Podesta Says Value-Added Tax ‘More Plausible’ as Deficits Grow
By Heidi Przybyla
Sept. 25 (Bloomberg) -- John Podesta compared the nation’s current budget crisis to the situation former President Bill Clinton faced in 1993 and said some form of a value-added tax is “more plausible today than it ever has been.”
“There’s going to have to be revenue in this budget,” said Podesta, Clinton’s former chief of staff and co-chairman of President Barack Obama’s transition team, said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing today.
A so-called consumption tax would “create a balance” with European and Japanese economies and “could potentially have a substantial effect on competitiveness,” said Podesta. Value- added taxes in Europe and Japan encourage savings by taxing consumption.
Podesta said such a tax may be regressive, but can be balanced by exempting some products and using “the money to support low-wage workers.”
Podesta, who is now president of the Center for American Progress, a Washington-based public policy group, is convening a meeting of economic policy experts Sept. 30 to discuss the long- term fiscal deficit.
The Congressional Budget Office estimated in August that the budget deficit will be 11.2 percent of gross domestic product, the highest since World War II. Clinton, facing a deficit of 4.2 percent of GDP, pushed Congress to raise taxes on the wealthy to help trim the shortfall.
“He passed it without a single Republican vote,” Podesta said. “It led to the longest period of growth in the United States history.”
Ending Tax Cuts
Podesta said Obama will begin by ending the upper-income tax cuts enacted under his predecessor, President George W. Bush. “Then you have to look at whether that gets you far enough of the way,” he said.
On health care, Podesta expressed optimism that Congress will pass a health-care bill in the next couple of months even though so far none of the measures has won Republican support and Democrats are squabbling over whether to include a government-run program to compete with private insurers.
“We’re in a narrow track now between the ideas that are being debated in the finance committee and those being debated in the House,” Podesta said.
If Maine Senator Olympia Snowe, a Republican who has been working closely with Democrats on compromise legislation, votes for a bill, “that really advances the cause forward,” he said.
Delay
Senate Finance Committee Chairman Max Baucus put his panel to work drafting a proposal this week after months of seeking agreement with Snowe and other Republicans. So many amendments were filed by members of both parties that Baucus pushed the committee’s debate into next week.
Podesta said Senate Democrats may resort to reconciliation, a parliamentary tactic that would require only a simple majority vote. “The path is there to move forward,” he said.
On politics and personalities, Podesta said Clinton has patched up his relationship with former Vice President Al Gore. Historian Taylor Branch, in a new book called “The Clinton Tapes: Wrestling History with the President,” reports on his recorded interviews in which the former president spoke candidly about many issues, including his differences with Gore.
Podesta said he recalled “one last session in the White House,” after Gore lost the 2000 election to then-Texas Governor George W. Bush, “where they kind of let it all hang out for a few hours.”
“That was the anger of the campaign,” Podesta said, and “you don’t get over those things in 15 minutes.” For his part, “President Clinton had some questions about the way the vice president ran the campaign.”
The two “have great respect for each other,” Podesta said. “I would describe them as friends again.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aGxdXdfWrZ7o
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