Dylan Matthews and Andrew Prokop join Matt to talk about Republicans hopes, dreams, and nightmares on tax reform.
Learn more about your ad choices. Visit podcastchoices.com/adchoices
This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
I once just a tribe myself and where the universe took out Manhattan, Manhattan PATH, ride. It blew my mind welcome to another, we need some bucks. Media pack has not worked. I met replacing us join me today. We have Andrew broke up and reduce the office until Matthews, who has abandoned us further greener pastures of greater Newark New Jersey. glad to have you guys here. Oh I'm wondering where tax reform, soon after- and I talked about this a little bit on Wednesdays episode, but you know it's a big deal. I this is big for organizing principle for the Republican Party It's gonna be an overarching sort of Thiemann in Congress
and it's also not really clear- that it's going tat to happen in any way do Dylan and Andrew have both recently written great stories about this. and I thought I saw Dylan with you: can you Can you lay out a little bit like what we always in this tax framework that that got police? I like what is it? What what is a frame keep it short. So the frame- is it not This piece of legislation and the people counting in the White House in Congress are sure to tell you this, because it's it's a way to get out of answering the lot of specific questions about it, but it lay out it sort of like a campaign planets like that level of specificity it's way now roughly what they think that the rates on the individual side should be white textbooks their willing to closed what they are going to try to the corporate rate down to and then a few assorted other measures. So I think too, of the few things
republicans agree on an have agreed for years that we should get rid of the estate tax and the alternative minimum tax, and so it includes that and then gets into observe, slightly more detail about what to do with with corporate in individual taxes, so the corporate side. The big thing is that that going to try to cut the rate from thirty five to twenty percent, that's obviously very very large percentage cut and they claim that this is going to happen through some changes to the base, so that you're using a lower rate but you're talking more profits from corporations. They have not given a lot of detail about how that's going to happen there. Some gestures vaguely, but there also gestures about ways that they want to shrink the base and tax fewer profits and then, on the individual side, the plan is to serve consolidate the seven rates we have into three or four rates the bottom it is gonna, be all higher the top rated below lower so but they're going to try to
been saved for that for low income people by expanding the standard deduction and expanding the child tax credit. That's the vague trade off their offering to two people to buy and the Turkey thing is that when you are looking at all this together corporate taxes, most people think are paid by people. corporations who tend to be really rich. Yes, certainly seems like they're gonna cut the top rate for fur individuals and so it seems very clear. The very wealthy people are gonna benefit a lot from the semi state tax in these days, yeah, which is almost comically progressive. What what? What? What's that? The current cut off for precise exit, senegalese exemptions like yeah, for five million. So if you're a state is than that, you pay nothing above that you pay some reasonable percentage of of the amount above that and you can get an answer. Sophisticated,
Explain I can get around it in a number of ways, but only you like a few hundred. pay it every year it's only very, very wealthy households. It doesn't raise much money, but what money it does raise. It raises progressively So we know that this whole package is super good for rich people. and we don't really know what it does. Fur middle and lower income, people we, because they haven't told us what the brackets like where they stop an end. rise. There, there's gonna be three ray: it's right right, but they haven't said Google pay them or why it's almost whack you're that yeah so like theirs. It does a bomb twelve percent rate, which is higher than the ten percent rate now, but they won't say where it ends. They say that there's gonna be a top thirty five percent rate, but then there are also might be a mystery rate of this of thirty five percent and they won't say what percentage that is or wedding come it will apply to, and so it's
can a wishy washy, and so there are some things in it that are really bad for people in the middle class like raising the bottom tax rate. They also want to get rid of the state local tax deduction, which is really important for people, especially as were high tax states like New Jersey, Washington DC as transit states. The relevant states that we live in, but also states like Utah, that the chairman of the Senate Finance Committee and saw it in which his speeches tricky, and so there you know that, but there also expanding the descended action. There banning the child tax credit Evans it by how much, but they say there doing that and serve figure. How that all washes out is tricky. The tax policy centre made a run at an end, and it seems like something like thirty to forty percent of middle class people, as usually people on its words like the upper middle class. Like the eighty two ninetieth presentable
are gonna be paying more, and so the majority of people get tax cut, but a very significant minority get attacks, hike so you're. In this awkward situation, where Gary Cone trumps had economic adviser has been ass light. Can you guarantee that there's gonna be a tax cuts from Alsace people and he can't do it because, like the he just can't guarantee that, given the facts on the table, while he could lie you could why ya didn't fit. Steve Mnuchin said that this plan was going to reduce the deficit by a trillion dollars and that everyone was going to get a text. So I think, that's probably like the way forward as a Menstruation spokesperson hits it's true that the producer of suicide squatters Sansom, like unbelievable untrustworthy, he's them. You know there's a way to it, but I mean this is, I think, we're it is important to get at the user to look at it from afar and its I call K. This can be like some big tax cuts for the rich and
maybe some smaller tax cuts in Chad Tax Credit, whatever else for for everybody else, and that's it. roughly the George W Bush template right who who put forward a taxpayer that in a liberal complained was incredibly regressive was incredibly skew toward which people. But it was in fact true that everybody got attacks cut from that tax plan. An even I got attacks cut, but some like Winkie dink part time you, know, college job. I think, and at the end of the day it was it was difficult to mobilise opposition ride. It was, it was hard to say to people. Well, your tax code is small compared to some other guys tax got so nobody should get a tax cuts and that's where this sort of broadly speed king. You know if you separately, far away from it that that's what the Pine China China looks like, except of course, then you have a big sort of increasing the deficit, which they also say: they're not to write,
Yeah, there's a really good paper after the Bush task cuts by other cartels, called homer, gets attacks cut of getting into this dynamic of of people like now Venus envious, as you might think that their that their benefiting the benefiting less than someone like if your gaining So it turns her you're not gonna, be resentful, thus began, but they ve themselves into this corner where they don't want this thing to cost too much they they make claims did not adding to the deficit that that may or may not credible and may there may not be be enforced by moderate Republicans in the Senate, who are more serious about wanting. It do not add to the deficit, and so, if you want do not add to the deficit, and you want the corporate cuts felony as they come from somewhere, and so you can't just do of blanket everyone's, a winner approach that the Bush pioneered. You got up
make choices about winners and losers, and that's her upsets sets the whole political calculus of of why this wooden upset the middle class. and a lot of this is just sort of republican leaders working backward from what Senate rules allow back during the Bush administration like we remember it as Bush passed, a big tax cuts, but really the plan was crafted in a way that could work in the Senate budget reconciliation process. To avoid the filibuster and to do that, the planet to abide by setting rules, and those rules state that any bill has to reconciliation, can increase the deficit after ten years. It can add to the deficit in the short term, but it can't keep adding after tat
there's so the way Bush passed, a big tax cuts that added a to the deficit. Despite that is he sat up all his tax cuts to expire in ten years, so, basically, Senate scoring would score the bill in such a way that it would add to the deficit in the short term, but in gear. Eleven. The tax cuts all vanish and suddenly, where back to this, it is and an and anyone add to the deficit in the long term. The reason that Republicans don't want to do this again. is, they want to make some like a sweeping overhaul of the corporate tax code. They they want to do what is thought of as tax reform, not just pure tax cuts this reform will involve a lot of tax cuts, but they
Do it in such a way that its permanent and that will last on ten years they ve they ve been am very has tend to making these big changes to it We're protects code expire or setting like a sunset on them, Doug halts Egon. Who is one of them? eating. Conservative economists promoting this effort, told me that it would be lunacy too, change the foreign taxation of corporate income two to a more M territory. system and then to have it just vanished after a few years. They really want to make these corporate tax overhaul changes permanent and to do that they can add to the deficit after ten years and to make that be the case. They need to come up with some revenue,
he too, either close deductions or or basically come up with some revenue that will balance out the tax cuts that They are doing as part of their corporate tax reform in the long. I think. its wooden zoom in on this corporate piece of it, because it's both sort of the conceptual centerpiece and also I feel I got a black hole into which they ve gotten sucked firm for no good reason right and indeed the deal with with corporate income taxes. Thirdly, as the United States, levies are thirty five percent corporate income tax rate, which is high by international standards. Most statutory rates are lower than that but then famously the effective rate that companies pay is quite a bit lower than that ended. It very is, from year to year across the business cycle quite a bit, but it is gotten as low as an effective rate of twenty one percent. I think sometimes pops up to twenty six said. Twenty seven percent
So then, another thing is that the United States purports to collect taxes on global profits, the world wide profits of companies that are headquarters. The United States that's a little bit unusual, but then there is also a ton of shenanigans that that companies use just what I get out. that costs should bang so the jewish and clearly is a potentially promising terrain for some kind of war. For right, when the statutory rate is thirty, five percent, but you're actually collecting in the mid twenty percent, you clearly could do some kind of reform. Were you a limit. a lot of options and you bring the rate down quite a bit? The Obama administration had a proposal along those lines that I believe had a twenty eight percent tax rate. That was what they thought. You know they could sort of work out mathematically and including keeping a handful in the most prized
sorry Deductions Mitt Romney in his twenty twelve campaign, he was more aggressive than that. He promised that he was. Can we all get it all the way down to twenty five percent? He didn't have a lot of details about how that was going to happen are or how we must work. Publican seem to have I don't know how to say this, but I mean they. They pulled this twenty percent number out of their collective asses. It doesn't bear any relationship to the members to the mast it to the finances, particularly because they simultaneously want to completely give up on collecting any global revenue for from companies. So there keep talking about tax reform and end. They seem serious about it like serious enough that they're trying to make this permanent as Andrew was saying and like running around telling people. It would be ludicrous or insane for this to not be done on a permanent basis, but just in that part of
I don't see how it how it works in and then there's the sub, maybe don't get, can you explain, expensive thing. Sure- oh man expenses. My favorite thing to talk about what it means is They keep saying. Why does like they're gonna Braun the base and lower the rates are going abroad, the basic and lower the waves, but then also they have this idea, which is the opposite of which is the opposite. Its I mean it's often peered with something that the the bronze base so the basic ideas that currently the way the corporate tax were exposed in the? U S and in most places is when you like, build a factory or, if you like, by some equipment, you can't deduct that all the first year, you have deserved depreciated over the time that it's used so like, let's say vocs. Media buys office building somewhere for, like ten million dollars. I say it again: yeah we're crushing it are. You can't like take ten million dollars off of your corporate tax law and combat year there,
their rules about how long you act like That'S- that's been used it bearing for for real estate. It's often like twenty years- I wonder, and so you- u gradually take like a twentieth each year in the dock that so, this raises more money than just letting everyone deduct everything immediately by a lot of economists. Don't like it, because if you let everyone in deduct their investments, mediately dummy what more investments and recurring currently at this point. We're corporations are instead of investing in new factories, and things are to serve giving money back to their shareholders lot, which allows people things problem and so forth. Fencing basically just says you can deduct the forecast immediately and it's mostly republican proposal, but there are a lot of democratic economists. You think it's a good idea to Jason Furman serve after leaving the Obama administration came out as a supporter of of four expense in which he could have had to be quiet about well,
in a democratic administration, and so they should basically be. There should be a bonus for companies that plough a large share of their revenue into like new stuff right new factories that employed ball New research new, like it's, it's a way to get their companies investing, rather than just like ploughing money back to shareholders, as is the dream of how this would work and its usually pair. with with a change to disallow the deduction that is currently therefore interest. You pay on loans, currently we have the super messed up system in the. U S where the effective rate on investment You borrow money to do. It is negative because you can deduct the rest on any loans you take out like the government is effectively pain. You money to take out debt and this has like super messed up consequences, particularly in the financial industry that,
that, if you're wondering why it became viable for like Goldman Sachs to take out like a hundred ex leverage on on various bats, like that, de la Rachel. I think we should. We should understand the sort of multi step process. He read so it's like investments, durable capital, investments right, you buy an airplane, but you you don't get to deduct that full caught right right away. So you you have to do she added over time. So then you might think looking at that, like. Oh that's bad. That makes a too difficult for companies to finance investment in the future so that was addressed by saying, while the interest on your loans will be tax deductible. So now I borrow money, I buy the airplane. I write down the value of the airplane overtime and also each year. I did at the interest.
that I'm paying alone, so no cash sort of actually deposited my corporate treasury to buy the plane, but I'm getting a big sort of tax reduction for it. So we saying ok that supports adequate sort of physical investment and the economy, But then making interested adaptable is also a huge subsidy to just sort of pure financial players. Re re headed encourages companies. make investments by borrowing money rather than using money they already have, which is like a big deal. Russian and encourages them to use money. They already have for like dividends and start by backside, so so so apple has hundreds of billions of dollars in its corporate accounts and also cells, tons and tons of bonds. Re write, like Apple, is not a company. that needs a lot of money. He heard her courage and I'll. Send you don't think of them is like desperately going to banks and be like you gotta help us out man, but like they do that, because they have a big tax reason to do that, and so the dream,
Stick to the facts are that spire by this, this reform of you do for expensive, and then you can't do the thing with that anymore, All of this is expensive and suspicion. Expensive early on, because people then through deduct a whole lot of of investments and that's really firstly in the near term, it's less costly in the long run, because they ten years on their no longer deducting money for that same investment, but it costs a lot of on and if it reduces the base of corporate profits that your taxing, and so you proud We need a slightly higher rate if you, if you dont, want to add to the Duff Don't you want to do this? You, you probably have to jack the corporate up to pay for that
maybe that's. Ok like having a lot of economists who support this would say this gets rid of a lot of what they think is bad about high corporate tax rates, and so maybe it's all right to have a higher rate if it's only taxis or of profits that don't that they come in action. Some of us to have normal investments, but so that the basic thing is that the republican framework has like three key commitments and corporate taxes. One is to cut the way to twenty percent. One is to stop taxing foreign profits. One is to do the full expend saying, but then also their support. Revenue neutral tax reform right into the Detroit to square the circle in like bizarre ways, so that the current way that the framework works is that they do full expense in four or five years, which is stupid like it's. The only way to avoid is, it is even more lunacy that, like I think, serve making a temper
for some other stuff is stupid. Just in that, like companies need time, plan in its like Weird took to just like we change the rules very frequently in its disruptive and costly. stupid in that it's just like a five year. Amnesty move I, and so is just a time shifting thing you're, not growing the economy. Just saying like you should do these investments in twenty seventeen to twenty twenty two instead of the next five years. I am what I have done trumps reelection cap. paying and take, take, take a break and then gonna talk about an old book. Leaving the house, especially these days, can can turn into like this word. Most amazing scavenger sogdiana catch. While I get your keys, get your phone, I got a kid got together His little water bottle. A million low things here and there and its it can be like
your pain in the ass a, but, on the other hand, it's like losing stuff. You know that's annoying, it's terrible! You don't want to do it. You want to keep track of things, and now there is a solution to that and its tracker. Eight years ago they changed everything with their first tracking device that have general again with the new tracker pixel ass. It would try Pixel you never need to worry about losing anything again. It's the lightest, Bluetooth tracking device on the market. You just put the tracker pixel on anything. You tend to lose keys while, you can put on a cat. I don't have a clue but they want you to know that you can put it on your cat. I haven't I my keys super you for small enough to fit anywhere. If we miss place anything that has the tracker pixel attach used too smart for at ninety decibel law will have the final seconds for Ellie Delight, see them find it in the dark, which is incredibly useful. I'm always was some dark in a really great feature. Is that if the thing that you lost your phone right, if the keys are in your pocket, but you know where you left your phone, you can press the button and you tracker picks up
then your phones, gonna ring, even if the funds on silent power is a huge lifesaver and you can even locate name this miles away where, if you, if you like. Actually leave it somewhere and you go someplace else. Every tracker users, part of the largest crowd locate network in the world. ways but for finding your stuff, and so you know like ok, I left that in the restaurant over there and at least if you can even go Later I think I've got a thirty day money back guarantee. That means you have truly nothing to lose. You go to the track. Are dotcom, slash weeds to get twenty percent off any order? That's the track! T r ac k are dot com, slash weeds for twenty percent off the tracker that comes sweet of you, so it you do. I see you, you ve been reading showdown a good you got slightly. Yes, I have so far this is a book that was written about the night in eighty six tax reform law that was passed,
under President Reagan and he cited into law and its basically held up as the gold standard for how tax reform can actually happen this book, explains why journalists are so enthusiastic about tax reform, primarily because the book is really good rather than because the eighty six tax reform is that good yeah it's an it's a fun story, it's written as basically an underdog story of you know all that What both that Reagan and the key Senate Republicans uniting with various characters on the democratic side to do this before form that they think would be good and sort of fat. You now have benefits. Were all America in standing up to special interests, lie Yes, you are fighting furiously to try to kill that. That's, basically, the narrative presented in a
It's a narrative. Tat, I think, has been a. I mean this is a narrative has been largely serve accepted. I mean one thing you might have seen over the past three Is some sort of sneering journalistic headlines like? Is there really gonna be tax for farmers? It just can be tax cuts and like the reason, for that, is that people people like this book about the eighty six tax reform right that the heroes they didn't just do some lame ass tax cat they did attacks were for that, like it brought tax rates. down with broad benefits for everyone, but they also took on the special interests and enclosed these loopholes, but I think it could thing about. That's right I mean that's, I think clearly true regarded it, as the specifics of the bug is that this was a bipartisan action yes some so at the time Democrats controlled, the has representatives, Republicans controlled Senate and Ronald Reagan was president,
The person who first sort of came up with the idea to loads and end a bunch of deductions and loopholes and answered if use that to pay for cutting the right. It- was Senator Bill Bradley of New Jersey, who is a Democrat, and this was kind of his big idea. He was a rich basketball player and he thought the tax code was cry, see and too many loopholes and was too complex, and you know that rich people could- take advantage of all these euro deductions loopholes in and thought that this way you know why, ever people try to end these deductions in the past generally and is that some sort of special interest to lobbying group would would be in and get it kept in, and so his big he was then you could am sort of swamp. Those
individual special interest lobbyists by making. Sure a lot of people would benefit from the lower rates in general. So what happened with nineteen the six was. That the business community was split in some is because there were a lot of businesses that thought they would benefit from the rate cuts that were in. plan and were some that were furiously opposed to having their loopholes, closed by any end. Enough kind of deals were cut, certain loophole, clothings were scaled back, other ones more or less I've tax by day. In the end, there are enough people who one or companies who won from this legislation to get it through and anything. It's a point, it was. It was conceptualize as a bipartisan effort, re media. Six. Sixty votes was not without the issue because, because when you think about it, right,
legislatively like the way you can take on some special interests. Is by being able to tell the special interests that you have some some room to manoeuvre right that, like just adding one senator on your side isn't necessarily gonna scuttle the whole bill, because you're playing with like the whole field of senators, and that's me would just seems conceptually unsound about this, like that, this republican tax reform effort it started with it the destination based cashflow, tax concept and then basically, Walmart came out against it and there's two were possible: Senator from Arkansas, and they were like y know about this guy's and then like that's all she wrote. Because when you're doing a partisan tax bill, you can't say you can't be like. Maybe I'm gonna pick up a Democrat from Vermont on this idea and role. You like you want to stay on the team. In said, it's like any group of three republican senator
Noise can veto anything. So it's really hard to do anything that upsets anyone in any significant way. I also think it is important to remember that eighty six tax reform it wasn't just like by person in there. Like people from both parties supported it like the ideas in it were substantially like had something for both sides, so the overall structure of it was that it raise taxes on corporations to lower them on individuals. It shifted the burden that way, that's the opposite of what the current plan is meant to do it. Equalize treatment of capital and own waging come so there is. There is no difference in tax rates. The people pay on capital gains in and evidence and stuff. That was a democratic when that was not Republican when that there were there were things about it like those much lower rates that that obviously played into republican priorities, but
There really was something that you cook latch on to you and claim is a win regardless of what party or amphetamines, They construed the preferential tax rate for capital gains as an example of a loophole right that they were. They were closing Where is like saying, there's gonna be a cut in the estate tax is the opposite of for raising the end. You, like your phrase, was like people work in, so many people were going to benefit from the lower rates ripe alike, so few people benefit from eliminating the state tax Are you actually close enough loopholes to pay off? Do that fiscal cause of limiting these eight x, not that big in the grand scheme of things. But the people who hey. It are so small, a number and they're so rich that too, to finance to actually finance that by you know, taking away piddling home office deductions or whatever else is like gonna, created a huge circle,
losers? Yes, so you're right that this is not a conceived as a bipartisan tax reform effort in any way so far there hoping to pick up, maybe a couple of stray democratic vote if they can but the republican leadership has shown no inclination to make this sort of a major policy compromises that would require getting a lot of democratic support on something like this, like. I don't think it would have been impossible to think of some kind of tax reform bill. That Democrats would really like, but clearly one of the main purposes of this bill is to cut taxes on core. Nations and the wealthy by a lot and there, and they are trying to pay for that by you know, using ending a bunch of deductions for individuals in many cases, and am so
the problems that have arisen lightly. As you mentioned the desk, from this cash flow tax. That was their first big idea of how to pay for this thing and any got killed other next, big idea is to end all probably it'll, be scaled down to just limit the state and local tax deduction. So I think you ve talked about their son the week before by it. The problem here is that there are a bunch of republican com, this man in districts are states with a lot of taxpayers who am who use this deduction and they are already furiously lobbying to get to scale back now. This is something that if this was a bipartisan effort- and you know it had a prospect of getting eighty votes, then maybe something like this would be kept it
by that. But the margin in the house is difficult in and if a couple people objective Senate, and the whole thing goes down. So there's there already tagamet scaling back, it's not clear how much it will be scaled back, but but it seems like it's not going to survive completely intact. At this point that I wish that we should do another break better, but I wonder what the budget has that plays into their Sunday in interesting way. I will be starting these days about fake news. Alternative fats, news media needs more important than ever to you know, get some you'll get some information from from reliable sources and not just rely on social things all the time and in so textures a great that has some of the most trustworthy credible locations in the world. Time magazine, Yorker Vanity, Fair, the Atlantic, others are in there and they give you access
not just like your favorite magazines, but the latest investigative journalism. U S, politics, domestic and international news of all around the world as so. What is it like? This is an act that is sort of jointly produced by a bunch of the world's leading magazine reserves, and so it lets you read on your smartphone or on your ipod, especially looks with great I've. Had Ipad the foresight to design and lay out of every magazine and they go beyond the magazines himself finding joy articles. You want to read with daily recommendations and got exclusive interactive features, the videos and more at this summit in great ones out derriman their story, newsy politics ones that the EU might be interested, in particular the weeds, but it also that sports illustrated that fast company they got rolling stone it. It's all in there, it, sir, about you mark. Would you like to check out back issues is bonus content normally its nine ninety nine a month which is obviously needed. Singly good hundred vaccines for ninety nine a month. If you sent up right now it texture outcomes, such weeds, get a fourteen day free trial
free is like, but you can't do that you can see I too, like one or two magazines, or you could have all your favorites on your part from their tablet. All the time for way. Last should start you're free trial, now the text, her up their offering our listeners a fourteen day free trial to get a texture, dot com, slash weeds, that's fourteen days to try to extra for free, a texture, dot com, slash weeds, textured com, slash weeks, ok, so I Andrews was taught him at the disdain local tax reduction and you a number of housework, publicans, I've, representing deed, now,
infamous sort of weak, affluent, suburban districts, often districts that have been republican for a long time, but showed a trend away from from Donald Trump lot of vulnerable republican members and that the House pastor a budget resolution this week, which sort of facilitates that the tax reform- and it includes closing of of the salt deduction, and I front from a number of people who had served called up congressmen and in southern California and had been told by their office that well, you know, representative zones are wanted to move the process forward, but does not believe that will be in in final legislation took an Who gives a fuck? What does that mean? Why why? Why does it move the process forward? Well, sir, What Republicans are trying to do right now is to set up the budget reconciliation process in the Senate
it will allow them to pass a tax bill with only fifty one votes, rather than the sixty that are needed to advance a bill past the filibuster in most cases this we already saw this happened this year. They set it up for Obamacare repeal and that ended up failing and the reconciliation instructions that they set up for Obamacare. Repeal now expired. So basically they need to set tax reform This track again, this majority vote tracked and the you do, that is by passing a budget resolution. So we basically have to lay out projected spending levels. or the government, but The budget resolution is weird process because a lot of it just isn't real a lot of what is written in it.
am would become. Law will never become law because the Van majority of spending bills in the Senate, half to pass with that. They have to be to filibuster. They have to get over sixty votes, which means there all need democratic support. which means that I you know you can put in the cuts in the budget resolution. And the budget resolution itself can pass with just a majority, but then the cuts them selves. can't need to be separately appropriated so so So in a sense that the real budget is the conciliation instructions. The main purpose of this is just to set up the reconciliation process. Better, so read. So so when you reading about this, like, as you know, consumer of them that's right. You have to understand. The difference between the budget could call for, like cutting the Education Department budget in half
but if it doesnt contain reconciliation instructions to do that, then it carry any legislative force like education departments budget will be appropriated to the normal sixty vote process some time in the far out future in a more bipartisan way. That will be more modest, but the resolution itself can just have these sort of made up numbers, so people can go home and say you know voted to do whatever eliminate the Department of Commerce, and that's that What we're going through right now and that the point in the process were at is that the house on Thursday passed its budget resolution that has reconciliation instructions now. The Senate has drawn up an entirely different budget resolution, so this was the price
says of some negotiation between senators pat to me and Bob worker who are too bigwigs on Senate Budget Committee, and so send it appears to be where the real action is Nobody is taking the House budget resolution, particularly seriously, but you know because the Senate is going to be where the biggest challenges. What they have drawn up is interesting. They set up a reconciliation for tax reform. However, they have said that a tax reform bill is allowed to add one point: five trillion dollars to the deficit over the first ten years. So that is where their target is for how much tax form, or at least the maximum- that tax reform can cost in the short term, so now they had to actually passed that through the Senate and done that may be tricky though,
How will we get it done by Adam but there, but there be some issues ran. Paul has sent me some noise is in and he voted against the budget resolution that set up Obama care on reconciliation because he didn't like that. It didn't balance the budget the sun. That's why about another senator sad talk. Rain is sick. He supposedly going to come back in middle Toby urban areas in the hospital. Donald Trump said he was in the hospital and that doesn't appear to be true, but but he does it or to be not doing, well and he's not in Washington. Even though the Senate is at his ease recuperating from some elements that will see if he does make it back button, basically, the point is that in the end the Senate is going to if they want to do tax reform through budget reconciliation, they have to pass this budget resolution
and then the House and the Senate have to agree on the exact language of this budget resolution, and only then will the reconciliations instructions be set up so Dell, and this is one point- five trillion short term jobs that I mean Jesus spawn to anything like clearly in that the framework or is this just sort of two different like piles of numbers footing best each other, seems like you, Ve Helsinki has voted vast, each other so we don't have a score for what this framework will actually cost. The estimate that the tax policies and our came up with is about three through point trillion over ten years languages and their assuming right that, like twenty to thirty percent of people, want to pay higher taxes right, there's room twenty three percent. It will pay higher taxes they have not modeled the growth effects of this
Republican say they want to include in the score that they say they want to do some version of dynamic scoring. That shows that that the tariff cuts will partly pay for themselves. Then again, if they actually want to do that, the people were gonna. Do that score the National Budget Office in the joint committee on taxation, who are now they're they're, not as wildly domestic, as is the term administration, is about the ability of toxic has to pay for themselves to put it lightly, so yeah one for trillion just doesn't correspond to that now. been an all out assault on the tax policies on earth. The Trump administration has been been waging Kevin has it their chief economist, went to tee pc to talk at an event. And when they asked like why're you insulting us. I use like that's what when you behave responsibly and when to say that they thought there would be the massive revenue.
from economic growth and- and you even know what you're talking about, and we don't have the final thing yet, and so If I take him at his word, he has no idea what this thing costs he does not know if it costs one point five trillion. He does not of a cost. Double one point, five trillion he's just say and stuff. so I want to take a final breakin and then, let's, let's talk about this, was so great that the dynamic score Why would you ever by a teacher for fifty dollars? If you knew it only has seven dollars to make you know when we wouldn't it and with ever lame you never two over paper for party clothes, they make premium essentials using the finest mature without traditional markups. Let me tell you wilcots. You know that you're, never a propane are they want. You know what you're paying for and why the radical transparent about every step in that process from the materials they used, the ethical factory work with and because they sell directly to you, the president, thirty to fifty percent lower than traditional retailers, everyone's cause look better. They cost better, they last longer
essentials. Like a cotton crew t shirt, I've got some of these are in their exactly, but they should be their simple. Stylist Ameer Ali cereals. At my wife loves her or Kashmir. Crew sweatshirt I really like that this or t shirts- and I, like my I've, got a weekend- your bag for them. That is really really great. They got other courts are out, there slim fit genes, straightway Denham, men's, Japanese, Oxford. I got a few their stuff and I really enjoyed it. These are timeless essentials. The sugar like the bay, sick building blocks of any great wardrobes. They give you just what you're looking for no frills but real quality there, inexpensive and affordable, but they're really high quality, certain basic stuff, you know. You live your life. What, with these things, you can really is that my answer right now you that free shipping on your first quarter, neither ever lane dot com, slash weeds, that's ever lane dot com, slash weeds, ever lane, dot, com, slash weeds. ok. So I mention this unless observed the weeds, but I went back and back and looked at the paper and there's a
interesting. Two thousand six offers of tax analysis thing that Georgia be bushes. Treasury department came out with and they're making the As for a dynamic score for making the Bush tax cuts permanent, which as we discussed previously, this pass them in two thousand one with this, like wink, wink it'll go away after ten years and then me we started saying Congress, you make these tax cuts permanent today, Treasury do a dynamic score, which was designed to show that this was not really as expensive as Pino Democrats might it was, and the result I had to say, as is, is very, inconvenient to actually for Republicans, because, they say is that the tax cuts would do a lot to boost growth if they are financed by spending cuts right soup suits of the paper makes the case that making the Bush tax cuts permanent paired with some Bush arab proposals on,
security or Medicare. Whatever else would like boost the I think they say zero point. Seven percent per year with sounds like a little but actually is kind of a lot, but that's is being proposed here right in its because it is they that so far from This will boost growth, so much that we don't need to have offsets right is that I did the odd would they could get someone to agree to was. If we offset this, it would be really good for the economy, but it seems like what has it was. France is a score, that's gonna say this grows the economy, so much that it doesn't need an officer bright I also disagree very clear about this. They were doing that if they were financing. All this was spending cuts leg I dont know. If it's
leader really impossible to find three point: five trillion dollars and cuts over ten years to pay for tax cuts, and they have the whole package not be a massive net benefit reduction, such tax increase for no class people, but it certainly seems like that's inevitable. Well, I mean I mean they're. There was always the why the should Ministration could get its tax cuts passed, but couldn't ever get this permanent with offsets past is that it is true, forms very quickly from everyone gets a small tax got to ever gets a small. Skype and in exchange like mom, is kicked out of her nursing home right and like that, but that doesn't that doesn't fly the only really big benefit programs. You no help help the poor, but but also help. The middle class a lot and and the tremble ministries has not he's been interesting to me, but like they have not even notional. Lee suggested that the way they're going to finance this giant tax God is by reducing
government spending, even though In some sense. That's the traditional idea of conservative economic policy, at least as far as I remember Emmy at me, Have I missed something like somebody in Congress saying like what happened to cutting spending but there's some rumbling from people like Mark meadows in in the freedom cock s about certain. Maybe we get some food stamps cuts in here, and maybe we get some medicate cuts that we couldn't get through in a bomb curriculum, but a? U can get those cuts through an apology. I appeal for a reason. They they hurt. People who were members of Congress were interested in protecting and and two. If you, really just wanted to stick to the poor and I really do all it like that limits, how much money you can make like. I wish it would be a tragedy if food stamps were wiped out. over the next ten years, it would not pay for this tax plan an end. This I think, brings us back to this
troll challenge Republicans are facing here, which are kind of just various versions of this. Aim dilemma, which is that any attempt to act? The way I pay for a large chunk of their big tax cuts, which they seem to have to do, because, if Senate rules, at least in the long term, at least mostly even if you do have an optimistic dynamics for some time. Any attempt to actually do that is naturally unpopular, because if the people whose taxes go up or whose benefits would be cut so em, and yet you know the political formula that George W Bush did you successfully in passing his two major tax cut. The US was that everyone would benefit like that is the point equally popular thing to do, and that is what Republicans themselves we have have often promised like
One of the issues that had come up this week is data Paul basically read the tax policy centre report on the republican framework, and he expressed incredulity that as many as thirty percent of middle class, taxpayers could see their tax bills go up because of the republican to form, and I use a little incredulously yet he was like this is ridiculous and that he has, framing his opposition. As kind of warning, Republicans of an obvious very serious political problem. I am sometimes you ran pause, a libertarian with it yes in credit views on stuff, but here I think his views would be pretty broadly shared among republican politicians like raising tax is even on thirty percent of the middle classes seems to be a pretty unpopular thing to do, and so he and a ban on bright part this weekend that he had a great little
this year. Where ran Paul wrote this isn't about the tax cuts being perfect. It just about it not being attacks hike because of some policy. One goal, no one in America is asking for a guarantee that ass a bill, no one is going to cheer for bullet points on a white paper. All they will do is ask. Do I pay more or less under your plan, and that is kind of you know a big chow? I urge that Republicans are facing right now, like the popular thing to do is just to cut people's taxes and back, they want to do this big corporate ex overhaul in and make it permanent they're looking for all this ways to raise more tax revenue in and their finding at that's. Her difficult? I'm fighting a strange new respect for rampart, because. I remember went from one. I said to myself: well, there's something in a taxicab and now it s really looks to me like I'm, actually attacks increase,
you say that to tell what I look to the public, a body to do is raised by taxes. It was a bad enough went when Obama wanted to take away five. Twenty nine account scams from from precious upper middle class professionals but he at least you know wanted to do it to to finance it a good cause of universal preschool or something to to ask you no upscale, but not super duper, rich professionals to pay higher taxes. In order to have it's so Facebook it doesn't need to pay any taxes on its european revenue does not seem like incredibly compelling to me as either politics or or substance. Really. But it. But it raises the question of like, at the end of the day, are there enough deficit hawks in the Senate to actually constrain this process or
Do they eventually reach this sort of obvious resolution of just like take out all the tax increases? And if that means guinea to scale back. The rate cuts like a little to make Susan Collins Happy or something I mean everything gets scaled back right, I mean when wanted to cut taxes, and then he had to scale back a little because Susan Collins and about unwanted stimulus near to scale back alone, because Susan Collins and that's just like The guy. Just gonna live right. That's rule world noble wages differed from my gun, Obama care. She became like a pretty hard. No, she was like she was. I am not going to vote for a bill that guts medicate right, big like a bottom line. It wasn't like you can, have got medicate a little bit less, but it's, I feel, like a lot of the Senate, has kind alike. I mean they're in town, but they serve like fled to the hills yeah. It's I think, there's a question.
based on how we ve seen this Republican Congress operate so far I mean They came within one vote of passing and Obamacare appeal bill descended. The house did past even though many house, members districts and constituents and interest groups would have been very negatively affected by them. Bill, and they were willing to just sort of cast all that to the win, because President Trump wanted this win, and this was the sort of thing that Republicans had promised to do for a long time. It's with their donors wanted. So I do think it's a real question, whether the crew, political imperative of just doing something of just now, failing again being embarrassed again, will drive and none of them to pass something on the deficit question specifically
you do have Bob Corker Senator from Tennessee who just ass, he was retiring and he said that he won't support any tax bill. That adds even a penny the deficit other? He also bears little compromise that we add, like a hundred fifty trillion. yes that there's there's a little wiggle room that he has set up for himself, a witch said well, I would accept a reasonable, dynamic score and dam and- and ass. He orchestrated this budget resolution compromise with pat to me that that lets the tax bill raise the deficit by one point: five trillion over ten years, but he sort of characterize. This is kind of you know. Giving giving some running room to write the bill. But in any case he's signal that he's going to try to be tough on the deficit, he's retiring, so he's not vulnerable
primary challenge. They will have very little political leverage in trying to get his vote and basically he says that the debt is the big challenge to America and he's going to close out his term really trying to make sure that in that they don't blow up the deficit, so he's one issue then said. The real question is whether the deficit HAWK faction is bigger than him, and especially if there are a bunch of them, who want to continue to have careers in Congress who might be vulnerable to primary challenges- furred not supporting president trumps tax bill because their Whitey concerns about the deficit, and we don't know Baby Susan Collins said John Mccain and Bob Corker would sort of band together, but it's also possible that em when they do band together that their them
It might be less of a hard, no and more of just kind of half a loaf kind of things like not one penny is a strong negotiating stance by them, but will see if he sticks by an end. Lisa Marquis he, who obviously became a huge stumbling block on and health care. A big priority of hers is drilling in the Alaska, national Wildlife refuge and that's been sort of folded into this legislation are evolving because that something that, like most Republicans just want to do other they probably don't care as much as she does, did they, but it also seems like a key sort of like effort to get her like a team in a way that she should never really was four for the health care effort. So the question of you know corker than becomes very sort of six
Forget dried because I mean if he means a lot about this amendment. Mccain is in a similar situation being immune to pressure Mccain voted against the Bush tax cuts. Unlike you know, ultra conservative like Diane Feinstein, so the joke about different, but she did vote for it. I mean twelve Democrats voted for that bill and John Mccain did not and it still couldn't break a full buster. It's it's why! Well? It was a different time. There was a like crazy legislating in the early arts, a medic carried Medicare Bell, Password fifty one votes, but no reconciliation instructions but so I can just guess. We didn't really heard, like John Mccain a week ago, said like there should be a bipartisan process and tax reform which clearly isn't going to be, and they were he's also said, like wait and see so it so. I spent he's like I'll, wait and see what they come up with. So you know he is.
He's giving his sort of same process stick but its unclear. If you will, you know a lot of his objections to the Obamacare appeal bill process were framed. In terms of you know, this is what Democrats themselves did in transforming the health care system and damn you know, It's not clear if he will be similarly motivated to oppose, like attacks, could be all that's done in this way. I think that the trouble for him- you know I mean I know what's frustrating about me came from leadership perspective- is that he likes to say things like let's wait and see rather than saying something constructive like I would vote for this. If it did something specific and then you could have right. Here, he's he's both like a very pivotal player on legislation, but also often disengaged from the process of drafting. Let
patient and then also very hung up on procedural issues, but is like it is this a little bit. I mean Mick in some ways became my good, the Europe of the health getting body. He hasn't very odd approach to the work of being the United States, Senator like he could by getting the mix on any of these topics like much further upstream and shape policy and in some direction or other, but outside of of things at related to the military? He doesn't really do that. He likes to China, do quickie quotes, and sometimes scuttle skinny were Bilbil said at the last minute, rather than actually be involved and things that and you really seeing that are on taxes right, like he's, clearly a huge question for this tax reform effort, but he's not he's not like putting answers in yeah and them you know also on that front, he is partially responsible for the revival of about.
Care appeal in September when he just happen to say one day all I really like this grand Cassidy bill, I probably before it and death, Republicans public is right. Oh ok and they started bringing back and then here Then he was later after weeks of work just said: no! Actually I'm not for, and I have all the same process objections I have before leaving one of the greatest pranks ever saying what he saw is. Is that by doing that, he seems to have scuttled the effort to pass a dream act which he favours right. So I mean it anyway. There's a lot of questions about this It's too me strains and one of the most influential on high profile senators of the past. Fifty in twenty years as over such a scatter, shot approach to the job of of senator
it is in some ways like I'm like a long way from Bill Bradley and Bob Packwood. Like plugging away I'm on their tax reform bill over over a series of months, which was a final thought When is the Senate and the house supposed alike, sit down in an hash out this, this unified budget, well, it could really happen in one or two ways. One is that they do sit down and shouting unified budget, and then it would have to pass. both the house again and then the Senate. Again, The other way is that the house could just accept whatever budget passes the Senate, and that is the next sort of passing a budget through the Senate is the next hurdle that they have to jump over and, and that could take a couple of weeks, sad Cochrane's.
expected to come back until October, sixteenth, I I believe, or somewhere around then something will have to get through the Senate and then either the House or Senate will have some negotiations on about a resolution or the hassle just cave and accept the sentence budget red resolution to keep the process going then for that. The house is supposed to right it's bill and Pass said they set a very aggressive, optimistic time line of doing Adam either Toby November, and then the Senate is supposed to do the same in and then there was a conference and I get it done and sent a trump by the end of the year, which seems to me, but also goes that so other than the budget. They also just need a tax plan, and if they
budgeting and attacks by and then they can move forward with winding up the votes, but so far they have really really neither of those things, and we ve seen it. You know per annum colonels, preferred way of legislating on major issues is to just released nothing for a long time right a bill in secret drop, it suddenly and then try to move it as quickly as possible. now. This will go a little more slowly this time, because and because the tax. Writing committees say are saying they were. the real market? This time, like the Obamacare repeal bill it technically went through committees in the house, but but it was kind of fake. They didn't really accept any substantive amendments. They just rubber stamped. What leadership had concocted, and so there are at least making noise. Is that the House Ways and Means Committee and the Senate, Finance Committee will like actually mark this thing up, that that day,
I consider serious amendments that you know them. debate at an end and that this will be sort of the return to a more regular order process of the kind that we didn't see in health reform. So that could come back a slow things down a little bed and and also allow for more you no actual participation from members of Congress than we saw on the Obamacare appeal bill, but in the end, den leadership is going to be in charge of what makes it the floor for a fight The facts are. Work will have to see if they stick by that, and I think there should be plenty more opportunities to do this over when we start to see them develops and closer to it to a real plant. May they had a lot of fanfare round this, but actually and take on an enormous amount of staff. Ok, soap. So thanks to Andrew Dylan for for joining me things tat. We ciao, ear, engineer here and you see and Peter Leonard producing from New York. Thanks to our sponsors
thanks I'll view for four lessening we'll be back next week with more weeds
Transcript generated on 2021-09-13.