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Sen. Cornyn to Obama: Take Tax Increases Off the Table

July 5, 2011 at 12:00 AM EST
President Obama announced Tuesday that he will host bipartisan congressional leaders at the White House for continued talks on a deal to reduce the nation's deficit and raise its debt limit. Judy Woodruff discusses the negotiations with Republican John Cornyn of Texas, who sits on the Senate Budget and Finance committees.
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JUDY WOODRUFF: President Obama announced late this afternoon that he will host the bipartisan congressional leadership at the White House Thursday for continued talks on a deal to reduce the deficit and raise the nation’s debt limit.

He went before cameras at the White House today to argue what he sees as the terms of debate ahead of this next round of negotiations.

PRESIDENT BARACK OBAMA: It’s my hope that everybody is going to leave their ultimatums at the door, that we will all leave our political rhetoric at the door, and that we’re going to do what’s best for our economy and do what’s best for our people. And I want to emphasize — I said this in my press conference — this shouldn’t come down to the last second.

JUDY WOODRUFF: Last week, Jeffrey Brown sat down with White House Chief of Staff Bill Daley to get the administration’s take on the negotiations.

Tonight, we bring you the Republican point of view.

Sen. John Cornyn of Texas joined me from Capitol Hill a short time ago. He chairs the National Republican Senatorial Committee and sits on the Senate Budget and Finance committees.

Sen. John Cornyn, thank you very much for talking with us.

SEN. JOHN CORNYN, R-Texas: Thanks, Judy.

JUDY WOODRUFF: The president also said earlier today that he believes there needs to be a big comprehensive deal now, not a short-term deal just to get the government through this debt limit date coming up this month.

SEN. JOHN CORNYN: Well, I think this is the opportunity, and this is the point of maximum leverage to try to get the best deal we can when it comes to spending cuts and to fix our broken entitlement programs, which are going to run out of money within roughly the next decade.

And — but, unfortunately, the president is kind of late to the game. He delegated this to Joe Biden. Eric Cantor and Jon Kyl left those talks when it became apparent that they weren’t making progress. And, so, finally, the president took personal ownership and responsibility.

I’m glad he did, because only he and John Boehner and Mitch McConnell, I think, are going to be able to reach a deal. And there’s not much time left to do that. But I hope they go big and I hope we take advantage of this opportunity, rather than have to deal with a piecemeal approach.

JUDY WOODRUFF: But if Democrats are prepared to give ground on entitlements, on Medicare and Medicaid, why can’t Republicans give some ground on the question of taxes, especially, you know, we’re talking about corporate taxes, tax — doing away with tax breaks for people who own private jets?

SEN. JOHN CORNYN: Well, we’re happy to talk to the president about tax reform, which his commission, the Simpson-Bowles commission, last December recommended. A lot of that is a good place to have a good extended discussion and to make our tax code, I hope, flatter, fairer, and simpler, and also to make our companies more competitive when it comes to job creation here at home.

But what it sounds like the president really wants is, in exchange for spending cuts, he wants to raise taxes on individuals, including job-creators here. And I think it really is kind of a shell game. I think what voters said last November is they want government to live within its means.

And it’s like saying, well, we will give up our dessert, but we’re going to continue binging on the buffet. And it just doesn’t make any sense.

JUDY WOODRUFF: Senator, the evidence, at least what I have read, is that, right now, the federal government is taking in tax revenues at the lowest percentage of gross domestic product in 60 years.

SEN. JOHN CORNYN: Right.

JUDY WOODRUFF: If that’s the case, then why isn’t there some room for tax increase?

SEN. JOHN CORNYN: Well, Judy, the one sort of revenue increase that we would support is to take the boot off the neck of the private sector, because, once that engine of job growth, economic growth gets back on its feet, then we will see a lot more revenue into the treasury.

And that’s why, in addition to cutting, we believe growing the economy, but — can only be done by the private sector. If you raise taxes on an already-burdened private sector, which is reluctant to get back in investing in new jobs and new physical plants, raising taxes just makes their burden harder, not easier.

And with 9.1 percent unemployment, I think we need to look at everything we can do to make it easier on job-creators to create jobs, not harder. And raising taxes would make it harder.

JUDY WOODRUFF: But it’s not — it’s not just tax rates that have been low or tax revenues that have been low compared to what they were for the last 60 years. Corporate tax, as a percentage of domestic — gross domestic product lowest that it’s been in a very long time.

We know corporations are sitting on a lot of money. They haven’t been creating jobs. So, what is the evidence that they would create jobs if rates stay the same?

SEN. JOHN CORNYN: Well, one of the reasons they are sitting on that cash — and, yes, they become a whole lot more efficient by laying people off, increasing automation, and various things within their companies — but they’re sitting on that cash because they don’t know what’s going to happen in terms of tax rates and in terms of regulation, in terms of what the health care costs are going to be from the president’s health care bill that they didn’t anticipate and didn’t factor into their business model.

So I think there’s a lot of anxiety out there that, if the president would — we could settle this issue that we’re not going to raise taxes, we will get past the spending problem by agreeing to spending cuts and entitlement reform, I think you would see the markets breathe a sigh of relief, and a lot of job-creators would invest money into new jobs, which is exactly what we need.

JUDY WOODRUFF: Let me ask this from a citizens’ perspective. If you’re a blue-collar Medicare/Medicaid recipient, you’re prepared under this Democratic proposal to share in some of the sacrifice.

But, meanwhile, you’re watching business owners, corporate CEOs not share in the sacrifice. How do you explain the balance to them, or lack thereof?

SEN. JOHN CORNYN: Well I think — what I think my constituents in Texas want is work. They want jobs. And they’re not being created now across the country.

And we know that people who don’t have a job, they can’t pay their home mortgage and they’re losing their home. So, what we need now more than anything else in this country is jobs. And we have seen the government, through its failed stimulus program, where they have said the targeted goal was to keep unemployment below eight percent, obviously, it wasn’t successful.

So that leaves the private sector. And, apparently, the president doesn’t understand the anxiety that this lurching back and forth in terms of regulation, financial burdens associated with health care, or just the uncertainty with regard to tax rates, what that’s doing to the private sector.

What it’s doing is keeping them on the sidelines. We need to settle this, calm down the politics here in Washington long enough so people can figure out what the rules are, so they know what rules they’re playing by.

JUDY WOODRUFF: We know, Senator, the president today called on both sides to come to the White House this week for another meeting, said, leave your ultimatums at the door. He’s calling for a big — a big compromise at this point.

But let me ask you about what bipartisan folks like Erskine Bowles, Alan Simpson, the Center for a Responsible Federal Budget, I mean, they’re saying there’s simply no way to get at this huge $14 trillion debt just on the spending side, that it — that you have to go after revenues to get to that number.

SEN. JOHN CORNYN: Well, I think that’s — there’s really two parts to that, Judy. One is to reduce the overall business tax rate, hopefully to make us more competitive globally, as I read President Clinton reiterated today.

It just makes sense, if it’s cheaper to do business here in the United States, then jobs will be created here. If it’s cheaper to keep that cash and to create jobs abroad, that’s what businesses will do because it makes economic sense.

But, again, I think the last thing I would think you would want to do, when the recovery is so anemic and when the private sector is sort of sitting on the sidelines because they don’t know what the costs of doing business are going to be, tax rates, regulatory policy, that I think we need to find a way to relieve that anxiety by saying, you know what? During a fragile economic recovery, just like last December with the expiring tax rates, the president agreed, this is not a time to raise taxes.

Well, it’s not still not a time to raise taxes with 9.1 percent unemployment.

JUDY WOODRUFF: Finally, Senator, columnist David Brooks in The New York Times today criticized what he said was the anti-tax faction in the Republican Party and said it doesn’t accept the logic of compromise. He said — he said, this is a movement with no sense of moral decency because it’s prepared for the United States to ignore the debt limit.

SEN. JOHN CORNYN: Well, Mr. Brooks apparently is not listening to the people that I’m hearing from in my state and across the country.

Look, this is — this deal is not over yet. We still have some time, thankfully, between now and August the 2nd to reach some sort of negotiated outcome. But what I think David Brooks underestimates is what it’s going to take to pass this, not only through the House, but also through the Senate. It’s going to require 60 votes through the Senate.

So it’s going to take more than the president having a press conference or having a meeting. We need to come up with a package that can actually pass both branches of the Congress between now and August the 2nd. And I just, frankly, don’t think tax increases, particularly during a weak economic recovery, are likely to pass either the House or the Senate.

JUDY WOODRUFF: We hear you.

Sen. John Cornyn, thank you very much.

SEN. JOHN CORNYN: Thanks, Judy.