Stephanopoulos Pushes Greenspan to Agree Taxes Should Be Raised

On Sunday's This Week, ABC's George Stephanopoulos pressed former Federal Reserve Chairman Alan Greenspan to agree on the wisdom of raising taxes. Stephanopoulos wondered “what would be wrong with letting the tax cuts for the top one percent expire?” and suggested that to “shore up” Social Security and Medicate that Congress “limit the tax cuts.”

Citing a Congressional Budget Office study, “which was just stunning to me,” Stephanopoulos recounted how “it said that in the last two years -- from 2003 to 2005 -- the increase in income for the top one percent exceeded the total income of the bottom 20 percent. Given that, what would be wrong with letting the tax cuts for the top one percent expire and plowing that money into education?” Following up, Stephanopoulos proposed: “If you have long-term problems in Medicare and then also in Social Security, wouldn't it make sense to, in addition to limiting them as I know you would like to do, to limit the tax cuts and shore up the programs in that way?” Stephanopoulos started the interview by summarizing John Edwards' claim that “average Americans are not winning in this current economy and the policies that we've been following for a long time are part of the reason.” Greenspan retorted: “His remedies will make it worse.”

As for the contention the top one percent should be taxed more because the increase in their income exceeded the total income of the bottom 20 percent, the Tax Foundation found the wealthiest already pay far more than their fair share: “The top 1 percent of taxpayers (AGI over $364,657) earned approximately 21.2 percent of the nation's income (as defined by AGI), yet paid 39.4 percent of all federal income taxes [in 2005]. That means the top 1 percent of tax returns paid about the same amount of federal individual income taxes as the bottom 95 percent of tax returns.” See my October 30 NewsBusters posting for the Tax Foundation's analysis of IRS data.

Stephanopoulos on Sunday returned to his tax advocacy of a year ago. The January 21 NewsBusters item, “With Another Candidate, Stephanopoulos Calls for Gas Tax Hike,” recounted:
Another Democratic presidential candidate, another chance for ABC's George Stephanopoulos to push for higher taxes on energy. On Sunday's This Week, when just-announced candidate Bill Richardson outlined how his energy policy would be based on conservation and improved technology, listing how "it's going to take more efficient air conditioning, it's going to take green buildings, it's going to take fuel-efficient vehicles," Stephanopoulos jumped in: "Higher gas taxes?" The Governor of New Mexico rejected the plea from Stephanopoulos: "No, you don't have to do it with taxes. You need a conservation effort that every American participates in, inspired by the President." Stephanopoulos remained unpersuaded, proposing: "But aren't higher energy taxes the best way to get people to conserve?" On the December 3 [2006] This Week, Stephanopoulos told Iowa Governor Tom Vilsack, a then just-announced Democratic candidate for President, that "just about every expert on energy says the best way to become energy independent is to raise the price of oil and gas, to have a serious energy tax. Why not call for it?"
A transcript of the beginning of the interview with Greenspan on the December 16 This Week with George Stephanopoulos:
GEORGE STEPHANOPOULOS: I wanted to start out with a response to Senator Edwards. You heard what he said about his defense of his populist rhetoric and his populist approach. He said average Americans are not winning in this current economy and the policies that we've been following for a long time are part of the reason.

ALAN GREENSPAN: He's correct in the fact that there is a stagnation in the middle class economic growth, but his remedies will make it worse, not better. So the critical question that confronts us is to recognize the problem, which is increasing inequality of income which I mentioned in some detail in my book and considered, in fact, a major problem which will be out for an indefinite period of time. We have to address that.

STEPHANOPOULOS: I wanted to get into that because you do talk about it a lot in the book. And there was a statistic that came out this week from the Congressional Budget Office which was just stunning to me. It said that in the last two years -- from 2003 to 2005 -- the increase in income for the top one percent exceeded the total income of the bottom 20 percent. Given that, what would be wrong with letting the tax cuts for the top one percent expire and plowing that money into education, which you think is part of the answer?

GREENSPAN: Well, the problem is fundamentally that our fiscal affairs as we reach out into the next decade are awful and, indeed, the Congressional Budget Office raised very serious alarms this week, but economists have been raising alarms for a long period of time, so I think we can't look at solutions without looking at the full context of how we're going to resolve the very large shortfall in Medicare and a lesser one in Social Security and looking at the total picture, because you just can't look at individual problems without a fuller context of where this country is going fiscally.

STEPHANOPOULOS: Well, in that fuller context then, if you have long-term problems in Medicare and then also in Social Security, wouldn't it make sense to, in addition to limiting them as I know you would like to do, to limit the tax cuts and shore up the programs in that way?

GREENSPAN: Well, I've always said, in fact, as soon as the budget surpluses disappeared, which was in 2002, I said my support for the tax cut was contingent and on pay go actually taking on meaning that offsetting reductions in spending or other tax adjustments be made in order to finance that specific tax cut. I still hold that true.

STEPHANOPOULOS: So in the Congress this week, and it appears like they're going to finalize it this week, fixes this patch in the alternative minimum tax, a $50 or $60 billion hit, and doesn't pay for it, increases the deficit, that's something you're against?

GREENSPAN: Yes.

STEPHANOPOULOS: That's a straight answer.
Brent Baker
Brent Baker
Brent Baker is the Steven P.J. Wood Senior Fellow and VP for Research and Publications at the Media Research Center