This week, Republican negotiators from the House and Senate finalized the party's, reaching an agreement on the measure that they hope to bring to a final vote in the coming days. The legislation would be the most significant rewrite of the tax code in decades and represents a key component of the GOP's domestic policy agenda.
Treasury Sec. Steven Mnuchin has been the Trump administration's point person for crafting the legislation, which would cut rates for corporations and individuals while eliminating the Affordable Care Act's individual mandate penalty. Mnuchin joined us to discuss what the White House hopes the bill will accomplish, and why he believes Washington lobbyists have "absolutely" been defeated in the process of crafting the bill.
What follows is a transcript of the interview with Mnuchin that aired Sunday, December 17, 2017, on "Face the Nation."
JOHN DICKERSON: Good morning and welcome to Face the Nation, I'm John Dickerson. The Republican tax plan is in the home stretch. The final package will be voted on Tuesday in the House and then moves to the Senate. At this point it looks like Republicans have enough votes to pass it.
The $1.5 trillion dollar tax cut plan roughly doubles the standard deduction for both individuals and married couples. It cuts individual tax rates. The talk- the top income tax bracket drops from 39.6 to 37 percent. The corporate rate decreases too, it goes from 35 to 21 percent. The bill eliminates the Obamacare mandate, with individuals no longer required to purchase healthcare. It could result in 13 million more people becoming uninsured. The child tax credit is doubled to $2,000, the income level for those qualifying goes up to $500,000 and $14,000 dollars of the credit will be refundable to those who income is so low that they don't pay income tax. The mortgage interest deduction is capped at $750,000 and the deduction for state and local taxes is shrunk to $10,000. According to the Congressional Budget Office and the Joint Committee on Taxation, it will add $1.6 trillion to the debt.
And we begin today with Treasury Secretary Steven Mnuchin. Welcome Mr. Secretary. Let me ask you a question about priorities in this. Throughout the discussion about this tax bill it's clear the corporate rate is going to drop significantly. All the way to 20 percent, it fixed at 21 percent at the end. In the end here for the middle class, they do get a tax cut, but for a president who dedicated his presidency to the forgotten man and who ran as a populist, is the weighting here correct?
STEVEN MNUCHIN: Absolutely. And first of all let me just say, this is a historic event. People said we wouldn't get this done, we're on the verge of getting this done. The single biggest change to the tax system ever that president Trump is going to sign this week and his priority all along has been fix a broken system. Over 90 percent of people will be able to fill out their taxes on a postcard. The corporate tax rate going from the highest in the world at 35 percent to 21 percent makes us competitive and more important, we fix a system where we now tax on US income which is all about creating U.S. jobs. We're going to bring trillions of dollars back on shore.
JOHN DICKERSON: Let me ask you though about- on- The top rate is going down. The president at one point said the wealthy won't be getting a tax cut, now they will, as it drops from 39.6 percent to 37 percent. Now that balances out the deduction in state and local, but only for those people who live in high state and local tax states. So again to this question of priorities: Mark Sanford, a Republican from South Carolina said, "From a truth in advertising standpoint it would have been a lot simpler if we had just acknowledged reality on this bill. Which is, it's fundamentally a corporate tax reduction and restructuring bill, period." What's your response to that?
STEVEN MNUCHIN: Not the case at all. Pass-throughs have the lowest rates they've ever had since the 1930s. That's a huge part of engine of growth - of- of small and medium sized businesses that are going to create lots of jobs. And this is about hard working families that are going to see, starting in February, tax cuts. We're already working at the IRS to update the tax forms and update the tax charts. And they're going to see this in their paychecks in February.
JOHN DICKERSON: I guess the question is: it's not that the middle class will get no tax cuts. They will, they will get a tax cut. But it's the size of the tax cut relative to the emphasis and size of what corporations will get through. Not every middle-class family has a pass through obviously. Tom Cole, Republican from Oklahoma, told John Harwood of CNBC this - "It just seems wrong" - when he was talking about the lack of tax cuts say help with payroll taxes or the fact that the carried interest loophole remains. He said, "It just seems wrong. We'd be better off if there were more populist victories in there." The president ran as a populist. The argument is there's just not as much for the middle class in this as there could be in this. It's not that they get nothing, it's that the emphasis is skewed.
STEVEN MNUCHIN: I think that's just not correct. And people are going to see this in their paychecks. This is about the middle class. This is about working families. This is about child tax credits that are going up significantly. As you mentioned, refundable parts of the tax credits going up significantly. People are going to see their paychecks go up. People are going to see their wages go up. That's what this is all about.
JOHN DICKERSON: On the wages question, how soon do you think -- the argument you make is that with corporations the taxes lower they'll pass it onto workers and their wages and then also they'll spend money on plants and equipment. How soon do you think that will take effect?
STEVEN MNUCHIN: I think we'll see that this year. We already see the stock market at record highs. You see people's 401ks up substantially. The average --
JOHN DICKERSON: -- But that's not wages. That's-
STEVEN MNUCHIN: No no, I'm just saying -- you already see companies in anticipation in the market. So you're going to see trillions of dollars come back, and I think you're going to see this year wages going up.
JOHN DICKERSON: Because Kevin Hassett, who is the Chairman of the Council of Economic Advisers, said on this question of when businesses are going to pass this on to the middle class. He said that if you go to the optimistic side of the literature it could take three to five years. If you go to the pessimistic side, it would about double that. So that's optimistic three to five. So this is being sold as a big Christmas present everybody is going to get but really this benefit that will pass on in wages, and plants, and equipment, Kevin Hassett, the president's chairman of his economic advisers, says three to five years in the best case.
STEVEN MNUCHIN: Well that's three to five years on this $4,500 but you're going to begin to see it right away. So you won't see it all come in, it will go in over three years as Kevin anticipates.
JOHN DICKERSON: But for something that's being sold to people as wages are going to go up, happy days are here again, happy days -- even in the best case scenario, and obviously there is a lot of debate about whether this will even turn out the way you've argued, even in a best case we're talking 3 to 5 years for broad shared middle class prosperity as a result of the theory this is based on.
STEVEN MNUCHIN: Not the case at all. You're going to see happy days starting in February, where hardworking families see that they have more money. That's something that is absolutely critical. You're going to see cuts anywhere from $2,000 to $4,000 for medium families of- with two kids. This is going to have a huge impact in the economy and it's going to have a huge impact on American jobs. You're going to see that right away.
JOHN DICKERSON: OK. Difference between what people see in their -- in their taxes going down versus the paychecks--
STEVEN MNUCHIN: That's correct.
JOHN DICKERSON: But let me ask you this question. The president -- another thing he campaigned on, central to his campaign was that he was going to drain the swamp, get rid of special interests. Public Citizen reports that -- lobbyists have to disclose the things they are working on. 6,243 lobbyists have worked on tax-related issues. That's more than half the lobbyists in Washington, worked on this. For a president who promised to drain the swamp, that seems like a lot of people working on taxes.
STEVEN MNUCHIN: Well, I think if it was up to the president, there would be a lot fewer of them. I mean, the reason why there are so many people working on it is, we've touched almost every single part of the tax code. So there are --
JOHN DICKERSON: Have the lobbyists been defeated -- in this-- in this case?
STEVEN MNUCHIN: Absolutely. And if you look at the massive changes to this, we fixed a broken tax system. That's what this was all about.
JOHN DICKERSON: One lobby-- Tom--Tom Cole talks about the carried interest loophole. That was something that the president said that loophole let hedge fund managers get away with murder. It's been tweaked a little, but it's still in there. Why was that worth keeping?
STEVEN MNUCHIN: Again, that was up to the House and the Senate. The president likes the overall bill, there's obviously little parts of this bill that he would have tweaked differently himself. The fact that it's moved from one year to three years is definitely a step in the right direction, and the fact that it impacts a lot of small real estate developers, but, you know, as you said -- the president couldn't get every single little detail he wanted. That was one of them that got left out.
JOHN DICKERSON: OK, that's it. We're out of time. I really appreciate it-
STEVEN MNUCHIN: Great to see you. Thank you.
JOHN DICKERSON: Mr. Secretary, thanks for being with us.