Rendell on Tax Deal; Senator Warner on Tax Cut Backlash; Republican Woes on Tax Deal
SPITZER: The narrative around the tax cut package just changed in the last few days. First, President Obama said the deal had to be made to extend benefits to the unemployed. That didn't go over so well, so his economic adviser Larry Summer said we risked a double-dip recession unless the package was enacted.</s>PARKER: Virginia Senator Mark Warner is a Democrat on the Senate Budget Committee. He had another idea that would have allowed taxes to go up for the rich and use that income for business tax cuts, but he couldn't sell it. Senator Mark, welcome. Senator Mark Warner, welcome. How are you?</s>WARNER: Thanks, Kathleen.</s>PARKER: So --</s>WARNER: Well, you know what? I still think my deal looks pretty good in my perspective in terms of what we're actually going to be voting on. But you know --</s>SPITZER: It looks great, Senator. You keep pushing it.</s>WARNER: Thanks, man.</s>PARKER: Well, so we know that President Clinton and President Obama met this afternoon.</s>WARNER: Right.</s>PARKER: And President Clinton came out in favor of the deal, saying it was the best deal possible under the circumstances. And he took questions for a long time. That is, President Clinton did. So what's your reaction?</s>WARNER: Well, listen, I wish I would have been in the room. I think there could have been a better deal. But the fact is, the deal was made and I think it will pass. I will support it because the alternative, frankly, is the notion that we're going to play Russian roulette or roll the dice with the American economy, because I think the economic uncertainty that could be created, particularly with what's going on in Europe at this point, of allowing the tax breaks for the middle class to expire, and allowing the unemployment benefits to expire, could be really a very, very draconian. So, you know, let's go ahead and move forward on this deal. What I hope is that -- though is that we in Congress could actually show that we could, you know, walk and chew gum. So my hope is -- and I think there's a lot of bipartisan support for this, that while we do this short term stimulus, we also make a commitment that next year we're going to do the real hard work, which is around real tax reform and deficit reduction. Because I think any economist that -- even the economists that applaud this deal say if we don't get our fiscal House in order over the longer haul, this is just putting off an inevitable decline of the country.</s>PARKER: Did President Clinton's enforcement of the plan have anything to do with your conclusion?</s>WARNER: No --</s>PARKER: Or has you reached that --</s>WARNER: I got a lot of respect for President Clinton, but I -- when this deal was announced, the reality of this or doing nothing, to my mind, was pretty clear, and that we had to act. And what I'm simply trying to do now is trying to rally folks on both sides to say, if we're going to add $900 billion to the deficit over the next two years, let's all -- so go ahead and in a bipartisan and civil way commit to, you know, doing deficit reduction and real tax reform over the long haul next year. Because if we don't, the -- every week that goes by, we add billions of dollars to the national debt. And frankly, I thought the Simpson-Bowles commission work that was done last week, I was the first guy not on the commission that would have said, again, not perfect, but I would have voted for it if it would have been on the floor.</s>SPITZER: Look, Senator, I don't mean to challenge you on where we are. But we still do have about 10 days or so until things really do run out of time. The Democrats in the House have taken a different position, saying no, we're not going to bring this to the floor. Why isn't there time now to say there are pieces of this package that are not stimulative? And I really don't think that the state tax piece or the reduction in marginal rates or the extension of the lower rates for the super wealthy has any stimulative effect. And meanwhile, we're borrowing money from China to pay for that. It's a real bad set of facts for the economy. Why can't we push back on those, and substitute your idea, use that money, at least for something that would be stimulative? Why isn't there time for that?</s>WARNER: Well, Eliot -- Eliot, I'd like to see that, and you know, I agree with you particularly on the estate tax. You know, we could have done something in the middle between the $3.5 and $5 million exclusion rate that would have caused a lot less heartburn, at least amongst a lot of Democrats. But as we saw, even when we raised -- tried to raise the marginal cutoff to $1 million in the Senate, we only got 53, 54 votes on that. So the fact was, we didn't have the votes on that kind of even higher level on a million-dollar cutoff a week ago. And with the clock ticking, you know, I do think we're looking at -- with perhaps some small addendum around the side here or there, I think we're looking at the framework of either this or potentially allowing the tax rates to expire and everybody taxes going up.</s>SPITZER: There was movement, certainly during the Clinton presidency, President Clinton began with some very heavy lift whether it was NAFTA or his budgets or the tax ideas, and he would get certainly members from his own party to come on board and occasionally across the aisle, as well. This president doesn't seem to be able to do that. Is that his failing or is it just a rigidity and a stubbornness and a uniformity on the Republican side that simply can't be overcome?</s>WARNER: One of the things that I have been disappointed in, in a lot of my Republican colleagues is, you know, there has been kind of an "our way or the highway" approach. And, you know, the fact is, over the last two years, we've had the numbers to jam stuff through. The Republicans had the luxury of just saying no. Come January, both parties are going to own both the problems and they're going to own the solutions. And I'm hoping at least on the Senate side there can be a reemergence of the group in the middle, Democrats and Republicans, and it'll be -- you know, we're going -- hopefully form a new caucus, the "let's get stuff done" caucus, which is --</s>SPITZER: Right.</s>WARNER: -- definitely what I think is needed.</s>PARKER: You know this afternoon at the press conference, President Obama and President Clinton spoke for a little while and then President Obama excused himself, he kept checking his watch and finally said look, I've got to go, Michelle -- I've kept my wife waiting for 30 minutes already. And he turned it over to President Clinton who seemed delighted to be back in place. What do you think of that?</s>WARNER: You know, I found one of the things as a current elected official, it's probably not good to comment on current or former president's in terms of their speaking time. You know --</s>WARNER: I'll do a quick pass on that one.</s>PARKER: Fair.</s>WARNER: Kathleen, I don't think anybody was surprised that the president -- President Clinton, you know, liked the opportunity to be back in the limelight.</s>PARKER: He seemed right at home.</s>SPITZER: Well, I think there's another reality here, which is that the terms of this deal are not, in my view -- again, I hope I'm wrong about this, but this is not a two-year transaction with the Republican House of Representatives starting in January, hard for me to imagine any political dynamic that has the Republicans in the House moving these numbers up, or making -- raising these marginal tax rates. So I think we're talking about something that will probably last at least a decade.</s>WARNER: But if we do that, the -- basically, the amount we add to the deficit now with these other add-ons is -- over the next decade is more than $4 trillion.</s>SPITZER: Senator, that is --</s>WARNER: More than $4 trillion. And remember, put this in context. Last week, all of the hubbub about the Simpson-Bowles thing that took on Social Security, took on Medicare, ended up -- you know, closing a lot of tax exclusions. In total, that only reduced the deficit $4 trillion. So, you know, the idea that these are going to be locked in stone with all of the other things that are kind of hard to get at, will mean that at one point soon, whether it's the next couple of years or five years from now, the bond market and others are going to say, they're not going to buy our debt anymore, and we're going to have the same kind of crisis that Greece and Ireland and potentially other countries in Europe has had. And if we don't step up.</s>SPITZER: Yes.</s>WARNER: And do our part on that, we all ought to be fired.</s>PARKER: I couldn't agree more with that. Senator Mark Warner, thanks so much for being with us.</s>WARNER: Thank you, guys.</s>SPITZER: Coming up in "The Arena," it's not just the Democrats balking at the tax deals. Some Republicans don't like it either. We'll be back to ask two insiders, is the tax deal dead on arrival?</s>RALPH REED, CHAIRMAN, FAITH AND FREEDOM COALITION: So basically what he's doing is, he's essentially conceding that for the duration of his presidency, the central pillar of the Bush economic policy will remain in effect. That is a devastating philosophical --</s>SPITZER: Ralph, I hate to do it, I hate to do it. I agree with you.