Senator Ron Wyden, an Oregon Democrat, said in an interview with Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend, that one his priorities as the new chairman of the Senate Finance Committee will be renew about 50 U.S. tax credits and deductions that expired as last year ended.
(This is not a legal transcript. Bloomberg LP cannot guarantee its accuracy.)
AL HUNT: We begin the program with Senator Ron Wyden, the just-selected chairman of the Senate Finance Committee. Thank you so much, and congratulations.
SEN. RON WYDEN (D-OR.): Thank you.
HUNT: You are an advocate of tax reform. You can look at the calendar, though. There’s no way you can do a comprehensive tax reform this year, is there?
WYDEN: Al, my sense is the challenge is going to be a two-step drill. The first is, we had about 50 of what are called the tax extenders. These are important measures, like research and development, renewable energy. They expired at the end of last year. My hope is that we can get them re-enacted promptly so we don’t sacrifice, you know, important investments, for example, that encourage innovation, and then use them as a bridge to more comprehensive reform.
HUNT: Let me just stay on that for a second. You mentioned the R&D and the renewables you’re for. Are there any of the extenders -- because they do cost money -- that should be killed?
WYDEN: Al, my first choice would be to first go to comprehensive tax reform, rather than to have to proceed with the extenders. But the reality is, when the House leadership last November, in effect, declared that Obamacare was their primary issue, that changed the time table. So I am not going to sacrifice important matters like research and development and innovation on the altar of perhaps some inaction on comprehensive reform.
HUNT: So you’ll pass almost all those extenders, maybe all of them?
WYDEN: I want to have a chance to visit with my colleagues. I had a good meeting last night with Senator Hatch, but my hope is that we can move quickly to address those. The economy needs it. Workers and businesses need it.
HUNT: Pass in the next month or two, maybe?
WYDEN: My hope is that it will move quickly. Obviously, Senator Reid sets the calendar. And then we move on to the heavy lifting of comprehensive tax reform.
HUNT: Can you do that, though, this year? I mean, I know you can set the predicates, but can you actually do it? It’s real tough stuff.
WYDEN: It would be obviously a big lift to enact a comprehensive reform package this year, but we can make a lot of headway. There have been a lot of good proposals...
HUNT: That way, can you do pieces of it? Or you just set the agenda for the next Congress?
WYDEN: My own view, Al, is that the tax code is like an ecosystem. You fluff is up over here, it fluffs up over there. But here’s why I think there’s real hope. Two Republicans over the last six, seven years have joined Senator Begich and I in a bipartisan effort. Senator Gregg, he was Mitch McConnell’s economics lieutenant when he was in the Senate. He and I sat next to each other on a sofa for almost two years to put together a bill when he retired. Senator Dan Coats, a conservative Republican from Indiana, joined me.
And much of what was done in the 1980s, when a big group of Democrats got together with Ronald Reagan, Bob Packwood, and others, you’d go in there, you clean out this mess of special interest goodies, use the money to hold down the rates, and keep progressivity.
HUNT: Mr. Chairman, I covered that. I was there. Of course, they did that two ways. Number one, they increased corporate taxes. And, number two, they treated capital gains and dividends as ordinary income. Would you increase corporate taxes in order to cut rates? Would you -- would you treat capital gains and dividends as ordinary income?
WYDEN: It is a different time. I would like to do more to get closer to parity between income from investment and income from wages...
HUNT: Not totally, but closer?
WYDEN: Yeah, and what we did -- Senator Gregg and I -- I think moves in the right direction. On capital gains, obviously a sensitive issue, we established an exclusion of 35 percent for capital gains. And above that, we treated it as ordinary income. So what that meant was, if you were a schoolteacher with a modest of stock that you had to supplement your retirement, you didn’t take a big hit. If you made all your income on capital gains, you were in the low 20s.
HUNT: So that’s your position, still?
HUNT: Can you just do this year business tax reform, the way the president was requested, without individual tax reform?
WYDEN: We’ll look at that. But here’s the challenge. Most businesses are not what are called C corporations, which is where the concern has been. Most of them are sole proprietorships, hot dog stands, barber shops, partnerships, so it is very hard to bite off just one piece of it. But we’re obviously going to look at that.
HUNT: Let me summarize. I get the impression that you really care a lot about this issue, you’d like to do something. The odds are that not much can be done -- after the extenders, not much can be done this year. We’d get a start, and then maybe the next Congress do something. Is that fair?
WYDEN: Al, the -- the challenge is to build on the good work that Patty Murray and Paul Ryan did at the end of last year. That was good. That kept the doors of government open. Now the challenge is to move on to the two big-ticket items, and they are really taxes and Medicare.
You and I have talked about taxes. Senator Johnny Isakson, the Republican senator from Georgia, Erik Paulsen, Peter Welch in the House, bipartisan, we have, I think, a proposal that can unlock the challenge of protecting the Medicare guarantee and holding down costs. It deals with what’s called chronic disease. I’m talking about diabetes and cancer and stroke and heart disease. This dominates the program, and I think we can reform it.
HUNT: One final tax question. Do you think when you do, do tax reform, should it be a revenue raiser that contributes to deficit reduction?
WYDEN: We had a breakthrough on this issue recently. Doug Elmendorf, who heads the Congressional Budget Office, indicated that he could actually score a pro-growth tax reform effort as generating revenue. Now, obviously, there are going to be a lot of pieces to this debate, but I can tell you, Al, this tax code is a rotten, dysfunctional mess, and my sense is that when we get through the extenders and we look at them as a bridge to comprehensive reform, Democrats and Republicans can come together.
HUNT: And it’ll raise revenues?
WYDEN: Doug Elmendorf says he’ll score it. And now we’ve got a big challenge of bringing people together.
HUNT: Let me -- let me turn to one more issue that’s in our jurisdiction -- so many things are -- trade. What are the odds that this year -- this year, 2014, Congress will approve either the fast-track negotiating authority or a trans-Pacific trade pact?
WYDEN: What I can tell you, Al -- and I look back at the history -- there are only a handful, for example, with Democratic senators, who were even around for the last trade promotion act voted in 2002, which I voted for. So what my colleagues say is they want a chance to talk about these issues, to have a chance to examine the changes in global commerce. For example, back in 2002, digital trade, in terms of various kinds of digitally enabled services, cloud computing and others, that wasn’t even on the radar. This is an area where we now lead. I’m going to give my colleagues an opportunity to talk about these issues, talk with the administration, and then we’ll go from there.
HUNT: So does that suggest action this year? Does that suggest that maybe you talk about it and wait?
WYDEN: Until you have a chance to talk to senators, particularly those who say this is essentially new to them...
HUNT: So it’s not -- it’s not clear yet?
WYDEN: What I’ve indicated to Senator Hatch -- we talked about this last night -- is -- and when we talked, I wasn’t even officially, you know, the chairman. I’m going to need some time to talk to my colleagues, talk to the administration. From my state, one out of six jobs depends on international trade. The trade jobs pay better than do the non-trade jobs, because they reflect a higher level of productivity. But the way to get bipartisan legislation moving is to give your colleagues a chance to be brought into the debate and, I will tell you, there needs to be more transparency in this discussion, because most of the Congress -- and certainly the country -- doesn’t even know what’s being discussed.
HUNT: Your colleague, Rand Paul, brought a suit this week to declare that some of the NSA spying, of which you have been critical, is unconstitutional. Do you support that suit?
WYDEN: I’m not up on all the details of the lawsuit, but Senator Paul and I have worked very closely together on these issues. Both of us feel, Al, that the government ought to be able to collect the information it needs when it needs it to protect our citizens...
HUNT: So supportive of the...
WYDEN: ... but the reality is, the idea of collecting millions and millions of phone records on law-abiding Americans doesn’t make us any more secure. It undermines our liberty. I personally believe that, yes, it is unconstitutional to collect millions and millions of phone records on law-abiding Americans. It violates the Fourth Amendment.
HUNT: You mentioned Medicare earlier. Do you expect any action this year on the affordable health care act? Or will it just be politically debated?
WYDEN: We’ll look at a host of issues with respect to administering it. And obviously, a lot of Americans are enjoying some real gains from it. I’m particularly pleased about the tough protections for Americans to ensure that they aren’t discriminated against with pre-existing conditions.
It used to be that the health care system in America was for the healthy and the wealthy. That’s what happens if you allow discrimination...
HUNT: So you think it’s working pretty well?
WYDEN: Well, we’re certainly seeing the numbers go up in recent weeks. We’ve seen health costs abate. The protection for people who were discriminated against in the past is a plus. So what I’d like to do is what I did on the Medicare Part D problem, the Bush program, to expand a Medicare for prescription drugs is work in a bipartisan way. So when the gavel goes down on the Affordable Care Act debate, I’m going to be reaching out to my colleagues.
HUNT: Do you think you can do that this year, given this environment?
WYDEN: We’ll start with some hearings. The first thing we ought to do is have some bipartisan hearings, and I’ve indicated to Senator Hatch that I want to work with him on these issues in a bipartisan way.
HUNT: Final question. The tax code -- under the tax code, the so-called 501(c)(4)s are supposed to be engaged in social welfare. We all know that’s largely a charade on both sides of the aisle, Democrat and Republican. There are a number of these groups that really primarily engage in politics and trying to affect elections. The IRS has proposed to restrict those activities. Do you agree with that IRS rule?
WYDEN: I think Senator Murkowski, who is my Republican colleague, and she and I have the first bipartisan disclosure bill, because the issue here is secret money and unlimited money. And the two of us, in Senator Murkowski’s words, have said, let’s use the ‘even Steven’ proposal. Let’s apply the same rules to the NRA that we apply to the Sierra Club. And I think if you’re going to get a tax break, it shouldn’t be for politics. It should essentially be for...
HUNT: So will the IRS rule affect that change?
WYDEN: We’re going to -- we’re going to review them. I think it’s clear that the rules need to be tightened up in a way that is even to both the right and the left.
HUNT: Chairman Wyden, it’s...
WYDEN: That’s very kind.
HUNT: It’s interesting to be able to call you that. It’s really good to see you today. Thank you so much.
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