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Rudy Giuliani on Budget & EconomyFormer Mayor of New York City; Republican Candidate for 2000 Senate (NY) |
A: I haven’t seen the details of it. I prefer permanent tax reductions to one-shot rebates or one-shot deals.
Q: But that would take a long time to see the impact of that, and there’s a crisis, apparently, right now.
A: That would be good, but I’d like to see a package put together where you get one for the other. The way I look at tax cuts is, I put out 64 tax cuts when I was mayor of New York City; I got 23 of them. Some of them, I had to trade one for the other. So I’m not opposed, at all, to the president trading some of these, but I’d like to see him get permanent ones as part of it. If he’s got to trade with the Democrats in order to give them some of the things they want, that’s OK, as long as he gets some of this permanent relief as well.
I would also immediately begin a program to reduce government spending. And then I would accelerate this whole effort to look at regulations so that America doesn’t over regulate businesses and money out of the US.
Those three things have to be adjusted. You can overtax, you can over regulate, and you can overspend to such an extent that you’re hurting yourself on a competitive basis. Those are the things that I think are the core of a sound fiscal policy.
If the government presents the picture of immediately moving toward pro-growth policies, you have growth right away. By announcing strong pro-growth policies, you can affect that decision, and that brings more liquidity. It brings more money. It brings more investment into your economy.
A: Yeah, favor. That’s why I made the announcement that we should do tax cuts right now. I favor a program right now of doing three things: Strategic tax cuts that stimulate the economy, like cutting the corporate tax from 35% to 25%, which would be an immediate boost in jobs and investment in the US.
Q: But even if you were president now and you put all of those in with the state of the union later this month, those wouldn’t help in the short run. Those wouldn’t help for a couple of years. What about a short-term stimulus?
A: The kind of short-term stimulus you need is to present the realistic picture of an economy that’s going to grow. And then the private sector and the investment from the private sector--the multiples of money that that would involve dwarfs anything that you’re talking about.
A: I believe that it’s a major problem, and it’s one that hasn’t been addressed the way it should be over the course of the last 20 years. And there are three major things that we have to do. First, we have to reduce government spending, and we have to be very disciplined about that. And we have to do it by imposing spending caps on the civilian agencies in governments--maybe 15%. We have to say that we’re not going to rehire half of the civilian employees that come up for retirement. 42% are coming up over the course of the next 8 to 10 years. They should not be rehired. That would give us a $20 to $22 billion reduction. And then we have to reduce taxes.
Q: Yes or no, is the debt a threat to our national security?
A: I wouldn’t call it national security. I would call it economic security. It’s very, very important. I think of Islamic terrorism as being national security. Economic security is also very important.
A: Well, I think the most important thing is the federal government has to restrain its spending. The problem is not the American people. What we should be doing is restraining the amount of money that Washington spends in a concerted way, with major reductions in civilian spending, using attrition, and leaving more money in the pockets of the American people. The strength of America is not its central government; the strength of America are its people. Restrain the central government, give people more choice, more money to spend, we’re going to see our economy booming.
A: Well, that would require their trying to figure out other ways to do it. I mean, rather than moving in the direction of more people on government medicine, I’d rather see us reduce the income tax burden, create an exemption for health care so people can buy their own health care. So that’s going to require they take a little bit more time, take a little more ownership of their health care. Rather than relying on government as the nanny government, let’s rely on people to make choices about their health care. Let’s rely on, instead of 17 million people buying their own health insurance, 50, 60, 70 million. You’ll see the price come all the way down and you’ll see the quality come up. That’s an American solution. It’s a bold one, but it’s the kind of thing America has done in the past. We rely on our people, not on our government.
A: Sure, I would make it a goal.
Q: But not a pledge.
A: I don’t do pledges. I didn’t do a pledge on taxes. I stated my intention was to lower taxes. I have a record of lowering taxes. My intention would be to balance the budget. I have a record of eight balanced budgets in a city where we had some serious economic and financial difficulties at various times, and we figured out a way to balance the budget.
A: I think you have to do across-the-board spending cuts the way Ronald Reagan. There are about 3 percent of programs that OMB finds every year are failing. They should be zeroed out.
A: The market is a wonderful thing. The free market is one of our greatest assets. With the free market, the sky’s the limit. The reality is that what we have to do is look at the fundamentals. A president can’t be a economic forecaster. What are the fundamentals? Keep taxes low. Keep regulations moderate. Keep spending under control. That’s an area where we need a lot of help.
ROMNEY: Well, we both agree with the need to cut taxes and have fought to do so. [But] Mayor Giuliani fought to keep the commuter tax, which was a very substantial tax, an almost $400 tax on commuters coming into New York.
GIULIANI: The difference is that under Governor Romney, spending went up in Massachusetts per capita by 8%; under me, spending went down by 7%. I brought taxes down by 17%. Under him, taxes went up 11% per capita. I led, he lagged.
ROMNEY: It’s a nice line, but it’s baloney. Mayor, you got to check your facts. #1, I did not increase taxes in Massachusetts; I lowered taxes. #2, the Club for Growth looked at our respective spending record. They said my spending grew 2.2% a year; yours grew 2.8% a year. But look, we’re both guys that are in favor of keeping spending down and keep taxes down. We’re not far apart on that.
Clinton never said that. The quote is by Alan Ehrenhalt, and Ehrenhalt didn’t call the free market “destructive” but used a softer term “disruptive.” As Clinton cited in “It Takes a Village”, Ehrenhalt said, “The unfettered free market has been the most radically disruptive force in American life in the last generation, busting up neighborhoods.“
To be sure, Clinton agreed with that sentiment. But she also said in the same book, on the next page, that ”the economy is also creating millions of new jobs.“ And later she said the free market is ”the driving force behind our prosperity.“
Giuliani misleads when he says Clinton called the free market ”destructive,“ when what she has really said is that it is both disruptive to neighborhoods and people’s lives, and a driving force behind prosperity.
Hearing this, one could be forgiven for thinking that Romney had raised tax rates substantially during his four-year term as governor. Not true--he tried to lower state income-tax rates 3 times but was stopped by the Democratic Legislature.
Giuliani calculates the percentage change in the tax-burden figure, which itself is a percentage; 17% & 11% are correct. But journalists generally avoid using such figures because they are confusing & easily misunderstood.
Tax burdens, of course, are dependent on the general state of the economy. The good times rolled for most of Giuliani’s tenure. Romney wasn’t so fortunate. Personal income grew 49% under Giuliani, 23% under Romney. So when Giuliani talks about leading and lagging, he might also mention a third “L”: luck.
When I came into office, I took over a city with a massive fiscal crisis. I took over a city with a massive crime crisis. We were on the front page of Time magazine as the rotting of the Big Apple. And I turned over a city that was the safest city in America, just about. I turned over a city that where we had reduced taxes 23 times. I turned over a government that George Will said was the most conservative government of anyone in the last 50 years. And I turned over a city where people had hope that hadn’t had hope before.
And before that, I was the third ranking official in the Justice Department. I’ve had a great deal of experience; I think it’s the kind of experience that helps to prepare you for president, if there’s any experience that does.
A: The thing that I would do different is I would establish accountability in Washington. Washington is a mess, and that’s one of the reasons Republicans lost. Republicans became Democrats. I would establish programs like I did in New York City--FedStat programs to measure accountability. You get what you measure. If you don’t measure success, you have failure. And I turned around New York City; I can turn around Washington.
A: Sure, big time. Compare that to other states and the federal government during that period of time, and it was about the lowest growth in government. It was below inflation & the growth of the economy. It was about the only government that was able to accomplish that. I lowered taxes, because I lowered the growth of spending in ways nobody else had ever done compared to other states, other governments And actually, the reduction in welfare was 640,000. And you have to see it in the context in which I did it. I did it in the context of a place that never did it before. I had to teach New York City how to use principles of fiscal conservatism.
But in his second term his handlin of city finances was far different. According to a city comptroller report, Giuliani increased city spending at three times the rate of inflation during those years.
In the end, Giuliani did what other mayors have done: he balanced budgets under sometimes painful circumstances and used the slack to fund his immediate political priorities. For Giuliani, who planned to run for higher office as a crime-fighter and tax-cutter, that meant funding tax cuts and a larger police force. Despite his rhetoric, Giuliani failed to take advantage of the booming 1990s economy to solve the city’s long-term budget problem--the “structural gap” in which expenses continually rose faster than revenues, creating recurring deficits year after year.
Too often, organizations base their projections on best-case scenarios. A city will borrow substantially after a healthy year only to find, when revenues sink, that it needs to ramp up taxes simply to cover its debt. Or a business will hire new staff and plush up its headquarters, even when its strong recent past cannot be relied on to continue.