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.