“Viewpoint” host Eliot Spitzer and Robert Reich, professor at the University of California, Berkeley, discuss the latest fiscal cliff negotiations in Washington. Robert Reich believes Democrats have the power in the budget battle, because the Bush tax cuts for the rich — which Republicans want to extend and Democrats oppose — will expire no matter what anyone agrees on come January.
“The question is, will the Democrats actually hold firm?” Reich asks. Reich also addresses whether limiting tax deductions instad of raising marginal tax rates on the rich could generate the $1.6 trillion in new tax revenues that Obama has set as a goal: “Just by limiting deductions for the wealthy you can’t get anywhere near the $1.6 trillion. … Now if you made the tax on capital gains equal to the tax on ordinary income, maybe that preference would get you closer. But nobody is talking about doing that, unfortunately.”
Reich said that Republicans would be the losers if Congress failed to negotiate a deal to avert the so-called fiscal cliff.
“I think we are moving in the right direction and we are moving in the right direction because the Democrats are holding most of the trump cards,” he said. “If nothing is done, remember, we go back to the Clinton tax rates of the 1990s, which were not all that bad, in fact the economy did quite well under those tax rates. If nothing is done, basically the Republicans lose.”
“And, if the Republicans try to make a case that they are not going to vote for an extension of middle class tax cuts unless the rich also get a tax cut that puts the Republicans in the position of showing America that they are going to hold the middle hostage and they sure are shills for the very rich -- something that a lot of people suspect anyway, but that kind of demonstration is not going to be good for the GOP,” Reich added.
Across-the-board spending cuts are set to go into effect at the beginning of 2013 if Congress fails to pass a budget that reduces the federal deficit. The Bush tax cuts are also set to expire.
Democrats have said they won’t accept any fiscal cliff deal that doesn’t let the tax cuts for the wealthiest Americans to expire, however they want to leave tax rates for middle and lower-income Americans unchanged.
Republicans have said they will oppose any increase in tax rates, but are open to reducing tax write-offs to increase revenue.
“Just by limiting deductions for the wealthy you can’t get anywhere near the $1.6 trillion,” Reich noted.
Robert Reich has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He also served on President-Elect Obama's transition advisory board. He has written twelve books, including The Work of Nations, which has been translated into 22 languages; the best-sellers The Future of Success and Locked in the Cabinet; and his most recent book, Supercapitalism. Mr. Reich is co-founding editor of The American Prospect magazine. His commentaries can be heard weekly on public radio's "Marketplace." In 2003, Reich was awarded the prestigious Vaclav Havel Vision Foundation Prize, by the former Czech president, for his pioneering work in economic and social thought. In 2008, Time Magazine named him one of the ten most successful cabinet secretaries of the century. He received his B.A. from Dartmouth College, his M.A. from Oxford University where he was a Rhodes Scholar, and his J.D. from Yale Law School.
Video courtesy of Current TV.