Should Conservatives Raise Taxes?

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This week on Conservative Crossroads, should conservatives support tax increases
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or in Cass says yes, Grover Norquist says no. Conservatives
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backing tax increases coming up on Conservative Crossroads now, Welcome
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back to Conservative Crossroads, the program where conservatives lean into
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their differences rather than deny them. I'm your host and
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moderator for this program, Henry Olsen, Senior Fellow at the
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Ethics and Public Policy Center. Today we have a discussion
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on tax increases. Should conservatives abandon their long time opposition
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to increasing taxes or should they retain the long standing policy.
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Here to argue in the affirmative that they should abandon
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that is or in Cass, founder and chief Economists of
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American Compass, and here arguing against changing course and continuing
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to oppose tax increases is Grover nor Quest, founder and
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President and CEO of Americans for Tax Reform. As is
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the norm on the program, each person will have five
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minutes to make an opening statement or and will go first,
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then forty minutes to mutually question one another, and then
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a two minute closing statement from each in reverse order
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of how they delivered the opening statements orin as the
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progenitor of the change, in policy Euro up first.
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All right, well, thank you Henry for convening this discussion,
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Grover for joining. I've been looking forward to this one.
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I guess I will start, maybe just at the level
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of principle, and talk about what we mean by conservatives,
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because of course I can think of people who wouldn't
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want to consider raising taxes, people who want to see
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the US collapse into communism, maybe anarchists and so forth.
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But for conservatives, I guess I would start with a
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few suggestions. One is that conservatives rightly view our elves
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as the trustees of a great nation that we've inherited.
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We recognize the intergenerational nature of the compact and our
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obligation to hand on something to the next generation even
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better than we received it. Obviously, we take personal responsibility
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very seriously, and I would suggest that including paying our
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bills is an element of that. And finally, we recognize
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that culture matters, and prudential statesmanship is not just a
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matter of conducting policy well, but really sets the tone
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for many other things in the country. And if you
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take all that seriously, then I think you have to
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look at the fiscal picture that we find ourselves in
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and recognize first of all that it's quite dire. We
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are now at the level of debt relative to GDP
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that we last saw right at the conclusion of World
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War Two. We are running enormous deficits and they are
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getting larger. And I think of particular note, the interest
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payments that we are making on the debt is now
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itself driving the debt. That is sort of the point
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at which you're not just warning that we might have
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a fiscal crisis to come, we essentially are in the
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midst of it. And so one thing I'm very much
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looking forward to discussing with Grover is whether there might
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be any alternative. I don't imagine he thinks that the
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status quo is sustainable, though I'll let him speak for himself.
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But if we assume that we need to address this situation,
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the question is how to do it. Certainly, I don't
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think we can solve it with tax increases alone. I
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think spending cuts need to be a serious element, probably
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even the majority of the solution. But I think that
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increasing taxes, first of all, given these circumstances, is appropriate
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and reasonable, and secondly that regardless, it is the only
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way to reach the kind of political compromise. We need
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to achieve that there is no political path to achieving
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spending cuts without any tax increase. And so let me
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talk a little bit then about just the practical side
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of things. You know, what would this look like, why
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do we need it? Obviously I mentioned the state of
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the deficit and what we're looking at. You know, there's
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the rhetorical point that's often made that that what we
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have is a spending problem, not a revenue problem, because
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of course spending as a share of GDP has gotten
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so high, up above twenty three percent. But it's important
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to recognize how much of that is the interest payments
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on the debt that we've accumulated. If you look at
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our underlying spending absent the interest on the debt, it's
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actually a little bit below twenty percent, so not that
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far away from the norm. Frankly, not that far away
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from what it was during the Reagan administration. And so
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I think it's particularly perverse you have run up debt
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as we have and then declare that because we now
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have the interest payments on the debt, we have a
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spending problem, when in fact, our refusal to pay for
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our past spending has placed us in this position if
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we were to cut spending and raise taxes. One thing
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to say about that is that that is an entirely
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plausible pathway that also has a tradition of success. It was,
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of course, the Budget Enforcement Act all the way back
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in nineteen ninety that first began the process of both
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raining and spending and bringing in more revenue, and that
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led to the only surpluses we've seen in a very
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long time. The Budget Control Act of twenty eleven likewise
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implemented budget caps that held spending in check for some time.
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And conversely, when we only cut taxes, when we insist
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that if we raise taxes, we will simply see higher spending,
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it turns out that that's not true. In fact, empirically,
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what you see is that tax cuts tend to go
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with spending increases, and vice versa. And I'll close by
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just quoting Bill Nascannon, Reagan economic advice founder of and
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or at least president for a time of the Cato Institute,
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who researched this exact question and came to the conclusion
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that the idea that you have to cut taxes to
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cut spending quote, is not consistent with the evidence at least.
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Beginning in nineteen eighty one, in a paper he published,
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I presented evidence that the relative level of federal spending
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over the period of eighty one through two thousand was
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coincident with the relative level of the federal tax burden
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in the opposite direction. And the reason for that is
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quite simple. If you don't make people pay for their government,
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they will support more government. If you insist on paying
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for their government, you will get more spending discipline as well.
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Thank you, Orn Grover, You're right sure.
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The question is should the Republican Party, the political vehicle
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for the conservative movement, raise taxes?
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And the answer is no.
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A tax increase is a pay cut. A tax increase
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is a reduction in people's take home pay. The Republican
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Party should not stand for that, given the on reasonable
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levels of spending and taxes that we have now. Raising
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taxes is what failed politicians do. Raising taxes is what
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people do instead of governing. Florida governs, they have a
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limited government. New York does not govern. They raise taxes.
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New York raises a lot more taxes than Florida does.
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The dead way cost.
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Of government is total spending and total cost of regulations.
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Those have to come down so to taxes. Now, what
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about the politics of tax hikes. Some people think, let's
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take a look at that. We've trust tried it, should
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we do tax increases. The Republican Party was willing to
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go along with this and support tax increases from nineteen
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thirty two until nineteen ninety four. We're not opposed to
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tax increases on principle. We didn't say no during that period.
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How did it work out for the Republican Party. They
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control Congress twice, They won Congress twice in sixty two years.
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It was as if the Washington Generals and the Harlem
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Globe Trotter's played every single day, and the Globe trotters
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always won and the friends the always lost. And what
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happened Republicans said, that's fine for the globe trotters and
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for the our friends, the Washington generals. But what happened
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there is the generals keep playing and they keep losing.
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The Republicans said, we're not doing this. So they branded themselves.
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They made themselves become the party that would not raise taxes.
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Branding is very important. You see that with Coca Cola.
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That's why you can pick up a coke and take
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it home. You're sure you got what you have. But
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here's the challenge with branding. If you get home and
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you're halfway through your bottle of coke and you see
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a ratead in it, you wonder whether you buy coke again.
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You share it with all your friends on the media,
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on social media, and what happens. Coke has a big problem.
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Republicans who raised taxes, or even suggest that Republicans who
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raised taxes are radheads in a coke bottle, they damage
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the brand forever else. And here's the good news. In
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nineteen ninety four of the Republican Party, ninety five six
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percent signed the commitment, written commitment to the American people,
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we're not raising taxes.
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What happened.
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We had a situation where the Republicans won eighteen years
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of government, House and Senate eight years, Democrats six years,
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mixed six years. So we've seen that as the party
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that won't raise taxes, we have a chance to govern.
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We stopped a ninety trillion dollar tax and spending increase
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that our friends on the left wanted with the Green
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New Deal. Not a bed start, but there's much more
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to be done, and we have to do it. How
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do we get there, How do we get more Republicans
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so you have the votes to actually reign in spending
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and deal with the entitlements that we're all put in
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by Democrats. Well, the good news is that federalism shows
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us how to do that. We have a situation in
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the fifty states where all the Republican states are cutting taxes,
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all the Democrat states are raising taxes. The Republicans are
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not only cutting taxes, but either of them went to
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a flat rate tax. They said, we reject Carl Marks's idea.
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The second idea he puts forward in his little list
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of ten things that every good communist government and dictatorships
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should do, and that is a graduated income tax. They said,
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we're not doing that. We're moving to flat rate taxes.
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Another two states, South Carolina and Kansas, have voted they're
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going to a flat rate automatically. Other states have decided
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ten twelve states now have said we're going all the
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way to zero. They put a cap on spending. As
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revenue comes above the spending, they cut spending, and they
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continue to ratchet down until that's gone. That's the success
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that we've had and that's why Republicans.
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So what happened? Did it work?
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People moved to red states, they leave the blue states.
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They moved to states with low taxes, they leave the
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states with high taxes. Jobs moves, capital moves, businesses move,
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children move when they get out of school, and their
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parents go after them. Down to Texas, down to Florida,
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down to states with no taxes or low income taxes.
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That's the success. We have their twenty four states now
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with flat rate taxes, another three coming. Well, what happens,
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how do we get more votes? Well, we just explained.
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Every ten years we do the census and we decide
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how many votes are in what states. And for the
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next in five years, we're going to add ten to
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eleven new Republican votes in each district. And fifteen years
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from now again another ten to eleven Republican votes in
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Congress and in the electoral College. It's going to become
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increasingly difficult for the Democrats to consider winning the presidency
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or the House. And that is where we end up
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with the votes to actually get the spending down as
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much as we need to. Republican Party is not going
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to give up on a winning streak.
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Thank you, Grover. Now we have the open exchange between
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the two of you. Who would like to go first?
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You got it, Sure, I'll kick off. I guess an
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interesting place I would start. First of all, I would
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say that, you know, I think state both politics and
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fiscal realities are different than ones in a number of ways.
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And we can dive into that further. But thinking about
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the federal level in particular, Grover to your point about
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sort of we will get the votes to eventually do
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the spending discipline, I'm curious what budget you would hold
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out as a model who has actually proposed a level
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of spending for the federal government that would allow us
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to cut taxes further and you see as politically plausible.
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Well, again, federalism is the path there. One of the
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things that Romney was who you worked for, was recommending,
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and he hired the guy who invented it, which is
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block granting all of the welfare states out to the states.
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Then you'll have fifty states doing fifty different things, and
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Massachusetts will go crazy and Florida will be saying and
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we'll find out, surprisingly that some states have very good
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ideas about how to reign and spending, how to fight fraud.
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You don't fight fraud when the federal government throws my
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into a state and nobody has any interest in even
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checking for it because it doesn't belong to anybody. So
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the government's been throwing out numbers. The Vice President's toss
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out rather large numbers of waste. I think the best
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way to find it is to blockrant. These things about
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block rant the welfare programs to the states. Let states
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to decide how much they spend and how they're going
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to handle it. We've seen when we did that with
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aid to families with dependent children, they dropped thirty percent
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spending across the board. They've found ways to target aid
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to people who needed it and not to people who didn't.
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We've actually passed legislation through the House and the Senate,
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gotten votes in the House and Senate. I'm doing the
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same for Medicaid. We were within one vote of doing
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it when McCain voted no. So the idea that we're
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miles away from being able to do this this is inaccurate.
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We're very close to being able to do it in
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the House and the Senate with a few more votes,
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or at least a few more serious votes.
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Well, respectfully, Grover, that doesn't answer the question. I mean,
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we've heard the phrase waste, fraud, and abuse obviously thrown
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away for decades or thrown around for decades. My question was,
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is there an actual budget roadmap out there that has
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a plausible path that shows what it would look like?
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Not just certainly you can block grant Medicaid. That doesn't
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get us anywhere close. It's unclear without hitting core entitlement,
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social security, Medicare, defense, and interest payments where the saving
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is coming from. Obviously, Heritage has tried to do a
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budget model. I believe they end up having to cut
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Medicare by about half. Paul Ryan, in his path to prosperity,
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ends up getting taxes back up to nineteen percent of GDP.
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So I'm just asking, what is this What can we
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hold on to that says yes, this is a level
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of spending cuts that the American people would ever consider,
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even on the right of center, that becomes fiscally sustainable.
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Well, I think you take a look again, you let
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the states figure things out.
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Who would have are you sending social stay, security and
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Medicare back to the states and national defense?
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No, I'm talking about that most of the welfare programs
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and certainly medicaid aid to families of dependent shild into
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jobs programs.
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These are ways to take steps.
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How much of the budget do you think a FDC
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and jobs programs are Okay?
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Those are look, those are steps in the right direction.
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The answer is, we haven't even tried. Bill Clinton tried
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to do this. Unless you give me a complete government program,
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we won't take any steps forward. Well, then nothing happens.
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So your rejection of the idea that you take step
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by step progress, I think is a silly one and
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isn't the way politics works in the United States. What
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we will do is keep taking steps forward, bringing spending down.
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And we need to do this because, among other reasons,
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the approach you have on government spending and the amount
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of government spending is damaging to Tokeville's America, the whole
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point of this country into Tokeville said, We're not Europe.
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And of course all of the approaches that the Democrats
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want want to turn us into Europe. Our job is
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to not be Europe. That's the big question that we
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have in front of us, and that's step by step.
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What Detekeville pointed out was in Europe you had these
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big government programs run by kings. Now you have them
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run by non government organizations. The only thing non government
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about them is that they get paid more than government officials.
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But it's all government money. Okay, I apprese agencies.
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Look what you're damaging with the over amount of government
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is damaging the ability of people to work together and
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the social cohesion, everything from people's faith organizations to groups
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what they want to work together and to Toekeville pointed out,
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we did it better not run through the government. Now
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the government tries to come over and take over almost
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every project that's run privately. Civil society is important.
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I certainly agree that civil society is important. I'm not
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sure how much further we can get on a discussion
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of whether to raise taxes if you're not able to
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describe even the vague ballpark of anyone who has shown
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how we would get spending down far enough without having
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to match some revenue increases as well. In addition to
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I guess I would just as a ask as a
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political matter, what does a Congress look like that is
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actually bringing spending down as far as you describe, further
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than it's been in many decades. In the context where
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obviously Democrats won't be open to it, and even Republicans
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for decades now have shown quite limited appetite for even
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the medicaid program you're describing, let alone Medicare, social Security Defense.
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I guess maybe I'm just repeating the question, but what
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would welcome yours as well?
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Well?
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I'll point out that we've tried it your way. Nineteen
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eighty two, we were promised three dollars of spending cuts
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for every dollar of tax increase with Reagan.
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That turned out to be a lie.
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The taxes were real the Democrats and the Republicans, because
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there were Republicans who liked to raise taxes Bob Dole.
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And when Reagan was president, he didn't have a Reagan House,
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he didn't have a Reagan Senate. We have a house
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in the Senate that much much more willing to reign
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in spending and to take taxes down than we ever
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had under Reagan, and certainly in the years, all of
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the years before nineteen ninety four. That's one of the
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changes and one of the differences when we have tried
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the idea of let's all sit down in a room.
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In nineteen eighty two, they cheated Reagan. The taxes were real,
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the spending didn't cuts didn't come. Reagan commented on that
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is one of the biggest lies that he'd been told,
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and how disappointed he was. Eight years later, George Bush
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had the same thing happened to him. I think he
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had less of an excuse for being fooled. But at
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the other hand, he didn't have the votes in the
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House of the Senate, and they said, we'll give you
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two dollars of imaginary money taxes spending cuts for every
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one dollar of tax increase. The tax increases were real,
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and both under the Reagan and the Bush negotiations, which
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the Democrats said, what they're going to do, what you
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think they're going to do, and what they've never done,
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and what they will do is not give you the
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spending cuts. In fact, spending increased more rapidly after the
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Reagan Deal and after the Bush Deal because they realized
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they could take advantage of it. In two thousand and eight,
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they did the same thing to McCain. McCain said, I
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would like to raise taxes on people with very expensive pensions,
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the part of the pension that goes to healthcare, the
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healthcare pat to the pension, and then use that to
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give to other people. He came forward with the program,
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they ran ads in him in all the key districts,
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all the key states and smashed his head in saying
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he wants to raise your taxes. And then Obama put
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that tax increase in the package of his bill. So
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we've had these discussions. We had one with Obama. Obama
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wanted two and a half trillion dollars in debt ceiling increase,
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and Republicans said, sure, just no tax increase, all spending restraint.
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And Obama came back and back and back again and hinted,
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the hinted about the question of getting more taxes in there,
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and the Republicans said no. And at the end of
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the day the final offer from the Obama people, which
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was conveyed to me because he wanted me to solve
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his problem for him by John Kerry, which was a
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one point four trillion dollar tax increase and two hundred
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billion dollars of spending hike. So their deal was going
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to be all taxes plus spending increases. What we got
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was all spending cuts. We won that fight. The argument
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that you have to cut a deal with the Democrats
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instead of defeat them with the American people watching because
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they're not interested in tax increases. But those are all
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the points that I think are important. But you're asking
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me about spending. And the point is this is about
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whether or not Republicans should raise taxes, and I say no, Okay,
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I guess the Republicans, I'll say, Now, we.
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Might disagree on a few of the facts here. I
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would encourage people to look at the CBO analysis of
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Bush's nineteen ninety deal, the Budge Enforcement Act, which CBO
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finds until we got to surplus's did hold spending in check.
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The twenty eleven deal with Obama, of course, made virtually
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all of the Bush tax cuts permanent. So the deal
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was to make permanent, expiring tax cuts in exchange for
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the spending cuts. And what I hear you saying is
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that worked, and they did adhere to the spending cuts.
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Now, so okay, not those are two separate projects. But okay,
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so these bulls that worked?
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Yes?
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Please, which Republican run states have realized your vision of
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raising taxes? You recommend tax increases to the Republican what's
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the Republican state that's taken your advice that works?
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Oh, I have no idea if state's done, it said
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a minute ago. I'm talking about the federal fiscal situation
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and the need to address that.
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That's not the question before us. But okay, taxes, taxes
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a federal, state and local, and with a federal system,
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we learned from the states as to what works, which
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seemed to shock you earlier.
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This is important.
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If it doesn't work in a state, maybe you ought
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not to do it at the federal level, which is
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why one of the funny things is that our friend
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from Vermont, Bernie Sanders, tried a one size, all fits
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government government program, the one seller, one buyer.
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Well, it's not going to work very well if I
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ask a question and you give a speech, and then
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you ask a question and you give a speech. So
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let me say a little bit more.
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I'm asking to stick with the topic of taxes, and
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you let me explain. And you not think of a
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Republican state that's done what you want on toxes. I
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haven't researched at the state level what the Republicans have done.
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I know that Kansas attempted to eliminate a number of
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taxes and that didn't go especially well. But when I
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think about the Revolution, the topic we're discussing should conservatives
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raise taxes? I take it to be should conservatives ever
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raise taxes? That is your position, if I understand it
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is that conservatives should never raise taxes.
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Is that right?
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I do not believe that it's necessary to raise taxes,
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nor a good idea to raise taxes.
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And in any situation.
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But your comment, Look, if there's an emergency, there's a
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seven trillion dollar budget, there's something in there that we
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could do without, or the emergency is the least important
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thing that's ever been invented. It's less important everything else
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in the budget. So if somebody wants to add to
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the budget, they've got to say every and they want
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to raise taxes, everything else in this budget is less valuable.
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Then my program is less valuable than anything that's in
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the budget.
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All right, So this is.
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Why i'm folks on the federal level, because I took
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your position to be that conservatives should never raise taxes,
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and so I would like to focus on a situation
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where I think clearly we need to I'm sure we
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could both think of plenty of situations where we don't
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need to raise taxes, but in this instance that I'm
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looking at the federal fiscal picture where I guess we're.
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Spending too much money. We need to spend less. To
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do that, you need more Republicans in the House and Senate.
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The good news is that's coming because of the way
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Republicans have governed at the state level. They've governed so
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well that people leave the blue states where people do
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raise taxes to meet the spending amounts rather than bring
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spending down to meet the tax amounts.
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Spending is too high.
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Taxes are too high, and we need to reduce them.
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I think the challenge you're asking about Kansas, the reason
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that what's happened in the country is that in the
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other states. Kansas, by the way, has just voted two
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thirds both houses to phase their income tax to a
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flat rate, and they do so by reigning and spending.
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That was not connected as well. It was not connected
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in the first one, but since then, North Carolina and
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all the other states that are facing their income taxes
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down to zero, and there are twelve of them now
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and more joining the vech is taking his income tax
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to zero if he gets elected. The next governor of
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Alabama's committed to taking theirs to zero. In Engrover Henry
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could I ask you to come in and moderate a bit.
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I'm concerned we're not going to be able to have
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a balanced back and forth without a little bit of moderation.
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Sure. I mean, one of the things that I'm hearing
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from from Orin is that this federal fiscal situation is
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so dire that it requires some sort of tax increase.
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And of course every state operates under the requirement that
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submit a balanced budget every year, so it doesn't never
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can get into the deficit situation. My question for Grover,
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and then I'll turn into or In a question. My
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question for Grover is do you see the federal deficit
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which is now running about six percent of GDP one
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hundred percent. Our debt is one hundred percent roughly GDP,
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that the amount that's held by the public. Do you
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see that as a crisis or do you see that
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as just normal government operating and that we could survive
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another decade or fifteen years. To use your transit to
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the Republican States example of getting of running six percent
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deficits per year and increasing the total number of debt
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so it becomes closer to the sort of debt levels
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that like in Italy or a Belgium are carrying okay.
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The challenge here is that we are spending too much money.
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The Democrats like to talk about the deficit because then
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they have an answer, which has raised taxes. They are
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never willing to help on spend less and only if
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you take tax increases off the table in a negotiation,
486
00:27:01.319 --> 00:27:05.799
as we did with the President, as we have done
487
00:27:05.839 --> 00:27:08.799
at the state level, do you ever get spending restraint.
488
00:27:09.119 --> 00:27:11.200
You have to say we're not raising taxes, we're only
489
00:27:11.279 --> 00:27:14.240
raining in government spending. As long as you're sitting with
490
00:27:14.279 --> 00:27:17.640
a Democrat, they keep putting taxes on the table and
491
00:27:17.759 --> 00:27:20.680
never get to a tax cut. We've had efforts where
492
00:27:20.720 --> 00:27:23.880
that was supposed to happen, and it didn't. The tax
493
00:27:24.440 --> 00:27:28.400
tax cut, I'm sorry. The spending cuts they promised turned
494
00:27:28.440 --> 00:27:30.599
out not to be true, turned out not to happen.
495
00:27:30.960 --> 00:27:33.720
So we're much better off taking that off the table,
496
00:27:33.759 --> 00:27:36.440
because you will. It's an imaginary. You're asking me if
497
00:27:36.480 --> 00:27:38.799
I believe in fairies. I don't believe in fairies. I
498
00:27:38.839 --> 00:27:41.319
don't believe the Democrats will sit down and pass a
499
00:27:41.319 --> 00:27:44.319
bill that actually reduces the size and scope of government
500
00:27:44.480 --> 00:27:47.559
on a permanent basis that matters. I do believe we
501
00:27:47.640 --> 00:27:51.200
can step by step reduce the cost of government and
502
00:27:51.400 --> 00:27:55.119
we can have tax reduction. Indexing capital gains for inflation
503
00:27:55.400 --> 00:27:58.319
would bring in a great deal of revenue. The President
504
00:27:58.359 --> 00:28:01.079
has endorsed it, the Chief you know so, and we
505
00:28:01.119 --> 00:28:01.640
have House and.
506
00:28:01.599 --> 00:28:02.559
Centate support for it.
507
00:28:02.720 --> 00:28:06.160
This is something that would help really get revenue in
508
00:28:06.279 --> 00:28:09.440
but more importantly economic growth in the future.
509
00:28:09.880 --> 00:28:14.440
So that's the But it sounds My direct question is
510
00:28:14.480 --> 00:28:18.359
it sounds like if that doesn't come soon enough. You
511
00:28:18.400 --> 00:28:22.279
know that, you know that we don't see measurable decreases
512
00:28:22.319 --> 00:28:25.880
in the deficit as a percentage of GDP. You don't
513
00:28:25.960 --> 00:28:28.720
think that that is a problem if we you know,
514
00:28:28.799 --> 00:28:31.079
five years from now, we're still at now.
515
00:28:31.200 --> 00:28:32.880
You're now you're putting words in my mouth.
516
00:28:33.160 --> 00:28:36.000
I said, that's why I'm awing question. I'm asking you
517
00:28:36.039 --> 00:28:36.960
to respond to that.
518
00:28:37.759 --> 00:28:38.319
Yeah.
519
00:28:38.480 --> 00:28:41.359
The answer is if you raise taxes, you will make
520
00:28:41.400 --> 00:28:44.079
things worth you will slow economic growth, and you will
521
00:28:44.119 --> 00:28:47.480
get a bigger deficit, not a smaller deficit. If you
522
00:28:47.559 --> 00:28:50.640
raise taxes, the Democrats will walk away from any spending cuts.
523
00:28:50.880 --> 00:28:53.039
This is their track record, this is what they do.
524
00:28:53.359 --> 00:28:56.319
It is asking someone to believe in fairies and then
525
00:28:56.359 --> 00:28:59.559
asking why I don't like fairies. Okay, it's you know,
526
00:28:59.839 --> 00:29:01.519
it's not that I don't like fairies, it's that they
527
00:29:01.519 --> 00:29:05.799
don't exist. And the idea that the Democrats, the Democrats
528
00:29:05.799 --> 00:29:09.119
have been in power all by themselves many times and
529
00:29:09.160 --> 00:29:12.519
more recently with Obama data sixty vote. If Democrats had
530
00:29:12.599 --> 00:29:16.240
any interest in raising taxes and cutting spending to solve
531
00:29:16.240 --> 00:29:19.240
a problem, they could have. They never did. They could
532
00:29:19.279 --> 00:29:22.319
have put money into socialecurity, they never did. They could
533
00:29:22.359 --> 00:29:26.160
have reformed some of the entitlements. They didn't accept it
534
00:29:26.200 --> 00:29:29.839
at gunpoint when the Republicans kept passing it and the
535
00:29:29.960 --> 00:29:31.880
President Clinton was told if he didn't sign it, to
536
00:29:31.920 --> 00:29:35.359
lose the election. So you're asking me about an impossible,
537
00:29:35.519 --> 00:29:39.160
not true, counterfactual fairy tale. Do I believe in that? No?
538
00:29:39.759 --> 00:29:42.599
And if you walk into a room believing that you
539
00:29:42.599 --> 00:29:45.079
will get tooken so orin.
540
00:29:45.160 --> 00:29:49.079
Let me ask you a question. What taxes do you
541
00:29:49.119 --> 00:29:52.720
think ought to be raised? Because that's always the question
542
00:29:53.119 --> 00:29:55.079
is do you think that taxes should go up on
543
00:29:55.119 --> 00:29:58.200
the ordinary American? Do you think taxes should go up
544
00:29:58.200 --> 00:30:00.799
on corporations? And if so, do you think what the
545
00:30:00.799 --> 00:30:03.759
effect do you think that'll have on economic growth? What
546
00:30:03.880 --> 00:30:06.400
taxes do you think should be raised? And roughly what
547
00:30:06.559 --> 00:30:09.480
share if the deficit is at six percent of GDP,
548
00:30:09.799 --> 00:30:12.160
which it is plus or minus a couple of tenths,
549
00:30:12.839 --> 00:30:15.599
what share of that closing that do you think should
550
00:30:15.640 --> 00:30:18.799
be borne through taxes? And how over how many years
551
00:30:18.799 --> 00:30:22.759
do you think that those taxes should be high? You know,
552
00:30:23.359 --> 00:30:24.240
how would you roll it in?
553
00:30:25.599 --> 00:30:28.440
Yeah, let me I will start broad and zoom into
554
00:30:28.480 --> 00:30:32.359
some of those specifics. I think roughly speaking, we probably
555
00:30:32.400 --> 00:30:35.559
need to tackle this with about one third increases in
556
00:30:35.640 --> 00:30:38.039
revenue and two thirds and spending cuts.
557
00:30:38.599 --> 00:30:41.119
And that is you mean the six percent of GDP.
558
00:30:40.920 --> 00:30:43.160
Yes, exactly, so we need to be getting closer to
559
00:30:43.279 --> 00:30:46.960
nineteen to twenty percent. You know, we actually there are
560
00:30:46.960 --> 00:30:49.160
a number of reasons we can run a small deficit
561
00:30:49.200 --> 00:30:53.960
quite sustainably, but say nineteen percent revenue twenty percent spending,
562
00:30:55.359 --> 00:30:59.279
and what that means in practice? You know, we we've
563
00:30:59.359 --> 00:31:02.680
done a lot of surveying of American voters and what
564
00:31:02.720 --> 00:31:04.400
we find is if you ask how would you want
565
00:31:04.440 --> 00:31:08.359
to address the deficit, and let them just assign one
566
00:31:08.440 --> 00:31:11.640
hundred points, how much spending cuts, how much tax increases.
567
00:31:12.559 --> 00:31:17.119
The sort of radicalism that growver articulates is found almost nowhere.
568
00:31:17.720 --> 00:31:21.880
Even among Republicans, the median response is twenty five percent
569
00:31:21.960 --> 00:31:26.200
tax increases, seventy five percent spending cuts. Overall, for Americans,
570
00:31:26.200 --> 00:31:29.920
it's about forty percent tax increases sixty percent spending cuts.
571
00:31:30.640 --> 00:31:32.319
And so that's sort of right in the range of
572
00:31:32.680 --> 00:31:35.440
the ratio that makes sense. It would also return us
573
00:31:35.480 --> 00:31:39.559
back to the kind of historical range that we were
574
00:31:39.599 --> 00:31:43.519
in when the budget was healthy, and by the way,
575
00:31:43.519 --> 00:31:45.920
it would return us back to the range that Paul
576
00:31:45.960 --> 00:31:50.279
Ryan envisioned in his own path to prosperity. So I
577
00:31:50.319 --> 00:31:53.599
think that's where we need to be aiming in terms
578
00:31:53.599 --> 00:31:55.279
of how we get there. I think we need to
579
00:31:55.519 --> 00:32:00.319
start with some small steps. I've certainly heard many times
580
00:32:00.359 --> 00:32:04.319
Grover's point about the ways in which any attempt at
581
00:32:04.359 --> 00:32:08.319
a deal will fail. The spending cuts won't happen. It's
582
00:32:08.359 --> 00:32:11.440
clear that it's clear that the nineteen eighty two experience
583
00:32:11.640 --> 00:32:16.119
was quite psychologically damaging to people of that generation. The
584
00:32:16.200 --> 00:32:18.799
reality is that that's not the actual track record. Nineteen
585
00:32:18.799 --> 00:32:22.599
eighty three Social Security deal held, as I mentioned, nineteen
586
00:32:22.720 --> 00:32:28.880
ninety Budget Control or excuse me, Budget Enforcement Act deal
587
00:32:29.319 --> 00:32:32.720
holds at least until we get to surplus twenty eleven
588
00:32:32.759 --> 00:32:37.160
Budget Control Act caps largely hold, and so there's actually
589
00:32:37.400 --> 00:32:40.960
both in those specific instances, plenty of evidence you can
590
00:32:41.000 --> 00:32:43.640
make a deal. As I quoted Bill and a Scan
591
00:32:43.720 --> 00:32:47.000
in earlier on the point. And if you just look
592
00:32:47.200 --> 00:32:49.640
in recent years what's happened. What you see is that
593
00:32:49.720 --> 00:32:52.839
when revenue starts to go up, actually spending does not
594
00:32:52.920 --> 00:32:54.839
go up higher. When revenue starts to go up, spending
595
00:32:54.920 --> 00:32:58.240
starts to come down. And conversely, when we just do
596
00:32:58.319 --> 00:33:00.599
a big tax cut, whether it was the Bush cuts
597
00:33:00.960 --> 00:33:02.559
in two thousand and one and two thousand and three,
598
00:33:02.839 --> 00:33:05.920
or then of course the Trump cuts in twenty seventeen,
599
00:33:06.519 --> 00:33:10.440
the result was not that we then saw spending come down.
600
00:33:10.799 --> 00:33:13.640
Actually we saw spending go up more. So we now
601
00:33:13.720 --> 00:33:17.359
have we talked about revenues. Yeah, can you talk answer
602
00:33:17.359 --> 00:33:20.119
the question which was taxes? What taxes would you increase?
603
00:33:20.559 --> 00:33:22.559
Yep? Yeah, Henry asked me. Yeah.
604
00:33:22.640 --> 00:33:24.559
Henry asked me how we'd get there, and I said
605
00:33:24.720 --> 00:33:28.160
I was starting broad and explaining where I would go.
606
00:33:28.759 --> 00:33:29.839
Let's get to taxes.
607
00:33:30.160 --> 00:33:30.400
Yep.
608
00:33:30.519 --> 00:33:32.720
So I think the sort of deal that we need
609
00:33:32.759 --> 00:33:34.400
to look at. I don't like the kind of Blue
610
00:33:34.480 --> 00:33:37.200
Ribbon Commission you know, let's get everyone in the room
611
00:33:37.480 --> 00:33:40.160
and solve the big problems on day one, which I.
612
00:33:40.240 --> 00:33:44.240
At Grover, I will moderate, I'll get it. Let him
613
00:33:44.279 --> 00:33:44.680
get there.
614
00:33:45.039 --> 00:33:49.480
Yeah, he Henry listened to sufficient speeches that I think
615
00:33:49.480 --> 00:33:53.519
he's comfortable with where I'm headed on this. The way
616
00:33:53.279 --> 00:33:55.200
that I would look at this is say, you know
617
00:33:55.240 --> 00:33:59.680
what we actually have to We have to soothe Grover's
618
00:33:59.680 --> 00:34:02.920
concern burns, and so the first step should be, can
619
00:34:02.920 --> 00:34:04.960
we do one hundred billion dollars of revenue in two
620
00:34:05.039 --> 00:34:07.880
hundred billion dollars of tax cuts and show that that
621
00:34:07.920 --> 00:34:11.840
can stick? Spend Oh yes, sorry, one hundred dollars of
622
00:34:11.920 --> 00:34:12.679
tax increases.
623
00:34:13.119 --> 00:34:15.000
I guess the question. I will cut to the chase.
624
00:34:15.079 --> 00:34:17.519
What taxes are you talking about? You're talking about taxes,
625
00:34:17.559 --> 00:34:20.239
income taxes, social Security taxes.
626
00:34:20.280 --> 00:34:22.679
So yeah, So the places I would start, I would
627
00:34:22.679 --> 00:34:24.960
take the corporate rate back up to twenty five percent,
628
00:34:25.119 --> 00:34:27.480
which is of course what the Republicans had been aiming
629
00:34:27.559 --> 00:34:31.599
for up until Tikja happened. I would take the top
630
00:34:31.639 --> 00:34:35.800
couple of rates back up to where they were before Tikja.
631
00:34:36.920 --> 00:34:39.800
I'd note that we're very pleased with the tariff revenue.
632
00:34:39.840 --> 00:34:41.440
That would get the twenty seventeen.
633
00:34:41.559 --> 00:34:44.519
Yes, the twenty seventeen tax cut. We're of course getting
634
00:34:44.559 --> 00:34:48.400
hundreds of billions of dollars in tariff revenue, which which
635
00:34:48.519 --> 00:34:50.760
I'm a supporter of, in which i'd like to see
636
00:34:50.960 --> 00:34:55.400
codified in legislation. I think there are some other smaller
637
00:34:55.480 --> 00:35:01.199
things when it comes to for instance, we support a
638
00:35:01.239 --> 00:35:04.400
financial transaction tax, which I think would be very helpful
639
00:35:04.519 --> 00:35:06.400
in the functioning of our financial markets.
640
00:35:06.559 --> 00:35:08.880
And there would be a tax on a small tax
641
00:35:08.880 --> 00:35:11.360
on the value of each stock trade or bond sale
642
00:35:11.440 --> 00:35:12.000
or so forth.
643
00:35:12.079 --> 00:35:15.000
Yes, exactly, And that the one with the targeted eight
644
00:35:15.039 --> 00:35:19.079
hundred billion dollars you were talking about that one. Sorry,
645
00:35:19.760 --> 00:35:21.679
I've seen you quoted that as a tax that would
646
00:35:21.760 --> 00:35:22.960
raise eight hundred billion.
647
00:35:23.800 --> 00:35:25.480
The financial transaction tax.
648
00:35:25.599 --> 00:35:29.440
Yeah, is that incorrect? How big a tax is that
649
00:35:29.559 --> 00:35:29.920
going to be?
650
00:35:30.920 --> 00:35:33.679
I've seen it scored in the range of sixty billion.
651
00:35:34.599 --> 00:35:36.800
Are we talking over one year of ten years.
652
00:35:36.719 --> 00:35:39.800
Ten years for eight hundred billion? Yeah, I think I'm
653
00:35:39.840 --> 00:35:41.679
trying to remember. There are a couple of different versions
654
00:35:41.679 --> 00:35:45.039
of it with the CBO scores. But yes, it's in
655
00:35:45.079 --> 00:35:47.519
the tens of billions of dollars in one year, and
656
00:35:47.559 --> 00:35:49.559
so hundreds of billions of dollars over ten.
657
00:35:50.079 --> 00:35:52.239
There could very well be sixty billion dollars one year,
658
00:35:52.280 --> 00:35:54.760
which is what Aorn's saying would over ten years with
659
00:35:54.840 --> 00:35:58.559
inflation equally eight hundred billion over ten. At grower start,
660
00:36:00.039 --> 00:36:03.000
let me jump to you gover, which is say you, oh, yeah,
661
00:36:03.840 --> 00:36:09.119
I know how Tom outter right? He says, raise the
662
00:36:09.119 --> 00:36:12.039
top two tax rates up to where they were before
663
00:36:12.079 --> 00:36:14.400
twenty seventeen, which I believe was thirty nine point six
664
00:36:14.480 --> 00:36:17.320
for the top rate, thirty seven percent for the second
665
00:36:17.360 --> 00:36:21.039
top rate. He says, raise a corporate tax at the
666
00:36:21.039 --> 00:36:23.440
federal level from I forget whether it's twenty one or
667
00:36:23.440 --> 00:36:26.360
twenty two up to twenty five, talks about a financial
668
00:36:26.400 --> 00:36:30.559
transaction tax. I'd presume you would oppose each of these,
669
00:36:30.599 --> 00:36:34.000
So I'll let you say that you would oppose each
670
00:36:34.000 --> 00:36:35.760
of these breather than put words into your mouth. But
671
00:36:35.840 --> 00:36:40.079
my question is you've often said, in addition to opposing
672
00:36:40.199 --> 00:36:41.800
one of the reasons to oppose them is that would
673
00:36:41.880 --> 00:36:47.559
hurt economic growth. Why do you think these specific ideas
674
00:36:47.559 --> 00:36:48.719
would hurt economic growth?
675
00:36:50.159 --> 00:36:55.599
Higher marginal tax rates discourage investment savings and economic growth.
676
00:36:56.639 --> 00:37:01.199
A twenty five percent a corporate rate federally would of
677
00:37:01.239 --> 00:37:04.360
course be a twenty nine i'm sorry, be a twenty
678
00:37:04.440 --> 00:37:07.639
nine percent rate, because states also have taxes, So we
679
00:37:07.679 --> 00:37:10.960
would be competing with China, which has fifteen percent on
680
00:37:11.000 --> 00:37:14.440
most of theirs, and we'd be up at twenty nine.
681
00:37:15.440 --> 00:37:22.280
At twenty five, we're at fifteen plus i'm sorry, twenty
682
00:37:22.320 --> 00:37:24.960
one plus the four we have twenty five. We're kind
683
00:37:25.000 --> 00:37:27.000
of in the middle. In Europe that's not very strong,
684
00:37:27.079 --> 00:37:29.559
and it's much high. It's higher than China's. I don't
685
00:37:29.599 --> 00:37:33.559
think I want to compete with China on lower taxes,
686
00:37:34.000 --> 00:37:39.280
less regulatory costs, less government costs, not lower wages. If
687
00:37:39.280 --> 00:37:42.320
you're having higher taxes on the American economy than China
688
00:37:42.360 --> 00:37:45.239
has on its, you're talking about having to compete on
689
00:37:45.280 --> 00:37:49.119
lower wages. That's not where we are to go. Kamala
690
00:37:49.199 --> 00:37:52.519
Harris took a position very similar to this, so did
691
00:37:52.599 --> 00:37:55.519
Joe Biden. The idea of taking the top rate up
692
00:37:55.559 --> 00:38:03.639
to Obama's rates, this is something that the administration specifically rejected.
693
00:38:03.760 --> 00:38:06.719
I was very pleased that JD. Vance was the guy
694
00:38:06.760 --> 00:38:10.119
who was the key vote, the deciding vote to have
695
00:38:10.239 --> 00:38:13.480
the tax cuts made permanent and reject the idea of
696
00:38:13.519 --> 00:38:16.480
taking the top rate up, which people were pushing at
697
00:38:16.480 --> 00:38:19.960
the president, and I talked him about it the night before.
698
00:38:19.960 --> 00:38:22.159
He decided that this was never, never, never, never, never
699
00:38:22.239 --> 00:38:24.800
going to happen. He had promised that he was going
700
00:38:24.840 --> 00:38:27.119
to take all the rates and make them permanent. And
701
00:38:27.199 --> 00:38:29.000
advisors who come to you and tell you to break
702
00:38:29.039 --> 00:38:31.559
your promise are doing to tried to do to the
703
00:38:31.559 --> 00:38:34.840
president what people did to George W. Bush, and it
704
00:38:35.039 --> 00:38:38.280
broke him. The guy won the Cold War, he kicked
705
00:38:38.320 --> 00:38:41.559
a rack out without sticking around for twenty five years,
706
00:38:41.679 --> 00:38:44.159
and he's remembered for having lied his way into office
707
00:38:44.199 --> 00:38:46.679
and raised taxes. That is not what you do to
708
00:38:46.719 --> 00:38:50.199
presidents that you like. It was a disaster for him.
709
00:38:50.199 --> 00:38:53.880
It'd be a disaster for Republicans. The idea that raising taxes,
710
00:38:54.840 --> 00:38:57.159
it was just first, it would slow economic growth. Why
711
00:38:57.159 --> 00:38:59.360
would you do that. We should be in the business
712
00:38:59.480 --> 00:39:03.400
of reigning and spending. And again it's step by step.
713
00:39:04.599 --> 00:39:07.000
You talked about the states having to balance the budget.
714
00:39:07.719 --> 00:39:12.440
New York and California and Chicago have wildly unfunded liabilities.
715
00:39:12.440 --> 00:39:15.079
They don't have it, they do have wild deficits. And
716
00:39:15.480 --> 00:39:17.840
it is the states that don't do that that are
717
00:39:17.880 --> 00:39:21.159
in much better shape. So I do think it's very
718
00:39:21.199 --> 00:39:23.800
important to look to the states to find out what works.
719
00:39:24.320 --> 00:39:28.360
The Republicans with lower taxes and less spending are succeeding.
720
00:39:28.400 --> 00:39:30.880
People are moving there. We're supposed to be doing what
721
00:39:30.960 --> 00:39:33.559
the people not, what makes not what makes be encounters
722
00:39:33.599 --> 00:39:36.559
in DC happy. People have not said they want to
723
00:39:36.559 --> 00:39:39.480
spend this much money. Nobody voted to do all this stuff.
724
00:39:40.119 --> 00:39:43.119
And in point of fact, if you block granted to
725
00:39:43.159 --> 00:39:45.280
the states, you led some states to say we're not
726
00:39:45.320 --> 00:39:46.920
going to do this. A lot of these things should
727
00:39:46.960 --> 00:39:50.760
be done at the state level. So taxes are too high,
728
00:39:50.800 --> 00:39:52.639
there's no reason to raise them. If you raise them,
729
00:39:52.679 --> 00:39:54.119
the Democrats will just spend the money.
730
00:39:54.800 --> 00:39:56.679
So now let me ask a question for both of you,
731
00:39:56.760 --> 00:39:59.719
and that is about Social Security, because that is a
732
00:39:59.800 --> 00:40:03.239
pro program that is no longer being funded by the
733
00:40:03.280 --> 00:40:07.920
tax revenues. We are effectively borrowing to meet the monthly
734
00:40:08.039 --> 00:40:11.400
payments that we send out to our fifty to sixty
735
00:40:11.440 --> 00:40:17.440
million retirees and the reserves, which is to say, the
736
00:40:17.559 --> 00:40:21.559
borrowing that the Treasury is held on its own. That
737
00:40:22.840 --> 00:40:28.679
represents the balance of Social Security taxes in the nineties
738
00:40:28.719 --> 00:40:32.440
and oughts that exceeded revenues will be exhausted somewhere in
739
00:40:32.440 --> 00:40:34.159
the four to five year period. So we're going to
740
00:40:34.239 --> 00:40:38.599
have to deal with the Social Security program sometime within
741
00:40:38.719 --> 00:40:43.920
the next two the next administration. What would each of
742
00:40:43.960 --> 00:40:50.000
you do if to cut that deficit. On the one hand,
743
00:40:50.880 --> 00:40:56.360
if you simply let the program continue, it's estimated that
744
00:40:56.719 --> 00:41:00.719
twenty seven to thirty percent of retiree benefit would be cut.
745
00:41:00.760 --> 00:41:02.840
That would be a savings of a couple hundred billion
746
00:41:02.920 --> 00:41:05.800
dollars a year and would be a substantial down payment
747
00:41:06.239 --> 00:41:10.519
on to reduce the deficit. So that's one option. Another
748
00:41:10.599 --> 00:41:13.519
option would be, you know, get the same way, only
749
00:41:13.840 --> 00:41:17.679
allocate spending cuts differently, and the other way would be
750
00:41:17.719 --> 00:41:20.719
some sort of tax increase only or some sort of bargain.
751
00:41:21.519 --> 00:41:23.960
Let me go first with you, Grover, how would do
752
00:41:24.000 --> 00:41:28.480
you think Republicans, assuming that they have a trifecta, which
753
00:41:28.480 --> 00:41:32.639
they could very well when this program comes, when this
754
00:41:32.840 --> 00:41:35.039
crisis gets hit, they could very well have the Senate,
755
00:41:35.119 --> 00:41:37.639
the House, and the presidency in twenty nine or twenty
756
00:41:37.639 --> 00:41:41.519
thirty if they have the sole power, how should they
757
00:41:41.559 --> 00:41:44.679
handle this without entering into an agreement with Democrats? And
758
00:41:44.679 --> 00:41:47.000
then I will ask the identical question to you orn,
759
00:41:47.800 --> 00:41:50.079
just give Grover a few minutes to give his complete answer,
760
00:41:50.119 --> 00:41:52.360
and then you'll have a few minutes for your complete answer.
761
00:41:53.079 --> 00:41:56.679
Sure, we needed to do two things. One is so
762
00:41:56.800 --> 00:41:59.800
security says that they're saving the money, they're not it.
763
00:42:00.079 --> 00:42:02.480
And the challenge is that it was sold to people
764
00:42:02.559 --> 00:42:04.840
is something that it isn't. It isn't a savings program.
765
00:42:04.880 --> 00:42:06.440
It isn't a four to one k or an ira.
766
00:42:07.039 --> 00:42:10.039
Other countries have actually set up four one ks and
767
00:42:10.119 --> 00:42:12.559
iras and avoided this problem.
768
00:42:12.840 --> 00:42:13.960
We need to get to there.
769
00:42:14.280 --> 00:42:16.519
And part of what the president does with something that's
770
00:42:16.559 --> 00:42:20.039
a baby step that Trump accounts, it begins to let
771
00:42:20.119 --> 00:42:23.199
people save for their future. We still have the crisis
772
00:42:23.280 --> 00:42:24.880
right now because the government has led to us for
773
00:42:24.920 --> 00:42:26.679
a number of years about the fact that they were
774
00:42:26.719 --> 00:42:30.039
saving money for us, and they weren't. But we need
775
00:42:30.079 --> 00:42:32.719
to make that pole for people in the future. And
776
00:42:32.760 --> 00:42:36.000
that's why expanding four to one case iras, making it
777
00:42:36.039 --> 00:42:39.679
easier for people to save that way, ending the taxation
778
00:42:39.760 --> 00:42:42.599
of inflation on capital gains, all of these things. Sixty
779
00:42:42.639 --> 00:42:45.599
plus percent of people are in four to one case iras,
780
00:42:45.639 --> 00:42:49.079
sixty plus percent of people are in houses. These things
781
00:42:49.199 --> 00:42:53.800
all ameliorate the challenge you have because to give money
782
00:42:53.800 --> 00:42:56.679
to Social Security is taking it from one person and
783
00:42:56.679 --> 00:42:59.119
giving it to another. It's not making people better off.
784
00:42:59.440 --> 00:43:02.639
It's not solving a problem down the road. We need
785
00:43:02.679 --> 00:43:04.880
to at the same time that we come to some
786
00:43:05.159 --> 00:43:10.679
deal with this. There is obviously the amount of value
787
00:43:10.880 --> 00:43:13.480
underground in the United States. The value of federal land
788
00:43:13.599 --> 00:43:17.599
is easily sold easily if the Democrats don't stop you.
789
00:43:18.119 --> 00:43:21.480
But one could certainly do that. You could reduce the
790
00:43:21.920 --> 00:43:27.239
benefits to people who are capped and on top earners
791
00:43:27.239 --> 00:43:29.519
would be one way to reduce some of the money.
792
00:43:29.880 --> 00:43:31.559
Is it fair know where they lied to?
793
00:43:31.760 --> 00:43:34.199
Yes, but a lot of people are going to be
794
00:43:34.280 --> 00:43:37.119
damaged because the government set up a program which was
795
00:43:37.159 --> 00:43:40.360
destined to fail because of the way it was set up.
796
00:43:40.559 --> 00:43:43.000
And that's a challenge. That's why we have fewer government
797
00:43:43.039 --> 00:43:47.320
programs hopefully in the future. But yes, with the sale
798
00:43:47.360 --> 00:43:48.960
of land, you could solve a lot of the problems.
799
00:43:49.559 --> 00:43:51.599
So when I'm just I don't want to put word
800
00:43:51.639 --> 00:43:53.679
your mouth, but I do want what I hear you
801
00:43:53.760 --> 00:43:56.719
saying is that you'd be you think that rather than
802
00:43:56.719 --> 00:44:00.719
a twenty seven percent cut for everybody, that targeting cut
803
00:44:00.760 --> 00:44:03.800
benefits to people who have resources and are at the
804
00:44:03.840 --> 00:44:06.679
top of the Social Security check earning. You know, people
805
00:44:06.719 --> 00:44:10.079
who have been earning close to the taxable cap for
806
00:44:10.119 --> 00:44:12.400
a long time should have their benefits cut, and that
807
00:44:12.480 --> 00:44:15.559
we can backfill some of the revenue losses or some
808
00:44:15.599 --> 00:44:19.239
of the by selling federal lands, or.
809
00:44:19.559 --> 00:44:21.519
You could deal it all with federal lands. There's plenty
810
00:44:21.559 --> 00:44:24.039
of federal land and plenty of good stuff under the ground.
811
00:44:25.000 --> 00:44:27.360
We do need to expand the amount of money people
812
00:44:27.400 --> 00:44:29.760
can save in for one case, and I raise there
813
00:44:29.800 --> 00:44:32.800
is something you could do so that you're making it
814
00:44:33.119 --> 00:44:38.159
better off for everybody. And what we did see is
815
00:44:39.119 --> 00:44:44.559
Senator Marino from Ohio assigned onto a bill written by
816
00:44:44.719 --> 00:44:49.760
Elizabeth Warren which was just three trillion dollars in tax increases. Now,
817
00:44:49.800 --> 00:44:51.679
since then he's talked about we should have a flat
818
00:44:51.719 --> 00:44:53.679
rate income tax at the same time that we fix
819
00:44:53.760 --> 00:44:59.559
social security. On radio in Ohio comes up with a
820
00:44:59.559 --> 00:45:03.159
lot of really good ideas on tax cuts. I think
821
00:45:03.320 --> 00:45:07.480
the negative reaction across the board, including the other center
822
00:45:07.480 --> 00:45:11.920
from the state on opening bid being has three history
823
00:45:12.119 --> 00:45:17.079
trillion dollars. Elizabeth Warren, what else would you like? Is
824
00:45:17.119 --> 00:45:20.480
exactly the kind of thing that's damaging to the party,
825
00:45:20.840 --> 00:45:25.559
damaging to Ohio, and damaging to him. So you can
826
00:45:25.679 --> 00:45:29.119
solve the problem with the sale of underground assets and
827
00:45:29.519 --> 00:45:33.519
offshore assets and lands. There's enough money there to tide
828
00:45:33.559 --> 00:45:36.400
you over to when you actually let people save their
829
00:45:36.440 --> 00:45:39.519
own money. Social curity is the number one creator of
830
00:45:40.000 --> 00:45:44.440
unequal amounts of savings and wealth because it takes money
831
00:45:44.440 --> 00:45:45.960
from poor people and they never get to save.
832
00:45:47.400 --> 00:45:49.920
Okay, So the same question is to you orurn social security?
833
00:45:50.039 --> 00:45:54.000
Coming up with the crisis sometime in the four to
834
00:45:54.039 --> 00:45:57.920
six year period, Republicans have the trifecta. They come to
835
00:45:57.960 --> 00:46:02.360
you and say, solve my problem. What's your solution, or yeah,
836
00:46:02.599 --> 00:46:02.840
this is.
837
00:46:02.840 --> 00:46:03.400
A great question.
838
00:46:03.440 --> 00:46:05.519
I'm glad you made it concrete like this because for
839
00:46:06.039 --> 00:46:09.920
someone from my position, this is very straightforward. I think
840
00:46:09.920 --> 00:46:12.719
we both need to make reforms on the spending side.
841
00:46:12.719 --> 00:46:16.000
I agree with Grover we need to means test at
842
00:46:16.000 --> 00:46:18.719
the top end, and I also think we need to
843
00:46:18.760 --> 00:46:22.320
bring more revenue in generally for the government. I don't
844
00:46:22.440 --> 00:46:25.239
tend to be a huge fan of targeting. Okay, this
845
00:46:25.360 --> 00:46:29.519
money specifically saves this program, but I do think it
846
00:46:29.599 --> 00:46:33.599
makes sense to raise the cap somewhat on payroll taxes,
847
00:46:34.280 --> 00:46:36.840
and I think more broadly, as I just listed in
848
00:46:36.880 --> 00:46:39.159
other places, there are a lot of other places we
849
00:46:39.239 --> 00:46:42.559
could start finding more revenue. I do want to highlight
850
00:46:42.599 --> 00:46:46.119
that it's very telling that while Grover is quite confident
851
00:46:46.199 --> 00:46:48.400
that we can cut spending all the way down until
852
00:46:48.440 --> 00:46:51.199
we don't have a revenue problem, his solution on Social
853
00:46:51.239 --> 00:46:54.440
Security isn't actually to cut spending down right. First he
854
00:46:54.559 --> 00:46:57.639
mentioned Trump Accounts, which is of course an entirely new
855
00:46:57.679 --> 00:47:02.559
program of government spending, putting money into the accounts, and
856
00:47:02.599 --> 00:47:05.760
then he mentioned selling federal land. That is, rather than
857
00:47:06.760 --> 00:47:10.360
actually pay our bills and account for the cost of
858
00:47:10.400 --> 00:47:12.800
the things that we want to do, he wants to
859
00:47:12.840 --> 00:47:15.960
take one of the permanent assets that we have inherited
860
00:47:16.000 --> 00:47:18.519
down through the generations and sell it off in a
861
00:47:18.519 --> 00:47:22.119
one time transfer. Now I think there could be situations
862
00:47:22.119 --> 00:47:25.280
in which selling federal lands makes sense as well. I'm
863
00:47:25.320 --> 00:47:28.559
not entirely opposed, but I just want to underscore here
864
00:47:28.559 --> 00:47:31.559
that we've just dug into the first program and we're
865
00:47:31.599 --> 00:47:35.280
already looking for revenue because we can't actually cut the
866
00:47:35.280 --> 00:47:37.679
spending that far. We could now have the same conversation
867
00:47:37.679 --> 00:47:40.599
about Medicare. We could have the same conversation about defense,
868
00:47:41.079 --> 00:47:42.920
and we'd be in the same place, which is that
869
00:47:43.280 --> 00:47:45.320
there are lots of sort of ways to get around
870
00:47:46.079 --> 00:47:49.440
around the issue, but there is zero political appetite for
871
00:47:49.519 --> 00:47:52.119
the level of cuts that Grover would need to advocate
872
00:47:52.519 --> 00:47:54.920
to make his no tax posture plausible.
873
00:47:55.400 --> 00:48:00.320
So I want to conclude this portion with a final
874
00:48:00.639 --> 00:48:06.360
specific question, and that is defense that the United States
875
00:48:06.440 --> 00:48:09.840
average over the last decade or so somewhere between three
876
00:48:09.880 --> 00:48:13.079
point two and three point five percent of GDP on
877
00:48:13.239 --> 00:48:17.800
all national security, which includes the Defense Department and includes
878
00:48:17.840 --> 00:48:21.760
the defense of spending nuclear weapons is in the Energy Department,
879
00:48:21.800 --> 00:48:28.559
and so forth. The President has asked, between his official
880
00:48:28.639 --> 00:48:32.119
request and his supplemental request for an increase to about
881
00:48:32.159 --> 00:48:35.599
five percent of GDP. He has asked all of the
882
00:48:35.639 --> 00:48:39.800
allies to spend within the next decade five percent of GDP,
883
00:48:40.239 --> 00:48:44.480
which obviously would exacerbate the deficit problem if not either
884
00:48:44.559 --> 00:48:48.559
offset with domestic spending cuts or finance through text increases.
885
00:48:49.400 --> 00:48:52.639
Do you support the President's idea that we need to
886
00:48:53.400 --> 00:48:57.320
raise defense spending somewhere close to the five percent of
887
00:48:57.400 --> 00:49:01.800
GDP level, somewhere with the in the president's first term,
888
00:49:02.280 --> 00:49:06.239
And if you do support that. Then do you support
889
00:49:06.239 --> 00:49:10.800
offsetting that with either revenue or domestic spending or do
890
00:49:10.840 --> 00:49:14.280
you support increasing defense? And if you oppose it, can
891
00:49:14.320 --> 00:49:17.199
you explain why you oppose it. Let's start with you, Orn,
892
00:49:17.280 --> 00:49:20.000
and we'll go back to Grover, and that balances out
893
00:49:20.079 --> 00:49:21.840
how I've been allocating to them.
894
00:49:22.360 --> 00:49:25.519
Yes, I oppose it. I don't think it makes any
895
00:49:25.559 --> 00:49:27.960
sense to be trying to increase defense spending. I would
896
00:49:27.960 --> 00:49:32.440
actually like to see us gradually reducing defense spending as
897
00:49:32.480 --> 00:49:36.280
a share of GDP. I realize that requires changes to
898
00:49:36.320 --> 00:49:41.119
our grand strategy and military posture generally, and I think
899
00:49:41.239 --> 00:49:44.079
those are necessary as well. I think those are probably
900
00:49:44.360 --> 00:49:47.800
a good unto themselves, because we should be a republic and.
901
00:49:47.800 --> 00:49:48.599
Not an empire.
902
00:49:49.480 --> 00:49:51.599
But even to the extent that there is a case
903
00:49:51.639 --> 00:49:54.800
for much more aggressive commitments around the world, we are
904
00:49:55.039 --> 00:49:58.639
unfortunately now in a position, in part because of the
905
00:49:58.679 --> 00:50:03.119
wild fiscal irresponse ability of recent decades, where it is
906
00:50:03.159 --> 00:50:04.800
simply not a plausible option.
907
00:50:06.400 --> 00:50:09.639
Grover, the last word will be yours on this question,
908
00:50:09.679 --> 00:50:12.280
and then I will transition to you for your final
909
00:50:12.559 --> 00:50:13.880
concluding two minute statement.
910
00:50:14.880 --> 00:50:20.320
Sure the dove Zachheim, who was the Comptroller of the
911
00:50:20.320 --> 00:50:24.400
Pentagon commented that when we downsized from the Cold War
912
00:50:24.480 --> 00:50:28.079
six percent of GDP down to three percent, we reduced
913
00:50:28.119 --> 00:50:34.119
the number of soldiers, sailors, airmen, planes, trains, automobiles, but
914
00:50:34.159 --> 00:50:37.440
not the number of bureaucrats in the Pentagon that it
915
00:50:37.559 --> 00:50:40.440
was at seventh hundred thousand, and he said that you
916
00:50:40.480 --> 00:50:45.000
could have dropped two hundred thousand from that number without
917
00:50:45.039 --> 00:50:49.239
having challenges, and you could go beyond that. I have
918
00:50:49.320 --> 00:50:53.480
offered and urged the administration to take the legislation that
919
00:50:53.559 --> 00:50:56.440
was actually prepared on that and take a look at
920
00:50:56.480 --> 00:51:00.679
how many of the civilian employees you could reduce expensive
921
00:51:01.679 --> 00:51:06.960
and again, according to the Comptroller, not necessary to the
922
00:51:07.039 --> 00:51:12.000
national defense. That is, I mean depending on not doing
923
00:51:12.000 --> 00:51:14.960
that they ought to be doing those things. The other question,
924
00:51:15.000 --> 00:51:17.239
of course, is we're now finding out that a lot
925
00:51:17.239 --> 00:51:20.239
of what we thought was necessary for the military Ukraine
926
00:51:20.280 --> 00:51:22.920
and others they're building in their basement at much lower
927
00:51:22.960 --> 00:51:26.920
costs than anything we had. So part of this is
928
00:51:27.159 --> 00:51:29.880
let's take a look at how we can do things
929
00:51:30.079 --> 00:51:33.719
less expensively. The reason why Europe to antie up is
930
00:51:33.719 --> 00:51:36.119
that they haven't been there. We've been there all these years.
931
00:51:36.800 --> 00:51:41.039
I'm not sure that raising additional spending here is necessarily
932
00:51:41.559 --> 00:51:45.280
a good idea, but there's a lot of spending restraint
933
00:51:45.320 --> 00:51:47.519
that could be done. And has it yet?
934
00:51:49.000 --> 00:51:52.360
Okay, well, then thank you for an enlightening discussion, and
935
00:51:53.039 --> 00:51:55.320
thank you for inviting me something to be something other
936
00:51:55.400 --> 00:51:57.719
than a potthead plant, which I usually am. Now that's
937
00:51:57.719 --> 00:52:01.960
a reference to a the Oliver North hearings for those
938
00:52:02.000 --> 00:52:05.840
of you who are old enough to recall them. We
939
00:52:05.880 --> 00:52:09.639
are now into our closing statements and in reverse order. Grover,
940
00:52:09.880 --> 00:52:12.199
you have two minutes to conclude, and then I'll turn to.
941
00:52:12.199 --> 00:52:14.119
You ORIM sure.
942
00:52:14.679 --> 00:52:17.440
The question was should be be raising taxes? And I
943
00:52:17.480 --> 00:52:20.280
have pointed out that at the state level all should
944
00:52:20.320 --> 00:52:23.360
Republicans be raising taxes or for raising taxes? And I
945
00:52:23.440 --> 00:52:26.760
pointed out the Republicans across the country at the state level,
946
00:52:27.000 --> 00:52:32.519
which is serious amounts of money and serious dangers of overspending.
947
00:52:32.639 --> 00:52:36.000
As we have unfunded liabilities in the trillions of dollars
948
00:52:36.239 --> 00:52:41.079
from Blue states pension funds. Red states have actually governed better.
949
00:52:41.400 --> 00:52:43.639
The federal government needs to look at how the Red
950
00:52:43.679 --> 00:52:46.840
states have operated, but also to give the Blue states
951
00:52:46.840 --> 00:52:51.079
an opportunity to get there. Here's the question, do we
952
00:52:51.159 --> 00:52:55.440
become Europe, Do we raise taxes to follow the overspending
953
00:52:55.760 --> 00:52:59.000
instead of recognizing this overspending and not. I heard all
954
00:52:59.039 --> 00:53:01.480
the assertions that we can possibly cut spending in any
955
00:53:01.480 --> 00:53:05.159
meaningful way, and yet we haven't even gotten the Democrats
956
00:53:05.159 --> 00:53:09.039
to take baby steps. I do believe with an improved Congress,
957
00:53:09.079 --> 00:53:11.000
but it does take that the Democrats are not willing
958
00:53:11.039 --> 00:53:13.960
to cut spending. They're not willing to reduce deficit spending.
959
00:53:13.960 --> 00:53:16.920
They're not willing and they will raise taxes, but then
960
00:53:16.960 --> 00:53:19.880
they will spend it as well as they always have.
961
00:53:20.360 --> 00:53:23.239
So the idea that if we gave the Democrats more
962
00:53:23.239 --> 00:53:26.800
revenue they would do something other than spend it is counterfactual.
963
00:53:27.360 --> 00:53:30.000
We do have two parties going in very different directions.
964
00:53:30.039 --> 00:53:32.639
It wasn't that way in the past, but with the
965
00:53:32.639 --> 00:53:36.559
Democrat becoming party becoming as radical as it is, they
966
00:53:36.679 --> 00:53:40.000
just don't have the capacity to reduce spending. Remember, they
967
00:53:40.079 --> 00:53:43.400
just got off a ninety trillion dollar request on spending
968
00:53:43.840 --> 00:53:47.320
and taxes that they wanted because of the Green New Deal.
969
00:53:47.760 --> 00:53:51.119
They're not in a mood to do anything serious. What
970
00:53:51.119 --> 00:53:53.559
we need to do, what we can do with growth
971
00:53:53.599 --> 00:53:57.079
from economic growth, reducing taxes particlan, saving as an investment
972
00:53:57.320 --> 00:53:59.800
to get more economic growth, and we do need to
973
00:53:59.800 --> 00:54:02.559
sell properties to pooh pooh that and the money we
974
00:54:02.760 --> 00:54:05.960
sold land to be a part a great deal of
975
00:54:06.000 --> 00:54:09.360
our countries, the money that we had in early years,
976
00:54:09.639 --> 00:54:11.320
you could do that as well. The value of the
977
00:54:11.400 --> 00:54:14.159
land is much greater because now we know what's underneath
978
00:54:14.199 --> 00:54:17.599
it very valuable. Well, you could fix social Security with
979
00:54:17.760 --> 00:54:20.199
the funding that could come from that and a bunch
980
00:54:20.199 --> 00:54:21.960
of other things, but you do have to look at it,
981
00:54:22.159 --> 00:54:25.639
and you have to beat the Democrats who don't want
982
00:54:25.639 --> 00:54:28.880
to do that and want to raise taxes instead. So
983
00:54:29.559 --> 00:54:32.599
there's no gift from the Democrats on spending. The Republicans
984
00:54:32.599 --> 00:54:35.880
should not raise taxes, and we made fools again. We
985
00:54:35.960 --> 00:54:39.480
can as the Republican Party strengthens as more and more
986
00:54:39.719 --> 00:54:44.239
electoral College votes move into the red states, end up
987
00:54:44.360 --> 00:54:46.880
with a solid Republican vote. And we were within inches
988
00:54:47.119 --> 00:54:49.960
one vote of saving hundreds of billions of dollars if
989
00:54:50.000 --> 00:54:52.280
McCain did not vote voted the way he did. So
990
00:54:52.320 --> 00:54:55.159
it's not like they aren't trying and they aren't working
991
00:54:55.159 --> 00:54:57.280
to get there, but they do need a few more
992
00:54:57.320 --> 00:54:59.440
senators and a few more congressmen.
993
00:54:59.280 --> 00:55:00.559
Both of which have very doable.
994
00:55:01.280 --> 00:55:03.679
We're winning, and we're not going to raise taxes because
995
00:55:03.719 --> 00:55:05.920
that would stop us from being in a position to
996
00:55:05.960 --> 00:55:06.480
do anything.
997
00:55:07.360 --> 00:55:09.800
Thank you, Gover orn your two minutes.
998
00:55:11.000 --> 00:55:14.639
Sure, I guess to start with just a broad observation
999
00:55:14.760 --> 00:55:17.119
on where we went in the debate. You know, the
1000
00:55:17.559 --> 00:55:21.480
question upfront was should conservatives raise taxes? And I think
1001
00:55:21.599 --> 00:55:24.280
the way that you know, the discussion shifted to what
1002
00:55:24.280 --> 00:55:28.239
should Republicans do is telling because we're essentially just having
1003
00:55:28.280 --> 00:55:34.039
a political argument. I don't think there's actually anything genuinely
1004
00:55:34.199 --> 00:55:39.400
conservative or defensible from a conservative starting point about taking
1005
00:55:39.480 --> 00:55:42.840
this sort of absolutist position. Obviously, you know, whether we're
1006
00:55:42.840 --> 00:55:44.719
going all the way back to Burke, whether we were
1007
00:55:44.760 --> 00:55:47.440
just looking at Thatcher at Reagan who both raised taxes
1008
00:55:48.079 --> 00:55:51.119
and so on, the notion that thou shalt not raise
1009
00:55:51.159 --> 00:55:56.400
taxes is a conservative position is incorrect. I certainly think
1010
00:55:56.440 --> 00:55:59.760
we need to approach this in a balanced way, you know, Grover,
1011
00:56:00.119 --> 00:56:02.599
to summarize my position as we can't cut spending in
1012
00:56:02.639 --> 00:56:05.920
any meaningful way, that's incorrect. I've just said we need
1013
00:56:05.960 --> 00:56:08.840
to in fact close most of the deficit through spending.
1014
00:56:08.920 --> 00:56:12.039
You're talking about on the order of a trillion dollars
1015
00:56:12.079 --> 00:56:15.960
a year given the deficit today. But the question, if
1016
00:56:16.000 --> 00:56:18.960
we're just being politically pragmatic, is what is the most
1017
00:56:19.000 --> 00:56:23.000
plausible pathway to do that. The argument that the most
1018
00:56:23.039 --> 00:56:27.960
plausible pathway is to only cut taxes, win supermajorities, and
1019
00:56:28.039 --> 00:56:31.239
then suddenly have Republicans become spending hawks that they have
1020
00:56:31.360 --> 00:56:34.000
not been when they've had control and do things for
1021
00:56:34.000 --> 00:56:36.679
which there is no political support in the country on
1022
00:56:36.760 --> 00:56:40.320
the spending side strikes me as implausible. I think a
1023
00:56:40.440 --> 00:56:44.719
much more reasonable path is to actually be reasonable, recognize
1024
00:56:44.719 --> 00:56:47.320
that we need to approach the problem from both sides,
1025
00:56:47.840 --> 00:56:51.199
and see how Democrats respond. It's possible that Demoscrats will
1026
00:56:51.199 --> 00:56:53.079
say no deal, we want to do a ninety trillion
1027
00:56:53.119 --> 00:56:55.960
dollar new deal. But if that or green new deal.
1028
00:56:56.039 --> 00:56:58.719
But if that's the case, then Republicans will have adopted
1029
00:56:58.760 --> 00:57:01.719
what I think is a very popular posture, which is
1030
00:57:02.119 --> 00:57:04.639
we are willing to do the responsible thing, and it
1031
00:57:04.679 --> 00:57:08.360
will put Democrats in a very difficult position. I often
1032
00:57:08.440 --> 00:57:12.159
note that there's nothing inherent in our democracy that leads
1033
00:57:12.159 --> 00:57:14.840
to these kinds of fiscal imbalances. We went two hundred
1034
00:57:14.880 --> 00:57:17.920
and twenty five years up until the year two thousand,
1035
00:57:18.599 --> 00:57:22.639
with extraordinary fiscal responsibility, with debt to GDP about thirty
1036
00:57:22.679 --> 00:57:26.480
three percent, with no deficit, in fact surplus. As far
1037
00:57:26.480 --> 00:57:30.000
as I could see, what changed was the side that
1038
00:57:30.039 --> 00:57:32.880
had always insisted on fiscal discipline, saying, never mind, will
1039
00:57:32.920 --> 00:57:35.480
cut taxes no matter what. That's what we need to
1040
00:57:35.559 --> 00:57:38.480
change back. I guess I would give Grover credit for
1041
00:57:38.519 --> 00:57:43.519
perhaps having more influence on our national fiscal policy than
1042
00:57:43.559 --> 00:57:46.280
anyone else in recent decades. I would just note that
1043
00:57:46.360 --> 00:57:49.079
our fiscal position is a complete disaster.
1044
00:57:50.360 --> 00:57:53.199
Thank you Laura, thank you Grover, and thank you listeners.
1045
00:57:53.719 --> 00:57:56.679
I'll be back in two weeks with another program of
1046
00:57:56.760 --> 00:58:02.039
Conservative Crossroads. The topic the unitary excus executive. John Yu
1047
00:58:02.360 --> 00:58:04.840
thinks it's a good idea and mandated by the Constitution.
1048
00:58:05.320 --> 00:58:08.519
The president is not the hr officer of the executive branch.
1049
00:58:09.280 --> 00:58:12.119
A lot of I think what the dispute amongst conservatives
1050
00:58:12.320 --> 00:58:15.519
evolves is is there any substance as well? And this
1051
00:58:15.639 --> 00:58:17.800
the Supreme Court has not touched.
1052
00:58:17.559 --> 00:58:20.159
As much George Will does not.
1053
00:58:20.599 --> 00:58:24.840
It seems to me the unitary executive theory scratches what
1054
00:58:24.880 --> 00:58:28.840
I would call humanity's rosetta stown itch, that is, the
1055
00:58:28.920 --> 00:58:34.320
desire to find something that decodes everything and answers all questions.
1056
00:58:34.719 --> 00:58:36.440
I'll see you then take care.