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Economist Stephen Moore on the Trump Tax Cuts

Economist Stephen Moore on the Trump Tax Cuts Read Transcript

With us now from Washington to talk about the president's tax

plan is Steve Moore.

Steve's an economist with Freedom Works.

He was an economic advisor to the Trump campaign.

Steve, it's good to see you again.

Thanks for being here.

Might I ask you a quest--

I am in a very--

I'm in a very good mood this morning.


I mean those numbers that you recited--

3.1% growth, you know, that's up from 1 and 1/2% growth

under Obama in his last year in office.

So there is no question about it.

This economy has really ramped up,

and we're going to get 3% growth in the third quarter.

And that's before we've done this tax cut, you know.

So well if we get this tax cut we

could get 3 and 1/2 to 4% growth.

Boy, will that feel good.

You know, Steve, let me ask you a question.

I listened to a couple of those Republicans--

I mean the Democrats--

talking about a tax cut for the rich.

How can you have a tax cut for somebody

that isn't paying taxes?


Great point.

So the poor people--

you know the democratic constituency,

they don't pay any taxes anyhow.

So of course, the people who are earning money and paying taxes

are the only ones you have a tax cut for.

Isn't that correct?

It is.

You know, it's funny, when I came in this morning, Pat,

one of your assistants here said,

what are you talking about?

I said taxes.

And she said to me, show me the money!

You know, I think that's the way a lot of people are feeling.

Show me the money.

They want to see some money back in their pockets,

because the government is pickpocketing

so much of their money.

So if you're-- let's talk about the middle class for a minute,


The people making maybe $40,000 to $100,000 a year

and for, you know, most states that's a middle-class family.

You're going to save, by my calculation,

anywhere from $2,500 to $5,000 a year.

Now, for a family that's making, say, $60,000 a year,

Pat, that by the way is paying all those increased

premiums under Obamacare, that is going

to be very welcome tax relief.

Now as you know, Pat, I--

my buddy Larry Kudlow and I helped

write the original tax plan for Donald Trump

during the campaign.

And this plan they came up with yesterday, which I like a lot,

is very similar to the original plan.

What we do is we do provide lower tax rates for high income

people, but we're taking away a lot of the deductions

and the loopholes.

You know, when I--

I was looking at some polling recently,

1,000 people poll about what they think of our tax system,

and the word that comes up so often is rigged.

The American people think the tax system

is rigged to the special interest groups

then the lobbyists and the politically connected.

And you know what?

They're right about that.

Let's get rid of the lobbyists, the loopholes.

Let's have everybody pay their fair share, but at a low rate

that everybody can afford.

And it's going to be good for the economy.

I guarantee it.

See the businesses we pay corporate tax,

probably the highest in the world when you consider it.

You'll get the federal tax, the state tax, local taxes,

et cetera.

Talk about that.

The president wants to bring it all to 20%, though.

Is that going to make a big difference,

and can that get through Congress?

I believe it will, and the only thing

that I object to this plan--

I love the plan.

The only thing they took out was, you know,

originally we had a 15% tax rate for our businesses,

and unfortunately they made it 20.

But that's still a big improvement.

But I did say to some of my friends at the White House,

I wish you'd stuck with the 15% rate.

But yeah, we will go from the highest rate in the world--

by the way, Pat, most Americans do not know that.

They do not know that American businesses pay the highest tax


We pay higher tax rates than China, than Germany,

than Canada, than almost all the European countries.

We even have a higher tax rate than Sweden and Cuba,

for goodness sakes.

I mean it's crazy out there.

And it is putting American's companies to a disadvantage.

I got to tell you, I had dinner a couple of nights

ago with Fred Smith, who is the CEO of FedEx,

one of the great American entrepreneurial companies ever.

He employs hundreds of thousands of workers.

And I said, you know, Fred, if we

do this tax cut, what will it mean for your business?

He said, Steve, we're going to go out and, you know,

purchase new planes.

We're going to have more delivery trucks.

We're going to hire more workers.

We're going to pay our workers more.

That's just one company, Pat.

And if you magnify that throughout the economy,

you're going to talk about higher wages, more job


I thinking you have 10 million jobs through the end

of the decade with this plan.

Why do the Democrats want to keep the tax rates so high

and punish people?

Why don't they want to ease up on the American people?

What is it in their psyche that makes them want

to do what they want to do?

It's a sad thing, Pat, because, you know,

it used to be back in the 1960s, John F. Kennedy, who

is one of our iconic presidents, he ran on cutting taxes.

He said, look, grow--

cut the taxes.

You'll get more jobs.

You'll get more wages.

You'll have a more vibrant middle class.

He was exactly right about that.

And then of course you know this, Pat,

our mutual great friend, Ronald Reagan, he picked up that theme

and, boy, did it work.

I was on CNN a couple of days ago and they're saying,

oh, this isn't going to work like it didn't work for Reagan.

I said, it didn't work for Reagan?

You know we created 20 million new jobs,

the stock market went through the roof.

And by the way Ronald Reagan just squeaked by-- you

remember this one, Pat.

He squeaked by for re-election.

He only won 49 states.


And as he used to talk-- well maybe you don't remember--

his running opponent, George Bush,

started talking about voodoo economics.

Voodoo economics, yep.

But the truth is this is not going to add to the deficit.

This will grow the economy.

Is that-- what will this do to the deficit?

I believe so.

You know, that's it-- well the budget resolution that Congress

will pass calls for a 1 1/2 trillion dollar tax cut over 10


Now we're going to have to make up for that a couple of ways.

We're going to grow the economy more.

And when you grow the economy and put more people to work,

Pat, that means more people are paying taxes.

That's a good way to balance the budget.

But the other thing that you've got to do

is you've got to cut some government spending.

I mean, let's face it.

We got a $4 trillion budget right now.

We can certainly cut the spending

and make up for that difference.

But you're never-- the other thing is, Pat,

this is such an important economic lesson

for your listeners, and I know people

know this who listen to this show,

you're never going to balance the budget if the economy isn't



Just the fact that Donald Trump has gotten us

up to 3% growth, that's going to cause more tax revenues.

That's going to cause, you know, more--

higher wages for people.

So you've got to have economic growth

and you have a vibrant economy if you ever

hope to balance this budget.

And incidentally I didn't answer your question

about why Democrats today don't get aboard this.

I was in-- have you ever been to Grand Forks, North Dakota?



I was in North Dakota yesterday, in Grand Forks.

And, you know, North Dakota is a key state,

and they have a Democratic senator, Heidi Heitkamp.

For those of you watching the show,

if you live in North Dakota put some pressure

on Heidi Heitkamp.

75% of people in North Dakota want this tax cut.

It's going to be a tough vote for her.

I think we can get Heidi Heitkamp.

I think we can get three or four Democrats in the United States

Senate to vote for this tax bill.

Well, it looks like Joe Manchin of West Virginia

should be a candidate.

You got it.

He's another one.

You got it.

And a whole lot of other ones.

Well you think the Congress is going to accept the president's

plan as he's outlined it or will there

be some radical changes in it?

It's going to change of course and it's-- probably

they're going to have to cut back on some of the-- you know,

this is a big grand vision, and I love everything in it.

They might have to squeeze back on a little bit, but yeah.

And you know what we need to do, Pat, we

need to put pressure on Congress.

Everybody in this room, talk to your congressman.

Call up and talk to your senator.

Tell them we want this tax cut.

We want to grow our economy, and we

want better jobs for Americans.

It's going to be close.

It's going to be very close in the Senate, Pat.

Just like what we saw on Obamacare--

let's not fall one or two votes short in the Senate this time.

Let's get over 50.

Let's get to 55 or 60.

Well, I'm for that.

Let me ask you, you know, the truth

is if they take away the deduction for state taxes,

now that that's going to go after California and New York.

It will almost look like payback time from the Republicans

to the Democrats.

Talk about that.


So you're right, this is one of the big pay forces.

You know, one of the stupidest deductions in our tax system

is that you get to write off your state

taxes from your federal taxes, which

just rewards these high tax states like California and New


By the way, California and New York

have the highest income tax rate of 13 and 1/2%.

And you can-- but ladies and gentlemen

you could move to Texas and Florida and pay zero.

So that's why a lot of people are doing that, Pat.

But they would never be able to sustain those very high tax

rates if it weren't for the fact that the federal government is

essentially subsidizing 40% of that

by allowing people to write that off.

So I'm very much in favor of getting rid

of the deduction of state and local taxes.

And by the way, you know, liberals love to talk about,

oh, well let's tax the rich.

50% of the benefit of the state and local tax deduction

goes to the richest 1%.

It goes to Warren Buffetts and the Bill Gates

and the LeBron James of the world.

So this is a good way of making the rich pay their fair share

by getting rid of that deduction.

It will not-- It will not impact middle class workers

because, Pat, under our plan, 90%--

get this, 90%, 9 out of 10 Americans

will no longer have to itemize their deductions.

Pat, you're not going to have to have those shoe

boxes of receipts anymore with all of the-- you know,

the charitable deduction, this and that, because you'll just

check off the box.

So it'll be good for the economy and simplification,

and we hope to get a postcard return.

Wouldn't that be something?


Steve, well, thank you.

You're a great salesman.

I'm ginned up.

I'm ready to go.

Let's get this done.

Well, come back and talk about it more.


Yes, you got it.

We want to see this go through.


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