Representative Dave Camp, a Michigan Republican and chairman of the House Ways and Means Committee, predicted in an interview on Bloomberg Television’s “Political Capital with Al Hunt” that Congress will raise the $14.3 trillion debt ceiling before the government runs out of cash Aug. 2.
(This is not a legal transcript. Bloomberg LP cannot guarantee its accuracy.)
AL HUNT: We begin the show with Chairman Dave Camp of the House Ways and Means Committee. Mr. Chairman, you’re right in the middle of everything. Thank you for being with us.
REPRESENTATIVE DAVE CAMP: Great to be with you, Al.
HUNT: Simple question: Will Congress pass an increase in the debt ceiling by August 2?
CAMP: I think Congress will pass an increase in the debt ceiling, but I think it’ll have to have the spending reductions and some of the structural reforms that we’ve been looking for. And I hope -
HUNT: But you can’t get those passed by August 2, can you?
CAMP: Well, I think you can get a commitment to pass those.
HUNT: A commitment.
CAMP: And I think if there’s a structured deal and an agreement between the president and the speaker and the Senate, I think, yes, you could do that.
HUNT: One of the things that’s on the table right now, apparently, is immediate cuts from discretionary spending - mainly of about $1.7 trillion - and then with a commitment to come back this year to do about $2 trillion more, half roughly in entitlements, half in higher revenues. Can you live with something like that?
CAMP: Well, I think what we also need is a tax reform piece, because we need to not only cut, but we also need to begin to grow our economy. And I think that’s where the trade agreements and tax reforms are a critical part of -
HUNT: But can you agree to a net revenue increase?
CAMP: It’s - not - I don’t like the idea of higher taxes.
HUNT: We know that, but -
CAMP: So that’s probably not going to be something that will work in the House. But I think certainly a series of spending cuts that at least match where we have to go on the debt limit and the tax reform, which will help grow our economy, is something we can look at.
HUNT: Pete Domenici, as you know, longtime Republican chairman of the House Budget Committee, who’s done a study on this, says that if Democrats won’t accept cuts in entitlements and Republicans won’t accept higher revenues, higher net revenues, there’s no way anything substantive can happen.
CAMP: Well, what Republicans are accepting is an increase in the debt limit.
CAMP: And we believe that the taxes are not a good idea. Now, what we really need to do - because that’ll hurt our economic growth. And, obviously, national unemployment at 9.3 percent, Michigan just went to 10.5 percent -
CAMP: - we need jobs. And the tax increases will actually hurt the job creation -
HUNT: Let me ask you about that. If taxes are the chief drivers of economic growth, tax cuts, lower taxes, let me ask you two questions. Why did Ronald Reagan in 1982 - unemployment was at 10 percent - increase taxes about $100 billion a year, and why did Bill Clinton increase taxes and produce a lot more jobs than George Bush, who cut taxes?
CAMP: Well, in ‘82, we had a huge recession, and, of course -
CAMP: - I was in the private sector then and suffered the ill effects of that. But where we got the job growth was after ‘86, after tax reform -
HUNT: Well, we got it - we got it from ‘82 to ‘84, because Ronald Reagan ran on morning in America.
CAMP: But the real growth in jobs occurred after that ’86 tax reform act.
HUNT: But don’t you agree those tax increases of Clinton and Reagan’s weren’t the job-killers that Republicans now say tax increases -
CAMP: Well, we had a very different world situation. We didn’t have the competition from growing economies around the world. And what we’ve got now is a stagnant economy in the U.S. So in a growing economy, the Clinton tax increases, the Reagan tax increases were a very different prospect than they are now.
And the fact that we’ve had this long-time high unemployment, longer than the Great Recession -
CAMP: - tax increases would only hurt that recovery.
HUNT: Mr. Chairman, let’s see if I’m reading you right. I think you’re saying you hate the idea of higher taxes. You don’t want higher taxes. You think it’d be a bad idea. If you could put together a deal and you had to swallow some higher revenues in a context - net revenues in the context of tax reform, you might consider it?
CAMP: If you could get higher revenues to the government through growth in the economy -
HUNT: No, no. No, I’m talking about tax reform. I’m not talking about long-term growth. I’m saying something that you wouldn’t like but you could accept if you got entitlement reform and the other thing.
CAMP: Well, we had Secretary - former Secretary Baker and former Leader Gephardt come to the Joint Taxation Committee with Senator Baucus and myself -
CAMP: - and they said, if you raise revenues in tax reform, it makes it much harder to do it, because everyone will say, “My ox is being gored.” So I think the higher revenues make it harder to get the kind of tax reform that we need to grow our economy.
CAMP: And also, I really believe it will make it harder for us to create jobs.
HUNT: Let’s talk about spending cuts, then, because you supported the House-passed “cut, cap and balance” plan. A constitutional amendment for a balanced budget is coming up, 10 years to have a balanced budget. Paul Ryan has a budget, which you also voted for: $338 billion deficit in 2021. What would you cut beyond Paul Ryan?
CAMP: Well, I think, frankly, the Ryan budget is a great path that we need to get on. And it just shows how enormous this deficit problem is that we really have to begin to address these so-called promises that have been made to the American people, because, frankly, they’re false promises.
The long-term debt of the United States is not sustainable. We need to get on a path to get to balance. Frankly, the president’s budget never got to balance.
HUNT: Right, but Paul Ryan’s goes to $338 billion deficit. What would you cut beyond that?
CAMP: Well, I think that what you have to do is get on a path. And what - what - which is now - it’s not just the Ryan budget, but it’s now the House budget, because it passed the House with bipartisan support.
CAMP: That proposal has the right mix of spending reductions immediately, long-term changes, and tax reform -
HUNT: But no balanced budget to 2040.
CAMP: But it’s scored to give us a million jobs in the first year alone.
HUNT: So that’s more important than the balanced budget, per se?
CAMP: Well, I think we get to balance with the House budget. We never get to balance under the president’s budget. That’s the big distinction.
HUNT: Well, the Republican Study Committee, which was oft-cited in this debate, would get to balance. It raises the Social Security retirement age to 70. You support that?
CAMP: I think that anything we do with Social Security has to be done together in a bipartisan way. But clearly, the current path we’re on with Social Security is not sustainable.
HUNT: But you would only support raising the retirement age if Democrats agree?
CAMP: Well, the Democrats have to agree.
HUNT: Okay. How about raising the Medicare eligibility from 65 to 67?
CAMP: It’s something that’s being discussed. I think, again, I think that will be something - hopefully it will be part of the larger agreement that the president and both the speaker and the Senate are working on.
HUNT: Mr. Chairman, what the Democrats say is you’re right, but if you want us to accept that, you’ve got to accept higher revenues. We give on an issue that has been precious to our base, increasing Social Security, increasing Medicare eligibility. Will you give on higher net revenues?
CAMP: And we have - are giving and have given - you can see by the vote on “cut, cap and balance” - on the issue of increasing the debt limit. That is the issue that’s important. So this idea that the tradeoff is us accepting higher taxes, we’ve already begun that tradeoff -
HUNT: With the debt ceiling.
CAMP: - with increasing the debt ceiling.
HUNT: Okay, let me ask you this. You want a 25 percent top individual rate when you get around to tax reform. It would be the lowest since 1931. Would you envision ending or sharply curtailing the home mortgage deduction and health care exclusion in order to do that?
CAMP: Well, the home mortgage deduction is obviously a very critical part of many people’s investment, so that is something that we’re going to look at very carefully, but do it in a way that understands just how important that is. I think it’s something that we’re going to look at every deduction -
HUNT: So with home mortgage, may be gradually reduce it, but not do it instantly and not eliminate it?
CAMP: We - we would put everything on the table, discuss everything, and see where we could get the political consensus to move forward. But clearly, we have to look at the two largest so-called tax items, which are, as you mentioned, home mortgage and the health care deduction. We’re going to look at those. But I’m not going to prejudge where the committee might end up on those issues.
HUNT: Corporate tax reform, you think you’ll get to it this year?
CAMP: I think so. I hope so.
HUNT: You think you’ll write a bill this year in Ways and Means Committee?
CAMP: I’m going to try to do that.
CAMP: And especially if it’s part of the debt ceiling, I’ll be able to do that.
HUNT: And with a top rate of 25 percent for corporations?
CAMP: That’s the target.
HUNT: OK. Let me ask you this. Chinese currency - in the last Congress, you voted for a bill to retaliate against Chinese goods if they didn’t do something with their currency. There’s a discharge petition coming up, has 40 percent of the House. Would you consider a similar bill this year?
CAMP: I would consider that issue in connection with the many issues that we have regarding China. I think, frankly, intellectual property and a host of others need to be part of that discussion. China currency was the only issue that we had presented as - we weren’t in control.
But I do think that we have an important relationship with China, a complex relationship with China. But, frankly, many of these issues need to be led by the administration.
HUNT: Do you think you can -
CAMP: These are government-to-government contacts to help resolve some of these issues. And we need a stronger effort from the administration on all of these fronts -
HUNT: Can you fend off -
CAMP: - intellectual property.
HUNT: Can you fend off that discharge petition, then?
CAMP: I believe so.
HUNT: You believe so. Okay, one final question. Tax holiday for repatriation and foreign-source income, is that likely to happen this year?
CAMP: I think repatriation is best not done as a one- off.
CAMP: - that changes the structure so that we’re not back at the table in another two years, saying -
HUNT: So part of corporate tax reform?
CAMP: Part of corporate tax reform.
CAMP: Because if you don’t do it, then in a few short years, you have money stranded overseas that’s being invested there, not here. We want that money invested here so those plans and those high-value jobs that go with those factories and plans and structures are in the United States, not overseas.
HUNT: Chairman Dave Camp, all the issues we’ve been talking about will come before your committee. You’re in the hot seat. Thank you very much for being with us today.
CAMP: Thanks a lot, Al.
HUNT: Okay. And when we come back, a lot of plans are in the mix, but will any of them help us avoid default? Bloomberg reporters are next.
***END OF TRANSCRIPT***
THIS TRANSCRIPT MAY NOT BE 100% ACCURATE AND MAY CONTAIN MISSPELLINGS AND OTHER INACCURACIES. THIS TRANSCRIPT IS PROVIDED “AS IS,” WITHOUT EXPRESS OR IMPLIED WARRANTIES OF ANY KIND. BLOOMBERG RETAINS ALL RIGHTS TO THIS TRANSCRIPT AND PROVIDES IT SOLELY FOR YOUR PERSONAL, NON-COMMERCIAL USE. BLOOMBERG, ITS SUPPLIERS AND THIRD-PARTY AGENTS SHALL HAVE NO LIABILITY FOR ERRORS IN THIS TRANSCRIPT OR FOR LOST PROFITS, LOSSES OR DIRECT, INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THE FURNISHING, PERFORMANCE, OR USE OF SUCH TRANSCRIPT. NEITHER THE INFORMATION NOR ANY OPINION EXPRESSED IN THIS TRANSCRIPT CONSTITUTES A SOLICITATION OF THE PURCHASE OR SALE OF SECURITIES OR COMMODITIES. ANY OPINION EXPRESSED IN THE TRANSCRIPT DOES NOT NECESSARILY REFLECT THE VIEWS OF BLOOMBERG LP.