Tax reform is the next big GOP push. Here’s what to expect

Politics

JUDY WOODRUFF: There is no question health care has commanded the spotlight recently on Capitol Hill, but waiting in the wings, an issue equally important to Republicans. And that one is arguably even harder to solve. It's tax reform.

Our Lisa Desjardins is here to walk us through where efforts stand.

Lisa, you have been spending a lot of time looking at this. Who has been pushing this, who is working on it, and what do they want to accomplish?

LISA DESJARDINS: First point, Judy. This is a process very different than health reform, than health care.

First of all, let's look at who Republicans are using right now, who is determining this. It is the big six leaders. That means two leaders from the White House, the treasury secretary and also the president's national economic adviser, then Leader McConnell in the Senate, as well as the chair of the Senate Finance Committee, and then Speaker Ryan himself and his tax-writing chairman.

Here is what they came out with in the last week, an idea that they say they want to lower rates for individuals and businesses. And they also want to simplify our large tax code. We hear that a lot, fewer brackets, but also fewer deductions.

So, it's not clear who wins or loses yet, but the White House has come up with a little bit more specifics. They have said they want to cut the corporate rate from 35 percent to 15 percent.

JUDY WOODRUFF: So, it's not clear, you're saying, yet who the winner — who is a winner and who is a loser, what income brackets stand to gain or lose?

LISA DESJARDINS: No.

And I think that's why we're talking about it tonight. It is very important that people start paying attention now, because they are starting to make these decisions.

JUDY WOODRUFF: So this is a massive undertaking. I happen to remember tax reform back in 1986, a long time ago. It takes a long time. It's complicated. Do they really hope to get this done by the end of the year?

LISA DESJARDINS: Well, as you remember, in 1986, it took almost a year for President Reagan to do that. And that was with the help of Democrats.

They only have a few months left. And they want to get this done by the end of 2017. Let's whip out the calender and see how that could possibly happen. Here is what Republicans are hoping happens. In September, they're hoping the House can pass a tax reform bill.

Then, sometime in October or in November, they would hand it over to the Senate. They are hoping that is when the Senate would pass its tax reform bill. You see that there.

Now, here is another problem, though, Judy. Look back at September. At the end of September, they have got to fund all of government, also have to pass a debt ceiling increase, and, oh, by the way there is still talk of passing a health care stabilization bill or Affordable Care Act bill.

That is an incredibly crowded calender. And on top of all of that, Judy, to even get to tax reform, they have to pass a budget. And so far, the House Republicans have not found the votes for that.

JUDY WOODRUFF: And none of that is simple, as you suggest.

So let's talk about the money. I believe you were telling me they want this to be revenue-neutral. They don't want it to raise the deficit. But there was income — there is money they were counting on this year that hasn't materialized.

LISA DESJARDINS: Right. They thought they would get money perhaps from an idea from House Republicans, which was to increase an import tax, a border adjustment tax. That is off the table because it ended up being too unpopular.

Also thought they would get nearly a trillion dollars from health care reform. That doesn't look like it will happen. That was all money they were going to use to cut taxes. So, without that money, where do they find the tax cut money so that they don't raise the deficit?

It's a big question. And one consideration right now is perhaps to cut mandatory programs, like Social Security and Medicare.

JUDY WOODRUFF: So, Lisa, just backing off of this a little, for Republicans, why is this important? Do they know what they want to accomplish here at the core? And what are Democrats saying about all this?

LISA DESJARDINS: Republicans see this as about the economy and jobs.

I think a good sound bite to listen to is this Senator John Thune, who is leadership on the Senate side. He said this on Tuesday.

SEN. JOHN THUNE, R-S.D.: We think that tax reform really needs to be built around the idea of economic growth. We get greater growth in our economy, it creates better-paying jobs, higher wages, provide tax relief for middle-class families in country, simplify the code.

LISA DESJARDINS: It's interesting. Democrats don't dispute that. They also want economic growth. They want people's taxes lower.

They say they are willing to work on this, but they have some requirements, Judy. They don't want a tax cut for the wealthy. They also say no cuts to Medicare or Social Security in tax reform. Those are areas where they clearly seem to disagree.

JUDY WOODRUFF: So, again, looking at the calendar, today is August the 3rd.

LISA DESJARDINS: Yes.

JUDY WOODRUFF: When should people start paying serious attention to all this?

LISA DESJARDINS: Well, I think already we have seen this week the Koch brothers and their organization have rolled out their effort to push for tax reform, also seen Speaker Ryan. Next week, we will see an important speech by the Ways and Means chairman, Kevin Brady, in California.

But, Judy, my advice is, I think, September is the time to really pay attention. If the House can get something moving in September, then this is a real effort. If they get sort of stuck on the rocks, then they have got a real timeline problem. So, there's three weeks of September.

JUDY WOODRUFF: Lisa Desjardins following it all at the Capitol for us, thank you.

LISA DESJARDINS: My pleasure.

Recently in Politics