Our CNBC Interview
May 17, 2005
Windows Media: http://www.taxfoundation.org/media/video/050516-kudlow.wmv
Courtesy of Radio Blogger, a full transcript of the interview is below:
CNBC’s “Kudlow & Company,” May 16, 2005Guests: Scott A. Hodge & Andrew Chamberlain, Tax Foundation
Kudlow: This just in, as we say in the news biz. A Democrat has put a proposal for social security reform on the table. Congressman Robert Wexler has got a big constituency of social security recipients in his home state of Florida, is offering up a payroll tax hike. He says we’ll fix the solvency problem without reducing benefits. Who’s benefits? You know how the word tax hike gets under my skin. It’s so bad. On this show, we believe in tax freedom. We’ve asked Mr. Wexler to come on the show, but I have to tell you. Raising the tax cap is going to be just the beginning. After that, payroll tax rates, income tax rates, even a value added tax are possible. I believe that’s the Democratic program, but I also think the Republicans are shooting themselves in the foot with their failure to curb spending. Special interest spending and overall corporate welfare, including my favorite, the agriculture subsidy welfare queens. Here, no doubt to list all the better options, Scott Hodge, president and Andrew Chamberlain, webmaster, staff economist. This is the Tax Foundation’s new tax blog site. Welcome, gentlemen. Scott, let me start with you. I know you’re going to go after appropriate tax policy, but what about spending policy. Because at the end of the day, the GOP is opening itself up to Wexler-type tax hikes.
Hodge: Well, they box themselves in a corner, as you say. They’ve become the biggest spending Congress, and this president is becoming the biggest spending president in history. And they’ve really bound themselves, now, to record level deficits, which are causing this clamor for higher taxes. In particular, raising the payroll cap on social security taxes, which as you know, will be a huge hit on small businesses across America, and probably cause even greater instances of outsourcing to places like Bangalore. If you want to improve the living conditions in Bangalore, India, just raise the social security taxes here in America.
Kudlow: Terrific stuff. Andrew Chamberlain, welcome to the show. I know you’re going to be blogging on taxes, which is terribly important. There are very few out there. But I also know that you’re a non-partisan operation. How will you price it out so that things are done equally?
Chamberlain: Well, we’ve instructed the economists that are participating to talk about the economics of issues, and not so much the politics. So, we’re a non-partisan organization, and our economists are really…they’re goal is to teach the public how to think about taxes…good tax policy.
Kudlow: All right. So you’re going to give, essentially, equal to both Democrat and Republican positions, and you’ll rate them at the end of the day on the basis of, let’s say, taxpayer considerations.
Chamberlain: Right. We want…on our weblog, we’ll mostly be talking about ideas rather than the politics.
Kudlow: All right. This is great stuff. I think the blogosphere needs it, and will welcome you to it. Scott Hodge, let me go back to you real quick. We’re in our two minute drill, as you know. What’s the outlook for full scale tax reform?
Hodge: Well, I think the stars are aligning pretty good here. After all, in just a few years, most of the Bush tax cuts will expire. At the same time, you’ve got the alternative minimum tax crisis looming in the horizon. It looks like both parties, I think, have an interest to come together and overhaul the tax code in some fashion, so we eliminate the penalties on savings and investment, and hard work in America, and have a simple tax code that all of us can figure out and understand.
Kudlow: So you’re fairly optimistic. It’s still quite possible.
Hodge: Yea, I’m probably Pollyannish, given all the cynicism here in Washington. But I really do think that the stars have aligned…
Kudlow: Well, Connie Mack and John Breaux are going to look at it. They’ve had some great stuff…
Hodge: They’re both bright men. They both understand the politics, and I think they’ll come up with something that’s workable and achievable in Congress.
Kudlow: Andrew Chamberlain, I notice, looking at your site, the JFK tax cuts of the mid-60’s, at least as a percentage of GDP, were actually the largest tax cuts. Bigger than Ronald Reagan’s, and bigger than George Bush, the Republican’s. Do you think we’ll ever see a time when the Democratic party comes back with a JFK-like tax cutting program, or tax reform program, which I think would be a huge political winner?
Chamberlain: Well, I think there’s wide agreement on what constitutes good tax policy. And so there’s no good reason why the Democratic party shouldn’t support the same sort of sensible tax reforms that the Tax Foundation advocates regularly.
Kudlow: What do you think about the chances, real quick, for a state tax elimination, which passed the House, and at least a good rate cut to 15% in the Senate?
Chamberlain: Well, I can’t really…I haven’t followed the estate tax issue closely, but we may be blogging on that as the legislation moves its way through Congress.
Kudlow: All right. Terrific Stuff. Thank you very much, Scott Hodge, Andrew Chamberlain. Look forward to the website. One more break. And if you’d like to see a transcript of tonight’s tax blog segment, please go to our pals Radioblogger.com. As always, we appreciate their coverage.
End of interview.