60 Minutes Promotes Washington’s 1098 Income Tax Initiative, Stahl Hails Stockman as ‘Brave’ for Wanting Tax Hikes

Barely 36 hours before Washington State voters go to the polls, CBS News aired a 14-minute unregulated in-kind campaign expenditure on behalf of “Yes on 1098" and its chief cheerleader, Bill Gates Sr, sandwiched by Lesley Stahl hailing rogue Reagan adviser David Stockman as “brave” for advocating the end to the Bush tax rates and imposition of a 15 percent national income surtax. Stahl trumpeted:

One Republican brave enough to go public is David Stockman, President Reagan's budget director. He says all the Bush tax cuts should be eliminated -- even those on the middle class. And he says his own Republican Party has gone too far with its anti-tax religion.

She segued to how “many of the states are in the same boat, facing huge deficits with few prospects for cutting, which is why Washington State is joining the movement across the country to tax the rich,” championing how “Bill Gates Sr., has poured his own money into backing Initiative 1098. The tax would bring in $3 billion a year, to be spent mainly on education, which has suffered cutbacks as the state reels under a massive deficit.”

Serving as little more than a propagandist, Stahl played a naif who recognizes the reasonableness of the proposed new tax:

STAHL TO BILL GATES SR: Let's say a couple earns $500,000. How much do you think they'll have to pay?

BILL GATES SR: Well, they would pay $5,000, because that's five percent of the $100,000 on which they would pay.

STAHL: Oh, they would only pay on $100,000. They're exempt up to the $400,000. So they'd only pay on $100,000.

GATES SR: Precisely.

STAHL: Well, that's not very much-

GATES SR: Precisely.

STAHL: -if you earn that kind of money.

GATES SR: Precisely.

Stahl proceeded to discredit those opposed to Gates. Confronting a businessman who says he may have to move his employees to another state, Stahl countered: “Okay, four out of the six have income taxes. I mean I've heard a lot of businessmen say what you're saying. And I keep wondering, ‘Well, where are they going to move if they leave?’”

Stahl also insisted “the state budget has already been cut by $5 billion, and the Governor, Christine Gregoire, says they're at the bone.” Gregoire, a liberal Democrat, employed the usual scare tactics: “To cut people off hospice I think is immoral. To cut children off health care, to cut their education so they don't have a chance at a decent future, I think that would result in an immoral budget.”

Returning to Stockman at the end of her story, Stahl let him advocate for a 15 percent surtax, but then she fretted:

The antipathy to raising taxes or making any real spending cuts, whether in Washington D.C. or Washington State, is so intense, Stockman despairs that when Congress returns after the election, they'll do what they often do: nothing.

Excerpts from the advocacy piece on the October 31 60 Minutes (online version):

LESLEY STAHL: When Congress returns after the elections on Tuesday, it’ll face one of the most hotly debated issues in the campaign: raising taxes on the rich. That's President Obama's position -- to keep the Bush tax cuts in place, except for those on the wealthiest two percent – as a way to reduce the dreaded deficit.

It's an idea already percolating among the governors. Eight states have increased so-called “millionaire” income taxes so far, as a way of avoiding drastic budget cuts on health and education. And on Tuesday, voters could make Washington State the ninth. But with our national debt in the trillions, budget experts will tell you that just taxing the rich isn't enough.

One Republican brave enough to go public is David Stockman, President Reagan's budget director. He says all the Bush tax cuts should be eliminated -- even those on the middle class. And he says his own Republican Party has gone too far with its anti-tax religion.

STAHL TO STOCKMAN: “Tax cutting is a religion.” What do you mean by that?

DAVID STOCKMAN: Well it's become in a sense an absolute. Something that can't be questioned, something that's gospel, something that's sort of embedded into the catechism and so scratch the average Republican today and he'll say “Tax cuts, tax cuts, tax cuts.” It's rank demagoguery. We should call it for what it is. If these people were all put into a room on penalty of death to come up with how much they could cut, they couldn't come up with $50 billion, when the problem is $1.3 trillion. So, to stand before the public and rub raw this anti-tax sentiment. The Republican Party, as much as it pains me to say this, should be ashamed of themselves.

STAHL: This, from Ronald Reagan's old budget director, architect of the largest tax cut in American history. But he doesn't let the Democrats off the hook. He says he cringes when he hears the President say things like this:

PRESIDENT BARACK OBAMA: I believe we ought to make the tax cuts for the middle class permanent.

STOCKMANL We have now got both parties essentially telling a big lie. With a capital 'B' and a capital 'L' to the public: and that is that we can have all this government, 24 percent of GDP, this huge entitlement program, all of the bailouts. And yet, we don't have to tax ourselves and pay our bills. That’s delusional.

....

STAHL: Many of the states are in the same boat, facing huge deficits with few prospects for cutting, which is why Washington State is joining the movement across the country to tax the rich. On Tuesday, voters will decide on Initiative 1098 that would create a income tax, but only on the wealthy, of whom there are many: 133,000 millionaires and seven billionaires, including Bill Gates of Microsoft.

His father, Bill Gates Sr., has poured his own money into backing Initiative 1098. The tax would bring in $3 billion a year, to be spent mainly on education, which has suffered cutbacks as the state reels under a massive deficit.

BILL GATES SR, IN A POOL: Vote yes on 1098, it’s good for Washington.

STAHL: Washington is one of only seven states without any income tax. The proposal would create a five percent rate on income over $200,000 for individuals and $400,000 for couples; a nine percent rate kicks in at half a million dollars on individuals and a million for couples.

STAHL TO GATES: Let's say a couple earns $500,000. How much do you think they'll have to pay?

BILL GATES SR: Well, they would pay $5,000, because that's five percent of the $100,000 on which they would pay.

STAHL: Oh, they would only pay on $100,000. They're exempt up to the $400,000. So they'd only pay on $100,000.

GATES SR: Precisely.

STAHL: Well, that's not very much-

GATES SR: Precisely.

STAHL: -if you earn that kind of money.

GATES SR: Precisely.

STAHL: His son Bill is on his side along with the public employees' unions. The other side is a who's who of the state's big businesses: Boeing, Amazon and even Microsoft. Bill Gates is still chairman, but Microsoft CEO Steve Ballmer opposes the initiative, which is why they're calling this the battle of the billionaires.
 

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GATES SR: The fact of the matter is there are 43 states in this country that have a state income tax. And in those states, the Microsofts or the ABCs, whatever, have not fled the state. I mean, it's just a gross exaggeration..

STAHL: But entrepreneur Bryan Mistele begs to disagree.

BRYAN MISTELE: This initiative really is a nail in the coffin of small businesses and start ups in our state. It really impacts the tech community very heavily.

....

STAHL: Mistele is the CEO of Inrix, a software company that monitors traffic around the world and provides data for GPS systems and sites like MapQuest. He says businesses would leave the state, especially high-tech companies like his that deal in data and aren't tied down by factories or assembly lines. He’d consider moving some of his 60 employees to other states where he has offices.

STHAL TO MISTELE: What other states?

MISTELE: Massachusetts, Florida, California.

STAHL: Massachusetts, income tax. Go ahead. California income tax.

MISTELE: Texas, Florida, Michigan, Colorado.

STAHL: Okay, four out of the six have income taxes. I mean I've heard a lot of businessmen say what you're saying. And I keep wondering, “Well, where are they going to move if they leave?”

MISTELE: Well, each state has its own competitive advantages. So by adding this additional burden, it makes us much less attractive.

....

STAHL: The state budget has already been cut by $5 billion, and the Governor, Christine Gregoire, says they're at the bone.

GOVERNOR CHRISTINE GREGOIRE: To cut people off hospice I think is immoral. To cut children off health care, to cut their education so they don't have a chance at a decent future, I think that would result in an immoral budget.

STAHL: She says she doesn't understand why so many of the state's high-tech CEOs, who are always complaining about the woeful state of American education, are so opposed to paying this tax for schools

....

STAHL, ON STOCKMAN: He says there should be a one-time 15 percent surtax on the wealthy that he estimates would cut the national debt in half.

STOCKMAN: In 1985, the top five percent of the households, wealthiest five percent, had net worth of $8 trillion, which is a lot. Today, after serial bubble after serial bubble, the top five percent have net worth of $40 trillion.

STAHL: Oh my God.

STOCKMAN:  The top five percent have gained more wealth than the whole human race had created prior to 1980.

STAHL: Of course it would never pass. There's the rub.

STOCKMAN: There's the rub.

STAHL: The antipathy to raising taxes or making any real spending cuts, whether in Washington D.C. or Washington State, is so intense, Stockman despairs that when Congress returns after the election, they'll do what they often do: nothing.

STAHL: I remember that great expression, “Let's kick the can down the road,” that became kind of the mantra.

STOCKMAN: Yeah, and it still is today.

STAHL: Just kick it down the road. We'll solve it tomorrow.

STOCKMAN: Kicking the can down the road, except it's no longer a can. It's a giant junkyard.

— Brent Baker is Vice President for Research and Publications at the Media Research Center. Click here to follow him on Twitter.