CEOs call for reforms to entitlements

Head of Caesars Entertainment Corp sounds off


This is a rush transcript from "Your World," January 16, 2013. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST: All right, well, you got the hikes, now give us the cuts -- U.S. CEOs calling on Washington to get serious now about, well, slashing spending, offering their own plan to reform Medicare and Social Security without throwing granny off a cliff. There's a concept.

Caesars Entertainment Corporation CEO Gary Loveman leading that charge, he's here and only here.

And, Gary, hats off to you, because you didn't sort of tink around the edges. You went broadside attacking these problems, beginning with Social Security and Medicare, raising the retirement age to 70, means-testing a lot of Medicare and all of that. That is going to win you friends fast and furious, but your argument was, and the organization's argument was and is, we have got to do something now, right?

GARY LOVEMAN, CEO, CAESARS ENTERTAINMENT GROUP: If the government wants to have a fiscal situation that it can live with that can support growth for the economy prospectively, we have to address the growing expense of entitlements, which today constitute more than 40 percent of government spending and will very shortly be the majority of government spending.

There really isn't any alternative, Neil.

CAVUTO: So, what do you think, Gary, when you hear so many in Congress say leave entitlements alone and rely on revenues, because there are a lot more revenues to be had than spending cuts to be gained?

LOVEMAN: I can't -- I just can't understand that argument.

We, as Americans, put these in place many years ago to support Americans in the later stages of our lives. The good news is, the later stages of our lives now come later, because we're living longer and healthier lives.

So, why would we ever think that these programs should be left untouched, when the very circumstances that gave rise to them in the first place have changed for the better? So, we ought to see this as an opportunity, and not dwell on it as if this is some sort of unfortunate thing we find ourselves talking about.

CAVUTO: Part of your thinking is to think longer term. In other words, when people hear, oh, my gosh, Gary and his group want to raise the retirement age to 70, you are not advocating that right now.

LOVEMAN: Not at all.

CAVUTO: In fact, I think you're trying to assure people who are 55 and older now are -- are sticking by the same rules as they exist now. Those younger phased in with slightly later retirement ages, but that falls on deaf ears. You're going to get called on the carpet for all but throwing granny off a cliff. How do you feel about that?

LOVEMAN: Well, I just think that's a completely unrealistic characterization.

We are suggesting that people that are today 55 and older see no different. If you are under 55 -- I'm now 52 -- nothing would change for the next 10 years. And the change from 65 to 70 for Medicare would not happen acutely. It would be feathered in over a very long period of time.

CAVUTO: Well, Gary, Gary, Gary, maybe we can -- part of a deal here, since you and I are of similar age, could you knock down a little lower so that I could be safe and not have to worry about this?

LOVEMAN: Well, I'm pretty sure that the $13,000 in real terms that you will receive as Social Security recipient will not figure ever so prominently in how you're planning your retirement, Neil.

But I think for folks like us, there is lots we can do to make this program more...


LOVEMAN: It should be more to everyone else.

CAVUTO: OK. That seems to be a no coming from you, Gary, the shared sacrifice I did not want to share with you.


CAVUTO: But in all seriousness, you bring up a very good point, that this is long-term thinking, this is a long-term adjustment, this is a long- term fine-tuning to keep entitlements alive.

And what insults me about this argument, even if you are trying to slow the growth of an entitlement -- in this case, you are just trying to keep it viable -- you are all but, you know, giving Alpo to grandpa and grandma.


CAVUTO: And that is not what you are doing.

LOVEMAN: It's not at all.


CAVUTO: But this is what we run against every time you try to address entitlements.

LOVEMAN: Well, the problem is fundamentally demographic, Neil. So, we are proposing fundamentally demographic responses to it.

It's as it someone came in for an infectious disease and was treated with chemotherapy. We're suggesting that this problem has arisen because Americans are living longer and in better health and hence the government is supporting -- the taxpayers are supporting a larger percentage of one's life. And that was never what was intended, so why not...

CAVUTO: Well, what about more revenues then?

When you have so many in Congress arguing that, look, we actually got only half, almost a third of the revenues we wanted in this latest cliff deal, let's explore more revenues, let's have the rich pay more, and then, then we will address some of these cuts or savings that Gary alludes to, what do you say to that?

LOVEMAN: Well, because it's the wrong instrument.

The economy is very weak. We need to do whatever we can to support job creation and economic vitality. Raising taxes more than was just accomplished in the last go-round here in the few weeks on any category of Americans is not a good solution to a problem that is fundamentally a demographic problem, not a taxation problem.

CAVUTO: But you don't argue that taxes should be part of it. You argue that right now we have got the tax part of it. Let's focus on the spending part of it, right?


And we can ratchet back the level of Social Security benefit that people in higher income brackets receive once they become eligible for receiving them, not withstanding your personal concern about that.

CAVUTO: Absolutely. Absolutely.


LOVEMAN: We can certainly do that. And that addresses that issue. We can make the receiving end of it more progressive. But the last thing we would want to do in a weak economy is continue to increase the level of taxation on people that are above the threshold level today.

CAVUTO: Your group also gets into, as do others, Gary, about the notion that just showing a direction that looks at least more fiscally sound could pay rich dividends, right? Not only will the markets be happy, not that we want to make necessarily the markets jump for joy, but it would show sort of our fiscal cred, and there is a great deal to be said of that. Explain that.

LOVEMAN: There is great concern among people in jobs like mine that the government has lost its capacity to find pragmatic solutions to relatively straightforward problems.

And instead the debate is polarized and largely dysfunctional ultimately. So I think what you are suggesting and I agree with, is that any evidence that Washington is capable of getting on with finding sensible solutions to these issues - it would be encouraging to everyone and would provide a greater level of confidence and stability.

CAVUTO: All well-thought-out ideas. There is enough there to both offend everyone and challenge everyone, which is I think the making of a good idea.

LOVEMAN: Let's hope so.

CAVUTO: Gary Loveman, very good seeing you.

We will talk later how you personally secure a deal that would benefit me, but obviously that didn't entertain you.


CAVUTO: But we will have time alone.

Gary Loveman, thank you very, very much.


LOVEMAN: Pleasure to be here.

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