Obama vs. McCain on Fiscal Responsibility

(photo by LA Times)

Now that I’m on a better internet connection and have found a better transcript to work from (courtesy of CNN), I thought I’d do a better side-by-side on the two candidates’ references to fiscal policy in their Saturday evening interviews with Pastor Rick Warren.  This is what interests me way beyond the “cone of silence” controversy.

Here is the exchange between Pastor Rick and Senator Obama on tax policy and what defines “rich” (my emphasis added, and my edits in italics):

WARREN: OK. Taxes, this is a real simple question. Define rich. [ laughter ] I mean give me a number, Is it $50,000, $100,000, 200,000? Everybody keeps talking about who we’re going to tax. How can you define that?

OBAMA: You know, if you’ve got book sales of $25 million, then you qualify.

[ laughter ] [ applause ]

OBAMA: Yes.

WARREN: No, I’m not asking about me.

OBAMA: Look, the - here’s how I think about it. Here’s how I think about it. And this is reflected in my tax plan. If you are making $150,000 a year or less, as a family, then you’re middle class or you may be poor. But $150,000 down you’re basically middle class, obviously depends on the region where you’re living.

WARREN: In this region, you’re poor.

OBAMA: Yes, well - depending. I don’t know what housing practices are going. I would argue that if you’re making more than $250,000, then you’re in the top three percent, four percent of this country. You’re doing well. Now, these things are all relative. And I’m not suggesting that everybody is making over $250,000 is living on easy street. But the question that I think we have to ask ourselves is, if we believe in good schools, if we believe in good roads, if we want to make sure that kids can go to college, if we don’t want to leave a mountain of debt for the next generation. Then we’ve got to pay for these things, they don’t come for free, and it is irresponsible [to act as if they come for free].

I believe it is irresponsible intergenerationally for us to invest or for us to spend $10 billion a month on a war and not have a way of paying for it. That, I think, is unacceptable. So nobody likes to pay taxes. I haven’t sold 25 million books but I’ve been selling some books lately, and so I write a pretty big check to Uncle Sam. Nobody likes it. What I can say is under the approach I’m taking, if you make $150,000 or less, you will see a tax cut. If you’re making $250,000 a year or more, you’re going to see a modest increase. What I’m trying to do is create a sense of balance, and fairness in our tax code. One thing I think we can all agree on, is that it should be simpler so that you don’t have all these loopholes and big stacks of stuff that you’ve got to comb through, which wastes a huge amount of money and allows special interests to take advantage of things that ordinary people cannot take advantage of.

And here’s the exchange with Senator McCain on the same issue (again, my emphasis added):

WARREN: Ok, on taxes, define “rich.” Everybody talks about taxing the rich, but not the poor, the middle class. At what point - give me a number, give me a specific number - where do you move from middle class to rich?

Is it $100,000, is it $50,000, is it $200,000? How does anybody know if we don’t know what the standards are?

MCCAIN: Some of the richest people I’ve ever known in my life are the most unhappy. I think that rich should be defined by a home, a good job, an education and the ability to hand to our children a more prosperous and safer world than the one that we inherited.

I don’t want to take any money from the rich — I want everybody to get rich.

(LAUGHTER)

I don’t believe in class warfare or re-distribution of the wealth. But I can tell you, for example, there are small businessmen and women who are working 16 hours a day, seven days a week that some people would classify as - quote - “rich,” my friends, and want to raise their taxes and want to raise their payroll taxes.

Let’s have - keep taxes low. Let’s give every family in America a $7,000 tax credit for every child they have. Let’s give them a $5,000 refundable tax credit to go out and get the health insurance of their choice. Let’s not have the government take over the health care system in America.

(APPLAUSE)

So, I think if you are just talking about income, how about $5 million?

(LAUGHTER)

But seriously, I don’t think you can - I don’t think seriously that - the point is that I’m trying to make here, seriously — and I’m sure that comment will be distorted — but the point is that we want to keep people’s taxes low and increase revenues.

And, my friend, it was not taxes that mattered in America in the last several years. It was spending. Spending got completely out of control. We spent money in way that mortgaged our kids’ futures.

(APPLAUSE)

My friends, we spent $3 million of your money to study the DNA of bears in Montana. Now I don’t know if that was a paternity issue or a criminal issue…

(LAUGHTER)

… but the point is, it was $3 million of your money. It was your money. And, you know, we laugh about it, but we cry - and we should cry because the Congress is supposed to be careful stewards of your tax dollars.

So what did they just do in the middle of an energy crisis when in California we are paying $4 a gallon for gas? Went on vacation for five weeks. I guarantee you, two things they never miss - a pay raise and a vacation — and we should stop that and call them back and not raise your taxes. We should not and cannot raise taxes in tough economic times.

So, it doesn’t matter really what my definition of “rich” is because I don’t want to raise anybody’s taxes. I really don’t. In fact, I want to give working Americans a better shot at having a better life, and we all know the challenges, my friends, if I could be serious.

Americans tonight in California and all over America are sitting at the kitchen table — recently and suddenly lost a job, can’t afford to stay in their home, education for their kids, affordable health care. These are tough problems. These are tough problems. You talk to them every day…

WARREN: All the time.

MCCAIN: … everyday. My friends, we’ve got to give them hope and confidence in the future. That’s what we need to give them, and I can inspire them. I can lead, and I know that our best days are ahead of us.

(APPLAUSE)

Stark contrast, indeed.  And it would be so even if both candidates had received this question ahead of time and prepared all they wanted for this question–”cone of silence” or not.  These exchanges are just the latest clarification of the two candidates’ fundamentally different views on:  (i) the role of government in income redistribution (determining what’s “fair”); (ii) the ideal size of government; and (iii) what happens to tax revenues when you cut tax rates. 

And here’s a better copy of the text of Senator Obama’s response to his last question, which Pastor Rick for some reason did not ask of Senator McCain:

WARREN: OK. I’ve got 30 seconds. What would you tell the American public if you knew there wouldn’t be any repercussions?

[ laughter ]

OBAMA: Well, you know what I would tell them is that solving big problems, like for example, energy, is not going to be easy and everybody is going to have to get involved. And we are going to have to all think about how are we using energy more efficiently and there’s going to be a price to pay in transitioning to a more energy-efficient economy and dealing with issues like climate change. And if we pretend like everything is free, and there’s no sacrifice involved, then we are betraying the tradition of America.

I think about my grandparents’ generation, coming out of a depression, fighting World War II; you know, they’ve confronted some challenges we can’t even imagine.

If they were willing to make sacrifices on our behalf, we should be able to make some sacrifices on behalf of the next generation.

Comments

[GMC:]

Franklin Roosevelt, a Democrat, introduced the Social

Security (FICA) Program. He promised:

1.) That participation in the Program would be

completely voluntary.

2.) That the participants would only have to pay

1% of the first $1,400 of their annual

incomes into the Program,

3.) That the money the participants elected to put

into the Program would be deductible from

their income for tax purposes each year,

4.) That the money the participants put into the

Independent 'Trust Fund' rather than into the

General Operating Fund, and therefore, would

only be used to fund the Social Security

Retirement Program, and no other

government program, and,

5.) That the annuity payments to the retirees

would never be taxed as income.

Since many of us have paid into FICA for years and are

now receiving a Social Security check every month --

and then finding that we are getting taxed on 85% of

the money we paid to the federal government to 'put

away', you may be interested in the following:

----------------------...

Q: Which political party took Social Security from the

Independent 'Trust Fund' and put it in to the

General Fund so that Congress could spend it?

A: It was Lyndon Johnson and the Democratically-

controlled House and Senate.

----------------------...

Q: Which political party eliminated the income tax

deduction for Social Security (FICA) withholding?

A: The Democratic Party.

----------------------...

Q: Which political party started taxing Social

Security annuities?

A: The Democratic Party, with Al Gore casting the

'tie-breaking' deciding vote as President of the

Senate, while he was Vice President of the U.S.

----------------------...

Q: Which political party decided to start giving

annuity payments to immigrants?

AND MY FAVORITE:

A: That's right!

Jimmy Carter and the Democratic Party.

Immigrants moved into this country, and at age 65,

they began to receive Social Security payments! The

Democratic Party gave these payments to them

even though they never paid a dime into it!

'A government big enough to give you everything you want,

is strong enough to take everything you have.'

-Thomas Jeff erson

2008 Aug 19 08:57 AM

[sidestick:]

How can you compare them when McCain didn't say anything?

2008 Aug 19 09:16 AM

[John Cordes:]

So apparently six years of Republican controlled congress and Whitehouse has brought about all the affluence and job creation they promised while being responsible stewards of a budget surplus handed to them? And we should be concerned with free loading immigrants and ignore the trillion dollar pre-emptive war? With corporate pension funds going bankrupt and jobs being outsourced to thirdworld countries I find little comfort in either your analysis or McCains penchant for answering serious questions with one liners. Perhaps we would have all been better off following the Bush prescription of investing social security assets in the stock market? Oh yeah that would have bankrupted the government and the people. Never mind.

2008 Aug 19 11:20 AM

[ferguson:]

The great empires in world history have all been done in by greed and over-reaching for political and economic power. As of this time, the U.S., is headed down that path, inspired by the delusionary leadership of those Republican icons, Ronald Reagan, George W. Bush and John McCain. Wealth is being concentrated in the hands of the few, while a sufficient cohort of social conservatives has been swindled into thinking that they should go along for the ride.

Obama is right. The greatness of this country has never resided in its military or its economic power. It resides in our principal of government of the people, by the people and for the people and government that is responsible, not just to the greed of the moment, but to future generations. That means that tax cuts for the rich, waging a tragically mistaken war and passing the bill along to future generations is not only disastrous policy, disastrously conceived and disastrously executed, it is fundamentally un-American. My vote is for an authentic American patriot, Barack Obama.

2008 Aug 19 12:10 PM

[ferguson:]

I should have added that I am 67 years old, a social security recipient, and more concerned about what is in store for my children and grand-children than I am about a manageable income decline for many of my generation who are very well off and could live quite well with less.

2008 Aug 19 01:23 PM

[woodsey:]

Which political party overrode prohibitions against usury?
Both
Which political party created the subprime robbery?
Both

2008 Aug 19 01:31 PM

[Filmflam:]

Which party in power has never had an increase in the debt to GDP ratio while president in the post-WWII era? The Democrats.

en.wikipedia.org/wiki/...

2008 Aug 19 01:39 PM

[CaptainJJack:]

Even John McCain disowns the Republican morons in the White House when it comes to fiscal policy, and yet he is willing to continue the Bush tax cuts without ANY plan to reduce spending other than he says there is a lot of waste he can cut.

Really. By far the biggest increase in the debt is due to the increase in the defense budget (both on budget and in the supplemental war spending that Bush thinks should be not be paid for), and before 2006 he was head of one of the subcommittees that reviewed the Pentagon's budget.

I have an idea for both candidates. Why don't we balance the budget FIRST, and then cut expense or introduce new spending?

There is nothing like the idea of a potential tax increase to start lawmakers thinking about ways to cut.

Finally, Social Security has never been funded from General Revenues. Lyndon Johnson created the Unified Budget in 1968, but that is not the same as funding the SSA from General Revenue.

The last big tax increase to fund the SSA benefits came in the 1980s, under Reagan, and it was bipartisan and was the right thing to do. I would argue that it was Reagan's biggest fiscal accomplishment.

2008 Aug 19 02:05 PM

[Bryanb:]

Wow! One typical politician who acts like a sleazy used car salesman and another who answers real questions with thought-out and sensible answers (even though they may be painful). Think about it guys. Which would be better for America?

2008 Aug 20 02:49 AM

[1fstcat:]

Fiscal responsibility does not mean TAX & SPEND! If you want to start taxing successful businessmen and women, start acting like one!

2008 Sep 09 12:32 AM

[joeschmoepo...:]

From 2001 through 2007, total government spending increased a whopping 47 percent, from $1.86 to $2.73 trillion. It didn't do that all at once, but rather, grew each year an average of 6.2 percent.

The worst year during that time period for government growth was 2002, when it increased 7.9 percent. The best was, perhaps surprisingly, 2007, the last year that was mostly baked by the Republicans. Government spending only advanced 2.8 percent that year. Republicans tried to reform themselves, but did too little too late.

How did the Democrats do? Spending has advanced this year an astronomical 8.3 percent, to $2.96 trillion, exceeding even the worst of the Bush years. Total spending this year was more than a trillion dollars higher than it was when Bush took office in January 2001, and more than $200 billion of that increase was accomplished in just the last year.

2008 Oct 09 05:46 PM