David Stockman on the Folly of the Bush Tax Cuts

NPR's Guy Raz interviewed David Stockman, the Reagan administration's director of the Office of Management and Budget, about the GOP's "Pledge to America."  Stockman found much to criticize in John Boehner's plan saying "the plan just doesn't measure up." 

He also came out solidly against extending any of the Bush era tax cuts:

RAZ: David Stockman, let me ask you about the idea of making the Bush tax cuts permanent. Some economic analysts have said that if you do that, that by the year 2020, the government wouldn't have enough money to spend on anything except for Medicare, Social Security and defense if it's lucky. Do you think that sounds about right?

Mr. STOCKMAN: Yes, I do. We couldn't afford the Bush tax cuts when they were put in in 2001, 2003. Now, we're - eight years later, we're trillions in additional debt later, we're two unfinanced wars later, we're a trillion dollars of stimulus spending later, 800 billion of TARP, so it's pretty obvious if we couldn't afford them back then, in no way, shape or form can we even dream about affording them now.

RAZ: Do you think President Obama is being honest with the voters?

Mr. STOCKMAN: No, I don't think he is at all. I think when he said no taxes on the middle-class or on anyone below 250,000, he was being totally disingenuous. That's most of the people in the country. Sure, there...

RAZ: You're saying he has to raise their taxes as well?

Mr. STOCKMAN: Sure, absolutely. He should tell them, we're going to raise all your taxes because that's the only way we can support all these programs that I want to keep. He's for, you know, everything we have in the budget today, and a lot of it is meritorious and a lot of isn't. This president who ran on the ticket that I, you know, change you can believe in. I'm going to tell you -tell it to you like it is, can possible take that no tax pledge and then support all of this spending and all of this stimulus, just doesn't add up.

RAZ: Are you worried?

Mr. STOCKMAN: Yes, I'm very worried about it because I thought it would never come to this. When I was in the White House in the Budget Office in the early '80s, we had the deficit breakout, 100 billion or 200 billion. Admittedly, the economy was smaller then, but it was still four or 5 percent of GDP.

Here we are today with a deficit that's 10 percent of GDP and it doesn't look like there's any prospect that it's going to decline at any time soon or any willingness to even acknowledge the problem and address it. The idea that the economy is weak, and so we have to wait two or three years, is just an excuse.

The economy is weak because of our irresponsible fiscal and monetary policies over the last 10, 20 or even 30 years. And it's going to keep getting weaker unless we face up to the problem. So, yes, it's the chicken and egg. If we cut spending and raise taxes, it may slow down the economy even more, but that's unfortunately the choice that we face.