Former Reagan adviser advocates higher taxes

>>> democracy and taxation. in 1936 , that is still a fight. mister justice oliver wendell holmes once said taxes are the prices we pay for our civilized society. one sure way to determine the social conscience of a government is to examine the way taxes are collected and how they are spent. and one sure way to determine the social conscience of an individual is to get his tax reaction. taxes are for all of the dues we pay for the privilege of membership in an organized society. that society becomes more civilized. government, national and state and local is called on to assume more obligations to its citizens.

>> that's fdr in october, 1976 . he's running for re-election. it's not a lame duck -- that is about his fourth case. it sounds like another planet given the tax politics. in the history you have been studying, is that an outlier or close to what the argument has been?

>> lawmakers made the argument in two ways. you clearly try to link the revenue raising that you want to do to the social investments. the malloy approach.

>> exactly.

>> the way to do it is training on the austerity that is going to result if you don't bite the bullet . look at california. it was the vanguard of that movement. in this past election, facing a fiscal cliff of its own, the prospect of trigger cuts, if they didn't adopt proposition 30 if they raise taxes. they decided to go for the tax increases and that's because they saw what that austerity could mean. you really have to do both. we talk about the investments and the costs.

>> please.

>> i was going to say, the federal level , one of the things we saw in 2000 , i know you want to keep taxes and spending separate, but i think we shouldn't. what we have seen is a great pitch to reduce taxes. again, i'm in favor of it. the route to great economic growth . that being said, it is not true, even with the best tax cuts when you spend like a drunken sailor , which happened under the republicans. if you cut taxes and increase spending, that's the equivalent of raising taxes in the future. i think it's key to keep those together.

>> bruce, do you think there's a case to be made to fellow conservatives about raising taxes here?

>> yes. first of all, the -- one of the problems with the norquist if you raise the taxes, there's -- she's incorrect. she's assuming the taxes will rise to pay for spending. narquist will not allow it to happen. it used to be the main constraint was the fear it would lead to higher taxes. if it never arise, you can have your cake and eat it too. we reduced the tax cost of spending. if you look at the long term budget forecast, one of the main drivers or long term spending is interest on the debt. if we don't raise taxes, we are automatically causing an increase in spending. so, we need higher revenues, both to restrain spending and to change the dynamics of the fiscal process.

>> i don't agree with you, bruce because actually --

>> surprise, huh?

>> actually, we're having this conversation about increasing taxes because while you are right, taxes don't go up immediately, what happens is you end up with large deficits. you end up with a lot of debt. as a result, because people don't like debt and deficit, that opens the door to rather than cut spending, increase taxes. i think there is a real connection.

>> if you raise the taxes first, then you wouldn't have the deficits.

>> well, i mean --

>> your idea is so dogmatic you are living in a fantasy world. balance a budget by abolishing medicare and other ludicrous ideas.

>> there won't be enough tax revenue to pay for the large spending increases --

>> that's not true. that's not true. it's a factually incorrect statement. let me point out something important. federal revenues are 15.8% of the gdp. it's way, way below the historical average. if we could get up to the post war average.

>> if we could get up --

>> we would knock $15 billion a year off the deficit.

>> this gets to the key roll that growth plays. i know you want to respond. i want to take a