The Senate Budget Committee approved a tax reform bill along party lines Tuesday, sending legislation to the Senate floor that a key fiscal conservative lawmaker says is vital to pass if Americans want to see the economy continue growing and eventually booming.
The vote in the committee was 12-11, and included ‘yes’ votes from Sens. Ron Johnson, R-Wisc., and Bob Corker, R-Tenn. The bill already cleared the Senate Finance Committee and will now be considered by the full Senate.
Senate Majority Leader Mitch McConnell admitted Tuesday that getting to 51 votes in favor of the bill is still a work in progress, but Rep. Dave Brat, R-Virginia, a member of the House Freedom Caucus, says Republicans must push this bill across the goal line or the economic consequences will be severe.
“Our economy needs it and you see every day on the financial channels that if anyone hiccups and there are two ‘no’ votes then the market goes down,” said Brat, contending that investors are bullish because they are assuming tax reform will get done.
“That’s an objective reality that’s out there. This is baked in the cake and if we don’t come up with these tax cuts, the economy will not continue to grow like it has been. It’s been flying high and consumer expectations are high and that’s where we want to keep it,” said Brat.
The effort to sway moderates took a bit of a hit this week, when the Congressional Budget Office, or CBO, estimated that the Senate bill would add $1.4 trillion to the national debt over ten years and would hurt middle class and poor Americans the most.
Brat is firing back on multiple fronts, first challenging the CBO’s recent history of badly inaccurate estimates.
“I think that’s probably based on the teachings of Karl Marx. They’ve been wrong so many times on every thing they do,” said Brat, noting a recent report on health care costs in Charlottesville, Virginia.
“The CBO said Obamacare was going to lower the cost of health care. Now the premiums for a family are $30,000. The deductible is $9,000. So you’ve got to pay $39,000 before you see one dollar of insurance. There’s CBO’s infinite wisdom on scoring the costs of these things,” said Brat.
Despite the frequent criticism of capitalism, Brat says world history proves the free market is the surest path out of poverty.
“Is capitalism good for the poor or is communism and command systems and top-down (better)?” said Brat. “The history of nations is the history of poverty unless you have capital accumulation.”
Brat says the GOP approach of allowing deductions for all capital will not only be a boon for business owners but will likely mean more money in pockets of employees. He says that’s a far cry from the Democrats calling for higher taxes and much higher spending.
“They want to increase $10 trillion, increase spending $11 trillion and they end up with more debt than wee do in our tax piece even after they they raise taxes $10 trillion in the Progressive Caucus budget and tax plan,” said Brat.
While confident Republicans have a good plan, Brat says they need to do a better job of messaging.
“I wish the mainstream media was more fair in the messaging and our team needs to do a much more aggressive job of messaging about the benefits of free markets,” said Brat.
Sen. Johnson and Sen. Steve Daines, R-Montana, had earlier said they could not support the existing Senate bill because it provided far more benefits to corporations than to small businesses. Johnson says he’s encouraged by some changes made to address his concerns.
Brat says Johnson and Daines are right that pass-through businesses that file at the individual rate need more help in the legislation. He says the House worked to beef up tax breaks for those small businesses, including just a nine percent tax rate on the first $75,000.
He also says Americans will be helped by married couples paying just 12 percent on income below $90,000. The next bracket, 25 percent, stays in place up to $260,000.
Brat would like to see more help for small businesses, but he says math is a real challenge for the GOP in making all of this work.
“There’s about $6 trillion in tax cuts and $4.5 trillion in pay-fors, so on net they know there’s only so much you can put around, so you want it to be as pro-growth as you can be,” said Brat.
But Brat says time is of the essence and Republicans need to get the job done.
“They all know we have to have these tax cuts go into effect,” said Brat. “It’s going to be a net win for everybody.”