Former Labor Secretary Robert Reich wrote a terrific column today on how completely irresponsible Newt Gingrich's new tax plan he just released is, so naturally CNN apparently wouldn't put him on the air unless he was forced to argue with The Wall Street Journal's resident hack, Stephen Moore.
Here's Reich's column -- Newt’s Tax Plan, and Why His Polls Rise the More Outrageous He Becomes:
Newt Gingrich has done it again. With his new tax plan he has raised the bar from irresponsibility to recklessness.
Every dollar estimate I’m about to share with you comes from the independent, non-partisan Tax Policy Center – a group whose estimates are used by almost everyone in Washington regardless of political persuasion.
First off, Newt’s plan increases the federal budget deficit by about $850 billion – in a single year!
To put this in perspective, most forecasts of the budget deficit cover ten years. The elusive goal of the White House and many on both sides of the aisle in Congress is to reduce that ten-year deficit by 3 to 4 trillion dollars.
Newt goes in the other direction, with gusto. Increasing the deficit by $850 billion in a single year is beyond the wildest imaginings of the least responsible budget mavens within a radius of three thousand miles from Washington.
Imagine what Standard & Poor’s or Moody’s or Fitch would do if it became law. We’d go directly from a triple-A credit rating to triple X – the veritable porn star of fiscal mayhem. Interest on our debt would become larger than most of the rest of the budget.
Most of this explosion of debt in Newt’s plan occurs because he slashes taxes. But not just anyone’s taxes. The lion’s share of Newt’s tax cuts benefit the very, very rich. Read on...
So of course, Moore just loved the plan since it benefits the interest of the 1 percent he's always looking out for. Transcript below the fold with Moore's hackery, touting the tired old lines about how trickle-down economics works and claiming that slashing taxes on the richest among us is going to create jobs and with Reich calling him out for how utterly ridiculous his arguments were. Blitzer wrapped it up, calling it a "great debate." Sorry Wolf, but there's nothing "great" about letting one of your guests come on and spew lies aimed at making the income disparity we've got in the United States worse.
BLITZER: And joining us now Robert Reich, professor at the University of California Berkeley, the former labor secretary during the Bill Clinton administration.
Also joining us, Stephen Moore of the "Wall Street Journal," senior economy writer. Guys, thanks very much. Let's get right to the Newt Gingrich tax plans.
And you tell me, good ideas, bad ideas. Let me start with you, Steve, first of all. He says he wants to cut the highest individual tax rate from 35 percent down to a flat 15 percent rate. Good idea or bad idea?
STEPHEN MOORE, SENIOR ECONOMICS WRITER, "WALL STREET JOURNAL": Yes, I love the idea of a flat tax. You know, this is the old Steve Forbes flat tax idea, although it's even lower rate.
He would also make it an option so people could stay in the old system or move in the new system. And he also wants to cut the corporate tax rate to 12.5 percent, which would make, Wolf, the United States overnight go from the highest tax rate country on our corporations to the lowest.
I love it. I think it's very pro-growth and I think it will create jobs.
BLITZER: Robert Reich, what do you think?
ROBERT REICH, FORMER LABOR SECRETARY: I think it's totally nuts. I mean, already the highest income earners in this country who are getting a higher share of total income than they have in 80 years are already paying the lowest marginal tax rates they've paid in about 40 years.
To take those marginal tax rates down to 15 percent, I mean, you're going to blow a gigantic hole in the federal budget over $1 trillion in one year.
And on top of that, you know, the biggest beneficiaries according to the independent Nonpartisan Tax Policy Institute, the biggest beneficiary, the lion's share goes to the wealthy of this tax cut.
You know, the people who are at the top 1/10th of 1 percent, earning an average of $8 million a year, get 25 percent of all of these benefits of this tax cut. This is absurd.
BLITZER: Let's get -- hold on, Steve. Answer the question, the Tax Policy Center, this group that did this study, they say it would create $1.3 trillion in additional deficit in one year if it went through.
MOORE: Yes, well, they're not looking, Wolf, at the spending side of the aisle. That's the other part of the fiscal plan that Newt Gingrich has. He wants to cut a lot of spending.
But the other thing that tax policy center doesn't look at, Wolf, is the idea that if you cut these tax rates and you make America the lowest tax rate country in the world, you'll get a lot of capital, a lot of jobs in this country.
I think it actually will raise revenue. And Bob, where you are wrong is on the idea of the big tax cut for the rich because remember, the Gingrich plan gets rid of all of the loopholes, gets rid of all carve outs, and all the special interest provisions.
So now Warren Buffett and Bill Gates don't have anywhere to hide their money. Everybody's going to have to pay that 15 percent, no longer will Warren Buffett be able to pay lower than his secretary.
REICH: Well, the point is that nobody is going to have to -- if you're very rich, you don't have to worry about tax shelters anymore or loopholes because you're paying 15 percent. In other words, you know, this is the same rate that the people who are secretaries and sanitation workers and people who are, you know, who are child care workers are paying.
You know multimillionaires will be paying, at 15 percent, Steve, this is the most unfair, stupidest tax plan I've ever heard. And it just creates the gigantic hole in the tax budget. Again, this is the independent, nonpartisan tax policy center giving us these data.
I mean, this is -- this is taking supply side economics to a bizarre extreme. And nothing trickled down from the Bush tax cuts, we know that, most people got no benefits at all. And now what is Gingrich doing? Let's take the Bush tax cuts and magnify them 500 percent.
BLITZER: Hold on a second. He goes even further, Newt Gingrich, and says eliminate completely all capital gains taxes, all estate taxes, as well. You love that idea, don't you?
MOORE: Yes, this is a tax cut plan. It's on steroids in terms of economic growth. Imagine what this would mean for America's competitiveness and that's the big issue, competitiveness against other countries.
Let's take the example of the corporate rate. If you can go from being the lowest corporate tax rate, you're going to bring jobs and businesses back to the United States. You and I, Bob, talk a lot about the problem of outsourcing jobs. This is going to bring in sourcing jobs back for the United States.
REICH: Steve, look at history, we've had this gigantic Bush tax cut, we had no increase in competitiveness. Actually the median wage dropped. There was no trickle down. And on top of that, you say we need a corporate tax cut right now?
I mean, big corporations are sitting on $2 trillion of cash. They don't know what to do with the cash. It's the problem is on the aggregate demand side. The problem is consumers are not spending.
I mean, this tax plan just gives more money to people at the top, creates a huge hole in the budget deficit, creates more unfairness. This is the worst tax plan and believe me, I've seen some bad ones. This is the worst one I've ever seen.
MOORE: That's what you said about Reaganomics. You didn't like the Reagan tax cuts and they actually led to more tax payments by the rich. They led to the creation of about 18 million jobs. I think that worked out pretty well. This is the next logical extension of Reaganomics.
REICH: Yes, Reaganomics. We can debate Reaganomics, Steve, but this is taking the Bush tax cuts, which were even worse than the Reagan tax cuts and it is basically -- I mean, look -- any rational person is going to look at this.
And look at the rational nonpartisan analyses both on the corporate side at the individual side in a time in our history when we have giant budget deficits.
A time in our history when the rich have a higher percentage of total income and total wealth and we've seen in 80 years and they're going to say this is totally absurd! This is beyond absurd.
MOORE: You know what Americans think is totally absurd. Bob, they think the current tax system is totally absurd. They don't think it works for America because it's way too complicated, way too time consuming, and way to anti-jobs.
And one of the reasons Newt Gingrich is doing so well, he wants to blow up the tax system and start over and I give him a lot of points for doing that.
REICH: I give him negative points. I'll give you a simple tax system that's based on progressivity. People at the top have paid the exact same marginal tax rates they were paying in the 1960s and 1970s when we had very, very good economic growth.
And that is if you're earning over $1 million, 70 percent marginal tax on everybody --
MOORE: Bob, you don't want to go back to 70 percent tax rates.
REICH: Of over $1 million.
REICH: Money over $1 million. And I'd link the capital gains to the same way. We get rid of the budget deficit. We'd have a fair tax system. We could lower everybody else's taxes. Steve, that's what we ought to do. It's exactly the mirror image. It's the opposite -- MOORE: If you want to go back to the '70s. I want to go back to the '80s and '90s.
BLITZER: Quick political question to wrap it up. First to Steve Moore, politically speaking, getting into an election, let's say Newt Gingrich has his flat tax 15 percent versus President Obama's got his own tax plans. As you know, who wins with the American public on that debate?
MOORE: Well, Obama wants to go to 45 percent to 50 percent on the tax rate, Newt Gingrich wants to go to 15 percent. So you're talking about a massive difference in philosophy and governing philosophy, and I will say this. I think Newt wins that fight and I think that's what this election will be about. Do we want growth or do we want envy?
BLITZER: Robert Reich?
REICH: Well, look, and I think the election is going to be about paying their fair share. Are the wealthiest in this country paying their fair share to bring the budget deficit down and make sure that there is enough money left for schools and equal opportunity and investments and infrastructure for everybody else?
Steve Moore and Newt Gingrich want to go back to what we had pre-1930s when we had a very unequal society and a society that did not -- and was not able to invest --
MOORE: Bob, you keep saying rich aren't paying -- the top 1 percent pay 40 percent of the income tax.
REICH: Steve, I think most people understand what's really going on. They know there's no trickle down. They know there's no trickledown economics.
MOORE: They know we can't tax our way --
REICH: They know the game is rigged in favor of the rich and powerful.
MOORE: That's why we're going to flat tax. We agree. That's why -- people gain the system.
BLITZER: All right, gentlemen, I think we've -- we --
MOORE: Overall, rejected.
BLITZER: A good debate, a solid debate. I suspect we're going to be hearing a lot more on this debate in the coming weeks and months. Steve Moore, thanks very much. Robert Reich, thanks to you as well.
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