S. HRG. 110–221

S. 2063, THE BIPARTISAN TASK FORCE 

FOR RESPONSIBLE FISCAL ACTION 

ACT OF 2007

HEARING

BEFORE THE

COMMITTEE ON THE BUDGET 

UNITED STATES SENATE

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

October 31, 2007—S. 2063, THE BIPARTISAN TASK FORCE FOR 

RESPONSIBLE FISCAL ACTION ACT OF 2007

(

Printed for the use of the Committee on the Budget 

S. 2063, THE BIPARTISAN TASK FORCE FOR RESPONSIBLE FISCAL ACTION ACT OF 2007

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39–356pdf 2007

S. HRG. 110–221

S. 2063, THE BIPARTISAN TASK FORCE 

FOR RESPONSIBLE FISCAL ACTION 

ACT OF 2007

HEARING

BEFORE THE

COMMITTEE ON THE BUDGET 

UNITED STATES SENATE

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

October 31, 2007—S. 2063, THE BIPARTISAN TASK FORCE FOR 

RESPONSIBLE FISCAL ACTION ACT OF 2007

(

Printed for the use of the Committee on the Budget 

COMMITTEE ON THE BUDGET 

KENT CONRAD, NORTH DAKOTA, CHAIRMAN

PATTY MURRAY, WASHINGTON 

RON WYDEN, OREGON 

RUSSELL D. FEINGOLD, WISCONSIN 

ROBERT C. BYRD, WEST VIRGINIA 

BILL NELSON, FLORIDA 

DEBBIE STABENOW, MICHIGAN 

ROBERT MENENDEZ, NEW JERSEY 

FRANK R. LAUTENBERG, NEW JERSEY 

BENJAMIN L. CARDIN, MARYLAND 

BERNARD SANDERS, VERMONT 

SHELDON WHITEHOUSE, RHODE ISLAND 

JUDD GREGG, NEW HAMPSHIRE 

PETE V. DOMENICI, NEW MEXICO 

CHARLES E. GRASSLEY, IOWA 

WAYNE ALLARD, COLORADO 

MICHAEL ENZI, WYOMING 

JEFF SESSIONS, ALABAMA 

JIM BUNNING, KENTUCKY 

MIKE CRAPO, IDAHO 

JOHN ENSIGN, NEVEDA 

JOHN CORNYN, TEXAS 

LINDSEY O. GRAHAM, SOUTH CAROLINA 

MARY ANN NAYLOR, Majority Staff Director

SCOTT B. GUDES, Staff Director

(II) 

iii

C O N T E N T S 

HEARINGS 

Page 

October 31, 2007—S. 2063, The Bipartisan Task Force for Responsible Fiscal 

Action Act of 2007 ................................................................................................ 1

STATEMENTS BY COMMITTEE MEMBERS 

Chairman Conrad .................................................................................................... 1

Ranking Member Gregg .......................................................................................... 9

Senator Byrd................................................................................................................. 106

WITNESSES 

Robert L. Bixby, Executive Director, The Concord Coalition ............................... 80, 83

Hon. Steny H. Hoyer, Majority Leader, United States House of Representatives ....................................................................................................................... 13, 17

William D. Novelli, Chief Executive Officer, American Association of Retired 

Persons (AARP) .................................................................................................... 54, 57

Hon. Leon E. Panetta, Co-Chair, Committee for a Responsible Federal Budget, and Director, Panetta Institute for Public Policy ......................................... 23, 27

Hon. David M. Walker, Comptroller General of the United States, U.S. Government Accountability Office............................................................................. 34, 37

(1)

S. 2063, THE BIPARTISAN TASK FORCE FOR 

RESPONSIBLE FISCAL ACTION ACT OF 2007

WEDNESDAY, OCTOBER 31, 2007

U.S. SENATE, 

COMMITTEE ON THE BUDGET, 

Washington, DC. 

The Committee met, pursuant to notice, at 9:03 a.m., in room 

SD–608, Dirksen Senate Office Building, Hon. Kent Conrad, Chairman of the Committee, presiding. 

Present: Senators Conrad, Nelson, Stabenow, Cardin, 

Whitehouse, Gregg, Domenici, and Graham. 

Also present: Senator Voinovich. 

Staff present: Mary Ann Naylor, Majority Staff Director; and 

Denzel McGuire, Minority Staff Director. 

OPENING STATEMENT OF CHAIRMAN CONRAD 

Chairman CONRAD. The hearing will come to order. I want to 

welcome everyone to today’s Budget Committee hearing on the Bipartisan Task Force for Responsible Fiscal Action Act, which Senator Gregg and I have introduced just last month. This hearing is 

designed to give the Budget Committee feedback on the proposal 

from key leaders and policy experts. I would like to welcome especially the distinguished witnesses we have here today. 

House Majority Leader Steny Hoyer has done an outstanding job 

in his leadership role in the House, has been a strong advocate for 

PAYGO fiscal discipline and addressing our long-term fiscal challenges. We are honored to have him with us today. 

In addition, we have former House Budget Committee Chairman, 

OMB Director, and White House Chief of Staff, Leon Panetta, who 

brings an unparalleled level of Government experience and knowledge to the table. In his role as Co-Chairman of the Committee for 

a Responsible Federal Budget, Leon Panetta continues his commitment to a sound fiscal future for the country. 

We also have with us today the Government Accountability Office Comptroller General David Walker, who has truly driven the 

national agenda on this issue, and we are indebted to him for his 

leadership. His convening of the Fiscal Wake-Up Tour is providing 

a tremendous public service and is getting a very strong response 

from around the country. We cannot thank him enough for his efforts and for being here today. 

The AARP CEO Bill Novelli brings another important voice to 

the table. As the leader of AARP, Bill Novelli represents the 38 

million members of his organization age 50 and older. We very 

2

much appreciate Bill Novelli and the vision and the leadership that 

he has brought to these issues. 

And we also have with us the Concord Coalition Executive Director Bob Bixby. Bob has joined Comptroller General Walker and 

Leon Panetta on the Fiscal Wake-Up Tour and has been another 

leading voice in the fight for fiscal responsibility. And I thank all 

of these witnesses. 

Let me begin by just briefly outlining the problem as we see it 

and the key elements of the legislation Senator Gregg and I are 

proposing. Put up the first slide, if we could. 

We are facing a demographic tidal wave. The number of retirees 

is projected to climb to roughly 80 million people by 2050.

3

Let’s go to the next slide, if we could. 

Rising health care costs are compounding the problem by exploding the cost of Federal health programs. By 2050, if nothing 

changes, more than 20 percent of our gross domestic product will 

be spent on Medicare and Medicaid alone. That is more than we 

now spend on the entire Federal Government.


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Let’s go to the next one. 

We do not just have an entitlement spending problem. A lot of 

the emphasis on this hearing today, I have noticed, is about entitlements, and clearly, they are at the center of what needs to be done. 

But we also have a larger imbalance between revenues and expenditures. If all of the 2001 and 2003 tax cuts are made permanent 

without offset, the costs will explode at the same time that the cash 

surpluses in Social Security and Medicare become deficits. In other 

words, the tax cuts will dramatically worsen an already deteriorating, long-term budget picture—that is, if they are un-offset either by spending reductions or by other revenue.


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Clearly, we have to act, and we have to act sooner rather than 

later. Here is a quote from the Federal Reserve Chairman Mr. 

Bernanke making exactly this point. He said, ‘‘One might look at 

these projections and say, well, they are about 2030 or 2040, so we 

really do not have to start worrying about that yet. But, in fact, 

the longer we wait, the more severe, the more draconian, the more 

difficult the adjustments are going to be. I think the right time to 

start is about 10 years ago. And the reality we confront is that 

whatever option is chosen, we must have bipartisan support. These 

problems are simply too big to be tackled by one party alone.’’


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The former Treasury Secretary John Snow made this point earlier this year. He was quoted in the Wall Street Journal as saying, 

‘‘You cannot do health care reform or Social Security reform without a bipartisan consensus. If we have made a mistake, it was not 

approaching it in a more bipartisan way.’’


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Now, clearly, we must do this on a bipartisan basis. That is why 

Senator Gregg and I believe our legislation is an approach that 

could work. Here is a summary of how it works.


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It creates a bipartisan task force designed to address the 

unsustainable long-term imbalance between spending and revenues 

with a special focus on the long-term entitlements. Everything will 

be on the table. 

It will be made up of 16 members—8 Democrats and 8 Republicans. The Senate Majority Leader and the Speaker of the House 

will select the eight Democratic members; the Senate and House 

Minority Leaders will choose six Republican members. The two additional Republicans will include the Secretary of the Treasury 

Henry Paulson, who would chair the group, and another administration representative selected by the President. 

All task force members must be currently serving in Congress or 

the administration. The task force would submit its report by December 9th of 2008 to be acted upon by the incoming 111th Congress. This will come after the November election, so Presidential 

politics should not play a part in the outcome. 

To ensure a bipartisan result, three-quarters of the task force—

12 of the 16—must agree to the report. Each side will have to move 

off their hardened positions to reach an agreement. To ensure timely action, the legislative recommendations will be given fast-track 

consideration in the Senate and the House. And to again reinforce 

the bipartisan nature of the legislation, final passage will require 

a supermajority—three-fifths of both the House and the Senate. A 

strong bipartisan vote for legislation will help ensure it receives 

wide support from the public and is not overturned by a future 

Congress and administration. 

I believe the stakes are enormously high for this country. I believe our Nation’s fiscal future is on the line. We simply cannot ignore the coming crisis and hope the future will somehow solve 

these problems unaided by congressional and administrative action. 

The longer we wait, the harder the choices will become. The time 

for action is now. 

I know these are difficult subjects. I have had colleagues come 

to me over the last several days and express concern about the direction we are taking, concern about what Committee of jurisdiction would be affected, concern about one aspect of this, the timing 

of it, the make-up of the group. All of those are legitimate concerns, 

and that is why we are having this hearing, to try to get on the 

table what are serious concerns that could be addressed constructively. 

With that, I want to turn to my colleague Senator Gregg, who 

has been such an able partner in this effort. While Senator Gregg 

and I sometimes disagree on matters before this Committee, on 

this we are absolutely joined at the hip. We believe strongly that 

this is an opportunity to address these long-term fiscal concerns. 

I also want to welcome our colleague Senator Voinovich, who is 

not a member of the Committee but who has asked to sit in today, 

and we certainly welcome him. He has been a leader on these 

issues in the U.S. Senate, somebody that recognizes the long-term 

dangers of inaction, and we certainly welcome Senator Voinovich to 

be with us today. 

Senator Gregg? 

9

OPENING STATEMENT OF SENATOR GREGG 

Senator GREGG. Thank you, Mr. Chairman. Let me once again 

congratulate you for not only putting your toe in this water, but 

jumping in completely on the issue of how we address what I consider to be and what you obviously consider to be the single biggest 

domestic issue which we face as a Nation as we move into the next 

10 to 20 years, and that is, how we deal with the retirement of the 

baby-boom generation, how we continue to deliver quality services 

to that generation as it retires without overwhelming the ability of 

our children and our children’s children to have a quality of life 

too. 

I think you framed the question well. In your first chart, it was 

pointed out that we double the retirement age. Let me just put up 

another chart, however, which, of course, we have seen before, 

which reflects the fact that the issue really comes down to three 

basic programs, which are the major entitlement programs—Medicare, Social Security, and Medicaid—and the fact that those three 

programs under their present rate of growth projections—which are 

not going to change, by the way, because the people who are going 

to create this issue are alive and they are going to retire, and they 

are my generation and your generation. And as a result, the cost 

of supplying the benefits which have been promised to those individuals will exceed the amount that is presently spent by the Federal budget as a percentage of gross national product by the year 

2025 and will continue to climb, so that we will end up in the high–

20-percent range, probably up around 27 or 28 percent of gross national product, being required to support those three programs 

alone by the mid-2030 period. And that is simply not sustainable.


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To put it in another context, the median income of the American 

household today is about $56,000. The median home price of the 

American family or the value of their home is about $200,000. The 

unfunded liability—and this is just Social Security and Medicare—

for every American family today is $440,000. That means we have 

on the books an unfunded liability that exceeds by a factor of 2 the 

value of their home or their assets, and obviously by a significant 

factor the income of the American people.

Now, you cannot tax your way out of this problem, if we did the 

tax rates would essentially be out of control on the American people if you simply tried to address this issue on the tax side of the 

ledger. That does not mean taxes should not be on the table. They 

should be on the table, and this proposal puts them on the table.


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But the problem—go back to the first chart.


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The problem is undeniable and it must be addressed, and that 

is why I congratulate the Chairman for holding these hearings, but 

more importantly, I appreciate the Chairman being willing to work 

in a bipartisan way to try to resolve the issue. 

And why have we chosen this process? Because we believe that 

when you put policy on the table, it is good, it gets debated, but 

it does not go anywhere because the way this system works around 

here is that, once you put an idea on the table, it immediately is 

confronted with the naysayers, and the well gets poisoned before 

the idea can move down the road. So instead of putting the policy 

on the table first, we have concluded that what we need to put in 

place a procedure which will drive policy, good policy, and result 

in action. And, thus, that is why this commission is structured the 

way it is. 

Second, we believe that any resolution of this issue has to be absolutely bipartisan, and it has to be viewed by the American public 

as absolutely fair. These programs affect so many Americans that 

unless they perceive the solution to be fairly reached and in a bipartisan way, it is simply not going to work. That is why we especially appreciate the AARP participating today, because you represent, obviously, a huge constituency that is impacted by this. 

And, third, we think, the two of us, and those who are sponsoring 

this bill—and we obviously have people in the House here supporting it, and we especially appreciate the Majority Leader being 

here today. His imprimatur is absolutely critical to this effort. But 

we believe that for the procedure to work, you have to put in a 

room the players who have money in the game, so to say, the people who are responsible for the decision and who understand the 

policy. And that is why we have limited this to Members of Congress and to the executive branch. Everybody knows the moving 

parts here, especially on Social Security, and there is no question 

that you can go to the substance of a resolution fairly quickly if you 

can back out the politics. And so by putting the players in the room 

who understand the issue and asking them to work in a bipartisan 

and fair way to reach a conclusion, we believe we set up a process 

which will lead to the right policy. And the key to this whole exercise is basically to use fast track. Because we have had a lot of 

commissions, the Chairman has served on them, really good commissions which have put out really good ideas. But because there 

has been no action point, nothing has happened because the issues 

are so hot button and so radioactive. 

And so the proposal here is that whatever proposal comes out of 

this group—remember, it has to come out with 75 percent of the 

members of the commission agreeing, and then 60 percent of the 

House and the Senate agreeing—it is fast-tracked for a vote so the 

decision is made on whether or not it makes sense. Procedure can 

drive policy, in our opinion, and that is why we have structured it 

this way. 

And so, again, I congratulate the Chairman for his extraordinary 

work in this area. If we are successful, he will deserve the majority 

of the credit, and it will be a tremendously appropriate thing to do 

for the American people. 

Thank you, Mr. Chairman. 

13

Chairman CONRAD. I very much appreciate the Ranking Member’s kind words, but I was just wondering: In terms of this caricature, was this supposed to be my likeness? 

[Laughter.] 

Senator GREGG. When Edvard Munch did that, he was thinking 

of you, even though you had not been born. 

[Laughter.] 

Senator GREGG. I believe the painting was stolen. I am not even 

sure they got it back yet. 

Chairman CONRAD. OK. Well——

Senator STABENOW. Mr. Chairman, on behalf of the Committee, 

I would like to say that does not look at all like you. 

[Laughter.] 

Chairman CONRAD. I thank the Senator, the gentlelady from 

Michigan. 

We now want to turn to the Majority Leader of the House of Representatives, the Honorable Steny Hoyer, somebody who has a sterling reputation on the question of fiscal responsibility. Welcome, 

Majority Leader. 

STATEMENT OF HON. STENY H. HOYER, MAJORITY LEADER, 

UNITED STATES HOUSE OF REPRESENTATIVES 

Mr. HOYER. Thank you very much, Mr. Chairman. I am very 

pleased to be here with you and Mr. Gregg, and I want to congratulate both of you for your leadership on this critically important 

issue. 

Very frankly, I thought that that picture might be depicting our 

children 25 years from now as they are aghast that none of us did 

what was necessary to do to save them from the crisis that will 

confront them if we do not act. Your proposal attempts to achieve 

that objective. 

I want to say how pleased I am to be here with a number of you 

with whom I have served, including the distinguished Ranking 

Member, Mr. Gregg, for a short period of time before he came to 

the Senate; Debbie Stabenow, my very dear and good friend; and, 

of course, probably my closest friend, one of my closest friends in 

life, and certainly in the Congress of the United States, he and I 

were elected to the General Assembly together in 1966——

[Laughter.] 

Senator CARDIN. Can I——

Chairman CONRAD. He now wants personal privilege. 

[Laughter.] 

Mr. HOYER. Ben Cardin. 

Chairman CONRAD. Do you want to deny that he is a friend? 

Senator CARDIN. Yes, am I going to be able to correct the record 

here. 

[Laughter.] 

Chairman CONRAD. Probably not. 

Mr. HOYER. And, Senator Whitehouse, good to be here with you, 

sir. 

I am also very pleased to be here with my dear friend with whom 

I served so long in the Congress, and he was, of course, a leader 

in the Clinton administration, Leon Panetta; David Walker, who 

has been a giant in trying to call the attention of the American 

14

public to the crisis that confronts this; Bill Novelli, who, as you 

pointed out, Judd, represents an extraordinarily important constituency in participating in solving the problem that confronts us; 

and Robert Bixby, representing the Concord Coalition, who does 

such great work in also calling the American public’s attention to 

this crisis. 

I want to also say that although I did not serve with him in the 

Congress of the United States, he and I have become good friends, 

and I so admire you, Senator Voinovich, for the courage that you 

have shown in speaking out on tough issues. 

Mr. Chairman and Ranking Member Gregg, thank you for inviting me to testify at this very important, timely hearing on proposals to establish a bipartisan task force to address our Nation’s 

long-term challenges. Before I begin, I also want to thank two 

other witnesses here today: Comptroller General David Walker, 

whom I have already referred to; and Robert Bixby, the Executive 

Director of the Concord Coalition; as well as Leon and David. 

As Mr. Bixby has stated previously, the basic facts of our fiscal 

challenges are a matter of arithmetic, not ideology. Two factors 

stand out: demographics and health care costs. Analysts of diverse 

ideological perspectives and nonpartisan officials at the Congressional Budget Office and the Government Accountability Office 

have all warned that current fiscal policy, as both you, Mr. Chairman, and Mr. Gregg have pointed out, is unsustainable. Our long 

term, even under the most optimistic projections, is not sustainable. 

The bottom line is this: Turning a blind eye to our long-term 

challenges would not only be irresponsible, it would be dangerous 

to our Nation’s continuing success. And I would say Mr. Gregg indicated that this was our largest domestic problem. In the long term, 

in my opinion, this will be our Nation’s critical problem domestically and internationally because it will undermine our ability to 

fund responses in either arena. 

We must consider the consequences that our actions or our failure to act will have on our future and the ability of those who come 

after us to meet the challenges we face. Those of us who believe 

that the American people want their Government to invest in national security, health care, education, infrastructure, scientific research, and other priorities have a critical stake in addressing the 

budgetary pressures that will be created by the growth of entitlement spending. If we fail to act, future Congresses will find their 

hands tied in meeting new challenges and funding other priorities, 

and I believe that our Nation will be weakened as a result. Thus, 

we must act. We do not have time to waste with the first of 78 million baby boomers preparing to retire next year. 

And there is plenty of room, of course, for debate over the mix 

of options that should be considered. Recall that in 1983, President 

Reagan and Speaker O’Neill worked together across party lines to 

protect Social Security, setting an example for future generations. 

In fact, that was not particularly controversial, notwithstanding 

the fact we took significant actions. It was not because the American people concluded that President Reagan and Speaker O’Neill 

both believed it was necessary to do, that as difficult as it might 

15

be, perhaps, in fact, it was necessary to do. We need to do the same 

thing now. 

Finding a politically viable, equitable, and financially sound solution to our fiscal challenges will require bipartisan discussions in 

which all options must be on the table, as both you and Mr. Gregg 

have pointed out. A solution must be bipartisan. Rigid ideology 

must give way to workable solutions, and reasonable sacrifice will 

be required. None of us, of course, like to discuss that. 

I would like to believe that Congress could address these issues 

through the regular legislative process. However, the experience of 

recent years suggests that this is extremely difficult in the current 

political environment, and perhaps in political environs in the past. 

Therefore, as you have and I have reluctantly concluded, a task 

force or commission may be the best way to bring us to the place 

where we can spur action on this issue and reach agreement on solutions. 

I agree with those who say that we should act sooner rather than 

later. I think the President is correct on this, and all others who 

make that observation, because left untended, our challenges only 

grow greater and solutions more difficult. 

Nevertheless, I have reservations about the timetable set forth in 

the Conrad-Gregg proposal, which envisions the task force putting 

forward a final plan with legislative recommendations in December 

of 2008. Under this proposal, legislative recommendations would be 

developed by a task force that includes members of the current administration, even though the recommendations would not be acted 

on until the new administration takes office. I see two problems 

with this idea. 

First, this administration, which has refused, in my opinion, to 

put all options on the table, would have even less of an incentive 

to make compromises in a process that would not culminate until 

they left office. 

Second, the new administration will have no stake in the success 

of a proposal that has been put together without its participation. 

Now, do not misunderstand this observation. These concerns did 

not require us to hold off acting in 2008. Instead, I believe we 

should move forward next year with enabling legislation providing 

for the establishment of the commission, as you suggest, or task 

force, so that work on developing recommendations can begin 

quickly after our new administration is sworn into office. The commission could even begin to move forward with the process of defining the scope of the problem and engaging the American public on 

the choices, the educational efforts we face, thereby building on the 

work begun by Treasury Secretary Hank Paulson. 

As many of you have, I have spent a lot of time with Secretary 

Paulson. I think he came to Washington from an extraordinarily 

lucrative endeavor to give service to his Nation to try to accomplish 

reform on entitlements. I think he is, like many of us, discouraged, 

which has led to this proposal. 

For example, the Securing America’s Future Economy Act, introduced by Congressmen Cooper and Frank Wolf and Senator George 

Voinovich, sets forth a two-part process in which the commission 

spends 6 months engaging the public in a dialog and issues an interim report detailing the problems before beginning the second 

16

stage of putting forward recommendations. I am sure that all of 

you will be discussing, as we will on the House side, that alternative. 

However, the process of developing a plan and legislative recommendations, in my opinion, should not begin until we have a 

new administration inaugurated on January 20, 2009. That is not 

a criticism of the present administration. It is a recognition that 

the timeframe in which this will be solved will not be this administration. A new administration is able to provide input into the process, either through direct participation of the task force or through 

appointments to the task force. 

I also strongly believe, Mr. Chairman, that the process for considering the task force recommendations should be revised to allow 

consideration of alternatives from the administration and Congress 

or other budget-neutral amendments. Those who oppose the priorities and tradeoffs recommended by the commission should be 

given, I think, the opportunity to put forward constructive alternatives. However, I certainly agree with Senator Gregg’s observations that we need a process that will require consideration. I think 

you are absolutely right. Having a report, having input, having 

education is a process that has already been done. What we need 

is a process to enforce some action. 

This approach, which is included in the SAFE Commission’s proposal, also would increase the prospects of enacting legislation by 

making it possible to modify the task force proposal to deal with 

the elements of the recommendation that proved to be controversial 

and jeopardize enactment of the entire plan. 

A commission, of course, is not a silver bullet. Members of Congress and the administration still must be willing to make tough 

choices. However, a commission with credibility and bipartisan 

support could, and hopefully will, provide the leadership necessary 

to ensure that these issues receive the attention and serious consideration they deserve. 

Again, I congratulate both of you for your leadership on this effort and indicate to you that while I am here as an individual—

and I do not speak for either my party or the House on this issue—

I want to assure both of you that I look forward to working closely 

with you and with the administration, present and future, addressing this critical issue to our Nation and to our people. 

Thank you very much. 

[The prepared statement of Mr. Hoyer follows:]

17


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Chairman CONRAD. Majority Leader Hoyer, first of all, thank you 

for the very thoughtful suggestions that you have made here, and 

it is, I think, especially helpful to the consideration of this proposal 

that we will give on this side. And I would just speak for me. I take 

very seriously suggestions that come from you because you have 

enormous credibility with me, and I deeply appreciate your taking 

the time to think through these issues and give us your thoughts. 

Senator Gregg, any comments? 

Senator GREGG. Well, first off, again, I want to echo what the 

Chairman says. Your credibility on this is critical to the process, 

and so the fact that you have been willing to come forward and be 

so outspoken is just, I think, extraordinarily positive for moving 

something forward. 

You have raised two fundamental issues with the proposal we 

have got, which is the timing and the amendment process, which 

are very legitimate concerns. I guess I have less issues with the 

timing. I think your arguments on timing are probably, as we move 

down the road, probably very legitimate. I do think there is some 

advantage, quite honestly, to having it in the divided Government. 

We have a divided Government now. Whether we will have a divided—I hope we will have one Government the next time around, 

and it will be a different Government, and I hope it will change the 

current one we have. But, in any event, let’s assume that we do 

not get a divided Government the next time around. I think it will 

be more difficult for the process. 

Mr. HOYER. I agree. 

Senator GREGG. But I think your timing issue is legitimate from 

the standpoint of that is something that should be able to be 

worked through. 

On the issue of amendment, I just want to make this case, which 

is that the whole concept here is to have the players at the table, 

have those players have to reach an agreement which is viewed as 

fair and bipartisan—that is why we have the supermajority. For 

the commission to report, it takes 75 percent of the commission; 12 

out of 16 have to agree. So either side can kill it if they do not like 

it, and as a practical matter, both sides have to like it before it 

could pass. And so the idea is that what they produce should be 

a package that should be able to go through the process and be 

voted up or down. And if you give another shot, bite at the apple, 

so to say, coming out of left field—or right field—you immediately 

activate the naysayers at a level that probably kills the whole process. You give them a vehicle to say, well, I would do this but I will 

not do that. 

And so I believe very strongly that a non-amendable vehicle 

along the lines of BRAC is the way to do it, but we can discuss 

that. But I certainly value your thoughts. 

Mr. HOYER. Senator, if I might, I think you make a good argument. I think you can argue it both ways. I think in the final analysis, it is going to depend upon a President and a congressional 

leadership that wants to do this, whatever the mechanism. I mentioned O’Neill and Reagan. The crisis confronting them was real. 

They perceived it as real, and they responded in a bipartisan fashion, and that is why we got it done. I think ultimately that is the 

way we are going to get it done, hopefully. 

22

I want to observe to you that I am disappointed that in the construct that is present today, with a Republican President and a 

Democratic Congress, Speaker Pelosi—the to-be-Speaker Pelosi and 

I had lunch with President Bush 2 days after the election. I 

brought up the issue that we had an opportunity with a Republican 

President and a Democratic Congress to resolve, hopefully, solutions to these issues. The reason I think that works is because the 

Republican President can blame the Democratic Congress or the 

Republican Congress can blame the Democratic President, however 

you want to perceive it, for that which is difficult for their constituents—whether it is raising revenues or adjusting benefits. Such a 

nice word, ‘‘adjusting’’ benefits. But they can blame the other side 

for doing so, which is why it works. And I frankly think—and I 

think it is unfortunate for our people—we have missed an opportunity in this last 12 months. I think Secretary Paulson believes 

that as well, and I share his view. But I think a fact of life is, as 

your commission recognizes, that it does not appear that we are 

going to make any progress in the current construct. 

Senator GREGG. I agree with you, and we did miss an opportunity, and it was missed in January, and certainly not because we 

did not make an effort to do that. But I think it needs to be pointed 

out here that whether the next President understands this or not, 

the next President’s Presidency is going to be defined by how they 

handle this problem, because they are going to be 8 years into the 

retirement of the baby-boom generation. The baby-boom generation 

starts to retire now. They are going to be 8 years into that retirement. The wave, which is a tsunami type of event, is going to be 

not over the horizon. It is going to be on the horizon, and coming 

at us and starting to break. 

So the next President has to address this issue. There is no 

choice. 

Chairman CONRAD. I know, Majority Leader, you have other duties that call, and, again, we thank you very, very much for your 

contribution here today. It is very thoughtful as always. And I tell 

you, I think we are approaching a defining moment, and the fact 

that you are an active advocate for proceeding and trying on a bipartisan basis to present the country with alternatives, solutions, 

I think is especially important, and we thank you for it. 

Mr. HOYER. Thank you, Mr. Chairman. Thank you. 

Chairman CONRAD. The Committee will call the second panel led 

by the Honorable Leon Panetta, the Co-Chair of the Committee for 

a Responsible Federal Budget and Director of the Panetta Institute; the Honorable David Walker, the Comptroller General of the 

United States; Bill Novelli, the CEO of AARP; and Bob Bixby, the 

Executive Director of the Concord Coalition. 

I want to thank all the witnesses here. I especially want to thank 

them for being willing to be part of a panel. We are trying to accommodate time constraints of some of the witnesses here, but we 

thought this subject is so important and the witnesses that are 

here are such central voices to this debate that we wanted to accommodate them in every way possible. 

With that, I want to welcome Leon Panetta, a man with a remarkable background: Chairman of the Budget Committee in the 

House of Representatives, the head of the Office of Management 

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and Budget, Chief of Staff to the President of the United States. 

I do not know of anybody that has had a broader experience or 

background in trying to actually come up with solutions on a bipartisan basis than Leon Panetta. 

So, Leon, our warmest welcome to you. 

STATEMENT OF HON. LEON E. PANETTA, CO-CHAIR, COMMITTEE FOR A RESPONSIBLE FEDERAL BUDGET, AND DIRECTOR, PANETTA INSTITUTE FOR PUBLIC POLICY 

Mr. PANETTA. Thank you, Mr. Chairman and Senator Gregg and 

my friends and colleagues that I have had the opportunity to work 

with in the past. I really appreciate the opportunity to be able to 

come here and testify on behalf of S. 2063, the effort to create a 

bipartisan task force or commission to try to deal with the fiscal 

problems facing this country. 

I am honored to have this opportunity and appear before you as 

Co-Chair of the Committee for a Responsible Federal Budget. It is 

a group that has been working, as many of you know, over 25 years 

to try to promote the effort for fiscal responsibility. 

I have come before you a number of times in the past to fight 

for budget priorities and for budget discipline. And in the past, I 

must say, although there were political differences with regards to 

how we approached this issue, I always felt there was a fundamental commitment by both parties—by both parties—to try to 

work toward deficit reduction and a balanced budget. 

I think you are facing an even greater challenge at the present 

time because although there are concerns about the debt, the growing debt that we face, there appears to be a lack of will and commitment to make the tough decisions that have to be made if you 

are going to achieve deficit reduction. 

I commend you, Mr. Chairman, Senator Gregg, for the effort that 

you are putting forward here with this legislation because it is an 

effort to try to seek bipartisan cooperation and build, frankly, on 

the lessons of the past. We cannot ignore what we have been 

through in the past, and I think we ought to learn from those lessons. And that is what you are trying to do with this legislation. 

I am here to try to share with you, I think, some of the principles 

that I learned during the time that I have had the honor to deal 

with this challenge. As Chairman of the House Budget Committee, 

as you pointed out, as Director of OMB, and as Chief of Staff to 

the President, I have participated in almost all of the key budget 

summits that were held during the past and the negotiations that 

were held to try to achieve deficit reduction. 

We govern in our democracy either by leadership or by crisis. If 

leadership is there and willing to make the tough decisions, then 

hopefully we can avoid crisis or, in the very least, control crisis. 

But if leadership is not there, then ultimately crisis drives policy. 

I think we are living at a time when crisis is largely driving policy, whether it is the war, whether it is global warming, energy 

issues, immigration, Social Security, Medicare, or runaway deficits. 

And every one of these issues in some way relates to resources and 

our ability to have resources to confront those challenges. 

The failure to have adequate resources to confront each of these 

issues, I think, in large measure guarantees that probably for the 

24

first time in our history, our children are going to have a lower 

standard of living, because we are basically burdening them not 

only with a huge debt, but we are going to fail to invest in their 

future because we will not have the resources to do that. We cannot invest in their future by borrowing from their future, and that 

is essentially what we are doing now. 

It is clearly a moral imperative to confront this issue. I think it 

is a fiscal and economic imperative. And I happen to believe that, 

more importantly, this is an issue of national security because I do 

not think we can confront any of the major crises that face this 

country without first confronting the challenge of the budget, establishing fiscal discipline, and providing the resources necessary to 

deal with all of those crises that we face in the 21st century. 

This failure of leadership combined with exploding entitlement 

programs, as pointed out, changing demographics, the rapid growth 

of health care costs, the slowing of the labor force, and growing interest costs places us on an unsustainable path to fiscal chaos. 

What is even more discouraging is that it seems to ignore every 

lesson we should have learned from the past. 

Every President, going back to Washington, had to confront the 

challenge of dealing with deficits and dealing with debt, and they 

made it a moral obligation to confront those deficits, whether it 

was Washington, whether it was Lincoln, whether it was Franklin 

Roosevelt, whether it was George H. W. Bush, whether it was Ronald Reagan, or whether it was Bill Clinton. Every one of them 

made a moral commitment that you have to confront Budget issues 

and that deficits are not going to solve themselves. For many reasons, the Budget Act that we operate under basically recognizes the 

obligation to be fiscally responsible. That is why the Budget Act 

was passed, to create that discipline. 

In the 1980’s and 1990’s, the prospect was that we were going to face record deficits going from $250 billion to $500 billion to 

$600 billion. I think there was one projection that had us at $600 

billion going into the 21st century. We faced exactly the same gridlock between Republicans and Democrats at that time. Republicans 

did not want to raise taxes, cut defense; Democrats did not want 

to cut domestic spending or deal with entitlements. And so there 

was gridlock. 

With the failure of leadership to confront that challenge, what 

happened was that crisis then became the engine that forced 

change. On the one hand, there was manmade crisis, because what 

we developed with Gramm-Rudman basically cut everything across 

the board, and as a result, Congress did not want to face the issue 

of a drastic cut across the board. That was one crisis. But there 

was also a crisis that took place in the markets with the stock market crash in 1987. And there was real concern that the markets 

would continue to weaken if we did not exercise fiscal discipline at 

that time. 

To the credit of President Reagan, he convened the first budget 

summit that was made up of the leadership of both the House and 

the Senate, along with representatives from the administration, 

and we developed at that time a bipartisan deficit reduction plan 

that was put in place. The first summit by a President. It was followed, as you all know, in 1990, by a second summit that was conVerDate 0ct 09 2002 11:09 Dec 21, 2007 Jkt 000000 PO 00000 Frm 00030 Fmt 6633 Sfmt 6601 C:\DOCS\39356.TXT SBUD1 PsN: TISH
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vened by President Bush. That, too, included administration and 

congressional leaders. We met at Andrews Air Force Base for almost 2–1/2 months. We then brought the negotiations to the Capitol, and what we developed in the end was a deficit reduction 

package of close to $500 billion that included landmark budget enforcement tools that I can tell you, as Chairman of the House 

Budget Committee, were very effective tools I had to try to ensure 

that we stuck to that agreement. 

Three years later, President Clinton built on the success of those 

efforts. When I was OMB Director, we put together the economic 

plan, and in many ways that economic plan reflected a lot of the 

same principles included in the 1990 budget agreement. We 

achieved a deficit reduction package of close to $500 billion that 

was evenly divided between spending restraints and revenues. 

While it was not bipartisan, ultimately I think those principles 

were embraced by a bipartisan agreement with the Balanced Budget Agreement in 1997, which was bipartisan, and which basically 

endorsed a lot of what was contained in the economic plan. All of 

that ultimately produced a balanced budget and a surplus that was 

approaching $5.7 trillion. 

As a participant in all of those efforts, the key principles are 

these, and many of them are included in your legislation: 

No. 1, it has to be bipartisan. It has to include Congress and the 

executive branch and the President. The key leaders of both parties 

need to be there. The President’s key economic team needs to be 

there. It is important that the committees of jurisdiction be represented. You need Finance, you need Ways and Means, you need 

Budget, you need Appropriations. Those are the key committees 

that should be at the table in terms of negotiating. 

No agreement that provides for serious deficit reduction can, 

frankly, be enforced without the support of those key committees 

and without the support of both Republicans and Democrats. 

As pointed out, each party basically provides cover to the other 

party on some of the tough decisions that have to be made. That 

is the only way you can deal with all of the issues that face us. 

That takes me to the second point: Everything has to be on the 

table. Everything has to be on the table. If you make exceptions, 

if you try to exclude certain areas from being considered, then you 

are dooming the process from the beginning. You have got to put 

everything on the table. That is not to say everything ought to be 

considered in terms of a final package, but everything has to be on 

the table. You have got to work your way through all of the issues. 

Third, nothing is agreed to—this is what I call the Tom Foley 

principle, because he always used to say this at the beginning of 

the summit. Nothing is agreed to until everything is agreed to. It 

allows you the opportunity to consider every option, every possibility, but you do not have to necessarily include it until you have 

seen all of these pieces and finally put together a negotiated package. 

Fourthly, there has to be enforcement. You cannot have an 

agreement if it cannot be enforced. That means that in the final 

set of policy recommendations you ought to include important 

budget enforcement tools. They have to be there. Spending caps 

26

and PAYGO have to be considered, as well as an expedited process. 

I think you do need an expedited process. 

I am a little concerned, frankly, about the supermajority requirement because if you are going to put together an effective deficit 

reduction package, this is tough. You are talking about some very 

tough choices that have to be there. And even with the support of 

the President, even with the support of the leadership, you are 

going to have a lot of members who are going to be very hesitant 

to support this kind of package. So take a look at that. I think it 

is sufficient to have a majority, frankly. On the House side, I think 

the rules will allow for not only an expedited process but for passage. On the Senate side, I think if you operate under budget and 

reconciliation rules, frankly you can avoid any barriers to trying to 

get the issue to the floor. I just think you ought to think about 

that, because if you go through a task force, you go through a commission, you need to get that passed. 

No press. This thing has to take place in a confidential setting. 

You have got to have an honest exchange. If you are going to restore trust, which is the biggest problem you have got right now, 

the only way you are going to do it is if everybody can talk with 

each other honestly, without having it play out in public. 

And, last, if you do deficit reduction, I think you ought to target 

it over 5 years. Obviously, entitlement reforms and changes will 

produce savings beyond that, but I think in a 5-year timetable, you 

at least have a realistic target area where you can basically try to 

achieve the goals established in an agreement. That is generally 

what we did in the past, and I would recommend it to you as an 

approach in the future. 

S. 2063 is very important in the sense that it provides the same 

kind of framework for the principles that I just talked about, and 

that is the only way you get this job done. 

I want to compliment you for working to put this together. Politically, all of us would like this to pass soon, but I think we all understand the politics that you are dealing with right now. At the 

very least, it ought to be the framework that a new President and 

new Congress put in place. And let me tell you, if a new President 

is going to deal with it, it has to be done in the first year. You cannot wait. It has to happen immediately, and it has to be the first 

challenge that President is willing to take on. Otherwise, it becomes very difficult to put it together. So I urge both of you to take 

this kind of proposal to the candidates that are out there and hopefully get their support for it. 

We know that a new President and Congress are going to confront an unprecedented set of crises at a time of political divisiveness and at a time of tremendous distrust. The greatest challenge 

facing our new political leaders will be to establish a healing process in which parties can work together and try to re-establish a degree of trust. It has to begin with the budget because that relates 

to every other crisis that is going to confront the new President. 

As I said, we govern by leadership or crisis. We have crisis. It 

is time for leadership. 

[The prepared statement of Mr. Panetta follows:]

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Chairman CONRAD. Thank you, Leon. A very powerful statement. 

I hope people are listening. I really do. I hope colleagues are listening, because the crisis is here. It is a slow-moving crisis, so we are 

not feeling the pain yet. But it is coming. And we can choose to 

kick this can down the road or face up to it, and more than anything, I hope we face up to this because we can avoid so much pain 

for this country and so strengthen our economic future if we act. 

General Walker, thank you for being here. Thank you for the 

leadership you have provided. You have done so much to put this 

on the national agenda, leading the Fiscal Wake-Up Tour around 

the country and being a constant voice of reminder. The other day 

I spoke to a group downtown. They told me you were coming the 

next day, and I heard that your message and mine closely correlated. So we gave them a double dose. 

I very much appreciate your being here today. General Walker? 

STATEMENT OF HON. DAVID M. WALKER, COMPTROLLER GENERAL OF THE UNITED STATES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. WALKER. Thank you, Chairman Conrad, Senator Gregg, and 

other Senators. I appreciate the opportunity to testify. I want to 

thank you for your leadership on this very important issue. 

This is a very important hearing. It should be heard by every 

Member of the Senate and the House of Representatives. It is a 

critically important time. 

My staff has put together a very thorough and professional statement, which I would like to be entered into the record. 

Chairman CONRAD. Without objection. 

Mr. WALKER. And I would like now to speak from the head and 

the heart, and I am going to start and end with the heart, and a 

have a little bit of the head in between. 

My family came to this country in the 1600’s. My wife’s family 

came to this country before mine did. Both of us have relatives that 

fought and died in the American Revolution, mine in South Carolina. 

Senator GRAHAM. Sorry about that. 

Mr. WALKER. No, it is all right. 

[Laughter.] 

Mr. WALKER. It was for a good cause, and we were on the right 

side, Senator. 

But in all seriousness, I, like all of you, love my country very 

much. I have deep roots in this country. I care for it deeply. But 

I am very concerned about our collective future. We have too many 

people focused on today and not enough people trying to help create a better tomorrow. 

America is the only superpower on Earth today, but that is temporary. There will be at least one more within the next 20 years, 

and possibly as many as three more. Our key challenge is to maintain our superpower status and to take steps to make sure that our 

future is better than our past. 

We face a range of key sustainability challenges. Our fiscal challenge is the largest and the most overarching one, but it is not the 

only one. Other examples include health care, education, energy, 

environment, immigration, and critical infrastructure—just to 

35

name a few. Our current policies in these areas are unsustainable 

on the present course, and the sooner we recognize that reality, the 

better off we will be. 

From a fiscal standpoint, we have been diagnosed with fiscal cancer. We do not face an immediate heart attack, but that cancer is 

growing within us, and it threatens our Nation’s economy, our 

standard of living, and our national security unless we begin to 

treat it now. 

We have a false sense of security about where we stand fiscally. 

It is true that the deficit has come down for 3 years in a row, and 

obviously smaller deficits are better than bigger deficits. But it is 

also true that during that same 3-year period of time the total liabilities and unfunded commitments for Social Security and Medicare for the United States have gone up trillions of dollars in current-dollar terms. For example, our deficit this last year was estimated at $163 billion. You can more than double that because we 

spend every dime of the Social Security surplus. And on top of that, 

our preliminary estimate is the Nation’s total fiscal exposures, liabilities, and unfunded commitments increased during the last 

year from about $50 trillion to about $53 trillion. By doing nothing, 

they go up $2 to $3 trillion a year because of known demographics, 

rising health care costs, and compounding interest costs. And we 

cannot forget what Albert Einstein, who was a pretty bright guy, 

said: The most powerful force on this Earth is not nuclear power, 

it is the power of compounding. And when you are an investor, the 

power of compounding works for you. But when you are a debtor, 

the power of compounding works against you. 

I have been to over 30 States in the last 2 years, 24 of which 

were the Fiscal Wake-Up Tour. I have spoken to thousands, if not 

tens of thousands of people, and in my opinion the American people 

are starved for two things: truth and leadership. The biggest deficit 

our Nation faces today, in my opinion—and this is a nonpartisan 

statement, and it is not just the public sector—is a leadership deficit. It is a very real problem. 

Our clock is ticking. Time is working against us. The commission 

that you propose—or task force, I should say, and other proposals 

have proposed a commission—I believe is an essential step to setting the operating table for the next Congress and the next administration in order to get a fast start. Presidential leadership is also 

essential because only the President has the bully pulpit, and that 

President has to work on a bipartisan basis in order to achieve 

meaningful change. 

Your task force proposal, your legislation, includes a number of 

key elements that GAO has indentified as being essential for success based upon past commissions. As you know, you have asked 

us to take a look at the experiences of other countries. We are 

doing that. And, clearly, we ought to be informed by those experiences because some countries, quite frankly, are ahead of us in this 

regard. 

While your commission or your task force includes a number of 

proposals that are laudatory and essential, I would have four areas 

for your consideration. 

The first one is membership. I think the number of commission 

members is reasonable, and while I believe that you ought to have 

36

a significant majority of sitting members, as you do, on it, I would 

respectfully suggest that you may want to think about slightly reducing the number of sitting members and potentially adding up 

to four other key players from key stakeholder groups. 

Second, I would respectfully suggest that you consider having bipartisan co-chairs, especially given that you have an outgoing administration. 

Third, I would respectfully suggest that the commission not report before February of 2009 because the commission needs time 

to consult with the next President and key players of the next administration in order to try to achieve their buy-in, or at least their 

willingness to take it seriously. 

Fourth, I would suggest that you may want to consider allowing 

consideration of a limited number of substitutes that meet certain 

key criteria that are laid out in advance. 

And, finally, I would suggest that you may want to consider that 

while it is fully appropriate, I believe, to have a supermajority requirement for the commission to make recommendations, in my 

opinion, I think a simple majority should be required to pass the 

package. So a supermajority of those that are deeply involved, that 

spend the time, that understand the tradeoffs, that do all the 

homework, is appropriate, I think, but I think a simple majority is 

all that you should seek for purposes of passing the package. 

In closing, I commend you for your leadership. I believe that it 

is time that our country exercise its fiduciary and stewardship responsibilities. We are not doing it today, in my opinion. What is 

going on today is the Federal Government is spending more money 

than it makes. It is charging the national credit card. It is building 

up compound interest and expecting our kids and our grandkids 

and generations yet unborn to pay it off. And that is not just fiscally irresponsible. That is immoral. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Walker follows:]

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Chairman CONRAD. Thank you very much for a very powerful 

statement, General Walker. 

Mr. Novelli, thank you very much for agreeing to be here. You 

lead a group, probably the single most powerful, potent group with 

respect to representing people over 50 in this country, and so it has 

special significance for you to be here today. Please proceed. 

STATEMENT OF WILLIAM D. NOVELLI, CHIEF EXECUTIVE OFFICER, AMERICAN ASSOCIATION OF RETIRED PERSONS 

(AARP) 

Mr. NOVELLI. Thank you. Good morning. On behalf of AARP’s 

more than 39 million members, I appreciate the opportunity to 

present our views regarding the bipartisan task force for responsible fiscal action, and I would like to commend Chairman Conrad 

and Senator Gregg for coming together in a bipartisan way to address our country’s long-term fiscal problems and to help break 

down the gridlock that is so prevalent in Washington. 

Taking on these issues in a bipartisan fashion is truly significant. They affect everybody—Republicans, Democrats, Independents, and, most importantly, our children and our grandchildren, 

many of whom are not yet old enough to declare their allegiance 

to one party or to another. How we address these issues is going 

to determine what kind of lives they will have and what their future will be. And as we just heard, their future is not going to be 

very bright if they are drowning in the red ink of budget deficits 

or if they cannot afford health care or cannot attain long-term financial security. 

The majority of Americans today believe that the coming generation is going to be less well off than their parents, and if that happened, it would be the first time in American history, and it would 

be a major step backward for the American dream. And that is why 

we at AARP appreciate very much your willingness to tackle these 

tough issues. We welcome your willingness to consider every aspect 

of the problem. And to us, this means both revenues and expenditures; it means tax entitlements as well as spending entitlements; 

and most of all, the health care system and its skyrocketing costs. 

The projected rapid growth in Federal spending for the big entitlements—Social Security, Medicare, and Medicaid—over the next 

30-plus years is frequently attributed to three great demographic 

trends: the retirement of the boomers, increased longevity, and low 

fertility rates. But the primary source of our future budget problems is the growth in health care costs throughout the system. 

These costs have grown faster than the economy, even in times of 

prosperity, and well before Medicare and Medicaid ever came on 

the scene. 

As Congressional Budget Director Peter Orszag has said, and I 

am quoting, ‘‘The long-term fiscal problem is fundamentally one involving the rate at which health care costs grow and much less 

about the aging of the population.’’ So, yes, we have a deficit problem in this country, but we have a health care crisis. Health care 

costs are the key fiscal problem for the Federal budget. If we do 

not do something about rising health care costs, we will not be able 

to control the costs of Medicare and of Medicaid. And health care 

costs are also the great challenge facing parents and their families, 

55

business and labor, and State and local government as well. And 

not only are health care costs too high, but we are not getting our 

money’s worth in terms of health outcomes from our system. 

At a time when individuals and families are at most risk of 

health and financial insecurity, we urge you to look beyond the conventional response of either raising revenues or reducing benefits. 

Some of these both may well be necessary, but they are not the 

only options. Nor are they even the best options for American families. They are not going to help families make ends meet or when 

their children get sick or as they get older. There is another option 

that can work for everyone, and that is to lower the overall cost 

of health care to make it affordable and sustainable. 

And that is why it is so important to make health care reform 

with cost containment a key element and a central part of the task 

force’s mandate. This means shaping a more effective delivery system with improved information technology, greater coordinated 

care, and focus on chronic illness, more and better use of comparative effectiveness research, and greater transparency about the cost 

and the quality of care. 

Now, how does Social Security fit into this? It is surely the most 

successful domestic Government program in history. It keeps millions of people out of poverty, and it creates a critical safety net 

for people as they get older, for people with disabilities, and for 

young people whose parents have died. If the proposed task force 

could muster the bipartisanship necessary to fix Social Security’s 

long-term solvency problem, that would be a great accomplishment. 

Now, we all know what the options are, but we need to have an 

honest, bipartisan debate, consider all the tradeoffs, and reach decisions that are fair and equitable. Strengthening Social Security is 

going to require some tough choices, and our members are prepared to make those choices. They want Social Security to be there 

for their kids and their grandkids. 

While we support the mission of the task force, we do have some 

concerns about it. Its work is going to affect everyone in every part 

of this country. This is not like a military base closing. This is 

about what kind of society we are going to have and what kind of 

future our young people can look forward to. It is going to require 

major transformations in public and private practices and individual behaviors. 

We believe that the proposed task force should allow for a thorough, thoughtful examination of these huge, complex issues. The 

fast-track approach that is proposed seems to us to be a bit too 

fast. It lessens the opportunity to conduct a full analysis and debate and to enable interested parties to present their views. 

The inability of Congress to amend the task force proposals contributes further to these limitations. We would like to see these elements considered and changed. 

If the task force is set up in a bipartisan fashion with time for 

discussion of the issues in the task force and in the Congress, including revenues and expenditures, with health care costs a key 

element, then AARP will be a constructive partner. We believe that 

we can play a very constructive role, and by this I mean that we 

will take its deliberations and its ideas to our members and to 

their families and to the public of all generations, and we will bring 

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their ideas and concerns to you. We have the ability to do that in 

the spirit of engagement and education in States and in communities across the country, and we will. 

These are critical issues affecting all Americans, and their voices 

and concerns need to be heard. We look forward to working with 

you to assess this and address it in a bipartisan way for the benefit 

of all Americans. 

Thank you. 

[The prepared statement of Mr. Novelli follows:]

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Chairman CONRAD. Thank you, Mr. Novelli, and thank you for 

the leadership that you have shown. Thanks for the willingness to 

engage on these issues and the recognition that we simply must 

act. That is critically important to the process, and obviously you 

are a powerful voice across the country, and your willingness to engage your membership and others in a constructive dialog about 

how we begin to solve these problems is critically important. 

Mr. Bixby, welcome. The Concord Coalition has been one of the 

most responsible voices, continuing to press Congress and the administration for fiscal responsibility, and we appreciate your participation in the Fiscal Wake-Up Tour as well. Welcome and please 

proceed. 

STATEMENT OF ROBERT L. BIXBY, EXECUTIVE DIRECTOR, 

THE CONCORD COALITION 

Mr. BIXBY. Thank you, Chairman Conrad and Senator Gregg and 

members of the Committee. Thank you for inviting me to discuss 

S. 2063, the Bipartisan Task Force for Responsible Fiscal Action 

Act. The Concord Coalition is often critical of congressional initiatives and things that come out of the administration, and it is a 

pleasure to be coming up to say something praiseworthy about an 

initiative because I think this is a very important initiative, and 

both of you are to be congratulated for focusing attention on such 

a vital subject for our Nation’s future. 

There is very little dispute that the current fiscal policies are 

unsustainable and that future generations are the ones most at 

risk from inaction. Too few of our elected leaders in Washington 

are willing to acknowledge the seriousness of the long-term fiscal 

problem, and even fewer are willing to put it on the political agenda. So by focusing attention on this critical issue and insisting that 

it must be addressed in a bipartisan manner, you are certainly setting a very positive example. 

The economic and moral case for long-term reform of fiscal policy 

is pretty clear. As has been mentioned often, we have an unprecedented demographic transformation taking hold, and it is important to realize that this is happening in the backdrop of rapidly rising health care costs and steadily falling national savings. And all 

of that is a very dangerous combination for the future health of the 

economy. While it may seem that there is no immediate crisis, according to a broad bipartisan consensus, current policy is indeed on 

an unsustainable path. 

People often ask us on the Fiscal Wake-Up Tour, When is a crisis 

going to hit? Can you tell us when a crisis will hit? What year? 

What is it going to look like? Well, nobody can say when all of this 

might end up in a crisis or exactly what it might look like. Indeed, 

there may be no crisis at all—just a long, slow erosion in our Nation’s standard of living. In either case, that is a dismal prospect, 

and doing nothing now to avoid it would be an act of fiscal and 

generational irresponsibility. 

Beyond fiscal imbalance, the policies embedded in today’s budget 

process threaten to place ever tighter constraints on the ability of 

future generations to determine their own fiscal priorities or to 

meet the challenges that cannot now be foreseen. As the share of 

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Federal resources pledged to retirement and health care benefits 

grows, it will leave shrinking amounts for all other purposes. 

So the central problem, as we look at the charts going forward, 

is this: some people can make a good case that we should keep revenues at about 18 percent of GDP and spending at about 18 percent of GDP, and you could make a case that we could let revenues 

go up to 25 or 30 percent of GDP, if that is where we wanted to 

spend. But no reasonable person would argue that you should keep 

revenues at 18 percent of GDP and spend at about 27 or 28 percent 

of GDP. And, unfortunately, on our current path that is where we 

are headed. Deficits of that size would truly be unsustainable. 

So the sooner we get started, the better. Inaction now only increases the prospects of more severe choices later. 

In looking at the proposal for a task force, it is logical to begin 

by asking why can’t the traditional process handle this. I would 

like to highlight two factors: political realities and a budget process 

that is focused on the short term. 

Changing course is obviously going to require substantial spending cuts from projected levels or equivalent tax increases. Neither 

party wants to be the first to propose these tough choices out of 

fear that the other side will attack it. And, similarly, neither side 

wants to discuss possible compromises of its own priorities out of 

fear that the other side will simply take the concessions and run. 

Unfortunately, these fears are justified. 

Partisan divisions in Washington have now become so wide that 

the Concord Coalition believes that a task force or a commission 

may now be the only way forward on this issue. As for the budget 

process, it is stacked against long-term planning. There is nothing 

in the budget process that requires Congress to review the currentlaw outlook beyond the next 5- or 10-year window, much less take 

corrective action. So without some mechanism such as this task 

force to put the hard choices between spending commitments and 

taxes on the record, everyone can continue to ignore the long-term 

consequences of current policy. 

Now, what are the criteria for success? The Concord Coalition 

Co-Chairmen, Bob Kerrey and Warren Rudman, two of your former 

colleagues, wrote an op-ed that we all considered at Concord for the 

Washington Post last year and outlined some criteria, which I will 

go over. And it is repetitive of what a lot of others have said, so 

there seems to be pretty good consensus. 

First, it must be truly bipartisan. Any perception that the purpose is to facilitate swift enactment of a partisan agenda would 

doom the task force to failure. We, too, believe that it should have 

bipartisan co-chairs and equal representation. 

Second, it must have a broad mandate. While it is critical to control the growth of entitlements, particularly Medicare and Social 

Security, the task force should examine all aspects of fiscal policy, 

as your proposal would do. 

Third, there must be no preconditions. If either side sets preconditions, the other side will simply not participate. Your task 

force recognizes that and puts everything on the table. 

Fourth, it must engage the public. In Concord’s experience with 

the Fiscal Wake-Up Tour, when people are armed with the facts 

and given the opportunity for honest dialog, they are willing to set 

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priorities and make some hard choices. And, moreover, it seems 

highly unlikely that the public would react well to a reform package for which it was unprepared. 

Fifth, and finally, its recommendations should be voted on in 

Congress. They should be guaranteed some sort of up or down vote. 

Absent this element, the report would simply join many others on 

the shelf. 

I would just make a couple of comments about changes. I mentioned bipartisan co-chairs. We do think that would be important. 

There is a lot in a name, such as the Kerrey-Danforth Commission 

or the Hart-Rudman Commission or the Breaux-Thomas Commission or the Greenspan Commission. If this were called the Paulson 

Commission, it would look like something coming out of the current 

administration, and you might—I think it would be good to have 

bipartisan co-chairs just for that purpose and also because it would 

establish more credibility, I think, across party lines. 

I would also join others in encouraging a slightly more flexible 

amendment process, although I realize when you get into that, you 

know, there is a very tough line as to where to stop. But it could 

be that allowing for amendments might be a mechanism for helping the new administration become involved in the process, or perhaps even just letting off steam of people that wanted to say that 

they had an alternative to vote for before they had to make the 

hard choice and vote for the tough package. But I certainly would 

not get carried away with amendments. It should be limited in 

some fashion if you did them. 

Another recommendation that I would say—and I would end 

with this—is to take advantage of the authority you have provided 

to have some public hearings, and I would agree with Mr. Panetta 

that your negotiations, the dialog between members is not something that you want to do in public. But I do think there should 

be some public hearings about the nature of the problem and the 

realistic options for doing this. This is really what we do on the 

Fiscal Wake-Up Tour. We have had a very positive response. People love to see folks from Brookings and Heritage who acknowledge 

up front that they do not agree with each other on the solutions 

talk about how they do agree on the magnitude of the problem and 

the nature of the choices that must be confronted. So some sort of 

process for involving the public and making the public aware of 

your activities would help, I think, raise the comfort level of members and would also help ease passage if people were prepared for 

the types of recommendations that the task force would come up 

with. 

One thing—and I will close with this—we emphasize on the Fiscal Wake-Up Tour, this is not a numbers issue. This really is a 

moral issue. It is about the legacy that we are going to leave to future generations. Right now we are building a house for them to 

move into that we know is structurally unsound. We would not do 

that in our personal lives. We should not do it with our public policies as well. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Bixby follows:]

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Senator GREGG [presiding]. Thank you, and I thank the entire 

panel. I join with the Chairman in his acknowledgment and appreciation of the panel’s presentation. 

The Chairman had to take a call dealing with the farm bill, talking about problems. 

I will reserve my time, and Senator Graham has been sitting 

through the whole hearing, and then we will come to Senator 

Domenici. Obviously, if the Chairman returns, he will take over. 

Senator GRAHAM. Well, thank you, Senator Gregg. 

One, I appreciate everyone coming to the Congress and telling us 

the same thing over and over again. 

[Laughter.] 

Senator GRAHAM. And I do appreciate the Chairman and the 

Ranking Member for actually doing something. We have got something we can rally around now. I am not too optimistic that we will 

seize the moment here, but I watched the Democratic debate last 

night, which says a lot about my life. But I thought it was interesting about Social Security. They had a real confrontation, and I 

would like to put on the record, I appreciate what President Bush 

tried to do. He really went all over the country trying to explain 

the problem that looms with Social Security, and I am going to 

focus my time on Social Security because, Mr. Novelli, I agree with 

you in this regard: A solution to Social Security is probably more 

achievable than health care because literally it is a math problem, 

and it is the gateway to solving every other entitlement. 

So, Mr. Panetta, let’s start with Social Security. You are someone 

who has been around the town a long time and in very different 

important positions. Can you imagine solving the Social Security 

problem without somehow adjusting the age for retirement? 

Mr. PANETTA. Well, I certainly think that has to be one of the 

things on the table, and I personally would have no problem adjusting the retirement age with the fact that people are growing 

older at the present time. 

Senator GRAHAM. Can you imagine a bipartisan solution that did 

not include some source of new revenue regarding Social Security? 

Mr. PANETTA. No. You have to increase the revenue. 

Senator GRAHAM. Can you imagine many Republicans coming on 

board without some new growth potential in Social Security? 

Mr. PANETTA. Growth potential? 

Senator GRAHAM. Yes, that people can get better rates of return 

than the current system offers, younger workers. I will answer that 

for you. The answer is no. Now——

[Laughter.] 

Mr. PANETTA. I guess you can answer for me. 

Senator GRAHAM. Yes, yes. I am just trying to—I just do not believe there would be a whole lot of Republican support for the solution that takes the growth opportunity off the table. 

Now, Mr. Novelli, there is an add-on account and there is a 

carve-out account, and I understand the AARP is opposed to a 

carve-out account in terms of achieving new growth. Is that correct? 

Mr. NOVELLI. Yes, it is. 

Senator GRAHAM. Would you be open-minded to an add-on account as a way for younger workers to achieve new growth? 

94

Mr. NOVELLI. Yes, we would. We promote and welcome the idea 

of add-on accounts. We think it is a very good idea. 

Senator GRAHAM. And, Mr. Panetta, I think President Clinton at 

one time suggested that. 

Mr. PANETTA. That is correct. 

Senator GRAHAM. Now, General Walker, can you imagine a solution to Social Security that does not have some form of recalculating benefits based on income? 

Mr. WALKER. No. I think that would be part of a likely solution 

where you provide somewhat lower replacement rates for middleand upper-income individuals and possibly strengthen it for people 

near the poverty level. 

Senator GRAHAM. Because it is virtually impossible to tax your 

way into solvency. Is that correct? You just could not raise revenues enough to solve the Social Security problem by just raising 

taxes. 

Mr. WALKER. Well, you could, but I do not think that would be 

a desirable way to do it. In fact, I think it is possible to exceed the 

expectations of every generation of Americans without raising taxes 

for Social Security. But you are going to have to have additional 

revenues for health care. There is no way you can get away——

Senator GRAHAM. Right, right. The point I am trying to make is 

that there is no one way to do this. You put a little of this, and 

you put a little of that. 

Now, from the Concord Coalition’s point of view, I really appreciate your organization’s leadership on this. Can you imagine a solution to this problem that does not involve all the things I have 

just said? 

Mr. BIXBY. Well, I have a vivid imagination, but I think 

what——

[Laughter.] 

Senator GRAHAM. Well, let it flow. 

Mr. BIXBY. I think what you have described is the likely solution, 

with all of those things. I can well imagine a solution with all of 

those elements in it, and I think a solution that did not have all 

of those elements in it would not be a complete solution. 

Senator GRAHAM. In the next 52 seconds, really, the problem is 

leadership. Unlike other aspects of entitlement reform, Social Security, I believe, is probably the easiest to solve. And we have talked 

about growth, revenue, age adjustment, and recalculation of benefits. Those are the four moving parts. And I bet if we got in a room, 

we could do this in about an hour. The question for each of you is: 

Do you believe that together you can provide political support to 

help people on this Committee have a breakthrough that we have 

yet to be able to achieve? Will you commit to providing that political support, each of you, rallying around a bipartisan document 

that has all these moving parts when it comes to Social Security? 

And you can answer in any order you would like to answer. 

Mr. PANETTA. There is no question that we would certainly support that effort, but I also have to caution you that I really think 

you have to address the whole deficit issue, and it is not just Social 

Security. It is also health care costs. It is also the fact that deficits 

are increasing rapidly. Particularly if you extend the tax cuts, you 

are going to have even greater deficits. So it is all of those issues 

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that have to be on the table if you are going to confront the challenge that faces us. 

Mr. WALKER. Senator Graham, I have already been to over 30 

States outlining possible frameworks for a variety of reforms, including Social Security, so I am already there. But I would respectfully suggest that one of the reasons that the President’s effort 

failed, despite his sincere efforts to try to achieve reform, was that 

the process he employed was fundamentally flawed, and process 

matters. You are not going to make tough changes dealing with Social Security, health care, tax policy, unless the process has integrity and credibility. 

Mr. NOVELLI. Senator, I know you are zeroing in just on Social 

Security, but to reiterate what Mr. Panetta said, you know, it 

would be good to look at these things in the broad context, as this 

task force is designed to do. But just on Social Security, regarding 

support, what I want to tell you is that we do this all the time. We 

have had many, many, many community-level meetings across the 

country where we say to our members Social Security has a longterm problem. There are a variety of ways in which it needs to be 

addressed. Here are 10 or 12 of them. Tell us what you think. 

And I can tell you that inevitably they look at both sides of the 

equation. They look at the revenue side, and they look at the benefit side. They do not run away from anything. I do believe that 

there is support among the public to make Social Security strong 

for future generations. 

Mr. BIXBY. The package that you describe is one that the Concord Coalition would certainly support, and I harken back to the 

days of the Clinton initiative in 1998 when Concord worked with 

AARP on organizing forums. And I was talking to Mr. Novelli before, and we would certainly be willing to enter into some sort of 

effort like that again on Social Security or anything else. 

But I think that those are the elements, and we would be happy 

to support it. 

Senator GRAHAM. Thank you. 

Chairman CONRAD [presiding]. Thank you, Senator Graham, and 

thanks for your long-time interest in these subjects and your willingness to think outside the box. That is, I think, going to be critical to the process, and you have certainly been a strong voice for 

proceeding sooner rather than later, which we appreciate as well. 

I have listened very carefully, and that is really what this hearing is about. What are the things that we need to do or at least 

take into consideration as we proceed? And I am hearing timing. 

I am hearing alternatives. I think some of you have suggested actuarially equivalent alternatives at least being a consideration. And 

I am hearing the question of supermajority for the panel, but 

maybe majority vote in the Congress. 

Senator GREGG. Co-chairs. 

Chairman CONRAD. Co-chairs. Bipartisan co-chairs. From General Walker, the possibility of some outside members. 

Let me ask this question, because I have heard this repeatedly: 

that this should be done through the regular order. We should just 

let the regular legislative process, the committees of jurisdiction 

proceed in the regular order to address these issues. 

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Mr. Panetta, what would you say to those who suggest that alternative? 

Mr. PANETTA. It will never happen. The committees of jurisdiction will never take on the kind of challenges that are involved in 

this kind of effort. You know, they are committed to obviously 

doing the things that they do best within their committees, and the 

last thing they want to do is to make the kind of tough decisions 

that hurt people in this process. And you are going to have to make 

tough decisions that in one way or another are going to require sacrifice by all of the American people. And most of these committees, 

frankly, are not going to rise up to that challenge unless they are 

at a table and unless this is the requirement that has to be accomplished. 

Every summit I participated in—and Pete Domenici was there at 

everyone that I was involved with—every one, I have to tell you, 

the Chairmen of those committees were not particularly anxious to 

be there, but the fact was that the President and the leadership 

asked them to be there. And as a result of that, they felt a commitment to meeting those requirements. If you just leave them under 

their own jurisdictions, that will never happen. 

Chairman CONRAD. General Walker, what is your take on that? 

Mr. WALKER. Well, as you know, my client is the Congress of the 

United States, so I will say something that is a little bit of a risk. 

I think the regular order is dysfunctional as it relates to these 

types of issues. And it is, quite frankly, understandable because 

you are talking about putting together a package that crosses many 

different jurisdictions. In order for this thing to be successful, 

among other things, not only does it have to be bipartisan and everything has to be on the table, but you have got to put together 

a package that makes sense. And the idea that that would end up 

emerging from the regular order I think is just totally unrealistic. 

Second, you really need more meaningful and effective public engagement and interaction than you get in congressional hearings. 

You just do not get meaningful and effective public engagement. 

Town hall meetings—and I had the privilege to be involved in the 

effort in 1998 between AARP and the Concord Coalition on Social 

Security reform, are just totally different than when you get into 

congressional hearings. 

And, last, I think realistically you are going to need a package 

that will provide political cover to all parties. That is going to be 

essential, because there are going to be things in here that some 

people do not like but they are necessary in order to help make 

sure our future is better than our past. 

Chairman CONRAD. Mr. Novelli, what would be your reaction to 

those who say, well, just leave this to the normal process? 

Mr. NOVELLI. Senator, we have been doing a lot of research 

among the public, among our members, and I think that there are 

two important lessons learned. One is that the public is very worried. The average person out there is worried about his or her price 

of health care, whether they can afford it, whether they can keep 

it. They are worried about the fact that they may have kids at 

home and they are caring for aging parents. They are worried 

about their own adult children and the fact that they do not have 

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insurance or coverage or the ability to save for retirement. So you 

have got that sense, that high level of worry. 

So when we say that the pain is not here yet, actually the pain 

is here. The public is feeling pain. But there is another aspect of 

what the public is feeling, and that is anger. The public, if I may 

say so, is fed up with Washington. The public is angry at the Congress and at the administration, and basically what they are saying 

is, ‘‘Enough is enough.’’

And so I think that extraordinary means are necessary. I think 

a task force to do what Mr. Panetta said, which is to regain trust, 

to do the public hearings that General Walker is talking about, is 

in order. Business as usual is not going to get it done. 

Chairman CONRAD. Thank you. 

Mr. Bixby? 

Mr. BIXBY. I agree. I think one of the problems with the current 

budget, with the budget process, is that it does focus on the 5- or 

10-year budget window or even just the current year. And the problems that we are concerned with here on the Fiscal Wake-Up Tour 

and with your task force is the long term, things that will have 

consequences in 20, 30 years. And there is nothing in the traditional process that forces any attention to that, so I think the task 

force may well be essential, in addition to reasons that others have 

mentioned, to provide a process for looking at the long term. 

Chairman CONRAD. All right. Senator Domenici? 

Senator DOMENICI. Thank you very much——

Chairman CONRAD. Maybe I could just say, Senator Domenici, a 

long-time Chairman of this Committee, has probably participated 

in more of these efforts than all the rest of us combined. So he 

brings a special understanding. 

Senator GREGG. He has his own bill. 

Chairman CONRAD. He does. He has his own legislation on this 

as well. Senator Domenici? 

Senator DOMENICI. Well, thank you very much. I noted this on 

my calendar, this hearing, and I noted that the two of you had introduced a resolution, and that prompted me to come up here because I am really thrilled with the idea that maybe you will pass 

either your resolution or it modified or whatever it would be. And 

I know that you had a House leader over here, which leads me to 

think that you are really serious. I urge that you be serious about 

getting one. I think the fact that Senators are so frightened and 

House Members so frightened to do anything about Social Security 

and Medicare I do not think means that they are too frightened to 

vote for a resolution of creating a commission. I am with you. I 

have one in. Mine is a pretty good one. It took a long time to get 

it done. Senator Feinstein is my cosponsor. It probably ought to be 

looked at when you put yours together. It is different in some respects. But it was a prominent Democrat who was feeling how her 

caucus might feel that got on it. Senator Feinstein made me make 

certain changes because of the Democratic input she was feeling. 

I think it is time. If we could say, well, maybe we would put it 

off again for this or that, frankly I think you would exert the best 

kind of leadership if you said we want to do it as quick as we can, 

we want to challenge these Senators to say, OK, we know we cannot do it, we ought not let America suffer the downfall because we 

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cannot do this one. We ought to let a commission try. It almost 

worked with the last commission. You remember that, under the 

previous President, Democratic President. It had one person 

change your mind, or we would have had a terrific recommendation. We would have been fighting over here, but I think we might 

have gotten it done. We all know what happened, and that was totally political. You have got to learn from that and try to prevent 

it so that it can happen. We hope it can. 

And I would say in reading yours I just had a couple of concerns. 

I think you should only be covering entitlements. Your language 

seems to indicate that you are talking about all expenditures. I 

surely would not have this commission work on appropriated accounts, and I asked the former Chairman, now Ranking Member, 

when you were out, and he said he did not think you all intended 

to go beyond entitlements. 

I do not know what entitlements beyond Social Security and 

Medicare you ought to do. I mean, should you bring in veterans 

and ask for more problems? I do not know. They are getting—to my 

way of thinking, get the two big ones if you can and get going. 

Maybe there is something else to it. 

I want to say to all of you, we need you because, you know, the 

people do not believe anymore that we will do what we say. You 

must know that, Mr. Novelli, from the seniors that you poll frequently. And I honestly believe that the Senate is filled with pretty 

decent, hard-working Senators. This issue is impossible politically 

unless we find a way to do what we are talking about. 

I had coined a word once because it was so difficult to even ask 

for a vote on this issue, because the Senators were wondering who 

voted first, to see if they voted or not. So I said we have to—this 

vote has to pass the ‘‘simultaneity’’ test. Everybody has to vote at 

the same time so that——

Senator GREGG. Simultaneous combustion. 

Senator DOMENICI. Yes, simultaneous combustion, because if you 

ask the Democrats to vote, then the Republicans will say they did 

it. I do not know if democracy, acting normally in regular order, 

can meet this kind of challenge. But you better do what you have 

told us and put a resolution together. We hope we can get good 

people. Do you want more Congressmen and less lay people? Or, 

Mr. Chairman, what is your—do you want more Congressmen and 

-women? That is what I did in mine, too. Only two laymen, the rest 

were Congressman and -women. What is yours, do you remember? 

Senator GREGG. No. It is all Members. 

Chairman CONRAD. All Members. 

Senator DOMENICI. All Members of Congress. 

Senator GREGG. And the administration. 

Chairman CONRAD. Administration and Congress. 

Senator DOMENICI. That is mine, the same way. That is good. 

Well, yes, sir? 

Mr. WALKER. Senator Domenici, for your consideration and for 

Chairman Conrad’s and Senator Gregg’s, I actually think one of the 

things you ought to think about is taking the best portions of your 

bill, the task force bill, and possibly others including that of Senator Feinstein and Senator Domenici because in my view we really 

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cant downpayment on what now is estimated to be a $53 trillion 

imbalance. And realistically, I think that is going to mean budget 

controls, comprehensive Social Security reform, round one of health 

care reform, and round one of tax reform. Realistically, you have 

got to do at least those four. 

I think Senators Domenici and Feinstein have recognized that 

the best you are going to do the first time out is a significant downpayment and that we are going to have recurring problems on the 

mandatory side. I would respectfully suggest it is not just mandatory spending like entitlements, although that is the biggest one, 

I agree with you, Senator Domenici. We also have a lot of mandatory back-door spending that are called ‘‘tax preferences,’’ $800 to 

$900 billion a year. And I think that one of the things that they 

recognize in their bill which I think has merit is you are going to 

want to periodically come back and make some recommendations 

beyond the initial downpayment because, this $53 trillion hole is 

going up $2 to $3 trillion a year by doing nothing. 

So I would encourage you to think about whether or not you 

might be able to work something that combines the best of both 

proposals. 

Senator DOMENICI. You are saying ours is permanent. 

Mr. WALKER. It is a standing commission that would report, at 

least as I recall, every 5 years, if I recall. 

Senator DOMENICI. That is correct. 

Mr. WALKER. Or it could report—one of the things we have 

talked about during the Fiscal Wake-Up Tour is to have mandatory 

reconsideration triggers for both mandatory spending programs 

and tax preferences that when a trigger is hit, this commission 

could have to come back and, make a recommendation in advance 

of 5 years if some trigger is hit. 

But I think you have to have it apply to both spending and tax 

policy; otherwise, I do not think you will get the agreement. 

Chairman CONRAD. Let me just say that I am entirely in agreement with you. What you just outlined is what has always been in 

my head, that you have got to deal with long-term entitlements; 

you have got to deal with what I would consider round one of 

health care, because we are not going to solve the health care issue 

at one convening. That is not going to happen. That is the 800-

pound gorilla. Mr. Novelli made it very clear. I agree with that entirely. That is the thing that can swamp this boat. And it is going 

to swamp this boat if we fail to act. And I think tax reform is critically important as a component. You have got to deal on the revenue side, you have got to deal on the spending side, and I think 

increasingly we have got to look at what makes our country more 

competitive. The world has fundamentally changed since the pillars 

of the tax agenda of the country was put in place. The world has 

changed fundamentally, and we are going to have to seriously, I 

think, reconsider the way we do the tax business of the country. 

I would say Senator Domenici and Senator Nunn a number of 

years ago had a very thoughtful proposal about fundamental tax 

reform looking at making America more competitive. I think we 

have to go back and look at proposals like that one. 

Do you want to go next, Senator Gregg? 

Senator GREGG. Sure. 

100

Senator DOMENICI. Thank you for letting me go ahead of you. I 

appreciate it very much. 

Senator GREGG. It is a courtesy. I am happy to do it as a courtesy to the former Chairman, the long-time Chairman and leader 

on this issue who has always got good thoughts on these points. 

I want to return to the point that the Chairman made and to another issue, which is the points which have been raised here about 

how the commission should be set up are very legitimate but extremely resolvable. I mean, we can come up with a process here. 

With the exception of the amendability, I think I can be in agreement with almost any ideas that have been thrown on the table 

here. The issue is the institutional resistance to actually getting a 

commission passed. 

The Chairman highlighted one, which is the issue of the jurisdictional question, other committees being concerned that their jurisdiction is being stepped on, and I think your answers were right 

on, that you cannot do this type of a long-term policy under the 

present regular order, regrettably. We have proven that over and 

over again. 

The second institutional impediment to this is I believe a lack of 

public support for the approach, and I am wondering how we energize people to be more sensitive. I mean, you are obviously doing 

your tours, which have been extraordinary. But is it possible that 

the AARP should or would be willing to participate in calling for 

this type of an event? Because, honestly, if this is not entered into 

the Presidential debate as an element of the debate, if the candidates for the nomination or the candidates who are nominated 

are not willing to say when we come to entitlements, Medicare and 

Social Security, it has got to be bipartisan and it has to be fairly 

structured and we probably have to do it this way, we are probably 

not going to make any progress. 

Is there something further that we can do to energize this? Because right now we are being sort of slow-walked because some of 

our colleagues—on both sides of the aisle, regrettably—see these 

issues as the bludgeons which get people elected, tax policy on our 

side, Social Security policy on the other side, and they do not want 

to give up that club to use in the next election. And we have got 

to come up with some way to say, hey, the American public tells 

you you cannot use these clubs, we have to make progress here. 

Do you have any more thoughts? I mean, I really congratulate 

General Walker and the Concord Coalition for the tour. I mean, 

they have been exceptional. They came to New Hampshire and it 

was great. But I do not think we have gone the next step, which 

is to say to people do not use the club of tax policy and use the 

club of Social Security policy as a way to not allow a commission 

to go forward because you need those political tools. 

Does anybody have any thoughts on this? 

Mr. PANETTA. You are absolutely right. You have hit on the fundamental problem here, which is that members do not want to 

walk into the buzz saw that is going to be involved in making the 

kind of choices we are talking about because those are used as 

clubs on both sides to beat each other up, and, you know, you are 

largely engaged in partisan trench warfare up here, and everybody 

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is basically in their trenches, and nobody wants to get up and have 

to deal with it. 

I think you need to look at history here. The only way it developed is that, A, there was crisis, and whether or not crisis will happen in the markets as a result of this, who knows, over what period 

of time. But, clearly, crisis does drive this institution to try to respond. It is a lousy way to govern, but it clearly is one of the ways. 

Senator GREGG. But this may be, as Mr. Bixby pointed out, a 

slow developing cancer where crisis is never really identified at a 

public level of intensity. 

Mr. PANETTA. You are right. The other thing I was going to point 

to is there was a guy named Ross Perot who made this a national 

issue during a Presidential campaign. And the fact was that the 

public responded to his appeals to try to deal with the deficit and 

what it was causing, and that in large measure, I have to tell you, 

working for President Clinton, it was Perot’s campaign that produced some of the impetus to move an economic plan that dealt 

with the budget deficit. 

So, clearly, the Presidential candidates have to address this issue 

and make it a priority. If they do, then whoever is elected obviously 

then has at least the political impetus to go to the American people 

and say I am going to do what I said I was going to do and try 

to bring those parties to the table. 

So there has to be that political process of educating the public 

to the need to deal with this issue. I think the public is ready for 

this message. There is the fact that wherever Gen. Walker, Bill 

Novelli, and Bob Bixby go to talk to the public, they respond. Every 

group I talk to responds to this issue. But it is going to take a Presidential candidate on both sides to be willing to address this issue 

and the need to take action. That ultimately is going to be the only 

way you are going to bring players in this institution to the table. 

Mr. WALKER. As I said, Senator Gregg, while I believe that a 

task force or a commission along the lines of what you propose is 

an essential element to achieve sustainable success in this area, I 

also believe that Presidential leadership is also essential to be able 

to attain it as well. And while the Fiscal Wake-Up Tour has been 

very successful, it is but one of many things that are going on right 

now. 

For example, I have spoken with Ross Perot on more than one 

occasion. He is going to fund a website to try to be able to get some 

more visibility in this area. 

Second there is a commercial documentary that is going to be released next spring in time for the Presidential general election 

campaign to try to gain more visibility on the issue. 

I think it is absolutely critical that the next President make fiscal responsibility and intergenerational equity, which includes at 

least the four things we talked about before, one of their top three 

priorities. If they do, I think we can turn this thing around. If they 

do not, I think it is only a matter of time before we will get a crisis. 

And, you know, so that is what we are trying to do. The Fiscal 

Wake-Up Tour and others, we are trying to make this a general 

election issue through a variety of different efforts, and this task 

force would compliment that effort because it would help to set the 

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tration to try to be able to make that downpayment and get some 

momentum to improve credibility and confidence. 

Chairman CONRAD. General Walker, do you have any idea in the 

movie who will be playing the Chairman of the Senate Budget 

Committee? 

[Laughter.] 

Chairman CONRAD. I was hoping for George Clooney. 

Mr. WALKER. Believe it or not, since this is a documentary, it is 

going to have real players in it. 

[Laughter.] 

Mr. WALKER. Real players. 

Mr. NOVELLI. Senator Gregg, I think that it is clear that the public does want action. I mean, we are at a moment in time when we 

can build on the public concern and demand for action. 

As I think you know, we started Divided We Fail with the Business Roundtable and SEIU, and tomorrow we are going to announce a major additional partner in this coalition. And we have 

been going around the country. We have got in your State, in all 

the early primary States, caucus States, we have been basically 

training hundreds and hundreds of volunteers to essentially ask 

the candidates what are they going to do about Social Security, 

what is their plan for health care. 

I really believe that we could add to this educational effort the 

idea of this task force. I think there is an up side and a down side 

to it. The down side would be if this does not happen—or if it does 

happen and it becomes another shelf document, as Mr. Bixby 

said—then the public is going to be even more angry and more disappointed. The up side is good, though. This is a task force that 

is specific. It is something the public can understand. It is something that they can actually engage in and support. 

So, yes, I believe we could put this task force into the Divided 

We Fail message, but I think that if we do it, something has got 

to happen. 

Senator GREGG. Well, I would simply state that the task force as 

structured requires that something happen. That is the whole point 

of it. And, obviously, if you folks made it the cause du jour, it 

would have a huge impact in the process. 

I apologize for my phone. It has got to be my children. 

Mr. BIXBY. One other thing that I would mention, there was—

back when Congressman Stenholm and Congressman Kolbe had a 

Social Security bill, they came up with this ‘‘Get Out of Jail Free’’ 

card, which was anybody that supported on a bipartisan basis the 

bill, they would agree to rebut negative campaigning against that 

person in their re-election campaign. So as a hypothetical, if, you 

and I were running against each other and I started accusing you 

of wanting to destroy Social Security and Medicare, then, Mr. 

Graham, who may have supported you in this effort, would agree 

to rebut that in your home State and say, Bixby does not know 

what he is talking about, something like that. 

So, you know, that is just sort of fighting fire with fire politically 

if people signed up for this. 

Chairman CONRAD. OK. Senator Nelson? 

Senator NELSON. I want to encourage you on this task force, and 

you certainly have my support, because it is only by these kinds 

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of attempts of building consensus that we are going to get any kind 

of headway in an extremely poisoned, highly partisan atmosphere. 

And I come to these conclusions simply out of the experience that 

I have had. 

Leon and I were in the House at the time, in 1983. Social Security was within 6 months of getting to the point that it was not 

going to have sufficient revenues coming in for the payouts. And 

two old Irishmen, bitter enemies, political enemies—personal 

friends, and there is a lesson in that, that they could fight like the 

dickens in the day, but at night they had a personal relationship 

that they could sit down and talk to each other. And, of course, you 

know who I am talking about: the President and the Speaker of the 

House. And they said we are going to take Social Security off the 

table as a political issue in the next election, and we are going to 

use a vehicle something like this task force. It was called a commission. And they put all the highly visible people on there, including Claude Pepper, and they came out extracting a little bit of pain 

from everybody in the process and made Social Security actuarially 

sound for the next 80 years. 

And so when you get to these highly emotional issues, these politically radioactive issues, like Social Security, Medicare—indeed, 

the health insurance system of this country, which has got to be 

completely overhauled. But there are so many players in it, you 

just cannot get it done in a normal circumstance. I wish I could believe that we could get this kind of leadership emerging out of the 

Presidential election, but I do not think it is going to be there because of the radioactivity of these issues. So the leadership and the 

bipartisanship is going to have to be built by the next administration. And that means that they are also going to have to set the 

table for working together with the parties, like the two of you do. 

We do not get a lot of bipartisanship on this Committee on the 

issues, but we sure get the bipartisanship in the way that the two 

of you can work together. And so, too, it has got to be with the next 

President and the Republican leadership in the Congress. 

Now, I am not very optimistic because I see the—I do not see the 

leadership like Tip O’Neill and Bob Michel or Whoever was the 

Democratic leader back then and Bob Dole. And they could cut 

deals. They could work things out. They had a good personal relationship. And we have got to get back to that in order to be able 

to hit a consensus on these kind of very thorny issues. But what 

you all are doing is certainly the right track: try to build a consensus. 

Now, I have offered—this is a side issue. We have got a huge 

problem of insurance for catastrophe. Nobody paid any attention 

until finally Katrina came along, but it was not Katrina in the 

sense of windstorm insurance., because that did what it normally 

would do, a Category 3 hitting the Mississippi coast. It was just because it was an unusual kind of thing, which was filling up the canals in New Orleans and the bowl filled up that you had this huge 

economic loss from Katrina. But it underscored the problem that 

we have got a problem that no one State and no one insurance 

company can withstand the big one when it hits, and the big one 

is a $50 billion insurance loss storm hitting a major metropolitan 

area direct from the water or an 8-point-plus on the Richter scale 

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earthquake hitting San Francisco or Memphis. And it is coming, 

but we cannot build consensus because everybody has got their own 

little selfish interest to protect. 

I have offered to try to build it with this, what we called an 

emergency commission on insurance, on catastrophe insurance, and 

we are having trouble even getting that out of the Congress. 

So I commend you, Mr. Chairman, for what you are trying to do. 

Chairman CONRAD. Well, I thank you, Senator Nelson. 

One thing I have learned is that the Senator from Florida is absolutely serious about fiscal responsibility, and he is willing to cast 

tough votes to achieve it, and I respect that enormously. 

Senator Gregg, do you have additional comments? 

Senator GREGG. I just want to thank you again for being the engine behind this effort and thank the panel, especially the Majority 

Leader of the House, for being willing to step forward and make 

the case, because you have got the credibility and the bipartisanship that we need in order to make progress here. We thank you 

for being willing to be advocates. 

Thank you very much. 

Chairman CONRAD. Yes, let me just conclude by thanking the 

witnesses here today: Congressman Hoyer, the Majority Leader, 

who led off this hearing. 

Leon Panetta, former Chief of Staff to the President of the 

United States, a former House Budget Committee Chairman, 

former head of the Office of Management and Budget. Nobody has 

dealt with these issues over a long period of time or shown more 

leadership for fiscal responsibility than Leon Panetta, and we very 

much appreciate your being here. 

General Walker, who has really helped put this issue on the national agenda by leading the Fiscal Wake-Up Tour. I remember 

your talking to me about this several years ago. I was just delighted to see that you have carried through, and you are unrelenting, and that is exactly what it takes. 

Bill Novelli, you came to me some months ago and said that 

AARP recognizes fully that we are on an unsustainable course, and 

collectively we have got to find a way to address these long-term 

issues. And for you in your position and with the full weight and 

muscle of your organization behind that stance, you can make a big 

difference here in whether or not we take this on or whether this 

can gets kicked down the road one more time. I can say Senator 

Gregg and I are really struggling to find a formula that can put 

in place a process to lead to the beginning of a solution to these 

problems. 

And, Mr. Bixby, and the Concord Coalition, thank you for the 

leadership you have shown all across the country. Thanks for continuing to remind our colleagues that these are issues that really 

matter and really are central to whether the United States is going 

to continue to be a great power, because that is really how big this 

is. 

I hope all of you will remain available for additional discussions. 

I think one thing we need to do is find a way to pull together a 

consensus proposal, and then to have people push it aggressively 

because that is going to take—you know, I tell you, I hear from our 

105

colleagues on both sides. They would just as soon we went away. 

They really would. 

Senator GREGG. Well, that is just you they are talking about. 

[Laughter.] 

Chairman CONRAD. I think it is because of the picture. You 

know, maybe not so much that Senator Gregg and I go away on 

a personal basis, but that this issue go away. You know, honestly, 

I really hear from my colleagues—and I get the drift. I know what 

they are saying. They are speaking in code. Nobody is so crass as 

to say, gee, we wish you—well, that is not true. I had a Senator 

yesterday say he really wished we would not bring this up and that 

we would not push it, it is OK to have a hearing, but do not do 

anything more than that. 

But, look, the stakes are enormous for this country, and, Leon, 

you said it so well. You either deal with problems by crisis or 

through leadership. And we sit around here and wait for the roof 

to cave on, or we can act. How much better would it be for this 

country if we acted. We can do this. This country has faced up to 

World War I, World War II, Vietnam, Korea, the Great Depression, 

the flu epidemic. We can certainly take this on. 

But it is going to take will. It is going to take will. And it would 

be very helpful if you continue to press and to say to our colleagues 

that kicking the can down the road is no answer. That is just going 

to make eventual solutions far more difficult. 

With that, I want to again thank the witnesses and especially 

thank my colleague Senator Gregg for his determination to carry 

on. 

[Whereupon, at 11:02 a.m., the Committee was adjourned.]

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