I'll just repeat what Steve Benen said when Ralph Reed first appeared back on the scene earlier this year...
Ralph Reed?...Wait a second. Ralph Reed believes he can show his face in public again? He thinks he has the credibility to once again be a political player?
Go read the rest for a little trip back to 2006. Way to give this schyster some undeserved credibility CNN! Parker: "...welcome one of the brightest conservative minds..." -- excuse me while I go throw up will you? The only thing this man is good at is separating gullible people from their money.
SPITZER: And we're going to go off on this name your cut crusade with every person who comes here. And we want you to weigh in where you think we should cut the federal budget. Go to cnn.com/ParkerSpitzer name your cuts and we will share your ideas on our blog and on the show.
PARKER: Now let's continue this conversation and welcome one of the brightest conservative minds into "The Arena." Joining us now is Ralph Reed, chairman of the Faith and Freedom Coalition.
SPITZER: Welcome, Ralph. Guess what. This is your lucky night. We're starting a new challenge called "Name Your Cut." So Ralph, what would you cut from the federal budget?
RALPH REED, FAITH AND FREEDOM COALITION: Well actually, Eliot, Paul Ryan and the Republicans on the budget committee -- House Budget Committee have already identified about $1.3 trillion in cuts. Just real quickly, return the unused TARP money. That's about $250 billion. Return the unused stimulus money which has largely failed. About 35 to 40 percent of that hasn't even been spent. Freeze federal hiring and pay, that would save you about $20 billion a year, about $250 billion over 10 years. And in addition to that, I think we ought to look at increasing both Medicare and Social Security at a rate of increase of income rather than inflation. That would preserve both of those programs. And then finally cap and reduce discretionary spending which has gone up by 84 percent in two years under Obama. That would save you about $100 billion. So, I just gave you $2 trillion. I hope that's enough.
PARKER: Ralph, that reads like the Republican's pledge for America. I think those are some of the points...
REED: Yeah, right, well not entirely because some of that is Ryan's road map, which is not in the pledge, but I take your point.
PARKER: Well, you had something to do with that pledge, I understand, you were at least a consultant to the leader, to John Boehner's office in developing that. So what was the goal of the pledge and why now?
REED: Well, I think the Pledge to America was a seminal document in the sense that the Republicans led by John Boehner and Eric Cantor could have just said what they were against rather than what they were for. They could have just ran as the anti-Obama, the anti-Pelosi. And I think that might have been enough to get them the House. We'll never know. But to their credit, they understood that if you want to govern, you can't just say what you're against, you got to say what you're for. And so they put forward proposals on spending, on taxes, on education, on social and cultural policy, and on foreign policy and I think it's a good blueprint for the future.
SPITZER: Ralph, let's come back to the numbers for a minute because even if I were to agree, which I don't that your cuts came to $2 trillion a year, what you also do is extend the Bush tax cuts for the rich which then reduces revenue by $4 trillion over the next 10 years which is why all the analysts who have looked at your document say that it increases, increases, the federal deficit by $1.5 trillion over the next decade which is why David Frum, a very respected conservative voice, you know, he's an icon in the conservative world. He said the document is "a repudiation of the central foundational idea behind the Tea Party. The Pledge to America declares 'sorry, we don't believe this.'"
I hate to say it, the numbers don't add up because you haven't specified a single cut. I'm not talking about slowing the rate of increase. A single cut in Social Security, Medicaid or Medicare, and as we all know, and we've been saying this to the public, that's where the money is. So, what will you do to slow the rate of increase in Medicare, the single largest piece in the entitlement system? Medicare specifically, what are you going to do?
REED: Well, at the risk of stating the obvious, Eliot, that's not going to be done exempt on a bipartisan basis.
SPITZER: Happy to do it on a bipartisan basis.
REED: Sure, but having said that I think we have to move to a model where, as at some state levels with regard to Medicaid extension or Medicaid spending, the program is allowed to take place in the form of Medicare recipients buying insurance policies on the private market as has taken place in Medicare Advantage, and private companies competing for that dollar.
Medicare part D, Eliot, which is the prescription drug benefit that monthly premium came in 40 percent below what the congressional budget office originally projected. Why? Because companies competed for that dollar, they wanted that business and that's the problem with traditional one size fits all Medicare.
I'm the son of an M.D., who's an ophthalmologist in rural north Georgia where half of his practice was Medicare and Medicaid and they set his rate. If the patients were empowered so that they were chasing the docs and the nurses and the hospitals instead of the government, we could greatly balance that program.
SPITZER: I just want to understand, because we're trying to get answers. What you're saying is privatize Medicare?
REED: I didn't say that.
SPITZER: No, but that's really what you're saying. You're saying, let people opt out and let people opt, the same way you wanted to privatize Social Security. I'm just trying to explain it so people can understand this. REED: Yeah, what I suggested was you can do a model for Medicare as a whole, similar to Medicare part D or Medicare Advantage, where people pay premiums and they can choose what kind of policy they want.
SPITZER: Which is...
REED: ...give the recipients a choice. And instead of offering everybody a Cadillac, you give them different things they can choose from and they decide whether or not they want to pay additional premiums.
SPITZER: Do you agree though with what I said before, that since I totaled and accepted your number for the cuts you said you were suggesting over the next 10 years and then netted out against that the impact of the tax cuts that you're also extending into the next decade, the impact on the budget of the Pledge to America increases the deficit by about $1.5 trillion to $2 trillion over the next decade. That's simple arithmetic based on the numbers you gave me.
REED: No, I don't agree with that. And that's the same kind of static, green eyeshade accounting that has led to every evaluation of every tax cut over the last 50 years going back, by the way, to the John F. Kennedy tax cuts in the '60s saying that they were going to lead to less revenue rather than more revenue.
Ronald Reagan had the deepest and broadest tax cuts in the post World War II period. The amount of revenue that came in off those lower rates was double what it was eight years earlier. In the case of George W. Bush, we were told the same thing would happen. His last budget, before the slowdown of 2008, was about $175 billion, which is a rounding error in a $14 trillion economy. So, I don't agree. And even when Jimmy Carter, by the way, cut the capital gains tax rate in 1978, more revenue came in on capital gains on the lower rate than came in under the high rate.
SPITZER: That's because there was growth which is already built into these models. I'm just doing the arithmetic. You say you're cutting spending by two, but then you're reducing tax revenue by four. Four minus two means we're going to be less -- have less revenue in the amount of negative to in addition to the deficits we've already got. This is simple arithmetic. You mean -- what's wrong with those numbers?
REED: Well, what's wrong with those numbers is, as I understand your proposal and as I understand the Obama administration's proposal, it is on January 1, they want to increase taxes on everybody making over $250,000 a year.
SPITZER: No, no, no. Let's keep the subject your proposal, which is you're cutting spending by two. I'll accept that number. But you're reducing revenue by four.
REED: Eliot, it's a very simple -- it's a very simple choice. We either allow tax rates to go up January 1 or we don't. You're for them going up...
SPITZER: No, I'm not. Ralph, I'm taking your numbers...
REED: I'm for keeping them where they are in the deepest and longest recession since World War II.
SPITZER: But the impact of extending the tax cuts as you want to do it is a loss of revenue of $4 trillion, but you're only cutting $2 trillion on the spending side. Four minus two is two. That's all I'm saying.
REED: Well, that's your math. I haven't subscribed to it.
SPITZER: Ralph, that is my math and I'll stick with those numbers any day. If you want to teach me a new math, I'm game.
REED: All I know is this. Under the kind of policies that you advocate, we've had the two largest back-to-back deficits in American history. I rest my case.
PARKER: All right...
SPITZER: And that's because George Bush gave us an economy...
REED: If we want more than that, than we want a Democratic Congress and Obama for another four years.
SPITZER: Four minus two. We'll leave the answer to Ralph when he comes back. We'll figure it out.
PARKER: OK, Ralph, I'm going to just try to reel things back in a little bit here to just politics. Can you talk a little bit about the midterm elections? How do you think the Tea Party candidates are going to do?
REED: I think they're going to do extremely well.
PARKER: I think you just heard why.
REED: Yes, I think we did just hear why. And by the way, the Democratic candidates, Pelosi and Obama, made them all walk the plank on the stimulus, on taxpayer funded bailouts, on higher taxes, on Obamacare. And frankly, it's killing them from coast to coast. And I think not only is Marco Rubio going to win in Florida going away, I think Joe Miller's going to win in Alaska, Ken Buck in Colorado, Rand Paul in Kentucky, I think Sharron Angle's going to win in Nevada and I think a whole lot of other...
PARKER: But how many Senate seats is this, Ralph?
REED: Well, you know, I'm not really in the prediction business. I think if you look at the handicappers right now in Washington, they would say seven to eight, but I don't really -- I think midterm turnout is so hard to call that I think it's -- let me put it to you this way, I think both chambers are in play. And I think it's entirely possible that you're going to have a Republican House and a Republican Senate.
PARKER: All right, Ralph Reed, thank you so much for being here. It's wonderful to see you again.
REED: Thank you good to be with you both.
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