In conversations with Maria Bartiromo, the Presidential hopeful talks about his plans for taxes and charges that he lacks experience
Barack Obama is arguably the most sought-after person in America—with the possible exceptions of soccer star David Beckham and Kristen, the call girl in the Eliot Spitzer scandal. So trying to secure an interview on the economy with the senator is about as easy as getting 15 minutes with Alexander Hamilton. Finally on Mar. 27, after Obama delivered an address on the economy in New York, I sat down with him and asked him to plug some specifics into his grand plans for change. Then we talked further by phone on Apr. 2. What appears below is an edited version of both those discussions, including portions of the initial interview that aired on CNBC. Since we first talked, the calls for Senator Hillary Clinton to stand aside and cede the nomination to Obama have grown louder. But as of press time on Apr. 2, the bruising contest showed no signs of ending.
Critics might say we're in dicey economic times. We need a President who is going to hit the ground running. How are you going to convince critics who say you lack the experience of some of your colleagues on the campaign trail?
Look, there are only three candidates left: myself, Senator Clinton, and Senator [John] McCain. None of us has run a business or been President. And so when it comes to economics, the experience all three of us have must be assumed from our policies and the people we have around us. And if you look at some of the people who support me, whether it's Paul Volcker or Warren Buffett, these are not people who would support [me if they didn't think I] had what it will take to manage this economy. And when you look at my approach to the economy and how I've talked about it over the course of not just the past year but since I've been in public office, you'll see that I've been ahead of the curve. I gave a speech in September warning that the problems that we were seeing on Main Street were going to have an impact on Wall Street.
How high will you raise the 15% capital-gains rate?
I haven't given a firm number. Here's my belief, though: We can't go back to some of the confiscatory rates in the past that distorted sound economics. And I certainly would not go above what existed under Bill Clinton, which was 28%. It would be significantly lower than that. But I think we can have a capital-gains rate that is higher than 15%. When I talk to people like Warren Buffett or others and ask them how much of a difference a 20% or 25% [rate is going to make], they say: "Look, if it's within that range, then it's not going to distort economic decision-making."
But it's not just the Warren Buffetts of the world who own stocks. Let's say the cap-gains tax goes from 15% to 25%. That will have an impact on a lot of people.
That's why I think that maybe you could structure something in which people with certain incomes would stay at 15%. The broader principle is making sure we've got a tax code that is fair for all Americans. It is not unreasonable to say that those of us in the upper brackets have benefited disproportionately from a globalized economy and those benefits have been compounded by the Bush tax cuts. We can take a look and see how we can exempt people who own stock through 401(k)s or pension funds while still making sure that those who have been the primary beneficiaries of economic growth over the last decade and have seen their incomes skyrocket are paying a fair share. What we're talking about is going back to the tax structure during the '90s. Rich people were still rich. But we had a more balanced budget and as a consequence could sustain economic growth. For us to roll back some of those tax cuts and put this economy on a more stable fiscal footing…that is actually good long term for our economy, for investors, and Wall Street.
The pattern we're on right now—having added $4 trillion worth of debt in the name of our children and our grandchildren and borrowing from China, South Korea, and Mexico, as well as the oil-producing states—that's not a recipe for long-term economic growth. And look, I would prefer lowering taxes for everybody, including myself. But it wouldn't be the responsible thing to do. You can't fight a war that is costing $10 billion a month, rebuild our crumbling infrastructure, educate our kids to compete with China and India, make sure that our senior citizens aren't wasting away, and still eliminate taxes for the wealthiest Americans. You can't do all those things at once. You've got to make choices.
What about the top marginal rate for ordinary income?
What I've said is that we should go back to probably a top marginal rate of 39%—what it was before the Bush tax cuts. I would not increase taxes for middle-class Americans, and in fact I want to provide a tax cut for people who are making $75,000 a year or less. For those folks, I want an offset on the payroll tax that would be worth as much as $1,000 for a family. I don't want senior citizens who are bringing in less than $50,000 a year to have to pay income tax on their Social Security. And I want to provide an additional 10% mortgage deduction, a mortgage interest credit, for those who currently don't itemize. Because if you live in a house that's pretty expensive, like I do, and I itemize, I get a pretty big break from Uncle Sam. If you own a $100,000 house, and you're making $65,000, $75,000 a year, you're not getting that same deduction. I think that will actually help relieve some of the pressure on homeowners.
Why raise taxes in a slowdown? Isn't that going to put a further strain on people?
There's no doubt that anything I do is going to be premised on what the economic situation is when I take office next January. The thing you can be assured of is that I'm not going to make these decisions based on ideology. I'm not a dogmatist. My opponents to the right would like to paint me as this wild-eyed liberal, but I believe in the market. I believe in entrepreneurship. I believe in capitalism, and I want to do what works. One of the problems with the Bush Administration has been its rigidness when it comes to economic policy. It doesn't matter what the problem is, they'll say tax cuts. Trade deficit? Tax cuts. Slowdown in manufacturing? Tax cuts. At a certain point, if you've only got one arrow in the quiver, you're going to have problems.
Tell me how you've been managing your campaign and how that relates to how you'll manage the White House.
My basic approach to leadership is to hire very good people, set a clear vision for where I want the organization to go…then give people a lot of power to do their jobs and hold them accountable for doing them. I said early on that I wanted to have a cooperative atmosphere. I didn't want a lot of drama. I wanted to focus on building a broad-based network of support rather than just relying on all the usual suspects in politics. We put together a budget, and we stuck to it. We've put together clear objectives and we've achieved them. So I think it's fair to say that having started from scratch and competing against organizations built over 20 years—including an organization built by a former President—we have outperformed the others in terms of fund-raising, volunteer participation, votes, and states won. And we've done so without a lot of turmoil or turnover. And I think it should give people some confidence that I know how to manage a team.