This Week Transcript: Peter Orszag and Eric Cantor

ORSZAG: What's very clear is this budget delivers a tax cut to 95 percent of working families. I mean, I think we have to come back to the basic question here. I just reject the theory that the only thing that drives economic performance is the marginal tax rate on wealthy Americans and the only way of being pro-market is to funnel billions and billions of dollars of subsidies to corporations.

That is the heart of this argument. And I think it's -- I think we've already -- we've seen what the effects are over the last eight years.

STEPHANOPOULOS: But you do concede that this capping of carbon emissions is going to increase energy rates for just about everyone in the country? And that is the equivalent of a tax, isn't it?

ORSZAG: Well, I think we have to be -- let's be fair about this. Either you're going to look at what -- what is collected through the tax code and what's returned through the tax code.

And on that basis, there's a tax cut for 95 percent of Americans, or you have to go all in. Let's also count the benefits that families get through Pell Grants, the benefits that they'll receive through constraining health care costs, the benefits that they get from weatherizing their homes, and so on. All in, this budget makes the vast majority of American families much better off.

STEPHANOPOULOS: So you're not -- you're not disputing that this package -- the cap-and-trade on its own will increase prices for -- for most Americans, but they're going to be getting other benefits in the budget?

ORSZAG: Absolutely.

STEPHANOPOULOS: And there is also -- the Republicans are also taking aim -- including our next guest, Eric Cantor -- at your proposal to shave deductions, the benefit of the deductions for Americans earning over $250,000 a year. Congressman Cantor says, "Is there any better time to have charities in full throttle than when you have tough economic times?" Your response? ORSZAG: There's been a lot of confusion about this, too. Let's be clear about several things. First, the best thing that could help charitable contributions is to get the economy back on its feet. That was the whole goal of the recovery act.

This proposal doesn't take effect until 2011. The revenue would be dedicated to health care reform, and that is the key to our fiscal future, so let's keep our eye on that.

Furthermore, the majority of contributions come from middle-class families. And you have to ask this fundamental question...

STEPHANOPOULOS: Who, you say, aren't going to be hit by this?

ORSZAG: Not only are not going to be hit by it, but let's ask a question of fairness. A middle-class family makes $1,000 contribution to a charity, they get $150 back on their taxes. Bill Gates makes that same contribution, $1,000 to the same charity, he gets $350 back on his taxes. All we're saying is the tax break for Bill Gates should be walked back a bit to $280.

STEPHANOPOULOS: But you know it's not just Republicans who have a problem with this proposal. Key Democrats, like the chairman of the Senate Budget Committee, Kent Conrad, I think Senator Baucus, as well, have said, wait a second, we're not sure we can go along with this. If the Senate and the House will not go along with this proposal to shave deductions, does that mean you'll scale back your health care promises?

ORSZAG: Well, we hope they will go along with it. And what we have said is...

STEPHANOPOULOS: I know, but that's not what I asked.

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