it's good for people. there are certain sorts of tests where the medical profession is pulling back on their recommendations because they think those tests are not fair -- >> i would ar that we are doing all of one and none of the other. i really don't see dynamic scoring at all in that area. i would really encourage you to keep looking at that. otherwise we can't do our job. >> thank you very much. thank you for your indulgence. the hearing is adjourned. >> thank you. >> "washington journal"

continues. host: we want to turn our attention to the growing budget deficit. joining us here is maya macguineas with the committee for the responsible federal budget will stop in regard to -- responsible federal budget. year,ard to the coming the cbo directed us this past week. guest: right, the congressional budget office came out with its long-term projections. these are important, because

they show is not what to expect if we are just in this decade, which is how we look at the budget as far as 10 years numbers, but in a long term which is not good. it is not a surprise, but is a useful reminder that the deficit has been coming down in the short term. in some ways, that is good. in some ways, that is bad. the short-term improvements stand in the way of a stronger economic recovery. you kind of worry about the fact that you don't want deficit reduction to come too fast. you want the economy to be able to regain its footing and get on top of the medium and longer-term projections. not doingnse, we are very badly. our debt is already at postwar historically high levels. and projected to grow at unsustainable levels. there are a lot of warnings in this report. host: let's put this in terms of numbers. from the cbo and your own organization, the overall debt is about 73% of the gdp and by 2025, 80% of the gdp, exceeding

the size of the entire u.s. economy by the 20 30's, and doubling the entire gdp after 2080. see,: right, as you can the debt is growing faster than other parts of the budget, faster than the economy, growing as a share of the economy. and that is basically the definition of something that is unsustainable will stop it is growing faster than the whole economy. underlying factors are also unlikely to change. a big piece of this is the aging population. there is no trick there. we are going to be getting older, and that is a good thing that people are living longer, but it has a negative effect on a lot of parts of our budget that we have not adapted to and made changes to to figure out how to deal with the aging population. another piece of this debt growth is interest payments. ourstest growing part of budget is interests. to me, that's huge waste. that is where you are throwing money away. it is not on investment or important priorities for the country. it is just paying interest because we have been unwilling

to pay for our debts in the past. there is a clear warning that the long-term is unsustainable. changes will have to be made. the real question is, how do we get a political system that is intent on ignoring these problems to own up to them and start working on these issues? is noularly because there impending crisis. it is not as if something terrible will happen this year if we do not make changes. that allows politicians to kind of sweep it under the carpet to try to avoid grappling with these issues. important, issues like social security, medicare, things that people depend on. it is important that you start making no stringent -- those changes sooner rather than later. people have enough understanding of what is going on. then you can protect people who depend on the program. but delaying those changes will do a lot of damage. a gallup poll came out recently that only six percent

of the american people are worried about the debt. and the president continues to say we are bringing down year-to-year debt. it has been brought down and have since i took office in 2009, he says. guest: that is a lot of the reason people are not worried about the situation. in the past couple of years, it was on the forefront of the national agenda. people knew it was an issue. we had government shutdowns. we all must have defaults. we were doing a lot of things in washington focused on the deficit and debt. not a lot of productive things and we did not make as much progress as we should have, but recently the president has been talking about how we have cut the deficit in half. what he is not talking about is that the deficit is still very high and projected to grow way over the long term in a way that will cause it to grow it in -- at an unsustainable rate. the president is talking about with the deficit having come down, i would argue that is not really what is important, and could be bad for the economy. you do not want to reduce the deficit too much in the short

run. what he, and we, and the country should be focusing on is that if you look at the projections going forward, we have made promises in programs that we do not have a way to make good on. we have borrowed so much that are interest rates are -- interest payments are growing and our unsustainable. we do not have a plan. and i would say, you do not even need to get to a balance. just get to where the debt is not growing faster than the economy. no question, we do not have a plan to do that. focusing on this year and saying we do not have a problem takes away from where attention should be, which is that we need to make changes, and hopefully gradual changes to get control of this out-of-control debt. host: our guest is maya macguineas, who is a member of the steering committee for the fix the debt campaign, and the presidential committee for a responsible budget. is testimony from

wednesday, a warning about the growing debt. [video clip] debt held by the public would also start to rise again more rapidly than gdp. and because such debt is now larger relative to gdp than at any point in u.s. history, except for a brief time around world war ii, further increases in the long-term could be especially harmful. 25 years from now and 2039, federal debt held by the public would exceed 100% of the gdp, we and the economy could not be sustained con -- in definitely. host: again, that warning is from the congressional budget office to rector. -- do we get there yet shall congressional budget office director. how do we get there? guest: i would say it's going to

be a lot of hard choices and people would have to understand there are many hard choices. i would suggest people read the cbo report. they put out really good, impartial work. laying out the numbers is a real awakening of why it is important. the second is you cannot fix his problem on spending cuts alone for more tax cuts on the wealthy alone. none of those are going to fix the overall problem. this is a situation where we have to put the entire budget on the table, all areas of the budget, and do a real scouring of what changes we can make. the fastest-growing programs, other than interest them are those that relate to the aging of the population and our health care programs. to begin settlement programs -- social security, medicare, and medicaid -- need to be addressed. in 2030, the social security trust fund and the medicare part a trust fund will be running out of deserves. -- out of reserves. we do not want to get close to that. we need to look at how we adjust them to do needs testing, which

is reducing benefits for higher the retirementd age, raise the payroll contributions. i am in the camp that you have to do a little bit of everything to get to a sensible fix. that is true for the entitled -- entire budget. entitlementlook at programs. discretionary spending, which is where a lot of public investments are, has been hit in recent years because we have have the sequester, the across-the-board spending cuts that have hit. many people would say we need to make more public investment. i think there is a strong case for that, but we need to find a way to pay for them. right now, you have tons of good ideas on how to make investments, but no real plan. do have to look at revenues. you cannot fix the budget on the spending side alone, either from a policy side or a political perspective. you have to republicans and democrat coming up with something they can agree to, but it needs it will be revenues and pending.

but when you look at revenues, the important thing is to look at how to reform the tax code. it is a disaster. it is filled with tax breaks on both individual and corporate side. lots of things are inefficient, and and do not work. over another group as far as winners and losers. there is over a trillion dollars in revenues in the tax code. if you get rid of those tax breaks, there is space to bring down those rate in a way that will grow the economy and raise revenues for the federal government. there are smart ways that you can inform entitlement spending. perhaps, through new public investment and get revenues from tax reform. you could get a great 10 year budget plan that would not make too many changes in the short run. again, we need to make space for the economy to recover, but we have to bring the debt down so it is not growing faster than the economy. and asked a white all matters,

this is not to fix the debt for itself. -- and as to why it all matters, this is not to fix the debt for itself. this is to grow in a sustainable way so we have an economy that is once again making investments, creating jobs. this is part of an economic recovery package, growing the overall economy. we are doing better in this country. right now, wages have stagnated. there are not enough jobs. a lot of people are hurting in the middle class and being squeezed in a terrible way. you need to make this debt plan part of that overall economic plan to address these big economic challenges that the country has right now. to ask about how congress gets all of that done in light of what they have or have not done. they cannot even work on the immigration supplemental. that is unlikely to happen before the august recess. calling from new york. welcome to the conversation. caller: good morning. i have not heard you say anything about the military spending in this country. -- do youow how much know how much to this date, and

are there projected numbers of how much we will spend in iraq? do you think that has anything to do with the budget or the deficit or anything like that? i'm getting off the phone, thank you. for your question. absolutely. the cost of the two wars over the past decade exceed well over a trillion dollars. and if you at all the related costs, far more. and in partly, we did not pay for them. this is the first time in this country's history we did -- we were in gauged in wars where we did not make any attempt to pay for the cost. that contributed significantly to the growth of the budget deficit over the past decade. the deficit, just to take a step , came from a number of things. the two wars that we did not pay for. the very large tax cuts that we had under president bush that we did not offset the cost for. new spending, such as things like the prescription drug program and growth under discretionary spending. and more importantly, we have a

terrible economic crisis in 2008, the downturn affects the deficit dramatically because you are spending more and revenues are coming in lower. reengaged in a lot of stimulus to try to help offset the contraction in the economy. the two wars were a significant contributed there. plan is tord, the have a major drawdown in the cost of those overseas engagement. it will not contribute, barring other activities. and i would say for anyone who watched the previous hour of the show, it is a very sobering time right now. we are reminded today of all of the terrible risks there are around the world, so one can never assume there will not be other overseas operations. but right now, with what we are engaged in, we are assuming there will be a drawdown. but -- so the current projections of debt do not estimate to be spending nearly as much as we have in the past. part of the reason you want to get a handle on your deficit and debt is because emergencies arise. ,nd whether they are military

natural disasters, or economic, you need to have a budget that has room in it, so you can run deficits when you have to borrow for a national emergency or to help deal with a contracting economy otherwise. when we walked into the economic crisis in 2008, we had debt levels that were half what we have now. that allowed us to bar a lot. and there is a lot of disagreement about whether borrowing was the right thing to do, but i would argue is critical from keeping the economy from getting worse, being able to have applicability. to have that fiscal flexibility. and when we come into the next recession, which is -- which we will, with our debt twice of what used to be, we do not have the same flexibly. we have used the tools and toolbox. than what youent said about the military, and you make a good point. that certainly contributed to the deficit where we were. going forward, we do not know

what our military costs may or may not be. but we are not in a good position to handle additional costs as they come to us, those that are unexpected. host: our guest is maya macguineas, a graduate of harvard, and the president of the committee for a responsible budget. you can go to the u.s. see where youto are. how many zeros? guest: [laughter] host: let's go to muriel in brookfield, oregon. caller: hello. i would like to know -- when i had alone, the bank would tell me, put it toward your loan, not the interest. putting it toward your loan brings down the interest. you keep paying the interest, it will never go down. -- and first of

all, why are we giving other countries money and they are not giving us any money? thesey don't we put immigrants coming down in detroit and chicago. believe me, they will go running home because it's just as bad. i would like an answer to the loan problem, though, thank you. host: ok, foreign aid. guest: i will focus first on your question about interest payments. if you are talking about -- i don't know if you have a mortgage, but my guess is that you do. payments on the loan rather than the interest helps people pay off the mortgage. but with the federal government, most people would say it has a lot of power to borrow. and most people would say that the thing that makes sense is for the u.s. government to borrow money when the economy is debt and to pay down that including some of the principal when the economy is strong. you run budget deficits when

your economy is weak and budget surpluses when it is strong. that is why i do not think we need to balance the budget every year. it is a nice, elegant thing to be able to understand that we pay for everything that we spend every year. but for the federal government, it makes sense to even out over a business cycle, which is usually 10 years. most economists and policy experts on both sides of the aisle would say that what the u.s. government should shoot for is a balance budget over the business cycle. the economy is weak, and in that surplus when you are taking in more, you pay down some of your principal and bring the debt down a little bit. is, the u.s. debt is going to be growing whenever we have deficits. and it is growing most of the time, but not necessarily troubling. what is troubling is when it is growing faster than the economy. this is not even a high standard here. it is not come i owe, you have to -- it is not, o, you have to pay more than you are spending

every year. right now, the vast majority of our budget goes to consumption items, not investment items. but if it was the rivers and we were investing in infrastructure to my research, education, things that had high payoff, you could make an argument that we could be borrowing more. the problem is, we are borrowing money for consumption programs. we are borrowing money that we have no ability or plan to pay back, and we are borrowing money in both good times and bad times. hy are we doing this? because nobody really wants to pay the bills. about existing programs or new priorities, politicians -- and this is both parties -- love to come up with things that we ought to do and do not want to pay for it. we, the voters, need to do a better job of holding them accountable. if you're going to cut my taxes, what spending will you cut to offset that? newou're going to create a spending program, how will he pay for that?

-- how are we going to pay for breaks and tax subsidies. a comment from jodi on our twitter page. and from the congressional budget office, to go back to your earlier point about where spending is going, spending on entitlement programs including social security, on track to rise 14% of the gdp, double the historical average of seven percent. medicare, medicaid, and other health-care programs are projected to pursue past -- to surpass social security expenses next year and equally percent of gdp in 2039, far above the current rate of just under five percent. brassica -- from omaha, nebraska, next with maya macguineas. caller: good morning.

say that the federal government borrows money. it creates money. there is a modern monetary --ory, and worn most other war and most learned has a book called seven indemnity fraud. most money -- most people do not know how money is created. one thing is, you could simply put a transaction tax on wall street. that would bring in $160 billion. currently, they pay nothing. when i buy a stick of gum, i pay a nickel tax on it. wall street pays nothing. one thing you could do also is stop offshore tax havens. allow the government to negotiate medical costs and drug tops -- and drug costs. host: this goes to your earlier thought about tax reform. colorsi appreciate the ideas. those are the exact things that

we need to be talking about. there's a transaction tax that has gotten a lot of attention recently because of the financial crisis, and other european countries are looking at where you attacks a very small amount for every transaction that takes place. you could raise a tremendous amount of money. the downside is that it could slow down the liquidity of our financial markets. i think it will get a lot more attention in the future. and the specific idea of negotiating drug prices, that is something that comes up generally as part of medicare reform. there is potentially a good deal of cost savings to be gained there. there is trade-off with every policy. you need to look at what effect that has on the innovation of the pharmaceutical interest rate -- pharmaceutical industry here. very serious policy idea, which has been included in most of the health-care reforms to one extent or another. and yes, the overall transaction tax is another piece.

is probably the most important thing that is going to move in the near term. i think the most important thing to think about to fix the fiscal problem is entitlement reform. the most important thing to help with that, and also helpful -- hopefully help to spur the important.at is right now, we have a global economy and we are playing on a very different feel than we have in the past. our tax code is incredibly outdated. i look at the individual side and there's a tremendous amount of reform we could do there in terms of consolidating and reforming the tax breaks that exist. but on the corporate side, where there is actually some interest from both the white house and members of congress, that may be the first step to it. you should look at individual tax reform and corporate tax reform together. senatorntly, you had baucus, who is now the ambassador to china, but was the head of the senate finance committee, and chairman camp, come up with very serious tax

proposals, which were taken very seriously on both sides of the aisle. the white house has also made some suggestions for corporate tax reform, not individual, but i think they should be done together, particularly because so many small businesses are affected on the individual side, not the corporate side. you would want to do this comprehensively. but there is also this idea of a model of tax breaks and bringing down the rates. there are some differences on whether it should raise revenue or not, but there is a general belief that these changes would help grow the economy and generate some revenues no matter what, by the economic growth. i think we should go farther and raise a significant amount of revenues if we are doing it with a hole big budget deal, which we should. but then the caller is also talking about other taxes out there we could talk about. there is a transaction tax, a carbon tax, which is something this country should be considering. just looking at the gas tax consumption that is going on with the highway trust fund,

what we would do with that. there are always questions about whether we should be moving our income tax system to more of a consumption tax system. there are so many things we should be doing on tax reform, frankly, because our current tax system is so bad. there are tons of loopholes, and as the person who e-mailed in 20 doubt, many of them are industry specific and the opposite of what we have -- want to have, which is a level playing field and one that promotes competition. tax reform should be an area where we should be able to come together, say there is a problem that needs to be worker on, -- worked on, and work on some solutions. those tax break are very highly regarded by the companies that like them. there are lobbyists that can make quite a career protecting them. but if people can understand that specific tax breaks that are small and targeted cost a lot of money, and are willing to trade them for improvement in

overall rate, we could do a lot of good for the economy and the budget by raising revenues. maybe -- will or the political climate be different in 2015 to tackle these issues? guest: i would like to be optimistic. maybe it's my optimistic answer. we can exaggerate how broken the clinical system is right now. this is a system where, friendly, we looked at what we -- what was going to happen and was could we were not going to be able to do the a digital i was talking about, the 10 years -- we were not going to be able to do the budget deal i was talking about, the 10 years. we look at this and said, maybe this way we will do no harm, maybe we will not make the deficit worse. how wrong that has been. if you look at every idea that has come upon the hill right now , whether it was fixing medicare, tax extenders, creating new benefits, nobody wants to pay for this in a and honest way.

even on the highway trust fund, we are talking about using a huge budget gimmick, called pensions moving, which allows companies to put less money into their pensions in the short term, which leaves them with higher tax bills. they collect more money for the government, but in the long-term, they have to put that money back into the pension systems, so that will take away money coming into the federal government. but it also leaves the pension systems underfunded and at risk of having to come to the pgb see gbc, which would have to pay for them. this is the kind of thing that we see over and over again, because people do not want to pay for the policies they are talking about. there is such a lack of real will to make hard choices on the budget, and honest choices on the budget. symbolic, orust reflective of what is going on at large in congress.

fiscal is just one of the problems. but the overall economy and throughout the country, members not trying toe solve these problems right now. polarization and partisanship have frozen the system. i'm very worried. i think a lot of your listeners are worried, to, that we are not in a space lyrically to address these challenges -- in a space politically to address these challenges. host: another point from one of our viewers. revenue is not the problem. please get a clue. we have a bloated government. the growing gap between the money the government spends and , at the growth of aging population, rising health-care costs, and the expansion of federal subsidies for health insurance. these are all reasons why the nation's debt is increasing.

another call from linda. caller: i want to walk -- talk about the food stamp program, obamacare, and social security. all of these programs are therefore the poor. will we be able to sustain these going forward? guest: that is a great question. we need to be able to put those programs so they are sustainable. we understand what promises we are making and how they need to be cap. clearly, we have the capacity to, but they cost money. we have to be willing to pay for those programs and make good on the promises. i would say, on social security, there is no way we are going to be able to make good on all the promises we've made. there will have to be changes to the whole program, both by putting more money into the system, but also by probably scaling back benefits, i think, for the well-off. very wealthy the get money from social security, too. and there is some space to adjust those levels. obamacare, we will see how much

the cost controls on health care are able to save money. we've made some progress there in the past years, and that is the good news. the question is whether that obese is things going forward. there are many questions about health care. and food stamps, there is certainly the money to pay for the program. the question is whether we're going to and whether we will fund that as one of our priorities. if we go back to budgeting where we lay out our national priorities and a plan to pay for those programs, that gives a lot of security. i think the main cop -- the main question from the caller is to my fairy scary to be out there and not know what you can depend on, what promises -- from the collar is, it is very scary to be out there and on the web promises you can depend on. it is important for people to know what they can rip -- what they can depend on from social security and medicare when they retire. it is important to have sustainable programs so people can plan accordingly.

if people want to follow you on twitter, how can they do so? guest: that is a great question. onm at -- @maya macguineas twitter. i have multiple twitter handles. and you can go to the responsible --

>> also, what's your sense for -- do you support bringing articles of impeachment at this point? how does that tie in with this effort to sue? >> they all start with articles of impeachment. we have an impeachment process that happens every four years and the american people knew exactly what they were getting into this time around and they voted to sign back up with president obama for four more years. i'm not i want rested in going through that exercise. i'm not trying to make a point. i'm trying to make a difference. i don't see us going down that road. as for the lawsuit in particular, i'm glad we narrowed it. we did this again not to make a point but to make a difference so when we talk to legal scholars they said if you throw

all of your grievances into one piece of legislation you're not going to be able to get standing. it's going to look like a political stunt but if you narrow your greeances down that's going to be the way we'll get this through the court's front door. and it's actually broader than the employer mandate. it is the aca in whole so we will be able to talk about a whole variety of issues. again, this is not the republican house suing to stop the implementation of obamacare. this is the republican house suing to require the implementation of obamacare. it's fascinating that we're having this constitutional crisis around these terms but i can think of no better terms to have it around.

>> we are 50 miles south and west of des moines. the wallaces of iowa consist of three generations of wallaces. the patriarch was known as fondly as uncle henry and he was the founder of wallace's farmer magazine. his son henry c wampletlass was u.s. secretary of agriculture under woodrow wilson and henry c.'s son was born on this farm in 1888. he went on to become editor of wallace farmer magazine. he was then asked by franklin roosevelt to serve as u.s. secretary of agriculture which he did from eight years from 1933 to 19 41 and 19 41 to 1945 he was roosevelt's vice president. as u.s. secretary of agriculture he is known for the

agricultural adjustment act. which was the first time that farmers were asked not to produce. at first people couldn't believe the things that he was proposing regarding that but then as prices went up they started to listen to him. and people still refer to him today as the genius secretary of agriculture.