Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: The tariff is a tax increase.
Speaker 3: It's a tax that applies to imported goods and the
Speaker 3: United States, so it burdens US importers.
Speaker 2: There's no way that it's a tax cut.
Speaker 3: It increases revenue, it increases the tax burden in the
Speaker 3: US economy.
Speaker 4: Rookie York in the Tax Foundation on the early edition
Speaker 4: of Balance of Power yesterday talking about how tariffs might
Speaker 4: impact impending tax policy. Because you know, we're doing it
Speaker 4: all at once right now in Washington, joining us as
Speaker 4: Kevin Brady, former US Congressman from Texas, spokesman for the
Speaker 4: Alliance for Competitive Taxation, of course, former chair of the
Speaker 4: House Ways and Means Committee.
Speaker 2: It's great to see you in town.
Speaker 4: I don't know if you're hearing anything on what we're
Speaker 4: going to learn tomorrow, but everybody's trying to get a
Speaker 4: sense of what this announcement will be from President Trump.
Speaker 4: Whatever it is will help the color the debate around taxes.
Speaker 4: Right We've started this whole process talking about tariffs helping
Speaker 4: to raise revenue to cover the cost of tax cuts.
Speaker 2: Will that be fulfilled tomorrow?
Speaker 5: You know, likely, not necessarily. I think people are hoping
Speaker 5: that tariffs will be short and uses leverage to bring
Speaker 5: countries to the table with better resolution on issues, including
Speaker 5: lower tariffs. I think people are hopeful it's not a
Speaker 5: high universal tariff that is permanent nature, which will cause.
Speaker 2: A lot of economic damage.
Speaker 5: But I think the point is for all the uncertainty
Speaker 5: that's around tariffs seems to be in every sector and
Speaker 5: lots of families around the country.
Speaker 2: It really drives home the.
Speaker 5: Need for certainty within the tax coat. And I think
Speaker 5: really the pace that the Houses Senate are moving forward
Speaker 5: on recognizes as sooner they get this done, the better.
Speaker 5: They've still got some big hurdles. This is a hard
Speaker 5: This is a hard job in the best of times.
Speaker 5: With the near zero majority in the House, a higher
Speaker 5: degree of difficulty in a bigger way depths and depthsits matter.
Speaker 5: So yeah, there's a lot of challenges ahead. But I
Speaker 5: think I really command the House Senate tax writers. They
Speaker 5: are moving as fast as as it's allowed.
Speaker 3: But are they moving in the same direction, rowing in
Speaker 3: the same boat to an extent that will allow this
Speaker 3: process to move quickly?
Speaker 5: Ultimately they will, I'm confident they will. But the Housan,
Speaker 5: you know, they are different personalities and they move different.
Speaker 2: Ways and different rules.
Speaker 5: So I think the Senate this week looks to be
Speaker 5: sort of advancing their idea. I think some of us
Speaker 5: thought that the next step would be the two houses
Speaker 5: have reconciled sort of the design. What I always said
Speaker 5: was reconciliation was the runway you landed tax reform on.
Speaker 5: So they're definitely two different architects, different designs at this point. Ultimately,
Speaker 5: I think important for the Senate to act in advance
Speaker 5: like the House has. But as sooner they they in
Speaker 5: the White House get on the same page, the better.
Speaker 4: You're in an interesting moment here, as you've been spending
Speaker 4: time in Washington now for months, getting closer to the
Speaker 4: finish line to extend or make permanent the Trump tax cuts.
Speaker 2: That's been your charge.
Speaker 4: But she heard Eric Yorke's comment when we're coming into
Speaker 4: this this conversation, you're taking that amount away from individuals
Speaker 4: and businesses in the private economy. By any definition, this
Speaker 4: is a tax increase. So we could be in a
Speaker 4: world where they cancel each other out.
Speaker 2: So I hope not.
Speaker 5: You know, I actually think tariffs are a tax, but
Speaker 5: worse economical because not only do they drive up prices,
Speaker 5: really distort the economy and slow it down. In most cases,
Speaker 5: it invites retaliation on our made in America workers, you
Speaker 5: know what I mean, in a big way. And as
Speaker 5: you know, it's not enough to buy American. You need
Speaker 5: to sell American all throughout the world. Tens of millions
Speaker 5: of jobs depend upon our ability to do that successfully.
Speaker 5: The tax code plays a key role on ADVI. Tariffs
Speaker 5: really change the whole dynamics there Again, I think that's
Speaker 5: why people are hopeful and why policymakers, I think Congress
Speaker 5: are given the President.
Speaker 2: A bit of a honeymoon here.
Speaker 5: You know, I mean to unveil this strategy, which we're
Speaker 5: going to see a lot of it tomorrow. But they're
Speaker 5: very nervous about the impact on prices, the economy, and
Speaker 5: their workers, especially because our trade agreement with Canada and Mexico,
Speaker 5: the most consequence trade agreement on the planet, has worked beautifully,
Speaker 5: was renegotiated under President Trump. And not only is it
Speaker 5: to create about seventeen million jobs in the US that
Speaker 5: give us more affordable prices, more affordable cars, and allows
Speaker 5: us to combine our strengths to compete better against China.
Speaker 5: So Yeah, lots of stake and all these announcements well and.
Speaker 3: Clearly, sir, you are a big advocate for the USMCA.
Speaker 3: When you hear the language now coming out of Canadian
Speaker 3: Prime Minister Mark Karney about this having fundamentally altered the
Speaker 3: relationship between Canada and the US, do you think that's
Speaker 3: just posturing because he has to put up a show
Speaker 3: of force against these policies or is this actually going
Speaker 3: to be hard to come back from.
Speaker 2: It's going to be difficult to come back.
Speaker 5: This is such a strong partnership economically and integration has
Speaker 5: worked for all of our strengths. It's tough to hear about,
Speaker 5: you know, being named the fifty first state.
Speaker 2: Or sort of the rhetoric around this.
Speaker 5: It's having an impact in both of our borders as well.
Speaker 5: So I think the sooner that we can come to
Speaker 5: the table and work through these issues. Certainly, Mexico can
Speaker 5: agreement with America is almost near zero tariffs on most products,
Speaker 5: pretty low barriers. Not perfect. You know, we've had trade tensions.
Speaker 5: We have to resolve those, but we should never forget
Speaker 5: because of our strengths. Putting them together, we compete better
Speaker 5: against China. We compete better against the world. That matters
Speaker 5: a lot to jobs and prosperity.
Speaker 4: You mentioned the thin Republican majority in the House right now.
Speaker 4: I suspect that's when you couldn't have imagined while you're there.
Speaker 4: There are a couple of special elections in Florida today,
Speaker 4: House races where it appears that Republicans will hold two seats,
Speaker 4: one from held by Matt Gates, the other Mike Waltz,
Speaker 4: the President's national security advisor. But that's sixth District race,
Speaker 4: the Waltz seat, the district Donald Trump won by more
Speaker 4: than thirty points. You've got a Republican said to be
Speaker 4: on the ropes here and might scrape out a close victory.
Speaker 4: This is being framed by some as a proxy as
Speaker 4: a statement on the Trump policies.
Speaker 2: Do you see it that way? Or are we reading
Speaker 2: into this too? Yeah?
Speaker 5: I don't great question. I don't don't know. I don't
Speaker 5: know that race quite that will have been following it
Speaker 5: closely like everyone else has. So I just think these
Speaker 5: special elections get a lot of attention, and then when
Speaker 5: they don't really you know, come out, they're quickly forgotten.
Speaker 2: You know what I mean? That's right, you know they
Speaker 2: tend to work back to the norm.
Speaker 5: I think that'll happen again, but sure, I think Republicans
Speaker 5: and Democrats from paying attention every election at this point.
Speaker 3: Well, and there won't be a third special election for
Speaker 3: at least next top president was a little bit concerned
Speaker 3: about holding onto that one. Therefore he's keeping her in
Speaker 3: the House rather than you an ambassador. But an issue
Speaker 3: in her district in New York, really all of New
Speaker 3: York and other high tax states that we often talk
Speaker 3: about with you is the salt cap. And Bloomberg is
Speaker 3: reporting today that they're looking at Republicans in Congress are
Speaker 3: looking at raising it to twenty five thousand dollars from
Speaker 3: the current ten thousand dollars. I wonder if that's in
Speaker 3: line with what you're hearing, and if you think that
Speaker 3: is enough to pacify the salt Gaucus will still keep
Speaker 3: in conservative hardliners in line.
Speaker 5: Well, it should be, because it's a huge increase.
Speaker 2: I mean, both dollar wise and the impact on the.
Speaker 5: Tax bill itself is going to be significant. It is
Speaker 5: certainly a huge expansion of what is basically one of
Speaker 5: the biggest subsidies who've gotten the tax coat, you know,
Speaker 5: on the individual side, of that, and so I would
Speaker 5: think for the high tax states, again, who's most of
Speaker 5: taxpayer's overwhelming got a tax cut, that is a huge number,
Speaker 5: I think, probably bigger than I thought it would be, frankly,
Speaker 5: but I think it's going to be very careful, very
Speaker 5: important for them to arrive at that consensus number between
Speaker 5: Republicans the House, Senate, and the White House. The sooner
Speaker 5: they do that, the better they're able to move the
Speaker 5: whole package.
Speaker 4: For There are a few stories that we could ask
Speaker 4: you about that tend to get more attention from our
Speaker 4: viewers and listeners are subscribers at Bloomberg. The salt story
Speaker 4: gets a read spike every time it hits the terminal here.
Speaker 4: Does that number sound like something that will bring members
Speaker 4: of the Salt Caucus over because you can explain they're
Speaker 4: needed to pass any final bill.
Speaker 2: Right.
Speaker 5: So, I think given that there are a number of
Speaker 5: Republicans who believe the salt tax numbers should be zero,
Speaker 5: that everyone should just pay their own state and local taxes,
Speaker 5: that would be that would be a big give to
Speaker 5: I think the publican members from the high tax states.
Speaker 5: So you know, if that is the number that would be,
Speaker 5: that would be a huge win for them.
Speaker 2: I don't know that's the case.
Speaker 5: You hear about a doubling to twenty thousand and I
Speaker 5: guess one question is that twenty five thousand four all
Speaker 5: incomes or for some You know, there's lots of ways
Speaker 5: to sort of target those things because so much the salt.
Speaker 2: Goes to the million dollar household.
Speaker 5: So yeah, still more details I think need to be known, and.
Speaker 2: The details do matter.
Speaker 3: Kevin Brady, former chair of the House Ways and Means Committee,
Speaker 3: and spokesperson for the Alliance for Competitive Taxation, Thank you
Speaker 3: so much, as always for joining us.