Democratic senator: We have to put entitlement cuts on table, too

>>> we have moved a bill in the house twice. we should not have to move a third will before the senate gets off their ass and begins to do something.

>> i think he should understand who is sitting on their posterior. we're doing our best here to pass something. the speaker is doing nothing to try to pass anything over there.

>> welcome back to " morning joe ." 21 past the hour. joining us now from capitol hill , democratic senator from virginia , senator mark warner . we also have donny deutsch , mark halperin , john heilemann, all back at the table.

>> all right, governor, let me ask you this, if you went 1,400 days without putting a budget out as governor of the state of virginia , would you not sort of not be in the position to complain about the other side not doing -- today is the 1400th day since democrats have actually passed a budget and --

>> you know, at the end of the day , i think people are tried blaming who --

>> no, no, no, hold on a second. with all due respect, 1,400 days since you guys have passed a budget. we're friends, but you can at least admit that the democratic senate and harry reid is in no position to point fingers at people for inaction, right?

>> we ought to pass a budget and we're going to pass a budget this year. but let's also lack at the fact that there's not a single plan out there. i've been involved in every one of these bipartisan plans that hasn't said, you need about, on the minimum, about $1.2 trillion if you're going to do a new revenue, if you're going to do a $4 trillion deficit reduction plan. i'm all for believing we have boot got to do more entitlement reform, but we have to do more revenues as well. and opposed to going through all of these stupid cuts, not only have we heard about 750,000 lost jobs, but in certain cases, we'll cost the taxpayers money. when we buy ten tanks, we get a volume discount. we'll break those contracts. when you do four years of cancer research , and don't get the first three years, you'll flush that. that's less meat and eggs going to the grocery store , driving up grocery prices. this was set up to be the stupidest of all options. whoever dreamed it up, who knows at this point, but at this point, let's avoid it. we have a plan tomorrow, half cuts, half revenues, but if we can't get that through, let's go ahead and give the president some discretion, so we can mix in some priorities.

>> we don't want to split hairs here, but the president came up with the plan, and finally admitted it this week.

>> senator mitch mcconnell wrote this about the sequester, senator. "the president's been going around warnings of utter chaos if the sequester takes effect. and while i agree that those cuts could be made in a smarter way, and don't like the fact that they fall disproportionately on defense, what does it say about the size of government that we can't cut it by 2%, 3% without inviting disaster? doesn't that make our point?

>> i think we can cut it more than that if you actually try to do it in a rational way, not over seven months of a fiscal year, where you have no ability to choose, i go back to those 975 separate programs in the navy. they're not all of equal value to the taxpayer or of equal value to the defense of the country. anybody that's been a governor, anybody that's run a business, there's a smart way and stupid way to cut back. this is the most stupid of all ways. all i'm saying, we ought to do targeted cuts and ought to do revenues and we ought to put entitlements on table as well.

>> good for you and you have.

>> okay, mark halperin , the fact that it's not done says what about who?

>> that there's no deal. that once the grand bargain fell apart, there's no way to get these things done easily. the logic was, put in things the that both sides like, that it would pass. that these individual deals can't move. and the tax issue right now is huge. i don't think the president would do a deal to replace the sequester that didn't have revenue. and i can't see a revenue deal passing the house that doesn't have major entitlement reform and major tax reform , which is nowhere near being ready to be voted on.

>> so donny deutsch , if you and i are debating in the next election, and i, a senator that voted for sequester and you're running against me, and you say, you slashed this and you slashed -- let's say in ross perot style, look at this chart. i'm going to show you a chart, this is a chart that john barrasso and mitch mcconnell put out. the top line is what happens without the sequester, the bottom line is what happens with the sequester, and it is, jeffrey sykes, professor of economics at columbia helpfully explained the other day, the line after the sequester cuts is actually below what barack obama said we were going to be doing, as far as cuts go, in 2009 !

>> thank you, professor erwin cory.

>> but look at this, though, seriously. so your hair is going to be on fire and you're going to be able to carry the day saying, i just slashed spending?

>> no. i want to throw that back to the senator of virginia . when you say that entitlements are on the table, specifically, you're the entitlement cut guy. go.

>> let's first of all go back to that chart. the reason those lines are so close is that 65% of the budget is not being touched by these entitlements. because that means military pay and personnel, that means social security , that means medicare, that means medicaid, that means agricultural subsidies . i go back to simpson bowles gang of six. we laid out a plan that cut $4 trillion out of our debt. we got the shots from the left and the right. but when you look at the domestic discretionary or the military discretionary lines, those cuts are actually about 8 to 10%.

>> but i want to go to the meat and potatoes. just talk to me specifically, because republicans need to hear democrats saying that. once again, you're in charge of it. you've got the paper in front of you. give me the entitlement cuts.

>> let we start with chain cpi, a more rational way to measure inflation. let's look at raising the cap on social security . let's look at a phased in, raising the age of social security . let's look at means testing , medicare. let's look at combining the various medicaid programs into a single deductible, so everybody's got at least a little bit of skin in the game, in terms of the services they use. let's look at things like graduate medical education , where we've got to make sure we train enough doctors, but there are some excesses in that category. we've got a list of about 12 separate line items that actually add up to hundreds of billions of dollars, that democrats and republicans have agreed on. we also want to acknowledge as we go into the entitlement debate, because health care costs are actually rising at a slower rate than they were projected to raise in 2010 , we've actually made some progress, whether that's the recession or whether that's the beginning of the affordable care act kicking in, there are some bright spots here that never get mentioned in the debate. but there's a whole host of very specific items that i would be in fair of.

>> john heilemann?

>> senator, i keep thinking that this is a -- that we're looking at this thing in isolation. the problem is, every one of these crisis we look at in isolation, we think about the fiscal cliff crisis, this crisis. we have a couple other things that are coming up. we'll have to vote on a continuing resolution to try to keep the government open, in a month or so, there's another debt ceiling vote coming up. stepping away from this deadline on friday, do we, over the course of the next -- as the succession of self-imposed crisis come down on us, do we have the wherewithal and the time to get back to what mark talked about, to get back to a grand bargain? is this chaos going to lead towards that, or is this chaos going to make it harder and more unlikely to get the big deal done over the course of the next two or three months?

>> remember with the macroeconomics, there's more private capital sitting on the sidelines now than ever before. the single biggest thing, holding back that capital and holding back reinvesting in america is us in washington, getting our act together, and doing that grand bargain. we need to do only another $2 billion over the next ten years. if we can't get that done, shame on all of us. it's going to mean revenue and entitlement reforms and yes it's going to mean some of those cuts, but done in a targeted smart way, where you can actually plan for them, rather than having them lump into a seven-month time frame .

>> all right, thank you so much, senator!

>> senator mark warner , thank you!

>> thanks for having you here?

>> you can't judge him, but he does have the courage to step forward and talk about entitlements.

>> that's true!

>> we thank you for that.

>> he has courage!

>>> coming up, a new lawsuit accuses the world's top beermaker of watering down their brew. cnbc's brian shactman joins us now.

>> talk about a scandal.