tv Tax Reform Panel Discussion CSPAN April 26, 2017 9:21pm-10:07pm EDT
with race. >> sultanate at 8:00 eastern on c-span's q&a. >> a panel on u.s. federal tax policy. federal house ways and means chair outlines recommendations for overhaul on tax legislation through the house and senate. vehicle newspaper host of this event. hill newspaper hosted this event. is 40 minutes. >> i would like to call the senior policy advisor at pricewaterhousecoopers. senior fellow on budget and policy priorities. president of the committee for responsible federal budget, and grover norquist, president and founder of the americans for tax reform. what was your reaction to the
secretary's comments? we recently wrote a story about the possibility of taxsportation mixing with reform. >> big step forward. very different division. if you put into your spending in tax reform that is left less resources . d all far s the debt asn cents -- are you concerned about this blowing a hole in the nation's debt? >> thank you for asking about offets. i am a huge supporter about tax reform.
we need that to grow the economy and increase competitiveness. lowering the corporate tax rate is an important piece. there has been no talk about what the offsets are. this is on the giveaway side. the purpose of tax reform is to grow the economy. you bring rates down. you also grow it by having improved allocation of capital. the way we can pay for this is bringing rates down. that will help growth. the third thing is, don't balloon our near record level of national debt. you want a plan that is paid for. seen plans that are paid for grow the economy more than once that -- than ones that aren't.
i don't want this to be paid for by magic. >> we have not seen a lot of bipartisanship so far. >> perhaps, but this is not tax reform. tax cuts should not be conflated with tax reform. my vision is one in which we recognize that revenue is inadequately low benchmarked. demographics alone, we need more revenue, not less. , whetherenges geopolitical or environmental, we need more revenue not less. i am not alone in that view. tax reform should not be this equalizing. -- dis-equalizing. the mnuchinllow
rule, where you don't see tax cuts for the wealthy. everything we have seen goes far in the other direction. this is not tax reform, these are regressive tax cuts that will exacerbate our fiscal challenges. >> you have dealt with this issue. a few have scars to prove it. what advice would you give the trump administration not at they are just starting this initiative? >> what we have heard is critical in that the administration is engaged with house and senate leadership that is interested in advocating for tax reform. they can certainly help try to get through the ups and downs that will be natural in any legislative process.
the fact that they are pushing news.d on it is welcome i did not have the kind of engagement from congressional leadership at the time. this is a big game changer. being a bige this difference in how health care was handled? >> there have been a number of plans on tax reform over the last decade. there is a broad consensus that our tax code is broken and we to do something about it. enoughder 2% gdp is not to those people entering the workforce. there are some common themes. that is very different. health care has been a polarizing issue for many years. obviously there are disagreements.
there some ideas that aren't quite as partisan as other areas of policy. >> how important is it to get health care done first? >> i think it is extremely important. president trump has said so. the reasoning for it is that obamacare was 19 taxes with a stethoscope stable to the top of it. that was $1 trillion over a decade. if you're going to get to a 3%growth policy, you grow at instead of 2%. you get more revenue coming in. much better than taking money somewhere else out of the economy. if you can take $1 trillion off which isble to start,
next by more than 1 trillion and spending. that is paid for. that is a trillion dollar tax cut every decade into infinity police aide for -- infinity fully paid for. that you are $1 trillion closer to your statue of what tax reform should look like. that is why it is an extremely important first step. if you skip that, you end up with a mess. >> if you're going to flip the freedom caucus members, you would lose moderates, but the senate would be difficult too, wouldn't it? >> these have been negotiated before. there are senators that have pieces in the bill that is not yet been filled in.
this has worked with the senate and governors as well. the obamacare repeal is the also reform of medicaid. it, 5050 states do different approaches. you learn what works and what doesn't work. 50 different states, block granting. it is a reform of medicaid and a and major taxpeal cut. counting until you get to 218, that was important. they got tired of whispering in each other's ears and said, you guys working out. they wouldn't have left the room without the support they needed. have debt bills.
they would tackle social security, which president trump doesn't want to do. mark meadows tried to change his mind, was unsuccessful. would he do it in a second term if he wins? indications is that he sticks to what he did in the campaign. promisesem with was and other promises is that the numbers don't add up. the thing that will most likely change his mind is if you go through the fiscal situation, our debt is highest since world war ii. othere on track to add an $10 trillion to the debt. that will be his $10 trillion.
he will own that. he has a lot of policies on his whichist from tax reform, sounds like it would be fully paid for, two spending increases. you can't do that. you can't take the most critical part of budget reform off of the table. you talked about sequencing and tax reform. the first step has to be budget proposal. it was a skinny budget, one third of the budget one year. proposal. soon they will come out with the full budget. how do you have those numbers work together? have been very sent on balancing the budget within 10 years. you cannot get to balance if you have big tax cuts and taking off entitlements. sorry grover, but numbers are entirely unrealistic in terms of growth.
the reason we will not sustain 3% growth, we have a very different labor market situation then we have had in the past. there are no credible estimates of those policies that can get us up to 3% in a sustained way. we should be plugging in aspirational -- souldn't be plugging in aspirational numbers that won't get us there. we can't walk away from entitlement reform. think tax reform should move through the house? how do you think they will go about it? leadership is on board. do you think this is can be easier or harder than health care? >> it was difference when i first got to congress.
it will have to be much more transparent than people were used to years ago. memberengaging member by . you want to engage congress in a large broadway. it is doable. i have net with many numbers individually discussing tax reform. there is a base of knowledge. an active legislative affairs team can be helpful on these issues. players on the field can make a big difference. open, transparent, and build consensus. i think it can be done. >> orrin hatch wants to do some
summative bipartisan bill. bill.e kind of bipartisan >> the house has been taking cap mode for quite a while. it is important to talk with the democrats to gather ideas and see where the pressure points are. i suspect there will be discussions with democrats. i don't know if house democratic leadership will allow democrats to vote for the bill. you want them to be part of the process. let me respond. for anything to approach cutstisanship, the tax will have to move closer to what democrats think of as tax reform. that involves revenue neutrality
-- that is probably too low a bar. mn tax plan that breaks the uchin rule and exacerbate inequality should be unacceptable to democrats. amplifyh, i have to this point. you have heard the secretary. i have respect for the work he is trying to do. he said the tax cut will pay for itself. that is patently false. no tax cut has come anywhere close to paying for itself. that is not the same thing as saying that tax cuts can never have any growth impacts. the impacts are uncertain. i can show you evidence of tax cuts that were negative in terms of growth. dey are demon in this -- are
minimis and often not the sustained. we should inject a firm dose of reality and wholly discount what i called dynamic scoring abuse. the idea that you can make up large taxout how a cut is going to pay for itself. let's just agree that we can stop pretending on that point. >> you obviously can have an index scoring and grow the economy. getting above 2% as opposed to below 2% is huge. it is very important to do that. it really depends on how you put the package together. you are always late able to do tax reform in such a way that the economy grows. frankly what americans are worried about is that the american dream is not for them. we have had flat growth.
if you can get tax policy that means that forward -- to we have to stick with a static score? >> can a tax cut pay for itself? >> it depends how you define it. it depends on how you approach it. tax cut was supposed to drop taxes down to $12.9 trillion. instead it went up to $13.3 trillion. it raised money for what they said it was going to cost. we cut taxes and the government had more money over that time then they projected with the tax cut. that is the most recent tax cut that we had. to completely pay for itself. the idea that it never happens is a little bit silly. in the reagan years we went from 2% growth to percent growth. growth.
>> tax cuts do not pay for themselves. >> you can also use dynamic scoring for issues that both parties care about, like infrastructure. it doesn't have to be limited to tax policy. >> i love a good fight about dynamic scoring. >> [laughter] >> dynamic scoring has real merit in terms of policies that have more effect on growth than others. >> what do you think a realistic percentage of growth is? >> it will not find realistically that tax cuts pay for themselves. -- will will increase pay for a fraction, maybe 20% of a tax cut.
it will increase decimals of percentage points. you want to use dynamic scoring to guide us toward progrowth policies. just showing the economy did one thing at the same time you did tax cuts -- a correlation is not an academic model. >> your earlier question was on bipartisanship. when clinton raised taxes it was just with democrats. when obama raised taxes it was with democrats in the house and senate. there is no member of the house and senate network vote for a tax increase. that won't vote for a tax increase. there is no republican won't vote for a tax cut.
1990,n't find one since since bush found some willing for a tax increase. of all issues in front of the most on tax divides us a bipartisan basis. we are on two sides of the tax fight. d votes for a tax bill is a fool's errand. we should always be in favor for the. i don't expect them. >> not even the red states up for reelection? >> it is conceivable you could have one or two. after the votes, one or two might vote that way. the pressure from the left is so
strong that that will happen. happen.won't youynamic scoring can show -- looking at economy and infrastructure, which goes the economy. there are a lot of different players. that could be progrowth. -- unpaid for tax reform with unpaid for infrastructure, we can increase the debt by twice as much. reforms pay for themselves when they grow the country more. that want toeople make hard choices and those that think you can have something for nothing.
a devastating election for democrats in november. whether they want to give president trump any kind of victory? do you think the tone has been set? >> i find it very challenging to point to a trump policy that says this is going to help the working class. i don't believe this democrat-republican split.
those for whom the economy works extremely well and those for whom it hasn't. whether you live in a red or blue state, a tax cut that delivers half of its benefits to the top 1% looks completely wrong in spirit of the real economy and what the president ran on. what should the administration be watching on tax reform? this has already triggered a massive lobbying fight on the border adjustment tax. everyone has a vested interest in the tax code. is that the biggest obstacle, overcoming lobbying interests? >> the biggest obstacle is keeping momentum going forward, eventually having a peace of ofislation -- a piece
legislation that continues the work on tax reform. keeping that moving forward is the biggest challenge. there are common themes that both parties agree with. on the international side, bringing those dollars back overseas is something that democrats have expressed support for. areas where you might be able to get democrats support at some point. at that point it becomes a bipartisan effort. repeat ofo avoid a the affordable care act. i have been in the majority toys and the minority twice. i know that it doesn't stay one way. you want to bring people along at a minimum. >> it took the democrats 2 years
act of the tax reform 1986. that was four years later. many d's voted for the revenue neutral tax reform package. their desire is unending. the rest of them are addicted to having more and more taxes. this is the divide between the parties. it is the central divide between the parties. democrats keep asking for tax increases. like teenage boys at a prom date, asking for the same things repeatedly in different ways. notjob is to say no and eveer stick with yes. >> let me say that i missed dave
camp. >> you may be alone on that. >> it is not because i agree with everything you wrote down. is deeper than anything i have seen since. the problem the way you tee this grover, teenaged boys against whomever. >> [laughter] >> i am trying to bring faxed to the table. is percent of people over 65 going to grow from 15% to 21%. that is demographics. that is reality. surveysican people in consistently tell us that they want to protect social security and medicare for them. that is the reality.
people have ideas that say that is unsustainable. we can have good arguments about that. it is not that democrats want to raise taxes because we are crazy about them. is that democrats look at the challenges that we face. does goay that bubble through the system and comes down later. those costs will not always be in the present. they are costs that we faced. to deny that is to put this debate in a reality -- in a non-reality, where it has been stuck since we have been here. >> the first thing the democrats did when they want the house and senate was to take $800 billion and throwing up in the up. tot too fully reform -- not fully reform entitlement. >> a $800 billion stimulus. >> that was a very effective piece of work. oh my gosh.
that is ridiculous. that is nothing to do with the deficit, by the way. by 2000 and, -- 2010, the recovery act had been contributing less than half a percent to the deficit. >> i never thought that tax reform would solve our problems. i always felt that tax reform was one tool in the toolbox that could help get our economy growing again. you are not going to solve all of the long-term fiscal obligations with tax reform in and of itself. it is an important thing we should be trying to bring consensus on. our process doesn't work without some consensus. you have to have trade-offs, even within the party.
some people might have an r after their name, but that is not necessarily their views on policy matters. for, far as it being paid do you see a good amount of vote no, evento on a tax cut bill? >> i think they are struggling with that now. that is why i think a comprehensive budget is critical. they say, i want to balance the budget in 10 years, or 4 years. above talking about well $5 trillion when we look at the estimates so far. just to balance the budget in 10 years before this tax cut would require $8 trillion in savings. it is hard to find that in a 10 year window. if you need to offset a $5
trillion tax cut, anybody who cares about getting into a balance is in a real corner. wnthink we have to get debt do so that it is not growing a faster than the economy. any goal will be excluded by these tax cuts. it comes back to entitlement reform. throughout the campaign, when the president was running, cap saying he would grow the economy by tremendous growth rates and would take that growth to deal with our fiscal challenges. withnnot fix this problem tax reform alone. if we use economic growth to pay for tax reform, you can't double count them and use them to fix
the fiscal situation. one of the promises from the trump administration, we will deal with the economy to deal with debt. for a growth plan to help with fiscal challenges, you know want to pay for new initiatives, to things on the table and get debt not growing as quickly as it is supposed to. anybody who struggles between being scully responsible and tax cuts -- being fiscally responsible and tax cuts has to look at spending first. >> these are not two different project lenses. >> until you get a politician to promise they will never raise taxes, only then are they ever willing to think about reforming government. that is why when tax increases are on the table, they don't reform government, they spend money. when people say we have crises with entitlements, politicians
say, i will raise taxes to pay for all of the stuff we have been doing, and more stuff. when you say we are not raising taxes, then and only then do politicians begin to govern. if we are going to do something in addition, we are going to find less spending somewhere else. >> i am not a big fan of pledges. why would you have a plan to say no to spending increases? >> how do you do it? >> it's taking the easy road out.
you can't say i won't vote for spending -- >> pledges are really done. -- really dumb. >> [laughter] >> the difference between what grover is espousing to a much more thoughtful approach is that you can't say cutting taxes is good, raising taxes is bad. and you can't say raising taxes is good and cutting spending is bad. it is very dynamic. there is a time for both. if you look at the spending side of the equation where all of the spending cuts have come from, i object to this notion of talking about spending as if it is this thing in the sky that is divorced from what we are spending on. if you look at where we have cut spending most it is on the discretionary side of the budget. includes training of workers.
that is essential for helping folks that have been left behind. that includes research. that includes funding the irs and social security administration functions that people say are very important to them. it is childcare -- it is a set of programs for low income people that means a ton to them, and in my view breaks down some thate opportunity barriers people actually voted for trump to help them with. my problem is that he is not doing any of the above. let's not talk about this up in the stratosphere. >> how will you deal with the nation debt problem approaching $20 trillion? would you just do clean debt hikes? what is the solution, or is it growth? >> i don't do magic growth numbers.
in order to raise the revenues we need to both stabilize and bring down the debt, we are going to have to raise more revenue. i have a piece in the american prospect about doing that. much of it is about closing loopholes. this mnuchin to rule is capping tax expenditures, equalizing rates ontexas on labor -- of taxes labor. >> to put that in perspective, we lose $1.6 trillion per year in tax expenditures. >> who is we? the american people or the government? we is a different thing. >> and then we the taxpayers have to make up for it. or we the citizens have a much
bigger debt. >> or reduce spending. >> i am looking forward to the reduce spending approach. they don't all the on that stuff. everyone votes yes or no on a tax increase. >> the lawmakers on those lost. laws. those >> you write a client that can hold, and we will look at it. >> the government loses $1.63 from tactics editors per year. -- $1.3 trillion from tax expenditures per year. bringing down in the rate by that much would be a good way to do the trade off. camp put that dave forward is impressive. it talked about broadening the base in the best way.
that helps grow the economy, getting rid of those tax breaks and putting them into lower rates. scoring,nder dynamic you will be looking at provisions in the tax code anyway. you will not be able to ignore all of those. the reason i did both static and dynamic scores, no phil has been scored. we want to get as close to a real-world analysis of what these policies will do. but it's going to be incredibly challenging obviously because the parties are in such different places on these issues. i do think -- i'm still optimistic that the desire to make sure that the future growth is here in the united states, that our corporate headquarters remain in the united states, that people have a shot at upward mobility which is what growth and jobs and higher incomes do, and i think that is
what you can -- you can get those metrics out of dynamic scoring which help make the case for the policies that you're trying -- jared: let me say two things about dynamic scoring. when dave camp's tax plan came out, there was a ton to admire in that plan, the j.c.t. gave us a dynamic score. they did the right thing, they gave six different version what is they thought it would do. those versions led to higher g.d.p. growth in 10 years, i think it was higher level of g.d.p. in 10 years between .1% and 1.6%. between nothing and a moderate amount. the folks who were trying to sell dave camp's plan, parts of it which i admired, many parts, they chose the 1.6. this is a cherry picking opportunity. the tax policy center evaluated
trump's tax plan, and they told us it would cost $6.2 trillion in lost revenues over 10 years. then they did a number of dynamic scores. the cost fell from $6.2 trillion to $6 trillion. so that's how much they found that tax cut would pay for themselves using state-of-the-art methodology. i'm not against dynamic scoring. i'm against cherry picking and dynamic scoring abuse. congressman camp: we were plowing new ground there. they did give ranges. that was expected. they said that revenue to the government would be between $50 billion and $800 billion. jared: very broad range. congressman camp: advocating for the bill talked about $800 billion in pro-growth. now it's been refined. they are required to give a dollar number. there won't be ranges anymore. part of this process is evolving the macroeconomic modeling. i would also say, many of the outside groups and think tanks
and analysis that looked at the bill actually, gave it more generous growth numbers in the joint committee on taxation. so i think it will be a more , refined number. you got to start somewhere. it was the first time that was done. i do think we will have a better analysis. why not welcome that as opposed to an analysis that is static that assumes no matter what you do the economy doesn't grow. that as investment goes up, labor goes down. if labor goes up investment goes down. this i think ultimately will be a helpful tool for policymakers going forward. grover: what we heard we can't have 4% growth any more. you may be old enough to remember at the end of four years of jimmy carter the democratic party on the left said limits to growth. we can't ever grow again. we have run out of oil. and at the end of the obama administration with 2% growth under their belt for all that time, worst recovery in modern history, they said we can't have growth anymore, everybody's too old. the excuse always come at the
end of a tax and spend administration that we can't have growth. and when you change that policy you can get growth. we got growth when we didn't let our friend clinton spend the money he wanted to spend in the last six years. we actually got a balanced budget because he wasn't allowed to spend what he wanted to and cut the capital gains. , clinton's growth doesn't count? >> no. it counts. it started jared: because republicans got in the mix? grover: it was a bipartisan effort to stop him from spending. his budget plans were $200 billion deficits as far as the eye can see. what happened was he wasn't allowed to do the spending and we cut the capital gains tax over his objections. jared: thank you for your help. maya: things are different now and we do dramatically need a real plan to grow the economy , because the labor market is not going to be nearly as big contributor to growth as it has been because baby boomers are moving into retirement. that means we need as comprehensive a plan to come up with. tax reform should be a part of that. i think what i have heard out of the secretary of treasury has been very encouraging.
i agree with deregulation. i agree with looking at how we're spending money so it goes to more public investment things that also help grow the economy. changing how resources are spent, away from consumption to investment. and a key part underlying all that is not growing our debt. because when you look at these plans, if the plan grows the debt, that brings down your growth. so in order to do this you also need to offset the cost. because the labor market challenges we have, this is not the 90's or 80's in terms of what we're going to be able to achieve, we need to do everything we can to grow the economy. jared: i have a plat that i will put on my blog later today in honor of maya. [laughter] it shows the debt to g.d.p. plotted against g.d.p. per capita growth since 1792. those are numbers from richard cogan. it is a random scatter plot.
unfortunately, for your wrap there, there is no systematic relationship between debt and growth. that doesn't mean the debt can grow out of control. i'm with you on that point. but i would be careful to at least empirical try to tie it to -- maya: was the debt at these levels at any other point other than world war ii? we're about to go to unprecedented territory. jared: no. no. that's true the debt is highly elevated -- look, when the economy -- maya: i'm going to put a scatter plot on my nonexistent blog, too. that shows the debt is going -- jared: when the economy moves towards full employment as it is now, you want your debt to g.d.p. ratio come down. bob: we have to leave it there. this listless panel we have had here. [applause] i'll hand it over. >> thank you so much bob and to our panelists. this brings us to the end of the program. on behalf of the hill and american bankers association. i appreciate your joining us today.
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