After a frustrating failure on repealing or even reforming Obamacare, Senate Republicans are about to embark on a tax reform debate that prominent House conservative says will either pass and spark badly needed economic growth or spell doom for the GOP majority in Congress.
“If the Senate doesn’t vote yes for tax reform, we’re out of business. They might as well pack their bags and head for home,” said Rep, Dave Brat, R-Virginia, a former economics professor and member of the House Freedom Caucus. He also sits on the House Budget Committee.
The first step towards unveiling and advancing specific tax reform legislation is for the House and Senate to agree on a budget. The House version contains far more in spending cuts but GOP leaders are urging House members to approve the Senate bill as it stands since nothing better will emerge in a conference committee.
Brat bristles at the thought of losing so many cuts because that limits how aggressive Republicans can be in their tax cut proposals but he says getting tax reform done soon is vital.
“We had $200 billion in mandatory reforms that we were pretty happy about achieving. We’re going to be giving that up, but if we don’t move on taxes right now the alternative is giving up about three weeks and then maybe not getting tax (reform) done before Christmas,” said Brat.
And why would that delay be so bad?
“The longer you wait, the more the swamp engages and takes away their special loopholes and deductions. Those are called pay-fors. If you lose that money, then we will not have the money we need to lower the rates for the middle class,” said Brat.
Given the Senate’s inability to pass anything on the health care front, Brat understands why skepticism abounds over this legislation as well. However, he says the crafting of this legislation has been far different, with key leaders in the House, Senate and the White House agreeing strongly on the framework for legislation.
That includes dropping the corporate tax rate to 20 percent, the S Corp or small business rate to 25 percent, providing middle class tax relief and easing the repatriation process for business to return to the United States.
While nothing is guaranteed in this political climate, Brat is confident about the progress to this point.
“If five or six folks in the Senate decide to put up a roadblock, we’re going to be in trouble again, but so far, no one’s put up any stark red lines yet,” said Brat.
One reason for that, Brat suspects, is that politicians who scuttle tax reform will pay a severe price back home. He says the people who flocked to Trump – and to some extent Bernie Sanders – want more money in their paychecks. And he says tax reform is the key to making that happen.
“They haven’t had a wage increase in 30 years. They rightly know that the swamp and the system up here is rigged in favor of elites and against them. They’re demanding attention, so I wouldn’t want to be the senator who holds that up. I don’t think it’ll go too well for them,” said Brat.
Finding support among Democrats is going to be difficult in any meaningful numbers, as leaders on the left accuse the GOP of catering to the rich at the expense of the poor and middle class and being unconcerned about adding to the deficits after spending eight years castigating President Obama for doubling the national debt.
Brat says a look at the facts proves who is more serious about fiscal responsibility.
“The progressive Democrat budget they put in two weeks ago: we put in tax cuts and we’ve got to overcome $1.5 trillion in 10 years with economic growth, which we think we can pull off with some of the other levers as well.
“But the Democrats put in a $10 trillion tax increase over 10 years and $11 trillion in new spending and end up with more debt and deficits than we do even though they raise taxes by $10 trillion,” said Brat.
Brat is also weighing in on a couple other controversies associated with the legislation that still hasn’t been introduced. Earlier this week, a tweet from President Trump poured cold water on the reported plan to cap 401(k) contributions at $2,400 per year. Brat says that was never on the table.
He also defended the GOP goal of eliminating federal income tax deductions for state and local taxes, saying national tax policy shouldn’t be formulated based on what states decide to levy in taxes.
“I don’t think the federal government should be in the business of picking winners and losers and subsidizing rates that vary across states,” said Brat.
Eliminating the deduction would hit taxpayers hardest in high-taxing states like New York, California, and New Jersey.
“They have high taxes. They have high government services and they like it that way. Why should someone in a low-tax state like Texas or the Midwest be paying for elites on the beaches,” said Brat.
Brat did not weigh in to a large extent on the Twitter feud between President Trump and Sen. Bob Corker, R-Tenn, other than to say he prefers discussing policy goals rather than social media zingers.
“I’m in favor of getting rid of picking winners and losers, saving $1.5 trillion, giving everybody a tax cut, getting economic growth going, putting a couple thousand dollars back in the average family’s pocket and getting their kid a job when they get out of college,” said Brat,
He says this will be a moment of great possibility for young people.
“The one thing I can tell them with a straight face is, ‘I’m going to pop this economy for you. I’m going to give you a chance. If you want to jump in and go pro-business, I’m going to provide an opportunity for you to set up the rest of your life. I highly encourage everyone to take advantage while we get this economy moving right now,” said Brat.
