Republican Study Group Favors Trump's Tax Plan, Rep. Davidson Says
STEVE INSKEEP, HOST:
President Trump and Congress may have one more chance to pass major legislation in 2017. Health care and infrastructure haven't happened. A seeming deal on immigration has grown elusive, which leaves a tax proposal that the president will be promoting today. This is also going to be tough since the president needs every Republican vote and has been attacking a Senate skeptic, Bob Corker of Tennessee. Reporters asked Press Secretary Sarah Huckabee Sanders if the president is alienating Corker.
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WHITE HOUSE PRESS SECRETARY SARAH HUCKABEE SANDERS: I don't think he's alienated anyone. I think that Congress has alienated themselves by not actually getting the job done that the people of this country elected them to do. They all promised and campaigned on repealing and replacing Obamacare. They haven't done that. They've campaigned on tax reforms. Hopefully we see that happen. We're certainly committed to that and think we'll get there.
INSKEEP: The tax plan must begin in the House, where it would be voted on by our next guest, Congressman Warren Davidson of Ohio. He's part of the Republican Study Group which favors the tax plan. Good morning. Thanks for coming by.
WARREN DAVIDSON: Good morning, Steve.
INSKEEP: So much to ask about there. First, Sarah Huckabee Sanders saying you're not getting the job done. Are you not getting the job done?
DAVIDSON: I think if she's speaking about the Senate, the House really has delivered on the agenda. There - it's not been as strong as a lot of us had hoped for, but it's been progress. It's been collaborative. And we're hopeful that that'll catch on over in the Senate.
INSKEEP: OK. And so now we have this tax plan, which Senator Corker is concerned about because according to one study you reduce taxes, you increase the deficit. The federal government gets less revenue. It would add $2 trillion or more to the deficit over a decade. Why is that a good idea?
DAVIDSON: Well, I think that's important. We have a CBO Show Your Work Act so that they actually have to show their work in terms of how they're modeling things.
INSKEEP: The Congressional Budget Office, which comes up with these numbers. OK.
DAVIDSON: Correct. And the reality is, is our economy is growing too slowly. Our spending is growing at 3.5 percent roughly, which is progress. It's - it's not good progress, but I mean, it's not as - not where it needs to be. We need to shrink spending. But we have to grow revenue. We've been growing revenue at about a percent, percent and a half. And so the real focus of this tax plan is to solve that gap by growing our economy.
INSKEEP: You're arguing that economic growth is going to be so great that tax revenue will increase rather than decrease?
DAVIDSON: Absolutely. If you look at why we - why we balanced the budget in the late '90s, it was because we had a massive economic expansion. So we really have to do the things that are going to drive growth in the economy.
INSKEEP: Well, let's just be frank, though. A lot of economists would doubt that cutting taxes is going to grow the economy enough to bring all the revenue back in. It is at least - we could argue about it. We don't need to do it here - but is at least a debatable proposition. And I'm thinking that just a few years ago, when Obama was president, House Republicans were willing to default on the debt rather than borrow a - a single additional dollar. It seemed to be a really significant problem. Is it no longer that big a problem?
DAVIDSON: It's an incredibly big problem. If you look at what happened under Obama, the deficit national debt doubled. The deficit spending - now, this is a - this is the games that people play with math - deficit spending has - has actually gone down because it started at such a high point. We were overspent by $2 trillion in '09. And we only manage in Congress the discretionary part, which is about 30 percent of our spending.
INSKEEP: Because it's hard to control Social Security and the other things, sure.
DAVIDSON: The mandatory thing's 70 percent. So this is what's really out of control and very hard to reform. So conservatives have tried for a long time to contain spending. We will continue to try to contain spending. Right now we have an opportunity for the first time, since I got my driver's license, in 1986, to really reform taxes. And so you focused on cuts earlier. And cuts alone won't grow the economy this way. We really need substantial reform so - we have a consumer-driven economy. Hardworking families have to get more cash in their paychecks, more take-home pay. That's going to be very important. U.S. corporations, like Apple, Apple has 10 percent of U.S. corporate cash offshore. They don't have that because of political ideology. They have it because our tax code is broken. We need those dollars on deposit in U.S. banks available be lent to small and medium-sized businesses that are going to be the growth engine of our economy. They're the fastest rate of hiring. And so this creates opportunities that are going to drive our economy.
INSKEEP: You're referring to the fact that you can offer a kind of tax holiday to encourage companies to repatriate money they've put overseas.
INSKEEP: Let me ask about working families that you just referred to, though. And this is another area where it's debated. We don't know the exact wording of the legislation, but the Urban-Brookings Tax Policy Center took what information they could and asked, will middle-income people get a tax cut? Because you're talking about eliminating a lot of tax exemptions that ordinary people use. And their conclusion was many middle-income people would actually pay more. Are they right?
DAVIDSON: No. I think that's - that's completely arbitrary. And my hunch is, given the source, that it's skewed to draw the worst possible conclusion because it makes news, I suppose. But the reality - the reality - the reality is, is the tax - the income levels on the brackets have not been set. So why would that be? So there's four brackets. Zero percent, 12 percent, 25 percent and 35 percent.
INSKEEP: But we don't know the income level for each one.
DAVIDSON: You don't know the income levels which are going to be laid on.
INSKEEP: Let me just ask, though, a bottom line question then. Are you prepared to guarantee that no middle-income person is going to pay more when you eliminate deductions that they use like the personal exemption or the exemption for paying state taxes, things like that?
DAVIDSON: You know, what I'm interested in seeing is a - is a bill and a process that produces more take-home pay for working families. And is there - is there a possible way to say but in this magic scenario somebody paid a different amount? I - you know, that's a - that's a hypothetical that we really can't answer. But when you look at what is - what is the intent of the framework that's out there, no precise bill yet, the collaborative process we're on right now is to make sure that it's true. Every - every one and working family gets a paycheck.
INSKEEP: Congressman Warren Davidson of Ohio, thanks for coming by. Really appreciate it. He's a member of the Republican Study Group.
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