Last week, CNBC’s Squawk Box had Reps. Marcy Kaptur (D-OH) and Jeb Hensarling (R-TX) on to discuss President Obama’s laughable budget submission. I found it amazing how this long-term congresswoman who sits on the budget committee has such a paltry understanding in economics, math and other reality-based sciences. Instead she relied on Democrat talking points that sound all pleasant to brain-dead Democrat voters, but have no substance or credibility as true economic policies.
The exchange starts out pleasant enough. Yet it becomes obvious that Kaptur is woefully ill-versed in the economic problems of the country, let alone how to resolve them. Her (and Obama’s) plan: simply pour more stimulus money into crony coffers to “create jobs,” which will magically save Social Security and Medicare without having to do anything at all to stop them from bankrupting us and destroying our children’s future. When the financially knowledgeable hosts have put up with enough of her pie-in-the-sky economic pattycake and expect her to address the illogic in her plan, she pouts and lashes out, telling the CNBC anchors that they just don’t care about jobs.
If you don’t want to watch the whole thing, at least move towards the end and hear Michelle Caruso-Cabrera’s sharp reply to her insult. (Things start to heat up around 8:30. Caruso-Cabrera’s stony glare around 11:15 says it all.)
It’s interesting that Kaptur and Rep. Dennis Kucinich (D-OH) have been redistricted to have to run against one another for the same seat. I know little to nothing about Ohio state politics, but I would bet the Ohio Democratic Party had a hand in creating that matchup to push her out of office if they have to lose a seat there.
Here’s a cleaned up version of the CNBC-provided transcript of the exchange:
CNBC HOST JOE KERNEN: President Obama submitted his budget to congress today. Joining us to discuss this and more is Representative, I was going to call you Jim Hensarling, reflecting back to when the president called you Jim, but i won’t do that.
REP. JEB HENSARLING (R-TX, Chair House Budget Committee): You have a good memory.
KERNAN: I do. Representative Jeb Hensarling. Was that on purpose? You know him, don’t you? Was that an accident?
HENSARLING: I don’t know. You’d have to ask the President, I assume so.
KERNEN: Chairman of the House Republican of Congress, he was, you might recall, the co-chair of the Joint Select Committee on Deficit reduction, and Representative Marcy Kaptur, she’s a Democratic member of the Budget and Appropriations Committee. And Congresswoman, it’s good to see you.
REP. MARCY KAPTUR (R-OH, member House Budget Committee): Good morning.
KERNEN: Are you running against Kucinich because of, do you have to, because of the redistricting? Are you in a fight yourself there?
KAPTUR: Yes, we have a primary march 6th. We are early. We only had eight weeks to introduce ourselves to the people of Cleveland and of course the city of Lorraine so we’re working very hard out here in Ohio.
KERNEN: Well, now you got to argue with Jeb from the left, and yet to take on Congressman Kucinich, I figure you have to move…I don’t know. I’m all confused. Where are you? Why don’t you start with where you are on the budget…
KAPTUR: As a member of the Budget and Appropriations Committee, I think I understand the fiscal situation pretty well and I think if Congressman Hensarling and I can agree, America can agree. I don’t think we need any more partisanship. I think we need to keep up our progress in terms of growing this economy and investing in our country here in Cleveland. People really are interested in building bridges. They want to get more people back to work. We have to continue the automotive recovery, and obviously invest in education, so we don’t need to print any more money. We really need to invest in our country and keep this economy growing.
KERNEN: What do you mean if you and Congressman Hensarling can agree? Have you agreed on something?
KAPTUR: Well, you know we’re good friends and I think the partisanship that divides the institution we serve in doesn’t serve any purpose, and the country can’t stand any more bickering, so I think what we need to do in order to keep the economy growing is to make sure that Republicans and Democrats put their arms aside and really deal with what we can do together to, and help President Obama keep this economy growing.
KERNEN: So okay then, Congressman Hensarling, what in the budget do you see that you can agree with the President on?
HENSARLING: Well, one, let me say I agree with Marcy’s sentiment, but unfortunately, as the co-chair of the Super Committee, i didn’t see the follow-through with her colleagues. Republicans came to the table willing to compromise on policy. I mean we put tax revenues on the table, and unfortunately I didn’t see any commensurate compromise from the other side, but you know hope springs eternal. I’m looking forward to seeing the details of the President’s budget but this detail is obvious and that is he’s about to give us our fourth, fourth trillion-dollar deficit in a row. I mean the nation is just drowning in red ink. There’s a number of reasons why we’re looking at the slowest, weakest recovery since the great depression, but frankly, this debt is a huge drag on our economy. We got to quit spending money we don’t have, and so I’m very concerned at what he’s trying to do and he’s not really facing up to the drivers of the problem. I mean the president has admitted that the big drivers of our debt are Medicare, Medicaid and health care, nothing else comes close, that’s pretty much a quote but yet he doesn’t do anything about it in his budget to save and secure these programs for future generations. So again I look forward to seeing the details but I’m afraid it may be more of the same and that is red ink, fewer jobs, less hope, less opportunity.
CNBC GUEST HOST DAVID WALKER: Congressman Hensarling, Dave Walker. You will probably never have more power in your life than you had when you were co-chair of the so-called Super Committee, and I must tell you that that was an incredible disappointment, that it did absolutely nothing.
HENSARLING: Well, David, I was on it, so I share your disappointment.
WALKER: My question to you, Congressman, is, do you believe that we can solve our long-term structural deficits at 18.4% of the economy in revenues or are we going to have to have more than that but achieve it through comprehensive tax reform?
HENSARLING: Well, I do believe and as you well know, David, we put comprehensive tax reform on the table. It has been in our budget, that was authored by Congressman Paul Ryan, the house budget will come out soon once again. Frankly, I think we put forth pro-growth revenues even in the Super Committee, that would have raised more revenue. It’s not, you know we’re trying to raise revenue in a way that is smart for the economy that helps create jobs and frankly a fairer, flatter, simpler, more competitive tax code would do that. We had it in our budget. The President hasn’t had it in his budget. It was not supported by Democrats on the Super Committee, but again, I hope it will deserve greater attention, because at least growth, growth won’t solve the entirety of our problem, as you well know, David, but it’s a significant part of it. Ultimately we’re going to have to deal with our health care and retirement security programs to make them better and more cost effective, and frankly patient- and senior-driven for future generations. That’s where the real challenge is.
WALKER: What I hear you saying is, it is going to take more than 18.4% of GDP, but you need to achieve it through comprehensive tax reform.
HENSARLING: As you well know, spending which has been at 20% of GDP since World War II, is due to double to 40% over the course of the next generation.
WALKER: I understand.
HENSARLING: So you can’t tax your way out of this problem. I mean you’re going to have to deal with the spending side. Even if we gave the President every single job-killing tax increase he asked for, as you well know it’s about 16%, maybe 17% of the additional debt he’s going to add on to the national debt. You just can’t tax your way out of this problem.
WALKER: There’s no question it’s primarily a spending problem. I would respectfully suggest it’s not exclusively a spending problem. Congresswoman Kaptur, on the other side of the coin, do you believe we have to renegotiate the social insurance promise for Medicare, Medicaid and Social Security in order to maintain the safety net at the same point in time to reduce projected spending in those programs in a way to restore fiscal sanity?
KAPTUR: The most important step we can take to assure all of our social insurance programs and earned benefit programs are solvent in perpetuity is to get people back to work. Our focus has to be on economic growth and investment in this country. President Obama has laid out a road map for that. I’m anxious to walk down that road, because here in Ohio, northern Ohio, from Cleveland through Lorainne to Toledo, we see the results of the automotive industry recovering. It is magnificent. Let me tell you, it’s lifting revenues in all accounts, in order to help us fund our school systems.
CNBC HOST MICHELLE CARUSO-CABRERA: Congresswoman, hold on one second. David Walker, is she correct? Could we grow enough so that way Medicare could be paid and would become solvent? At what rate would the United States have to grow to pay for Medicare?
WALKER: As a former trustee of Social Security and Medicare and knowing something about the government’s finances, I can tell you there’s no way that will work. You would have to grow the economy by double-digit real GDP growth, achieve full employment for decades and that still–-that’s not going to happen. That’s just not going to happen. There’s a simple four-letter word Washington needs to understand: it’s called math. The math doesn’t work. We need more revenues but we’re going to have to renegotiate the social insurance contract and health care is a much bigger problem than Social Security but it has to get renegotiated, too.
CARUSO-CABRERA: Ma’am, is your party ready to renegotiate the social welfare contract?
KAPTUR: I think what President Obama did with the Affordable Health Care plan was to put us on a track for prevention and to save some of the costs that are burdening us as an economy on the health care side. Those changes are going to lock in. In terms of Social Security, which is an earned benefit, as well as Medicare. If we can lift people’s economic lives, where they’re working again and paying into those funds, believe me, you’ll see growth and you’ll see security in those funds.
CNBC HOST ANDREW ROSS SORKIN: But Congresswoman, there’s not enough…
KAPTUR: But when you have so many people sitting on the sidelines, we’ve got to have programs to put people back to work, building bridges, here in Ohio…
CARUSO-CABRERA: But the spirit of the question was…
SORKIN: Congresswoman, I’m not, we obviously want to put…
KAPTUR: …to have idle people doesn’t help the economy grow. We have to keep our shoulder to the wheel, and invest and create jobs in this country.
SORKIN: Congresswoman, we want to obviously create new jobs…We need to get the economy back in order, there’s no question. Having said that, as David just said, the math doesn’t work. Ultimately, you have to somehow fix the safety net, and what it means probably is making the safety net a little less safe. And the question is…
KAPTUR: I’ll tell you if we didn’t have the trade deficits that are wiping out most of our GDP growth we would have more job creation in this country, so I respectfully disagree with the gentleman. The problem is we have too much drag..
CARUSO-CABRERA: You believe that with job creation, we could pay for Medicare?
KAPTUR: I do.
CARUSO-CABRERA: Okay. There you go. I’m glad you’re on the record for that.
WALKER: Just so you know, Congresswoman, on Medicare, based on realistic assumptions from the chief actuary, Medicare is underfunded $37 trillion and Social Security is underfunded $9.2 trillion, and those numbers go up 2 to 3 trillion a year on autopilot because of the power of compounding. That’s where we’re at and Congress better start doing its job, because Greece is not far off.
KAPTUR: We need investment in this country, sir, if so many jobs hadn’t been outsourced…
WALKER: We do need some of that too. I do agree with that. We need some of that too.
KAPTUR: …more people would be working and, if we would open the closed markets of the world, including China and Japan, we could sell more of our goods. Why does a Cherokee cost $85,000 in China? If we could manufacture, and do it really well, and they could buy our products, we could put many more people back to work here.
SORKIN: Ma’am, I apologize, the issue, it’s not an either/or….
WALKER: We need both. We need both.
CARUSO-CABRERA: Andrew lost his mike so we’re having a ‘squawkward’ moment here.
SORKIN: That is the longest mike. Sorry, the point is it’s not an either/or proposition, it’s a combination and that ultimately is where we’re going, Congresswoman, with this question. Everything you said you could agree or disagree with, depending on where you are politically, but we need to grow the economy, but the other issue is dealing with these entitlements. And it sounds like you’re not prepared to deal with them.
KAPTUR: My primary focus is putting people back to work, because I understand the drag that this level of unemployment puts on this…on economic growth, and from what I’m hearing you say, you don’t have much of an interest in helping to reemploy the millions of Americans who are sitting on the sidelines and want to work. This is a huge problem.
CARUSO-CABRERA: No, that’s completely false. The spirit of our question was whether or not you are interested in talking about entitlement reform in a way that would ultimately help the budget in the long-term. There’s nothing in any of the questions that we suggested here that we don’t want people to get back to work. That’s not true.
KAPTUR: I’m glad to hear that.
WALKER: Actually, I do believe we need more investment, but the truth is, if we don’t start dealing with structural deficits we are gonna have bigger economic, much bigger unemployment, much bigger underemployment problems in the future.
KERNEN: Congressman Hensarling…
KAPTUR: …Social Security and Medicare, if I could just say, I was part of the Congress to help restructure that back during the 1980s….
HENSARLING: Can I hop in here real quickly on Medicare?
KAPTUR: …I know we can do that if we can merely sit down together and talk. I don’t agree with the Super Committee structure because it really disempowers most of the Congress….
KERNEN: Jeb. Jeb. Last word, Jeb.
KAPTUR: …So Mr. Hensarling tried, it didn’t work.
HENSARLING: The whole institution is about talking, and again the debt is a drag upon our job creators. I spent all of Friday talking to job creators in the Fifth Congressional District of Texas. They’re worried to death about this debt. They know sooner or later they’re gonna have to pay for it. On Medicare let me give you two numbers: a half a trillion. The President and Democrats took half a trillion dollars out of Medicare and the President’s health care plan not to shore up the finances of Medicare but rather to pay for the President’s health care plan. Here’s the other number, 15. That’s the number of members of the Independent Payment Advisory Board, which is this new unelected group of bureaucrats that now are going to have the power of life and death over Medicare decisions, and so you know, there are two fundamentally different routes. The Democrats are going on one that will ration health care and lessen the quality…
KERNEN: We’ve got to run. We’re done. (unintelligible crosstalk)
CARUSO-CABRERA: Ok. Nevermind. Thanks, guys.
KAPTUR: Let’s get back to work. Let’s get regular order in the Congress….
KERNEN: All right. We’re gonna end it there.
CARUSO-CABRERA: We’ll keep the satellite up during the commercial break and you can talk to each other. Thank you, Congresspeople.
KAPTUR: …Let’s use the committees of jurisdiction to get the work done.
HENSARLING: …So I guess that means it’s factual.
KERNEN: All right. It’s nice to see that big grin. Let that thing go. Oh, boy. Congresspeople, Hensarling and Kaptur, thank you.