David Gergen is a CNN senior political analyst. David, the debt commission is dealing with proposed changes like the ones I just talked about as well as changes to social security, the age at which you get it. Taxes, Defense spending, every single one of these, David, are highly charged issue.
Listen to the commission's co-chairman Erskine Bowles and what he said this week.
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ERSKINE BOWLES, CO-CHAIR, COMM. ON FISCAL RESPONSIBILITY & REFORM: Solutions are all painful and there's no easy way out. I think for many years, elected officials have been were worried they would be punished if they made the tough decisions.
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VELSHI: David, what t does the president - what has Congress do with this now? Because there are absolutely tough decisions that come out of this commission. It's tough suggestion.
What chance have these suggestions to bring down the deficit and bring down the debt got of passing and being implemented? DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Well, they've got a heck of a lot better chance today than they did six months or a year ago, Ali. I think the one thing we can say about this deficit commission, while it did not achieve the 14 out of 18 votes it needed in order to make a formal recommendation to the Congress, it did build a healthy majority. It got 11 out of 18 members of the commission voted in favor of this whole package, and that was a significant step forward. It really has put the deficit high on the agenda for next year.
There is no way the Congress and the president can dodge next year because the American people are now fully alerted to the fact that these are huge problems coming at us very quickly, and if we don't want to go the way of what's going on in Europe, with a Greece or an Ireland or possibly Portugal and all the rest, we've got to get our act together.
So I think they've made a lot of progress, and you've got to give them credit for that. What has been disappointing to me, frankly, is that the president, during all these deliberations, has been pretty much on the sidelines. Yes, he set up the commission, deserves credit for that. But he -- I think he could have taken a much stronger role and gotten even better results had he gotten more actively involved.
VELSHI: Let's talk about this with Christine Romans, my co-host. She -- Christine, you know that it's hard -- we often hear that it's hard to do the math on this, to cut taxes, which Republicans want to do, or extend certain tax cuts and cut them elsewhere, to cut down the deficit and the debt, which many Americans share, but certainly Republicans rate that as their highest financial priority for the country, and to deal with this economy's, with high unemployment. So how do we deal with this without setting something else off track? I think if we've learned anything in the last few years, that everything you do has an effect on something else in the economy.
ROMANS: And then an effect on something else, and then it keeps going, and you don't really always know what the unintended consequences are breast cancer be. You're right, if you cut too much too quickly, do you hurt a nascent recovery here? The whole point, from all these people who are sitting around that table and discussing this, is how do you juice the economy and help jobs in the near term while still addressing structural problems in the longer term, and doing both of those things -- I mean, I think you've heard some of the members of the commission start talking about, I think this could -- this could lay the groundwork for good jobs growth. They're starting to talk about it in the terms of jobs growth eventually. So that is -- it's a discussion, Ali, that's been happening all over the globe. How do you juice the economy in the near term and tighten the belt at the same time --
VELSHI: Right.
ROMANS: -- in the longer term? It's a very, very difficult line to walk.
VELSHI: For those that don't know what's in this thing, Jeanne Sahadi and the team at Money.com have got a lot of detail on it. But Jeanne, I like this because it tells you there are ways to cut the deficit and the debt, but it tells you that they're going to be painful. Give us some highlights. There are some tax increases. There's a discussion about taking away the mortgage interest credit for people. There's a discussion about all sorts of things that we hold very dear.
JEANNE SAHADI, SR. WRITER, CNNMONEY.COM: Sure. Broadly, what the commission is recommending is to overhaul the tax code, which is not a new recommendation. Tax experts have wanted to do it for a long time. And a big piece of that is to eliminate all the tax breaks we know now, which, yes, includes the mortgage interest deduction, but also hundreds of others, and then only add a few back in as lawmakers decide is judishish -- sorry, judish -- judicious.
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SAHADI: One of them would be the mortgage interest deduction, but it would be back at a reduced rate. They recommend only allowing the people to take the deduction up to $500,000, as opposed to $1.1 million loan, and also to only take the interest deduction on a first home and not a second home. Yes, it's not going to make home owners happy or the real estate industry, and there's going to be a lot of lobbying against it. But it is really just one of the many things that has to happen in order for our tax code to get simpler, to lower income tax rates. To do this, they're going to use a lot of them savings from reducing tax breaks to lower everybody's income tax rates quite dramatically.
GERGEN: Yes, but Ali two points. One is, you can do both at the same time. The whole point of the deficit commission is to pass these deficit reduction bills next year but don't have them kick in for a couple of years. And the theory is, of course, that will send a signal to the markets that we're serious about deficit reduction and it will be a tonic to economic growth. It will help produce jobs, even as you do some other things to create jobs.
But I want to disagree with the notion about how painful this deficit commission proposals are. I think they're rather mild, actually. They're very extended out. They come in -- you know, in terms of raising the retirement age to 68, that doesn't happen until 2050. And this plan doesn't even balance the federal budget until 2039. That's a very gradual, you know, slope, glide path. And you -- and they're talking about narrowing deductions, not getting rid of them.
This is not -- yes, it's going to put more of a tax burden on the upper income. But if we do this right, we get spending under control, there are a lot of upper income who would say, Yes, it's time to do that to save the country.
VELSHI: Right. Excellent. Good conversation to all of you. Thanks so much, David Gergen, Jeanne Sahadi. And Christine Romans will be back very shortly.
Transcript from CNN's your Money Aired December 4, 2010