Former special counsel to President Clinton and acclaimed expert in the field of crisis management, Lanny Davis joined The Costa Report to discuss the effect a $20 trillion deficit will have on future generations of Americans and offer advice to the next president. According to Davis, in spite of inheriting a $300 billion deficit and nationwide recession, President Clinton left office with a budget surplus.
Despite receiving criticism from both sides of the aisle at the time, Clinton pressured Congress to reduce spending while raising taxes. It was a one-two punch.
“Bill Clinton turned out to be right about the effect of raising taxes in 1992,” Davis said. “It helped the country, and I look at that history as verifying that premise.”
Davis believes Clinton’s approach will work again, but this will require the next president to raise taxes. When asked whether higher taxes will discourage investment, Davis stated that even if this is shown to be the case, taxes must still be raised “because in the long term, if we go bankrupt, the incentives or disincentives to investment don’t matter â it’s bad for the country.”
When the host of The Costa Report asked Davis whether raising the capital gains tax is the equivalent of punishing success, Davis didn’t disagree.
“Oh, it certainly feels that way to people who are successful, but this is one of those arguments that sounds right until you think it through,” he responded. “In 1935, when Franklin Roosevelt said, ‘I want young people to pay taxes to support old people,’ the young people said, ‘Why should I do that? I’m not going to pay for somebody else to be able to retire and not work.'”
Davis noted that Social Security was passed despite the opposition of most conservative Republicans, and said it’s a discussion Americans have had many times before â whenever they’ve been subjected to a tax increase.
“When the progressive income tax was introduced into our vocabulary, it meant that people earning more money would pay more taxes than people earning less. That debate meant taxing success vs. taxing lack of success,” he said. “Yes, to some degree you’re penalizing people who are successful, but that’s our social contract. That’s what’s made America great. I happen to be in the upper tier of people whose taxes will be raised, and I agree to pay more if part of that is going to be dedicated to reducing our debt.”
The blame for a national debt that continues to soar shouldn’t land on our current president, Davis said, but on the shoulders of Democrats who continue to spend as if using credit cards isn’t a moral issue.
“I have two older children and six grandchildren, and then I started all over again and have a 17-year-old and a 10-year-old,” he said. “That makes me wonder if it’s fair for me to go around the world using my credit card, using first-class airfare, first-class dinners and hotels, having a great time, then coming home and dumping all of my receipts on my son’s bed.”
To hear the full interview with Lanny Davis visit www.rebeccacosta.com