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Hugh Hewitt Book Club

Speaker Paul Ryan On Vegas and the Gun Control Debate, and Tax Reform Plans

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The audio:

10-07hhs-ryan

The transcript:

HH: Speaker Paul Ryan, thanks for sitting down with me.

PR: Congratulations on the new show, Hugh.

HH: I’m enjoying it. But it’s a grim week

PR: Yeah.

HH: Las Vegas, and I wanted to begin there. People are grieving. The President visited the city this week, and immediately, talk turns to legislation. John Cornyn has said he wants to have hearings on bump stocks, open to a vote. Are you open to vote on bump stocks?

PR: Yeah, look, I didn’t even know what they were until this week, and I’m an avid sportsman. So I think we’re quickly coming up to speed with what this is. Fully automatic weapons have been banned for a long time. Apparently this allows you to take a semi-automatic, turn it into a fully automatic. So clearly, that’s something we need to look into. And people are just coming up to speed with what these things are, and so that is something we’re definitely going to have to look into.

HH: On Jimmy Fallon on Wednesday night, Former Secretary of State Clinton said that the GOP had fully sold out to be NRA. Your reaction?

PR: I disagree. I think we’re actually sticking with the Constitution. This is a constitutional right. You don’t casually dispense of people’s rights. But like I said, just in the answer to your last question, if there’s something that allow a person to circumvent the law, that’s clearly something we’ve got to look at.

HH: In 1996, Australia passed their ban, banned all semi-automatic weapons, some shotguns. They did a buyback of between 650,000 and a million. Is there anything holding you back from bringing such a proposal to the House floor, because I think it would fail?

PR: Yeah.

HH: I don’t even think you would get a majority of the Democrats.

PR: Yeah, I totally disagree with it. Why, yeah, the Second Amendment is holding us back from bringing a proposal like that.

HH: But in order to illustrate to the American people…

PR: Oh, you mean as a show vote?

HH: Yes.

PR: That’s just, that just sounds like showboat politics. I think we should spend our time with legislation that we actually intend to pass.

HH: All right. Now, there are lots of forums being held. And people say it’s time to talk about gun control. You’ve always been willing to talk about it with me. We’ve had long conversations about it.

PR: Yeah, we – that and the mortgage interest deduction.

HH: Yeah, we’ll come to that a little bit later.

PR: Yeah, I know you’re going to get to that.

HEWITT: Are you willing to do those sorts of town halls? Sometimes, they’re setups to make Republicans look heartless.

PR: Oh, well, I just did one with Jake Tapper, sorry, on another network. I do employee town halls, I do telephone town halls. What we’ve not wanted to do is have a situation where constituents from your actual district get shouted out by protestors that are bussed in, and that is typically what the tactic has been lately.

HH: All right, so if I set one up, get Lester Holt or someone else to talk about guns and violence, can we count on the Speaker?

PR: Oh – I – we’ll see. We’ll see.

HH: All right. Let me turn to big tech and then go to taxes. Last week I had Kevin McCarthy on this program, and we talked about Twitter and Facebook and Google. They are the big three. They are very powerful, they’re very private. Is it time to look whether or not either the Antitrust Division or a new agency has to get some control over them?

PR: Yeah, what I find with technology and antitrust laws, technology moves so fast that something that seems like a behemoth today could be disrupted or replaced tomorrow. Look at taxi cabs and Uber. Look at the way technology turns. So if you spend your time trying to stop big firms from being big, you’ll end up actually, I think, slowing down economic growth and development. So these firms will probably be replaced in some future day by some other disruptive technology, and that’s the kind of economic vitality we want in our free enterprise system. So I don’t think you should just knee-jerk because something – somebody’s big. Let’s go after them? That’s the wrong mindset. We want the market to be disruptive. We want entrepreneurs to have access to be able to…so if it’s a firm correcting a barrier to entry to prevent disrupters and small business from innovating and competing, then that’s a problem. But if it’s somebody’s big for the sake of being big we want to go after them, then I think you’re actually going to actually do violence to the free enterprise system that gives us higher living standards in the first place.

HH: I’m not a big believer in high moats and big walls and that theory that people can prevent barriers to entry. It just doesn’t seem to me likely. But national security does alarm me. Facebook had more than 3,000 Russian accounts…

PR: Yeah.

HH: What do we do about that?

PR: So on that, well, that’s, we’re having hearings about that. So with respect to other governments trying to influence our election, in particular Russia, that’s clearly something that we have to have a hand on. The reason we know things about this is because we’re doing a Russia investigation, both in the House and in the Senate, to find out what is it that they do and how can we uncover what they do, prevent it from happening again, and then share that information and technology with our allies, they tried to disrupt the French election, so that we can prevent this country from the destabilizing democracy. I really think Putin’s game, de-legitimize democracy so he can look at little bit better by comparison. We need to do everything we can to prevent that from happening and spreading.

HH: Do you think big tech will self-regulate, though, when it comes to national security? I’ve heard senior executives from that industry completely reject the idea that end-to-end encryption is a danger in any way, that they want lock down and make automatically locking cell phones, and otherwise deny law enforcement the tools they need.

PR: Yeah, these are extremely complicated issues. They involve lots of various different principles that are very important, and that’s why I think you just can’t knee-jerk on any of these things. That’s why we have committees to look into all of these things. Judiciary committee has hearings on this stuff all the time. We have a Russian investigation right now. So what you don’t do is just take some knee-jerk reaction, not knowing the full consequences of what it is government would be doing. So that’s why I think you just need to have, you need to pause and think this stuff through and understand the ramifications of any kind of policy decision we make.

HH: Leader McCarthy seemed open last week to legislating in this area. Is Paul Ryan?

PR: Just what I basically just said, if we conclude that this is the right thing, that this protects principles, this protects property rights, this protects our Constitution, and it also protects national security, then yeah. But if you’re asking me to make a choice between protecting civil liberties and not, I’m going to vote to protect civil liberties. So I think it is very important that you understand what it is we do, and we don’t make rash decisions at the government level and rue the day we did so, because we have infringed upon a person’s civil liberty. So that’s why you have to think these things through.

HH: I agree. It was 17 years between the completion of the Transcontinental Railroad and the formation of Interstate Commerce Commission, because the big railroads came in and they ran everything.
PR: Yeah.

HH: And so it’s been about 13 years since Facebook arrived, so it seems now that we’re in the –

PR: We’ve got four more years, is that what you’re saying?

HH: We’ve got four more years until we get an agency.

PR: Yeah, yeah, right.

HH: No, but I mean it does seem to me, Facebook has got a huge mode, and they have been abused by the Russians. Is there a way for our national security apparatus to cooperate? And if not, getting cooperation from Silicon Valley to oblige cooperation?

PR: Yeah, so okay, so Facebook is getting abused by the Russians. Let’s say you just get rid of Facebook tomorrow.

HH: Yeah.

PR: What are the Russians going to do? They’re going to abuse somebody else, something else. So let’s go focus on what it is the Russians do, how do they do it, how we do we stop them from doing it, and how do we work with American companies to help us do that. That’s the question.

HH: All right, let’s go to taxes. I talked to Kevin Brady this week, Chairman of House Ways and Means. He believes the tax bill will clear the House in October. I think that’s crazy. What do you think?

PR: I don’t think it’s crazy at all. I think that’s the plan.

HH: With, what day does it get to the Committee? You haven’t even gotten the budget until today.

PR: Oh, I won’t, I can’t, I don’t know what time this is airing, but we’re passing…

HH: Saturday.

PR: OK, so on – this is Thursday…

HH: Yeah.

PR: We’re passing the budget today. We’re passing the budget today. The Senate is marking it up right now. So we, the train is on the tracks, and we’re moving. The whole purpose of this timeline is to get law this year, 2017, so Americans wake up in 2018 with a new tax system that is wired for growth, that gives middle income people a real break on their taxes, that dramatically simplifies the system by getting rid of loopholes so this code’s fairer, and allowing people to actually file their taxes. Nine out of 10 people file their taxes on a postcard. That kind of dramatic simplification is really good for families, people living paycheck to paycheck, economic growth. And then on the business side, we are really hitting our businesses in such a way with a bad tax code, that it puts them at a huge competitive disadvantage. You get the business code fixed by lowering their rates, so they’re on par with the rest of the world or better, we will have much faster economic growth. We’ll have more jobs, higher wages. That’s the goal with tax reform. And the reason we want to get it done this year is so we have a really good 2018 so that people can go back to work, wages can go up. That’s the hope. And we can get three percent growth in this country. It’s not a, it’s not something we’ll never get again before, but we have to have a policy that get us three percent growth, and we haven’t had a year like that in about a decade.

HH: The collision with K Street is coming. And by that I mean…

PR: That’s why this hasn’t been done since ’86.

HH: Yeah. The state and local tax deduction is the one that is drawing the most fire. The New York Times this week said it’s almost certainly not going to make it in. What’s the Speaker say about that?

PR: Look, you have to broaden the base to lower the rates to allow everyone in America to get a middle class tax cut, to allow everyone to have a simplified tax system. By doubling the standard deduction and keeping things like charity and mortgages you make it so that people don’t have to itemize. You make it so that people don’t have to have a long tax form. So that you just subject much less of their income to taxes in the first place. That’s the kind of radical simplification that I think all Americans, no matter what state they come from, are going to be thankful for.

HH: Let’s be clear. Is the state and local deduction dead, dead, dead, Paul Ryan?

PR: I’m not going to get ahead of our tax writers, because the job of Speaker is to help craft the framework and then be respectful of the committees who are going to write this bill. But, clearly, that’s something that’s on the table, because if you want to lower taxes for all Americans, if you want to simplify the tax code, then you’ve got to reduce loopholes so you can lower everybody’s tax rates. Remember, in exchange for less loopholes means a higher standard deduction and lower tax rates and a net tax cut for middle income people. That’s the purpose of tax reform. But what I don’t try to do, as the Speaker of the House, is micromanage the committees who do the actual work of writing these bills. I used to chair this committee. The last thing I wanted was the Speaker of the House to tell me how to write the legislation that my committee had been working years on.

HH: We saw the President make a comment about Puerto Rico bonds this week and the bonds cratered.

PR: I saw that. Look, we passed legislation. I actually negotiated this bill in, last year. We have a, an oversight board for Puerto Rico. It’s called PROMESA, which is the law we passed, to deal with Puerto Rico’s financing crisis. That is the proper place. So this is not about having government change property rights on bonds. This is about, we have an oversight board that is working to get Puerto Rico in a good fiscal position so that they can actually go back and borrow again. If we were to take away property rights, then it would be really hard for Puerto Rico to ever go out and borrow money in the future. So we got to be mindful of that.

HH: I bring up their bonds not because it’s a good idea to kill the bond holders. It’s not. You might have to bail out Puerto Rico in a different way.

PR: Yeah, but the issue here is, can you help Puerto Rico get, nurse themselves back to fiscal health, back to economic health, so that in the future, they can actually go out and borrow money? And if you mishandle this situation, you could set up Puerto Rico for failure for a long time in the future. We want to set up Puerto Rico for success in the future.

HH: So when you deal with the state and local income tax deductions, aren’t you messing with the bonds of other states…

PR: Not in the least. Not in the least. Not in the least. Not in the least. Not in the least, because…

HH: Tell me why not, because a lot of bonds people would disagree with you.

PR: …because bonds are still tax preferred. Bonds are, bonds, the ratings of bonds and the bond markets are going to be just fine, because if you get three plus percent economic growth, if you actually lower tax rates on hardworking Americans and on small businesses, you’re going to have a stronger economy. That’s going to give you more revenue, that’s going to give you more growth, and that’s going to make it easier for municipalities and states to go out and float their bonds and finance their projects.

HH: Speaker, you’re talking to a human being. If you cut me I will bleed, but you’re also talking to a Subchapter S corporation.

PR: (Laughing)

HH: And so this Subchapter S corporation loves your tax bill, because it’s going to take my rate from 39.6 percent to 25 percent. Why in the world do that?

PR: Well, can I ask you a lot of personal questions about your…

HH: No. (LAUGHTER)

PR: So, okay, this is a good, this is a good question. So this is one of the things that our tax writers, which I used to be one, has to look at. So let’s just take the best quarterback in America, Aaron Rodgers…

HH: That would not be correct, but go ahead.

PR: (laughing) Okay, so we don’t want to have a tax law that says Aaron Rodgers, who gets his salary from the Green Bay Packers, salary income from the Green Bay Packers that’s guaranteed, you know, contract income, taxed at 39.6, and then let him turn it into an LLC, Aaron Rodgers LLC, and be at 25.

HH: Right.

PR: That’s not what we’re interested in doing here. But if you’re talking about the actual pass-through – the Subchapter S corporation that’s out in an industrial park in Elkhorn, Wisconsin with 50 employees competing against Canada taxed at 15 percent, and they’re up above 40 percent, yeah, we’re going to lower their tax rate so they can be competitive. So the question here is, how do you have the right rules and definitions of income so that Aaron Rodgers no offense, I mean, like I said, he’s the best guy out there, so that he can’t, all of a sudden, shelter his income, his income from the regular tax rate that he ought to have applied to him. And how do you define business income so that it is lower tax? That is, that is something that…

HH: It’s complicated.

PR: It’s very complicated. I could go for half an hour on how you write these rules and the three-part test, and things like that…

HH: I’m with you, because Aaron…

PR: The point being people with wage and salary income, that’s a different tax rate, and that’s why the President wants to have this fourth rate, which we’re looking at, so they don’t get the big rate cut that it goes to the middle class. But don’t forget, Hugh, 8 out of 10 businesses in America, they’re not corporations. They’re LLC’s, they’re Subchapter S’s, and their tax rates go even higher than corporations.

HH: Right, I know. I know.

PR: And we are really shooting ourselves in the foot in this country. We tax our businesses between 35 and almost 40 percent, effectively, in America. And the rest of the world taxes their businesses, on average, at 22 and a half percent. In this global economy, what that means is it tells companies in America, don’t make things in America, don’t be an American company, move overseas. The thermostat in this room is made by Johnson Controls, I bet. That used to be the biggest businesses in Wisconsin, headquartered in Milwaukee. It is now headquartered in Dublin, Ireland. And their international tax rate is 12 and half percent…

HH: It’s got to come down.

PR: …because that’s what Ireland is, not 35 percent. That’s the point we’re trying to make here.

HH: But if we look, if we tackle Aaron Rodgers, pardon the pun, he is making money from an insurance company by doing funny ads. That’s going to a Subchapter S. That’s not coming from the Green Bay Packers. Do we need to lower that rate?

PR: Yeah, I haven’t looked at Aaron Rodgers’ tax form, so I don’t know what his is.

HH: Yeah, but should we lower that rate for…

PR: But the point being you have to have, you know, straight line tests, you know, just real tests of is this a businesses or is this a person’s guaranteed wage and salary and count income?

HH: Perfect. Let me close by asking you about the President. There have been…

PR: I’m sorry, okay.

HH: There have been four crises in a month. I think it’s a record – Irma, Harvey, Maria and now the Las Vegas Massacre. How do you think the President is doing in this pressure cooker?

PR: I think the President, I’ve talked to him about these things. He has tremendous compassion. He’s flying to these emergencies as soon is he can without jeopardizing responses. And I think the fact that he’s going and stopping what he’s doing and focusing on these things, we’ve talked about the supplementals, we’ve talked about these issues, it shows me that the people who are suffering from these tragedies are in his mind front and center.

HH: Last question, Speaker Ryan. Are you going Babe Ruth on this tax bill? Are you going to pick your, the fence, say it’s going over the wall? Is it going to happen this year?

PR: It’s got to happen. So, look…

HH: That’s not a yes.

PR: I feel, well, I’m the House of Representatives, not the United States Senate. I was going to show you my chart…

HH: Please do.

PR: I don’t have time. We’ve got to get going but, you know, we’ve got, passed bills passed out the House, 383 bills. Wait, oh, these are the wrong charts. Wait, sorry, there we go. Sorry, I’ve got, I’m using two-sided charts. We save money here.

HH: (laughing)

PR: Bills passed out of the House, 337 bills. Sitting over in the Senate, 274. So on the, this half of the Capitol, we can hit our timelines. We can pass our bills. It takes more time to get things done over in the Senate. But I still believe that the Senate, using the rules that they can to avoid filibusters, to get things done quickly, and I think they’re just as invested as we are to get this done, by the end of the year. That’s our plan. That’s their plan. I know we can meet that deadline. I’m pretty sure they can, too.

HH: Bob Corker, Rand Paul, they’re trouble.

PR: Got to go.

HH: Got to go.

PR: All right, Hugh.

HH: Thank you Mr. Speaker.

PR: See you. You bet.

End of interview

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