Well House minority leader roads is in Minnesota today along with the number of other Republicans including Illinois. Congressman. John Anderson, who was first elected to the house in 1960. He has served as chairman of the house Republican conference since 1969, and he is a member of the house rules committee and before election to the house. He practice law in Rockford, Illinois also with us today on midday Thomas who served as undersecretary in the treasury Department under the Gerald Ford Administration will gentleman welcome to Minnesota. I suspect you have a very busy schedule because if I understand correctly this Republican attacks Bliss Congressman Anderson is designed to get all of us thinking about the Republican proposal to cut federal income taxes. Is that right? Yes indeed in the strategy is to visit. I think it's agent all major cities across the United States from New York on the East De Los Angeles on the west coast and sound the alarm as to what we think the prescription is with respect to a dealing with inflation dealing withProblems of the American economy. We think that that means we ought to reduce taxes and the prescription is I understand. It is a 33% cut in federal income taxes over three years time or some juggling of those figures but that proposal which I guess has fallen under the general rubric of the camp Rother Rockin proposal. However, you choose to phrase it has fallen on hard times. It's been defeated at almost every turn in Congress. So at least for the moment to Congress is not going along with Republican proposal. Is that right? Well, it is true that yesterday. It was defeated very narrowly or two days ago in the Senate finance committee prior to that when we offered it in the house as an alternative to the Democratic tax bill. It was defeated by a vote of 177 to 240 but going back a little bit earlier than that when we had the humphrey-hawkins bill in the house and we offered this as an amendment. It was defeated by only 22 volts a switch. In other words of 12 votes could have made the difference. So I think the issue was really a lot closer than some of thesePrior votes or defeats that you referred to it indicate and it would seem to indicate to the the indication to a lot of politicians in office holders that the call for a tax cut has broad support across the country. I want to talk to you about that issue in just a moment some of the reaction that you have been getting from people as you travel across the country, but for some specifics about how this would be accomplished under the Republican proposal federal income taxes have been taking a larger share of our take-home pay. It seems right along. How do you propose to cut income taxes federal income taxes and avoid inflation that some say would result as a result of all the increased demand, of course, we've had a number of tax cuts in recent years and that has always been the Hue and cry that if you reduce taxes that you are going to either stimulate inflation or huge deficits and so on to go back to 1964. We had a tax cut in that year that paid for itself. According to Walter Heller who was the Democratic chair.The Council on economic advisers in a year. So I think there's some pretty good precedence for suggesting that the kind of economic growth that this particular cut if phased-in to the extent of 30 or 33 and a third percent. It would stimulate the kind of economic growth that would eventually boost government revenues to the point where we would have a a broader base on which those lower rates would be assessed and therefore the government would not suffer from too much in the way of loss of Revenue, but I want to I want to carry your question one step further and say that I'm one of those who thinks that one of the real purposes and one of the real values to be derived from this tax cut is that it would in turn lead to a reduction in federal spending and only as we enforce the kind of discipline that can be obtained through pre-empting revenues that would otherwise flow into the federal treasury by cutting taxes. Are we ever going toAround of the job of cutting spending this seems to me to be one of the central issues in elections all around the country this fall we have had some of the same themes raised in our own Minnesota primary here last week and we continue to hear the cry for reducing federal spending as what are the centerpiece of talking about federal income tax cuts. Do you convert Ben Anderson have a list or do you have suggestions that you aware you would begin as to where those cuts can be made because I think people once they hear the general statement want to get down to specifics yes indeed and they're entitled of those specifics and I made a very considerable study of the whole question of the government regulatory process. I'm the author along with the Barbara Jordan on a bipartisan basis of a regulatory Reform Bill. I think there's too much government regulation today of the lives of both individuals and of our business enterprises and our society. Generally, we have literally 85,000 Regulators today.On the federal payroll we spend or the American people spend literally 140 million man hours a year filling out more than five thousand forms that have been dictated by the federal government. I think in this area of over-regulation government-mandated inflation through the higher cost at this regulation has produced. I think this is one very important area where we could cut back and save literally billions of dollars. Let me ask you about that. Do you think could for example limiting the regulatory powers of Osho FDA FTC Interstate Commerce Commission? What have you do? You really think Congressman Anderson that we would that you say the savings might be billions of dollars, but with those billions of dollars add up to enough of a saving so that we could really make a dent in the deficit. Let's say we saved you five billion dollars is an enormous figure figure by my standards. I think that it has to be a combination of spending cuts and increasedGrowth in the economy econometrics Studies by Chase econometrics for example has indicated that by 1980 we could have an increase in the gross national product. If we put through of the tax cuts that were promoting in this Republican tax alternative. We could have an increase I think by 19 I said 1980 I mean by 1982 we could have an increase in GNP in excess of 100 billion dollars and there's some other estimates that are even more optimistic than that. So I would suggest that we can get the federal budget into balance by a combination of a reduction in present spending in the present level of expenditures and by promoting the kind of basic growth in the economy that would so energized the economy that the government revenues would not shrink as much as a 33 and a third percent cut wood.The economy is not going to be static as as these Cuts take effect. Absolutely that gets us back to I think central point we want to discuss and that is how quickly the formation of new jobs would take place giving a cut in federal income taxes. We have heard the proponents of the roskamp measure for example say that if we cut federal income taxes, we will take people off the unemployment rolls. They will start paying taxes revenues will actually be increased to the government but how realistic is it to believe that those kinds of jobs that people want to stay in for a time and Industry will be interested in keeping around for a time. How quickly will they be formed if there were a tax cut just how many jobs do you think would be formed? Well, I've seen it kind of studies again that would indicate that for a million jobs could be created by the end of the. That this tax cut would be fully implemented. You're always going to have arguments about what is the lead time required to create new jobs know we have that.One, for example, we passed the investment tax credit if incidentally was originally proposed by John Kennedy way back in 1962. So there's a question in the minds of people at the how rapidly New Capital spending new investment is going to produce jobs. It takes time, of course to draw up the budget that is required for an investment decision to implement that budget to build the plant to install the equipment to hire the workers and so on but I think that the confidence that would be engendered in the economy. Once people saw that we were serious about phasing-in on a steady basis a reduction in Texas. It would engender the kind of psychological uplift in the economy that kind of confidence that would cause people to go out and start spending start investing and as a result, I feel sure that we would have in normal Savings in a short time and unemployment compensationAll the transfer payments that are required under various welfare programs and I think that it could be done in a relatively short. Of time Congressman Anderson and will return in a moment to quiz you a bit more on the Republican tax place, but also with us today is Jerry Thomas a man who served in the Gerald Ford Administration is now under Secretary of the Treasury Department, and I'd like to ask you about this business of the mechanics of revenues Federal revenues in this country. Is it your understanding that if there is a cut in federal income taxes that to the revenue to the government in the way of increased earnings taxes on increased earnings will be increased. Are you convinced of that? There areThere's evidence of that is a congressman pointed out though and Under the Kennedy administration when a tax cut came about how they were Great Debaters or should be its healthy that it would have an effect on it that it would not create new jobs that it would stifle the services of the government just the contrary took place. I have to tell you my visit to your great state today is not as a former under secretary or one who serves a decade-and-a-half in A legislature, but rather as a businessman because we call this attacks Blitz and I guess we're reaching out to try to get some attention because it's not new with Republican party. The Republican party has historically made an honest attempt to reduce the size of government. And we finally figured out the only way we're going to do it is to go to the people we can't do it in the Congress you see in the last 50 years. There's only been two occasions when they when there has been a republican Congress.Send a Harry Truman once under Dwight Eisenhower and other Dwight Eisenhower with that Republican Congress. We didn't have that deficit spending. So how do you reduce you go to the people because we've been unable to do it in the majority Congress meaning the Democrats. And if that corollary there you talked about reducing bureaucracy will work it will in fact increase profits. It will create new jobs because as a businessman in Florida now, I'm sure the same is true in this great state. More than 50% of my time is spent not trying to increase profits not trying to expand the business not trying to compete with a person down to business in the same business as I found a block with the same benefits. I more than 50% of my time as an average. Businessman is spent trying to satisfy government regulations. And if you'll get that government off our back we in the private sector will be able to hire more people will increase more profits. Now as far as Revenue this tax contemplates for people making less than $10,000 a year as much as a 90% cut in their income taxes are federal income taxes on the average. It's 30% You see the people that have been getting hurt by those in the middle class. We've got programs for the poor. We're talking to the rich, but the people that are really getting it in the final analysis the ones who are carrying the burdens of supporting government services in this country are the middle class and if you give them more money back, You're going to get a bigger buying out of the dollar. They're going to buy more things are going to generate the very thing that made this country grow that private-sector and that's going to create more jobs. It's when you have a person like Bill Coleman a black who was Secretary of Transportation who's speaking for minorities and said we need this for the minorities. We really need it because this is a way to create real jobs, not temporary jobs and government but real jobs, you will not lose that Revenue you will get a greater source of Revenue because you'll have a stronger economy and with a stronger economy more money will pour into the into the government more people will be paying more taxes people are unemployed now have jobs and pay taxes. I want to ask him both of you the same question, whatever happened to the idea of indexing the federal income tax rate structure. That is to say when some of us get a 7% increase in our salary that's more than enough by inflation and then of course, we may enter a new tax bracket and will get a 7% increase in salary. We may pay From 9 to 10 % two more in federal income taxes each year couldn't the federal income tax structure be indexed in such a way so that we would have achieved the same result Republicans might win more support for their proposals. Everybody might be happier. Let me tell you what the ranking Republican member of the House Ways and Means Committee the text right in committee told me just this morning when we were discussing this question in effect, the proposal that we are offering amounts to indexing that actually with inflation at the rate that is projected for 1978 Barber conable. I remember from New York suggest it in the second and third years of this three-year tax cut in effect. All you're doing anyway is indexing taxes because of given given the fact that inflation pushes people into these higher tax brackets about the only way that you can compensate for that is the kind of cut that there were recommending so indexing on a more permanent basis so was offer. Amendment 2A to the current tax bill before the Senate finance committee and defeated on a on a tie boat and it was offered in the house committee and defeated quite narrowly there. So it's an idea that's being talked about increasingly. But actually I go back to my original point. This is not an extreme proposal that we are offering. You know, when President Carter talks about the giving the American people attacks cut of 16 billion or 20 billion dollars. He's not giving him a cut it all if you figure in the new Social Security taxes become effective in January the proposed energy taxes in his energy program. And then the inflation that is produced or push people in the higher bracket in about 20 billion dollars more in taxes in fiscal 1979, which begins in a few weeks on October one. So, we've got to have a larger cut. Older people are going to be going backwards. However, the Democrats I think say that is only the first step in their tax cut phase. Is that right? Well, I'm not sure what I say because we've had so many different proposals coming out of the other side door from the other side of the aisle that I've lost count and hasn't started out, you know, the $50 rebate and in early 77, then he went to a 25 billion dollar tax cut then he went back to one of about 2:15 billion dollars. Now, he's talking in terms of 20 billion dollars. I don't think they really got their act together. We have we know what we think is is is a good thing for the American people and that gets us to the issue Gentlemen of the kind of reception. You've been getting as you cross the Midwest and first you started in the Eastern portion of the United States and I can imagine your answer to that question. Of course, I assume that you will say the reaction has been very much in your favor. But what I'm interested in knowing is how did you decide to pull together this particular Republican media blitz and then send her on the cities you are visiting. Did you particular did you pick areas with a particular? Congressman Anderson Well, obviously, I think we took cities that are important cities that have good media markets or where Republicans have a chance of now and yes, I'll be very Frank with you. I think that the Minnesota has some of the most exciting prospects for the Republican party that we've seen in many years. I think at all. I think that all played a part in on making up the itinerary. So I'm just really giving you kind of a guess now we see Republicans doing things in this tax Blitz that a lot of people don't associate with the GOP the grand old party in normally reserved group of people this afternoon Thomas and Congressman Anderson, you're going to hold an outdoor rally almost unheard of for Republicans. I think probably we have bad PR. All right, if you look for example of the contributions to the Republican Party, they're much smaller than the Democratic party when we talked about where the country is today 46 of the last The years United States Congress has been controlled by the Democratic party. Now when you go back that 50 years only 10% of what we call the gross national product. That means everything we've learned in this country was absorbed by government at all levels today. It's more than 38% In fact, the average taxpayer in America today does not earn any money for himself or herself in a calendar year until May 3rd. So that time it's goes to pay for government at all levels and we've tried and do the job in the Congress and the Republicans route number so you go to the ultimate source of power and that's really the people and that's what we're attempting to do here. I think I think our trip was best epitomized by a lady in the in Brooklyn when they were there and the news media went to her because he wanted to get away from you know, they'll Republicans and they went to this lady and I said, what do you think about this and they explained it to her and she said, you know I'm an immigrant from Russia. I came to this United States 40 years ago and they pin the donkey on me another very good at getting them when they came in in the Democratic party. So all my life, but no 40 years. I've I voted Democratic and I'm making more money than ever dream possible to making $17,000 and I can't afford it anymore. You know, all of this complicated tax system they have on me. That's what we're trying to do something simple people understand a reduction in your personal income tax and she said for the first time I'm going to vote Republican because I've been voting Democratic and it hasn't worked out and that's what we're really trying to say. We're really trying to tell the people what the Republican party is all about. It's a battle that we've had all along to keep down the growth of government and we really haven't been successful in convincing that message and what we are with you at the same table. I was a Democrat most of my life in Florida when I was present for the sun. I was a Democrat and I finally made a decision it doesn't work there. So I've got to go The people who are trying to really get a hold on it and who take the beatings at the pole year after year trying to reduce the growth of government. I can say in one sentence. You want to get a handle on inflation. You want to whip inflation. The only way to do it is to stop the deficit spending and the growth of government. I think this is the concern of a lot of people that has this message of reducing federal federal spending reaches the ears of the public many people will use a meat cleaver approach to this message if they will say, yes, we can simply reduce government by 1/3 by 20% whatever figure you want to use. Do you find people who are simply white washing all civil servants? All public employees has bad and that federal spending can be reduced across the board or are you finding a more thoughtful ization of the problem do you think OIP in Candor have to say that you get mixed answers on that question. Some people I think frankly do say that. Let's just take a figure of a fixed percentage for a certain amount. I don't happen to think that's a very good way of going about it. I try to emphasize in one of my earlier answers that in this area of regulatory reform. I think that we can pinpoint some savings. The other thing again, I want to go back to is that let's not forget that the biggest Percentage of the federal budget today is going to a lot of these so-called human resource programs transfer programs that would automatically be reduced if we could improve real growth in this country. So the people had jobs and we're paying taxes and not collecting unemployment compensation or weren't accepting transfer payment. Then I think you're going to see government spending go down. So I don't think you have to take a meat ax on just in discriminately carve up the Federal Government. There are certain minimum standards that have to be observed when it comes to enforcing the law as to health and safety standards obviously will now I've heard those those statements turned around just slightly and used in just the other way that actually most of the federal budget most federal dollars go in the form of subsidy to private Enterprise in this country that that is to say when we do not give military arms to Nicaragua, but rather provide them with military credits with which they can purchase arms in this country that amounts to a subsidy of our Defense industry in this country. So aren't you a little concerned Congressman Anderson about that message where you say most of the budget dupe is devoted to human services and Human Resources when some others say that is much more complicated than that. It is actually a subsidy of Private Business in this country. Well, we have what are called the tax expenditures in the form of subsidies and then some of them out to be re-examined. I think and frankly it done away with for example, we're going to have before the house now and air service improvement Bill so-called which actually is a deregulation bill of the Airlines and I think that sure there are some subsidies that business will have to learn to live without even as we speak to cut back on these other program is that sort of the underside don't put this final question to both of you. Once again, is that the dark side or the underside of this message that you are carrying across the country that people are hearing your message. Let's cut federal income taxes. But the underside of that is at the people who are going to take it in. The neck are the people who have always taken it in the neck when the federal government reduces spending the poor the people who are not of the dominant to racial group in the country of the people who are the marginally employed. How do you react to let me very quickly disabused anyone of the notion that the poor going to get it. When this tax program calls for a decrease of 90% for people in a family of four with an income of $8,000 or less. They're the ones that are going to get the biggest tax break and if the economy grows as we believe I know it will there going to be hired they're going to get real jobs. And so no fire from having a the minority's suffer as a result of this program. They're going to benefit in a way that they have never known possible under this whole system of subsidies and government programs. The one concern to I have to say we've been talkin about the reduction of government. I wish this Republican measure did reduce government, but I have to tell you that it will generate the economy to the extent that the government will not lose Revenue, but we want to talk about programs. I get a little disheartened when I see $3,000 of my money is a taxpayer being spent to study the mating calls of frogs. I get a little concerned when $20,000 is being spent to study the diving habits of seals in the Antarctica and four. Hundred thousand dollars is spent sending the scientists there. I get a little concerned when I make an effort in Treasury and reduce $250,000 of expenditures from an agency in the government and have a member of the news media writing for a trade magazine call up and say isn't that really peanuts, you know that statement building here a billion there after while to get into real money. You can reduce government. So we're talkin about that also, but please don't be Miss have a misconstruction there. It will not reduce the revenue to government because it will generate this economy as it did previously and people will be making more money and even if they're at a lower tax bracket, they're going to be paying more taxes and the real message here. It's going to for the first time. Help create jobs in the private sector not government jobs jobs are people can pay taxes and it's going to help the middle class that people have been carrying the burden of government for too many years. Will thank you gentlemen both for appearing with us today on midday. Let's give you a chance to get a plug-in for the rally so that the people can hear you as well. Where will that rally be? I think it's in Downtown Minneapolis this afternoon if I'm not mistaken, but we'll get you some information on that a bit later and midday.