Full Episode: Tax reform and the first indictments in the Russia probe

NANCY CORDES: Taxes, terrorism, and the widening Russia probe. I’m Nancy Cordes, in for Robert Costa. We tackle it all, tonight on Washington Week .

PRESIDENT DONALD TRUMP: (From video.) We’re about to begin a long trip.

MS. CORDES: As President Trump embarks on a high-stakes trip overseas, political battles brew at home over tax reform.

HOUSE SPEAKER PAUL RYAN (R-WI): (From video.) With this plan, we are getting rid of loopholes for special interests and we are leveling the playing field.

HOUSE MINORITY LEADER NANCY PELOSI (D-CA): (From video.) What’s really important to know about what they’re doing is what they give you with one hand, they take away with the other.

MS. CORDES: All this as the Russia investigation intensifies, with the first indictments, a guilty plea from a former Trump campaign advisor, and new questions about the attorney general’s congressional testimony.

SENATOR AL FRANKEN (D-MN): (From video.) You don’t believe that surrogates from the Trump campaign had communications with the Russians. Is that what you’re saying?

ATTORNEY GENERAL JEFF SESSIONS: (From video.) I did not, and I’m not aware of anyone else that did, and I don’t believe it happened.

MS. CORDES: But court documents and a photo tell a different story.

We’ll get insight and analysis from Kelsey Snell of NPR, Philip Rucker of The Washington Post , Jeff Pegues of CBS News, and Jim Tankersley of The New York Times .

ANNOUNCER: Celebrating 50 years, this is Washington Week . Once again, live from Washington, substituting for Robert Costa, Nancy Cordes of CBS News.

MS. CORDES: Good evening. Republicans rolled out their plan to overhaul the way every American pays taxes this week. They say the business-friendly proposal will make companies more competitive and simplify the tax-filing process. Among the key provisions, lowering the corporate tax rate from 35 percent to 20 (percent), reducing the number of tax brackets from seven to four, doubling the standard deduction, and protecting 401(k) savings plans. The GOP plan would also eliminate the alternative minimum tax, deductions for student loans and medical expenses, and it would cap mortgage deductions on new home purchases at $500,000. I asked the bill’s chief author, Texas Congressman Kevin Brady, why he thinks this plan will achieve the growth and higher wages that the Bush tax cuts promised but didn’t deliver.

REPRESENTATIVE KEVIN BRADY (R-TX): (From video.) A complete redesign of the code, we’re not just putting higher-octane fuel in an old clunker of a tax car. We propose to drive a newer tax car that can compete and win against any country in the world.

MS. CORDES: Jim, I am going to start with you because you have been relentlessly crunching the numbers for the past 36 hours. Should a middle-class family like this tax plan or not?

JIM TANKERSLEY: I feel like I’ve been living in a tax car, so this is good. No, a middle-class family has a lot to like in this plan, and some things to worry about. And depending on what type of middle-class family you are, you may see a tax cut or you might see a tax increase. So if you’re a middle-class family that just takes the standard deduction, you’re probably going to get a tax cut. You’re going to have lower rates and you’re going to have a higher standard deduction. But if you itemize, if you have high medical costs, or if you live on the coasts in a very expensive housing area and you pay a lot of local property and income and sales taxes, then you might actually see a tax increase because those are going to be capped or in some cases going away.

MS. CORDES: So when Republicans say that the average family is going to have an extra $1,100 in their pocket at the end of the year, is that an accurate representation?

MR. TANKERSLEY: So for the typical family that Republicans talked about, that’s true, that family would see an additional $1,100 from lower taxes in the next year. Interesting note about that family, though: because of the way that some of the benefits to the middle class end at the – after five years in this plan, that family, after five years, would have higher taxes than they would today.

MS. CORDES: And they’d be left hoping that the tax cuts get reinstated, but as we know, nothing in Congress is a sure bet.

MR. TANKERSLEY: Right. And this is part of the problem Republicans have. They can’t make everything permanent because the plan can only lose so much money in terms of tax revenue. But they’ve chosen to keep the corporate side permanent and that particular provision for the middle class to be temporary. And so by making that choice, they are opening up the possibility that taxes could go up on those families.

MS. CORDES: And, Kelsey, right now Republicans believe that this plan would cost about $1.5 trillion over the next 10 years. What are its prospects now in the House? There are already a handful of Republicans who don’t like some of the provisions, like the change to the mortgage deductions. So are there enough of them to really slow down its progress?

MS. SNELL: Yeah, I think that this has a really good chance of passing in the House. They are going to start doing work on it in the committee level. The House Ways and Means Committee will take it up on Monday. That should take three, four, maybe five days to get done. And after that, they will send it to the House floor. There are some skeptical Republicans, but they’re, by and large, really in favor of just doing a tax plan. This is something they’ve been promising, something they’ve been waiting for. And they’re really eager to pass this and say that they have a legislative achievement that not only satisfies something that the president wanted to do, but also they can take it home and say to the people who vote for them: I’m cutting your taxes.

MS. CORDES: Right. And I have rarely seen Republicans as giddy as they were at the end of this week, just because they finally managed to produce a tax plan, which is not as easy as it sounds.

MS. SNELL: No, it’s really hard. And part of the reason it’s hard is because writing a comprehensive tax plan means getting rid of things like the – you know, the state and local tax deduction, or reducing the deduction for mortgage interest. And typically that’s when you get all of the lobbyists and all of the people who are advocating for these really popular tax breaks coming in and throwing up their hands and saying: You can’t do that. You can’t do that. It’ll ruin the economy. And, you know, I think that you’re still going to see a lot of that in the coming days.

MS. CORDES: Easy to cut. Not so easy to raise revenue.

Phil, it must not have been an accident that Republicans unveiled this plan one day before the president left on a 12-day Asian trip. (Laughter.)

MR. RUCKER: Yeah, that’s right. Look, the president, they feel, can be very helpful as this relentless, energetic salesman out in the country, touting this plan as big, historic, amazing tax cuts. But he’s not that helpful on the nitty-gritty of the policy details. And particularly when this moves over to the Senate, where it’s a much more difficult hurdle to get those votes, there are a lot of tensions between the president and some of those key Republican senators, including Bob Corker of Tennessee. And so the president’s absence can actually potentially be helpful in the sausage-making process on Capitol Hill.

MS. CORDES: Although, Kelsey, they are now considering one of his suggestions, which is putting the repeal of the individual mandate from Obamacare into this tax plan. What does that do to the politics, and what does that do to health care?

MS. SNELL: Well, I think they are considering it, maybe not as seriously as they are considering other changes. It’s a really difficult political issue because it would alienate a lot of people who voted against the health care bill. And it brings in this dynamic of relitigating fights that were very nasty for the Republican Party for the past – the entire first part of this year. It would help them on the actual math equation of making the tax cuts fit these complicated Senate rules that say you can only lose $1.5 trillion over the 10-year span. Yes, it would definitely help solve that problem, but the politics I think are just too huge.

MR. TANKERSLEY: Yeah, what it would do is it would give Democrats and other opponents of this bill a victim, a face of people who are in fact being hurt by this policy. And that was a big thing that tripped Republicans up during health care, was that Democrats would point to this person will lose their coverage. And if you give millions of people losing their coverage to Democrats as a weapon against you, that opens up a whole bunch of arguments that you otherwise might not have in a tax bill.

MS. SNELL: It’s also such an open wound for Republicans right now, the failure that they had earlier this year on health care. And I don’t think they really are comfortable – they haven’t figured out that solution. If they had, they would have passed a bill. And to redo this, it’s just – it’s not what anybody wants.

MS. CORDES: And it’s interesting that Democrats so far have been a little listless in fighting against this tax plan. You certainly don’t see the same kind of passion that you saw when it came to health care. Is that because it’s harder to rail against something that is going to save a lot of people money?

MR. RUCKER: I think so. And you’re not taking away an entitlement from people, like with the health care efforts to repeal Obamacare. And the Democrats have struggled to come up with a sort of clear message about this tax bill. You heard Chuck Schumer say it’s like a dead fish, when it’s out in the sunlight long enough it’ll start to stink. But do people really smell the tax bill? It’s like – I don’t know that that works. You don’t see the energy out in the country. Maybe you will in a few weeks, but it’s not there now.

MR. PEGUES: Well, didn’t Elizabeth Warren say this was a tax break for rich Republican donors, or something like that? Is that the line of attack they’re going to use?

MR. RUCKER: Yeah. One of the lines of attack, yeah.

MR. TANKERSLEY: Yeah, there’ll be – I think that other thing is they will seize on individual provisions here. Like the mortgage interest deduction is a thing that people think very aspirationally about, and that you could see Democrats try to make a lot of hay with. Definitely student loans – not being able to deduct interest on student loans. You will see Democrats harp on that a lot. And medical expenses. That is a thing that I am already hearing from a lot of Democrats about, that they are raising their most concerns over.

MS. CORDES: Well, and Republicans are calling this a middle-class tax cut, but the real cuts, the permanent cuts are all on the business side.

MS. SNELL: Well, I would say, though, that the funny thing about that is that they – yes, they are all on the corporate side. But Democrats generally agree that the corporate rate is kind of high and they would like to see that reduced. So it’s hard for them to fight against that. It’s also very hard to see a situation where Congress will say in five years that they’re going to get rid of a tax break, they’re going to – because the flipside of cutting somebody’s taxes is raising somebody’s taxes. And the moment they go back and they say, you know, we are not going to keep this tax break, they’re saying we’re going to raise your taxes. And Congress hates doing that.

MS. CORDES: Practical question, will you be able in fact to do your taxes on a postcard?

MR. TANKERSLEY: I think for some people, you will be able to do your taxes on a postcard, yeah, sure. Many of those people could do their taxes on a postcard now if the tax form was the size of a postcard. But I think you will have more people who are just taking the standard deduction and deciding to do that in the more simple way.

That said, if you’re a business it is going to get harder to do your taxes. There are more complicated things. If you own your own business, small business, you might get some breaks, you might not. It’s just – it’s very complicated how they’re changing the business rules.

MS. SNELL: Yeah, I heard it described as a gift to tax attorneys and CPAs.

MS. CORDES: How does the White House see the president’s role when it comes to tax reform? And do they think he’s filling that role well right now?

MR. RUCKER: So he’s been actually pretty involved in this debate so far, but not in terms of crafting the policy specifically. He’s been more helpful in trying to bring certain senators to the table, to soothe out tensions with others. He’s been out golfing, for example, with Lindsey Graham, the senator from South Carolina, and Rand Paul from Kentucky. Both of them have been critics of Trump’s in the past, but he’s trying to build some camaraderie and talk about taxes and repair some relations on the Hill.

And then he plans to hit the road. He’s going to go sell it. You saw him in the White House this week describe it as a big Christmas present for the American worker. I think we’re going to hear that again and again and again. And he’ll be out doing rallies trying to galvanize public support behind the bill.

MS. CORDES: And the politics are interesting, because Republicans say they’re fulfilling a promise, but there hasn’t been a huge clamor for tax cuts. And there hasn’t been any clamor at all, at least among the public, for corporate tax cuts, which usually polls as being pretty unpopular.

MR. PEGUES: Well, I went to a barber shop – and you’re probably wondering why I did that. But I did go to a barber shop – (laughter) –

MS. CORDES: It looks excellent.

MR. PEGUES: Thank you. I didn’t crunch the numbers, but I talked to a barber. I just wanted to get a sense of what he was feeling about this tax plan when it was announced. And he was skeptical about the whole thing, and the tax credits. Is it really going to make a difference in my life? That’s $1,100, or whatever it is. It’s not – it’s not going to make a huge difference. And oh, by the way, I don’t trust Congress to do the right thing for the American people. So they – you know, this guy that I talked to seemed sort of skeptical about where this is going.

MS. CORDES: Not a lot of trust right now. And you’ve already got some Republican senators saying they’ve got their own ideas when the bill gets over there. So are we going to have the same situation that we did with health care, where the House passes it and then the Senate essentially says we’re ripping it up and starting all over again?

MS. SNELL: Yeah. Absolutely. They aren’t ripping it up, but they are starting from – they’re starting from a similar starting place, so that the House started from, but they are definitely going in their own direction. I think that the business side will probably stay largely the same, but the individual side I just don’t know how the Senate is going to accept many of those things, particularly the mortgage interest deduction, the student loans. Those things will change.

MR. TANKERSLEY: Yeah, the other issue that’s going to be big in the Senate that we haven’t talked very much about yet is debt.

MS. SNELL: Yes.

MR. TANKERSLEY: The Senate has more – I mean, Republicans have been saying for years that deficits and debts are holding back the economy. That tune has changed with this bill, to put it mildly. They are explicitly authorizing $1.5 trillion in additional deficits, even though they say it will be smaller because the economy is going to grow faster. But it’s – most economic projections do not suggest that it’s going to grow fast enough to pay for itself. And you have some real fiscal hawks over in the Senate – Bob Corker, Jeff Flake, John McCain. And you can really see them insisting on maybe scaling back this bill a bit in order to make it more fiscally conservative.

MS. SNELL: I don’t know if you’ve heard this, but I’ve talked to a lot of people who said that they actually think that it could cost more than the 1.5 trillion (dollars) over time, because of some of the budget gimmicks that are in there, and the way that the taxes – it would be used, right?

MR. TANKERSLEY: Yes. Yep.

MS. CORDES: Right. And the question is, how much more debt are these fiscal hawks willing to put up with?

I want to switch gears now and talk about another big story this week, Russia. On Friday the president began a critical 12-day trip to Asia, where the main focus will be on the rising nuclear threat from North Korea and on trade. But all week the trip has been overshadowed by the Russia probe and special counsel Robert Mueller’s indictment of two former Trump campaign officials, including former campaign chairman Paul Manafort. But it was the guilty plea by former foreign policy advisor George Papadopoulos that really surprised most of Washington this week. The 30-year-old pleaded guilty to lying to the FBI and is reportedly cooperating with investigators. A Trump campaign photo shows that Papadopoulos was part of a March 2016 national security meeting with then-candidate Trump and Jeff Sessions. According to court documents, it was there that Papadopoulos pitched the idea of a meeting between Russian President Putin and Mr. Trump. And Trump campaign advisor J.D. Gordon, who is also in that photo, confirmed the discussion. Attorney General Sessions never disclosed that conversation during multiple congressional hearings, and President Trump spent the week distancing himself from the indictments by dismissing Papadopoulos as a low-level volunteer.

Jeff, I want to start with you because you have been laser-focused on this all week long, and today you reported that there’s a new climate of fear at the end of this week in the Trump orbit. Explain what you mean.

MR. PEGUES: Yeah, I’m so impressed that Papadopoulos was rolling off your tongue. (Laughter.) Earlier this week people were sort of struggling with his name, but now he’s become a household name. And what has happened over the last several days since the indictments were unsealed and since America learned about George Papadopoulos is that there are some people who are being scrutinized by the special counsel’s office, and I talked to one of them who tells me that it’s every man for himself. So they are feeling the heat. People who are under scrutiny are feeling the heat, and it’s all of a sudden become real to them this week with the indictments against Paul Manafort and Rick Gates and George Papadopoulos, of course, popping up. So the question is, who is next? And they’re talking about that. I was on the phone with someone who is under scrutiny, and they said, why are you calling me? Why are you – do you know something I don’t know?

MS. CORDES: Wow.

MR. PEGUES: So they are a little panicked this week.

MS. CORDES: And is that because they now don’t know who’s cooperating with the FBI, who they can trust, who they can’t trust?

MR. PEGUES: I think there’s some of that at play here. This person told me that everyone in the inner circle is possibly a target, and they are wondering who’s cooperating or who’s not cooperating. So there’s a lot of uncertainty, but they’re definitely feeling the heat.

MS. CORDES: And at the very least we got more proof this week that people in the Trump orbit knew about these stolen Clinton emails well before the rest of us did, maybe even before these emails were given to WikiLeaks. But knowing about the emails is not the same as colluding.

MR. PEGUES: Well, and that’s true. But if you look at the timeline – and that’s what has been so revealing this week, is some of this information that George Papadopoulos, for example, was given was well before the Democrats came out and announced that we believe we were hacked by the Russians. And then you had the Donald Trump Jr. meeting. Again, they were offered dirt on Hillary Clinton, and again, this was before the Democrats revealed, hey, we’ve been hacked by the Russians. And so the timetable is interesting here, and we’re learning more about some of the pieces that led up to the summertime and the release of the emails, and investigators are looking at that too. They are looking at this timeline trying to figure out, OK, well, where are the gaps here; what was happening around this period that Donald Trump was out there saying, hey, Russia, if you’re listening; what was happening around the time that the GOP platform was changed as it relates to Ukraine. So some of these very important moments along that timeline in 2016 are now being revealed, and some of it to investigators is really starting to come together and make sense.

MS. CORDES: And you definitely can sense a change in atmosphere, Phil. In fact, you reported this week that one White House aide said the walls are closing in and everyone is freaking out. And then you reported that the president was angry, he was consumed by this, and he came out and said I’m not angry. (Laughter.)

MR. RUCKER: Yeah, he actually – we reported this in The Washington Post , and he actually called The New York Times to say it’s not true, he’s not mad at anybody. But look, if you look at what the president –

MS. CORDES: His tweets would say – would say something. (Laughter.)

MR. RUCKER: – has been saying and writing all week, it’s hard to conclude anything other than this is a frustrated, if not angry, man. And look, he consumed this indictment on Monday morning the way we all did. He didn’t know what was coming. He was sitting up in his residence in the White House watching cable television, just watching the news, waiting for the alerts, calling his lawyers, calling his friends. He was upset. And you know, he was upset in part because his name was dragged through it, and he felt like the charges against Manafort and Gates were not related to their work on the campaign; this was their international business before they joined the Trump orbit. But it still is a tar – a real difficult moment for his presidency and endangers a lot of the people around him.

MS. CORDES: So, Kelsey, where does this leave Attorney General Jeff Sessions?

MS. SNELL: Well, there is a possibility they could recall him. They could – you know, they could ask more questions in Congress. It’s very difficult, though, because many of the senators, have good relationships with them. They like him. He was around for a long time. It’s just – it’s a tension that I’m not sure they’ve quite figured out how they want to handle. And I don’t think they want to talk about it at this point because they haven’t figured it out.

MS. CORDES: When Steve Bannon and others say that the president should go harder on Robert Mueller, get tougher, what do they mean? What can he do beyond tweeting or firing Robert Mueller?

MR. RUCKER: There are a few things that they mean. And Bannon, actually, is not advocating that the president fire Mueller, but Bannon is advocating that the White House be more difficult with the special counsel – don’t provide documentation so freely, you know, erect some obstacles, get allies on Capitol Hill to really point out what Bannon believes are serious vulnerabilities in Mueller’s background and in the team around him, a lot of people who have given to Democrats in the past, call them out for it. And Bannon, I talked to him this week. He actually said the congressional Republicans are like church mice – that’s his phrase – they’re not standing up for this president and they’re not being tough on Mueller the way he thinks they should be.

MS. CORDES: Although they have agreed to open a couple of investigations into –

MR. RUCKER: Devin Nunes has, yeah.

MS. CORDES: – Uranium One, this sort of debunked conspiracy theory about Hillary Clinton and some Russian donors mining for uranium here in the U.S. Jeff, do you get the sense that the law enforcement community is responding to that frequent suggestion from the president in any way?

MR. PEGUES: No, and I – it’s funny, last week that was really the talk, right, leading up to this, which sort of got me thinking, well, does the president know that something is coming and somebody’s going to be indicted, right? And so this week, after the indictments were announced, you didn’t hear about Uranium One as much as we did last week.

So, to your question, law enforcement, no, they’re focused – at least the people that I’ve spoken to about this, they’re focused on the Russia investigation. As you know, there’s a lot happening around that investigation, so many different legs of it, whether it’s the Facebook and Twitter, whether it’s obstruction case, whether it’s, you know, coordination. So there are a lot of people who have their hands full with that investigation on its own.

MS. CORDES: And there has been some political fallout. Sam Clovis, who had been nominated by the president to be chief scientist at USDA but who was also an aide on the campaign and in these documents was seen to be encouraging Papadopoulos to continue communicating with the Russians, he withdrew his nomination this week.

MR. RUCKER: He did. He was scheduled for a hearing for his nomination I believe next week, and that would have been a – turned into a whole Russia hearing, and so he wanted to get out of it. But more importantly, Nancy, he didn’t even have scientific credentials to do this job. He was nominated to be the chief scientist with no scientific background. So he’s going to be staying in the administration, but working as a senior White House advisor at the Agriculture Department, which means he doesn’t have to face Senate confirmation.

MS. CORDES: So what kind of message was the White House sending in the first place when they nominated someone with no scientific experience to be the chief scientist?

MR. RUCKER: Look, he’s a guy from Iowa, so maybe they figured he knows farm issues and agriculture. But more importantly than that, he was a loyal advisor on the campaign, and this is a government – an administration that cares a lot about patronage.

MS. CORDES: Jeff, I want to close with a question about some of the swings that the president took at the law enforcement community and the judicial system today, saying essentially that it’s a joke. Does this affect the law enforcement officers you talk to? Does it bother them, or do they just ignore it at this point?

MR. PEGUES: I asked federal law enforcement officials at a gathering last night how they felt about that. I think earlier in the week he said our criminal justice system is a joke.

MR. RUCKER: A joke and a laughingstock.

MR. PEGUES: A laughingstock. So there was that, and that of course didn’t go over well. However, over the last, what, 10 months or so, there – you know, the president has taken other shots at law enforcement, so I think they’re sort of numb to it at this point.

MS. CORDES: Yeah, got it.

MR. TANKERSLEY: I think an interesting riff on that, though, is that the president had a huge week this week of policy, and he spent the end of it not talking about the House tax bill or his appointment to chair the Federal Reserve, but instead talking about criminal justice issues, democratic – inter-democratic issues. He’s very, very good at distracting from the policy focus of his own administration.

MS. CORDES: Got to go. Thank you so much, Jim, Kelsey, Phil, Jeff, for joining me tonight. And thanks to you. Our conversation continues on the Washington Week Extra . You can find that later tonight and all weekend long at PBS.org/WashingtonWeek. Robert Costa will be back next week. I’m Nancy Cordes. Have a great weekend.