Banks Should Rethink Tax Plan Objection, Brady Says (Transcript)
Representative Kevin Brady of Texas, chairman of the Joint Economic Committee, said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend, that a Republican plan to revise the U.S. tax code will benefit large banks by helping them stanch job losses within the industry.
(This is not a legal transcript. Bloomberg LP cannot guarantee its accuracy.)
AL HUNT: Welcome back. We’re joined now by Congressman Kevin Brady of Texas, chairman of the Joint Economic Committee and the ranking Republican member on House Ways and Means. Speaker of House Ways and Means, Dave Camp, with your support, unveiled the most comprehensive tax reform package in 30 years. There isn’t any chance that the House will actually vote on it this year. It really is for discussion purposes, isn’t it?
REP. KEVIN BRADY (R-TX): Well, I don’t know the timing on a vote, but I know the timing to lay down this draft is long overdue. This code is dragging our economy down. It’s just costly, complex, it’s unfair. Someone sometime had to lay down that first top-to-bottom rewrite...
HUNT: And you have done that in a really admirable way, but -- now you’ve talked to the speaker and everything. Is there any chance that the House will vote on it this year? Or is this for an important discussion to take up next year?
BRADY: I think it depends upon how it moves from there. I know the members in our conference are very interested in fixing this broken code. We obviously have a lot of segments of industry that are weighing in, in a big way.
HUNT: So you think there could be a vote this year?
BRADY: You know, I don’t -- again, don’t know the timing. I just know back home and up here, people are hungry to fix this broken code and, more importantly, they want a say in it, which the American public for the first time will have that.
HUNT: Congressman Brady, let me ask you this. Whether there’s a vote this year or not, doesn’t this proposal set the predicate in many ways for any subsequent action in the next Congress, any -- for instance, the tax on the wealthy banks and carried interest? That really has to be part of any future package, doesn’t it?
BRADY: Well, you know, I think this is important, because it takes that big step so we can have the adult conversation with specifics on this tax code. I think, again, it really is how this is received, how groups weigh in, how members feel about it, and, at the end of the day, we want the most pro-growth, built-for-growth tax code. This is just the important step.
HUNT: The bank tax on the large banks, I think about six of them, people say it’d never happen because they are so powerful. They will never let that happen.
BRADY: Well, let me just say this. I think in the draft, discussion draft, they start with a 30 percent rate cut. They start with a $3 trillion stronger economy. And they start with their customers...
HUNT: So you think this package is good for them?
BRADY: I think if you look at the whole package, I think this has much more benefit, especially as banks are laying off thousands of workers because of this disappointing economy.
HUNT: They will oppose it, the big banks. Will the small banks support this?
BRADY: Well, I don’t know. But here would be my advice to the big banks. Look, take a look at the whole package, even the economic growth and especially impact on customers, and if you’ve got a better idea on how to help us lower tax rates, bring it. We’re listening. Bring those ideas, and let’s have that discussion.
HUNT: Grover Norquist, the anti-tax guru, says that -- yeah, it’s a good idea that you guys put something out on the table, but he said it -- I’m quoting him -- “severely hamstring capital investment and damage potential economic growth over the long run.” Why is Norquist wrong?
BRADY: You know, I had not heard Grover’s point there. He’s always got keen insight on tax issues. Again, I think, by simplifying the code, reducing those rates in a major way, we know this will grow the economy. We believe it’ll draw more capital to the United States. So I think, again, we start...
HUNT: He’s just wrong that it’s going to hamstring capital investment?
BRADY: No, I’m not saying that. I think there’s a lot of this draft proposal to be commended. We ought to always be looking for ways to improve it.
HUNT: So there may be ways in capital investment that would be changed?
BRADY: Always. And I will tell you, as most people know, I’m very big on cost recovery. I think that’s -- along with rates -- a very key part of this. So we’re always looking to improve.
HUNT: Let me give you another critique, which is, it’s presented as revenue-neutral. And by one scoring, it certainly is, over the first decade. But this is the Committee for a Responsible Federal Budget, bipartisan. It’s got a number of Republicans, like Alan Simpson and others on, and praises parts of it, but says one thing. He says it relies on one-time revenue sources and timing shifts to pay for permanent rate cuts, meaning that it could increase deficits in that second decade.
BRADY: I disagree.
HUNT: They’re wrong?
BRADY: In fact, I think it’ll be just the opposite. I think it’ll generate more federal revenue. The JCT’s score, dynamic score, which is critically important, will add $700 billion in new revenues to help us pay down the debt. And I think -- and I believe, absolutely convinced, spending cuts can get us halfway to a balanced budget. We’re going to need a stronger economy.
HUNT: But you think that second decade it will raise revenues because of the dynamic effect?
BRADY: I think it will in the first decade.
HUNT: OK. The other -- you drew a parallel the other day to the 1986 tax reform under -- under President Reagan. One of the differences, however, is that under that measure, which I was old enough to have covered, that the Earned Income Tax Credit for the poor was vastly expanded. Under this proposal, it actually would cut on EITC. So a woman making the minimum wage, $17,000, two kids, she’d lose up to $2,000 in four or five years. Should the poor have to bear the burden for any of this?
BRADY: No. They don’t, in fact. In this draft proposal, every one making up to $100,000 a year sees a tax cut, a tax cut. And average family takes about $1,300 more.
HUNT: But I’m talking about the EITC. That’s cut back a little bit. Shouldn’t that be expanded, rather than cut back?
BRADY: Actually, it’s not. In my view, it’s really -- it was originally supposed to offset the payroll taxes. Unfortunately, it’s gone far beyond it. So it’s refocused back on making sure those payroll taxes are offset. It’s actually phased out later, so that more families have that opportunity, and it doesn’t create that -- sort of that poverty trap where the harder you work and more you earn, the more you’re punished.
HUNT: But if you...
BRADY: I think it’s -- I think it’s a much smarter way of helping people and encouraging employers to hire.
HUNT: As you go through further analysis, though, you would want to make sure that the working poor actually get some kind of a break, as opposed to a penalty on that?
BRADY: In my view, no one benefits more from this discussion draft from people who are underemployed, minimum wage jobs, and those trying to get that first job.
HUNT: OK. Let me ask you one final question. Both you -- Chairman Camp is term-limited after this year. Both you and Paul Ryan have expressed interest in being the next chairman of the Ways and Means Committee. In this town, it’s said Paul Ryan has the inside track, he’s better known, he can raise a lot of money. Is that true?
BRADY: Well, I’ll tell you -- he’s a terrific leader, a good friend. And -- but the point is, I’m qualified and prepared to lead this committee. At the right time, I’m going to make that case to my colleagues. This is all about the ideas and how we can move tax reform, trade, entitlement reform forward, so it’s good to have a healthy competition.
HUNT: And what do you think are your prospects of being the next chairman?
BRADY: You know, I’m going to be in a position to lead this committee. We’ll see how all of it goes, but...
HUNT: That says like you think you’re going to get it.
BRADY: Well, I’ll tell you what. Hopefully we’re going to present two good choices to our colleagues.
HUNT: OK, Kevin Brady, thank you so much for being with us today.
BRADY: Thanks, Al.
HUNT: And coming up, unease in Ukraine and the Clintons, Bill and Hillary, look to the future. We’ll be right back.
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