TRANSCRIPT: Freedom Partners Forum: Ted Cruz, Rand Paul and Marco Rubio In Conversation with ABC’s Jonathan Karl

Take a look at what Cruz, Paul and Rubio shared with ABC's Jonathan Karl.

ByABC News
January 26, 2015, 12:54 PM

— -- The first 2016 presidential forum of the year took place on Sunday Jan. 25 featuring a conversation between Sens. Ted Cruz, R-Texas; Rand Paul, R-Kentucky, and Marco Rubio, R-Florida, moderated by ABC News’ Chief White House Correspondent Jonathan Karl.

The panel, which took place in Palm Springs, California, was sponsored by the Freedom Partners Chamber of Commerce, a not-for-profit connected to conservative billionaires Charles and David Koch.

The following is a complete transcript of the 75-minute forum:

ABC News' JONATHAN KARL:So good evening, as you heard I'm Jonathan Karl with ABC News. It is great to be here in Palm Springs with three United States senators that are not only actively considering running for president but as far as I can tell actively preparing for possible runs for president. So it is great to be here.

This is the first time this year that we have seen multiple potential or even likely candidates for president sharing a stage. And I can assure you it will not be the last time. But this was the first time. My goal is simple. I want to have a free-flowing discussion. There are no timers, there are no bells. I don't want any talking points. No campaign speeches. Just what I hope'll be a lively and very informative conversation.

So with that, let's get right to it. I wanna start with the big picture on the economy. We've heard a lot of this from the present. Seven million jobs created since he took office. Unemployment rate is down to its lowest level in about eight years. Gas prices down. Even the deficit is down from where it was a few years ago.

So as we remember the last time we had a Republican in the White House spending was rising, deficits were rising and we had the greatest recession since the Great Depression. So, Senator Cruz, why should voters trust the Republicans with the economy again?

SENATOR TED CRUZ:Well, look, for one thing what we're doin' now, it isn't workin'. And--

JONATHAN KARL:Wait, seven million jobs.

SENATOR TED CRUZ:--but let's talk about that a little bit. So you watched the State of the Union last week. We were all sitting there watching it. And it seemed to me like we were watching a description of an alternate reality. You know, my daughters, as you know, are four and six. It reminded me of one of their favorite stories, Alice in Wonderland.

It was not connected to fact. Listen, right now what we have in this country is really a divided America. For those with resources they're doin' great right now. The top 1%, the millionaires and billionaires that this president loves to demigod one or two of whom are here with us today-- the top 1% earn a higher share of our income nationally than any year since 1928. The simple truth is with big government those with resources are doing well.

The people who have been hammered for the last six years are working men and women. We have today the lowest labor force participation since 1978. Ninety-two million Americans aren't working. And you wanna talk about what's making life hard for working men and women, wage stagnation. Median wages today are equal to what they were in 1996, for 20 years.

JONATHAN KARL:Okay, but let's-- and Senator Paul, maybe you can pick up with what I asked was why voters would trust Republicans again, right? I mean, wage stagnation's been a fact for about 30 years in this country. But, again, last time Republicans had the keys we had the greatest financial crisis since the '30s.

SENATOR RAND PAUL:It is okay if I object to the premise of the question?

JONATHAN KARLYou know, I believe in freedom here. So go ahead.

SENATOR RAND PAUL:All right, let's start with somewhere in the beginning of that question there was this statement that the president made which I find to be the most galling thing I've heard in a long time. Or in Texas we might say a big whopper, all right? He said that deficit's decreasing. Well, technically that's kind of true. But it makes you think he's somehow a fiscal conservative.

All right, he quadrupled the deficits for many years and now they're coming off a little bit of quadrupling. But he is said to add more debt than all 43 previous presidents combined. So I think having him the premise of the statement that he's doing anything good about deficits is wrong.

JONATHAN KARL:Oh no, no, no, but to be fair, I didn't say he was doing better by deficits.





SENATOR RAND PAUL:--but here's the thing is you wanna know is the economy getting better? I think it is getting a little better. I think there is some disparity, as Ted said, between high and low. But the reason I would say the economy's getting better is despite the president and despite the president's policies. One of the things that has led the resurgence is oil and gas boom. The oil and gas boom's being done on private land, not public land. We're not allowed to drill on public land. This president should take no credit for any kind of recovery we have.

JONATHAN KARL:So--but--Senator Rubio, you in 2010 looking at the president's policies said that he was putting us-- quote-- "On nothing short of a path to ruin." Can we acknowledge at least that four years later with the unemployment now 5.6%-- you know, economic growth, the stock market about, you know, doubled since he took office, can we at least acknowledge that he didn't bring us to the point of ruin?

SENATOR MARCO RUBIO:No, in fact, we should be even more concerned 'cause we've lost four or six years in the process and I'll explain to you why.

The first is the unemployment rate, one of the significant reasons why the unemployment rate has gotten lower is 'cause less people are looking for work. We've lost-- our labor participation rate is-- has declined rapidly. But here's the second point which the president misses and some in our party miss as well, we-- these traditional markers of economic growth and prosperity don't work like they once did because there has been a structural change in the nature of our economy. Our economy we--this is not a cyclical downturn that we went through simply. It is a massive structural change in the very nature of the economy.

For starters, it's no longer just a national economy, it is truly a global one where your partners, your clients, your customers are-- and your competitors are just as likely to be halfway around the world as they are halfway across the country. And we are increasingly less globally competitive for investment and for innovation because of taxes, because of regulation. And quite frankly, because of anti-business rhetoric from Washington.

Second, many of the jobs that have sustained our middle class have been outsourced or eliminated. They've been replaced by automation or machines. There are better jobs that could potentially take their place. But they're either not being created in this country because of tax policy, regulatory policy, the national debt, Obamacare, or too many of our people don't have the 21st century skills they need for that.

And the third, and that's something that, Senator Cruz touched on a moment ago as well, the wage stagnation is happening at a time when the cost of everything is going up dramatically. And it's not just that the cost of everything is going up. We have expenses we didn't used to have. So my parents as a bartender a maid working at a hotel like some made it to the middle class. But they didn't have a cable bill until I insisted on ESPN. But they didn't have a cell phone bill until their 70s. We didn't have an Internet bill.

We, you know-- the-- and these are the sorts of things that are now crushing people, and especially the middle class. And I'll close with this point, I still teach a course of at Florida International University, a political science course. And most of my students come from what you would consider working class families. Let me tell you what they're really frustrated by and their parents are, they don't make enough for student aid, but they make too little to pay for it. So they're being weighed down through an extraordinary amount of student loans as the price of higher education continues to artificially inflate because we have a higher education monopoly in this country. Basically a university higher education cartel. All these factors are happening and the president's still trying to solve all this with big government, 20th century ideas that don't work anymore.

JONATHAN KARL:So I don't know if you guys saw this but Mitt Romney's talking about running again. Talking to people about a potential candidacy.

SEN. CRUZ:Really?


JONATHAN KARL:Yeah, this is --and he said that he would have three pillars of a campaign if he were to do it again. He says it would be ending poverty, empowering the middle class and national security. So my question-- and I-- this is a jump all to any of you, if Mitt Romney had run on those three pillars last time around, would he have won? Don't all talk at once.

SENATOR MARCO RUBIO:Well, if he had run on those three pillars, would he have won against Barack Obama?


SENATOR MARCO RUBIO:I don't know. I will, you know, I don't bla-- Mitt Romney I think is a extraordinary person. I thought he ran the best race he possibly could. It didn't work out.

JONATHAN KARL:You thought he run-- it was the best race he possibly could?

SENATOR MARCO RUBIO:Yeah, I mean, the best he-- you know, I think he put it all into the race. He, and I think, you know, he's someone who's earned the right to decide whatever it is he wants to do. I don't want to sit here and talk bad about the guy or about how he ran his campaign or what he should've done here or there. Monday morning quarterback is not something that, you know, I'm interested in being. I will just say that the things he's identified are all, at the end of the day, particularly, well, all three of 'em are directly tied to economic growth.

For starters, as I said, on economic growth today is as dependent on global factors as ever before. And that's why a strong American leadership is so important. Because in the absence of American leadership it leaves a vacuum that creates chaos on the planet. We have an important role to play that no other nation can play. And that about eliminating poverty, the best cure for poverty is a job, a good paying job. And our economy isn't producing enough of them.

If you're willing to work for $8 or $9 an hour, you can find a job. But you won't be able to pay your bills. So I do think those are essential issues that I would-- that are fine to focus on. But I think the bigger issue that we should look at is the one I outlined earlier and that is we are going-- undergoing a dramatic economic transformation and our government and many of our leaders, in both parties, are stuck in the 20th century in terms of trying to solve them.


SENATOR RAND PAUL:I'm kinda with Ann Romney on this one. No, no, no, no, never.

JONATHAN KARL:No, no, no, to Mitt Romney running again?

SENATOR RAND PAUL:Yeah, but I think the-- seriously, what I would say-- and the reason is is that, once again, I agree with-- Marco on this, I think he's a good man, he's a generous man. He would of made a great president. He would of been much better than this president.
But to win the presidency you have to reach out and appeal to new constituencies. And I just don't think it's possible. And if he thinks, "Well, I'm just going to change a few themes and next time I'll reach out to more people," I think it's a little more visceral than that how you connect with people. And I don't think that's anybody's fault. I'm just not sure that that visceral connection is there with enough people to win a general election.

JONATHAN KARL:Well, let's get this, 'cause in talking about these three pillars what Romney is saying-- and he's talked about the gap, actually Senator Cruz, you alluded to it as well, the increasing gap between rich and poor in this country.And my question to you, beyond Romney, this is a much bigger issue than any one candidate is do you think that we have a problem in this country with the rising-- with the increasing gap between rich and poor and is it the job of government to try to lessen that gap?

SENATOR TED CRUZ:Look of course we have a problem. And I have to say I chuckle every time I hear Barack Obama or Hillary Clinton talk about income inequality because it's increased dramatically under their policies. Now I-- you look at the last election-- I think 2012 the reason Republicans lost can be sum up it in two words, 47%.

And I don't just mean Mitt Romney's comment that was caught on tape that, "The 47% of Americans who are not currently paying taxes who are in some as dependent on government, we don't have to worry about them." I don't just mean that comment.

I think Mitt is a good and decent and honorable man. I think he ran a very hard campaign. But the central narrative of the last election-- what the voters heard was, "We don't have to worry about the 47%." And I think Republicans are and should be the party of the 47%. You know, when you look at what we have right now, we have a structural system where those who walk the corridors of power in the Obama administration, they're getting fat and happy. The counties in and around Washington D.C. are getting richer and richer and richer with crony capitalism. And those that don't have access, it's getting harder and harder to move. And I think we need to move back to a dynamic where you have Schumpeter's creative destruction, where you have small businesses that are creating opportunities.

We should be fighting for the little guy who has dreams and hopes and desires. And what has happened under Barack Obama-- look, when government takes over the economy what it does, what it's done in the European socialist nations is it freezes everything in place. And it exacerbates income inequality. The reason so many millions of people have come to America seeking freedom, the reason Marco's parents fled Cuba to come here, the reason my dad fled Cuba to come here is this is a land where anybody can start with nothing and achieve anything. And in the last six years that income mobility has gotten harder and harder for people to achieve.

SENATOR MARCO RUBIO:Senator, I would just-- and one of the things we were able to say in Florida, Ted, and I think you're able to say in Texas is the reason why people fled New York and came here--


SENATOR MARCO RUBIO:--is because of and both of our--

SENATOR TED CRUZ:But Marco, the one point is here is not California.

SENATOR MARCO RUBIO:--no, no, right, here meaning-- I-- we're still-- we still think we're in Texas and Florida. But I think you've touched on an important point that I wanna build on, a couple points to make. The first is the issue is not the central-- income inequality is a symptom of a bigger problem. Opportunity inequality. And the reason why we have opportunity inequality America 1) is this massive structural change. Right? When my parents came here in 1956 they both had the equivalent of a fifth or sixth grade education and they made it to the middle class as a bartender and a maid. It's very difficult to do that in the 21st century. There are jobs out there that will allow you to get there. But you have to have skills and you have to have a system that allows people to access that. So that's a big part of it.

The second problem is we have safety net programs that don't cure poverty. They alleviate the symptoms of poverty. But they do not cure it. And they don't cure it by helping people either find a job or acquire the education they need for a better paying job. But the bigger issue is the one that Ted has talked about and that is this, if you are a major corporation or a very wealthy multi-national company you might not like big government but you can afford to deal with it. You can hire the best lobbyists in Washington to create loopholes and the best law firms in America to help you navigate them. If you're trying to start a business out of the spare bedroom of your home, you can't do any of that.

And the result is that business never happens. And that is increasingly becoming a problem. And there are multiple examples of it and Obamacare is one of them. Imagine for a moment if you were in business and I told you, "We are going to pass a law that makes people-- we're going to force people to buy what you offer. We're gonna subsidize it if they can't afford to pay for it. And if you lose money, we're gonna come in and bail you out with taxpayer money." That is a heck of a deal. And that's exactly what insurance companies were able to do through Obamacare. A perfect example of the kind of cronyism.

JONATHAN KARL:Yeah, Senator Paul.

SENATOR RAND PAUL:You know, the initial question also was about does government have a role in fixing income inequality? I think it's important to think about this because government does have a role in enhancing and enabling the general welfare. The general welfare is everyone equally. It's not really the sense of where the wealth should be distributed but that we should enhance the general welfare. There are problems with income inequality. Interestingly, worse in states led by Democrats, in cities led by Democrats and in countries led by Democrats.
But the thing is is that one of the things you have to understand, if you're an ordinary person in our country and you're trying to save to get ahead you put your money in the bank and it gets zero.
You don't have the wherewithal to have enough money to buy stocks. You have to be a little bit above that to buy stock. The way to make money and the way money has done well in the last several years is in the stocks market. But why are the interest rates 0% in your bank account? Why don't you make any interest rates?

It's because of the Federal Reserve keeping interest rate low. Why do we keep it low? Because we have this massive debt that we've gotta pay off with new money, with cheap money. And so it's all intertwined. And it's-- income inequality is indirectly, if not directly, related to big government.

JONATHAN KARL:So, you know, Senator Santorum just yesterday, former Senator Santorum was at the forum in Iowa. He was talking about this issue. And he said, "For years the Republican message has been a rising tide lifts all boats which is fine unless your boat has a hole in it." And he was making a point that there is a role for government to help those at the bottom. Do you agree with that?

SENATOR TED CRUZ:I think there is a role for government protecting rule of law. And creating an environment where the private sector can create jobs. Government doesn't create jobs. Any politician that runs around talking about all the jobs they've created is blowing smoke. The people who create jobs are, frankly, the men and women sitting here. The people who create jobs are people in the private sector putting capital at risk to meet a need. Now government is very good at screwing that up.


SENATOR TED CRUZ:And government has two important levers to facilitate job creation and create an environment where the private sector can create jobs. And those two levers are tax reform and regulatory reform. And every single time in our history that we have simplified taxes, reduced the burden, reduced the compliance cost, simplified regulation so that small businesses which create two-thirds of all new jobs can do that. We've seen an economic boom, we've seen people climb out of poverty into prosperity. That was true in the 1920s, it was true in the 1960s, it was true in the 1980s. We know how to fix this. And it's to get Washington to stop screwing it up.

SENATOR RAND PAUL:You know, I think government has a role and a safety net but it needs to be transitory and it needs to be a step towards a job. The goal shouldn't be more welfare, the goal should be the job. In creating jobs though, I agree completely with Ted, government doesn't create jobs.

There's the productive sector and the non-productive sector. Government's the non-productive sector. Government is inefficient and ineffectual at almost everything they do. In fact, I say it's not that government is stupid, although it's a debatable question.


SENATOR RAND PAUL:Government doesn't getting the right signal so we should minimize. We have to have government for certain things that the private world can't do. But we should minimize what government does, maximize the productive sector. And you'll get more jobs created.

JONATHAN KARL:Well, let me just two specifics here, one: I think an easy one with the three of you-- the minimum wage. I think all three of you have come out against raising the minimum wage. So my question is do you think there should be a federal minimum wage at all? Just simple yes or no answer.

SENATOR MARCO RUBIO:No, it's more than a yes or no answer. Those are always-- the bottom line is--


SENATOR MARCO RUBIO:--I'm not for repealing the minimum wage. But I can tell you, I don't want people to make $10.10 an hour. I want them to make $30 an hour, $35, $40 an hour. And the only way you're going to get there, not through a law but through a growing economy that creates those jobs-- and then have-- giving people the opportunity to make that and more. And my problem with raising the minimum wage is not that I wanna deny someone $10.10. I'm worried about the people whose wage is gonna go down to zero because you've now made them more expensive than a machine.

JONATHAN KARL:But you're not for repealing the minimum wage. You think there should be a federal minimum wage. You're happy where it is now at $7.25 an hour?

SENATOR TED CRUZ:John, I think it's important to look at who loses out. You know, we had a debate on the minimum wage just recently. And I gave a floor speech on the Senate floor with three simple charts, $10.10, the proposed Obama minimum wage. And then the next chart Marco just referenced was $0.00 which is the real Obama minimum wage because when you have the lowest labor force participation since 1978 to the millions of Americans who have lost their jobs under the Obama economy that's their minimum wage.


SENATOR TED CRUZ:And then let me tell you the third number I had up there was $46.98. $46.98 is the average hourly wage of an oil and gas worker in North Dakota. And what I wanna see is an awful lot more people making $40 and $50 and $60 a week-- an hour and an awful lot less people making zero dollars a week.

JONATHAN KARL:Okay, but-- and I wanna-- I wanna move off this. I just very sh-- do you think there should be a minimum wage at all?


JONATHAN KARL:$7.25, is that the magic number? Is that where we are? I mean, you--

SENATOR TED CRUZ:--I think the minimum wage consistently hurts the most vulnerable. So, for example, on this--

JONATHAN KARL:--so there shouldn't be one. The market should set the minimum wage?

SENATOR TED CRUZ:--let me give you an example of this increase to $10.10 that Obama was urging. The Congressional budget office estimated up to one million people would lose their jobs. And the people who would lose their jobs are low-income, primarily African-American and Hispanic workers. And let me make it very real, 1957 when my dad came to the United States, he was 18. He couldn't speak English. So his first job was washing dishes. He made 50 cents an hour. Why did he get that job? Because you didn't have to speak English to take a dish and put it under hot water. Now if we had come in and made the minimum wage $2 an hour, you know what would of happened? They would of fired my dad and they would of bought a dishwasher.


SENATOR TED CRUZ:That's who gets hurt.

JONATHAN KARL:--so let me try this one more time. Senator Paul, you gave me--

JONATHAN KARL:--an answer.

SENATOR RAND PAUL:Let me make a comment.

JONATHAN KARL:Just a straight--

SENATOR RAND PAUL:You know, I think what's important even more than whether we should have and what we should have or how much it should be is what is our attitude towards work? I'll give you an idea of, like, Michelle Obama, what she said about her kids. She wanted them to get minimum wage jobs so they could see how terrible it was to get a minimum wage job.

I see it completely the opposite I have two boys. One works delivering pizza, the other one works at a call center while going to school and they make minimum wage. And I'm proud of them. I'm proud of them when they go, "Dad, I've got money and I will pay for some things."

JONATHAN KARL:Right, so is-- but before I move on, would you give a yes or no if you think that we should have one?

SENATOR RAND PAUL:I could go into a long answer again if you'd like.

JONATHAN KARL:No, no, I just want a straight answer. I really don't want a long answer.

SENATOR RAND PAUL:No, here's the short answer--

JONATHAN KARL:But you could also say you don't wanna answer. That's fine too.

SENATOR RAND PAUL:--no, here's the short answer.

JONATHAN KARL:It's a free country.

SENATOR RAND PAUL:The minimum wage is only harmful when it's above the market wage. Okay, so when it's above the market wage it causes unemployment. The simple way to look at this is that if it's $7 an hour and labor can afford ten workers at $7 an hour, if you make it $14 they'll afford five workers. So you will have unemployment. The CBO says it would cost a half million jobs. So this is an economic argument. This is something that should be done in a rational way, not an emotional way.

JONATHAN KARL:Okay, so let me move onto to another--

SENATOR RAND PAUL:Did you like our answers?

JONATHAN KARL:--you wanna get really quickly?

SENATOR RAND PAUL:Did you like our answers?

SENATOR TED CRUZ:He was persuaded. I think John--

SENATOR TED CRUZ:--agrees with him now.

SENATOR MARCO RUBIO:I just wanted to-- as a practical matter I'm not calling to repeal the minimum wage. I'm not saying to get rid of it as a practical matter. I think it is what it is and we don't-- that's a disruption that we don't need with all so many other disruptions happening.

But I will say this, I think that all this focus that the president has on the minimum wage is a cure-all for the, you know, the problems being faced by working Americans is not only a waste of time, I think it shows how un-serious he really is about dealing with the challenges of our time.

JONATHAN KARL:Okay, so let me move on-- from a proposal the president has made to one that Paul Ryan has made. Paul Ryan had put out this plan as you all know to address the issue of poverty. And what he has proposed is an expansion of the earned income tax credit financed by closing tax loopholes. And he has specifically mentioned-- closing, you know, ending tax benefits to the oil and gas industry. And using the revenue saved there, estates are $4 billion to $7 billion a year-- to pay for an expansion of the earned income tax credit.

So my question to you-- all of you-- is do you agree with that principle of expanding federal spending on anti-poverty programs but doing them-- Ryan would say--

JONATHAN KARL:--in a smarter way-- using it--

SENATOR RAND PAUL:I'll go on that.

JONATHAN KARL:--by closing some tax loopholes.

SENATOR RAND PAUL:All right, I'll start on this one. When you look at the earned income tax credit, it has about a 25% fraud rate. We're looking at $20 billion to $30 billion. And this is from estimates from the GAO, from the government themselves.

If you want to help people who are of lower wage income, working class folks, I think the better way, rather than giving something that's refundable is to give them a deducting against their social security tax so they're working and you get the deduction for work. I don't really like the refundable nature and also the fraud related with the earned income tax credit. So I would object to what Paul Ryan's doing and I would offer a deduction on the social security-- taxes.

JONATHAN KARL:And you'd been in favor of ending tax benefits to the oil and gas industry to pay for that?

SENATOR RAND PAUL:See, it's I don't-- can I object to the premise again?

JONATHAN KARL:Well, you can. I mean, you can do whatever--


JONATHAN KARL:--you want, but, I mean, answer the question.

SENATOR RAND PAUL:--well, some you might call it a benefit. And if I'm in the oil and gas industry I might call it a business expense. You see what I mean? So it depends on what we're talking about.

JONATHAN KARL:Okay, whatever you wanna call it, would you be in favor of ending it to pay for--

SENATOR RAND PAUL:Well, it's important to what we're talking about. There are a lot of business expenses. I'm for the opposite. I'm for 100% expensing in the first year of everything you spend on your business because then you spend more and you'd buy more and your business would grow. So I'm not really-- a lot of people and Washington wanna cut out these loopholes and they wanna have revenue neutral tax reform. I tell people, "That's what we're for I'll go home." I want to cut taxes.

JONATHAN KARL:All right, Senator Rubio.

SENATOR MARCO RUBIO:A couple points, first on the oil and gas business exempt, I don't know the details of which one he's talking about. But the one that's traditionally debated is not an oil and ta-- oil and gas deduction, it's a deduction on capital expenditure that any industry could potentially use under the existing code.
They just seem to focus on the energy sector. And I'm not saying Paul Ryan is. I'm not familiar with exactly what-- which ones he's proposing or looking at. But on the earned income tax credit it's largely a program designed to reward work. I have actually called-- and I've worked with, for example, scholars at American Enterprise Institute on a concept called wage enhancement.
It would replace the earned income tax credit instead with something called a wage enhancement that it elig-- people between $15,000 and $40,000 a year in a scale that would ultimately phase out be eligible for that instead. And here's why that's better. First it's tied to your paycheck as opposed to simply your tax return. As Rand just alluded to a moment ago there was significant amount of fraud in the earned income tax credit program because people will file on the return, claim that they are supporting children, some of which sometimes don't even live in the United States, some of which are not their children, they're nephews and nieces and cousins.And there is significant fraud in the EITC program. A wage enhancement would be directly tied to what you're making. What it would do is it would a-- it's the same funds but you're delivering it through a different mechanism to r-- tied directly to work. And here's what the-- why that's valuable.

It now makes work more valuable than staying home and collecting long-term unemployed or collecting a disability in some cases. And that's important because Rand was also alluding to something which is very important, there is no such thing as a meaningless job. There is no such thing as a dead-end job. I've heard the president say that. There are jobs you don't wanna be doing your entire life. But even in a job that's paying you $8 an hour, you are learning skills and you are be-- and you're giving experience that are be-- that are valuable to you especially in the long-term. So there is no such thing as that.And we want as many people as possible working because we think, you know, if you're sitting home for five years and then decide to re-enter the workforce it's hard to find a job. Employers look at your resume, they see you've been sitting around for five years doing nothing and you're stigmatized by that. It is not good to have so many people sitting at home and not working. And one of the ways we could incentivize that is by replacing the EITC with a wage enhancement instead.

JONATHAN KARL:Okay, let me-- I've heard all of you at various times rail against corporate welfare You're, I think it's safe to say, all against corporate welfare, right? But there was a vote in the Senate, we call it-- this happens every year, the tax extenders package where you-- I think all three of you-- correct me if I'm wrong-- voted-- in favor of this package that had tax breaks for rum producers, wing energy, Hollywood, NASCAR track builders, race horse owners.

SENATOR RAND PAUL:Are you arguing against NASCAR? I just want to--

JONATHAN KARL:I would never. My dad's a big NASCAR fan. I would never do that But, you know, if you're--I mean, why did you vote for basically what is a-- you could have-- a package of heavily lobbied for, specific tax benefits for specific industries that were able to get these because they're been effective at lobbying, Senator Cruz?

SENATOR TED CRUZ:Look, that is a good example of one of the problems with Washington which is log rolling. That bill had a lot of good things in it and a lot of lousy things in it. And I'll tell you, at least in my office, and I suspect in Rand and Marco's office we had considerable debates about what the right vote was on this.

Ultimately for me, there were critical elements of the tax code that were important. Things like deducting business expenses that go right to small businesses-- expensing and to small businesses creating jobs and at a time when we've got stagnate economic growth. I couldn't in good conscience vote to strip away that tax treatment.

Now the reason that you get leadership in both chambers wrapping that up with these lousy tax expenditures is precisely because they wanna put people in that box where the good element of it forces them also to include the rest of it ab-- and so, yes, there was corporate welfare there. And I will say one of the very nice benefits, I'm going to do something you haven't heard me do often, which is praise Mitch McConnell. One of the real benefits I believe of the new Republican majority is that Mitch McConnell has pledged to allow an open amendment process. What I would have liked to have seen on the tax extenders is the ability to offer amendments to strip out the garbage--

JONATHAN KARL:So would you--

SENATOR TED CRUZ:--and have straight up and down votes on the corporate welfare part rather than it all being wrapped together in one mess that we had to vote up or down on.

JONATHAN KARL:--so would you favor doing away with all of these tax benefits? I mean, I get the sense that it's a question of definition, Senator Paul?

SENATOR RAND PAUL:Yeah, and the other thing about it when you define a-- deduction or a credit as-- a corporate welfare you're sort of assuming that it was the government's money. I mean, this is earned by companies. And you may say it might be an unfair distribution of taxes. But really most of these companies are paying a lot of taxes. I don't think there are many companies that through the extenders are not paying any taxes.


SENATOR RAND PAUL:So here's my point is that if I were designing a tax code would I try to make it a better tax code and maybe not have some of this unevenness to it? Yes. But if I am faced with a vote to eliminate some deduction or a credit that raises taxes I think we pay plenty of taxes and I'm against raising.

JONATHAN KARL:--but you just a few minutes ago said that you were against revenue neutral tax reform. In other words, you are against the idea of eliminating these specific tax benefits, tax treatments, and in return using exactly the same amount of money saved to lower the rate.

SENATOR RAND PAUL:I think it'll do nothing to help the economy. I think to help the economy--

JONATHAN KARL:Well, it'll be more equitable. You wouldn't have--

SENATOR RAND PAUL:--well, no, to help the economy you need-- it'd be-- most equitable is letting people keep their own money. So you'd let them keep more of their money--

JONATHAN KARL:--well, this'll be the same amount of money but instead of having some industries--

SENATOR RAND PAUL:--right. And you so you wouldn't stim--

JONATHAN KARL:--that have better lobbyists--

SENATOR RAND PAUL:--you wouldn't stimulate anything because the same amount of money's going to the non-productive sector which is in Washington. So revenue neutral means you shift the burden from the left half of the room to the right half of the room just doesn't excite me. I mean, if that's what people wanna go in Washington to do, they can do it. And I can--