Senator Ron Johnson (R-WI) is a businessman who ran against then-Senator Russ Feingold (D-WI) in the 2010 elections. Since his victory at that time, he has led on the issues most important to the Tea Party – repeal of Obamacare, the national debt, the federal budget, and taxes.
Senator Johnson was kind enough to sit down with Tea Party Patriots blogger Dustin Siggins last week for a short time to give his thoughts on spending, the three-year anniversary of the passage of Obamacare, and other issues facing the nation.
Dustin Siggins: How is the district work period going for you?
Senator Ron Johnson: We’re traveling all over the place, talking to people, doing my PowerPoint presentation, laying out the depth of the problem. It’s relatively shocking to people, but they need to understand really how serious our fiscal situation is.
DS: Absolutely. Well, thanks for your time today; Alex has been working really hard to set this up, so I really appreciate your time.
SRJ: Not a problem.
DS: Speaking of spending, I guess my first question goes right into that. You’ve long been a critique of how much the government spends and how much debt is accumulating. Given the differences between the House and Senate initial proposals for the budget, how do you plan on being involved to make sure the legislation that comes out of any potential conference addresses the concerns you have?
SRJ: First of all, I seriously doubt there will be a reconciled budget resolution coming out of Congress. There’s just too great a difference. I think the primary benefit of having the Senate finally pass a budget – they haven’t done it in close to four years, but now they have – it puts Democrats on record for what their solution would be to the debt and deficit problem, and we find out they have no solution. Other than increasing Americans’ taxes, and increasing spending.
It’s actually pretty jaw-dropping. If you look at a ten-year budget resolution, you really have to hone in on that first year. The Senate budget actually increases spending over the CBO [Congressional Budget Office] baseline by $100 billion, it increases the deficit by $75 billion in just the first year. Plus, it proposes to raise taxes by one-half a trillion dollars in additional taxes, and it never balances.
Compare it to the House budget, which doesn’t increase taxes, and puts us on a glide path to have a balanced budget after 10 years.
So now the American people actually have an indication of what Democrats won’t do to solve the problem. Democrats can now be held accountable, which we haven’t had that blueprint since I’ve been serving.
DS: When it comes to the debt, I’m sure you’re aware recently President Obama, Speaker Boehner, and Chairman Ryan have all said the debt is not a problem right now, that it’s a problem in the future. Do you agree with them on that? Do you think we need action in the near future as opposed to the Ryan budget, which looks at the medium-term and long-term?
SRJ: The sooner we start reigning in the size, scope, cost, and debt of government, the better. When you take a look at the entitlement programs, particularly Medicare, but also Social Security – but Medicare is the number one problem. And it’s the biggest problem in the second or third decade. President Obama is correct there, but we need to start reforming those programs now. We need to put the structural changes in place so they can get going in 10 years, when the true problem in Medicare starts occurring.
Really, we should not wait on this. It’s totally irresponsible.
One of the things I talk about in my speeches is that I don’t know any parent or parents who willingly drive up their credit card debt, their personal debt, without ever intending to pay it off, but fully intending to pass it on to their kids and grandkids. Unfortunately, I don’t know anyone on a personal basis who would do that, but collectively, that’s exactly what we’re doing to future generations. We are doing intergenerational theft. It’s wrong, people need to understand it, and we need to stop it. And the sooner we stop it the better.
DS: So what do you think is needed initially – say, in the next two years – if you were king, so to speak – what would you do in the next two years to really set us on a good fiscal path?
SRJ: I would – Cut, Cap, & Balance is a really solid proposal. I think if we are going to solve this thing long-term, structurally, you need a constitutional amendment to limit the size of government to a certain percent of GDP. Now, I’d argue that should be somewhere between 18 and 19 percent because the 50-year revenue generation has been about 18.1 percent. So if you’re ever going to live within your means, you have to recognize that’s about all the government can extract from the private sector, about 18.1 percent.
So you need that constitutional restraint in place. It’ll take awhile to actually enact that, so in the meantime you pass a statutory bill. The Cap Act was one proposal that put you on that exact glide path, statutorily, that a constitutional amendment would do. And what we’re seeing here statutorily is what a constitutional amendment would do.
What we’re seeing here is, for example, even though I voted against the Budget Control Act, that Act is starting to have some real teeth. We actually, statutorily, limited what the federal government could spend. The result of it was the sequester, but we also enacted limits on what future Congresses could spend, in terms of total spending as well. So it’s those overall fiscal restraints that will force politicians to start prioritizing spending, and hopefully force politicians to start looking and reforming the entitlement programs.
One of the amendments I proposed in the budget debate was a requirement in any budget that would pass to have 75-year solvency for both Medicare and Social Security. That would be one of those overall controls that would force Congress to act. And that’s the problem right now. Since we have no constitutional requirement to balance the budget or limit spending, we have no statutorial or constitutional requirement to make sure that any program that’s actually solvent in the long-term. None of those things are occurring.
So we have to enact bills, constitutional amendments, to force Congress to push Washington to actually act.
DS: When it comes to solvency, one of the big things the CBO is now saying is Social Security, Medicare, Medicaid, interest, and Obamacare. We’ve just hit the three-year mark, and I’m sure you’ve seen the reports showing the costs are going through the roof for the individual insurance market. Even the Administration has admitted that that estimate is not going to be too far off, so they’re countering with the “We’ll have subsidies,” and everything else to compensate.
What are your plans to repeal the law, and replace it with market-oriented, patient-centered health care system, especially in light of the fact that the President is not going anywhere until 2016?
SRJ: Sure, and that’s part of the problem. This law was passed almost entirely as mandatory spending. So all the spending is locked in, and unless you pass another law, or repeal that law, in terms of what Congress can do, it’s very little, and so what’s happening now, for example, in the budget debate, we actually had 79 Senators vote to repeal the medical device tax. So as each one of these components of Obamacare starts being implemented, and starts creating real harm, probably the best we can hope for – barring success with other court challenges, which are ongoing – all you can do is limit the damage of this bill.
I don’t even like saying that, but I think that’s the reality of the situation. For my part, the other thing you have to do is start providing the American people with the information about how harmful this is. Hopefully, convince them before the harm actually occurs.
Two of my amendments that were passed during the Budget Committee mark-up. One requires CBO to provide us with the full cost of Obamacare every year, so it doesn’t get hidden in all the different agencies. And the second one, I think, even more significantly – and this was a roll-call vote, and I believe 6 Democrats joined me in asking CBO to provide us with the “worst-case scenario” score.
Part of the problem with the gross underestimation of the costs of Obamacare is the CBO says on net only 1 million Americans will lose their employer-sponsored care and get on the exchanges with those huge subsidies. 170 million, approximately, Americans get their health care through their employers. And the employers are incentivized to drop coverage, so I’m asking CBO to let me know if 30%, if 50%, and then if 100% of employees lose their employer-sponsored care, what would that cost? So far, they have refused to give me that analysis. Hopefully, this will prompt them now, and I’m gonna keep pushing those Democratic Senators that voted for it to keep putting pressure on Director Elmendorf to give us that worse-case scenario score. That might open up some peoples’ eyes, and possibly that type of information might get people to start rethinking whether Obamacare’s a wise action.
The Administration just delayed implementation of some of the health care plans on small businesses because they simply can’t get the regulations in place in time. This is going to be a disaster for our health care system and our economy.
DS: Can you explain, just for a moment – you said that Obamacare was passed almost entirely as mandatory spending, but yet the House is claiming partial success with “defunding,” as are Senate Republicans, because the IRS and other discretionary spending in the CR [Continuing Resolution] were held constant as opposed to increasing for Obamacare. Can you explain a little bit of that, why it’s mostly mandatory spending, why you can’t touch that every year, and what was held back in the CRs?
SRJ: So much of the spending was already appropriated and approved, and just continue to go on, so there’s only so much of the implementation’s costs you can defund. And again, in those instances, you actually have to have laws passed, passed by the Democrat-controlled Senate and signed by President Obama. As much as I’d love the Republican House to be able to work its will in Washington, it’s only one out of basically three governing bodies here that need to chime in and pass laws, and we just don’t have the power to change much of this stuff, so it’s an enormous challenge.
DS: Switching angles a little bit here, the GOP has done a lot of self-examination since the election. Different theories are out there, that more outreach by the GOP to minorities, immigration, a whole variety of different aspects. One thing the Tea Party saw was the GOP never worked with any grassroots on anything last year. Mitt Romney at the RNC, for example, disenfranchising delegates. How is your approach to making the GOP more electorally viable different from the GOP’s, perhaps particularly in relation to the grassroots?
SRJ: Well, first of all, I think you work overtime not to alienate any group of Americans. Whether they’re friends are on our side – which basically I believe the Tea Party groups are a core constituency of the Republican conservative movement – you don’t alienate Hispanics, young single women. I think you point out all the time that Republicans, conservatives, we are concerned about every American. I think across the board, all Americans share the same goal – we want to have a prosperous America. We want every American to be able to build a good life themselves and their family. We can’t say that enough.
So it first starts off by – you don’t alienate people. And then, secondly, you stick to your principles in terms of knowing, understanding, and then educating Americans on what works. And what does work? It’s a free market kind of system, it’s freedom and individual liberty. We need to celebrate success, we need to encourage and incentive business, not demonize them. We need to grow our private and productive sector, not grow government. And I think the American people generally understand that growing government is not the solution.
And, so, again, if we just stop alienating different groups, if we work overtime to push what actually works – and I think the American people inherently understand that it’s not growing government, because not many people look at government as a particularly effective or efficient entity.
And so it’s just extremely important that we educate the American public about the severity of the problem, and also educate them on what we know actually works, and I think they inherently understand what works. I think that big, overall theme and message is probably as important as – you know, getting the election mechanics right is also important, but you gotta do it all.
DS: Okay. I guess my final question here is, you were on ABC News a few weeks back, and – I don’t have the exact quote in front of me – but you said you would consider raising revenue as a trade-off for entitlement reform. I was just hoping to get some more detail about that from you.
DS: Were you talking about –
SRJ: Well, first of all, nobody has to worry about me violating the tax pledge. I signed it not because I did it for election popularity or gain, but I just think increasing taxes is a really bad policy. It puts at risk the economic growth that is 10 or 20 times as effective at raising revenue for the federal government. So when you’re talking to folks, what you don’t want to do is have them think you are absolutely closed-minded to any potential idea they may have. So the only thing I leave myself open for is, if you’re talking about Social Security, reforming Medicare, and in the solution for Medicare – for example, the President admitted this, we’ve been saying this – that Americans pay in $1 but they are going to get $3 worth of benefits. If, in reforming one of those programs, we’re talking about all the different components for a solution – age eligibility, the inflation calculation, means-testing, potentially a dedicated revenue stream to bolster the program for individuals, for example, if we set up a program where there is additional payroll tax being collected, but it’s going right to a personal account. So what I said is I might take a look at that. Okay?
SRJ: So nobody has to worry that I’m going to do some grand bargain: “Well, okay, President Obama, increase tax rates for Social Security reform.” I’m the person saying, “Listen, those types of grand bargains shouldn’t’ even be talked about. They shouldn’t happen. Let’s separate the different problems – they are enormous in themselves, so let’s handle Social Security separately. Let’s handle Medicare, let’s handle pro-growth tax reform.
All in separate buckets; none of them should really have to do with the other ones. Like we said, they are enormous problems, they need to be solved individually.
DS: So you would, potentially, consider, for individual programs like Medicare and Social Security, for each program themselves, but you would not consider a grand bargain that raises taxes by $1 trillion in exchange for $5 trillion in cuts.
SRJ: Absolutely not. And again, all I said was, I might take a look at it. If you’re gonna negotiate with somebody – and I’ve said this a lot – first talk about what you agree on. So the first step is defining the problem, admitting you have one. You work toward all the elements you do agree on. For example, Social Security and Medicare, people understand the basic components of what have to consider, what’s going to have to be negotiated over.
What you don’t want to do is walk into negotiations saying “I’m not going to even look at one or two of those components.” So I’m just saying I might take a look at it. But trust me, I will not violate my tax pledge. Because increasing taxes on the American economy will be counterproductive. It will harm economic growth. Economic growth is far more effective at raising revenue than increasing taxes.
DS: Then I guess I have one final question, which would be, if a proposal was out there that would raise taxes, but in some ways have a net lowering – i.e. loopholes were cut, rates went down – that would be something you would support because there was a net tax deduction.
SRJ: Oh, yeah. Or even tax neutrality. What I told the President – actually, in talking with Democratic Senator Ron Wyden (D-OR) about this too, he’s kind of leading the charge here for pro-growth tax reform on the Democrats’ side– I would scrap the entire tax code. I would start from ground zero, with a clean piece of paper, with two basic principles: Raise the revenue you need – from my standpoint, that’s somewhere between 18 and 19% — and then do no economic harm. Stop trying to economically and socially engineer through the tax code. It causes far more harm than good. So I would slim down the tax code.
You know, one additional source of revenue, we have would be that $200, $300 billion in compliance costs that are right now going to tax accountants. I like tax accountants, but I’d like to put them to work analyzing economic behavior for businesses rather than “How do you lower your tax bill?” But you could potentially send that revenue back to the federal government.
But, again, I’m talking dramatic, paradigm-shifting tax reforms, is what I’d be supportive of.