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Newsmakers

December 6, 2007

Host: Susan Swain

Guest: U.S. Sen. Judd Gregg (R-NH)

Reporters: John Shaw, Market News International,

and David Clarke, Congressional Quarterly

SUSAN SWAIN, HOST: Our guest on “Newsmakers” this week is Senator Judd Gregg of New Hampshire.

As the lead Republican on the Senate Budget Committee, he is right in the middle of all the budget negotiations and debates that have been going on in this town for the past few weeks.

Here to question the senator, David Clarke of Congressional Quarterly, and John Shaw of Market New International.

Mr. Shaw, I’m going to just turn right to you for the first question.

JOHN SHAW, CONGRESSIONAL CORRESPONDENT, MARKET NEWS INTERNATIONAL: Yes, senator. Good afternoon.

The budget year is two months old – the fiscal year 2008 budget is two months old. Eleven of the 12 bills aren’t done. A lot of the federal government is operating under a stop-gap spending bill.

How do you see this year being brought to a conclusion? And what are the elements of a reasonable compromise between Congress and President Bush on the discretionary budget?

U.S. SEN. JUDD GREGG (R-NH), RANKING MEMBER, SENATE BUDGET COMMITTEE: Well, first off, I think it’s unfortunate that we’re at this point. And I don’t think we have to be at this point.

I think it’s a failure, quite honestly, on the part of the majority to bring the bills forward in a timely manner on the Senate floor and to send them down to the president. But they didn’t want those bills to go down, because they didn’t want them to be vetoed.

And so, essentially, we’re stuck with this C.R. and this omnibus situation. How we’re going to resolve it is still unclear.

It really comes down to the issue which is at the core of most of the debate this year in the Congress, which is how we fund our troops who are in the field. We have, obviously, a lot of soldiers, men and women, who are out there defending our country. And they need the support of the Congress and the American people through getting the funds and resources necessary to do their job, whether you agree with what they’re doing or not.

And the president has said that he needs – or the military needs – approximately $50 to $70 billion of what’s known as “bridge” money – money to support the troops, until about the middle of March or April of next year, who are in the field.

And the congressional leaders – Congresswoman Pelosi, specifically, says she’s simply not going to give the president that money without very significant conditions attached to it, as has Senator Reid.

And our position is that there shouldn’t be conditions on funding soldiers who are in the field, that if you’ve got issues with the war, do them separately from actually paying for the costs of paying soldiers and giving them the support they need in the field.

Failure, quite honestly, to give them that support means that the Defense Department will have to raid other accounts in order to basically put operational dollars into the field.

And that has a very practical impact on soldiers who are in the field, obviously, but more importantly on their families who are back home, because you’re talking about significant layoffs, significant contractions in services delivered to families of soldiers who are out of the country defending us.

And that’s not fair to those families to have the Pentagon be put in a position where they basically have to take away kindergarten at some military base, or they have to lay off the civilian employees who are doing the support facilities at some base, because they can’t get the money necessary to fund the troops who are in the field without doing that.

So, this is where the essence of the problem lies. If we could straighten out the funding for the troops in the field, get a bridge fund of $50 to $70 billion, unencumbered with strings on the political side, then I think the rest of the package of bills, which are domestic spending, would come together fairly quickly.

SWAIN: A follow-up?

SHAW: Well, senator, as you know, the last several years have been very difficult in getting the budget passed. When you were chairman of the Budget Committee, you had a plan, you weren’t able to get a final budget resolution. The spending bills were delayed, as well.

Why is it that Congress is having so much trouble over recent years getting budgets passed, particularly when they haven’t been overly ambitious in terms of big entitlement or tax reform, just sort of standard budgets? It seems that in the last couple of years it’s been very difficult to get the budget done.

GREGG: Well, I think in the last year, it’s because we’ve spent – we’ve cast approximately 60 votes and spent almost the entire year debating the issue of Iraq.

And therefore, the agenda of doing the business of the government, passing the 13, or now 12, appropriation bills that are necessary to fund education, health care, farm programs, things like that, were simply pushed off the calendar and never reached the floor in a timely manner. That’s pretty much what happened this year.

In the year that I did the budget, we actually passed the appropriations bill and a budget the first year. The second year we didn’t get a budget, and then we had an election in the middle of the year, and that caused us to end up without getting the appropriations bills done.

But this year, it’s a little different scenario. I think it’s almost entirely the fact that we’ve spent the entire year debating the issue of Iraq on the floor in different machinations. And as a result, the calendar has not been opened up to appropriations bills being done timely.

Also, I think that, the fact that the president has made it clear that he’s set a very strict spending limit on the non-defense domestic side, and our colleagues on the other side of the aisle don’t want to send bills down to him that he would veto, because they’d be over that number.

So they really didn’t want to complete these bills to begin with. And they’ve always sort of, I think, had a game plan in the back of their mind that, if they sent him one great big bill it’d be harder for him to veto it than if they sent him individual bills.

DAVID CLARKE, BUDGET REPORTER, CONGRESSIONAL QUARTERLY: Just following up on the annual spending bills, the president, like you said, has been very firm in his top line for those bills. And Democrats said that’s one reason why they haven’t sent them down, is they haven’t seen any sense that he’s willing to compromise on that.

Do you think that the budget he sent up was reasonable? Or do you think that there should be some spending above what he requested?

GREGG: Well, I think his budget was tough, especially on the non-defense side.

And I would have been willing to negotiate some numbers here in the context of making sure that the first thing we do is fund the troops in the field.

My view is that the first obligation of a national government is to defend the country. And when you have soldiers who are in the field, you support them.

So, in that context, if we – if they were willing to give us the bridge dollars, as I said earlier, if they were willing to support funding the troops in the field, then I’d be willing to discuss – this is just my own personal view – I’d certainly be willing to discuss a number that might be over the president’s base number, but it wouldn’t be that far over it.

But for example, in the health and education area, his proposal cut health and education funding by about four percent. I think I’d be certainly happy to go forward with a freeze.

CLARKE: On the war funding, the main sticking point seem to be whether or not there should be language in there calling for withdrawal of troops, or setting a goal of a date to have them out. But there’s been other language in there regarding the amount of time that troops should serve at home, as well as some other things.

Do you think Republicans are open to any restrictions, so long as it’s not setting a date for troop withdrawal? Or do you think they want a clean war funding bill with no strings whatsoever?

GREGG: The people who are on the ground in Baghdad and in Afghanistan, who are walking the streets there, they don’t expect us to be putting our political agenda on the funds they need in order to do their job. I mean, that’s just not right. It’s not appropriate.

So, no. I don’t think we should be putting any restrictions on that. These men and women are out there defending us. And they’ve taken their oath of responsibility pretty darn seriously, and they’ve put their life on the line. We should be willing as a Congress to give them the support they need.

And if we’ve got another agenda down here, you know, Ms. Pelosi wants to force them out of there in six months or eight months, or Harry Reid doesn’t like the president, and he wants them out of there in a year – let that agenda be debated outside of making sure that these men an women, who are doing such a tremendous job for us and really putting themselves at risk, get what they need.

SHAW: Well, staying on the war funding issue, as you know, several months ago, the chairman of the House Appropriations Committee, David Obey, saying he wanted to stimulate a debate, talked about having some sort of surtax to pay for the war.

Democrats ran away from the proposal. Republicans were very critical of it.

Is Obey wrong in saying that it’s at least worth debating how we are paying for these wars? It’s now $400 or $500 billion for Iraq. And so far, all of that money has been borrowed.

Is it just a given that we have to borrow this level of funds to pay for these wars?

GREGG: No, I don’t think so. I think – I actually thought David Obey’s comments were worth debate.

There probably is some need, in my opinion, to pay for some of these additional costs, either by cutting other domestic programs, would be the approach I would take, recognizing we can’t do guns and butter.

But if David wants to do it on the tax side, that’s a possibility, too. But I do think that’s worth discussion. I don’t think it should be all put on the debt calendar.

SHAW: When you go back to New Hampshire and people talk about the war, do they ask that question about just its fiscal impact on the country? And do people in New Hampshire say that they think it’s worth discussing how the sacrifice should be shared more broadly, in terms of paying for the war?

GREGG: You don’t hear that in that context, no. People, for the most part, are very concerned, very frustrated with what’s been happening in Iraq, although there’s a sense, I think, that progress is being made.

Whether or not the progress is permanent and will be long-lasting is still very much in question. I think most people look at it that way. But they do feel that the surge has made some progress in giving some stability there.

But do they get into an in-depth discussion of how we should be paying for this? I haven’t heard that myself.

SWAIN: Senator, just before we get into some more particulars about the numbers, you cast this as a problem on the part of the Democratic leadership.

The “New York Times” editorial page lead editorial today, “The President’s Cynical Budget War,” they say that “this is President Bush’s lame duck attempt to repair the Republican Party’s threadbare fiscal reputation.”

What’s your reaction to that?

GREGG: It’s the “New York Times,” for goodness sakes. When was the last time the “New York Times” ever wrote anything positive about a conservative or a Republican?

I mean, let’s be honest about it. That’s a liberal paper. It has a very liberal agenda. It’s editorial policy is to the left of most Americans, and certainly those who live outside of the city of New York. And so, I don’t take it too seriously.

SWAIN: So, in the minds of the Republicans who are negotiating, the ’08 elections are not part of this calculation?

GREGG: Well, that wasn’t the question.

SWAIN: Well, it’s repairing the Republican Party’s fiscal reputation. That’s a prelude for the election, I think is what they’re saying.

GREGG: Well, if you’re going to interpret it that way, then, yes. I think it’s legitimate to say that, we, as Republicans, should maintain our historic role as being fiscally disciplined, as being the party of fiscal discipline.

And part of that is to limit the size and the rate of growth of the federal government. That’s always been my primary role as a member of the government, and I think it reflects the people of New Hampshire’s concerns.

So, yes, that’s what I want to do. That’s what I’ve tried to do. I do think we’ve made mistakes in the past.

But on balance, if you look at the first year here of a Democratic Congress, they’ve proposed to increase spending by about $150 billion. They proposed to increase taxes by about $250 billion. And that doesn’t even count some of the significant action they’ve taken in the area, for example, waiving PAYGO on entitlement accounts.

So, I don’t think there’s much question. The Republican Party still remains a party of fiscal discipline, and one committed to fiscal discipline – especially in comparison to what’s happening on the other side of the aisle, as they’ve tried to govern this year.

SWAIN: About (ph) half-way through.

CLARKE: You brought up PAYGO. Democrats have pointed to that rule that they’ve implemented as sort of proof that they’re committed to being fiscally disciplined. The rule basically requires new tax cuts or new spending to be offset by cuts or spending – tax increases elsewhere.

They’ve said Republicans didn’t take that tact when they were in control, and that’s led to more debt.

But you’ve been a critic of the rule, and also how Democrats have implemented it.

Why is PAYGO a bad idea? Why is this idea of trying to find offsets for policy proposals not the way to go here?

GREGG: Well, their position is totally just ingenuous. They use this term PAYGO as if its motherhood – and they claim that as – and they wrap themselves in it as just (ph), as fiscal discipline. But every time the PAYGO has come up, they have waived it on any significant item.

They’ve waived PAYGO, or taken actions which have basically circumvented PAYGO on 13 different occasions this year, totaling $143 billion – that’s billion dollars – of new spending, which should have been subject to PAYGO rules.

So, when on the spending side of the ledger they’re confronted with a PAYGO test, they’ve basically ignored it, and not used it to discipline spending at all.

On the tax side of the ledger, they’re perfectly happy to use PAYGO, or at least they claim they are. However, once again – and I have no problem with them waiving PAYGO on the tax side of the ledger, because I happen to believe that taxes are people’s money, and they should be able to keep it. And it’s a lot different than spending, which is the federal government spending your money, which is something we should be very aggressive in disciplining.

But we should also be saying to people, if you – if we’ve got ways to let you keep more of your tax dollars, you should be able to keep it. But again, on the tax side of the ledger, they’re also about to waive PAYGO on the AMT fix.

So, it really is a – it’s a term of art that they use, and that they claim as their – shows they’re fiscally disciplined. But the substance of the situation is that they don’t use it when they’re creating new spending programs, and they’re not even using it on tax issues, which they agree with, such as AMT.

The only place they’re willing to use PAYGO is in extending capital gains rates, dividend rates and the basic rate and the death tax rate.

They want to make sure that those four items have to – if they’re going to be extended, have to be offset with tax increases. So, it’s basically a mechanism to force tax increases in order to maintain present tax policy on issues that they disagree with – capital gains rates and dividends rates.

But on issues they agree with, such as repealing AMT, they’re not going to use PAYGO. Now, on issues of spending, where they clearly want to spend the money, and they’re not willing to pay for the either with PAYGO.

So, it really is a – I call it Swiss cheese-GO. And I think that’s an understatement.

SHAW: Senator, you’ve been chairman of the budget committee, and now the ranking Republican. And you’ve chaired a couple of subcommittees in the Appropriations Committee, so you’ve seen a lot of the federal budget.

Is there – are there some things that the federal government is doing now that they just should not do? Are there functions that have just, that the federal government has assumed, that just should be removed?

Because, as you say, conservatives have a view of a smaller government, but they oftentimes don’t really specify how it should be shrunk or reduced. So, do you have some broad ideas on that score?

GREGG: Well, I think you’ve got to go where the money is, as Willie Sutton used to say when he robbed banks. And that’s in the entitlement accounts.

The simple fact is that we’ve got entitlement accounts on the books that we can’t afford. We know that we’ve got a – we’re about to be hit with a generation that’s going to retire, which is going to double the number of retirees.

On our present path, we’re going to hit a fiscal bankruptcy of this country, which will be catastrophic. We basically have approximately $66 trillion – and that’s with a “t,” it’s very hard to understand what a trillion dollars is – but $66 trillion dollars of unfunded liability just to pay for three programs. That’s Medicare, Medicaid and Social Security.

What does that really mean? Well, it means that our children and our grandchildren, as those bills come due, because we’ve got this large retirement group called the baby boom generation, that has to be supported.

Our children and grandchildren are going to have a quality of life that’s much less than ours, because they’re going to have to pay such a high tax burden in order to maintain programs that are on the books.

Trying to put it into another perception, or another way to make it more understandable, today, the federal government spends about 20 percent of the gross national product. If you take those three programs alone, those three programs alone will spend 20 percent of the gross national product by about the year 2028. And by about the year 2025, they’ll be up to about 27 percent of gross national product.

So, that means, that if you want to keep the size of the federal government about where it is – which is what we’ve had now for about 40 years, a government that uses 40 percent of GDP and allows the economy to grow, because it’s not overwhelming, the cost to people through tax burden – if you want to keep the government about where it is, you would have to cut out defense, you’d have to cut out education, you’d have to cut out environmental protections, because there would only be three programs you could support. And then even doing that, you’d end up with 27 percent of the economy going to the federal government.

So, we’ve got to address that issue. We’ve got to address the issue of Medicare and Social Security, and to a lesser degree, Medicaid.

And I’ve been trying to lead the fight on this for a long time. We now have a proposal, which I think makes a lot of sense. We’re not going to do it all on the spending side. We’re not going to do it all on the revenue side. We’ve got to have a combination of the two to do it right.

We now have a proposal to approach this, which I think makes sense, which myself and Senator Conrad – the Democratic chairman of the Budget Committee – has come up with. The two of us have agreed on this. We’ve got a lot of co-sponsors on it.

And it essentially sets up a group of people who are members of Congress, who understand these issues, who don’t have to be brought up to speed, along with members of the administration. A very small group says, you – actual, absolutely equally divided, eight Republicans, eight Democrats – you guys know.

You sit down. You figure out the best ways to alleviate the problems. Make these programs more sustainable. Make sure our kids have a better shot at having a decent future.

And then, we will vote your proposal up or down by a supermajority, so that the proposals will be agreed to in a bipartisan way. They’ll be absolutely fair. Nobody will be feeling they got gamed. You’ll have fairness, bipartisanship, and you’ll have an actual vote on what the resolution – or at least a step in the direction of resolution should be.

And we really need to get on and do that.

SWAIN: Such as the base closing commission that takes the politics out of the decision for the members of Congress.

GREGG: Well, that’s right. It basically gives – it doesn’t take the politics out of it, but it gives the members of Congress insulation from the politics, so that they can say, well, these folks reached this agreement. They reached it in a bipartisan way.

Actually, of the 16 members, 12 would have to vote in favor of the proposal. And as a result, you’ve got a situation where other members, who may not want to make those tough votes can say, well, it’s the right thing to do. These folks agreed on it. I’ll vote for this, because it’s a bipartisan and fair effort.

SWAIN: But it sounds like, Senator Gregg, the message to the baby boomers, no matter how you come at it is, expect fewer benefits as you age, whether it’s Medicare or Social Security.

Is that correct?

GREGG: Well, I’m not sure that’s correct, to be very honest with you.

I think we could structure a Social Security system where you actually got a better return on the money than what we’re getting today. So, you might be able to expand the pie faster, so you would be able to maintain benefits.

In the health care system, that’s a big issue. Health care has so many moving parts, it’s very difficult to know how to easily slow the rate of growth.

But what we don’t want to do is set up something which basically undermines research and entrepreneurship, which will hopefully bring the cost down over the years.

So, do you have to shrink the pie? Do you have to give people less benefits? I don’t – I’m not so sure that’s true.

But obviously, that would be part of the initial exercise, whether or not that was necessary in the end. You’d have to find out.

CLARKE: It seems like there’s bipartisan, broad agreement with the fact that there are a lot of challenges facing the entitlement programs, and that something needs to be done. And you brought up your proposal to create a task force.

But it seems to be something that everyone in Washington says, this is a problem. But then, there doesn’t seem to be much movement toward doing something about it.

I mean, obviously, there’s a lot of – no one wants to say there’s possible benefit cuts, or they’ll be tax increases.

Why do you think there hasn’t been momentum? And what do you think has to happen in order for people to start seriously trying to address the issue?

GREGG: Well, that’s why we came up with this proposal, Senator Conrad and I.

Because I think what happens is, somebody comes up with an idea as to how to correct the problem. For example, the president proposed private accounts, which is actually a very legitimate idea, in my opinion.

But that immediately becomes a flashpoint for all the different interest groups around this town, who then send out letters to all their constituencies saying – and sometimes that look like Social Security envelopes – it says, “If you don’t send us money very soon to fight this horrible proposal, your whole Social Security check will be lost.”

And everybody energizes their interest groups around here. And it can be on the left, or it can be on the right. And it can just be people who want to make money off of some scare tactic.

But the practical situation is that, if you put policy out front, and you put it out as an individual senator or an individual member of the administration, you immediately get attacked from some interest group that wants to make a point and generate political points.

So what we decided was, rather than putting the policy out front – because it gets defeated so quickly through this process of being attacked from all sides – that the better thing is to produce a procedure which leads to policy, and have a procedure which everybody can agree is absolutely fair and absolutely bipartisan, so the American people knows that, when the decisions are made by this group of people, it’s not going to be any – nobody’s going to be gamed.

Everybody’s going to have had a fair hearing at that table. All the interest groups are going to have been represented. And the decision of this group will be in the best interests of everyone.

It may affect some groups. Some people may see their benefits reduced. Some people may see their taxes go up. But everybody will have agreed that this is what needs to be done to get it right.

And so, procedure driving policy is the way we’ve decided to approach this, rather than put policy on the table and have it just pecked to death.

SHAW: Senator Gregg, the presidential campaign is underway, and it seems like there has been a fairly minimal discussion of fiscal issues in the campaign. Obviously, the war in Iraq is one reason for that.

But why do you think more conversation isn’t being held on these issues? And what would you like a Republican nominee to be saying to the country about the budget challenges that the next president will assume?

GREGG: Well, it has been discussed. In fact, I’ve listened to both the Democratic and Republican debates, and you do hear a fair amount of it, especially on health policy and on tax policy. So, there is discussion going on.

What I would hope a Republican nominee would say is, A, we’ve got to address these issues, and we especially have to address the issue of entitlement policy. We also should do major tax reform. And B, this is the way I want to do it, and be very forthright.

I don’t see any downside to getting into these issues and discussing them in a forthright way. The American people are pretty darn sophisticated. They know – they know that we’re about to hit a baby boom generation crisis, because most of them – you know, they’ve (ph) got 70 million baby boomers. We all know who we are, and we know we’re going to retire. And we know it’s going to be a problem for our children.

So, people are a lot more sophisticated than maybe some folks think. And they’re willing to hear a substantive, thoughtful discussion on these issues. So, let’s get into it, and let’s do it.

Now, for example, Senator Conrad and I have proposed this bipartisan approach on entitlement reform. Senator Wyden and I, and Senator Bennett, have proposed a major initiative in the area of health care, which will significantly, I think, improve health care delivery, and also hopefully rein in costs. That’s the purpose of it.

And in the near future, I hope, with Senator Wyden again, to be able to offer a proposal that’s bipartisan in the area of tax reform, which would dramatically overhaul our tax laws.

These are all big issues. They all should be addressed. And we’re going to try to put ideas on the table to get people to discuss these things. And hopefully, some of the presidential candidates will react to them.

CLARKE: Being from New Hampshire, do you have any predictions for who’s going to win your state’s primary? As a Republican, I think you support Governor Romney?

GREGG: I do support Governor Romney. I certainly hope he’ll win.

But one thing that’s predictable about New Hampshire is that it is always unpredictable and is extremely – and the electorate in New Hampshire listens very closely, works very hard in getting up to speed, expects to go and hear and listen to and exchange ideas with the candidates – which I think is the great strength we bring to this process, by the way.

And it usually doesn’t make its mind up in a final way until that last week after the Iowa caucus has occurred.

And in this year it’s very interesting, because both primaries are open fields. This is the first time that’s happened in a long time, that there’s no presumptive candidate on either side. And so, you’ve got a very open process.

And in New Hampshire, we have a lot of independent thinkers and independent voters. And they can go into either primary. It’s not clear where they’re going to vote yet.

So, this is all very fluid, and I wouldn’t want to make a prediction. Obviously, I hope that on the Republican side Mitt Romney wins. I think he’s our best candidate. I think he’s a can-do problem solver, who approaches issues on a fiscally conservative way, and I like that.

SWAIN: And we have 30 seconds left.

Did his religion speech help today, senator?

GREGG: I didn’t get to hear it. I read it, and I thought it was excellent. But I think it’s really unfortunate that he had to make it, to be honest with you. I thought we were past that as a country.

I think this sort of under – sub rosa bigotry that’s being sort of fed out on the issue of religion is really not constructive or healthy for our society. I don’t think it should be an issue.

A man of faith or a woman of faith should be able to run and not have to have that faith question.

SWAIN: Thank you very much for your time this week.

GREGG: Thank you.

SWAIN: Senator Judd Gregg of New Hampshire.

(BREAK)

SWAIN: Gentlemen, you’ve been following the budget battles and debates. Why don’t you put into some context the senator’s observations of what the process is all about?

Why don’t we start with you, David?

CLARKE: Well, I think it’s interesting what he’s saying about this, about trying to complete the year-end annual spending bills. It’s always a problem for Congress to finish the work.

But this year, there’s really been sort of two things in play as far as not getting that work done.

The first is disagreement between the president and Democrats over spending. And now, what he’s bringing up is the Iraq war.

Republicans have made it pretty clear that, if there’s not going to be some sort of compromise or a deal made on funding for Iraq, they’re not going to cooperate on the domestic spending bills, even though, as Senator Gregg said, especially in the Senate, there’s probably a fair amount of his colleagues who feel that what the president sent up wasn’t entirely realistic. They would have liked to see a little more spending.

But a lot of this has just been on hold as far as the typical deal-making that goes on, because there’s just – the Iraq issue just seems to dominate everything that comes up on Capitol Hill.

SWAIN: There’s beginning to be talks of pink slips for government workers, if this isn’t resolved. How do you see it all playing out?

SHAW: Well, it seemed like Senator Gregg sketched out the elements of a compromise, in terms of forcing the Democrats to back down on the war spending. And I thought he was signaling that maybe the president would come up a little bit on the domestic accounts.

There’s about $23 billion separating the White House and Congress. The Senate majority leader, Harry Reid, has said, let’s split the difference. So far, the White House hasn’t been saying yes to that.

But I thought Senator Gregg was sort of hinting that, if they made a concession on the war front, the Democrats, that Republicans might come up a little bit on the domestic accounts. And actually, I think Senator Gregg, as an appropriator, probably thinks those funds might do well to come up a bit. So, that seemed to me where he was heading.

SWAIN: Were you surprised about his answer to the question about Dave Obey and payment for the war, and not to continue to add to the overall federal debt?

SHAW: I was. I thought – because I recall the day that Mr. Obey suggested it. And Democratic leaders ran away from that proposal frantically, and Republicans were holding press conferences just announcing it.

And Senator Gregg, I think, gave an answer that is more nuanced than you usually hear, saying, you know, this is a very costly war, and we have to at least think about how it’s going to be paid for. And I thought he went out of his way not to just be dismissive of the proposal.

CLARKE: I think for Senator Gregg and some other Republicans who serve on the budget committees, they’ve been a little bit – they have not been entirely happy with the matter (ph) and the way the war has been funded – not necessarily the totals or the goal of the war.

But for the most part …

SWAIN: Off budget, in other words.

CLARKE: … the funding has become off budget. It’s – they feel that it’s sort of sent up at the last minute, forcing Congress to quickly approve it and not do a lot of vetting.

There’s always a feeling that, whenever you’re approving hundreds of billions of dollars, that some of it’s not needed.

So, I think that Senator Gregg and some other people, Republicans, they’ve wanted a more orderly process for funding the war, even if they agree with the goal and even the funding levels. They just feel it’s been a little ad hoc, and that five years in, that that’s not the way to do it.

SWAIN: Talking about orderly process for funding the war. But John Shaw, you asked the question about the past few cycles. In fact, it would seem that it’s the result of such close balance of power between the two parties that’s made these budget debates so difficult.

Now, we have one more year of budget to go before the election. What is the next year going to be like in this town?

SHAW: Well, unfortunately, it’s probably going to be more of the same.

But I think – I mean, the point I was trying to get at, too, with my question is that, these have not been ambitious budget years. There’s been years where they’ve had massive deficit reduction programs or major tax reform. That hasn’t occurred.

These are just very vanilla years in which they’ve tried to get the budget passed, and they really haven’t been able to. And Republicans, a couple of years ago, showed themselves to be incapable, and Democrats are struggling this year.

So, it seems a more endemic problem. And people point out, that’s the most basic thing a government does, is pass a basic budget. And it’s having – Congress is having a lot of trouble doing its most elemental work.

SWAIN: One specific debate that’s rolled up into a lot of people’s tax planning is the AMT – the patch, as it’s called – which also affects how much money the government has to spend. So, this is something, with the year end coming so quickly. Tax forms have to be printed, and the like.

How is this particular debate going to end up?

CLARKE: Oh, that’s a big question.

SWAIN: If you had a crystal ball.

CLARKE: If I had a crystal ball, I’d probably (INAUDIBLE).

I think that’s just been very tough for the Democrats, because obviously, no one wants to leave for the year without putting this patch in place. But there’s been some division between the Senate Democrats and the House Democrats.

The House Democrats have been very firm that they want that cost totally offset, and that’s really not flying in the Senate. And so at this moment, we sort of still just have a standoff.

I guess the – you know, the guess has been that eventually they’ve have to pass something that’s not offset, and just get it done for the year, because if they leave, there are legitimate repercussions for taxpayers. And no one ants to go home for Christmas and answer to constituents on that.

But as of today, they’re really still sort of just staring each other down over this, trying to figure some sort of compromise that doesn’t seem to be coming up.

SWAIN: Sounds like two more weeks of very late nights on Capitol Hill.

CLARKE: That’s right.

SWAIN: Thanks to both of you for being here this week.

SHAW: Thank you.

CLARKE: Thank you.

END