I.O.U.S.A - Addison Wiggin [109]
I would hope we can demonstrate we ’ re intelligent people that don ’ t wait until they create a calamity in their country before they deal with problems that are obvious to anyone who ’ s ever studied economic policy and fi scal policy and monetary policy. You only need to look around the world to see places like Argentina, Turkey, and Germany after World War II whose governments have effectively achieved a meltdown condition. Knowing this can happen to modern nations, we should not let it happen to ours.
Q: What would you say to Americans who think economics is too complicated to get their head around? Why is it important for people to try to understand this and get a handle on it?
Paul O ’ Neill: I think it ’ s really important for the American people to understand the basic principles that are involved in these issues. Otherwise it ’ s pretty diffi cult to make an intelligent choice about who should lead the nation. What do you want in a president? Are you happy to just have someone that seems to be charming and charismatic, or do you want someone that will make a diffi cult decision, or help us to make diffi cult decisions that are in the long - run interest of the people? I would argue we need to elect people who have deep values and leadership c16.indd 220
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characteristics that are probably expressed by a person who will tell you, “ I ’ m going to come and I ’ m going to tell you the truth about some things that you may not want to hear, but that you need to hear. I ’ m going to do my best to make them simple enough so that you can understand why we have to make some diffi cult choices. ”
I believe this is not all a bitter medicine that we need to take. I believe there are things that we can do as a nation that are good for the long - run condition of our nation, that reinforce the value structure of our nation. For example, to assure that when people get to be 65 years old, that they have fi nancial security. That is also consistent with becoming a truly saving nation, which is something we need to do.
Q: Just going back to tax cuts one last time, do you have any thoughts on why people say, “ Well, it goes back to the Reagan thing: Supply - side theory says that tax cuts are all good because it ’ s all going to work its way through the system and it ’ s all good. ” Does that hold water? Does supply - side theory work under certain conditions but not all conditions?
Paul O ’ Neill: You know, I believe that it ’ s possible — not easy, but it ’ s possible — and for sure it ’ s desirable to have a simple tax system. I hate that the titles that get put on these things, but the idea of people paying, say, 15 percent or 20 percent of their income on a no - nonsense basis with no deductions and no credits has a lot of appeal to me. I believe simplicity is our friend in having a tax system that really works, and I think it ’ s also true the lower the tax rates, the better. But a modern nation like ours does need to collect money to pay for our needs that we share together, such as national defense or interstate highway system.
I also believe that in a just nation, all of the people who have means help to pay for the things that people who don ’ t have the means need. So, that if you have a very low income and you can ’ t meet your fundamental living needs, then we the people should give those people money. Now our tax code has been used and abused with tax credits and dependency allowances and the c16.indd 221
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rest to deal with this problem. I would much prefer that we did all of this on top of the table, partly because when you use the tax system for our social program purposes, people with very low incomes are left out. In order partly to adjust for that, we have a refundable tax credit which was instituted several years ago during the Clinton administration; it got some momentum and it ’ s been carried forward. I would much prefer that we be grown up enough so that we faced the fact that some people need fi nancial help