Dick Armey Returns Fire On Tax Cuts and The Economy

Democrats and Republicans are locked in the same old fight they have been in for decades. You know the one, the fight about tax cuts and their role in stimulating the economy.


Rep. Paul Kanjorski took a swipe Monday on Squawk Box at former House Majority Leader Dick Armey's claims that allowing the Bush tax cuts to expire would stall the economy. He pointed out that in 1993 Dick Armey said "the sky is falling" because of Clinton administration tax hikes and the economy was "going to go into an absolute disaster."

Obviously the sky stayed aloft and the late nineties economy was not an absolute disaster.

We asked Dick Armey to respond to Kanjorski's interview.

LL: What do you have to say to Representative Kanjorski's comments on Squawk Box?

DA: They are obviously quite desperate to give reference to the success the American economy had during the Clinton years. The part of the story they don' t tell is President Clinton had planned to raise taxes, increase the size of government and further enfranchise the labor machine and raise the price of labor. That's the basis from which I made the prediction of "disaster".

Why didn't we have an economic catastrophe? Because the Republicans took the majority in 1994 and Clinton's plan was never realized. President Clinton than enjoyed the joint success with the Republican majority with the restraining of the growth of government.

Back then, government growth accounted for $1.56 for every increased tax dollar for 10 years to an increase in government spending of 56 cents on every tax dollar in the ensuing years after the Republican majority. And the budget went from deficit to surplus.

Let's see, I retired in 2002. Kanjorski has had eight years to repair all of the "damage" that I've done. I wonder what he's been doing with all that time?

LL: How do you define the economy right now?

DA: The economy is in a state of higher anxiety. What you got is trillions of dollars in private hands that's being held out of the market. This is pretty much what Ronald Reagan had when he took over from President Carter.

Private investors are just sitting it out because of the high uncertainty on what the government will do next with no understanding on what to do. You don't know if you are going to have a massive tax increase next year or not. There's all kinds of difficulty.

Even if the Democrats in office, had the resolve to extend the Bush Tax Cuts they are so inadapt and clumsy whenever they chose to do the right thing, I'm not certain they can get it done even if they wanted to. I don't think the private sector is going to regain its nerve until after the midterm election and that's if they only see a Republican majority in one house or both.

LL: The Tea Party has been labeld by many Democrats as "extreme". How do you dispell that?

DA: The Tea Party may look extreme because the Obama Administration is standing on the extreme left. In their misguided awareness they think they are standing on middle ground.

We are not far right. What has happened is this movement has had a major impact on reforming the Republican party seeking re-election.

Look at the 'Pledge to America'. It is in fact almost a carbon copy of the Tea Party's 'Contract For America'. So obviously we are having an influence there.

Their moderate candidates are losing to bonified conservatives, and in every case where a Republican party nominee who won the nomination in their open primary, the Tea Party candidate has not decided to go the third party route. Its actually the exact opposite for the Republicans.

Look at Alaska, Florida, the defeated Republicans are going the third party route. So if the Republican Party wants to avoid a third party candidate that wrecks their candidate's chances for re-election, they better start disciplining their own establishment prima donnas.

LL: You have said it was never the intention of the Tea Party to become a third party. What do you think of this metamorphism?

DA: The Tea Party has shown a greater level of sophistication than the Republican establishment. We wouldn't have the current governor of New Jersey if it weren't for the practical mindness of the Tea Party activists who switched off the Libertarian or the Republican.

We would not have a Republican Senator out of Massachusetts if it wasn't for the practical mindness of the Tea Party activists who supported a guy who wasn't a perfect conservative.

Same thing in Florida. It was the Tea Party activists who solidified Rubio's candidacy quickest. The fact is, our Tea Party activists have known better what is going on the ground in their state and in their district than the national parties because they live there.

LL: Do you think we'll see a Tea Party Presidential Candidate in 2012?

DA: I think we'll see somebody who emerges from the Republican Primary as the Republican Party nominee because that person has had the greatest appeal to this wave of small government activists' called the Tea Party movement.

These folks look into the Republican body and they will elect the most conservative nominee that is electable in the general election. They are very practical minded about it. But whoever wins the Republican primary, will be a person who has the energy and the enthusiasm of the grass roots movement behind them known as the Tea Party movement.

LL: Who do you want to see run?

DA: There are so many good people out there. Mike Pence just won the Straw Vote. Certainly in the state of Indiana, Mitch Daniels has made a good show for himself. I will probably talk to Jim DeMint again for him to run. There are a number of great candidates that are available to run.

LL: Have you found more Reagan conservatives being attracted to the Tea Party over the Republican party?

DA: Yes. Take a look at the primary turnout where Cassell was running. They doubled the turnout that they had two years earlier and most of the turn out increase were disillusioned Republicans that had stayed home a couple of years ago because the GOP as an echo, not an option.

Now they came out because they have an option now. The Republican Party is trying to expand the tent and the Tea Party has been that tent expansion. And if the candidates are not Reagan Republicans, they are not going to win the affections of the Tea Party movement.

LL: In terms of the rhetoric on the Tea Party being "extremists" what do you say about the name calling.

DA: Well, look who hasn't tried something wacky or silly when they were in high school? Are you going to be branded for life for what you tried? When I was in high school I thought about going into the ministry. And now that I've told you and its national news, "Dick Armey once thought about going into the ministry" do you think the Democrats are going to pounce on this and say, you know now we have positive proof that Dick Armey is a righteous man. I mean give me a break.

What did you experiment with when you were in high school? Not many of us want to talk about it. We shouldn't have talked about it.

But the fact of the matter is, the question that's before the nation is what are the policies you will want to support particularly with respect to the runaway of government spending, the growth in the size of the deficits and the crippling effects of this massive government on the performance of the private sector, the economy and the individual liberty of your citizenry?

Those are the important issues voters need to address when stepping in the election booth.

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A Senior Talent Producer at CNBC, and author of "Thriving in the New Economy:Lessons from Today's Top Business Minds."