Matt Miller on Taxes and Stimulus | Big Think

Matt Miller on Taxes and Stimulus

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Matt Miller on the rising costs of baby boomers

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Matt Miller:

Matt Miller is a senior fellow at the Center for American Progress; a contributing editor at Fortune; and the host of "Left, Right & Center," public radio's popular week-in-review program. Miller's first book, The Two Percent Solution: Fixing America's Problems In Ways Liberals And Conservatives Can Love, was published in 2003, and was a Los Angeles Times bestseller. His latest book, The Tyranny Of Dead Ideas, was published by Henry Holt/Times Books in January 2009. Miller served as Senior Advisor to the Director of the Office of Management and Budget from 1993 to 1995. He lives with his family in Los Angeles.

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TRANSCRIPT:

Question: Is cutting taxes a dead idea?

Miller: There’s no question that a huge stimulus that includes a big chunk of new government spending and also big new tax cuts needs to be part of what we do to get through the next couple of years. But after that, and we will reach the far side of this downturn, there’s just no question. It’s pure math that taxes will rise as a share of the economy, as a share of GDP over the next decade. It doesn’t matter who’s in power. In fact, in the book I quote a couple of John McCain’s top economic advisers who say there’s no question that taxes will go up because we’re going into the baby boomers retirement right now and that means, you know, 76 million baby boomers sit at their rocking chairs were doubling the amount of people on social security and Medicare. There’s already $50 trillion in unfunded liabilities in these programs and there’s just no way the math works at current levels of taxation. So people in both parties behind closed doors will tell you this but no one will utter it publicly. One of the points I’m trying to make with the book is even though no one would really want this, no one wants taxes to go up, but they’re going to. I mean that’s inevitable. And the good news is we’re not going to become France or Sweden. The economy is still going to thrive and, in fact, as I try to do with the research, when you look at the history of taxes and spending as a share of the economy, we’ve seen that civilizations and societies get more modern and wealthier, taxes and spending have gone up as a share of GDP and the economy is fine. So, it’s unutterable now but the idea that taxes hurt the economy and are too high isn’t dead idea, and the fact that we can’t have the honest discussion about it stops us from having the debate we really need, which is given the taxes are going up inevitably over the next decade, what’s the best way to do that for the economy? You know, there are good ways and bad ways to do this and I think it means we need to shift our tax system away from taxing payrolls and corporations, which is where a lot of our taxes come from now and tax things like dirty energy and consumption which will help us made environmental goals, national security goals and be better for the economy in general.

Question: Has the U.S. approached taxation with more wisdom before?

Miller: Everything is a function of our history and at certain times. I mean, FDR created the payroll tax as part of paying for social security. That developed a life of its own. It started very small, you know, if you’ll look at the history. Now, you know, it takes 12.5% and 15% if you’ll include the Medicare part out of both the employer and the employee. But back in FDR’s day and around the ‘50s and ‘60s, it was only around 2% of payroll. So politicians found it was the kind of thing people didn’t notice much. You can ratchet it up a little bit to increase benefits. But now we’re at that point where actually most families pay more in payroll taxes than they do in income taxes and it’s crazy ‘cause it’s a job killing tax, you know, it’s not sensible for a host of reasons, but what’s sensible doesn’t often, you know, end up becoming what seems politically possible until enough folks start talking differently in ways that change our thinking and then change what we do.

Question: What’s the tax outlook as baby boomers age?

Miller: Taxes are going to go up. And if Republicans are in power when all the boomers are hitting the fan, they’ll find a way to raise taxes and try and call it something else. Or more likely what usually happens we get both parties to get together in the dark of night, you know, jump off the cliff together.

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