tv Washington Journal CSPAN February 12, 2016 8:30am-9:01am EST
ourselves. the reason the distinction 2009,s right now is since we're coming of that terrible economic downturn, our deficits or massive. there are at a trillion dollars. the company became very concerned about trip fiscal policy because we had the trillion dollar deficit. at that point, the deficit was not our problem. the deficit was not an immediate challenge. the deficit has come down as the policy has recovered. the president said the deficit has come down by three quarters. that is not what the problem was. was actually helping to stimulate the economy when there is not enough demand. the problem is that our debt has been soaring as a result of that. when we went into the economic crisis of 2008. our debt was the average amount it is relative to the economy. our debt is now 74% of gdp. it is headed to be in the 80's by the end of the next your
time. we get very scary can projections from the congressional budget office. that matters for many reasons. it impacts the underpinnings of the entire economy. wages, jobs, economic mobility. our ability to invest in new things. that is the debt level. what i think we should be really worried about is when we have our next economic crisis and we can't attend like we well. we are probably closer to the next crisis than the last one. given the normal length of the business cycle. we do not have the same fiscal flexibility we had last time when debt levels are twice their average. which is where we are now. intory hard to go recession and user budget to help stimulate demand and counter what is going on in the broader economy. so, we're very lucky when we hit the 2008 crisis to have a healthy debt situation. now. not have that deficits are coming down. they were coming down. that made the media, the public
and the candidates all say thank goodness we do not have to worry about this. meanwhile, the debt is going up at a very significant clip. at record levels coming it really leaves is in a vulnerable economic situation. that is one of the things i worry about looking down the road. host: the president's budget, $4.15 billion through spending, 4.9% overall. the federal deficit would shrink by $500 billion. that shrinking debt becomes 75% of gdp. of thatagon's portion discretionary spending is $582.7 billion. maya mcguiness is our guest. she is head of a group called the committee for responsible federal budget. prior to that she worked on wall street. masters from the jfk
school of government harvard. what is your committee? the committee for responsible federal budget is a phenomenal organization. is are 35 year anniversary. it has been around a long time. when i was at the kennedy school studying policy, i kept thinking that my dream would be to have a bipartisan, i'm a political independent. kind of an orphan in a city like washington. i do not know why we divide ourselves and to parties and then just be each other out. i wanted bipartisan organization that pushes for more responsibility. thisrns out there was wonderful and. the committee for a responsible federal budget. i got tapped to lead it. the board of directors is made up of all the people who have worked in government on both sides. people on the congressional budget office. they run the fed, the treasury department. the budget committee. our chairman, our governor mitch daniels. panetta.
and congressman tim petit all former members of congress are in those various positions. obviously, very they vary across a spectrum from conservative to more progressive. same with our board. what i think is really special about the board is that not only are they engage in this issue, they know what it takes to budget. isis not a think tank that come up with a pie-in-the-sky idea that would never work. it is a group of people who've been there and done this and are trying to work with policymakers to try to get us to be more responsible. we spent a lot of time working with members of congress and educating them about the budget. helping them come up with ideas about ways we could pay for things and put together a deal. we also spend a lot of time outside washington because public education is key on this. member education is key on this. ask a, it is very rewarding. a lot of people outside of washington get it. they understand you cannot borrow indefinitely.
the president's budget deficit will put into a situation where all never come down. it will not decline from his record levels from right now. that is very frightening. in the states, people understand this a lot. what i do not think they understand which is kind of hard is how it matters to their life. thatve a nagging feeling borrowing this much is not sustainable. it cannot be good for the economy. then, give candidates who come along and angrily huge tax cuts are great new spending program or free this or three that. -- free that. we have people telling you the deficit does not matter. where john talk about why this matters and how it is connected to people's economic well-being. we put the debt on the downward path.
you would over time's see significant growth in the economy. people will be making more, on average with their wages. it really does impact their bottom line. a politicalle with year trying to get them to talk with candidates or talk with candidates directly. saying you cannot run around the , and not talk about how you're going to fix the debt. if they have not talked about it on the campaign trail come it will be a lot harder to help people get what we're spending, how we're spending. passing that bell with our kids is not a sustainable economic land. host: your turn to talk with milo mcginnis -- mia mcginnis. thank you for taking my call.
i just wanted to point out one quick thing i noticed. with the obama administration and the affordable care act. it just brings up as revenue generated by the student program as a means to pay for it. because, they know whole thing. so, this is bad. student loans are partially predatory. the government not only makes money on these interest, but also in defaults. this is a horrible thing we have seen cause inflation. who keeps the accountants in check? we have a quick follow-up. we pay 70% in taxes. the richest of the rich. today, the richest of the rich pay 15%. say the rich are
being taxed more today? three big topics. pain for the formal care act, student loans, and are the rich paying enough? we could devote an entire show to each one. manyure you have done that times. the affordable care act has been incredibly contentious. some people love it, some people do not. that will continue. i want to say one thing, i take your point that you want to have financing for health care programs. i think that in defense of the affordable care act, when they built it, they paid for it. do something we've not seen in quite some time. we had a prescription drug nothing that was paid for. the notion you had to pay for something had been thrown out the window for the past decade.
whether or not you hate obamacare, the notion that you have to pay for it is important. what we have seen recently is cause for concern. despite the fact that there is a big agenda to repeal or replace obamacare, that has not happened in any of the spending programs. we have started scaling back on things we paid for. that is one example where there is a way we're taxing high dollar health care programs to help pay for the aca. that has been pushed back. there is a real concern that will be repealed. there are folks on both sides of the aisle who do not like the tax. guess what? people do not like taxes. people do not want to pay for the spending that we have. what worries me is that we are starting to scale back some of these things we paid for. the cadillac tax is a sensible tax. that will help control costs and health care and raise revenue.
if are going to get rid of it, we need to pay for something else. probably should have more programs to vote wall this. student debt and the country is a huge issue. the government role in the private sector is a huge issue. clearly, we do not have the right models yet. they're both redundant. there is real concerns about how it is incentivizing people to take on more debt. i think this will be one of the big problems we need to tackle going forward. now, you bring up one of the biggest topics. obviously, it was a discussion at last night's debate. the whole campaign, the question of income inequality, and what is a fair tax code. there is no correct answer. fair is in the eye of the beholder. i think it is important to note that tax rates, marginal tax rates are lower than they used to be. they were as high as 90% at one point.
they kept coming down, and others a lot of talk about them going up. trade-off on how you raise money efficiently and progressively. i think that there were probably be a consensus that you will need to raise more money at the high-end. particular because of all these marginal tax rates. there are high at 39.6. inspection tax rates, which you end up making as much much lower. think the reason for that is that in our tax code, we have tax expenditures. that's what they're called. is $1 trillion per year in lost revenue because of credit deductions, exemptions, exclusions. all sorts of tax breaks heard the largest portion of which go to the well-off. one thing that i think people should think about is that in addition to sure we should we i because a point i will say here's a higher tax rate, the bigger the
disincentives to fix her taxes. if you're taxing carbon, there is a bigger disincentive to pollute. if you're taxing income, it is a tax that determines whether people want to work or not. making say people millions of dollars a year are not going to stop their job just because they pay a slightly higher tax rate. we will look at the economic literature to determine if that is true and if that is not true. i think an important thing to look at is getting rid of a bunch of those tax breaks. think about how to have your tax breaks for the well-off. you can make your tax code more progressive without doing as much damage. your question did justice. i think this is a huge topic. i think the distribution of our tax code is not what is going to do with the problem of income inequality. i think that is a huge problem. i think our goal is to figure out how you have a tax code that is progressive and economically as efficient as possible.
i think that pushes us towards a large overhaul of the tax system. anybody who pays taxes already already knows that we are talking about fundamental reforms. revenuethat will raise and also be distributional he fair. host: mike is in houston texas, you're on with maya mcguiness. good morning. i just got up off the floor. i have a question. the top 10% of income tax earners, the top 10% of earners pay 70% of federal income tax. problem in the united states. if there are a problem in america, i like to hear the reason. i do not understand. the tax code is 73,000 pages. you want to eliminate tax breaks. i'm considering. why not make it more
transparent. having more transparent tax code. host: i think we get the point. i want to follow his point up with this. calculated over spending higher taxes planned for eliminating the debt, if so, how much for each? his point, 10% paying 70% of all taxes. 73,000 pages for the tax code. then, what about your committee? question isnk the why i have not done this topic justice at all. income inequality is huge in this country. the most well-off are making the most money. the other side of that is mike's point. they are also paying by far the greatest share of taxes. i do not think will fix this problem by taxing the well-off more. i think we will try to figure out what a shared more broadly
with workers at all income levels. that is a huge challenge. is a discussion i wish we were having. how do you ensure you are growing your economy in a way where those gained are shared. , leaves people doing better with their company's growing. this is a time of growing automation. this is something that i do not know the answer to. wishis something that i was happening more. these are the two different ideologies. i see merit in both of these. on one hand, the rich are making so much money. they are, effectively, paying more taxes on a regular basis. a share of the taxes is huge. you look at the congressional
office being published, it is hard to say they are not paying enough in taxes. the real challenge is how do you grow your economy in a way that benefits folks along the spectrum? to be doneal work there. i think we have to look at different government incentives. with look at how the private sector organizes itself. this, to me is on the fundamental policy challenges we need to be working on. there are good ideas from both parties. i think one of the problems that happens in election season is that if a republican embraces something, democrats rejected. i like to see more of a cooperation. we know that for our country to be competitive, we need a thriving middle class. i like to see more efforts on how you adapt and modernize our economy. matthew in new york. democrat, go ahead. caller: good morning.
i like to start off by saying that i do not think austerity works. you know, the whole trickle-down theory, i was listening to the republican colleague before me talking about the rich paying x amount. i find that difficult to believe. i read that ceos and people running multinationals are doing is that they are trading their actual salary for stock or bonds. they do not actually get a huge salary. actuallyey are not receiving the salary, they're not exceed paying the taxes that should be do. that is just my opinion. i'm also curious, what do you think about inversion?
is a rare way we can tax offshore money being held in various places? host: ok. let's leave it there. guest: a lot of great points. have thatw that we question from twitter from before. i am not a fan of austerity. one of the great things about our economic position in the world is that we are still the strongest economy in that when people get jittery, this -- they rely on u.s. bonds. they sarah deficit is large with our debt levels. we do not have to shrink our budget to close our deficit immediately, the way some other countries have had to. aat we do need to do, there's big difference between austerity, dealing with our deficit like it is an emergency, and fiscal responsibility. that is loud make a huge argument for. i would say you cannot have a debt that is growing faster than your economy on an unsustainable
path worked will continue to grow and grow. were interest payments are the fastest part of your budget. or you haveleft to make these public investments. we are tax code creates incentives against growth. say, fiscal responsibility is looking at the medium in the long term. had we get our bed -- debt back on a path that is sustainable. we need to put in place changes that over time will change the trajectory of the debt. we're so lucky to be in a country where we can do that, markets are not forcing us to do with austerity. why would not risk in his? i know why, it is because politically it is difficult and we are not in a good place. we know that the model would be not to focus on the short term. we need to get the medium and long-term debt trajectory. point, i'll make a
plug for our website. budget, we will go by midafternoon today have these numbers posted. people see there is a balance congressional budget. as an assessment of how much these different groups of people paying taxes. looking both at income taxes and a total tax burden. people see that you can almost say whatever store you want. the rich pay a huge share of taxes. a huge share make of the income. i will also say there is no right answer. the discussion will be helpful if we all have those facts. is a realinversion problem. again, i think our economic system has not caught up with our globalized economy. we have real competitive issues or he know the companies will
move wherever they can't and minimize their tax bill. at the same time, they are getting the benefits of having been in the united states. try, and corporate and versions isolations, the administration has tried to do that. i do not think it will be successful. say that if we cannot do the corporate side, we will do them successfully. we will look at how corporations and these issues are taxed. inform the different treatments around the country, and tried to get rid of the incentive for company to go abroad. there are measures we can put in place to see that we will not get some of these benefits. but, there are smart tax lawyers who stay one step ahead of the tax law. if you cannot put the genie back in the bottle, if you cannot keep corporations from going abroad because our economic
incentives to do so. also think that corporate taxes, a lot of times, it might be easier to capture that revenue by having a tax code that taxes the people who are making the money. whether the shareholders, executives, the earners. the tax people at that level, rather than the corporate level, they may be more effective at getting it done. to the question i was asked on twitter which is interesting, because i always thought that you should not be out there whining about the need to do something if you're not putting forth a proposal of your own. think the best thing out there is a sense and gold plant. it is still relevant. people should pull it up and look at what they are suggesting we do. they're talking about reforming every part of the budget. how to fix social security and burned out health care costs. how to have savings and the discretionary portion of the budget. we have this pool of moneys or we could invest in public opportunity funds.
how to raise more revenue, which we need. but we need to do so anywhere that actually lowers the tax rate, but brought as a base. we will take in more money, but anyway that creates fewer inefficiencies in the economy. , domenici rivlin was another plan that i worked on. it was summer and equally as effective in looking at all parts of the budget and achieving an important fiscal goal of getting a debt so that is not growing faster than the economy. i worked at a plan like this with a colleague bill golfed and just to say this is what it would take. i think the important thing is, people have to understand what is involved. i will link this to the campaign. you cannot listen to people promising trillion dollars a tax cuts, are trying dollars in spending programs without understanding how that fits into the entire budget. again, on our website,
with a budget simulator. this menacingly a fun thing to do on a friday night. there is a budget simulator where you can go online and you can't say my goal is to balance the budget down 60% of gdp. it will take you through all of your choices. what do you want to do with defense and health care. what you want to do want taxes? where you want to spend more money? word you want to spend less? we used to do this with members of congress all the time. they learned a lot from it. i think working on that trade-off is critical. there are a million things i would like to spend more money on. work wellgs to not together. particularly when you start with record levels of debt. for anybodyimulator who things that will be fun to do, it is on our website. it is a good tool. the answer is yes, we have put forth budget plans. i've done one. we supported a lot of the frameworks, because we know what
it will take. i think an important thing is introducing an element of realism into the discussion. the campaign, everybody is talking about deficit and debt, the proposals they put forward do not get us there. on the republican side, with tax cuts that would lose $1 trillion to ones that would lose $10 trillion. there's a lot of handwaving about we will close the spending with waste, or other things that are not specific. you cannot get from that kind of revenue loss and tax cuts. let's just get this figured out. tax cuts do not pay for themselves. cuts can grow the economy. cutting taxes helps grow the economy. it does not grow the economy enough to pay for itself. if you cut taxes by a dollar, it does not say you get another dollar back in revenue. most literature suggests you get
maybe $.15 on that dollar back. we cannot cut taxes and pay for them ourselves. we can cut taxes, but you have to be ok with spending. on the republican side we have not heard much of that. on the democratic side, we heard a lot of proposals that pay for the spending plans. these plans are large. they would absorb a lot of tax dollars. the tax rates, if you look at the bernie sanders proposal, they go up a very high into the 70% margin. that is before he has done anything to help get controlled the record debt. i will say that if you take all of the new money you will raise and you put it into a new program but have not fix the debt, we still in a physically dangerous position. my point is that political season and primary season is not a good time to worry about the primary. you need to figure out how we're going to pay for that and what sort of plan, what would you put
in your first audit that will get the debt under control. if we do not have that discussion, we are still pending these promises that are not backed up by the numbers. it will make it much more difficult for this country to really put in place a fundamental budget plan that makes sense and is fiscally sound and is part of an entire plan to grow the economy. you cannot have sustained economic growth which is something we desperately need when you have a very weak fiscal underpinning to your economy. host: bob, philadelphia, republican line. good morning. thank you for taking my call. i'm a think our guest for the work that she does. winston churchill said it many years ago that america does everything wrong until it finally gets it right. now, having said that, in the guests opinion, how didn't how many years do we have to go before people are so against the wall that we finally have to
address this madness. let's face it. that is what it will take. it will take this country having its back against the wall and having no choice but to address these issues. in the guests opinion, having more years. host: we have the point. guest: i'm sorry, you have one minute to answer. it is an excellent question. always thought there were two models for change in the course we're on. leadership and crisis. that is why i'm so focused on the election. it is important that we get a leader who is in the white house who can help us focus. if we do not have political leadership, it will never be a grassroots movement. i wish it were, it is not something people march in the streets over. it will ultimately be some kind of crisis that will force our hand. or, we will just muddle along. what that means is that we keep making small budget improvements. we will re-raise tax rates. most of those are not smart.
it is a policies who put in place that help close the gap. they did it in a way that was not good for the budget or our long-term thinking. i worry that we will keep putting in place these budget deals that are not smart. they are politically motivated. short-term motivated. they will do enough to stave off the crisis, but they harm our long-term growth. if we do not have economy growing, everybody will suffer from that. the crisis will depend on how the rest of the world is doing. we're still better than they are. maya mcguiness. president of the group called federal budget. is the website. on this friday night, you can go and you can create your own budget. maybe make it a group party. thank you. come back and spend three hours get this so that we can more calls. the house of representatives are
an early. there are 9:00 and eastern time. they just open the doors. they are on their way in. they will be working on issues like north korea as well as looking at some debt limit technical issues. [captions copyright national cable satellite corp. 2015] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] father conroy. chaplain conroy: let us pray. merciful god, we give you thanks for giving us another day. as members prepare to return to their home districts, endow them with ears to hear, voices of their constituents, those who voted for them and those who did not. it is the strength of our representative democracy that all have a voice in the governing of the nation. our nation will soon be remembering presidents washington and lincoln, giants of america's history, one presided over a nation united