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Is the Republican Party’s Refusal to Raise Taxes Fiscally Irresponsible?

Whoever wins the 2024 election will soon face a critical decision about extending four trillion dollars in tax cuts expiring next year. Whether taxes will be raised, or cut is in question, against the backdrop of $34.1 trillion in federal debt. For the past few decades, the Republican Party has embraced the belief that lower tax rates and less government spending boost the U.S. economy. However, there is disagreement among conservative thought leaders about the way forward on taxes for the Republican Party. Specifically, some argue that preferences for tax cuts ignore the looming deficit and that refusing to raise taxes further imbalances the federal budget. However, others continue to argue that our debt is caused by government overspending and will actually be helped by tax cuts and that these same cuts also help promote a flourishing economy.

With this background, American Compass’s Oren Cass and Club for Growth’s David McIntosh debate: Is the Republican Party’s Refusal to Raise Taxes Fiscally Irresponsible?


Nayeema Raza: Hi, everybody, and welcome to Open To Debate. I’m Nayeema Raza. I’m a journalist at New York Magazine and Vox Media and I’m your guest moderator for today’s debate. It is often said, thanks to a 1789 letter penned by founding father Benjamin Franklin, that there are only two guarantees in this life: death and taxes. But if we were to add a third in the 21st Century, it might be that the Republican Party will almost always refuse to raise those taxes. Indeed, we saw major tax cuts under President George W. Bush, 80% of which were made permanent under his successor, Democratic President Barack Obama, who also raised taxes to cover things like military expenditures and the Affordable Care Act.

We saw more yet under President Donald Trump in 2017, many of which are set to expire in the next year, 2025. This debate over taxes is particularly timely, not just because of yet another looming budget negotiation that has us once again at the precipice of a potential government shutdown, but also because the 2024 elections will determine what happens to those expiring tax credits with Republicans overwhelmingly seeking to continue them and Democrats proposing to only keep tax cuts for less wealthy Americans, while introducing new taxes for wealthy individuals and for corporations on top. It’s a difference that the Wall Street Journal has recently reported is around $6 trillion in revenue over ten years.

To put that number in context, that’s almost 20% of our current national debt, which is $34 trillion and counting. All of this begs the question of whether the Republican Party’s refusal to raise taxes is fiscally irresponsible. Here to debate that, I have two highly influential Republicans who do not see eye to eye. Let’s meet our debaters. Arguing yes to the question is Oren Cass. Oren is the executive director of the think tank American Compass. New York Magazine also dubbed him, “the nerd trying to turn the GOP populist.” He’s a former senior fellow at the Manhattan Institute and a political adviser who has advised Senator Marco Rubio on economic policy and served as domestic policy director in Mitt Romney’s 2012 presidential campaign. Welcome, Oren. Thanks for being here.

Oren Cass: Thank you.

Nayeema Raza: Are you in fact the nerd trying to turn the GOP populist?

Oren Cass: I am a nerd. We’d have to talk about the word populism a little more but it’s not a bad description.

Nayeema Raza: Not a bad description. Thank you for being here. Arguing no to the question of, “is the Republican Party’s refusal to raise taxes fiscally irresponsible,” is former U.S. Congressman from Indiana, David McIntosh. Welcome, David.

David McIntosh: Thank you.

Nayeema Raza: David is a co-founder of the Federalist Society for Law and Public Policy and he is president of the Club for Growth, a conservative organization that advocates aggressively for free markets and against taxes. The New York Times calls it an anti-tax organization. The Club for Growth’s political arm has backed the state races of influential Republicans like Texas Senator Ted Cruz and Florida Governor Ron DeSantis. Welcome, David.

David McIntosh: Thank you. It’s great to be here.

Nayeema Raza: Are you in fact an anti-tax organization?

David McIntosh: I think that’s a fair description. We’re called a lot of things but I’ll take that one.

Oren Cass: That’s one of the nicer ones.

Nayeema Raza: Yes, one of the nicer ones. All right, before we jump in, I just have two rapid-fire questions for you. They are two-fold. I’ll ask each of you to address them. Why you think the discussion is urgent now, at this moment, and which politician, just so we can start to personify this debate, who do you look at, it could be a Republican or a Democrat—we’d be surprised if it were the latter—that’s the best exemplar of what Republicans should be doing tax-wise? Oren, I’ll start with you.

Oren Cass: Well, I think it’s obviously a hugely important issue in that we are in, at this point, a fiscal crisis. The enormous and projected increasing deficits are not sustainable. We are paying interest on the debt approaching what we spend on Medicare or Social Security or defense. Either something has to give or something is going to break. In terms of who I look to as, I think, exemplars and potential leaders on these kinds of issues, I think, frankly, everyone on both sides has a long way to go in thinking about the compromise that are going to be necessary.

Nayeema Raza: Give me one person.

Oren Cass: But folks like, I think, Senator Rubio and Senator J.D. Vance, I think, are doing the best job of really thinking through what it’s going to take.

Nayeema Raza: Great. Okay. David, same two questions for you. What are the stakes, why is it urgent now, and who is the best exemplar?

David McIntosh: I think the question is a misdirection from the problem we have. Oren mentioned that we’ve got a looming fiscal crisis, runaway spending and debt, and the problem really is the spending, not the tax structure. I think the key is to convince Republicans and Democrats that they have to hold the line on that spending and that’s the way you’ll end up eliminating some of the deficits and eventually reducing the debt. I think the leader who did best on tax policy was actually former Senator Pat Toomey, who did a large amount of the crafting of the Trump tax cuts, but he also understood why certain tax cuts were better than others. They generated more economic growth and he was able to get a consensus, at least among Republicans, to move forward with that type of policy.

Nayeema Raza: All right, well that helps us understand and grok a bit the debate in who would be your role models. I want to want to jump in now to opening arguments. We’ll dive right in. I want each of you to take a few minutes to just explain your position. Oren, you’re up first. You’re arguing yes to the question, is the Republican Party’s refusal to raise taxes fiscally irresponsible? Tell us why.

Oren Cass: All right. Well, I want to start by thanking David for joining this conversation. I think it’s a critical one that is going on within the party, more so behind the scenes right now, but I think we have to make progress on. I actually wanted to start with some of the places where I assume we agree. I think I agree entirely with David’s point that spending is at the end of the day, the heart of the problem we have right now. The spending post-pandemic is totally out of control and it’s going to have to be brought back into control. I think we agree that we should want government to be limited.

We should want to only burden taxpayers with the taxes necessary to provide the services we are committed to providing. I think we agree that fiscal responsibility entails raising that necessary revenue, meaning balancing the budget at the end of the day. I think as you heard in our initial comments, we agree that we are in a totally unsustainable situation right now. I’ll let him correct me if any of that’s wrong, but my assumption is we probably start in a very similar place on a lot of that. I think where we disagree and the resolution does a good job of highlighting this, is how do Republicans address that.

My position is that, at the end of the day, both in terms of what conservatism demands in principle and what our political realities require some amount of new revenue, which means a tax increase in some way is going to have to be part of any way out of this. If we are going to be fiscally responsible, that means being willing to consider tax increases. I would highlight three reasons for that argument. One, as I said, it is a matter of principle, the idea that conservatism means cutting taxes isn’t true. If you go all the way back to Edmund Burke, he has a wonderful quote about how everything is a matter of circumstance.

That at the end of the day, statesmanship and policymaking means responding to specific circumstances, not holding to an abstract principle. To that end, Ronald Reagan raised taxes repeatedly.

David McIntosh: After he cut them.

Oren Cass: Absolutely. He also cut taxes, but when he cut the taxes and they realized they didn’t have enough revenue, his response was to raise taxes, at least five major legislative increases. Some people will tell you as many as 11 times. George H.W. Bush raised taxes. The idea that you cannot raise taxes is a very newfound “principle,” which I’d put in scare quotes because it is not a principle at all. The second point I would make, and this goes to conservative practice and how we actually get to where we both want to go is that at the end of the day, it’s not taxes that determine how big government is, it’s the spending.

Whether or not you raise the money for what government is doing, it is what government spends, the role it is playing in the economy, that dictates the size of government and whether or not it’s limited. If anything, the deficit spending is worse because you’re distorting markets further and adding more debt. What concerns me is that the idea that, well, if we cut taxes enough spending will have to come down, doesn’t actually make sense. What you’re doing is essentially telling people they can have the big government and not even have to pay for it.

Whereas, it seems to me the conservative approach should be to say, guys, you’re going to have to pay for the amount of government we have, which means if you want lower taxes, you’re going to have to sign up for the lower spending, too. That’s why we can be for both together, but the more that you allow them to diverge, it seems to me the more you lose the argument. That’s the third piece in my mind, is just the empirical case. Since the early 1990s, Republicans have tried this, we are just going to deprive the government of revenue and the spending will come down. It has failed miserably. It simply does not work.

It is obvious, in fact, it does not work. The quintessential image stuck in my mind is that 2012 Republican primary debate when the candidates were asked, would you take $10 of spending cuts per $1 of spending increases? They said no. I assume David would say no. My view is you cannot be fiscally responsible unless you are willing to say yes to that.

David McIntosh: Thank you. Oren, yes, we do agree on many things and I’m delighted to be here with you to talk about that and where we do disagree. My answer is emphatically no. Raising taxes would hurt the economy, hurt the American people, send us in the wrong direction. To say we’ve got a big spending problem, and therefore we should raise taxes, seems to me the exact wrong direction because it deflects from needing to gather the political force to actually get Washington to reduce spending. I agree with Oren. Since the 1990s, politicians in both parties have ignored any sense of responsibility about spending because they could borrow.

The new economic theory says, don’t worry about debt and deficits, it’s all going to be fine. They don’t tell you this, but the reason they think that is, is so that we can shuffle the consequences off to the rest of the world because our currency is the reserve currency. That’s coming to an end. You see China and Russia and India, Brazil, starting to form a coalition to challenge us as that reserve currency. When that happens, then all of the inflation that comes from our debt comes back to us, even worse and more dire consequences than we’re seeing now with inflation. The answer isn’t to say, okay, let’s belly up to the bar and raise everybody’s taxes.

Because what we’ve seen in the past is lower taxes actually increase the economy and that lets the government collect more revenue. Kennedy did it in the 1960s and the economic growth went from 2.5% to 4.5%. Reagan, on the whole, cut taxes, flattened taxes, and you saw tremendous economic growth. Clinton cut taxes when the Republican Congress came in with the contract with America and his capital gains tax cut led to 1% higher GDP. That extra growth, particularly in the tech sector, brought in so much more revenue that by holding the line on spending, which was the last time Congress held the line on spending, we actually had a surplus for the first time in about 40 years.

Again, the Bush tax cuts helped generate economy. The Trump tax cuts did, too. They increased economic growth from 2.5% to 4.5% and greater investment. Conversely, with the Biden tax increase recently where the Congress did go along with about less than half a trillion dollars of tax increases, they coupled that with multiple trillion dollars of deficit spending. Increasing taxes in the past has not been accompanied with spending cuts, it’s been accompanied with more spending. Reagan found that out. He thought he had a deal with the Democrat Congress where he would raise one of those tax increases, Oren mentioned, and in exchange they would reduce spending by two or three times the amount.

Well, they took the tax increase but the liberals in Congress went ahead and actually kept the spending. It’s not a recipe for dealing with a key problem, which is, we have runaway spending, we have no political control on that. We’ve got leaders in the Republican Party like Mitch McConnell saying it’s always good politics to spend more money. There isn’t that type of leadership in our party to actually do something about the spending. It’s hard, but if we raise taxes, typically, that puts the burden of paying for all that spending in an ever-increasing amount on working families. The middle class has to carry the greater burden of tax increases.

You can say tax the rich, you can say tax corporations, but inevitably, they pass it on down to the consumers and so, it’s the little guy, the working man and his family who end up paying the bill when we raise taxes. I would say there are three justifications for lowering taxes and I’ll get into that in our back and forth.

Nayeema Raza: Perfect. Thanks to both of you, gentlemen. We know now where you stand and why. Let’s take a quick break. When we’re back, we’re going to dive into this discussion on the question, “Is the Republican Party’s refusal to raise taxes fiscally irresponsible?” after this break. Welcome back to Open to Debate. I’m your guest moderator, Nayeema Raza, and we’re debating the question, is the Republican Party’s refusal to raise taxes fiscally irresponsible? We’ve just heard opening statements from our two debaters, American Compass executive director, Oren Cass, and Club for Growth president, David McIntosh. I want to try and summarize your arguments briefly before we dive into them.

I think, Oren, you started articulating what the two of you agree on, which is a lot. You’re both conservative Republicans. You both agree that spending needs to come down. You both agree that federal deficit is a problem and it’s a problem that you’d like to fix, ideally, with more revenue. You both agree in the role of limited government, which is related to that, I think, decrease in spending. I’d add to that a fourth thing, which David, you brought up, which is that spending isn’t coming down. Empirically, I think you both have argued this. Oren, you’re saying even when taxes are cut, spending isn’t coming down. David, you’re saying even when taxes are increased, spending isn’t coming down.

In both cases, spending isn’t coming down. This is a challenge we’ve seen in Republican and Democratic Congresses and White Houses. This is a political problem, really. In terms of your arguments of what’s happening and what needs to be done, Oren, you laid out three ideas. First is, you challenge the principle, this principle that the Republican Party needs to be against raising taxes. They said this is a relatively new principle. It isn’t borne out by the history of the Republican Party and it’s a fundamentalism that might get in the way of effective policy to solve that urgent crisis of the fiscal deficit, of the federal deficit.

You argued, again, spending will not come down, spending hasn’t come down. Third, you pointed to, and you actually said that this is a challenge because you want to align the public’s understanding. You want to show that actually tax cuts would bring about smaller government and tax increases might bring around bigger government. You want to align, if I’m not incorrect, the incremental cost of government, basically, and show people that they have to pay for that in the form of taxes or something versus just continuing to pay less for more government. Then thirdly, you pointed to the empirical evidence.

Now, David actually challenged that empirical evidence. He pointed to a time in history, the 1990s, where there was a balanced budget at that time he was a congressman in the House serving for Indiana, in the House of Representatives. He also pointed out this idea that it’s irresponsible because it distracts from the conversation around spending. The idea that it would be irresponsible to raise taxes because it would distract from the broader question of spending, because spending hasn’t come down with any tax increases. It would be irresponsible to suggest that it might. You finally, I think, brought up this idea that it’s unsustainable.

That right now where we are is unsustainable, but there is a model in the past, there’s a model that we’ve seen not just under Republican tax cuts but under Democratic tax cuts that we can actually get to more effective government, balance the budget, and we need to do so because of the challenge of real and rising federal deficit and real and rising interest rates. Is that a correct statement of both of your arguments?

Oren Cass: Yeah.

David McIntosh: Yeah.

Nayeema Raza: Okay. I want to start with this empirical fact because I feel like we have to close this argument. Oren, you’re saying effectively never have we seen these tax cuts deliver a reduction in government spending. David is pointing to his particular point in time, the 1990s. In fact, I think 2000 was the last year that we saw tax revenue exceed tax spending in that last surplus and also saw a big boom in Silicon Valley and others, things that contributed to that tax revenue. I should also say David was arguing largely the mechanism, this idea of lowering taxes will grow the overall pie and therefore, grow revenue.

It will add to the revenue. He points to the 1990s as an example of that. Oren, how do you look at that? Was that an aberration? Was that proof of the policy? What do you think?

Oren Cass: Well, I guess I would challenge the narrative that David presented in a couple of ways. One is, I think it’s fair to say that Reagan cut taxes more than he then re-raised them. It’s also very important to note that Clinton raised taxes more than he then cut them. David mentioned a particular capital gains cut that did happen, but in fact, the overall picture is that Reagan lowered taxes in the ’80s, H.W. Bush and then Clinton raised taxes in the ’90s. All that wonderful boom that David is describing came in the context of a higher tax environment than what certainly Republicans were advocating for. Bush then cuts taxes 2001 to 2003 and we shift to a lower growth environment again.

I don’t know of anyone who argues that actually the economy performed better after the Bush tax cuts than it was performing before them. If you actually look at the picture, this idea that it doesn’t matter if you raise or cut tax that the same thing happens with spending. It’s not true. If you actually look at what happened and what was going on with spending, and I usually use as a share of gross domestic product. I assume that’s typically how you guys will look at it as well. It’s a good way to understand, how much are we collecting in taxes relative to the size of the economy? How much are we spending?

I jotted this down going in. Tax increases in 1990 and 1993. In the subsequent year, spending comes down significantly as a share of GDP after the tax increases. Then, we cut tax in 2001 to 2003. Spending goes up as a share of GDP during the George W. Bush administration. Obama raises taxes in 2012. Subsequently, spending comes down as a share of GDP. Donald Trump cuts taxes end of 2017. Spending starts going back up as a share of GDP. In fact, empirically, in the wake of tax increases, spending has also come down. In the wake of tax cuts, spending has gone up faster.

I think this is particularly a problem for Republicans who simply cannot make a claim to having any sense of their own fiscal responsibility on the spending side or any plausible path. Even if they controlled the entire government and could do whatever they want, there is no evidence to believe Republicans would actually bring spending down as much as they would need to to sustain the level of taxes they keep insisting on.

Nayeema Raza: Yeah, go ahead.

David McIntosh: Let me interject. I think it’s a false analogy to link tax cuts with spending decisions particularly since 2000 after Bush W was elected. The spending decisions were separately made from the tax decisions and there was no sense that we had to reconcile them in balancing the budget. The decision was balanced budgets didn’t matter. It’s important that we spend the money. We’ve tried various ways of getting to a balanced budget requirement, almost past the balanced budget amendment in the ’90s, made a mistake of not accepting Gephardt’s proposal, which would’ve been fine to include Social Security into that formula.

Then, we’ve tried automatic cuts, sequesters, and other ways of forcing Congress to reduce the spending and the political will has not been there to keep those. In fact, you’re right, Oren, Republicans have joined up with Democrats to break those type of balanced budget limits. The only real solution is to gain a political mandate to actually control spending. You look at the core of what Newt Gingrich put together in Contract with America. He and John Kasich, the budget chairman, were determined to get to a balanced budget. They had a lot of other programs within that, some defense spending increase, welfare and reform, tax cuts.

But the political determination was, we were going to reduce or hold even spending so we can get to a balanced budget. I haven’t seen that momentum. Certainly, the Democrats don’t ever believe that. They think more spending, larger government is the right policy and now we’re seeing, as you point out, $34 trillion dollars in debt. But a third of the Republicans joined in with them and you see that, I think of it as the appropriator caucus of Democrats and Republicans, who get political benefits by spending other people’s money.

Oren Cass: Can I jump in right on this?

Nayeema Raza: Yeah, go ahead.

Oren Cass: Because I think there were two important points there in my mind that I entirely agree with but leads me to a very different conclusion. One is, as you said, there is no link between the tax policy decision and the spending policy decision. That I think it’s exactly what I’m trying to say, that it is not the case that if you increase taxes, well, then spending’s going to run away or if you cut taxes, well, that’s how we get spending down. These are separate conversations in a sense. Then, secondly, to your point, if we are going to make any progress on this, we are going to need a political mandate. We need to actually construct a political coalition that can make progress.

In my mind, the key question is, where is that political mandate going to come from? This is where the $10 of spending cuts, $1 of tax increases I think is such a useful construct, which is more likely as an agreement that could actually make progress politically. $10 of spending cuts with $1 of tax increases or $10 of spending cuts with $0 of tax increases? Which one do you think has a better chance of actually building momentum in the American political system?

Nayeema Raza: David?

David McIntosh: If those $1 of tax increases are honest tax increases that the middle class is going to pay, I don’t think that builds the political coalition. By the way, I want to thank Oren for what he’s doing in one very important way. Older guys like me that served with President Reagan view the policies that he had, I think, correctly as the right vision for a good economy, good country, strong country. Part of their criticisms I hear is, you guys just keep saying we need to do Reagan. We need to think of policies, conservative policies that will—

Nayeema Raza: That’s not what you’re saying?

David McIntosh: That’s correct. I have stopped saying that and started arguing for the virtues of the policies that I believe in. I think Oren challenging conservative leaders to do that and to reach out to a broader coalition that Donald Trump brought in to the Republican Party, which includes a lot of middle class working families that grew up voting Democrat, felt the party left them and now will vote Republican. Let me turn to why I think the tax increase part of it is a mistake.

Nayeema Raza: I want to ask you a question before you get there, which is, I just want to point out that Oren, when he was stating back your two positions, I think the first one was a bit different to what I heard David say, so I want to get to that, which is, I don’t think… David, if I understand your argument correctly, you don’t think that cutting taxes is necessarily going to get us decreased spending, but you think that a discussion around cutting taxes could distract us from the more urgent question around cutting spending. Is that correct?

David McIntosh: Yes, that’s correct.

Nayeema Raza: Is that an appropriate restatement? I also want to let you—

David McIntosh: Corollary to that, I don’t think his trust that we could put together a package of some tax increases and a lot of spending cuts will actually work politically. The ability to actually enact those spending cuts, there’ll be incredibly pressure against it. Now, Oren posed the thing, “Well, is it better than no tax increase?” He said, “Do you have a better chance at it?” I think we’ve got to figure out a mechanism and a message that directly focuses on the spending part and forces people politically to do that because of the voters being so upset at what’s happening.

Nayeema Raza: What is your plan to do that? Because, obviously, a big part of spending is Social Security and Medicare, which almost all Democrats and most Republicans aren’t going to feel politically comfortable cutting given their constituencies. What’s the plan to get there?

David McIntosh: I think politically it’s not wise to start with that as your focus on cutting spending. One of the things that is little known is that about a third of programs we call entitlements are not Social Security, they’re not Medicare, they’re farm subsidies. There are other programs that didn’t want to go through the political process, so they convinced Congress to make them a permanent spending plan. I think we should look at those and see, are we getting our value out of that type of spending? Then, I think an up and down review of what the government spends money on and getting rid of the spending that we don’t need that, frankly, the private sector should provide for.

Along with the concern about the economy is a growing concern about institutions like colleges and corporate America pushing a social agenda that many voters don’t want, and that’s part of the coalition.

Nayeema Raza: You’re talking about things like student loan forgiveness. Is that what you’re talking about?

David McIntosh: Student loan forgiveness, but more pressure for a woke agenda in the workplace, a woke environment at the universities. Those are not pure, to say economic issues, but I think actually the solution to those, and some people have said, okay, we’ll regulate. We’ll regulate the tax industry and tell them they can’t just have liberal social arguments. They’ve got to have conservative ones. I think that’s a mistake. I do think we should look at all the spending and say, where have we subsidized social programs that we think are bad for the country? Let’s stop that spending.

Nayeema Raza: I want to let Oren respond to that.

Oren Cass: I appreciate the way David has run through those priorities because when we talk about how Republicans have failed to get spending under control, this is how. The list of things you just described, if we cut all of those, if we wiped out all the woke-related spending entirely, if we wiped out farm subsidies, if we did that stuff, there is no way we would get spending as a share of GDP below 20%. It has not been below 20%, by the way, average over the last 40 years. It has not been below 20% average over the last 20 years. There’s no way that sort of budget is going to get spending as a share of GDP under 20%.

Now, I think the things you’ve described are good, we should do them, but this underscores the fact that while we have a major spending problem, it is not only a spending problem, that the GOP tax agenda, if we look at what the Trump policies were raising as a share of GDP, it was about 17%. What you’ve just described, I have not seen any plausible budget that gets our spending down to 17%. What you’ve just gone through explains why, because as politically unwise as you say it may be to raise taxes, the spending cuts that you would need to get to 17% of GDP is far, far, far more politically unwise.

What we have is a situation where, yes, spending has to come down a lot. Let’s say not only 20, let’s get to 19. You still need more tax revenue and that’s where this 10 for one piece becomes so important and where, by the way, if you’re actually trying to craft a plan, you can do it responsibly.

Nayeema Raza: I want to just pause for a moment so listeners understand. The reason you’re talking about a 20% target is because the current federal deficit of $34 trillion is about 1.2 times GDP. Correct?

Oren Cass: No.

Nayeema Raza: Is that why you’re trying to bring it down?

Oren Cass: If you just think about the size of our government, the most helpful way to think about it is what share of our GDP is collected as taxes and what share is spent? That 20% number happens to be going all the way back to 1980, roughly what the federal government spends every year. Right now, we’re way above that. To David’s point about the spending problem, I agree with.

Nayeema Raza: I want to let David respond to that.

David McIntosh: My solution wouldn’t be to proportionally increase spending to GDP. It would be to hold it flat and grow GDP through a low tax policy because if you increase taxes, that decreases the growth of the economy, decreases wages, decreases the ability of people to invest and deploy their capital because the resources are coming to the government rather than staying in the hands of the private sector.

Nayeema Raza: You believe that cutting taxes is sufficient to raise revenue because it will so stimulate the economy?

David McIntosh: We have a relatively low tax environment now which should assist us in growing the economy. You’ve got other policy questions like overregulation and government competition with the spending that are a problem. What I’m worried about is something Oren mentioned, the automatic tax increase that’s coming up in 2025.

Nayeema Raza: Which, otherwise stated, could be the expiry of tax cuts.

David McIntosh: Right.

Nayeema Raza: Yeah, not increases. You’re saying that lower tax—just so I can understand—you’re saying that lower taxes, a consistently low tax environment, which you think we currently have because of Donald Trump’s 2017 tax cuts actually acts as a stimulus for private investment, for the economy to grow, and that government could tax that economy at a lower rate to bring in more revenue. The challenge has been the uncertainty that’s created by the fact that these tax cuts are not permanent. That’s not allowing the growth that you would like to see. Is that your argument?

David McIntosh: On the tax side, that’s right. But I think those other policies—

Nayeema Raza: Okay. I want to let Oren respond.

David McIntosh: But let me just say, I think there are other policies that will accelerate that growth such as reducing the regulatory burden.

Oren Cass: I think it’s important to note we’ve established here, there is no actual plan to get spending down to the level that we are apparently willing to tax at.

Nayeema Raza: Although it sounded like there was some interest in reducing woke spending. I don’t know. I don’t know exactly what—

Oren Cass: It doesn’t matter. The share of the budget, it’s irrelevant.

Nayeema Raza: But, yeah, or farm bills or something.

Oren Cass: It’s an interesting political argument. It’s not going to do anything about our spending problem.

Nayeema Raza: Got it.

Oren Cass: What you see happening now, and this goes exactly to this question of, is it fiscally irresponsible? There’s no actual plan here to balance the budget. Instead, there’s a claim that if we keep taxes low enough, we’re going to get enough growth that the budget will magically balance over time. I want emphasize-

David McIntosh: Let me interject. I do think we should actually have spending cuts start with just returning pre-COVID spending because we don’t need all the spending that was added during COVID. I do advocate for very significant spending.

Oren Cass: Sure, but that does not close deficit or achieve what we agreed right at the beginning, which our goal, which is we need to be raising enough revenue to cover all the spending we are in fact doing.

David McIntosh: No, no, I haven’t agreed with that as a goal. I think we need to have a tax policy that contributes to economic growth and that when we cut the spending back to the way it was pre-COVID and hold it level, that growth will get us to a point where we can balance the budget.

Oren Cass: Right. Because it’s important to get to this, this idea that, well, if we cut taxes, we’ll get more growth. It is just not true. It is something people say. I just want to read, let’s look at the Bush tax cuts as an example. I brought a great paper written by Andy Samwick, chief economist in the George W. Bush administration, said there’s no first order evidence in the aggregate data that these tax cuts generated growth. Careful microeconomic analyses give similar conclusions. More generally, tax cuts that are financed by debt for an experienced period of time, which is what you are proposing, will have little positive impact on long-term growth and could reduce growth.

Okay. The actual economic literature on deficit finance tax cuts, especially when taxes are as low as they are already, right? This is not Reagan days, 70% marginal rates. We already picked that fruit. There is virtually no evidence that at current levels tax cuts generate growth. It is simply something we say to justify the lower tax cut, the lower taxes, which if that’s your priority is fine, but it is not fiscally responsible.

Nayeema Raza: We are going to have to go to a break, but I want to keep discussing this and we will come back right after this break to continue the conversation around the question, is the Republican Party’s refusal to raise taxes fiscally irresponsible? When we come back, David, I’m going to have you respond to that. It’s challenge of your argument that reducing taxes will not stimulate economic growth. We’ll be right back after this break. Welcome back to Open to Debate. I’m your guest moderator, Nayeema Raza, and I’m joined here by debaters, Oren Cass and David McIntosh, two influential Republicans associated with American Compass and the Club for Growth, respectively.

They have been vehemently but civilly, I would say, disagreeing over this question, is the Republican Party’s refusal to raise taxes fiscally irresponsible? We were just in the middle of a heated exchange where Oren, you were quoting economist Andy Samwick, and challenging a core part of David’s argument. David’s argument being something we’ve heard from a lot of conservative Republicans and economists saying that tax cuts will grow the economy, they will stimulate private sector investment, they will make the economy more productive.

David was pointing to the 1990s, under Clinton, as a vision for what that could be and create more revenue for the government. Even at a lower tax rate they could yield with a smaller percentage of a bigger pie, greater revenue. David, what do you say?

David McIntosh: Yeah, I vehemently disagree with that analysis because the fact is, after the Bush tax cuts, we saw the economy grow faster than inflation, which it hadn’t been doing before. After the Trump tax cuts, we had 3% GDP growth and investment grew from 2.5% to 4.5%. There are incentive effects with these tax cuts that do lead to a stronger economy, more jobs being created, higher wages, which happened after the Trump tax cuts. You can be very selective in these economic studies to get to a result. My thesis on this is that both for Bush, at the beginning of our deficit spending run, more for Obama, and even more for Trump.

The overhang of the debt and refusal to deal with the spending question is what has caused the negative effects on the economy. To have a solution that says we’re going to make it harder for our economy to grow, harder for people to invest, harder for workers to earn more money by raising all of their taxes and assume that that’s going to take care of our debt problem, I think, is a fallacy. The Democrats believe it. I don’t think Republicans should.

Nayeema Raza: I want to really go back to the principles. One of the principles that I think is really interesting is that spending and taxes don’t seem to be related in many ways. I think both of you are arguing that. We’ve seen two crises, a pandemic and a recession in 2008 and 2020, obviously, with the pandemic, where we’ve needed massive stimulus bills coming in under Republican administrations and continued under Democratic administrations, on both sides. The Democratic administrations on both sides. There’s also been wars. We’ve been a nation that’s been at war for the last 20 years until the withdrawal from Afghanistan and now is supporting, obviously, a quite expensive foreign policy over in Ukraine and in the Middle East.

These have been drivers of spending in addition to entitlements that are growing. Another driver of spending of course is rising inflation. The government, there was a $2 trillion deficit last year and $600 billion plus of that was driven by the fact that in 2022, that was used to pay down the debt because interest rates were rising. I just want to ask this question. Is any of this realistic? We are talking about a $34 trillion deficit. Is it realistic to actually make a dent? Because that deficit has just gone up year after year. It’s an up into the right curve.

David talked earlier in his opening argument about the idea that this has been justified because of a sense of the currency will carry us, and that is being challenged by the strength of powers like China. Oren, is this even possible what you’re laying out? Is it a pipe dream? Is it possible? Tell us.

Oren Cass: Well, I’m very optimistic. The idea that in a democracy and so forth, people won’t be responsible or whatever else. For the first two centuries of the American Republic, we had no problem running a relatively balanced budget, raising taxes commensurate with what we spent. The 1980s and Reagan’s policies were very interesting in a lot of ways. I think on net, they did a lot of good. There was obviously the foreign policy dimension of it as well. Then, coming to the 1990s and again, balance the budget. Again, let’s just keep in mind Clinton tax environment, much higher than today’s tax environment.

If we went back to the Clinton tax environment, we would cover the revenue raised side of any sort of deal easily. Now, David would say that would destroy wage growth.

Nayeema Raza: What would you say, David?

Oren Cass: I think David will tell you this is—

David McIntosh: The spending differential is huge.

Oren Cass: That’s true. That’s right. We have to bring the spending down, too. But my point is that, well, somehow this is bad for the economy and growth will slow, investment won’t happen, wages, et cetera. If we had the Clinton tax environment, is refuted by the Clinton tax environment. The reason I’m going through this is to say, what changed? We agreed on this at the beginning, I think, is one of the two political parties decided we will never again accept raising taxes. We’ll just keep cutting them and also, by the way, not be very responsible on spending.

Nayeema Raza: I want to ask, David, you identified yourself as an old guard Republican who’s worked in the Reagan administration, et cetera. This is when the policy changed. There were times when President Kennedy wanted to cut taxes. The Republicans advised him against or fought him to keep taxes high.

David McIntosh: No, but he did and it benefited the economy.

Nayeema Raza: He did, but this is a relatively recent phenomena in the Republican Party. Explain to us why you think it’s so fundamental, why you think it’s so core.

David McIntosh: Yeah. Again, the point you emphasized that I’ve made earlier is, a tax increase is a deflection from the real problems we have. I do, too, remain an optimist. I think it’s going to take leadership that looks beyond the question of taxes and says, what is a responsible spending here? We shouldn’t, as politicians, just try to buy our re-election by adding more of spending. But that’s just one of the other questions. Another one is to take a deep look at the role of government in the economy and in our lives. We’ve used the regulatory systems from securities regulation, approval of health care products, labor regulation.

To impose an enormous burden, particularly on the manufacturing, producting side of the economy. The financial side’s relatively less regulated, but on the production side there’s a huge economic burden that we place on them that we don’t get that much benefit from. We need to protect safety, health and the environment, but we don’t need the government dictating how the private sector allocates its resources for those goals. We should set the standard and then let the incentive effect of the private sector and competition who can meet the goal the cheapest and the most effect. Let me just close by saying the cost of that is born almost directly by working middle-class Americans.

A job in America costs an extra 30,000–35,000 in regulatory costs. If a job goes to Mexico or to China, they don’t pay those costs. In addition to the wage differential that people look at, the cost of government in our working economy is enormous and we’ve got to have fine leadership who will deal with that and cut it.

Nayeema Raza: This comes back to a point that Oren was making earlier, who pays for the cost of increase in government? I want to give you, Oren, a minute to respond to this and then I want to move forward to the political mandate question, but take a moment to respond to this idea of who pays for regulation.

Oren Cass: Yeah, well, I agree entirely on a lot of these regulatory points. There’s, I think, a tremendous opportunity. I would actually underline it and go further, which is to say, this speaks to the fact that good pro-growth policy isn’t the same thing as tax cuts. I think there are enormous number of things we could be doing to promote growth, many of which David just described. Not coincidentally though, we’re not talking about taxes anymore because on the tax question it is not at all clear that at the current tax rates that we have, more tax cuts is somehow the thing that we need.

There’s this wonderful anecdote, as they were trying to sell the Trump tax cuts, I think it was the Wall Street Journal annual CEO conference, one of the Bush officials was up on stage talking about how this was going to unleash investment, whatever. The moderator just turned to the audience and said, how many of you are going to increase your investment if the Bush tax cut goes through? Literally, no one raised their hand, to the point where the Bush official said, why aren’t your hands up? That’s the reality. This is not at this point, actually, good economics or good policy. It’s just ideology and it’s not supported by the actual history of what has worked in America.

Nayeema Raza: Okay, so I want to get into this question of what’s politically popular or what’s going to actually move the needle with voters? Because according to a 2019 Pew study, over half of Americans think that the tax system is unfair, over half of them feel they pay too much or they feel that they pay more than their fair share in taxes. The Republican policy, whether or not it’s fiscally irresponsible of not raising taxes, this is a question we’re asking, it seems like it’s politically popular. Would you both agree with that? Voters like low taxes. Would both of you concede to that?

Oren Cass: Of course, voters like low taxes.

David McIntosh: They look at what these elected officials do when they raise the taxes and how they waste the money and continue to have deficit spending so, yeah, they’re very skeptical.

Nayeema Raza: Yeah, and that also ties in Democrats who are inheriting tax cuts to want to keep some of those tax cuts for particularly the middle class or for a lot of their voter base. You talked earlier, David, about needing a political mandate. I assume that to you means a Republican majority in the House and Senate or even the White House, but the ability to execute on policy vision. I wonder if part of your argument is that it’s irresponsible for Republicans to raise taxes because it’s politically profitable for them to keep taxes low and therefore get the mandate to do all these other things like deregulate or cut spending that you believe Republicans are going to do even though we’re not necessarily seeing that on the spending side. Is that fair?

David McIntosh: It’s not really fair, Nayeema. Good policy is good politics, so I think it’s good policy to say, what’s on the table now is whether we’ll let an automatic tax increase come in in ’25. Republicans should say no, we want to extend the current tax structure, not raise your taxes. But that should be one part of five, six, 10-agenda items, hopefully half of them on the economy. A true and sincere effort and program to cut the spending back to pre-COVID levels, a plan and an agenda to deal with the regulatory costs that limit the creation of new jobs and increasing wages.

I believe in free trade, so a trade program that lets us sell our products overseas and at the same time recognizes we have national security threats from China, and that we’ve not paid attention to that in the past with our free trade policies. But I think an agenda with those four or five pillars of pro-growth policy. The tax one is, at this point, Oren’s point is correct, we’ve cut taxes from the historic highs of the Kennedy days and the Reagan days, but the immediate agenda would be not to raise them and do that by extending the Trump tax cuts.

Then, the rest of the agenda I think is what helps really generate growth and that puts the whole economy and the public, the voters, in a much better view of government because they’ve done something to help them.

Nayeema Raza: Oren, do you want to reply to that? Because I think that it seems… Yeah, I’ll let you reply.

Oren Cass: The answer is yes, I always want to reply.

Nayeema Raza: Yeah, but I want you to specifically reply to whether that agenda that David laid out, it seems to you sufficient to not require taxes to be increased or to at least not commit to a policy to not increase taxes.

Oren Cass: Right. Look, there are some parts of what David described I agree with entirely, some I don’t. We could have policy debates about any of those.

Nayeema Raza: Yes. I don’t want to go there.

Oren Cass: The reason this debate is about fiscal responsibility is because it is very important, particularly given our current situation, that we be fiscally responsible. The question therefore is, what is it going to take to get what is a totally out of control fiscal situation back to an effective one? As we’ve discussed, we both agree spending reductions have to be a huge part, certainly, the majority of what’s going to have to close that gap. The question at the end of the day, and this is where I think the kind of this poll versus that poll isn’t necessarily especially useful is, what is the set of actual choices and tradeoffs available to the nation and the American people? Who are the leaders who are actually going to step up and lead?

Nayeema Raza: I want to ask a specific choice in that, and we have a few minutes left. I want to ask specifically about a particular kind of tax, which is a very politically heated discussion, carried interest. The carried interest tax provision, which was thought that it would come down under Biden’s Inflation Reduction Act, but Senator Kyrsten Sinema, a Democrat, stood up for the lobby and ensured that the private equity tax benefit, private equity venture capitalist hedge fund tax benefit that allows their carry in these vehicles to be taxed at a lower long-term capital tax gains rate be allowed to continue. I’m curious if each of you would support raising taxes on those financiers by getting rid of the carried interest tax. Oren, you first. Are you supportive?

Oren Cass: I would certainly get rid of the carried interest loophole. I just would say I do want to—

Nayeema Raza: But I want to hear from you.

Oren Cass: Yeah, but I just want to note that this is the Left equivalent of “let’s cut woke spending.” Nice political talking point. I think substantively we should get rid of it. It has zero impact on the actual fiscal situation.

Nayeema Raza: Yes, because it would not make as much of a dent as a real significant tax weight.

Oren Cass: It’s a political talking point, the same way that woke spending is.

Nayeema Raza: Okay. What do you think, David? Would you agree to such a tax because that wouldn’t affect the middle class, right?

David McIntosh: Well, I would not get rid of that for the following reasons. One, this is a little bit wonkish, but over the last 5–10 years, the big loophole’s been shrunk. They have to hold the value longer. Many of the hedge funds don’t get the full advantage they used to from that. It’s not as big, a wide open disparity between that form of investment and others. But the real reason I wouldn’t close it or change it is, at that level, finance and investments are international. It’s very easy for the people who take advantage of that now to move to Europe, England, other financial centers.

When they do, they could still invest in America and American companies but psychologically, they’re not here and they’re going to invest less in our country. I don’t think it raises any real revenue and it opens us to this risk that the financial structure moves overseas, no longer benefits American companies.

Nayeema Raza: Okay. That’s helpful. Thank you. I want to just close with asking Oren, which taxes would you suggest increasing? You’re saying carried interest is not a good example. What are you talking about increasing?

Oren Cass: Well, so one area is tariffs, I think, and this gets into trade policy also, but tariffs generate a huge amount of revenue. That’s one place. I think another is we have a lot of tax expenditures, tax breaks in the code. Closing them does not really have an effect on growth at all, to the extent that’s what you’re concerned about and especially for higher income households, mortgage interest deduction, health insurance deduction, these kinds of things. There’s literally hundreds of billions of dollars in those places. Then, I would take marginal rates back to where they were in the Clinton administration, which as we saw was perfectly compatible—

Nayeema Raza: What was the highest marginal rate at that time?

Oren Cass: 39.6.

Nayeema Raza: Which was part of the Biden’s policy, right?

Oren Cass: We bounced back and forth up to that but even if you go a point or two higher than that, we’ve seen that there is no conflict between that in the kind of investment economic growth we want.

Nayeema Raza: David, are any of those increases acceptable to you?

David McIntosh: I’m very tempted to make a political response and say—

Nayeema Raza: Let’s hear it.

David McIntosh: … that sounds like a Democrat Party program, that they’d have a wet dream if Republicans would agree with that. But to take it on its merits, the one part I would agree with is to close a lot of the tax expenditures. I wouldn’t touch the interest rate deduction and I wouldn’t touch the charitable deduction because those are so fundamental to the way our society’s been built up in very good ways. Those are tax spending, if you will, that have led to really good things in our society. A robust charity network, home mortgages, people living and owning their own home creates a different community.

But the rest of them, a lot of these corporate benefits and little deductions and exemptions they have, I agree with Oren. We should eliminate those, get closer to a flat tax. I wouldn’t raise the rates because I think that would restrict investment and hurt the economy. On tariffs, I think we have to acknowledge the people who pay those tariffs are the customers in this country, either business to business, so if you put a tax tariff on steel when it comes in, then a company that uses steel to make a car, to make anything, pays higher cost for their input and passes that on to their customers.

Nayeema Raza: So not a fan of tariffs?

David McIntosh: I’m not a fan of tariffs.

Nayeema Raza: Got it. Even though it’s a part of…

David McIntosh: We think, at the Club for Growth, we think, what would this policy do for someone who shops at Walmart? Walmart shoppers have a huge benefit of less expensive goods, most of which are imported from India, China, and other countries.

Nayeema Raza: We’re going to run out of time, but I want to ask you each for 15 seconds before we get to closing arguments. What has been the most compelling argument you’ve heard from your opponent in this debate? I’ll start with you, David. What’s the most compelling argument?

David McIntosh: I think it does go back to the, we need to clean up the tax code for these benefits for particular industries or parties and get to a flatter tax that is lower and everybody benefits from.

Oren Cass: I appreciated David’s point just now about the typical household of the Walmart shopper. I think if the Club for Growth’s agenda and priorities were focused on the well-being of that household, I would be very happy.

Nayeema Raza: Are you contending that they’re not?

Oren Cass: That would be a much longer discussion.

David McIntosh: We’ll say yes and go with that.

Nayeema Raza: Okay. Sounds a bit like a no to me. With that, I want to get into our closing arguments. Oren, you’re going to have the first shot at the mic drop. You have two minutes to tell us why you are arguing yes to the question, is the Republican Party’s refusal to raise taxes fiscally irresponsible?

Oren Cass: Well, I think the definition of insanity is doing the same thing repeatedly and expecting a different result. We have now had 30 years of a Republican Party that has insisted on signing Grover Norquist’s tax pledge and also begging the table and claiming that we are somehow going to get spending down and balance the budget and things have only gotten worse, regardless of who’s in power. The idea that if we just do that a little bit harder, it’s really going to work now, is totally implausible and would I think lead to exactly the pessimism you described. Yet, the 34 trillion is just going to keep going up if we keep doing that and it will keep going up until the system truly breaks.

That is the definition of fiscal irresponsibility. What are the alternatives? I guess one alternative would be betting that somehow you’re going to claim some supermajority and have a totally different set of leaders and all the world’s incentives are going to change and magically this approach that has never worked at all is going to work. Or, we could look at the thing that worked repeatedly and consistently throughout American history, and by the way, is common sense, which is that people have to compromise. We have to pay for the spending we do. If we want people, the voters, to care about spending and think about bringing it down, they have to understand that they have to pay for the spending that we do.

What does that look like? That looks like an actual deal where both sides come to the table and make real commitments. The idea that, well, but we’re never going to get the spending cuts, just isn’t true. That’s the entire premise of legislating. If you do a package, if all we did was say, hey, all of those expenditures that we were talking about, we want to actually put those on the table and in return for which, we actually want some serious legislative changes to things like farm subsidies. That could be a bill that actually moved with bipartisan support very quickly and was now a positive step. That is entirely plausible except for the Republican Party’s refusal to raise taxes, which is fiscally irresponsible.

Nayeema Raza: Thank you, Oren, for that. David, now you’re going to have the final word here. Give us your closing argument. Why are you saying no to this question, is the Republican Party’s refusal to raise taxes fiscally irresponsible?

David McIntosh: Thank you. It’s been great to be here with both of you. I firmly believe it would be a terrible mistake for the Republican Party to embrace a tax increase agenda. I think it would first of all hurt Americans who are working and trying to make a living for their families. It would hurt the investment in the economy and it would grow the government, which would limit individual freedom. When government takes resources out of the economy for its spending priorities, it means people have fewer resources to pursue their dreams, their lives, their freedom to make choices for themselves.

The economic effect of that is to slow down the entire economy and to become more like a socialist country like they are in Europe, which the citizens end up suffering for that with a lower benefit of living, a lower lifestyle and less benefits for them and their children. It would be a mistake for Republicans to embrace that. I also think it would be politically disastrous for Republicans to do that because they’re viewed now as the only thing that is holding back government. As you pointed out in poll after poll shows, Americans no longer feel government is actually good for them.

The government has lost the trust of the American people in part because of the dysfunction we see, in part because of the self-interest that the elite who run government have shown in the way they deploy it. I think the best economic solution is to face the fact that there’s an automatic tax increase on the table. Oppose that, say we’re going to extend the current tax cuts and then develop a program to grow the economy to get back to a robust competitive economy that isn’t micromanaged by the government.

Nayeema Raza: Thank you, David. Thank you, Oren. I’d like to thank our debaters for being with us here today. We so appreciate you showing up. You’re approaching this debate with an open mind and strong arguments and bringing your thoughtful disagreement to the table. In short, you’re being open to debate. Thank you for being here, gents.

Oren Cass: This was awesome. Thank you.

David McIntosh: It was, thank you.

Nayeema Raza: It was a lot of fun.

David McIntosh: And the commitment to debate, I think, is even more important than tax policy and so thank you for sponsoring a program that promotes that.

Nayeema Raza: Thank you. I want to give a big thank you to the audience who tuned in to this episode of Open To Debate. Thank you very much and a big thank you to you, the audience for tuning into this episode of Open To Debate. Thank you for listening to Open To Debate. As a nonprofit working to combat extreme polarization through civil debate, our work is made possible by listeners like you, the Rosenkranz Foundation, and supporters of Open to Debate. This show is generously funded by a grant from The Laura and Gary Lauder Venture Philanthropy Fund. Robert Rosenkranz is our chairman, our CEO is Clea Conner, and Lia Matthow is our Chief Content Officer.

This episode was produced by Alexis Pancrazi and Marlette Sandoval. Editorial and research by Gabriella Mayer and Andrew Foote. Andrew Lipson and Max Fulton provided production support. Mili Shah is Director of Audience Development. The Open to Debate team also includes Gabrielle Iannucelli, Rachel Kemp, Linda Lee, and Devin Shermer. Damon Whittemore mixed this episode and our theme music is by Alex Clement. I’m your guest host, Nayeema Raza. We’ll see you next time on Open To Debate.

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