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Paul Geary
David Rogers
Transcribed November, 1, 2004
The New Editor
From "The Morning Program with Paul Geary," WCAP AM radio 980, Lowell (Boston
area), Massachusetts, early 1995.
(Discussion began about Clinton proposal for federal money for 100,000 police, and kids
programs such as "midnight basketball.")
Paul Geary: Well Senator, how to you respond to the argument that, yes that's all well and
good, we need police in a place like Lowell, but why should we send our money to
Washington so they can just send it back to us?
Senator Kerry: We shouldn't. I don't believe that. We're trying to fill the gap. Frankly, the
front line of responsibility for this particular effort is at the state level and the local level.
But you tell me who at the local level is going to find the money if they don't have the
money? And who's going to tell you at the state level when everybody's running around
saying we're going to cut your taxes and give you back your money, they don't seem to be
prepared to put it into the police.
Paul Geary: So you don't buy the argument that...
Senator Kerry: I buy the argument that there is a concept in America called federalism.
Richard Nixon believed in it. Richard Nixon was one of the primary people who helped send
money from the federal government to communities who don't have the money. That's the
way in America we try to adjust for differences in tax base. If you've got a lot of cities like
Lowell, Lawrence, Haverill, New Bedford, Fall River, Springfield and Holyoke, Pittsfield,
and places where they just don't have the tax base because you've got lower income, higher
unemployment, where's the tax money going to come from? You have to share it from
other parts of the world, or the country, that have more money. That's the notion of
federalism.
Paul Geary: Then you don't believe the argument that the large federal tax burden has been
what has caused the economic problems in cities like Lowell in the first place?
Senator Kerry: Paul, let me tell you a secret. And it's too bad its such a well-kept secret.
I voted for the biggest tax cut in the history of America. In 1986 we cut taxes more than
any other Congress in history, and that was four years after they cut it, again, more than
any other Congress in history in 1981, they cut taxes. We took the tax rate in America from
70 percent down to 33 percent, and for most Americans down to 28 and 15 percent.
Paul Geary: And we were still able, even given those tax decreases, we were able to
increase revenue in every one of those years, so why should we not do that again?
Senator Kerry: I think what we ought to do is cut some programs. The tax base now is
about where it was historically back in the 1950s and 1960s relative to the gross domestic
product of the country. Now I believe we're spending too much in certain areas. I think
Democrats have to be prepared to say entitlement programs are on the table because the
rate of growth in them is exceeding our capacity to pay. It's not that we're raising taxes. It's
that the programs that are automatic are increasing automatically, and they increase simply
because there are more people growing older, using the services of Medicare, Medicaid, or
agriculture, or pensions. Those are where you have the growth. There is no growth in the
domestic side of our budget, Paul, we've actually cut that overthe last ten years and we've
cut it about 12 percent over the next five years.
Paul Geary: OK Senator, I agree with you 100 percent in that regard, so what do we do
about these entitlement programs?
Senator Kerry: I think we have to -- well we have to -- the reason many of us were
worried about the Balanced Budget amendment or one of the reasons was that it didn't
protect social security which deserves to be protected because it represents money earned
by people under a special kind of contract. You pay into that all of your life and you're
supposed to get it back. I don't think we should use that to balance the budget but I do
believe that social security needs to be fixed in a way that protects it for the next generation
because right now it's on such a big pay-as-you-go basis that there won't be money there
unless it is fixed.
Paul Geary: So what do we do to fix it specifically, do we means-test?
Senator Kerry: I think you have to do several things and it's going to be very very difficult
to do it obviously politically, but I think people have to hear the truth and we have to talk
about it. One of the most important things that we have to do is get people during their
lifetime to save more money, invest more, and not to rely so much on the notion that when
they turn 65 there can be 20 years of a payout of money they didn't put into the system.
What's happening today.. when social security was put in, it was expected that you would
be live until you were about 62 and the payout was at 65. That was the life expectancy.
Now if you turn 65, the life expectancy is 80, 80 plus. So we're actually paying out many
many more times what people put in to the system and it is crazy for us to be paying H.
Ross Perot or Warren Buffet money beyond what they even paid into it. I think every
American has a right to get out of the system what they put in plus interest. But after that,
after you got out what you put in plus interest, it ought to be means tested.
Paul Geary: Senator, I can attest to the difficulty politically in that regard because
whenever I bring up the subject I get a blizzard of phone calls from angry senior citizens.
Senator Kerry: But you see, Paul, anybody who is today 55, 60, has a right to expect what
the system said it was going to do. I don't contest that. I don't think you break contracts
with people. I think what you have to do to fix it, is begin to phase in a system where those
who are younger begin to understand a personal responsibility to begin to accept greater
savings and greater effort to provide for their future. And in America we have to get away
from the notion -- and my party has not been great about it -- but we have to get away
from the notion that everybody is owed something in a government check. We have to get
back to the sense that there's a certain level of personal responsibility and yes the
government will help, government will provide a helping hand, but not a hand-out.
Paul Geary: Senator, we want to keep the social security system solvent, but in so doing
we have raised the social security tax above 15 percent shared by the employer and the
employee, and those people who are self-employed really get socked. In my view the social
security tax is the most unfair and regressive tax. When we're talking about raising the
minimum wage, and yet somebody who has a full-time job and makes the minimum
wage pays something like $1000 in social security tax, is there any talk, or is there any
political will of making it such that poorer people don't pay that very regressive tax?
Senator Kerry: I think the key thing is, in the whole tax structure, we've got to create a
bigger gap between working and not working. And we tried to do that beginning with the
Earned Income Tax Credit but what we have to do is manke certaqin that people who are at
the lower end of the income scale can make more money before Uncle Sam tries to grab it
back. So whether you do that in the social security structure or within the overall
exemptions, or tax, I'm open to doing that. I think you have to. But I do think it's very
important also to remember that on the minimum wage, Paul -- you know, during the 1950s
and 60s, every part of America grew together. If you were in the bottom quarter, quintile,
you know, quintile, not the bottom quarter but quintile, excuse me, lowest 20%, your
income in the 1950s went up 128 percent, you know, in that period. But, if you were in the
top quintile, it went up 98 percent. Today, the bottom quintile has gone down 14% in the
last ten years, the next quintile's gone down 4 percent, the middle two have stayed the
same, and the top quintile has gone up 105%. So you've had this incredible disparity in
American growing. The lower income earners, people on minimum wage, are not able to
get out of poverty today. During the 1960s and 70s, minimum wage was at 100 percent of
poverty level. You were able to get out of poverty. Today, it's only 70 percent of poverty
level. So no matter how hard you work, you're still struggling. That's one of the main
reasons we've got a lot of angry people around. People know they're working harder,
everybody's working harder. Middle income people are struggling to make ends meet, they
know that the wife is working, they're working, there's a kid's working, they're all in the
house, you can't buy the next house as soon as you thought. You can't have the vacation
you thought you were going to have. People feel this anger and I understand that.
Paul Geary: Sure -- well Senator my point was that, today, rather than raise the minimum
wage to $5.10 or whatever the government wants to do, why don't you just exempt those
people from the social security tax, and they would end up taking home the same amount of
money.
Senator Kerry: Well you can't... I mean, it's one way to do it, Paul, but you can't exempt
it altogether because you've got to build the fund towards their retirement. So there's got to
be a sufficient level. I don't disagree with you that I think at the lower income scale it's
higher, it's gotten too high and people are feeling that pinch. And it is regressive in that
sense.
Paul Geary is a contributing editor to The New Editor.