Week In Politics: Debt And Taxes
ROBERT SIEGEL, host:
A lot of the political news in Washington these days is about the economy. And to paraphrase Benjamin Franklin: the two things you are certain to hear about these days are debt and taxes. So that's our agenda for our political observers, columnists E.J. Dionne of The Washington Post and the Brookings Institution and David Brooks of The New York Times.
Mr. E.J. DIONNE (Columnist, The Washington Post): Good to be with you.
Mr. DAVID BROOKS (Columnist, The New York Times): Good to be here.
SIEGEL: And, first, the Bush-era tax cuts would expire at the end of the year without some action. E.J., are Democrats and Republicans determined to strike some kind of deal?
Mr. DIONNE: Well, forgive me, but can I talk a little bit about the idiocy of Washington, D.C. I mean, here you have a week where the Bowles-Simpson proposal comes out - we'll be talking about it - all about doing big cuts to reduce the deficit. And then here you have demands that we extend the Bush tax cuts, including the tax cuts for very wealthy people. If you just let all those tax cuts expire, you'd have as much deficit reduction as you get out of the Bowles-Simpson proposal.
And with President Obama, Democrats, a lot of them don't want to do this. But the Obama administration's bargaining position has been pitifully weak, I think. If I ever have to bargain again for a house or a car, I'm not going to ask them to do it for me. And you have to hope that at least they will get out of this a, you know, an increase - a continuation of unemployment benefits, and, also, a continuation of the Obama tax cuts. If you let those go, a single mother who works full...
SIEGEL: You mean the Bush tax cuts?
Mr. DIONNE: No, I mean the Obama tax cuts from the stimulus plan.
SIEGEL: That came with part of the stimulus package.
Mr. DIONNE: And I think the Obama administration is bargaining for some of those. And if you let those go, a single mother of two who works full-time for minimum wage, $14,000 a year, would lose 1,500 bucks. So we're going to cut taxes for millionaires and not even let that through? We got to see if they can at least get that for their efforts.
SIEGEL: David Brooks?
Mr. BROOKS: Well, that's a lot. You know, I think we're going to see the Bush tax cuts, all of them extended for one year or three years. And we're going to see an extension of the unemployment insurance. I think short-term that's the right thing to do. We just heard about the uncertainty for a lot of business people. They got to know how much taxes they're going to pay. And they don't need the extra punishment right now of having a tax hike if they're in the small business community.
So I think it's the right thing to do. At the end of those one year or three years, I hope they get rid of all of them because then we have to get serious about the deficit.
SIEGEL: But what about E.J.'s claim that the Obama administration isn't bargaining hard enough. There's another CBS poll out this week which says a majority of Americans support the idea of keeping the cuts only for people who make less then $250,000.
Mr. BROOKS: Republicans won the election. So right now the Obama administration has no leverage at all. If they don't do anything, then taxes go up momentarily. The Republicans come into the House and they extend all the cuts. The Obama administration has no leverage. I'm mystified by some of the things they're doing, like, freezing federal pay. Politically I'm not sure why they made that concession unilaterally. But they have no leverage on this larger issue.
SIEGEL: Yes, E.J., very briefly and then we have to get into Bowles-Simpson.
Mr. DIONNE: Just very briefly. They are giving away leverage. They're assuming that they would lose the fight if the tax cuts died. The House passed an extension for the tax cuts for people earning less than 250,000. They're not even willing to take a chance to let it go for a couple of weeks. And by giving that away, they're giving away the whole thing to the Republicans. They could have a much stronger position.
SIEGEL: Now, Bowles-Simpson, the president's appointed debt reduction commission voted for the chairman's recommendation, 11 to seven today. Does that say the country is nowhere near a big bipartisan deal on spending and taxes or maybe it could be not too far over the horizon? David?
Mr. BROOKS: Probably not. But what the Bowles-Simpson group did was, A, remind us of the seriousness of the issue. And second, open up the debate. On the surface of Washington politics, there's an incredible polarized gridlock. But underneath there're an amazing number of really radical conversations going on in Congress, in the White House, to do radical tax reform, radical entitlement reform, radical budget rescissions. So these conversations are now bubbling up.
And I think it's possible, I wouldn't bet on it, I think it's possible if you found the right political strategy you could break through and have some really significant change over the last - next couple years - more than we expect right now.
SIEGEL: And we'd see Republicans embracing some kind of tax increases and Democrats embracing reform of entitlement...
Mr. BROOKS: That's part of a big tax reform - an entire reform of the tax cuts.
SIEGEL: E.J., you agree with that?
Mr. DIONNE: I wish I could see something like this coming together. The Bowles-Simpson proposal is, I think, flawed at its heart because they have - they expect way too many cuts in discretionary spending, which has already been cut. They are not very specific on how they're going to cut health care. And some of what they suggest is dangerous.
But I will give them this. They put tax reform on the table. And if there is anything that's lasting out of this, and I agree with David on this, it's that we have to discuss tax reform. They also put defense cuts on the table and having this rather conservative proposal take military reduction seriously is very important. I just don't see how the politics comes together.
Conservatives ought to embrace this. This is at heart a very conservative proposal. And I salute the conservatives on the commission who actually voted for it. But you saw many conservatives run away. They don't like anything that's specific. They just like to talk about...
Mr. BROOKS: No, that's not...
SIEGEL: They want to see health care costs come down or addressed.
Mr. BROOKS: They say we can't raise taxes without some sort of defined benefits for entitlements. As long as Medicare and Medicaid remain open-ended commitments, then all the revenue you would raise through tax reform will all get sucked up into that. So they want to see that. And that's a fair position.
Mr. DIONNE: I don't think it's a fair position to just run away from Bowles-Simpson because they've got a lot of cuts in here - in fact, excessive cuts in Social Security. So if this isn't good enough for them, I don't know what will be.
SIEGEL: Well, thanks to both of you for expressing your positions. E.J. Dionne of The Washington Post and David Brooks of The New York Times.
Mr. DIONNE: Thank you.
Mr. BROOKS: Thank you.
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