The (Anti) Tax Man

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.

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.

CBSNews.com: And I know you're still fleshing out Mitt Romney's economic record. But do you think he's running a different kind of campaign for president, particularly on economic issues, than he did for Governor or Senate in Massachusetts?

Pat Toomey: Well, it generally seems that there's a change, at a minimum in tone and emphasis, and it might be more substantive than that, when you compare his run for the Senate to his current run for the presidency. But there, too — to be fair to Gov. Romney — you've got to look at the context in which he led Massachusetts, an overwhelmingly liberal and Democratic legislature and political culture generally. And that constrains what a governor can do. You know, what we're hoping to really flesh out is the policies that he advocated, and put that in the context of what was achievable, so that we get a fair assessment of his record.

CBSNews.com: Do you want a Fred Thompson or a Newt Gingrich to enter the GOP field? Do you think there's an economic conservative vacuum?

Pat Toomey: It's not clear to me whether there is an economic conservative vacuum, but there is a political vacuum. There is clearly an opportunity for somebody to consolidate the center of the Republican ideological spectrum, the heart of where the big numbers of voters are. Rudy Giuliani and Sen. McCain clearly occupy the left-wing of the Republican political spectrum.

There are plenty of guys competing on the right. Gov. Romney has had an opportunity to consolidate the center, but he hasn't achieved that yet. And that's why I think Fred Thompson is going to get in this race, because he's the guy with national name recognition and a record as a sort of a standard, middle-of-the-Republican-ideology kind of conservative. So, it's a big opportunity for him and I think he's going to jump in.

CBSNews.com: How important are economic conservatives in determining not just who can raise money, but ultimately who can win the Republican nomination? Do you have a research that shows the influence of economic conservative views on GOP primary voters?

Pat Toomey: We have it in a variety of anecdotal ways. I can't give you comprehensive, national polling data to show this. But there's no question in my mind that the most powerful common idea, common principle that unites the Republican coalition is the idea of limited government and economic freedom.

We are a broad coalition that includes people that are very socially and culturally conservative, and some that are more liberal. We've got people who disagree on foreign policy and defense, differ on matters like gun control and states' rights.

But the thing that almost all Republican voters agree on is that we need smaller, smarter government, with less spending and lower taxes. There's almost no debate, or I should say no disagreement, amongst Republicans on that. And a successful presidential candidate in the Republican primary needs to acknowledge that and get the support of that big, big segment of Republican voters.

CBSNews.com: So if economic conservatism is the greatest common denominator of Republican primary voters, is it conceivable — and I know you're an economic and social conservative — for somebody who's an economic conservative but a social liberal to win the Republican nomination?

Pat Toomey: Yes, it is entirely conceivable. Mayor Giuliani clearly would fit that description. And I think it's entirely possible that he could win this race. It's too early to predict that he will, but he's a very strong candidate. He's got very strong support. I think he's leading in the national polls. His fundraising is going very well. And, yeah, it's entirely possible.

CBSNews.com: David Brooks recently wrote a column in which he said, "The conservative movement has grown a collection of special interest groups that restrict its mobility. Anybody who offers unorthodox tax policies gets whacked by the Club for Growth." How do you respond to that?

Pat Toomey: I think David doesn't understand the tremendous consensus amongst Republicans for limited government, less government spending, and lower taxes. As I said earlier, there's almost no disagreement amongst the vast majority of Republican voters on this. And there is a liberal element in America, generally, and a tiny fringe liberal element even within the Republican party — you know, the Christie Todd Whitman types — who are OK with higher taxes and bigger government. But that's a fringe element. Republicans are united by their belief in the kind of economic policies that we advocate. And a successful presidential candidate is going to acknowledge that.
By Brian Goldsmith