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Pennsylvania Senator Pat Toomey on Tax Reform Prospects in the Senate

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The transcript:

HH: Joined now by Senator Pat Toomey of the great state of Pennsylvania where Carson Wentz is playing for the Eagles and not for the Browns, but I’ll overlook that, Senator Toomey. Good morning, how are you?

PT: 8-1.

HH: Ouch.

PT: I mean, they’re just, they are just awesome, so sorry about that.

HH: Did you catch the Ohio State-Penn State game, though?

PT: Oh, that was nice.

HH: (laughing) Okay, well, let’s get to, turnabout is fair play, you bring up 8-1.

PT: All right.

HH: All right, all right. First question, have you spoken to Senator Ron Johnson about his threat to scuttle the tax bill?

PT: I have been having conversations with Ron Johnson for quite some time about this. I haven’t actually spoken with him since yesterday afternoon when he indicated that he is not in favor of the bill in its current form. We were in the middle of marking up the bill in committee. But we’ve had extensive conversations about his concerns.

HH: Is he negotiating? Or is he truly going to vote against this?

PT: Listen, I don’t know what Ron is ultimately going to do. He has concerns that are difficult to completely solve, in my view. He has some valid points. We want to work with him and find a way to get to yes for him.

HH: Because, is he, are all of the senators aware of the consequences of failure to pass a tax bill out of the Senate?

PT: Oh, I think so. I think so. I don’t think anyone’s under any illusions. This absolutely has to happen. And you know, I accepted a long time ago that it’s not going to be my idea of perfect. That’s not going to happen. What it is going to be is much, much better than what we have now, vastly better than what we have now. And that’s called progress, and I’m for progress.

HH: Now there are two categories of consequences if the tax bill does not get out of the Senate. One is economic, and one is political.

PT: Right.

HH: On the economic side, I don’t believe America can stay competitive, Senator Toomey, with a 35% corporate rate. Do you agree with me?

PT: We’re not competitive now. This is why we have had thousands, literally thousands of companies move their headquarters overseas. This is why we lose internationally competitive business. This is, I think, a big part of why we have had the worst recovery from a recession in American history. It’s driven in part by this disastrous tax code. I think you’re absolutely right.

HH: So I think one argument to make with Senator Johnson is that all that new investment that has been announced for Wisconsin is going to simply not materialize, and jobs are not going to be produced in the Badger State if this doesn’t pass. But secondly, I think the Trump bump, the rally that we have seen since last November, is based in part on the market pricing in tax reform, and that if you guys kill tax reform, the market is going to adjust radically down, and a lot of people are going to get hurt bigly. Do you agree or disagree with me on that?

PT: I completely agree, and I’ve been making that same argument. I think if we were talking last summer or early in the summer, maybe the market was giving a one in four chance of a major tax reform happening. As of now, I think it’s more like a three in four chance. And if it falls apart, then all of that optimism that’s built into the current price structure, it comes out, and that will be ugly.

HH: It will be ugly, and that leads me to category two, political consequences.

PT: Right.

HH: I believe if we fail to do anything, we being Republicans, fail to do anything with majorities in the House and the Senate in the first year of such a situation, that not only will the House be lost, that the hitherto thought impregnable majority in the Senate will be lost. Your reaction, Senator Toomey?

PT: If we don’t get either health care reform or tax reform done, then I think it’s very likely we lose the House and a very reasonable chance that we lose the Senate, too. I mean, we’ve got some reasons why we should pick up seats in the Senate, but hey, people are going to just really, really question whether Republicans can govern. And that’s a bad situation to be going into the midterm election with.

HH: I am also confused by the attacks on the Leader, who I believe to be the best leader of my lifetime, and I follow this pretty closely, because he’s managed to save the Supreme Court. I think he has persuaded Senator Grassley that the blue slip as applied to circuit courts is antiquated and not applicable. I think he has moved things to the brink of success. What is it about individual senators that somehow makes them incapable of thinking of the benefit of the good of the whole as opposed to their own egos?

PT: Well, I think most of us are thinking we want to hold together here. We want to be a team. Most of us have things we would like to see changed in the bill and realize we’re not going to get everything we want. And most of us are going to get to yes. You know the problem, it’s we can only afford to lose two. If we lose a third, then we’re sunk. And that’s the challenge. We’re going to carry, we’re going to hold the vast majority of the Republican conference. It’s, the question is can we minimize the outliers that are going to oppose this, if any? And we might be able to hold everybody in the end, but you know, that’s the question.

HH: My question to you, and I know senatorial courtesy. I don’t want to make this too specific. But on the health care bill, it was Senators Collins, McCain, Murkowski and Rand Paul who killed the Republican repeal effort in a variety of different ways. Have you talked to any of them or any of the impediments to tax reform and just said do you really understand what you’re doing not just to the bill but to the party, and not just to the Senate but to the House, and not just to the Senate and the House, but Republicans everywhere, and thus to the country? Do they really get it?

PT: I think they do. I think they do. I’ve been focusing on substance. I’ve been focusing on saying okay, what are your concerns, and let’s see how we can address them. And in some cases, maybe the information is not entirely accurate. You know, I mean, the bill was significantly modified just yesterday morning. In other cases, we responded. So for instance, Ron Johnson raised a very valid concern about the mechanism that the House uses to allocate income for a pass-through, right, the kinds of businesses, actually the most common businesses in America, not corporations, not C-corporations anyway, but partnerships and LLCs and subchapter S companies. So Ron didn’t like the mechanism that the House used, and we in the committee said you know what? He makes a very good point. It’s not a very good mechanism. It’s got a lot of flaws. It’s too complicated. We came up with a different mechanism altogether that’s much better, and every, I think everybody agrees it’s a better mechanism. So that’s the kind of process we’ve been trying to go through – sit down with our colleagues and say you know, how can we make this better, how do we get you to support it, and make the change wherever we can.

HH: But what confuses, you know, I deal with audiences every day, and they see a headline in the Washington Post, Ron Johnson Threatens To Scuttle Tax Reform, and they take that message away. It’s like when Dean Heller came out against Obamacare and derailed it. It’s like when the Freedom Caucus derailed Obamacare repeal and replace. The consequences of individual actions are so much greater than they appear to have even knowledge of, Senator. It’s like they’re unaware of the way the world works.

PT: My colleague, you mean?

HH: Yeah.

PT: Well, I think they understand the consequences. I certainly hope so. I don’t know how you couldn’t. I mean, it’s very obvious. It’s staring us all in the face. And we discuss it. I mean, I think we all understand this is a, this exercise cannot fail.

HH: All right, so that brings me to my next question, which is a different subject entirely, the blue slip. Yesterday, Senator Leahy attacked Justice Willett of Texas, one of the leading jurists in the United States, on a tweet about bacon. And I thought to myself the Senate really is dissolving into a crazy institution that people are losing respect for. Do you folks ever talk about that, how the country as a whole is losing respect for your chamber?

PT: Some of us have, yeah. Some of us have. I mean, the country as a whole has lost respect for the federal government, for Congress as an institution, for the Senate as an institution. Yeah, it’s a problem.

HH: Well, what’s the answer to that? I think it’s actually more debate on the floor like Senator Cotton taking it to Senator Schumer yesterday about the individual mandate being a tax. And I played that. But I don’t often see many senators on the floor talking about stuff.

PT: Yeah, I think that’s fair. I think that is part of it. I mean, we had a lot of good, robust debate in the committee at times. At other times, it was just shrill, you know, hair on fire reaction from our Democratic colleagues. But we’re going to have, I think we’ll have a vigorous debate on tax policy on the Senate floor the week we get back from Thanksgiving. I think we will pass this bill out of committee today. And if we, you know, we can get the votes we need, and I, we’re already very, very close, we’re going to be on the Senate floor and you’ll hear that debate. And it’ll be very constructive, and I hope it’ll be very illuminating about you know, the differences between our parties.

HH: Last question on judges, then I want to go back to taxes. Are blue slips dead as a means of killing circuit court nominations?

PT: I hope so. You know, the idea that we’re going to allow one individual and, or certainly a minority, to veto President Trump’s circuit court judges because they have not been able to accept the outcome of the election, that’s just crazy.

HH: And specifically, Justice Stras, Minnesota Supreme Court justice nominated 170 days ago, I believe. Al Franken is blocking him having a hearing. Not only is he a brilliant jurist and on the Minnesota Supreme Court and from the University of Kansas, he’s the grandson of Holocaust survivors. I do not understand how in the world anyone could not say let’s give this man a hearing and a vote. And they might not like him for ideological reasons, but I just think your rules are so screwed up that it’s not a Democrat or a Republican problem. It’s a problem about credibility of institutions.

PT: No, it is, and here’s a big part of this, Hugh. It’s, the rules have been this way for a long time. The rules were not abused. In the past, the rules were used to facilitate the functioning of the Senate. That’s what the purpose of rules are. But they were designed in a way that they could be abused. People had the judgment. They had the discretion. They had respect for the institution and each other so that they chose not to use the rules as a tool for you know, shutting down the institution. We’re no longer operating in those times. People don’t exercise that restraint. You have, for instance, the example you just mentioned. You have the fact that our Democratic colleagues in the case where they support a judge, will vote for cloture, the procedural vote that you’re familiar with, and then they will still force us to consume the 30 hours before the vote to confirm him, and then they’ll vote to confirm him. And now the 30 hours was built into the rules for the unusual circumstances when senators felt very strongly and they wanted to debate this person. They’re not on the floor debating. They support the guy. They could care less. They’re doing it just to prevent us from functioning. And when you have literally many, many hundreds of nominees to confirm, if you do that every time, you can really block Senate action. So that’s what’s happening now. My point is the rules are no longer suitable for the behavior of the members, sadly, so we have to change the rules.

HH: I agree, and the Reid Rule is that you can change the rule with a simple majority. I hope you do. Steny Hoyer tweeted out, Democrat number two in the House, Democrats aren’t alone in their opposition to the #GOPTaxScam. Senator Ron Johnson is speaking out in opposition to the bill. Republicans ought to reject this bill that would raise taxes on millions of middle class families, and then it quotes GOP Tax Scam. If they can pass it without me, let them. I’m not going to vote for this tax package. I’m giving them fair warning to do a good tax bill. This is Ron Johnson being used by Democrats.

PT: Yeah.

HH: Was he aware he was walking into that trap?

PT: Well, he certainly should have been. Obviously, this is what the Democrats have been hoping for. And thus far, people who have concerns haven’t taken that position. So now, we’ve got a more difficult challenge. But hey, we’re going to figure a way to get through this.

HH: I hope you are right. Pat Toomey, you’re one of the good guys. I appreciate you being candid with me. Go forth and back to the good fight.

End of interview.


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