The (Anti) Tax Man

CBS News' Brian Goldsmith Interviews Club For Growth President Pat Toomey

(CBS)  Political Players is a weekly conversation with the leaders, consultants and activists who are shaping American politics. This week, as the Republican presidential candidates conducted their first debate, CBS News' Brian Goldsmith talked with Pat Toomey, a former GOP congressman from Pennsylvania and leading economic conservative who now heads up the Club For Growth, a conservative action group.

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CBSNews.com: The Club for Growth is issuing a series of white papers, describing your view of the Republican presidential candidates on economic issues. Your McCain memo, which I just read, calls him "no supply-sider," and says, "his record is tainted by an antipathy toward the free market and individual freedom." Is he a bad choice for economic conservatives?

Pat Toomey: There certainly are considerably better choices for economic conservatives in this field. I think it's pretty clear that Sen. McCain really has never embraced the supply-side idea or the virtues of lower taxes. He voted against all of the Bush tax cuts repeatedly. He was one of only two Republican senators to vote against all of the 2001 and the 2003 tax cuts.

And he criticized them, using the same kind of class warfare rhetoric that we normally expect from left-wing Democrats. Sen. McCain continues to oppose permanent repeal of the death tax, or any repeal of the death tax, for that matter. And he won't sign a pledge not to raise taxes.

So you put all that together, and it's pretty hard to believe that he would be committed to lower taxes as president. That's a big and very important part of a president's economic agenda. And with respect to Sen. McCain, it's pretty worrisome.

CBSNews.com: Sen. McCain says he actually opposed the Bush tax cuts for fiscally conservative reasons. He says that they created a big deficit, which conservatives should oppose. Is it ever acceptable, in your view, to oppose a tax cut in order to strive for a balanced budget? Or, for that matter, is it ever acceptable to oppose any tax cut?

Pat Toomey: Well, let's look at what he said at the time. At the time, he said he didn't like the Bush tax cuts because he thought they favored the rich, even though they took millions of lower-income Americans off the income tax rolls altogether, and increased the total percentage of income taxes that would be paid by higher income folks. So that was factually incorrect. Nevertheless, that was the reason he gave at the time.

The president and the Congress passed the most pro-growth tax cuts in a generation in 2003. And today, we've got record high levels of revenue going into the Treasury. The deficit is shrinking. As a percentage of our economy, it's already much lower than it has been on average in the post-war era. And, in fact, it's just a couple or three years away from being fully balanced.

So what this tax cut package proved, once again, is that if you cut taxes the right way, especially marginal income tax rates and taxes on capital and investment, you get so much stronger economic growth that you more than offset the lost revenue. So, this is why I make the point that Sen. McCain's clearly not a supply-sider. He doesn't acknowledge the constructive feedback from stronger economic growth that follows cutting taxes.

As for whether you should ever oppose cutting taxes, it's very hard for me to see, in the current political and economic environment. Given the size of the federal budget, given the level of total taxes, and given the opportunity to further enhance growth by lowering taxes further, it's very hard for me to see why you wouldn't want to lower taxes further from where they are. There's no question in my mind, the economy would grow faster. There'd be stronger job growth and better wage growth, if marginal income taxes, for instance, were lower than they are today.

CBSNews.com: In your view, or in the Club's view, what is the optimal tax level, or indeed, the optimal tax system?

Pat Toomey: Well, the optimal tax system, first of all, would be one with a very low rate and a very broad base. And one in which the government doesn't pick winners and losers by providing all kinds of loopholes and deductions and credits and all kinds of gimmicks, as the current system does. So, a flat tax would be one way to achieve that. A national sales tax would be another way to achieve that.

As far as the rates, I would like to see total taxes as a much smaller percentage of our total economy than it is today.

It's today somewhere in the high teens, at the federal level, maybe 18 percent or so. We'd be better off if it were much lower. And to do that, what we really ought to do is cut spending, because the federal government spends way too much money. It spends money on things it shouldn't be doing. And we'd have a much, much stronger economy, if we had less federal spending and lower taxes.

CBSNews.com: Sen. McCain now says he'd vote to extend the Bush tax cuts that he so strongly opposed. Is he flip-flopping on that issue?

Pat Toomey: I think he knows that his campaign would probably be over if he did not support making the Bush tax cuts permanent. The support for making the Bush tax cuts permanent is almost universal amongst Republicans. It's overwhelming amongst people of all parties. So for just a political reason, it's a non-starter, to be opposed to extending the Bush tax cuts, unless you're running in the Democratic primary.

CBSNews.com: Do you believe he'd actually fight for that, as president?

Pat Toomey: Well, this is what's worrisome. It's hard to imagine that it will be a very high priority for Sen. McCain, if he were president. But I take him at his word. I believe that he would support making them permanent. I think he would prefer that they be made permanent, rather than be responsible for a huge tax increase. But would he use precious political capital to preserve even the parts of the Bush tax cuts that the Democrats will demagogue against? I don't know about that.

CBSNews.com: David Keene, another Political Player, said he thinks that pretty soon Republican primary voters are going to realize that Rudy Giuliani wasn't "America's Mayor," he was New York City's mayor. How is his New York City economic record, in your view?

Pat Toomey: We're still fleshing out all the details and the subtleties in the context. And that's an important part of this. Mayor Giuliani took over as mayor of one of the most liberal cities in America, with a very powerful and very liberal media, and an overwhelmingly Democratic city council.

And he adopted some pretty strong conservative economic, pro-growth policies. Meaning he cut taxes, he cut spending, he privatized activities that the city was involved in. And he stood up to some very powerful special interests in New York, including the media, but also organized labor and other groups that were very counterproductive to economic growth. So I think we've got to take a look at the job that he did in the environment in which he did it. And in that sense, Mayor Giuliani deserves a lot of credit.

[randalds]

Who cares who this idiot likes? The entire goal of the mis-named "Club for Growth" is the complete privatization of the entire government. They don't want smaller government, they want no government at all, with all real power being held by the wealthiest families and corporations. They honestly believe that no taxes and no government, with a wealthy ruling elite and everyone else in a worker class, is the way a country should be run! Every last one of their ideas and policies, taken to their inevitable and logical conclusion, leads to that same twisted end. Hey no taxes sounds great, until you realize that they also want you to have no say in your life too.

[cpaide]

If this "interview" actually reflects the views of Pat Toomey and the Club for Growth, then I must say that the Club needs to grow in their understanding of basic economics and tax policy.

A broad-brush approach to cutting all taxes is ignorant and dangerous. All taxes are not alike in their application or their effect. Estate taxes, income taxes, sales taxes, property taxes, excise taxes, etc. all serve a purpose.

If you lessen or eliminate the estate tax, for example, then wealthy people will tend to hoard their wealth, both in productive and non-productive assets. However, if the estate tax is raised to 60 or 70 percent, these people will spend or distribute more of their wealth, thus helping the economy and thousands of working people.

[motherjones-2009]

The Club for Growth should find a name more fitting to their philosophy. The Club for Greed fits the bill perfectly.

[bellal-2009]

If you lessen or eliminate the estate tax, for example, then wealthy people will tend to hoard their wealth, both in productive and non-productive assets. However, if the estate tax is raised to 60 or 70 percent, these people will spend or distribute more of their wealth, thus helping the economy and thousands of working people.
Posted by cpaide at 12:44 PM : May 04, 2007


How about we quit worrying about everybody else's stuff. Who are we to decide what people do with their money. That's what I hate about the tax code. It's nothing but social engineering and should not exist in a true democracy. A flat tax or consumption tax would be the most fair form of taxation.

[randalds]

It's nothing but social engineering and should not exist in a true democracy. A flat tax or consumption tax would be the most fair form of taxation.
Posted by bellaL at 08:37 PM : May 04, 2007

Of course it's social engineering, because if we didn't use the tax code (and other laws) in this manner then the rich would literally own the nation and everyone else would be permanently poor with no chance for class mobility. The fact is that unchecked wealth would destroy America by turning it into a society of rich elite ruling a permanent worker class. A completely "true" democracy can not exist for more then a generation or two since the rich would simply force their will on the rest of the people.

[bellal-2009]

Of course it's social engineering, because if we didn't use the tax code (and other laws) in this manner then the rich would literally own the nation and everyone else would be permanently poor with no chance for class mobilityPosted by RandalDS at 12:51 AM : May 05, 2007


How so?

[randalds]

Unchecked wealth always leads to abuses by the rich against the poor. It's the power that wealth gives some people. They feel they are above the law or that they know best about what's right for the country. A fine example of this was the late 1800's when robbery barons almost took complete rule of this nation away from the people. The middle class was shrinking quickly and it was only public outrage in the early 1900's at such things as workhouses, poor dying in the streets (esp the elderly) and no child labor laws, that stopped the abuses and instituted checks on wealth like anti-monopoly laws and an income tax system. And excellent book on the change, the revolution, that took place is "The Age of Roosevelt: The Crisis of the Old Order, 1913-1933", by the incomparable Arthur M. Schlesinger

[randalds]

Throughout the history of humanity there has existed an ideal of Noblesse Oblige, literally Nobility Obligates. The idea being of course that the wealthy one is the more of an obligation one has to help out those less fortunate then oneself. the reason that this is important in a democracy is that it is assumed that one makes their wealth from the less fortunate members of society, usually by selling them a product or service, so that it makes sense to return some of the wealth back to the same people so they can live such a lifestyle as to be able to continue consuming and not to revolt over their poverty. A graduated tax system is a form of legally enforced Noblesse Oblige and is necessary to maintain a healthy democracy.

[bellal-2009]

What's that have to do with the tax code Randal? Taxing the rich does not help the poor. It just trhows more money down the endless bottomless pit of govt. Very little really trickles down. IT's really much less effective than the market. Anyway, I hate the social engineering in the tax code. It's just more of the same BS. The largest lobby get a tax break. It has absolutely nothing to do with the poor. The poor don't pay taxes anyway.

[randalds]

Of course taxing the rich helps the poor, when the money is properly spent and controlled. And of course it's social engineering, but it's necessary because all of government is a form of social engineering itself. No matter who is in power they will social engineer, the only question is to whose benefit, the poor, the rich or the middle class. Just because the current government abuses it's power and throws some money away does not mean that we should throw all of government away or that all of government is a waste. The idea is to fix the corrupt parts of our democratic form of government, not just chuck it and leave the running of the nation to the richest or to market forces. That's social Darwinism and it will always lead to a two class society. In order to maintain a fair democracy for all there simply must be some rules, some laws and some taxes designed to keep the elite in check.

[randalds]

The poor don't pay taxes anyway.
Posted by bellaL at 02:46 AM : May 05, 2007

Nor should they. Taxes should be paid only by those with the means to pay them. After all since they are making more money then it is obvious that it is they who are gaining the most from our free society and therefore should pay more to help maintain the free society that they are gaining there wealth from. Each should help fund the government for all, according to their own means, not their own needs.

[bellal-2009]

Randal, you obviously have more faith in govt. than me. I think a change would be refreshing and anything to get the power back to the people sounds good. We have laws and a justice system. That should be enough without govt. taxation on every stinking aspect of our lives.

[randalds]

Well, it's really that I have faith that our government can be fixed. That's why I'm opposed to people on the far right who say they want to practically do away with government. The government itself is not the problem. The people who are running it sometimes are. For instance while I believe the government should stay out of people's private lives I also realize that there are something so big and important that you must have a strong federal government to deal with them. Like wars, natural disasters, poverty, health care, Social security, etc. The problem really is the people on the extremes. Those who want the government to do everything for them and those who want nearly no government at all. Like with most things the answer is in the middle somewhere, but being in the middle is not a popular place politically these days on this issue. Everyone running for any office seems to be on one side or the other. The government is NOT the answer to everything, but it's not the problem causer other say it is either.

[bellal-2009]

Randal, it appears to me that our job as citizens is to keep govt. under control because it's natural tendency is to inflate.

[toolmangler-2009]

"Throughout the history of humanity there has existed an ideal of Noblesse Oblige, literally Nobility Obligates. The idea being of course that the (more) wealthy one is the more of an obligation one has to help out those less fortunate."
Posted by RandalDS at 02:11 AM : May 05, 2007

I ask this by way of curiosity, "How can one be 'Noble' and 'wealthy" at the same time since a truly Noble man will use his possessions to help his fellow man, thereby reducing his former 'wealth' closer to zero and changing his status to somewhat less than wealthy.

Not being antagonistic but merely trying to 'scratch' my curiosity bump..
Any takers?

[randalds]

Randal, it appears to me that our job as citizens is to keep govt. under control because it's natural tendency is to inflate.
Posted by bellaL at 06:10 PM : May 05, 2007

That's true, it does indeed. Actually what seems to happen is a party (either one) that is out of power runs on a platform of fixing the government and cutting the waste, right up until the time they get back into power and then the government puffs up even more. I know some people are pushing for a 3rd party, but as far as I'm concerned it's not realistically going to happen in my lifetime, so I support the democrats, because history over the last fifty years shows that the republicans talk about smaller government (and talk and talk and talk, but it always seems to get much bigger under their watch then under the democrats.

[randalds]

Posted by ToolMangler at 10:09 PM : May 05, 2007

Well traditionally they idea of Noblesse Oblige is most closely associated with the Feudal era when most people were either born into nobility or took it by force of arms. So the wealthy part came first before the pressures to show goodness to the masses. In a more civilized society (like ours) it is hoped that the wealthy would be more generous, though it's still not usually the case. These days it's usually more twisted by some of the very wealthy when they gain power by pushing the idea of charitable organizations rather then using the government to help the poor.

"Indeed you can usually tell when the concepts of democracy and citizenship are weakening. There is an increase in the role of charity and in the worship of volunteerism. These represent the ilite citizen's imitation of noblesse oblige; that is, of pretending to be aristocrats or oligarchs, as opposed to being citizens." %u2014 John Ralston Saul

Personally I think it's possible to be noble AND wealthy, but few wealthy people even try these days. Therefore we tax them.

[toolmangler-2009]

Good'un randalDS.
Sauls statement has stymied me for a tad. I'll get back to you, mebbe.. (grin)

[toolmangler-2009]

so I support the democrats, because history over the last fifty years shows that the republicans talk about smaller government (and talk and talk and talk, but it always seems to get much bigger under their watch then under the democrats.
Posted by RandalDS at 10:17 PM : May 05, 2007


Unchallenged laws are pulling this country down the path of defeat. Too many agencies have been given the power to enact laws, rules, penalties and assorted 'Maxims' that erode our basic rights. besides anarchy followed by rebuilding show me an alternative or two.

[randalds]

Anarchy may not be necessary. I still hold out a slim hope that enough people will finally wake up and see that the government that is supposed to belong to them is slowly being taken away. The so-called leaders of today frighten the masses with boogymen like bin Laden and Saddam and use them to scare small children and republicans into handing over to them the very rights that thousands died winning for them and hundreds of thousands died protecting. I have no doubt that the generations of soldiers and Americans that came before this one are turning in their graves in disgust at the cowardice of today's citizens who hide under their beds and in their closets every time the government tells them they are in danger. Still, there may yet be a tiny chance to avoid anarchy. A very tiny and rapidly shrinking chance.

[bellal-2009]

. besides anarchy followed by rebuilding show me an alternative or two.
Posted by ToolMangler at 10:47 PM : May 05, 2007


Shrink govt. and get rid of coroprations (impossible).

The baby boomers will look back at their lives and see how corporations took their country from them and ruined it. We may retire wealthier than our parents but look what we've sold out to.