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More Conversations with Pastor Rick on Fiscal Responsibility

August 18th, 2008 . by economistmom

(photo by LA Times)

Now that I’m on a better internet connection (spending a night back home from the beach before heading back tomorrow) and have found a better transcript to work from (courtesy of CNN), I thought I’d do a better side-by-side on the two candidates’ references to fiscal policy in their Saturday evening interviews with Pastor Rick Warren.  (This is what interests me way beyond the “cone of silence” controversy.)

Here is the exchange between Pastor Rick and Senator Obama on tax policy and what defines “rich” (my emphasis added, and my edits in italics):

WARREN: OK. Taxes, this is a real simple question. Define rich. [ laughter ] I mean give me a number, Is it $50,000, $100,000, 200,000? Everybody keeps talking about who we’re going to tax. How can you define that?

OBAMA: You know, if you’ve got book sales of $25 million, then you qualify.

[ laughter ] [ applause ]

OBAMA: Yes.

WARREN: No, I’m not asking about me.

OBAMA: Look, the - here’s how I think about it. Here’s how I think about it. And this is reflected in my tax plan. If you are making $150,000 a year or less, as a family, then you’re middle class or you may be poor. But $150,000 down you’re basically middle class, obviously depends on the region where you’re living.

WARREN: In this region, you’re poor.

OBAMA: Yes, well - depending. I don’t know what housing practices are going. I would argue that if you’re making more than $250,000, then you’re in the top three percent, four percent of this country. You’re doing well. Now, these things are all relative. And I’m not suggesting that everybody is making over $250,000 is living on easy street. But the question that I think we have to ask ourselves is, if we believe in good schools, if we believe in good roads, if we want to make sure that kids can go to college, if we don’t want to leave a mountain of debt for the next generation. Then we’ve got to pay for these things, they don’t come for free, and it is irresponsible [to act as if they come for free].

I believe it is irresponsible intergenerationally for us to invest or for us to spend $10 billion a month on a war and not have a way of paying for it. That, I think, is unacceptable. So nobody likes to pay taxes. I haven’t sold 25 million books but I’ve been selling some books lately, and so I write a pretty big check to Uncle Sam. Nobody likes it. What I can say is under the approach I’m taking, if you make $150,000 or less, you will see a tax cut. If you’re making $250,000 a year or more, you’re going to see a modest increase. What I’m trying to do is create a sense of balance, and fairness in our tax code. One thing I think we can all agree on, is that it should be simpler so that you don’t have all these loopholes and big stacks of stuff that you’ve got to comb through, which wastes a huge amount of money and allows special interests to take advantage of things that ordinary people cannot take advantage of.

And here’s the exchange with Senator McCain on the same issue (again, my emphasis added):

WARREN: Ok, on taxes, define “rich.” Everybody talks about taxing the rich, but not the poor, the middle class. At what point - give me a number, give me a specific number - where do you move from middle class to rich?

Is it $100,000, is it $50,000, is it $200,000? How does anybody know if we don’t know what the standards are?

MCCAIN: Some of the richest people I’ve ever known in my life are the most unhappy. I think that rich should be defined by a home, a good job, an education and the ability to hand to our children a more prosperous and safer world than the one that we inherited.

I don’t want to take any money from the rich — I want everybody to get rich.

(LAUGHTER)

I don’t believe in class warfare or re-distribution of the wealth. But I can tell you, for example, there are small businessmen and women who are working 16 hours a day, seven days a week that some people would classify as - quote - “rich,” my friends, and want to raise their taxes and want to raise their payroll taxes.

Let’s have - keep taxes low. Let’s give every family in America a $7,000 tax credit for every child they have. Let’s give them a $5,000 refundable tax credit to go out and get the health insurance of their choice. Let’s not have the government take over the health care system in America.

(APPLAUSE)

So, I think if you are just talking about income, how about $5 million?

(LAUGHTER)

But seriously, I don’t think you can - I don’t think seriously that - the point is that I’m trying to make here, seriously — and I’m sure that comment will be distorted — but the point is that we want to keep people’s taxes low and increase revenues.

And, my friend, it was not taxes that mattered in America in the last several years. It was spending. Spending got completely out of control. We spent money in way that mortgaged our kids’ futures.

(APPLAUSE)

My friends, we spent $3 million of your money to study the DNA of bears in Montana. Now I don’t know if that was a paternity issue or a criminal issue…

(LAUGHTER)

… but the point is, it was $3 million of your money. It was your money. And, you know, we laugh about it, but we cry - and we should cry because the Congress is supposed to be careful stewards of your tax dollars.

So what did they just do in the middle of an energy crisis when in California we are paying $4 a gallon for gas? Went on vacation for five weeks. I guarantee you, two things they never miss - a pay raise and a vacation — and we should stop that and call them back and not raise your taxes. We should not and cannot raise taxes in tough economic times.

So, it doesn’t matter really what my definition of “rich” is because I don’t want to raise anybody’s taxes. I really don’t. In fact, I want to give working Americans a better shot at having a better life, and we all know the challenges, my friends, if I could be serious.

Americans tonight in California and all over America are sitting at the kitchen table — recently and suddenly lost a job, can’t afford to stay in their home, education for their kids, affordable health care. These are tough problems. These are tough problems. You talk to them every day…

WARREN: All the time.

MCCAIN: … everyday. My friends, we’ve got to give them hope and confidence in the future. That’s what we need to give them, and I can inspire them. I can lead, and I know that our best days are ahead of us.

(APPLAUSE)

Stark contrast, indeed.  And it would be so even if both candidates had received this question ahead of time and prepared all they wanted for this question–”cone of silence” or not.  These exchanges are just the latest clarification of the two candidates’ fundamentally different views on:  (i) the role of government in income redistribution (determining what’s “fair”); (ii) the ideal size of government; and (iii) what happens to tax revenues when you cut tax rates. 

And here’s a better copy of the text of Senator Obama’s response to his last question, which Pastor Rick for some reason did not ask of Senator McCain:

WARREN: OK. I’ve got 30 seconds. What would you tell the American public if you knew there wouldn’t be any repercussions?

[ laughter ]

OBAMA: Well, you know what I would tell them is that solving big problems, like for example, energy, is not going to be easy and everybody is going to have to get involved. And we are going to have to all think about how are we using energy more efficiently and there’s going to be a price to pay in transitioning to a more energy-efficient economy and dealing with issues like climate change. And if we pretend like everything is free, and there’s no sacrifice involved, then we are betraying the tradition of America.

I think about my grandparents’ generation, coming out of a depression, fighting World War II; you know, they’ve confronted some challenges we can’t even imagine. If they were willing to make sacrifices on our behalf, we should be able to make some sacrifices on behalf of the next generation. 

5 Responses to “More Conversations with Pastor Rick on Fiscal Responsibility”

  1. comment number 1 by: Patrick R. Sullivan

    It’s pretty clear that one candidate is comfortable using government to direct people’s activities: ‘If they were willing to make sacrifices on our behalf, we should be able to make some sacrifices on behalf of the next generation. ‘

    And the other is not: ‘I don’t believe in class warfare or re-distribution of the wealth. But I can tell you, for example, there are small businessmen and women who are working 16 hours a day, seven days a week that some people would classify as - quote - “rich,” my friends, and want to raise their taxes and want to raise their payroll taxes.’

    If you think economic policy was better in the quarter century 1958 through 1982, vote for Obama. If you prefer the most recent quarter century–1983 through 2007, vote McCain.

    Keep in mind though, that the main economic issue in the next 25 years is going to be what to do about SS, Medicare and Medicaid. And those are problems created by the Federak govt.

  2. comment number 2 by: economistmom

    well, Patrick, I’ve got to say I think it’s pretty generous (and odd) of you to give the Clinton years to McCain…Obama is much closer to acknowledging that we will have to raise revenues/GDP, and that this can be a plus (not a minus) for economic growth.

  3. comment number 3 by: Patrick R. Sullivan

    I’m giving the Clinton years to Milton Friedman. He–along with Newt Gingrich–operated in a completely different intellectual environment than the 60s and 70s.

  4. comment number 4 by: Gerald Prante

    I would say that Milton Friedman did have a positive impact on the world of economics, but it’s a stretch to say he was responsible for the 1990s economic growth. Under economistmom’s view, Friedman’s contribution to the Clinton growth years would be his emphasis to the economics community of “to spend is to tax,” thereby opposing deficits, which the Clinton deficit hawks did that helped economic growth, ceteris paribus. (There are other more important factors that helped the 1990s economy than just that, however.)

  5. comment number 5 by: Patrick R. Sullivan

    Clinton inherited an economic expansion nearly two years old. He also inherited the spending caps, that were largely the work of Phil Gramm, from the 1990 Budget Act.

    Then, in 1994, he really got lucky; the Democrats lost both houses of congress. That checked Clinton’s (and his wife’s) worst instincts. Add in Y2K investment in IT, and you’ve got the record 10 year economic expansion.

    But, the intellectual background music was by Friedman. Control money supply growth, let markets allocate what is produced, how it’s produced and distributed, when at all possible.