Week In Politics: Tax Cuts
MELISSA BLOCK, host:
And now we turn to our regular political commentators, E.J. Dionne of The Washington Post and David Brooks of The New York Times, for more tax talk. Welcome to you both.
Mr. E.J. DIONNE (Columnist, The Washington Post): Good to be with you.
BLOCK: We just heard Democratic Senator Mark Warner there putting a fast track on the tax overhaul. David Brooks, how would you gauge the appetite for sweeping tax change done quickly before 2012?
Mr. DAVID BROOKS (Columnist, The New York Times): Voracious.
Mr. BROOKS: Voracious appetite. It makes perfect sense. First, politically, unlike health care reform, there's sort of a consensus about it. Most people want to flatten the rates and simplify the tax code. There's a populist argument for it because it would really stick it to the special interests. And there's the economic argument for it. There's really only one thing we can do over the next three or four years to really combat the slow growth we're likely to have, and that's to make our tax cut efficient. So it makes perfect sense on every level.
BLOCK: Makes perfect sense, but, E.J., a lot of oxes would get gored in that process.
Mr. DIONNE: Right. A lot of people like the looks of it when they read the menu, but I'm not sure it's going to be so easy to actually, if you will, eat the thing. I mean a lot of Democrats actually wish they had made - started on tax reform at the beginning of last year. So, right now instead of still arguing over the seemingly ancient Bush tax cuts, we'd be arguing about or looking at a new and better system.
But there are a lot of problems. I think the biggest is that Democrats especially want to raise taxes on capital gains and dividends. So that income would be treated the same as ordinary income. And that's really the only way you can lower the rate and raise more money. Republicans hate the idea now even more than they did back when we had tax reform in '86 of raising taxes on capital gains. I think that's going to be the biggest argument we have. But I think it's a good thing that we're talking about it.
BLOCK: Well, let's talk about the president's deal this week with the Republicans on extending those Bush era tax cuts. He got a slap down yesterday from House Democrats who are outraged by the deal. Today in the Senate we've had the independent, Bernie Sanders, who took to the floor and spoke for hours in the style of a filibuster. Let's take a little - a listen to some of that.
Senator BERNIE SANDERS (Independent, Vermont): The reality is is that the top 1 percent already today owns more wealth than the bottom 90 percent. How much more do they want? When is enough enough? You want it all?
BLOCK: E.J., some Democrats are hopping mad about the deal. Is that - are they rightfully mad about it?
Mr. DIONNE: First of all, I love Bernie. He is actually a socialist and so you can't slander him by calling him a socialist. He says that himself. I think this whole tax deal is a Rorschach test. At first, it's strange that centrists and moderates who, a week or so ago were calling for bipartisan agreement on deficit reduction, now praise a measure that will add something, like, $858 billion to the deficit. The only test, it seems, is if Republicans are for it, make it bipartisan, it must be great.
The administration says, look, we may have had to give into the Republicans, but we got a lot more. They have this little chart they're circulating among Democrats: what we got, which is $238 billion, unemployment compensation, payroll tax cut, child credit and some other things, what they got - only 114 billion for the rich.
But a lot of Democrats are mad less about the content than about the fact that the administration seemed to fold early on this and didn't give very much time for negotiations and didn't see the advantage of having a public fight. So I think the story over the Obama presidency, good at the inside game, not so good at the outside game.
BLOCK: David Brooks?
Mr. BROOKS: Listen, they had to do it. The Republicans are about to take over the House. There are a lot of red state senators on the Democratic side who wanted to extend all the tax cuts. The law was expiring. They had no choice. They had a very weak hand because they lost the election. I thought the Obama administration did actually a fantastic job, given how little leverage they have in getting things that they want.
So the Republicans get the no tax increase on the small businesses, on the rich and everybody else. The Democrats get all the things E.J. mentions. What we have is a pretty strong stimulus bill. And, now, I hate deficits as much as the next guy. But the fact is we're only going to have long-term austerity if we can get the economy growing. And if we've got to have a short-term stimulus, to get there I think it's probably worth it. So on balance I thought it was economically and substantively a reasonably good deal.
BLOCK: Speaking of getting the economy going, I want to play for you a little bit of the interview that President Obama had with Steve Inskeep on MORNING EDITION that aired this morning. The question was, how does keeping the tax rate for the richest the same as it has been for a decade create one single job? And here's how the president responded.
Pres. OBAMA: It doesn't, which is why I was opposed to it and I'm still opposed to it. The issue here is not whether I think that the tax cuts for the wealthy are a good or smart thing to do. I've said repeatedly that I think they're not a smart thing to do, particularly because we've got to borrow money, essentially, to pay for them.
BLOCK: Not smart, but he went on to say, E.J., that he was not willing to sacrifice getting unemployment benefits extended because the Republican position on this was so strong it would've undone the entire deal. Was it worth the trade in the end?
Mr. DIONNE: It'll have been worth the trade if he's right that this is enough of a stimulus to get the economy moving. It will not have been a good decision if the Republicans can use this to create extraordinary pressure to cut programs like Medicare, Social Security and his own health plan.
BLOCK: And David Brooks, you do not see this as triangulation on President Obama's part. Why not?
Mr. BROOKS: No. Triangulation is when you sort of position yourself in the middle on trivial things. Bill Clinton, my favorite program he had was no handguns for deadbeat dads. That was triangulation, trying to be in the middle. What Obama has done is staked out a clear position, pretty liberal position, but said, hey, I'm not the only person running this country. I got to negotiate. And so he negotiated. And I thought what he did was actually pretty good.
BLOCK: OK, thanks to you both.
Mr. DIONNE: Thank you.
Mr. BROOKS: Thank you.
BLOCK: David Brooks of the New York Times and E.J. Dionne at The Washington Post.
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