Representative Diane Black joined me this morning for the latest on the Conference Committee between House and Senate on the final tax reform bill:
HH: I’m joined now by Representative Diane Black, chairman of the House Budget Committee, a member of the tax reform conference committee whenever it sits. Representative Black, welcome, congratulations. You have two bills that you must put into one bill and do so quickly. How soon will that be done?
DB: Oh, I think we’ll get it done tomorrow…not.
HH: Oh, come on. I thought I was going to jump up and down, because if that was the real world, if it was business, you guys would get it done tomorrow.
DB: Amen, amen. I know in our business, we move a lot quicker than they do here in Congress. But we are really delighted that we are where we are today. At least we got something out of the Senate. Look, I don’t mean to pick on them. But my goodness, it just seems like they, it takes forever for them to get a decision made. So we at least are at this point where we can begin combining the two bills and taking the best pieces out of each one of them.
HH: Let me begin with the business interest deduction, Chairman Black. This matters a great deal to a lot of businesses that borrowed to expand over the last ten years. The House was better than the Senate, but neither are good enough. Is that top on your list for addressing with your Senate colleagues, getting the business interest deduction back to where it is robust and works for businesses?
DB: Yeah, we know that this is a concern, because we put our bill out there, of course, several weeks ago. And we’ve been listening to the various industries. I will say Kevin Brady and their staff there in their office have been taking a lot of calls, as have all of us with meetings, and listening to how what we’ve put out there is going to affect businesses. We all know that when businesses do well, that they have, there’s an opportunity for the economy to grow. And we, look at what’s happening in the markets just with the anticipation of the economic growth. So we want to be sure that we get there. Now you know, Hugh, that any time you adjust one thing, there’s a dial on the other side that needs to be adjusted. So we always have to remember what our main point was when we started this out, to have something fairer, flatter and simpler. And there are going to be some changes that will need to be made, and we’ll all work together to make sure that we don’t harm businesses, but that we do lower those taxes in that focus that we wanted, right there in the middle income, give them the greatest tax relief.
HH: If I can put one bug in your ear, Chairman Black, it’s that I would rather see a corporate tax rate of 21 or 22% than the elimination of the business interest deduction, because I think you will bankrupt a lot of hard-working businesses who borrowed to expand in reliance upon the ability to deduct their interest from the borrowing, and that therefore I’d rather see everyone pay a little bit more on the corporate side than to shut down some businesses that relied on that. But let me ask you about calendar, and very seriously, I do, I believe stuff happens. I remember Jim Jeffords switching parties. I remember the sad case of Senator Heinz dying in a plane crash. I just remember stuff. And therefore, I am not ambivalent about speed. I think you folks need to buckle down and get this done this week. What is the urgency level in the Congress?
DB: You are exactly right, and I think the faster that we can get this done, we really don’t have that many things that are that terribly different. But they are different, and so there, as you know, and have been watching this in the Senate, in order for them to be able to get the votes, they’ve had to do some things that we don’t like in the House. We like permanency, and they do some things over on their side that I don’t believe give the businesses and the economy the kind of certainty that they need. So that may be one of the biggest things, is that we have more certainty in our bill than they do, but we’re going to try to take the best out of each bill and come out of this as quickly as we can. It’s good for the American people if we can get this done quickly.
HH: I’ve gotten a lot of emails from grad students. I mean, there are a legion of grad students out there who are concerned that they’re suddenly going to be hit with a great deal of income that is phantom income. It’s just tuition that they are not charged. What is going to be the compromise on the grad student elimination of their non-claiming of income, Chairman Black?
DB: Yeah, we’re hearing a lot from people on that. Our office is really flooded when we put our form out there. And we are listening to what they have to say. I was at a couple of events in my district where the grad students showed up and actually, I asked them bring your information to me. Let’s go over it. I want to put it on paper. I want to see. So that is one of the areas that we’ve heard a lot. Everybody is hearing a lot, and we are going to have to look at that to see what we can do to even that out.
HH: So you are sympathetic to their arguments though?
DB: We are. We are.
HH: All right. Let me ask you, Senator Inhofe offered an amendment based upon an idea I proposed, which was to allow a one-time deduction from people’s retirement income of up to 25%, tax it at a flat rate of 10%, not the ordinary income plus a penalty. That would raise tens of billions of dollars, if not hundreds of billions of dollars, for the revenue side, and it would allow people to use their withdrawal to fund their mortgage reduction because of the HMI changes. Any chance of that making it in? Has the House even discussed that? It’s an easy revenue source that makes everybody happy – home builders, realtors, retirees, people with mortgages. Has that been discussed, yet, in the House?
DB: It has not been discussed in the House, but we know that that was something that was discussed in the Senate. It may be on the table. I couldn’t speak to that with certainty, but I think it is an idea worth looking at.
HH: I really, I think it just raises hundreds of billions of dollars, and everybody jumps up and down. Everyone I talked to with retirement assets would immediate take 25% of their retirement out, pay the 10% penalty, or the 10% tax to the federal government…
HH: …and then reduce their mortgage. Let me ask you, then, about the big difference – number of brackets and the death tax. What does Diane Black think about those two issues?
DB: Well, you’ll remember when we went into this, we had the fairer, flatter, simpler motto that we all talked about. And so that was really what we were trying to do, was condensing these brackets. We, on our side, do believe that’s still what we should be doing, is condensing them. Now we did widen the brackets as far as the income levels in each one of those brackets. And the bracket allowed those lower incomes to go to the next lowest bracket. So we like what we did. I do think this is one that we’re probably going to push pretty hard to keep, because otherwise, you have a lot of cliffs. When you have these numbers, these seven different bracket and the closeness that they are, you have a lot of cliffs that people get on. So then they, you know, $15 dollars over what that last bracket was, you’re put into the next bracket up for just a small amount of money. And we were trying to get rid of those cliffs. This brings those cliffs back.
HH: So I hope you prevail on that. On the death tax, I’m more with the Senate than with the Houses, because I fear concentration of wealth at too great a number. But I think there’s a compromise there somewhere, isn’t there?
DB: Well, I will tell you that it just seems so unfair, and this is a conservative idea that I believe in, and we have talked about for years, that when people pay taxes on those dollars, and they earn that money, that when someone dies, you shouldn’t tax it again. You shouldn’t take away what they have worked so hard. And that is sort of the American dream is you work hard and you pay taxes on it the first time. You shouldn’t have to pay taxes on it again. So we like what we did in the House, and I think that is going to be one of the areas that we’re going to try to stick with what we did in the House.
HH: Now one of your colleagues, and she is estimable, the former speaker of the House, Nancy Pelosi, now the minority leader, and I give her a lot of respect for hanging in there all these years. She was on Meet the Press with me this weekend. But she said yesterday, it’s the end of the world, this tax bill. “This is Armageddon.” What do you say to your old colleague when you see her using that kind of rhetoric?
DB: You know, it’s so hard for me to have someone who is so respected and the leader of their party to use this kind of language. We can have a good debate. We can have differences. But really? To tell the American people this is Armageddon, I think it’s irresponsible. I really do. You can talk about the differences. You can talk about where you think this might hurt a certain group of people of certain income levels, but to say that somehow it’s Armageddon, that the country is going to just dissolve because of this? I just think that’s irresponsible language.
HH: Will you seek her out and have a chat with her about this, because I know you two must have been friendly over the years. You’re a senior Republican lawmaker and chairman of Budget, and a woman, and she’s the highest-ranking woman ever to serve in the Congress. You two ought to be able to talk to each other.
DB: You know, I wish that I could say that we have that kind of relationship, and I did try some seven years ago when I first came to Congress to have that relationship with her. Unfortunately, I don’t. However, I will tell you there are a number of women on the other side of the aisle that I have regular conversations with, and that we can have good dialogue without having some kind of Armageddon-type of language that goes out there. And I do have excellent conversations and relationships with my colleagues on the other side of the aisle, both male and female. And we have good conversations within our Ways and Means Committee. It’s just a shame that that’s what we’ve come to.
HH: 30 seconds left, Chairman Black. When will we see a final tax bill on the President’s desk? What’s the latest date by which it will get to the President’s desk?
DB: Well, we have committed that we will get it there by Christmas, but I certainly hope we move a lot faster than that. Again, we have some differences, but I think we can get those differences ironed out. And if we have to spend day and night doing it, I think we should do it. Get it on the President’s desk as soon as possible.
HH: Day and night, Chairman Black, and remember the 25% withdrawal of retirement assets at the 10% tax solves all your problems.
End of interview.