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Hugh Hewitt Book Club

Jeb Bush On His New Tax Plan And Reaction To Donald Trump’s Rolling Stone Interview

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The audio:

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The transcript:

HH: Pleased to begin today’s Hugh Hewitt Show with former Governor Jeb Bush. Governor Bush, welcome back, good to have you.

JB: Thank you, Hugh, looking forward to seeing you next week.

HH: I am looking forward to the Wednesday night debate a lot. Today, of course, is we’re going to talk taxes, primarily, a little Trump, I’m sure, but tomorrow is the 14th anniversary of the attack on America. The first seven years of those 14 years, your brother led. His finest hours were the weeks, the months immediately after 9/11, and then again when he authorized the surge. The second seven years have been under President Obama. Are we less safe today, Jeb Bush, than we were on 9/12 of 2001?

JB: We are less safe in terms of our commitment to protecting the homeland, for sure. We’ve allowed our defense posture to be dramatically altered by the sequester. The cuts are devastating. Our intelligence capability is down. I think the infrastructure around protecting the homeland that was built up is still strong, but we have to have leadership to maintain it. Our cybersecurity is definitely a disaster. If you look at the Hillary Clinton situation, it’s also part of a larger problem of a federal government that is lax and doesn’t think that cybersecurity is important. So there are, and you see, as we pull back, you see these new threats of Islamic terrorism growing in importance in gaining energy. So I’d say that we’re living in perilous times, for sure.

HH: Now what do you believe will be the impact of giving $100 billion dollars to General Soleimani and the Quds Forces?

JB: Oh, gosh, Hugh, they don’t need $100 billion dollars to do what they’re doing, but it will replenish the efforts to prop up the Assad regime, which is combined with ISIS in Syria creating the greatest humanitarian crisis that we’ve had in a long, long while. They’ll continue to destabilize Iraq, Yemen, provide support for Hezbollah in Lebanon. They’ve renewed their support for Hamas in Gaza, creating great hardship for Israel. And so this will just be fresh capital for them to continue to pursue what they do, which is to be the largest supporter of terrorism in the world. And we’ve negotiated a deal with them to give them that money. It’s Alice In Wonderland diplomacy.

HH: Now we’ll spend some time, I’m sure, Wednesday night talking about the Iran deal and what happened. Let’s turn to your tax plan, which you unveiled over a couple of days, the last couple of days. First of all, kudos to your writers and researchers for finding someone named Reagan Love in South Carolina.

JB: (laughing) Thank you. She’s a real person. She’s a schoolteacher, and…

HH: I gather. You can’t make up Jonathan and Reagan Love. People need to go find that. They’re like the most ideal voters ever. But your new plan says it works whether you’re on Main Street or Wall Street, no special favors, no special breaks. Three rates of 10, 25 and 28%, and you said yesterday we will have return to the structure and act in President Ronald Reagan’s monumental and successful 1986 tax reform. Now Governor Bush, I worked for Ronald Reagan. He also had deductions in his plan that you’re getting rid of, specifically the home mortgage interest deduction, the state income tax deduction, other deductions. What about that problem?

JB: Well, we’re not getting rid of the home interest deduction. We’re putting a cap on the deductions you can take, because since 1986, when the code was cleaned out, we have had Democrats and Republicans alike, with good intentions, I’m sure, have clogged the tax code up again with thousands of different deductions and credits. And so by putting a cap on those deductions as 2% of adjusted gross income, we’re shifting the benefits of this, perhaps proportionately, at least, to the middle class that doesn’t take as many deductions. And when you raise the standard deduction, as we’ve done by doubling it, or near doubling it, you’re taking, you’re putting people off the tax rolls altogether, or they’re only going to fill out a two page form. There will only be 13 million people that will be filing the long form now. And I think shifting power away from Washington, D.C. is a great idea. And as it relates to the local and state deductions that have benefited big government states for a long while, why should a state like Florida or Texas or many other states subsidize states that have never really challenged how they go about their business. They basically have been captured by the public service unions, and that cost is born by all of us. I just don’t think that’s fair.

HH: Now Governor, I’ve had this argument. I’m glad you’re campaigning bluntly on this, because to get it through, people need to know exactly what they’re getting. But it will have the impact, as I read through it a couple of times, a 2% adjusted gross income cap, not for charitable deductions, though. Let’s be clear about that. You’re not capping charitable deductions, correct?

JB: That’s right. No, that’s the only thing that is excluded, and we had a big debate about that, just because I think it’s important to maintain support for not-for-profits. There’s an argument that people give money to charity not because of the deduction, but there would be a big risk that a lot of really important groups that help a lot of people might be impacted.

HH: And an I also assume that when you’re done with this, things like the casualty loss, which my friend, Hank Adler, always points out to me, the tax code has a lot of casualty loss provisions, because when a hurricane sweeps away your home, or a fire burns it down, you can’t be expected to pay taxes for a couple of years if all your accumulated wealth is destroyed.

JB: That’s right, and so, and we, look, we also eliminate the alternative minimum tax, which is a tax that basically punishes people and creates the hardship of having to fill out two tax forms and take the highest tax liability. It’s a tax on the middle class, it’s a tax on people that because of inflation ultimately are going to get into a higher tax bracket. We eliminate the marriage penalty. So if you’re a spouse that’s at home, you right now, if you wanted to work, you have to pay taxes on the cumulative amount of income that your family has earned, and that’s a deterrent for people that want to get back in the workforce. What we’re proposing is that a spouse who wants to get back in the workforce, that those dollars they earn won’t be taxed at all. And then we have another part of the plan that I think is important, and in growing importance because of the change of our demographics. Anybody that is eligible for Social Security, that is age 67 and up, if they’re working, and there are a lot of seniors that are, they pay the payroll tax, continue to do it. We’re suggesting that that be eliminated so that they can save that money for their own retirement. They’ve already paid into the system more than enough. So if you add all this up, and then when you end the estate tax once and for all, the death tax, you add all this up, and this is a pro-work, pro-middle class, pro-economic growth tax policy that I think will, when it’s, if you look at the dynamic of the text of this, would generate all sorts of income for people that right now are struggling.

HH: The criticism that will come, because I’ve had this debate before, is that that’s all true, especially the drop in the corporate tax, which you propose at 20%, incredibly important. But if will have the impact of devaluing every home in America probably by about 15%, according to the economist I talked to, Richard McKenzie. If you cap the home interest deduction, the value of home drops in reflection of the inability to write off the mortgage interest, and you’ll cripple the blue states with the high income tax. Here’s my problem with this. People built their lives around tax codes built upon deducting mortgage interest and upon being able to deduct state income taxes. In the law, we call it reliance damages. You’re telling people basically move or be screwed.

JB: No, we’re going to give them reductions in their tax rates. They still can deduct mortgage interest. And many people will still be below the 2% cap. And for high income people that live in California, no offense, Hugh, but you might have to pay a little bit more, but your state is the reason that that’s taking place. You have a 13.3% income tax rate, for crying out loud.

HH: Oh, believe me, I know.

JB: Why should I have to pay for that when I’m living in Florida? I mean, that’s your problem.

HH: I understand that, except my…

JB: Elect a Republican conservative. Bring Ronald Reagan back to California.

HH: Yeah, I’m 59, and I can move, but I’m thinking actually I’m not the issue here. The issue is the two-income couple who is 35 and bought a house two years ago expecting to have a mortgage interest deduction and a state income tax deduction to protect them, and they’re tenured at their school system, and now you’re telling them, Jeb Bush, they’ve got to move to Florida. That’s basically the message of this tax plan.

JB: No, not at all. We’re cutting their taxes. Their federal income tax liability will be reduced. They’ll, depending on what their actual circumstance is, if they own a home, depending on what their interest rate is and all that, they’ll likely be below the 2% cap. And on a net basis, they come out ahead. And that’s what we need to do. We need to give people a boost so that they can make decisions on their own. And on the corporate side, we’re eliminating the worldwide taxation. We’re lowering rates. We’re allowing for full deductibility of capital investment that would create higher productivity and higher wages, and we’re eliminating interest deductions going forward that so that we’re rewarding capital investment, equity investment, and we’re not rewarding debt, which is one of the reasons why we had the calamity of ten years ago.

HH: Well, let’s switch over now, and it’s a great plan, by the way. I like a lot of it. It just will, I think you’ll hear from the mortgage interest community and the home building community, but we’ll see how that plays out.

JB: Sure.

HH: Let’s turn to other taxes. The sales tax is not proposed. You don’t have a national sales tax, and you don’t say anything about a national severance tax on oil and natural gas. And a lot of us who sit around and look and see North Dakota booming, and my old state of Ohio booming with lots of, John Kasich’s got a severance tax on the table in Ohio. Why not a sales tax to capture the underground economy? Why not a severance tax to capture basically found wealth that fracturing is making available to people?

JB: Well Hugh, why not have a carbon tax? Why not tax this? Why not tax that? The reason that these taxes in and of themselves are not going to be beneficial economically is that all those taxes are passed onto the middle class and to working people. And what we should be doing is focusing on expanding the energy revolution to give American working families the best deal that they’re ever going to get, which is lower utility prices and lower gasoline prices That should be, and frankly, and you know this very well, also allows for the export of crude and natural gas, expedite all this so that we can use our energy bonanza as a national security tool to deal with the blackmailing influence of Russia or in Europe. And there’s a lot of benefits of creating a North American energy strategy of low cost energy to allow us to reindustrialize the country and allow for manufacturing to come back. And our tax plan actually will accentuate that, will accelerate that, because of full expensing of capital investments.

HH: You say that the burden is going to go up on the top 5% and the top 10% as well, and I believe actually most Americans will support that. I do. But I also want to make sure that we do not cripple that productive job creating 10% at the top.

JB: Yeah.

HH: Have you in any way found a way to cut spending on the entitlement side? Is that going to be part of this proposal, because otherwise, you know, this will create, what did Al Gore used to say, blow a hole in the budget and destroy the lockbox sort of thing? Is there an offset in entitlements?

JB: You’re, it’s a very astute point. And first of all, the top earners will pay less overall, they’ll pay less, they’ll just pay proportionately more of the taxes than they pay today because I think you’re right. You want to make sure that the people that invest in the high wage jobs of the future aren’t penalized by this. And the implication is, first of all, the whole idea of static scoring, which is what the bean counters in Washington use and the liberals love, is wrong. Tax policy, as we’ve seen over and over again, has a dramatic impact on economic activity. And when we grow the economy faster, government gets disproportionately more revenue. So when you factor in the dynamic scoring and you factor in the need to reform our entitlement system and curb spending, I would argue cut spending across the board, but for our military, where we can reform our military spending, but we need more of it. You’re going to get to balance quicker than if you use the left’s approach, which is more taxes, more regulation, more Hillary Clinton top down-driven kind of approach to life. That will destroy the country. I like the bottom up approach where people make these decisions interacting amongst themselves to create prosperity for all of us.

HH: But no entitlement reform specifics from Jeb Bush before the election?

JB: Oh, yeah, we’ll have it. We’ll have it before the election. I mean, you saw this tax plan. There was nothing hidden here. This was a full tax plan. No one else has done that, because I want to defend these idea and persuade people that there’s a brighter future for them. And we’re going to have entitlement reform. We’ll have an energy policy. We’ll have a regulatory reform policy that will give people the sense that we can unleash the animal spirit of this country again. I think politics ought to be about idea, not the loudest person on the stage.

HH: And with that transition, have you had a chance, yet, to read Paul Solotaroff’s Rolling Stone piece on Donald Trump?

JB: I read it, and look, my motivation is to serve. I’ve learned to have a server’s heart. It gives me joy. The idea that this is all about the person running is not part of our tradition in American politics, and that article just was a reflection of me, me, me, me. And the disparagement of talented people, particularly if you read that article, of Carly Fiorina, just, I don’t get it. I don’t see how a person believes that they can become president of the United States by insulting everybody.

HH: Well, Solotaroff’s key quote, it’s one line, is, “Because Trump’s central claim is he’s not them.” And I think that’s very perceptive writing on the part of the Rolling Stone reporter.

JB: Yeah.

HH: That is what he’s arguing, isn’t it?

JB: I think you’re right, and I think that when people get to see, for example, in my case that I was a disrupter in Tallahassee, that I didn’t go along with the way things were done, that we had career civil service reform, lobbying reform, we balanced the budget eight years in a row, we took on the teachers’ union, the public unions, the trial bar, I mean, it was a turbulent time. But I disrupted the old order on behalf of the people of the state of Florida. When that story is told, and it will be told, in fact, we started our advertising today in New Hampshire, I think people will see that I’m not part of the Washington establishment, that I can fix this. I won’t just talk about. I’ll actually go out and do it.

HH: Last question, the tone of the campaign in the last few weeks is definitely past boiling already. Next Wednesday night, do you expect sparks between candidates? Or an appeal to reason that will break out and suddenly we’ll have Lincoln-Douglas style manners?

JB: Hugh, it depends on your questions.

HH: (laughing)

JB: (laughing)

HH: That is so not the case.

JB: No pressure.

HH: No pressure. Okay, Governor Bush, we will see you on Wednesday night in Simi Valley. Thanks for spending time with us this morning.

JB: Take care. God bless.

End of interview.

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