NPR: Sen. Alexander: Tax Deal Will Create Jobs

NPR's Melissa Block talks to GOP Sen. Lamar Alexander about the proposed tax plan. The Tennessee Republican says the plan will result in job creation.

Posted on December 9, 2010

GUY RAZ, host:

So, we heard why many Democrats are angry about the tax deal. We move on now to someone who is happy with it.


I'm joined now by Republican supporter of the deal, Senator Lamar Alexander of Tennessee. He is the third ranking Republican leader in the Senate. Welcome to the program.

Senator LAMAR ALEXANDER (Republican, Tennessee): Thanks, Melissa.

BLOCK: Senator Alexander, what about this insurrection today by House Democrats? They're saying if this is essentially a take it or leave it deal, we're going to leave it. How does that complicate things on the Senate side?

Sen. ALEXANDER: Well, I wasn't in the Democratic conference. It's a part of an adjustment around here. One of the adjustments is we're moving from a situation where the Democrats have these huge majorities and say we won the election, we'll write the bill, we have the votes - to a situation where the president is trying to act in a bipartisan way by taking some Republican ideas, as well as Democratic. And that just takes a little getting used to.

BLOCK: But one thing that the House Democrats are demanding is flexibility on the estate tax. Do you see any room for negotiation there?

Sen. ALEXANDER: I hope not. I mean, we need to settle the estate tax. This is a compromise that makes a lot of sense. It's 35 percent, $5 million exemption. We think it's fair, and we should pass it.

BLOCK: Let's talk about some of the broad contours of what you like about this bill. How do you justify that a quarter of the tax savings in this deal go to the wealthiest one percent of the population? Help us understand why that's fair.

Sen. ALEXANDER: Well, the goal is to create jobs. And if you raise taxes in the middle of an economic downturn on anybody, especially the job creators, you make it harder to create jobs.

BLOCK: And if you look at the proportions, though, of the top, top sector of earners in this country getting the bulk of the benefits, why does that help?

Sen. ALEXANDER: Well, if you're a small business person in Tennessee, what this means is that you won't be paying tens of thousands of dollars, perhaps more, in taxes and you can use that to create a job. It also means that your employees who work there will get a one-third reduction in their payroll tax payments every two weeks. And maybe they'll spend some more money creating more jobs. So it's a combination of policies that all together are focused on jobs.

BLOCK: Would you want, Senator Alexander, the tax cuts on the wealthiest earners extended permanently, not just for the two years that you've agreed to now?

Sen. ALEXANDER: Keep in mind, these aren't tax cuts. These are the tax rates that have been in place for 10 years.

BLOCK: But they're set to expire and they would be extended. And I'm wondering if you would want them to extend permanently.

Sen. ALEXANDER: That means they're set to go up. So they're not cuts, they're tax increases. It's the largest tax increase in history that's automatically set to go up January 1st. I believe that those tax rates ought to stay the same permanently. Our taxes aren't too low, our spending is too high. That's another debate we're going to be having. But right now, our whole goal is to make it easier and cheaper to create private sector jobs. Raising taxes on anybody doesn't do that.

BLOCK: So you would want a permanent extension, then. Curious, then, how that can be justified with the widespread fear about ballooning deficits and the talk about the future that we're leaving for our grandchildren. How do you justify a package of tax cuts that adds $900 billion to the deficit?

Sen. ALEXANDER: You keep calling them tax cuts and I have to respectfully disagree with you. You don't cut taxes when you leave tax rates at the same level they are. This is a big tax increase that will happen January 1st. The debt is the second big problem we have. Jobs is the first, debt is the second.

One way to reduce the deficit is to increase the revenues. And you increase the revenues of the government by growing the economy. So this is one way to help reduce the deficit by getting revenues up. A second way is to reduce spending and the debt commission, with five out of six senators of both parties voting yes, has recommended a very dramatic way that we could move in reducing spending, which I hope we get to and I intend to try to support.

BLOCK: Senator Alexander, thanks for talking with us.

Sen. ALEXANDER: Thank you for your time.

BLOCK: That's Senator Lamar Alexander, Republican of Tennessee.