Schultz Insists Higher Tax Rate is Not ‘Tax Increase,’ Claims Heritage Agreed w/ Him ‘Cutting Taxes Not Job Creator'

During the past week, MSNBC’s Ed Schultz had trouble acknowledging that allowing a tax cut to expire, in effect, is a tax increase, as he debated on the Ed Show the issue of whether the tax cuts passed during the Bush administration – due to expire at the end of this year – should be extended beyond 2010. On Tuesday’s show, even while noting that the top marginal rates would increase from 35 to 39 percent, Schultz absurdly claimed: "The bottom line is they want you to believe that letting the Bush tax cuts expire is a tax increase. ... The Republicans are saying that, hey, this is all about a tax increase. No, it`s not. It`s the law they put into effect. It`s the law that they signed. It`s the law that they pushed under President Bush. It had an expiration date. Now they’re coming back saying, well, it`s a tax increase. No, it`s not. People in the top two percent are going to go from 35 percent to 39 percent. Ninety-eight percent of Americans are not going to be affected."

The MSNBC host also insisted on the semantics of calling an extension of the tax cuts "cutting taxes," even though such an extension would, in effect, leave rates the same and merely stop rates from increasing in 2011. Schultz went on to deceptively claim that the Heritage Foundation’s Curtis Dubay, appearing as a guest on Tuesday, had agreed with him that "cutting taxes" does not create jobs. On Wednesday’s show, during a discussion of financial reform, after guest Stephen Sprueill of the National Review spoke in favor of extending the Bush tax cuts, Schultz misleadingly shot back: "No, it doesn`t work. And it`s not a job creator, and the Heritage Foundation guy was here last night admitting that cutting taxes is not a job creator."

In fact, Heritage’s Dubay had argued that, while a real tax cut does stimulate job growth, an extension of the Bush tax cuts would merely prevent jobs from being lost since allowing their expiration – an effective tax increase for 2011 – would likely result in job cuts. Schultz seemed to see no value in warding off jobs losses as he harped on the idea that keeping rates the same – which Schultz misleadingly calls "cutting taxes" – would not increase job growth.

Schultz began his discussion with Dubay on Tuesday by asking if an extension of the tax cuts would create jobs. At first, Dubay instinctively answered in the affirmative before quickly clarifying that allowing taxes to increase would cause job losses, and that therefore extending the tax cuts would be necessary to prevent the job losses that would occur if the tax cuts are allowed to expire. Schultz quickly jumped in to badger Dubay charging that "you just contradicted yourself" even though Dubay was in reality correcting or clarifying himself:

ED SCHULTZ: Well, wait a minute. What is it? Either they create jobs or they don`t. You just contradicted yourself. If we extend the Bush tax cuts here, will it create jobs?

CURTIS DUBAY, HERITAGE FOUNDATION: It will prevent jobs from being destroyed. If-

SCHULTZ: But it won`t create jobs, right? I`m talking about job creation.

Schultz also pressed the semantics that allowing tax cuts to expire would not really amount to a tax increase: "No, no, no. We`re not increasing taxes. We would be following the law that the Republicans passed. Did they not pass it?"

The MSNBC host even nitpicked about Dubay referring to the current tax laws as "policy" as he snapped: "It`s not a policy! It`s a law! It`s a law! Now be honest about this."

The interview with Dubay concluded with Schultz still unwilling to admit to any value in preventing additional jobs losses by halting an increase in taxes:

SCHULTZ: Well, if we do change this, if the Democrats cave in and go ahead and change this, the law that the Republicans made, will it create jobs?

DUBAY: Well, like I said before, it`s not going to create new jobs because this is the tax policy that`s in place. But if we allow them to expire and the taxes to increase, we will destroy jobs.

SCHULTZ: Okay, all right, so you just admitted that there`s no guarantee that if we allow the top two percent in this country to continue on with the tax breaks that they have, that it`s going to create any more jobs, which-

DUBAY: You`re missing what I said.

SCHULTZ: No, I heard exactly what you said. I heard exactly what you said.

On Thursday, the MSNBC host repeated his claim that cutting taxes does not produce jobs during an interview with the Heritage Foundation’s Ernest Istook, as he misleadingly seemed to refer to the extension of tax cuts as "cutting taxes." Schultz: "The tax cuts aren`t going to create any jobs. We had a guy from the Heritage Foundation, who you`re a part of, the other night admit that on the air."

After Istook argued that "That`s not quite what he said, but I understand your point," Schultz insisted: "That`s exactly what he said. Well, we`ve got an economist from Princeton University saying the same thing, that extending the tax cuts is not going to create any jobs."

Below are transcripts of relevant portions of MSNBC’s The Ed Show from Tuesday, Wednesday, and Thursday, July 27, 28 and 29, with critical portions in bold:

#From the July 29 show:

ED SCHULTZ: What do we do, honestly, what do we do with Americans, over four million of them, 50,000 a day adding to the rolls here? They are now statistically out of the equation. What do we do with them?

ERNEST ISTOOK, HERITAGE FOUNDATION: Well, it`s a somber statistic. You`re exactly right about that, Ed. And most of them, of course, what they want is not really unemployment benefits. What they want is a job. And if we focused just on the unemployment benefits, rather than focusing on the reasons that jobs are scarce and businesses are holding on to $1.8 trillion in assets that they could be using to expand businesses and expand jobs, it`s the uncertainty knowing that the largest tax hikes ever are coming up in January, that there are killer regulations. The ability to create jobs is being restricted by government policy. It`s being restricted by the uncertainty. And rather than just addressing the symptom, we ought to be addressing the root cause. If you keep expanding unemployment benefits, you know, originally at six months, and then you have multiple extensions that go up to 99 weeks, and then you take it to 129 weeks, and maybe 159 weeks after that, all you`re doing is addressing the symptoms. It`s a dog chasing its tail.

SCHULTZ: Well, Ernest, you and I are different on this, no question about it. The tax cuts aren`t going to create any jobs. We had a guy from the Heritage Foundation, who you`re a part of, the other night admit that on the air. Economists are now coming out saying-

ISTOOK: That`s not quite what he said, but I understand your point.

SCHULTZ: That`s exactly what he said. Well, we`ve got an economist from Princeton University saying the same thing, that extending the tax cuts is not going to create any jobs.

#From the July 28 show:

ED SCHULTZ: All of a sudden, the Republicans are worried about debt. All of a sudden, the Republicans are so worried about the debt and everything else. The fact is that they`re tight with the dollar because they want to see this guy not make it and the Democrats not be in control. It ain`t about regulation. It`s not about control. It`s about competition. It`s about hanging onto the money. It`s about the concentration of wealth. And it has now filtered itself right into the banking business in this country. It`s unfair. And so, but let me ask you this in closing. I`ll give you the last word. What`s the solution? To let small businesses sit out there and do nothing and be at the mercy of the big banks who are sitting on the money? What`s the solution?

STEPHEN SPRUIELL, NATIONAL REVIEW: I`ve got an idea, Ed. How about let`s not raise their taxes. You`re in favor of repealing the tax cuts-

SCHULTZ: Good night, good night.

SPRUIELL: -on the top two brackets.

SCHULTZ: That has nothing to do with access. Good night.

SPRUIELL: That would hit 60 percent of small business profits in this country.

SCHULTZ: No, no, no, no. No, I can`t deal with that.

SPRUIEILL: Obama’s policy on small business is he wants to keep them small.

SCHULTZ: That simply is not an idea. Cutting the taxes is not an idea.

SPRUIELL: As long as they stay small, he doesn’t have a problem. Once they get big enough, he wants to tax their profits.

SCHULTZ: Yeah, okay, all right. And, see, it`s always about cutting the taxes. I asked for a solution and you go right to cutting taxes. Great to have you with us, Stephen.

SPRUIELL: Hey, what works is what works.

SCHULTZ: No, it doesn`t work. And it`s not a job creator and the Heritage Foundation guy was here last night admitting that cutting taxes is not a job creator. But getting money to small businesses and the little guy is what`s going to save this economy, and the big white collar boys on Wall Street, they don`t want to let it happen to the Obama administration. Good to have you with us.

SPRUIELL: Thanks, Ed.

SCHULTZ: Good scrap tonight, thanks so much.

#From the July 27 show:

ED SCHULTZ: Good evening, Americans, and welcome to the Ed Show tonight from New York. These stories on the table and hitting "My Hot Buttons" at this hour. You know, I really hope the Democrats have the guts to end the Bush tax cuts for the rich and not cave in to the Republican attack machine. Not now. Now’s not the time to get weak knees. The Treasury needs the money. I`ve got commentary on that coming up in just a moment.

...

But this is the story that has me fired up tonight. The President, he went face to face with Republican leadership behind closed doors today. And on the agenda, the Bush tax cuts. Gosh, what are we going to do? Democrats are about to step onto a political mine field, in my opinion. They need to step up and show some intestinal fortitude, guts, whatever you want to call it, and end the Bush tax cuts for the top two percent. We have had enough. The Republican party is ready to go to the firewall on the issue over the August recess.

REP. MIKE PENCE (R-IN): And House Republicans will fight this tax increase with everything we`ve got.

ERIC CANTOR, HOUSE MINORITY WHIP: There is one party who believes that now is the time, as Mike just said, to raise taxes in the depth of a horrific recession, and there`s one party that doesn`t.

REP. CATHY MCMORRIS RODGERS (R-WA): On January 1, 2011, America is facing the largest tax increase in our history.

JOHN BOEHNER, HOUSE MINORITY LEADER: And I think the American people understand that you can`t raise taxes in the middle of a very soft economy. And if they attempt to raise taxes, they will wreck the little bit of a recovery that we have, in fact, seen.

SCHULTZ: Is that an admission that there is a recovery, Mr. Boehner? Well, that`s another subject. The bottom line is they want you to believe that letting the Bush tax cuts expire is a tax increase. You know, if the Republicans wanted them to last forever, they should have made it the law when they had the House, the Senate and the White House back in 2005.

Now, let`s just hold it here for a second. The Republicans are saying that, hey, this is all about a tax increase. No, it`s not. It`s the law they put into effect. It`s the law that they signed. It`s the law that they pushed under President Bush. It had an expiration date. Now they’re coming back saying, well, it`s a tax increase. No, it`s not. People in the top two percent are going to go from 35 percent to 39 percent. Ninety-eight percent of Americans are not going to be affected. So who are those sound bites protecting? President Obama has promised not to raise taxes on individuals making up to $200,000 a year and families making up to $250,000. This is how Treasury Secretary Tim Geithner put it:

TIMOTHY GEITHNER, TREASURY SECRETARY: What the President believes, and I believe this, is the right thing for the country, the fair thing, the responsible thing for the country now, is to make sure we leave in place and preserve tax cuts that go to more than 95 percent of working Americans. I think it is fair and good policy to allow those tax cuts that only go to two or three percent of the highest earners in the country to expire as scheduled. The country can withstand that. The economy can withstand that. And I think it`s good policy.

SCHULTZ: As scheduled. How correct he is. That`s what the Republicans agreed to when they had the majority, but, you see, they had this game plan that this was going to be a great political football just before the midterms. Yes, they do think that far out. It`s a generational fight. Now, I believe it`s time for the most selfish generation in the history of the country to step up and show just how much they value America. Joe Biden – and this is not new stuff – the Democrats were on the campaign trail saying we`re going to have to do this when this happens because we`re going to need the money. Joe Biden had it right during the 2008 campaign.

JOSEPH BIDEN: We want to take money and put it back in the pocket of middle class people.

KATE SNOW, ABC NEWS: Anybody making over $250,000-

BIDEN: Is going to pay more.

SNOW: -is going to pay more?

BIDEN: You`ve got it. It`s time to be patriotic, Kate, time to jump in, time to be part of the deal, time to help get America out of the rut.

SCHULTZ: So who do you stand with? Biden took all kinds of heat for saying that at the time, but he was spot on. Look where we are now. For the last decade, the richest two percent in America have been living high on the hog, and the middle class, of course, has gotten what? And, of course, we`re in the middle of two wars that nobody wants to pay for, financial collapse that we`ve got to recover from, and now record levels of unemployment. Then, of course, Republicans don`t want to help those folks out either.

Nobody, no one in the last decade, has asked the top two percent income earners in this country to do anything, no sacrifice whatsoever. The Republicans and their buddies in the Tea Party have been running around this country screaming about deficits for the last 18 months. They act like they love America, but they just don`t like picking up the dinner tab, do they? They’re cheap as hell. Republicans also made millions of unemployed wage earners wait because, you know, they were just so concerned about this $34 billion relief package because it wasn`t paid for. But they never paid for a dime for the Bush tax cuts, did they? They never had that figured out. It was supposed to stimulate the economy.

Now, pay attention to these numbers, folks, if you can. The Center on Budget and Policy Priorities, this is what they show, the 2001 and 2003 tax cuts added about $1.7 trillion to deficits between 2001 and 2008. And over the next decade – you want to leave them in? – making the tax cuts permanent would cost $4.4 trillion.

The Republicans have no shame. They have no sense of economic patriotism at a time when the country needs it. And when it comes to taxes, that`s really all they’re about. Their mission has been to privatize everything in this country. They want to starve local, state and federal governments of any kind of revenue that give service to this country, especially when it comes to job creation.

In the meantime, Democrats, which surprises me, Democrats like the chairman of the Senate Budget Committee, North Dakota Senator Kent Conrad, he`s getting some weak knees about pulling the trigger on these taxes that are supposed to go into effect because that was the law. The top two percent are the folks that would pay more. Now, I think it`s time for Senator Conrad in his leadership position and other politicians to set their own self-interests aside and do what`s right for the country.

I know where Senator Conrad comes from, and I can tell you they’re all uptight about those rich farmers. They’re uptight about the taxes going up. Hey, the Republicans made the law. Now they want to change it, and now they’re using it as a tax issue as we go to the midterms.

Now, don`t you find it somewhat interesting – and we`re going to have this story later on in the show. A big battle on the House floor today about Afghanistan and war funding, $33 billion.

Republicans, they don`t want to pay for it. They don`t want to pay for it, but they want their tax cuts. And they will blame the Democrats for butchering the economy if the top two percent don`t get what they want.

Now, the Republicans are out there time and time again saying that we`ve got to have tax cuts, but it`s not for the middle class. "Middle class," two words that Republicans never use. All the breaks go to the top. And when is this country, the majority of Americans, going to realize, that giving tax breaks to the top two percent, it doesn`t create any more jobs? All it does is concentrate the wealth. We`ve got some more statistics coming up for you later on in the show that are staggering as to who exactly is thriving in this economy while the middle class gets gutted.

Tell me what you think in our telephone survey tonight, folks. The number to dial is 1-877-ED-MSNBC. My question tonight is: Do you think the Democrats have the guts to end the Bush tax cuts for the richest two percent of Americans? Press the number 1 for yes. Press the number 2 for no. We`ll bring you the results later on in the show.

Joining me now is Curtis Dubay, a senior policy analyst at the Heritage Foundation. Mr. Dubay, good to have you with us tonight. Do the extension of these tax cuts, the position of the Heritage Foundation, do the extension of these tax cuts create jobs?

CURTIS DUBAY, HERITAGE FOUNDATION: Yeah, absolutely. Well, I shouldn`t say they create any more jobs. These are policies that have been in place for a decade now.

SCHULTZ: Well, wait a minute. What is it? Either they create jobs or they don`t. You just contradicted yourself. If we extend the Bush tax cuts here, will it create jobs?

DUBAY: It will prevent jobs from being destroyed. If we increase taxes-

SCHULTZ: But it won`t create jobs, right? I`m talking about job creation.

DUBAY: We`re not changing the tax code. This is the tax policy that`s been in place for a decade now. We`re not cutting taxes. We`re keeping in place the policies that have been there for a decade. If we increase taxes, we will destroy jobs.

SCHULTZ: No, no, no. We`re not increasing taxes. We would be following the law that the Republicans passed. Did they not pass it?

DUBAY: Well, they passed it under reconciliation which we learned so much about during the health care debate.

SCHULTZ: But they did pass it.

DUBAY: But what matters is what current policy is. The current tax code has been in place for a decade.

SCHULTZ: The Republican majority passed the Bush tax cuts, correct?

DUBAY: It doesn`t matter who passed it.

SCHULTZ: If you can`t answer that, Mr. Dubay, come on now. Who passed the damn law? Was it the Republicans or the Democrats?

DUBAY: I just told you. It was passed under reconciliation in 2001 and 2003.

SCHULTZ: It was the Republicans.

DUBAY: Sure.

SCHULTZ: And now the Republicans want to go back and change the law they passed. Is that correct?

DUBAY: The current policy has always been to-

SCHULTZ: It`s not a policy! It`s a law! It`s a law! Now be honest about this.

DUBAY: The current tax system expired because it was passed under budget reconciliation laws.

SCHULTZ: By the Republicans.

DUBAY: But that`s a quirk, that`s a quirk in law because it was passed under reconciliation.

SCHULTZ: Wait a second here. This is what the Heritage Foundation does. I`m trying to give you a chance to be correct on the figures here.

DUBAY: You`re trying to make a political point when I`m not interested in that.

SCHULTZ: The Republican majority passed the taxes.

DUBAY: Yes.

SCHULTZ: The Republican majority passed the Bush tax cuts. It had a sunset date, correct? Yes or no?

DUBAY: Yes.

SCHULTZ: Okay. Now the Republicans are trying to change the sunset date. Correct?

DUBAY: No, they`re trying to keep the taxes that`s been in place for a decade now and prevent a massive tax increase.

SCHULTZ: No, but they have to change the sunset date.

DUBAY: Well, forget the sunset date. They`re trying to make it permanent, which would be good policy.

SCHULTZ: You know, to have a good conversation, Mr. Dubay, you`ve got to, if you want to call it a tax increase, that`s fine. But the law`s going to expire, and that law was made under Republican reconciliation. And now they`re coming back trying to change that. Yes or no?

DUBAY: Yes.

SCHULTZ: Okay, I appreciate that.

DUBAY: I just want to move forward here.

SCHULTZ: It took you a few minutes for you to get to that. All right, now, the next thing is it`s about job creation in this country, okay.

DUBAY: I agree with that.

SCHULTZ: Well, if we do change this, if the Democrats cave in and go ahead and change this, the law that the Republicans made, will it create jobs?

DUBAY: Well, like I said before, it`s not going to create new jobs because this is the tax policy that`s in place. But if we allow them to expire and the taxes to increase, we will destroy jobs.

SCHULTZ: Okay, all right, so you just admitted that there`s no guarantee that if we allow the top two percent in this country to continue on with the tax breaks that they have, that it`s going to create any more jobs, which-

DUBAY: You`re missing what I said.

SCHULTZ: No, I heard exactly what you said. I heard exactly what you said.

DUBAY: We`re trying to prevent a massive tax increase, a job-destroying, economy-slowing tax increase. I`m not arguing that extending current policy will create jobs. I`m arguing that if you allow the taxes to increase, we will have a lot fewer jobs.

SCHULTZ: Okay, good to have you with us, Mr. Dubay. Appreciate your time tonight.