The Daily Rundown | July 18, 2011
>>> the truth is, you can't solve our deficit without cutting spending. but you also can't solve it without asking the wealthiest americans to pay their fair share . or without taking on loopholes that give special interests and big corporations tax breaks that middle class americans don't get.
>> well, that was the president trying to keep pressure on, for his weekend radio address, but it looks like congress has lost its appetite for any sort of big deal . right know the question is if there's any scenario under which conservatives in the house will vote to increase the debt ceiling and whether there will be legislation where they're needed. grover norquist is president for americans for tax reform , the most famous pledge now, i think we all know. and we're going to have another discussion down the road about this idea of all these groups climbing on to the pledge world.
>> it's only one pledge.
>> okay. tell us specifically about the pledge. because there's two parts to it.
>> sure. look, the pledge says, it's a commitment by somebody who's running for office or in office --
>> and you ask anybody who's running for office down to what level?
>> federal and state.
>> some towns and cities have done it themselves, but we put a unified pledge --
>> for state legislature and up.
>> it's the same wording. if somebody says, fred took the pledge in kansas, you know what he means. it's not different for different states.
>> and won't raise taxes?
>> won't raise taxes. for the income tax at the federal level , it says, i won't raise rates unless rates come down. it's a way to make sure bob dole conn get around the pledge when we wrote it 25 years by quote/unquote broadening the base, getting rid of deductions or credits in a way to raise revenue. i'm in favor of tax reform which is getting rid of many deductions and credits and having a significantly different tax rate on the individual side and business side.
>> it sounds like if you eliminated loopholes and you lowered the rate and --
>> dollar for dollar.
>> and it did -- see, that's right. and it did increase revenue. if there was a net revenue increase to the government, you would be against --
>> that's a tax increase.
>> on somebody. even if it's a loophole, even if the rate is going down overall.
>> this is overall. this is looking at all taxpayers, or you're taking more or less money. certainly with some tax reform , somebody who had a tax advantage before --
>> somebody's going to be paying more money.
>> the test is total tax revenue . not how it affects fred.
>> it's total tax repeats. so you have said that the deficit -- this is what you told david gregory last week. you said it is a misdirection that that really shouldn't be the focus. so i read that and i said, okay, so if the deficit is the number one issue for you, and not over and above spending, then they shouldn't sign your pledge. you're saying, don't use the tax code to try to bring down the deficit?
>> the problem that we have as a country is the federal government is spending too much money. the problem isn't the deficit. the deficit is the difference between two important numbers. how much money the government spends and how much it takes by force and taxes. the difference between those two numbers, that's not the key thing. the key thing is total government spending . that's the deadweight cost of government. if the government spent $100, took $90 by taxes, and borrowed $10, you would solve what problem by taking all $100? would you free up resources for the private sector? no. deadweight cost to government is total spending. that's what this debate is about here. obama wants to say, you know what the problem is? the peasants are sending enough cash to pay for my government, we should raise taxes. no, the problem is you're spending too much.
>> if the deficit is one of these problems that's coming and you've got a solution that is four to one, four to one in spending cuts. and i know there's a lot of skepticism, with you who's got a listening memory of '82 and '90. but at some point, if you feel like you could verify the 4 to 1, a trust but verify the 4 to 1, could you live with that?
>> get rid of the spending restraint, take the tax increase, and move forward.
>> if you want to get rid of the deficit, to do this over time . and if you get rid of it, you have more of a chance of cutting spending long-term, do you not?
>> the goal is to reduce total government spending , not to focus on the deficit. raising taxes does not do anything to help cut spending. raising taxes is what obama and other democrats do instead of cutting spending. they say, we don't have to cut spending, we can raise taxes. no. it's all about spending.
>> were you concerned when you heard speaker boehner was doing a grand bargain with the president?
>> no, because speaker boehner, one, has taken the pledge and always kept it as a congressman. he leads a caucus in the house of representatives , where all but six republicans have made the commitment in writing never to raise taxes. he knows he leads a republican party that's not going to raise taxes and that he personally is committed to that as well.
>> if he signed on to a grand bargain that included some sort of revenue increase, what would you have done?
>> well, he would not sign on to a deal that raises taxes. he's said it 100 times . i know some people keep asking it different ways. advocates of more spending keep asking republicans whether they might be open to a tax increase the way a teenage boy asks the same question on a prom date. but the answer is no. no. no.
>> all right. are you convinced balanced budget amendments can prevent tax increases? isn't there an argument that a balanced budget amendment , that have taken place in the states, has actually forced the hands of split government control to raise revenues?
>> interestingly, people talk about the role the taxpayer protection pledge has played nationally in washington. this last year, it has stopped tax increases and brought about significant spending restraint in texas and florida and pennsylvania and michigan and new jersey and ohio and indiana.
>> but in the past, balanced budget amendments have led to increased taxes and fees in states, have they not?
>> they have. and that's why you need a governor and a legislature that's signed the pledge, or a constitutional amendment that requires a two-thirds vote to raise taxes. california's cutting spending and not raising taxes . why? because they require --
>> so you're not signing -- you wouldn't sign on to a balanced budget amendment that was simple majority in taxes?
>> no, because a court could come i in and raise taxes on you. that's why the present republican senate, every republican senator has agreed to that constitutional amendment that requires a two-thirds vote to raise taxes and doesn't simply allow you to get around the balanced budget amendment , because there's an emergency. this is not your father's flawed balanced budget amendment that was just silly. this is -- this has teeth.
>> grover norquist , head of american tax reform , you always come up with some interesting analogies there. teenage boys everywhere running for their lives. grover, thanks very much.