GOP Flip-Flops on Paying for Tax Cuts – Unnecessary When Cuts Benefit the Rich, But Required When Cuts Help the Middle Class

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Before the debate this week on extending the payroll tax holiday, Republicans used to insist that tax cuts paid for themselves:

CARLY FIORINA (R-CA), FORMER U.S. SENATE CANDIDATE: Let me just propose something that may seem crazy to you. You don`t need to pay for tax cuts. They pay for themselves.

SEN. MARCO RUBIO (R), FLORIDA: You need policies like an extension and making permanent the `01 and `03 tax cuts. They will be paid for because they create economic growth.

SEN. JON KYL (R) ARIZONA, second ranking Republican in the Senate: You should never have to offset the cost of a deliberate decision to reduce tax rates on Americans.


MADDOW: You should never have to pay for tax cuts. Tax cuts pay for themselves. That was Jon Kyl then.

Here`s Jon Kyl now.


KYL: I`ve never said that all tax cuts always pay for themselves.

Full Transcript:

Just a moment ago, just seconds ago, they officially lit the Rockefeller Center Christmas tree in midtown Manhattan right outside. Do you want to see it though?

Ready? OK. Here we go, ready, and here it goes. Bink. Yay! And the newsroom erupted in cheers.

And with that, we now begin the arduous process of making end of the year lists, right? It`s now officially, now that the tree is lit, it is now officially end of the year list making time in America.

For everybody who`s making their list about the worst, the best, the most ridiculous, the most amusing moments in American politics this year, I have a pitch I would like to make. I do not want Senator Jon Kyl to be left out. I`m worried he`s going to be forgotten.

It was April of this year when the Republicans were threatening to shut down the federal government if they didn`t get their way on defunding Planned Parenthood. That`s what it came down to in the end, remember? Republican Senator Jon Kyl of Arizona got up on the Senate floor and he told a lie.


SEN. JON KYL (R), ARIZONA: If you want an abortion, you go to Planned Parenthood and that`s well over 90 percent of what Planned Parenthood does.


MADDOW: Not true. Very, very not true. Of all the things Planned Parenthood does, abortion is more like 3 percent of what they do. And 3 percent, I`ve checked, is not over 90 percent like he said.

Asked to correct the very, very, very bad math that he expounded on the Senate floor, Senator Kyl`s office responded with something I think should be on or at the top of or at least near the top of every year-end list about notable moments in politics this year. I`m just saying.


T.J. HOLMES, CNN ANCHOR: You know what? I just want to give it to you verbatim. It says, “His remark was not intended to be a factual statement.”


MADDOW: Ta-da!

Even if that were all that happened in that episode, not intended to be a factual statement was already I think in Hall of Fame territory for political moments of this year.

But then Stephen Colbert started the “not intended to be a factual statement” hashtag on Twitter. For example, for the past 10 years, Jon Kyl has been two children in a very convincing Jon Kyl suit. Not intended to be a factual statement.

Also, once a year, Jon Kyl retreats to the Arizona desert and deposits 2 million egg sacks under the sand. Not intended to be a factual statement.

Or Jon Kyl is an accomplished nude hula dancer. He`s not welcomed in Hawaii. Not intended, right?

Or this might be my favorite one — Jon Kyl once ate a badger he hit with his car. Don`t worry, Wisconsin, it`s not intended to be a factual statement.

The only off-note in the brilliant humor of the whole not intended to be a factual statement fiasco is that Senator Jon Kyl, himself, never really seemed to get it, which makes it less fun. I mean, he never seemed
to understand what everybody was laughing about. He never poked fun at himself about it. He never seemed to realize he had made himself into a bit of a joke.

And so, now, seven months later, as the number two Republican in the United States Senate, Jon Kyl, I think in part because he didn`t get it the first time around, is getting himself into the same kind of trouble he was in with the Planned Parenthood thing. He`s walking into essentially the same trap.

And you can tell he`s got no self-awareness about it at all, which is kind of a pity. Here`s how he got himself all bollixed up now. In July last year when Republicans wanted to add $700 billion to the deficit by extending the Bush tax cuts, including for the wealthiest Americans, Jon Kyl was the guy they put out to convince the country that doing that would actually be totally free of cost.


CHRIS WALLACE, FOX NEWS: How are you going to pay the $678 billion just on the tax cuts for people over — making more than $200,000 a year?

KYL: You should never raise taxes in order to cut taxes. You do need to offset the cost of increased spending and that`s what Republicans object to. But you should never have to offset the cost of a deliberate decision to reduce tax rates on Americans.

ED SCHULTZ, MSNBC HOST: This is Kyl`s statement to reporters in the halls of the Congress. “My view, and I think most of the people in my party, don`t believe that you should ever have to offset a tax cut.”


MADDOW: Now, this is something that is sometimes called believing in the tax fairy. It`s a belief that if you reduce the revenue that government is taking in, the government doesn`t actually take in any less
revenue. You reduce the amount that they`re getting, but they don`t get any less. If that sounds magic, it`s because it is. It`s called believing in the tax fairy.

Actually in 1980, when Poppy Bush, George H.W. Bush, was running against Ronald Reagan, he did not call it believing in the tax fairy. What he called it was famously, voodoo economics.

When George W. Bush, the Bush the son, was president, his chief economist described people who believed in this idea as, quote, “charlatans and cranks.”

So, when that whole fight was going on last summer about extending the Bush tax cuts, the way that we talked about it on this show, was that if you believed in the tax fairy, you also believed that cats like baths.

Hi. Sorry. I think, do we have one more? Do we, OK. I think — actually that`s not the one I was thinking of. I think there`s one more.

That`s the one I was looking for. All right. If you believe in the tax fairy, you probably believe that cats like baths. Thank you blessed Internet.

That — the tax fairy thing has been the Republican mantra for years. Tax fairy, magic, charlatan, cats like baths, that says that cutting taxes, cutting revenue doesn`t actually cut revenue. Cutting taxes doesn`t add to the deficit. It`s free. You don`t have to pay for tax cuts. Tax cuts pay for themselves.


CARLY FIORINA (R-CA), FORMER U.S. SENATE CANDIDATE: Let me just propose something that may seem crazy to you. You don`t need to pay for tax cuts. They pay for themselves.

SEN. MARCO RUBIO (R), FLORIDA: You need policies like an extension and making permanent the `01 and `03 tax cuts. They will be paid for because they create economic growth.

KYL: You should never have to offset the cost of a deliberate decision to reduce tax rates on Americans.


MADDOW: You should never have to pay for tax cuts. Tax cuts pay for themselves. That was Jon Kyl then.

Here`s Jon Kyl now.


KYL: I`ve never said that all tax cuts always pay for themselves.


MADDOW: And if I did, it would not have been intended to be a factual statement. Also, have you tried the badger? It`s delicious this time of year.

Jon Kyl, you are amazing — even if you don`t understand how amazing you are.

The reason that Jon Kyl is now denying he ever believed in the tax fairy, the reason he`s been caught in this new embarrassing thing which he doesn`t seem to get how embarrassing it is, is because what has been the Republican position that tax cuts are free, that you just can freely lard them on to the deficit because they`re magic and it somehow doesn`t apply to the deficit if it`s a tax cut, Republicans have now decided that they no longer believe that, at least not for this year and at least not for one specific kind of tax cut.

Last year, President Obama signed into law a cut in taxes we all pay from our paychecks so anybody who gets their income in the form of a paycheck got a tax cut. Now, really, really rich people generally don`t get paid by paycheck, so it`s really something that benefits — this tax cuts is basically something that benefits people who work for a living and not the rich. It`s a lot of money, too. It`s like $1,500 per year per

President Obama and the Democrats got that passed last year and want to extend that tax cut now. And the Republicans up until now have said no. The Republicans have said they`d like to see the taxes go back up on anybody who cashes a paycheck.

Realizing that is a really off-message place for them to be, the Republicans advocating for a tax hike and at Christmastime, they`ve now started to change their minds a little. But now their line on is it they would consider going along with extending the payroll tax cut thing but they have a condition.


SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: In all likelihood, we will agree to continue the current payroll tax relief for another year, but we believe it should be paid for. We believe with this kind of deficit, we ought to pay for it.


MADDOW: Hold on. What happened to the tax fairy? I mean, you should — what was that? It was you should never have to offset the cost of a deliberate decision to reduce tax rates?

Republicans don`t believe that you should ever have to offset a tax cut. That`s what they said. That`s what Jon Kyl said back in the day. Did Mitch McConnell disagree with him? No, he did not.

Mitch McConnell saying at the time: “I think what Senator [Kyl] was expressing was the view of the view of everybody Republican on that subject.” So, tax cuts are free, tax cuts are magic fairy dust for
everybody, except now, and except when you`re talking about people who get paychecks, except for working people.

According to Republicans, the Bush tax cuts for the richest people in the country, those are free. But the ones for everybody else, those are very, very expensive.

The big picture is the Democrats are winning on this issue. The Republicans are in the process of caving in a way that unfortunately Jon Kyl doesn`t realize is funny.

But the common wisdom about governing in an election year like this, is that because the primary action is on the Republican side, all of the political discussion in the country, all of the atmospherics will be about Republican ideas. And so, it will be really hard for a Democratic president to get anything done in that sort of environment.

But on this payroll tax thing, Republicans have not been able to hold it together. They are caving — somewhat magnificently. It is not over, but it is ending.

What does that mean for White House strategy moving forward? Deeper into this election year? And does this strategy they have applied to hit pay dirt here on this issue apply to their other priorities as well?

Joining us now is someone who knows. White House senior adviser David Plouffe.

Mr. Plouffe, it is good to have you here. Thanks for being with us.

DAVID PLOUFFE, WHITE HOUSE SENIOR: Thanks for having me, Rachel.

MADDOW: I`m sorry to make you sit through me teasing Jon Kyl. I hope it does — everybody knows it does not reflect on you.

The extension of the payroll tax cut is obviously not a done deal. Is it your belief, though, that Congress will pass an extension?

PLOUFFE: Well, they need to. First of all, there`s a vote in the Senate later this week where all 100 senators have a chance — it`s a very clarifying vote. We can cut taxes for 160 million Americans, 98 percent of the small businesses giving them incentives to hire long-term unemployed workers and we can actually responsibly pay for that by asking roughly 300,000 people who make over $1 million a year to pay their fair share.

I can`t think of a more clarifying vote, a clear vote, about where your priorities stand.

And so, the president today in Scranton, Pennsylvania, as he has throughout the fall, is going to make the case that Congress can`t go home without doing something to help the economy, help the middle class. And if we don`t do anything, if Congress goes home without extending the payroll tax, then taxes go up, $1,000 per person.

Think about that — weeks and weeks of groceries. Most people out there are living in fear of an appliance breaking down. People are living on the edge. And yet the obsession of Republicans in Congress seems to be do everything they can to not ask anything from the wealthy.

And clearly, we have an economy that`s imbalanced and as we look to create jobs and produce economic growth, help the middle class, it`s time to ask the wealthiest Americans to do a little bit more.

MADDOW: How big do you think the economic impact would be if the Republicans stick with where they have been on this issue at least until recently, if the payroll tax cut isn`t extended and in effect we get a tax hike for Americans in this country? How big is the economic impact?

PLOUFFE: It would have a catastrophic effect. First on the macroeconomic side, every economist of any political stripe has looked at this and says this would have a huge impact on growth. It would raise the
unemployment rate.

And then think about what it means for the average person. Not many people out there in the middle class, people trying to get to middle class, can afford to have $1,000 come out of their paycheck. And again, the vote this week could not be more simple. We can give everybody who`s working out there $1,500 tax cut, the president actually wants to expand it a little bit, give every small business tax incentives to hire new workers, and we can pay for that by asking 300,000 people in this country who make over $1 million a year to pay a little bit more. And that`s the right thing to do for the country.

So, that`s where our energy this week. We are glad to see some Republican leaders now at the 11th hour saying, well, maybe it wouldn`t be such a good idea in the holiday season, as you said, to raise taxes.
That`s great. But we got to get this done and we ought to get it done in the right way.

MADDOW: When you talk about paying for it with the tax on the richest Americans, 300,000 people in the country, I think that there`s two different ways of looking at that in terms of its political impact. On the
polling numbers, most Americans say they got no problem with that, that seems like something that seems like a good economic idea, it`s one of the highest polling ideas in terms of its popularity among Americans.

But if you look at the first nationwide political ad run by the Karl Rove group, Crossroads group, it attacked President Obama, not on anything else of what he`s done in term in office, attacked him as a tax raiser. They`re banking on the idea, that even though you`re saying you just want to raise taxes by a small amount on millionaires, they think that people will just hear that as Obama wants to raise my taxes.

PLOUFFE: We`re very confident and comfortable having this debate. For the working people in America, the middle class, the president, this president, has a remarkable record of continuing to cut taxes. In fact, as he said in Scranton today, if you`re a middle class voter, your taxes are lower than when he came into office. So, we will win this debate.

And I think it`s pretty clear in this tough economy, most middle class voters out there believe that the president is looking out for them. He`s trying to make decisions on their behalf. And as we try and boost the economy in the short term, but also do the smart things in the long term we need to do, to get the country on the right track, we`ve got to do this in a fair and balanced way.

So, all we`re saying is — and listen, the president has shown his willingness, cut spending, carefully deal with entitlements, you know, willing to do tough stuff here. The real barrier to progress, creating jobs, cutting taxes, reducing the deficit, really resides with, you know, a few dozen Republicans in Washington, because Republicans around the country, common sense mainstream Republicans, believe that the wealthy ought to be asked to do a little bit more.

So, this is really a position only held in Washington and by those Republicans running for president. And it`s a position that`s out of the mainstream, not of the country, but of their own party.

MADDOW: That was also true, though, this time last year, or June of last year, spring of last year, when there was an argument going about whether or not to extend the Bush tax cuts. The Republicans won that one to the extent that the tax cuts got extended; the president since said he`d never do that again. He will not allow that to happen again. Why did the Republicans win that last time if you are confident now that they will not win it this time?

PLOUFFE: Well, I — listen, I don`t think they won. At the end of 2010, remember, the payroll tax, which you mentioned a few minutes ago, goes primarily to working people. That was part of the agreement,
extending unemployment benefits.

MADDOW: You definitely got tradeoffs for it, but you did extend the Bush tax cuts.

PLOUFFE: Well, for two year, and it was the important thing to do, particularly for a struggling middle class. Where would we be this year, by the way, with high gas prices, with the shocks coming out of Europe, the Japanese earthquake, all the things that are affecting our economy, gas prices higher, food prices higher, if people didn`t have the $1,000 in their paycheck.


MADDOW: I don`t have any doubt you couldn`t get other good tradeoffs for doing it again. But why won`t they get the Bush tax cut extended?

PLOUFFE: It`s not going to happen, OK? The Bush tax cuts for the wealthy are going away at the end of next year. And that`s why, really, if Congress was responsible, because you both have the Bush tax cuts and you have this sequester looming. So, why don`t you control your own destiny here and reduce the deficit in a balanced way, do smart tax reform that can actually be both fairer and simpler, but also be something that`s more progressive?

So, listen, this debate has been clarifying this fall about whose side are you on, what`s your view about how to help the economy? And the president is focused each and every day what are the things to help the middle class — put teachers back to work, rebuild schools, rebuild roads and bridges, give tax cuts to middle class, to small business owners. The job creators Republicans like to talk about, we`re the ones trying to cut
their taxes.

MADDOW: David Plouffe, White House senior adviser, I can tell that you`re the guy who`s in part in charge of clarifying by the way you talk about this stuff. It`s good to have you here, sir. Thanks for your time. Appreciate it.

PLOUFFE: Thank you very much.

Source: MSNBC

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