Representative Fred Upton, a Michigan Republican, said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend, that he expects the U.S. Congress to agree on legislation to extend a payroll tax cut and unemployment benefits before the end of the year.
(This is not a legal transcript. Bloomberg LP cannot guarantee its accuracy.)
AL HUNT: We begin the show with Congressman Fred Upton, Republican chairman of the House Energy and Commerce Committee. Thank you for being with us, Mr. Chairman.
REPRESENTATIVE FRED UPTON: It’s Fred, Al. How are you?
HUNT: All right, Fred. Thank you. It’s good to be here. Congress is rushing to adjourn before Christmas. Will you resolve the payroll tax holiday and unemployment benefits controversy in order that - before you get out?
UPTON: I think we will. My sense is - and it’s still a working project, as we talk now. The keys, particularly from the Republican side, are that these have to be paid for.
UPTON: We’re not going to increase the size of the deficit.
HUNT: Will you compromise on that with some of the Democratic demands? I mean, is there a middle ground?
UPTON: Well, I’m not sure - well, you know, the Senate this last week, they had two competing proposals. Neither one of them passed.
UPTON: So I think -
HUNT: So you still think some sort of compromise -
UPTON: - what emerges from the House -
HUNT: - is likely?
UPTON: Yeah, but the bottom line is that they’re going to be paid for. It’s not going to be just off we go and we’re going to increase the size of the deficit or hurt the trust fund.
HUNT: This is a political question, but the Democrats appear to have won the fight politically. The most prominent conservative blogger, Erick Erickson, says he’s astounded, quote, “Democrats are outmaneuvering Republicans on a tax cut and that poll after poll show that Republicans are siding with the rich.” Now, aren’t you politically losing this battle?
UPTON: No. I mean, from - again, from our perspective, they have to be paid for. This is a tax cut that expires that hurts working Americans, you know, pretty sizable amount, $1,000, $2,000 bucks, depending on how much people earn. And it - the impact is in January, and our leadership is committed to extending the tax cut, not raising taxes, therefore, but finding -
HUNT: But to pay for it.
UPTON: - but finding the offsets.
HUNT: But you don’t think the other side’s -
UPTON: And I think -
HUNT: - won the political battle?
UPTON: Well, the Senate bill - remember, there’s been no bill yet in the House. But at the end of the day, that is the proposal that will emerge in the House that the Senate then will have to consider -
HUNT: This brings up -
UPTON: - they’ve not done yet.
HUNT: - the overall question of the deficit. You were a member of the supercommittee. It didn’t succeed. That means, you know, over $1 trillion of cuts are supposed - automatic cuts are supposed to take place in a little over a year. Will they? Or will they be diluted?
UPTON: No. They - it - by the supercommittee not reaching an agreement, we have the automatic sequester that comes in, $1.2 trillion in cuts. Those will stick.
Now, we’re going to be looking at the defense and the non- defense side of the ledger, because, remember, it’s equal on both sides, and there will be a debate over the next 12 or 13 months looking for changes - I mean, no one really wants these automatic cuts to come into place -
HUNT: So the cuts will take place, but there may be a different -
UPTON: But there will be an opportunity for us to change those with elements of a variety of different things.
HUNT: OK. Tell me this. If you’re unable - you’re unable to agree - you certainly -
UPTON: By the way, remember, the bottom line was that $1.2 trillion in deficit - debt reduction really does occur, one way or the other, either with the automatic across-the-board cut or, had the super-committee found an alternative, that it would have equaled the $1.2 trillion, as well.
HUNT: If Simpson-Bowles, which was a compromise between competing claims, got support from Republicans and Democrats, if that were put in a - up for a floor vote right now, would you vote for it?
UPTON: I don’t know, because it’s not been scored, I don’t believe, by the CBO. There were some numbers there that were a little bit fudged, as I understand it. It was - for me, I want the debt to go down. The Simpson-Bowles was a larger plan than the minimum that was sought by our committee. We actually met with a number of the Simpson-Bowles members. It can be part of a base.
I mean, at the end - you know, as I look at solving this debt situation - and we have to do it. It didn’t come up overnight. It happened over a long period of time - we have to look at where there is common ground. That’s what Simpson-Bowles tried to do. Frankly, that’s what the supercommittee tried to do, as well.
And I’m - you know, we came close. We came close. And - but it’s not all for naught, because even looking at this debate that we’re having now on the payroll tax extension, we’re looking at a number of different proposals that, in fact -
HUNT: So some of that -
UPTON: - the supercommittee worked on. And really, I think you’ll see some agreements down the road. Corporate tax reform, I’ll tell you, Dave Camp, the chairman of Ways and Means Committee, Max Baucus, most of us on the supercommittee realize that we want corporate tax reform, we want to lower the rates, we want to flatten them, and we want to eliminate a number of the different loopholes or deductions.
HUNT: But you don’t want net tax increases, and you’ve resisted tax increases on the wealthy -
UPTON: Well -
HUNT: - because you say - and I think this is fair - these are the job-creators and so don’t destroy jobs. Let me read you - you know, there’s a guy named Nick Hanauer. He’s a billionaire entrepreneur Internet investor. He wrote a column for Bloomberg about it. He said, “Rich people don’t create jobs. Middle-class consumers are far more job creator than I’ll ever be. And since 1980, fat cats like me have made out like wild. We ought to help the middle class.”
UPTON: Well, remember, half of the small businesses - and small businesses create more jobs than anybody else - half of small businesses file as individuals. So what the Toomey proposal did - and Toomey was a member of our supercommittee -he looked at locking in the current tax rates, or lowering them, but eliminating a number of the different loopholes or deductions and, in fact, generating more revenue.
One of the things that I believe that - you know, as you look at the whole equation, I wasn’t opposed to raising more revenue by having more people work. That was the key, getting people back to work, paying the taxes, and helping to lower the deficit.
HUNT: Why under those pre-Bush tax cut tax rates did the economy do so well in the ‘90s? And why under the Bush tax rates, less for the wealthy, to do so poorly in this decade?
UPTON: Well, a couple things. One, spending went up, Al, the wars. I mean, that’s trillions of dollars. And also there was no change in the entitlements. And we also know -
HUNT: But that shouldn’t hurt the economy. That shouldn’t hurt economic growth.
UPTON: Yeah, but that impacts the debt and the deficit.
HUNT: But I’m asking, why did the economy grow a lot? Why were more jobs created in the previous decade under higher taxes than in this decade under lower taxes?
UPTON: I don’t know specifically the answer to that question. I can - I can maybe merit a guess. But, I mean, in large part is because our job - we lost jobs. I mean, look at the jobs report that came out this last week, three-hundred- some-thousand people actually stopped looking for jobs.
HUNT: Your state of Michigan went through the roughest of times -
UPTON: We are still in the roughest of times.
HUNT: - but you’re coming back. The autos are really doing better. Was Barack Obama right or not in the auto rescue plan of 2009?
UPTON: The auto rescue plan was led by a bipartisan member - every member of the Michigan delegation, Republican or Democrat, helped with the autos.
HUNT: So it was the right thing to do?
UPTON: It was the right thing to do, because - and looking back now in hindsight, not only was the money paid back, you know, most - a lot of the interest was paid, too.
HUNT: So your two major -
UPTON: They wouldn’t have survived.
UPTON: We’ll see. I mean, at the end of the day, by the auto companies surviving - and, remember, that even the companies that did not receive the auto money - Ford, as an example - they argued in support of the effort for Chrysler and General Motors, because they use the same suppliers.
UPTON: They couldn’t build the cars that they build today had the parts suppliers that provide parts for all of them - Toyota and Honda, as well - they wouldn’t have survived.
HUNT: It’s not going to be - it’s not going to be a plus for Romney or - or Gingrich next year?
UPTON: They are both - in Michigan, because of our overall economic climate, any Republican candidate is looking actually pretty good in Michigan. And Michigan hasn’t gone for a Republican since 1988.
HUNT: Fred, thank you so much for being with us.
UPTON: Al, always good to be with you.
***END OF TRANSCRIPT***
THIS TRANSCRIPT MAY NOT BE 100% ACCURATE AND MAY CONTAIN MISSPELLINGS AND OTHER INACCURACIES. THIS TRANSCRIPT IS PROVIDED “AS IS,” WITHOUT EXPRESS OR IMPLIED WARRANTIES OF ANY KIND. BLOOMBERG RETAINS ALL RIGHTS TO THIS TRANSCRIPT AND PROVIDES IT SOLELY FOR YOUR PERSONAL, NON-COMMERCIAL USE. BLOOMBERG, ITS SUPPLIERS AND THIRD-PARTY AGENTS SHALL HAVE NO LIABILITY FOR ERRORS IN THIS TRANSCRIPT OR FOR LOST PROFITS, LOSSES OR DIRECT, INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THE FURNISHING, PERFORMANCE, OR USE OF SUCH TRANSCRIPT. NEITHER THE INFORMATION NOR ANY OPINION EXPRESSED IN THIS TRANSCRIPT CONSTITUTES A SOLICITATION OF THE PURCHASE OR SALE OF SECURITIES OR COMMODITIES. ANY OPINION EXPRESSED IN THE TRANSCRIPT DOES NOT NECESSARILY REFLECT THE VIEWS OF BLOOMBERG LP.