harry reid's amendment. right now, barring an agreement with republicans, the final vote on passing the overall bill could happen on christmas eve. there are lots of ways for you to follow the debate on health care. you can watch it live, gavel-to- gavel, and edited and commercial free only on c-span2. . .

>> senator, let me big with you -- let me begin with you. those reports often residing government shelves. why would this be any different? >> this would be different because of the way it is set up. it is set to be fully bipartisan and it is set up to get the assurance of a vote on a recommendation from the commission. so the statutory commission and the law that governs this commission would provide that the recommendations of the commission would not be amendable and would come to the floor of the house and the senate for an automatic vote. >> would be commission have a

target for deficit reduction or would there simply be the ability to set whatever target they want to target? why would we expect members of congress to set an ambitious target for themselves when they have not been ambitious about this effort in the past? >> those are excellent questions. we do not set a specific target. part of the work of the commission should be to determine how much reduction to achieve. the reason we are hopeful that they will take this on aggressively is that everyone knows that it is required. we are clearly on an unsustainable track. the deficit is approaching 100% of the gross domestic product of the country. it will exceed 100% in the next few years. according to the congressional budget office, it will be 400%

of their gross domestic product. what we face is a longer-term challenge that requires an action or a set of actions and i think that colleagues know that, they really need to take this on any meaningful way. >> but why not set a target to begimr with, rather than leaving it up to the commission to do it? >> it is a matter of negotiation between senator ghraib and myself. -- senator gregg and myself. we concluded that the best thing was not to set a fixed targets. that is the judgment we came to. >> senator, you picked up a fair amount of support for this proposal so far. there are 35 sponsors and cosponsors. how do expect the rest to give up their authority.

you are and a prayer or a tax writer, it would affect what you do with the commission. >> going through the regular committee process has not and will not address the challenge of this dimension. when we have come to something of this significance, we have had to look to a special probe teacher. in the 1980's, we did that with -- a special procedure. in the 1980's, we had to do that with social security. there was a bipartisan plan to put the country back on track. we were then facing record deficits. the situation now is far more acute. the baby boom generation is poised to retire and that fundamentally changes everything. we no longer have time to get well. we no longer have time for this to play out over a lengthy time.

we now have to take action to get the country back on more secure footing. and we have to begin the actions sooner rather than later appeared >>. >> is this not really your responsibility? congress's responsibility? >> it is. but, repeatedly, congress, and in the regular order, in the normal committee process, is not want to take on a challenge of this magnitude effectively. the reason for that is very simple. the regular order is geared for partisan divide and partisan gridlock and all of thawhat that entails. a special process is what has been required in history. i think that is what is required now. this is the only way you will cut through the clutter. it is the only way you will

avoid the stumbling blocks that are put in place to stall the action. party control shifts back control appeared -- party control shifts back and forth. >> obviously, the leaders in each chamber would appoint the members for the commission. i imagine you already have some ideas of your own. you know the budget process pretty well. you think you should be on this committee? >> of course, i do. >> in names or positions, should it be appropriators? >> it should be people who need to be involved in this, people who are involved with these issues must intimately, and know them the best. for example, the chairman and ranking member of the finance committee, the chairman and ranking member of the ways and means of the house, the chairman and ranking member of the banking committee.

those would be logical people to put on such a commission. >> you also want to have a couple of members of the administration on this commission. i would like to hear your thoughts about the reception that this idea has been getting from the administration. how enthusiastic are they about it? what with their role be on the commission? >> as we see it, in our proposal, the secretary of the treasury would be there representing the administration and the administration would name one other person. i always assumed that would be the head of the office of budget management. that would be an obvious person to include. the co-chair would be the secretary of the treasury. that would be a critically important role. >> but your proposal is basically for everyone to link arms and jumped off the cliff

together, i essentially. do you really think the administration is enthusiastic about that idea when the commission would be taking action just at the beginning of the next presidential election cycle? >> i cannot speak for the administration. i have been in many hours of negotiations with the them. i do think that they are warming to the idea that there needs to be in a process like this one, not necessarily this one that we propose, but something like it in order to effectively take on this threat. the circumstance we face as a nation is very clear. we have had the death of -- we have had the depth of the previous administration. the current trend line, the debt

will currently increase more. we have only seen a debt like we have now once before in our history, and that was after world war ii. in the longer term, the trend is even more dramatic and more serious. we have exports of everetevery t coming forward. they all say that we are on an unsustainable track. the sooner we do with it, the better. >> president obama said on wednesday that he thinks it is too early to talk about tax hikes or spending cuts because that will hurt the economy. do you agree with that? when he unveils his budget in february, what will you be looking for that would assure you that he is taking this problem seriously? >> i agree with his assessment, that is too soon to begin raising taxes or cutting

spending. by the way, even though more revenue is needed, i do not think that the first place we ought to look is for a tax increase. i think we need to look at more effectively and aggressively collect what is due end is not been paid. we are only collecting about 70% of the taxes that are owed under the current system. if we actually collected everything that was owed, we would be relatively in good shape. the problem is that the current system is increasingly inefficient. it is increasingly being gained by offshore payments, by abusive tax shelters, the difference between what is owed and what is paid, and we need to get america back on tradtrack. on the spending side of the equation, we have to face up to the entitlements which have

turned it to be very adversely affected by 50 million people coming in your the baby boom generation. i am part of the baby boom generation. we have to face the reality. >> who is not doing their job? does the irs lacks the resources to collect the debt? >> there are a lot of us responsible for a revenue system that is badly out of sync with the world we are in today. when this tax system was devised, we did not have to worry about competitive positioning in the unit is states. the united states was dominant. but now we do. when this tax system was instituted, we did not have all of these accountants and lawyers sitting around figuring out how to avoid and evade the system going offshore. you did not have these offshore opportunities that exist today. by the way, if you want to see the magnitude of what is occurring in these offshore tax

savings, just go global offshore tax savings and see what you find. -- just go google offshore tax savings and see what you find. it is very eliminating. >> -- it is very illuminating. >> all lines of taxation, a lot of people think -- along the lines of taxation, a lot of people think about the added value tax or some national sales tax that the commission would be tempted to look to to raise revenue. what would be your response to that idea? >> i do not think that any of us can prejudge what the commission will conclude. there would be given the assignment to face up to the debt threat hanging over this country. you saw a newsweek just had a cover story talking about how great powers decline. it starts with an explosion of debt. we have had that happen in our country over the last eight

years. and we see the trend continuing. my own belief is that the american people know that we are on a track that cannot be sustained. they want something to be done about it. they understand that it is difficult for current institutions to do what needs to be done. and we need to give a group an opportunity to come up with a plan and, if the super majority of the group can agree to a plan in have come to congress for a vote, it would take a super majority to pass and the president could veto it. there are lots of opportunities for college to be fully involved. they will all have a vote. it would require a supermajority to pass. >> on the house side, the blue dog democrats, they are talking about a pay-go approach. if congress does not pay for new spending, there would be

mandatory across-the-board cuts. you're not a fan of that because there are too many loopholes. but if it came down to it and get your commission set up, we do go along with it? >> it would not be smart of me to negotiate in public. >> come on. >> let me say what i have said privately and publicly. i am actually a supporter of statutory payment. but not if it has three trillion -- $3 trillion of exemptions. the middle tax -- the middle class tax cuts, that is entirely reasonable to make permanent. it is entirely reasonable to have doctors covered for two years for the alternative minimum tax or the estate tax. and then turn over those matters to this commission for final determination, a final plan that would come to congress for a vote. but, as i said, i do not favor

statutory pay-go with $3 trillion exemptions. with the creation of a commission with the responsibility to come up with a strategic plan for this country's fiscal future and statutory pay-go without $3 trillion of exemptions, but nonetheless, certainly exam to the middle-class tax cut, we know we're going to do that. we may as well just face it. >> you mentioned yesterday that you have been talking with the white house and they are considering setting up a debt task force of their own. but that would not have the power to enforce in the congress like your proposal would. what can the white house do to make sure that your proposal does not become law and that they said that there's and congress pays attention? >> the principles that are

critical to the functioning of any commission a task force, number one, it has to be fully bipartisan. no. 2, it has to deal in an across-the-board fashion with the debt threat. you have to look at revenues, expenditures, and adam and programs as well as discretionary spending like defense, -- entitlement programs as well as discretionary spending like defense. it has to come to vote at the congress. >> how would that work with the white house proposal? >> if you have an executive order commission, it does not have the force and effect of law. the one in the 1980's to deal with social security was an

executive order. it did deal effectively with the problems before us at that time. so that serves as a possible model. >> nancy pelosi says that the idea of this commission cedes too much authority to a commission and takes away from congress. will she go along with it? if not, what does it do to your idea? >> i cannot speak for the speaker. i have absolute respect for the job that she does and all the challenges that she faces with the variety of views from our caucus and her committee chairman. but i believe that this is an idea whose time has come. i believe, that if we just review what happens, we will see the chances of dealing with this through the regular process of

congress is the most [unintelligible] [unintelligible] increasingly, i think there is an understanding that we are running a great risk with their economic future of the country. the risk that we are running is that those who are financing the state will wake up some morning and say, you know, there's too much debt over there. we have to move these things. we need to put the united states dead in a special category it has to be in a riskier category than the aaa rating that we have enjoyed for a very long time. we have the chinese who have become the biggest fine dancers of american debt, saying that they are increasingly concerned about our ability to pay back its debt. there are many around the world at international meetings saying, are you not going to face up to this? are you not going to show the rest of the world that the united states can assure us that

they will pay their debts? last year, 60% of the debt was financed by foreign entities -- 68%. many said that they would not show up at the next bond auction. we would have to have massive cuts in spending and increased taxes and half to dramatically raise interest rates in order to attract capital to finance this debt. if that day ever arrives, we will rue the day we did not face up to this challenge earlier so that the solutions could be less [unintelligible] >> does not the idea this commission undermine the way congress is working right now, on health care?

a lot of your democratic colleagues say that health care reform that they are passing will achieve great savings in the future in health care spending for the government. yet, if you're commission comes into being, i will have to engage in health-care issues and try to squeeze a lot more savings out of the health-care system. if you -- you would effectively rewrite health-care legislation. >> i do not think so. it is clear to me that there will be more savings in the health care cuts than this legislation provides. i had my staff draw a chart the other day that shows the dead trajectory that we are on. while it is important for debt reduction in this legislation,

$650 billion in the second 10 years, if you stack that up against how big the debt is becoming, is a relatively modest contribution to reducing that long term debt overhang. frankly, it makes my point. we entered this process with the notion that health care reform would fundamentally deal with the 800 pound gorilla and our long-term debt. it reduces debt, but not in a way that fundamentally changes our long-term outlook.

>> even if they do not take steps to reduce the debt next year, they have to show investors that they're serious. former fed chairman alan greenspan said on thursday that it is next year. >> why do so -- i think so, too. i am not a hoover righ-ite. we cannot add taxes in the midst of a downturn. we have told focus on long-term debt reduction. this is not a one-year or two- year process. this is a plan that will be multiple-years in duration. it fundamentally changes the trajectory we are on.

we will all be the better for it. otherwise, we wait and the longer we wait, the stronger the solution will have to be. >> it will still raise spending. >> no. if you look at what has happened under this administration under this congress, taxes have been substantially reduced, not increased. the spending increases have largely come as a result of the need to provide liquidity to the economy. that is exactly what we should have been doing. we have to help people understand the difference between what makes sense in the short term and what makes sense in the longer term. when your ended sharp economic

downturn, -- when you are in a sharp economic downturn, you have to increase debt. in the longer term, you have to reduce debt. we have to be able to walk and chew gum at the same time. i think people are smart enough to figure that out. in the short term, adding debt to the deficit was exactly what we needed to do to with avert a collapse. for the longer term, just the reverse is required. >> there is talk about imposing a tax on financial transactions, wall street transactions. it raises a very large amount of money. it could do a lot to reduce deficits over the longer run. what are your thoughts about that idea? >> i believe that idea only has

merit if it is done in coordination with other financial centers. if it were done only here, that would run the risk of pushing markets out of the united states, in terms of their headquarters, pushing them overseas, which would be counterproductive. while such attacks may have merit, it only does, in my judgment, -- -- while such a tax may have merit, it only does, in my judgment, if it is done in coordination. >> as you're well aware, the house opted to go for a smaller amount to give time to negotiate. the senate is going to act on this. judd gregg is going to try to add a smaller increase. would you vote for that as well? >> absolutely. i think it would be hugely beneficial if we would pass our

commission idea. but we are not going to let the debt of the united states be defaulted on because we do not get their way. we have indicated that we are not going to support any long- term extension of the debt without our approach being adopted or something like our approach. >> if you're commission gets attached to the smaller increase, then the house will have to come back and be there agree on it or reject it before the new year. as you know, time is running out. is that not a game of brinksmanship? >> i do not think so. we're talking about something that fundamentally threatens the economic security of our country. that is my belief. to offer our commission an

extension, even short term, it would require the house to come back before the end of the year. i do not think that is too much to ask given the extraordinary seriousness of what we confront as a nation. >> realistically, do you think you're better opportunity comes next year when you face a long- term extension of the debt ceiling? >> absolutely. on a short-term extension, there will be some members who are in support of the commission and will vote for it because they will not want to force the house to come back. we will lose votes in that context. we have been very clear. we're not going to allow the united states to default on its debt. that would be a disaster for this country. that would be a disaster for the united states. but, at the same time, we will not support a long-term extension without some means of

facing up to our long-term debt. >> senator conrad, thank you for joining us. >> thank you. >> we continue this conversation with andy sullivan. is this commission going to happen? >> i am not the whip of the senate, so i can give you an actual vote count. but it does look like this is becoming more an issue of concern for the public that is exerting aggressively on lawmakers. >> i tend to agree. i think speaker pelosi recently started to talk more favorably, even though she has still some reservations about the details. that bodes well for the area. the administration is also showing signs -- that bodes well for the idea. the administration is also showing signs that suggest they

are actively considering it. they have concerns about how politically achievable all of the goals really are. but they are all coming around. >> but is it a commission that is our view think will have real political muscle and the ability to rein in spending? >> if the members of the commission of the people that senator conrad describes, the many folks in congress, the people who oversee the riding of taxes and the spending of that money, then it does stand chance. those are people with a lot of power over the issue. >> this is coming in the midst of the health-care debate. will the economy and spending be the next summit issues? >> yes, absolutely. this comes under the category -- actually, a couple of categories, under the economy and spending there is concern about our long-te