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Time is running out for Democrats and Republicans to negotiate to raise the federal debt ceiling. The U.S. will default on its loans in nineteen days, unless politicians reach agreement. Senate Republican leader Mitch McConnell warned the Republican brand could be “destroyed” if congress allows the government to default.. But many in his party have dug in against a compromise. And anti-tax crusader Grover Norquist is holding Republican lawmakers to the pledges his organization asked them to sign, opposing any tax increases. He joins Diane to discuss taxes, spending and debt negotiations.
MS. DIANE REHMThanks for joining us. I'm Diane Rehm. Grover Norquist heads one of the most influential conservative groups in D.C. In 1985, he founded Americans for Tax Reform. It's an advocacy group that asks politicians to sign a pledge to oppose any and all tax increases. As of June 1,236 members of the House and 41 senators, near all Republican, took the pledge. Some commentators say this poses a major obstacle to reaching a deficit reduction agreement needed to raise a federal debt ceiling.
MS. DIANE REHMGrover Norquist joins me in the studio to talk about taxes, spending and debt negotiations. I'm sure many of you will want to join our conversation. Feel free to call us, 800-433-8850. Send us your email to email@example.com. Join us on Facebook or Twitter. Grover Norquist, it's good to see you.
MR. GROVER NORQUISTDiane, good to be back with you.
REHMThanks for joining us. Take us back to the beginning, to the founding of Americans for Tax Reform. Tell us about the thinking behind it.
NORQUISTSure. You remember that President Reagan and a number of Democrats, Gephardt and Sen. Bradley of New Jersey were talking about tax reform going into '85, '86. And there, we are looking at the top marginal tax rate at the time, which was 50 percent, and they eventually took it down to 28 percent. But they did so in a way that it raised just as much money as last year and the year before.
NORQUISTThey did it in a revenue-neutral manner. So tax rates fell, but tax deductions and credits were reduced. Many were eliminated so that the government should raise as much money next year as last year, but with lower rates and a broader base, to simplify the tax code, to have fewer deductions and credits, to get rid of distortions that flow from that, and to have people face lower tax rates so it affects less.
NORQUISTThe tax code will have less effect on decision-making by individuals and businesses. People would spend their money the way they wanted to and invest the way it was best to do with lower rates.
REHMAnd you then came up with this pledge...
REHM...in 1986. Tell us about the pledge.
NORQUISTSure. The Taxpayer Protection Pledge was designed to help, not just protect tax reform but to help pass it because there were a number of members of the Congress who are concerned that if you reduced rates, broadened the base, that over time the rates would drift up again, how to protect against that. Why would they want to do tax reform if they thought it could be easily undone?
NORQUISTSo I created a Taxpayer Protection Pledge, wrote it out, sent it to a bunch of congressmen and senators and said, what do you think? And the pledge said, starting day -- today, if you run for office and you take the pledge, you're saying, I'm promising to the voters of my state and the American people that I will oppose and vote against any effort to raise rates or to broaden the base unless rates come down, too.
NORQUISTSo doesn't get in the way of tax reform, too, but it does get in the way of either raising rates or raising taxes by having something that you call tax reform that's really a tax increase. That year, we had, at the end of the '86 election -- and Reagan went out and campaigned and encouraged people to take the pledge -- we had 100 members of the House and 20 members of the Senate took the pledge.
NORQUISTThen, in 1988, the pledge became more famous because George Herbert Walker Bush was running for election to follow Reagan. And he signed the Taxpayer Protection Pledge. And in the New Hampshire primary, Dole had just won in Iowa, was expected to win in New Hampshire. Pete du Pont, who was governor of Delaware, running for president also, at the New Hampshire debate, just two days before the primary, handed Dole the pledge on television, said, the rest of us have signed this pledge not to raise taxes, will you?
NORQUISTAnd Dole recoiled as if somebody had tossed a cross into a vampire's lap. I mean, it wasn't just, thank you, no. It was visceral on TV. And a number of commentators in New Hampshire and elsewhere said -- and that's when he lost the New Hampshire primary because while the pledge itself, the Taxpayer Protection Pledge, was not famous nationally, it was, in fact, famous in New Hampshire.
NORQUISTI grew up in Massachusetts. And I think part of my thinking in designing the national pledge came from the success of what New Hampshire citizens call The Pledge, which is when you run for governor you say, I won't impose an income tax. They don't have one at the state level in New Hampshire. And I won't impose a broad base sales tax -- there's no sales -- they have excise taxes. But they don't have a sales tax, no general sales tax.
NORQUISTSo that cost Bush -- it cost Dole the primary. Bush then won. But he broke it in '90, lost the presidency, and, at that point, citizens said, I get it. Candidates only take the pledge if they mean to keep it because they know it's a career ender to break it.
REHMGrover Norquist, he's president of Americans for Tax Reform. He serves on the board of directors of the National Rifle Association, the American Conservative Union and the Nixon Center. He is the author of two books, "Rock the House" and "Leave us Alone." Do join us, 800-433-8850. Yesterday, Moody's moved one step closer to downgrading the credit rating of the U.S. How would you expect the country to be affected if Congress fails to raise the debt ceiling by Aug. 2?
NORQUISTWell, if between Congress and the president they can agree on increasing the debt ceiling, that doesn't mean we don't pay our interest on the debt. It does mean the government does not have as much money two months from now as they need to pay all the obligations that they see. Now, they could decide not to pay the debt, and then no one would lend you money anymore. Or they'd really require higher interest rates to lend you more money.
NORQUISTOr you could cut spending other places. And it's a significant drop in the amount of money the government would have. So Obama would have to choose to default. Default is not automatic. But you'd look at all the different options, see what you could spend money on or not. And he might choose to default on some or all of the debt. Or he might to choose to take the money out of other things.
NORQUISTOr the Aug. 2 date might not be completely a hard number. Originally, remember the secretary of Treasury said the date was in May. Now, there is a point at which there is a hard date.
NORQUISTBut it might be a day later. It might be a week later.
NORQUISTIt could be a month later.
NORQUISTBut it's around Aug. 2, not -- if not exactly Aug. 2. So I think most observers in Congress would recognize that it would be a good idea to extend the debt ceiling. The question is, with what -- in return for what? Will there be spending restraint in the future or not? And that's the argument that the Republicans and the House are having with the president.
REHMAnd what's your opinion of Sen. McConnell's contingency plan in case Congress fails to reach agreement on the package?
NORQUISTI know a lot of conservatives were unhappy that he was setting up a fallback position, and I suppose you always worry if somebody has a fallback position, that they're abandoning the lines. But in point of fact, I think there's wisdom in what McConnell is talking about. And that is it's not just saying to the president, if you can't agree with us on spending restraint, we'll let you borrow the money you say wish to borrow. But it'll be your decision alone.
NORQUISTDon't tell us that we were part of that because we are willing to raise the debt ceiling in return for spending restraint. But if you can't come to an agreement with us and you just want to do it on your own, it's going to be your decision. You have to explain to the American people why you didn't cut spending. But it goes beyond that. He also says, you have to show us $2.5 trillion in spending restraint.
NORQUISTYou don't have to vote it, but you have to put it up there and offer it. And what Mitch McConnell is getting to -- the Republican leader Mitch McConnell in the Senate is getting at, is that President Obama has not yet come to the table with a plan. The Republicans in the House passed a budget, the Ryan roadmap. It dropped $6 trillion from what Obama had planned to spend in his original set of budgets.
NORQUISTAnd -- but the Democrats in the Senate is, you know, for the last 2 1/2 years, have never actually passed a budget. I mean, Harry Reid didn't do a budget last year. He hasn't done a budget this year. They're not holding hearings. They're not doing any of the appropriations things that normally a Congress does. They just chose not to. So there's no Democratic budget on the Senate side, although Conrad's talking about having one.
NORQUISTThe Republicans passed theirs in the House several months ago. The president hasn't put something down in writing. And I share McConnell's view that the president's saying, why can't we be reasonable? I'm making sacrifices on spending and my tax increases are teeny. And McConnell and Boehner saying, write that down. Write down what spending restraint you're talking about so that the American people can judge if your spending restraint is serious.
NORQUISTAnd write down your tax increases, so we could see if they're painless or not painful. And I think forcing the president to put in writing what he's trying to do, what he wants to do, rather than give speeches about it is a good idea and it is not nothing. It is not a minimal demand by the Republicans.
REHMLast night, Mitch McConnell said if we do not move forward on solving this deficit and debt ceiling problem, the Republican brand will be destroyed. Do you agree?
NORQUISTI think that if the debt ceiling isn't increased and we can't find some way to move forward, I would hope with what Congressman Boehner laid out six months ago, says, look, if you want to -- if Obama, you want $2.5 trillion in more debt capacity, give us over the next decade, not tomorrow, but over the next decade $2.5 trillion in reduced spending.
NORQUISTObama's present plans are to continue about $10 trillion in additional debt over the next decade, plus tax increases. So he's got a lot of additional spending he's putting forward. The Republicans would like to pull that back.
REHMGrover Norquist. We'll take a short break here. When we come back, we'll talk about some of the programs that Grover Norquist would like to see done away with. Stay with us.
REHMAnd welcome back. Grover Norquist is with me. He's president of Americans for Tax Reform and the author of the pledge given to members of Congress, promising that they would not raise taxes. And the question of what exactly raising taxes means has come up a number of times. For example, defeating the ethanol tax subsidy, the ethanol subsidy, do you regard that as a tax increase?
NORQUISTI am in favor of getting rid of the tax credit that consumers get -- the producers get for making ethanol and that save consumers' money. There's about $3 billion of tax credit between now and December when the system goes, disappears. It's term-limited. I am for getting rid of that -- at the same time, reducing tax rates so that it's not a net tax increase. I'm in favor of getting rid of most deductions and credits.
NORQUISTI'm not wedded to any of them in particular, as long as we take the rates down, building on what Sen. Bradley and Gephardt and Reagan, president -- then President Reagan, were working on in '86. I think we could go further than they did in '86, reducing a lot of the deductions and credits. The ethanol tax credit is a particularly silly tax credit. It's not helpful. But we ought not to take tax credits and deductions and use it to raise money to spend, should be part of tax reform.
REHMAll right. You have, at one point, said that you'd like to shrink government so much that it's small enough you could drown it in a bathtub. That's your quote?
NORQUISTThe actual quote was actually from somebody who is saying, do you want to get rid of government?
NORQUISTAnd the answer was no. I don't want to abolish the government. I do want to reduce it dramatically, in point of fact, to the size where you could drag it into the bathroom and drown it in the bathtub, which is hyperbole for very small.
NORQUISTSo don't get rid of it. Make it teeny.
REHMOkay. Here's what I want to know. I'd like to know exactly what programs you would like to get rid of. For example, would you like to do away completely Social Security?
NORQUISTNo. I would support giving people -- younger people -- the option of having a 501 (c) that...
REHMBut that's getting rid of Social Security as we know it today.
NORQUISTWell, it'd be reforming it. I mean, as we know it, it goes bankrupt at some point. What we would like to do is say to younger people -- to older people, stick with it. Nothing changes for you. But if you're 20, 30 or 40 and you'd like to take your FICA taxes and put them in a 401 (k) and do that if you're comfortable with that -- and younger people tend to be more comfortable with 401 (k) s and defined contribution plans -- that should be an option.
REHMSo you'd get the government out of that kind of pension plan that's been in existence.
NORQUISTI would hope that all pensions, not just Social Security, but state and local government pensions -- many of which have been underfunded, many of which have not been organized as well as they might -- rather than slash them -- and there's been some significant reductions of pension obligations in various states. They just reformed the New Jersey pension, so the next 30 years it'll cost $130 billion less in New Jersey with a bipartisan agreement.
NORQUISTI would tend to prefer to give government workers the option, either a portable 401 (k), like teachers have with (word?)...
NORQUISTOr if they want to stay in the old system, that works fine. But that, over time, I think, would cost less.
REHMWhat do you mean stay on the old system?
NORQUISTThe old defined benefit plan.
REHMBut you'd get government out of it.
NORQUISTWell, I believe, over time, most people would choose...
NORQUIST...going to the defined contribution plan. But...
REHMAll right. Let me ask you now about Medicare. Would you like to see Medicare and Medicaid abolished?
NORQUISTWell, with Medicaid, which is the means-tested aid to lower-income people...
NORQUIST...with health care, I certainly support what we did with welfare reform and what Paul Ryan's roadmap does. He takes about 75 different means-tested programs -- Medicaid being the largest, food stamps. It's what we did with AFDC. We say, okay, these 75 programs, Kansas, we used to give you $3 billion last year to pay for them. So we gave you $3 billion and index it for inflation, but not more than inflation.
NORQUISTAnd, by the way, here are the 2,700 rules we used to impose on you in those. No rules. You handle it. But expenses will not go up as rapidly as it has in the -- just with inflation. When we did that with welfare, people thought bad things would happen. And, in point of fact, a lot of people got off welfare dependency. The government spent less money. People who needed help got help.
NORQUISTSo I think when you look at Medicaid and the number that Paul Ryan has in his budget, over the next 10 years, to block grant Medicaid and have it increased with inflation but not beyond that saves about $750 billion.
REHMWould you like to see that program demolished altogether?
NORQUISTNo. I think it -- the good news is that when we talk about reducing government spending, I'm much more in favor of reforming government to where it costs less rather than saying, here's the program. Do -- spend half as much on the same program. I'm much more interested in taking a look at what we did with welfare reform. We didn't say we're going to cut welfare 40 percent. We said we're going to put it out to the states, let states handle it and...
REHMBut states have no money.
NORQUISTWell, states were given money with welfare.
NORQUISTWell, they were able to drop significant costs and keep the money. They spent less than the Feds gave them.
REHMAnd, of course, they had to take an awful lot of people off Medicaid in the process.
NORQUISTOff welfare, you're thinking...
REHMOff welfare because they did not have the money to continue paying the number of people they had.
NORQUISTWhen I talk to state legislators, their position was they actually got people jobs and off of welfare. I think if we look at -- governors are saying that they would like to have the money they get now for Medicaid with fewer strings and not growing as rapidly, they think they could handle it better. And that includes Republican and Democrat governors. They really haven't been able to find a governor who opposes the idea of letting the states have it with fewer...
REHMAnd tell me...
NORQUIST...which is why, I think, the D's have focused -- the Democrats have focused their criticism on Medicare. And perhaps there's an agreement to be made. We could fight about Medicare, but an agreement may be available on some of those means-tested aids -- aid programs like Medicaid because the states think they could handle it better than Washington.
REHMI'd like to know. You talked about President Bush somehow rescinding his no new taxes.
NORQUISTBush 41, yes.
NORQUISTHe broke it. He didn't rescind it. He broke it.
NORQUISTPeople who commit adultery do not rescind their marriage vows. They break them.
REHMAnd the consequences. Do you say to those who sign the pledge -- what do you say to them if they go back...
REHM...on their word?
NORQUISTThe pledge is -- and you can go to our website, atr.org...
NORQUIST...and you can see there's a pledge for presidents and a pledge for state legislators and governors and a federal pledge. They're just slightly differently worded, but, basically, no net tax increase is what people are committing to. And the pledge makes it very clear that each candidate or incumbent governor, state legislator, congressman, president -- the commitment is, to the people of their state and to the American people, that they will oppose tax increase.
NORQUISTThe promise isn't to me. It's not to Americans for Tax Reform. It's to the people who vote for them and put them in office.
REHMBut what happens if they do go against it? What does…
NORQUISTIf -- sure.
REHM...Americans for Tax Reform set out to do?
NORQUISTWell, we keep copies of the pledge. We make multiple copies. We share them with the person who takes the pledge. We share them with the media in that state. We certainly would share them with anybody who is running in a primary or general, against someone who broke the pledge. And there have been times where we've called in to all of the voters in a district or a state and said, to remind you that when Fred ran for Congress, Senate state legislator, he promised, on this pledge, on the website -- you can see his signature, her signature -- they promised not to raise taxes, and they did, in this case.
NORQUISTI wanted to share that information with you. So we will work to inform voters. However, over 24 years in 50 states, we have 1,200 state legislators, 13 governors, 236 members of the House and 41 senators have taken the pledge. So everybody in elected office knows what the pledge is and whether they've chosen to sign it or not.
NORQUISTCitizens don't wait for Americans for Tax Reform to react to someone who raises taxes.
REHMAll right. I want to go back to what programs you would like to see eliminated to shrink government so much it might, in fact, drown in its own tub. And let's talk about food safety and the FDA. What would you like to see happen to the FDA?
NORQUISTWell, the Food and Drug Administration and the decisions that people make where you have to test various drugs, the challenge is when the government comes and says we've just approved this new cancer drug...
NORQUIST...and it will save 5,000 lives this year. The question is, you've been testing that for 10 years. Next year, we're going to have the drug, and 5,000 people's lives are saved. What happened to the 50,000 people who aren't with us because the drug was delayed for 10 years?
REHMSo would you like to see the elimination of the FDA?
NORQUISTNo, of course not. But what you want to do is say, why do -- why does the FDA say that drug tests in Britain or France are not -- they're not necessarily admissible? I think it seems to be a little bit of a protectionist thing going on here where we don't take advantage of some of the tests that are done in other countries. I also think we should have different rules for drugs that save lives.
NORQUISTIf somebody's -- if another aspirin and painkiller may be something you could wait awhile on, but if you've got a disease and you're dead in three years and they tell me it's going to take it seven or 10 years to test the new drug, I think that's not helpful.
REHMWould you like to see the FDA reduced in size dramatically?
NORQUISTNo. I'd like to see it more competent and be able to move quicker, i.e. use tests from other countries.
NORQUISTI'm not talking about from third world countries (unintelligible)...
REHMOkay. But here's what I'm trying to get at.
NORQUISTThe FDA doesn't cost very much money. You want to get to the real dollars?
REHMDepartment you'd like to see completely eliminated. The Department of Education, how would you feel about that?
NORQUISTWell, I would certainly support all efforts to give parents more choice and have fewer dollars spent outside the classroom...
REHMI'm talking about the Department of Education. Would you like to see that eliminated?
NORQUISTOkay. No. And let me -- I'm trying to explain that I'm not in favor of sort of cutting and slashing things. I am interested in trying to do it more competently, for instance, state and local government, the federal government. The federal government pay -- average pay, pension, benefit-- $120,000 an employee if you take all of the benefits, plus the pay average, private sector average, $60,000 a year. So the private sector pay, pension, benefit, $60,000 average. Federal 120...
REHMBut you're -- Grover, you're not really answering my question. What I'm asking is you want to make government so small it would drown in a bathtub. And what I'm trying to ask -- and you're sort of going around each question I ask -- is what departments in the federal government would you like to see eliminated totally?
NORQUISTOkay. Those parts of the U.S. government which manage the sugar quota program, which make it illegal to bring in...
REHMSo the Department of Agriculture.
NORQUISTWell, at least that part of it which deals with the sugar quota, which raises the price of sugar three times the world...
REHMJust sugar? Just sugar?
NORQUISTNo. We start with that one.
NORQUISTYou want the ones that obviously -- that do obviously no good. I think we need to reform the FDA. I don't think we ought to not have an FDA.
NORQUISTI think we ought to not have anyone in the government whose job it is to stop people from selling sugar less expensively. I don't think anybody should be doing that.
REHMGrover Norquist, and you're listening to "The Diane Rehm Show." What about the Department of Homeland Security?
NORQUISTWell, my brother used to be head of the -- chief financial officer for the Department of Homeland Security. So I'm assuming he was trying to do a reasonably good job of keeping costs down. But you've noted the Defense Department, and, there, we spend $120 billion this year occupying Afghanistan. We are spending three times what we did when Obama came in to the presidency.
NORQUISTThere are three times as many troops there as when Obama came in to the presidency. The withdrawal he's talking about now takes you to twice what was there when he became president.
REHMWould you like to see the Department of Defense eliminated?
NORQUISTNot eliminated, but dramatically reduced in terms of cost.
REHMHow dramatically reduced?
NORQUISTWell, they're talking now somewhere between $400- and $700 billion dollars over the next decade. I think, as we reduce our cost of occupying Afghanistan -- if we continued what we're doing, it's $1.2 trillion to keep doing it for the next decade. I don't think we should be spending anywhere near that amount in the next 10 years occupying Afghanistan. The costs of occupying Iraq are about $50 billion a year, down from where they had been. But these are very expensive...
REHMBut these are wars. What I'm talking about...
REHM...are Departments. And that's what I'm trying to get at. Is the Department of Defense and each of its branches -- Department of the Army, Department of the Air Force, Department of the Navy -- would you like to trim them so they're small enough to fit into a bathtub and drown?
NORQUISTWell, okay. The actual original quote was to drop government in half as a percentage of GDP over a generation, over 25 years. I mean, the other is the high (unintelligible) to make it small and teeny. And it's not about drowning government in the bathtub. It's making it small enough to fit in the bathtub, meaning, make it smaller.
NORQUISTBut, again, I don't -- I'm not advocating, and I just don't think, politically, it's constructive to say abolish this particular agency because every agency does some usual things and some unusual things. Every agency does some things well and some things poorly.
REHMIs there any one agency you would like to see completely abolished?
NORQUISTThe guys who manage the Davis-Bacon Act, which is part of the Labor Department, the department that manages that that...
REHMNo. I'm talking about departments now.
NORQUISTThere's a department that does Davis-Bacon.
REHMNo. But I'm talking about large entities. Would you like to see the Department of Education abolished?
NORQUISTWell, not if what you mean every single program they run abolished. I don't know that you need a cabinet office. But what I would...
REHMA cabinet office. You'd like to see it abolished as a cabinet office.
NORQUISTWell, I don't even know that it -- that there's an advantage to having it being a cabinet office. First, it's not a cabinet office. It only came in as sort of a campaign promise under, not Clinton but Carter. But, look, I'm talking about real numbers of savings, okay? If you paid federal workers what you paid private sector workers, it's $47 billion a year or half a trillion dollars over a decade.
NORQUISTIf you paid state and local workers the equivalent of what the private sector made, you're talking about $332 billion dollars a year or over $3 trillion in a decade. That's not cutting a single job or a single service.
REHMGrover Norquist, president of Americans for Tax Reform. We'll open the phones when we come back.
REHMAnd it's time to open the phones and take your calls, 800-433-8850. First, to Bowling Green, Ohio. Good morning, Bob. You're on the air.
BOBYes. Good morning. I'd like to ask Mr. Norquist how he feels about the number of tax raises that President Reagan instituted when he realized his initial tax cut went too far.
NORQUISTWell, I certainly agree with Reagan when he told me that the 1982 tax increase was the biggest mistake of his presidency. And, of course, we had strong economic growth that flowed from the marginal tax rate reduction '81, '82, '83. And I think that the Tax Reform Act, which was revenue neutral in '86, was quite helpful. But you're right, he had that Democratic legislature in the House, and he did sign some tax increases.
NORQUISTThey were, you know, not necessarily good idea, but he did do that. But he was also an endorser of the pledge. So at the end of his presidency, he made it clear he stood with the idea of not raising taxes.
REHMAll right. Let's go to David in San Francisco, Calif. Good morning to you.
DAVIDGood morning, Diane. And I certainly don't want to say good morning to a traitor. (unintelligible)
REHMI'm sorry. I am not...
REHM...going to allow such a comment to be made on this program this morning. I want to ask you about something that was said by Sen. Coburn.
REHMHe said, what's more conservative, to fix the country and not let it go bankrupt or to follow a pledge to Grover Norquist? He's not running. Coburn is not running for re-election in 2016. He described you as a well-paid lobbyist. He said, "We cannot allow one individual to have that kind of power over a vote that can help fix the country." He's talking about the vote on raising the debt limit.
REHMThe senator said, Mr. Norquist exercises his power by "threatening all these guys here for the first time by saying he'll send mailers, press releases and make it known to their constituents that they are not conservative. Coburn argued support of his ethanol measure had from GOP senators was their way of saying, Grover, you're stupid, forget it, we're going to vote the right way." That's the quote from Sen. Coburn. How do you respond to that?
NORQUISTIt's a little bit sad. Sen. Coburn, of course, has made a promise to his constituents in Oklahoma when he ran for office that he wouldn't vote for a tax increase. He didn't make any promise to me. I've never called him on the phone and say, keep your promise to me. The people of -- I'm sorry -- Oklahoma, his state, would like him not to raise taxes because that's what he said to them when he vote -- when he asked for their vote.
NORQUISTHe didn't say make me king and let me do anything I want. He said, I want to be your senator. And here's what I'll do, and here's what I won't do. So he misstates when he suggests that any one takes a pledge to me or the Americans for Tax Reform, but rather, they make that commitment to their constituents. And if he wants to break his word to his voters, he needs to talk to them, not to me.
NORQUISTHe don't need my permission to break his word.
REHMTo San Antonio, Texas. Good morning, John. You're on the air.
JOHNHi. Good morning. I'm interested in the tax reform question.
NORQUISTMm hmm. Yes.
JOHNWe could shift the tax burden from things that are helpful to society, like people going out to do something useful for an income and benefit somebody else. Shift to things that are harmful to society like depletion of resources or putting pollution, carbon methane, mercury, whatever, into the air. Well, the mercury goes in the water, too, I suppose.
REHMGive me your question, sir.
JOHNThe question was, does Americans for Tax Reform have any position on shifting the tax burden to things that are harmful so that we can take a kind of pollution cost, you know, charge a fee to...
REHMAll right. Thanks for calling.
NORQUISTYeah, not necessarily opposed to that sort of reproach. We certainly do something like that, sir, in the '86 Tax Reform Act and what Congress is talking about. I mean, one of the things that's interesting is when we get past this argument about spending more, where Obama wants to spend more and the Republicans want to spend less over the next decade, there is actually a fair amount of agreement on tax reform moving forward.
NORQUISTObama and the Democrats have all talked about taking the top rate to 25 percent, which is something that's also in the Ryan plan. You're talking about individuals and corporations and eliminating a lot of deductions and credits, which is not taxing icky things versus good things. But it's certainly taxing in a less destructive way.
REHMGrover, I wonder if you have any concern about the increasingly rapid wide divide between the rich and everyone else in America. CEOs last year had an increase of some 23 percent in their take-home reaching, you know, $10.8 million a year for some CEOs. And at the same time you've got how many millions of people out of work. It does seem as though that gap is widening. And I wonder how you would address that.
NORQUISTYeah, well, again, I'm not interested in the state or the government telling people how to organize their economic lives or how they structure it. The reason we have CEOs getting paid tens of millions of dollars is back in the '80s. Do you remember they were paid hundreds of thousands of dollars? And during the recessions, politicians said, you bad people, you made $500,000 last year while managing General Motors, and they lost money.
NORQUISTYou must get paid based on stock value from now on. And so the pay was shifted from straight salary to getting compensated based on how well the company did, i.e., companies that lose money and the stock market goes down, you get paid less. When the stock market does well, when the economy does well, some of those pay packages are pretty explosive. But it was something that they were mau-maued into by congressmen and senators.
REHMBut why shouldn't their increased income be taxed at a higher rate in order to share the burden -- a greater part of the burden since they are taking a greater part of the income?
NORQUISTWell, you've seen all the charts that went -- that top half of American taxpayers paid 99 percent of all federal income taxes -- not all taxes, state and local, but federal income taxes. And the top few percentage of don't -- people -- the guys you're talking about pay a tremendously disproportionate share of the tax burden to the point where, in states like California, 20,000 people walk across the border to Nevada or Wyoming or Texas where there's no income tax and they can't pay their bills anymore because so much of the income tax comes from the top 1 or 2 percent of the earners in that state.
NORQUISTSo we actually do have a very, very, progressive income tax structure. Now, when we've cut marginal tax rates, when Reagan did it in '81, when it was done in '86, when the capital gains tax was cut in '97 under Clinton and then again in 2003 under Bush, each case, the highest 1, 2 and 5 percent of earners not only paid more in dollars, but as a higher percentage of the total tax burden.
REHMAll right. Let's go to Hassan in Baltimore, Md. Good morning. You're on the air.
HASSANGood morning. You know, I just wanted to ask Mr. Norquist that -- is there any tax or is there any, you know, is there any tax that he likes? Is -- because you kind of stole my thunder (unintelligible) what program in his world, his perfect world, what would the government look like? If you -- if he, you know, look at history, we see that most of these deficit -- most of the deficit was run upon the Republican president.
HASSANSo you're saying that we have a spending problem. You guys made up spending problem. And now you want to fix the spending problem on the back of the middle class and the poor by not having the people who are -- who benefited way in disproportion to everyone else from these tax policies, not pay their fair share. That's my question. What -- but what tax -- is there any tax that you like? I mean, you know, is there anything in the government that is running right?
REHMAll right. Thanks for calling.
NORQUISTWell, obviously, there are some things that the government does that it does well. And our government is less destructive of economic growth and human liberty than most of the other governments around the world. So if you're grading on a curve, we're doing pretty well. I think we can do better yet and be less expensive and less intrusive.
NORQUISTI don't know that we want the government to decide what kind of light bulbs we use or force people to use those toilets that don't flush completely. So I think it's some limits to what the government ought to tell us to do and how to run our lives. And, certainly, the Constitution, actually, is a collection of things the government's told they can't do. You can't tell us what church to go to. You can't tell us what books to read.
REHMIs there one department in the U.S. federal government that you would like to see eliminated completely?
NORQUISTWell, there are probably lots and lots of little ones. I'm more interested in reforming the whole thing, but I'm not sure that agriculture subsidies, where the government subsidizes people for growing certain crops. I don't see any role for that.
REHMSo would you like to eliminate the Department of Agriculture?
NORQUISTNo. The trick there is the Department of Agriculture, like all these other departments, has many, many things inside it.
NORQUISTSo if you said get rid of the whole thing, there are pieces of that department that I'm not even aware of what they are.
REHMSo there is not...
REHM...a single department of the federal government that you'd like to eliminate?
NORQUISTWell, there may well be. But if I was trying to reduce the size and scope of government, I wouldn't start by going into a department that does 200 things, most of which, you know, I don't necessarily know exactly what they are. I would rather go in and say, let's have full transparency, which has been a major project of Americans for Tax Reform over the last three years, getting state governments, and now the federal government, to put every expenditure online.
NORQUISTActually, an idea that came out of Texas with Gov. Rick Perry, but now 26 states, Republicans and Democrats, have passed laws that every check written by the government, every contract the government runs into should be online, so you can see if somebody's brother-in-law is getting that contract. That saves a lot of money. But there's no particular department that disappears, and yet it makes government more accountable and saves money. If you're waiting...
NORQUIST...you know, we're not interested in lopping off arms and limbs. We are interested...
NORQUISTIt's like losing weight -- which limb would you lose? We don't want to lose any of them.
NORQUISTBut we do want to lose weight.
REHMGov. Deval Patrick of Massachusetts.
NORQUISTWe went to college together.
REHMYou went to college together. And at the 25th college reunion, you and he shared in 2003 -- apparently, you said something about a permanent Republican majority in America. Somebody had erupted and said, come on, Grover, surely one day a Democrat will win the White House. And you replied, we will make it so that a Democrat can not govern as a Democrat. You made that comment in 2003. What did you mean?
NORQUISTWell, that's his memory, but we'll go with it. It's probably something close to that. The point being -- I want to move the present political structures and debates down the road to a greater degree of individual liberty to people saying, individuals makes decisions over their lives rather than the federal government. The old -- I mean, X number of years ago, the top marginal tax rate was 90 percent when Teddy -- when John F. Kennedy was elected, that's down to 35 percent from 90 percent.
NORQUISTThere are very few Democrats, if any, that want to go back to 90 percent. So we have made it impossible for Democrats to go back to FDR's top marginal tax rates. I would like to take rates down to where there is a consensus, where even Democrats and Republicans would agree to -- that rates should be lower, that's Democrats and Republicans would agree that the government should allow all parents full choice in how they educate their kids.
REHMWould you like to see President Obama fail as a president? Is one of your goals to ensure that he is a one-term president?
NORQUISTWell, I -- he is failing as president. I don't want him to fail as president. I mean, the amount -- the $800 billion that was spent on the stimulus was a failure. And instead of creating 3 million jobs, we lost 1.5 million jobs
REHMHe inherited a huge amount of debt that had been created by the Bush administration. He walked into office. He inherited three wars. You know, there was a lot...
NORQUISTOh, yes. Absolutely. He inherited...
REHM...there on his plate.
NORQUISTOkay. He inherited the Afghan war, and he tripled the cost. And he tripled the number of troops. He inherited a debt of $9.9 trillion, and today it's $15.4 trillion by December within this year.
REHMSo in that sense you feel he is failing...
NORQUISTHe's making things worse not better, okay. I want him and the country to succeed. I want jobs to be created, not destroyed. There are 1.5 million fewer people than when he spent that $800 billion on the stimulus package.
REHMIs one of your goals to see him as one-term president?
NORQUISTWell, if he won't turn around on the overspending and the debt and the tax direction that he is going in, which has killed so many jobs, then we need a different president, Republican or a Democrat, who will be pro-job creation.
REHMWill you focus your energies on making sure that no Republican votes to increase the debt limit?
NORQUISTNo. I'm focused on making sure that people who have taken the pledge not to raise taxes don't raise taxes. I'm in favor of raising the debt ceiling in return for spending restraint, sure, absolutely.
REHMBut, of course, the president has offered a huge compromise. He has put a huge compromise on the table, which would be a $4 billion -- trillion dollar compromise. And yet that has been rejected.
NORQUISTWell, when he puts that in writing, we can have a conversation about whether...
REHMI think they are already...
REHM...conversing about it...
NORQUISTNo. We keep asking for it in writing. And when we see it on the front page of The Washington Post, then we'll know it's in writing. Right now, this is what Mitch McConnell wants. He said, would you, please, put in writing what you're giving your speeches about and what your staff is leaking to people? Put it in writing, so the American people can see it. The Republicans have put their budget in writing, and I would like to see Obama put it in writing.
NORQUISTThen we can have a conversation about whether it's a good idea or not. That will be good.
REHMGrover Norquist, he is president of Americans for Tax Reform, want to thank you so much for coming in today.
NORQUISTDelighted to be with you.
REHMAnd thanks for listening, all. I'm Diane Rehm.
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