A question of taxes. Take a hike.

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deal here out of this gang of six on the budget that includes tax increases?

SEN. TOM COBURN (R), OKLAHOMA: Well, we are not talking about it. We

are not talking about raising tax rates at all so.

GREGORY: All right, but here`s — here`s…


COBURN: So, if there`s a net effect of tax revenue, that would be fine with


GREGORY: Alan Greenspan was on this program last week. He said the

Bush era tax cuts should expire for everybody. Is that not fair?

SEN. KENT CONRAD (D), NORTH DAKOTA: So, you have got to work both

sides of the equation. But we did not raise tax rates in this proposal. What

we did was have tax reform.


MATTHEWS: Welcome back to HARDBALL.

That was Republican Senator Tom Coburn of Oklahoma and Democratic

Senator Kent Conrad of North Dakota on “Meet the Press” yesterday.

Can Democrats and Republicans find a way to fix the budget?

Former Labor Secretary Robert Reich is a professor at U.C. Berkeley and

author of the new book “Aftershock.” There it is. And University of Virginia

Professor Larry Sabato is the author of “Pendulum Swing.”

Gentlemen, thank you for coming on the show.


MATTHEWS: This is something that has really gotten sort of bogged up or —

or clogged up in American politics. That is, you can only adjust one side of

the ledger now. That means cutting taxes — or cutting spending, and that`s all

anybody talks about.

Look at these new numbers right now. We have got a “Washington

Post”/ABC poll you might not be shocked by. Forty-three percent — 53

percent opposed to even a small tax increase and small cuts in Medicare. It`s

written as almost minuscule and it`s written as a fair proposition, and people

still reject it 53-45.

Then you ask people, should we go after — sock it to people that make most

of the money, and it`s 3-1 tax people, over 72 percent.

Robert Reich, it seems like people don`t want any kind of an across-

the-board adjustment in anything. They only get excited about hitting people

hard who they are not. In other words, I can read a poll to know that most of

the people who are responding to this are making less than $250,000 a year,

and they`re saying hit the people that do make more.

Is this where we`re at, we only go after the rich, that`s it?


REICH: Well — oh, Chris, I thought the most part of that “Washington

Post”/ABC poll you`re talking about is that 54 percent, 54 percent of

registered Republicans said taxes should be increased on the rich.

Now, I haven`t seen anything like that for the last 30 or 40 years. And I

haven`t been following every poll for the last 30 or 40 years, but for years

Republicans have been saying and most of the public has been believing that

if you cut taxes on the rich, then you get trickle-down economics that

benefits everybody, and, also, if you increase taxes on the rich, everybody

will be hurt because some day everybody`s going to be a millionaire.


REICH: Well, those are two methodologies, and they have both gone out of

style and out of fashion. So, even Republicans are beginning to say, look, if

we have no other choice, let`s raise taxes on the rich.

MATTHEWS: So, if that`s the voters` opinion, Larry, why isn`t it happening?

Why do both parties…


POLITICS: It`s not happening…

MATTHEWS: We just saw two members of Congress who are supposed to

be the guys in the middle cutting the deal, they were gun-shy, both of them,

on any kind of tax increase.

SABATO: Yes, because a poll is a not an election. That`s fundamentally the

difference here.

Look, the reason Republicans almost universally, not just Tea Party

Republicans, but mainstream Republicans, oppose any tax increase is

because if they do, they`re guaranteed not just a Tea Party challenge.

They`re probably going to be challenged in a primary by another mainstream


And it`s gotten to the point where tax increases are now defined, at least by

some, like our friend Grover Norquist, as being the elimination of tax subsidies

for things like the ethanol industry. So, it`s — it`s getting tougher and tougher

even to raise fees and close loopholes and eliminate subsidies.

MATTHEWS: Well, this is a problem for both parties because, Robert, if — if —

if you can`t get any give from the Republican side on revenues, on taxes,

even on an increase in revenue through reform, if you can`t do that, it seems

to me very hard to get the Democrats to agree to any kind of cut in spending.

So, the president can`t get his own party to do any kind of budget

adjustment, any kind of effort to reduce the deficit that`s real, if he can`t get

the other party to increase revenue. So, both sides get hurt politically

because neither side will move then.

Is that where we`re at? Nobody wants to do anything because nobody`s

doing everything?

REICH: Chris, if you assume that compromise is actually halfway between the

president`s proposal and Paul Ryan`s proposal, then, yes, you are stymied —

you are completely stymied. But if the public and I think a lot of Republicans

and not a few Democrats are getting a lot of news when they go home right

now at town meetings, when the public actually registered what they want —

no cut in Social Security or Medicare, and do tax the rich and let`s get rid of

corporate welfare, let`s pare down military spending — when so many

representatives are hearing that in the town meetings you might actually see

a more, a greater willingness to compromise when they come back.

MATTHEWS: Well, I see that don`t touch Medicare. I don`t see the excitement

of raising taxes. Do you hear it, Larry?


MATTHEWS: For the rich?

SABATO: I`m with you, Chris.

MATTHEWS: I mean, do they actually demand at meetings?

SABATO: Well, I don`t know what people are saying in their meetings. I doubt

that`s what the Republican members are hearing — and remember, it would

have to pass the Republican House.

Look, there`s only one open window for a compromise and that is, Bob

mentioned, corporate welfare. I think Republicans would say as Senator

Coburn did, closing loopholes, tax reform. That may be a way to produce

some kind of compromise. But if you`re talking about a general increase in tax

rates, forget about it. Not going to happen.

REICH: Well, Larry, I completely agree with Larry on that. No general increase

in tax rates, but what we`re talking about is increasing taxes on the rich. Not

only getting rid of the, you know, extension of the Bush tax cuts for people

over $250,000, but also, for example, capping home mortgage interest

deductions, maybe, what, $20,000 a year. I mean, there are a lot of things

that can be done that would get in my view a great deal of public support.

MATTHEWS: But you`re not running for anything, Robert. And, Larry, and

you`re not running for anything. And I think Larry made the point a minute, I

think that was crisply stated. There`s a difference between a poll and an

election. If all you have to do is expose yourself as a Republican to any kind

of problem with the voters, they`ll kill you on it. The Republicans will be Tea

Partying you. The Democratic side, they`ll get you on Medicare.

So, I`m afraid that the solution politically for this crowd of people in politics

today is: do nothing. Let the deficit ride.

Robert, don`t you think that`s what`s going to happen, really? They just going

to let this deficit balloon and they`re not going to do anything about it.

REICH: Chris, always the path of least resistance is to do nothing. But if the

dollar continues to drop, if we see that — it`s not just Standard & Poor`s but

capital markets become very afraid that the Republicans and Democrats

doing nothing, then their hands may be forced and may have to do something.


REICH: And then the question is: what are they going to cut or what tax are

they going to raise? And I think if you can raise any taxes at all, it`s got to be

on the rich.

MATTHEWS: I don`t see any leadership out there from either party cutting a


Larry, what about Haley Barbour quitting? I thought he might be able to thread

the needle. He might be, to use another metaphor, a Tea Party-appealing

person but without being a Tea Party person. But — what do you think? Why

did he quit?

SABATO: Chris, I think he`s one of the smartest politicians in either party and

he just proved it today. He wasn`t selling. And he picked it up. He wasn`t

selling because of the D.C. lobbyist thing, because of the Mississippi

connections, because of his accent and looks. And he decided I think rather

sanely he didn`t want to go through this tortured presidential selection

process for nothing.

MATTHEWS: So, now, there`s only a couple left. There`s only Jeb and maybe

Christie. Who`s the — what do you call it — the dark horse for you? Who`s

going to come in the race and win it on the Republican side, anybody?

SABATO: I doubt anybody comes in but the person who just keeps being

mentioned is Chris Christie and he loves it no matter what he`s saying.

MATTHEWS: I agree with you completely on that.

Robert Reich, Chris Christie, what do you think? Big surprise —


REICH: I think he could be a very strong candidate but don`t take your eyes

off Mitt Romney. He looks the part. He acts the part. He has gleaming white

teeth. He is kind — now, wait a minute, I know the public is very —


MATTHEWS: You are setting him up. You are setting this guy up — duller than

you can imagine.

REICH: Mitt Romney is an empty — Chris, I`m not — I`m not a supporter of Mitt

Romney. I think he`s a very strong candidate. I mean, Mitt Romney is an empty

suit. I think in fact —


MATTHEWS: You heard what I said the other day? He gives empty suits a

bad name.

Anyway, thank you, Robert Reich. Thank you, Larry Sabato. You`re just

setting this guy up. An ass (ph) and a gold and the horse is what you want.

About William Brighenti

William Brighenti is a Certified Public Accountant, Certified QuickBooks ProAdvisor, and Certified Business Valuation Analyst. Bill began his career in public accounting in 1979. Since then he has worked at various public accounting firms throughout Connecticut. Bill received a Master of Science in Professional Accounting degree from the University of Hartford, after attending the University of Connecticut and Central Connecticut State University for his Bachelor of Arts and Master of Arts degrees. He subsequently attended Purdue University for doctoral studies in Accounting and Quantitative Methods in Business. Bill has instructed graduate and undergraduate courses in Accounting, Auditing, and other subjects at the University of Hartford, Central Connecticut State University, Hartford State Technical College, and Purdue University. He also taught GMAT and CPA Exam Review Classes at the Stanley H. Kaplan Educational Center and at Person-Wolinsky, and is certified to teach trade-related subjects at Connecticut Vocational Technical Schools. His articles on tax and accounting have been published in several professional journals throughout the country as well as on several accounting websites. William was born and raised in New Britain, Connecticut, and served on the City's Board of Finance and Taxation as well as its City Plan Commission. In addition to the blog, Accounting and Taxes Simplified, Bill writes a blog, "The Barefoot Accountant", for the Accounting Web, a Sift Media publication.
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