Streams

Simpson on Budget Dealings and Gingrich

Wednesday, December 21, 2011

Recap from It's a Free Country.

Welcome to Politics Bites, where every afternoon at It's A Free Country, we bring you the unmissable quotes from the morning's political conversations on WNYC. Today on the Brian Lehrer Show, US Congressman (R-NJ 5th) Scott Garrett discussed unfinished business including the payroll tax holiday and unemployment benefits.

Former U.S. Sen. Alan Simpson (R-WY), co-chair with Democrat Erskine Bowles of the National Commission on Fiscal Responsibility and Reform, talked about his bipartisan plan for budget-cutting and the latest trouble in Congress. 

Spooked by Newt? 

Simpson said his experience dealing with then-House Speaker Newt Gingrich's political wrangling over policy was indicative both of Congressional sausage-making, but also gave insight into a scorched earth leadership style that he would take into his presidency.

I’d be very spooked, not because of his personal life. It’s what he did – and I watched him – an extraordinary breach of trust.

Simpson described a deal orchestrated by Gingrich and some Republican lawmakers in both branches of Congress known as the Andrews Airbase group to remake fiscal policy - and the extraordinary betrayal engineered by Speaker Gingrich to President Bush and Senate Republicans.  

They met in confidence at Andrews Airbase and they said “look, we can get two year budgeting, we can get this, we can get this,” it was an extraordinary, sweeping proposal. And they said “but, it can’t work unless we get some revenue.” They went to [President] George [Bush], and they said “George, Mr. President, this is a thing that will solve things and do things for this country but we’re going to have to have revenue.” And George said, “well, read my lips is what I’ve said, but if you guys can do this and you can promise me you can get the votes in the House and Senate I will accede to that knowing what it will do to me politically, but I will do it for the country.”

And they said we’ll get it for you. And [Senator Bob] Dole came back to the Senate and I think the vote was about 60 to 30, it was a good bipartisan vote. And we got it done. It went to the House. And Newt got up on his hind legs... and he said “well, as a member of the group out there I voted for it, but now as a member of the House, an individual member, I’m going to vote against it and I hope many of my party will.” He took with him Armey and Delay, all the troops. Imagine the glee of the Democrats. I mean, they were just chuckling. They said: it’s a two-for. Newt broke his word and this is the end of George Bush cause of ‘read my lips.’ Go look at the roll call vote of that vote, and you will say to yourself: “man oh man, this is some guy.”

Guests:

Alan Simpson

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Comments [34]

Tobin tax and asset tax on rich? from Yet another way to fix the deficit.


Someone who makes 50 million a year is still very well compensated
and very well motivated even if they a pay 70 % top marginal
rate - after all - its not hard to motivate smart, skilled, experienced
professional people to work very hard for "a mere" $15 million per year.

If you doubt this, recognize that through most of America's most
successful economic times, CEOs were paid MUCH LESS (in current dollars).
In many highly successful countries like Germany and Japan, highly
successful CEO are STILL paid much less. Allowing them to keep
a total compensation of 15 Million for a year's work is very generous.

This is why the wealthy can and should pay more. They KEEP more
than everyone else - including many very smart, well educated,
hard working, experienced professionals. If some individual chooses
not to accept a "mere" $15 million, there are plenty of other excellent
people to replace them (unless of course the Board is engaged in
crony capitalism).

Here are 2 additional taxes that would help fix the deficit :

(1) a Tobin tax on financial transactions (which would need to
be coordinated with our trading partners).

(2) An annual ASSET tax on assets above $ 5 million.

Both would raise substantial revenue which could reduce the deficit,
teduce other people's taxes, and/or be invested in the future of
the country (for example, R&D, infrastructure or education).

Senator Simpson, why didn't you and Senator Bowles consider these
sorts of taxes ?

You should.

Dec. 21 2011 07:07 PM
Treat Cap Gains as Normal Earned Income from Tax Simplification for the 99 % - which will raise revenue


Here's tax simplification which would dramatically
improve our budget deficit :

TREAT ALL INCOME - whether Normal Earned Income or Capital Gains
the SAME. Tax it at the same marginal rates as normal Earned Income currently is.

Over 1/3 of all US assets are held by the Top 1%.
Treating Capital gains to the exact same marginal rates as
normal earned income will protect pensioners and small savers,
but will make sure the rich do not pay a lower tax rate
than the people working for them. In addition to being
much simpler and more fair, it'd raise a major amount of
revenue for the government which could be used to reduce
the deficit and/or to invest in the nation's future (for
example in R&D, infrastructure and education).
(One could even lower the rates that everyone pays on earned income
and still come out ahead - this would be a tax break for the 99%,
and would also stimulate the economy since they're more likely
to spend it).

Senator Simpson, why did you and Senator Bowles not look into
ways of making the tax code simpler, more fair and more efficient -
such as equal treatment of earned income and capital gains ?

You should.

Dec. 21 2011 06:57 PM
Tax Intellectual Property Monopolies from A "Sales Tax" on IP


Intellectual Property - including revenue from Patents, Copyright and
Trademark are GOVERNMENT GRANTED MONOPOLIES. IP represents a substantial
portion of the economy. By Taxing IP "Sales" (including licensing fees,
leasing, etc) the Government could raise a substantial amount of money
to help reduce the deficit and/or to pay for important investments in the
nations' future like infrastructure and research.

Currently, most major IP companies legally evade US tax by
aggressive transfer pricing to offshore tax havens. GE, Google,
a large percentage of COMPANIES WHO BENEFIT FROM THESE GOVERNMENT
GRANTED IP MONOPOLIES LEGALLY CHEAT the PUBLIC OUT OF TAXES ON IP.

A SALES TAX on ALL IP used in the US market would generate considerable
revenue and make these beneficiaries pay their share.

In the absence of GOVERNMENT to grant and protect these monopolies,
IP would be worth nothing. Theres is no "laisez-faire" free market
value - other than what they get because of government actions.

Many IP holders act as PRICE DISCRIMINATING monopolists- charging US
consumers more than out competitors overseas. A poor US citizen winds
up subsidizing the price of wealthy non-US citizens all the while
undermining our international competitiveness.

An IP tax is progressive - it is rarely used for essentials (except
for some essential medicines), and most IP is owned by people who
are well off - not the poor or middle class. Because IP is a monopoly
with very small marginal costs, most of the cost of the tax will be borne
by the SELLER Monopolist in the form of lower profits, NOT by consumers
in the form of higher prices. (IP is a "Bertrand"-like equilibrium).

A Gross-Revenue IP "Sales" tax will also capture payments from
non-US companies who SELL IP here - as such it is a tax that does not
discriminate against US producers.

TAX IP GROSS REVENUES (an IP Sales Tax) - it is an excellent,
efficient and fair source of revenue for the State.

Dec. 21 2011 06:41 PM
Rick Maiman from Flushing, Queens

What a breath of fresh air. As I'm involved in the business of journalism I don't usually comment or call in to shows, but Senator Simpson is a precious public jewel of a citizen. His Cody, Wyoming twang and lexicon is wonderful to hear, but the wisdom of his words rings true with the validation of something surely more dear yet absent especially on this side of the Rockies.
He strikes the pragmatic, conciliatory measured tone so sorely lacking in both houses today. Is it any wonder that the vast 99% majority is mostly disgusted. I wish he were running again.

Dec. 21 2011 04:00 PM
Marc Anders from Manhatttan

Brian, please tell me this: You take up precious airtime setting up Alan Simpson as some sort of eminence gris, and then waste it on a discussion of the musty issues surrounding the Anita Hill/Clarence Thomas dustup of 20 years ago, instead of asking him what he thinks about serious questions of conflict of interest regarding the activities of Justice Tomas' wife which are in the news right now?

Dec. 21 2011 12:26 PM
Marc from New York City

I love this guy. His take on sexual orientation and leaving decisions on abortion to women ("I don't men have any place voting on this") is right on. and his honesty about his part in the Clarence Thoma/Anita Hill hearing was impressive.

Some of his comments had me laughing out loud. I am looking forward to hearing this one again when its up on the web.

The fact that he wished Brain Merry Christmas was kinda funny and sweet. Now that he is way beyond running for re-election he is the kind of well intentioned - though imperfect curmudgeon truth teller that we need many more of these difficult times.

Dec. 21 2011 12:09 PM
Zach from UWS

This was an excellent interview. I really appreciate Senator Simpson's honesty and pragmatism. His story about Gingrich and President Bush illustrates exactly what has gone wrong in American politics over the last 20 years.

Dec. 21 2011 11:43 AM
Bobby G from East Village

More NPR Republicans!

Dec. 21 2011 11:38 AM
jgarbuz from Queens

The Left got MOST of what it wanted in the 1970s! It got abortion. It got "no fault divorce." It got mothers getting child custody in 85% of divorces. It got its takeover of the educational system. It got mostly "free" medical care for the poor and aged. It distributed homes to the poor without any visible means of repayment. It got plenty. The Right is just trying to take back some of these giveaways and bring back some balance before the country collapses into anarchy.

Dec. 21 2011 11:37 AM
Jack Jackson from Central New Jersey

I'd rather see all deductions go, rather than see some go and some stay. We already lose too much legislative time and energy trying to decide who wins and who loses in the tax deduction game. Eliminate all deductions and we'll lose 90% of the lobbying.
Cut the FICA rates back to 3.1 - the double deductions paid by my generation have built up $2T of surplus - but apply them to incomes up to 5X the personal median - approx. $250K. End the match by the self-employed at that level. Collect the corporate match for another 20X median.

Dec. 21 2011 11:35 AM
Robert from NYC

The comment by the (R) Senator that the people are frustrated because only the extreme Right and the extreme Left are represented in Government, is incorrect and reflect the views of the Right.

The extreme right is overrepresented in Congress but the extreme Left has no representation, at all.
The Right is represented by the R. Party on the whole, and the D. Party represents the Less-Right.

The real Left is not represented, and gets no real coverage and opportunity to present its views in the mainstream- media.

Dec. 21 2011 11:32 AM

"the little guy doesn't itemize" - shows how clueless Sen. Simpson (and most of them) are on the middle class...

Dec. 21 2011 11:30 AM
jgarbuz from Queens

I think the abortion issue and the breakup of the American family, and the destruction of fatherhood, has a lot to do with the economic mess the West finds itself in today. We don't have a sufficient native population replacement rate, and hence increasingly dependent on immigration and hence changing the cultural and ethnic balances in the country to the point of Balkanization. And gay marriage means gay adoption, and that means a market for babies from poor or single families. Those are the main reasons I oppose abortion and gay marriage. THey have economic repercussions beyond the "moral" or "religious" arguments.

Dec. 21 2011 11:29 AM
Ramaswamy from Closter, NJ

Two comments-

1. I think it is outrageous that Mr. Simpson thinks that only the wealthy itemize their deductions. Mortgage interest and property tax deductions are the most important tax easements that middle class Americans get.

2. I have the perfect solution for the payroll tax.. Invert the tax structure so that you pay NO payroll taxes for incomes BELOW say, $100,000 per year. In other words, create a floor rather than a ceiling.

Dec. 21 2011 11:28 AM
Nick from UWS

Bravo Senator Simpson. You are sorely, sorely missed.

Dec. 21 2011 11:27 AM
MP from Brooklyn

Wow, it's a Christmas miracle. I'm actually loving listening to a Republican talk.

Dec. 21 2011 11:26 AM
Edward from NJ

When Bill Clinton says that he would have accepted Simpson-Bowles, he's lying -- possibly to himself.

Dec. 21 2011 11:24 AM
Susan from nyc

Solving the budget crisis is simple, if we had a government that would behave like grown-ups:

1. Eliminate ALL deductions (that means mortgage, charity, child, state and local tax, business loopholes, etc.) If Congress really thinks something is worth supporting, they will have to appropriate funds for it openly and defend the decision. After all, every deduction someone gets means everyone else pays more, since government must still be funded.

2. Institute a single, progressive income tax that covers ALL income--there is no reason to tax income one does not work for (i.e., capital gains) at a lower rate than income one puts in time and effort to earn. Set these rates to actually cover our obligations. Now that the Supreme Court has recognized corporations as persons with equal free speech rights, tax them at the same rates as persons.

3. Disallow any political contributions from non-constituents--representative government can only function if those in office actually represent those who elected them rather than those with deep pockets. Set representative pay and privileges at the mean for their constituents.

4. Eliminate the cap on payroll taxes; these are the only taxes where the poor pay the maximum rate while the rich have an upper limit.

The current system breeds distrust and contempt, as our purported representatives ignore their constituents in favor of their corporate paymasters, obscuring their bought-and-paid-for favors with endless, incomprehensible layers of taxes and deductions. Time to clean House (and Senate).

Dec. 21 2011 11:21 AM
Robert from NYC

I'm on the left and I agree that raising the age (and it's only 2 years!) and raising the cap or eliminating it would greatly improve the Social Security "problem" that are down the road albeit far down the road because SS is not as bad as the "get rid of" SS group say it is.

Dec. 21 2011 11:21 AM
John A.

Just a word of acceptance herein.

Dec. 21 2011 11:21 AM
MichaelB from Morningside Heights

What about shifting the FICA tax, so not only is the cap raised significantly, but that the first $20 or $30k is exempt?

Dec. 21 2011 11:20 AM
Mary Joyce Carlson

What is the REAL reason that neither side is proposing (as far as I know) raising the income level at which Soc Security contributions are deducted from paychecks - as was done under Reagan?

Dec. 21 2011 11:16 AM
MichaelB from Morningside Heights

See? The destructive tone has begun already! No wonder our nation is in the condition it's in.

Instant cynicism is intellectually lazy.

A book I have been reading, "The Folly of Fools" by Robert Trivers points out that people with entrenched views only entrench deeper, even if given evidence that disproves their positions.

And people from BOTH sides of the political aisle do it.

Dec. 21 2011 11:16 AM
David from West Hempstead

Why not just raise the cap on FICA taxes instead of raising the age? 106K is far too low.

Dec. 21 2011 11:15 AM
Rick from Connecticut

The real problem is that we don't have any more Alan Simpsons still in the House or Senate

Dec. 21 2011 11:15 AM
Robert from NYC

I getting tired of hearing that after the middle there's the "extreme" right and the "extreme" left. Well NO! NO! There are gradations that move from the center (or mediocre) out to those extremes that are NOT extreme.

Dec. 21 2011 11:15 AM
Sam from Brooklyn

Please ask the Senator what he means by the radical left? In other words, what is radically left-wing about the Democrats' stance on the payroll tax cut?

Dec. 21 2011 11:14 AM
Shelodn from Brooklyn

As long as we just have two entrenched political parties with a congress that isn't term limited - we are doomed..

Dec. 21 2011 11:13 AM
gary from queens

The payroll tax is the FICA deduction on paychecks (Federal Insurance Compensation Act). It is designed to fund Social Security and medicare----entitlements for current recipients of that safety net program.

The program is billions in debt and heading for certain insolvency in a few years. That's why cutting the tax is imprudent. If Republicans had suggested it, the liberal media would have alleged it was conservative intent to destroy Soc security and medicare. The usual song and dance.

But why are Dems supporting it?! Two reasons. Obama needs to get re-elected. So he's giving the little man a few crumbs. The second reason is to create a wedge issue to demagogue: ie "look how republicans want to screw the little man out of a tax cut!" etc.

Next question: Why are Repubs opposing the FICA tax reduction? Two reasons. 1. They don't want the US to become Greece or italy, which is drowning in entitlement obligations it cannot pay. Cutting the FICA tax now makes no sense.

But then WHY do republicans favor tax cuts for the rich? That answers the second reason they oppose the tax cut.

2. It is not the "rich" per se whom they are concerned about. it is the investor class in this country. I will explain:

Conservatives are supply siders. They believe the trigger for economic growth comes from supply----not demand.

Refer to
http://www.friesian.com/sayslaw.htm
http://endoftheamericandream.com/

That's why conservatives want tax rates for the investor class of the society to stay low right now, during a recession. The proof of it's efficacy is the failure of Obama's unparalled government stimulus spending (to stimulate the demand side), causing more debt, higher interest payments, and chasing away private capital investments----yielding high unemployment (note: gov employment is a drag on the economy).

Stimulus spending for the non-investor class, and stimulus tax cuts for the non-investor class is why our economy is messed up now. The FICA tax cut is just more of the same----of the latter. (Cash For Clunkers would be an example of the former).

I would recommend my article at this point, which fills in the gaps:
http://cfic.us/articles/An.Economics.Tutorial.For.Liberals.pdf

Dec. 21 2011 11:13 AM
Michael from disgusted by his presence

Why is this clown an authority on anything? His reference (as we all recall with disgust) about Social Security: "a milk cow with 310 million teats." Ask this walking joke how much his congressional monthly pension check is (answer: way too much) ~ and how much he pays for health care coverage (answer: nothing). Please go away.

Dec. 21 2011 11:11 AM

Ask Simpson what the plans are to save the National Labor Relations Board. NLRB must have a quorum of at least three of five members in order to operate. But one member’s term expires at month’s end, and Republicans have meanwhile refused to confirm President Obama’s two replacement nominees. Unless a solution is found, the NLRB would be frozen come January. Without the NLRB, workers would lose their legal recourse to defend their right to organize and to protect themselves against anti-union activity by employers.

Dec. 21 2011 11:11 AM
Michael Bergelson from Morningside Heights

Senator Simpson is "old school" Congress -- the kind of patriotic gentleman who put his country first, whether you agreed with him or not.

He was also known as a straight shooter -- one of the most forthright -- no bureaucratic hack-talk, or euphemism from him.

But let me stand back and see how fellow commentators tear into him and question his motives.....which is predictable and inevitable on these blogs.

Dec. 21 2011 11:11 AM
Lois from West Milford

Question for Senator Simpson - If someone is represented by one of the extremely partisan members of the House or the Senate, does he have any suggestions as to what approach to take when asking them (begging them!) to take a more moderate position on something?

Dec. 21 2011 10:19 AM

profits are up, cut corporate welfare

Dec. 21 2011 10:13 AM

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