Transcript: Super Committee Rep. Dave Camp’s Q&A on previous debt proposals

Joint Select Committee on Deficit Reduction Hearing: Overview of Previous Debt Proposals on Nov. 1, 2011

Transcript of Rep. Dave Camp’s (R-MI) Question and Answer Session:

Rep. Dave Camp (R-MI), member of the Joint Select Committee on Deficit Reduction. IMAGE SOURCE: DeficitReduction.gov

Rep. Dave Camp (R-MI):

“I also want to thank our witnesses for being here and for all of your hard work and your testimony today. I do have a question.

“Mr. Bowles, in the Simpson-Bowles plan, you recommended that the United States move to a territorial tax system. I agree with that recommendation, because I think our current system is one that really means our companies and workers are not competitive. Do you share that view and is that why you recommended moving to that system?”

Erskine Bowles:

“Yes, I’ve read what you’ve – I guess it’s this committee – put out, what the Ways and Means committee put out. I was very much in favor of what you’ve put out.”

Rep. Dave Camp:

“Do you believe that – and in our proposal, our draft discussion we have out there – there are ways to move to a territorial system that does not create incentives for companies and employers to move jobs to other parts of the world or their investment or their R&D? But also I think it’s possible to craft a plan that could get that policy wrong. In the commission’s meetings, our discussions, you were focused on moving to a territorial plan that did not make our companies less competitive. Do you think that can be done in a context that can be revenue-neutral territorial plan?”

Erskine Bowles:

“Yeah, I do. I think if you encourage…If we stay on a worldwide system and you almost force companies to leave those dollars overseas, then naturally if they’re going to have to pay a big tax on those dollars to bring them back, I think the likelihood is more probable that they’re going to create the jobs somewhere else rather than here. That’s one of the principal reasons I support a territorial system in addition to the fact that everybody else in the world has gone to it with the exception of us.”

Rep. Dave Camp:

“You also really recommended a complete overhaul of our tax code. I appreciate the model that you’ve set up where you’ve tried to lower rates in exchange for doing away with various provisions or exceptions in the code. I think that has really shifted the debate on what tax reform might mean. Your reform proposal would raise revenue compared to the current policy baseline, but you didn’t do it by raising taxes. A lot of people get those two things confused. Why did you choose that route of raising revenue through reform rather than imposing new taxes?”

Erskine Bowles:

“Because I felt like based on my experience in the business world and the economists that I talked to it would create dynamic growth in this country and create jobs and opportunities for people. I felt that it just makes sense to get the spendings out of the tax code and to use that money more efficiently and more effectively by lowering rates and reducing the deficit.”

Rep. Dave Camp:

“Thank you. Dr. Rivlin and Sen. Domenici, in your plan you’ve had the government share of our GDP around 21%, I believe. Is that correct?”

Dr. Alice Rivlin:

“Yes.”

Rep. Dave Camp:

“That’s basically $1 out of every $5 of our economy would come to Washington, D.C. That’s more than the highest levels of revenues we’ve seen in the history of the nation. I think there’s only been one time where the government’s take has really gotten anywhere close to that level and that was during the Internet bubble because there were enormous capital gains revenues associated with that. Did you perform an analysis of the impact on the economy and job creation of having the government’s revenue of GDP reach that level?”

Dr. Alice Rivlin:

“No, not ourselves. We examined other people’s research on this.
“I don’t read the record as having much evidence at all of a connection between of the exact proportion of the federal government’s revenue and the economic growth. The reason ours went up was, as I’ve stated earlier in the hearing, we didn’t see how, in this very new situation of a much older population and the tsunami of the baby boom, we didn’t see how we could fulfill our obligations to those people and perform the other services of government without having the government in that range. It’s been there before. It’s not a disaster. This is not taking on new government responsibilities. It’s just saying, ‘We’ve got a lot more older people, and we’ve got to take care of them.’ That’s going to mean slightly higher government spending than we had in the days when the population was a lot younger.”

Former Sen. Pete Domenici (R-NM):

“Let me just say I, too, in my past life have used the percentages like that. I have learned that on many of them there is no reality attached to the number. Nobody can tell you that 20% or 19% is better than 19.5% or 20.6%. If you have the rest of the policies right, in our kind of economy, we will get growth. The problem we have in this country has been expressed over and over here today, and that is the population is growing older, the population has less workers per retiree. When we looked at the 20%, 19%, or 18.5% that was used as the historically significant number, we didn’t have this demographics. We didn’t have this kind of problem. So we solved it by trying our best to use the tax code to generate some extra revenue in the manner we have suggested here. At the same time, we have taken on the responsibility of some of the programs that are going to sink us if we sit by and say we have to have 18.5% and that’s all on the revenue side. Then what are we going to do on the exploding cost of the programs? I think we solved it in a pretty reasonable manner. If you want to just say let that one go, we’ll fix it someday. We can’t fix Medicare to match the 21% much less the 18.5%, which is historically right. So that’s my answer. I think there’s no absolute, positive evidence that any of these numbers are absolutely right. They’re right, they’re in the range, but if you do the other policies correct, we’ll survive the 21%, I’m sure.”

Rep. Dave Camp:

“You also had two new tax structures in your proposal. One was what you described as a ‘debt reduction sales tax’ or what most people would consider to be the value-added tax. The other was the tax on sugar drinks, the beverages. Did you do an analysis about the cost of those two new tax structures – the implementation of two new tax structures – on our economy and what that might mean?”

Dr. Alice Rivlin:

“Well, you’re right that we did have the ‘debt reduction sales tax.’ We didn’t call it VAT, but you’re right – it’s analogous to that. I think that the Senator and I and the other members of the group all believed that it would be sensible for the United States to move part of its tax burden off the income tax and onto a broad base consumption tax. But this is not the moment to do that. We realize that and eventually took it out, though we still believe in it, revamped our income tax proposals to make up part of the lost revenue.

“The sugar drinks was – you know, that’s not going to change the economy. Whether it, at the margin, discourages people from drinking too much soda, I don’t know, but we had some sentiment for doing it.”

Sen. Pete Domenici:

“I would say on the last one, sir, that we can look at the economic significance of. You’ve been the chairman of a committee, and I understand you are now, sometimes outvoted and you have to do things that aren’t necessarily the greatest.”

Rep. Dave Camp:

“I get that part.”

Sen. Pete Domenici:
“You got that.”

Rep. Dave Camp:

“All right. Thank you very much.”

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2 Comments on “Transcript: Super Committee Rep. Dave Camp’s Q&A on previous debt proposals

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