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Glenn Beck
Exposed: America`s Broke
Aired September 19, 2008 - 19:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEOTAPE)
GLENN BECK, HOST (voice-over): Hello, America. A few weeks ago I asked my producers to put together a special week to focus on all of the unfunded commitments that America has made, from Social Security to Medicare.
My theory was these commitments, which now total over $53 trillion -- that`s last year, money we obviously don`t have -- are a clear and present danger to our national security, because having massive amounts of debt, especially debt owned by foreign countries like China, enslaves us to them. Why haven`t we said anything about the poison dog food or the poison toys coming from China? The answer is the money.
Little did I know that on the Monday when we were planning on starting this series, that that would be the week where we`d see Lehman Brothers go bankrupt, American taxpayer becoming the owners now of a multimillion national insurance company by rescuing AIG. We`re another trillion dollars in debt this week.
And with all of the panic on Wall Street, it actually turned out to be the perfect week to take a step back and get out of the trees and look at the forest again.
It all started Monday with an installment called "Debt, Deficits and Deceit." I was joined by Stephen Moore, an economics editorial writer for the "Wall Street Journal" and co-author of "The End of Prosperity." And Paul Hodge, he`s the founding chair of the Global Generations Policy Institute and director of the Harvard Generations Policy Program.
(BEGIN VIDEOTAPE)
BECK: The budget, if you look at the polls today -- we`re getting ready to elect a president -- nobody is saying anything about the budget. They don`t think the budget is a big problem. It`s not high on anybody`s priority list.
Yet, at the same time, everybody wants something done with health care. How do you put these two together?
PAUL HODGE, DIRECTOR, HARVARD GENERATIONS POLICY PROGRAM: Well, I think that`s the pink elephant in the campaign, so to speak. If you`re taking a look at the two candidates for office, no one seems to be dealing with these particular issues. And it becomes more evident as you view the whole country from abroad.
I`ve just returned from an eight-month round-the-world fact-finding trip to visit about 27 countries to find out about how they`re handling their global economies and their aging populations and their health-care policies.
And it`s evident from looking at the United States from abroad and these different countries, that there`s a big problem ahead.
BECK: Yes. We`re -- we`re running towards socialism. They`re running away from it. True or false?
HODGE: Yes.
BECK: OK. Yes.
HODGE: And it varies.
BECK: OK.
STEPHEN MOORE, AUTHOR, "THE END OF PROSPERITY": Well, you know, Glenn, they`ve seen the financial havoc...
BECK: Yes.
MOORE: ... that it`s caused. It`s almost like we`re looking at the Argentina/Bolivia model. It`s like, yes, let`s meet...
(CROSSTALK)
BECK: I saw something -- I saw something this weekend on the worst countries in the world to start a small business, like 174 out of 176 was Venezuela, and it looked like the policies of some of the candidates.
MOORE: Here`s the problem. When you`re talking about this massive debt, and a lot of these are these unfunded liabilities. The mentality in Washington -- I`m there almost every day. The politicians think that they can give everybody everything. It`s this entitlement mentality.
BECK: Right.
MOORE: And you and I and Paul and everybody is entitled to the taxpayer money. And we can`t continue to do this.
BECK: So Steve, let me show you. This is a full screen of the federal spending revenues. If you look at these two lines -- where, OK, the yellow line is spending. That shows that it`s not the revenues; it`s spending.
But I want to ask both of you guys one question. I noticed the revenue line is damn near flat. That line encompasses the 90 percent tax that happened on the wealthiest 1 percent, and the lowest tax, the wealthiest 1 percent. That line doesn`t really even move.
MOORE: That`s right. In fact, that`s the reason you have -- you want to have the lowest tax rates possible to generate the strong economy. But as that chart is showing people, the spending is going through the roof. And the scary thing is, Glenn, it starts to really catapult when the Baby Boomers start to retire. And guess what -- when that happens? Within the next two or three or four years.
BECK: OK. So...
HODGE: And I might emphasize that that`s a big issue. The Baby Boomers, which we hear no discussion about.
BECK: OK. So let me -- Paul, let me -- the next one is major categories of federal -- of federal spending. This is just what we`re talking about. This chart, you see the -- I think it`s a blue line. That is the -- that is the discretionary spending. And you see that going down. And the entitlement and mandatory spending is the red line, and that`s going through the roof.
This is not -- what the politicians keep talking to us about is earmarks. Earmarks are part of the discretionary spending. Correct?
HODGE: Correct.
BECK: So...
HODGE: And what those figures show -- excuse me, Glenn.
BECK: No, go ahead. That`s what I was -- that`s what I was going to ask you. What does it...
HODGE: What those figures show is that -- just what you`ve been saying, that we`re going to be pretty much locked in to a budget, about 20 years from now. But it`s even going to happen earlier.
One of my -- and our research has shown is that, when they talk in terms -- or people talk in terms of what are we going to do for our grandchildren or children, I think we start -- start looking at what are we going to do for ourselves, because a lot of this stuff is going to happen when we`re alive. People are living younger longer, and therefore they`re going to be around for what -- we now, the Baby Boomers, are going to be around for when the difficulties occur.
It`s not going to be on the children or the grandchildren.
MOORE: Here`s -- here`s the problem in a nutshell. If we stay on the path we`re on right now, within in 20 or 30 years every federal tax dollar that we collect will go for two purposes: one, to send retirement checks to Grandma and Grandpa. And that will be you and me.
BECK: Right.
MOORE: And the other, to provide health care for people. And there will be no money left over, as you said, for national defense, for education...
BECK: Right.
MOORE: ... for the court system, for all the rest of the things government`s supposed to do.
BECK: So -- so I`d like to hear this from both of you, because I think the reason why this doesn`t get play is because people will -- you`re watching at home, and you`re like, "Well, that`s never going to happen. I mean, it`s just not going to happen. We`ll find a way out of it."
But what -- people don`t believe...
MOORE: Right.
BECK: ... that we could actually be, as a country, a Lehman Brothers. And yet, we`re using the same accounting practices.
MOORE: No, worse, worse. Much worse than -- we don`t account for Social Security debt. We don`t count that. And as Paul knows, we don`t count this Medicare debt on the budget. That`s not counted in the deficit right now. But every year that goes along, these unfunded deficits get bigger and bigger.
BECK: So Paul, help me out, and how do you make -- how do you make the case to people that, yes, this does matter?
HODGE: I think the first thing to do is start dealing with real numbers and not phony numbers.
MOORE: Right.
HODGE: Is that, you know, if you`re going to have good policy, and you`re going to have informed population in the electorate, you have to be able to generate numbers which are honest. The inflation -- what`s the true inflation rate?
BECK: Well, wait a minute.
HODGE: How much is this really going to cost? All these questions have to be -- you know, we have to start dealing with reality, as opposed to clouding it the way we do.
BECK: But nobody is doing that. Stephen, you`ve got -- you`ve got the budget. You have the president this week.
MOORE: Right.
BECK: This weekend, saying create another set of books for another $5 trillion.
MOORE: Right. You want to talk about phony bologna budgeting? What they did this weekend was crazy.
BECK: There should be (ph) jail for that.
MOORE: Well, if there were CEOs of private companies, they...
BECK: They would.
MOORE: They probably would. We just created new -- two new federal government agencies, and we`re going to say that their debt and their spending doesn`t count?
I mean, any company -- if Lehman Brothers could -- could just push all of their debts off budget, they`d look healthy today.
BECK: Right.
MOORE: But here`s why this is happening.
BECK: OK.
MOORE: Because politicians have about a two-year political horizon. They look as far as the next election. So Paul is talking about problems that are five, ten, 15, 20 years away. Do you think politicians care about what`s going to happen in 20 years?
BECK: No. Yes.
MOORE: Absolutely not.
BECK: Because they`ve don`t -- they`ve can`t get -- they`ve got to get elected again.
MOORE: Right.
BECK: OK, Paul...
HODGE: And that goes to the concept of debt. Debt has been a great thing for politicians, because instead of taxing, increasing taxes, or decreasing services, they`ve gone out and borrowed money. And that`s been easy for them.
BECK: But, again, I -- if I could leave with something, that chart that we showed earlier, it`s not taxes.
MOORE: Yes, you cannot tax your way out.
BECK: Because taxes -- why does it stay flat no matter what your rate is? Because it hurts the GDP?
MOORE: Yes, because when tax rates get too high, you just don`t generate any revenue. I wish Barack Obama understood that, because he wants to raise the rates. You can`t tax your way out of this crisis.
HODGE: And to be perfectly honest -- and to be perfectly honest, for certain groups, this -- they do not have disposable income to pay more taxes.
(END VIDEOTAPE)
BECK: When we come back, we`ll take a look under the hood of the two biggest entitlement programs out there, Social Security and Medicare. We just need a little transmission fluid, or is the whole engine shot? The unfortunate answer is coming up next.
(COMMERCIAL BREAK)
BECK: Welcome back too our special series, "Exposed: America`s Broke."
Back in 2007, it was Treasury Secretary Henry Paulson who came out and said that on our current course, Social Security and Medicare will consume every dollar of federal revenue and will -- and I quote -- "threaten America`s future prosperity." When I first read that, I thought, you know what, I don`t think he`s gone far enough. This week after all we`ve been through, I believe that to be absolutely true.
The promises that we have made and the things that we have done here in the recent past don`t just threaten America`s future prosperity. They threaten America`s future, period.
To try to figure out how we get off this course of destruction, I spoke earlier with Glenn Hubbard, the dean of Columbia Business School, and John Shoven, a professor of economics at the Stanford Institute for Economic Policy Research.
(BEGIN VIDEOTAPE)
BECK: This all started, Glenn, did it not, with politicians making promises and then just dog-piling and snowballing through the years?
GLENN HUBBARD, DEAN, COLUMBIA BUSINESS SCHOOL: Well, that`s certainly a big part of it. Another part is simply that the society has aged. Health-care costs have risen much faster than prices generally now for some time. But it`s very clear that we have to reform these programs, or we won`t be able to do anything else as a country.
BECK: OK. Everybody talks, John, about Social Security and says, "Oh, they got to fix Social Security." The real problem here -- Social Security is on a back burner in many respects. Medicare is the real problem, is it not? Or the immediate problem.
JOHN SHOVEN, PROFESSOR OF ECONOMICS, STANFORD INSTITUTE FOR ECONOMIC POLICY RESEARCH: Medicare is the bigger problem by far. On the other hand, Social Security is still a large problem.
Everybody in Washington says that Social Security is easily fixed, so why not fix it? We`ve known that it had a problem for 20 years, and it`s not fixed. If it`s so easy to fix, the next administration should fix it in the first 100 days.
BECK: OK. Medicare HI, which is the hospital insurance part, that`s already running in the red. How did we ever get to Medicare D, which is prescription drugs, which out of the $53 trillion of debt, Medicare D accounts for $8.4 trillion?
How did a so-called conservative, George Bush, and this Congress that is always claiming that they understand the problem, push through $8.4 trillion of additional debt?
SHOVEN: Well, they did it without raising anybody`s taxes so it looked like it was free. The average person who noticed their income tax didn`t go up, their payroll tax didn`t go up, and they`ve suddenly got Medicare part D. What a great thing to run for re-election on.
HUBBARD: John is absolutely right. It simply piled up big future obligations, and the whole existence of Part D points up the big flaw in Medicare, that it wasn`t really keeping up with private insurance.
BECK: OK. Well, hang on just a second. Glenn, let me talk to you about taxes. I showed a chart -- do we have the chart from yesterday with expenditures and revenues?
Yesterday I put this chart up, and it showed -- there it is -- the yellow line is spending. The other line is revenue. The revenue line, as I pointed out last night, relatively flat.
Well, after the program, I did some research on it. And apparently, it is like 8.3 percent, no matter what you charge. You can charge 90 percent on the top 5 percent. You can charge 30 percent. Revenues remain relatively the same.
You can`t dig yourself out of this hole with revenues. It`s always the same, no matter what you charge. Can you?
HUBBARD: No. I mean, revenue share is between 18 percent and 19 percent of GDP. If we were to try to fix our entitlement problem with tax increases, after a generation we`d have to raise every tax in the country by 60 percent. It`s simply not possible. The growth effects of that would be devastating. We would crowd out everything else in the federal budget.
BECK: OK. John, you say -- I read an article that you were talking about, age inflation. What`s age inflation?
SHOVEN: Well, 65, which is the age where you start Medicare, is not what it used to be. When Medicare was introduced in 1965, at age of 65, the mortality of those people were 3 percent, something like that. The equivalent mortality today is for people of roughly 70, 71 years old.
A year of life is, you know -- people at any given age are younger than they used to be. For instance, let`s go back to Social Security, 65 in 1935. It`s about equivalent to 75 today.
BECK: OK. So this is the thing that always drives me crazy. Everybody calls it Social Security. I remember my grandparents used to call it SSI. SSI, Social Security insurance. Only the government would understand insurance as a guaranteed payout. It was never intended to guarantee a payout for 10, sometimes 15, 20 years.
SHOVEN: You could go on. Twenty, maybe 30 years.
BECK: OK. So why don`t we -- we`ve indexed everything else. Why don`t we index age? Why can`t we take Social Security and Medicare and index age?
SHOVEN: I`m with you. I`ve written on that. It would be a great thing. We went from dollars to real dollars. We need to go from age to real age.
BECK: And, Glenn, you`re shaking your head no.
HUBBARD: No, no, no, it`s absolutely right. I mean, I think that that`s -- it`s part of a family of changes that we could make that would slow down benefit growth. I think adjusting for age makes sense, reducing the benefits of high income people. There are lots of ways to do this.
BECK: OK. Let me -- let me show you guys something here. I`m going to put it up on the screen. It`s called the menu of pain.
The story on is, this is why Secretary O`Neill -- what was it? -- left to go spend some time with his family. Others say he was fired by the White House, because he wanted to put this in the presidential budget of 2003. It never showed up until it was in the Social Security budget, but they buried it in the index.
What it is, is if you don`t -- this is in 2003. If you do these things right now, this is what we`ll have to do: increase federal income taxes by 69 percent, increase payroll taxes 95, cut federal purchases by 106, cut Social Security and Medicare by 45. If you see, those are the 2003. We`re now at 2008.
And what it`s saying is, it`s only going to get worse from here. There`s no way, guys, any of these things will be done.
Well, the fact is they have to. Arithmetic and budget constraints balance for the government, too. We have a choice of reconfiguring programs on the benefits side, raising taxes or both, but it`s not a choice.
BECK: Wait a minute. Wait a minute. Both of you guys, help me out on this. They`re both still talking about -- both parties are talking about even more spending and more programs and more bailouts and universal health care and universal everything! How do you stop this?
SHOVEN: You`re absolutely right. Neither candidate is taking the position of fiscal responsibility. They`re both competing for tax cuts. And at least Obama has got a whole menu of new spending plans. Neither one of them is sort of running on a platform of fiscal responsibility.
BECK: Right. Should the argument -- forget tax cuts and earmarks are such a small part of this thing. Shouldn`t we just be talking about massive spending cuts at this point? I mean, shouldn`t that be the priority?
HUBBARD: Well, it`s not so much spending cuts in the here and now is in the future of these entitlement programs, giving people time to adjust. And, yes, it should be the priority. But we need to change the budget rules of the Congress so that the Congress really has to understand that it will cut other spending or raise taxes every time it changes an entitlement program.
BECK: OK.
(END VIDEOTAPE)
BECK: Back in just a minute with a look at how little accountability there really is pour the financial mess we`re in. John McCain said yesterday that the chairman of the SEC should be fired. OK. There`s a good place to start. He`s not the only one. And that`s next.
(NEWSBREAK)
(COMMERCIAL BREAK)
(BEGIN VIDEOTAPE)
BECK: I want you to consider for a second instead of, say, we`re having not a financial crisis but an aviation crisis. Imagine if some company, Airbus, for example, was so reckless and irresponsible that planes just started dropping out of the sky. Do you think we`d have any special hearings or, you know, congressional inquiries? Heads would roll. You know it and I know it. People would go to jail. There doesn`t seem to be any interest in that right now.
My next guest says we need the same kind of accountability on Wall Street. Steve Cordasco, host of the "Big Money" show on 1210 AM in Philadelphia.
Steve, there`s no real outrage in this country on what`s going on on Wall Street, because I don`t think people understand what`s even going on. And I blame -- quite honestly, I blame the financial institutions themselves: the Fed, the treasury, the administration, and Congress.
STEVE CORDASCO, RADIO TALK SHOW HOST: Absolutely. You`re right on, Glenn. You`ve been on this for a long time.
This is a story, and I want everybody to listen closely to this. If you want to get to the root of what the problem is, it`s the truth. And nobody is telling the truth.
It starts with liar loans and people who got mortgages because money was cheap. It worked its way up through Congress and our politicians, into corporate America. It goes back to your analogy of Airbus and airplanes falling out of the sky.
Add on top of that the CEOs saying, "Hey, there`s nothing wrong with this product," as they`re falling out of the sky and people are passing away. Bottom line is, we need a congressional hearing to find out where the problem is.
BECK: OK. You know, Steve, we don`t need a congressional hearing, because those weasels won`t do anything about it. I`m starting next week on this program, I`m starting the "We the People" court. Because I`m going to name names.
On tomorrow`s broadcast, I`m going to give you names and a date of when it started. It started in 1992, and you will not believe how this started. And you`ll know exactly who to vote for after tomorrow. Because you`ll see how this whole thing started.
Who in Congress wasn`t involved, Steve?
CORDASCO: You know, it starts, I mean, Schumer`s not going to come out. His state`s got too much money invested in here in taxpayer dollars. You can go to Watson, California, who wanted her constituents all to be in a home, whether they can afford it or not. It resonates throughout the system.
BECK: Exactly.
CORDASCO: We`ve been lied to.
And what`s making it even worse, Glenn, last time I was on your show, we talked about Goldman Sachs and Wall Streeters, infiltrating our government. It goes back to what I said last time. Eisenhower said we can`t bring our generals into corporate America.
BECK: Yes.
CORDASCO: Who ever said Hank Paulson can do weekend deals? By the way...
BECK: Thank you for saying that. I was watching the news and I`m seeing the treasury secretary in the basement of the Fed, which is not a government organization, spending government money trying to bail banks out. And I thought, who the hell is representing the American people here?
CORDASCO: By the way, let`s just -- let`s get Merrill Lynch sold real quick this weekend, because we know we`re going to let Lehman blow up. And when happens, Merrill could do next.
And oh, by the way, CEO of Merrill Lynch, who you and I used to work at Goldman Sachs together, I know you put money into the deal, but you have a parachute here of 50 million bucks if this -- if you get sold.
That on top of -- and I don`t know if anybody`s picking this up, but two weeks ago, Warren Buffett after the Fannie Mae and Freddie Mac deal went down on a Monday, mentioned that he got a call from Hank Paulson on Sunday, asking if his -- if this structure passes the smell test.
Well, guess what: Warren Buffett runs a publicly traded company. He shouldn`t have access to inside information.
BECK: Thank you for having some passion. For somebody who actually cares about the story and the middle class and what it all means.
All right. Coming up, our "Real Story," next.
(COMMERCIAL BREAK)
GLENN BECK, HOST: Welcome back to our special series "Exposed: America`s Broke." With our government this week buying up bad mortgages and nearly bankrupt companies, that really rings more true than ever before, America is broke or soon will be.
Who in Washington can we trust to lead us out of this mess? Is there anybody; where is that leader?
Well, a couple of politicians came highly recommended, so I invited them on to the program to see if they`re really the kind of people who will put their country ahead of their party. You decide in the next few minutes.
Republican Senator Judd Gregg he is from New Hampshire, he is the ranking member of the Senate Budget Committee. Democrat Congressman Jim Cooper from Tennessee, he is on the House Budget Committee. And David Walker is the former Comptroller General of the United States of America, he was our chief bean counter for years and years and the current president and CEO of the Peter G. Peterson Foundation.
(BEGIN VIDEOTAPE)
BECK: I`m afraid that our politicians in Washington will find me a little hostile and I don`t mean to. I just don`t trust any of them.
We have a deficit in leadership. Explain that.
DAVID WALKER, FORMER COMPTROLLER GENERAL OF THE UNITED STATES O AMERICA: We clearly do. I mean we have a budget deficit, a savings deficit, a balance of payments trade deficit. But the biggest of all is the leadership deficit. But there are exceptions and two of the exceptions are going to be on your program today. By the way, Happy Constitution Day.
BECK: Yes I`ve run it through the shredder this week.
Ok, let me go to Congressman Gregg, then. Or I`m sorry, Senator Gregg. Senator, you`re a Republican. I`m a Conservative. I generally vote for Republicans, but I have to tell you, convince me that I can trust a Republican. You guys gave us prescription drugs, which was $8.7 billion on top of what we`ve already done.
SEN. JUDD GREGG, (R) NEW HAMPSHIRE, RANKING MEMBER OF THE SENATE BUDGET COMMITTEE: Trillion.
BECK: I`m sorry. Trillion. Sorry. Trillion.
GREGG: I actually voted against the prescription drug and have railed against it on innumerable occasions on the floor of the Senate because of the $8 trillion unfunded liability which increased the overall unfunded liability by about 10 percent, 15 percent, 20 percent.
So it`s a -- and that was a serious mistake. It shouldn`t have been done. Shouldn`t have been done the way it was done. We should have paid for it.
BECK: Ok.
GREGG: The issue here really is, how do you get folks, who as you mentioned in your lead-in, are concerned about the next election, to look at the next generation? And that`s been our problem. Congress is good at dealing in the next election but not the next generation.
And Jim and I have came up with a proposal along with Congressman Wolf and Senator Conrad to try to do that and it basically puts in place a brack- like (ph) approach where you set up a group of folks who are committed to doing something right and doing something aggressive in the area of Medicare, Social Security and tax reform, puts them in a room, says come up with a plan and then the Congress, without amendment has to vote the plan up or down. And it`s a fast-track way to get some results.
BECK: Ok. Congressman --
REP. JIM COOPER, (D) TENNESSEE HOUSE BUDGET COMMITTEE: Yes.
BECK: Oh Senator, it`s your turn to point to the Congressman. Congressman how can I possibly believe you guys because when you guys took control of Congress, you said, oh, we`re about the most ethical -- I mean let me remind you of what`s his name, Charlie Rangel.
You`ve given us a huge deficit. You had the Pay Go System and, yet, that aren`t doing anything. Pay Go, you`re still violating that. I mean why should I trust you guys?
COOPER: Well, Glenn, we put Pay Go back into place. And largely we`ve stuck to it, which is an improvement because the Republican Congress let it expire entirely.
Alan Greenspan said the single most important reform we could undertake would be to put Pay Go back in place. And we`ve largely done that.
But let`s look to the future. On December 15th of this year Hank Paulson, the Secretary of Treasury, a good Republican and good Secretary of Treasury will issue a report with the real numbers for America in it. These are the only audited numbers for America using real accounting, their essentially the annual report for America.
But Secretary Paulson will hide that report, he will bury it. He will not have a press conference. We know this because last year`s report completely hidden.
And that`s where you get the $53 trillion number in liabilities for America. We`ve got to expose this to the American public.
BECK: David, you know it as well as I know, this has been hidden for a long time. O`Neill tried to get it into the 2003 budget and he was left to go spend some time with his family, finally got it into the Appendix of the Social Security Budget when it was -- when the plan was there, called the index or Pain Index -- what was it, Menu of Pain.
Do we have that chart up here?
How is it, David, that we can get anybody to pay attention to this when the numbers are being buried, when you`ve got a couple of people in Congress and the Senate that want to do the right thing but nobody on the election - - nobody -- McCain, Obama, they`re not really talking about any of this stuff.
WALKER: Well, the numbers are in the financial statements of the U.S. government. They have been for a while. The problem is, nobody reads them.
And so the fact of the matter is you need to figure out how you can get this important information out to the public in a usable form.
It`s in the movie IOUSA. We at the foundation are doing a lot of things through the Internet with it. Stay tuned, you may well see a Federal burden clock rather than a Federal debt clock in the future. The problem is not the debt. It`s the unfunded obligations, the $53 trillion plus, $455,000 per household.
BECK: But how do I again -- here`s how much politics plays a role into it. Doug Holtz-Eakin, he was the director of the Congressional Budget Office. We tried to get him on, I think on Monday night`s program.
He`s the guy who has been doing the -- you know, he is the director of the CBO. Couldn`t get him on. Why? Because he`s now on as part of the John McCain campaign and the McCain campaign said, no, we`re not making any comment on any of this stuff right now.
What are you talking about? We`re not asking him to speak for the campaign. We`re asking him to enlighten the American people of the kind of games that are going on. If you can`t get somebody who -- both parties are saying they`re reformers -- if you can`t get them to come on and speak about it, well, what the hell does that even mean?
WALKER: Well, the truth is that neither one of the major candidates are really focusing on our fiscal hole. And one of the things we`re doing at the Peterson Foundation is we`re analyzing the position of both major candidates, will make that public within the next week or so, to be able to show whether or not they`re making progress or actually making it worse.
BECK: Ok, Congressman and Senator, I hate to be so harsh on you, because you guys are some of the good guys in Washington and you are trying to do the right thing.
The people are very, very frustrated. You guys in Washington just took another $85 billion away from us last night without even asking us. I don`t know where anyone finds that in the Constitution.
Let me ask you this. Assuming that people in Washington really do want to make a difference, what can we the people do to empower the good people to make things happen and to put country first, as John McCain would say?
GREGG: Well, I think the first and most important thing that people can do is speak to their -- the people who are running for office and say, do you support the Gregg/Conrad, Conrad/Gregg, Cooper/Wolfe proposal which would set up a procedure which would guarantee that ideas for correcting -- and maybe not resolving -- but significantly improving this fiscal plight that we`re facing are voted on up or down.
And so if everybody is held to the test of whether or not they would support such an approach and we get a majority of people elected who`ve at least committed in their campaigns that they would support such an approach -- and it shouldn`t be hard for them to commit to that -- then we can get some progress.
BECK: Congressman.
COOPER: Judd is right. Every businessman back home knows if you can`t measure it, you can`t manage it. And if you won`t measure it, you don`t deserve to manage it.
And that`s the position the Washington is in right now. We need people who`ll tell the truth about the national debt, the national fiscal gap, the annual deficit. And right now we don`t have enough people willing to tell the truth on those key numbers.
BECK: Have you guys both talked to your party leadership and said I`d like to know what our candidates are talking about, when McCain says we`ll make up the difference if you`ve lost a job and you`re going to a lower wage job, that we`re the country, we`re going to make up that difference.
I never even heard of that, where do you find that in the Constitution?
Or you go to Senator Obama and say, we don`t have the money for universal health care? Have you guys went to your own people and said, what the hell are you doing to us?
COOPER: Amen Glenn. I`ve been with Barack Obama. He gets it. Now, it`s difficult for any candidate during the heat of the campaign -- he gets it.
BECK: He gets --
COOPER: He knows this issue cold. He does.
BECK: David -- David, I thought you were giving me a couple of plain speakers.
A guy who says -- who wants universal education and universal health care, Congressman, you`re telling me he gets it?
COOPER: There`s a scored bill. You need to look at it, Glenn. Called Wyden Bennett, completely bipartisan, 16 Senate co-sponsors, it pays for itself, no tax increase. And it covers -- look at it.
BECK: No, no I`m sure it does. Magic money that grows on trees. Senator have you gone to your -- have gone
COOPER: Do your home work, Glenn.
BECK: I have done my home work, Congressman.
Senator, will you -- have you gone to your party and said what are you thinking?
GREGG: Yes, actually, I have, on numerous occasions. And we had actually the Senate leadership signed off on the Conrad/Gregg, Gregg/Conrad, however you want to call it that bill.
BECK: Ok.
GREGG: Unfortunately it got sidetracked when we tried to get some of the House leadership involved and the White House involved. But I believe there is a consensus and an agreement that can be reached here in the Congress to do something if we can back the politics out of it a little bit and set up a procedure which leads to action.
BECK: Ok.
GREGG: The problem here is that when you put policy on the table, everybody attacks it. But if you set up a procedure which requires the policy follow it, then you can get something done. And that`s why we proposed a sort of brack approach.
(END VIDEOTAPE)
BECK: We`ll be back in just a minute with a look at how our sense of entitlement will make us known as the greatest generation of greed in American history.
(COMMERCIAL BREAK)
BECK: Welcome back to our special series "Exposed: America`s Broke."
Of all the debts and the deficits that we`ve run up over the years, perhaps the most important one of all and the hardest one to close is the deficit of trust that we now have in Washington.
I spoke a little bit about that with David Walker, he is the former chief comptroller of the United States of America and president and CEO of the Peter G. Peterson Foundation and also Robert Bixby executive director of the Concord Coalition.
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BECK: Right before I went on the air I met with a guy who is an immigrant to our country. And he -- it`s so close to me today because I -- and he said, you know, how you doing? And I said, fine. And I could just -- just seeing him made me think, I wonder if he`s ever really going to see America at its best with the way we`re treating it right now. We`re selling us down the river and nobody`s really paying attention.
Agree or disagree?
WALKER: Well, America`s for sale. I mean America is mortgaging its future. It`s mortgaging the future of our children and grandchildren. We`ve seen a lot of disruptions here this week and in recent times with regard to the sub-prime crisis.
But what people don`t realize is the same factors that led to this sub- prime crisis with regard to the financial institutions and the mortgage- based securities exist for the Federal government`s finances.
So the real question is, are we going to do what we need to in the short- term or are we going to prevent the super sub-prime crisis which is the federal government`s finances.
BECK: Ok, Bob, the -- do you have access to a new study that shows that Americans are willing to do the hard thing, right or wrong?
ROBERT BIXBY, EXECUTIVE DIRECTOR, THE CONCORD COALITION: That`s absolutely true. I mean, if Americans are told the truth and realize what the stakes are, particularly for their children and grandchildren, they`re willing to make some sacrifices and make tough choices. They`re not being asked of that by the politicians and they`re not being given the truth about our fiscal situation.
BECK: Ok. Here`s my problem. And maybe, I don`t know if either one of you can answer this. My problem is I am willing to do the truth. I am willing to sacrifice for my children`s sake and for my grandchildren`s sake.
But I am not willing to give people another dime. I`m not willing to say, no, you can take my Social Security money that I`m paying every month and pay down the debt or do whatever we need to do. I`m not willing to do that because I believe they`ll spend it on something else.
WALKER: Well, I hate to you Glenn, they`ve already spent the Social Security Trust Funds. I mean it`s really an oxymoron. I mean -- only the government would call the Social Security Trust Fund a trust fund. It`s just not the same as Webster`s dictionary.
What we need to recognize is that ultimately we need to have some tough budget controls because Washington is spending $1.20 or more for every dime that it gets. I wouldn`t send another dime to Washington unless and until there are tough statutory budget controls.
At the same point in time we are going to have to reform Social Security and Medicare and Medicaid, we`re going to have to reprioritize and constrain spending, we`re going to have to reform the tax code and our health care system. We may need more revenues down the road but not until we do these other things.
BECK: Ok, Bob we aren`t getting another dime -- Bob, help me out on this. They`re talking now about lowering our credit rating -- just they were talking about this back in January because of Social Security and Medicare.
But now they`re talking about taking our credit rating and lowering it as a nation, which is the same kind of thing, if you go in to buy a car, if you`ve got poor credit, you`re going to pay more in interest.
And just lowering the credit rating and now they`re really talking about doing it because of what we`ve done in the last week. That takes everything we`ve said about the $53 trillion and throws that out the window. It`s much worse if they lower our credit rating, right?
BIXBY: Sure. There are a lot of things -- we`d have to pay higher interest rates and with the debt that we`re carrying and the new deficits piling up each year, that would be a direct cost to the taxpayers.
We pay about $230 billion or $240 billion a year in interest costs already. It`s about nine percent of the budget. And that`s a direct cost running deficits and interest rates are low. The federal government`s borrowing rate is low.
So if it goes higher, which it would tend to do if we`re going to have to attract capital and have a lower bond rating, then it`s going to cost more, yes.
BECK: David, your pin on your lapel is the Sons of the American Revolution. And we`ve talked about this before. I know you`re an honorable man and I know it drove you crazy to be in Washington and actually be instructed to -- well, just put it on another book, just make another book.
We now have a fourth set of books because of the mess we made. If somebody would have walked into your office and said, oh, by the way, we`re buying Freddie and Fannie and just put it on a fourth set of books.
What would you have said to them this week? What kind of advice from the inside being the chief bean counter, would you have said to these people?
WALKER: Well first, I think Washington is out of touch and out of control. I think Washington did not have adequate oversight and intervention when we had clear warning signals going off.
I would help them to understand that, look, we may need to do some things in the short-term to try to deal with the immediate disruption but we need to start dealing with our fiscal cancer. We need to learn lessons from this to make sure that we don`t allow the same thing to happen on a much bigger scale.
BECK: I`ve asked you this before. And last night I had these two guys on and I got calls about it on my radio show last night. Both of them shifted a little bit and tried to make sure that the Republicans were better than the Democrats and the Democrats were better than the Republicans. And you`ve held these guys up as great leaders on this.
How can -- I mean we`ve got Ron Paul on in a second and I`ve got to tell you something. Ron Paul is going to be mad as hell and there and anybody, there everybody calls him an idiot for saying financial disaster is coming.
How do you get people to move? They`re still not willing to move this week.
WALKER: First the American people need to get informed and involved. The American people need to understand the future of our country, their children and grandchildren are at stake, and you need to ask tough questions, you need to hold elected officials accountable for what they do or failed to do.
It`s absolutely critical, the next president make this a priority. If they do, we can turn things around. If they don`t, we could have a sub super- prime crisis.
(END VIDEOTAPE)
BECK: Back with some final thoughts right after this.
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BECK: So far, and that is a key phrase here, so far estimates are that our government has spent about $800 billion in the credit crisis bailout; and almost $1 trillion.
Now, that`s making Wall Street investors nervous. It`s making investors in America pretty nervous, too. It should make you nervous, for this reason.
Back in January, the rating agency, Moody`s, came out and said, that based on our current course -- I mean, you have to say this with glasses and a nerdy voice -- the United States of America is at risk of losing it`s triple AAA credit rating within the next decade.
Oh, geez.
When you hear somebody say Moody`s and credit rating, I`m looking, honey, where is the remote? But this is virtually unprecedented. And here is an easy way for you to understand what it means.
You have a credit rating, you have personal credit score. If you have a high score, then you`re not only more likely to qualify for a loan, but you`re also more likely to get a much better interest rate than somebody with a low score. Why? Because you`re a good risk for investors, you`ve proven that you know how to handle your finances responsibly. They`re willing to take a bigger risk on you.
Well, the U.S. government has always had the top credit score in the world. We`ve always been the world`s best credit risk and that is why we can sell debt to investors at the lowest interest rate around. But that is before we started promising trillions in dollars in social benefits, like Social Security and Medicare, and whatever else they want to promise now. And also, it`s before we started bailing people out, because their business failed.
Because of those things, our top rating may soon be in serious jeopardy. And if we lose it, the interest rate that our investors will demand, and remember a good percentage of those investors are now foreign countries like China, will have to rise to compensate for that risk. It`s like applying for a credit card.
The worse your credit score, the higher the interest rate. That means that even more of our money will go towards interest payments, which creates a vicious cycle, and leaves less money to our government to fund our government. It forces us to borrow even more; lowers our credit rating even further. And it goes on and on and on.
So how do we stop this slow spiral into bankruptcy? Believe it or not, the first step is closing the most important deficit of them all. That is the leadership deficit.
We can talk about credit ratings until we are blue in the face, but the leadership deficit, if it is fixed in both parties, Republicans and Democrats, until that`s fixed, nothing is going to do any good.
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From New York, good night, America.
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