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Proposed Obama budget includes surge in tax hikes

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    Lanny Davis on how will Capitol Hill react

  • Duration 7:12
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-- talk about President Obama is.

Budget proposal it includes.

A lot of tax hikes some of them controversial most of which we've been hearing about for awhile.

And joining us as you can see live from our DC bureau was -- Davis the former top White House special counsel.

To President Clinton and -- Gil writes articles for foxnews.com.

As well he's got -- their right now thank you so much for joining us.

Thank you.

-- they're just briefly go over some of the changes here.

This is for households making more than 250000.

Dollars or individuals making more than 200.

The top income tax rate rises from 35% to 39 point six.

Top rate on dividends rises from 15% to 39 point six -- -- on long term capital gains rises from fifteen to 20%.

The state tax rises from 35 to 45%.

And these.

Tax rates would be increased by a three point 8% surtax on top earners which would -- actually the top dividend rate.

To 43 point four and the top capital gains rate to 23 point eight.

-- -- to say some folks not happy about this what is your defense of these tax hikes.

My defense and no one's happy about raising taxes is that the American people liberals and conservatives.

Have to look at our children and our grandchildren and say is it moral pick -- up political.

For us to use credit cards to date hand -- the bills and say you pay.

When you grow up I say it's -- -- So all of us have to pay higher taxes and cut spending and do what Bill Clinton did in 1993.

Which was to do both.

Leading to a trillion dollar surplus when he left office.

Now what you just described as just the raising taxes -- I believe that Barack Obama is also cutting spending but not enough.

And I've urged him to endorse the Simpson Bowles commission recommendation of across the board.

Closing tax loopholes to raise revenues and cutting spending drastically Social Security.

Medicare and entitlement reform Barack Obama has not taken the step of endorsing that approach.

All right you know there are arguments on the other side.

That.

When you cut when you when you raise the taxes on the top earners that it has a stifling effect on the economy.

You know it it cuts back on growth.

It actually goes in the opposite direction and that these projections therefore for how much.

Revenue the government actually -- from it don't end up materializing because of the dampening down.

Growth that's the argument on the other side -- would you say that.

It's a legitimate argument and you do have to worry at a time of recession that taking money out of the economy is that what you're supposed to do you supposed to spend.

More money but when you are in a fifteen trillion dollar heading to sixteen trillion dollar debt.

Mostly to the Chinese.

You have to bite the bullet now let me give you two examples why it didn't work the way we both recognize is a legitimate concern in 1982.

Ronald Reagan was facing a deep recession and in 1983.

Ronald Reagan the great conservative president this is a fact.

Had the greatest tax increase in American history leading to a return to.

A better economy by 1984.

Bill Clinton did the same thing in 1993.

Raised taxes 500.

Billion dollars and cut spending 500 billion Republican said this is terrible you're going to -- exactly what you just said and look what happened.

By the end of the nineties so I think that we've got to address this deficit but we should short term -- -- spending on infrastructure of roads.

Bridges.

The things that we need as a public.

Infrastructure investment.

And I believe that's what President Obama has tried to do short term spend long term cut but not enough -- I do think he needs to endorse him involved.

You know there's also a debate over what to actually qualifies as well see with people in -- areas like New York City saying.

That a family of four and 250000 dollars -- is that really not.

-- -- that debate goes on and on.

Sure look if you're earning 50000 dollars a year and you're blue collar worker in New York -- a lot tougher than earning 250000 dollars a year.

But everybody -- got to sacrifice it needs to be across the board except for the very poor.

It certainly should be an across the board.

Sharing of pain in order to do something about what we're passing on to our children and grandchildren.

And I speak for myself I should be taxed at the -- that you just described goes back to the Clinton in 1990s.

Tax rates.

Which makes us pay higher taxes but does something about.

The future -- our children and grandchildren and I think we will have to play our part but the people on Medicare.

The people who are on Social Security we have to adjust the retirement age.

-- to a higher level do the things that Simpson Bowles.

Said we needed to do and we got too Liberal Democrats in two conservative Republicans support Simpson -- on that commission.

We're United States senators who -- the courage to say we've got to do the responsible thing.

And go back to balance budgets and go back to fiscal responsibility.

You know it's too late -- Now but there were also hearing how holes from people saying well sure you know now we can not talk about how we can't test this debt onto our kids.

But a lot of that debt came from these bailouts and stimulus bills and whatnot and that those are what led us here in the first place.

But you know -- -- fox contributor and Democrats I always have to do that yes you're right but.

So yes -- -- you're -- and I'm not even think there's some saying that no.

What you just said is -- fact but you also have did add the fact you omitted.

I'm like Brandon and schoolmate from Yale College George W.

Bush and I still have a great soft spot for President Bush.

Finance two wars.

In Iraq.

And Afghanistan.

Using a credit card that we're passing on.

To his kids and my kids no tax increase to pay for those two wars he also had a tax cut.

Mostly benefiting wealthy people that added trillions to this budget deficit.

Passing those bills on to our children our grandchildren so you have to say that both bush and the Democrats are complicit.

In ignoring the more responsibility we have to pay today's spending with today's taxes and not borrow from the Chinese.

And have our children -- the -- I would say there are a lot of conservatives who are very unhappy with President Bush in that regard so -- all right a lot I still -- President Bush.

Yes I heard I heard your articles about him and I know I know there's a fondness there -- I don't really we did things that fraternity parties back in the sixties that we do not discuss please just get the scoop.

-- -- girls that's okay -- -- Davis thank you so much for joining us send again he's got that article right now on foxnews.com.

As well thank you as always --

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