One senator's plan to reduce deficit

Sen. Tom Coburn, R-Okla. reveals his ""Back in Black"" plan to reduce the federal deficit, Monday, July 18, 2011, during a news conference on Capitol Hill in Washington. (AP Photo/J. Scott Applewhite)

Sen. Tom Coburn, R-Okla., served on the Simpson-Bowles commission, is a member of the Gang of Six and has published “The Debt Bomb: A Bold Plan to Stop Washington from Bankrupting America.” We spoke last week in his office. This is a lightly edited excerpt:

Ezra Klein: ‘Taxmageddon’ is coming at the end of the year. Depending on how you look at it, it’s an opportunity for Congress to trigger a massive and unnecessary fiscal crisis or to actually get some serious legislating done on our long-term fiscal issues. Are you optimistic about the outcome?

Tom Coburn: No. But it depends on what the mix is. If President Obama is still president and we’re in control of the Senate, I think you’ll see significant attempts to get something done. But I don’t think they’ll be much more successful than what we saw in August. And I wouldn’t consider that very successful. If Romney wins and we win control in the Senate, we have to send a signal that we’re going to fix it in order to take away all that potential risk to the economy.

Q: When you look at the Romney scenario, it seems Republicans have spent a few years learning how to take tough votes on the budget, particularly on the Rep. Paul Ryan plan. So if Republicans control the House and Senate, it seems to me that you’d see quite dramatic action on those issues, as they can be passed with 51 votes through budget reconciliation.

A: Well, you can. Ryan has a good plan. I don’t think it goes fast enough. But the fact is he’s got a plan. The president won’t put out a plan. Senate Democrats won’t put out a plan. It’s kind of like boxing with a shadow. You can’t ever hit it. But it doesn’t matter if you’re Democrat or Republican. The pain will get worse every year we don’t fix these things.

Q: I want to come back to the question of the plans in a second. But your book opens by imagining a dire fiscal crisis in 2014. And this goes to your contention that Ryan’s plan doesn’t bring down the debt fast enough. Where do you get the urgency of your schedule? I look at Treasuries, and they’re selling with very low yields. So you can say that’s just the Fed manipulating prices. So then I look at credit-default swaps on the United States, and there are no alarm bells there, either. I look at countries like Japan and England that have carried on with high debt levels for a very long time.

A: Well, you need to go study Japan. They’re going to crash.

Q: People have been saying that for 20 years.

A: You have two things coming together. This is the first year they’ll be a net issuer of debt outside their country. They’ve totally financed all their debt internally. We haven’t. That’s one big difference. They also have a much lower birth rate. So their population is shrinking and their demographic shift is much worse than ours. And this year, the postal system there that runs all their retirement accounts will not be buying any government debt. Zero. So the Japanese government, for the first time, is going into the international market. And the yen’s value is going to decline against every major currency. And they’ve now had almost two decades of no real GDP growth. So Japan isn’t going to make it. The reason they haven’t had any problems is they haven’t asked anyone else in the world to buy their debt. Now they’re going to have to.

The same thing ultimately will happen to us, but we’ll be the last person it happens to. The world still views this as the safest place. Europe is going to print money just like Ben Bernanke is printing money. And what’s the end result of that? Inflation.

Q: When Bowles-Simpson went before the House, it was rejected by a huge bipartisan majority. Could one outcome of the taxmageddon period be a grand bargain in the Gang of Six/Simpson-Bowles vein?

A: I don’t know the answer to that, frankly. The vote in the House proves what I said in the book. You had a vote in the House on a plan that could solve our problems and the Democrats didn’t vote for it because it touches Social Security and Republicans voted against it because of revenues. Both sides accentuated their differences rather than sending a signal to the international community that we could get together and cut $4.5 trillion over the next 10 years. Which raises the question: Why are they here? If you’re here just to get re-elected, you’re worthless to the country.

Q: You’re searingly critical of Congress in the book. So let me ask: How do you fix the Senate?

A: Let the Senate operate the way it’s supposed to: Put stuff through committees. Bring it up in regular order. Have an open amendment process. I’m the number one amendment offerer in the Senate in the last few years. The point is the Senate really could work if you let it work on the real issues. If you were to put Simpson-Bowles on the floor and really have a strong debate on that bill, it could get through the Senate.

Q: When I talk to the party tactician types, the senators trying to figure this out, their argument is that when you try to do this out in public, with 24-hour news media broadcasting every move and every possible compromise, the issue polarizes, the interest groups descend, the party bases descend and solutions get taken off the table. In the end, they think there will have to be some big backroom deal. They think a more open process would make this harder, not easier.

A: I just adamantly disagree. That’s the sickness of Washington. What that really says is the politician doesn’t want to stand up and debate and tell their interest groups no.