Congress ready to compromise on tax hikes?
But will spending cuts materialize?
- Duration 8:18
- Date Jun 16, 2012
But will spending cuts materialize?
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-- DC compromise push that could put taxpayers in a compromising position.
Reports out saying some influential senators -- in secret talks to strike a budget deal.
Worries mounting any new compromise might repeat history.
-- tax hike its upfront and spending cuts promise down the road the summit here says no deal would actually be better than that kind of deal.
Hi everybody I'm David has been welcome to fours on parts let's go into focus where sisters -- himself Elizabeth MacDonald.
Bill ball what Morgan Brennan.
Mike goes Avian and -- hunger so Steve.
No -- -- better than a compromise absolutely it's preposterous proposition the idea of putting on more taxes with an economy like this David.
How -- how you drive the economy down look at Europe.
And -- done much in terms reducing spending but they're piling on those taxes expecting congress to reduce spending like expecting Dracula deceased biting.
It just doesn't happen in the real world -- under no compromise better than a compromise what -- -- I think that put into words no one compromise together -- two worst words in the English language we have got to figure out how to compromise.
Look let's be careful what we talk about who there would be a tax increase on -- not gonna be across the board.
It's going to be on the highest levels of income and by the way.
I know this is not gonna solve our problems but you've got to give a little to get a little if you're looking for cuts across the board and that's not inappropriate.
It got to be willing to give a little.
Okay what Lee -- how these compromises worked in the past they have it worked I mean the last I was are really great compromise was a bipartisan -- in 1992.
Basically cut spending and do tax hikes and guess what I know it's cuts and spending their work tax -- supports eight Republicans and George H.
Bush out of office just -- 1982.
Under Reagan the same kinda compromised deal and guess what there were no basically the biggest tax hike up that kind of peace time history.
Spending went spiraling out of control and -- Entrepreneurial capitalism did not create this crisis why we hitting the big event -- the great guys -- the economy with higher taxes doesn't seem fair what.
-- but the fact is is that in the past very often they promise all kinds of spending cuts you get the tax hikes but you never get the spending cuts.
Yes history shows that's the case but I don't see how we can say no DL is better than ideal.
Given the fact that we've had every American economist from last couple weeks come out talking about the fact that this.
So called fiscal cliff that that we're expected to hit at the end of this year without a deal we'll send -- possibly into recession next here.
I think we have businesses who aren't hiring now they're holding back because of audience and see the fact that we don't have a deal in place.
I actually I'm okay I'm and you agree with Rick -- hair.
I think that it's okay if we saw a little bit of a tax increase for the top tax bracket right now.
I would also like to see some of those cuts Clinton plays I think looking at the Clinton -- model that was in place under Bill Clinton is a web.
Should be doing -- by Jose and let's look at the Clinton compromise because he did compromise with Republicans and what they compromised on by the way it was lowering tax freeze in 1980 -- in 1997.
They lowered the capital gains rate significantly.
And that actually helped boost the economy a boost revenues to the government right right and they also cut the rate of growth of spending -- remember at that point Newt Gingrich and the Republicans in the contract he had he had very strong support among the public for that and Clinton sort of took that feeling because he -- the public was behind it but I like -- -- -- Morgan and -- the same time a compromise the politicians are offering.
Give me a lot of money today and I promised sometime.
-- -- the wrong.
I'll pay it back maybe they'll look with -- -- Paul Ryan offered a very sensible compromise plan which didn't even cut spending it cut the rate of growth and Democrats put the kibosh on -- -- they are.
Remotely serious about reigning and spending at all.
They wouldn't have tried to kill that proposal ballots that it's like that -- show me the money show me the money I don't believe it until I see it -- There's -- these cuts -- little problem here which is that the US is the -- nation in history and it's high time we stopped expecting our trading partners such as the Chinese to fund our welfare state.
-- the start.
With a small tax on carbon that would keep getting bigger and bigger and by the way Steve.
Whatever number of cabinet level departments you want to defund I'll see you and I'll raise you one but separately -- -- got to have a or West Bank -- -- He is lowering tax rates and the public seems -- like -- the economy seems to like it.
Yet -- the whole point of government supposed to create an environment for economic growth not fattening up government.
And there's -- states are starting to do it and history shows with countries.
Countries that have low tax rates or lowering tax rates and up having more government revenue growth the country's high tax rates are raising tax rate.
And -- history it is popular.
Governor Christie is popular in New Jersey Governor Walker just one that that that election -- special election in Wisconsin.
Not only does it seem to work to lower tax rates and cut government.
But it's actually popular thing to do what's wrong with that.
Well look I'm a couple things first of all let's not jump the gun here you have Governor Walker did indeed win his recall her -- saying he's popular.
Think he's popular could be a stretch would get have a long conversation -- -- -- -- -- but but late but let me add something let me add something we already have a reasonably low tax rate you know we frame this argument.
As if you know we have this huge tax rate and now we're gonna at I -- do it.
We're not nobody is looking to do that at worst we're talking -- take you back to the Clinton levels where things worked out pretty.
-- -- gone well and I'll speak for yourself in Mac I've paid 50% a lot of people whenever any day of the American public is polled they say.
Taxes shouldn't be more than 25% 50% is a lot in my mind has a lot of by the -- the European organization OECD.
Says the United States is one of the most progressively tax countries in the world are very very high tax rates.
Just like any question of course is spending the -- -- saying essentially look.
I inherited a lot of spending no Pelosi and Reid have any George W.
Bush blew -- -- it's almost 28% of the US GDP.
And that was really bad and mortgage the top 1%.
Of US taxpayers.
Pay more than the bottom 90%.
I mean you wanna talk about fairness.
They pay more satire well they -- more -- bottom 90% but relative to their income that's not necessarily trail.
-- but I would not go on the -- -- because that's just not true either I mean what Buffett pays is very different than what most wealthy Americans pay.
Yes this is true however I don't think you can have I don't think you cannot consider raising taxes at least.
Tiny bit right now and you know what we really need is job growth.
Yeah totally brilliant job growth to bring up revenues until that happens the people that do have money should contribute a little -- Access for -- didn't ask for than -- but why are raised taxes for debt and spending we did not ask for is his tax saves yeah Friday united you don't you don't cut your way into prosperity -- an environment where people are willing to take risks again when you raise the price of good things like productive work risk taking success you get less of them.
And so when you destroy capital news for a midsize businesses -- these high tax rates guess what we all suffer for it looked at Europe.
And my goes -- bottom line is a compromise it depends on politicians.
Fulfilling their promises they haven't been too good at that -- -- -- it now and in fact you know to go to Rick's point about the Clinton tax rates yes but Clinton.
The -- was only spending 18% of GDP at that point.
Now we're talking about 24%.
So they're saying while we promise to make cuts hey listen get it down to 18% and then we'll talk bill -- go ahead.
Listen I got some very sad news for Mike and Steve and -- If you're paying a dollar your paycheck and taxes your true taxes or two dollars because the other dollar was wood up on your credit card by the federal government you don't want to be honest about it -- like attack cannot taxes spend your way to prosperity economist Milton Friedman said that's the last --