Congressman
Sandy Levin, who was re-elected by his colleagues last week as ranking member on
the House Ways
and Means Committee, was recently interviewed by The Washington Post on fiscal
cliff issues. 

Suzy
Khimm of the Post’s online Wonkblog conducted the interview and Levin’s office
distributed the transcript to reporters.

 

Suzy Khimm: Republicans say they’re willing to increase tax revenue
without increasing rates, which has sparked a lot of discussion as to whether
that’s possible. Do you think it is?

We’ve looked at every suggestion, and the conclusion is clear: In order to
address our needs, revenues have to include rate increases. That means that the
tax break for the wealthiest needs to end at the end of this year. We’ve looked
at every suggestion that’s come forth, and none of them meet the test of equity
and adequacy of revenues. 

Some have also suggested that a compromise could be struck in other
ways — by raising the top rate to less than 39.6 percent (the top Clinton-era
tax rate), or by raising the qualifying threshold from $250,000 for the Bush
tax cuts. Would you be open to considering these kinds of changes?

I think the first point that everybody needs to acknowledge is that the
president made it very clear during the campaign that his position is to end
the tax break for the very wealthy. The CBO report that came out really reinforces this: In terms of
the potential impact on GDP and the danger posed by the cliff, extending the
middle-income tax cuts is by far the most important part in terms of economic
growth. When they looked at the upper-income tax cuts, in terms of potential
impact of the cliff on economic growth, the conclusion of CBO was that it’s the
least significant factor in terms of economic growth. I think that sets the
framework. There needs to be an agreement to act within that framework.

In terms of proposal to change and to move up (the threshold) from $250,000,
everybody needs to be looking at the impact in terms of revenues. It would be
somewhat substantial, as you know.  Also there’s the issue of equity. What
happened under the Clinton-era top income rate? As they prevailed, we had very
substantial economic growth. We need to face the reality — in terms of adequate
revenues but also in terms of fairness. The upper 1 percent — they’ve received
the vast majority of increases in income over the last 10 years. In 2010, they
received well over three-fourths of it. So I think the next step is to face the
reality of adequate revenues, fairness and economic growth — these three
factors.

What do you think would be a good target in terms of tax revenue? Is
there a minimum level that you think would be adequate, as well as one that
would be ideal? 

You have to separate what needs to be done to avoid the fiscal cliff and
what needs to be done longer range. It’s a mistake to essentially collapse
those two — they’re not the same. I don’t think you can achieve everything
at once.

What really needs to be done is to avoid the cliff: Extend middle-income tax
cuts — if you don’t, it has a major downward spiral on economic growth — and to
not extend the high income tax cut; to put another patch on AMT for one year;
to handle physician reimbursement, the doc fix; and unemployment insurance.

Because unlike previous times when there was a cliff for unemployment
insurance, it really wasn’t a cliff. The federal program phased out. You have here
a human cliff in terms of (unemployment insurance): On Day 1, 2 million-plus
people would lose it entirely. The reason the middle-class tax cuts need to be
dealt with now is because of its effect on taxpayers and for growth. I say do
the short-range now, do it right, do it well, and set the stage to tackle
longer-term solutions. 

So do you think that it’s a mistake to tie long-term issues like
comprehensive tax reform to a fiscal cliff deal? Republicans want to do that,
and there’s some talk of attaching another trigger or other enforcement
mechanism to a fiscal cliff deal to make sure it actually happens.

I think the difficulty is how you set the triggers. We’ve tried that before.
I think the best way to proceed is to come to agreement sooner rather than
later on avoiding the cliff, extending middle-income not high-income tax cuts,
and essentially to have the kind of an atmosphere and agreement that we need to
tackle corporate and individual tax issues. Also, we’ll look at entitlements.

But to try to accomplish all of that in three weeks — I’m in favor of tax
reform, but I don’t think tax reform should be a reason to hold hostage the
middle-income tax cuts. We should vote for that — we should end the high-income
tax cuts and do the things that need to be done immediately, and essentially
set the stage that way. 

What do you think would be the right way to get savings from
entitlements? There have been a few ideas that were floated during the
supercommittee negotiations and other talks — provider cuts, raising the
retirement age for Social Security, raising Medicare premiums. Do you think any
of those would be a good place to start?

I think it’s a mistake to tackle Social Security at this point, because it
isn’t part of the cliff issue. In terms of Medicare, I’m in favor of sitting
down and having a serious discussion about the likely impact of the Affordable
Care Act, health-care reform, on the cost issue and changing the
fee-for-service structure. We took some steps in the ACA on that issue,
and we should do more.

What do you think should happen to the payroll tax holiday? There’s
been some interest from Democrats in either extending it or replacing it with
something similar, but there’s not much happening on that either. 

I think it will depend on a couple of events: the next report on
unemployment, and secondly, events in Europe.
So I think it’s a mistake at this point to say either yes or no. I think we
need to wait — the next report is due a week from Friday, and we’ll see. I
don’t think we should say not at all, and I don’t think at this point we should
embrace it.  

In other words, you think that if unemployment goes down and the
economy is doing well, perhaps we’d be okay letting a stimulus measure like the
payroll tax cut expire?

Yes. If we continue on the path of growth — the president won in part
because of the stimulus package, the recovery package, and other steps
including payroll tax cut had begun to turn around the downturn. I think it was
a major reason the president won. We need to continue that momentum. If it’s
stopped, we need to take another look.
 

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