tv House Freedom Caucus Discusses Tax Reform CSPAN June 14, 2017 9:03am-10:00am EDT
lawmakers and others were gathered for morning baseball practice. a suspect was taken into custody and is not a threat. we'll keep our eyes and ears on this and pass any updated information as we get it. now a tax policy hosed by the heritage foundation. good morning. welcome to the heritage foundation. we welcome those who join us on our web site, those joins us on cspan tv as well. we ask that your cell phones or mobile devices have been silenced. for those watching online e-mail
speaker at heritage.org. mr. spencer oversees a wide range of trade issues. he previously served as director of heritages row institute for economic policy studies where he spear headed our work please join me in welcoming jack spencer. >> good morning everyone. welcome everyone to the principals for tax reform, conversation wot house. what a great day to be here. i think i saw the sunshining
this morning, the humidity has jet to set in i think i even heard a bird chirping this morning. it's a great time to be in washington. we have a president not just threatening to shape things but he is actually shaping some things up. we have a congress talking about shaping things up. thank god they are working to appeal the obamacare mob strosty.
and paris, what a day that was last week. liberty sucking quagmire. those efforts can't come quick enough. it offers prosperity and civil society. of course americans get to keep more of their hard earned money. when washington takes less not only does it leave the politicians with fewer resources but it gives us more resources to get our economy humming again. that's why tax reform for getting paris. reform is not easy. we know what we want. we want lower tax rates. we want to we are move against savings and investing. we don't want to burden
america's business with such heavy taxation. we want fairness, transparency and similar police si. a lot of folks have ideas on how to achieve these common goals. unfortunately too often become barriers to success. we need to find our common ground. that's what a heritage foundation wants to help us do. it is a plan that provides a strong foundation moving forward. we are excited to give us his thoughts on tax reform. today i'm so very excited to host members of the house freedom. without further adieu let me
introduce our guests. i would like to introduce from the great state of ohio and his colleague, warren davidson. we also have dave representing the 7th district of the mo commonwealth of virginia. sit a district i spend a fair amount of time. i'm very happy you're there. finally the man i would like to invite to say a few words is mark meadows, chairman of the house free mman caucus. >> good morning. it's great to be here. it's always great to join so many of you here. it is always good to share a panel with three people that are a lot smarter than i am.
we'll refer them to some of my other colleagues. we need to set the frame work so you can ask the big questions. as we start to get more into some of the details of what we envisioned with tax reform. i want to compliment his foresight to really get the discussion going. any time you put out a blueprint it is a bold movement. everybody will find reasons why it won't work, not why it will work. like wise, to have this administration to put forth an idea on what they want to do for tax reform. the minute you do that there are people saying why their plan won't work. we have tried to be good
listeners over the last several weeks and months. some of you that are here are tax reporters. but leer a few fundamental facts there is not consensus for the border adjustment tax. the sooner we knowledge that and get on with a plan the better off we will be. so it is not anything where we have taken a formal position even though i have one of my colleagues on the panel. we have some who believe it's a great idea and some who believe it is not a great idea. but the facts -- the political facts are there is not
consensus. what we hope to line out today is a few principals that we believe the majority of the gop conference, hopefully the majority of the house can get behind to not only lower taxes behave true tax reform. the second part of that is time is critical. chairman jordan as i fondly refer to him, introduced a bill that looked at real reform. that welfare reform has potential of creating $400 billion in revenue that we can allocate and move across. i look forward to hearing more from him on that. we believe that time is of the essence. by that we need to get tax
reform done sooner than later. by that we should have a real proposal that we start debating before we leave the end of july. but if not we have already taken a formal position. we believe we need to stay in through august to get it done to make sure we put the priority first on the legislative ajean da. we mooef you ought to stay here. i think is phone dag of m coing together will be laying out some four principals we think can bring consensus and then have vigorous debate in terms of what may or may not work. thank you for joining us. it's a great crowd today. look forward to having good
discussion. >> thank you. my first question is, you started saying that there were three people who were not as smart. if i look at it that would leave one of us as the dumbest amongst the crowd. >> i'll just say i am clearly the dumbst. >> no. we won't. i was talking about my colleagues. we'll put you way up there in terms of your ability. [ laughter ] >> we'll let the audience decide. do any of our other panelists have anything to add? let's get to it. i think the plan is something we are all interested in.
as you mentioned, there's a lot of good stuff there. absent the border adjustment is that something they jully like. >> i think the 20% cut, as long as it aapplies those that also have a small business. those that have sole pro pry to ship. if it's just a corporate cut for the be so to outline that, a 20% rate for that. my advice where you allow that
to -- come back. it is actually in the plan. if you take out the border adjustment, how do you do to full and immediate expensing? for me as a business guy typically i haven't made those decisio decisions. a lot of big corporations don't make those decisions that way. a lot of small business guys don't make it that way. making permanent it would be prudent. allowing the entrance expense to be deducted. you have to do something for moms and dads on main street. one of those, whether it is
brady three point structure. we could come an agreement and start having real debates in the months to follow. >> perfect. anything? >> some of the rough numbers you may be shocked that melt care. he said i don't know if we are have the votes. that's trillion there that will go towards tax reformt. so all this plays in abdomen we have a budget piece going on right now. we are arguing about
$50 billion. that seems like a fair 2s thousand billion dollars. we have to vote an a a budget in a week or two. if you get are of the board i adjustable. i think some of us have some flexibility when it comes to taxes. we know for the next generation this is a once in a century opportunity to get this economy humming again for a decade. we have to keep the momentum
moving on all of that. >> one of the things, we can't lose sight. this is something we can't lose sight of. we do have to get the tax reform. i get the politics of the average household. but the doubling of the standard deduction for workers because what we have to do is get the work force engaged. one of the big challenges is getting labor. they ledbridged as as far as th can. it will probably work at odds and it makes it that much more urgent that we get our nis kal
policy. i think we need to do it by q34 3. the other things will have an aim pact that we need to drive and count we are strong physical growth. whether. >> when you talk about corporate reform. the problem has been that they laid it out and there is not yet a plan kplun kated on how you would implement it.
how do you ever pull it off? i think i lost a lot of momentum. even if you totally love it. i don't see how you pull it off politically. i'm hoping to learn and see what happens. >> seems to be two principals. one lets families get more of their money. what is not one of those is a whole new tax, what is not in those principals are this concept of neutrality. revenue is the way of saying the tax burden stay it is same. it always works out that the connecting class greting a good deal. . so it makes absolutely no sense.
letting families keep more of their money is not a tax government. it is called freedom. let's focus on deficit neutrality which says tax policy which lets families keep their money and oh, by the way, let's cut some spending. so under fundamental point, and i think dave was pointing to this. you can't get reconciliation if you don't pass a budget and right now a budget cannot pass in the house of representatives. what we are talking about putting forward the this. maybe we as the freedom caucus can live with a higher budget number if in fact we do welfare reform. it is part of that package. the idea is that you have to write it in such a way, the
dollar amount you get from welfare reform, write it to make sure that they get that dollar amount. sit good policy to encourage work, it is treating taxpayers by requiring them to living on taxpayers dollars. i don't see any other way out of it to get a budget agreement. if you don't get a. >> thank you. if breast implanted to.
with. >> -- we talked about the importance of building momentum in the middle class and the importance that they also feel like they winners. one of the difficult things of this issue is a corporate tax reduction. my question is a, are there ways we can do that? that is really is essence of what ultimately needs to happen. the second part of that question is how do we build momentum for tax reform. how many of you have had
economics? both supply and demand like this, right? so jim just said tax reform on the personal side. that's good, right? what's the major problem in this country? no productivity. you can do bail outs and put money in peoples pockets. on the supply side that's business and just to show you what a wide wrap in politics we have, the left will mock and ridicule and make fun of the up fly side. who is the sup fly side. it's everyone in bids. if you want to boost it and that's the ticks.
he's the business guy but all of you gung people need to help us out. how many of you have ever heard of dedra? and her economic is a moral phenomen phenomenon. so we need you all cheerleading with us about supply side is good, let's get things rolling. >> are you going to put out a pop quiz? >> question. >> and i'll give everyone a
warning. i have one or two questions left and i'll come to y'all. it's important that you help me carry us through the end of this presentation. you talked that maybe to get this done. can you talk a little bit about how tax reform fits in ohio. >> i believe on tax reform we need to agree four principals. let's come up with four principals and all do it.
by have numbers. it forces us to make critical decisions. if you can't come up with constructions it should influence your decisions on tax we form and all that. >> now, this last question pains me to ask. the senate is talking about delaying some of the obamacare taxes and maybe not at all. what does it do if we don't get
that done? >> it doesn't help. there's nothing we can do about that right now. i say this all of the time, our job is straightforward. do what we you cold the voters you were going to do. the bill we sent tloefr was a good step in the right direction. that's in the senate's hands. >> all right. let's open it up. if you could, give us your name and affiliation and keep the questions precise and short. >> you mean make sure there's a question in their commentary? >> yes.
we have these gentlemen to p provide the commentary. >> thanks. i know earlier on chairman meadows it sounds like you would favor some sort of full expen expensing. >> thank you. as a caucus we have not taken any official position. we have had a maybe two-hour debate about how all of this plays together. it's one of the best debates you'll find on capitol hill. everybody thinks the freedom caucus, we have had a same ideas on everything. a fight can break out any time. so as we look at that here is my
concern without the interest deductibility. you have to make two attentions. one is if we are doing full and immediate expensing you're assuming a cash scenario. it benefits those that have large amount of cash sitting around. i think that's a fundamental question along with what do you do with 17 or 18 trillion investment real estate that's autother out there. they are building all of these buildings that sit impty. you can almost pleadly create a problem in your real estate market by making a depreciation
and immediate expensing for the new if that makes sense. so my preference is make bonus deproe depreciati depreciation. i think we have to really look at it. i'm a numbers guy. i can make arguments both ways. >> yeah. i think that this is an example where you look at real differences in the sense of is it good in you get to deduct entrance and you jump through this hoop. the beauty is there's no hoops. for me unless you have an inkred whether i horrible -- or 100%
have build a couple of businesses. it's reminding your colleagues, is government overlehead. as stewards it's a message that i think people need to understand. i know that the democrats believe that the opposite is that the government permits you to make money. that's reflective. so any where, i do think reminding your colleagues that what you do is overhead. you know, providing the necessary services that the public needs, but the economy is what enables that.
here is the interesting thing. we are looking at anemic gdp growth. yet we are growing the government. that's what they have suggested. now, the interesting thing is full expenditures at that but yet cpi is growing at a little over 2%. i would and so if they weren't watching i would take full credit. it is an overall cap. if you had an overall grap you
end up with a gdp growth. what a novel idea is that? it's about physical restraint. >> yes. and we did this same kind of concept. you limit the size of your government. one of the things we this be kuking in. it's a way we can move forward but it also is necessary. the assumption in the budget projects are 3% growth. you to deal with obamacares. you have to deal with regulatory but even with i have heard it for three years across in sput
-- expectations. all of those will go to mandatory and ensite lment programs, all federal revenues. that means there's nothing left for, are. it is the sbir budget. so when we are talking about spending we need to reconcept yulize and get it through politically. you young people, your future is on the line. >> this seems like an
appropriate time for me to talk about one of our publications, our blueprint for balance which is a federal budget tham will give you more than you have eye have so lots out there if we had more like y'all to corey them out. you know it's an i got you question when the is woefr all of the hurm there are trends that are not very for the economy. marriage rates at an all time low. if we don't at ad dress thedres
can't grow the economy. how do that have skig nif cant implications for our country. >> so similar to this i think the this is a little bit of tax policy. we are talking about linking it. we spend close to $850 billion a year on programs in the united states. we spend it across 92 programs. the concept is really 80% of poverty is eliminated, work full time job and have no children outside of marriage.
okay. so of those 92 programs some are more effective than others. some are more effective at others at promoting healthy famili families. and so it's called welfare bracket. if we get a year to work, if we vote on this reform question. don't you go from 92 to -- madison only had five needs but maybe we can get to 24050
programs. 17 food programs. they are all for conservative middle-aged white guys. >> thank you for saying i'm middle-aged. >> i didn't know the life expectancy was 114 years. even some of the democrats like the idea. i have talked to a number of people on berd r board. you look at the reforms and how can how can you influence it? we do have to the leaders. that's the one high point where you see him as an idea. >> and i would probably be the skunk at the party on this
particular aspect any time you try to create a social desired outcome can be problematic. should there be a penalty? probably not. we know those facts to be accurate in terms of what gets you ahead. the other part of that is just like picking winners and losers. we need to be careful tax policy doesn't create an adverse issue when we are looking at this. i'll be any any parj but you put in and add don't get married,
have been more. so we have to incentivize work. we traveled to italy to see our son-in-law and daughter and our grand kids. we twlr last are there and i sa don't need to cook dinner. we'll go out to dinner. she says well, dad, we can't. i side what do you mean? if i'm paying. s she said they are open from noon to 2:30. they close, take anner rand. i thought who heard of that? america works. when you have policies so we
understand you guys talked about labor and neutralized but without having to do it with only tax sieavings. >> it the something it making sense to do. in the 11 years we have been there congress this is the latest we have ever done a budget. last year we didn't do a budge. there is not an agreement for this upcoming fiscal year. there's three different camps, why didn't we ford with the savings. we knee it will help it helps
the labor economics. it's a way to get past where we are right now. >> don't you need a deficit frau hall bill to get it through? >> some of the patax cuts coulde necessary. >> and now we are getting wonky here. think what i sympathy a so this is the encell hope. it you look at the tax cuts, have them exspire in year nine. that's ch as cloegs to
permanent. as a fall-back position you write your instruction sz. i think we need to be specific and make sure we enjoy the idea in that. it will help us work towards that decision over the next four weeks. >> and my other question is you talked about the next 20 months are you talking about enactment or a second that would come will ever this larger tax reform? >> no. i think you make it part of that. say no way you can them effecting the economy as do we doing it as a sand alone. she is talking mrt of a
four-point plan. the second is are you thinking abdomen mandatory? is it optional? >> i don't think you make anything mandatory. i think 8%. i i still think it creates another 400 billion in terms of revenues coming back. >>. >> okay. >> your former college said there were $300 billion unauthorized spending that had expired. i believe there are 48 rams.
what is the jiek hood? >> victim to none. i think gary wa-- palmer has the executive agencies. you get around and use the power of the purse and say none of these founds shall be used for whatever. you say this is apropuated pun. they spent half a trillion years unaccou unaccountab unaccountably. so we have a bill that would go
modeling, even though i might like to do that. but i'll give you a prime example. we have natural gas and oil reserves on federal lands right now. and when you tap those natural gas and oil reserves, it's a net cost. it is not a revenue producer. even though it's bringing in more revenue in, the way they score it says that it's actually costing us something. because they make the assumption that it's already being tapped. well, you know, it's just -- it defies logic. i don't understand. either you're pulling it out or you're putting it in. and, again, that's -- we've got some very, well, interesting rules is the way i would put that. looking at a budget window that goes to 15 years or something like that, certainly allows us to do -- we'd be open to looking at some of those revised models. >> i'm open to any structural process change that makes sense, but that doesn't get us past, i keep emphasizing this, but you
don't do an appropriations process, you can't have a spending bill unless you have a budget. you can't have reconciliation unless you have a budget. you have to get a budget. right now, the trump budget said we're going to plus up defense, lower non-defense discretionary. we have appropriators who say you can't lower this number we have house armed services say you can't take it up to 603 on defense spending. a bunch of us like the numbers that the trump budget put forward. you've got three basic groups that just can't get agreement. we know that's the fact because it happened last year. until you get an agreement on that, we can do all the structural process changes we want. nothing moves forward. and that's what we've got to focus on. what unlocks it all is this budget agreement. and someone can come up with a better idea than the one we're putting forward, which is do this kind of welfare reform which saves money over the long hall which helps families.
if someone comes up with a better idea, we're all ears. no one can. that's the key thing in the short term to do all these other things we promised the american people we were going to do. >> i'll add what jim said, there's the political angle to that. up here a lot of people think there's right wing versus left wing debate and we all hate each other and at war with each other. i met bernie sanders. right, the bernie phenomenal with the trump phenomenon. drain the swamp. i saw bernie at the white house, i said right wing, left wing? i see both sides of leadership doling out $4 trillion to their buddies. he said what do you think that's going on up here? right. so whenever we put in process stuff, this room's all full of process geniuses and whatever, article i people. we put in a balanced budget, it gets 50 votes. you put in term limit thing it gets 50 votes. so leadership on both sides has to a okay these process things ahead of time.
that's what jim's getting at, get the budget the right way. leadership has to say yes to that. the swamp is addicted. partly because 75% of the budget, you can't touch. right, mandatory entitlement and the rest is a lot of good stuff, right, because we're locked into this $4 trillion and what warren was saying there's all this money that's out there to be had. you think it's sitting there, right? we pay so much billions to dead people. so we have colleagues that went and found that money. it turns out it's going to somebody. it's in some other pot so it's fungible. we need to get our leadership on both sides of the aisle to start really putting -- locking us into these moves that take disln ov -- discipline over the long run. >> lining all these things up so we can move forward and get through the process that exists. the structure that exists today is a status quo structure. i mean, i've been here a year,
exactly a day today, one year ago -- [ applause ] one year anniversary. you look at the structure, we were doing strategy, structure, staff skills. look at the strategy, we've laid it out. we've got a party platform, we've got a play book. i look down here and talk about incentivizing work. it's in here, tax reform, it's in tax here in the play book. we've got strategy. the structure is designed today preserve the status quo. we have to really look at this structure and say is this structure something that's a holdover from when democrats ran this place for 40 years. we need a build structure that's going to change the status quo. jim is talking about one of the most important paradigms. why is welfare? we have to do the labor market but we have to get this artificial dividing line from defense discretionary and
non-defense discretionary and move it from discretionary and mandatory. the mandatory growth rate in spending is off the charts. bee reasonably checked. we've had more discipline on discretionary than attention is paid to. because mandatory is growing at such a rate. many of the means tested programs are in that mandatory piece. if you qualify, we spend the money, there's no cap on the amount of money. moving that paradigm is one of the most important structural reforms we have to do. if we don't get after mandatory spending, we will bankrupt our country. that is not compassionate and we should not let that happen. everyone talks about it intellectually, but day-to-day we preserve the structure that is on the collision course with bankruptcy. >> let me -- one final comment. jim's plan on welfare reform is something we need to do, not only for the budget numbers, but
for america. i've got hundreds of jobs in my district that could be filled tomorrow if the person would meet two basic criteria. pass a drug test and show up to work. that's a pretty low bar that they could fill good paying -- i'm not talking about anything -- i'm talking about substantially good paying jobs. we need to do that for the work horse. t we've got to make decisions. it's time to make some decisions. you know. and that's why i say, this four principles in four weeks, let's agree to it. there's a budget deal. news flash there is a budget deal that could happen if you adopt jim's plan, we'll work on the numbers, but only if we make some decisions and do it now. i think the american people have waited long enough. >> well said. >> thank you very much, what a great way to end the program. [ applause ]