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Business Officer Magazine

Tough Choices for America

NACUBO 2011 Annual Meeting keynote speaker Alan K. Simpson shares his opinions on what the United States must do to regain fiscal sustainability.

By Matt Hamill

Former Wyoming Republican senator Alan K. Simpson played a key role in the debate on the future of federal finances when he co-chaired the National Commission on Fiscal Responsibility and Reform last year. In December 2010, the commission submitted to Congress a plan of action in its report, "The Moment of Truth." Simpson discussed the report's proposals when interviewed for an annual meeting preview for Business Officer, in advance of his keynote speech at the Tampa conference July 9–12. Following are some additional comments from his interview.

On the approach taken by new members of Congress to budget woes

"How do we get your vote to increase the debt limit? That guy or that gal is then going to say, 'By cutting spending—cut spending, cut spending. Didn't you hear the American people?' Great. What do you have in mind? 'Well, I've got in mind earmarks, waste, fraud and abuse, foreign aid, Air Force One.' If that's where all this is going, when will they get on their hind legs and honestly say we can't do this without touching the 'sacred cow' issues of Medicare and Medicaid, Social Security, and defense?"

On the debt crisis

"We all agreed that deficit denial is dead. There wasn't a single person [on our commission] that didn't agree that deficits are critical, as well as the debt. We're a wonderful country, but both the most progressive and liberal members of our group and the most rugged conservative members of our group concurred that this country is on a course that can lead to . . . our still continuing as a great country, but we won't be No. 1."

On sources of revenue

"We propose revenue streams by getting rid of those tax expenditures—we called them 'tax earmarks'—which we found are really being taken advantage of by only the top 2 percent of people in America. The 'little guy' doesn't even know what oil depletion allowance is. Then, of course, the real drain is the employer deduction of employee health care."

On the mortgage interest deduction

"It's absolutely absurd to pretend that you're helping the 'little guy' get a home when you allow a $1 million mortgage and its deduction of interest. So, we said we're going to get rid of all 180 of these tax expenditures—which are really spending by any other name, and are really earmarks by any other name—and for that, we're going to use the money to give you three tax rates: 8 percent, up to $70,000; 14 percent, up to $210,000; and 23 percent of everything over that. Plus, take the corporate tax rate down from 36 to 26 percent. And, if you want to add back anything, then what rate will you raise? Now, that really is the moment of truth. Let's all agree the home mortgage interest deduction is very popular. So just say we'll give you a 12.5 percent nonrefundable tax credit. That really helps the 'little guy.'"

On Ronald Reagan as a symbol of fiscally conservative leadership

"Ronald Reagan raised taxes 11 times in his eight years. Now, why do you think he did that? He probably did it just to make the country run! He remains one of our most popular presidents. He said, 'Let's cut taxes and cut spending,' but [Congress] cut the rug out from under him and that's the way that often works."

On campaign reform

"Money is corrupting the system. [Former senators] Bill Bradley, Bob Kerrey, Warren Rudman, and I are co-chairs of Americans for Campaign Reform. Well, imagine what the Supreme Court did to our little ship: shot a torpedo right through the hull. Now a corporation or a union can give unlimited money, even anonymously, as if they were a recipient of the First Amendment right of free speech."

On the media

"The media isn't helpful to anybody. They're interested only in conflict, confusion, and complexity—but not clarity."

MATT HAMILL is senior vice president for advocacy and issue analysis, NACUBO.

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