Senate GOP Press Conference on Build Back Better Costs Transcript

Senator Mike Crapo: (00:03) All right, let's start again. So as you know, we're here to talk about the SALT tax. The SALT deduction is a wealth transfer from low tax to high tax residents, particularly high income residents and punishes residents of low tax states and their state's fiscal prudence. I want to look at the chart here and show you this chart. This first chart shows that the SALT tax deduction issue is the second largest part of the spending bill. And as you can see here, it's far higher than the climate money, it's higher than the family and medical leave, higher than the energy tax policies change, higher than the child tax credit, in fact, it's 85 billion higher than the child tax credit. And the list goes on. This is what we are talking about, and I think it's critical that it is literally showing a transfer of wealth to the wealthiest in our country, in the second largest part of this bill. A majority of this tax benefit will go to the wealthy taxpayers in the 10 largest states in California, New York, New Jersey, and Illinois alone account for 46% of this cost. Senator Mike Crapo: (01:20) Now, if you look at this chart over here, it's a little bit hard to read. This shows who in America gets the benefit of this $275 billion of expenditure tax expenditure taxpayers in the bottom 40% get zero. When you get up here to the next percentile, the average tax savings for these Americans is $20. You've got to get all the way up here to those making over $500,000 before you start seeing a boost. You see a larger one when you get up over... Well, this is over $250,000, this is $366,000, this is $500,000, and here is those making over $1 million dollars. So, if you look at this chart, right here is the bulk of all the transfer of wealth here that's going on, and it's going into income categories over $366,000, and over 886,000, this is mostly the millionaires who get an average tax cut of $14,900. So it goes for $20 or less for the vast majority of the middle and lower income categories, up to $15,000 for those making the money, and those having the highest incomes. Senator Mike Crapo: (02:55) And no matter how our Democrat colleagues frame their proposals to increase the SALT cap, the proposal is regressive in any way that you look at it. And the expansion of the SALT cap is costly and is a break for people with higher incomes. I'm going to stop at that point right now, because my colleagues have a lot more to say on this. We're going to go first to Chuck Grassley, and then to Senator Capito, and then I'll get back to my list. I don't know what the order is next, but let's go there and we'll proceed from there. So Chuck Grassley: (03:30) I'd like to point out the inconsistency of the Democrats. Remember how they attacked Republicans; the tax cut of 2017 was tax cut for the rich, even though the top 1% ended up paying a higher percentage of the total tax coming into the Federal Treasury than they did before 2017. And then Democrats always want you to believe that they're always worried about the middles class. Well, in this particular time, the Build Back Better really stands for Blue State Billionaire Bailout. And I don't know how you can make that any more clear than what these charts already show, but it's giving tax cuts to the millionaires and billionaires, mostly in the coastal states, and the blue states of our country, and Democrats are worried about those people. And they want you to believe that they're only worried about the middle class or the lower income classes. So this is something that will bring down their Build Back Better because it was really a Blue State Billionaire Bailout. Senator Capito: (04:57) Yeah. Blue State Billionaire Bailout. Thank you, Chuck. That's great. And I think Senator [inaudible 00:05:04] did a good job of delineating with these charges and explaining really what I see is a hypocrisy of the supposed Build Back Better, or better term, the, "Reckless Tax and Spending Spree" that that bill represents. We had this discussion. And when we passed, what I think was one of the most monumental pieces of the legislation in 2017, the Tax Cut Bill. We had this discussion on SALT. I remember it was an active discussion on the floor, on what direction we're going to go. And we decided that this was a fair way to, to spread the tax burden across country. Senator Capito: (05:42) I live in West Virginia, we are one of the states who has the lowest participation in terms of being able to take advantage of a SALT deduction. So I don't want to subsidize the billionaires in these states, the 10 biggest states that are going to be getting the largest amount of benefit from this SALT deduction. So, but the hypocrisy of the whole thing to me is really in the first chart. Because supposedly as the President has explained, nobody under $400,000 is going to bear tax burden, this is all aimed at helping those who need help the most. However, their second priority is to answer the call of those who are in the higher income tax brackets in the states where many of them represent, particularly on the House side. So I think in order to if, and when this bill comes before us, and if and when it has a readjustment of the SALT deduction, I plan to put forth an amendment that will strip that, and take it back to the original 2017 provisions that we wrote into that law. Senator Capito: (06:53) I think that that would be well received. I think it would be one that we see is fair in terms of spreading the tax burden, and I think it would also be fair to those states, and those tax payers in those states are not subsidizing states, and people who live in states who mismanage their money, who have high taxes, who don't pay attention to what those impacts are to the people of their state. So, this is a giveaway to the top and most wealthiest 5% in this country. So thank you. And thank you for letting me kind of skip ahead; I've got to go back to commerce. Senator Mike Crapo: (07:36) You bet. And we'll just to those in order that you've shown up here. But before we do that, I should have clarified. These are not my charts. This is the CRFB, and this is the Tax Policy Venter. These are their charts, not ours. Speaker 4: (07:55) Can you say it from the mic, sir? Senator Mike Crapo: (07:55) Oh, I'm sorry. This is the CRFB chart, and this is the Tax Policy Center chart. Speaker 4: (08:03) Thank you. Senator Mike Crapo: (08:05) Rick? Senator Rick Scott: (08:06) Thanks. Well, first off, let's take what this is, this is when a blue state like California, New York, Illinois, New Jersey have high state taxes, they want taxpayers from low states that have smaller budgets to pay a portion of their taxes for a portion of their budgets. So a state like Florida, which our budget is about half of what new York's budget is per person, they want our taxpayers to subsidize their taxes. That's not right. That doesn't make any sense. So step one is Florida tax payers, Texas tax payers, all our states that have lower taxes, we shouldn't be subsidizing the budgets of California, New York, New Jersey, all these ridiculous states. They can't live within their means. That's number one. Senator Rick Scott: (08:53) Number two is what they're doing, how they're paying for this is they are, they're cutting Medicaid in states across the country. Oh, all only red states. States like Texas and states like Florida. They're cutting our Medicaid program, which makes no sense. So you're going to cut the program for the poor, and give tax breaks to the rich. That doesn't make any sense. Now we got elections next year. How can anybody in a red state that's seen in this bill, they're being asked to subsidize the rich in these blue states, and have their Medicaid cut, how can they ever vote for this bill? Senator Mike Crapo: (09:37) Senator Corning? Senator Cornyn: (09:39) I think Senator Scott makes a good point. This is reverse Robin Hood. It's taken from the low income Americans and giving money to the people who are the wealthiest and well off. I know we've all struggled with the BBB or Senator Grassley, I think he had four B's in his alliteration, but I think one of the ways you can look at this bill is Build Back Broke. This doesn't cost zero, as President Biden had the temerity to suggest, and it doesn't cost 1.75 trillion. It's closer to $5 trillion in spending, and somebody's going to have to pick up the tab. And what the Democrats want to do in, really a startling display of hypocrisy is to get regular working families to subsidize the wealthiest Americans who live in these deep blue states, and large urban areas across the country. Senator Cornyn: (10:39) My constituents, my 29 million constituents in Texas are not interested in the subsidizing bad governing decisions made in places like New York and San Francisco, and they shouldn't have to subsidize it. But I'll just point out that this is part of a trend as well. You see this interestingly enough, when it has to do with the subsidies for electric vehicles, you can buy an $80,000 car, and the federal government under the Democrats proposal will pay you back $12,500, potentially. The average American drives a car, 280 million, roughly, cars on the road, that's worth about $25,000. So you're going to ask people who can't afford to buy those expensive cars, to subsidize rich people who can afford to buy them by taking money from low income or middle income families, and transferring that to the rich. This is a stunning display of hypocrisy, and it deserves to be called out. I think Senator Crapo for leading this effort. Senator Mike Crapo: (11:43) Senator Hoeven. Senator Hoeven: (11:45) Thanks Mike. So, Democrats continue to push this tax and spending bill, and they're doing it at a time when inflation is high, and this bill's just going to increase inflation. You saw in the last month that inflation was over 6% on an annualized basis. I come from the Midwest, it's actually over 7% on an annualized basis. And so, we know inflation is a tax on everybody. Inflation is a tax on everybody, on your food, on your fuel, on your housing, you name it, but it hits low income people the hardest. So, it's a tax on everybody, but it hits low income people, the hardest. Now Democrats want to double down on that and by increasing taxes and increasing regular, they're also running the risk of putting our economy in stagflation. Something that we haven't seen since the late seventies and early eighties, and that really undermines the wages of working people. Senator Hoeven: (12:47) Now on top of all that, on top of inflation, on people who can least afford to pay it, and making it worse and continuing to disrupt the supply chain with regulations and higher taxes, they've decided to give their wealthy friends in New York and California, a big tax break. They're going to raise the SALT deduction, the deduction for local property to taxes from 10% to 80%. So they're going to give a big break to their friends in California and New York, the wealthiest people, while they increase inflation. Will they make it more difficult for low income people across this country. Makes no sense makes absolutely no sense. And people need to understand that. They need to understand that, and they need to call their Senator, and they need to call their House member and say, "Stop that. We do not want that big tax and spend bill that will make things worse, particularly for low income people. And we want to get back to the kind of policies that grow our economy, that solve the supply chain disruptions, and that create more opportunity." Senator Mike Crapo: (14:00) Senator Portman. Senator Portman: (14:03) Thank you. I think Senator Hoeven has said it well; I don't think any of us expected to be able to support legislation that would be a huge new spending increase $1.9 trillion back in March, and this one really is over $4 trillion because you have to assume that some of these popular programs will not be sunset, as they never are sunset here in the Congress. So it's unprecedented in terms of the spending; the largest bill ever. And then in terms of taxes, what a terrible time to raise taxes on the American economy, and the American worker, American families. So I don't think we expect it to support it, any of us, but I think we're really shocked by how bad it is, and particularly the fact that what they have done, I don't know if they meant to do this or not was provide a huge tax cut for wealthy Americans. Senator Portman: (14:48) Let me give you a data point that is kind of shocking; 2/3 of millionaires people making over $1 million a year will get a tax cut under this legislation. 2/3 of people making over $1 million a year will get a tax cut, primarily because of the SALT cap being increased, but other reasons as well, actually the number's over 68%. So it's almost 70%. And if you make $30,000 bucks a year, only 30% of people get a tax cut in the first year. After the first year, it's about 10% and goes down from there. So think about that. They're putting forward a bill that not only has this gargantuan new spending and all these taxing increases, but the benefit of it goes to the higher end. And I don't think people think that's fair. Senator Portman: (15:38) And so, I do hope that the American people look at this, and understand that by putting more stimulus in the economy, of course, you're going to increase the demand side, therefore inflation, so that's a huge issue. People I represent are primarily concerned about inflation right now. Of course, we don't want to put taxes on the economy right now, as we're trying to get out of this pandemic, but it's even worse than that, because it's so skewed toward benefits at the top end. Again, almost 70% of those people make over $1 million a year, get a tax cut. If you make $30,000 bucks a year, 30% get a tax cut in the first year, and after that it's 10%, and then less in the proceeding years. So, it's a shock to me. Senator Portman: (16:20) Here's the other point that I've been looking at that I think is very interesting. The cost of the SALT cap increase is somewhere between $230 billion $85 billion, depending on which analysis you look at. But it doesn't matter which analysis you look at, it's still $100 billion more for the SALT cap than for the cornerstone social policy in their legislation, which is the Child Tax Credit, right? So when you look at this, the Child Tax Credit is getting a $100 billion less than the SALT cap. The SALT cap goes again, skewed toward the wealthiest. So I don't know. I mean, maybe they meant to do this; that makes it even more surprising to me. I'm not sure they did, but this is it is. And this is what the American people are going to judge. "Does this benefit me? Is this the right thing for our country at this time of high inflation and struggling to get out of this pandemic?" I think it's exactly the wrong policy prescription right now. And I hope people will rise up and let folks know in the House and the Senate, "This is just not smart. This is not the right way for our country to proceed." Senator Mike Crapo: (17:37) Thank you, Senator Tillis. Senator Tillis: (17:41) Thank you, Senator Crapo, thank you all for being here. I'm not going to repeat what some of my colleagues have said, but I do think it bears repeating that the wealthiest people in the high tech states are going to benefit from the SALT deduction. I was thinking about in 2010, I may be conflicted in coming to a press conference like this, because the fact of the matter is the people of North Carolina may have benefited from being a high tech state back at that time, what did we do? And what should Chuck Schumer do? And what should Nancy Pelosi do? They should go to their state Houses, they should go to their governors, and reduce the tax burden on people in California, and New York, and other states that are high tax states. You want to make the tax burden... What you're going to do here. If you raise the SALT deduction in those states, you're not only going to give tax breaks to the wealthy, but you're going to give a green light to those governors and those legislators to raise taxes, because they're going to take some of the edge off by increasing the SALT deduction. Senator Tillis: (18:42) So this not only harms people immediately, and it not only benefits the most wealthy, but it could creates a clear and present danger that these legislatures may just go a little bit more up on their state taxes, maybe some of the county taxes. And that's why I'm against this. This provision is purely about giving tax breaks to the wealthy, and it will ultimately harm the middle class. Senator Mike Crapo: (19:07) All right. We haven't got the rest of them to show up yet, so let's start if there are any questions and we'll, I hope collectively, be willing to take your questions. Yes? Speaker 10: (19:17) So, you're talking about how this bill is terrible for inflation. I wanted to talk to you about the China package, and your Trade Act in the China package. It had a number of things that would reduce taxes by reinstating MTB, the GSP, and bringing back more exclusions for the 25% tariffs on Chinese bids. Are you going to be a conferee? And what chances do you see for your Trade Act coming into the final compromise bill between the House and Senate? Senator Mike Crapo: (19:48) I hope I will be a Conferee, I cannot confirm whether that is the case yet. We aren't even been close to a conference yet though. I hope that the House will move and get us into a conference. And I have very high hopes that we will keep the Trade Act provisions included. Remember, it got 91 votes in the Senate. That's a signal to the House and to the country that this is important. I can tell you that our allies, particularly those are around China, those in the South Pacific and India are very interested in those trade provisions to help them push back, and strengthen themselves against China's aggressive economic and military policies. And so, I think that the case can be made for this being one of the key parts of our China bill and will hold. Speaker 10: (20:31) So, does that mean you also want India to come back into the GSP? Because, of course, they were kicked out a few years ago. Senator Mike Crapo: (20:37) Yeah, I personally would like to see that. Speaker 10: (20:41) Thanks. Senator Mike Crapo: (20:42) Any questions? Yes. Senator Portman: (20:43) Mike, I kind of want to answer that. Senator Mike Crapo: (20:44) Yeah. Go ahead. Senator Portman: (20:46) One thing I like about the trade provisions that were in the legislation, and I'm a strong supporter of the legislation overall, and the safeguarding American innovation in there, particularly to protect our intellectual property, but it's counter inflationary. In other words, it would be positive right now. It would help on the supply chain issues, and it would help in terms of our inflationary pressures on the supply side. So it makes sense. The other bill we're talking about today, the Reconciliation Bill adds to the demand side, and it's demand chasing supply, right now, that's causing our inflation. So actually that trade bill would be very helpful. Senator Portman: (21:20) As Senator Crapo knows, there's also another bill coming that we'd like to do with regard to making sure the level playing field with China is there, a level playing field 2.0, and that would help as well, but these are all great provisions and I strongly support them. Senator Mike Crapo: (21:33) And before we go to this next question, you prompted another thought on my part, and that is when you talk about inflationary and counter inflationary, and the contrast that Senator Portman made between, what's been called the Build Back Better bill and the China bill, the Bipartisan Infrastructure Bill that we all agreed to is also counter inflationary. And so, one of the big arguments we're having here on all of these pieces of legislation is, let's do what builds and strengthens the supply side and protects our economy and grows it, rather than feeding the inflationary side. Yeah. And you had your hand- Speaker 11: (22:13) I guess, two questions relating to SALT. First, do you think the fact that it seems like Democrats are having trouble finding consensus on what exactly they want to do on SALT is maybe assign some of your attacks on this are effective? And then, I guess the second question I have is, how do you think this issue might play out in the midterm elections? Senator Mike Crapo: (22:32) I'll take a quick shot at that, and I invite either of my colleagues to do the same. Yes, I do believe there is discord on their side about this, for the very reasons we've been talking about. And that gives me hope that we will be able to have some success in getting this terrible provision out of the bill. I would, of course like to see the entire bill stopped, and there are many parts of the bill that I think are harmful, but this is a poster child of exactly why these provisions on the SALT tax are absolutely counter to what the entire pitch for this bill has been. Senator Tillis: (23:13) Yeah, the only thing I'd add to that, I think, our trying to increase awareness is important, but I think my colleagues on the other side of the aisle are smart, and many of them will go back to their states, and recognize that they gain no benefit from it, and a disproportionately few number of states will benefit from it. But, I've got to repeat; you are sending a green light to legislatures who want to raise taxes to say, "Now we can a little bit, we'll let them preserve some of that benefit that the rich people are going to get, but we can raise taxes a little bit," which is going to disproportionately hurt the people that are struggling paycheck to paycheck. So I think they're looking at the mechanics, they're looking at the specific application of their states and saying, "There's not really a lot there for us here. In fact, it may take some of them backwards." Senator Mike Crapo: (23:58) Do you want to say anything? Senator Portman: (23:58) Oh no. Look, I don't think our critiques are causing the consternation among the Democrats. Maybe we should take more credit, but I think it's the facts, and the facts are pretty plain, which is that when you raise the cap, you are skewing this toward the wealthiest Americans. Again, 2/3 of people making over $1 million a year, almost 70% are getting a tax cut. And if you make 30,000 bucks a year, good luck; only 30% of people are getting one. And that's just for year. After that, it goes to about 10 point something percent and then down to single digits. Senator Mike Crapo: (24:29) And then goes way down. Senator Portman: (24:30) Yeah. Way. So, I think it's the facts and facts are stubborn things. And I think that's why you see some Democrats, including a couple prominent Democrats who I've talked to say, "Why are we doing this SALT cap increase?" Senator Mike Crapo: (24:46) Go here and then over here. Yes. Speaker 12: (24:48) So, I know that we're here talking about salt, but also the larger economic picture. And of course, Friday is the deadline for the government shutdown. There are some in the Republican party, both on the House side, in the Senate who think that shutting the government down over vaccine mandate reinforcement funding is the right way to go about this right now. Do you guys think that that's the right move? Senator Mike Crapo: (25:08) I'm not going to comment on that, because I understand the concerns, but there are concerns on both sides and I'm not going to push either side's agenda right now. So, do either of you have a comment on that? Senator Portman: (25:21) I don't know what the state of play is, I'm not going to comment, Speaker 12: (25:24) But should the government be shut down? Senator Mike Crapo: (25:25) The government should not be shut down on in my opinion. And it's my hope that we can avoid that. Yes? Speaker 13: (25:32) Senator, what's wrong with changing the cap so that it's phased out for people with higher incomes? Senator Mike Crapo: (25:38) That it's phased out for people with higher incomes? Speaker 13: (25:40) Right, so they don't get a deduction? Senator Mike Crapo: (25:42) So if you look at the chart over here, when you say, "Higher incomes," it's already phased out for everybody who makes less than $175,000 a year. And so, the question is, phasing it out here, that's what we're talking about, is getting rid of this expansion of it for the very, very top income categories. I think you might be referencing some of the discussion that is reported in the media between Senator Sanders and Senator Menendez. As I see it, those are simply, what I call gimmicks to try to make this look better, or look different in terms of the rhetoric. But you can't make this better with rhetoric. I want to go over some of the statistics that Senator Portman has just referenced. Less than 1/3 of those earning between 20,000 and $100,000 will receive a significant tax cut of any kind under this bill. More than 2/3 of those earning a million dollars or more, and nearly 90% of those earning between 500,000 and 1 million will receive a significant tax cut. Senator Mike Crapo: (26:49) And as Senator Portman has already pointed out in 2023, one year after we've gotten into the bill, almost all of the lower and middle income class tax relief is gone, and it phases down rapidly from what's not gone at that point. And so, there isn't really a way to do what you just said, unless you get at the higher brackets here, and that's exactly what we're talking about. Why do they have a mechanism put into this bill that does nothing, and cannot be argued to do anything other than to give the second largest poor of the allocation of this bill to the top income categories of earners in America? Senator Mike Crapo: (27:37) Any other questions? All right. Thank you all very much for coming. Senator Portman: (27:41) Thanks Mike. Speaker 14: (27:42) Thank you, Senator. Speaker 15: (27:42) Thanks. Senator Portman: (27:43) Great charts. Senator Mike Crapo: (27:43) Oh, I pointed out that's the Tax Policy Center's chart, not mine. Senator Portman: (27:43) Yeah. Senator Mike Crapo: (27:51) [inaudible 00:27:51]. Senator Portman: (27:51) Oh really. That's interesting. Speaker 16: (27:51) [crosstalk 00:27:51] Hi Leanne. Nice to meet you. [Mahra 00:27:51]. [Mara 00:27:51]. Senator Mike Crapo: (27:51) [crosstalk 00:27:51] Can you see there, the really tiny little blue line here? [crosstalk 00:27:51]. Speaker 16: (27:51) Oh hi, good to see.. Do me a favor? [crosstalk 00:27:51]. Can I just see? Senator Mike Crapo: (27:51) [crosstalk 00:27:51]. Speaker 17: (27:51) Yeah, [inaudible 00:27:51]. Senator Portman: (27:51) Yeah. Yeah. It's amazing. Speaker 18: (27:51) [crosstalk 00:27:51] Testing my [crosstalk 00:27:51]. Senator Portman: (27:51) And this one here, that says 100 billion. Senator Mike Crapo: (27:51) It's 85 billion. This is CRFB. Speaker 16: (27:51) No, I'm just like, [crosstalk 00:27:51]. Senator Portman: (27:51) Oh okay, yeah. Senator Mike Crapo: (27:51) But there are different estimates. This is [crosstalk 00:27:51] showing tax, but. Senator Portman: (27:51) Yeah. Senator Mike Crapo: (27:51) And CRFB. Senator Portman: (27:51) Yeah. Senator Mike Crapo: (27:51) Yeah.