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University of Denver
Denver, Colorado
MR. LEHRER: Mr. President, two minutes.
THE PRESIDENT: When I walked into the Oval Office I had more than a trillion-dollar deficit greeting me, and we know where it came from: two wars that were paid for on a credit card, two tax cuts that were not paid for, and a whole bunch of programs that were not paid for, and then a massive economic crisis.
And despite that, what we’ve said is, yes, we had to take some initial emergency measures to make sure we didn’t slip into a Great Depression, but what we’ve also said it let’s make sure that we are cutting out those things that are not helping us grow. So 77 government programs, everything from aircrafts that the Air Force had ordered but weren’t working very well, 18 government programs for education that were well intentioned but weren’t helping kids learn.
We went after medical fraud in Medicare and Medicaid very aggressively, more aggressively than ever before, and have saved tens of billions of dollars -- $50 billion of waste taken out of the system. And I worked with Democrats and Republicans to cut a trillion dollars out of our discretionary domestic budget. That’s the largest cut in the discretionary domestic budget since Dwight Eisenhower.
Now, we all know that we’ve got to do more, and so I put forward a specific $4 trillion deficit reduction plan. It’s on a website, you can look at all the numbers -- what cuts we make and what revenue we raise. And the way we do it is $2.50 for every cut we ask for $1 of additional revenue paid for, as I indicated earlier, by asking those of us who have done very well in this country to contribute a little bit more to reduce the deficit.
Governor Romney earlier mentioned the Bowles-Simpson commission. Well, that’s how the commission -- bipartisan commission that talked about how we should move forward, suggested we have to do it -- in a balanced way with some revenue and some spending cuts. And this is a major difference that Governor Romney and I have. Let me just finish this point because you’re looking for contrast.
When Governor Romney stood on a stage with other Republican candidates for the nomination, and he was asked, would you take $10 of spending cuts for just $1 of revenue? And he said no. Now, if you take such an unbalanced approach, then that means you are going to be gutting our investments in schools and education. It means that -- Governor Romney talked about Medicaid and how we could send it back to the states, but effectively, this means a 30 percent cut in the primary program we help for seniors who are in nursing homes, for kids who are with disabilities. And that is not a right strategy for us to move forward.
MR. LEHRER: Way over the two minutes.
THE PRESIDENT: Sorry.
MR. LEHRER: Governor, what about Simpson-Bowles? Will you support Simpson-Bowles?
GOVERNOR ROMNEY: Simpson-Bowles, the President should have grabbed that.
MR. LEHRER: I mean do you support Simpson-Bowles?
GOVERNOR ROMNEY: I have my own plan. It’s not the same as Simpson-Bowles. But in my view, the President should have grabbed it. If you wanted to make some adjustments to it, take it, go to Congress, fight for it.
THE PRESIDENT: That's what we’ve done, made some adjustments to it, and we’re putting it forward before Congress right now -- a $4 trillion plan --
GOVERNOR ROMNEY: But you’ve been -- but you’ve been President four years --
THE PRESIDENT: -- a balanced --
GOVERNOR ROMNEY: You’ve been President four years. You said you’d cut the deficit in half. It’s now four years later; we still have trillion-dollar deficits. The CBO says we’ll have a trillion-dollar deficit each of the next four years. If you’re reelected we’ll get to a trillion-dollar debt. But you have said before you’d cut the deficit in half. And I love this idea of $4 trillion in cuts -- you found $4 trillion of ways to reduce or to get closer to a balanced budget, except we still show trillion-dollar deficits every year. That doesn't get the job done.
Let me come back and say, why is that I don't want to raise taxes? Why don't I want to raise taxes on people? And actually you said it. Back in 2010, you said, look, I’m going to extend the tax policies that we have. Now, I’m not going to raise taxes on anyone because when the economy is growing slow like this, when we’re in recession, you shouldn’t raise taxes on anyone. Well, the economy is still going slow. As a matter of fact, it’s growing much more slowly now than when you made that statement. And so if you believe the same thing, you just don't want to raise taxes on people.
And the reality is, it’s not just wealthy people -- you mentioned Donald Trump -- it’s not just Donald Trump you’re taxing. It’s all those businesses that employ one-quarter of the workers in America, these small businesses that are taxed as individuals. You raise taxes and you kill jobs. That's why the National Federation of Independent Businesses said your plan will kill 700,000 jobs. I don't want to kill jobs in this environment.
I’ll make one more point.
MR. LEHRER: Let’s let him answer the taxes thing for a moment.
GOVERNOR ROMNEY: Okay.
MR. LEHRER: Mr. President.
THE PRESIDENT: Well, we’ve had this discussion before --
MR. LEHRER: No, about the idea that in order to reduce the deficit there has to be revenue in addition to cuts.
THE PRESIDENT: There has to be revenue in addition to cuts. Now, Governor Romney has ruled out revenue. He’s ruled out revenue.
MR. LEHRER: Is that --
GOVERNOR ROMNEY: Absolutely. Look, the revenue I get is by more people working, getting higher pay, paying more taxes. That's how we get growth and how we balance the budget. But the idea of taxing people more, putting more people out of work, you’ll never get there. You never balance the budget by raising taxes. Spain -- Spain spends 42 percent of their total economy on government. We’re now spending 42 percent of our economy on government. I don't want to go down the path of Spain. I want to go down the path of growth that puts Americans to work with more money coming in because they're working.
MR. LEHRER: But, Mr. President, you’re saying in order to get the job done, it’s got to be balanced.
THE PRESIDENT: If we’re serious, we’ve got to take a balanced, responsible approach. And by the way, this is not just when it comes to individual taxes. Let’s talk about corporate taxes. Now, I’ve identified areas where we can right away make a change that I believe would actually help the economy. The oil industry gets $4 billion a year in corporate welfare. Basically, they get deductions that those small businesses that Governor Romney refers to, they don't get. Now, does anybody think that Exxon Mobil needs some extra money when they're making money every time you go to the pump?
Why wouldn’t we want to eliminate that? Why wouldn’t we eliminate tax breaks for corporate jets? My attitude is if you got a corporate jet, you can probably afford to pay full freight, not get a special break for it.
When it comes to corporate taxes, Governor Romney has said he wants to in a revenue-neutral way close loopholes, deductions -- he hasn’t identified which ones they are -- but thereby bring down the corporate rate. Well, I want to do the same thing, but I’ve actually identified how we can do that. And part of the way to do it is to not give tax breaks to companies that are shipping jobs overseas. Right now you can actually take a deduction for moving a plant overseas. I think most Americans would say that doesn't make sense. And all that raises revenue.
And so if we take a balanced approach, what that then allows us to do is also to help young people, the way we already have during my administration, make sure that they can afford to go to college. It means that the teacher that I met in Las Vegas, a wonderful young lady, who describes to me she's got 42 kids in her class. The first two weeks, she's got some of them sitting on the floor until finally they get reassigned. They're using textbooks that are 10 years old. That is not a recipe for growth. That's not how America was built.
And so budgets reflect choices. Ultimately, we're going to have to make some decisions. And if we're asking for no revenue, then that means that we've got to get rid of a whole bunch of stuff. And the magnitude of the tax cuts that you're talking about, Governor, would end up resulting in severe hardship for people, but more importantly, would not help us grow.
As I indicated before, when you talk about shifting Medicaid to states, we're talking about potentially a 30-percent cut in Medicaid over time. Now, that may not seem like a big deal when it just is numbers on a sheet of paper. But if we're talking about a family who's got an autistic kid and is depending on that Medicaid, that's a big problem. And governors are creative, there's no doubt about it. But they're not creative enough to make up for 30 percent of revenue on something like Medicaid. What ends up happening is some people end up not getting help.
GOVERNOR ROMNEY: Jim, we've gone on a lot of topics there. And so it's going to take a minute to go from Medicaid to schools --
MR. LEHRER: Come back to Medicaid, yes.
GOVERNOR ROMNEY: -- to oil to tax breaks and companies going overseas. So let's go through them one by one.
First of all, the Department of Energy has said the tax break for oil companies is $2.8 billion a year. And it's actually an accounting treatment, as you know, that's been in place for a hundred years.
THE PRESIDENT: It's time to end it.
GOVERNOR ROMNEY: And in one year, you provided $90 billion in breaks to the green-energy world. Now, I like green energy as well, but that's about 50 years' worth of what oil and gas receives. And you say Exxon and Mobil, actually those $2.8 billion goes largely to small companies, to drilling operators and so forth.
But you know if we get that tax rate from 35 percent down to 25 percent, why, that $2.8 billion is on the table. Of course it's on the table. That's probably not going to survive if you get that rate down to 25 percent. But don't forget, you put $90 billion -- like 50 years' worth of breaks -- into solar and wind -- to Solyndra and Fisker and Tesla and Ener1. I mean, I had a friend who said you don't just pick the winners and losers, you pick the losers. So this is not the kind of policy you want to have if you want to get America energy secure.
The second topic, which is you said you get a deduction for taking a plant overseas -- look, I've been in business for 25 years. I have no idea what you're talking about. I maybe need to get a new accountant. But the idea that you get a break for shipping jobs overseas is simply not the case. What we do have right now is a setting where I'd like to bring money from overseas back to this country.
And finally, Medicaid to states -- I'm not quite sure where that came in except this, which is I would like to take the Medicaid dollars that go to states and say to a state, you're going to get what you got last year plus inflation, plus 1 percent. And then, you're going to manage your care for your poor in the way you think best.
And I remember as a governor, when this idea was floated by Tommy Thompson, the governors -- Republican and Democrats -- said, please let us do that. We can care for our own poor in so much better and more effective a way than having the federal government tell us how to care for our poor.
One of the magnificent things about this country is the whole idea that states are the laboratories of democracy. Don't have the federal government tell everybody what kind of training programs they have to have and what kind of Medicaid they have to have. Let states do this. And, by the way, if a state gets in trouble, well, we could step in and see if we could find a way to help them.
MR. LEHRER: Let's go.
GOVERNOR ROMNEY: But the right approach is one which relies on the brilliance of our people and states, not the federal government.
MR. LEHRER: We're going on -- still on the economy, but another part of it. All right, this is segment three, the economy. Entitlements, first answer goes to you -- two minutes, Mr. President. Do you see a major difference between the two of you on Social Security?
THE PRESIDENT: I suspect that on Social Security we’ve got a somewhat similar position. Social Security is structurally sound. It’s going to have to be tweaked the way it was by Ronald Reagan and Democratic Speaker Tip O’Neill. But the basic structure is sound.
THE PRESIDENT: I suspect that on Social Security we’ve got a somewhat similar position. Social Security is structurally sound. It’s going to have to be tweaked the way it was by Ronald Reagan and Democratic Speaker Tip O’Neill. But the basic structure is sound.
But I want to talk about the values behind Social Security and Medicare, and then talk about Medicare because that’s the big driver of our deficits right now.
My grandmother, some of you know, helped to raise me -- my grandparents did. My grandfather died a while back. My grandmother died three days before I was elected President. And she was fiercely independent. She worked her way up -- only had a high school education, started as a secretary, ended up being the vice president of a local bank. And she ended up living alone by choice. And the reason she could be independent was because of Social Security and Medicare.
She had worked all her life, put in this money, and understood that there was a basic guarantee, a floor under which she could not go. And that’s the perspective I bring when I think about what’s called entitlements. The name itself implies some sense of dependency on the part of these folks. These are folks who've worked hard, like my grandmother, and there are millions of people out there who are counting on this.
So my approach is to say, how do we strengthen the system over the long term. And in Medicare, what we did was we said we are going to have to bring down the costs if we’re going to deal with our long-term deficits, but to do that let’s look where some of the money is going -- $716 billion we were able to save from the Medicare program by no longer overpaying insurance companies, by making sure that we weren’t overpaying providers, and using that money we were actually able to lower prescription drug costs for seniors by an average of $600, and we were also able to make a significant dent in providing them the kind of preventive care that will ultimately save money throughout the system.
So the way for us to deal with Medicare in particular is to lower health care costs. When it comes to Social Security, as I said, you don’t need a major structural change in order to make sure that Social Security is there for the future.
MR. LEHRER: We’ll follow up on this. First, Governor Romney, you have two minutes on Social Security and entitlements.
GOVERNOR ROMNEY: Well, Jim, our seniors depend on these programs, and I know any time we talk about entitlements people become concerned that something is going to happen that’s going to change their life for the worse. And the answer is, neither the President, nor I are proposing any changes for any current retirees or near-retirees, either to Social Security or Medicare. So if you’re 60 or around 60 or older, you don’t need to listen any further.
But for younger people we need to talk about what changes are going to be occurring -- oh, I just thought about one, and that is in fact I was wrong when I said the President isn’t proposing any changes for current retirees. In fact, he is on Medicare. On Social Security he’s not. But on Medicare, for current retirees, he’s cutting $716 billion from the program -- now, he says by not overpaying hospitals and providers, actually, just going to them and saying we’re going to reduce the rates you get paid across the board, everybody is going to get a lower rate. That saying we're cutting the rates. Some 15 percent of hospitals and nursing homes say they won't take any more Medicare patients under that scenario. We also have 50 percent of doctors who say they won't take more Medicare patients.
We have 4 million people on Medicare Advantage that will lose Medicare Advantage because of those $716 billion in cuts. I can't understand how you can cut Medicare $716 billion for current recipients in Medicare. Now, you point out, well, we're putting some back, we're going to give a better prescription program. That's $1 for every $15 you've cut. They're smart enough to know that's not a good trade.
I want to take that $716 billion you've cut and put it back into Medicare. By the way, we can include a prescription program if we need to improve it. But the idea of cutting $716 billion from Medicare to be able to balance the additional cost of Obamacare is, in my opinion, a mistake.
With regards to young people coming along, I've got proposals to make sure Medicare and Social Security are there for them without any question.
MR. LEHRER: Mr. President.
THE PRESIDENT: First of all, I think it's important for Governor Romney to present this plan that he says will only affect folks in the future. And the essence of the plan is that you would turn Medicare into a voucher program. It's called Premium Support, but it's understood to be a voucher program.
MR. LEHRER: And you don't support that?
THE PRESIDENT: I don't. And let me explain why.
GOVERNOR ROMNEY: Again, that's for future people --
THE PRESIDENT: I understand.
GOVERNOR ROMNEY: -- not for current retirees.
THE PRESIDENT: So if you're 54 or 55, you might want to listen, because this will affect you.
The idea, which was originally presented by Congressman Ryan, your running mate, is that we would give a voucher to seniors and they could go out in the private marketplace and buy their own health insurance. The problem is that because the voucher wouldn't necessarily keep up with health care inflation, it was estimated that this would cost the average senior about $6,000 a year.
Now, in fairness, what Governor Romney has now said is he'll maintain traditional Medicare alongside it. But there's still a problem, because what happens is those insurance companies are pretty clever at figuring out who are the younger and healthier seniors. They recruit them, leaving the older, sicker seniors in Medicare, and every health care economist who looks at it says over time what will happen is the traditional Medicare system will collapse. And then what you've got is folks like my grandmother at the mercy of the private insurance system precisely at the time when they are most in need of decent health care.
So I don't think vouchers are the right way to go. And this is not my -- only my opinion. AARP thinks that the savings that we obtained from Medicare bolstered the system, lengthened the Medicare trust fund by eight years. Benefits were not affected at all.
And ironically, if you repeal Obamacare -- and I have become fond of this term, Obamacare -- (laughter) -- if you repeal it, what happens is those seniors right away are going to be paying $600 more in prescription care. They're now going to have to be paying co-pays for basic checkups that can keep them healthier. And the primary beneficiary of that repeal are insurance companies that are estimated to gain billions of dollars back when they aren’t making seniors any healthier. And I don't think that's the right approach when it comes to making sure that Medicare is stronger over the long term.
MR. LEHRER: We'll talk about -- specifically about health care in a moment. But do you support the voucher system, Governor?
GOVERNOR ROMNEY: What I support is no change for current retirees and near-retirees to Medicare. And the President supports taking $716 billion out of that program.
MR. LEHRER: What about the voucher --
GOVERNOR ROMNEY: So that's number one. Number two is, for people coming along that are young, what I'd do to make sure that we can keep Medicare in place for them is to allow them either to choose the current Medicare program or a private plan -- their choice. They get to -- and they'll have at least two plans that will be entirely at no cost to them. So they don't have to pay additional money, no additional $6,000 -- that's not going to happen. They'll have at least two plans.
And by the way, if the government can be as efficient as the private sector and offer premiums that are as low as the private sector, people will be happy to get traditional Medicare. Or they'll be able to get a private plan. I know my own view is I'd rather have a private plan. I know I’d just as soon not have the government telling me what kind of health care I get. I’d rather be able to have an insurance company. If I don't like them, I can get rid of them and find a different insurance company. Let people make their own choice.
The other thing we have to do to save Medicare, we have to have the benefits high for those that are low-income. But for higher-income people, we’re going to have to lower some of the benefits. We have to make sure this program is there for the long term.
That's the plan that I put forward. And by the way, the idea came not even from Paul Ryan or Senator Wyden, who is a co-author of the bill with Paul Ryan in the Senate, but also it came from Bill Clinton’s Chief of Staff. This is an idea that's been around a long time, which is saying, hey, let’s see if we can't get competition into the Medicare world so that people can get the choice of different plans at lower cost, better quality. I believe in competition.
MR. LEHRER: Okay.
THE PRESIDENT: Jim, if I can just respond very quickly. First of all, every study has shown that Medicare has lower administrative costs than private insurance does, which is why seniors are generally pretty happy with it. And private insurers have to make a profit. Nothing wrong with that, that's what they do. And so you’ve got higher administrative costs, plus profit on top of that, and if you are going to save any money through what Governor Romney is proposing, what has to happen is, is that the money has to come from somewhere.
And when you move to a voucher system, you are putting seniors at the mercy of those insurance companies. And over time, if traditional Medicare has decayed or fallen apart, then they're stuck. And this is the reason why AARP has said that your plan would weaken Medicare substantially. And that's why they were supportive of the approach that we took.
One last point I want to make: We do have to lower the cost of health care, not just in Medicare, but --
MR. LEHRER: We'll talk about that in a minute.
THE PRESIDENT: -- but overall.
MR. LEHRER: Okay.
THE PRESIDENT: And so --
GOVERNOR ROMNEY: That's a big topic. Can we stay on Medicare?
THE PRESIDENT: Is that a separate topic?
MR. LEHRER: Yes, we’re going to -- yes, I want to get to it.
THE PRESIDENT: I’m sorry.
MR. LEHRER: But all I want to do is very quickly before we leave the economy --
GOVERNOR ROMNEY: Let’s get back to Medicare. Let’s get back to Medicare.
MR. LEHRER: Governor --
GOVERNOR ROMNEY: The President said that the government can provide the service at lower cost and without a profit.
MR. LEHRER: All right.
GOVERNOR ROMNEY: If that's the case, then it will always be the best product that people can purchase.
MR. LEHRER: Wait a minute, Governor. Wait a minute.
GOVERNOR ROMNEY: But my experience -- my experience is the private sector typically is able to provide a better product at a lower cost.
MR. LEHRER: Can we -- can the two of you agree that the voters have a choice, a clear choice between the two of you on Medicare?
GOVERNOR ROMNEY: Absolutely.
THE PRESIDENT: Yes.
GOVERNOR ROMNEY: Absolutely.
MR. LEHRER: All right. So, to finish quickly, briefly on the economy, what is your view about the level of federal regulation of the economy right now? Is there too much? And in your case, Mr. President, is there -- should there be more? Beginning with you -- this is not a new two-minute segment. Just start, and we’ll go for a few minutes, and then we’re going to go to health care, okay?
GOVERNOR ROMNEY: Regulation is essential. You can't have a free market work if you don't have regulation. As a businessperson, I had to have -- I needed to know the regulations. I needed them there. You could have people opening up banks in their garage and making loans. You have to have regulations so that you can have an economy work. Every free economy has good regulation. At the same time, regulation can become excessive.
MR. LEHRER: Is it excessive now, do you think?
GOVERNOR ROMNEY: In some places, yes.
MR. LEHRER: Like where? Let me know.
GOVERNOR ROMNEY: Other places no. It can become out of date. And what’s happened with some of the legislation that's been passed during the President’s term, you’ve seen regulation become excessive and it’s hurt the -- it’s hurt the economy.
Let me give you an example. Dodd-Frank was passed, and it includes within it a number of provisions that I think has some unintended consequences that are harmful to the economy. One is it designates a number of banks as "too big to fail," and they're effectively guaranteed by the federal government. This is the biggest kiss that's been given to New York banks I’ve ever seen. This is an enormous boon for them. There have been -- 122 community and small banks have closed since Dodd-Frank. So there’s one example.
Here’s another. In Dodd-Frank, it says if --
MR. LEHRER: You want to repeal Dodd-Frank?
GOVERNOR ROMNEY: Well, I would repeal it and replace it. We’re not going to get rid of all regulation. You have to have regulation, and there are some parts of Dodd-Frank that make all the sense in the world. You need transparency. You need to have leverage limits for institutional --
MR. LEHRER: Well, there’s a specific --
GOVERNOR ROMNEY: But let’s -- but let’s mention --
MR. LEHRER: Excuse me --
GOVERNOR ROMNEY: Let me mention the other one. Let’s talk the other big one.
MR. LEHRER: No, let’s not.
GOVERNOR ROMNEY: Okay.
MR. LEHRER: Let’s let him respond -- let’s let him respond to this specific on Dodd-Frank and what the Governor just said.
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