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[no audio] >> welcome to "newsmakers." our guest is grover norquist, president of americans for tax reform. joining us in our studio to talk with grover norquist for this next half-hour are jonathan allen, a congressional reporter for political and eric wassen, budget reporter for the hill. before we get to the other guest, we wanted to bring up today's q &a. one of the headlines from there

is says you are a committed tax opponent but you see a new dynamic in politics. what are you seeing out there? >> there are two things. in d.c., there is gridlock because the republican- controlled house of representatives don't have to pass a legislation that president obama doesn't like. present obama doesn't have to sign a thing that the republicans wish to enact and the senate is divided against itself. there are 41 democrats willing to filibuster anything reasonable and there are 41 republicans willing to filibuster anything unreasonable. each has their own definition of what is reasonable. there is a certain limitation to what can happen in d.c. obama can get new spending programs and the republicans have a hard time rolling them back things that are already low. it is as if you had two sumo wrestlers evenly matched spending two years inside that circle unable to push the other

guy out of the circle. it will not be dramatic television for the next two years. at the state level, however, there are 22 states where the republicans have the governorship and both houses of the legislature and 11 states where the democrats have the governorship and both houses of the legislature. in 11 states, and this will continue for 12 years, with redistricting, the 22 republican-controlled state will tend to become more republican with a stronger redistricting. the others will become more democratic. 12 years from now, you have states like illinois which has already raised the income tax as soon as they got in, conn., another democratic state, raise the income tax, california is trying to raise the income tax. that is 8 2/3 requirement to raise taxes. in the 22 republican controlled states from wisconsin to ohio to michigan to texas to

florida, georgia, maine, you are seeing a move in the other direction toward less regulation, lower taxes, less spending, fewer powers for the union bosses to take money from government workers through dues. the country will move in two very different direction state- by-state. 12 years from now, you will see interesting divisions and what happens of the next 12 years, and a young person would get up and move to a state with no income tax. florida, texas, and older people with assets will be moving out of state with death taxes and high income taxes. >> following that broad look from gordon norquist let's get to specifics. let's begin with jonathan allen. >> you have recently been involved with senator coburn and a discussion of energy taxes, at the mall in particular.

he wants to get rid of a tax break for ethanol producers. there has been an accusation that he is generally known as conservative, he is looking to raise taxes by eliminating an unreasonable tax break. can you explain why that particular ethanol subsidy should stay on the books? >> i am in favor of getting rid of the tax reduction for ethanol production/debatable tax reduction which makes bad economic policy. it is bad energy policy. americans for tax reform has always supported getting rid of that tax credit. and reduce in the gasoline taxes overall for all americans. i don't quite understand how cobourg got confused about this. this was a major attempt by the congressional campaign committee to say that if you sign this

bill, state legislature, governor, which as no net tax increase. if you want to get rid of a tax credit because it is bad economic policy and was put in corruptly, there is no objection to that. americans for tax reform is founded by president reagan as the outside group to push for the 1986 tax act which was about reducing rates. we are very much for that. what the pledge says is if you want to get rid of a reduction or credit, reduce the rates and everybody else so that it is not a hidden tax increase. i don't know why coburn misunderstands that. we have always been opposed to that tax credit. some tax credits are repayable. that is spending. that is not a tax cut. tax credits, if it is a pure tax credit, the government does not

take your money. that is not giving you something. when a mugger walks past on the street and fails to take your wallet, it is -- he does not give you your wallet. when the government doesn't take your money in taxes, they did not give you that money, they let you alone. the attempt to use tech -- tax policy to drive energy policy, tax real energy, and subsidize fake energy, stuff that doesn't produce energy on a cost- effective basis is bad policy and we should get rid of those deductions and credits and reduce rates for everybody else, not use it as a back door hidden tax increase. >> the issue that you were just a discussing seems to be part of a larger dispute and was being characterized about this gang of six plan that is going on in the senate. these talks are to develop a

legislation based on the fiscal commission's report which included simplifying the tax code but raising revenue. how confident are you that this gang of six plan, if it had that, would be dead on arrival in the house or senate? where is this dispute with your friend tom coburn stand now? >> americans for tax reform asks all candidates for federal office to sign a pledge. it is about no net tax increases brett we are very much in favor of tax reform, reducing rates, broadening the base, that's why we are formed. we drew a line in the sand -- don't ever use tax reform as a way to raise taxes and go after people. when i came into this town, ted kennedy was the advocate of tax reform. tax reform was code for raising your taxes. through ronald reagan, we changed that and now tax reform

means revenue neutral tax reform. our pledge is the defender of that. we feel very strongly that nobody should poke holes in that line of defense against tax increases. the commission that obama put together which was not ratified by congress. , some for henpecked guys like simpson who he knew would support increased taxes, they came up with an idea, a plan that promised to reduce spending by $3 trillion in the future and raise taxes by $1 trillion. that was their numbers. paul ryan looked at their plant and said there are tax increases. it would actually be a $2 trillion tax increase. it is a big tax increase.

we led with their lower number. two is worse than three is worse than that. i understand the temptation of trying to get the democrats to come to the table to reduce spending. democrats say they will come if you put tax increases on the table. i have had conversations with each of these senators on the phone. they assured me that everything is on the table but we will never agree to a tax increase. they sent me a letter. we have seen this before in 1982. ronald reagan walked into a room with the democrats and promised $3 of spending reductions for $1 of tax increases. they don't come any tougher or more serious or more committed than ronald reagan and his white house and the bill passed the tax increases were real. over the next five years after that plan passed, spending

adjusted for inflation, spending went up more than it was scheduled to go up before. ronald reagan got taken and he referred to that decision as the worst decision of his presidency. in 1990, the democrats in congress came to president george herbert walker bush and he was a cheaper days. they say you get two dollars of spending restraint. ronald reagan got cheated out of $3. the $1 of tax increase, $80 billion of tax increases happened. spending went up after the 1990 budget deal more rapidly than was expected before the deal. the democrats took him and got

the tax increase and they spend the additional money that was brought in and they spend in anticipation of the next time. we move toward and the democrats are back to bluesy and the football getting republicans to walk back into a room to get them to agree to real tax increases for delayed spending. that is a very dangerous way to go. i wrote a letter to all the senators saying to remember. 41 senators signed the pledge for no net tax increase. 237 members of the house. the votes are bear to filibuster it. why go into a negotiation and confuse voters as to where the republicans and democrats stand by having negotiations that are not being held in good faith by the democrats? they just want a tax increase.

they will talk about spending restraint. what they wanted the tax increase. when democrats did to these negotiations are like teenage boys and a prom date. there is only one thing they want. they will talk of anything else that there is only one thing they want and we want to keep our eye on that. >> there's a huge gap between the spending government does and the revenue they taken. what is the ideal way to tax? is there a broad assessment you can give on how you end up bringing those things together especially if you don't have revenue-raisers at all? >> that is the key question. there are two issues here. what is a pro-growth tax policy or a tax code that is less destructive of economic growth and job creation? also, how much do we spend?

you put the two central questions into one question. step one is what is our goal in terms of size of government? our goal is to limit spending as a percentage of the economy. you can spend less by cutting spending and a second is to grow the economy. if you had no death tax, we would not be taking a lot of savings out of the economy when people died. you would have stronger economic growth. if you had a capital gains tax that was lower or zero, you would have more economic growth. one reason we got to a balanced budget in 1997-2000 was republicans took the house and senate and nobody raise taxes and there was no deal with the democrats. the republican said we are not spending what president clinton wants. instead of what was projected to

be a $200 billion deficit, he did not get the spending he wanted and the economy grew because all the things that clinton threatens to do the economy were taken off the table. they did not pass health care and they did not have tort law. strong economic growth and spending growth was much smaller than had been projected. that brought you into balance. spend less, two, have a pro- growth economic policy. tort reform could be an important part of that. it is not a tax policy but it is damaging to the economy. i was just in texas talking to the governor and he is looking to do loser pays tort reform which is what britain has and they don't have the expense of tort law we have in the united states. that is a model.

if it moves toward in texas, you will see other states in similar directions. less spending, pro-growth policies that moving back to the federal level, mitch mcconnell said this morning >> he was talking about the debt ceiling increase. that is something the treasury forecast. the u.s. will bump up again the -- against the $14.30 trillion ceiling in a matter of weeks and this could cause a default on bonds. mitch mcconnell made the point rather vaguely that republicans will not raise that without something serious done on the desperate what should republicans be asking for? >> i think there are a couple of things. we don't need to raise that debt ceiling right away. the federal government owns $30

billion of general motors. what is the federal government on the part of a car company? sell it. you just bought yourself several days. the federal, and owns a great deal of land out west. they are not national park land that should not be owned by the government. sell that. that buys you two months. make a list of your assets. if you are in your household, and you had these debts that were bigger than your income, you would look to see what you can sell. what can you sell, what does the government on that they don't need to own? they own buildings and land at the federal, state, and local level. because of the obama spending spree over the last two years, spending is on a trajectory beyond with the american people are paying or willing to pay in taxes.

i think there is a great legislation that has been been put for that makes it the law of the land that bond holders get paid first. this argument that the secretary of the treasury puts forth is completely disingenuous that if the government had less money, and it needed to borrow more, that somehow you would not be able to pay your debts. you pay those first. you then decide to give several hundred million dollars to planned parenthood later but first, you pay your debts. the law that republicans are introducing in the house says make sure this is still law of the labs and never again can the american people be threatened that we lose our bond rating if politicians end up in gridlock. step two, there is wonderful legislation that has been put forth by darrell issa and a number of folks and this

legislation says that when state and local governments borrow money that is tax free on federal taxes, they have to make their books open for their own citizens to see them on pension liabilities. how can we now have trillions of dollars of unfunded local pension liabilities and health- care liabilities? these contracts were written five years ago, 10 years ago, 30 years ago. we are now just learning? this is enron run by 50 states and a great deal of towns and cities. let's make sure there are not any more government enrons and require that if you're going to borrow money you will have to have open books on your pension liabilities enter health-care liabilities. that is an important reform. i don't think the obama

administration can go to the mat to oppose transparency. they would not be able to protect bond owners as well. to not to those two things looked pretty bad. what are the spending restraints that we could get enacted? it will not be everything i would like for mitch mcconnell or john boehner would like. it is not zero and it should be a significant number. that is slightly vague go into that negotiation but more that you're offering now. >> you mentioned planned parenthood. friday, the republicans in the house unveiled a three-week continuing resolution which would avert a government shut down march 19 and would extend funding for another three weeks even though it cut spending. some groups are opposed to it.

they are trying to score that as a key vote. we see some tea party-backed freshman opposing it. that is over the planned parenthood a writer not being in there. you don't appear to be opposing that. why is that? >> i did an article with the susan b. anthony list calling for the de-funding of planned parenthood from federal funds. it was a traditional values pro- family group writing together. we said the government should not be in the business of funding this stuff. i want to find cotton can be there. -- candy either. there are many reasons to oppose hundreds of millions of dollars being paid to a healthy nonprofit that has plenty of resources. taxpayers should not pay for

that. that said, i am in favor of getting rid of it as quickly as possible in legislation that you can enact. i am very supportive of the house and senate leadership plan of getting two weeks and taking a back to the 2008 levels of discretionary spending. we won that first fight and now we are doing three weeks and you have to drop $6 billion. the administration came back just before that two week second and said we will give you $8 billion for four weeks. we could have had a deal if they had done that earlier. the administration is willing to cut spending and they have some suggestions on cutting spending. we have put them in already and we will take the view -- the

easiest of off the table to spend less. planned parenthood is not simply a spending issue. it also drags in a series of policy questions. i don't understand tactically white club for growth would not understand why we are winning on the spending issue, why bring in another issue right now? de-fund planned parenthood now? absolutely. is this both the only opportunity? -- is this the vote the only opportunity? this will come back again and again >> you support short-term and definitely? >> sometimes conservative activists and guys on the left, too, get concerned about republican leadership or the democratic leadership when they have tactical questions as opposed to a broad strategic or principles.

i think the republicans are trying to get as much spending restraint as possible as broadly and as rapidly as possible and as visibly as possible. it is not just good to cut spending $4 billion. you want independents who voted for the tea party because of cutting spending. we need to go back to them and watch us cutting spending. obama wants to spend and we want to spend less. it may be small numbers that independents don't spend all day watching c-span. they don't focus on politics all day. they run their lives. they look up from time to time and they don't necessarily say one party of the -- or the other as their permanent allies or enemies. in 2006, 30% of the country looked up and did not like the

occupation of iraq and afghanistan and did not understand what was going on. it seemed to be expensive in lives and money. four years later, the same independence looked up and said i never signed on to the tsunami massing -- massive spending increases. then they voted 60/44 the republicans. one needs to be cognizant of what the independents are focused on and what they care about and they are focused on voting against spending. if the republicans hold them, they win in 2012 and 2014 and we can begin to turn the ship around. you can have a different president at a different senate. that is the focus. >> let's fast-forward to the 2012 presidential race. which republican candidate has your heart and which one do you think can win? >> my first responsibility is to

get everyone of them to sign the pledge in never raise taxes. i enjoy working with all of them and have worked with all of them in the past, even the guys who are not running. i keep in touch with them because they might change their mind. i think all of them will take the pledge not to raise taxes. i would like to speak to all of them about getting ronald reagan on the $10, $20, or $50 bill. the secretary of the treasury can do that by executive order. there is a series of other smaller concerns. i think we have a goodfield. watch the governors. i think there could be a dark horse. it could be the horse you did not expect to run. watch somebody who is not yet announced to run. chris christie would be a serious candidate if he decided

to run. he could raise the money and would be an immediate pleasure. mitch daniels has not been announced would be a serious candidate that could run state -- nationally. rick perry of texas is not running but he changed his mind, he could raise the money out of taxes. he has a 10-year record as a governor. it would be very impressive. walker of wisconsin is not running but he has the name recognition. there are people yet to come into this race. i have worked with newt gingrich for many years. he is serious about spending restraint. he has been there on some of these negotiated fights. tim pawlenti is a serious and, the governor. -- and confident governor for the governor of massachusetts, mitt romney has run was before. that is a