DAVID GREENE, HOST:
Lawmakers are back in Washington - they've returned from their homes - and Republicans are talking taxes. GOP leaders are hoping to find a way to pass a tax overhaul by Christmas. Here's Republican Senator John Cornyn after he met with President Trump yesterday.
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JOHN CORNYN: The goal's to get the economy growing again, to get people with a little more take-home pay they can spend the way they see fit or save it for their retirement, and to make the United States economy competitive in a global economy where everybody's fighting for every single job and every single investment that can get.
GREENE: Now, the Senate bill still faces a number of hurdles, including some concerns from within the Republican Party. And I want to talk more about this with a senator who has been thinking quite a bit about the tax bill. It's Republican Pat Toomey of Pennsylvania. He's a member of the Senate Finance and Budget Committees, and he joins us. Senator, good morning.
PAT TOOMEY: Good morning, David. Thanks for having me.
GREENE: Well, thanks for coming on. You know, we talk a lot of politics. I'd love to dig into some of the policy here without getting too, too wonky, but it'd be great to hear what impact this this bill might have. And I want to start with the Congressional Budget Office, nonpartisan body, looked at this bill and is suggesting that lower earners in the United States might be worse off with this bill. Explain that for me. Why would you support something like that?
TOOMEY: So this is wildly misleading, and it's been seized on by some of our Democratic friends who want to mischaracterize the bill. Let me just state categorically low and middle-income people will pay less in taxes. That is a fact, and that has been confirmed by the Joint Tax. But let me explain why this...
GREENE: You're saying the Joint Committee on Taxation, which is another independent body.
TOOMEY: That's right. Thank you. That's right. Independent, nonpartisan Congressional scorekeepers who have evaluated this. Let me - and I think I can do it best with a simple analogy. Imagine a young man has a job where he makes $8 an hour. And imagine so as such he qualifies for the earned income tax credit and he receives the earned income tax credit, which is federal payment that goes to him to supplement his relatively low wages. One day he decides to quit the job. At that point he no longer gets the earned income tax credit. Did we raise his taxes? I would suggest that that's an absurd conclusion to think that we raised his taxes because he decided not to participate in this program which he had previously participated in or which he might be eligible for. But that's exactly what CBO and Joint Tax is saying.
What we do when we repeal the individual mandate, we simply say - and technically, we don't repeal it. What we do is we say the penalty for not buying an Obamacare plan will go to zero. There will no longer be a financial penalty. As it is today, people are hit with a tax if they decide that these plans are just not suitable for them or not affordable.
GREENE: If I may, I just want to catch our listeners up because you're bringing up the individual mandate. And we should say that one of the proposals here is to eliminate the Affordable Care Act individual mandate. And what the CBO is saying is if that happens because of premiums going up, there might be a lot of people, many of them lower-income people, without health insurance. They would no longer be getting some tax credits because of that. That is an assumption that they are making. Is that not a fair assumption, suggesting many of those people would suffer financially if this goes through?
TOOMEY: No. First of all, all of these programs, policies, are entirely available to anyone. We don't change a single rule about eligibility. We don't change reimbursements. We don't change any of that. We simply say you are no longer going to be punished if you decide it's not suitable for you. That's all.
GREENE: So you're saying...
TOOMEY: So someone might decide that it's not suitable for them then the payment that the Treasury makes to the insurance company - by the way, no money ever goes to the individual - the payment to the insurance company will be discontinued because the person decided they don't want to participate in that policy.
GREENE: So this is about choice to you. That's the important distinction. You're not disputing that the CBO might be right in the cases of some people. You're saying, in your mind this is a separate issue.
TOOMEY: No, it goes beyond that. It goes beyond that. Right, of course. There is a very important element of personal freedom. I find it extremely offensive that anyone ever thought that the federal government has the right to force people to buy a product against their will. That's wildly inconsistent with the Constitution, in my mind. But let's put that aside. The truth is no individual, even if they exercise this choice, is going to pay more in taxes. That's absurd. What's going to happen is the federal government will discontinue making a payment to an insurance company.
GREENE: Well, then let me ask. If the Obamacare question is so contentious and that if you remove that, your argument is more solid - I mean, some Democrats would say that still some lower-income earners might not get a tax improvement - if your argument is more solid without the whole mandate in this bill, why mix these things up? Why not take Obamacare out of this and just pass a tax bill?
TOOMEY: Well, because it's a good idea to take Obamacare out of this. For one, it's a tax cut that is very regressive. I mean it's a tax policy, the current tax policy. Under Obamacare, the mandate is very regressive.
GREENE: I'm sorry, did you say it's a good idea to take Obamacare out of this bill? You would rather just pass? You want to keep the elimination of the...
TOOMEY: I'm sorry if I'm not being clear.
GREENE: OK.
TOOMEY: I want to keep what is in the Senate bill which zeroes out the mandate penalty. And one of the reasons I want to do that is because the mandate penalty as it is currently enforced is very regressive. Eighty-three percent of the people who pay this tax, who get hit with this punishment, in Pennsylvania earn less than $50,000 a year. We're going to directly lower their taxes in a variety of ways. One of them is they're not going to have to pay this penalty anymore. So that is very constructive. It saves them money. It is a step in the direction of restoring their freedom to decide what kind of insurance plan they want rather than being forced by the government to pay what the government wants them to buy. It's very good policy.
GREENE: Let me just ask you broadly, Senator Toomey. The economy is at near full employment. Consumer confidence has been going up. The economy seems to be moving in the right direction. Why is this tax bill needed right now? What is the urgency?
TOOMEY: Well, I'll tell you what the urgency is. We have had, with the exception of the last several quarters, we've had a very long period, about eight years, of sub par, sub normal economic growth. After a deep recession, the American economy has always hysterically come - historically come roaring back, and this time it did not do that. I think there are a variety of reasons, but one clear element of this has been a drop in the capital stock - the growth in the capital stock declined dramatically - a corresponding drop in productivity, and we've seen virtually no growth in wages for many years. If we get our tax code competitive - which, by the way, over the last 30 years since we've done nothing, the rest of the world has been modifying their tax code - this is our chance to catch up and make our tax code competitive so American workers can thrive. Wages will go up, especially in a close to a full-employment economy.
GREENE: Lots more to talk about. Sadly, we'll have to leave it there for this morning. Republican Senator Pat Toomey of Pennsylvania. Thanks so much for the time, Senator.
TOOMEY: Thanks, David. Transcript provided by NPR, Copyright NPR.