on c-span. each night this week at 8:00 p.m. eastern on c-span we are featuring testimonies on the department budget. tonight, we will hear from janet yellen. watch that at 8:00 p.m. eastern here on c-span. host: this is bob bigsby, the executive director to talk about spending issues and particularly, the debt limit. good morning. guest: good morning. host: could you remind viewers about the coalition and how you are financially backed? guest: we were started in 1992 by two former united states senators. and a former commerce secretary. the idea was to have grassroots organization that would be based in washington but be active around the country to focus on issues of fiscal responsibility.

we are backed by people who send us donations every year. we have a fundraising dinner most years. we have not the last year or so because of the covid 19 situation. we get funding from the peter peterson foundation among others. host: i want to ask about the passage of not only the budget reconciliation but the infrastructure built. i want to start on the debt limit. it has been in the news. tell people exactly what it is and how it works. guest: sure. we have a statutory debt limit, which means there is a particular dollar cap, now around $28 trillion, he on which the treasury cannot borrow to finance the government's operations. it was originally enactedin world war i -- enacted in world

war i to facilitate government borrowing. at that time congress needed to approve every issuance of debt. they said borrow up to this limit. ironically it was meant to make it easier to borrow money. we think of it now is a way to prevent the debt from going up. that is not what it does though. i think the debt limit is very misunderstood. it does not prevent spending from going up. it does not raise taxes. it doesn't do anything to affect the policies that produce the debt, it just says to the treasury once these authorized policies take affect, you cannot pay for it beyond a certain amount. i think it's a very flawed mechanism, but it has gone back into effect.

some point in the next few months the treasury will probably not be able to issue new debt to pay its bills. host: the treasury department says technically the total of meta-money the government is authorized to borrow to meet legal obligations including social security, military salaries, tax refunds and other payments. is there a formula for how the raising of the debt limit is calculated? guest: no. it's an arbitrary number. that's another flaw with it. it has no economic significance. it is not tied to any particular budget plan. congress simply sets a number. when they bump up against it, they either raise it or suspend the debt limit, which is what they have been doing for the past several years. rather than raising it to a particular amount suspend it --

for example, the debt limit was suspended for the past two years. from august 2019. on august 1, 2021, the debt limit reappeared. the number was the prior number plus any cumulative debt in the interim. that was the formula, which does not make a lot of sense either. so, there you go with the debt limit. host: congress is the one that determines it. one person speaking out against it was mitch mcconnell. the prospect among the new democratic many proposals he talked about. here is a portion of mitch mcconnell from monday. [video] >> i understand they sent out the treasury secretary to argue both parties have addressed the debt ceiling together. of course it is our senate democratic colleagues who have no interest in what is

historically in order. they are borrowing and -- there borrowing and spending are historically abnormal. democrats boast about how wild and revolutionary their partisan vision is. our friends across the aisle should not expect traditional bipartisan borrowing to finance their nontraditional, reckless taxing and spending spree. that is not how it is going to work. democrats have all the existing tools they need to raise the debt limit on a partisan basis. if they want 50 lockstep, cutting votes to spend trillions and trillions more, they can find 50 democratic votes to finance it. if they don't republicans, they don't need our help. host: mr. bixby, those of the statements paid by -- made by the minority leader of the senate. how do you respond?

guest: a flaw in the argument is the bills the government needs to pay now, the reason to raise the debt limit, has nothing to do with the democrats' spending proposals in the future. it's about past bills that have a key under both administrations -- administrations of both parties. we would have to raise the debt limit no matter who was in charge. if mitch mcconnell was president, we would have to raise the limit. he would be asking the democrats to help him do it. treasury secretaries of both parties realized the alternative to raising the debt limit is defaulting on u.s. government obligations, which would be not only irresponsible but hugely damaging to the nation's credit worthiness. again, i would agree with anybody who says we have a debt problem.

that is one of the central premises of the concord coalition. we have debt on an unsustainable track. what i'm arguing is that the way to deal with that is to affect the policies that produce the debt. the debt is produced by spending that is going up much faster than revenues. so, debt is on an unsustainable track. simply saying we will place a cap on the debt does not change the spending and tax policies that are producing the debt. you are left with the government saying we have authorized all this, authorized this debt, but we will just not pay for it. that turns uncle sam into a deadbeat and would affect the nation's credit worthiness. the political back-and-forth over the death limit is dangerous. it puts the nation's creditworthiness at risk and that does not help anybody. you know, what they need to do

to get the debt under control is to start cutting spending or raising revenues in a way that would produce less debt. host: bob bixby joining us to talk about the debt limit and fiscal matters. you can ask questions. (202) 748-8001 for republicans. free democrats, (202) 748-8000 -- for democrats, (202) 748-8000. independents, (202) 748-8002. we saw the passage of this reconciliation bill, the framework for a budget. the debt limit was not included. could it be included in that or attached to another piece of legislation? guest: the democrats could have -- they have a couple of options. they could have put debt limit instructions into the budget reconciliation. that could still happen. the problem with that is that if

you do things the reconciliation, you get to follow the reconciliation rules. because it's an exception to so-called order. in recent years congress and presidents have suspended the debt limit rather than raising it to a specific level. you can't suspend the debt limit through reconciliation. the reconciliation rules specifically say you have to raise the debt limit or -- i forget the exact language -- it says something like a specific amount. the democrats would have to raise the debt limit by x trillion. they view that as a politically difficult vote and would rather suspend the debt limit so you don't have to put a number in there. if you go through

reconciliation, you would have to specify the number. the other way to do it is through regular order, which is just put a bill on the floor that raises the debt limit or suspends the debt limit. that would be subject to a republican filibuster. they would need 60 votes. that is the route they appear to be going. it is problematic in the sense that mitch mcconnell has been making the comments he has and republicans are not inclined at this point to provide the votes the democrats would need. in standing on the sidelines of this i worry a great deal about the unintended consequences that turning the fight over fiscal policy into the government actually defaulting on its obligations, even if it happens

unintentionally, i think would be very problematic for the country. host: the wall street journal reports almost all the senators -- not all but four have signed onto a letter saying they will not help the democrats as far as the debt ceiling is concerned. what does history tell us about making these kind of statements and then actually going against that and eventually voting to increase it? guest: eventually they will vote to increase it. there may be some way of obscuring it by attaching a debt limit increase or suspension onto must-have appropriations bills. congress has got the past by september 30 funding for the next fiscal year or the government shuts down. so they could attach a debt limit. they will not pass the appropriation bill but they will

probably pass the continuing resolution, a so-called cr. they will kick the can down the road. it's possible an increase could be part of the bill. if lies under the radar screen. host: we have some calls. miguel from maryland, you are on with bob bixby. go ahead with a question or comment. caller: how is it going? thanks for having me. a few years ago, they were talking about as far as the debt is concerned about issuing trillion dollar coins from the federal government to pay down the debt. i think that's a great idea. make 20 coins or whatever. mint them. the federal government is dealing one that has power to mint money. i think it's a genius idea and he would be perfect to get rid of the debt. guest: do you really think that

would get rid of the debt? caller: they created the dollar. they created the money we have now. how else would you get rid of it? guest: i don't think it would be taken credibly by financial markets. it would get rid of the debt limit to a certain extent, so it might limit that problem. i don't think we should be looking for magic solutions. we are spending more than we take in by increasing amounts every year on autopilot. that is the problem we need to fix. host: let's hear from of you were from beaver falls, pennsylvania. marilyn. you are on. caller: -- guest: it could be. probably not the kind of stimulus check that went out under the recovery act. i don't think that is part of

the new budget resolution. i think the democrats plan to continue the child tax credit that was passed in the rescue plan. they would like to extend that for a few more years. some would like to make it permanent. those checks will probably continue. host: we saw the cbo tell the senate if the passage of the infrastructure built took place, they would be debt accumulative with that. many republicans signing on yesterday to support that. what do you think of that move by republicans? guest: it's interesting. anybody who voted for that bill refuses to raise the debt limit, they really need to take a hard look in the mirror. that bill, according to cbo, would increase the debt by $256 billion. if you are at the debt limit,

how can you say we will vote for this bill that authorizes -- result in more deficits? the treasury cannot pay the bills. there has to be some consistency in thinking. i wish they had done more to pay for the infrastructure built. -- bill. there is an argument for roads and bridges and that sort of thing, you might not have to pay for it immediately because it 's an investment that will pay dividends over time. very few people would say the bill would pay for itself. i think they should have done more on the pay for side. some of the pay fors they used were kinda gimmicky. to get back to your question, which is a good one, if you just voted for a big bill the cbo

says will increase the deficit and you are saying will refuse to raise the debt limit, there's a fundamental inconsistency there. host: to redo the treasury secretary janet yellen's statement on the increase, "it does not increase the government's spending. it allows treasury to pay for previously enacted expenditures. it was in recent years that congress addressed the debt limit to regular order with broad bipartisan support." you think that could be future going forward -- feature going forward? guest: treasury secretary's have issued similar letters when we are running up against the debt limit. host: janice in massachusetts, independent line. you are on with bob bixby of the concord coalition. caller: i am tired of the democrats and republicans going overboard with our money.

i am so sick of them. they can all go scratch a nickel. host: the court of public opinion when it comes to these discussions. guest: exactly. it is understandable that people would be upset about running huge deficits. the last year we had a deficit, the annual shortfall. not talking about the accumulated total debt. the annual shortfall was around $3 trillion last year. it will be about $3 trillion this year. those are huge numbers. that was unusual because of the pandemic. there was a huge amount of emergency spending needed because the economy shut down and we had the health care emergency. these last couple of years are not the years you want to focus on when thinking about the

fiscal situation the government is actually in. what worries me is when the effect of the pandemic spending fade we are still at a point where we will be running trillion dollar plus deficits over the next decade and getting bigger and bigger. the budget was on an unsustainable track before the pandemic hit. it will be back on an unsustainable track after the pandemic fades. we need to focus on that. host: tony asks why is the debt limit separate from authorizations? when we set them, we are told spending is paid for in the limit will be set in the phony accounting would have consequences. guest: i think that is one of the options they should look at. the problem with the deadly limit is it is unconnected to the decisions that produce the debt. the questioner asked a good one.

if you raise spending or cut taxes and is estimated to increase the debt, should the debt limit go up by that amount? i think that would be a good amendment. host: howard and saulsberry, north yolanda, democrats line -- north carolina, democrats line. caller: i have a comment into question. i know there is a lot of other americans in debt. if they are going to be in debt, which republicans always talk about when the democrats are president, the debt, but if america is going to be in debt, let them be in debt for the people. like health care for all, or schooling for all. let's be in debt for fair housing for all. you know what happens? we are in debt partially because we give the one 1% of citizens

of america debt-free money. give us an idea of some of these corporations, how much money they are not spending back into america. thank you. guest: i don't have a specific estimate on that. it is probably a matter of subjective analysis of how much should or should not be reinvested. i think the caller points out that we need to have a debate when we talk about federal money and federal debt about what it is being used for. that is what they should be talking about. that's a perfectly legitimate argument the caller is making. debt for a particular reason that he supports is -- you

would have people arguing for lower taxes. it would be good for the economy to have lower taxes. that kind of political debate on where our physical priorities should be is what we should be doing. my point is whatever we decide, it needs to add up to a sustainable path so if you enact a lot of new spending programs, if you wanted to look at the budget resolutions, potential reconciliation bill we have coming up, and it will enact a lot of new spending programs if they want to. the key is it is not so much of good programs at bad programs, but if you want to enact them the need to be a sustainable, solid revenue source that would pay for them and not just think you can run ever rising debt to pay for whatever you want to do. same is true on the tax side.

republicans have been cutting taxes. the latest was 2017. let's have our policy debate, but make sure whatever we decide is done within a fiscal responsibly framework so it adds up over time. host: we have probably seen the national debt clocks when it talks about the level of debt. $28 trillion plus. this breaks it down to about $86,000 per person. how much does the individual -- who owes other debt? who were the main holders of the debt and how much of that is the individual person? guest: the number of debt per person, your share, is an abstract. it is not like you individually owe that much money. it is just trying to break the number down into something that sounds a little bit more useful to people than -- more

understandable than $28 trillion. we used to have a debt clock that we took around the country to do events. sometimes people would come up and say that number, that $28 trillion, what is your family's share? cannot write a check for that and then i am free and don't have to worry about it anymore? it doesn't work that way. we all own the debt in the sense that u.s. federal taxpayers have to pay for the interest costs on the debt. in terms of who holds it, mostly by investors. it is held by savers. a lot of companies that have pension funds, insurance funds want to hold u.s. debt because it is safe and sound investments as long as people don't go around defaulting on the debt by

refusing to raise the debt limit. also, we have about 33% of the debt is owned by foreign countries and foreign investors. there is that part of the debt as well. host: here is for bob bixby, keith in maryland on the republican line. caller: hello? host: go ahead. caller: i'm from fargo, north dakota. host: go ahead. caller: we have spent how much money on two wars with iraq? why do we make them pay up so we can get our debt down? if they don't want to pay out, let's collect some oil from them. do something.

between the bushes and their wars, that is how we ended up with a lot of problems right there. host: that is keith. mr. bixby, go ahead. guest: the war is over. we did spend a lot of money on iraq and afghanistan both. that did increase defense spending. generally speaking, war reparations tend not to be a good idea, coming back to people and saying now pay up. many historians would argue war reparations after world war i helped lead to world war ii. it is not, again, that sort of thing would not care our overall structural deficit between the

money coming in and the money going out. i guess what i would say is a lot of the people who made those decisions to initiate those military -- felt they would be doing it for the safety of the united states. people can argue about that until the cows come home. i'm not taking sides when we are the other. that is another way of looking at that money. host: we have been focusing on the policies of this administration. going back to the last administration, how much debt they did accrue? what did it add to the deficit and what was that attributable to? are there other factors? guest: i'm not sureguest: i can break that down specifically. i think the trump administration added about $7 trillion to the debt. don't hold me to that if i'm a few hundred billion dollars off.

part of it was the tax-cut, but certainly not anywhere near all of it. a lot of it was new spending and a lot of it was just baked into the cake. this is the fundamental point. we have a lot of programs that run on autopilot that are growing. medicare, social security, medicaid. because the population is aging and health care costs rise, the cost goes up every year. revenues don't keep pace so you get a larger deficit then debt -- deficit and debt every year. when trump took office you had an escalating deficit and debt. i believe the administration added to that. some of that, an important part

of it is it is already baked into the cake. we will add debt even if we do nothing. host: ray in pennsylvania, independent line. ray in clinton, pennsylvania, hello? let's go to jim in indiana, democrats line. caller: first of all good morning to you, good morning mr. bixby. a couple of questions and to verify my own beliefs. all these tax cuts we have been dealing with over the last 50 years has obviously, in my opinion, created a lack of revenue. that is our spending source. the second thing i think has led to this is the inability to downsize government to manageable numbers. you mentioned if we don't pass the continuing resolution in

september, the government shuts down. these happen months at a time. we are probably too big the way it is and that he simplifies the fact that maybe there are too many programs, too many employees and kind of thing. that there think -- third thing i hope you could help me with his i'm trying to read an article about wealthy people using their property and our collections and cars as collateral to borrow money from banks so they don't have to pay capital improvement taxes -- capital investment taxes. i wondered if he could speak on that last one as well. guest: i think your fundamental point is the right one, which is we need to look at spending and revenues. we, instead of looking at the ways to keep spending under

control or coming in at the same level as revenues so you have a sustainable fiscal policy, we are going the opposite direction. it is not surprising we have a debt problem. on the last point you made, i am not terribly familiar with the specifics of that. i apologize for -- i don't know about that particular tax maneuver. it does point out there certainly are provisions in the tax code that allow people to legally avoid paying higher tax. there is a lot of manipulation that can go on. much of it is legal. that is the problem. i do think we need to enact measures that would simplify the

tax code, get rid of the incentives that exist for people to limit -- to avoid taxation. host: when it comes to the reconciliation package, the efforts to raise revenue, you've heard about raising corporate taxes, taxing certain individuals, giving the irs more power. what are you -- irs more power. guest: those are options that ought to be on the table. to corporate income tax rate was cut of the 2017 tax cuts. it went way below what people were talking about. the obama administration proposed a rate reduction from 35% to 28%. originally the tax bill talked about maybe taking it down to 25%. then went all the way down to 21% or 22%. i think he came up to 22% in the

end. at any rate it seemed to be more of a politically motivated target then when that was necessitated by, you know, considerations of competitiveness and the economy. let me just -- the other thing. there are a lot of things of people talking about the tax gap. the difference between what taxes are owed and what taxes are paid. if you enhance the irs enforcement, can you get some of that money back? the answer is probably yes. probably not as much as proponents would like, like hundreds of billions of dollars. there certainly is room to improve the tax collection and bring in money that is already legitimately owed. host: as far as the expectation, as far as bringing in -- what

the hope is, what is the difference? why can't that be met? guest: there is a lot of hopefulness and optimism about money that could be collected that is not currently being paid. it takes a lot of money to track that down. you can have a situation where you are estimating a certain amount of tax -- exceeding. -- excuse me. there is a certain amount of revenue coming in because of tax avoidance. you have to track it down. that requires a lot of effort. the irs does recoup some of that. how much you are actually going to bring in on a net basis, i have seen projections you could get in $600 billion to $700

billion over 10 years. it is more likely to be a much lower number, maybe $100 billion. we should try to do that but don't expect that it's a real gusher of new revenue. host: ray on the independent line. caller: good morning, jonathan. mr. bixby, i would like to ask a question about -- i think you should enlighten the american people. a lot of people think the government owns money. they do not. the fed at a bunch of bankers print this currency. they are now buying treasuries, which is dangerous. you are printing money out of thin air that has no value and they are buying the currency. the debt is not owned by people anymore like different countries are not buying our debt. janet yellen was on here in 2017 on this program. she told the senate banking committee you have got to quit

spending money. we can't afford to keep renting this money. janet yellen said that. lately she said we have to open up the printing presses because she is back in the business again. i think what is going to happen here, this money will become worthless one day. the fed owns the money. they are not regulating. ron paul has been trying to get an audit on these people for years. there is no audit. we don't know how much was printed. you only get your information from the fed. all this stuff you are telling me, -- the american government does not own the money. host: let's let our guests respond. -- guest respond. guest: the fed has a difficult task. there is a huge pandemic and the government is shoveling money out the door to respond to it.

i believe that's a legitimate thing for the government to do in the face of a huge emergency. the fed, which does apply the money, is caught in the situation of how much is too much. when do you begin to pull back so you don't lead to a situation where you have great inflation? right now this is kind of an unprecedented situation. they are trying to determine when is the right time to begin scaling back and stop purchasing those securities and keeping interest rates very low. if you continue these policies, you would eventually cause damage through inflation. the fed has been saying they are not concerned about inflation right now.

they think it is temporarily high but it will come down and that is something we will have to see how that plays out. i can't tell you that i know exactly. i do know we can't keep the easy money policies we have in place now once the pandemic fades. i think the fed would actually agree with that. where you draw the line is some people think it's already gone too far and others say it should continue. you can't keep borrowing indefinitely and shoveling money into the economy indefinitely forever without it causing some harm to the nation's -- to the dollar, the value of the dollar and the inflation to the economy. anyway, --