Editor’s note: Below is the video and transcript of a discussion featuring Charles Payne and Steven Moore, which took place at the David Horowitz Freedom Center’s 2012 Restoration Weekend. Restoration Weekend was held Nov. 15th-18th at the Breakers Hotel in Palm Beach, Florida.
James Taranto: So Steve, this fiscal cliff — this is, as everyone knows — a bunch of laws take effect on January 1st, including the Bush tax cuts expire, there are new Obamacare taxes, the temporary reduction in the Social Security payroll tax expires. And — what am I leaving out?
Steven Moore: You’ve got the — and the spending cuts.
James Taranto: Right, and then the spending cuts, the sequestrations overtake us.
So let me begin with a devil’s advocate question about the tax hikes in particular. If the Bush tax cuts expire, that means we go back to the tax rates of 2000 — Clinton-era tax rates.
Steven Moore: Yes.
James Taranto: The Clinton era was not a terrible time economically. We had strong growth. How do you answer the people who say — well, let’s go back to the Clinton-era taxes? And it obviously is not incompatible with good economic growth; why should we not think that it will produce it in 2013?
Steven Moore: Okay. Well, thank you, James.
First of all, let me just say that I have — I think this is what, David, the fourth or fifth year in a row that I’ve been at this conference. And I just thank you again for inviting me. I love — this is my favorite conference of the year, so I just want to thank you all for being here.
And the reason I love this conference so much is it really recharges my batteries, and so I feel pumped up. One of the really great things about this conference is now I’m in stage three or four of recovery. I’m beyond depression, and now I’m angry. And so I’m ready to fight. And so thank you again for being here.
You know, I think it was Woody Allen who once said that he was asked to say something positive in a speech he was giving. He said — I can’t think of anything positive to say; will you accept two negatives?
I’m not going to — I’m actually going to try to cheer you up this morning. Because I do think, actually, out of the ashes of what happened last Tuesday, there is — well, let me put it like this. I think what we’re seeing right now is truly the twilight of liberalism. And I think that this is — in our lifetime, liberals and Democrats will never be as powerful as they are right now. And I think we’re seeing their rapid decline in the elections to come. And that starts with the question that James just asked me about — what we’re headed towards about this issue of the fiscal cliff.
And let me start by saying this — that in the 25 years I’ve been covering the economy in Washington, I have never seen anything — such a dysfunctional debate as we’ve had on this fiscal cliff. And let’s start from the beginning.
The day after the election, the Dow Jones Industrial Average lost 350 points. The next day, it lost another 150 points. The media somehow said — oh, my God, it’s the fiscal cliff, that’s the reason the stock market is collapsing.
Let me just start by saying this — the stock market did not collapse because of the fiscal cliff. The stock market collapsed because Barack Obama was reelected as President, right? I mean, it’s very simple.
And so you’ve readjusted prices of assets because we have a President, who will be President for four more years, who doesn’t understand how the economy works. So I think that the media has gotten the story completely wrong.
Now, there are two components to the fiscal cliff issue. And I want to address them both separately. Because really — as you know, Michele, right — there’s two fiscal cliffs. There’s the spending side of the equation, and there’s the tax side of the equation. And we have to treat these separately.
So let me start, if I can, James, with the spending side of the equation. And I want to get this message to you loud and clear. And we need to amplify this everywhere we go. Cutting government spending, cutting government spending, is good for the economy. It is not bad for the economy.
So this idea that somehow the world is going to come to an end if we make these automatic spending cuts is nuts. And in fact, I’m going to say something very controversial — I think we should do the automatic spending cuts. I think every single agency should be cut by eight to 10 percent next year.
Now, I don’t want to see — I respect people who say that these cuts in the Defense Department could be very significant and could be very dangerous. I accept that. I’m not an expert on military issues. A lot of people in this room know much more about that than I do. But I do know this — that there is waste and there is inefficiency and there is fraud in every single agency of government.
And I think that the one card the Republicans have to play in these negotiations with President Obama is to say — look, we’re willing to take these cuts. We haven’t cut government spending in 25 years in the town of Washington. Right, Louie? When’s the last time we actually cut government spending? We haven’t done it.
And so the Democrats have put themselves in quite a fix. Because President Obama is the one who came up with this idea of the sequester when he wouldn’t agree to negotiate on entitlements. And so, I do believe that if the Republicans would say — we’re willing to take these cuts, I think the Democrats would not be in the position that they are right now. I think they would be much more willing to negotiate on the issue of taxes.
And by the way, when it comes to federal agency spending, one of the things you all have to know — in the last four years, the average federal domestic agency of government has increased its budget by more than 40 percent. So to say that every agency can’t take an eight percent cut is nuts.
And by the way, the programs that are going to be cut under the sequester — it is true that the military would take a big cut. But you’re talking about the programs Democrats really, really care about — education, job training, energy — all of these programs would be significantly cut, and I think it should happen. So that’s an important part of the message, is that if the Democrats want to cut spending, we’re all for it.
Now, on terms of tax side of the equation, the other side of the fiscal cliff — this is an extremely dangerous situation. And you all know me — I am a supply-sider. I believe that President Obama doesn’t really understand this stuff at all. But tax rates really do matter, and they matter a whole hell of a lot.
Fact, I brought some — I want to show you a couple of slides, if I could. Okay, so let me just show you something. Some of you have seen this chart before, but I think it’s a really very significant chart. The red line in that chart is the highest income tax rate in the United States over the last 50 years. And you can see — you know, remember in the 1970s, we had a 70 percent marginal tax rate. And then you can see in the ’80s, Reagan came in and cut the top tax rate from 70 to 50 percent. And then, a few years after that, we got the rate all the way down to 28 percent. You can see the rate went up a little bit under Bush, and then under Clinton; and then it came down a little bit under George W. Bush.
But the main point of this is that over that whole period, the top income tax rate in the United States went from 70 to 35 percent. That’s a very significant reduction on marginal tax rates.
Now, here’s the interesting part about this. In fact, I just had a piece in the Journal on Friday about this. If you want to tax the rich, that blue line is the share of taxes paid by the richest one percent. You know, those are the evil rich one percent — the Warren Buffetts and the Bill Gateses, and the Tiger Woodses and the Justin Biebers, and people like that. Now, look at what has happened to the share of taxes paid over the last 50 years. As the top income tax rate went down, look at what happened to the share of taxes paid by the richest one percent — it actually went up. It went up significantly.
So when we had a 70 percent tax rate, the rich paid about 19 percent of all the federal income tax. Today — how many of you are aware of the statistic that the richest one percent pay 40 percent of the income tax? How many of you — almost everyone in this room knows that.
You know, Charles, I think — we all know this, but I think the American public have no idea about that. I mean, they have been so brainwashed and inculcated with this idea in the media that the rich don’t pay their fair share. I saw some polling on this — if you ask the American people what percentage of income taxes are paid by the richest one percent, they think it’s less than one percent. Because they think the rich don’t pay any taxes.
Anyway, the point here is — let me just show you one other. Some of you have seen me show you this before, but this is my favorite quote from modern American history, and it comes from John F. Kennedy. He said this three months before he was assassinated, in a speech at the New York Economics Club. And I just have to read it to you, because it is so apropos to where we are today. He said — it is a paradoxical truth that tax rates are too high today and tax revenues are too low — this is the part I love — the soundest way to raise the revenues in the long run is to cut the rates now.
How many Democrats believe that today? I mean, really, I don’t think there’s more than — you could probably count with one hand the number of Democrats who believe that to be true.
So we are facing this very extreme fiscal cliff issue. Here is what I will say about it. And by the way, you all know what we’re headed for. The personal income tax rate — which, by the way, is the income tax rate that’s paid by small businesses. In fact, two out of three people who are on that top income tax bracket who are facing this tax increase — two out of three of them — what they do for a living is they own, operate and invest in small businesses. The highest income tax rate would go from 35 to about 42 percent, which is about a 20 percent increase in the income tax rates.
James, it is not the end of the world. You know, Bill Clinton would say — well, we lived with this in the 1990s. That’s true, but we want the rates to be going down, not up.
But the other two rates that are really significant, and maybe even more dangerous, is what the President wants to do with investment rates. If you look at the GDP numbers over the last nine months, the weakest sector of the GDP over the last three quarters of the year has been business investment spending. Businesses are not investing today, and that is a very dangerous thing. Because business investment is the seed corn for a growing economy.
Now, can you possibly think of a worse time — given that we’re in an environment now where you have negative business investment — to be raising taxes on business investment? And that’s exactly what President Obama is suggesting. There’s an old saying — if you tax something, you get less of it, right? And if you tax something less, you get more of it.
So the capital gains tax was simply just a tax on investment and stock ownership. That would go from 15 to 20 percent. And by the way, one of the lies that President Obama said repeatedly, over and over and over, during the campaign, is — I’m only going to raise the tax rates up to where they were in the Clinton era. Remember that? He said that over and over. That’s a lie.
And the reason that’s a lie is — how many of you aware in this room that in that God-awful healthcare bill, called Obamacare, there’s a 3.8 percent investment surtax? How many of you knew that? So that means, by the way, that capital gains aren’t going from 15 to 20; they’re going from 15 to 20, to 23.8 percent. That’s a 60 percent increase in the capital gains tax.
And then, finally, the dividend tax is even more a catastrophe. Back in 2003, President Bush — and I was part of the economic team that came up with this proposal — we argued for reducing the dividend tax to zero. Because as you know, the dividend tax is simply a double tax on corporate income. We tax it at the corporate level; we shouldn’t tax it at the shareholder level. We didn’t get the dividend tax down to zero, but we did get it down to 15 percent.
What Obama wants to do is take the rate — remember, prior to 2003, we taxed dividends as ordinary income. So if we go back to that tax regime, James, dividends go from 15 to 42 percent, plus 3.8 percentage — so we’re talking about a tripling of the dividend tax.
So the point I’m making — and I’ll turn it over to Charles now — is — by the way, I pray to God that I am wrong about this. Because the last thing I want to see, even with Barack Obama in the White House — the last thing I want to see is this economy collapse. But I do believe if he goes forward with these income tax rate increases, it will cause a double-dip recession. And we’re going to see unemployment rise to above 10 percent officially. As you know, the real unemployment rate is already 15 percent. We could see 20 percent unemployment in this country if those rates go up. So this is an extremely dangerous situation.
To my good friend, Louie Gohmert, and to Michele Bachmann — please, please, please do not cave on this. If Republicans believe in anything, it’s for lower tax rates to grow the economy.
James Taranto: Well, thanks, Steve. We’ve been joined now by Charles Payne. I see we have –
Charles Payne: Hey!
Lost track in the gym, sorry about that. If we’re going to poor, you might as well be in shape, at least.
James Taranto: Excellent advice.
We have about 20 minutes left. So let me just ask if Charles has something to say quickly about the fiscal cliff issue.
Charles Payne: I think we’ll hit January 1st without an agreement. I think the stock market right now is acting like the bond market used to act, actually trying to force Washington to make some sort of a decision. I also think people should remember the debt lie — I mean, the debt ceiling situation.
Steven Moore: Yeah.
Charles Payne: Remember, July 29th they came to an agreement, the President signed it August 2nd, S&P downgraded us August 5th. So we collapsed, the stock market collapsed, after it was signed. So if we even cobbled together a deal that the market sniffs out as being maybe kicking the can down the road [of] something that’s going to hurt us, the market can still have an adverse reaction.
But I don’t have any faith — despite all the niceties and, you know, the post-election Kumbaya — that they’re actually going to get their act together. I think it’s going to be the public outrage, when the market starts to collapse — and, you know, it’s already begun — this is a warning right now; this is not the real collapse.
By the same token, if they come up with something — and I think the compromise is going to — I was thinking it would be something like a million-dollar cutoff, which — you know, to get up there and say to people, families making $250,000 are rich, and slap a Buffett tax on them, is the most disingenuous, mean-spirited thing you can do. Those are the exact people that have lived the American dream the hard way. Those are the people we should aspire to, not demonize, every single day.
So Steve was talking about people not realizing how much the one percent pay. Well, how could they, when every time the President speaks, he says that the economy is — that millionaires are riding the backs and the economy is riding on poor people, college students and senior citizens? That’s common sense. None of them are paying, you know, income tax. So how the hell — if you can’t figure that one out, that that’s a lie, then you certainly wouldn’t be able to understand how much the one percent pay, and that would definitely go over your head.
Here’s the problem, guys. We talk about President Obama’s, quote-unquote, economic policies, and we give him — we actually lend credence to it when, in fact, it has nothing to do with economics. It’s punitive.
Steven Moore: Right. I agree.
Charles Payne: It’s a punitive policy.
Steven Moore: I agree.
Charles Payne: It’s a punitive policy. It’s not an economic policy.
They’ve crunched the numbers. They know that this is a couple of days’ worth of their ferocious spending. It’s punitive. In my mind, in my opinion, the President is really anti-profit motivation. He doesn’t understand why people want to make so much money. He’s anti-profit motivation. Of course, he’s going to make a couple hundred million when he gets out of office, but that’s a different story.
He’s anti-profit motivation. And that’s why the biggest collateral damage so far has been to small businesses. Because these are the ones he really — listen, why do you want to join this corporate elite class? Why do you want to sort of — I got your back. Because if you listen to every single speech, every speech has been — okay, income inequality, right? How do we close this gap? And the answer has always been — this way. The answer has never been this way. You know, it’s never been — hey, how about we try to make everybody more prosperous, instead of people who’ve earned their prosperity poorer?
And so, to give it credibility in the first place — it bothers me that we have to even talk about it this way. And now, everyone, everyone, has regurgitated the line, you know, the Republicans are going to have to raise taxes on the wealthy. No, it’s not — 250 grand? Come on, give me a break.
So I would think that maybe some sort of compromise that I would think would happen would be a less draconian defense cut spending. I think maybe they’ll have a million-dollar cutoff, you know. But I’m not sure. Listen, the President says he’s offered the GOP ways of compromising. He says — listen, you can do this. You can have defense cut spending and higher taxes, or you can have defense cut spending and higher taxes.
So he’s offered the olive branch, you know, he’s been compromising.
So I’m not extraordinarily helpful there. But in the meantime, to Steve’s point — I think really, what bothers me the most is the damage that small businesses are taking. If you look at Small Business Administration data over the last couple of years, at the loan data, you will see — you talk about a fiscal cliff — the loans have dropped off a sheer cliff. Loans for $150,000 or less have dropped like 40 percent. Loans to black people have dropped like 40, 50 percent. Loans to women — you want to talk about a war on women — loans to women are down 40 or 50 percent.
No one talks about this. The ability to pull yourself up by your bootstraps — and because this is an amazing country — instead — and I think one of the speakers — maybe it was Krauthammer or someone — alluded to the idea — and I call it buckets of victims. Not special interest groups, but victims, you know. You create enough buckets of victims, the numbers add up.
So I think we’ll hit this issue. I think they’ll cobble something together at the last minute. I don’t have a lot of faith it would be before January 1st. But I don’t think we’ll — here’s the thing I think conservatives make a big mistake of — thinking that, okay, the economy will crash, and everyone will have this general epiphany that that’s the wrong way to go and come running back into the arms of conservatives.
Look at Greece. The last couple years, we used Greece as a cautionary tale to liberals. But it actually should’ve been a cautionary tale to conservatives as well. Because Greece did not crumble overnight. Greece was able — listen, how many people went to Greece in the last 10 or 20 years, and came back and said — those people know how to live! I mean, how come we don’t live like that? I mean, come on, be honest. I mean, people who go to Greece and come back go — oh, man, they get paid 14 months for 12 months of work, and women get off a year for a baby, and — oh, man, they know how to live!
So be careful to think that the economy is going to do the job that the conservatives should do, which is dramatically retooling their message. Dramatically retooling their message and going after people that you’ve written off mentally.
And just as a little aside, if I can, you know — the thing that bothered me the most this week was the conference call from Mitt Romney. Because I’m telling you right now, you can’t deride people for liking gifts. This was in my room when I got here. I love it.
It probably cost them 50 cents, but they bought so much goodwill with me — I love it. Everybody in this room loves gifts. Don’t make a segment of the population feel little because they like their gifts.
I grew up in Harlem, and 70 percent of the time we didn’t have heat or hot water. Don’t tell some kid without heat or hot water that what he gets is a gift, but your mortgage deduction is not. You’re going to lose these people forever. You already have.
You have to figure out a way to make them understand that these gifts are curses. Living in your parents’ basement till you’re 27 is a curse. Not ever pounding the pavement, your college degree fades away, not having any job experience — that is not a gift; that is a curse.
So you don’t deride them for liking this stuff. Who doesn’t like this stuff? But you got to say — Charlie, if you eat all of that, the gym you just did won’t — you’ve just negated the gym! That’s what you’ve got to tell me. Don’t tell me not to like it; tell me not to eat it!
This is the way you’ve got to do this. And this is the way it’s got to work.
Because, you know what? Newt Gingrich talked about turnout. At some point, it doesn’t matter if you get a thousand percent of the base out. You’ve got to convince all Americans to re-embrace the American dream. I think there are ways to do it.
I’ve been talking to people in the last couple days. I’ve got a whole bunch of ideas I can’t go over right now. But I will tell you — I don’t know that it will be the economy that will wake people up. And whenever the economy does completely collapse, it could actually be too late, anyway. It could actually be too late, anyway. There are people in Greece right now who actually want more benefits. You know, there are people who don’t understand why they’re being so mean to them — why Germany, why those stingy workaholic Germans, won’t give them more money. They don’t understand it. They don’t get it.
James Taranto: I think we have a difference of opinion.
Steven Moore: First of all, how come there was no gift in my room? I’m envious.
James Taranto: So I think we have a difference of opinion here between our panelists. Steve, you mentioned earlier that you see the twilight of liberalism. I guess that seems to me slightly premature. It’s more like, you know, the most optimistic view, I would say, would be late afternoon. But how do you foresee — I guess it would be in the next four years — us going from here to the twilight of liberalism? And how do conservatives come back?
Steven Moore: Well, it’s easy. Barack Obama’s a catastrophe for the economy. Right? I mean, if you were to ask me — if I could have a meeting with Barack Obama, and I could sit down with him for five minutes, and he were to ask me my advice about what to do about the economy — he’s not going to do that, but if he did, I would say — Mr. President, it’s very simple. Everything you did in your first term, do exactly the opposite in the second term. I mean, seriously. That’s the way you turn around the economy. Every decision you made, do exactly the opposite.
Now, the reason that this is the twilight of liberalism is because — I guarantee you, David, if you’re nice enough to have me back next year, I’ll make a bet with anybody in this room that Barack Obama’s approval rating a year from now is 35 percent or less. And I believe that. Because the economy is going to be in collapse. There’s going to be incredible Obama fatigue. And look, I look at the numbers. The Republicans are going to pick up 13 Senate seats in 2014.
Now, I’m not just sounding like Dick Morris. I know you’ve heard this before.
But we’re going to see the 2010 election cycle on steroids in 2014. I really believe that. And I think that in 2016, you’re going to see a Republican President.
Let me add one thing to what Charles said. And we don’t disagree, actually, at all; I agree with everything that Charles said. The one thing we haven’t mentioned — and even more dangerous in my opinion, Charles, than the fiscal — the tax increase, which is, sure, dangerous, is what’s going to happen with Obamacare. And this is something that a lot of people aren’t focusing on. But this starts happening in 2013, and then 2014 it takes full effect.
Just to give you one example — I gave a speech earlier this week to about 300 business owners who run restaurants — they’re a franchisee. It was the international franchise. So they own McDonald’s and Burger King restaurants, and Applebee’s and Denny’s and stuff. These are the people on the frontline of the economy. And they are major employers in this country. They are terrified of Obamacare.
And they — a lot of them said — couple things they’re going to do. One is any business with 35 or 40 people — they are not going to hire a 50th worker. We have essentially put a cap on employment in this country, for firms, at 50. Because the marginal cost of hiring that additional worker, as all these Obamacare regulations kick in, is 10,000 percent. And so that’s one of the things they said. They said — we will be damned if we hire a 50th worker.
The second thing that a lot of them said — this is amazing — people think that businesses and investors don’t respond to taxes, that taxes don’t have an impact — because the Obamacare applies to workers who work 30 hours a week or more, guess what they’re going to do? They’re going to hire people at 20 hours a week, or 25 hours a week, or 29 hours a week.
So — I’m not kidding, this is an amazing story, Charles. So I talked to these two guys whose restaurants are literally across the street. One of them owns a Wendy’s, and the other one owns a McDonald’s. You know what they’re doing? They’re hiring the same workers. They work 20 hours a week at the Wendy’s and 20 hours a week at the McDonald’s, to get around Obamacare. I mean, is that amazing?
Charles Payne: Yeah.
Steven Moore: And we’re going to see more and more of that.
One last point about this — if you look at the employment reports over the last year — this is something we’ve editorialized a lot; I’ve heard you talk about it — but this message did not get across to the American people. Of the jobs that were created this year — I forget the number, I think we created about a million jobs this year — whoopee! You know, Reagan created one million jobs in one month, and Obama’s celebrating one million in a year. But here’s the amazing thing — of those million jobs that were created this year, more than two out of three of them were part-time jobs. And that’s because of Obamacare.
So I think this is — and by the way, one other quick thing — if you live in a state with a Republican governor, please, please, please put as much pressure on them not to create an exchange in your state. Opt out of Obamacare.
Charles Payne: In fact, I want to piggyback on what Steve said. Really, without any fanfare this week, the Census Bureau came out with a supplemental poverty report. Did anyone hear about this? I’m just shocked it was not talked about at all, even on Fox. The official poverty number — when they took into account things like commuting, childcare costs, stuff like that — for 65 and over, it doubled. For everyone — it’s almost 50 million people in poverty right now. And you start to break down the numbers — people working part time — that [number's] exponentially in poverty.
So to Steve’s point — and it’s so interesting, because I used to always say, during the election, you know, I wish Mitt Romney would figure out a way to connect the dots from his Bain Capital work and how it positively impacted just regular people. And for me, the show that does it is “Undercover Boss.” You ever watch “Undercover Boss,” you know these kids, these people — they need these jobs. They’re not well-paying jobs, but they take harsh abuse from management. They don’t move up, even though they have the skills to.
And those are the same people — there was a woman on one of these shows real recently who was the nicest person in the world. She had three kids, and she lived in a homeless shelter, even though she was working for this company. And the point is, the more and more people we force onto part-time work, which is about one third of the workforce, they’re going to be people really living in poverty.
And it’s a shame. Because here again, we’re talking about a gift that’s really a curse. All of these supposed gifts — you don’t deride the people getting them; they don’t know any better, and we all like gifts. You make them understand, once again, that this is going to keep you perpetually in poverty. Now, they may throw a free cell phone in there to make you feel better, but you’re going to be perpetually in poverty.
And as far as small businesses are concerned — businesses with less than 50 employees from October of last year to October of this year created 713,000 jobs. Think about that. What if all those jobs were wiped out? Not only would the unemployment rate be higher but Barack Obama may not have gotten elected.
These are the warriors. These are the people that are demonized and beaten up every single time the President gets to the podium. And yet, these are the real warriors in our economy. It’s not the large businesses who, by the way, continue to fire people and have an army of lawyers, and can keep $1.5 trillion offshore. It’s that small business that does all the hiring. And then, if you even want to be more specific, businesses with less than 50 employees.
So based off hiring, to Steve’s point, imagine this country with 713,000 less employees in the last year. From that million-dollar number — that’s [250,000] — 25,000 jobs — I mean think about the harshness of these numbers.
So once again, I agree, Steve, this Obamacare thing is just going to be an unmitigated disaster in every way possible, in every way possible. But my greatest fear is that initially all of this stuff will feel good to the electorate.
Now, of course, Obama won’t run again, they won’t have the charismatic vigor and that kind of stuff. But I do worry about people becoming so accustomed that you make poverty just comfortable enough that people don’t have the oomph to get out of it, the oomph to escape it. And again, that’s why I personally consider it a curse.
And I’ll just tell you, again, you know, when I was growing up, I always told people — yeah, I grew up in an environment of two Americas, you know, where you had two women with two kids; one woman worked, one was on welfare. One woman would get up, cook breakfast for the kids, get them off to school. And then she would get on a crowded subway to a job making barely more than minimum wage. And then, over the weekend, she’d look out the window, and she’s see her two kids playing with the other woman’s two kids, and she’d realize — wow, those kids have the same clothes that my kids have. We live in the same building. Sometimes they seem to even have more than I do. Why would I work? What the hell is wrong with me?
That’s the danger of all of this.
Steven Moore: You know, Charles, let me add something to this, because it’s a really important point. I want you all to realize the kind of economic illiteracy we’re up against in Washington from the other side. About six months ago, Steny Hoyer, who is the number-two Democrat in the House — he’s the, quote, conservative alternative to Nancy Pelosi — he was asked at a press conference what we could do to create more jobs for the US economy. Honest to God’s truth, I am not making this up, Charles — he said — the economists I listen to tell me the two most important things we can do to grow the economy now are to increase unemployment insurance and increase food stamps.
Now, folks, that isn’t just a stupid thing to say. That is scary stupid. I mean, it’s frighteningly stupid how these people think.
Charles Payne: Well, Nancy Pelosi has said that many times. They talk about the multiplier effect, and how it’s actually a positive thing. And again — here’s the thing — are you helping me, Nancy Pelosi, with the food stamps? Or am I just some sort of chattel, a conduit, to get the money and put it back into society? Do you sincerely have compassion for me?
But the fact of the matter is, you’re right, Steve, it’s amazing when you speak to a lot of these — and that’s leadership. Forget it, I get a chance to interview [somebody else] — and I’m kind of sitting there like — you got to be kidding me. You’ve got to be kidding me.
James Taranto: I call this job creationism — the idea that an all-powerful government just says let there be jobs, and there are jobs.
We’re coming to the close here. But let me ask a question about sort of the long term. You know, we have this problem of growing dependency. But we have an even bigger problem of the aging of the population. The baby boomers are retiring. They’re going to be dependent on Social Security and Medicare. Paul Ryan and others have shown how this is unsustainable over the long term. You add on these Obamacare commitments, and it may be unsustainable over the short to medium term.
How do you see that playing itself out over the next four years and beyond? Are we in for a convulsive collapse of the welfare state here?
Steven Moore: You go first, Charles.
Charles Payne: Ultimately, you know, they print money. And of course, we know that that just is going to hasten the real challenge of a completely worthless currency.
James Taranto: So buy wheelbarrow stocks.
Charles Payne: Yeah. Yeah. Or buy wheelbarrows and a gun, you know, and get yourself a bomb shelter.
It’s a heck of a thing. And you wonder when will — again, this is just like the fiscal cliff, but in a bigger sense, that — when do we get the epiphany? And after we’ve fallen off the cliff, and we’re kind of thinking before we hit ground — golly, I wish I’d done things different, or right before the precipice. Because I think this is the precipice. And the notion that somehow we can just switch it at the last second is just folly — which, by the way, is Ben Bernanke’s problem — you know, the idea that somehow he can just stop the threat of inflation 30 seconds before it happens.
So I’m not confident that the American public — to Steve’s point, actually — has the wherewithal to understand that changes have to be made. And again, I point to Europe as a cautionary tale. Portugal elected a center-right government. And a lot of these countries are now, last second again, and they’re off the cliff. They’re like — man, maybe we should change.
And they were going to institute a policy where people paid 18 percent to their Social Security fund instead of 11 percent, and businesses paid 18 percent into this general welfare fund instead of 23 percent. The idea, of course — businesses would have money now to hire people. And they were doing this as part of a bargain with the EU to get 76 billion euros in a bailout.
Well, the uproar was so incredible that the guy just said — oh, forget it. We’ll increase taxes on income. We’ll increase taxes on assets. We’ll increase taxes on gas emissions. I mean, again, these are things that kill — you want to talk about austerity killing an economy, these are things that guarantee you will not grow the economy.
So here’s a group of people that are already ahead of us. And they can’t get the wake-up call, even the hard way. So I’m very worried about it. And I don’t see how it’s not going to end in disaster right now, although I still think it’s avoidable with some serious, serious attention put on it.
Steven Moore: So I want to answer your question in a kind of different way, in terms of the long-term prospects for the economy. Because we’re running out of time, and I want to get this point across.
One of the most interesting things that happened in this election was that the blue states in America turned a lot bluer, and the red states in America turned a lot redder. So you have — I would make the argument economically, in terms of the way our economy works — there has been no time in American history since the Civil War era when one region of the country was so economically different from the other region of the country. So you have red-state America, which is basically the South, right? And then you’ve got states like Utah and Arizona and Idaho, states like that, that are extremely red.
In fact, you know, of the states that — the 24 states that Mitt Romney won, 12 of those states he won with over 60 percent of the vote. Meanwhile, you have the economic catastrophe states. You’ve got the Northeast, which is just calcifying. And then — how many of you in this room live in the state of California? Raise your hand. Do you people have any idea how much trouble you’re in? I mean, seriously. This is an incredibly dangerous situation.
And James, you’ve known me for a long time. Charles, you’ve known me for a long — I’m an optimistic guy, right? I’ve always been optimistic [on] America. But I am not optimistic about California. I think California is a total catastrophe. I think California is the Greece of America.
Charles Payne: Oh, absolutely.
Steven Moore: And you voted to raise your income tax rate to 13.3 percent, 13.3 — what?
Unidentified Audience Member: [They] voted to raise our taxes.
Charles Payne: Yeah.
Steven Moore: I should say the people of Los Angeles and San Francisco voted to raise your tax rate to 13.3 percent. The reason I’m making this point, though, is — I believe what we’re going to see over the next — a trend that’s been happening over the last 20 years — it’s going to incredibly accelerate over the next 10 and 20 years — is red states are going to get really, really rich; and blue states are going to get really, really poor. And my one advice to you, from an investment standpoint — and I’m not very good at this; Charles is much better — buy real estate in states like Texas, Tennessee, Florida, New Hampshire — the states that are red. Because those are the states going to grow.
In the last four years — just one amazing statistic — California has lost 500,000 jobs; Texas has gained 500,000 jobs. You’re seeing almost a one-for-one replacement of jobs from California to Texas. And I worry about California. Because California — if you look at the last four or five recessions we’ve had, California’s always been the state that’s led us out of the recession. Now California has gone from being a — and correct me if I’m wrong about this, David — but it’s gone from being a sail to the US economy, a place where innovation happened; to a place that has become a complete anchor.
And so I’m very worried about that. If you live in California, get the hell out of there as soon as you can.
Charles Payne: They might.
James Taranto: Steve, I’ve followed your advice, actually. Two months ago, I bought an apartment here in Florida. And then Florida went for Obama.
Steven Moore: Oh, well.
James Taranto: I think we’re about out of time here. It’s 9:03. Unless –
Unidentified Speaker: We’re going to take two –
Steven Moore: Two questions.
James Taranto: Okay, we’ll take two questions from the audience. Why don’t we start right up here? Is there a microphone, or –
Unidentified Speaker: No, if you could just repeat –
James Taranto: I’ll repeat the question, okay.
Unidentified Audience Member: My heart is pounding so hard.
(Inaudible) plagues me why we’ve done this entire discussion. And there’s never been an acknowledgement of the fact that what we’re up against here are two models.
James Taranto: Right.
Unidentified Audience Member: One if the Marxist model. One is the capitalist republic model.
James Taranto: Right.
Unidentified Audience Member: You talk as if it’s this inadvertent thing that’s happening. They’re doing this policy, you can’t understand why they’re doing that, and they’re doing that. Don’t you agree with me that this is deliberate? This is what –
Charles Payne: Well, I think that’s the first thing I said. I said that this is punitive, this is — oh, I’m sorry, go ahead.
James Taranto: The question is — isn’t the left-wing economic policy an attempt at a Marxist takeover?
Unidentified Audience Member: I’m saying don’t you agree that this is what the American people have to be educated about? We have to be bold enough to use the word “Marxist.” We have to come out to say Islamofascism for our enemy abroad (inaudible) –
Don’t you agree that this (inaudible) we want to educate the American public about these two models, and we don’t want to choose that [word]?
Charles Payne: Well, first of all, the first thing I said was that this is all punitive, not economic. So I think I was saying what you are saying.
Unidentified Audience Member: (Inaudible).
Charles Payne: Well, listen, in your world, in your neck of the woods, and with your friends, that word resonates. And Romney just being able to toss out the word “Greece” in a debate without explaining to people what it meant resonated. To be able to toss out “Solyndra” without explaining what it meant resonated. Just throwing out certain words can backfire when the media can make you look like a kook. I mean, if you don’t have the time and the platform — and you have to create those by the way — to explain exactly what it means, just tossing out the word — listen –
Unidentified Audience Member: No –
Charles Payne: — the most recent Pugh survey showed that young adults, young people in America, prefer socialism to capitalism. So if you say this guy’s a Marxist, they’re going to go — that’s my man!
He’s got my vote! Are you kidding me? You can’t do it, you just can’t do it with labels. You have to really –
Unidentified Audience Member: They don’t know what Marxism is.
Charles Payne: Right.
Unidentified Audience Member: If we educate them –
Charles Payne: Well, the greatest education is to show all these countries that have tried this in the past, and in the present, and that are completely collapsing along with the state of California.
Steven Moore: Look, I agree with that. And look, I have this new book that just came out, called “Who’s the Fairest of Them All?” And it’s really meant to kind of — the word “fairness” is a perfect example.
Charles Payne: Right.
Steven Moore: The Left has kind of walked off with that term as if their policies are fair and ours are unfair. Well, wait a minute — if you look at — if you think about this, I mean, the whole — I don’t want to spoil the ending of the book, because I want you to buy it.
Stimulate the economy; buy that book. But you know, the point of the book — and it just shows it very clearly, and this is not anything that anyone in this room doesn’t know — the fairest system of all that creates the most wealth, that allows people to escape from Harlem to move to Beverly Hills — that system, that fairest system, is the free enterprise system. By the way, I think much better term than capitalism is the free enterprise system. Because I think it’s something that Americans instinctively believe in.
James Taranto: All right, one more question. The gentleman way in the back here?
Steven Moore: Louie Gohmert! My favorite guy –
Charles Payne: You get to ask the questions today.
James Taranto: I thought you looked familiar.
Louie Gohmert: (Inaudible) Steve, you were saying we should cut spending six to eight percent?
Steven Moore: As a start. As a start.
Louie Gohmert: Yes. Well, actually, Congress does not have the courage. [But] we had the moral authority, because we cut our own budgets in the House five percent two years ago, six percent last year. And I keep telling our wonderful, illustrious speaker, who now doesn’t care for me at all –
Louie Gohmert: — we had the moral authority to demand 11 percent cut from every department, every agency, in the government. Because we’ve done it now. And we should be doing that. It’s stupid not to.
But my question is — you know, Trump has said we ought to add a 25 percent tax or tariff on everything we buy from China, and our economy would be fixed. What do you think, instead of doing that, if we eliminated the 39 percent tariff that we add to every good or service produced by a company in America? What would be the effect?
Steven Moore: So, sorry, I couldn’t quite hear the end of that.
James Taranto: He said — I’m not sure I understand the question –
Steven Moore: I’m not sure I understand the tariff –
Louie Gohmert: Yeah, there’s a 39 percent tariff that American government adds to every good or service produced by a company in America.
Steven Moore: Oh, and that’s [our] corporate –
Louie Gohmert: You know it better as a corporate tax.
Steven Moore: Right, right, right.
Louie Gohmert: But it is a tariff on every American good and service. What would be a –
Steven Moore: Well, Louie, it’s a great point. And you and I have talked about this many times. I’m not going to belabor the point; I’d simply say this — that to be in favor of our current corporate income tax structure is unpatriotic. I mean, it’s not just bad — I mean, truly, it is — when you talk about outsourcing — and, ladies and gentlemen, I hate it when American firms outsource jobs to Mexico or Korea, or China or India — I hate it. You cut me, I bleed red, white and blue. If you want to stop the outsourcing, get rid of the corporate income tax, get rid of the capital gains tax, get rid of Obamacare.
Why couldn’t Mitt Romney say this in these debates? Why couldn’t he say it’s the Left’s policies that are leading these — you know, when you talk to corporations, they tell you, ladies and gentlemen, we have a 40 percent corporate tax rate, when you include states. And the rest of the world is at 25 percent. This is a head-start program for every country we compete with. Why would we do that? I mean, why would we shoot ourselves in the head?
We have to eliminate the corporate income tax entirely, in my opinion. Because it is just a millstone around the neck of this economy.
Charles Payne: And you know, I got to tell you, sadly, I think the election of Elizabeth Warren is going to take us –
Steven Moore: You’re spoiling my day! I was just –
Charles Payne: You know what, though? I tell you, you know, because she was the one who was sort of — any football fan knows, on the kickoff, the team that gets the ball sort of forms a wedge. And they try to advance it up the field. And the other team has one lunatic they call the wedge-breaker. His job is not even to make the tackle. It’s just to run as hard and as fast as you can and dive into that wedge. And she was the wedge-breaker on this kind of stuff. She is the wedge-breaker. And later on, Obama picked up on the idea that “you didn’t build that.” And if you think corporations have it hard now, you know, forget about it. That’s the one-two punch, the wedge-breaker, and the kingmaker — forget it. But I agree.
Also, another thing the tax is — that the repatriation of corporate profits is — I don’t think people understand how bad this is. We’re the only developed nation that taxes and penalizes companies for doing business overseas.
I’m not talking about sending jobs overseas; I’m talking about taking advantage of a global economy which, by the way, is doing amazing — Russia with five percent unemployment, Indonesia, Turkey, Brazil — we want Caterpillar to sell products down there. We want Whirlpool to sell to South Americans all these refrigerators. Because not only — they’re ambassadors to America, but also we would allow them to bring that money back.
One and a half trillion — let’s just say they brought back two or three — 200 billion, 300 billion. A third would go into dividends. But we’d probably get something on the order of $150 billion stimulus plan that costs everybody in this room zero. Zero. It adds nothing to the deficit. But it’s again that hatred, that anti-profit motivation, that keeps this kind of stuff going.
So to your point, sir — obviously, you know, we agree with you. But the idea in the campaign — the dual campaign, not just for President and local offices, but the dual campaign against Corporate America — which went on the last four years also — this was the part — corporations aren’t people. You’re trying to set them up with the idea that, you know what, we can gut these things without hurting anyone. That’s why they say corporations aren’t people. You know, in other words, we can sort of — we can drop a strange kind of neutron bomb on these things, where we kill the corporate profit but the people are left standing.
And this is what the American public — this is a campaign — by the way, they’re always ahead. They been doing this for a few years, and it got momentum.
So I agree with the 39 percent. But I actually worry that they’ll try to make it worse, not better.
Steven Moore: I know we’re over time. I’m going to make one really quick point, though, because it’s relevant to this. There is an easy way we could raise a trillion dollars a year — drill, baby, drill.
I mean, if we went for our natural resources — and by the way, Louie, I would love to see you and Michele introduce a bill where we eliminate our corporate income tax and make up with that revenue by drilling.
I was just out in North Dakota last month. Guess what state in the United States has the lowest unemployment rate? They’ve got a negative unemployment rate in North Dakota, they have so many jobs. Even the strippers from Las Vegas are moving to North Dakota, there’s so many jobs.
We can create a million jobs in this country and create a trillion dollars of revenues per year for going after our coal, our oil and our natural gas. That is the future for America. It’s one reason to be really optimistic about this country. We got more oil in North Dakota than Saudi Arabia has oil. So it’s a great, great story. We ought to go after it and use that money to reduce our deficit.
Charles Payne: Yeah. I agree.
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