Zakaria: Sales Tax, More Govt. Spending Needed to 'Restore American Dream'

On Thursday's Newsroom, CNN's Fareed Zakaria endorsed a predictably liberal solution to get the American economy moving again: enact more taxes and implement new government programs. Zakaria called for a national sales tax and advocated new government spending on "research and technology" and "upgrading the infrastructure." The CNN host also labeled tax cuts "bad stuff."

Anchor Ali Velshi brought on Zakaria during the last segment of the 2 pm Eastern hour to discuss his upcoming cover story for Time magazine, "How to Restore The American Dream." Velshi labeled the article a "must-read" and first asked his guest, "I overheard a conversation between you and someone else the other day where you said you don't even like using the world 'stimulus' anymore. There is an answer that doesn't emphasize consumption. It emphasizes investment. Explain that to me."

The Time editor stated that "as a society, we are over-consuming, and for the last 20 years, we've consumed more and more, not because we had any increase in wages, but because we borrowed more." He continued with his government spending recommendation and his negative labeling of tax cuts:


ZAKARIA: The average American now has 13 credit cards. Our debt went from about $700 billion in the 1970s to $14 trillion now. So, that's not the answer. What we've got to do is invest in growth- that means R&D- research and technology. That means upgrading the infrastructure. That shouldn't be considered- you know, there's good government spending and there's bad government spending- giving people tax cuts, frankly, or increasing their pensions- whether it's the left's- left-wing idea or right-wing idea- that's all bad stuff. But building new research labs, create- getting us from being the 22nd in bandwidth in the world to number one- those are all things that are going to spur growth, and those are the jobs of the future.

Velshi followed-up by asking about Zakaria's new tax idea, which he proposed in his Time article. Predictably, his guest included a lament about how America didn't compare with other "advanced" countries:

VELSHI: It's a good thing you're not running for anything (Zakaria laughs), because in this article, you actually propose a new tax. You dub it the 'American innovation tax.' It would be a way of getting you to what you're talking about: investment in the things that will make American competitive, and that involves many things. It means educating people to the level that- we can educate and put people through universities in science and technology and engineering and math. But why a tax? What would that do?

ZAKARIA: What the tax would do is it would just pay for it. I mean, I don't believe that there is a free lunch here. If you propose an important new government program, you've got to explain where the money comes from. Again, for the last 20 years, we've had plenty of new government programs and expanded them, but everyone keeps pretending that these don't cost anything- you know, Bush's prescription drugs for the elderly. Whether you like it or not, you've got to pay for it.

VELSHI: Right.

ZAKARIA: So, what I say is, we have no national sales tax in this country. We're the only country in the advanced world that doesn't have one. If we put it- one in at five percent- which would be the lowest in the advanced world- that would still generate tens and tens of billions of dollars. You need to find revenue sources if you need to do this. Now, in the long run, we've got to get our house in order. We've got to get some entitlement spending down-

VELSHI: Right.

ZAKARIA: We've got to get health care costs down, but we can't wait. South Korea, a country of 50 million people, is spending $35 billion on green technology in the next five years- acountry of 50 million people. Think of what the Chinese (unintelligible)-

VELSHI: And they're on the top of that broadband list that you talked about.

ZAKARIA: And they're on the top of that broadband- you know, we think we're number one-


ZAKARIA: And you look at these new studies that are coming out and it's frightening. We're not in the top ten in many of these areas, you know? So, there's- that's all the more reason why we need to spend to catch up. It's not to stay on top.

This isn't the first time Zakaria has campaigned for a national sales tax. He devoted his February 28, 2010 Fareed Zakaria GPS program on CNN to pushing for a "tax on consumption." He also twice bashed the Bush tax cuts on the February 14 and August 1 editions of his program.

- Matthew Balan is a news analyst at the Media Research Center. You can follow him on Twitter here.