Senate Passes GOP Tax Plan, House To Revote After Procedural Snag
RACHEL MARTIN, HOST:
In the very early hours of this morning, the Senate did something it has not done in more than 30 years. It passed a major overhaul of the nation's tax laws. The vote was 51-48. Every Republican president voted for this bill. They're betting a big corporate tax cut will ignite the economy. Here's Majority Leader Mitch McConnell.
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MITCH MCCONNELL: After eight straight years of slow growth and underperformance, America is ready to take off.
MARTIN: Minority Leader Chuck Schumer doesn't buy that supply-side argument.
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CHUCK SCHUMER: What has been sold as a middle-class miracle will instead deliver a hefty windfall to the wealthy.
MARTIN: Whatever you think of it, the bill heads back to the House for a vote today after a procedural snag. NPR's Scott Horsley covers the White House, and he is here to talk more about what has happened. Hi, Scott.
SCOTT HORSLEY, BYLINE: Good morning, Rachel.
MARTIN: So this is just a procedural snag, but explain what happened here.
HORSLEY: Yeah. This is a hiccup, not a heart attack. And it delays the final outcome but probably doesn't change it. What happened is after the House voted yesterday, the Senate parliamentarian - that's the sort of rules referee - found that some provisions in the House bill did not pass muster with the very particular Senate rules that the Republicans are using to push this through without a Democratic filibuster. So those provisions had to be stripped out, and that means the bill has to go back to the House for another vote this afternoon.
HORSLEY: Shouldn't change the outcome. The president's already planning a victory lap at the White House around 1 p.m.
MARTIN: What were the provisions, out of curiosity?
HORSLEY: Well, one is a measure that was championed by Texas Senator Ted Cruz that would have allowed parents to use tax-free college savings accounts to pay for K through 12 educational charges at private schools, parochial schools or even home schooling. That is out now. Another provision would have exempted a Kentucky school from a new tax that's being imposed on college endowments. And finally, the parliamentarian took issue with the sort of shorthand name that Republicans have attached to this - the Tax Cut and Jobs Act. So the bill will now have a much more cumbersome and parliamentary appropriate name.
MARTIN: Parliamentary-style name, yeah. So this was a party line vote in the Senate. Some Republicans in the House, though, voted no. What are some of the opponents saying about this bill?
HORSLEY: Well, the objection is - among Republicans is largely that it doesn't do enough to provide a deduction for state and local taxes. Right now, those taxes are completely deductible. Under the new bill, the first $10,000 will be deductible. That means some people who live in areas with high property values and relatively high estate taxes will be paying tax on more income next year than they have been in the past.
MARTIN: All right, NPR's Scott Horsley. Stay with us if you could, Scott. We are going to talk now, though, about this bill with a lawmaker who voted for it.
DAVID GREENE, HOST:
Yeah, that lawmaker is Matt Gaetz. He's a Republican from the state of Florida, and he voted in favor of this bill. He's in our studios this morning. Congressman, good morning.
MATT GAETZ: Good morning, good to be on.
GREENE: Well, thanks for coming. I know this bill has gone through many different iterations to make sure to have the Republican support it needed. Are you satisfied, happy with the final version?
GAETZ: Well, in a major overhaul of something as cumbersome as the tax code, I don't know that any one person can have precisely the outcome they want, but we seem to have worked well within the blueprint laid out by the president to lower tax rates for all Americans, to ensure that we've got an America First policy in the tax code by bringing assets from overseas back to America, by going from one of the highest corporate tax rates in the world to a tax rate that's competitive and ensures that American businesses won't be penalized when they're doing business overseas and generating revenue in this country.
GREENE: It sounds like you're not 100 percent satisfied since you said no one's going to be fully satisfied. What do you wish was still there that was taken out?
GAETZ: Well, I think that we could have simplified the tax code into fewer tax brackets. The original House legislation would have done that, would have gone from seven brackets into four. At the end of the day, we settled for lower rates in exchange for fewer brackets in our negotiations with the Senate. But all in all, this will be I think a real shot in the arm to the economy. We've had over 3 percent growth in the first quarter of the Trump presidency, largely in anticipation of policies like this that would ensure that we really reinvigorate entrepreneurship in this country and give small businesses relief that they haven't received since the 1986 overhaul of the tax code.
GREENE: Some Republicans were very concerned about making sure that these tax cuts - that there would be a way to pay for these tax cuts and be deficit neutral and not run up the deficit. Are you worried that the final version might end up running the deficit up more than you'd like?
GAETZ: I am. I was one of the Republicans that voted against the Senate budget that paved the way for this tax code. I far prefer the House budget. We took the position in the House that all tax cuts should be accompanied with spending cuts so that we could never drive up these mounting debts and deficits as a consequence of the rescue plan we had for the American economy. Unfortunately, the House folded to the Senate in that regard and allowed the deficit to increase in the short term. I would not have done it that way, but in Washington, we seem to be linear in a hard reform rather than sequential, so (unintelligible).
GREENE: Are you worried that this might sort of foreshadow something ominous in the party if the deficit does go up and there are some deficit hawks like you who might be tempted to look back and say, see that, my fellow Republicans, we should have taken care of this and paid for these tax cuts back then?
GAETZ: Well, I'm the third youngest member of Congress, and so I think I've got an obligation not only to my district but to my generation, and I fear the deficit hawk is becoming an endangered species in the Congress these days. But the president and the speaker have both made the commitment that welfare reform will be next, Medicaid reform - these are things that really impact the drivers of our debts and of our deficits. And the growing economy that we expect as a consequence of this tax bill will make all the other problems we have to address in spending easier to solve because you'll have fewer people participating in many of the entitlement programs and safety net programs if we can get the type of job growth and wage growth that we expect as a consequence of the tax bill. So hopefully it will facilitate the cuts in spending that are absolutely necessary to save the country.
GREENE: Before I let you go, I just want to make sure we, you know, that there are members of Congress - Democrats - who very much disagree with your argument that this is going to stimulate the economy. Also they argue that it really benefits the wealthy much more. Richard Blumenthal, Democratic senator, we heard from him this morning. He said that, sure, most Americans are going to see some relief, but for many, it will be crumbs. The Tax Policy Center says families earning less than $25,000 are going to receive an average tax cut of just $60. How do you respond to that?
GAETZ: Well, there are multiple ways where middle-class families will benefit. One initially will be the reduction in actual taxes that is paid or withheld, but also we expect to see rising wages as a consequence of this bill. We've done it the Democrats' way for eight years. We've had growing government and higher taxes, and the result has been a recovery that hasn't really impacted the middle class in more money in their paychecks. And so by cutting the corporate tax rate, our expectation is we'll be able to see job growth in the United States, we'll create disincentives for offshoring new jobs, and ultimately, that'll lead to real careers for the American people and more economic sustainability within the American household.
GREENE: Matt Gaetz is a Republican congressman from the state of Florida who supported this tax legislation. Congressman, thanks.
GAETZ: Thank you.
GREENE: We want to bring Scott Horsley - NPR's Scott Horsley back for just a moment. Scott, how solid is the argument from Congressman Gaetz and other Republicans that this will stimulate the economy, increase wages, create jobs?
HORSLEY: Well, Republicans are banking on that, certainly, because if you just look at the direct tax cut, the middle class only gets about 10 percent of what's in this bill. The rest goes to the wealthy or to corporations. So if Republicans are going to turn the tide of public opinion, which right now is running very much against this measure, they are counting on acceleration in economic growth and that flowing down to wages. One thing I would point out is that real wages in this country have actually been growing for the last couple of years after a long period of stagnation.
GREENE: NPR's Scott Horsley talking to us about - he covers the White House and has been covering this tax debate for us, and we really appreciate that, Scott.
HORSLEY: Good to be with you, David. Transcript provided by NPR, Copyright NPR.