we're doing a phase 2 we'll be doing it probably in October it may be a little
sooner than that and it'll be more of a middle class we did have left for the
middle class but this will be even more aimed at the middle class one of the
things we're thinking about is bringing the 21 percent down to 20 and then for
the most part the rest of it would go right to the middle class that was
President Trump with Fox's Maria Bartiromo last weekend marking the sixth
month anniversary of the 1.5 trillion dollar tax cuts and reform passed by
Republicans last year in hinting that phase two of those cuts could be coming
ahead of this fall's midterm elections Texas congressman Kevin Brady is
chairman of the tax writing Ways and Means Committee welcome mr. chairman
good to have you back so let's take well thanks for having me let's let's deal
with the economy before we get to phase 2 of the tax cuts you had really strong
jobs report on Friday but wages aren't going up all that much more they aren't
accelerating any insight to know why yeah you know I think part of this
really when the focuses of our new tax code is stronger productivity coming
from new investments it's something that really drives wages for the long term
for the right reasons that takes some time I was encouraged by the wage growth
in the first quarter didn't expect that to continue it quite that pace and it
hasn't but what I am seeing is and we are all saying are the business
investments that are being made in technologies equipment software all the
things that drive competitiveness in stronger productivity that I think in
the long term drives those wages up and keeps them in a sustainable way not an
artificial way a sustainable way that's gonna take some time but the investment
numbers in both the volume and how fast its accelerated including those coming
back from overseas I think it's gonna drive those wage overtime okay let's
talk about phase 2 of the tax cuts you heard the president talk about 20% rate
going to that what can we expect to see in that in that phase 2 and is it is
there something you can pass before the election you know so the focus here is
going to be on making sure those middle-class tax cuts and
those small business tax cuts are made permanent that's the major feature of
2.0 but I always try to remind our viewers 2.0 is really about changing
that culture in Washington where you know they wait 30 years in between
fixing the tax code we fall behind our competitors around the world then we
junk the code up with a bunch of special interest provisions that don't
ultimately work so what we're trying to do is establish every year a Congress
that looks at our tax code and asks how can we be more competitive as a country
more innovative better and so this first year 2.0 is about the permanence for
middle-class families in our small businesses we think we can do more to
help families save earlier and in more throughout their lives that's an area
that of tax reform that we had done some work on the Senate had done some work on
we think it's time can you pass that through the house do you plan to pass
that through the house before the election you have to wait until next
year we do my understanding as leader McCarthy would like to bring this to the
floor after we return from the August break right now in July we're gonna
spend the time just as we did with tax reform with our members of the House
listening to them laying out an outline of what 2.0 would look like making sure
we've got strong consensus as we head into August as well and we're working
closely with the President on all this of course and you're willing to take
that risk and making votes for this even if the Senate made which is
unpredictable obviously may not take it up yeah so I think part of the as we
know on tax reform 1.0 you know movement creates movement so I think the house
moving forward with the very pro-growth prominence of family-friendly 2.0 gives
the Senate the chance to pick and choose sort of which those elements they want
to move and win clearly 60 votes matter in the Senate and so the leader
McConnell and others will have to assess you know what the strength of those
different provisions of 2.0 Paul I don't see one big bill I really see a package
of three or four that can be broken apart to the work both for the house and
work for the Senate as well all right now let me ask you about trade because
of course the the tariffs against China are kicking in started to kicked in
Friday China responded retaliation immediately how worried are you that
trade and these tariffs which are really border taxes are going to start to slow
the economy's momentum you know I think I am worried you know I think the
economic momentum we have from the tax cuts end from our balanced regulation
has really given us momentum we haven't had before and so the tariffs issues
aren't showing yet but I believe they will I think here in Texas for example
our local manufacturers our energy industries are starting to weigh pulling
their punches on investment and new projects I know some of our local
businesses are actually losing work to foreign competitors because of it I know
that's not what the president intends and so I think the sooner that the the
White House can get that exclusion process working because that has just
failed today to make sure fairly traded products aren't caught up I do think the
exemptions on the Europe China and Mexico need to be really restored
because I think that's creating undue pressure here in the US I think the
president needs to go straight up against China and Raleigh the rest of
the world toward those unfair trade practices so I think some good smart
adjustments could really focus this trade strategy yeah but you're talking
about exceptions to the rule here and I what what but there's a lot of anecdotal
evidence that people are starting to get hurt
what does the president say when you explain that to him you know the
president's asking for patience he believes he can win this with China that
he can rebalance the trade agenda feels like we're not we don't have a level
playing field around the world and so he is challenging those older assumptions
he wants the time to be able to let this strategy work I think there is in
Congress strong support for challenging China's unfair trade practices but there
is growing frustration that the way the exemptions and exclusions are not
working are actually an the retaliation is hurting our far
and our manufacturers in a big way and that's where we're continuing to engage
with the White House all right mr. chairman thanks very much for being here
appreciate it still ahead a solid June jobs report as you as employers US
employers keeping up a solid hiring pace in June with American businesses adding
two hundred and thirteen thousand jobs the Labor Department said Friday that
the unemployment rate rose to four percent from three point eight as more
people began looking for work and not all of them found it those Friday jobs
numbers coming on the same day that the Trump administration began imposing
tariffs on thirty four billion dollars worth of Chinese goods with Beijing
retaliating with its own tariffs on American products including soybeans and
cars we're back with Dan Henninger columnist Mariana Stasia o'grady an
assistant editorial page editor James Freeman so Mary how strong is the US
economy right now yeah I think we're in a sweet spot here you know not only the
numbers that you mentioned but wages are moving up not as much as we would like
to see them they should be getting over three percent a year but there are 2.7
which is good news and I think the other thing that's really good about this
report is that labor participation moved up a little bit I think that's still a
problem and as long as you have low wage labor participation
I'm afraid that maybe that's going to hold back growth so that's probably one
of the bigger problems big number 600,000 though people newly entering the
workforce including a lot of people who were the longtime unemployed pretty
interesting yes that is interesting going off the sidelines yeah absolutely
but we still have again labor participation sixty two point nine
percent below 63 percent and it's kind of been hanging below there really since
the 2008 financial crisis James let me ask you about trade because obviously
that's a huge issue here the tariffs with China beginning back and forth how
worried are you that this is going to affect the momentum that that Mary's
talking about in the economy yeah it's a drag I think to this point you say that
the Trump tax cuts and deregulation are more powerful so
our than the the trade impact but who knows we may be at the early stages of
this right now more a concern you see the Fed reporting that it is
discouraging some investment but overall it's it's a picture of basically
optimistic US businesses investing more and hiring more
why aren't wages jams rising faster do you think do you have any theories on
that yeah that's really been a puzzle as we've seen the employers are looking a
lot at the NFIB Small Business Survey and every month shows small businesses
just dying for workers trying to find them so you wonder why wages have not
been rising faster I think this report with the 600,000 people you mentioned
coming back into the labor force gives us part of the answer that there is
still with that low participation rate a group of people and not just retired
folk but prime age working people who have still not joined the labor market
but are starting to come back into it that's very encouraging so Mary Donald
Trump would watch a show and say you know what you guys don't get it you
don't understand all this trade stuff short-term pain maybe but look it's
gonna be long-term gain this is my negotiating strategy you gotta hit them
hard we have more leverage we'll win just wait right and how do you say that
in Chinese because that's the same thing the Chinese are responding saying the
same thing and that's what makes people uncomfortable about the potential for
this to keep being ratcheted up you know one side than the other and going back
and forth and the the the sympathy that Donald Trump gets from most of the
American public is that China does not play by the World Trade Organization
rules and I think that's a legitimate complaint but as Marty felts and the The
Economist talked about in our paper last week we can negotiate that and we should
negotiate that but the idea Donald Trump's big
obsession that he's gonna defeat the trade deficit which by the way he's he's
expanding the size of it it's not as big as what he says but that is a mistake
because the US is richer than China and it means that we are gonna buy more than
they buy from us there's going to be a trade deficit well Dan the other point I
would make is look alright you're gonna get a deal well what are we gonna get a
deal okay how about your fighting with them
you
chickens and the Canadians on after your fighting with the Europeans on
and other things now you're fighting with the Chinese how about actually we
complete one of these what yeah I mean that's from your wonder you put the
money on the table but I think you know Trump is pretty adept at playing the
politics of these situations and the Wall Street Journal for instance had a
map at the end of the week on how the Chinese are very precisely targeting
their tariffs at counties that were carried by Donald Trump through the
Midwest and through the South farmers alona and exempting the counties that
voted for Hillary Clinton it's very obvious what the Chinese are doing make
the Trump voters hurt I think that could backfire if Trump has the opportunity to
say the Chinese are punishing you and exempting Hillary's voters why shouldn't
we fight back against the Chinese and I wouldn't doubt that some of his
supporters despite getting hurt will continue to support him James briefly
Scott Pruitt's resignation at the Environmental Protection Agency how big
a problem could that be for the president's deregulatory agenda
potentially it could be a good one because this is really in a big part of
what is given companies especially in the manufacturing and the energy sectors
the confidence to move forward and to make investments it's been very
encouraging whether you're talking about returning to science
returning to cost-benefit analysis
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