Tavis: Senator Mark Warner is serving his first term in the U.S. Senate following his time as governor of the Commonwealth of Virginia. He’s a key member of both the budget and banking committees and is behind a proposed compromise now over the issue of the Bush era tax cuts being so talked about these days in Washington. He joins us tonight from Capitol Hill. Senator, good to have you on this program, sir.
Sen. Mark Warner: Tavis, thanks for having me back on again.
Tavis: As I mentioned a moment ago, there’s so much talk these days, of course, about these Bush era tax cuts, so Congress is now back in session. What’s going to happen here?
Warner: Well, I think it’s still unknown. I think both political parties agree that 98 percent of Americans, everybody that makes less than $250,000 a year, shouldn’t have their taxes changed at all. We ought to give those people the certainty that we’re not going to mess with their taxes.
Where the debate has come has been what do we do with the top 2 percent, those folks above 250,000 a year in income? Frankly, both political parties have got a bit of a case to make.
The Democrats said if you extend the top 2 percent for 10 years, that’ll add $700 billion to the deficit. So that doesn’t make any sense. The Republicans have said well, we shouldn’t take any money out of the economy right now with the economy still in recession. That makes some sense as well.
So where it appears there’s been a kind of a political compromise that has said maybe we should just extend the top 2 percent for, say, two years. The problem with that has been that every time – and I’m a new member of Congress, but it seems to me every time Congress has a chance to punt on a hard issue, it will punt. Simply delaying this decision for two years I’m not sure is going to make a whole lot of good long-term economic sense in terms of the deficit.
Secondly, most economists have said to give folks at the very, very top an additional tax break at this point really may not be the best bang for the buck.
So my idea has been let’s go ahead and let the top 2 percent expire, as the current law says, but let’s recognize that for the next two years the money the government would have taken in, about $65 billion, let’s use that for targeted business tax cuts so that we can get the private sector rehiring again.
Because one of the things that has been absent from a lot of the news is that large American companies over the last couple of years, since this recession has begun, are actually financially better today than they were in 2007. So they’re sitting on top of $2 trillion worth of cash.
We ought to say, how can we use incentives and tax policy to get that cash off the sidelines, reinvesting and hiring folks again? My sense is with targeted tax cuts to try to make the choice between investing here versus investing abroad, we can make partially that happen.
Tavis: So what kind of hearing is your compromised proposed legislation getting?
Warner: Well, from the business community it’s actually getting a pretty good response because it’s hard for a business leader to say well, if my business can become more competitive, my business can do a little bit better, then they shouldn’t – most business CEOs say they don’t mind then going back to the same tax rates they paid under President Clinton on an individual basis when the economy was doing well.
I’m finding as I circulate this idea with my colleagues a lot of the Democrats are saying hey, this makes some sense. I’m starting to try chances to circulate it with the Republicans. It recognizes that both political parties have something to offer on this. It also, I think, would go a long way, I believe, because I would argue that which specific business tax cuts, that we ought to not say that ought to be decided simply by folk in Washington.
That we ought to encourage the business community to help up us say, where will we get the best bang for the buck? Because one of the things that concerns me is really the really harsh state of relations between the administration and Congress and the business community, and we’ve got to kind of lower the rhetoric and realize that you can’t be pro-jobs without also being pro-business.
Tavis: Where’s the evidence, Senator Warner, that we can point to that suggests that giving or extending these tax breaks for the rich and the lucky is going to do anything to stimulate the economy? Everything I read seems to suggest that these rich people are not pouring money back into the economy, so where’s the evidence, again, that suggests extending tax cuts for rich and lucky people is going to help the economy?
Warner: Well, Tavis, the fact is the best example of that is that’s been the policy basically since about 2001, 2002, so we’ve had seven or eight years of this policy and it’s clearly not done a lot to stimulate additional growth. I think most economists, and we use this – kind of the referee for most of these debates in Washington is a group called the Congressional Budget Office, the CBO, and they’ve said that if you give just those top-end folks this additional tax relief that a lot of people will simply put it in their stock account or put it in the bank and they won’t spend it.
Whereas if we actually say instead if we’re going to give $65 billion of targeted tax relief, let’s get the best bang for the buck. Let’s see if we can use it, whether it’s investment tax credit, whether it’s a payroll tax holiday, whether it’s an R&D tax credit, to get some of this money that’s sitting on the sidelines right now off the sidelines and reinvested.
So your basic point is there’s not a lot of evidence that continuing this tax break for the very highest end really is going to do much to stimulate the economy.
Tavis: So if and when the White House, as we are hearing that they are going to do, compromises on this issue, how is this going to endear President Obama to his progressive base, which he is already in trouble with?
Warner: Well, what I hope, Tavis, it would do is that we could kind of get out of the left-right battle here and say hey, how do we get people back to work? Nine point six percent unemployment; 15 million Americans unemployed, a lot of folks for many, many months doesn’t make good sense. If we’re going to be honest, we’ve got to acknowledge that government’s used its tools.
We’ve lowered interest rates, the Federal Reserve has lowered interest rates about as much as you can, and government stimulus spending, we’ve shot that bullet as well. I don’t think our Republican colleagues are going to go for more government stimulus.
So the one piece of the economy that’s still very healthy is large companies. They’re sitting on all this cash. What can we do to get them to start spending it, spending it here in this country and actually hiring people again? I think that would go a long way towards showing that this president is not anti-business, if he would embrace this kind of proposal.
That he realizes the private sector is where the job creation is going to come, and it might lower the rhetoric a little bit and I think that would be healthy for everyone. Frankly, I’ve been pleasantly surprised that a number of progressive members of Congress, particularly on the House side, have already actually endorsed my idea and said this makes sense. If we’re going to have some kind of compromise, Warner’s idea makes some sense.
Listen, I’m also first to acknowledge that if somebody’s got a better way to tweak my idea or improve upon it that’s going to make more job creation, I’m open for business. Let’s see if there’s ways that we can even improve on it.
Tavis: You mentioned the House, Senator, just a moment ago. We now know officially that John Boehner is going to be the man, the Speaker. We know that Nancy Pelosi is back now as the minority leader, so that issue now has been settled.
What about this notion that Republicans were at least standing on some weeks ago that there would be no compromise on these Bush era tax cuts? Is it your sense that they’re starting now to back off of that, Boehner included?
Warner: Well, Tavis, I think that’s yet to be seen. We have seen on a number of these discussions that some of the folks on the other side keep moving the goal posts. But my hope is that folks – the campaign season’s over. I think there were a couple of messages that came out of the campaign.
One was yes, we’ve got to get our deficit under control; two, it’s we’ve got to create jobs and three is I think the American people, whether you’re Democrat or Republican, they want to see us actually work together for the good of the country.
My hope would be if the Republican leadership simply says that all they want to do is take down President Obama, that’s not good policy and frankly I don’t think it’s good long-term politics as well.
So I hope everybody will check their D hat and check their R hat at the door and recognize that we’ve got to put on an American hat right now, and that means how do we stimulate job creation. There’s a billion people in China and a billion people in India who aren’t waiting for America to get its act together. They’ve got a plan, and they’re not going to wait on us.
We need to stimulate our own economy, and I think one of the ways to do that is through this effort that I proposed.
Tavis: Finally, speaking of deficit reduction, which you mentioned a moment ago, the Deficit Commission, of course, the commission all over the news over the last few days, and surprise, surprise, they’re talking about the fact that we have got to figure out a way to cut spending, discretionary spending. Your top line on what you’re hearing, at least what you’re reading, out of this commission, sir?
Warner: Well, listen, I think what the commission has done so far is they’ve given us the stark reality of how one, how big a hole we’re in, and two, that this is not going to be solved with just flimsy campaign rhetoric. It’s not going to be solved by just getting rid of earmarks.
It is going to take a real conversation with the American people to say okay, what do you want from the federal government and how much are you willing to pay? The idea that we’re going to solve this just by spending cuts or just by raising revenues, it’s going to take both side of the ledger and it’s going to take, I think, some honest conversation.
I’ll give you one example that’ll get me in some trouble. I think we need to understand on an area like Social Security, for example, that 50 years ago there were eight workers for every one retiree. Today there are two workers for every one retiree.
I believe that what the deficit commission said, for example, that said we’ve got to slowly start looking over a 10 or 15-year period of raising the retirement age, not for people who are 50 or 55. You grandfather in those folks, but to tell somebody who’s 25 or 30 chances are you’re not going to get Social Security until maybe you’re 69 or 70 or 71, especially since people are now living to plus-80, is an honest approach to some of these issues.
I honestly think the American people understand that, because again, just taking Social Security for a minute, the original time 65 was set as a retirement age was set in Germany by a guy named Bismarck in the 1870s, and he set 65 as the retirement age because at that point life expectancy was only in the mid-fifties. So some of this stuff is just math, and again, I think the American people are ready to do their share.
We as the political leadership have got to do our share as well and make sure that we put everything on the table.
Tavis: Democrat of Virginia, Senator Mark Warner on what’s going to happen in the coming days with these Bush era tax cuts. Senator Warner, thanks for your time, sir. Good to have you on.
Warner: Tavis, thanks a lot for having me on your show. Appreciate it.
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