With his Yankee pragmatism and the liberating feeling that comes with not seeking re-election, Sen. Judd Gregg has suddenly found himself the linchpin of some of the hottest fiscal issues in Washington.
The veteran New Hampshire Republican is playing a key role in the Senate debate over legislation to overhaul financial institution regulations and to tighten oversight of the Federal Reserve. He has teamed up with Oregon Democrat Ron Wyden to push for major tax reform. And if President Barack Obama’s Fiscal Commission succeeds against great odds, it will be in no small measure due to Gregg’s expertise, patience and commitment to fiscal reform.
Gregg is renowned for his flinty New England bluntness, as when he explained recently that the only way for a commission to succeed in reducing the long-term costs of popular health care and entitlement programs is for Republicans and Democrats to “hold hands and jump off the cliff together.”
During an interview with The Fiscal Times Wednesday, Gregg offered a suggestion that could split the bipartisan commission before it even settles down to work and infuriate liberal groups: Look for savings in Social Security to help reduce the long-term deficit instead of in Medicare and other health care programs that already have been cut under the new health care reform legislation.
Gregg says that Social Security is the best place for the commission to start because the problem is relatively simple to identify and the solutions are well known, even if winning support for them would be extraordinarily difficult.
The Social Security Trust Fund contains $2.5 trillion, but that's a misleading figure. Social Security trustees estimate that Trust Fund will begin to show cash flow deficits in 2016 without action. That means those collecting will get more than is being paid in by workers, depleting the fund. And while the trust fund won't be exhausted for decades, it will eventually be siphoned off to the point where only 75 cents on the dollar will be paid to beneficiaries, probably by 2041, without action.
“The best opportunity for consensus is on Social Security,” Gregg said. “There are very few moving parts; everybody understands what they are. Everybody knows how to fix it and this commission is well positioned to do something in this arena.”
“The big issue that will send the right message is on Social Security and I’m going to focus on that one,” he added. “I do believe there’s fertile ground for bipartisanship on the issue of how you get Social Security solvent in the next 50 to 75 years.”
Gregg , 63, a former governor of New Hampshire, is completing his third term in the Senate. He decided not to seek a fourth term following what proved to be a highly awkward incident in which he was nominated to become Commerce Secretary by President Obama but withdrew his name on Feb. 12, 2009. Without another election campaign to worry about, Gregg has been free to speak his mind.
Gregg signaled that he doesn’t think much of White House Budget Director Peter Orszag’s suggestion that if the commission can’t forge agreement, it should simply let co-chairmen Alan Simpson, a former Republican senator, and Erskine Bowles, a former Democratic White House chief of staff under President Bill Clinton, make recommendations.
“The purpose of the commission is to create bipartisan consensus,” he said.
“If we can’t reach agreement, that’s a statement of the ineffectiveness of the commission or knottiness of the problem and the need to address it another way.”
Bipartisanship is something that Gregg has been known for throughout his career, although it is something that has fallen out of fashion on Capitol Hill. Gregg and Senate Budget Committee chairman Kent Conrad, D-N.D., worked for two years to come up with a statutory budget commission – only to see it fail to pass the Senate. That led to Obama’s decision to appoint a commission with far fewer powers than the one advocated by Conrad and Gregg. Conrad sees Gregg as “substantive and practical, just what you’d want in a senator.”
Gregg, the ranking Republican on the Senate Budget Committee, went back and forth on the deficit commission idea for years, beginning during a trip to Bolivia and Ecuador three years ago, they both said. They had many meetings and disagreements along the way, but managed to forge a deal. “I win when I’m right, he wins when he’s right,” Conrad said with a wry smile.
Gregg used his experience and standing to dissuade his Senate colleagues from supporting what he viewed as a dangerous amendment this week during debate on financial reform.
Sen. David Vitter, R-La., had proposed an amendment to grant the Government Accountability Office sweeping powers to audit monetary policy decisions made by the Federal Reserve. Gregg argued that the amendment would establish a dangerous policy that would inject politics into the U.S. currency. The measure failed Tuesday by a vote of 37 for and 62 against. Former Sen. Warren Rudman, whom Gregg succeeded in the Senate, said Gregg is a worthy successor on the deficit issue, which Rudman also championed as part of the Gramm-Rudman-Hollings deficit reduction plan in the 1980s. He says Gregg is “to the right of center, conservative, but not ideologically conservative.”
That gave him the ability to negotiate, most famously with the late Sen. Edward Kennedy, D-Mass., on the No Child Left Behind education law. Gregg, a big fan of both presidents Bush, was leading George W. Bush’s agenda on education and Kennedy was leading his own. But they came together in the end to pass the law.
Gregg and Wyden also met over a period of years to create a new bill for tax reform. The bipartisan Tax Fairness and Simplification Act takes Wyden’s progressive stances and Gregg’s pro-business conservatism to come up with a bill that provides tax relief to families making up to $200,000 annually while instituting a single corporate rate. It reduces the number of individual tax rates to 15, 25 and 35 percent and eliminates the Alternative Minimum Tax.
“Senator Gregg kept coming up with ideas that hadn’t occurred to me,” Wyden said, describing how they kept the talks going for two years. One Gregg idea was to not allow indexing the business tax write-off for debt, Wyden said. “As soon as the words were out of his mouth, I thought it was a great idea,” Wyden said.
Gregg says his years of being governor of New Hampshire, between 1989 and 1993, taught him to compromise and make pragmatic decisions. He’s also been in the Senate Republican leadership for 16 years – the longest of any current senator, he said.
“I think having been a governor, you can’t be ideological – you have to be practical,” he said.
He still rises early every day and goes to the Senate gym by 6 a.m. before getting into the office by 7:00 or 7:30. He says that while it’s no fun (“Suffering I must go though before the start of the day”), he does it anyway.
He is leaving the Senate at time when his issues – the deficit, debt and taxes – are coming to the fore, but he says there will be others to carry the torch. And he denies that pressure from the Tea Party on one end of the ideological spectrum and the liberals on the other, forced his decision to retire from the Senate. He said he enjoys the Senate, but that it was time to move on. He does, however, think that the current atmosphere is making it harder for moderates like himself to survive politically.
“The hyperventilating news cycle causes everybody to try to outshout the other person, and you couple that with blogosphere and people who are at the margin when it comes to issues are often the loudest voices,” he said. “Substantive discussion of complex issues isn’t occurring. I think that’s bad for the country.”
