MSNBC - "The Rachel Maddox Show" - Transcript

Interview

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HAYES: You probably heard a lot about the Buffett Rule recently. It
would essentially create a minimum effective tax rate for people making a
million dollars or more a year. It would do that to avoid a scenario in
which, oh, I don`t know, an X private equity baron-turned-Republican
president candidate drawing $20 million a year in income largely on capital
gains, let`s just call him Kit Domny (ph), would pay an effective tax rate
of 14 percent, while middle class pays an effective tax rate that`s
actually higher than that.

That`s basically the Buffett Rule in a nutshell. It`s about basic tax
fairness.

Now, it won`t solve the deficit. In fact, it won`t make all that much
dent in and of itself.

But it should show something very important, which is that our
political institutions at the federal level retain the capability of
raising taxes on the wealthy. It is an open question whether they retain
that ability or not because it has now been 12 years and we`ve had
Republicans in office and we`ve had Democrats in office, and our
institutions have been unable to do that.

Despite rising income inequality, despite increasingly heated rhetoric
about the need to cut the deficit, they still cannot do it.

And just so we`re clear here, the reason the system can`t do it is not
because it is unpopular. Taxing the rich is one of the most reliably
popular things in American polling. Gallup polled on the Buffett Rule last
week. And they found 60 percent support for it.

Then today, on the day of the vote, a new poll from CNN revealed an
even more lopsided result. When asked if they would support a policy like
the Buffett Rule, 72 percent of Americans said yes -- 72 percent. Nothing
polls at 72 percent.

I take that back. Actually. Right around 72 percent of Americans
approve of hunting as a past time. Hunting as a past time comes in at 72
percent.

The Buffett Rule is as popular at hunting, and yet it was still
defeated tonight. We were brainstorming today about what the last
political issue to poll at 72 percent was and we remember that back in June
of 2009, during the health reform debate, the public option -- the public
option, oh, yes, the dearly departed public option polled at 72 percent.
Government administered health care program that would compete with private
health insurance companies. We obviously did not get a public option in
the end.

In fact, one can start to get the sense that the surest death knell,
the surest sign that a piece of policy will not make it into law is
widespread public support. There are other examples of this aside from
things like the public option and oil subsidies and raising taxes on the
rich. Seventy-six percent of Americans, for example, support eliminating
funding for weapon systems that the Pentagon doesn`t want. That`s the sort
of defense cut that Republicans have long resisted.

Remember the American Jobs Act that was proposed by President Obama
last fall. That package enjoyed 63 percent support among the American
public. That was apparently enough to render it dead on arrival in
Washington.

Last time when we were talking about oil subsidies, I described it as
caper because this phenomenon is, if you take a step back and think about
it, somewhat mysterious.

Our basic understanding of the way self-government works is that
public opinion, the majority of public opinion, is essentially supposed to
be transferred into legislative outcomes. And this is not a perfect one to
one process. We`re not Athens. We don`t have plebiscites. We have
representative democracy.

And there`s a whole bunch of complicated bells and whistles and checks
and balances and ways in which the process can be gained. But the basic
idea is that in order for a democracy to be functioning and credible,
there`s got to be some rough correlation between what the majority in the
country wants and what their government actually does. At the risk of
sounding hyperbolic, it`s a little unclear whether that sort of correlation
still exists in the USA of 2012.

In fact, there`s been some fascinating research on this. Larry
Bartels now at Vanderbilt University looked at effect of public opinion on
legislation. He matched Senate voting records with public opinion data,
but specifically public opinion data that was broken down by income level.

He found, quote, "In almost every instance senators appear to be
considerably more responsive of affluent constituents than to the opinions
of middle class constituents, while the opinions of constituents in the
bottom third of the income distribution have no apparent statistical affect
on their senators` roll call votes."

The thing that all of these policies issues that we`re talking about
have in common -- oil subsidies, the public option, taxes on the wealthy --
the thing they all have in common is they are powerful, moneyed interests
who don`t want to see them come to be.

There`s been a lot of cynical mockery of the Buffett Rule over the
last few days as being a kind of gimmick, saying it doesn`t fix the
deficit. It`s true. That it is in some ways symbolic.

But it is more than symbolism. It goes to a core existential crisis I
think this democracy faces right now. And that is the question of whether
our political institutions can enact into law positions favored by a
majority when those majoritarian positions will result in diminished wealth
or power for the most wealthy and powerful in society.

Joining us now is the author of the Buffett Rule legislation,
Democratic Senator Sheldon Whitehouse of Rhode Island.

Thanks for being here, Senator.

SEN. SHELDON WHITEHOUSE (D), RHODE ISLAND: Good to be here with you,
Chris. How are you?

HAYES: Well, I`m good. I`m bummed because I think that this -- I do
think the policy is a kind of test for this basic principle.

And when I look at the history of taxation policy in this country over
the last 12 years, what I see are -- what I see is one party implacably
opposed to raising revenue in any way, one party that will talk about
raising revenue at the upper end but has not been able to put it into
effect. And I despair of whether we can make a more fair tax code. And I
guess I`m turning to you, Senator, to wrench me back from the precipice of
despair.

WHITEHOUSE: Yes. Well, don`t despair too much, Chris. I think that,
first of all, this was round one. This will not be the first or last time
that a special interest in Washington was able to take one hard vote, maybe
two hard votes. But with the kind of popular support that you see, if we
keep coming at this issue, sooner or later we will win. And it`s important
for us for that reason to keep coming at this issue.

You have the problem of special interest money behind this. You have
the problem of the oath that so many of the senators swore to Grover
Norquist. But against all of that, a persistent public opinion, I think,
will prevail. You just have to make sure we keep going at it.

HAYES: That`s it. You raise public opinion.

I wonder do you think this was hard vote for Republicans across the
aisle. Because with the exception, I believe, of Susan Collins, it was a
party line vote. Mark Pryor, the only Democrat who voted against it.

Was this a hard vote for Republicans? I don`t get the sense that it
was. But you seem confident this is the kind of thing they will have a
hard time explaining back in their home states.

WHITEHOUSE: I think it was an easy vote for them in the sense that it
fit very well with the prevailing ideology that drives the Republican Party
in Washington. But I think it was a hard vote for them in the sense that
in that ideology, they know they are very distant from the American people.
That`s why if you looked at the debate today, you saw it ranges over
perhaps a dozen different issues.

And nobody was willing to stand up and say, you know what, it is a
good thing when somebody who makes $270 million in one year in the United
States of America pays a lower tax rate on their income than a middle
income family does. Nobody said that. They know in that sense that they
are wrong, but they are kind of prisoners of their ideology and that`s
where the public pressure comes in to break them free.

HAYES: When you said this was the first round -- I mean, the way that
this tax discussion and battle is shaping up is that we`re going to have a
series of skirmishes as we`re in right now and the election year. And then
there`s going to be a conversation whether it happens before the election
or after the election during the lame duck session about the extension of
the Bush tax cuts which all of which are now slated to expire at the end of
this calendar year.

How much leverage do you think this gives Democrats in terms of
actually moving toward a more progressive taxation system?

WHITEHOUSE: I think that each time we call this to a vote and each
time that the American people focus on this question and see how far apart
from their values the Republican ideology has taken the Republican
senators, the better our position is and the stronger we are to get what
every American -- I mean, huge majorities understand to be the right thing
done here.

HAYES: It`s interesting you say ideology and not interest, right?
Because I think we`re actually offering different theories of what happened
in this vote today.

The theory I`m offering is essential that you have interests that are
lobbying against this -- a tax raise on the wealthy because, well, there`s
a lot of money on the table. And what you`re saying is there`s a genuine
belief amongst your colleagues doing that it would be deleterious to the
economy. That it`s actually bad to the economy to do that.

I guess it doesn`t have to be either/or. Aren`t they and you getting
lobbied very heavily on these tax votes by people who have a lot of money?
I know, having written columns about it, I get calls from people in the
private equity and hedge funds that want to lobby me and I was just a
columnist in "The Nation" who cared. So, I can only imagine who comes into
your office.

WHITEHOUSE: Yes. I think it`s more of a both end situation, Chris.
I think in part, like the oil vote, there`s just special interest money out
there and special interest power out there and that has a significant
effect.

But at the same time, you also have to remember that a great number of
these people swore an oath to Grover Norquist, and that oath obliges them
to protect all sorts of tax loopholes and to oppose any increase even when
it`s from a lower rate for a multimillion dollar income up to the same
level that middle class taxpayers pay, which you think would be simple tax
fairness that everybody would appreciate.

And I think both of those things come together and that`s what makes
it in some respects an easy vote for Republicans, because they are so at
odds with the American people and because fundamentally on the merits, it`s
wrong, that`s what makes it a hard vote. And that`s why the involvement of
the public is so important.

And I want to thank everybody who went to buffettrulebill.com and
registered their vote, because it`s that kind of public pressure that will
make the difference here.

HAYES: That is actually the open question, whether the public
pressure will make a difference. We`re going to see that play out over the
course of this year.

WHITEHOUSE: Right.

HAYES: Democratic Senator Sheldon Whitehouse of Rhode Island, thanks
so much for your time. Really appreciate it.

WHITEHOUSE: OK, Chris, thank you.

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