CNN business correspondent Christine Romans claimed Monday that "any serious budget expert's analysis" concludes that taxes must increase. During CNN's coverage of President Obama's address concerning his deficit reduction plan, Romans asked not if, but when Republicans should get on board with his proposals.
"So at what point do Republicans say, okay, we agree that taxes have to go up, and here's what we'll agree to?" Romans posed to former Bush CBO director, Douglas Holtz-Eakin.
According to Romans, President Obama's proposal to raise taxes on millionaires is just fine. "So what's wrong with raising taxes for that crowd so they're paying the same on their overall income as a middle class family? I mean, what's wrong with raising taxes on just that sliver of the rich?" she asked innocently.
President Obama's tax hikes on millionaires mirrors Warren Buffett's "rule," which Romans referenced several times. Buffett has famously advocated that he and other wealthy investors should pay higher taxes.
[Video below. For audio, click here [1].]
Romans added that "this is the core of the Buffett Rule is that there are some people in this country who make an awful lot of money with their money, not with their hands. I guess you could argue it's with their brains, but you know your work is taxed differently in this country, that the people who work for Warren Buffett have a 35 percent tax rate."
Anchor Wolf Blitzer played devil's advocate with guest Douglas Holtz-Eakin, scrutinizing corporations like General Electric and ExxonMobil for their low or non-existent tax rates and their subsidies. He even played a clip of former President Clinton saying it was an "insult" to the wealthy to argue for lower taxes for them. "They don't mind being asked to pay their fair share," Clinton claimed.
A transcript of the segment, which aired on September 19 at 10:18 a.m. EDT, is as follows:
[10:18]
CHRISTINE ROMANS: You look at any serious budget expert's analysis of the situation, taxes have to go up. So at what point do Republicans say, okay, we agree that taxes have to go up, and here's what we'll agree to?
(...)
[10:22]
ROMANS: Doug, so you're talking about the Buffett Rule, and it affects maybe three percent of taxpayers, about 450,000 individuals. So what's wrong with raising taxes for that crowd so they're paying the same on their overall income as a middle class family? I mean, what's wrong with raising taxes on just that sliver of the rich?
DOUGLAS HOLTZ-EAKIN, former director, Congressional Budget Office: Well I think, if you look at this objectively, we already have something called the alternative minimum tax. It was designed in the 1970s to catch those 200-odd people who had lots of income and paid no taxes. It's been on the books for 40 years, and instead of fixing it, instead of actually addressing the nation's tax problems, the President's putting out a rule, which is going to be popular, everybody should pay their fair share – there's no specifics – once again, he's failing to lay down an actual plan. There's no legislation, and somehow this is going to solve our problems. No, a real solution would be write down a tax code in a tax reform the joint committee could try to get through by November, that would raise the revenue that he views as appropriate, raise it from the people that he thinks would be fair, and start the debate from that point of view. This doesn't move the debate forward, this is just a side-show.
WOLF BLITZER: I want you to listen, Doug, to the former President of the United States, Bill Clinton. He was on the Today Show, today, and he said this, listen to this.
(Video Clip)
Former President BILL CLINTON: The Republicans in Washington always say the same thing. Any tax on any upper-income person is bad because they're job creators. It's an insult to those people. They don't mind being asked to pay their fair share –
(End Video Clip)
BLITZER: You agree with the former President?
HOLTZ-EAKIN: I don't think it's an insult to people. I think it highlights the serious problem we have in the discussion of tax policy right now, which is all about who pays it, not what are we trying to do with our tax code. A tax code should have a purpose, it should have a philosophy. It should be more than just trying to collect money from particular people, without an aim toward economic growth, without an aim toward fostering charitable contributions, if that's desirable. We need to have that discussion, not this sort of side line about 22,000 Americans who happen to be very rich. That's what I'd like to see, that's what the Bowles-Simpson Commission tried to do, broaden base, lower rates. They raised a lot more revenue, more than a lot of Republicans would probably like, but that was a sensible starting point for the discussion.
ROMANS: So in the absence of real tax reform, I mean if you're saying what we need is real tax reform – and I'll be honest with you, a lot of people agree with you – but they say there's no political climate for real tax reform right now. In the absence of real tax reform, what do you do in the very near term to raise revenue, to get more money coming into the government and so that we don't keep running these yawning deficits.
HOLTZ-EAKIN: That's not the source of the deficit. Let me be very, very clear. If you look at America's problem, and you look forward as the commissions have, the problem is spending. It was 8-2 spending in some commissions, it was 7-3 on the others – the problem is spending, the problem is the entitlement programs, which are broken. Social Security is running red ink right now, Medicare is borrowing $280 billion a year from the general revenue, Medicaid is being entirely deficit-financed – these are programs that are not serving their beneficiaries well right now, as in Medicaid, or won't in the future with Medicare and Social Security, unless we fix them. So we have an obligation to fix these social safety net programs. We need to do it from a budgetary point of view, and because the debt explosion threatens our very economy, it is an imperative that that be the first topic. And if Republicans are supposedly always recalcitrant because they won't talk about taxes, Democrats put zero, exactly zero, in the way of serious entitlement reforms on the table, and that's the biggest problem. The President's own commission said so. So what's really disappointing about this, where the leadership is missing, is on the spending side.
(...)
[10:40]
BLITZER: Talking about tax reforms, a lot of people point this out, but tell us how to fix this if you think it should be fixed. A company like General Electric, they make billions and billions of dollars last year, I think something like $14 billion – 5 billion here in the United States – and effectively, in terms of federal income tax, pays zero, less than you pay, less than I pay, less than Gloria, Christine, anybody else. Is that fair? How do you fix that?
(...)
ROMANS: I was going to say, you know, if you – if you want to talk about reforming the corporate tax code, that's going to mean raising taxes for some corporations, because when you're going to – if you're going to simplify it, you're going to get rid of all the loopholes, that means tax rate, while on paper it'll be lower than 35 percent, some companies are going to be paying more tax, and the mood in Washington is don't raise taxes for anyone. So how do you do it politically?
(...)
[10:45]
BLITZER: But you understand, Doug, that as far as big oil companies are concerned – and I don't want to pick on ExxonMobil, but I will, just for a second, for the sake of argument – if they're making enormous profits every quarter, tens of billions of dollars, why should taxpayers like you and me and all the viewers out there subsidize them to make even greater profits when they're already making 30 or 40 or even 50 billion dollars in profits, they're doing just fine?
(...)
[10:55]
ROMANS: I want to make one point about who is paying all these capital gains income that's realized, because this is the core of the Buffett Rule is that there are some people in this country who make an awful lot of money with their money, not with their hands. I guess you could argue it's with their brains, but you know your work is taxed differently in this country, that the people who work for Warren Buffett have a 35 percent tax rate. The people – or other people – Warren Buffett is paying in the high double-digit, you know, high-teens. You know, 80 percent of the capital gains income realized in the U.S. in the last 20 years has gone to the top five percent of people, according to the Washington Post. So that's what the White House and more progressive economists want to zero in on. When you have to find money, you go to the people who have the money, and they say that's where it is. So it's a pretty easy pot to go after.