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tv   Politics and Public Policy Today  CSPAN  December 2, 2016 9:00pm-12:01am EST

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where bipartisanship reigns. let's talk about numbers. there is a book that is published called because it's cover is plum and also because these are jobs that are thought in some way to be plum. the support and policy positions of the got of the united states and they're often talked about as the positions the president is responsible for. they're actually the positions that are not in the civil was system. not technically, anyway. there are about 8,000 positions listed in the plum book. whoever er varies from it is you're talking to and whatever plum book you're looking at. so there's a large number of seemly non-civil service position. about 4,000 are what's called the senior executive service, which is sort of civil service
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but not and we won't talk about it. 4,000 is the number to remember. of those 4,000, about 1,600 of them involve either positions that the senate has to confirm or positions that the president gets to appoint, mainly in the white house, that are supportive of his own decision making processes. so the real number of presidential personnel is about 1,600. of those, only about 00 of them are seriously time-sensitive, important, policymaking positions. now, that's the good news. there's a large number, ,000, which seems unbelievably impossible to deal with. a much smaller number, 1,600, which is a little bit more reasonable but still a large number but there are only about 200 which are absolutely time sense active to standing up to the executive. that's, for example, the director of the f.b.i. the secretary of homeland
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security, the secretary of defense, etc. so there are about 200 of those poxes. that's the good news. that seems manageable. the bad news is there's never been a president who's gotten thorpse -- those 200 positions nominated or filled by the end of their first year. if you think about standing up the american government by comparison for example standing up the iraqi government, we do a far worse job of standing up our own government than we do standing up foreign governments that weaver trying rebuild democratic societies. that seems a little bit daunting. the good news is there's an enormously competent and dedicated group of senior civil servants who stands in the government -- those places in the government while it stands up. that's important to remember. if you have a takeaway about personnel, it's absolutely
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critical, absolutely daunting, everything that the presidency is in every aspect and there is good news and bad news. >> thank you. [applause] >> let me ask you all a couple of questions. we think of moving as moving all , that household furniture we have to move it all in now, when the presidential family moves in, how much do they actually move in? how much do they bring with them? what are their choices? >> they can bring as much as they want to. they can brick nothing at all. the white house collection of fine arts and furniture, furnishings is extensive and allows the first family that's going to be moving into the white house to furnish the house in its entirety with just those items. most of them are very historic items but each family usually
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has available to them also, casual furniture that we all have and those are also available or kept in the white house storage warehouse, which is run by the national park service. there's an extensive collection and they don't have to bring anything. but it's their decision, it's their home. they can bring pictures, they can bring furniture. laura bush in an interview and anita mcbride, who was her chief of statue can attest to that, that they brought a chest that was owned by his grandmother. yeah, and that's the only thing that they brought with them. not the only thing, because the president, who wrote a book called "a charge to keep," he had a painting that he wanted in the oval office and he gave it to me personally and said this goes on the wall to the left of my desk where i can see it every
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day when i walk into the office. there are a number of things, a lot of them private, that they bring on their own. but that was in the president's oval office and that's one of the things that people forget about sometimes. in addition to moving in the family's personal resident, the president's overwhelm office is an icon. on inaugural day, that's the first thing that the president wants to see is the oval office and that's covered by the press. the president walking into the oval office for the first time. during the transition in the executive resident si there's also a transition in the oval office. if he's chosen a different desk, that's in there. if he's chosen a new carp et, drapes for the windows, all those things have changed because that impression that's left by the first look in the oval office sends a message to the american people what the priorities are of this president and it's very important that we get it right from the beginning.
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>> there's also one other tradition they find quite charming and quite wonderful is the outgoing president leaves a letter for the incoming president and if you've never read it, i think george bush's letter to bill clinton is one that you should absolutely go online and read. it's basically saying your success is the country's success. i wish you luck in everything you do. but read it. it is -- i'm getting goosebumps thinking about it but each president leaves a letter in the desk. >> what did president bush say to you about that paint something did he tell you why the painting was important to him? >> absolutely. he said it was the paventing that he chose for the cover of his book "a charge to keep" because he had the idea that he, being the president of the quiet, he had a charge to keep with the american people. they gave him a direction in which he saw the country moving and he wanted to be there.
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one of the things that was one of his key points when he moved into the oval office, mrs. bush's efforts on behalf of education. what at was going to be was their keystone for the first year of the administration was education. of course, 9/11 intervened and the president became the protective president of the american people. curiously, though, on that morning, mrs. bush was on her way to the capitol to speak before senator kennedy and the committee on education at the capitol. so there's quite a confluence there of activities. >> also, before that, she'd been at the kennedy center where i was working and we were about to open a new exhibit with caroline kennedy on the kennedy center and what it meant. another piece of education and she was there that morning. >> on that morning, an example of the kind of way in which the
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white house staff has to be ready to do anything and the chief usher in particular does, can you tell us about your morning and seeing the -- watching television seeing the world trade center attacked and then the actions that you took that prepared the way for the president to come back to washington? >> once again, the confluence of events. the president was in florida. i'm sure most of you saw, in a children's setting in a classroom when the incident occurred. i happened to be at the south portico as the first lady was departing to go to capitol hill. she was told by the secret service agent that there had been a tremendous accident in new york just within the last couple of minutes as he ushered her in the car and he turned to
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me and said there's been a plane fly into the world trade center in new york. looked sky ward. perfectly clear skies, beautiful day. i thought how in the world could that possibly happen? went inside and this gets to be a long story so i'll make it as short as i can. i walked in after a period of time to see the television set in our office and i saw a plane fly into the world trade center and i asked one of my aveds how in the world did that occur? how did they get it on camera? and he said that's the second plane so after trying to stabilize my thoughts, we moved forward. there was actually going to be a reception on the south ground that night for the entire congress, both the house and the senate, a barbecue on the south grounds. there were over 150 picnic tables on the south grounds, chuck wagons because there was going to be a barbecue. eventually we had to go out and
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move those. i kept seven people. i'm sure you've all seen pictures of the police telling the white house staff to get out, get out. i was able to keep seven people with me on the south grounds and we got reports during the day, a report of a plane coming in, the report of a bomb at the state department. there were many activities, a quite confusing day. but we were able to move all those picnic tables out of the way because i knew that president bush was coming back to the white house. as ann said earlier, the white house is an icon. not only to the united states but to the world. and i knew the president of the united states was coming back to the american people's house to calm everybody down and we made sure that that area where the helicopter usually land was available. of course he made a speech to the american people that night followed up with mrs. bush in
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trying to get the families calm and continue with their daily activities. make it as short as possible, sorry. >> ann, when you came into the clinton white house, can you tell us how many people were there, what percentage of the statue that you would have, let's say, after a year, what percentage were there? ann: what i started with? >> yes, what you started with and then what the white house -- ann: the white house social office? >> no, generally it was in the white house. ann: i think there were approximately 500 people, which about 70% or political so 0% of those jobs -- i think those numbers are pretty good. 500, 525, probably somewhere around in there. so 70% of those jobs turn over which is why tibs first day i walked in, i had no staff in place and the staff was small. it was four people and i was very fortunate because i lived
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in washington and was able to put my arms around about 30 volunteers that essentially became almost like full-time staff to me, which gary knows. they were women and men who basically volunteered full-time to help us put together a staff that could run all the events that we were doing. but there's a tremendous turnover and trying to get the right people in place with all the procedures you have to do to get people in to working at the white house is quite a task. but it turns over and it turns over very quickly and you need to get things put in place so you can operate. around of the -- the 1,600 positions that are appointed by a president and that are key positions, if you look down and find that the most
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important positions, there are around 200. what are those positions? why are they so critical in moving the government? terry: ok, so most of those positions, these are -- either make policy or primarily national security related. so they're not make policy, they're defending the country. so that means all the cabinet secretaries. the director -- the chairman of the board of the governors of the federal reserve. the members of the board of governors of the federal reseven. the council of economic advisors. cabinet secretaries, deputy cabinet secretaries and within the various cabinet agencies, some critical cab neat people. so the -- cabinet people. the assistant secretary of treasury for terrorism finance. that's the guy who goes around
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the world and shuts down the financial institutions that are under girding terrorism groups. these are guys who carry out the president's policies, essentially carry out it will of the american public, as evidenced in the election process. some of them are more important to the president's agenda and some are less important, depending on what the president wants to focus on. cameesident george w. bush into office thinking he would be the education president. e was going to revamp your business, no child left behind. so there are people in the department of education which are more important to his agenda than say in the department of transportation. even though transportation is important to the american economy. so it's a matter of making
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priorities and choices, but all across the government, even if the president is not focused on transportation, the american economy depends on transportation and so somebody's got to be focused on it and those people are also presidential appoint combrees -- aa appointees and they also make serious policies. >> you could say that when president obama came in, we were in a financial meltdown and it took some while to get the treasury department stood up. so secretary geithner was there by himself. had no confirmed appointees below him and so it does make the task very difficult. and it's just the nature of our system that we want not just the president to participate in the appointment process but the
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congress as well through with senate confirmation, although as you had said, there have certainly been moves to try to make the process more efficient. one of the things that we've talked about, gary, that i thought was a really impressive ceremony, a very simple one but a meaningful one for a president is on that last day, one thing that you didn't mention was the ceremony which in part you established at the end of the reagan administration of the presentation of flags to the president. can you tell us about the staff getting together to say farewell to the president? gary: certainly. i'd be glad to. the resident staff becomes very close to the first family, especially when there's children involved, as there has been on a number of occasions. grow up with them, help them
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grow new some manners. and on inaugural morning before the inaugural committee arrives to escort the president and president-elect down to the capitol, the entire recess staff, usually around -- resident staff, usually around 93 people, is brought together in the state dining room for a brief goodbye with the first family. it becomes a tremendously moving period of time for the staff and for the families. it's a goodbye. it's a final farewell. one of the things that i established when i became the chief usher was to take the flag that's flying over the white house on inaugural day, afternoon when he's taken the oath of office and we take that down and we keep it with the curator's office, or in some cases in the desk draw in my office for four or eight years
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and also the flag that's flying over the white house on the morning the president is going to leave office. and i present those flags in a box made out of original white house wood. when the white house was rescrucked during the 1948 to 1952 renovation, the entire inside was gutted and some of that wood was retained for historical pumps and the curators and the carpenters of the white house maintained control of that wood at the direction of the chief usher and we make those boxes for the flags out of that wood and present it to the presidents. it usually ends up in their personal offices at their libraries. it's a very meaningful, small ceremony. it's a pretty private ceremony. the only people that are in there are the president, his family, and certainly sometimes the social secretary, the chief usher and a few possibly very close staff members.
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and it's one of those things that's a final goodbye and for the resident staff, it's extremely difficult because they have to go from that into their daily activities getting ready to move a new family in move the other family out and get ready for what's going to transpire in he coming four to eight years. >> ann, you came into the vice president's office as well as coming into the east wing side of the first lady hillary clinton. can you tell us, in coming in the carter-mondale period, was the movin -- because you were in the west wing. ann: right, i was working for vice president mondale. >> right, so you moved into the west wing office. ann: right. >> and how was that different, your movin during that time
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period. was it less kay ic? more so? ann: it was interesting because working for vice president mondale, right after the inauguration, he went around the world to meet all of the allies and reassure them and just meet them and talk to them about what was going to transpire in the carter administration and i was hired on the saturday night before they left at 10:00 a.m. on sunday morning. i was hired about midnight and asked to report to the white house at 8:00 in the morning, which i did. not knowing where, which gate i was going to. got in there and actually the wonderful thing for me was i became the world's leading expert in the 10 days they were gone on the white house. because it's -- again, finding those offices. setting up the systems, setting up the communications. setting up the way that you relate to all the staff within
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the white house and just figuring out what's going on so when the traveling party came off the road, and those were all the key people. i was the world's leading expert of 10 days on the white house and the vice president's office. i think to your point of chaos, the chaos is less now because of what's gone in place with the way the transition is set up. that money is provided to both campaigns to start to look at this process long before election day and i think if you learn anything from this panel, it's a very complicated, overwhelming task to set up and staff a government and we need the time. just physically getting people, the 200 people you talked about, getting them into the white house with a pass on inaugural day. i have one very funny story. on the very first day, inauguration day. -- marshall, who was mrs.
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clinton's personal aide was bringing her grown from blair house to the white house for the inaugural ball that night. she thought that the wave system, the white house access visitors entry system meant that you showed up at the gate and waved. and they knew that you were coming in with a dress and you were supposed to be there, but that's not the case. we can laugh about that but the thing is, in a post 9/11 period, the presidents after that were absolutely correct to figure out, again, peaceful transition of power and how to make that easier. anita coward attest and so -- could attest and so could gary in 2008, the tabletop exercises that they had been doing with both of the staff came into play the morning of the inauguration because they had a very serious threat and both teams, both the outgoing and the incoming teamworked in the situation room
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right up until almost the time to transfer power. so, you know, it's serious business and we have to treat it like serious business and i think that's what this transition process is doing. so yes, there's hecticness but i think a lot of the chaos has gone out of that situation. >> and terry, you had talked about bipartisanship and there is legislation that has been passed in the last few years that can you just tell us briefly if we're hitting our mark here, about any of the legislation, what it aims to do. terry: most of the legislation that's passed since say 2004 is either ordering national security, making sure that we spin up the government in a proper way and that we make sure that a lot of the things that we
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thought were being done turned out weren't and it really took somebody like george w. bush who more than a year ahead of announcing he was running for president, more than a year before he announced he was running for president, he had tasked some of his gubernatorial staff to start figuring out what would they need to know when they scombant that's the kind of guy he was. so a year before the peaceful transition would happen in ecember of 2007, he tasked his white house staff to make sure that there was a flawless, seamless transfer of authority from himself to whoever his successor was going to be, even though they didn't even know who that was. but it certainly would be somebody -- it could very well be somebody from another party
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and that's the kind of bipartisanship that exists around the transfer process. and coming in behind those decisions, which were individual decisions made by individual presidents and individual actors about how to carry out this process, the congress came in behind that and, in a bipartisan way, passed legislation that sort of turned what were individual decisions into statutory decisions. so now there's a range of things that happen -- in many ways they don't happen soon enough, but they are moving backwards in time. to get in right, you have to plan and that means you've got to be measuring the derechos. to be responsible and have fidelity to duty, the president -- the people who want to be president have got to have people thinking about what are they going to do if they win. >> thank you. thank you very much. appreciated, we've
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learned a lot about how the transition take place and it gives us a feeling that dd [captions copyright national cable satellite corp. 2016] -- that it's in good hands. that the career people who are there are doing a fine job of preparing the people who are coming in and that it's the transfer of power, although somewhat chaotic is, in fact, is a very good one. thank you very much. [applause] >> on newsmakers this weekend, we'll hear from the top
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republican and democrat on the house judiciary committee. representatives bob good lat and john conyers. they discuss community relations with police and their role with examining police accountability and aggression toward law enforcement. at 10:00 a.m. and 6:00 p.m. eastern sunday on c-span. >> so i decided to spend much more time on the young grant. i spent a week at west point trying to understand how this man could finish 21st out of 39 at west point and therefore sometimes viewed by these biographers as an historical intellectual lightweight and yet he said of himself, i must apologize. i spent all my time reading novels. >> sunday night on q&a historian ronald c. white talks about the life and career of the 18th u.s. , esident in his latest book
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ysses."n ul >> he said to a group of african-american leaders in the white house to the day when you can ride on a railroad car, eat in a restaurant, when you can do so along with other -- every other person regardless of their race, that day must come. it took 90 days for that day to come. grant was the last american president to hold those kind of views. >> sunday night at 8:00 eastern on c-span's q&a. >> house house ways and means committee chairman kevin brady spoke about simplifying the tax code and reducing the size of the i.r.s. his remarks were followed by a panel of experts who discussed a tax plan president-elect trump is proposing and how it compares to what house republicans want to do. from the her tanning foundation this is just under two hours. >> good morning everyone.
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welcome to the heritage foundation at the freedom center here in washington right across from the capital. all of those joining us today via c-span and streaming heritage members welcome. it is my pleasure today to introduce to you one of my eat friends and maybe more importantly great friend of the american taxpayer kevin brady chairman of the ways and means committee. he was first elected to the house in 1996 two years before i got to the house so he was a senior member when i got there. he represented the people of texas eighth congressional district near houston and continues to represent them today. last june as part of speaker ryan's better way he released a blueprint of a major tax reform initiative. this proposal is a key part of the conservative agenda that's going to restore prosperity in
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the united states and improve the well being of american families. his plan would reduce individual tax rates, the double taxation of capital gains and dividends would be reduced dramatically, and it would increase the standard deduction and the child tax credit. the u.s. corporate tax rate, now the highest in the industrialized world, would be reduced from 35% to 20%. we would also move to a territorial system similar to that of most of our major trading partners. this would make the u.s. a more attractive place to headquarter a business and produce goods. the plan would move more toward border adjusted destination, principal system that would treat u.s. produced goods the same as foreign produced goods rather than according to a tax preference to imports that we have now.
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lower marginal tax rates also reduce the bias against work, savings, and investment. the plan shares core components with the plan advanced by president-elect trump. i'm confident under chairman brady's able leadership the mannageable difference between the two plans will be resolved and that we will move forward with tax reform in the congress very quickly. we at heritage will do everything we can to educate the american people about the positive impact that these reforms will have on their lives and our country as a whole. one of i think the heroes here in congress, one of my great friends in congress, please welcome chairman kevin brady. [applause] congressman brady: jim, thank you very much not just for the introduction and invitation but thanks for your leadership both
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in the senate and at heritage. i don't know about you but i think this is an exciting time to be a conservative. in the work that's been done over the last decade, to prepare real solutions, to change the direction of this country, now is our opportunity to do that. and i don't know about you but when i went to bed on election night the next morning i kept thinking one thought. the american people gave us another chance. another opportunity to change the direction of the country in a major way as republicans with the unified republican government. we have a great responsibility here. but it's also an exciting opportunity. and i think, clearly, voters rejected what they've seen now for too many years. which is bigger government, higher taxes, washington knows best and washington will micro manage every moment of your life. here is our opportunity that we have dreamed of and we have to
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take full measure of that opportunity. heritage, again, thank you for all the work you've done to lead up to this moment. so i'd like to walk you through the better way proposal, what we call our built for growth tax code proposal. it starts here. you know, i think the greatest threat to our prosperity long term is our growing national debt. i think spending cuts can get us half way or more back to a balanced budget. if we want to complete the job and actually start paying down our national debt, we need a much stronger economy. and today we are going -- we are suffering through the worst economic recovery in half a century. millions of qualified americans cannot find full-time work. you can't go online each month without reading about another company considering moving their manufacturing, their research, their headquarters
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overseas. we don't have to settle for that type of economy. and the built for growth tax proposal that we propose aims to reverse all of that. so when we began this earlier this year, i set out two goals for tax reform. first, rather than the tax code designed simply to wring money from you, which is what we have today, we need a tax code built for growth, actually designed to grow wages, to grow jobs, to grow the u.s. economy. in doing that, leap frog america from dead last among global competitors back into the lead and keep us there. we want to be among the best places on the planet to invest, to create that new job, to move that new headquarters. those two areas, growth and leap frog back to the lead drove our decision making in our tax reform plan. we're proposing reforms, three
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major reforms. first, we go all in for growth in jobs and wages. by proposing the lowest tax rates on job creators in modern times and redesigning the tax code so that we can compete, our businesses can compete and win anywhere in the world but especially here at home. the second reform is we're proposing a tax code so fair and so simple that 95% of americans will be able to file using postcard style system. thirdly, because we're proposing so much fairer and simpler tax code really demands a fairer and simpler tax collection -- collector -- so we are proposing to bust up the i.r.s. and redesign it into a new style of agency that i'll talk about in a moment. if you hear me use the phrase propose a lot there is a reason for it. this is not our tax code. this isn't washington's tax code. it belongs to the american people. for the first time maybe in
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your lives you ought to have a real say in how you're taxed. we're proposing not imposing a proposal to jump-start this economy, to simplify our code, to redesign the i.r.s. in a way you haven't seen before. and so this is our proposal. on job growth, you'll recognize many of these provisions, jim, because they were represented in heritage foundation's 2015 business tax proposals. so, we propose to lower the rates equally, 43% offer every type of business, whether the largest corporation, or the smallest mom and pop. that has a very simple principle. we want to make sure we leave in businesses' hands the ability to survive tough times, grow in good times, continue to reinvest in new jobs and new technology at home rather than send that money to washington. to grow washington's economy. we propose for the first time
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full and unlimited expensing for businesses of all sizes. this may be one of the most pro growth provisions in the proposal. if you go back, we are all in for main street job creation not necessarily government job creation. if you look back the last 50 years on the indicators that match main street job creators whether government spending, consumer spending, on and on, look at all of them, but there is one indicator that when it goes up main street jobs go up and when it goes down they follow and that's business investment. when business is investing in buildings, equipment, software, and technology main street jobs grow. we propose for the first time to allow immediate, unlimited expensing of that business investment. we don't stop there. we know our businesses aren't just competing on main street but they're competing around the world. and today our tax code is no
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longer competitive. we tax our businesses here. washington taxed them abroad. in effect, our businesses face a tax barrier when they want to bring their earnings and profits back to reinvest in the united states. we propose to stop doing that. tax in the u.s. not tax abroad. in effect, not just lower the tax gate, obliterate it. so the business rate to bring for american companies when they compete and win around the world, the business rate to bring that back to invest in new jobs and new manufacturing and new research means zero tax rate. we don't stop there either. we know that today because of the way china, europe, and our main competitors tax, that maid in america products today are at a disadvantage here in america and disadvantage abroad. so we propose to match that tax approach but we propose to take taxes off made in america
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products being sold around the world and put it on imports coming into the united states. this, what we call border adjustability, has three major benefits. one, it levels the playing field for american made products. so competition going forward in the future will not be based on tax code. competition will be based on price and service and quality. whenever you do that, consumers win. secondly, it allows us to dramatically simplify the international tax code which is stunningly complex today. thirdly, perhaps most importantly, it, combined with lower rates, in a territorial system, this provision ensures we have eliminated every tax incentive to move jobs, innovation, or headquarters overseas. in fact, our goal is not simply to stem the tide and stop businesses in america from
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locating overseas. our goal is to bring those investments back. my belief is that by eliminating the import subsidies, by moving to a level playing field, we will become a 21st century magnet for new investment on this planet. we also eliminate the double tax, the second tax, alternative minimum tax on businesses. and perhaps my favorite part of the whole built for growth tax proposal is we propose to permanently eliminate the death tax, the estate tax. this tax is still the number one reason family owned farms and businesses aren't passed down to next generations. i think it is incredibly damaging to the economy. it funds a day and a half of federal spending. it's time for it to go. and so those provisions in jobs and salaries according to the
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tax foundation will grow the u.s. economy by over 9%. will grow after tax wages by nearly 8%. create several million new jobs and will vault america back into the lead of the most pro growth tax codes on the planet. that's where we go for growth on the wages and jobs. our second reform, fairness and simplicity, comes from this. as you know, since president reagan reformed the tax code, in 1980's, it has exploded in size, tripled in size, 70,000 pages. incredibly complex. as a former chairman of the committee dave camp once described it, the tax code today is 10 times the size of the bible with none of the good news. that's how he described it and i would agree. for years americans have asked, why can't we have a tax code so
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fair and so simple it could fit on a postcard? in four years, washington dismissed that idea. but our tax team went to work and that is exactly what we're proposing. a tax code that fair, that simple, that understandable that most americans will be able to use a postcard style system. here's how we propose to do that. first, we flatten out the tax brackets. as you know when president reagan began his reforms there were 15 different tax brackets. he flattened them out dramatically but today there are still seven. we propose to flatten it down to just three tax brackets. it doesn't need to be more complicated than that. we lower the rates that each of those tax brackets for a simple reason to reward work and productivityy, to encourage people to be productive and to keep more dollars in people's households and families so they can reach their dreams.
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.o we flatten rates the brackets. we lower the rates. we believe it is montreal to protect more of those first dollars families earn so we propose to increase the standard deductions fairly significantly because we think protecting those first dollars are important to low and modest income workers, for young people starting their first jobs out of school, for young couples with kids, with seniors where every dollar counts. we protect more of the first dollars with the larger standard deductions. but we go further than this. and this next provision may be in my view the second most pro growth part of what we're proposing. so after we've flattened the bracket, after we've lowered the rates, we propose for the dollars you earn from savings and investment to cut that tax rate again by half. so if you're at the 12% tax
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bracket your tax rate for savings and earnings and investment would be half of that 6%. and here's why. we're not a nation of savers and we need to. we ought to reward those who set aside money for the future. nd so this is incredibly helpful for those who seek and need to save but it's incredibly pro growth to the economy. here's how. this seems like a simple example. you'll remember this from your high school days perhaps in economics. but it's a good reminder of why savings and investment is so pro growth. when you and i earn a dollar there is essentially three things we can do with it. spend it, save it, invest it. so we can spend it. you could buy a donut. apparently that's what i do with much of my discretionary income. not so good for me. good for the local economy. you can save it. you can perhaps go to the local
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bank. not much interest on that, thank you, fed, but you can find a way to save it. but that money does be the stay in the loke a -- doesn't stay in the local institution. it goes right back out to the local businesses, maybe the owner of the donut shop so he or she can buy a second mixer, another glazer, deep fat fryer. maybe even add another worker for the early predawn shift. that's really good for the local economy. at this point jim demint is asking himself why does this guy know so much about donut shops? [laughter] >> the third thing you can do is investment. so perhaps in the stock market. perhaps in mutual funds. or, and you can see this coming, perhaps it's invested in that donut business so they can add a second location or a third. maybe expand to lunches. that is incredibly pro growth for that local community. so the reason we go, propose to you significantly lower rates
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on savings investment is to encourage and reward savings but also grow the local economies in a major way. and then the postcard, itself. as we look at making the code fair and simpler, we asked ourselves, even though only about one-third of americans itemize, what do they count on as families? so what we propose to you is to a limited postcard number of deductions and credits. first, we know that for most americans the home is the biggest investment you make in your lifetime so we propose to keep the home mortgage deduction. we're looking at how you can make it smarter and work better for more people. but we keep that on the postcard. secondly, we propose to keep the deductions and credits for charitable giving. we like charitable giving. we think it's important to give to your local church, your
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local community, a cause you believe in. maybe support the college you attended. we think it's important to encourage charitable giving. we're looking at ways to unlock more of that. we know, too, it is expensive to raise kids. we have two teenagers ourselves. we know this. and so we propose to keep a child tax credit, in fact, to increase it a bit to help families with those costs. and then college is incredibly -- post high school -- incredibly expensive. we propose to keep the help you get for college. in fact, we are redesigning that as well to make sure it applies just as equally to those seeking technical skills which are expensive as well. so my high school senior has decided he is going into welding. some day he wants to own his own custom fabrication shop. we're shopping today for technical schools, expensive as
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well. we need those type of workers so we propose to redesign that to make sure skills at every level outside of college and then other than one provision to help get people from welfare to work that will be redesigned in a major way, that's it. that is what we propose for the postcard. that fair, that simple, that understandable. as i started at the beginning when i said we propose this to you, here is my main point. for republicans, this is your postcard. it's not ours. you can add anything back to this you want. we can add single provisions, dozens of provisions back, hundreds of propose ignaczaks back. we can turn this postcard back into a telephone book if that's what you want. as long as you know, to do that, we're going to have to send more money to washington and hope we can beg to get some of it back. so we can add back the provision when you put in energy efficient windows at
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your home. we can put it back no problem. that credit you get, that $7500 credit you get for buying a tesla, we can put that back. you know, that credit you get for your gambling debts, not that it would affect anyone in this room, we can put that back. we can put back anything the american public wants as long as you know to do that washington will have to raise your rates back up and hope you can get some of it back. this is your postcard. not ours. this is why we're listening so intently right now on the tax reform proposal that we've laid out. so that's how we go all in for fairness and simplicity. the final form is because a fairer and simpler tax code demands a fairer and simpler tax collector. and the i.r.s. today is a huge agency with the power to destroy lives and businesses. and it is targeting americans based upon their political
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beliefs. that's not acceptable. so we propose to bust it up. to redesign it into three, much smaller, much more focused units. a unit focused on business staffed with tax experts on business to accurately and quickly answer business questions and resolve disputes for our businesses large or small. another unit to do the same for families. focus on customer service. i don't know how many of you tried to call the i.r.s. lately. but you didn't get through. and if you got through, and spoke to three people, you got three different answers to your tax question. that level of customer service or lack of it is not acceptable in your organization. it's not acceptable in that agency. we propose a second unit focused on customer service, timely and accurate answers to our tax questions. finally, because i have grown so tired in my home, i didn't move to washington. i live in a community, the
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woodlands just north of houston. and for years i have heard from families and small businesses they get into a tax dispute with the i.r.s. sometimes relatively minor ones. they will spend years and years, thousands of dollars and even when they win, they've lost. and so we're proposing a small unit independent of treasury and the i.r.s., in effect a small claims court so americans can quickly and affordabley get their disputes heard and resolved without having to spend thousands of dollars on attorneys and accountants. so that's how we propose to redesign the i.r.s. and the 21st agency with the singular mission of customer service. so as you look at those three proposals you may be thinking, this sounds too good to be true. but it's not. we've designed this to break even within the budget, considering the economic growth
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that will come with it. this is the only way to do that. the only way to lower rates for everybody is to eliminate the hundreds of special tax provisions for some. and so that's what we're proposing to you, significant trade-offs to move to this. for example, in business, we're proposing not to deduct your net interest costs. it is the change from where we are today. there's good policy reasons for doing that. for example, allowing full expensing where we write off things immediately in the first year and carry that forward. if you're also borrowing to do that and writing off that interest, at this point we're giving you a negative interest rate and paying you to buy stuff. we're not going to do that. eliminating that as well allows it to go to a more pro growth, dramatically more pro growth tax code overall. but that is a big change from what we do today which is why we're asking businesses large to small to test drive this
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give us back the feedback as we work to improve this at every step. for families and individuals, for example, so there are hundreds of provisions. there are -- that apply to some. for example, in our case we adopted our two boys. it's the biggest blessing we could ever have. we didn't take advantage of the adoption tax credit. we were just in the wrong tax bracket for that. but that's important to people. what we're proposing to the american people is rather than have hundreds of those provisions that apply to some at some point in their lives, why don't we lower the tax rates for everybody, let americans use those dollars for the priorities in their life whatever that may be. that's a change from where we're at today. we propose for those who itemize, those one-third of americans who itemize, that we don't deduct the state and
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local income sales and property taxes, which is a big change from where we're at today. here's how it works. under the current tax code, we keep your taxes high, you send your money to washington, you hope you can call some of it back to offset your local taxes but what's going on is that everyone is subsidizing each other. so rural taxpayers subsidize city taxpayers. middle class taxpayers are subsidizing higher earners. low tax communities and states are subsidizing high tax communities and states. our proposal is this. rather than high taxes and everyone subsidizing each other why don't we just lower the taxes and everyone just pay their own? the added benefit here is that the federal tax code will no longer subsidize higher taxes at the local level. we think that's a big change from where we're at today. that's why we're asking the american people to consider the
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postcard, to look at this, and the deductions and the provisions that count to them and bring us that feedback as well. so, jim, i want to stop to take questions from the audience but i will make the same request to you as we do to everyone we meet. i've done more than 40 town hall meetings on this back home. i've traveled the country to do the same. coast to coast to lay out the built for growth tax reform plan as well. test drive this. test drive this proposal and bring us back your feedback. now, don't take one provision out of this like the interest deductibility and drive it like it's that old clunker of a tax car we're in today. what we're proposing is a new car. it has different features. it drives much differently. most economists believe it drives much faster than the tax code we're in today. test drive the new proposal. bring us back that feedback. help us improve it every step. because the timetable for us is
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to continue to listen to the feedback through the end of the year. our tax teams are writing key provisions of this as we speak. we're also getting feedback to make this better as we work toward introducing this early in 2017. and now because we have a president willing to lead on tax reform in mr. trump, while we don't know yet where this fits in that first 100 days of governing, but wherever it fits, we're going to be ready to deliver pro growth tax code, tax reform that leap frogs america back into the lead and grows wages and jobs and salaries. jim, with your permission may i stop and take some questions? [applause] yes, sir?
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>> please just state your name and affiliation. >> happy to. thank you, chairman brady. i want to thank you for being here and commend your staff for being incredibly easy to work with receptive throughout this process. looking for your thoughts on how to include infrastructure investment with tax reform. congressman brady: so there is an interest by some to use the repatriated earnings to fund infrastructure in some form or fashion. we took the earnings from the $2.5 trillion of u.s. profit to bring it back to the united states we use those earnings to plow it right back into a more competitive tax code. lower the rates. redesign it so we can compete and win anywhere especially here at home. others would like to use that for an infrastructure related
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approach. so we'll listen to those ideas. i think at the end of the day the stronger economy we have the more certainty and redesign that actually grows the economy, frankly, is awfully important for investments in infrastructure or anything else. we know we'll be having these discussions going forward. hanks. yes, sir? >> all of the work you've been doing on this is terrific. and you are headed in a direction that we've waited to go in a long -- for a long time. i think the question that occurs to me is, in reading about this, is whereas in the house this is the direction you're going, the senate
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doesn't seem to be in the same planet when they talk about this stuff. and the big question comes down to is tax reform going to be done through the reconciliation process? when i think that you would be able to come up with a bill very much along the lines as you were talking about along with working with the administration and, you know, on details and things like that, or whether at least in e senate they're going to, quote-unquote, have a bipartisan bill because, you know, reconciliation is only good for 10 years. and if they do that, is they as a few years ago in the house prenegotiating with the democrats on a bill, i can guarantee you there will be no abolishment of the death tax for example and i'm glad you pointed that out, something we've worked on for many years and some other provisions.
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it will be something more like a democrat bill. so how do you see that resolving itself? reconciliation may be option, we are going to start differently. i am inviting our democratic members of the house to engage on tax reform. bring us your best idea on how to grow the economy, how to make the tax code fair and simple again for families. irs isredesign the
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something we will be focused on, customer service. we will listen to those ideas. here is why i think we ought to. because our democratic members of congress and their communities are suffering. they are seeing the same companies we see considering moving their jobs overseas. they can't be happy with the status quo today, and so we will a wide open opportunity for our democrats to bring their best ideas forward and engage on tax reform. and if theyys out will take that opportunity, i don't know yet, but we will open that door in a major way. yet, so that's the approach we will take. by the way, something about this proposal. ofincorporated the ideas
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more than 50 lawmakers in this tax reform proposal. we looked at the thinking of think tanks, progrowth organizations, presidential candidates, so this is not just a tax proposal. couldk the best ideas we identify, which is why this is in the house the first consensus tax reform blueprint in more than 30 years. moreis why it makes it real going forward, and i think we have a head start on making sure we can deliver this in 2017. >> thank you chairman brady. some ofould point out the similarities or differences between your tax plan and mr. trump's tax plan, i think we should focus on that and it
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might be helpful for us. >> i think the tax proposals are 80% the same. i think the differences are more than manageable. i think we can find common ground. pro-growthdibly along main street america. that is one change. we are very aggressive on the international tax reform, and on eliminating the incentives to locate overseas, the border just ability provisions, eliminates it. not only that, it reverses that back towards the u.s.. we think that is important to growth. we are hopeful the track team will take a look at proposals like that. we have similar tax brackets as well. days iink that in recent have heard one thought about the
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wages and the taxes of the top 1%, but here is my thought. no american should be stock with the obama tax rate. it certainly hasn't grown the economy. this is the worst recovery in 50 years. certainly it has an reduced income inequality. it has grown under this president. old-time thinking, high tax rate, hundreds of provisions, or try to phase them out or limit them, our proposal is different. arehe postcard, we proposing everyone know exactly what each other's deductions are. below are those rates, so the help you get for home and charity, kids in college, everyone knows what they are because they are exactly the same for everybody, so we are thinking differently about how you address tax reform and every tax bracket. yes, sir?
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my name is tim brown. i want to say i appreciate your comments. as aepresenting myself citizen and a taxpayer. it sounds good to me. you alluded to 1.i would like you to amplify on. highestre that the marginal tax rates on working for living in this country are on people who are at a welfare welfare, if you look at as a tax. theyou say more about how tax program will help the poorest of the poor have an incentive to work? >> sure. so, there is no quicker path out of poverty than a job, even faster, a good paying job. it is one of the missing ingredients in the obama
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recovery in a major way, not welfare, young people, middle-class, all but the elderly frankly, their percentage has shrunk within the workforce. this aims to reverse that, create more good paying jobs, key for those trying to work their way up the economic ladder. we think that is the ultimate answer here, coupled with regulatory reform. businesses are creating more mainstream jobs. view, searching for more customers for american products around the world, better, enforceable, productive trade agreements, i think are important as well for creating jobs here in the united states, and in the better way agenda, we propose a new way of looking at welfare. think about this. there are more people on welfare than working full time. take every man, woman, and child
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in 24 states total, that is the number of americans in poverty today. it is stuck there. it is not getting better, and it won't improve unless we rethink the way we address welfare. we lay out four key principles we know work at the local level, starting with requiring and expecting work for these welfare benefits, because that is the key access point out of there. , my answer is it won't be achieved merely through a fair, simpler, and more pro-growth code, but it can be if we think differently about how we address the issue. chairman brady, thank you for being here today.
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i was wondering if you could talk a little bit, given how much work you guys will have in congress early next year, about the timeline and sequencing for tax reform? >> it is difficult to know now. just beenteam, it has a few weeks. they deserve the chance to fill 13 out and think about the first 100 days, sort of get their feet on the ground there, so we are engaged with them now and will continue to stay engaged with them as well as we work out to find those common grounds on issues like tax reform and learn more. what i am here to say is that we are not focused on the process and its timing, we are focused on whenever that is set, we will he ready to deliver progrowth tax reform. that is exactly where we are at
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right now. >> one last question. >> yes, sir. that would be great. >> i think there is one way over on the side. >> i get your point about the expensing and the interest factor. if you take that extension to home mortgages and you are allowed to write off the home mortgage interest, would you not also be allowed to write off the commercial property interest. >> we are proposing not to do that. we are putting the home mortgage deduction in a separate category , because as we look at the someard, i think while would like to have fights over individual provisions in the tax code, the debate we are looking for in america is whether americans want something this fair and this simple and this understandable and are willing to make the trade-offs to get
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there, or we want to stick with the status quo? overwhelmingly complex tax code, who no one knows how provisions are applied. we are proposing a game-changing approach how we address that. for many families, that home mortgage deduction is something they count on. so that is why it will stay -- we're proposing to you to keep it within the tax code. for real estate or any industry, an economy growing at better than 3% or closer to 4% is dramatically better than 1.5% and 1.75% we've got today. lower tax rates allows them to continue to keep money invested locally. the ability to buy those new
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buildings, equipment, software the ability to not just grow the , economy but productivity and wages for workers is awfully important whether you're in commercial real estate or that donut shop owner. i keep coming back to that. so we're hoping and asking that every industry take a look at the entire blueprint, including the provisions that change that -- this economy in a very positive way and look at the impact it has on the industry. we want that feedback. we're looking to improve and make this better at every step so engage with us. , i'll finish with this. we can do this. it's been 30 years. i think the biggest challenge the tax reform is most americans have given up hope it will ever happen. what's occurring today is what is what occurred for president reagan. three major changes happening in america today. one, as with president reagan's reform, the american public was sick of the tax code.
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too complex, too costly, loopholes for everybody, headaches for them, they had enough. that's where we're at today. secondly, they were bold ideas on tax reform by law makers. and others. then it was the jack kempe and bill bradley. today we've got fair tax, flat tax, abc tax, we have provisions, smart ideas on tax reform. we have the same dynamic. third dynamic then, we had a president willing to lead on tax reform. today we have a new president coming into office willing to lead on tax reform. those dynamics that existed for the 1986 reforms have reoccurred again in a major way. this is a unique opportunity for us to do what most americans have given up hope will ever happen. it's a dramatic opportunity to leap frog america back in the most competitive place on the planet to create that new job. we are determined to deliver on that.
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so thank you very much for having me here today. [applause] >> if our panel would like to join us here on the stage, we'll continue this discussion. and i will turn the program over to my colleague david burton. when we are talking congress, i always want to call you dan burton for some reason. excuse me if i slip into that. david burton serves as our senior fellow in thomas a. rowe institute for economic policy studies and he will lead the , rest of this discussion. david? it's my pleasure to introduce three very high quality panelists.
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i've asked them to each speak for about 10 minutes, and then we'll have a question and answer session and a discussion. we're going to go first with jason, then steve benton, then dan mitchell. jason is a senior research fellow at the mercada center at george mason university and teaches economics at the johns hopkins and virginia tech. georgetown, if i remember correctly. he is a former acting assistant commissioner at social security administration and chief economist there. served as joint economic committee as an economist and is a very fine public finance economist working both in tax policy and entitlements. stephen is a senior fellow at the tax foundation.
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he went to the university of chicago as did i, but steve unlike me actually learned something while he was there. he served in the reagan treasury, was at the institute for research on economics of taxation for many years, and after norm died served as its president. he is an extremely fine tax economist and he and his , colleagues and foundation put together computable tax policy model there that is second to none, actually probably more , better, it's the very best in the united states. dan mitchell is a senior fellow at the cato institute. he is, when advocating for tax reforms, fiscal sanity, he doesn't know the meaning of the word fear, but in some respects, that should be unsurprising because there are lots of words
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dan doesn't know the meaning of. [laughter] >> you can see why i come here all the time. i get nothing but praise. >> dan worked for senator packwood who was chairman of the finance committee during the 1986 tax reform act, the last time we got substantial positive tax reform done. he once upon a time worked here at the heritage foundation. it's my understanding before i was here. it's my understanding dan here people have since repressed their memories of his stay here. in any event we have a very fine , panel. before we get to that, i want to take two or three minutes and discuss tax reform, the opportunity we have to get something very positive done for the american people and a few thoughts about what that might be.
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it's well established that if you're trying to create economic growth and opportunity you want to reduce marginal tax rates and move towards a consumption tax base. theory or micro economic terms that means that you should reduce marginal tax rates and move to a tax base so you reduce what economists who would call dead weight loss or excess burden. that is the lost economic output because of the dissonant effects of tax policy. this is something anybody who's had the joys of introductory price theory can do. the most important thing to remember about that is that the benefit of reducing marginal tax rates increases with the square of the tax rate reduction and the converse is also true, the economic losses increase with the square of the increase in the tax rate. optimal tax theory leads to the
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same results. if you look at optimal tax literature going back and its analysis of intertemporal choices, it tells you that you want to have a consumption base which most major tax reform , proposals lead you to. the finance literature leads to the same conclusion. if you want to have a tax system that's neutral with respect to all factors of production, you the to a consumption base, income tax double, trouble and sometimes quadruple taxes. capital and therefore leads to an inefficient, unproductive tax system. we want to eliminate tax preferences. why? there's two basic tax preferences. tax preferences for various producers distort the economy and lead to an inefficient production process and inefficient noneconomic choices by producers. what economist would say is that it shrinks the production
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possibilities frontier. on the consumer side when you start altering people's choices for comparable reasons, you get an inefficient ability of the economy to satisfy consumer wants. you want to have a tax system that taxes all production once that doesn't double, trouble or quadruple tax capital. we have the opportunity now, i believe, to achieve a substantial move toward those basic criteria what is good tax reform. chairman brady's proposal, which is being fleshed out as we speak, is an extremely positive step towards lower marginal tax rates and a tax base that no longer double or triple taxes capital income. similarly, the trump proposal reduces marginal rates dramatically and makes positive steps on the tax base side. so i think we have the best
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opportunity and quite literally three decades to get a very positive, pro-growth tax reform done. tax reform has the potential, if it's done truly correctly of as much as increasing gdp by 15% over a decade. this will lead to an extraordinarily positive economy in which wages increase and incomes grow and opportunities are once again available to the american people. with that, i'll turn it over to jason fichtner. dr. fichtner: do you want us to sit or stand up there? dr. burton: it is up to you. >> what do you want to do? majority rules. >> stay here. >> nice and easy. dr. fichtner: good morning, everyone. thanks for coming today. i'm sure most people going up to the election probably thought that hillary clinton was going to win the election, be fighting the same tax battle we've been fighting the last eight years.
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i made many vacation plans which we now have to cancel. the trade-offs we make for another chance to have good tax policy. let's just start with the basic for a moment about what any tax reform proposal the next congress should address by making three points first. first of all, the united states tax code severely distorts market decisions and allocation of resources. it impedes potential economic growth and potential tax revenue. let's make no mistake, it is in need of reform. we must do this and the time is now. second, economists generally prefer a broader tax base with lower marginal rates and brady's plan does that. as does president-elect trump's plan. the tax rates that drive the decision at the margin of what to do next, more work, more saving, more investment, plant , labor, equipment, intellectual property, more research and development, a broader base is more efficient because you're not treating some forms of income or expenses differently from others and creating a bias.
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i say economists generally prefer a broader tax base, but base-broadening shouldn't be traded off for other provisions in a vain attempt to achieve revenue neutrality that would raise the cost of capital and undo all the benefits of lower marginal tax rates on businesses. for example we don't want to , increase the length of appreciation schedules. i was pleased to see both chairman brady's plan and president-elect trump's plans have expensing to get rid of it altogether. many previous discussions we had in the past years is trying to figure out how to do lower rates extending the appreciation schedules. that's not the way to go. focusing on the right policy provisions brings in my third point, which is provisions that tinker around the edges like patent box, innovation box, anti-base erosion and shifting positions will only exacerbate existing problems that are already evident with our current corporate tax code. there is an old saying among tax
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economists, "the road to tax hell complexity is paved with good intentions." chairman brady made a good point of pointing out that he really wants to broaden the base and lower the rates. lowering the rates are very important. you can put it on a post card. you want to add all these extra provisions people want as their favorites, then you have got to raise the tax rates back up again. that distorts decisions and economic behavior. you have to make up revenue somewhere. we have trade-offs to make. let's avoid complexity and keep it simple. chairman brady does that. we need to focus on the causes of the policy problems, not just the symptoms. again, efforts to attempt to treat the symptoms and not the causes, efforts that tinker around the edges are doomed to fail and only exacerbate the existing problems and further the complexity and create equity-owned businesses using the tax code to pick winners and losers. absent tax reforms, u.s. competitiveness will continue to languish, and action will create troublesome results.
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a further loss of american jobs, sale of u.s. companies to foreign multinationals, a further erosion of the corporate tax base, and a continuation of the harmful tax policies biased against savings, investment, job creation, and economic growth. the united states tax code currently distorts market decisions in the allocation of resources. the tax code hampers job creation, impedes growth and tax policy, and one thing we keep this discussion going and we talked this morning and also with the discussion on the brady and trump plans, please keep in mind that only people pay taxes. corporations don't pay taxes. they are legal constructs with a statutory responsibility of remitting taxes, but the burden of paying taxes fall on people. either workers, capital, or consumers. too often, we hear opposition to tax reform by saying it's a cut on business. cuts taxes for businesses not people. that's not true. businesses are made up of people. the ultimate burden of taxes fall on people. we are cutting business taxes,
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we are cutting taxes on labor, cutting taxes on savings. that's important. many developed countries are reducing their tax rates. we have been doing the opposite recently. now there is a chance to do actually do something and be more competitive. beginning next year, finally we'll have both a new president and congress serious about tax reform. that's why a lot of us are so excited. exhausted economic research proves most basic effect, the more you tax capital or labor, the less you get of it. it also makes clear that incentives matter. reform willax lower tax rates. one thing we should not do, which i think is off the table going into next year, not raise tax rates. the united states corporate tax rate is one of the highest in the industrialized world. this now increases business flight to lower tax countries, taking their job, money, and tax dollars with them. while it's not going to solve all our problems, one of the biggest we have is lower the tax rate on the corporate side individual. lowering the corporate tax rate alone gives so many incentives
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to move businesses and jobs overseas. when we talk about efficiency, it's important income be taxed once and only once. there is much concern those who report significant earnings pay a lower tax rate than those with ordinary income. again, this fails to accurately reflect the tax that taxed first at the corporate level then the individual level. so keep in mind the incentives of the tax burden. my two colleagues will get into that specifically. policymakers need not fly blind when it comes to defining the principles and goals key to a successful revenue system. research suggests a successful revenue system should include the following. it should be simple. it's hard to understand that, but we have a very complex code that makes it difficult and costly to comply with. it also makes it easier to scam. congress should make the tax code as simple and transparent as possible to increase compliance and reduce compliance costs. it should be equitable. chairman brady talked about it
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, the idea of being fair. these policies result in immeasurable unintended consequences. while fairness is subjective, tax fairness would reduce the number of provisions in the tax code that favor one group or economic activity over the other. the tax code should be efficient because the tax code alters market decisions in such areas as work, savings, investment, and job creation and impedes economic growth and tax revenue. an efficient tax system must provide sufficient revenue to fund the government services but minimal impact on changing tax payer behavior. it also should be predictable. there are a lot of questions that use reconciliation, which would allow for a 10-year window. negative effects are not just from what it does today but what , it may do in the future. such uncertainty deters economic growth, and environment conducive to growth requires the tax code provides near and long-term predictability. the more we can do that locks benefits into the tax code forever, the better off we'll be.
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to sum up and conclude, there is a broad consensus across economic research as to which policies are most likely to provide growth and revenues and which are likely to fail. lower rates. again, exhaustive research has repeatedly proved the most basic point -- the more you tax something, the less you get. if you want more labor, work, savings more investing, more job , creation, tax them less. broaden the base and eliminate loopholes. one of the keys to successful fiscal reform is move away from a spending system that depends upon easily manipulated tax system. tax reform should have lower rates, broaden the base, and close loopholes and this leads to added employment and most likely even increase revenues. we shouldn't have double taxation and reduce bad tax incentives. forcefully, the plans offered by chairman brady and president-elect
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>> thank you, jason. steve? dr. entin: thank you for having us today. thank you, chairman brady. i was impressed with chairman brady's remarks. what i would like to go through today is what is wrong with the current system and then compare the current system to an ideal system and then look at how the brady plan moves in that direction to a considerable extent. many people often say, "oh wouldn't it be nice if we had a pure income tax with no deductions and everything treated evenly?" the dirty secret about the income tax is it was set up biased against saving and investment. the object was to redistribute wealth. if you had a perfect income tax, it would not be neutral. it would treat consumption items neutrally but penalizing saving for future consumption. that is the problem that we face.
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there we go. if you earn income and pay tax on it, you can buy a loaf of bread and jar of peanut butter and can sit at home eating your peanut butter sandwiches. we don't tax you again. there are a few excises on cigarettes and gasoline, but generally we don't tax after-tax income when you consume it. but if you buy a bond to buy interest payments in the future, we tax the interest. if you buy a corporate stock to get a dividend, we tax the dividend. if you put it into your small business, we tax the earnings on the business, even if it's after tax money. that's a second layer of taxes. it is a basic bias of the income tax system. next step a corporate tax to tax those dividends and capital gains distribution even before you get them. that's a third layer of tax that is not imposed on consumption. if you have enough money in your bank balances toward the end of life, which you set aside in case you need to go into a nursing home, that would eat up the exempt amount, and anything over that is hit by the estate
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tax. so that's the fourth layer of tax. a heavy bias. the next problem with the tax system is they don't even measure income correctly to begin with. if you're a business and you buy a $100 machine, you've spent $100. we don't let you write it off right away. we make you stretch it out over many, many years. if there is a non-zero cost of time value of money, which there is, and if there is inflation, that write-off is not worth the whole $100. you've spent more than we let you write off in present value, and we are overstating your income the entire time. so that means the tax rate's actually higher than it appears to be. and finally, we have the problem of trying to tax income from what is being earned abroad that has already been taxed abroad, and we have a complicated foreign tax credit to avoid the double taxation, which doesn't always work. so we have got a tax system that
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overstates income and then taxes several times. it's because of these problems that many people researched how to put together something sometimes called personal expenditure tax or consumption-based tax that can be progressive but doesn't have this added bias against saving and investment. what would that look like? in the first place, you would have to do something about the double taxation of saving. you would tax either the saving up front and not tax the returns, which we do with roth ira's and municipal bonds, or you would put the tax on the income when you first -- you would not put the tax on the income if you put it into saving. that's a regular ira, pension, or 401(k). then tax it when you take it out. but you taxed the original amount and the interest built up. all saving would get that treatment. not just limited amounts you take out by a certain time and follow certain rules on distributions. no. all saving would get that treatment.
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the next step, businesses need to stop double tax. -- we have to stop double taxing the corporate earnings. businesses get to deduct the dividend or integrate the two systems so business is taxed at the business or individual level but not both. then we have to get rid of that estate tax. because that's an added layer of tax on income that's already been saved. every penny in an estate has been taxed, either when you first earned it and saved it or put it into an investment and it earned more income and was taxed again. even in an ira where you postponed the tax on the saving, the heir has to start paying tax on it. so it has either been taxed already, sometimes more than once, or it's about to be taxed and the other provisions of the income tax always double taxation. the next step, you need to get rid of that long depreciation life and create expensing so that people get to deduct the full value of what they actually spent on the machine.
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not just some reduced value. finally, we should have a territorial tax system like most of our trading partners. income earned abroad where foreign governments provided the water and sewer and police protection, it's taxed over there, stuff that's produced here is taxed here. we don't get into each other's sandboxes and try and grab each other's toys. that's not the right way to do a global tax system. with all that in mind, let's take a look at how the house blueprint stacks up. it reduces tax rates for individuals and businesses. this partially reduces the tax at the business level and the added tax on dividends and capital gains. it doesn't eliminate one or the other. it's still a double tax. but the rates on both of them are lower. so there's less of a double tax system. in the process, they do eliminate the deductibility of interest while continuing to tax it at the recipient's level.
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the right way to tax interest is to either deduct the interest then tax the recipient or not deduct interest and not tax the recipient. they are eliminating the deduction but continuing to tax the recipient, which is a mistake. >> at half. dr. entin: at the reduced capital gains and dividends rates. there is some problem with that. the senate has an interesting proposal to eliminate the double taxation of corporate income. the dividend is paid out, it's deductible, but there is withholding tax the recipient can claim. it's something that can be worked out. both methods yield a very large amount of additional income because many of the recipients are tax exempt. the plan ends the death tax and gift tax, i believe. that's one of the key points in moving toward a neutral tax
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system. it adopts expensing. the other key point on the business side for moving toward a neutral tax system. it adopts the territorial structure that a neutral tax system would have, ending the anti-u.s. bias against producing here and selling abroad. these are big improvements. i give four out of five stars. i have to tell you, it's much better than what was done in 1986. in 1986, we did a lot of the cuts that were in effect in 1981. 1986 actually moved toward this pure income tax with longer asset lies, got rid of investment tax credit, made it harder to use ira's and pensions, damaged real estate by messing around with the depreciation allowances. and it did lower the corporate rate, but the other features were so great in raising taxes on capital relative to consumption that when you lowered the rates, you didn't make up to it. that was a move back to the pure income tax. this is a move in the general
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direction of a neutral tax where saving and investment are treated on par with consumption, and that bias is largely eliminated. why do you want to do it? because with the bias, as much as the old people back there where they wanted to redistribute wealth thought they were helping the poor, there are fewer machines bought, fewer farms operating, fewer mines, factories are fewer, and you have older machines and work force is less productive and wage is depressed. this sort of plan moving in this direction raises pretax wages, and that's where the big gains to the work force come from. not just the tax cut. when you run it through our model and calculate how much additional capital would be formed and how much wages would go up, we get dramatic results. this plan, even though it doesn't go completely toward a neutral base, is so far along that line that it gives you about a 9% boost in gdp, the capital stock will be almost 30%
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larger, wages will be almost 8% larger, there will be a couple percent more people working. the total increase in the economy of 9% will be split on the wage side between higher wages per worker and more workers working. you get a big improvement in the wage earnings and wage bill. the parent initial cost of almost $2.4 trillion would be offset to a very large measure by the growth effects of the plan and we figure over the decade it would only be losing about $190 billion, which is peanuts. and then further out you get even more revenue coming in. dr. burton: so people have some sense, over that 10-year period, the federal government is projected to collect about $45 trillion. so that $2 trillion static loss should be looked at in that context. dr. entin: yes. it wouldn't actually happen because you get most back from the growth. there is almost no revenue loss over the ten-year window and
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improvements further out. if you look at the distribution tables on a static basis, if you're lowering the tax rates on noncorporate business and capital gains and dividends, a lot goes to the top. if you factor in the wage growth, it looks like a much more even distribution. the total after-tax incomes that we project would be 8.7% higher on average. that would be between 8.4% and 9.3% higher for the bottom 99% of the population and would be about 13% higher in the top 1%, but the benefits to the 99% are huge, and the benefits to the labor force are huge, and that's why you want to do this kind of a reform. thank you. >> thank you, steve. dr. mitchell. dr. mitchell: steve, can you pass me the clicker? first thing i want to say, david, did you notice i dug out
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my old heritage tie from my closet? it's lost its power. i didn't want to persecute victimless crimes. i didn't want big government conservatism. i'm still a libertarian. i'm joking. i love my friends at heritage and it's good to be back here. what i want to do after we've had two very good presentations here from jason and steven, i want to touch on a few additional issues so that we can wrap this thing up assuming, of course, i can actually figure out how to work the thing. we've heard the principles of good tax policy. i probably don't need to reiterate that. but i want to add one thing i think that jason and steve and david would agree with. you can't have good tax policy if you don't control the growth of government spending. i have a lot of faith given what the house has done for the last several years and their budget resolutions that the house is
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serious about controlling the growth of government spending and therefore, enabling and creating breathing room to do good tax policy. i'm not quite sure what we're going to see out of the new president. the new president has said things that make me worry that he might not want to reform entitlements. if we don't reform entitlements, i worry we'll never have the chance to have good sustain -- good, sustainable, long run tax policy. even though it's not technically a principle of tax policy, if we don't control spending, we're never going to achieve those things all the other panelists have already talked about. in terms of those things they've talked about, let me reinforce a couple points. politicians actually understand that tax rates matter when they want to. they say, "oh, we need to higher taxes on tobacco and alcohol because we want people to smoke less." they're right.
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as a libertarian, i don't we should be trying to control people's private lives, but i would give them an a plus for economics. but then the same politicians oftentimes turn around and say, "oh, it doesn't matter if you have high tax rates on entrepreneurs and investors and things like that." of course it matters. people respond to incentives. we want to have the tax rates on productive behavior as low as possible. i want to also emphasize what the other panelists have said about the importance of reducing double taxation. this is where i thought chairman brady took the good work of former chairman kemp and put together a fax reform plan and then in effect turbocharged it by breaking out some of the barriers that kemp imposed upon himself and came up with a plan that's even better. but the key thing, and this really echoes what steve in particular was reinforcing, is reducing double taxation. i want to show you something that i think actually gets this idea across to politicians.
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i sometimes ask them, if you had an apple orchard, you spent all those years planting the trees, tending the trees, keeping away pests, pruning the trees, and finally your apple trees have matured, you have a good crop of apples. it's the fall. you're ready to harvest the apples, what's the best way to harvest the apples? do you pick them from the tree, or do you chop down the tree? even politicians realize wait, it wouldn't make any sense to chop down the tree because then i wouldn't have apples next year. but that's exactly what we do in our tax code with the double, triple, and quadruple taxing. technically, we are not sawing all the branches of the tree, we are not confiscating all the capital, but in this example i have here, the tree is the capital, the apples are the income. yes, tax the apples if you want at a low rate and things like that. do not saw off branches of the tree because it means have you fewer apples next year. that's what steve was talking
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about when he's referencing the fact we're going to lower people's income and there's going to be less income in the future for ordinary workers if we destroy capital in our economy with bad tax policy. and the good news is that in general, trump is pushing in that direction. there's no question brady is pushing in that direction. there's even some movement on the senate side where normally people joke that's where good ideas go to die. there's a lot of reason for optimism. in my last couple of minutes, i want to raise something that we need to think about as people who are friendly to the idea of tax reform, and that's the sort of destination-based, border adjustable part of the tax reform plan. it's not in trump -- but before i get to that, here's my little chart i put up. i have the flat tax as the gold standard. lower rate, no double taxation, pure no loopholes, and then i
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compare it to trump and i compare it to brady or the better way plan, however you want to call it. you can see both trump and brady are moving significantly in the right direction. i'm a purist. but i'm not under any delusions that we're going to get perfection out of the political system. and so when i'm giving them b's and b pluses, that's a tremendous move into the right direction that they've done. you'll notice on the lower right, i have these question marks under things like political risk, pro competitive, territoriality because what the house plan is doing is really radically different. it might turn out to be acceptable, but i think we are obligated to give some serious thought about what this means. because you're exempting all export-related income. you are not allowing any deduction for foreign-produced inputs.
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is that protectionist or not? is it going to be compliant with the wto? for those of us who have some gray hair, we remember back when you had the fisk eti issue. where the wto ruled against provisions of our tax code, and we eventually after years and years were forced to change it. will the wto do the same thing? business and indirect tax under wto, even though it's a corporate tax structure? you know, we have to think about those issues. and what worries me, and this is why i sort of have a question mark under political risk, the one thing i really fear for fiscal policy is having a value added tax added on top of our current income tax. in effect, the destination-based border adjustable cash flow tax you have in brady's plan is a v.a.t., but it's not because wages are deductable. if the wto rules against it, i worry, would politicians in washington, especially if maybe they're not as good as ones we
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hopefully have right now, so this it would happen like five years in the future by the time the cases get processed through the wto -- what happens if the politicians in the future who might not have the same interest of limited government get a wto decision and see the way to deal with this is to make wage no longer deductible, make it a v.a.t. because in theory even though it will be a subtraction method, the wto would probably approve it. and that i think, you might as well just fold up shop because our chances can of crowing the size of government would be very, very low. this is something we need to seriously think about. but also, we have to think about the implications for tax competition, which i think is one of the few good things on our side controlling the greed of the political class. the better way plan in some sense is based on a plan by alan auerbach published by the center for american progress, which is not exactly organization that is friendly to limited government and low tax rates.
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the first subtitle in his paper was "avoiding the race to the bottom," and that's a term that the left uses because they don't like tax competition. ireland cut taxes. other countries are cutting taxes. reagan and thatcher cut taxes. other countries had to cut taxes. i think that's wonderful. the left uses it as a race to the bottom. if alan auerbach wants to avoid a race to the bottom by doing a destination-based flow tax, that to me suggests uh-oh, we'd better be very careful about doing this because if people who don't like tax competition want that approach, that worries me a lot. by the way, i don't want to get into technical boring tax things, but this is a destination-based system which is the exact same thing that underlies the so-called streamlined sales tax proposal, in other words the internet sales tax cartel that state governments want because they don't want tax competition. brady's plan is great. but this is a very new different thing. i think we need to think about whether or not that would be
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good in the long run and then two final points that are political. when you do a destination-based system, in effect, the goal is to maximize the taxes paid by americans and having nothing tax -- having no tax levied on foreigners. politically, that doesn't make sense. so i sort of wonder about it. the other political thing i wonder about, normally all the things being talked about in these various plans, lower rates, less double taxation, territoriality, these are things the business community can be completely united behind. but when you do the destination-based cash flow tax, you're in effect saying to every company that does a lot of importing, think about walmart or something like that, you're going to make them very strong opponents, i assume, of the plan. if republicans are doing something where you to go up against the left, the media, a lot of opponents that are doing the usual fanning the flames of class warfare, do you want to have part of the business community against you? i think the better way plan is great.
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i think it is the best thing to come out of congress in a long time. i think there's been a huge amount of very serious, good work done on it. when we're thinking about melding the better way plan with the trump plan, i worry about this one provision. i don't know than enough thought has been given to it. these are just some concerns, since everybody else covered the main things about reducing rates, less double taxation, i figured i would close by raising a few warning flags because this is something we need to think about. thank you very much. dr. burton: thank you, dan. jason, do you want to have, say anything one or two minutes, three, whatever in response to anything the other panelists said? dr. fichtner: yeah, a few things. i think we're all in agreement up here. to two things dan said. one was controlling the growth of spending. he is completely right. and i ignored it in a sense as looking at what is good tax reform. but one of the problems going forward is because spending is
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so high, one of the opposition complaints to tax reform is that it does not raise enough revenue. we keep raising spending. so dan is completely correct on that. we have to get spending under control. that's long-term entitlement , we needo we can avoid to define the ideal tax system, which raises enough revenue to support the things we want but not overspending. he also mentioned something called the fisk, which i have less gray hair but still old enough to remember what it is. you would set up some sort of subsidiary at a nice tax haven that had a lot of sunshine and divert some of your sales through there to get a break on your sales from the u.s. exports. and it was called going fisking. f you're going on holiday. a lot of the tax planner would set up sales corporations to
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minimize u.s. tax obligations. the whole point of why that was being done is the u.s. tax rate is too damn high. at 35% tax rate, you give incentives for corporations to be more competitive by shifting business activity someplace else than the u.s. so again, lowering the tax rate is one of the biggest things we can do to improve growth and job creation. steve mentioned the idea about how much job creation economic growth will come out of this these tax reform plans if they go somewhere in the direction they're planning it right now. you might hear some debates and criticism about this dynamic versus static modeling. don't worry about it. get it out of your head. let's not focus on it it raises money or loses money. we know the baseline we're going under, the assumptions used for the baseline are wrong. we see a declining labor force participation. wages are -- people working are going down, income from wages will go down in the future. we see corporations are leaving the united states and business activity in the united states
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, and that takes tax revenue out. so assumptions of revenue going up or static are wrong. we don't want a static basis when you do reform. steve is right in his model is right. we are going to get better growth and turn around the problems we're having now and reverse the declines. hopefully get more work, more investment, more savings, that will lead to more revenue. let's not focus on whether dynamic or static is right. we know that static is wrong. whether steve's model takes us from 2% to 4% or 1.5% to 3%, we're declining. we are not just static, we are declining. we have to turn it around. these tax reforms will get us there. >> steve. dr. entin: some of us have enough gray hair to remember the disk that came before the fisk. >> domestic income sales corporation. dr. entin: the bulk of the growth from the blueprint is going to come from the expensing. followed by the rate reductions.
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up added still up -- fill that you get from the border adjustment is perhaps the least worthwhile to press for if you're getting a lot of pushback and it's going to cause you trouble. i wouldn't worry too much about it. but dan's right to raise the question, is this going to be a wto acceptable? the spending side of the budget is critical. we are wasting a lot of resources spending on junk. this infrastructure notion that it's going to salvage us and somehow be counter cyclical in the short run and do a lot of good and raise productivity by a huge amount, most of what we need to spend on infrastructure is maintaining what we have. that's not going to add to the capital stock. and infrastructure increases are not going to be a real panacea. we're not in a recession. we have been growing for a number of years, we have just been growing much too slowly. we're at equilibrium and it's too low. to get that fixed, you need an enormous increase in the private sector capital stock that's been depressed all these years by taxes and regulatory burdens.
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that's where most of the growth will come from. do the infrastructure only if it's going to yield a very high return because it's very important. build a bridge to somewhere and not build a bridge to nowhere, and make darn sure you've done a good cost-benefit analysis before you start. as we get more growth, some types of spending will naturally decline. the number of people needing public assistance will go down and people needing help with health care will go down as incomes go up. that's something we need to take account of in addition to the actual enacted spending reductions. model results that i've shown are fairly dramatic. and some people think we can't get there from here because there won't be enough saving here to fund all this added investment. if you put this plan in place, there will be. first of all, the business tax cuts increase retained earnings, which are part of saving.
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lower rates encourage more people to save. lower rates in the united states encourage more foreigners to invest here. and importantly, we spend a lot of our savings lending to other countries. and that can stay home. models that are constrained by not having enough saving to allow this growth to occur are simply wrong. they're closed economy models and nonsense. you hear this out of treasury and the tax committee sometimes -- if they quote you from a closed economy model, the results are to be ignored. finally, our model is not robust enough in many ways. there are a lot of people who have left the workforce that we show a labor response based on the number of people still in. what if the people who are out come back in droves? we are about 17% below the trend rate of growth since the 1960's. the recessions have knocked us down, and the weak recovery has
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not allowed us to get back there. we have never not gotten back there in the past. it's because of increased tax and regulatory burdens holding us back. we have got a huge amount of potential growth out there unutilized. and we are only showing we're recapturing about half of it with the changes. i think if we made the tax changes and regulatory changes, i think we would get the other 9%. we can do this. we just need the will and the house to act. we need to the administration to go along with it, and we need to the senate not to just sit there. dr. burton: all right. i'd like to say a couple quick things. then we'll move on to questions from the audience. dan is a very fine economist but he occasionally loses his way. and as sort of exhibit a in that, i'll bring to your attention that he roots for the university of georgia football team. i think everyone here probably can agree that that's a mistake.
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and in any event. >> a wayward youth. dr. burton: i wanted to say a couple things on the destination principle aspects of this plan. first off, i agree with what steve said is that the most important thing by far are the rate reductions and move towards expensing and that the border tax adjustment issue is of secondary importance. that said, he think it's significant important what, chairman brady has put together on the business side is fundamentally similar to the old flat tax with one difference. it the way it treats exports and imports. basically, the income tax taxes production in the united states and whether the goods are ultimately exported, and in some cases services, or sold in the united states, and if you produce things abroad and bring
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the goods into the united states, the income tax imposes no tax on the value added abroad. a destination principle consumption tax is different. it imposes the same tax on goods consumed in the united states whether they're produced abroad or produced in the united states and doesn't purport to impose any tax on goods produced in the united states but consumed abroad. the easiest example to see that is a sales tax, but european type credit invoice v.a.t.s are like that and so would be a subtraction method v.a.t. sometimes called a business transfer tax or business flat tax or business consumption tax. so the question becomes, do you want to affirm production of overseas or do you want a set tax system that is neutral with respect to producing things in the u.s. or abroad.
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i think the answer to that is almost certainly you want a tax system that no longer encourages you to move production offshore and that you want a tax system that is neutral in that decision. and chairman brady is moving in that direction. dan is absolutely correct, i believe it was dan that said that, that this will be undoubtedly litigated at the wto. the wto draw the distinction on the economically irrational basis it's permissible to have a border tax adjustment if it's an indirect tax. and it's impermissible to have a bta if it's a direct tax. so indirect, direct, indirect it's ok. direct it's not. we know that an income tax is direct under wto decisions. we know that a credit invoice type value added tax is indirect. we know a retail sales tax is indirect. we do not know ultimately what the wto would determine with
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tax.ct to a value added this is an open question legally. the of economic question i think is different. so the long and short of it is that i think dan's concerns on this matter are misplaced. i think steve's economic judgment, based on his model and the economic theory he goes into, is correct that it's of secondary importance but not of any importance. there's a little point here, -- there is a political point here, too. there's a lot of concern about trade. and i think everyone on this panel would agree that protectionist policies are economically destructive and counterproductive where you treat foreign production more adversely than domestic production, but bta enables people to address that concern
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politically in a way that's constructive and neutral between u.s. and foreign producers. with that, let's open it up to questions. we have time for a few questions if people have any. dr. mitchell: while we're waiting for a question, can i ask you a question, david? dr. burton: absolutely. dr. mitchell: if i'm a business and i want to buy an input from an american manufacturer, i get a deduction for it which, of course is proper because that's a business cost. but if i buy that same in you -- same input from a foreign producer, i get no deduction at all. that's not treating equally. why is that not just on the face of it protectionist that you have much worse tax treatment of foreign produced inputs than u.s. produced inputs? dr. burton: because the value of the good that was deducted has already been taxed, whereas the value of the foreign good produced has not been taxed by the united states.
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it would be as if you had a retail sales tax that said, if you produce something abroad, we don't impose any sales tax on it. but if you produce it in the united states, we're going to impose a sales tax on it. that's in effect what the current system does. that's what any origin principle tax does. i mean, i assume you would agree that the business input had been taxed. dr. mitchell: well, it does ultimately come down to a debate over destination-based versus origin-based taxation which would bore 99% of the people in the world to death. dr. burton: it is very, very important. dr. mitchell: but that's why i raised it. i think it's important for our side to hash through these issues before we get too far down the path. dr. burton: we will promise to do so, but i think the boring remark was correct. we move onto the next question. we do have a question. tim: again, i'm tim brown, citizen taxpayer.
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can i address you doctor, professor? dr. fichtner: whatever you'd like. jason is fine, too. tim: you made a comment in passing and as a citizen taxpayer, i would say something back to you and to the heritage foundation as an organization with some political -- not political, some public policy outreach agenda. you said static scoring versus dynamic scoring, forget about that, and i would say don't forget about that. what you must not forget about is that in the public perception, you open up the newspaper, you read an article, and you say, "look what those idiots on capitol hill and the white house are doing. they're going to send us into deficit land forever ever and ever and ever." what's missed is the difference between static and dynamic scoring, and i'm talking public outreach. i'm all on the side of dynamic scoring. i understand the issues feared
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but in terms of outreach and public policy communication, i don't think one person in 100 understands the difference in how important that is. dr. fichtner: this is not a disagreement. i'm with you on the importance. the concern that i have is you know, this town's a bubble. we've seen that from the election results that we're in a bubble. when you go outside and talk to the american people and start talking on the differences of static and dynamic, you have already lost them. what tends to happen, especially with today's media, they'll find where the criticisms are and the differences and focus on that to disparage the entire plan. our plan out and say is going to create 4 million jobs, maybe it creates 3 million to 5 million. it's not to say that the dynamic scoring of the model is wrong, but you're going to have people on the left with the tax policy center, people from brookings, center of american progress, they're going to come out if they haven't already starting to attack the tax foundation model and say it's wrong. not that the dynamic scoring is
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the wrong thing to do. now even tax policy center is going to have a dynamic model. they'll start quibbling on the differences. what i want to focus on is the fact that static is wrong and say the way we're doing things is wrong. it's wrong because they're not counting for participation or increased growth and because of that it's wrong, why is it wrong? because they're not counting for these things. the tax plans will fix that. that the american people understand. if we talk about static dynamic, we're going to lose them. dr. entin: 5, 10 years ago, the press was never picking up on the dynamic numbers. now they are. the house was not requiring dynamic scoring out of the joint tax committee. now it is. the closed economy models do not really work well, but they are trying. treasury is trying. the press is on board. it's working. but there's another reason for looking at the dynamic numbers.
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it is not just to reassure them that they are not voting for a big deficit. it's to teach them what the proposal is likely to do. if i have two proposals, one of which is not going to create growth and one of which is going to create growth, and they're both the same dollar amount statically, the house might think, "well, they're both equally good." but one is going to get you a lot more growth. dynamics claim process, -- scoring process, which first has to calculate the growth will give them that information that they would not have if they just tossed out on a static basis and didn't look any deeper. we had almost every republican candidate coming to us to ask us to score their plans, not because they wanted our advice as to how to change their plans. we didn't push them around like that. we said this is what we think will happen to your plan. some would come back and say i want more growth than that. or i want less costs than that. what if i substitute this provision for that provision? some of them came back 40 and 50 times.
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but it educated them as to what their likely outcome would be and they were able to target their growth and budget hit more efficiently by using a model which gave them that feed back. i think that's one of the biggest reasons for doing dynamic scoring is to lead to the better policy. dr. burton: so it is called dynamic scoring -- reality-based scoring. in some respects, i think it is better that we're talking about it takes into account economic reality that tax policy changes affect economic. dr. fichtner: we could start saying there's proper modeling versus improper. transparent versus misleading. if we do that, everyone will go that's what we should do. that's a good point to change our language. dr. burton: there's a question over here. >> return to the -- dr. burton: i don't think the mic is on. maybe i'm wrong. let's try that. >> yes.
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i just want to return to the foreign input discussion because i didn't find it boring. if a manufacturer who has a foreign input and pays a tariff on that input because there's no domestic source, how is -- i believe that would have a negative impact on them. say you've got a 5% tariff on an input. have you no domestic source. you're saying you would pay on that again. dr. burton: i am not sure i understand the question. >> you are a manufacturer in the united states and have foreign inputs. you pay tariffs on those inputs. dr. burton: no one's talking about a tariff here. >> it already exists. this bill is not going to get rid of foreign tariffs, is it? dr. burton: i see what you're saying. you're saying the 5% tax isn't part of the internal revenue code but the part of the harmonized tariff schedule? so then what's your follow on question from that? >> so my question is, i believe that i kind of am agreeing with dan here that foreign inputs if
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they are not treated the same as domestic inputs is not fair to domestic manufacturers who are trying to keep production in the united states. dr. mitchell: well, since david isn't jumping in, i'll jump in. that's one of the reasons why as i'm looking at this and i'm thinking, we have not paid enough attention to this issue and we need to. now, it might be that as we go down the road, one month, two months, that maybe my concerns will be eased, but right now, i just can't help but look at it if i'm buying from a supplier overseas i get no deduction, which means in effect the tax rate that exists is going to be akin to a tariff on that foreign input. >> he's already paying a tariff more than likely. dr. mitchell: but there will be a new tariff, which is akin to whatever the final corporate tax rate turns out to be. i think we need to -- those of us who want tax after reform
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need to pay attention to this and think about it seriously, because when it looked like hillary was going to be elected. nobody cared about these details, the house plan was simply a statement of principles. now all of a sudden this is a real issue and we might have a chance real things. what, 80%, 90% of what brady wants to do is going to be things i like. i'm just looking at this one provision and just worried, well, you know, maybe the trump -- trump's approach on this even though he gets rid of deferral, which i don't like. maybe we can mesh the two plans and get rid of everything i don't like and have nothing but things i do like, which seems perfectly reasonable to me. dr. burton: i guess the problem as you describe it is the 5% tariff and the tariffs vary depending on the source country and the product. not the proposed tax treatment,
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which is to treat u.s. production and foreign production identically. instead of what is done currently, which is u.s. production is taxed and foreign production is not. so. dr. entin: part of the confusion in this area, and it's intense even among economists, even among very experienced professors at leading universities when they get together and talk about this, they get kind of jumbled up. it depends on whether you're looking at the taxes passed back to the producers or that's being paid by the consumers. and if you're only one country in the world, it doesn't matter which way you look at it. if you've got more than one country, the earning point in your assumption where the tax falls can lead to opposite conclusions, which is why eventually the economists threw up their hands and said the exchange rate comes out to be the same. now, in a situation where you
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have france and germany and they both have a v.a.t. of the same size, none of this matters. if you view it as being paid by the consumers, it doesn't make any difference. it's a 10% tax on all the consumers in both countries. if you're thinking it's being regarded on the producer side, then if you've got the export from france and they forgive their tax, the germans impose the same tax on what is coming into germany, and it is the same thing, producers in france and producers in germany are paying the same tax in germany. no problem again. what you have here is a little different. you see, they have a corporate tax. it used to be the same size as ours or a little higher, and they had a v.a.t. on top of it. forgiving the v.a.t. on their export didn't hurt us. they've cut their corporate taxes and substituted an increase in the v.a.t. they may have an advantage there if you view taxes as being on the producer. it gives them a competitive advantage.
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if you view it on the consumer, it probably doesn't matter very much. if however, we take our whole corporate tax and convert it into what amounts to a kind of a vattish thing, then we are getting the advantage back on everything because we don't have a v.a.t. on top of the corporate tax. and they might look at that and say, "well, we'd have to abolish our corporate tax and enlarge our v.a.t.s to be everything in order to compete with what the united states has just done." i think to some extent, importers would feel some of that pain, too. i need to think this through much more carefully than i've been able to do because this is confusing. which end is the tax get imposed on, producer or consumer? and it is complicated. you will have pushback from the wto. and dan's right. we have to think this through a bit more. i'm sure there's an answer out there. i don't think we have it yet. dr. burton: unless you make extremely extreme, for lack of a
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better word, assumptions about elasticities that the truth of the matter is the incident is going to be somewhat on the producers and somewhat on the consumers. you wrote a fine paper, i forget incidentsf it, on analysis that people are interested if the subject might want to review. what's the name of it? dr. entin: it's in the heritage book "public square, private chamber," and it's also on the old iret website under bulletin 88. i don't remember what i called it. dr. burton: there was a book that was a heritage book called "the secret chamber of the public square." you can buy it for $5 or less on amazon because there's a lot of used copies floating around. and it addresses a number of issues we've been discussing, one of which is incidents, another which is the dynamic versus static modeling, and also jason did a paper on distributional analysis. to those of you who want to take a deep dive into some of these
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things, that book is probably one of the best things out there. dr. entin: it is free at dr. burton: the paper. >> that's vicious price competition there. dr. entin: marginal cost electronically is zero. >> if you want the rest of the masterpieces, you have to spend $3 on amazon. >> it's a good book. dr. burton: any other questions before we close this out? thank you all very much for coming. this session is closed. >> always a pleasure, sir. [captions copyright national cable satellite corp. 2016] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit] >> this weekend, the c-span cities tour looks toward the literary life of tempe, arizona. learn about man's relationship with wildfires and efforts to change the narrative of fire and withole in the environment the author of "between two fires." >> for 50 years, after the great
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, they tried to take fire out of the landscape. the problem was we took good fires as well as bad fires out that is have the history of our country. >> here from brooke system about the challenges of writing history. and do it asto try honest as i can, as balanced as i can come up i get to do something fundamentally creative and say this is what i think happened. history tvamerican on c-span3, here about the alliance of every goldwater and carl hayden through a collection of personal and political papers. >> when you look at carl hayden's career, he was responsible for cosponsoring and
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writing a huge amount of legislation that benefited the citizens of arizona and the united states. his legacy was very much a legislative legacy. barry goldwater was really a person who is an icon for the western united states. he was a person represented the interests of the west. -- jarodrrit smith smith, shows us the contributions of charles hayden. >> he was born in connecticut, he comes out west and travels over the santa fe trail, he eventually makes it to arizona in the 1850's. >> saturday at noon eastern on c-span3's book tv.
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working with our cable affiliates and visiting cities across the country. the house finished legislative business this week approving a defense policy bill that authorizes spending for 2017 defense programs. the measure passed 375-34 and heads to the senate for approval. just prior to taking the final vote, house armed services committee spoke about the process that led to the passage. this is 10 minutes. thank you, mr. chairman. i yield myself to the balance of the time. i want to raise three issues. first of all, i like a lot of what is in this bill, i think it is important also what is not in this bill. there are a number of issues that are extraneous to the actual business of national security that has been put in by one side or another that in
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conference we were able to remove. one of the most prominent ones was one that was raised earlier, the so-called russell amendment, it has to do with the ability of companies and businesses receiving a government contracts to discriminate. i was very much opposed to the russell amendment, i am happy we agreed to take it out, and i want to explain a little bit exactly what it is. it is rather simple. all of the executive order that the present did, accomplished in if you do business with the federal government, you cannot discriminate against certain classes of people. i don't remember all the different classes, but one of the big ones is you cannot discriminate based on race. in other words, if your religious tenets are racists, if you don't like black people and don't want to do business with them, we as the federal decided that is
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not acceptable and will not allow you to do business with the federal government. all this executive order did was added the lgbt community to those protected classes. basically what we're saying is, not only is it not acceptable to be racist, it is not acceptable to be homophobic, and i completely agree with that and i would hope our country would get the place where it would agree with that, as well. if you feel that you must discriminate against people, simply based on their sexual preference, we will not do business with you. that is a policy i think we should have, and that is what the executive order does, to reverse that in the defense bill would be an abomination, especially since we made so much progress. we finally got rid of don't ask, don't tell, so that day and lesbian people can serve openly. they have served in the military for decades -- i'm sorry, the house is not in order.
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[gavel] >> members will please take the conversations off the floor. allowedd recently transgender people to serve openly as well. i think that is a tremendous step forward. he russell amendment would take us back. i want to emphasize that all the executive order does is say, it is not all right to be racist or homophobic. i think that is a principle we should stand for as a country. i want to further add that even with that executive order, there are many exceptions that already test. -- exist. i don't fully understand all of those exceptions even though i am a lawyer. religious groups are allowed to discriminate based on the tenets of their belief. the people who are pushing the russell amendment re: have what they want. there is no need to further
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emphasize the fact that we are going to allow people who have contracts with the federal government to discriminate against the lgbt community. i think that is wrong and should not be allowed. the second point i want to make is on the money. we occurred again and again how underfunded everything is. we are spending $619 billion on the department of defense, far and away more money than any other country in the world. we've been spending more money on defense for decades than any other country in the world. we ought to be able to build a military that can protect our national security interests for that amount of money. not only should we be able to, we're going to have to, because we are $19 trillion in debt, i forget exactly what the deficit is this year, it is summer in the 500 billion-$600 billion range. coming inpresident who is offering trillions of dollars of additional tax cuts.
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we have a crumbling infrastructure and it is important we maintain the strength of our country at home, that we have a transportation and education infrastructure, well as having a national security infrastructure abroad. we have got to make some tough choices going forward. i believe we can meet our national security needs, friendly for less money than we spent. there are greater efficiencies, there are programs we don't need to continue with. those of the choices we are going to have to make in the years ahead because right now, we are planning on more programs and more national security than we could possibly have money for in the next decade. we cannot continue to duck the that getces -- choices us a department of defense that we can actually afford.
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lastly, i want to close where i started and say the product of this bill, i don't know how many pages it is this year, but it is a lot, requires a lot of work, and the people you see sitting behind us are the staff that do that work tirelessly, night after night. it is a year-long process to put it together and negotiate with the senate to get there. we have the most outstanding staff but i can imagine and want to make sure we thank them or that incredible work that they do, not just for us but for the men and women who serve in the military. i also want to thank chairman thornbury. we work in a bipartisan matter on this community -- committee. i've been here 20 years, and the country has become more partisan and more difficult to do anything, to pass any kind of bill where democrats and republicans actually work together. this is a shining example of the way the legislative process should work.
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many people are to thank for that, but it all starts with the chairman, it all starts with mr. thornberry and senator mccain on the other side eating dedicated to the principle of bipartisanship of working together, and of the absolute commitment that we will get our job done. sometimes it takes until december. i think we went all the way up to december 16 a few years ago, so we are ahead of schedule. sometimes it takes a long time and we always get it done. i urge passage of this very important bill and i think the chairman again for his great work and all of the staff who works make this possible. >> the gentleman's time has expired. >> i yield myself the balance of the time. i completely agree with the distinguished ranking member that to produce this bill requires a great deal of effort by a number of people, starting
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with him, other members of the committee, other members of the house. it is also essential that our staff support our work he thanked, as he is done a great job. i also agree about the leadership of senator john unique a man i think in the country's military history at this point. his leadership along with the ranking member senator jack reed have been essential, not only in this bill but in congress being able to fulfill its constitutional responsibilities. i know there are disappointments with this bill, mr. speaker, there are things people would like to see in here, a lot of them not really court defense issues, but those matters had to be dropped to get this bill to this point.
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i am confident that the new administration will review the executive orders the ranking member was talking about and that those unconstitutional restrictions on the first amendment will be reviewed, modified or repealed. all that facilitated eating this bill before us today. i'm also hopeful that the new administration will send us a supplemental request, because there are desperately needed modernization items from ships, airplanes, munitions and other things that are not authorized in this bill, but are needed desperately by our troops. that weand i expect will do better in the coming fulfill our sponsored abilities under the constitution. mr. speaker, i would in with this. i think the first of of the federal government is to defend the country. the constitution puts specific responsibilities on our shoulders to raise and support,
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provide a maintain, the military forces of the united states. the most important part of that responsibility deals with the people. this bill, if it is nothing else, supports the men and women who volunteer to risk their lives to defend us and protect our freedoms. for that reason alone, it deserves the support of every member of the house. thate it will receive support and yield back the balance of my time. c-span, or history unfold staley. in 1979, c-span was created as a public service by america's cable television companies and is brought to you today by your cable or satellite provider. us, he is the capitol hill your chief or "military times." he joins us to discuss the pic
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he joins us to discuss the president-elect's pick for defense secretary which mr. trump says he'll officially announce on monday. leo, this is retired general james maddis. tell us about the general and what is at issue. >> a very popular figure within the marine corps known for colorful language and being a real warrior style. some someone who is well respected in congress and not expected to face too much opposition but there is the problem of the national security act which says if you serve in the military you have to wait seven years to be eligible for secretary of defense. the general retired only a few years ago. he'll be at four years by the time this comes around. he'll need a special waiver to get through and a few lawmakers have already raised an eyebrow. >> how long has that restriction
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been in place of a member of the military serving a civilian role? >> this has been a law since the 1940's and as soon as congress passed it they almost immediately granted a waiver for former secretary of defense marshall. when it was first passed the original restriction was 10 years back in the 1980's they shortened that to seven years. in this case it is still a problem and a couple more hoops for folks to jump through. senator mccain has already said he fully supports the mat is nomination and thinks he as great pick and is willing to shepherd the legislation through needed to take care of this. but we did hear objection from senator joe brand right after the mat is announcement happened -- mattis announcement happened yesterday saying she has concerns this is supposed to be a civilian not a military post and that is why the law is in effect so she'll put up some resistance, at least make sure that the senate has to go through the normal procedure for passing legislation and not allow unanimous consent or sail
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through without conversation about why the law is here and what it means to have somebody who was in the military take over this role. >> let's go through some of those hoops. which committees would the waiver need to go through? would it need to pass in the house and the senate before he is confirmed? what kind of threshold of votes are we talking about? >> we're still trying to figure out all the details here because this isn't something that comes up on a regular basis but this is going to go through the senate armed services committee and as i said senator mccain who is the chairman of that committee has said he's already at work trying to draft appropriate legislation and make sure this sails through as easily as possible. since it is legislation it has to go through both chambers and is subject to the same rules and vote totals a normal piece of legislation would be. there is going to need to be 60 senators to sign off to get it through as opposed to the normal nomination process where they need a simple majority. it should be a little complicated and interesting to
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see how it all unfolds but as i said, there's pretty widespread support for him in this pick. he is a very popular figure within the military, within congress. a lot of folks are happy to see president-elect trump has picked someone very familiar with foreign policy and with these issues. so i imagine something that is going to take extra paperwork but in the end not be a real obstacle. >> here is a look at what the chair of the senate armed services committee has been saying about him. pleased that the president-elect has selected general jim mattis for secretary of defense one of the finest military officers of his generation. what has senator mccain said specifically about getting the waiver through congress? >> just that he's willing to work on it and is already at work to go through this. he doesn't see the nomination as any sort of real concern, real obstacle. on the democratic side the few democrats who have brought this up senator jill brand is the only one who officially said she'll oppose his nomination.
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we've heard from a few democrats who say, look, this is worth looking into. we don't have any problem with general mattis but there is a reason this law is on the books and we need to take serious consideration of that. >> here is a look, of course senator gillibrand from new york tweeted as well, while i respect general mattis' service i'll oppose a waiver civilian control of our military is a fundamental principle of american democracy. you said you're really not hearing any more than what you've heard from her about senators wanting to block this nomination. >> you know, congressman schiff on the house side has said he has some of the same concerns. adam smith a ranking member of the house armed services committee, he said he has the same concerns. again, it's concerns with this idea of do we have a civilian controlled military or military controlled military? no one is saying anything against general mattis at this point. he has had as i said some colorful language and
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controversial positions that got him forced out of the obama administration. he was openly fighting with them about their stance toward iran. but at least on the hill right now it's a theoretical discussion about military civilian control and not so much a discussion about general mattis's credentials. >> so if the waiver is passed you see pretty smooth sailing as far as confirmation is concerned? >> you know, for the number of questionable or possibly controversial nominations we're seeing this doesn't seem to be one of them. this seems to be one where a lot of folks are going to say a lot of the right things and maybe we'll see some nice, scholarly conversations be the what it means to have a civilian controlled military on the hill instead of attacks on general mattis's past. >> all right. we'll keep following you on twitter. leo shane is your handle. we'll look for your writing in the military times. military thanks so much. >> thank you. >> follow the transition of government on c-span as donald
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trump becomes the 45th president of the united states and republicans maintain control of the u.s. house and senate. we'll take you to key events as they happen, without interruption. watch live on c-span. watch on demand at or listen on our free c-span radio app. >> thank you very much. welcome to congress. >> coming up next a discussion about the future of conservativism with two republican lawmakers. that's followed by a public memorial service for former cuban president fidel castro. and later, a look at the presidential transition process ahead of inauguration day. next, outgoing house republican
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chair bill flores joining incoming chair representative mark walker for a discussion on conservativism and what to expect when a new congress begins in january. from the american enterprise institute, this is an hour. >> i'm delighted to welcome all of you to the republican study committee changeover in leadership event. our two guests before you today, you know them both. representative bill flores and representative mark walker. we'll talk today about the republican study committee and what the plans are for the future. please join me in welcoming our guests. [applause] as things generally are these days we have an audience here at headquarters and we also have a larger audience watching us here not live but semi live over the internet. a lot of people are joining us by live stream today. we'll be opening up for q & a. before we start, a tiny bit of housekeeping which is if you're watching us on live stream and
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you want to join in on the conversation, the way that you do that on your browser is to go to and enter the code event, the event code aei event. and the event -- aei event is the code. i also welcome our viewers on c-span. thank you for joining us. well, i've been looking forward to this event because it's something we've done at a.e.i. a whole bunch of times and a relationship we truly cherish. the republican study committee has been a force of intellectual ideas, has been a moral force in the u.s. house of representatives for a long time. and certainly since i've been in washington, d.c. it's incredibly impressive work. there are 170 members. it really is the majority of the majority in the house. and it impacts major policy. it has in the last few congresses and it really promises to do even more in the coming years given the political whirlwinds we've seen around
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here in washington, d.c. the aei and rsc have had a productive and very special relationship. this is the third time we've hosted this conversation between the outgoing and incoming chairmen. let me introduce the outgoing and incoming chairmen briefly before we actually turn to the meat of the event. the current r.s.c. chairman is representative bill flores who represents the 17th district of texas. he's on my far left here. if not idiosyncrasy logically at least geographically. >> let's leave it geographically. >> my guess is -- congressman flores was elected to congress in 2010 in the epic year of 2010 which is really the beginning of some major changes in party politics around the country. and was elected as r.s.c. chairman in 2014. before that he spent 30 years in the oil and gas business in texas. the incoming r.s.c. chairman for the next congress is representative mark walker from the sixth district of north
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carolina. mark and i have gotten to know each other through a series of communication seminars we've been doing on the hill which is really a lovely thing for me. i enjoy it a lot. he was first elected recently in 2014 and has had a rocket-like ascent heading up the r.s.c. in just the beginning of the second term. before he was in politics he worked as a pastor. before ministry he worked in business and finance. he's done a lot for the pocketbook and for the soul of a lot of americans. and now in politics. two weeks ago he was elected by his colleagues to share the r.s.c. and incoming congress. i congratulate you on that. >> thank you. >> that's terrific. we couldn't be happier. >> thanks. >> a few things we want to do today is i want to ask a few questions of outgoing chairman flores. then we'll direct a few questions to the incoming chairman. then we'll open it up to discussion with the rest of you. and, finally, we'll take some live and virtual questions and discussion and finish up by 4:00.
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so let's start with you. representative flores, you've been the chairman of the r.s.c. for the last two years of president obama's presidency. we didn't know where the country was going. i think we all got a little bit of a surprise in the last election i think it's fair to say. it is one of the few elections where both people on the left and people on the right were almost equally surprised by how things turned out. one of the key lessons, key takeaways in politics as far as i'm concerned, i am not a washington guy. i'm from the real washington. i'm from seattle, washington. but i haven't lived here most of my career. the remarkable thing that i find is that so many politicians interpret victories as permanent and defeats as permanent. this election tells us that those who saw the permanent realignment of american politics in 2008 as permanently to the left were wrong and those who see this as a permanent victory for the republican party are probably wrong, too. we should never treat any political victories or defeats
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as permanent. so let's talk about what you've seen over the last few years. what's your assessment looking back over the past two years of what you've done in r.s.c. and how you're thinking about it. how do you sew it up? representative flores: let me say this. if you look at the macro environment we started with, we started the 114th congress with some headwinds in front of us. first of all if you remember the president's first state of the union right after he got re-elected was that he was going to bypass congress. you remember the statement he said i've got a pen. i've got a phone. so that set the theme for the last four years of his presidency and he followed through with that threat. so he largely viewed the constitution as irrelevant and congress as an inconvenience. and that's the way he behaved in the last four years so we had to deal with that. that ultimately i think went to our benefit because the american people rejected that style of leadership. but that said, that is the environment we were living with,
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with the r.s.c. we did have a majority in the house. we had a majority in the senate. the senate majority you couldn't tell if we were really in the majority or not because it was hard to tell who was controlling the agenda over there. so the r.s.c. had to maintain a clear, thoughtful, conservative course moving forward. i think we did a pretty good job of that in the 114th congress. we set two of the most aspirational, transformational r.s.c. budgets we've ever passed. we also created a framework of task forces to be able to provide the underlying conservative substance for what became the speaker's a better way agenda. when speaker ryan became speaker and he talked about setting a w path for the country, we decided, look, we are the conservative majority in the house. let's set that. let's take ownership of this. we created six task forces and we dealt with national security, fiscal responsibility, economic
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empowerment, particularly those that are sort of the permanent under class folks in poverty we have in this country. we looked at better ways to deal with that. we looked at tax reform, health care reform, restoring our limited constitutional form of government, and we took all those on and we created a series of white papers for the speaker to use or for the house task forces to use and they ultimately formed 70% or 80% of what's in "a better way." if you take that one step further, to the presidential race, donald trump's make america great again really has most of this embedded in it. now, he articulated it in a manner a lot different than the way i would do it. it was definitely different than the way mike pence did. but he was saying essentially the same things in terms of let's get america back on the right set of rails. and so, you know, i feel like
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the r.s.c. played a part in the transformation of government that we've had over the last few weeks. now, history will determine whether that's the case or not. i do want to echo something you said. i just read a headline before i headed over here today, said the democratic party is dead. i think most of us in this room would like to say that's true. but if it's going to be dead, to keep it that way. if we as conservatives lose our bearings and go in the wrong direction, and we've seen it in the past. you saw republicans stray away in the 1970's and from their core principles during the bush 43 presidency. if we stray away that will provide the colonel that allows the democratic party to come back. we have to stay thoughtful to the core values that we espoused in this last election that gave us a unified government.
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i feel pretty confident under mark's leadership we'll do that. we've set the framework and i think mark is exactly the right person to lead us forward. >> what would you say are the biggest head winds you faced over the past two years? >> first of all, we had, you had a senate that believed that -- how do i want to say this -- carefully. let's just put it this way. the rules of the senate -- >> we're not on tv or anything. representative flores: i've already had a couple senators call me about some of my comments. some were house broken senators, too. anyway, let me say this. the american people make decisions in elections and they really don't care what our rules are up here. they don't care about this inside washington stuff. you know, when they say drain the swamp they mean drain the swamp. they don't care if there is a 60-vote threshold in the senate or not. they want to get things done.
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i think the biggest impediment we had over the last couple years or was primarily you had an out of control executive branch and when you're actually digging into the constitution we have a limited set of remedies to deal with that. if you don't have a senate that's willing to go ahead and use their majority in an effective manner to help you out. so if you want to change the behavior of the executive branch change the way you allocate dollars. that means you have to pass an appropriations bill. the senate only passed one or two appropriations bills. if you want to change the direction of the executive branch you've got to work -- you have to find a way to pass legislation that puts the president on notice he's going the wrong direction. we just had difficulty doing that. we were frenetic in the house. you all saw how productive we
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were in the house but it's just we couldn't really get that all the way through the article i branch and that was frustrating to many of us as conservatives in this country. >> hum. i can imagine a situation in which that's not entirely ameliorated that tension between the senate and house going forward particularly when there is a president and who knows what the tension is even going to be between conservatives and the white house itself in that it's going to be a big adventure. that leads me to my next question is what advice have you been giving that you can tell us here in public to mark? representative flores: well, first of all, i don't think i need to give very much advice to mark because i think mark is just wired right already. i hate to use that term, mark. i haven't told him that. don't get the big head on this either. but, you know, mark at his core is fundamentally conservative and a great leader and so i think he has all the tools in place. i guess the advice i would give to mark is the advice i'd give
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to any conservative. and that is, remember if we're fighting each other we're not fighting the true enemies of the hard working american families in this country that are suffering. and so we need -- we always need, when you decide that my conservative bill is better than yours, instead of trying to work together and figure out how you make it a common conservative bill or common conservative thing, that energy you're spending on doing that takes away from being able to achieve the objective of getting a thought fum, conservative solution across the finish line and on the president's desk and in the law so that you can improve the lives of again hard working american families. that's the advice i give him to make sure we are very careful to not let our r.s.c. conservatives fight among each other. make sure they've always got that north star to go out and try to touch all the time. >> factionalization can be a problem. in fact usually is a problem.
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what can we do about that? mr. brooks: i'll turn it over to mark walker for a second. a couple things you don't know about mark that i just learned myself. he is a trumpet player which i respect as a french horn player. it's important we all be brass players i believe. and also, is this right that you have an elvis impression that is well known on the hill? representative walker: i cannot confirm or deny at this point. i have to have two terms in before we go there. mr. brooks: we'll try to do this next time as outgoing chairman i'll get you liquored up and see what we can do with that. what do you see right now? you've been around, a member of r.s.c. and unyour way around the hill plenty well at this point. what are your top priorities for the republican study committee s the next chairman? representative walker. it is interesting how those have grown exponentially in the last 30 days. working we went from
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hard to throw legislation at the wall and hope it sticks to say listen we have a chance to push forward policy and laws that impact many generations. tax reform. how many decades have we been talking about tax reform? this administration has added another 8,000 pages of tax code relations -- regulations closing in on 75,000 pages. individuals and small businesses in the cross hairs of the i.r.s. they don't have a chance. we have good ideas and really still keep three major deductions. higher education, charitable giving but the mortgage interest rate deduction. keeping those three, simplifying the tax code. i think it's something that is a huge win that the american people would be, they have been clamoring for sometime. obviously without getting too much to a talking point the repeal of obama care. i enjoyed working with senator rubio as far as budget reconciliation. this is an opportunity to sink our teeth in very quickly and early on, mr. brooks. the reason why i think it is so important, what we do with that
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repeal, we want to make sure, i know there are arguments on cloture the 60 to 51. we have a standard and a chance to go after the heart of obama care even under reconciliation the 51 majority threshold. i think those two priorities are something we need to partner, lead out on the r.s.c. but hopefully partner with the whole conference to get done early in the spring. mr. brooks: terrific. sounds like you'll be pretty busy. do you think in fighting against factionalization do you think you can grow the size of the r.s.c. and bring in a lot of people? factionalization normally occurs when the other side is in the white house and you might be able to bring people together and more, probably a little bit more of a common theme. do you think growing r.s.c. is the way to do it? representative walker: i think it is a by product. it is not my first instinctive goal. i feel like if we do our job whether business politics, ministry, you do your job, then it fluctuates by itself as
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opposed to artificially trying to repeople in. that is our goal to try to attract them by the job we're doing not necessarily the marketing. mr. brooks: terrific. representative flores: sorry to jump in on this. the r.s.c. is not effective because of its size but because of the members that it has. and the ideas that they put forward. and how that they're willing to advocate for those ideas. not only at home among constituents but here among their colleagues, here among the outside groups, on the media and so forth. and so the r.s.c. today is at 178 members and i'm not sure that is really the right size. i think maybe a smaller r.s.c. would be possibly more effective. mr. brooks: price rationing here at aei. representative flores: what i'm trying so say is the size is not the important issue. i think mark hit it on the head. if we develop the right
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policies, the right strategies, then we'll have the right people as members to get the right thing done. mr. brooks: terrific. r.s.c. has traditionally been known as the conservative thinking coalition on the republican side of the house. but to the very many americans, a lot of people in this room are fairly sfiss kate in the factions that exist in the house. not factions in a bad way but different brands of the republican party on the house side. do the score card for the viewers at home. at this point they hear about the republican study committee, republicans and the republicans who are in leadership. and then the freedom caucases. and just sort of talk us through the different brands of republicanism these days on the house side. you want to start with that, mark? representative walker: i'd love to. what we're focused on is effective conservativism. mr. brooks: you mean r.s.c. representative walker: rsc. there is no reason we can't
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attract whether it's leadership, there are tuesday group members, another faction if you will. there is the right approach, the ight policy. [stand by -- audio difficulty]
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representative walker: we have an opportunity, an incredible moment in history right now to allow our voices to be heard. i don't want to elaborate too long on this but that is where i believe the approach is incredibly important. republicans and conservatives specifically many times are guilty of simply preaching to the choir. that's our culture. that's where you'll, if you want to use the -- that's where the amens are, the easy place. the easy path. but the aspect of or the goal should be how do we get that conservative message into new communities? into new places? and sometimes -- it's leading by relationship to visit, to listen, to grow those relationships. in the sense, i'll give you an example. if you look at a new or used car and go in the lot and look at all the different bells and whistles if i'm the salesman and i look at your used car and say that is the nastiest piece of automotive i've ever seen in my life there is automatically a
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defensive nature or flag that comes up. we've got to do better across the board as conservatives and i believe that really comes down to our messaging. that is what drove me to run for congress originally. we're going to stay consistent with that and i believe the r.s.c. provides an incredible place to exhibit that conservativism across the board whether in leadership or a aucus or in tuesday's group. representative flores: i have to agree. it's all the same thing. the right policy, the right approach. i like the way mark calls it the right voice which is very similar to what you tried to train us to do. you always talk about the conservative heart and how we don't do well in conservative messaging and so we've got to do it, got to have the right way to message the policies that the american people essentially voted for on november 8. so we've got to help articulate that and then have the policy
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underpinnings behind that. i believe the r.s.c. has the ability to do that. again, the membership today has a cross section like you said. it's not a mini conference. if you look at the average conservative scores of the r.s.c. it is way more conservative than the conference as a whole but we do have enough diversity that we have good, thoughtful ideas coming out of it that still drive the good, solid conservative solutions. mr. brooks: what i find really exciting is that there is going to continue to be a push and i know it is very important to -- bill, but continuing to i realize this looked like -- this was a 50/50 election. it was not the kind of wave you would say there are things going necessarily the republicans' republicans'
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way. this is not -- it doesn't look like permanent victory. the republicans are going to have to if they're going to be successful get the message into nontraditional communities to be sure. you mentioned priorities. the stuff the house can drive into the senate and get the reconciliation. repeal at least parts of obama care and what are the ontraditional things nontraditional things you're thinking about that will help represent the conservative republicans in a new way? basically conservative head, liberal heart. what do you do about that? representative walker: happy to take this. just yesterday we were able to bring in my staff and i and a couple other members bring in the top evangelicals from across the country and not just baptists like me but across the board, nondenominational guys. really people in different regions of the country talking about two things. immigration and race relations. because i believe the church has an opportunity not to erect a
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policy but partner with us on getting this message to fresh communities. i was privileged this pastime to be able to have two major endorsements in my area, two wonderful, life long democrats from african-american community, one lady has never had a republican yahrzeit -- yard sign up before. if you're willing to invest in that time, it allows you to speak on the topics and issues, the nontraditional topics. only builds the party, but there is little soil -- fertile soil. down in north is carolina among the minority community. but the kind with of how we share that message is crucial.


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