Teddy Kupfer of National Review and Greg Corombos of Radio America cheer President Trump’s selection of John Bolton as National Security Adviser and look forward to his tough stance on North Korean nukes and the Iran nuclear deal while liberals fear that Bolton will start bombing everyone. They also unload on the bloated $1.3 trillion omnibus that the majority of Republican representatives and senators approved, much to the delight of Democrats and the fury of fiscal conservatives. Teddy and Greg understand the desire of Republicans to rebuild the military but find the reckless spending in other areas unacceptable. They scratch their heads trying to figure out why more than half of millennials actually enjoy doing their taxes. And they offer a champagne toast to the late Democratic Georgia Gov. and Sen. Zell Miller and reflect upon his memorable keynote address at the Republican convention in 2004.
taxes
Union Dues Battle Reaches Supremes Again
The Supreme Court heard oral arguments over whether labor unions can force non-members to pay dues when they hold public sector jobs, and the upcoming verdict may have a major impact on organized labor going forward.
And one leading expert says if unions cannot count on compulsory dues, their next plan may be to get it from the taxpayers.
On Monday, justices heard the case of Janus v. American Federation of State, County, and Municipal Employees, or AFSCME. Mark Janus is an employee with the Illinois Department of Public Health. He is not a member of AFSCME, but $50 is still taken out of his paycheck each month in union dues.
AFSCME contends that the collective bargaining it does on behalf of public sector employees ends up benefiting all workers, thus collecting $50 per month from people like Janus is reasonable.
National Right to Work Legal Defense Foundation President Mark Mix says organized labor’s argument is full of holes.
“The fact that the unions have positioned themselves as the exclusive bargaining agent and the monopoly voice of all workers in the public sector is really the issue. This is the fundamental problem and the injustice of this particular situation. The unions say that everything they do benefits everybody they come in contact with. That’s just not true.
“So the idea is that Mark Janus, our client who we represented at the Supreme Court, is basically saying that what they’re doing in some cases hurts him. In some cases it’s arguable that it doesn’t help him. In some cases it probably does. But the bottom line is that he would lose his job if he did not pay these fees to the union,” said Mix.
It’s the compulsory policy aimed at non-members that Mix believes is unconstitutional.
“In order to work for his government and have a voice, he’s got to pay a private organization for that privilege. We believe that it all should be voluntary. If the union’s doing great work and they’re providing all these great benefits, then workers will join them voluntarily and that’s the way it should work,” said Mix.
Mix says organized labor often positions itself as looking out for the working class and middle class employees, but he alleges the reality is just the opposite.
“If Mark Janus wins this case, there’s nothing that stops any individual from joining a union. It won’t prohibit anything. It just simply gives individual workers the choice, and really, when you boil this out that’s what this is. It’s a battle, literally, between union officials and the rank-and-file workers they claim to represent
“What they’re saying is, ‘If you give these workers a choice…they may decide to do something different, and that’s really the fundamental issue at the bottom of this case. Union official are worried that if workers are given the choice, they may not choose to support them financially,” said Mix.
National Right to Work Legal Defense Foundation Staff Attorney William Messenger argued before the Supreme Court on behalf of Janus. Mix says Messenger was pleased with the way oral arguments went Monday, and he also highlighted how the various justices approached the discussion.
“In the last five years they have asked and talked about this issue, so they were well-informed,” said Mix, noting that the high court heard very similar cases in 2012, 2014, and 2016. The 2016 case deadlocked at 4-4 due to the death of Justice Scalia.
“Justice Kennedy was pretty animated and interested in this case. The first amendment is really the ultimate question here. Justice Thomas did not ask a question. Justice Gorsuch did not ask a question. Roberts had a few, Alito had a couple, and Sotomayor and Kagan led the charge for the other side,” said Mix.
Gorsuch not asking a question leaves some mystery as to the final verdict, since the other eight justices are on the record with their views. While not hazarding a guess as to how the court will rule, Mix says he “hopes the fundamental argument of free speech will hold the day.”
If his side wins, Mix says unions will quickly start looking for other sources of revenue and in left-leaning states that money might come from the taxpayers.
“They’re trying to convince legislatures to give them the authority to collect money from taxpayers if they lose the Janus case. We’re seeing things pop in New York, in California, in Washington state, and Hawaii. They’re actually going to ask the taxpayers to pay the fees they can no longer collect from non-members if we win this case, said Mix.
He suspects that road will also wind up a dead end.
“I think that gets them deeper into the hole as opposed to providing solutions for them. They may win on the short term by getting taxpayers to fund it, but I think once taxpayers find out they’re paying a private organization taxpayer money to do the work they’re doing, I think that will be another problem for organized labor down the road,” said Mix.
Mix says a far better reaction would be for unions to shape up and show non-members there is great value in paying fees for ongoing representation in collective bargaining and other areas.
A ruling on Janus v. AFSCME is expected before the end of June.
Tax Cuts More Popular, Rough 2018 Forecast, Are Reporters Fit to Serve?
Jim Geraghty of National Review and Greg Corombos of Radio America welcome a new poll showing nearly half of Americans hold a positive view of the Republican tax bill and are bullish on the economy, although they are not ready to give Trump and the GOP credit. They also wince as Democrats win a usually safe Republican seat in the Wisconsin State Senate, and Gov. Scott Walker urges GOP members and activists to make sure people know about their significant accomplishments. And they sigh as President Trump’s doctor gives the commander-in-chief a clean bill of health, but White House reporters still ask the physician a litany of repetitive questions about Trump’s mental health and whether he he is fit to serve under the conditions of the 25th Amendment.
GOP Tax Bill: Several Good Parts But Needs to be Improved
The House tax reform bill is now out of committee and headed for a vote on the House floor, and a leading advocate for small businesses says there is a lot to like in this legislation for businesses and individuals but she says there is definitely room for improvement.
Karen Kerrigan is president of the Small Business and Entrepreneurship Council and an influential voice on tax and regulatory policy impacting small businesses. Just last week, she sat to the left of President Trump at a White House meeting on tax reform.
Kerrigan says a number of key provisions are very good, especially dropping the corporate tax rate from 35 percent to 20 percent.
“It’s a really solid bill in terms of lowering rates, making those lower rates permanent, advancing simplicity for small businesses. That was very important, both on the business side and on the individual side,” said Kerrigan.
“We think those lower rates are going to be very helpful to allow them to reinvest more of their capital, more of their profits into their business at the end of the year,” she added.
And tax rates are not the only component that excites Kerrigan.
“If you do have these immediate cuts on the business side and also the expensing piece – you can’t forget about that – full expensing or expanded Section 179 expensing. That’s really going to trigger a lot more investment and a lot more confidence. Then you’re going to see higher growth in the economy as well,” said Kerrigan.
While corporations would see their tax rate plummet more than 40 percent, businesses other than corporations may face a murkier future. While dropping small business taxes to 25 percent, the GOP bill also keeps the top individual rate – through which many small businesses files with the IRS – unchanged at 39.6 percent for those making over a million dollars per year.
So will those businesses, known as pass-throughs, get relief?
“It really depends,” said Kerrigan, who says those making less than a million per year ought to benefit greatly from lower business taxes and lower individual rates. But that relief will not be happening for everyone.
“As it stands, there is a complicated formula, the 70/30 formula, that basically says from a pass-through perspective that 70 percent will get taxed from a wage perspective, which is the individual rate which may be higher for some small business owners. Thirty percent would get that lower rate,” said Kerrigan.
“What we’re trying to do is improve that pass-through rate. So maybe there’s better parity, perhaps 50/50, perhaps 40/60.
“The key right now is allowing more small businesses, particularly those that are in the upper income bracket, to get that 25 percent rate. We think those are resolvable and hopefully we’re going to get to a point where many small businesses are going to benefit from the lower rate,” said Kerrigan.
A major tactical consideration for lawmakers is how to craft the bill so senators can pass it with a simple majority. Senate rules only allow that to happen if the tax bill does not create additional deficits.
The Congressional Budget Office, or CBO, says the House GOP plan would add $1.7 trillion of deficits over the next decade.
Kerrigan pushes back on the CBO in two ways. First, she points out the CBO’s refusal to factor in economic growth in projecting deficits, a policy known as static scoring versus the dynamic scoring that Kerrigan and others believe is more accurate.
“They leave out the reality in terms of dynamic scoring and the impact that incentives and reduction and putting more money back into the private economy has on growth and people’s behavior and business behavior and that drives growth,” said Kerrigan.
Second, Kerrigan says the CBO has a lousy track record with its projections.
“You’ve got to remember the CBO has been notoriously wrong on a whole range of things over the past 5-10 years. If you look at their predictions on Obamacare, how many people would be insured under Obamacare, really wrong on that. The cost of coverage on Obamacare? They’ve been dramatically wrong on that as well,” said Kerrigan.
As the debate heads to the full House floor and begins separately in the Senate, Kerrigan is confident that Republicans are largely headed in the right direction, but she still wants to see it get better.
“We are working on a bunch of issues so that small businesses will be able to keep the value of that lower rate and get that 25 percent rate. It’s a process and we’re at the table and we’re trying to improve this bill as much as possible so that it will have the best effects for small business and for the economy as well,” said Kerrigan.
GOP’s Tax Reform Blunders, TSA Fails Test Again, USA Today’s Chainsaw Bayonet
Jim Geraghty of National Review and Greg Corombos of Radio America blast congressional Republicans over their embrace of scrapping the adoption tax credit and for considering an end to the property tax deduction. They also slam the TSA for failing miserably yet again in the latest test designed to see if our blue-shirted friends can actually stop guns, knives and bombs from getting through checkpoints. And they get a kick out of USA Today suggesting you could add a chainsaw bayonet to an AR-15 rifle.
EPA Sinks ‘Sue and Settle’
Limited government advocates and property rights champions are cheering Environmental Protection Agency Administrator Scott Pruitt for publicly announcing he will scrap the tactic known as “sue and settle” for as long as he is in office.
“We will no longer go behind closed doors and use consent decrees and settlement agreements to resolve lawsuits filed against the Agency by special interest groups where doing so would circumvent the regulatory process set forth by Congress,” Pruitt said in a statement.
So what is “sue and settle?” In short, it’s a way that politicians and bureaucrats shift policy by pretending to be in a legal fight with a political ally and altering a specific rule in order to supposedly avoid a lawsuit.
Patrick Hedger, manager of the Regulatory Action Center at the FreedomWorks Foundation, offers a more detailed description of how this political and legal charade plays out.
“(Government) agencies will sometimes collude with private actors, such as third party non-governmental organizations, non-profits, and other activist organizations in order to facilitate an expedited rule-making process that goes outside the normal rule-making,” said Hedger.
“There will be a faux lawsuit and instead of taking that suit to court, they will settle it out of court, generally behind closed doors, in a process known as a consent decree. That consent decree will force the agency to act in a way that’s normally a lot faster and more aggressive than a normal federal rule-making process,” said Hedger.
Hedger says this bureaucratic maneuver then provides political cover for an administration that wanted to change the rule all along.
“This is a way for agencies to avoid political accountability for controversial decisions. Usually, we’ve seen very expensive and aggressive regulations being passed, particularly environmental regulations. This is a way for agencies like the EPA, in the past, to say, ‘We had our hands tied by this lawsuit,’ even though this was their ultimate political goal,” said Hedger.
Hedger is quick to add that no party is innocent when it comes to using “sue and settle” but some administrations have utilized it much more than others.
“This has basically been a bipartisan practice but it accelerated greatly during the Obama administration,” said Hedger.
He also offered some examples of the more onerous rules established through “sue and settle,” including the Utility Maximum Achievable Control Technology rule.
“It basically forces power plants to put in expensive new infrastructure to achieve extremely stringent emissions standards. That’s estimated to cost almost $10 billion annually. There were Clean Water Act rules that applied to the Chesapeake Bay. Those are estimated to cost anywhere from $18-20 billion per year. All of these were achieved through ‘sue and settle’ litigation,” said Hedger.
Hedger is thrilled that Pruitt declared an end to a practice that subverts the normal rule-making process.
“This is a process that has been used by both Republican and Democratic administrations. This just shows that the Trump administration is very much still committed to getting back to regular order and the proper way of doing things.
“Instead of using this political end around to achieve its own goals, the Trump administration is just trying to bring the government back in line with the Constitution and the Administrative Procedures Act, which is supposed to govern regulations,” said Hedger.
Scrapping “sue and settle” is just one of several moves from Pruitt’s EPA that is drawing high praise from limit government activists. Earlier this month, Pruitt announced what many see as the beginning of the end of President Obama’s Clean Power Plan, which required substantial decreases in carbon emissions and was considered the death blow to the coal industry.
Earlier this year, Pruitt also started the rollback of the Waters of the United States rule, or WOTUS. That update changed the definition of navigable waterway from one you could actually navigate with a boat and was usually connected to a larger body of water to virtually and standing water in a drainage ditch or even a puddle.
Hedger likes Pruitt’s policies but likes his fidelity to his oath even more.
“I think Administrator Pruitt is doing a phenomenal job of, first and foremost, putting the Constitution first,” said Hedger. “There is a way to achieve a clean environment while also adhering to the rule of law and I think that’s the structure that we’re seeing from Pruitt’s EPA.”
But while Pruitt is making a lot of big moves, Hedger says the next EPA boss could easily reverse it all. He says lawmakers need to get involved.
“This does, at some level, have to fall back on Congress to stop passing these vague laws. Particularly in the case of ‘sue and settle,’ there are parts of the Clean Air Act and the Clean Water Act that encourage that encourage this type of practice. So Congress should go in and clarify that they never intended for this ‘sue and settle’ and consent decree practice to happen,” said Hedger.
Hedger says Pruitt’s moves on process and on existing rules are a breath of fresh air to property and business owners. However, he says much more can be done to relieve the regulatory burden on American families and businesses.
“Right now, there’s so much focus on tax reform, which is good, but if you look at the estimates of the economic burden of federal regulation versus the economic burden of taxes, they estimate that the regulatory burden in this country approaches two trillion dollars per year, which is more than is collected in individual and corporate income taxes,” said Hedger.
How the Obamacare Flop Impacts Tax Reform
The implosion of the Senate’s attempt to address Obamacare also makes effective tax reform more difficult, but the leader of the nation’s largest grassroots taxpayers organization is still optimistic big things can get done.
But make no mistake, repealing the Obamacare taxes was supposed to grease the skids for the tax reform effort.
“The task has not been made easier by the lack of progress on Obamacare repeal and replace, but we’re going to have to approach this with a lot of vigor right now. The American people are waiting to see that this Congress and this administration can get something comprehensive done,” said National Taxpayers Union President Pete Sepp.
How does the failure of the Obamacare repeal specifically impact the tax reform push?
“We’re going to have to deal with some of the Obamacare taxes in some fashion, through tax reform or outside of tax reform simply because several of those Obamacare taxes directly effect conventional income tax rates,” said Sepp.
“I’m talking about, for example, the earned income surtax of 0.9 percent, also the net investment income tax of 3.8 percent. Those types of taxes will actually increase the rate that members of Congress are trying to lower over the long term,” said Sepp.
Nonetheless, Sepp is bullish, even after watching the flop on healthcare in Congress because it appears congressional leaders and administration officials are all singing from the same songsheet this time.
“That means lower tax rates, simpler tax filing procedures, making sure that small businesses don’t pay a higher tax rate than larger ones and, in fact, should pay a lower rate. There are also things that will help to address the lack of competitiveness of our companies overseas and the tax disadvantages there,” said Sepp.
Sepp is pleased that the House Ways and Means Committee and the Senate Finance Committee are working in tandem on legislation rather than crafting completely separate bills. He also says GOP friction should ebb greatly now that all the major players agree to stop pursuing the Border Adjustment Tax, which would place taxes on goods entering the U.S.
In addition, Sepp is excited about Republicans trying to drop the corporate tax rate from 35 percent to somewhere between 15-20 percent, and he says the rate for small businesses should be even lower.
He also is hopeful that Congress can remove the massive paperwork burden for business owners.
“We also need to look at how business claim their expenses and write them off. This is an incredibly complex area of the tax code. It amounts to anywhere between 30-50 percent of the paperwork burden that a business faces,” said Sepp.
On individual tax policy, Sepp wants to see Congress pursue much lower tax rates in exchange for removing the vast majority of deductions that are currently available to taxpayers. He says rates really need to plummet before that trade is a good deal for most Americans.
“The rates range from 10 percent to over 40 percent currently. We need to get the rates down even lower, five percent or even zero if we expand the standard deduction and perhaps a top rate of 30-35 percent. If we do that, the trade off of deductions will be worth it,” said Sepp.
Sepp stresses that the status quo is not an option. He says America suffers more each year as America fails to use the tax code for our economic advantage.
“Tax reform needs to happen because companies are inverting every day. They’re taking their headquarters overseas and with it a lot of profits that could be taxed here. The tax code is getting more complex every year. Even if we don’t pass new laws, implementing old ones and designing all the regulations around them add to that burden,” said Sepp.
‘This Is A Rescue Effort’
Senate Republican leaders revealed their closely guarded health care bill on Thursday, predictably outraging Democrats and leaving some conservative senators insistent that the bill doesn’t go far enough.
Known officially as the Better Care Reconciliation Act of 2017, the legislation kills Obamacare’s individual mandate, scraps many of the current taxes on the books, and gives more power to the states to define the health care market.
On the flip side, the bill increases subsidies over what House Republicans approved last month and offers a slower phasing out of Medicaid expansion. Both plans keep the Obamacare provisions of forbidding insurance companies from rejecting patients with pre-existing conditions and allowing young adults to stay on their parents’ policies until age 26.
Some of the top conservative health care policy leaders are effusive in their praise. Foundation for Research on Equal Opportunity President Avik Roy says, “If it passes, it’ll be the greatest policy achievement by a GOP Congress in my lifetime.”
Galen Institute President Grace-Marie Turner also likes the plan, noting that it addresses the four areas she believes must be dealt with as a result of Obamacare’s many problems. Specifically, she says any final product must provide a safety net, create a bridge to new coverage, allow states greater flexibility on regulations, and reform Medicaid.
“This bill does all four of those key things,” said Turner. “Yes the Senate moves the dials in slightly different ways and they learned from the reaction to the House bill, particularly in the way the refundable tax credits were structured for people who need help in purchasing coverage.”
Turner admits the Senate bill spreads taxpayer dollars around more liberally than the House plan.
“Young people, people that are in lower income categories and people (nearing) Medicare age will get more help than they would have through the House bill,” said Turner.
That approach extends to Medicaid as well.
“It gets back to a more normal way of spending the federal-state match for Medicaid spending, but it does it over a longer period of time. So the states have more time to adjust to reductions in their Medicaid payments,” said Turner.
“But they are also going to have a lot more flexibility with this bill than they would have otherwise had. Obamacare just basically added millions more people to a faltering Medicaid program instead of building in reforms,” she added.
While many on the right see the legislation as a significant improvement over the status quo, some changes must be made if Republican leaders want the votes needed to pass it. Sens. Ted Cruz, R-Texas, Mike Lee, R-Utah, Rand Paul, R-Kentucky, and Ron Johnson, R-Wisc., say they cannot back the bill in its present form because it doesn’t do what the GOP promised to do the past four election cycles.
“Currently, for a variety of reasons, we are not ready to vote for this bill, but we are open to negotiation and obtaining more information before it is brought to the floor,” the senators said in a joint statement.
“There are provisions in this draft that represent an improvement to our current healthcare system but it does not appear this draft as written will accomplish the most important promise that we made to Americans: to repeal Obamacare and lower their healthcare costs,” they added.
Turner says she is encouraged by the language of the statement and expects their concerns to result in a stronger bill.
“I think the leadership knows they are going to have to make tweaks and adjustments to this bill. Fortunately, we’re now sort of out of the policy realm and we’re in the vote-buying realm. ‘What do you need, Sen. Paul? What do you need Sen. Johnson, etc. to be able to vote for this bill,” said Turner.
“We saw on the House side they made it better when people started to push back strongly,” said Turner.
She also says the underlying arguments from the four senators are spot on but she says the parameters for moving this legislation make things more complicated.
“They are right that we’ve got to do more to get costs down and to give people more choices. But they’re also so constrained by this process they have to go through, this reconciliation process, to be able to pass this with 51 votes, means that everything in the bill has to directly pertain to federal spending and federal taxation,” said Turner.
“That means that it’s really hard to get to the regulatory structures through this bill, which is why I think we need to think about this as a first step – breaking the logjam – so we can begin a process of making changes that effect this one-sixth of our economy so that we can begin to move forward to give people the choices that they want. but we can’t do it on the Obamacare platform,” said Turner.
Turner says with Medicare and Medicaid on the books, the conservative goal of wrenching health care away from the clutches of government will remain just that. However, she says the key provisions allowing more latitude to the states is a major step in the that direction.
“There’s always going to be a federal footprint. The question is whether it’s Bigfoot and it crushes the health sector or whether it has an appropriate footprint of helping people in need while allowing the private market to work,” said Turner.
The greatest howls of protest came from Democrats, who denounced the bill as cruel and likely to kill many people the moment it was released.
“That sort of tells me they were against it before they even knew what was in it,” said Turner.
While fully aware of the partisan divide in Washington and the Democrats’ intention to defend President Obama’s signature domestic achievement, Turner is stunned that Democrats are fine with what Obamacare is doing to health care right now.
“Are they really defending Obamacare, that has caused health insurance costs to double for an individual since the year before this law was passed, 140 percent higher for families. You have many counties that are at risk of having no options for people to use. Obamacare has not worked,” said Turner.
“There have been no changes in any meaningful way, other than one regulation, for the Trump administration or this Congress to precipitate this. This is failing of its own right,” said Turner.
Given the current numbers in the Senate, Turner believes this legislation is about the best the GOP can do on its own and that lawmakers must act.
“This is a rescue effort and they’ve got to get this done,” she said.
Breaking Down the Budget Battle
President Trump’s budget proposal for the coming fiscal year is coming under fierce criticism from Democrats and the media but a House Budget Committee member who spent 20 years as a college economics professor is impressed by Trump’s goals while warning that the president will need to address entitlement spending at some point.
The Trump administration released it’s $4 trillion budget proposal while Trump himself was overseas. It calls for robust increases in national security spending while calling for considerable cuts to various government departments. Democrats have labeled the budget as cruel and likely to cause children to die. Republicans warn the final appropriations bills probably won’t look much like the Trump plan.
Rep. Dave Brat, R-Virginia, spent 20 years as an economics professor at Randolph Macon College. He believes Trump is generally on the right track.
“Overall, I’m impressed, It’s got the big pieces in the right place,” said Brat. “The major piece I like is the policy aimed at getting three percent growth. That will solve a lot of problems going forward,” said Brat, while praising the policies Trump is clearly emphasizing in the budget.
“It pluses up the military. It tries to clean out the swamp. It reduces some bureaucracy. It balances in 10 years. All of these are good conservative policies,” said Brat.
Brat says the Trump plan is a great improvement over what the Democrats are proposing. In fact, he says they have no solutions at all.
“As a visionary document, we’re moving in the right direction. Across the aisle on the Democrat side, they haven’t even ever put forward a budget that balances, not even in a 75-year window,” said Brat.
Brat and other Republicans admit getting what they want in the appropriations process won’t be easy since Senate rules require at least eight Democrats to approve any spending bills. But while Democrats can gum up the process, Brat is acutely aware that voters will not accept failure when it comes to fiscal discipline.
“We should compromise but we shouldn’t give away the store. In my view, the other side has given away the store too often. On our side, we need to clean up some of this, rearrange the (entitlement) programs so the kids get sustained benefits over their lifetimes. We’ve got to get the economy moving and some of that requires discipline,” said Brat.
“So our side gets hit hard but we need to step up to the plate and take it. That’s our job and the American people expect us to get it straight,” said Brat.
But what about Democrats alleging children will die as a result of the Trump budget? That allegation was especially targeted towards a proposed $800 billion in Medicaid cuts. Brat says that’s dishonest reporting of the facts.
“The Democrats call them cuts. They’re cuts from the baseline. Medicaid still keeps increasing. It just doesn’t increase at the pace it was going at, and that pace is bankrupting the country,” said Brat. “Lot of politics going on right now but not much substance offered by the other side. They’re great at hurling the insults but they’re short on the economic studies,” said Brat.
He also says White House Budget Director Mick Mulvaney made it very clear how he want about finding places to cut in the Fiscal 2018 budget.
“He said, ‘Look, there’s no mystery. It’s just like running a business. You look at each of these programs one by one by one and you compare the benefits against the cost.’ He made it very clear the safety net is not in question,” said Brat.
Brat says Democrats and Republicans need to realize that calling for a trillion dollars in cuts is just the tip of the iceberg.
“Some on the left are giving us a hard time over trying to save a trillion dollars or so, but even if we save one trillion that leaves you with another hundred trillion dollar shortfall with Medicare, Social Security, Medicaid, etc,” said Brat, who says failure to address the key entitlements will make 10-year spending cuts seem like loose change.
“Either you reform them and update them or else the kids get nothing. The left is acting like ‘draconian’ cuts are going to hurt people. Those cuts are nothing in comparison to the mandatory piece,” said Brat.
He says the clock is ticking loudly and time is short before entitlements engulf the entire budget.
“Those mandatory programs will account for 100 percent of all federal revenues in about 15 years. That’s not a typo. All federal revenues will be spent only on the mandatory. That means there’s no money for the military, transportation, running government,” said Brat.
With that kind of looming fiscal crisis, Brat says the only path forward is to get every able-bodied adult into the workforce, and that’s where tax reform and tax cuts come in. He says the demonizing of so-called supply side economics is bizarre.
“That term is used as a pejorative right now in D.C., supply-side tax cuts. I taught economics for 20 years. The demand side is all the people out there called consumers. The supply side is also everybody out there that works for a living in business. That’s the supply side,” said Brat.
He says it’s time for Washington to embrace the supply side again, since pumping up the demand side was a major flop.
“We’ve tried demand side stuff. We’ve had bailouts, etc. that pumped money back into people’s pockets. It gives you an instantaneous jolt, but if you’re serious about getting the economy growing you better incentivize business. Trump probably won the election on that,” said Brat.
Brat believes doing tax cuts and tax reform right will set the stage for economic growth, which is the best hope for avoiding fiscal disaster in the near future. He says tax cuts give businesses reason to hire, thereby beefing up the labor participation rate and bringing in more federal revenues through taxes.
“If we solve that one it’s huge,” said Brat. “I think a lot of the worries go away if we get this economy rolling again.”
Will Republicans Pass A Health Bill?
Just days after winning conservative support for an amended bill to gut the taxes and mandates associated with Obamacare, Republicans are still struggling to find the votes for passage, but the man leading the legislative effort is confident the votes will eventually be there.
GOP leaders have given their blessing to an amendment championed by Rep. Tom MacArthur, R-N.J., and House Freedom Caucus Chairman Rep. Mark Meadows, R-N.C. But while giving states more say in the health plans offered to their residents is winning the applause of conservatives, moderates seem to be leaving in numbers big enough to sink the bill.
House Ways and Means Committee Chairman Kevin Brady, R-Texas., is confident the votes will eventually come around.
“I think the hesitation has only been to be able to digest this, to be able to think about how it applies back home, before they commit their vote. The conversations that I’ve been in are very positive and we’re just going to keep working on it,” said Brady.
And despite the pressure from Democrats and the media on the timetable for getting this done, Brady says he’s less concerned about meeting a specific deadline.
“I’m a big believer in letting the consensus drive the timing. So don’t set a date. I want to deliver on my promise to repeal Obamacare: all the taxes, all the mandates, all the subsidies, defund Planned Parenthood and return control to the states. That is what I am intent on doing,” said Brady.
Brady, who played a key role in crafting the original American Health Care Act, says the current bill is an improvement.
“Centrists and conservatives sat down and said, ‘How can we make this better?’ As a result, the MacArthur amendment , as well as the Palmer amendment before it, continue to lower premiums , which is what we want for every American, gives states more flexibility to design plans that are right for the state and the community rather than Washington control,” said Brady.
Brady says if this bill can get through and Health and Human Services Secretary Tom Price acts to roll back regulations, much of Obamacare will be history.
“Getting steps one and two done with the White House repeals 90 percent of that or more and puts in place free market options but we still have more work to do,” said Brady.
“Allowing types of business to join together, to buy across state lines, to have much better options, (as well as) malpractice reform, where we get those junk lawsuits out of medicine. All of those are going to have to be standalone bills,” said Brady, noting that Senate rules cannot allow everything to be done by reconciliation, which would skirt the possibility of a filibuster.
Brady says some of the more popular provisions in the current law would stay, including no one being refused coverage for pre-existing conditions, allowing children to stay on their parents’ policies until age 26, abolishing lifetime caps and more.
Brady says it is not only vital to pass the AHCA in order to bring relief to struggling Americans, he says it’s vital for the next major priority – tax reform.
“We never anticipated in tax reform having to also repeal another trillion dollars of taxes that were included in Obamacare. All these taxes hurt the economy. They raise costs on patients. They hammer small businesses. We need them gone, but if we had to do that through tax reform, that would mean we couldn’t lower the rates as much for families or local businesses or to become competitive against China and Europe,” said Brady.
In fact, Brady believes getting the AHCA through is really the trigger for accomplishing much of the Trump agenda.
“This is all about momentum for the Republican conservative agenda in Washington. This president wants to shake things up. We need to be right there to deliver on these big changes, so building the momentum off of health care into tax reform, I think, is helpful,” said Brady.