House Majority Leader Kevin McCarthy joined me on my MSNBC show this morning:
HH: Joining me on set, the Majority Leader of the United States House of Representatives, Congressman Kevin McCarthy from California, longtime friend. You were standing right behind Steve Scalise. That must have been quite a moment, Kevin McCarthy.
KM: It was a big moment, because I’ve known Steve long before he got into Congress. We were in Young Republicans together. I was with Steve in Louisiana when we got sworn into the State Senate. This is a man that’s a real fighter. And I thought he showed a spirit people haven’t seen in Congress in quite some time. I hope that continues.
HH: I played his whole speech on my radio show, and I did not know that Cedric Richmond, Democrat…
HH: …was the first man to get to his hospital bed in his Democrat baseball uniform. And it sort of showed a different side of Congress that not a lot of people in the United States see.
KM: Yeah, he and Cedric have been friends for quite some time, and so I was down at the hospital on the day he was shot waiting for Jennifer to come up. And people don’t realize how close Steve came to not making it. But his strength, it was amazing. And for him to be able to be walking, because he hadn’t been able to put as much weight on that other hip for quite some time, and he, I go see him in rehabilitation, they come in to work on him, and he said can I do it twice as long. He’s a fighter.
HH: That was the good news. That was the great news, in fact. Losing Tom Price as the Secretary of HHS is a blow. I know he’s a friend of yours. I’ve heard the names Senator Jon Kyl. I’ve heard Bobby Jindal, other people. Who do you think the President needs to get health care through the Senate? It gets through the House. You guys have passed hundreds of bills. They all get stuck in the Senate. Should he turn to a Jon Kyl to try and get someone who can bridge the Susan Collins-Rand Paul gap at HHS?
KM: I don’t know changing someone at HHS gets it through the Senate. Maybe changing someone in the Senate gets it through the Senate. It just seems to become a difficulty over in the Senate not just with health care, with so many other items as well. I think they, I would bring the Senate together and not just about health care, but start looking at what America needs, and I’d bring maybe an expert in and know how to build a team. You can’t be two individuals…
HH: What you said just now, maybe they need to change someone in the Senate, are you suggesting they need to change leadership in the Senate?
KM: No, no. I’m not suggesting leadership by anything, because it’s, leadership has done all the battle going in there. To me, it seems one or two individuals wants to hold everything up. And that’s the frustration I’ve had with the history of the Senate, where one individual can hold everything up.
HH: So if we look at health care, do you think a Jon Kyl, so deeply respected in the Senate, might be able to help bring together the Rand Paul’s and the Lisa Murkowski’s, the McCain’s….
HH: I have a lot of respect for Jon Kyl. Jon Kyl can serve at HHS, or he can serve at DOD. That individual did a tremendous job while he was in the Senate. He led in a great deal of ways. I think he can serve in so many places. But I’d leave it to the President to pick the person he has the most confidence in.
HH: Now let’s turn to some legislative matters, big tech and then to taxes. In 1869, the Continental Railroad was completed. It took 20 years for the Congress to decide they needed to start regulating the railroads, because they were too big, too powerful, too private. And so we got the Interstate Commerce Commission in 1887. Facebook is 13 years old. You had hearings this week with Twitter. The Russians used Facebook and Twitter to attack us. Should the House Intel Committee look into establishing a new agency to regulate big tech, yes for national security within the confines of the 1st Amendment, but to make sure that these big Silicon Valley companies keep America’s security at the center of their agenda?
KM: I’m always concerned about security. I’m also concerned about the 1st Amendment. I never want to tramp on the 1st Amendment’s ability. I first want to have all the facts. I notice it woke up Twitter. It woke up Facebook. But I want to let the hearings go through. Let’s get all the facts, and let’s make a decision, because we are living through the fourth industrial revolution. And this is a fundamental change, and you can’t apply the old laws to what’s happening new. You’re going to have to have some new ones to look at, and I think let’s get all the facts. Let’s look at intel. Let’s have a discussion and see where we need to go, but let’s also protect the 1st Amendment.
HH: I wouldn’t give it to the FCC. I wouldn’t give it to any existing agency.
KM: No, because that becomes political.
HH: But what about a new agency that just says we’re not here to shut you down, we’re not here to do your 1st Amendment rights anything wrong, but we’re going to regulate you in the interest of the national security? We’re in a regulated industry right now. In fact, if someone buys an ad on TV, they have to be…
KM: They don’t realize it.
HH: …and my radio show is the most regulated thing in the world. Why not have some super-specialized agency supervising Silicon Valley?
KM: Because you know what? I’ve watched agencies grow on others. Before I go to that extent, I first want to have all the facts. I don’t want to jump for a solution until I figure out the complete problem and how it’s being used, because look…
HH: But you’re open to it?
KM: I want to look at everything, yes, because this is the point. Social media is a wonderful thing. But it also allows ISIS to recruit.
KM: There’s good and bad that gets created with this. So how can we keep the 1st Amendment, how can we keep the positive things, but how can we keep those things that are not just bad, but harm the world? Let’s look at our ability to be able to do that. But I don’t want to jump to a new agency. I want to have all the facts. I want to protect the 1st Amendment before I make any decisions going anywhere.
HH: House Intel is doing that. Over at Justice, they have an Anti-Trust Division. When you get too big and too powerful, Anti-Trust steps in with Microsoft, with AT&T. Should the Anti-Trust Division be looking at Facebook and Twitter as well? They’re so big and so powerful.
KM: Well, listen. We thought IBM was too big and too powerful. When 2010, when we came into Congress, Uber only had three cars. The one thing about innovation, the big and powerful don’t stay that long. So I don’t want to harm innovation. I want to keep innovation going. But there’s nothing wrong with actually monitoring where something is going. There’s a lot of discussion with one or two companies becoming too big moving into other industries, maybe having a monopoly from that stand, but I just think innovation kind of stops, will stop us to be able to grow. Let’s look at it. Let’s monitor it, but let’s not just to conclusions and say we’re going to knock something out.
HH: I was joking before the show began. You’re sort of for Republicans the governor of California. You’re the senior Republican from California. And so I know the industry must come to you and ask for your special intervention when they need it. But do you speak to them sharply about the fact ending encryption is a danger to the United States?
KM: Look, I talk to them a great deal about that. We’ve got to be able to protect our nation and protect our freedoms at the same time. And this is something that we shouldn’t do from one, between media. We should do it by sitting down together and finding a solution. And I found a number of people in the Valley, the patriotism of others, that want to be able to do it. But they are strong libertarians, and I respect that, and I want to be able to protect that at the same time.
HH: More on that later. Let’s turn to the tax bill. Can you get your side of it, the budget and the text of the bill done in October?
KM: I think we can get it done before the end of the year for sure. Next week will be the start of tax reform, because the first phase will be getting the budget done. We will get the budget done next week. We had a great conference and a retreat this week where we moved away from the Capitol, spent five hours walking through it. I think Kevin Brady has done a tremendous job here. I mean, think about it. You start out, you want to make it simpler, you want to make it fair, and you want to make us competitive around the world, so no longer will families have to spend days on their tax return. They’ll do it in minutes. They’ll be able to keep more of what they earn. We’ll go back to having growth in America. I mean, if you really look at it, if you take the worst growth year under the eight years of Bill Clinton, the worst year is still higher than the best year under Barack Obama. And that has been the real challenge of America – the lack of growth. And if we want to solve any of our problems, from the deficit, from our military and others, we’ve got to get growth.
HH: I think you’ve got to have this bill. This is a must-pass, or this year is a disaster.
HH: You agree? It’s a must-pass…
KM: I agree 1,000%.
HH: All right, so given that, the one big obstacle is the state and local tax deduction. High tax states, I used to be in California, I’m in Virginia now. But I used to hate the idea that they would take that away. And I know New York hates it. Have you talked to your members? You whip votes.
HH: Are they going to go along with this? Are they going to say…
KM: Well, we talked to it, and it’s not finalized all the way we’ll go, but let’s first start with our premise. Are we going to write 50 individuals’ tax for each state? Did we say we’re going to write a fair plan, and we’re going to end loopholes? So what happens here is, is it fair that another state subsidizes the mismanagement of California? We know what’s happened in California with Democrats.
HH: Yes, we do.
KM: They don’t have a taxing problem. They have a spending problem of what they spend their money on. So they raise their state tax to 13%. Why do they make that argument? Oh, it’s okay. We’ll let it write off on the federal government. We’ll have everybody else in the country subsidize our mismanagement. What happened here is if we want to look at it and protect one loophole, look at the entire bill. If you look at the entire tax bill, and I’m a Californian, this is a good bill for you.
HH: So Kevin McCarthy, is the state and local deduction dead, dead, dead?
KM: I don’t think the state and local deduction should continue, because if you want to have a fair tax code for the entire nation, if you want to just protect California and New York liberal base, where they just want to keep raising taxes and make the rest of America pay for it, and what they’re spending it on, a train to nowhere, the cap and trade, the other things, and make everybody else subsidize that? That’s wrong. And if you want to end loopholes, that’s wrong. But if you look at the entire bill in the total part of it, and you’re in California, this is a good bill for you.
HH: And so last question, Leader McCarthy, Babe Ruth once pointed to the fence and said, called his shot, put it over. I’ve asked a number of people. Pat Toomey wouldn’t do it. Marc Short from the White House wouldn’t do it on the radio. Are you calling your shot? Is this bill going to pass and get signed by the President?
HH: By December 31st?
KM: I will promise it’ll be out of the House before then. Knowing what happens in the Senate, I can’t make predictions there. But this is a must-pass bill. If we want to look at the future for America, and I don’t look at this bill as a Republican, I look at it as an American. This is an American tax bill that helps all. It allows a family for the first $24,000 is tax free. It lets you fill it out on a postcard. You still get to deduct your interest on your home, your charitable. It’s fair to all.
HH: Quick one, casualty loss deduction. We look at Puerto Rico, which needs help, and we were talking about that. The casualty loss deduction can’t go away, can it? You still have to have complexity.
KM: Yeah, we’re going to have some in it, but the one thing you can do here is if you double the standard deduction, if you sit instead of looking at a loophole and look at the final bill, you’ll come out much better. And not only will we come out much better, but we’ll be able to compete around the world. Think of small businesses going down to 25%, the lowest it’s been in 80 years. Small business creates more jobs than anyone else in America.
HH: You began as a small businessman with your deli.
KM: At 21.
HH: I know that’s close to your heart. Kevin McCarthy, Leader of the House Republicans, thank you for joining me this morning on the Hugh Hewitt Show.
End of interview.