December 17, 2017

Sunday School 12/17/17

I dropped in NBC's Meet the Press this morning.

One of Chuck Todd's guests was Marc Short, the Trump administration's director of legislative affairs, who was there to talk mostly about the GOP's tax plan. Todd started out by playing a number of Trump's promises about tax reform:
  • At the center of our plan is massive tax relief for the American middle class.
  • We're gonna have three brackets instead of seven we're doing a major major major simplification.
  • And we're gonna make it nice and simple. And we're getting rid of carried interest.
  • All of this does not add to our debt or deficit. In other words it's going to cost me a fortune!
And then he asked Short about those broken promises. Here's his answer.
Chuck there are many deliveries here in the bill that the president made promises on. One, it does simplify the tax code, some of the things you're not talking about is that it eliminates oil and gas production credits, it also eliminates many deductions that families and businesses were taking such as specifically lobbying expenses. It's helping to drain the swamp.
 There are promises he made he delivered on. There are certain industries here that made it impossible for us to deliver on every single one of those. But keep in mind what's most important, Chuck, we've lowered the corporate rate from 35% to 21% to bring jobs back to our country. That was a signature accomplishment in this bill, a 40% reduction.
He is lowering and delivering middle income tax relief to families across the country. For an average single mom earning $40,000 with two children, she gets a $1400 tax benefit. For the average family of four earning $70,000 they get a $2000 benefit. He delivered on his promise to focus on middle income families as well as to provide corporate tax relief. The simplification, there are several elements we did simplify. We didn't get as much as we want, it's a part of the compromise here you have to work with. 
Todd asked about Short leading with the corporate rate being the "signature accomplishment" of the bill, and how that part is permanent but the individual aspects are not. In part, short blamed the Senate's budget reconciliation process.
We would love to have the individual side permanent too. The reality is that corporations need to make investments years in advance to know what's going to happen as opposed to numbers continuing to gyrate. You're giving them assurances to where we're going to be 10 years out so they can make long term investments in our country. The budget reconciliation rules in the Senate are somewhat arcane and make it difficult to do both. If we could get the individual side permanent, we would love to do that also and we will continue to try and work to do so.
In response to a question about bipartisanship and real tax reform,  Short noted, among other things
Oh, it is real reform. It's the most significant tax reform we've had since 1986. 
Fast forward past the conversation about entitlements and more Trump campaign promises, which  the cynic in me says will be dropped like hot potatoes once the tax plan is approved, and about the Mueller investigation, to the final round table discussion.

It's not always I find myself agreeing with George Will, but he nailed it
Well, first of all, (Short) said it's the best simplification since 1986 which is rather like being the tallest building in Topeka. The fact is, they took a 70,000 page tax code and made it more complicated. Then the question rises, "well, will the Republicans reform entitlements?" The tax code enriches the entitlement menu by doubling the child tax code and making $1400 of it refundable which means a check goes out to people who don't pay taxes.
Because, well, Republicans are the ones who think paying people to have more children is wrong. Right?

Will also called out something about the corporate tax rate that most folks don't consider - where does the money paying the taxes actually come from?
Lowering the corporate tax rate, the proper rate for corporation taxation is zero because we don't know who pays them. Economists argue about whether it comes out of employees' wages, shareholders, passed onto customers. If you don't know who's paying a tax, don't have that tax.
And finally, he said one of the things I've long maintained.
Reduce it to 21%, it's a great thing to do. But any company that was paying 35% needed to fire its lawyers and accountants. The fact is most companies are paying on average of about 28% anyway. 
What a fantastic accomplishment for the GOP. and Merry Christmas to us.

See you around campus - after the New Year.