ROBERT COSTA: In Alabama, an epic upset, and Republican urgency on taxes. I’m Robert Costa. The victory by Democrat Doug Jones upends both parties on the Hill and ahead of the midterms, tonight on Washington Week.
PRESIDENT DONALD TRUMP: (From video.) We want to give you, the American people, a giant tax cut for Christmas.
MR. COSTA: President Trump says Republicans are on the verge of passing a sweeping tax cut bill, one he says will boost the middle class. Critics say that tax overhaul would provide generous cuts for corporations and the wealthy and would add more than $1 trillion to the national debt.
HOUSE MINORITY LEADER NANCY PELOSI (D-CA): (From video.) They’re robbing the future, ripping off the middle class. And why? To reward their friends, corporate America.
MR. COSTA: The massive package would double standard deductions, but cap other popular tax breaks, including deductions for mortgage interest and state and local taxes. It would also eliminate the individual mandate under the Affordable Care Act.
HOUSE SPEAKER PAUL RYAN (R-WI): (From video.) This tax cut will mean less of a paycheck going to Washington and more to the hardworking person who earned it.
MR. COSTA: But Democrats are calling to delay the vote until Alabama Senator-elect Doug Jones is seated.
SENATE MINORITY LEADER CHARLES SCHUMER (D-NY): (From video.) It would be wrong for Senate Republicans to jam through this tax bill without giving the newly elected senator from Alabama the opportunity to cast his vote.
MR. COSTA: We explain what a compromise could look like when it comes to cutting taxes, with Kristen Welker of NBC News, Jeff Zeleny of CNN, Nancy Cordes of CBS News, and Shawna Thomas of VICE News.
ANNOUNCER: Celebrating 50 years, this is Washington Week. Once again, from Washington, moderator Robert Costa.
MR. COSTA: Good evening. Republicans are charging forward tonight with their sweeping tax cut bill, after two Republican senators reversed course and said they would support the legislation. Republican leaders made some last-minute changes to win over Florida Senator Marco Rubio, who threatened just yesterday to vote no. Another holdout, Tennessee’s Bob Corker, the only Republican to vote no on the original Senate version, also said he would support the bill, despite his concerns about the $1.5 trillion it will add to the deficits.
Nancy, you just came from Capitol Hill. And you got to update us all, where is the state of play tonight? It looks like Senator Corker and Senator Rubio have actually gotten to yes. Where does that put the bill?
NANCY CORDES: It’s a very, very good day for Republicans. And it looks like they are on track to meet their timeline, which is a vote in the House on Tuesday, a vote in the Senate shortly thereafter. It doesn’t sound like a major milestone to take a House Republican bill and a Senate Republican bill and meld them together. But actually, there are so many ways that that could have gone wrong, there are so many stakeholders who are attached to one version or the other. So the fact that they said they would get it done on Friday and they did is actually a big sign of how unified this party is. And it’s the culmination of a decades-long dream. So it seems like, you know, the party’s really hanging together now, and looking to avoid any last-minute derailment.
MR. COSTA: Shawna, they’re unified, but a lot of these holdouts, because of what happened in Alabama on Tuesday, they think they have leverage. This process has been rushed. So what has happened in the tweaking of this bill? Who has been able to be pulled across the line?
SHAWNA THOMAS: Well, Rubio, who you mentioned – Senator Marco Rubio of Florida –
MR. COSTA: Child tax credit.
MS. THOMAS: – was able to get the child credit sort of changed basically, in a way so that people could get the money back themselves. But basically, he was sort of masterful in the leverage that he had. Everyone has been saying we have to pass this bill by the end of the year. We have to pass this bill by the end of the year. They didn’t really have to pass this bill by the end of the year. (Laughter.) But with Senator-elect Doug Jones from Alabama next year, they really do kind of have to pass this bill by the end of the year. So we saw that. He came out strong and came out publicly that he thought that the bill needed to be better for the middle class, and he got what he wanted. And they worked it into the bill. And the thing is, what that creates are a couple of losers, possibly. You have Senator Susan Collins. We don’t know how she feels about this bill. We do know she wanted something to be done about shoring up the Obamacare markets. But she probably doesn’t have any leverage anymore.
MR. COSTA: What’s the White House’s and the president’s role specifically in closing this deal?
KRISTEN WELKER: Look, I think the president has been engaged in a very different way than he was during the whole health care debate. I think he was more read-in on the details. He was working the phones behind the scenes. Unlike health care, when he was sort of making promises to individual lawmakers, I’m told he learned from some of those mistakes. And he was really serving as an energizing force, I think, as opposed to sort of derailing the negotiations. Today we had a chance to ask him some questions early in the morning, and I asked him if he would support increasing the child tax credit. He indicated the answer to that was yes. So it was very clear, as the day was progressing, that this was moving in a good direction for this president. I don’t think you can overstate it. President Trump needs a victory after the failure to repeal and replace Obamacare. He hasn’t had a major legislative victory. And so this was a full-court press for this president, the vice president, and his entire top staff.
MS. THOMAS: And I think that –
JEFF ZELENY: I think it’s a –
MS. THOMAS: Sorry.
MR. ZELENY: It’s also a test of, you know, that Republicans do tax cuts. This is what they do. So if this had not been accomplished, it really would have been a sign that governing in this era is impossible. But I think you have to give credit to the fact that – you’re right about the president. He engaged in a different way. He was working the phones, but not out there as much publicly. And I’m told he knew more about the details than he talked about the details, and I think that’s clear. Whenever, you know, you ask him questions, he – you know, he was engaged with what each senator wanted. But it’s also easier to – I think to build a piece of legislation rather than to take one away, like the health care debate. And that’s why this was different, I think, than the Obamacare debate.
MR. COSTA: You had a quick point, Shawna?
MS. THOMAS: Well, yeah. I think even publicly the president – they did have events. He did have speeches. He did go to towns. And usually at those events he pretty much stayed on message. They wanted this badly.
MR. COSTA: So the president was taking a big-picture approach. He was talking in broad strokes about the legislation. And part of it, we haven’t had many hearings on this piece of legislation. The public’s not really aware. The bill was released on Friday night. We’re all still reading the 500-page document. So let’s take a look for a second about what is actually in this bill. We all want to know. And what would happen if it became law.
First, the individual rate would drop from 39.6 to 37 percent. The corporate rate drops from 35 to as low as 21 percent. The standard deduction for individuals doubles. It will now be $12,000 for individuals and 24,000 (dollars) for married couples. Republicans say this would simplify the tax process, and allow more people to stop itemizing. The proposal preserves the deductions for medical expenses and student loans. People living in high-tax states, like New York and California, well, they could pay more under this new provision that limits state and local income and property tax deductions at $10,000. Republicans will also repeal the most controversial provision of the Affordable Care Act, the mandate that requires just about everyone to have some form of health insurance or pay a fine.
Nancy, on the health care point, this is a major overhaul of President Obama’s signature law. We’re not talking much about it when we’re on Capitol Hill because it’s all taxes, but this is a health care debate as much as it is a tax debate.
MS. CORDES: Republicans don’t want to talk about it because they’d love to be able to slide that through. There’s another big GOP priority in this bill they don’t talk a lot about either, and that is opening up part of the Alaskan Wildlife Refuge for oil drilling, which was kind of a give-away to Lisa Murkowski of Alaska, to win her over, but, you know, something that Republicans have wanted to do for a long time. And it was interesting, as you went through the laundry list of what is in the bill, it’s remarkable how much at this late hour we still don’t know. First of all, because we just got the bill and it’s 500 pages.
But also because, I checked again right before we went on the air, the Joint Committee on Taxation – which is sort of the nonpartisan referee, if you will, the bipartisan number crunchers – has not been able to release its analysis of this bill. So we don’t know basic things like how much does it cost. We think it’s about 1.5 trillion (dollars), but we don’t really have any idea. What does this mean for people at every income level? Yes, their individual rates are coming down, but they’re also losing some deductions. How do they fare, you know, when you average all that out? We don’t know, because Republicans were negotiating some of these things right up until about 12 hours ago and it takes time to run the numbers. And yet, lawmakers are being expected to vote on this in just a few days, and they may not have all those answers when they vote.
MS. WELKER: And I think, while this is a legislative victory, certainly, for Republicans – once they do finally do get it passed, if that is in fact what happens – it’s not necessarily a political victory for all of the reasons that you’re just mapping out, Nancy, and also – because if you look at the polls, this is not a popular piece of legislation.
Now we’ve of course seen that before. If you talk to Republicans, they say, hey, look at the Reagan tax cuts. That was wildly unpopular. Obamacare was very unpopular initially. So their calculation is that ultimately people will start to like this. But I think there is a concern that in 2018 Democrats could really use this on the campaign trail.
MS. THOMAS: Well, and one of the things that the senators – the Republican senators had to do to get the House Republicans on board was that top rate of 39.6 percent, bring that down to 37 percent. The original Senate bill did not do that.
So they have now given the Democrats something where they get to say, hey, if there’s the richest of the rich in this country, they are going to get a tax cut. And I don’t think the Senate Republicans originally wanted to give that away. They also wanted to keep a couple of ways to pay for the bill.
MR. ZELENY: And I think also, at the – you know, all along the way – as Kristen knows, we’re at the White House every day – the president always talked about getting Democratic votes for this.
MS. WELKER: Right.
MR. ZELENY: Early on he said we’ll get Democratic votes. In fact, he’s gone out to a bunch of red states that have Democratic senators, and was trying to entice them. At the end of the day, that – you know, it fell short and was sort of a half-hearted effort.
But I think that that is the – you make the point of 2018. As people digest what’s in this bill and realize that it does not help a lot of Trump voters necessarily as much as Trump donors, I think that is something going forward – it will be the legacy of this bill.
I mean, the healthcare bill was obviously freighted with a lot of weight. It was passed around this same time – Christmas Eve of the first year of the Obama administration, at least in the Senate. Once this is all digested, politically you’re right. It’s not going to be that great for everyone.
MS. CORDES: I will say that there are some changes in this final version that may help to win people over, at least in the short term. The fact that that child tax credit is refundable up to $1,400. That’s a pretty big chunk of change. The fact that some of these deductions that they were planning to eliminate, for student loans and, you know, for health costs, which – those were incredibly unpopular. They dialed that back. And so, yes, some of these goodies expire in 2025, but in the short term there may be lower- and middle-income people who say, OK, I’m obviously not getting as big of a tax cut as the wealthy, but I’m still getting a tax cut, so how can I hate this plan.
MR. COSTA: When do we expect the vote?
MS. CORDES: Oh, it’s looking like Tuesday in the House and then, you know, the Senate has to take some time to allow for debate. Democrats probably will take up all of that time, but if everything goes according to plan, the Senate vote would take place on Wednesday.
MR. COSTA: Shawna, Jeff brought up the midterms, and when you look at this bill, the corporate rate – the cut is made permanent to about 21 percent.
MS. THOMAS: Yes.
MR. COSTA: The middle-class tax rates are not permanent. Is there going to be a political cost for Republicans next year because of the fact that the corporate rate is locked in and it’s really helping corporations?
MS. THOMAS: Well, I think the thing that Republicans are going to say is that, yes, to make the system work through the reconciliation process, the special process the Senate is using to pass this bill, we had to sunset those tax cuts for individuals’ personal income tax cuts. But we’ll continue them on. And there is sort of a historical trend that when you try to sunset tax cuts, someone ends up going ahead and extending them and extending them and extending them because nobody wants to run on your taxes increasing.
But that will be brought up, and that’s part of the messaging problem that the Republicans have, which is when you start to look down the line, middle-class people’s taxes go up at a certain point and the corporations’ don’t.
MR. ZELENY: One thing that’s not been discussed – I’ve been sort of surprised – the debt, and the price tag on this, for it being a Republican administration – I mean, Republicans, you know, were often the stewards of – and concerns, you know, about this were front and center.
Bob Corker is really one of the only senators to talk loudly about what is this costing everyone here, and he is on board with this. I’m told one of the reasons he came on board – a Republican who is very close to this process told me that Leader McConnell went to him directly and said, we need your vote on this. Senator McCain, as we know, is battling brain cancer in Walter Reed. It’s unclear if he will be able to come back and vote. He wants to do that next week. But having Bob Corker on board is certainly an insurance policy, if you will.
But he raised the concerns about the debt. You don’t hear much about that from many other people, certainly not the White House. I haven’t heard the president talk about that at all.
MS. WELKER: No, they’re not focused on that. I think they’re focused on the corporate tax cut. The president loves to talk about that. He wanted 15 percent; he didn’t get the 15 percent he wanted. They had to compromise at 21 percent, and their argument is that’s something that’s really going to boost the economy.
MR. COSTA: And they’re banking on the economic – the markets doing well –
MS. WELKER: Absolutely.
MR. COSTA: – and the tax cut. They think – it’s traditional Republican orthodoxy, trickle-down economics will win them votes next year.
MS. WELKER: Right. Well, and President Trump has already started to make that argument. He’s tweeting about the economy, the stock market, almost every morning to sort of highlight that point. Look at how the markets are already responding to the mere idea that this is going to pass. And so I think you are going to see him continue to hit that point very hard.
MR. COSTA: Let’s just talk about what sparked all this frenzied activity this week because it was the upset in Alabama that started all of this, the special election where Democrat Doug Jones beat Republican Roy Moore. It was a race dominated by the allegations of sexual misconduct against Moore, but it nonetheless was a significant political moment. A Democratic win in the Deep South, Trump country.
And when I was on Capitol Hill this week talking with senators on both sides, I heard from Democrats that it wasn’t just about Moore – Senator Bernie Sanders told me this – it was a referendum on President Trump.
The question remains, however, whether Democrats can translate this win into an effective way of stalling the Trump agenda or winning back control of Congress.
Shawna, what are you hearing from Democrats about whether this tax bill is actually a gift to them, and they can build on the Alabama momentum?
MS. THOMAS: I mean, I think – I think in some ways Nancy Pelosi had said that this is a little bit of a gift to them. And they’ve also said, you know, you don’t want to do this, but they are going to run on that. They are going to run on the idea that they are lowering rates for people who are rich, and that’s not – it’s just not a great message for Republicans, and they can – the thing about Republicans is that they can say, you know, you’ve got to wait and see, and the economy is going to get better. And that takes a while, just like we saw – as Kristen pointed out – with Obamacare.
People kind of like Obamacare now, now that they sort of understand how it affects their lives. This is a slow build, and we won’t be able to tell you how tax reform is going to work, but the Democrats are going to tell you for a while, hey, that rich person down the street got a tax cut.
MR. COSTA: How does – if the Senate now is 51 Republican seats, 51 – 52 to 51, how does that change Capitol Hill?
MS. CORDES: Well, it’s interesting because, on one hand, there’s not that much legislation that you typically pass with 51 votes rather than 60. We’ve been in kind of this unusual phase in the Senate where Republicans have been using this reconciliation process, this budget process to pass legislation using 51 votes – first on healthcare, now on taxes. But after that, it’s going to get more difficult, and so, you know, their problem isn’t going to be that it’s 51-49 and that makes it tighter when they try to pass with a simple majority. The problem is going to be that, on a lot of legislation that they want to pass, they’ve got to get to 60, so they’re going to need Democratic support for the first time and, you know, everybody’s muscles are sort of atrophied.
MR. COSTA: And the president reached out to Doug Jones, the senator-elect.
MR. ZELENY: He did, and it was a phone call pretty early on. I mean, this was one of the biggest defeats that President Trump has had, politically speaking. But in a tweet about 11:00 on election night, pretty measured and conciliatory, congratulating Doug Jones – less than 12 hours later, he was on the phone with him, congratulating him, inviting him to the White House, to come over. If you think of Doug Jones, like, yes, he was branded as a liberal, but he’s still a Democrat from one of the most conservative states, sort of an extinct creature.
That used to happen all the time – the Ben Nelsons of the world, if you will – like Democrats from Republican states. So we’ll see what Doug Jones does. He’ll play ball in some respect, but I was sort of struck by – the week began so poorly for President Trump, but it will end, likely, as one of his strongest weeks, if this bill is signed.
MS. WELKER: And I thought it was interesting – earlier today the president was asked, is it time for Roy Moore to concede, and he said, yes. He didn’t hesitate, and I thought that that sort of underscored the point that you are making, Jeff.
Doug Jones, I thought, ran a very smart campaign prior to the allegations that came out against Roy Moore. He said, look, I’m someone who can work with anyone in Washington. If you talk to Republicans, they say they are holding him to that – maybe not on every piece of legislation, but think about some of the things they want to tackle in the new year. Infrastructure, for example – that’s an area where I think Democrats and Republicans can find some agreement.
The president keeps talking about welfare. We’re trying to drill down on some details – what specifically is he talking about, but those are potential areas, I think, of common ground.
MS. THOMAS: The one thing I want to say is that in – Doug Jones has his seat, it will be up for reelection in 2020.
MS. WELKER: Right.
MS. THOMAS: The odds that a Democrat re-wins that seat are not that good in Alabama, especially unless Judge Roy Moore decides to run again or something like that. So – (laughter) –
MR. ZELENY: Which is not an impossible thought. He’s still running, and he hasn’t dropped out yet.
MS. THOMAS: He ran again for judge, won after getting kicked out – (laughter) – so let’s just remember that.
And so I don’t know how much leverage the Republicans or President Trump have over Doug Jones if, in the future, the idea of him winning that seat again is really unlikely.
MR. COSTA: People say don’t read too much into special elections, Jeff, but at the same time this was a major win for the Democrats, and it made President Trump be a little bit – to reach out, to extend a hand.
MR. ZELENY: It did, it did. I mean, he had no choice, really, and he was humbled by this in the moment. You’re right, this – I mean, odd circumstances all around, but the – I think the takeaway here is, has President Trump’s relationship with Steve Bannon changed? They’re still close, but will he follow him in – you know, if he’s challenging another sitting Republican senator? Don’t count on it.
MR. COSTA: The hardliner from Breitbart, he’s still in the president’s ear, but we’ll see how much he impacts the president moving forward.
But there’s a bigger picture, too, among all this tax discussion, because as lawmakers this week were hammering out the final version of this tax bill, President Trump was taking aim at the FBI minutes before he was speaking to a graduating class at its national academy. Here’s what he had to say from the White House lawn.
PRESIDENT TRUMP: (From video.) Well, it’s a shame what’s happened with the FBI, but we’re going to rebuild the FBI. It’ll be bigger and better than ever. But it is very sad when you look at those documents, and how they’ve done that is really, really disgraceful, and you have a lot of very angry people that are seeing it.
MR. COSTA: Today was just the latest in a barrage of criticism from President Trump that he’s directed at the FBI, saying the bureau’s reputation is in tatters. Nancy, when you think about this moment for Republicans, they’re moving forward on one of their promises on taxes. When you’re on Capitol Hill, are they worried that the president’s comments about the FBI, his conduct when it comes to the Russia probe, that could be a major problem for them that – going into 2018?
MS. CORDES: That worry is an undercurrent that is there all the time. It’s not escapable. At the same time, they are so used to him doing this – attacking the CIA, attacking the FBI – that it’s sort of become background noise at this point, or at least they treat it as if it is and try not to address it. Yes, it gets them off-message. Yes, they desperately disagree with it. But they try not to acknowledge it because no one wants to be in a fight with the leader of their own party.
MS. WELKER: And, Robert, if it’s background noise on Capitol Hill, it’s really starting to bubble up to the forefront at the White House. And you saw that play out today in President Trump’s remarks. He’s really ramping up his attacks against the FBI. I think it reflects, potentially, a new strategy, a tougher strategy. He’s trying to undercut the investigation. Nothing really new about that, but he feels like he’s been energized by a top official at the FBI who was removed from the special counsel investigation amid some questionable text messages. But there is a debate in Trump’s inner circle about how to respond, how tough should he get. You mentioned Bannon. Bannon wants him to get a lot tougher.
MR. COSTA: Well, based on that, Jeff, should we expect Robert Mueller, the special counsel, to be fired in the coming weeks? Is that on the radar for the White House? Is a pardon for former National Security Adviser Mike Flynn on the radar?
MR. ZELENY: Well, the president was asked that this morning and he said I’m not thinking about that yet, but left open the possibility of pardoning Flynn. I think we have to see. I mean, Michael Flynn obviously is cooperating with the special counsel because he was only – he plead guilty to one charge. But I think going forward here the idea inside the White House, his lawyers believe that, you know, he’s not the subject of this. They want to get through this as quickly as possible. They have tried to suppress every urge and inclination to fire Bob Mueller because that would create a whole situation. But Rod Rosenstein, the deputy attorney general who appointed him, he voiced his support for Mueller here. So I think any firing of Mueller would set all of this back.
MR. COSTA: Shawna?
MS. THOMAS: And any firing of Mueller, Rod Rosenstein in some ways would have to do it.
MR. ZELENY: Right.
MS. THOMAS: Basically, the president would have to tell Rod Rosenstein I want him fired and Rod Rosenstein would have to say – who’s the deputy AG – would have to either say, OK, I’ll do it, or say no, and then you end up in sort of a Saturday night massacre situation a little bit. So it’s a little bit hard to fire him, but there is no political upside and no one on Capitol Hill on the Republican side wants that to happen.
MS. CORDES: And no justification, because apparently he did the right thing. When he found out about these text messages, he removed this FBI agent from the investigation. What more is it that he’s supposed to do?
MR. COSTA: And the congressional committees are on the line now investigating Russia. Will they close by the end of the year?
MS. CORDES: No. (Laughter.) There’s so – you know, there’s just more and more all the time.
MR. COSTA: We’re going to have to leave it there. Thanks, everybody, for joining us for our conversation tonight. And stay tuned if you’re watching for a special edition of the Washington Week Extra. That’s coming up next on most PBS stations. We’ll be talking more about the Alabama Senate race and President Trump’s Twitter feud with Senator Kirsten Gillibrand. Remember, if you missed the show or the Extra, you can find both online Friday nights and all weekend long at PBS.org/WashingtonWeek.
I’m Robert Costa. Thanks for joining us.