Full Episode: Republicans reshape the American tax system, latest developments in the Russia probe

Dec. 21, 2017 AT 7:40 p.m. EST

This episode was previously recorded.

House and Senate GOP lawmakers kept their promise and passed a tax bill before Christmas, but debate continues on the bill’s merits and its repeal of the Affordable Care Act’s insurance mandate. The panelists discussed the bill's uncertain future, along with new twists that emerged in the investigation surrounding Russian meddling in the 2016 election.

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Notice: Transcripts are machine and human generated and lightly edited for accuracy. They may contain errors.

ROBERT COSTA: Done deal. Republicans pass the most sweeping rewrite of the tax code in a generation. I’m Robert Costa. How the tax bill could affect your paycheck, plus tensions over the Russia probe, tonight on Washington Week .

PRESIDENT DONALD TRUMP: (From video.) We are making America great again. You haven’t heard that, have you? (Cheers, applause.)

MR. COSTA: Jubilation at the White House as President Trump cheers the passage of the Republican Party’s biggest priority, overhauling the American tax system.

SENATE MAJORITY LEADER MITCH MCCONNELL (R-KY): (From video.) It’s been a year of extraordinary accomplishment for the Trump administration.

MR. COSTA: The vote, along party lines, marks the president’s first major legislative victory of the year. The massive package doesn’t just cut taxes; it eliminates the insurance mandate under Obamacare, lifts a ban on drilling in Alaska, and adds more than a trillion dollars to the deficit over a decade. Democrats say the bill fails the middle class.

HOUSE MINORITY LEADER NANCY PELOSI (D-CA): (From video.) The GOP tax scam is about bleeding the middle class dry to pad the pockets of corporate America and the wealthiest 1 percent.

MR. COSTA: Plus, is the president on a collision course with Robert Mueller’s Russia probe? As more Republicans accuse the special counsel of corruption, a top Democrat issues a warning to the White House.

SENATOR MARK WARNER (D-VA): (From video.) Any attempt by this president to remove Special Counsel Mueller from his position or to pardon key witnesses would be a gross abuse of power.

MR. COSTA: We discuss it all with Yamiche Alcindor of The New York Times , Dan Balz of The Washington Post , Andrea Mitchell of NBC News, and Eli Stokols of The Wall Street Journal .

ANNOUNCER: Celebrating 50 years, this is Washington Week . Once again, from Washington, moderator Robert Costa.

MR. COSTA: Good evening. President Trump is calling the passage of the Republicans’ tax bill an early Christmas gift to middle-income Americans, and he invited Republicans to the White House to celebrate the legislation – legislation he says will fulfill his core campaign promise.

PRESIDENT TRUMP: (From video.) Ultimately, what does it mean? It means jobs – jobs, jobs, jobs. So it’s going to be really a very special period of time. We’re in a very special period of time.

MR. COSTA: The massive package provides deep and permanent tax cuts for corporations, tax breaks for the wealthy, and more modest and temporary tax reductions for middle-class Americans. It also repeals part of the Affordable Care Act, a provision that requires all Americans to carry health insurance. And it lifts a 40-year-old ban on drilling for oil and gas in Alaska’s Arctic National Wildlife Refuge. This legislation promises to become a flashpoint in the 2018 elections, and could certainly determine whether the GOP retains its majorities in Congress.

Dan, it’s great to have you back on Washington Week .

DAN BALZ: Nice to be back.

MR. COSTA: The heart of this legislation, Dan, is the corporate tax cut. They make it permanent. It comes from 35 down to 21 percent. What does that mean for Americans? And what’s going to be the test for this administration as it’s enacted?

MR. BALZ: Well, you just heard the president say this is going to be a bill that is ultimately going to be about jobs. The promise that they are offering the American people is that by cutting the corporate tax rate they are going to be able to increase economic growth, they are going to be able to create a significant number of new jobs, and that the added economic activity will bring in more tax revenue to the federal government.

Now, we know that the forecasts about both the economy and what this tax bill would do are pretty modest, so what are they going to be able to measure it on? I think we’re seeing already some of the indicators that they’re going to seize on. There have been a number of corporations who have announced that they’re going to raise the minimum wage for their workers to $15, or that they’re giving some workers bonuses. I suspect that for a time the administration is going to seize on every example like that and try to magnify it to give people a sense that there’s a huge amount of activity. But in the end, the numbers are going to tell the story.

MR. COSTA: How do we look at this, Andrea? When you think about all these corporations announcing bonuses at the end of the year after this tax bill passed, but it really is more of a long-term effect that we’re going to have to evaluate.

ANDREA MITCHELL: Absolutely. And those announcements remind me of the announcements from a number of companies in the Midwest, in the Rust Belt, that they were not moving overseas, that they were keeping jobs there, from the first couple of weeks in the transition or the first couple of weeks of the Trump presidency. It turned out to be ephemeral. It didn’t materialize. Those jobs did move overseas. They didn’t produce what the president had pointed to. And this, again, is going to be – it’s going to have to be proved. These thousand-dollar bonuses – especially from AT&T, which has business in front of the Justice Department with a big merger pending, and other companies that have interests with the administration – don’t amount to a whole lot. Gary Cohn was quoted as saying that people can, you know, do amazing things and renovate their homes and get new refrigerators with a thousand dollars. So I don’t think he’s been, you know, shopping for a carton of milk anytime recently. But the fact is that there are very few economists, independent economists, who predict the kind of impact on wages that really would matter to the base of Donald Trump.

MR. COSTA: Yamiche, what about the other part of this, the health care law? Republicans, as they were at the White House, they were cheering that in a sense they had repealed the Affordable Care Act, the president’s – President Obama’s current health care law. But how much of this tax bill, does it actually deal with health care? Does it actually gut current law?

YAMICHE ALCINDOR: It doesn’t gut current law. But if you’re a Republican who wants to say that we were able to do taxes and health care in one bill, you can at least use that and kind of superficially say that we got a lot of stuff done the Democrats told you we weren’t going to get done. But essentially the individual mandate, the part that said you have to buy health insurance, that was the most unpopular part of the bill. People really didn’t like the fact that the government was telling them you have to do this. But they did that for a reason, because most of the people that are buying health insurance after this law was passed were the people with preexisting conditions. They were the older, sick people. They were people who’s – maybe even young people who had heart conditions from birth. They were the people who were going to have to use up a lot of the health care. So health insurance agencies essentially said we need young – we need young people, we need healthy people to kind of supplement this. Now what we’re going to see is that essentially people are going to be able to not buy health insurance, but then they’re going to be able to go to the ER and still get health care, which means that people’s premiums could end up going up. So I think long term, as people start to see whether or not their actual health care, if their – if the cost of it starts to increase for them, they’re going to come to resent the fact that that it was the Republicans who did it.

MR. COSTA: We’re keeping an eye on health care throughout this entire process, Eli. But Andrea mentioned Gary Cohn, the White House’s national economic director. Take us inside the process here, because the Republicans were battling the pitch from Democrats that this was a pro-rich, pro-Wall Street bill. And there are elements – not only the corporate tax cut, but the carried-interest loophole – that remain as part of current law on taxes. Why was that? And what was the White House’s view in going after the carried interest or not going after the carried interest?

ELI STOKOLS: Well, Donald Trump campaigned over and over and said, look, this is a loophole, it’s just a giveaway to hedge fund managers, people like me who have a lot of money; we’re going to get rid of it because it’s not helping you, the middle-class voter, the sort of prototypical Trump base voter. That’s what he said during the campaign trail. Once they got into the nitty gritty of actually tackling tax reform, the administration was split. I think Gary Cohn was probably a little more disposed to doing that, Steve Mnuchin not so much. But when it got to the Hill – and from our reporting we understand that, you know, the president laid down a couple markers on this: corporate tax cut, middle – you know, cut in the corporate rate and middle-class tax cut. But after that, he basically said to the members of Congress, you guys go write this bill, figure it out, that’s what I want in it. And as this went through the process on the Hill, especially on the House side, Republican members, enough of them, came forward and said we don’t want that loophole going away, we want to keep that. Kevin Brady, a member from Texas, obviously, that’s a state that has I think a higher percentage of hedge fund folks, people using that deduction, that loophole, than any other state. And so a number of lawmakers came forward and they scuttled that, and you didn’t hear much about it in the last few days. I saw an interview that Steve Mnuchin did when he was asked about this and he said, well, it’s really not that much money. We’re talking about tens if not a hundred million dollars or more. In the scheme of a $1.5 trillion package maybe it’s not that much money, but it is a lot of money that can fund other things. They choose not – chose not to touch it.

MR. COSTA: Dan, when you think about the pressure Eli’s talking about from the business community to keep this deduction or get rid of that deduction, we all thought there would maybe be more pressure from the right, from conservatives, to vote against this bill because it raises the deficit over a decade over a trillion dollars. Why weren’t Republicans on Capitol Hill scared away from this bill on the deficit issue?

MR. BALZ: You know, there are a lot of Republicans who have been deficit hawks for a long time, but I think that Republicans and Democrats have both learned over the years that you don’t lose elections on deficits; that you can do what you want with the deficit. The public doesn’t like the idea that we have a huge national debt. They don’t like the idea of deficits. But they don’t necessarily vote on it. And so, you know, Democrats have been tagged as the tax-and-spend party. Republicans have been tagged as the borrow-and-spend party, which is to say they’re prepared not to cut spending significantly to do anything with the deficit and they’re prepared to cut taxes and borrow money to do that. And so I think in the end the impetus was to get a tax bill through. It wasn’t – it wasn’t going to be pretty. It was going to be, you know, very quickly done. And the question of the deficit became secondary to the goal of having a tax bill passed so they had something to go and campaign on.

MS. MITCHELL: And, in fact, there are a number of senators who had been such deficit hawks, lifelong deficit hawks, and they are facing credibility problems because they have embraced this now. I think, as you point out, they wanted to get something done. Otherwise they had nothing to point to. As unpopular as this is in the polling right now, they think they can sell it. The president thinks he can sell it, call it a middle-class tax cut, that at least initially people will feel something in their pockets. And the fact that it’s going to go away in a couple of years and the corporate tax is permanent down to 21 percent, which is really quite blindingly shocking, really, because they were not – the corporate world was not even asking for 21 percent. Nobody was paying the 35 percent, none of the big corporations were. The effective rate was much lower. And they were expecting maybe to bring it down to 29 (percent) or something like that. They were not expecting 21 (percent). It’s a real – a real golden opportunity for the – big business.

MS. ALCINDOR: And part of – when I was thinking about this tax cut – this tax cut being passed, I started thinking back to all the people, the Trump voters that I talked to, some of them who had voted for Obama who then switched to Donald Trump. The main mentions that they gave to me was that I just want my life to be better, I want someone to feel like someone cares about me, I want this – I want my job to come back, I want – I want my family to feel as though the government understands what we’re going through. And I don’t know if this tax cut is going to get the Republicans there. I don’t know if the people who voted for Donald Trump thinking that their lives were going to be better, if in two years when it’s time to start thinking about voting for someone – reelecting him, whether or not people are going to turn around and say, OK, I think that what they did really helped my family. They might have a couple of extra dollars in their pocket, but they’re probably not going to get their jobs, and they’re probably not going to get enough money to put their kids through college.

MR. COSTA: So, Eli, how does the White House see that, the argument Democrats are making that Yamiche is talking to on Capitol Hill? They’re trying to reclaim the populist mantle from President Trump. Is the White House, is the president prepared to be a salesman ahead of the midterms on this bill?

MR. STOKOLS: The president has always been a salesman. He was a salesman throughout this process. He was a salesman on the campaign. At heart, he is a salesman, and they do have something now to go sell and go argue about. Rather than having gone 0-for-2 on health care and taxes, they can at least say, OK, we did this, we also lumped some other stuff – individual mandate, ANWR – into this bill, and look at all the things we accomplished in year one. But I think in terms of figuring out how that works, if you spin this ahead to next November, Andrea said this is sort of like stimulus right now. The economy’s doing well, and yet we have a president whose approval rating generally is below 40 percent. That’s hard to do in an economy this good. It’s hard to make a tax bill – a tax-cut bill unpopular, and yet this is incredibly unpopular. Maybe that will change, but it is clearly a reflection of the country that seems to have fatigue already with this administration, the constant controversy and chaos. And I think it’s the president’s personal political location – where he is, what he does every day – that drags down the tax bill, that drags his own numbers down in spite of the economy. And I think, you know, voters may vote on whether they get a thousand dollars back in their pockets next year, but a lot of them may need more to get past just watching the Trump presidency, living the Trump presidency every day.

MR. COSTA: And, Dan, know where this bill is particularly unpopular? Suburban districts in high-tax states, because they saw their deduction for state and local taxes is capped now at $10,000. So these are the most vulnerable Republicans, and their representatives, many of them on the Republican side, voted against the bill.

MR. BALZ: Yeah. I mean, I think that people are going to wait – have to wait and see what it actually does to them, and people are not going to know that instantly. So it’s going to take a period of time for people to actually evaluate, well, what does it mean for me, what does this combination of things in the bill actually mean for me. We know that there are a lot of people who are going to get some kind of a tax cut, but will they feel it’s a big enough tax cut compared to what corporations and the wealthiest are getting? I mean, Eli’s point about the unpopularity of this bill, I mean, the Wall Street Journal -NBC poll has it 63 to 7 (percent) that people see this bill as tilted toward the wealthy, not to the middle class. That’s a huge number to try to overcome. I mean, we saw in the battle over the Affordable Care Act the idea that the Obama administration put forward, which was, well, once the bill is enacted, even though it’s unpopular at the time it’s enacted, people will get to like it better. Well, that didn’t happen in time for 2010, nor did it happen in time for 2014. The Democrats took a bath in both of those elections. And I think that’s the issue of the challenge that the Republicans have to be able to sell this, to change those numbers in a significant way.

MR. COSTA: And that scene at the White House, they’re not only tied to this tax bill, they’re tied to President Trump.

MS. MITCHELL: Not only tied, I don’t even know how to describe the embrace, the hugs, Paul Ryan calling it exquisite leadership, Orrin Hatch and the vice president absolutely extolling the virtues of Donald Trump. I mean, it really defies credulity to see grown men behaving this way towards a political leader whom they – we all know they have privately criticized and publicly criticized in the past.

MR. COSTA: Let’s stick with some of the other tensions in Washington for a moment, turn to them, and there are new twists in the investigations into Russian meddling in the 2016 election. Politico is reporting that a group of House Republicans has gathered secretly for weeks in the Capitol in an effort to build a case that senior leaders of the Justice Department and the FBI have improperly and perhaps criminally mishandled the contents of a dossier that describes alleged ties between President Trump and Russia, and that’s according to four people familiar with the play-ins. House Intelligence Committee Chairman Devin Nunes of California is leading those discussions. And on Wednesday, Democratic Senator Mark Warner, he pushed back against a growing number of these Republicans who have questioned the credibility of Special Counsel Robert Mueller’s probe, and he warned that the president should not shut down the investigation.

SEN. WARNER: (From video.) Firing Mr. Mueller or any other of the top brass involved in this investigation would not only call into question this administration’s commitment to the truth, but also to our most basic concept: rule of law. It also has the potential to provoke a constitutional crisis.

MR. COSTA: Earlier this week, the president’s son again told supporters that there are people at the highest levels of government who are trying to undermine President Trump.

DONALD TRUMP, JR.: (From video.) My father talked about a rigged system throughout the campaign. And people go, oh, what are you talking about? But it is, and you’re seeing it. There is and there are people at the highest levels of government that don’t want to let America be America.

MR. COSTA: Strong words, Yamiche, from the president’s son, from Chairman Nunes on the House Intelligence Committee. What is going on on the right, inside of the president’s circle as well? And are House Republican leaders and Senate Republican leaders listening to this clamor as they move ahead in how to handle the Russia probe?

MS. ALCINDOR: I think that on the Republican side you’re seeing people kind of gear up for what might be a 2018 conversation about whether – about whether this investigation should be allowed to continue. The president’s attorneys have been telling him for a long time that things were going to be wrapped up by the end of this year. That doesn’t seem to be the case, and I think President Trump has been somewhat restrained on Twitter when it comes to actually attacking the special counsel. I think come January, come February, that’s going to change. You’re going to start seeing him probably echoing what his son said, but also echoing what Fox News and other Republicans have been saying, which is that Mueller might be influenced by some of the political tactics or political influences. He’s, of course, a Republican that’s leading this investigation. I think sometimes that’s lost in all the conversation. But essentially they’re gearing up to make the argument that he’s not qualified, and, of course, Democrats are really, really frustrated and really, really scared about whether or not he’s going to get fired. But I think that there’s enough there and enough scuttle there to think that President Trump probably would not want to fire Robert Mueller. Thinking about what happened when he fired James Comey, I just don’t understand why he would want to do that.

MS. MITCHELL: Well, I think it’s already having an impact, because in our polling we see – in the NBC News- Wall Street Journal polling we see that Mueller’s reputation and his – his reputation for credibility and lack of bias has been severely damaged by all this, the clamor, people on Fox News saying that he’s planning a coup against the United States. And it’s just been remarkable, considering that he is a Republican as Yamiche says. He’s a war hero, decorated Marine, and has – and was selected by Rosenstein, who’s also a Republican, the deputy AG. There’s also a theory that Rosenstein will be fired, and therefore the Justice Department will then take charge of the Mueller probe because Sessions is recused, but they can replace Rosenstein and put somebody much more compliant in charge after Rosenstein testified that he did not see any problem with what Mueller was doing, that he actually thought that Mueller was behaving very appropriately. So I think that this, plus what you’re seeing on the House side – and we’re now reporting that the FBI has been ordered by Sessions to look into how Mueller and the FBI handled the Hillary Clinton-Bill Clinton Uranium One probe that stemmed from that Clinton Cash book. So there’s a lot going on.

MR. COSTA: So many swirling issues. So many swirling issues, Eli. And as – the president has all these different people in his ear. He has his lawyer(s), Ty Cobb and John Dowd. They’re telling him he may be exonerated; he should be patient. And then you have people like Devin Nunes, the chairman, and you have his own son saying fight, fight, fight. Where is the president tilting at this moment?

MR. STOKOLS: Well, it’s always hard to tell. So far he’s listened to Ty Cobb and his outside counsel, and he’s been, for him, relatively restrained in terms of attacking Bob Mueller. But I think what’s interesting is a lot of the people who are out there carrying water for this administration, Republicans going out there, members of Congress saying Mueller should be fired. I mean, it’s not just Donald Trump, Jr. It’s several members of Congress who are saying this now, too. One of them, freshman Representative Matt Gaetz from Florida, was on Air Force One with the president a couple weeks ago when he went down to the rally in Pensacola. They discussed this. Gaetz has talked about it a little bit, and basically revealed that the president was encouraging. And so there are all these questions about, you know, is the president behind the scenes doing this. I think deep down this agitates him. He wants a full exoneration. He wants it to be over. And he believes to a degree that this is a witch hunt, that it’s unfair, and that the things propagated by Fox and Friends about the FBI agents and the corruption and the Deep State, he’s always been prone to accepting various conspiracy theories, things that, you know, you see a scintilla of evidence and you – it validates the entire premise. So I don’t think that we can sit here and say just because he hasn’t attacked Bob Mueller yet explicitly directly that he’s not, as Yamiche said, maybe considering doing so, or at least getting a little edgy as this gets closer to him.

MR. COSTA: So what to make, Dan, of Senator Warner sounding the alarm? Was it a typical, expected, partisan shot, or is this really a growing crisis, perhaps, on the horizon?

MR. BALZ: Well, I mean, if the president were to fire Mueller, that would be a constitutional crisis. I don’t think there’s any doubt that that would be the upshot of that. You know, there continue to be rumors of a possible firing. Nobody knows whether that’s going to happen, and the White House, everybody has said no. The president himself said, no, I’m not planning to fire him. But I think that there is so much concern that Senator Warner wanted to put down a marker. As the – you know, as the ranking Republican – or Democrat on the Senate Intelligence Committee, he wanted to put down a marker to say if you do this you will pay a huge price. But I think, going back to everything else that’s going on, it seems at this point unless Mueller has some dramatic finding that all of the work that is being done is going to create a muddled outcome, that this is going to be seen through a partisan lens. There’s a battle for public opinion that’s underway from both sides trying to shape how people will think about what the ultimate outcome is. And until we see that and until the public sees it, I don’t think we’re going to know which side they’re going to come down on. But I think that the friends of Donald Trump are doing what they can to make it difficult for Mueller to come out with a clean finding that the country as a whole is going to accept.

MS. MITCHELL: And that, in fact, could be part of the process of what – really what the strategy is. The other thing about it is that the Republican leadership has not permitted Republicans and Democrats who wanted to pass a bill in the Senate that would protect Mueller from being fired – that has not gotten to the floor. That’s part of the frustration. And the other thing is that –

MR. COSTA: We’re going to have to leave it there. There are many frustrations on Capitol Hill. Those frustrations will continue. And we’ll keep talking about them this week, and every week I’m sure, moving ahead. Thanks, everybody, for being here.

And don’t go anywhere if you’re watching because the Washington Week Extra is coming up next on most PBS stations. We’ll discuss how the White House has been reshaping the judiciary and rolling back regulations this year. Plus, President Trump’s threat to withhold billions of dollars of aid from the United Nations countries that do not support his decision to recognize Jerusalem as the capital of Israel. And if you ever miss the live show, you can find it online Friday nights and all weekend long at PBS.org/WashingtonWeek.

I’m Robert Costa. And from everyone here at Washington Week , best wishes for the holiday season.


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