Harris' tax plan would be far more committed to a responsible fiscal trajectory, says Wendy Edelberg

>>> ALL RIGHT, OUR NEXT TWO GUESTS WILL HELP US UNPACK KAMALA HARRIS' $5 TRILLION TAX PLAN, WHICH INCLUDES AN INCREASE AT THE HIGHEST MARGINAL RATE FOR THE TOP 1% TO 39.6%, INCREASING THE TAX ON CAPITAL GAINS TO BE SAME AS ORDINARY INCOME AND AS BECKY LOVES TO POINT OUT, UNREALIZED GAINS FOR TAXPAYERS WITH WEALTH GREATER THAN $100 MILLION AND RAISING THAT CORPORATE RATE TO 28%. JOINING US NOW TO UNPACK IT ALL, TALK ABOUT WHAT IT MEANS FOR HIGH EARNERS AND COMPANIES, WENDY EDLEBURG WITH BROOKINGS ECONOMIC STUDIES AND DIRECTOR OF THE HAMILTON PROJECT AND SCOTT LINCECUM, THE CATO INSTITUTE VICE PRESIDENT FOR GENERAL ECONOMICS. THANK YOU FOR JOINING US. SCOTT, I'LL START WITH YOU. THERE WAS THE PEN WHARTON STUDY GOT A LOT OF ATTENTION THIS WEEK, BUT THEY DID NOT INCLUDE VICE PRESIDENT HARRIS' REVENUE RAISERS THERE. AND I WONDER WHEN YOU FACTOR THAT IN, WHAT IMPACT COULD HER PLAN HAVE ON THE DEFICIT? >> RIGHT, WELL, WHEN YOU INCLUDE SOME OF THE THINGS THAT SHE'S PROPOSED RECENTLY, WHETHER THAT'S NOT TAXING TIPPED INCOME, EXPANDING THE CHILD TAX CREDIT, AND THEN SOME OF THE OTHER THINGS WE HEARD FROM SENATOR SCHUMER ABOUT REMOVING THE SALT CAP, IT SEEMS THE PENN NUMBERS NEED TO BE RERUN BECAUSE I THINK THERE IS GOING TO BE A LOT LESS TAX REVENUE THAN WE THINK AND COMBINED WITH THE SPENDING IT WILL BE A MUCH BIGGER DEFICIT NUMBER. >> AND, WENDY, WHEN YOU LOOK AT THE TRUMP SIDE A LOT OF POINTS MADE ABOUT THIS WOULD, YOU KNOW, ADD SOMEWHERE BETWEEN $4 TRILLION AND $5 TRILLION TO THE DEFICIT DEPENDING WHETHER YOU SCORE IT DYNAMICALLY OR JUST SCORE IT ON ITS OWN. WHAT DO YOU THINK ON THE REPUBLICAN SIDE OF THEIR PLAN VERSUS WHAT VICE PRESIDENT HARRIS IS TALKING ABOUT AS IT RELATES TO THE DEFICIT? >> AS IT RELATES TO THE DEFICIT, I THINK HARRIS ADMINISTRATION WOULD BE FAR MORE COMMITTED TO A RESPONSIBLE FISCAL TRAJECTORY. AND FAR MORE COMMITTED TO MAKING OUR TAX CODE MORE PROGRESSIVE. YOU DIDN'T TALK ABOUT TARIFFS. I THINK IMPLEMENTING A 10% ACROSS THE BOARD TARIFF ON ALL IMPORTED GOODS WOULD NOT ONLY RAISE PRECIOUS LITTLE REVENUE BECAUSE IT WOULD INCREDIBLY DISRUPT WHERE FIRMS ARE TRYING TO SOURCE THEIR IMPORTS FROM, BUT IT COULD ALSO POTENTIALLY REDUCE ECONOMIC GROWTH, WHICH WOULD HAVE ITS OWN NEGATIVE EFFECTS ON REVENUES. SO, BROADLY SPEAKING, I THINK THAT HARRIS PLAN WOULD LEAVE A LOT MORE MONEY AROUND TO BE INVESTED IN THE PRIVATE SECTOR WHERE IT CAN BE PRODUCTIVE. >> AND, SCOTT, WHAT ABOUT THAT? WHAT HAS BEEN SURPRISING TO ME AND BECKY AND I WERE TALKING ABOUT THIS EARLIER IS THAT ON THE REPUBLICAN SIDE, YOU HAVE VERY LITTLE DISCUSSION ABOUT CUTTING GOVERNMENT, CUTTING GOVERNMENT COSTS. BUT EVERYTHING THAT WE HAVE HEARD FROM THE TRUMP CAMPAIGN AS IT RELATES TO TAXES ARE ABOUT BASICALLY GIVING TAX CUTS, MORE TAX CUTS TO COMPANIES, MORE TAX CUTS TO PEOPLE, EXEMPTING TIP WAGES, ET CETERA, AND ASIDE FROM SOME BIG NOTION THAT MAYBE TARIFFS CAN PAY FOR SOME OF IT, THAT'S NOT PART OF THE TAX PLAN BECAUSE IT DOESN'T GO THROUGH CONGRESS, WHAT DID THE PAY FORS ON THE REPUBLICAN SIDE OR ARE THEY JUST GOING TO ACCEPT WHATEVER TRILLIONS OF DOLLARS IS GOING TO ADD TO THE DEFICIT, JUST BY EXTENDING THESE TAX CUTS AND PERHAPS ADDING MORE? IS THAT ACCEPTABLE? >> I DON'T THINK SO. THIS IS -- IN THE OLDEN DAYS, THE REPUBLICAN PARTY PAIRED TAX CUTS WITH SPENDING REFORM AS WELL. AND PARTICULARLY AT THE BIG DRIVERS OF OUR SPENDING AND OUR DEBT PROBLEM, BEING ENTITLEMENTS. MEDICARE AND SOCIAL SECURITY AND THE REST. THESE DAYS YOU LOOK AT THE GOP PLATFORM ON MEDICARE AND SOCIAL SECURITY, THERE IS NO DETAILS -- >> SO THEY DON'T REALLY -- DO THEY JUST NOT -- THEY HAVE BEEN TALKING ABOUT THE DEFICIT FOR AT LEAST A YEAR, IF NOT MORE. DO THEY REALLY JUST NOT CARE ABOUT IT OR WILL THEY CARE ONCE THEY GET IN OFFICE? >> I THINK -- I'M HOPING IT IS MORE OF THE LATTER. WE ARE GETTING IN THAT SILLY SEASON, WHERE THERE IS NOT A LOT OF SUBSTANCE, BUT I WOULD CERTAINLY HOPE FOR MORE AND I WOULD JUST AGREE WITH WENDY THAT THE TARIFFS STUFF AIN'T GOING TO CUT IT. IT WOULD NOT ONLY BE A HUGE TAX ON CONSUMERS. IT IS NOT GOING TO TOUCH THE AMOUNT OF REVENUE THAT WE WOULD NEED TO REPLACE IN THE INCOME TAX OR HIT THE SPENDING TARGETS WE NEED TO BALANCE THE BUDGET. >> AND, WENDY, YOU KNOW, GOING BACK TO YOUR POINT ABOUT VICE PRESIDENT HARRIS, I WAS A LITTLE SURPRISED THAT IF SHE IS TRYING TO APPEAL TO MODERATES, SHE'S TRYING TO BE A CENTRIST HERE, SHE BASICALLY JUST -- MAYBE THEY JUST DON'T HAVE TIME GIVEN WHERE WE ARE IN THE CAMPAIGN SEASON, BUT JUST LIFTING THAT WHITE HOUSE BUDGET AND ESSENTIALLY HER SAYING, LOOK, I DON'T HAVE MUCH OF A TAX PLAN, BUT I ENDORSE THE PROPOSALS IN THE 2024, 2025 WHITE HOUSE BUDGET, WHICH INCLUDED THINGS LIKE TAXING UNREALIZED GAINS, THINGS LIKE BRINGING THE CAPITAL GAINS TAX TO THE HIGHEST EVER IN HISTORY. WHY WOULD SHE DO THAT IF SHE IS TRYING TO APPEAL TO MODERATES AND EVEN TO BUSINESS THAT MAY SEE HER AS A SAFE ALTERNATIVE? >> I THINK SHE HAS TWO BROAD GOALS. FIRST, RAISING MORE REVENUE TO LEAVE MORE MONEY AVAILABLE FOR PRIVATE INVESTMENT. AND FUND OUR SPENDING PRIORITIES. SECOND IS TO DO MORE TO TAX THE CORPORATE SECTOR AND HIGHER INCOME PEOPLE. WHICH I COMPLETELY GET AS A PRIORITY. WE NEED TO MAKE OUR TAX SYSTEM MORE PROGRESSIVE, GIVEN HOW INCREDIBLY UNEQUAL INCOME IS IN THIS COUNTRY. PRETAX AND TRANSFER. AND AS FAR AS MONEY THAT WE'RE RAISING FROM THE CORPORATE SECTOR, WE'RE RAISING MAYBE HALF AS MUCH FROM THE CORPORATE SECTOR AS THE, YOU KNOW, OTHER DEVELOPED COUNTRIES. SO, BROADLY SPEAKING, I THINK HER GOALS ARE IN THE RIGHT PLACE. THERE IS LOTS OF WAYS THAT WE CAN THINK ABOUT DOING MORE TO TAX HIGHER INCOME, HIGHER WEALTH PEOPLE. STEPPED UP DEBT IS JUST COMPLETELY ABSURD AND JUST -- BUT WE'RE GOING TO HAVE A ROBUST TAX DEBATE ABOUT THE BEST WAY TO DO THIS. I THINK WHAT SHE'S DOING IS LAYING HER PRIORITIES ON THE TABLE. >> YEAH. I AGREE. I JUST -- I THINK YOU'RE ABSOLUTELY RIGHT. WE TALKED, YOU JUST CLOSED SOME OF THE LOOPHOLES AS OPPOSED TO DOING SOMETHING RADICALLY DIFFERENT FROM ANYTHING WE HAVE EVER DONE, WHICH IS TAXING UNREALIZED GAINS, WHICH EXPOSES HER TO SO MUCH CRITICISM AND MAKES AMERICANS AFRAID THAT THEY'RE GOING TO START DOING THAT WITH THEIR HOUSES, WITH THEIR SMALL BUSINESSES, WITH RESTAURANTS. I JUST THINK IT OPENS UP A WHOLE CAN OF WORMS THAT HAD SHE BEEN MORE SELECTIVE ABOUT HER TAX PROPOSALS SHE COULD HAVE AVOIDED MAYBE. >>