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Senate Majority Leader Mitch McConnell On The Conference Committee On The Tax Bill

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Senate Majority Leader Mitch McConnell joined me this morning:




HH: I am joined now by the leader of the United States Senate, Senator Mitch McConnell from the great state of Kentucky. Leader McConnell, welcome back to the Hugh Hewitt Show. Thank you for joining me.

MM: Yeah, glad to be with you, Hugh.

HH: It is great that you got the bill out of the Senate on tax reform. When do you expect it to get to the President’s desk? Do you expect to get it to the President’s desk?

MM: Oh, yeah. Well, before Christmas, we’ll have to have a conference with the House yet ahead of us and work out the differences, but the core of the two bills are really very similar. And I think we’ll be able to do that in fairly short order.

HH: Let me walk through the major differences between the House and the Senate, Mr. Leader. The biggest difference is SALT, and in the Wall Street Journal this morning, there was a story titled California Republicans push to preserve income tax deduction. Do you see the Senate moving in a way that mollifies the House members from high tax states?

MM: Yeah, I mean, look, there are a number of different kind of moving parts here. It’s pretty hard to predict exactly what kind of compromises we make. But clearly, the conference report’s got to pass both houses, and I would remind our friends in the House, we have a very, very slim margin in the Senate. But look, I think we can work these things out and get this across the finish line before Christmas.

HH: There is a reduction in the House of the business interest deduction, and the Senate got rid of it entirely. I have heard from business owners that this will put them out of business. Have you heard the same thing? And do you think business interest will be revised in the conference?

MM: Well, look, I mean, everybody’s taking a look at it and trying to figure out whether they’re advantaged or not. But the overwhelming majority of people in the country, groups, business groups, like this bill, because it achieves the core goal that we started out with, a 20% corporate rate, a dramatic reduction in tax rates for pass-through’s, that is businesses that are not incorporated, which is a majority of the businesses in America. If you look at the big picture, I think we’ve achieved in both bills the goals that we set out. There are some dials that will have to be twisted, and there are some complaints. But there’s overwhelming support among businesses both large and small who feel that this will give us a chance to get the country growing again after eight years of not having a single year of 3% growth. I mean, we know what needs to be done. We need to change the regulatory environment. The President’s already doing that. And we need to fix this lousy tax code.

HH: Let’s talk about four of those dials in addition to SALT. One of them is business interest deduction. Do you think that dial is going to turn so that more interest is deductible for businesses that have borrowed in the past and find themselves now on the rack if you eliminate business interest deduction?

MM: Yeah, I just can’t tell you, Hugh, how these dials are going to come out. It’s impossible to predict the final product.

HH: All right, what about, is it possible to predict that the alternative minimum tax will go away, because that struck a lot of us as an unexpected addition in the Senate’s deliberations. We thought part of this was to get rid of the alternative minimum tax.

MM: Yeah, that was the original goal. Look, again, that’s just one of the dials that has to be twisted. And there’ll be some of them twisted here to try to get this thing in the best possible position at the end of the day. But of course, it has to pass the House and the Senate. And so we have to take into account the different politics, for example, of the two bodies. For example, the state and local tax deduction is not as important to Senate Republicans as it is to House Republicans. But bearing that mind, we put the $10,000 deduction in the Senate bill. There’s some in the House who would like to see that applied not just to property, but to income tax, you know, where you can sort of pick which state and local tax you want to deduct. That sounds like a kind of reasonable idea. There are a lot of these things that are floating back and forth, and it’s just impossible for me on your program or frankly to anybody else at this point to predict exactly how the final product turns out.

HH: I get that, but you’re the leader, so what you have to say, what you just said there was very encouraging, I think, to high tax state Republicans. Let me ask you about a near and dear cause to my heart, Hillsdale College. Some of your colleagues on the other side took to the Senate floor to target an institution because of its ideology. There are Title IV colleges that are eligible, and Title IV colleges that accept student aid. Hillsdale’s in the former category, not in the latter, and I believe it was Senator Merkeley attacked them by name. That is, you’re a 1st Amendment absolutist. You know it’s unconstitutional for the government to be non-viewpoint neutral. What are we going to do about this?

MM: Yeah, well, that provision prevailed, and it’s not a provision just for one college. There are other colleges that choose as a matter of principle not to take any federal money. One of them is a Jewish institution in Denver. They didn’t happen to mention that one. They just wanted to attack Hillsdale College, because it’s a conservative institution, and try to make it look like some kind of one-college earmark. Well, it isn’t. There are lots of other colleges around the country that choose, for whatever reason, not to take federal money. Well, they don’t cost the federal government anything. And we thought their foundations ought to be exempt.

HH: I hope that gets back in the final bill. I trust that others…

MM: Oh, it’s still in. It’s still in.

HH: Well, they raised the limit, but I’m afraid it’s going to chill contributions to Hillsdale because eventually, their endowment’s going to grow large enough that it will be eligible. They just raised the limit. I don’t think any of these seven or eight or ten colleges ought to be taxed at all, because they take no federal money.

MM: Yeah.

HH: This is a way of clawing back some of the subsidy. And so we’ll look at that. Let me ask you about, Senator Inhofe offered an amendment based on conversations on this program to allow up to 25% of retirement assets to be brought out for a one-time tax penalty of 10%, provided they were used to pay down mortgages or invest in diversification for retirement like real estate. That will raise a lot of revenue. Has that been scored, Mr. Leader? Have you talked about it with Senator Inhofe?

MM: I have not talked to him about it. Frankly, Hugh, I’m not familiar enough with it to comment on it.

HH: Do you need to raise more revenue in this conference, do you think?

MM: Well, it’ll have to be revenue neutral in the end. And every time you make an adjustment in one area, you have to adjust some other area.

HH: I really think if…

MM: The conferees, the conferees will be working on that.

HH: I really think if you get to that retirement asset 10% one-time thing, you’ll raise a bundle. Two more tax conference stories. Grad students have been pummeling me, and the parents of kids in college who took tuition-free offers on the theory that they weren’t going to be taxed for it. I’m not against taxing them in the future, but if they made their lives’ plans according to the old tax code, shouldn’t they get some transition rules to get out of that bind, Mr. Leader?

MM: Yeah, well that provision’s not in the Senate bill, and so we’ll just have to see how that works out in conference. But that provision’s not in the Senate version.

HH: All right, and the last tax bill, the number of brackets, Chairman Black on this show yesterday said look, this is where we disagree with the Senate. They’ve got seven, we’ve got four. We don’t need that many cliffs. You opposed in principle to shaving the number of cliffs?

MM: That’s just a detail to be worked out between the House and Senate. I don’t think it’s a matter of overwhelming principle one way or the other. What we were trying to do, of course, is to make sure there was tax relief for every bracket. And on average, the average family of four is going to save $2,200 dollars a year, on average, in the Senate bill.

HH: So it sounds to me like Mitch McConnell believes whatever we need to do to get this done to make as many people possible happy and get to 50 votes or 51 or 52 votes in the Senate, you can live with?

MM: Well, it’s not just a question of making people happy. It’s a question of getting the country growing again. I hear that the bill’s not very popular. Well, look, plenty of times when you try to do a big bill, it’s not popular. But is it the right thing to do for the country? And we think this slow growth threatens the future of America. This is a tax bill, coupled with regulatory reform, that will get us growing again. We’ve had two quarters in a row of 3% growth. I don’t want to read too much into that, but consumer confidence is up. We finish this tax bill, I think America can take off again.

HH: All right, let me turn to a couple of other Senate measures, Mr. Leader. Justices Willett of Texas and Stras of Minnesota, Mr. Ho and Mr. Duncan have all received hearings. Do you expect their nominations will move to a final vote by Christmas?

MM: I hope so. As you know, Hugh, because you’ve been on this from the beginning, the principal way we’re changing America is through the court system. Not only Neil Gorsuch, I saved that seat for the next president, and it turned out to be Donald Trump and not Hillary Clinton. We also have a record number of vacancies in federal and district courts going back to the 1950s. We’re rapidly filling them. Let me tell you the definition of rapidly. We’ve already done nine circuit judges this year. Barack Obama did three in his first year, and he had 60 Democratic senators. And those three that you mentioned, we hope to confirm before the end of the year. That would bring us to 12.

HH: Yeah, there are four. Mr. Duncan may not have enough time between his hearing and the vote, but I hope you get all four. Let me ask you about ambassadors. Rick Grenell’s a friend of mine, and Germany is the most important country in the world that is a non-nuclear country. And we need an ambassador there. Why are Democrats holding him up?

MM: Hugh, they’ve been doing that across the board. The willingness to confirm appointments by President Trump has been quite limited, shall I say, on the Democratic part. And ambassadorships, for example, that normally just clear on a voice vote, many of them have you know, made us take a lot of time in the Senate. And that’s the way you slow walk or kill a nomination, by balling it up. So it’s a frustration. We’re hoping to be able to clear a number of not only ambassadors, but positions in the administration before the end of the year.

HH: Let me return to Mr. Grenell. He is gay, and everybody knows that. Is there homophobia on the other side of the aisle? Is that part of the reason they are slow walking an ambassador to Berlin?

MM: I have no idea. They’ve had every excuse in the book.

HH: I’m just shocked. It’s a huge ally, and they have huge problems there. Let me, and so do you think we’ll get any more ambassadors by Christmas, Mr. Grenell and others?

MM: I hope so, yeah. I mean, we hope to have a big package by the end of the year. That’s typically done, although the way they’ve handled Trump’s nominations this year have been atypical. Usually…

HH: You and I have talked about changing the Senate rules to limit the number of hours of debate for non-cabinet secretaries. Is that rule change going to happen, do you think, Mr. Leader?

MM: I don’t know, but there are bipartisan discussions going on about that, because it is kind of silly. What you’re talking about is after you’ve already made a decision to confirm someone, just how much more time do you need to talk about it?

HH: Yeah.

MM: It’s kind of a ridiculous position that we’re in. And actually, there’s some Democrats who may be interested in joining us to change that.

HH: Two more questions on politics, Mr. Leader, and I’ll let you go. Has Senator Hatch told you his plans of whether or not he’s going to seek reelection?

MM: He hasn’t. And we’re not sure what Orrin’s future is. Of course, he’s chairman of the Finance Committee, and just achieved a great victory with this Senate-passed tax bill. And it’s quite a capstone to a long career.

HH: He’s a great American, but we do need clarity on these seats, don’t we?

MM: We do. We do, and I anticipate he’ll decide sometime soon.

HH: And so we have any other vacancies among the Republican ranks, in your view, of people who are eligible to seek reelection who will not be seeking reelection, like Senator Flake?

MM: I don’t think so. I think, you know, mostly, we’re on offense in this coming cycle. There are 25 Democratic seats up and only 8 of ours. We only have one retirement at the moment, Jeff Flake from Arizona. If Senator Hatch were to take that route, there would be two.

HH: Now in that era of politics, there are the Bannonite wing. They’re out slamming Mitt Romney last night in Alabama, and bollixing up a lot of different races. Are you confident of people like Josh Hawley in Missouri and anybody in Indiana against Joe Donnelly and the other places? Do you think you can pick up seats in this cycle, Leader McConnell?

MM: Well, I hope so, but we’re not going to lose any nominations to the kind of candidates that guy you were talking about endorsed. What he’s a specialist in is nominating people who lose.

HH: What did you make of his attack on Mitt Romney last night?

MM: I’m sorry?

HH: Last night, Steve Bannon launched into an attack on Mitt Romney that was just, you know, some people believe it’s anti…

MM: Well, I can tell you what I think.

HH: Go ahead.

MM: I can tell you what I think of Mitt Romney. I think he’s a great American, and has had an outstanding career, and is a truly remarkable Republican. I’m glad he’s a member of our party.

HH: And how much is fundraising being impacted by this alleged split in the Republican Party, which I don’t see, but which a lot of journalists like to write about?

MM: No, it’s not affected. We’re doing very well. It, this is not much of a split. You know, it’s a split only when you have a lot of success. This is the same element in the party that cost us a bunch of seats in 2010 and 2012. We changed our business model. We started winning primaries with people who could actually win in November, and that’s how we took the Senate in ’14, and that’s how we kept the Senate in ’16.

HH: Okay, last question, Leader McConnell. Can you give me a guess, a percentage, that tax bill will hit the President’s desk? What level of certainty is Mitch McConnell at today?

MM: Well, almost certain. I mean, I can’t imagine having come this far we’re not going to finish the job.

HH: Leader Mitch McConnell, thank you for joining me.

MM: Thank you, Hugh.

End of interview.


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