[BARACK OBAMA, AUGUST 2, 2011] This compromise guarantees more than $2 trillion in deficit reduction. It's an important first step to ensuring that, as a nation, we live within our means.

[SUITERS] That was President Obama after he signed the compromise bill to raise the country's debt ceiling. It came after a very heated battle, and now Democrats and Republicans will try to determine where those spending cuts will come from. And what will it all mean for energy spending here in the U.S.? Joining us for this week's MIX, former Democratic Senator Byron Dorgan of North Dakota. He was part of the Senate leadership for 16 years. He also chaired the Senate Subcommittee on Energy Spending. And former Republican Senator and Majority Leader Trent Lott of Mississippi. He served in the Senate for 19 years. Both former senators are cochairmen of the Bipartisan Policy Center's Energy Project. They are also senior advisers to law firms that represent energy companies, and, gentlemen, thank you both for taking time with us today.

[LOTT] Glad to be with you.

[SUITERS] The bill to raise the debt ceiling calls for $2.4 trillion in spending cuts over 10 years. How much of that will fall on the Department of Energy?

[DORGAN] My hope is that, with respect to energy, there's going to be an understanding there's a difference between spending and investing. Most of what we want to do to move this country towards greater independence, or less dependence on foreign oil, and move towards electric vehicles and move to explore other forms of energy, most of that is very important investment for the future of the country. I don't think there's a way of knowing what's at risk, but I think anybody that cares about almost anything ought to understand, everything's vulnerable, as this supercommittee begins to get moving.

[SUITERS] Senator Lott, before we get to the supercommittee itself, the debt deal includes $917 billion in cuts just to begin with. Then, beyond that, the special committee in Congress will try to come up with $1.5 trillion in cuts. What are the odds that that committee votes to raise revenue by repealing tax breaks for the oil and natural gas sector? This has been a hot-button issue, especially for Democrats.

[LOTT] With regard to, you know, what this supercommittee will do, the possibility that they will look at oil and gas issues, whether you refer to them as subsidies or tax breaks, would be on the table. And they need to be careful how they do that.

[SUITERS] Electric vehicles and wind energy -- both require subsidies to be viable in the current economy. How vulnerable are those, if this committee, and indeed, all of Washington, is focusing on debt reduction, cutting spending?

[DORGAN] Well, I'm concerned about that. I think both are very important. We have people say, "Well, you shouldn't pick and choose with respect to these subsidies." Look, we've been picking and choosing for 100 years. We said to the American people, "If you go out and look for oil and gas, God bless you, and we'll give you tax breaks for doing it." We've been doing that, and I'm not complaining about it. I would say, on the last question you asked Trent, you know, most of the oil and gas is out there, being discovered by independent producers, and particularly with respect to the majors, if they're using their money to buy back stock and drill for oil on Wall Street through mergers, they don't need incentives at that point.

[SUITERS] Back in April, you wrote together that -- I want to paraphrase here -- the U.S. needs to boost its production of conventional sources, like oil, while aggressively working on alternatives. How much will that cause be hurt if the federal government has less money for energy research and development, or for tax incentives?

[LOTT] Well, it could be hurt, but, you know, we need a national energy policy, I believe. I want more production of everything. I want more oil and gas, hydro, nuclear, I want to make greater use of natural gas, let's try the electric vehicles, but what I've not always wanted to do is to put more money into conservation and into alternative fuels. I think we need to do the whole package. Republicans are going to have to say, Look, we're going to have to deal with conservation. We're going to have to look at alternative fuels. We're going to need that. We have to be prepared to do that, to get more production, the conventional sources, until we can get more going in these other areas. That's the package that we need to find a way to bring Republicans and Democrats together to produce a product.

[DORGAN] I agree with that, and that's why I think both of us have come to the Bipartisan Policy Center. Instead of getting the worst of each party, let's get the best of both parties, and come together in an energy policy that moves our country forward. At the moment, we're just gridlocked.

[LOTT] If we would do more on energy, it would bring revenue into the federal government, it would create thousands of jobs quickly that are not there now.

[SUITERS] Don't we have to spend, to do more in energy?

[LOTT] Well, if we would just open up -- go back to where we were in the Gulf before the spill -- it would create hundreds of thousands of jobs and bring in tons of revenue.

[SUITERS] Do you think the debate over spending and taxes puts the 18 cents a gallon federal gasoline tax at risk? This is a law that's set to expire at the end of September.

[LOTT] There are people that would be happy to see that tax go away in the price of a gallon of gasoline. Actually, I think that number should be more. Now, a lot of Republicans would have an attack to hear me say that, but --

[SUITERS] Does that mean you're calling for a higher tax on gasoline, Senator?

[LOTT] I believe what we need is a highway and an infrastructure program in America, for lanes, planes, trains, ports, and harbors infrastructure, water and sewer. How do you get that? You have to pay for that. And I bought the argument from President Reagan -- that is a user fee, that's not a tax.

[SUITERS] But is this gasoline tax at risk right now, Senator Dorgan, simply because of the timing?

[DORGAN] Oh, I hope not. I mean, you can't put anything past the current political system, but everybody understands -- I mean, we don't want Third World roads and bridges. I mean, we want to invest in this country's infrastructure. I agree with Trent, not only should we extend the current gasoline tax, it ought to have some marginal increases, because we need to invest -- the other side of that, that investment creates a lot of jobs instantly -- building roads and bridges, you put people to work immediately.

[SUITERS] Well, before we send all these recommendations straight to the Congressional supercommittee, let's wrap it right here. Former Democratic Senator Byron Dorgan of North Dakota, former Republican Senator Trent Lott of Mississippi, now both with the Bipartisan Policy Center, gentlemen, thanks again for joining us today.