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Oklahoma Senator James Inhofe on the Hewitt Amendment to the Tax Bill

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The audio:

12-05hhs-inhofe

The transcript:

HH: Joined now by United States Senator James Inhofe, longtime friend of the program, but really a friend, because not only does he listen to it, sometimes he acts on it. And I want to thank you, Senator Inhofe, for actually listening to ideas that do not originate in the Congress, but acting of them when the tax bill was debated.

JI: Interesting thing, Hugh, this is, the discussion’s going to take place as to how we’re going to offset some of this stuff, how can we raise revenue really quick. I’m talking about in a matter of days and a matter of weeks, and I can’t think of any single thing that would do it more than this. Let me offset or at least make a comment. Yeah, we did not introduce it. What I didn’t want to do is introduce that as an amendment and have it fail, because as it is right now, it is an amendment that was introduced where we’ve asked the Joint Tax Commission to do a scoring. That is something that has to take place. You and I both know it would be very difficult to score, because we don’t know how many people out there, I can’t imagine anyone aged 40 or so who would not take advantage of this, but it’ll be germane to this discussion, because the major discussion is going to be how can we raise revenue quick to offset these great ideas that we have in the tax reform? And this is germane right in there. I had mentioned that I always like to talk about the Reagan thing, because I’m one of the few who’s old enough to be, I wasn’t around, not in the Senate, of course, but I was in business at that time. And what people don’t realize is if you release this money out into the economy and get the economy going, which the President is doing today, people forget, you know, our 2nd and 3rd quarter, those are 3% quarters of GDP growth. And back during the Reagan days, if you start with the original amount of revenue that came in, in 1981, that’s when they had the huge reductions, 70% going down to 50%, that increase the revenue, actually was $750 billion. And the same thing happened in ’86. Now when the liberals say well, the debt still went up, the deficit still went up during that time, that’s because the Democrats were in charge of the House and the Senate during that 15, 20 year period. And as the additional revenue came through, they spent it all. And so that was the problem that we had. Now if we can anticipate we’d have Republicans in charge, that wouldn’t happen again.

HH: Now Senator Inhofe, to remind everyone who’s just tuning in, the proposal that was originally aired on this program was to allow every individual with retirement assets to withdraw up to 25% of their retirement at a cost of 10% that would go to the federal government. They’d also have to pay state taxes on it as well, but 10% to the federal government, but no other charge, and that they could use that money to pay down their mortgages or invest in real estate. And if that is on the table for the conference, every realtor in America ought to go for it. Every home builder ought to go for it. And everyone with retirement assets who want to pay down their mortgage or invest in real estate ought to go for it. Are you telling me it is on the table, it is possible that it could be adopted by the conference?

JI: Well, you can do, in a conference, you can do about anything you want if you have a handle that addresses the issue. And this issue is going to be addressed in terms of raising revenue. Now yes, let’s keep in mind when you described that, Hugh, it’s a flat fee of 10%. And what the savings would be, and the criticisms by some people, well, when the time comes, they’d otherwise take this out of retirement. They’d paid ordinary income tax on it, and this waives that ordinary income tax.

HH: Yes.

JI: However, the amount of stimulation of the economy as we just now went through with the experience we had during the Reagan years will more than offset that. And besides that, that would be a hit that might come maybe 20 years down the road. If you’re 40 years old, you exercise this thing that we would have in there, then it would be not until age 59 and a half, say 20 years out, that there would be a loss. And by that time, you have already have recovered much more than that loss would be.

HH: Absolutely. I just…

JI: I think it’s ingenious, and it’s the only thing out, I can’t think of one thing out there that’s going to have an immediate thrust of generation of revenue in the first few weeks, or actually days.

HH: I have talked to literally scores of people with retirement assets and mortgages. And they would all do the same thing. They would all take out as much as they could and pay down their mortgage, which would free up free cash flow for everyone, reduce their mortgage debt, and generate 10% revenue to the federal Treasury that otherwise won’t arrive. So the President discounted value of future tax receipts lost pales in comparison to the immediate revenue.

JI: It does. It does, because this would, and I can’t think of anything else that would be immediate. That’s why I was fascinated when I, you know, I heard you talking about it on the program, but I was a little skeptical. I thought that’s too easy.

HH: It is too easy.

JI: And so we went into it.

HH: (laughing)

JI: Well, yeah, well things, you know, but in looking at it, we figured there’s just no way that, this is such a no-brainer. Now we’re…

HH: What I liked about…go ahead, Senator.

JI: Well, I was going to say is that one of the reasons that we’re doing so well and this President’s doing so well, and one of the areas that was an area of my specialty, as you know, when I chaired that committee for a long period of time all during the Obama years, Environment and Public Works Committee, the over-regulations. People don’t realize that right now, either through executive orders or CRA’s, we have done away with some 50 executive orders, 15 CRA’s. In fact, mine was, one of mine was the first one, the first signing ceremony. But now, that’s the reason, I think there are two things that are the reason for the jump that’s happening right now that we’re experiencing, and that is people are getting rid, the President and we’re getting rid of the over-regulation that’s in society. And also, the anticipation that for the first time since 1986, we’re going to clean up this thing and have a new tax system in America.

HH: I think the market is on edge waiting for this, Senator Inhofe. Let me turn to your other area of expertise. And I will talk with Leader McCarthy, I just talked to Diane Black about it, if it’s eligible for inclusion in the conference, I think they’ve got to do it, because they’ve got to find revenue. They just have to find revenue, so I hope they do it. Let me ask you about next year. You have one more budget reconciliation cycle to go before the election. I hope you will use that to get rid of the Defense sequester. What are we going to do about this Defense sequester?

JI: Well, we have to do something about it, because if you look at our committee, the task committee, the Senate Armed Services Committee and the House Armed Services Committee, we talk about why it’s going to be absolutely necessary to get this done. People don’t understand that right now, we are living in an area where our, we’ve just disarmed America. Only a third of our ground brigades are working. 60%, over 60% of our F-18s aren’t flying because of the maintenance problems that we’ve had during the last eight years. So we have to do something about it. We’ve got, and that should be the number one priority. However, if you remember, we went through eight years of a president who didn’t, who had a policy that you can’t put any more money into Defense sequestration unless you put an equal amount of money into the social programs. And if you’ll remember, the Democrats went along with that for that period of time. I think the main thing, and it is happening today, the uniforms are finally talking about how the critical situation, we’re in the greatest threat that we’ve been in, in the history of our country, you could argue. Any time you have the ability of somebody who demonstrated that ability a week ago, from North Korea, you know that we’re in a real threatened position. We’ve got to, and we in this committee, our NDAA bill, we did put in a rebuilding of our missile defense system. We’ve got a lot of things in there, and so we’re well on our way. We’ve got to get the appropriators to agree with that. And we’re just going to have to face up and say you know, if you get, if you have any doubt about what we’re supposed to be doing here in Washington, go and read the Constitution. We’ve got to defend America. And this is the only way we can do it.

HH: Do you think that that will, that you do get one more 51 vote measure. It’s the reconciliation cycle. You get one more bite at that apple of 51 votes in this Congress. Do you think that’s going to be the centerpiece of it?

JI: I think it could be. It should be. And it would be my centerpiece. But I can’t predict that.

HH: Senator Inhofe, once again, I thank you for just being open to ideas. When you said you had chewed it over and picked at it and couldn’t find anything wrong with it, I thought to myself he really did look at it, and you offered it as an amendment, and I appreciate that the bubble gets pierced occasionally by good ideas that don’t come from staff or from think tanks inside the Beltway.

JI: Yeah, appreciate that. That’s true.

HH: Thank you, Senator Jim Inhofe of Oklahoma, one of the great men of the Senate, and on Defense especially, on roads and bridges, but he also listens to good ideas, and I greatly appreciate that.

End of interview.

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