Cheney Transcript
By Kudlow's Money Politic$
Here is the transcript of my interview with Vice President Dick Cheney
LARRY KUDLOW, host:
Mr. Vice President, Mr. Cheney, thank you very much for coming to KUDLOW &
COMPANY. I appreciate it. You know, on the front page of this morning's
newspapers, Republican defections on the budget, and then on the business
pages, oil. I'd like to cover both. Let me begin with the budget, if I may.
Vice President DICK CHENEY: Sure.
KUDLOW: Some leading Senators, Republicans, Senator Smith of Oregon, stopping
the Medicaid savings, Senator Coleman stopping the community development block
grant savings, Senator Chambliss trying to give the agriculture welfare queens
even more than was budgeted. Why is this? How are you going to meet your
deficit targets if all these senators, some of them leaders and influential
ones, are stopping you?
Vice Pres. CHENEY: Well, I think we'll get there. This was a Senate and
House act. The House did a better job on those particular items. They, in
fact, supported the Medicaid reductions and supported the entitlement changes
we needed. The Senate, obviously is its own independent body. We don't have
a veto over this process, but we work closely with it. I was up there for
about six hours last night, and we got the bulk of what we asked for, but
we've got to go to conference not between the two houses. I think we'll come
up pretty close to our original request.
KUDLOW: I mean, it's interesting to me. The supply-side tax cut experiment
of June '03 has played out beautifully. The economy is growing rapidly, tax
collections are rising about 10 percent right now. But there's still this
chronic overspending which at last count, I think year to date, fiscal year
date, is about 7 percent. And so it just seems to me there has to be a huge
premium on holding down spending, because economic growth and tax cuts are
threatened by that, aren't they?
Vice Pres. CHENEY: They are, and fiscal restraint's very important, and if
we want to keep tax rates as low as possible, which we absolutely do--That's
been the key, as you say, to our economic growth--then we've got to be tough
on spending. And the budget the president submitted is a good budget. It's a
tough budget, and it had some entitlement reductions in it as well as what
needs to be done on discretionary spending. There's about a $5 billion
difference on the discretionary spending cap now between what we recommended
at $843 and the Senate passed at $848. That goes primarily to that Medicaid
proposal you talked about. But we'll work on that in conference, and the
House is at our level, so we're not far off in terms of the aggregates of
where we need to be.
KUDLOW: With respect to these issues--Medicaid, bond subsidies and so forth
and also the great transportation bill, which is looming out there--is there,
in one of these old beautiful desk drawers, a dusty old veto pen someplace?
Vice Pres. CHENEY: Yes, sir. If we get a highway bill that's higher than
the $283 that was the agreed-upon number, it'll be vetoed.
KUDLOW: Yeah.
Vice Pres. CHENEY: And that's what we got through the House. The Senate
agreed to it. At the last minute, they came in and tried to raise the funding
level in the Senate, but they know that $283 is it. We've been there now for
two years. This bill's been hung up, and it has not gone forward because the
president's been very tough, and he said, `I said 283. I meant 283. You send
me something bigger than that, it's going to be vetoed.'
KUDLOW: All right. Let's look at oil for a moment, if I may. Oil is once
more marching up towards $60 a barrel. A lot of private-sector and Wall
Street economists are marking down their economic growth and raising their
inflation estimates. My question to you, sir, is, are White House economists
doing the same thing? Does it now look like slower growth ahead as a result
of this oil spike?
Vice Pres. CHENEY: I haven't seen that yet, Larry. We watch the same
forecasts I think everybody else does, the blue chips and so forth, and
obviously $60 oil begins to bite, have some impact on the economy. On the
other hand, oil is much less important as a total part of our economy than it
was 15 or 20 years ago. And we're still well below the all-time high in terms
of the real ceiling when you allow for inflation. We have not gotten yet to
the highs we were at back in the early '80s. So we think we'll be able to
weather this, but there's no question energy is a problem, oil in particular.
We did get through the Senate this week, I think, a major success story,
approval to go forward on development of ANWR. We've been fighting for that
for years. This is the first time we had the votes in the House and Senate to
get that done.
KUDLOW: Is it possible that the ANWR drilling fields could yield twice as
much as experts think, the same way the Prudhoe drilling field has? I
mean, when they started Prudhoe--What?--in the late '70s, people were talking
about a nine-month shelf life. It turns out the new estimates have gone from
nine billion barrels of oil to 20 billion. Is it possible that the ANWR field
could produce the same unexpected windfall?
Vice Pres. CHENEY: It's possible. I don't want to--you can't build your
policies, obviously, based on hope, but the fact of the matter is, when we
originally back in '79 and 1980 established the Arctic National Wildlife
Reserve, we set aside a portion of it for possible petroleum development
because we think, in fact, there are oil resources there. There's only been
about one well drilled on it, so there's a lot we don't know here about it
yet, but the estimates are that we should be able to produce at least a
million barrels a day out of it. That's very significant. Obviously that's
about 5 percent of our total consumption today. That's plus. That's oil that
would not come from overseas.
The other thing it's important to remember here, too, is what's happened over
the last several years is our technologies continually improve, and we're able
to recover more and more out of fields than we could previously.
KUDLOW: At cheaper rates.
Vice Pres. CHENEY: Cheaper rates. Whereas you used to get maybe 20 to 30
percent of the oil that's there actually recovered, we're able to steadily
improve on that. So we'll get significant resources out of Alaska, as we
should.
KUDLOW: Are you interested that some state legislators, most notably
Virginia, are now making noises to start drilling their own oil off the outer
continental shelf, the OCS? I mean, that's kind of taking matters into their
own hands, but it could produce more power.
Vice Pres. CHENEY: Yeah. Well, you've got to recognize that as a nation, we
don't drill off the East Coast, we don't drill off the West Coast or the big
areas of the country that are off limits. A lot of areas should be off limits
for environmental reasons and so forth. But the fact of the matter is, there
are significant resources out there we've never developed. We've made other
decisions. When we get to $60 oil and gasoline prices well above $2 a gallon,
I think people may take a more realistic look at what our priorities are.
KUDLOW: All right. Let's turn to Social Security, which is a constant
headline day in and day out. What is interesting to me is, in recent days,
I've seen a whole spate of polls that basically show the public clearly
recognizes there's solvency problem with Social Security. Has President Bush
really won this first round? The Democrats originally denied any need to deal
with Social Security on an urgent basis. Has he won this first round?
Vice Pres. CHENEY: I think he has. But I don't think of it in terms of
winning and losing. What we did--the president set out with a very explicit
mission in mind. He decided we needed to address the Social Security problem,
and he's done, I think, a very good job, because he's very aggressive, going
out on the stump. He's been in maybe 20 states. It's State of the Union time
by the time he finishes next week talking about the problem, and the polls
show the vast majority of Americans understand there is a problem with Social
Security in the sense that we made promises that have never been funded, and
we need to address that issue.
The other thing I sense when I spend time on the Hill and when I'm talking
quietly with members of Congress is, I think, in fact, there's a recognition
on the part of some of our friends on the other side of the aisle that indeed
there is a problem that does need to be addressed. And the Senate this week,
among other things, passed a resolution 100-zip laying out the facts with
respect to Social Security and with the shortfall, which does, in fact, exist.
So there's, I think, growing consensus that there is a problem that has to be
addressed.
KUDLOW: Well, speaking of corralling some Democrats to support a Social
Security reform bill, which I assume will include personal savings accounts,
has anyone given any thought to enlisting former President Clinton, as you
enlisted him in the tsunami effort? He did talk about the urgency a few years
ago. He did talk about private savings accounts. You seem to be enjoying
good relations with him. Is he a potential ally in this fight?
Vice Pres. CHENEY: Well, we haven't had any discussion about that, but maybe
once we get through--he finishes up with his tsunami assignment, he'll be
ready for other duty.
KUDLOW: All right. I just thought I'd put that on the table. So you
wouldn't rule it out necessarily?
Vice Pres. CHENEY: No. I think I really believe, Larry, that eventually
there are going to be a number of Democrats who are going to be active
participants in this process. I think the notion that they would turn their
back on this problem and say to the American people, `One, there's no
problem,' or `We're not going to step forward and be part of figuring out what
the solution ought to be,' I think that's a loser for them. And Harry Reid
was out in 1999 talking about private accounts. The fact of the matter is,
This is a significant problem, and we need to come together as a nation and
solve the problem.
KUDLOW: Is the price of gaining some extra Democratic votes for eventual
passage an increase in the Social Security wage cap; in other words a tax
increase? Is that the price? Is that why it's been put on the table?
Vice Pres. CHENEY: What we've done is we've said, `Look, let's put
everything on the table. You got an idea? Bring it on. We want to hear from
you.' And there's a lot of intellectual ferment out there that I think is
exactly what we wanted to create. And we've got a lot of old ideas that have
been around for a long time such as raise the retirement age or increase
taxes. The interesting proposition came forward in the last week by Robert
Pozen in terms of the different concept about how you'd address the
indexing question. You can go back and look at ideas in the past from Pat
Moynihan, Tim Penny, other Democrats who have been involved. So I think
there's a good healthy debate started. What the president's said: Put
everything on the table. He hasn't endorsed any one particular solution other
than personal savings accounts. We believe that ought to be a part of any
final resolution here. But, you know, we really want to have a wide-open
national debate. We think we need to have that kind of debate with the
Congress as well before you come to a consensus.
KUDLOW: What do you say to the critics of this wage cap business? I mean,
after all, when you do the math, a wage cap increase would punish successful
earners, would punish small businesses up to $10 million, according to some
estimates, would actually overturn the effects of the tax cuts of 2003 and by
some calculations would roll back economic growth incentives, kill jobs. I
mean, what do you say to that?
Vice Pres. CHENEY: Well, those sound like good arguments against it, Larry.
I'm not here today to endorse it or support it. The president has not
supported it. Again, though, what position we need to be in, when somebody
throws something on the table, we don't want to start--reject this, reject
that. Now is not the time to do that. Partly, we'd get involved in
negotiating with ourselves, and it also discourages people from coming forward
to being part of the process.
Now this is an issue that has been very, very difficult for politicians to
deal with over the years. We did it in 1983 when you and I were here
previously, got a good package that basically was passed on a bipartisan
basis, Tip O'Neill involved, President Reagan and so forth. We need to be
able to produce a package again this time. There's some obvious things we
think ought to happen, personal retirement accounts. There are other things
that you and I, I'm sure, have strong views about. I'm in the position that
the president's in, which is bring it up, put it on the table. We're not
going to yell at anybody for putting out an idea that we don't necessarily
support or agree with. And we aren't going to begin the process by rejecting
all kinds of options out there. Let's start talking about it.
KUDLOW: One of the options out there, as I'm sure you know, is a
Ryan-Sununu bill, which is a bold proposal. Take all the employee payroll
tax...
Vice Pres. CHENEY: Right.
KUDLOW: ...and put it right into private savings accounts. It's been scored
by the Social Security actuaries as very sound. Surpluses would reappear in
2025, and all the unfunded liabilities would disappear after that. It's the
ultimate lockbox. I mean, individuals would hold the key. The government
would be put out of commission on this. I'm surprised you didn't go for the
Ryan-Sununu bill.
Vice Pres. CHENEY: Well, we haven't gone for any one bill yet. I had
Congressman Ryan at this very table this week talking about his proposal
together with a number of other members from the House. There are a lot of
ideas out there kicking around. Charlie Stenholm supported one in the past,
and Jim Colby. You know, there's a long list, and we want them all on the
table as we begin this process. And I think you have to have that kind of
open process if you're going to get people to buy into it.
KUDLOW: All right. Another one, Senator Frist appeared on KUDLOW & COMPANY
last week, and he had a side-by-side comparison. He used the thrift savings
plan here in Congress in Washington...
Vice Pres. CHENEY: Right.
KUDLOW: ...which, over the life of the plan, 1987 to 2004, including the big
market crash of 2000 to 2002, still, after inflation, 6.5 percent per year
rate of return. And then they looked at the internal rate of return of Social
Security, 1.6 percent.
Vice Pres. CHENEY: Exactly.
KUDLOW: Why aren't people in the administration selling private accounts by
showing side-by-side, this is 6.5 percent, and this is only 1.7 percent. I
mean, wouldn't that crank up the younger people, get them out there and
saying, `Hey, this is what we want'?
Vice Pres. CHENEY: I plan to do exactly that on Monday when I'll be out in
Bakersfield, California, with Congressman Bill Thomas, the chairman of the
Ways and Means Committee. He and I are going to go out and do a joint Town
Hall together. I just went over those numbers this morning. You're right. A
thrift savings plan, five different options and alternatives range all the way
from a little over 4 percent to almost 11 percent return over the last 10
years, depending on which plan you pick. The fact of the matter is, it works.
It works very well for federal employees, members of Congress. We've also got
a lot of plans out in the country where state and local employees are not in
Social Security. They're in separate plans very similar to the thrift savings
plan resembling the kind of option we want to make available to Americans born
after 1950.
Again, it's important to emphasize, if you were born before 1950, you're
already retired, about to retire, the plan is going to be the same for you.
There's going to be no change in your status. But for that younger
generation, folks who know that we've never funded the promises we've made to
them, they have, I think, a right to a system that will work for them, and
personal retirement accounts provide a big part of the answer.
KUDLOW: I mean, the substitution of market-generated benefits is much more
reliable than government-generated benefits. I mean, that's the whole history
of it.
Mr. Vice President, we only have a few seconds left. I want to ask you,
there was a phenomenal column in The Wall Street Journal yesterday or the day
before by Leslie Gelb of the Council on Foreign Relations who coined a new
term: Cheney envy. And basically a lot of people are envious, not only at
the tremendous success of the president's policy to spread democracy through
the Middle East and worldwide, but also your honchoing internally of those
policy-type issues. Let me ask you, sir, with Cheney envy in mind, I know
you've closed the door about running for president, but if the president
himself were to ask you to run, as the steward of the Bush-Cheney policies,
the freedom and democracy abroad, the tremendous economic and domestic reforms
here at home, if the president asked you, would you reconsider your
door-closing on a race in 2008?
Vice Pres. CHENEY: I've made it very clear, Larry, that my tour here is tied
to him. I agree to come back to government. I've had a great 25-year career.
He persuaded me to come back after eight years in the private sector. I've
loved it, hadn't regretted it for a minute, but I'm here to serve him as long
as he serves. Now I looked some years ago myself at the idea of running for
president. I decided then not to do it. I came back this time and work with
him in part because I'm not running for president in '08, because my agenda is
his agenda. I think if I were a candidate, then you'd begin to get the
traditional divisions develop inside the West Wing, the president headed down
one road and the vice president worried about how he's being received in
Ottumwa, Iowa, and the Iowa caucuses four years hence. It doesn't work that
way.. It's worked very well for us. I'm absolutely committed to doing
everything I can to help him succeed, but I'm also committed four years from
now. I don't plan to be here. I'm going to be out on the road or back with
my grandkids or fishing streams I've not yet fished.
KUDLOW: All right. Mr. Vice President Cheney, thank you for coming on
KUDLOW & COMPANY.
Vice Pres. CHENEY: Thank you, Larry |
