difference in vision is breaking through.


Ms. Tyson:  I think I’ve heard a wonderful new expression here that’s called liberal leaps with the evidence, with the facts.


One last question.


Question:  It seems to be that we have two negative here. One that Democrats saying we are in the right track but we need more time.  We ask you to be patient.  The other side, Romney people are saying something like okay, where do you see the debt, the public debt of America is increasing so high that it’s endangering the whole thing.  Today the American debt for the first time, you know, rise to $16 trillion.


How could Obama address tomorrow the problem of the increasing debt and without endangering the whole thing?


Ms. Tyson:  What comes to mind here is the reality that if you’re serious about the long run debt you do not start your program with a $5 trillion tax cut.  It’s the wrong sign.  It’s a negative. You’re trying to find additional revenues and spending cuts to deal with a long run debt.


So what do Romney and Ryan propose?  They propose to keep all the Bush tax cuts which if we actually eliminated all the Bush tax cuts we would be halfway there in terms of deficit reduction.  But no one’s proposing that.  But just to say think about them.   They’re saying we keep all the Bush tax cuts, we double down, we add another $5 trillion.  Then oh dear, we have to balance the budget, we have to stabilize the debt.  But gee, initially we’re going to have to increase the debt dramatically to pay for those tax cuts.  That’s okay, let’s figure out some big spending cuts we can do immediately.  Well, that’s Medicaid.  Oh we better not do anything on Medicare or Social Security because we’ll lose the elderly voters so we’ll put all that off until 2022 and beyond.  It’s just not credible.


They can’t attack a President who has a ten year plan that’s been scored by the Congressional Budget Office that cuts $4 trillion off the deficit.  $2.50 of spending cuts for every $1 of revenue increases.  Stabilizes the debt to GDP ratio.  This has all been confirmed by the Congressional Budget Office.  Brings non-defense discretionary spending as a share of GDP to a more than 50 year low. Those are the facts about the President’s plan.


If the Republicans are saying, if Romney is saying I’m worried about the debt, I would then say to him okay, so what’s your plan?  He doesn’t actually have a detailed plan.  The details he’s put out there are $5 trillion of tax cuts on top of the Bush tax cuts.  I assume he’s going to embrace Ryan’s Medicaid cut, although I’m not sure.  He’s going to embrace the voucher scheme, but that doesn’t start to have any effect until after 2022, 2025, 2030, and by the way, as I said, it’s not a cost containment scheme.  That’s just a scheme to say the federal government will only spend so much a year; the rest of the problem is put onto the beneficiaries.  We’re going to impose debt reduction on the beneficiaries because we want to improve the debt at the federal level.


So that would be my response.  I think the President has a plan.  It has been scored.  He has said there are longer run, bipartisan solutions that he is willing to work on.  He submitted such solutions last summer in anticipation of the debt limit.  He was rebuffed by the Republicans in Congress.  He was rebuffed by Ryan who walked away from the Simpson Boles Commission.


I think the President’s record here speaks for itself.  He is the only one with a serious plan on the table that’s been scored and he has indicated his willingness to work on the longer-term issues with the new Congress.  He indicated his willingness to work on it the last Congress. It’s just they wouldn’t agree to work with him.


Meanwhile, Romney’s plan explodes the deficit up front through $5 trillion of extra tax cuts.


Thank you.