Wonkblog is running a series of interviews with key lawmakers and stakeholders on the "fiscal cliff." On Wednesday, I talked with Sen. Tom Coburn (R-Okla.), a long-standing fiscal conservative and member of the Gang of Eight, about the state of play since the election has ended. Our conversation is below, lightly edited for length and clarity.
What has stood out to you about what party leaders have said about the fiscal cliff since the election has ended?
There's a problem out there. It's got to get solved; it's got to get solved by the president leading. He's got to put forward what we ought to do and ought to negotiate from there?
The point is real leadership — get in the room, here's what I ought to do. All of the speculation doesn't do anything to do anything except muddy the waters. He needs a clear vision statement, what he thinks we ought to do, and specifically how. If his answer is only to raise taxes, that doesn't stop the problem. We ought to stop sequester.
But the president has put his budget out for 2013, which would avoid the full impact of the fiscal cliff's spending cuts and tax hikes. Is that not specific enough for you? What's missing?
What is his solution to sequestration? How do you, in fact, cut spending somewhere else rather than the straight-through sequester? He has the head of every agency there, [who can say] what's important and what's not. He has the leaders in the Pentagon — they know what's important and what's not. The way you solve the problem is to sit down and lead. And I think hopefully he's going to do that when he sits down with [House Majority Leader John] Boehner.
What do you think of the president's vow to raise taxes on the top 2 percent, as a way to get to a $1.6 trillion in tax revenue?
It doesn't get [us] anywhere in terms of the problem. We have a problem — we don't have enough growth, we have too much spending. You can't just address one of them. How you address the tax revenue affects the growth. You've got to be able to address the elephant in room, entitlements — the number one cause of our future deficits.
It's fine to say $1.6 trillion. But what are you doing on Medicare, Medicaid, so capital sitting on the sidelines gets invested? If it's just raise taxes, that doesn't solve it. And I've been one of Republicans saying we're willing to do that.
So you do agree that the president's $1.6 trillion tax revenue target is reasonable?
As long as you reform the tax code. If you raise $1.6 trillion in taxes and don't reform the tax code — those who make all this money [will pursue] tax avoidance. It's not going to get invested, it's going to get protected.
If you took away all the directed benefits through code — the credits, the deductions — you have $1.3 trillion a year to play with. But you've got to buy that back — the mortgage deduction, charitable deduction. That's why you've got tax reform, to have more clarity in terms of what the returns will be. That's how you're going to grow.
I don't think you have to raise rates — you can lower rates and you will have every bit as much revenue that the president wants by raising two rates. You can do both. If you just raise rates, that's going to be a drag on invested capital. I'm all for the very wealthy paying more taxes. But how you do it is very important.
So what do you see as the path forward for achieving that in the next week and months?
The president's got to lead on it, number one. If you're going to turn off the sequester, you need the security that we're not going to lose $700 billion in promised savings from debt limit. [Ed.: This week, Coburn laid out $68 billion in defense cuts from the "Department of Everything."] You've got to write in a time for certain that the tax code goes away and new one comes in — Here are the parameters and revenues through deductions and reforming the code.
And how are the Gang of Eight talks going? Have you discussed much since the election has ended?
I never comment on the Gang of Eight.
Other Q&As about the austerity crisis: