Fred on Kudlow & Company
Fred Thompson talked with Larry Kudlow about economics, taxes, and politics. It will air on CNBC tonight at 7:00 PM ET. But if you don’t want to wait The Page posted the transcript:
KUDLOW: Warren Buffett, very famous billionaire, one of America’s richest men, one of America’s best investors, Warren Buffett testified yesterday, Senate Finance Committee. He wants to raise taxes. He wants to raise the death tax, he wants to raise capital gains taxes, he wants to tax private partnerships and private equity firms. What do you make of this fellow Buffett and what he’s saying?
Mr. THOMPSON: I don’t know. I don’t know what to make of him. I don’t know the gentleman. I know he’s been pretty successful under policies, probably, that are contrary to what he’s talking about now. But I do know something about the policies they’re espousing. They’re basically the policies of the Democratic Party. And I think they’re dead wrong. You know, you look back history, you know better than most, whether it’s been in the 20s or the Reagan administration or the Kennedy administration or this administration, when you’ve lowered taxes and lowered tax rates, you’ve got economic growth. I mean, everything depends on economic growth. And it gets back to our fiscal policies, our taxing and spending policies. And lower rates induce the kinds of things that contribute to economic growth.
And not only that, but it reminds us that, you know, the wealth of the government is not the same thing as the wealth of nations, you know. If you leave the money in the taxpayers’ pockets, you know, you’re not losing revenue, it’s going to productive places on which that is taxed, too. It brings more revenue into the government. We’re bringing more revenue in on what, that one day in April, I guess, earlier this year, brought more revenue in in the history of the country under lower tax policies. So that’s what’s–that’s what’s given us, what, six years now, almost, of economic growth. That’s what’s allowed us to overcome what happened on September 11, the Wall Street bubble and the scandals and all of that, and still gave us a growing economy. Oil prices and all that. It’s really remarkable that we’ve done what we’ve done. And I think a lot of that goes back to 2001, 2003 tax cuts.
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KUDLOW: Would you cut the corporate tax, whether there’s a recession or not, just as a matter of policy?
Mr. THOMPSON: Absolutely. Absolutely. No questions about that.
KUDLOW: How low would you take it?
Mr. THOMPSON: I would–I would say it should be no higher than 28 percent. That would be the norm of our competitive trading partners. We’re the second highest now in the industrialized world. I think we’re only one of two countries that hasn’t lowered its corporate tax rates since 1994. And you know, when our rates started getting higher than our European friends, you know, we should take a serious, serious look at it. It’s making us less competitive than we need to be. I don’t know why in the world we’re still bashful about doing something that would be good for our companies from a competitive standpoint and be good for American workers and be good for our economy.
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KUDLOW: All the Republican candidates have defended President Bush’s low capital gains tax and low dividend tax. But I want to ask you on a different matter, again, recession or no recession. Senator Hillary Clinton and the other Democrats are bashing Republicans. They say the Bush tax cuts only help the rich, but they go on to say that the middle class has suffered, their wages are stagnant, and the income inequality is expanding. How do you respond to Hillary Clinton’s attacks on that? Would you focus and do you have a middle class tax cut plan?
Mr. THOMPSON: The answer for every conceivable ill in America is to tax some of the most productive people in our economy. Soak the rich. I mean, you can put it in different guises and call it different things, different times, but that’s essentially their answer to absolutely everything. Five percent of Americans pay about 60 percent of the taxes now. How progressive do you want to get? I think everybody who espouses that sort of philosophy ought to say, how much is the federal government entitled to of someone’s earnings? These people aren’t usually born rich. If you look at the numbers, you see so many Americans start out as a lower rate. There was just a study done the other day that the IRS put out.
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KUDLOW: How about Social Security? You’ve put out a pretty bold plan. I think it’s the most detailed of any candidate either party. You’re going to slow down benefits, you’re going to have add-on for private savings accounts of kind of 401(k), as I understand it. First of all, let me ask you this. A lot of pundits are saying, `Well, why would he do this? This is probably lousy politics.’ Why are you doing this?
Mr. THOMPSON: You know, I don’t think it’s lousy politics. I think the American people are smarter than people–politicians give them credit for. Everybody knows what the economists are all saying, that is our current system is unsustainable. What I’m doing is putting forth a plan that will save Social Security. The current path is unacceptable and unsustainable. Even the politicians agree on that. They just want to change the subject after making that statement. I’m forcing them to talk about it.
I’m the only one that’s got anywhere near a detailed plan to do it. And I’ve got several components. It has several components to it, but the main one is, as you pointed out, is individual private accounts, which government would match on a sliding scale, something that is a good concept in and of itself, but alone can’t solve the problem. In addition to that, you’ve got to change the way you index benefits when someone retires. We can–we can index benefits to inflation and continue to have the COLA the way we have it now, cost of living increase, the way we have it now, indexed to inflation, and make sure that the future retirees get the same thing that current ones do. But we’re now promising future retirees something much greater than that that we cannot deliver.
KUDLOW: Are you touching the third rail when you do this, and talk about even future benefit slowdown? Not a reduction but it is a slowdown. Do you get inside your body a certain heartburn feeling? I mean, everyone says you can’t do this, Senator Thompson.
Mr. THOMPSON: I know.
KUDLOW: Why are you out there doing it?
Mr. THOMPSON: Well, for me, from a political standpoint, frankly, no, it’s the right thing to do. If you can’t do the right thing, say what you believe and what everybody really basically knows that run for president, why do it? I mean, why bother? I mean, life is too short for the aggravation. So if you can’t…
KUDLOW: So why bother?
Mr. THOMPSON: …say something, you’re saying something important. I’m telling the truth, I’m forcing everybody else to address it. And for the benefit to me? I think Americans–the American people will look at something like this and a guy like me and say, `You know, I don’t know if this is the right way, but the guy’s doing what he thinks is right, and he’s addressing issues and he’s not afraid to tell us before he gets elected to something what he’ll do when he gets elected,’ remembering that people are smart enough to figure out that if you’ve got a system that’s going bankrupt and a guy’s trying to do something to save it, you don’t compare what this guy is doing compared to pie in the sky, you compare it to the bankruptcy, which is inevitable. So you know, we’ll see how it turns out. But I’m pretty optimistic about that, too.
Disclaimer: I work for Friends of Fred Thompson, Inc.
