The Republican-controlled Senate passed its version of tax reform early Saturday morning with a simple majority, but Congress will still need to reconcile it with the House-passed version and come together on an agreement to fund the government for the rest of the year.
Office of Management and Budget Director Mick Mulvaney joined "Face the Nation" Sunday to discuss taxes, and more.
What follows is a transcript of the interview, which airs Sunday Dec. 3, 2017, on "Face the Nation."
JOHN DICKERSON: And we're back with White House budget director Mick Mulvaney. Mr. Director, this is not in your bailiwick, but I've got to ask you as an administration official. Yesterday the president said that he knew Michael Flynn lied to the F.B.I. and that's why he fired him. But then consistently he said this investigation is a witch hunt. But if you lie to the F.B.I., that's not a witch hunt.
MICK MULVANEY: John, you're probably asking the exact wrong person about that. It's been kind of a busy week for me. I'm working two jobs. In fact, I'm leaving here to go back over to the C.F.P.B. on a Sunday. So I'm probably not the right person to ask about the Flynn investigation.
JOHN DICKERSON: All right. We'll let that be there. Let me ask you about taxes. The president said that he might be okay with a 22% corporate rate instead of a 20% corporate rate. Is that right? And why the change?
MICK MULVANEY: I don't think it's change. I think what you heard the president say is, "Look, we're very close to the finish line." You know he's wanted a 15% rate from the very beginning. That move to a 20% rate is part of the discussion. My understanding is that the Senate has a 20% rate now. The House has a 20% rate now. We're happy with both of those numbers. If something small happens in conference that gets us across the finish line, we'll look at it on a case-by-case basis. But I don't think you'll see any significant change in our position on the corporate taxes.
JOHN DICKERSON: One of the goals for this tax cut plan was that it's going to make taxes less complicated. Taxes are not going to be less complicated if this passes.
MICK MULVANEY: They will be for ordinary people. For ordinary Americans they will be. For small businesses, they're still going to be fairly complex. But they always were. You know when you sign up to be a pass-through entity that your life is going to be fairly complicated for taxes. But for ordinary folks it will be.
JOHN DICKERSON: But for conservatives who wanted to shrink the I.R.S., the I.R.S. is going to have to get bigger to watch all of these new tax regulations. Because if you don't, you're not going to squeeze the revenue out that you need to keep the budget more in balance than it would be.
MICK MULVANEY: Keep in mind there's not a lot of new regulations. Yeah, you're going to change the way we treat, again, pass-through entities. But a lot of the deductions are gone. A lot of the loopholes. Again, one person's loophole is another person's deduction. Those are gone. So there is still some simplification. So I don't think, no, you're not going to see a dramatic increase in the size of the I.R.S. in order to administer this law.
JOHN DICKERSON: Let me ask you about carried interest. You and I have talked about this. The president said the loophole that exists that allows people to get away with murder, hedge fund managers and so forth, there have been tweaks in that but not material changes. Why was that something that couldn't get through given what the president said, which is that these people who benefit from that loophole are getting away with murder?
MICK MULVANEY: Yeah go back to the very beginning. And you know I've talked about this before. We laid out some principles at the White House. That principle was ordinary families would pay less, and it would be simpler for them to pay, and the corporate rate would come down. Within those guardrails, we sort of left it up to the House and the Senate. And the House and the Senate apparently I think have both settled on the same plan, which is that if you hold an asset longer than three years, you're going to get that carried interest treatment. The same in both bills. But I think that does discourage some of the abuse, the short-term churning and so forth.
JOHN DICKERSON: But there's not much short-term churning. People who benefit from the carried interest, I think the average holding on the assets is well over three years. So it's not something that's going to get at what the president made a big deal about both as candidate and as president. The treatment that benefits those people he said was getting away with murder, that's going continue.
MICK MULVANEY: But, again, go back to what our priorities were. Ordinary families, lower corporate tax rate. We got that. What the House and the Senate sort of filled in the details on that was up to them.
JOHN DICKERSON: We've talked about this before, that priority, sticking with the priorities. But the middle class families are still - there's going to be about a quarter that might see their taxes go up. And in the Senate bill, those tax cuts expire. And just in watching this go through there's been such focus on keeping that corporate rate steady at 20%. But there's been that flexibility on really being able to say what you started being able to say at the beginning of this, which is that everybody in the middle class will get a tax cut.
MICK MULVANEY: I'm not sure where the quarter number comes, but let's talk about--
JOHN DICKERSON: Well, those--
MICK MULVANEY: --the expiration.
JOHN DICKERSON: --who deduct, who don't take the standard deduction, who itemize, those are the ones who might see their taxes go up.
MICK MULVANEY: Well, but keep in mind also we're doubling the size of the standard deduction. So the number of people who will otherwise itemize will go down dramatically. But, anyway, come to this issue of the expiration. That's, it is. Call it what it is. It's gaming the system. The Senate rules are so bizarre and so arcane that you have to sort of horseshoe a bill into that Senate reconciliation process, which is why they're supposedly these rates are going to expire after five years. The Bush tax cuts were the same way, and most of them didn't expire. We said before. We'll say again. If it's good policy, it'll be permanent. If it's bad policy, it'll be temporary.
JOHN DICKERSON: Gaming the system seems like a dangerous place to be when you're passing legislation.
MICK MULVANEY: Well, they did it for health care. Any time you want to get something through the Senate on 50 votes, you have to sort of--
JOHN DICKERSON: I know. But you do want to repeat--
MICK MULVANEY: --those rules.
JOHN DICKERSON: --the mistakes of the other team that you were so unhappy about? Do you want to repeat those mistakes yourself when you're in charge?
MICK MULVANEY: What I'd rather do is change the rules so that ordinary legislation can be considered on an ordinary basis and you're not sitting there forcing policy into procedure. You shouldn't let procedure dictate what your policy is, which is exactly what you have to do because of these rules.
JOHN DICKERSON: Yeah. Well, but people would say those procedures helped keep the deficit problem going down. But let me ask you about the shutdown which might be coming. Government's running out of money. Democrats wouldn't meet with the president. What's the status of things?
MICK MULVANEY: You know, it's funny to see now that the Republicans are in charge I think there's a group of right-wingers in the House who say they want to shut the government down. There's a group of Democrats who want to shut the government down over DACA. And there's a group of lawmakers from some of the hurricane states who want to shut the government down until they get what they want. This just sheds light on the fact that the appropriations, the spending system is broken when any little group can sort of hold the government hostage. We need to get beyond that. I think that we will, I don't think you'll see a government shutdown.
JOHN DICKERSON: People used to say that about you. You were in one of those little groups when you wanted to shut the government down for reasons. You've changed your stripes.
MICK MULVANEY: Well, all the more reason the system should be fixed. We don't spend money properly in Washington, D.C. We jump these massive bills to massive bills. The government shut down I think, John, 17 times in 20 years between '80 and '94 or something like that. So it used to happen.
JOHN DICKERSON: But some people would say, "Well, then go back to the tax bill where people gave up their fiscal conservatism in order to get a tax bill." That this is always what happens.
MICK MULVANEY: No. No. I mean--
JOHN DICKERSON: You want to fix the system, but--
MICK MULVANEY: Well--
JOHN DICKERSON: --the instincts are to basically--
MICK MULVANEY: But my reputation is as a fiscal hawk. At least I hope that it is. And that's why I'm so interested in seeing that tax bill passed. Because deficits are a function of two things, the amount of money in and the amount of money out. Spending is one of those. Tax revenues is the other. We have to get the tax revenues up. That means we have to get back to a healthy American economy, grow the economy so that you make more money, I make more money, ordinary Americans make more money, and so does the government. That helps lessen the deficit.
JOHN DICKERSON: Obviously there's a big debate among other deficit hawks about whether this bill meets that criteria.
MICK MULVANEY: I've had long conversations with Mr. Corker. Yes, sir.
JOHN DICKERSON: Well, more than him. But, anyway, a good shutdown. The president once talked about, "It would maybe be good to have a shutdown." Is that still his view?
MICK MULVANEY: Well that goes back, I remember when he said that in April. And that goes back to the system being broken. Congress doesn't spend money the way it's supposed to. It's supposed to pass, and I know this is getting deep down in the weeds, 13, 12 different appropriations bills. They don't pass any. And we have these massive bills at the end of the year. And either they pass those all at one time or it fails all at one time. And that's sort of managing by crisis to crisis. And it's not a good way to run the country.
JOHN DICKERSON: Our crisis is we're out of time. Mr. Director, thanks so much for being with us.