Trumpcare failed to pass the House of Representatives, and now the focus turns to tax reform. Will tax reform be any easier for President Trump to get through Congress than health care reform? Here are 5 things you need to know about tax reform and why it won t be as easy as it seems. 1. Deficit matters. Tax reform, lowering the tax rate, will increase the deficit in the short term, even if the supply-side logic that economic growth will increase tax revenues pays off in the long term. 2. Trump loves tariffs. But what happens when free traders in Congress object? What happens when the World Trade Organization says the border adjustment tax breaks its rules? 3. Trump has very little leverage at this point. 4. Democrats are not going to work with Trump. 5. Trump seems to think that if Republicans don t work with him, they think he's silly. Well, it'd be hard for it to be worse than a Gordian knot, but it won't be much better than a 10% approval rating for the president, will it be hard to get him to compromise on tax reform? And what s going to happen if he doesn t compromise on his core priorities? Can he get the votes he needs to get something done? or will he just keep failing to get anything done, no matter how hard he tries? Is there any chance he can get any traction from either side of the aisle? Or is he just going to have to get it done at all? If he doesn't get any support from either of his own party, is he going to get his act together? ? Or will he go back to his base or not get any of it? any chance at all at least get any at all, at least not much at all ? or at least any chance or is it going to be better than he s gonna get a chance to get any kind of deal at all on his base to get some semblance of a chance at anything at all?? Is he s just not getting any chance to do anything at all he saving him on his agenda at all in the first place and he s not getting a deal? Will he just a deal he s getting a chance or not even a deal on his name? in this episode? Learn more about it here on this episode of The Five Things He Can Do It?
00:00:00.000After President Trump's devastating political defeat over Trumpcare, and his vow not to return to healthcare in its wake, Trump allies say that he will move next on tax reform.
00:00:08.000That was an open question, actually, since Trump has also talked in sterling terms about a huge infrastructure bill that would dump a trillion bucks into public works.
00:00:15.000But, given the Trumpcare political circular firing squad, will tax reform be any easier for Trump to ram through Congress?
00:00:21.000Here are five things you need to know.
00:00:25.000One of the first prominent Republican talking points during the Obama era was that Obama had blown out the deficit, which of course he had.
00:00:31.000The national debt was $10.6 trillion when Obama took office.
00:00:34.000It was almost $20 trillion when Obama left office.
00:00:36.000Tax reform, lowering the tax rate, will increase the deficit in the short term, even if the supply-side logic that economic growth will increase tax revenues pays off in the long term.
00:00:45.000That means Republicans are going to have to contend with the slew of headlines that they're blowing out spending, even if they're just letting people keep their own money.
00:00:51.000And that's if they don't use budget reconciliation.
00:00:54.000If they do use the process known as budget reconciliation, they'll have to demonstrate that their plan won't increase the deficit over the next 10 years to only need 51 votes.
00:01:02.000And the projected savings from Trumpcare, $1 trillion over 10 years supposedly, won't be available as an excuse to cut taxes since Trumpcare didn't pass, and since that estimate wasn't actually true.
00:01:12.000Tax reform advocate Grover Norquist says Trumpcare's failure will only allow the top marginal tax rate to drop to 28% rather than 20% on this basis.
00:01:21.000Second, Trump has sent mixed messages on taxes.
00:01:23.000During the campaign, Trump's tax plan was one of the best among all Republican candidates.
00:01:27.000He called for dramatic lowering of all of the top tax brackets.
00:01:30.000But, in 2011, Trump said, quote, I don't mind sacrificing for the country, to be honest with you.
00:01:35.000Before he rolled out his campaign plan, he talked openly about raising taxes on the highest income earners.
00:02:20.000So Trump thinks trade is a zero-sum game, a mercantilist position that has been debunked repeatedly by economists.
00:02:25.000But that means he thinks that American companies can only benefit if we tax imports and subsidize exports.
00:02:31.000Trump's plain and simple tariff plan has now been turned into something slightly more acceptable by the Republican Congress, the Border Adjustment Tax, which is essentially a value-added tax all of Europe.
00:02:40.000Investment returns aren't tariffed, but all goods sold in the U.S.
00:02:43.000are taxed at 20%, including investment goods, while the corporate tax is lowered.
00:02:48.000That means a subsidy for exporting companies and a penalty for importers, even importers who buy products to use in exports.
00:02:54.000This should raise the value of the dollar and buy an equivalent amount to the tax.
00:02:59.000But as William Gale of the Brookings Institution explains, quote,
00:03:06.000The border adjustment would have no effect on the trade balance, the level of exports, the level of imports, the domestic price level, or the net profitability of importers and exporters.
00:03:15.000Trump may embrace the border adjustment tax as a substitute for his tariff love, particularly since he doesn't seem to understand the intricacies of the border adjustment tax.
00:03:22.000But what happens when free traders in Congress object, saying that importing American companies like Walmart shouldn't be penalized?
00:03:29.000Or what happens when the World Trade Organization says the border adjustment tax breaks its rules, and Trump tries to ram it through anyway, calling those who oppose him globalists?
00:03:37.000Fourth, Trump has very little leverage with Republicans at this point.
00:03:40.000Trump threatened Republicans to pass Trumpcare.
00:03:42.000Instead, he had to pull his bill because it appeared he'd be short by up to 40 votes in the House.
00:03:46.000Trump's desire to rush the bill, his obvious lack of knowledge on the bill, his mixed messaging on its contents, all of it combined to undercut his leverage.
00:03:53.000His leverage isn't going to grow on tax reform, particularly given all the interest involved.
00:03:57.000Finally, Democrats are not going to work with Trump.
00:04:00.000Trump seems to think that if Republicans won't work with him, Democrats will.
00:04:42.000And we're going to get to all the ramifications of that, including, most importantly, as Yoda suggests,
00:04:49.000Except now it's the war on Republicans, the war on conservatives particularly, not the war on Republicans.
00:05:01.000The war on conservatives has begun and we'll talk all about that because Trump is actually leading that war.
00:05:06.000This is what some of us had feared, but we'll get to that in just a second.
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00:06:31.000So, again, when last we left our story, it was not clear.
00:06:34.000It was Thursday, so we had to leave before the apex of the story, before the climax of the story, and the story climaxed with Trumpcare going down to flaming defeat.
00:06:45.000And it went down to flaming defeat because it was a crappy bill.
00:06:50.000The people who are not to blame, the only people who are not to blame in this whole situation are the people who took seriously the promises that they made to the American people over and over and over again for seven years that they were going to repeal Obamacare.
00:07:02.000Not replace it with Obamacare Light, not replace it with Obamacare Part 2.0, not replace it with a new subsidy, not replace it with a new entitlement program,
00:07:09.000Not replace it with the same central regulations that Obamacare maintained?
00:08:28.000The radically shifting logic about Donald Trump in order to make excuses for the fact that he did a pretty terrible job pushing this bill, it's pretty amazing.
00:08:36.000I want to go through each player in this drama and explain what they did right and what they did wrong, and who deserves the blame.
00:08:42.000But right now, all fire is focused on the conservatives, and Donald Trump and his team are openly saying that they now want to pander to Democrats, that they want to turn to the left.
00:08:50.000And we'll get to that in just a little while.
00:08:52.000But first, first, what did Trump do wrong?
00:09:55.000And he didn't have time to coordinate with McConnell or with the House Freedom Caucus.
00:09:59.000Trump didn't bother to actually have these people over for dinner and try and talk with them until the last five minutes before the bill was rammed through.
00:10:05.000Even when it was rammed through, he then deployed the absolute
00:10:47.000He said, look, you cannot release a plan in 18 days and hope that this thing is going to go through.
00:10:51.000The biggest broken promise in political history.
00:10:54.000What's your reaction to that judgment?
00:10:56.000Well, John, first I'd say the President is right that the Democrats gave us Obamacare and the failure of this bill this week doesn't solve the problems of Obamacare.
00:11:05.000It's continuing to get worse and our health care system is groaning under the weight of Obamacare.
00:13:19.000He's the one who decided that instead of going and negotiating with all the various parties, I mean, Paul Ryan's been there for a while.
00:13:24.000He could have spent the past few months going to all the available parties and talking with them about what can pass and what can't, going to the Freedom Caucus and saying what can pass and what can't.
00:13:38.000It is his job to cobble together a bill that people can actually vote for.
00:13:41.000Instead, he cobbled together the single most unpopular bill I have ever seen proposed in front of the House Republicans by House Republicans.
00:13:48.000I mean, do you understand how crazy it is?
00:13:50.000I mean, John Boehner did this a couple of times, but you understand how crazy it is that Paul Ryan, who's supposed to be the consensus guy, the guy who had to be begged into being Speaker of the House, couldn't put together a bill better than this?
00:14:00.000So, naturally, this led to some controversy.
00:14:03.000Everybody has sort of been expecting Trump to dump Paul Ryan under the bus, because Ryan is allied with Reince Priebus in the White House, and Steve Bannon doesn't like Reince Priebus or Paul Ryan, and so there's been a lot of Machiavellian manipulations here.
00:14:15.000So over the weekend, Donald Trump tweeted that he wanted everybody to watch Judge Jeanine Pirro.
00:14:20.000And people didn't know what he was talking about.
00:14:22.000There was one theory that was plausible that suggested that he was talking about Judge Jeanine was supposed to reveal something about the leaks investigation or something.
00:14:31.000But Trump saw that because there was like a little chyron on Fox.
00:14:34.000The other theory is that he told people to watch Judge Jeanine because he knew Judge Jeanine was going to lead off with this rant.
00:15:57.000Of course, Reince Priebus is going to be saying that.
00:15:58.000I'd be more assured if Steve Bannon were saying that, because Steve Bannon actually hates Paul Ryan, whereas Reince Priebus is from Wisconsin and is close friends with Paul Ryan.
00:16:05.000Well, I want to get to the House Freedom Caucus and Trump attacking them in just one second.
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00:17:30.000I mean, how much mail are you going to send for you and your business in those four weeks?
00:17:50.000Instead, he issued an ultimatum last Thursday in which he said, if we don't get a vote right now, we're not going to do anything on health care because he didn't want to deal with the problem.
00:17:58.000And then he blamed the Freedom Caucus.
00:17:59.000So here is what Trump tweeted about the Freedom Caucus.
00:18:02.000He tweeted, Democrats are smiling in D.C.
00:18:04.000that the Freedom Caucus, with the help of Club for Growth and Heritage, have saved Planned Parenthood and Ocare.
00:18:10.000This is absolutely galling and disgusting.
00:18:12.000The only people who saved Planned Parenthood and the funding for Obamacare and all the rest of it are Donald Trump and Paul Ryan and all the people who wanted to push this crappy bill.
00:18:20.000Because the fact is that this crappy bill would have maintained all the central provisions of Obamacare.
00:18:24.000The only good thing it did was restructure Medicaid.
00:18:28.000Making it into a block grant instead of a need-based program.
00:18:31.000Even that would have changed over time because a new Congress would come in from the Democratic side and presumably reinstate it.
00:18:36.000It wouldn't make it a permanent change.
00:18:38.000This idea that it was the Freedom Caucus that really sunk this, Club for Growth and Heritage, all those people supported him.
00:18:47.000I didn't vote for either of them because when it came to Trump, I was concerned that Trump would basically just be, he would govern like a Democrat and undercut a lot of conservative values.
00:18:58.000That's not true of the Freedom Caucus, or Heritage, or Club for Growth.
00:19:01.000All of them openly supported President Trump, and here is Trump slapping them in the face as hard as he possibly can.
00:19:06.000And let's just point out, when it comes to Planned Parenthood, when it comes to single-payer healthcare, there's only one person in this entire equation who has come out in favor of those things.
00:19:14.000Let's flash back just a few short months ago.
00:19:18.000When you get rid of the lines, it brings in competition.
00:19:21.000So instead of having one insurance company taking care of New York or Texas, you'll have many.
00:19:26.000They'll compete, and it'll be a beautiful thing.
00:19:29.000As far as Planned Parenthood is concerned, I'm pro-life.
00:19:32.000I'm totally against abortion having to do with Planned Parenthood.
00:19:54.000In a different age, which is the age you're talking about here, what I'd like to see is a private system without the artificial lines around every state.
00:20:02.000Get rid of the artificial lines, and you will have yourself great plans.
00:20:06.000And then we have to- We can stop it there, okay.
00:20:08.000The artificial lines, guess what wasn't in that bill?
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