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Roundtable Reviews Candidates Tax Plans

Roundtable Reviews Candidates Tax Plans

FOX News Special Report With Brit Hume - September 10, 2008

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN, (R) PRESIDENTIAL CANDIDATE: I'll keep taxes low and cut them where I can. Senator Obama will raise them.

My friends, my tax cuts will create jobs. His tax increases will eliminate them.

OBAMA: Let me tell you something. I intend to cut taxes for 95 percent of the American people--95 percent of you will get a tax cut.

(END VIDEO CLIP)

HUME: Well, maybe. But there is a little problem with that, because about 40 percent of the American public pays no income taxes at all. So there is a fact question here.

Mort, you are the wonk here. Who is right here?

KONDRACKE: He will give a lot of tax credits out. That's what he means.

HUME: To people who don't pay taxes.

KONDRACKE: They don't pay income taxes, but all workers pay payroll taxes.

HUME: But these are income tax cuts.

KONDRACKE: All right, they are income tax rebates, I think is a fair way-

HUME: Or bates. You can't rebate something that hasn't been bated yet.

KONDRACKE: In any event, he is definitely going to give money-that's what this is. It's redistributionism, and it's Keynesian. The theory behind what Obama is all about, his economic plan, is pure Keynesianism. He is going to spend a lot of government money, invest it, and some of it legitimately in human capital and in infrastructure, and going to redistribute income from the rich to the poor.

McCain, on the other hand, has turned into a supply-sider. He wasn't one when Bush first introduced, but now he is going to have even bigger tax cuts than George Bush had.

In fact, according to the Tax Policy Center, he's going to lower the tax revenues of the federal government to 16.8 percent of GDP, the federal government now spends 20 percent of GDP on stuff. So you're going to have to slash domestic spending like crazy in order to balance the budget or you will have a huge deficit.

HUME: And do the tax increases that Obama proposes cover the spending that he is proposing?

KONDRACKE: No, they don't. Obama is going to spend a lot more money than he is going to take in, especially--

HUME: So is this one of these arguments where each side is arguably correct and arguably incorrect?

SAMMON: You know, it depends on what your ideology is. If you believe in supply side economics, and the Tax Policy Center says that he could improve efficiency, McCain, but he will also increase the deficit by a lot.

KRAUTHAMMER: What Obama is calling a cut in that clip is essentially the government sending a check of between $500 and $1,000 to all Americans except the top five percent.

Now, if you aren't paying taxes because your bracket is low, you are getting a check. If you are, the check is in the form of a credit, and it reduces your income tax.

Normally if you say "I'm cutting taxes," it is a cut in rates. This is not a cut in rates. This is a check. In other words, it is what we called earlier in the year a "stimulus package," and that is spending. It is not a tax cut. It's a clever way for a Democrat to increase spending that is essentially a handout and call it a tax cut.

So it is--I think it's a fraud. If you want to say that people of low income ought to get a check, OK, and let's argue about that. But if you are calling it a cut, people assume it is a cut in taxes. It's not. It's a giveaway.

SAMMON: Critics call it "welfare." That's the word for it. If 40 percent of the earners aren't paying any taxes and you give them a $500 check, it is arguably fair to call that welfare.

The other thing to remembers is that Bill Clinton in `92 campaigned explicitly on a promise for a middle class tax cut, got elected, and said "Now that I have had a chance to look at the books, I think we're going to raise taxes," and raised taxes across the board on the middle class.

And the final point is that it's not --

HUME: He also raised rates on people in upper income brackets, too.

SAMMON: Right. But he promised a middle class tax cut and turned around and raised taxes on the middle class.

But it's not just the Democrats. Even under the Bush presidency, they have made the tax code more progressive, which is to say made a bigger percentage of people who don't pay any taxes and put a disproportionate of the burden on upper income earners.

I once asked Josh Bolten when he was the director of budget over there at the White House, is this really something you're proud of as a conservative Republican administration? He said we don't get that question that often from reporters. I said, yes.

For more visit the FOX News Special Report web page.

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