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CROWLEY: Joining me now, Kentucky Republican Senator Rand Paul, who launched the Senate's Tea Party Caucus earlier this fall. Senator Paul, thanks for being here.
Let's talk right now. I don't see -- I don't think many people see any chance that a Republican -- I think you heard Senator Murray, a Democrat say -- is going to come forward and say we're going to put as much in tax revenue on the table as spending cuts. Therefore, this whole thing implodes. Is that your impression?
SEN. RAND PAUL (R), KENTUCKY: Yes, but I think you need to listen between the lines here. We are offering to close loopholes. We're offering to close loopholes on those who are the wealthiest taxpayers. This is what the president has been saying he wants. We are willing to close those loopholes, but we want it to be part of tax reform, which lowers tax rates. The only thing that's ever helped unemployment in this country was when Kennedy lowered tax rates and when Reagan lowered tax rates, and unemployment was cut in half each time. CROWLEY: The problem is that between now and tomorrow when the supercommittee has to come up with something, you can't have tax reform. I mean, people have been trying to reform the tax structure for I don't know how long. And to then say -- which it seems to the world the Congress is saying -- you know what? Yes, it is going to shake the world markets; sure, it might undermine the U.S. economy; yes, there are going to be painful cuts across the board, but we just can't agree on how to go forward in an adult way. Is that the picture of Congress that people are going to get?
PAUL: Well, you know, sequestration is automatic cuts. And it's kind of like when your kids are misbehaving -- yes, sequestration are automatic cuts. And the thing is that you -- I would have automatic cuts. It's sort of like telling your children that, you know, if you don't clean up your mess, or else, really maybe we need the or else because Congress isn't behaving the way they should be behaving. Maybe sequestration is our only way we will get any kind of cuts.
CROWLEY: OK. So you are willing to have cuts in the Pentagon budget that the defense secretary has said will be devastating.
PAUL: I think we need to be honest about it. The interesting thing is, there will be no cuts in military spending. This may surprise some people, but there will be no cuts in military spending, because we're only cutting proposed increases. If we do nothing, military spending goes up 23 percent over 10 years. If we sequester the money, it will still go up 16 percent. So spending is still rising under any of these plans.
CROWLEY: So you don't--
PAUL: In fact, if you look at both alternatives, spending is still going up. We're only cutting proposed increases in spending.
CROWLEY: So you don't believe the defense secretary, who says this is really going to be harmful to the military and the Pentagon?
PAUL: That's an interpretation. But what I can tell you are the facts is that defense spending will go up $100 billion over 10 years even if we sequester $600 billion. Because the curve of spending in our country is going up at about 7.5 percent a year. All spending goes up. That's why if you were to freeze spending for 10 years, no cuts, but just simply freeze spending for 10 years, they would call that a $9 trillion cut, because they are planning on spending going up $9 trillion.
CROWLEY: Listen, you have put out -- had a go-big alternative that you put out that you said would save about $6 trillion over that same 10-year period. It included things like reductions in the Department of Education, in K through 12 spending, slowing down foreign aid, reducing defense spending, capping welfare programs at 2007 levels. I know that you know, when you put this together, that the Democrats will not go for this, and I know that the Democrats put together programs that they know Republicans won't go for. Why shouldn't the public look at this and say, this is one giant re- election bid by both sides? PAUL: Well, what I would say is there's one program in that $6 trillion. If you take Medicaid, block-grant it and send it back to the states, that gives you $1.7 trillion in cuts. It exceeds the targets that the committee was designated to do. So you could cut just one program and do a pretty good job.
Now on their side, they say we're unreasonable. They want to raise taxes $1 trillion in the middle of a recession. Most of us think we're taxed enough already. Spending has gone up 25 percent. Taxes and rates have been stable since 2003. Revenue has fallen because we're in a recession. We need to grow the economy, get out of a recession. It's the only way we're going to balance our budget. CROWLEY: In fact, the polling shows that most Americans do think that what we call the Bush era tax cuts for the wealthy should be allowed to expire, and that's one of the things you all won't give up, saying, no, we want a total tax reform.
My point here is that I know that you have said the president clearly didn't want to deal because it is a better campaign issue for him if there's no deal.
CROWLEY: Why shouldn't people look at Republicans for putting stuff on the table they know full well will not pass and why isn't that the Republican agenda?
PAUL: Well, we have to start with the facts on who does -- are the rich paying their fair share? Because we hear that over and over again, the rich are not paying their fair share, the top 1 percent, the millionaires in our country, pay on average 29 percent of their income. That's what they pay on average. If the average carpenter who makes $50,000 to $75,000 a year pays between 15 percent and 18 percent.
The top 50 percent of wage earners pay 96 percent of the income tax. The rich and the middle class are paying their fair share.
CROWLEY: If they pay.
PAUL: Yeah, the vast majority are, though.
CROWLEY: But there are--
PAUL: There are anomalies, there are aberrations.
CROWLEY: Sure. Go ahead.
PAUL: The people -- the people who are not paying, we're all for making them pay. If you are a millionaire or you are a corporation that's not paying, we're all for eliminating those loopholes and deductions. But on average, the vast majority of millionaires and billionaires are paying all of the taxes. That's who pays the income tax.
CROWLEY: A couple things I want to ask you about quickly. If by the end of the year Congress doesn't act, long-term unemployment benefits will expire, that is benefits for people who have been unemployed 99 weeks or longer. Are you willing to vote for an extension of long-term unemployment benefits?
PAUL: If you want to extend unemployment benefits, they have to be paid for. We have an unemployment program. We have a tax for it. And it's paid for, for 26 weeks. So the question is, do we want to borrow money from China to pay people not to work?
I think we need to figure out how to get people back to work. So I don't want to concentrate on extending how long people can be paid not to work. I want to get millions of people back to work. And the only thing historically that has ever worked in our country is to lower tax rates on the upper-income folks. We don't want to raise their taxes. You need to lower their taxes if you want to put people back to work.
CROWLEY: OK. So, I'm going to take that as a no, that you are opposed to it because of finding ways to pay for it.
Let me ask you about the payroll tax, that is Social Security taxes, which were cut by about 2 percent for most people, and that will also expire, so their Social Security, their payroll tax will go up.
Are you willing to extend that?
PAUL: The hard part here is that Social Security is $6 trillion short because we have less workers and more retired people and we're living longer. So if you're $6 trillion short, should you cut the revenue stream into Social Security?
I want lower taxes for everybody. I don't care--
CROWLEY: Right. And that's a tax cut.
PAUL: -- where you come from on the economic ladder. I know, but yes, I have a difficult time with saying it's a good thing for Social Security to lower the amount of money coming into it right now, because it is a system that's $6 trillion short. So I don't know, we'll have to cross that bridge when we get there, but I have a tough time with figuring out how that helps Social Security.
CROWLEY: All right. You are almost at that bridge. December 31st will be here, sooner or later. That's for sure.
Thanks so much, Senator Rand Paul. We appreciate it.
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