Economist says forget reconciliation, pass Senate version of tax reform bill
As Congress prepares to reconcile differences between the House and Senate versions of a tax reform bill championed by President Donald Trump, at least one economist is saying the committees are a waste of time.
During a Dec. 6 segment of the "Chicago’s Morning Answer" radio program on WIND, guest Stephen Moore, distinguished visiting fellow for The Heritage Foundation’s Project for Economic Growth, said lawmakers would be better off adopting the “superior” Senate version of the bill.
"Chicago’s Morning Answer" is co-hosted by Dan Proft, who also is a principal in Local Government Information Services, which owns this publication.
Proft was skeptical of Moore’s suggestion, calling both plans “meatball sundaes” that contain a mixture of good and bad provisions. For example, Proft said the House and Senate versions differ in their treatment of the corporate alternative minimum tax, the Obamacare individual mandate and the number of tax brackets.
“It may not be an ‘A’, but it’s a 'B' plus,” Moore said. “If you’re conservative and believe in limited government and want to give people tax relief and want to get the economy to grow faster, this is a really good plan.”
Moore suggested anticipation of the new plan was behind Wall Street’s recent surge and cited 2017’s growth in the gross domestic product as anticipation for the reform.
“That means everybody’s getting richer, anyone with a 401(k) plan or who owns stock,” he said. “A prosperous, pro-growth environment is good for everybody.”
The piece of the puzzle Moore disagreed with was the need for the bills to go through the reconciliation process. Moore said he was uncertain whether to trust Arizona Sens. John McCain and Jeff Flake, both Republicans, and others he labeled “RINO Republicans.”
“They’re making this way too complicated,” he said of the reconciliation. “This is a historic piece of legislation. They’re cutting the corporate tax rate to 20 percent, they’re gutting Obamacare, finally, by getting rid of the individual mandate, which is a slow-motion repeal of the bill.”
Co-host Amy Jacobson questioned the bills’ merits based on negative media coverage.
“I heard on CNN this morning if I’m a school teacher I should be concerned about this tax plan, if I’m a homeowner I should be concerned,” Jacobson said. “So is this just propaganda from the left?”
Moore acknowledged some of the cuts are set to expire in 2024 but said “no Congress would let them expire” once in place. But he blamed the overall negativity on politics.
“They’re (the mainstream media) apoplectic about this bill because they know it kills the Democrats on Obamacare and it’s going to grow the economy,” he said. “All those things are very positive and Trump is going to get re-elected if he get this thing passed.”
Moore said the individual mandate hurts young, presumably healthy, workers just starting out because it requires them to pay for coverage they don’t need. He advised them to instead establish a health savings account to cover catastrophic health events.
“People don’t want to buy Obamacare,” Moore said. “There’s going to be a rush to the exit” when the individual mandate is repealed, he predicted.
Moore also lauded Sen. Ron Johnson (R-WI) for pushing to trim the small business tax rate in the Senate version of the bill from 40 percent down to 30 percent.
“There’s a Trump effect here in anticipation, in no small part to the pro-business tax cut,” he said. “We’re going from having the highest tax rate in the world for business to one of the lowest rates.”