Thune Joins Squawk Box
“[Tax] permanence is something that the economy would pick up on and say, ‘This is pro-growth. This will create jobs and generate growth in the economy.’”
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WASHINGTON — U.S. Senate Majority Leader John Thune (R-S.D.) today joined Joe Kernen, Becky Quick, and Andrew Ross Sorkin on CNBC’s Squawk Box.
On tax permanency:
“[If] you look at what is being proposed, and what I would argue is the thing that’s different is permanence … If you do this on a permanent basis, Tax Foundation, for example, says you get another 1.8 percent GDP growth out of that, and that’s a huge impact on government revenues. So you get more growth, you get more revenues.
“For every 1 percent increase in gross domestic product, the standard rule of thumb is about $3 trillion in additional tax revenue. So you’ve got to have pro-growth policies to deal with deficits and debt, and then you’ve also got to deal with restraining federal spending, which is the other objective – or, one of many objectives – in this bill that we’re working on.”
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“As [the House of Representatives] looks at this, there are decisions that have to be made about how to accommodate some of the things the president wants to do, some of the new things, and how to accommodate making some of these policies permanent. And I think, frankly, as I mentioned earlier, permanence is something that the economy would pick up on and say, ‘This is pro-growth. This will create jobs and generate growth in the economy.’”
On budget reconciliation:
“[W]hen [Democrats] had unified control of the government – House, Senate, and White House – they did two reconciliation bills which increased spending by $3 trillion. And we have now, for only the fifth time in the last century, unified control of the government – House, Senate, and White House. And by the way, four of the five times we’ve had it, it’s only lasted two years. So you really have to maximize your opportunity.”
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“You’ve got to look at other areas of the budget and try and … start bending the curve down. You start bending the curve down, you get growth in the economy, more revenue coming in that way. And pretty soon, this thing starts to look manageable. And I think that’s what this exercise and process ought to be about, and we ought to use the opportunity we have in front of us to do something meaningful to get the country on a more sustainable fiscal path.”
On providing tax certainty for small businesses:
“[T]hey’re 96 percent of the businesses in this country. The one thing, of course, pass-throughs want is they want to keep their 199A deduction, the 20 percent deduction that was written into the 2017 bill. But as you look at what’s currently in law, all of it expiring at the end of the year, on the business side what you want is growth. You want pro-growth policies.
“When the economy is growing and expanding, it’s creating better-paying jobs, people are making money, taking realizations, and paying taxes – and tax revenue goes up and goes up dramatically. So on the business side, that’s what you want to see.”
On President Trump’s tax policies:
“Well, I don’t want to see taxes go up on anybody … we’re all about lowering taxes, not raising taxes. But I do think the president, he’s not a conventional president – people didn’t vote for a conventional president, and I think his policies reflect that. And I think the people around him understand what he’s trying to achieve here – and that is, if you look at what he’s proposing, there’s particular emphasis on working Americans, hence, no tax on tips, no tax on overtime, trying to lower taxes on people who are on Social Security, you know, the people who are out there trying to make a living in this country. And I think a lot of his tax policies will reflect that.”
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“On the individual side, I think what the president is trying to achieve, again, is to help working Americans who are out there every day trying to just take care of their families.”
On strengthening Medicaid by eliminating waste, fraud, and abuse:
“The president’s taking Medicare off the table. But if you look at where the spending is, general fund spending – because both Medicare and Social Security have payroll taxes – about half of Medicare is general fund, about half is payroll tax, and most of Social Security is payroll tax revenue coming in. But net of payroll taxes, the big driver of federal spending is Medicaid, and a lot of that’s because the states have figured out how to game it.”
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“[Y]ou take a state like New York or California, they have really figured out how to game this … [T]hey do things like provider taxes that they use to leverage to get more federal revenue, federal money coming in, then rebate the taxes to the providers. There are a lot of games that are played and … I think there are things that most people agree on that’re reforms like work requirements.”
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“But we have a chance to do something meaningful about spending and about this $38 trillion debt, which is not sustainable, and we’ve got to start slowing the growth of spending, and you can do that without hurting beneficiaries. And I think work requirements is a good example of that. That saves you … over $100 billion and there are some other reforms in Medicaid that I think you can … do as well.”
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