Melissa Davlin, Idaho Reports:

Thank you so much both for joining us. For those who aren’t familiar, what is the proposal?

Mick Mulvaney:

The proposal is to try and get thirty-three states together to approve a convention to pass a balanced budget amendment to the Constitution. That sounds a little sort of convoluted, but the theory is this, is that you need thirty-four to actually have a convention. But if you get to thirty-three, Congress might step up and say you know what, we really don’t want the states to go to convention because Congress will want to write its own rules about balancing the budget, so they will take over then and do it on their own accord.

Davlin:

Senator Craig, you’ve been talking about this since I think the ‘eighties. In fact, I found a clip of you from C-SPAN from 1992.

Sen. Larry Craig:

Ronald Reagan drove me to it. Yes he did.

Davlin:

When you were on C-SPAN in ’92 talking about this, Idaho was represented by a conservative Democrat, Richard Stallings, who supported this. There have been other conservative Democrats who have supported this over the years. Times have changed. The debt has increased by $30 trillion since then. Why is now the time?

Craig:

Well, now’s the time because it’s a generational issue as much as it is a national security issue. When you deal with the kind of debt structure we now have, at $34 trillion, with interest on debt possibly going to a trillion dollars annually, it is literally eating our budget up and leaving very little resource left for the public and the public need. That’s obviously the first step. The second step is it does damage our national security in every sense of the word. And then it becomes generational. It’s your children and your children’s children that may well experience the instability created by a country that is at or in bankruptcy. So, we have to deal with those in a real sense. You can bring it down to the size of the home itself. The individual home cannot operate in that kind of debt and deficit. It ultimately destroys itself or goes bankrupt, and we are on the verge of that in this country.

Davlin:

Let’s talk a little bit about that, because I hear so much about kitchen table economics, you know, that Idaho families live within their means. But there’s no law stopping me from going down and opening up a line of credit that I can’t afford for a car that I don’t need. I know that because of financial education, not a law. Is a constitutional amendment too big a stick to wield to get the budget in order?

Mulvaney:

The difference in the examples you give is that in your case, you would be out spending your money. You were incurring the debt and so forth. In Washington, they’re spending somebody else’s money. It’s not actually their money, and of course that mentality has given rise to where we are right now. I was reading recently that 77% of the debt that we have today is as the result of bipartisan legislation. So people always ask, oh you know, why isn’t there more bipartisanship in Washington? The problem is we do have bipartisanship in Washington, it’s just on one thing and that’s spending more money. If you’re a Republican and I’m a Democrat, the one thing we can agree on it seems is to spend more money on what you want and in exchange we’ll spend more money on what I want. That’s sort of the grease that makes Washington go, and that’s how you get $34 trillion in debt. There’s no one party that does it to you, it is a bipartisan debt.

Davlin:

I wanted to get your take on that too, Senator Craig. These are these are popular programs, a lot of them that Republicans and Democrats both vote to spend on. How do you get Americans on board when there may be or will likely be cuts to popular programs like veterans’ benefits?

Craig:

Let’s go back to the home analogy. Our debt was costing us not as much and we could borrow at the rate that the Congress borrowed and the feds borrowed over the last number of years, because of zero interest rates. All of a sudden they move the interest rate to quell inflation and the cost went astronomical. The average house in Boise today, if you bought it 5 years ago would cost you in interest alone $1,000 to $1,200 less than if you bought it today. There’s the very real difference. It is a reality of being able to afford. And, I have never seen a program that couldn’t be cut or downsized or reshaped or eliminated altogether. The reason we have all of these programs today is because we can spend somebody else’s money to do it.

Mulvaney:

That’s right. People always say oh are you going to cut this, and you’re going to cut a very popular program. It’s hard to describe to you how many programs are in Washington DC that you’ve never heard of. There’s folks that want to spend more money on things like veterans benefits, and we could if we could figure out a way to not spend a bunch of money on programs that no one cares about anymore. We waste a tremendous amount of money. One of the reasons, the primary reason we’ve done that is that there’s been no fiscal discipline. When you own the printing press you don’t have to have any fiscal discipline. One of my least favorite lines in Washington DC is whenever somebody floats a new idea and I say well we can’t afford it, they always say well we can’t afford not to. We’ve been using that language for far too long. If you actually force Congress to live within the means, they do exactly what you just talked about, which is prioritize the stuff that really people want and need and that helps folks, and get rid of all the stuff that is simply wasteful.

Davlin:

Sure. There are still some people though who are concerned about it being in the Constitution, as opposed to getting there through another means. Whether it’s education, whether it’s voting in people who share that philosophy and would do it organically through their votes. Might a measure like this drown out conversations about responsible spending and getting there another way?

Mulvaney:

No, I actually think this drives conversations about responsible spending.

Craig:

Prioritizing.

Mulvaney:

The state legislature is the same way, I was in the state legislature. The conversations we don’t have now is, okay we’ve got this much money, as a group now what are our priorities? We have cost benefit analysis. Okay we’ll spend it here because this helps the most people. We won’t spend it here because this doesn’t help enough people. Those conversations don’t take place. Those are rational conversations that you really wish lawmakers were making, and they would make it if they didn’t have unlimited money. Those are the conversations people have in the state legislatures, but they don’t have them in Washington DC.

Craig:

Let me also say that our state legislature just convened, and there isn’t a senator, Democrat or Republican, or a House member, Democrat or Republican, that doesn’t come with the mindset that they’re going to borrow a lot of money and spend. They all come knowing they will balance the budget, with the current revenue available. Or if we are in a dramatic situation, and we’ve done it in the past, we might raise taxes for a time for that purpose if it was so important. But not one of them come with the attitude that they’re just going to spend, or they’re going to add a new program or somebody suggested something new and different, and can I get the appropriation to do that. So what I suggest to you is that a constitutional amendment requiring a balanced budget progressively changes the mindset in Washington that Mick is talking about. That transforms us back into a responsible posture of spending based on priority.

Mulvaney:

Keep in mind forty-nine states have this sort of language, and they function properly. So there’s nothing to be said, there’s no argument I don’t think, that says if you put it in the Constitution the federal government couldn’t function. We know that we can because the states do it already.

Davlin:

The states do it, but our budget is significantly smaller than the federal government’s, of course. When you’re talking about some of the cuts we had to make during the Great Recession, at the time our general revenue was about two billion dollars only. Those cuts hurt, to be sure, but we’re talking about much more money, and as you mentioned far more programs on the federal government side. How much does that complicate?

Mulvaney:

It doesn’t. It’s just a question of scale. My guess is – and I don’t know the numbers in Idaho – but if we took a look at the numbers in a in a regular state, what you look at not in terms of numbers, don’t look in terms of dollars, look in terms of the percentage of your state’s GDP. It’s probably fairly significant. It’s not a lot of money because it’s a relatively small state. That’s how you look at it in Washington. Yes the numbers are really big, but on a percentage basis we spending about 22% of our national income and we’re taking in in taxes about 18% of our national income. That 4% is sort of the difference between those things. That translates at every different state level, okay, so you can just take your state. Take 18% and 22% and see where you are. So yes, the federal government is bigger, there’s a lot more programs, but they’re also drawing on a much larger economy for their tax base. So it’s just a question of scale, not a question of sort of the concept.

Craig:

I agree.

Davlin:

I’m also curious too about how this might affect emergency funding in terms of natural disasters. You’re from South Carolina, hurricanes come to mind. For you in Idaho, it’s wildfires and the occasional flood, sometimes snow. One of the reasons we’re able to balance our budget is because in times of emergency, the federal government provides dollars. Whether or not you agree with that philosophically, that’s what happens. How would a measure like this affect emergency spending when we do have a disastrous wildfire season?

Craig:

Well now we’re talking about how you manage the public lands, and how you manage the Forest Service and the BLM.

Davlin:

It all plays in together.

Craig:

Of course it does, 62% of our state is federally owned. If you go back just 20 years to the way it was managed then, we didn’t have wildfires, not of the kind we have today. And if we did, they were put out very quickly because you didn’t decide to let something just burn. You moved in quickly and put it out. The state of Idaho manages about 20% of timber land. They don’t have wildfires, they put them out.

Davlin:

They also proactively reduce fuel loads.

Craig:

And they budget accordingly. The Forest Service is broke today because we quit green sales cutting, and so it has to be dramatically subsidized by the general fund to put out the wildfires of mismanagement.

Davlin:

We can talk about what happened 25 and 30 years ago, but the reality is this is where we are today.

Craig:

I don’t disagree with that.

Davlin:

Are we too far down that road for this specific measure without radically affecting emergency funding?

Craig:

No, I don’t think so, because then we go back to Mick’s point of prioritization.

Mulvaney:

And you also go back to the specific language. Keep in mind, this is a general initiative to start a debate about a balanced budget amendment. There’s all sorts of specific language you could look at when you get to that point. One of the proposals I’ve heard is if we ever have to go to war or we have emergency spending – and most of our disaster relief, we deal with hurricanes mostly in my part where I live in the country, that’s emergency spending – it’s sort of off-budget. And you could have a proposal that says, all right for emergency spending we’ll do it but it takes a two-thirds vote of Congress or a three-quarters vote of Congress because everybody knows it’s that important and it is an emergency, and we’re going to go ahead and spend it. Maybe that’s the rule for incurring debt when you’re dealing with situations like COVID or the Great Recession. So it’s not saying that 100% of the time you’re not going to go into debt. It’s going to say, look, maybe from time to time, if we need that emergency spending, we’ll have a higher threshold. Again, that’s a debate you have once you get a little further down the road on the specific language

Craig:

And Melissa, that’s exactly what we did in 1995 and 1992. There were eight articles in House Resolution 1 and one of those was emergency spending, based on the collective knowledge of Congress as to what was an emergency. War was one of them, and then there were general national emergencies, and the two-thirds majority vote, the super majority vote required to cause Congress to move in that direction. So, it isn’t handcuffs.

Mulvaney:

It’s not handcuffs. It’s interesting, that same report from the Committee for the Responsible Federal Budget, the one that I just mentioned before, it looked at the budget since the 1990s and said if you hadn’t done any tax cuts and hadn’t done any spending increases – even with the emergency spending from COVID and from the Great Recession – we’d have no debt today. None whatsoever. So, the emergencies, although they look big especially – and obviously because they are emergencies, they get a lot of attention – that’s not where we spent. That’s not where most of our deficit comes from.

Craig:

If you’ll notice today when the issue of raising the debt ceiling debate comes – we’re right in the middle of it now, and it dominates Congress because it is a super majority. It does force people to think, and that’s part of that new chemistry we talk about in the mindset of a member of Congress when they know they have to do something responsibly in this area.

Davlin:

Americans keep voting for politicians in both the legislative and executive branches, though, who keep voting for these spending increases. Aside from getting Congress to get in line, how do you get Americans on board?

Mulvaney:

That’s the hardest part. No one in Washington DC has ever lost their job for spending too much money, and that’s a problem. I think that’s because the American public doesn’t realize how much their government really costs them. I think we have a discussion all the time in the balanced budget world about, well do you raise taxes, do you cut spending – I think it’s probably ending up going to be a little bit of both. But if you actually had to raise taxes to pay for the government that you had, I think there’s a lot of Americans who say, you know what, I don’t want that much government. I’m okay with paying a little bit more tax, but I don’t want to pay for all of that government. Why don’t you folks start looking at ways to shrink the size of the federal government, to get it down to the point where we can afford to actually pay for it. But keep in mind, for the last 40 years as the debt to the GDP goes and skyrockets starting about 1980, ever since then people have been getting their government for free. I think if they realized how much it costs they’d ask for a lot less government

Davlin:

We touched on this a little bit before but one of the reasons that this proposal took off a bit in the early nineties was you had conservative Democrats who were on board.

Craig:

Right.

Davlin:

I don’t have to tell you that conservative Democrats are a dying breed nationally. How do you convince a polarized Congress and a polarized country that this is not in fact a partisan proposal?

Craig:

Probably the greatest factor that would drive members of Congress in a bipartisan way to issuing out for the states to consider, a resolution of an amendment, is simply the fear that they would turn that over to the states or the convention to write. I believe Congress would come together as they did in the past to craft that.

Mulvaney:

And there’s another angle. The senator is absolutely right. There’s another angle to it though, which is that some issues that we think are partisan can change. I’ll draw an analogy between what’s happening today on the Southern border. It used to be a Republican issue. Right now, you’ve got Democrat governors and Democrat mayors paying attention too. It’s becoming more and more of a national bipartisan issue. Once the debt really starts to dig in and people are realizing we’re spending more money on debt – just on interest payments – than we are in national defense and it starts to squeeze out other programs, that’s when it might become a bipartisan issue. So it could be both ways. It could be Congress deciding to make it bipartisan because they don’t want the states to decide it, or it could be the voters just looking at it and saying, you know what, this is important to all of us.

Davlin:

Some of the lawmakers in Idaho who are most concerned about federal spending are also most concerned about a an Article V convention of the states because that opens up the Constitution for changes, including the Second Amendment and so many other things. What would you say to those lawmakers?

Mulvaney:

That a properly written legislative proposal does not allow that, a runaway convention. You can have, in fact in many states, if you go to convention and you raise an issue that’s not on the authorizing language, it’s a crime. So, there are ways to narrow the focus of a convention, and that needs to be done.

Davlin:

Are you going to get there?

Mulvaney:

Yeah, that’s the language we are proposing for this. We are proposing a convention just for this one topic. There are other efforts out there to do other things in a much broader convention. That’s not what this effort is about.

Davlin:

Those efforts include things like term limits and other issues that are unrelated. Is this the time? The international community is unstable right now between all of the issues going on in Europe and the Middle East. Is now the time to look at this, understanding that it is a process that would take a couple years?

Craig:

Well, let me suggest this. It wasn’t widely publicized, but about a month ago, Mr. Putin was sitting with some of his oligarchs in Moscow talking about the Ukrainian war and the money we’re pouring in there. He offhandedly laughed and said, well don’t worry about the US. They’re about broke. They won’t be able to afford this any longer. That is the real international question. How does a factor of a nation as important as the United States continue to play an international role of stability in the world?

Mulvaney:

You’re not old enough to remember – but he and I are – how we won the Cold War. We bankrupted the Soviet Union.

Craig:

We outspent them.

Mulvaney:

They were not, their economy could not keep up. They did not have enough money to keep up with us militarily, and that’s what won the Cold War. We’re at risk of losing that war right now. To your other point, you’ve got a situation where, yeah, the world is unstable. It’s unstable during a period of time where we’ve had an unlimited printing press, and that hasn’t brought any more stability to it. So maybe there’s not a correlation between our printing press and world stability. Maybe it lies in other factors

Davlin:

One more question. In ‘92 when you were on C-SPAN, that was an election year. It’s also an election year right now. Is this going to factor in to who you support for president during the upcoming primaries?

Mulvaney:

Well, they’re all friends of mine. I mean, I worked for Donald Trump for a long time. Nikki Haley was sat next to me on the state legislature floor in South Carolina for four years. Ron DeSantis and I served together. So, I’m happily sitting back and hoping Joe Biden isn’t president again. But that’s not because of this issue.

Davlin:

But for the primaries, for you personally, is it going to factor into who you support?

Craig:

No. As long as they’re not Mr. Biden.

Davlin:

All right. Former U.S. Senator Larry Craig. Mick Mulvaney, former director of the Office on Management and Budget and former chief of staff for President Donald Trump. Thank you both so much for joining me.

Mulvaney:

Thank you, Melissa.

Craig:

Thank you.