June 4th, 2012

Romney economic advisor on tax philosophy: “the bulk of the adjustment (should) be borne by upper income households”

In a Sunday exclusive, CNN’s Fareed Zakaria spoke with GOP Presidential candidate Mitt Romney’s economic advisor, Glenn Hubbard, about the economic philosophy of the presumed nominee.  Hubbard, currently the dean of Columbia Business School and the former chairman of the President’s Council of Economic Advisors (George W. Bush Administration), said that there are many ways to achieve a balanced budget while cutting tax rates, including proposals from President Bush’s 2005 commission, as well as the Simpson-Bowles and Domenici-Rivlin committees.

Hubbard also said it’s likely the most of the eventual tax burden will be “borne by upper income households…”  More of their exchange is below:

ZAKARIA:  So let’s talk about the specifics of some of these issues because that’s where it becomes — it’s often hard to figure out how it works.  To cut marginal rates, you would have to do it, as you say, the way Simpson-Bowles does it.  Now the way Simpson-Bowles was able to do it is they get rid of a lot of the deductions, the so-called loopholes, but the big money is in the very popular deductions, the deduction — the interest deduction for mortgages, the — you know, the deduction for employer-based health care. Is he going to get rid of those deductions?

HUBBARD:  No. What Governor Romney has said is, look, first of all, we need to cut marginal rates. And he would cut them essentially to exactly the same levels in the Bowles-Simpson so-called compromise plan. Part of that revenue is made up with economic growth. Most of that, though, has to come from base broadening, about which he’s said two things. One, everything should be on the table.  There’s nothing eliminated, put everything on the table.  And second, that the bulk of the adjustment be borne by upper income households. Remember, that Bowles-Simpson was trying to raise close to 2 percentage points of GDP in revenue. Governor Romney is trying to be revenue neutral. And so his tax plan wouldn’t have to raise as much revenue from base broadening as Bowles-Simpson.

ZAKARIA:  But you — I mean I want to press you on this, because even if you’re not trying to raise as much, it’s very tough to get any significant revenue if you don’t touch the big deductions.  The big deductions are the interest on mortgages, the interest — the health care and federal and state taxes.  I’m sorry, local and state taxes.

HUBBARD:  Correct.

ZAKARIA:  Those three collectively are…

HUBBARD:  Those are the big ones.

ZAKARIA:  So is he willing to look at those?

HUBBARD:  He has said so.  He has said everything is on the table.  He looks forward to working with the Congress to do it.  There are many ways to do it.  We have Domenici-Rivlin.  We have Bowles-Simpson.  We have President Bush’s 2005 commission.  There are lots of ways. But everything has to be on the table.  And, again, the adjustment really has to focus on upper income households.

The full transcript of this program may be found here.   FAREED ZAKARIA GPS airs Sundays on CNN/U.S. at 10:00am and 1:00pm and on CNN International at 8:00am and 3:00pm.  All times Eastern.