Senator Mike Crapo said in an interview on Bloomberg Television’s ‘Political Capital with Al Hunt,” airing this weekend, that President Barack Obama’s $447 billion jobs proposal is discouraging because the administration is relying on unaffordable spending initiatives rather than more fundamental changes in economic policy needed to battle joblessness.
(This is not a legal transcript. Bloomberg LP cannot guarantee its accuracy.)
AL HUNT: We begin the show with Senator Mike Crapo of Idaho, who joins us here in the studio. Thank you for being with us today, Senator.
SEN. MIKE CRAPO (R-ID): Thank you, Al. It’s good to be with you.
HUNT: Let me start off by asking you about the president’s Thursday night address to Congress, his jobs initiative, your impression. Did he do well? Did he make sense?
CRAPO: Well, I think he gave an incredibly powerful speech, but, frankly, I was discouraged by it for a number of reasons. It continues to look at temporary solutions that are very expensive, continues to try to spend our way into a prosperous economy. And, frankly, on a number of other fronts, the president seemed to be very resistant to the kind of fundamental economic and fiscal reforms that I think are the kinds of things that we should be pursuing.
HUNT: What - what was he resistant to, for instance?
CRAPO: Well, I interpreted his remarks about regulatory reform to be pretty much, no, we’re not going to do it.
CRAPO: We’ve got a little bit going on, but that’s about it. And I think that’s one of the biggest problems we face right now, with uncertainty in the economy and in the business world.
HUNT: How about the payroll tax proposals he made last night, both for small business and for employees? Should they be enacted, extended for a year?
CRAPO: You know, the payroll taxes are something that I’ve supported in the past, and I think that they could be extended, as the president has proposed.
HUNT: And increased.
CRAPO: And increased, actually. He’s extending to the employees, as well as the employers. And I don’t disagree with that, because I do believe that that’s something that can be helpful in the small business arena and, frankly, with individuals, as they deal with incredible troubles right now.
I don’t believe it’s the kind of fundamental reform of our tax code and our economic policy that we really need to begin aggressively pursuing.
HUNT: And how about short term? Is it desirable or not, the aid to states to prevent layoff of teachers and the stuff for veterans?
CRAPO: Well, it’s a good idea, except that it’s so expensive.
CRAPO: And what we have seen is that, over the last - well, since the president took office, we’ve had added $4 trillion to our national debt, and we’ve lost 1.7 million jobs, trying to spend our way into it with the government support of this kind. And we’ve got to ultimately realize that we really, truly need a paradigm shift in our fiscal policy.
And what the president’s proposals last night were, for the most part, amounted to - they amounted to adding about $450 billion of new spending over the next couple of years and then trying to offset it over 10 years by stalling the effort we have to reduce the deficit.
HUNT: Now, the president said it would all be paid for under his proposal, but he would insist that the super-committee and then Congress pay for this additional $447 billion. Is that a pipe dream?
CRAPO: Well, it’s a pipe dream, and it’s also a discouragement, for this reason. It’s a pipe dream in the sense that he’s proposing to do the pay-fors over 10 years, but the spending is happening over two.
CRAPO: And we need to remember that. But even more so, the way he said he wanted to do it was that he said he wanted to just add this on top of what the joint committee that’s now working on the debt crisis solution is working on. And the reason that’s discouraging is because he appears to be saying that, if we meet the minimum target of about $2 trillion to $2.5 trillion of the debt ceiling debate conclusion, that then we can start spending again.
But the problem is that that was a very minimal solution dealing with the extension of the debt ceiling. We need to be hitting about $4 trillion to $5 trillion of deficit reduction over 10 years before we can really just keep our head above water and start developing those fundamental reforms that I talked about earlier.
HUNT: What are the odds that the super-committee is going to come up with something?
CRAPO: Well, you know, I’ve been asked that question many times, and I don’t have a good answer. I pretty much say, if you look at the traditional politics in America, which are still in play, it’s hard to see how - how the committee gets somewhere, because we’ve had so many efforts at it in so many different contexts. That being -
HUNT: But you succeeded (ph) in the Gang of Six.
CRAPO: Yeah, but that’s what I just about to say. There are - the reasons to succeed are so powerful and so compelling and so imminent right now, in terms of the impact in our economy, that I believe that this committee truly not only has an opportunity, but has the capacity to do something big. And there will be a lot of us who will be advocating that and helping to build the pathway for this committee to be a success.
HUNT: But, Senator, you also were on the Bowles-Simpson commission and looking at both of that, the Bowles-Simpson and at the Gang of Six. The one thing that happened is that there were sufficient numbers of people from the Democrats, the left, if you will, who gave on entitlements against the base of the party, and there were sufficient number of Republicans like you who, however distasteful, gave on higher revenues against the base of the party. You’ve got to do both to get something done, don’t you?
CRAPO: You really do. But I want to clarify that, because on entitlement reform, that’s straightforward. We need to get in and do the kind of fundamental reform that will help us to change the spending lines.
On tax policy or revenue policy, it gets a little bit complicated, because we truly can generate more revenue to the federal government by the kind of basic tax reform that the commission and the Gang of Six proposed. And we can actually achieve that in a revenue-neutral way at the outset, but grow the economy.
HUNT: But both Bowles-Simpson and the Gang of Six would result in net revenue increases. They are very clear that we’re going to have to increase taxes some, tax reform, too, and that may produce more revenue down the road, but we’re also going to have to increase taxes.
CRAPO: Bowles-Simpson did. The Gang of Six had proposed that we utilize dynamic scoring as we create the revenue - the rate reductions. And I personally think that it could have been achieved, that the revenue would have been higher and the tax rates could have been maintained.
HUNT: But here’s what Barack Obama says. Hey, I’ve given on entitlements. I’m - he said last night, I’m willing to cut the spending on Medicare. The Democratic base doesn’t like that. And then he says, not a single Republican leader in Congress or a single Republican presidential candidate is willing to do the same thing on the other side of the equation.
CRAPO: And - but he always brings it back to making the wealthy pay their fair share -
CRAPO: - and saying that his proposal is raising taxes. And - and, again, whether it’s the Gang of Six or the Bowles-Simpson commission, they did not raise taxes. They reduced the tax rates and, in the Bowles-Simpson case, they didn’t reduce them in an entirely equal amount to the reduction of the tax expenditures. In the Gang of Six process, we were adjusting that to try to achieve the utilization of dynamic scoring and get there.
But the point is, the president continues to focus on raising taxes. And that is not the solution - I don’t support that. And I don’t think that there will be prominent support for that.
HUNT: But weren’t you disappointed when the Republican presidential field all said they wouldn’t support any kind of package that cut spending by $10 for every $1 of revenue increase? Didn’t that disappoint you?
CRAPO: I was not disappointed in the sense that they were all holding firm on saying not raising taxes. But I was disappointed that they didn’t focus the debate on the kind of tax reform that will generate greater tax revenue. And that’s what, I believe, is going to be the ultimate solution here.
HUNT: Who do you expect to be the Republican presidential nominee? Who would be the best candidate for the Republicans?
CRAPO: Another tough one. I have not endorsed anybody yet, because I’m waiting to see who I think is the one who can win next November, a year from now.
CRAPO: And I haven’t made in my own mind a strong conclusion about who that will be. I think that right now we have a number of strong candidates. Obviously, Perry and Romney are the two who are appearing to emerge right now. But I always remind people that this kind of - it’s - this early in a -
HUNT: It is early.
CRAPO: - in an election cycle, people can move around a lot.
HUNT: Of those two, does one seem more electable as of today?
CRAPO: I would think Romney may be a little more electable, but I don’t know. And, frankly, I have to say, I don’t know Perry very well, but that’s just my initial thought about it.
HUNT: You will have a lot of time to learn it, I expect.
CRAPO: That’s right.
HUNT: Senator Crapo, thank you so much for joining us today.
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