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The Trump administration has released an outline of what it calls "the largest tax reform" in U.S. history. White House Budget Director Mick Mulvaney sat down with Judy Woodruff to discuss the president’s goal of driving economic growth, whether or not it matters if President Trump will personally profit from his own tax plan and more.
On this day when the White House is unveiling the outline of a tax system overhaul, and negotiating down to the wire over a federal spending plan to fund the government through September, I sat down with Mick Mulvaney, the head of the Office of Management and Budget.
I spoke with him at his office this afternoon, before there were reports of a deal on health care subsidies.
Director Mick Mulvaney, thank you very much for talking with us.
MICK MULVANEY, Director, Office of Management and Budget: Judy, thank you for having me.
I do want to start by asking you about taxes. That's the big announcement coming from the administration today.
The proposal, among other things, calls for increases in the standard deductions, individuals and families.
Big cuts in corporate business taxes.
What is the administration trying to accomplish with this proposal?
Getting economic growth back where it's supposed to be.
I think what we have forgotten for the last decade is that America used to be a fast-growing economy. If you look over the course of our 200-plus years, we're supposed to grow at about 3 percent, on average, and that's where we have been since World War II, at the very least, even further back than that.
But, for the last decade, we have been growing at less than 2 percent. That doesn't sound like much, but if you think about it in terms of the power of compound interest, when you take an economy our size that only grows 2 percent a year for a decade, instead of 3 percent a year, the difference between those things are tremendous.
Folks who are 30 years old have never had a job during a time when the economy was growing at 3 percent. And it's entirely different. When I was a young person, if you got fired, you could find another job. If you wanted to quit, you could go start your own company.
We haven't had that for 10 years now. And we're trying to get back to that. And that is what is driving not only everything we do at the White House, but specifically this tax plan.
A number of the analysts who have looked at say, when you put together the proposed business tax cuts, some of the individual cuts, and when you look at the proposal to do away with some of the taxes that are now in the Affordable Care Act, in essence, it's the top 1 percent of Americans, 1 percent of American, high-income level, who are going to benefit the most from this.
How do you answer that?
I'm not sure how could they could come to that conclusion.
I would be curious to know what assumptions they're making regarding the value of deductions. For example, we get rid of all the deductions on the personal side, except, I think, let's see, charity and some of the home interest deduction.
So, I'm not sure how you could make that conclusion, unless you're making some wild assumptions about the nature of those deductions.
Where do you see the benefits falling, what income?
Middle class. Middle class and business, writ large, both large business and small business.
In fact, it should be one of the largest reductions on small business, what we call S Corporations, in the history of S Corporations. So, we're trying to drive the economic benefit here to the taxpayers in the middle, the folks who are in the middle class, who are paying the taxes, and the places where they work.
We know the tax cuts for these so-called pass-through businesses, owner-owned businesses, are going to be among the beneficiaries. We know President Trump, it's the kind of business he has.
How much does he stand to benefit? And I ask people of because people are saying, we don't know what his tax income situation is. He has said he's not going to release that. How does the public know that he doesn't stand to benefit significantly?
Well, I actually don't care about whether or not someone else benefits. I care about whether I benefit, I being just anybody. Right?
As long as I'm better off, why should I care if somebody is as well? What I look at through is the lens of the business I used to run. I owned a restaurant. It was a fast, fresh Mexican restaurant. In fact, I rolled burritos the day that I announced I was running for Congress.
And this would be a huge benefit to us, to the point where S Corporations right now pay tax at the pass-through rate, which is typically the highest individual rate of the owners of the business.
You take that number to 15 percent, it allows me to keep a lot more money in my business. And what I would have done, had I still been in that line of work, is start preparing to open another restaurant.
I also want to ask you about the revenue loss that comes from all these tax cuts.
The administration at one point was talking about a border tax, some kind of adjustable tax at the border. That doesn't appear to be part of the proposal right now. How do you address significant drop in revenue, at a time when the country is — has deficits that are historic?
And we can talk about deficits more. And I want to. But let's talk about — you asked a couple different things, which is the border tax. Keep in mind that this is the first round of discussions. It's not a pre-cooked bill. It's not prepackaged. This is sort of our principles, so just because it's not in this first round of principles doesn't mean it won't be in a final version of the bill.
The president is interested in trying to figure out a way to tax imports, especially from countries that tax our exports.
Regarding the revenue loss, keep in mind that the corporate income tax only generates, I think, about only $300 billion a year. So, you can do a fairly good bit within the corporate tax, and not cost a lot of revenue.
And, finally — and you have heard Secretary Mnuchin talk about this today — we're hoping for really, really good growth from these numbers, from this tax reform.
But, as you know, when big tax cuts instituted during the presidency of Ronald Reagan, that growth didn't materialize. They ended up having to raise taxes again by the end of his administration.
Actually, that's not true. We did get really good growth from the Reagan years.
You saw GDP grow at very high rates as we came out of the recession, something that didn't happen at the end of the recession in 2007-2008. President Obama chose to deal with his recession by increasing regulations and getting government more involved in the economy.
President Reagan decided to do the exact opposite. President Reagan got a tremendous result in terms of economic growth. President Obama gave us eight years without 3 percent growth. So, I do think history shows us, if we do the tax reform right, that we can put people back to work and grow the economy.
Well, I want to move on to the budget.
You finish up the fiscal year later on. Right now, we don't know if there's an agreement on a spending — on a spending plan for the rest of this year. Where does that stand right now?
That is a really, really good question, and I don't know either, which bothers me a little bit, because I'm the budget director.
But we had thought we had a deal on Monday. The Democrats had objected to our inclusion of the bricks-and-mortar portion of the border wall. They said that that was a poison pill. And to sort of drive home their point, they said, well, now we want these cost-sharing payments, cost — the CSR payments, cost-sharing reduction payments to the insurance industry as part of the Obamacare.
And they said — they put that on after they found out our request for the wall.
Well, we took the wall request away on Monday. And we're still waiting for the Democrats to let us know where they stand. So, we thought we had a deal on Monday, almost 48 hours ago now, and we have no idea where the Democrats are.
We don't know if they're doing internal polling that maybe says they're going to benefit from a shutdown. We're really — we're not concerned yet, but I'm a little surprised that we haven't buttoned this up.
Is the administration, are you, the president, prepared to go ahead with a spending arrangement that doesn't include these payments to — subsidy payments to insurance companies that help low-income Americans?
Well, that's the whole idea, is that the bipartisan bill that is being — that I think has been negotiated now for three months, two months, on the Hill never included those payments until about two weeks ago.
So, we just assumed when we gave up on our immediate demands for the bricks-and-mortar wall that the Democrats would do the same thing. And for some reason, they're not being straightforward yet about what they want to do on those payments.
The White House, you mentioned the wall, the fact that the president initially said this was something he felt very strongly about. It had to be — there had to be money in there to pay for a bricks-and-mortar wall.
What signal that does it send, though, that he — that was a centerpiece of his campaign.
The day after we sign the bill that keeps the government open for the last five months of the fiscal year — our fiscal year ends the end of September — the discussions begin immediately for the larger budget for the full 2018 fiscal year. In fact, that's the budget we happen to be working on today as well.
We're doing '17 and '18 at the same time. Those conversations will have actually already started in terms of what wall funding will be in 2018. So, I don't think it's fair to say he's dropped anything. We simply said, look, this is the last five months of the fiscal year. There's very little we can get built in five months anyway, so let's focus instead on things we agree on.
The Democrats say they support border security. In 2006, for example, then-Senator Obama voted for a lot of the stuff we're asking for right now.
So, it's not a lessening of his — that this is a priority for him?
It's simply a recognition of the fact that we only have five months left in the year anyway. That's the only discussion we're having right now, and that there are other things we can agree on.
So, let's agree on them. Let's fund the government and let's start talking about 2018.
Final question. We're coming up on the 100-day mark.
I'm familiar with it. Yes, I have heard a little bit about it.
For President Trump.
As you know, there are critics, even friends of the administration out there, who are saying, this has been a rocky beginning for this administration, that you haven't been able to get as much done as you wanted. Pulling back — Obamacare hasn't been repealed and replaced, the border wall that we have just been discussing.
How do you see these first 100 days?
A lot of the stuff that was entirely in our control, I think we have actually exceed our own expectations.
You can talk about the number of bills that the president has signed. I think there's been at least 13, more than any president since World War II, the number of executives orders that we have issued. Again, it's not just number of these things, but what they have done.
By passing this legislation, we have undone a lot of the regulatory regime that the previous administration put in. We have undone a lot of damage they did with our executive orders. So, we have actually been able to reduce role of government in your life a great deal in the first 100 days.
We take that as a huge success. I think President Trump is the first president since the 1880s to have a Supreme Court justice in the first 100 days. Yes, we have not gotten health care done. Yes, we're just starting tax reform today.
But keep in mind those are things we had to work with Congress, and Congress turned out to be a lot more broken than we thought it was. In fact, one of the reasons we think the Democrats have not responded on our funding proposals for this year is that they don't want to give it to us within the first 100 days.
So, that's how poisonous the atmosphere is that we're working in, that they sort of agreed in principle. They want to say yes, but they won't say yes until after the 100 days to deny that to the president. That's just absurd. And the folks back home pay the price for that, which is unfortunate.
Budget Director Mick Mulvaney, thank you very much.
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