David Smick, who advised on the 1981 and 1986 tax reform plans, gives his take.
This is a rush transcript from "Your World," December 4, 2017. This copy may not be in its final form and may be updated.
NEIL CAVUTO, HOST: All right, well, thank goodness stocks stopped trading just a few seconds ago. The market day is over.
For a while, we were up a lot stronger than this. But a gain is a gain and a record for the Dow is a record. And that's how we close things up.
Welcome, everybody. I'm Neil Cavuto.
And the tax cut buying spree continues. It wasn't as big as it was earlier, but it was impressive nevertheless. And a lot of this has to do with something we heard when we were doing our live coverage over the weekend.
And that is this, that lawmakers believe it's distinctly possible that they're going to get this thing signed, sealed and delivered before Santa is anywhere near your house. Take a look.
(BEGIN VIDEO CLIP)
REP. KEVIN BRADY, R-TEXAS: The House is coming back early Monday to move towards a conference committee, so we can do the hard work to finalize these details this year.
CAVUTO: By when?
BRADY: Well, our goal is to get it done by Christmas. And we're on that schedule.
REP. RON DESANTIS, R-FLA.: You have got to work through the weekend. You have got to work the nights. This idea of taking a recess and doing this, the public is sick of that. So get it done. I do think time is of the essence and we have to get this done before Christmas.
(END VIDEO CLIP)
CAVUTO: Get her done. That's exactly what they're trying to do.
To FOX News Channel's Peter Doocy on how they plan to do it. He's joining us on -- he's joining us, I should say, on Capitol Hill.
PETER DOOCY, FOX NEWS CORRESPONDENT: Hi, Neil.
Just four days before the government runs out of money and has to shut down if they are not fully funded for at least another couple days or weeks, the Democratic leaders who blew off the meeting with President Trump last week are saying that they will head to the White House on Thursday for a budget summit.
House Minority Leader Nancy Pelosi, Senate Minority Leader Chuck Schumer are saying this: "We're glad the White House has asked for a second meeting. We hope the president will go into this meeting with an open mind, rather than deciding the tan agreement can't be reached beforehand."
But some Republicans here are already calling out these Democratic leaders for being too cavalier with issues that could shut down the government.
(BEGIN VIDEO CLIP)
REP. LUKE MESSER, R-IND.: They of course last week showed how political this whole process has been. It's a manufactured crisis. The question about what we're going to do with the DACA, it doesn't have to be solved until March. And it's a manufactured crisis to try to tie it to spending here at the end of the year.
(END VIDEO CLIP)
DOOCY: The next big order of business today, a House vote about two hours from now to go to a conference where lawmakers must take two different bills, the House tax bill and the Senate tax bill, and figure out what stays and what goes.
(BEGIN VIDEO CLIP)
SEN. JOHN BARRASSO, R-WY.: The big differences are the Republican bill in the Senate eliminates the mandate of Obamacare. It takes Obamacare from being a mandatory program to a voluntary program.
And, yes, I like the idea of making the -- taking away the death tax entirely.
(END VIDEO CLIP)
DOOCY: One senator from Georgia, David Perdue, a Republican, says he thinks that this tax bill finalized could be on the president's desk within 10 days.
The House majority leader, Kevin McCarthy, says that the only reason they are in tonight, instead of tomorrow, as originally planned, is to get the ball rolling for this conference. We're now starting to see here in Statuary Hall some lawmakers trickling back into town.
And we hope to know soon which lawmakers will represent the House and which will represent the Senate at this conference that they may be able to get done this week -- Neil.
CAVUTO: All right, Peter Doocy on Capitol Hill.
In the meantime, it was a very big November for stocks, as you know, heading into December, one of the best months for stocks. How will things go?
Well, starting off on the right foot right now. The question is for how long. A lot of these gains did dissipate by day's ends, but they were appreciable nevertheless, and for the Dow, of course, another record.
FOX Business Network's Deirdre Bolton with more on that.
DEIRDRE BOLTON, FOX BUSINESS CORRESPONDENT: Hey, Neil. Well, you're right.
Stocks were very close, actually just eking out records, although, to your point, especially on the S&P 500, we did close at slightly lower, but the Senate tax bill, that was passed over the weekend, and GOP lawmakers pushing for that final bill, as we just hearing about, to get to the White House before Christmas.
So some traders are saying that, despite losing a little bit of steam this afternoon, that the Dow will reach that record 25000 before the end of this calendar year.
Now, speaking of Christmas, December is historically a strong month for stock performance. The Spoke investment group put out a note, a 100-year performance report, and it shows the December is the best performing month these past 99 other years.
So, on average, the Dow has gained 1.55 percent in December and it has finished higher nearly 75 percent of the time. Now, there are many theories as to why stocks fare well in the last of the year. Some say that the upbeat holiday mood plays a part. People shop for Christmas gifts.
Workers either receive holiday bonuses or they learn what they will be, even if they're paid out later. And people are more likely to spend more and they are also more likely to invest money, put new money back into stocks.
Some investors putting off selling shares in December as well, kind of pushing off potential tax liabilities on gains into the new year.
Not everybody has a rosy outlook, though, for this December. Bob Doll, he's the chief equity strategist at Nuveen Asset Management. He says markets have gained so much this year, that investors may want to break with past patterns and sell in order to seal in profits.
We looked at November alone. You have the Dow up better than 3.5 percent in that month, 23 percent higher for the year so far. If you look at the S&P 500 in November, as a comparison, up 2.8 percent just in the month of November, up 18 percent year to date.
So these are already pretty heady gains. And on top of that, Doll is pointing out that the tax reform bill is still a wild card. He says if for some reason it doesn't pass in the expected form, especially for corporate taxes, some on Wall Street would be shocked.
Many investors have been pricing in stronger economic growth, higher corporate profits due to corporations anticipating those lower taxes for those companies. Doll says if the plan does pass as expected, there's also a chance the market will sell off, since some investors sell on the news, which means investors take profits on gains.
Either way, Neil, we have had a heck of a year, a heck of a bull market run. We're in this ninth year. So, we can't be too surprised if December closes down, but right now all indications and most experts are looking for the markets to just close the year stronger -- back to you.
CAVUTO: Yes. People in a good mood about that.
CAVUTO: Thank you, Deirdre, very, very much.
As Deirdre pointed out, all of this happening in record-setting fashion, and fast fashion at that. Whatever the differences between the two plans and how they reconcile them, think in mind that this whole process from beginning to now where we stand, a couple months, think in mind going back to the 1986 Tax Reform Act, a little over a year.
That was then. How the heck are they moving so swiftly right now?
David Smick is a former chief of staff to Jack Kemp.
David, what is going on here? And what do you make of just the sheer speed of all of this coming together?
DAVID SMICK, FORMER JACK KEMP CHIEF OF STAFF: I think it's very clear. They don't want a tax bill sitting out for six months to have every corporate lobbyist run TV ads making a case for their thing to undermine it. And they know they don't have a lot of the mainstream media behind it. The Democrats are certainly not behind it.
So, they have got to move quickly. The other thing is, they have this very, very thin margin in the Senate. And they have a senator running in Alabama who, if he doesn't win, then the Democrat will be seated somewhere around 12 days from the election, which is July -- which is December 12, so somewhere before -- there's a reason they mentioned we are going to have this done by Christmas.
CAVUTO: Right, absolutely.
SMICK: Because they want to make sure that it's done -- it's done before the Alabama problem rears its ugly head.
CAVUTO: Yes. No, you're right about that.
It's all one party one-way, though. Now, the difference with some of these prior tax cuts, they would have bipartisan support. Now, bipartisan, depending on the president at the time, could mean just a couple from the other party, but that's all you need.
SMICK: Yes, but...
CAVUTO: Is that a big deal?
SMICK: Go ahead.
CAVUTO: No, go ahead.
SMICK: Well, in 86;, we had a big bipartisan agreement.
SMICK: I was involved in that one and the '81.
But I have got to tell you, there wasn't a lot going on until the last -- until the end. And then it came together quickly, I mean very, very quickly.
SMICK: And the Republicans now, I mean, they know each other. The Senate and the House Republicans, they have been talking about this for years.
So this notion that they this is all strange to everyone, they know how they're going to negotiate a compromise in conference. They have already war-gamed that a long, long time ago.
What do you make of what they do now? There had been a rumor floating around this morning, quickly debunked by some in Congress, the House, more to the point, where -- and I don't know whether there was any truth to it, David -- that they would just take what the Senate came up with and the House would vote yea or nay to expedite it still further.
Now, again, they pooh-poohed that when I raised it with a number of representatives. What do you think of that?
SMICK: I don't think it's -- that's going to happen.
But I think that, normally, the way this works is -- in a conference is, the House that has the narrowest margin, which in this case is the Senate, is the one you tend to use their bill as a guide, because it makes sense.
Paul Ryan had a 13-vote margin. This is the Senate. It's much more narrow.
SMICK: So, you start with their bill and you try. And the biggest compromise that was necessary has already been accomplished.
That was the one that Susan Collins insisted on, which was the $10,000 exclusion on the elimination of the state and local income taxes. But I'll tell you what. I think there's a surprise coming, potentially here.
If you notice over the weekend, the president very slyly said, well, you know, I could accept a 22 percent corporate rate or a 21 percent rate.
All right, the other thing is, the House Republicans have never really been comfortable having the top rate on individual income remain the same. Actually, there's a little bubble, and so it would actually go up.
And so they have never been comfortable for that. They don't want tax reform in this climate, with the S&P having boomed and all the rest, to be a big tax cut for people at the top, but they don't believe in a tax increase either.
And when you have the state and local deduction going, that is a tax increase. I think the surprise could be...
CAVUTO: So, they would go beyond what the Senate has with the 38.5 percent rate? OK. We will see.
SMICK: I think it's possible.
And I speak -- I don't speak just making this stuff up. I think there's a -- they're thinking about it. I know that for a fact.
SMICK: And it's a possibility, which I think is one reason the market has been -- I assume that if I'm -- they're telling me something, they're telling a lot of other people.
And I think it's a real possibility that that happens, not that they want to give that top bracket a tax cut at this point. They just don't want to -- they don't feel comfortable about a tax increase. And that would be big news.
CAVUTO: Don't do it now. Yes.
David, two things I learned, that as a possibility, and, B, that you're not nearly as young as you look, that you were actually involved in the '81 and '86 tax cuts.
SMICK: I know. I know.
CAVUTO: I'm kidding. Good for you. No, a historic figure.
All right, thank you very, very much, David Smick.
SMICK: I feel...
CAVUTO: Go ahead.
SMICK: I like one of those guys that they interviewed during the Civil War commemoration.
SMICK: You know, what was it like holding Robert E. Lee's horse when you were 15?
CAVUTO: Tell us about that first tax cut, daddy.
CAVUTO: All right, very, very good. Very good seeing you, David, David Smick.
SMICK: All right.
CAVUTO: So many details, as he pointed out, to iron out, but the markets, if you had any doubt that they are on tenterhooks about these things, look very carefully about how they respond when things don't go to their liking or they're stunned, like a revelation.
Remember, last week, that revelation that maybe General Flynn was going to serve up the president and that he was talking to the Russians at the behest of the president before the election? Oops. A problem there.
And now no less than the president of the United States says if you got burnt in that 350-point sell-off, you might have ground to sue ABC -- after this.
CAVUTO: All right, markets continue to rally today, but, man, oh, man, for a while on Friday, it was a different story, when ABC News was reporting in that Brian Ross report that the president might have been sending marching orders to General Flynn to go ahead and talk to the Russians, presumably we're told from Brian Ross, to -- all this before the election itself.
It turns out whatever communications were going on were after the election, which is very, very different. For a while, the Dow was down close to 400 points before correcting on the clarification, and, of course, the ensuing tax cuts.
But, still, it raises questions by no less than the president of the United States that if you were hurt in that downdraft, maybe you should sue ABC. ABC has already suspended Mr. Ross for four weeks without pay.
We have got The Washington Times' Madison Gesiotto with us and former DOJ official Tom Dupree.
Welcome to both of you.
Tom, it's very always nice to sort of peg a market loss or a day loss to events like these outside. But having said that, the president really wanted to send a bigger signal about the news media, right?
TOM DUPREE, FORMER JUSTICE DEPARTMENT OFFICIAL: I think that's right, Neil.
And, look, my personal view is, shameful as this episode is, at the end of the day, I don't think it's a situation where you could sue the reporter or ABC. Our law gives us journalists extensive protections.
I think you would have to show a lot of facts that simply aren't present in this case. And in my view, I think ABC has handled the situation responsibly by suspending the reporter for 30 days, and I would hope will conduct a very rigorous internal review to figure out what went wrong and ensure that something like this never happens again.
CAVUTO: Madison, the key element in this story was that the timing of that so-called conversation that General Flynn was having with the Russians. It's night and day talking to them before an election vs. after, right?
MADISON GESIOTTO, THE WASHINGTON TIMES: Absolutely. Brian Ross' reporting was dishonest. And what he put out was fake news, based on allegedly only one unnamed source.
CAVUTO: Well, you're making the assumption he did so deliberately. Journalists do make mistakes, right?
But, I mean, as an experienced journalist, he should have known better than to put a story out like that based on one source that honestly doesn't seem very reliable.
So, I think it's really disappointing to see that. Americans across this country lost money as a result of it, because I do think this is connected to the Dow dropping that day.
On top of that, I mean, ABC needs to take a look at their reporting standards. And someone above him obviously dropped the ball as well, because this wasn't reviewed properly.
CAVUTO: All right, now, again, proving losses that were later recouped by the day's end, you have to really think of a limited group of day traders there, I guess there, Tom.
But there's the basic issue that it is going to give pause to news organizations to dot the I's and cross the T's. But, by definition, they can't. Right?
So, is that going to have -- and I have heard a number of press groups and the likes say this will put a chilling effect on what we do.
What do you say to that?
DUPREE: Well, I don't think it will have a chilling effect on responsible journalism.
I think that many reporters out there, arguably most reporters out there, are responsible and that they do things likes check or double-check with multiple independent sources. And they don't necessarily think I have to be the first person to get this out the door and publish it at the expense of being right.
I think this whole episode is a good cautionary note, because there's no question, journalists wield immense power in our society. And when they make a mistake, you can see the consequences.
So, hopefully, reporters will look at what happened here and make -- go the extra mile to ensure that their stories are truthful and accurate.
CAVUTO: Do you think, Madison, that it will go to that degree, though?
Or that people who are -- when you hear talking to the Russians, the administration talking to the Russians, and that famous Joy Behar scene on "The View" where was almost applauding the constitutional crisis to come, that no one stopped on anyone to check and double-check?
We were very leery here saying that there was no other one to confirm this, that the issue would be the timing of those conversations, but few and far between. What do you make of that?
I think it's scary to see the political climate that we're in. And, as reporters and as people in the media, it's very important to focus on not expedience, but on accuracy.
And that is something that a lot of reporters -- not all, of course, but a lot of reporters have not been focusing on throughout the 2016 election and into Trump's first year as president.
And so when it comes to stories, especially stories as big as this one, I would have hoped that more people would have double-checked on this in other media outlets, including at ABC, much quicker than they did.
CAVUTO: All right, guys, I want to thank you both very, very much.
CAVUTO: All right, in the meantime, so many scandals in Congress, so little time.
So who do you think John Conyers, for one, is going to listen to, this group telling him to stay or his friend and colleague telling him over the weekend to go?
(BEGIN VIDEO CLIP)
REP. EMANUEL CLEAVER, D-MO.: I can almost assure you that John Conyers is doing to make what I would think is the right decision for his own legacy.
CAVUTO: Which is what? Which is what?
CLEAVER: And that is to -- is to step down and try to enjoy the rest of his life.
I don't think it's worth damaging his legacy anymore by hanging around until the next election.
(END VIDEO CLIP)
CAVUTO: All right.
What appears to be a big victory for the president of the United States. I'm not talking about tax cuts. I'm talking about from the Supreme Court moments ago allowing him to fully enforce a ban on travel to the United States by residents of six largely Muslim countries.
The judges saying in this order that the policy can take full effect, even if legal challenges against it are going through a variety of courts pretty much across the country.
Now, the ban applies to travelers from Chad, Iran, Libya, Somalia, Syria, and Yemen. Lower courts have on and off said this goes too far, that this is racist, that this is targeting people on the basis of their religion.
We do know that Justices Ruth Bader Ginsburg and Sonia Sotomayor have left the lower court orders in place. The others presumably did not. So, that would appear to be a 7-2 decision. We will keep you posted.
In the meantime, the president also fully endorsing Republican Alabama Senate candidate Roy Moore.
FOX Business Network's Blake Burman with more on that.
Blake, no doubt now, right?
BLAKE BURMAN, FOX NEWS CORRESPONDENT: Yes, no doubt about it.
This was pretty clear from the White House, from the president himself today. There had been a pretty good amount of ambiguity on it leading up to today, but now President Trump has fully endorsed Roy Moore.
And here's how he explained it this way in a tweet earlier this morning, Neil. The president wrote -- and I quote here -- "Democrats' refusal to give even one vote for massive tax cuts is why we need Republican Roy Moore win in Alabama. We need his vote on stopping crime, illegal immigration."
He went on to list a handful of other issues.
And the president finished by saying: "No to Jones, a Pelosi-Schumer puppet."
In a statement, a celebratory Moore said the following -- quote -- "President Trump knows that the future of his conservative agenda in Congress hinges on this election."
He went on to say: "We had a good conversation over the phone and are working together towards a conservative victory on December 12."
Now, the president's full embrace today of Roy Moore comes as other Republicans are starting to walk back some of the criticism that they had on Moore.
For example, Ted Cruz, who last month said he couldn't urge people Alabama to vote for Moore, and Mitch McConnell, who said that Roy Moore should drop out of the way -- out of the race, rather, since, in the last few days, have taken a different tack. Listen here.
(BEGIN VIDEO CLIP)
SEN. TED CRUZ, R-TEXAS: This is an issue that the voters have in front of them. And they will make a decision. I think we need to respect the will of the voters.
SEN. MITCH MCCONNELL, R-KY., MAJORITY LEADER: We're going to let the people of Alabama decide a week from Tuesday who they want to send to the Senate, and then we will address the matter appropriately.
(END VIDEO CLIP)
BURMAN: Neil, President Trump won Alabama in 2016 by 28 points, some 300,000 votes.
It's a deep, deep, deep red state, as you know. Right now, according to the RealClearPolitics average, Roy Moore only leads Doug Jones by some two- and-a-half points -- Neil.
CAVUTO: That one is a nail-biter. All right, thank you very much, Blake Burman.
Meanwhile, embattled Democratic Congressman John Conyers, supporters for him are saying enough with this. They're holding a rally for him in Detroit today, as more Democratic lawmakers are urging him to resign.
I told you about Emanuel Cleaver, who was on with me live this past weekend, saying his friend should step down right now, not wait until his term expires next year next year.
Independent Journal Review White House correspondent Erin McPike with us.
Erin, what do you make of this growing call?
ERIN MCPIKE, INDEPENDENT JOURNAL REVIEW: For Conyers to resign?
MCPIKE: Look, I think, right now, Conyers is obviously at home trying to make sense of what he should do to go to forward.
And I think this rally is really about his supporters trying to preserve some modicum of respect for his legacy. That's what I think it's really about.
I have seen some political consultants in Michigan say that some of the people who are rallying are doing it because they're jockeying to replace him in Congress. So, that's a lot of what this rally is about, because you're not seeing the same kind of rally come forward for somebody like Al Franken right now.
In terms of what is going on with House leadership, look, there's some new Democrats, some younger, some newer Democrats in the House who have been looking for a reason to overthrow the Democratic leadership in the House.
And this is a great opportunity for them to try to off her.
One of the things that is kind of interesting, because much has been made of the fact the average age of the Democratic leadership I guess is north of 75. So, when a Steny Hoyer or a Nancy Pelosi come out to say, maybe for the better part of valor, you should go, Congressman Conyers, there's more intrigue to that than meets the eye, right?
I think -- again, I think a lot of these Democrats are using it in an opportunistic way. Now, whether or not Conyers should step down is kind of separate from that.
MCPIKE: You're seeing a number of members of Congress starting to get hit with some more of these accusations.
And, honestly, Neil, I have heard a number of stories under the surface that haven't necessarily broken yet. But this -- lots of these stories are going to go into the next year.
And what is going to be the standard for when members of Congress have to resign and for what?
When you hear there could be other shoes to drop or whatever, it leaves you wondering. But all of this comes at the same time the president has decided to put aside any feeling of antsiness here by putting his full support behind Roy Moore.
And obviously he's gotten some within the hierarchy of the Republican Party to say, you know, we agree. Whatever Alabama voters want -- I think that was the gist of Mitch McConnell's comments -- that is fine. What do you think is going on there?
MCPIKE: Look, I think that that's going to be a dangerous game for the president to play, because, as you know, Billy Bush had that op-ed in The New York Times this morning.
And you will hear more and more about what Donald Trump has done. I think it's only brought back the spotlight on some of his own transgressions and the accusations against him.
I think it was a dangerous move. Now, obviously, they want that Republican vote in the Senate. But you have seen a number of Republicans say that they think Republican voters in Alabama should support the Democrat, Doug Jones because of -- out of principle.
So, I thought that was a rough line for the president to play, especially when he has got so much on the line right now.
CAVUTO: But he wouldn't win over any people on that issue anyway. The ones who agree with him on that would stick with him. The ones who don't will never go back to him, right?
MCPIKE: Sure. Yes, that's right.
But it doesn't mean that it's going to go away as an issue or go out of the news. In fact, I think it will only get more of a spotlight in the news. And his own issues will stay in the headlines because of it.
CAVUTO: All right, Erin McPike, we will follow it closely, a lot more, obviously, on this issue.
And it could involve other -- other congressmen and other issues.
In the meantime, you think the ACLU calling Colin Kaepernick courageous is outrageous, wait until you hear what TIME magazine may do -- after this.
CAVUTO: Attention, shoppers in aisle three at CVS -- $69 billion for a big insurance company named Aetna?
Don't laugh. It's reality. And others could follow. Get ready.
We're back in 60.
CAVUTO: All right.
We're just getting some images coming in to us regarding Illinois, people running away from high taxes. Relax. Relax. It's a movie. Fine.
But my point is this, that if taxes get high enough, they're not going to stick around Illinois or anywhere elsewhere where that is happening. And, of course, they're all lit up over this, fired up.
OK, I'm done.
Jeff Flock is not.
So, Jeff, you have to see the B-roll we're using.
CAVUTO: Yes, thank you. Work with me.
Now, what is going on here? The taxes go up, the people leave? What is happening?
JEFF FLOCK, FOX BUSINESS NETWORK CORRESPONDENT: Apparently, that's what the case is, I suppose. If you build it, they will come. If you tax it too much, they will leave.
According to the latest numbers from the IRS and the Illinois Policy Institute, which is a conservative think tank here in Illinois, the state lost about 86,000 residents from 2015 to 2016, and, with it, $11 billion in adjusted gross income.
And why? Well, if you take a look at a poll, by far, the biggest reason is the increased tax burden in the state; 25 percent of the people said -- that were leaving said it was because of the high taxes, worse even than the cold weather, which is about to hit us here in Chicago.
In addition to an income tax increase this past year, property taxes already at the highest level in the country, higher than New York, higher than California, higher than New Jersey, higher than everywhere.
You might think,though, that with all of the high taxes, the first people to leave -- and then talk about a millionaire tax -- the first people to leave would be the wealthy. Well, actually, the data doesn't support that. Folks making over $200,000, they actually increased in population over the 2015-to-2016 period.
I guess Illinois is a great place to live, if only you can afford it -- Neil.
CAVUTO: Yes, that's getting to be the case in a lot of places.
Thank you very, very much, my friend, Jeff Flock.
So a lot of people are looking at this and want to know, are the rich disproportionately benefiting here? And I have told you on this show and on FOX Business that there's a variety of ways of looking at this. And that's where the fake news thing can come in, because you can argue the number a variety of ways.
Daniel Geltrude is with us right now. He follows this, noted CFA, very good with these numbers.
Dan, let's talk, first of all, about how they come to the conclusion that the rich disproportionally benefit, when their taxes, especially in these high-tax states, when those losing those deductions, are going to pay more?
DANIEL GELTRUDE, GELTRUDE & COMPANY: I think that's the -- that's just the talking point that people come up with, is to say that the rich are going to get a tax break. It's simply not true.
CAVUTO: But what are they -- they are usually attaching that -- the estate tax goes higher, that is one that skews to them. But the sheer numbers don't show that that is changing for the rich as a whole.
GELTRUDE: No, they don't.
So if you're talking about simply from an income tax standpoint, if you're a high earner, and let's say you happen to be in a high-tax state, and now you're going to be losing all of your state and local tax deductions, and the rates are not coming down at the highest level.
GELTRUDE: If they are, it's just a little bit in terms of the proposal. Their taxes have to go up.
CAVUTO: One of the things I have heard explained to me how this skews, where like The Washington Post and some of these others will say the rich are benefiting, is, they lump them in with those who take advantage of this new pass-through rate, in other words, other individuals with companies and all of that, that can somehow jibe that to their liking.
But it's not that easy.
GELTRUDE: No, it's not, because the -- both the House and the Senate are both building in some checks and balances to make sure that people are not going to be able to just shift their income from earned income into pass- through income and therefore take advantage of a lower rate.
They're not going to allow to do that. As a matter of fact, someone like me, who is an accountant or a lawyer or professional services, the House is specifically excluding you from being able to do that.
CAVUTO: Right. Well, that's because they don't like you.
CAVUTO: But, Dan, here's another thing I hear. They say it would lower taxes for corporations.
The rich, who disproportionately do invest, they're going to be beneficiaries of that, higher taxes and all. They will get that. There's no way you can really quantify that anyway. So, that's why I always say, why don't we compare apples to apples, rates to rates?
Here's what your rate is now. Here's what it will be. And that's been the simplest way, at least for my thick skull, to get and compare tax rates in the past.
And this shows quite the opposite of the rich disproportionately benefiting.
GELTRUDE: That's true.
And when you say comparing apples to apples, it's not so easy to do that, because you have the House plan with four tax brackets. You have the Senate plan with seven.
CAVUTO: Right. Right.
GELTRUDE: We currently have seven. The income ranges are changing within each of those brackets.
CAVUTO: Even now.
GELTRUDE: Even now.
So, it's really, really hard to figure out what exactly is going to happen. It's really difficult.
CAVUTO: But we're still going to need people like you, aren't you?
GELTRUDE: Well, fortunately, that's the case.
But I'll tell you this, Neil. When you talk about people being concerned about what is happening, very few people are calling me saying, how is Cavuto going to make out, one of those rich guys?
GELTRUDE: They're saying, how am I going to do?
GELTRUDE: People are concerned about themselves.
CAVUTO: Wise, very, very wise.
Dan, always good seeing you. You were great this weekend. And we're catching you this weekend as well. Puts it in perspective, and in English, which is always valued.
But I do want you to meet the United States senator, whom I love Dan, but he is trying to people guys like him out of business. John Thune is next.
CAVUTO: All right, a lot going on Capitol Hill today.
A key House vote hours away. The idea now, try to merge or work on merging the two respective efforts on the part of the House and the Senate to cut taxes.
South Dakota Senator -- he's the Republican Conference Chair -- he's a big wig there -- John Thune, the senator, of course, who has put in his sights every accountant in his country, CFAs, you name them. He's joining us again.
CAVUTO: Senator, good to have you.
SEN. JOHN THUNE, R-S.C.: Thanks, Neil.
CAVUTO: We were just talking to a fellow here who says, you know, it's really not that much simpler. People are going to still need my services.
I suspect he's right. What do you think?
THUNE: I think he -- I think there's going to be plenty demand for accountants and lawyers.
THUNE: But we will have simplified it in some ways.
I mean, doubling the standard deduction means that you're going to have a lot fewer itemizers. About a third of the people in the country itemizer today, fewer than that in my state.
But we think, after this is said and done, there will be under 10 percent, maybe as few as 5 percent, who have to itemize to get some of the benefits that we have got included in here. So, it will be simplified, Neil, but there will still be plenty of need for accountants out there.
CAVUTO: Yes. I think some people are a little nervous without them, so maybe that's just...
THUNE: That's right.
CAVUTO: But, Senator, there's talk that there might be a hike in the corporate rate beyond the 20 percent, 22 percent.
The president seemed open to it, maybe because it will pay for other things. Can you update us?
THUNE: Well, my preference would be, we keep it at 20. I think that's where we need to be. We fought hard to keep it at 20 in the Senate. There were a lot of runs on raising to it use it for other things.
But I frankly think, Neil, that if we want to ensure that, going forward, we have got a rate that is competitive in the global marketplace, we need to be at 20. I think a lot of these countries are going to see what we do and try and beat it and go lower.
And so every point that we tick that up I think is going to put us in a position where we're going to be less competitive internationally. And, to me, that was part of the -- one of the whole reasons we needed to do this. We have got to get America to make it an attractive place to do because. And today it's not because of our antiquated and very, very high corporate tax rate.
CAVUTO: A number of congressmen, particularly from high-tax states -- less of an issue with senators, of course, who are largely Democratic who come from these high-tax states -- but they have argued, pretty much to a man or woman, Peter King among them in Long Island, New York: I can't vote for this. You know, the way we can't write off state and local taxes for my constituents, it's a deal-breaker.
What do you think?
THUNE: Well, we moved toward the House on that.
We allow a deduction on property taxes up to $10,000. State and local, obviously, not deductible on the income tax level. But I think that's a policy change that needed to be made. This is something -- it's a provision in the code that does subsidize high-tax states.
It's a benefit that is claimed largely by high income earners. And so I think it makes sense. And I hope that we will be able to retain that in our conference with the House and that, when the conference report emerges from that deliberation, that both the Senate and the House will be able to pass and at least get rid of that state and local deduction where income taxes are concerned.
CAVUTO: Who put the AMT back in, though, Senator? That looked like it was dead and gone, and then it reappears.
THUNE: Yes, I'd like to see it dead and gone too on both the individual and the business side.
And it was clawed back a little bit to help pay for some of the changes we had to make at the last minute to get the bill through the Senate.
But we're looking at the interaction between the AMT and the regular corporate tax rate to see what those effects are. Obviously, we're getting -- we're hearing from people about that. And I hope that in the conference committee, we will be able to get this resolved in a way that ultimately gets rid of its impact and its effect.
CAVUTO: Senator, I don't want to hit you broadside with breaking news or try to trap you here, but Roy Moore has gotten the formal support of the president today and had a phone call with him when he was traveling out to Utah.
Mitt Romney not so impressed. Quoting from the former presidential candidate: "Roy Moore in the U.S. Senate would be a stain on the GOP and on the nation. Leigh Corfman and other victims are courageous heroes. No vote, no majority is worth losing our honor and our integrity."
What do you think?
THUNE: Well, I have said before that, if and when he gets here, there's going to be this cloud. I think there's going to be an ethics investigation. I think that's probably inevitable.
And that it would -- everybody would be better served if he would step aside and allow somebody else to one. Even as a write-in candidate, I think we win that seat with a Republican.
But the president sounds like he's sort of stepping up his activities in that race. That's his prerogative. But I still think it's in everybody's best interests, including the party, the Senate and the country, if we could eliminate the distraction that ultimately is going to come with this election.
CAVUTO: So, you slightly differ from Mitch McConnell, who says it's up to Alabama?
THUNE: Well, I mean, ultimately, it is.
I can't -- I'm not going to suggest that -- they don't care what Washington, D.C., thinks. But my own view is that it's going to create problems for the agenda, simply because of the distraction that will be in full display if and when he wins and arrives here.
CAVUTO: Senator, I mentioned Mitt Romney.
There's talk that your colleague Orrin Hatch wants to steps down, retire. President Trump was singing his praises today, that is, Orrin Hatch, presumably to stay.
Mitt Romney has been mentioned as a possible replacement or someone who could run for that seat, probably win it.
How would you feel about that?
THUNE: Well, first off, I love -- I have had great affection for Chairman Hatch. He's my chairman on the Finance Committee and largely instrumental in getting this tax reform bill through the Senate.
That's a decision that is up to him. I'm a big fan of Mitt Romney. I campaigned for him when he was running in 2012. And, eventually, if there's some role for him, love to help out.
But that's going to have to be sorted out by Senator Hatch and others who are interested in this race.
CAVUTO: All right.
THUNE: But my guess is, right now, Senator Hatch is planning to run for reelection.
CAVUTO: All right, we will watch very, very closely.
In the meantime, you seem to have overcome losing potentially all the accountants' votes in this country.
CAVUTO: But I joke.
Senator, very good having you.
THUNE: Yes, that's right.
CAVUTO: Thank you very, very much.
THUNE: Thank you.
CAVUTO: Dow up 58-and-a-half points on progress on all of this.
We will have more after this.
CAVUTO: All right.
The polls remain tight in Alabama for Roy Moore. But there's already a divide among many Republicans as to whether to just let Alabama voters decide it, which seems to be a consensus, commonsense view, and those who are concerned about the message it would send if a victorious Roy Moore were allowed in the United States Senate.
You heard from Mitch McConnell a slight shift in his position, that let the Alabamians decide, the president phoning Judge Moore while he was out going out on Air Force One to Utah, expressing his support for him, that he's a better alternative than the Democratic candidate, Doug Jones.
And now, in the middle of all of this, you have the former Republican presidential candidate Mitt Romney, who says: "Roy Moore in the U.S. Senate would be a stain on the GOP."
We have got a battle royal going on here, and it won't be decided until we have the Alabama election a week from tomorrow.
Charlie Gasparino following it all.
This is a very quickly developing story, isn't it?
CHARLIE GASPARINO, FOX NEWS SENIOR CORRESPONDENT: Yes, it's a political tightrope.
And it's the establishment, essentially, of the GOP fighting back against the insurgents, the Bannonites, Steve Bannon, the former presidential adviser -- former adviser to President Trump, currently the lead guy at Breitbart, represents the sort of insurgent wing of the Republican Party.
He helped push Roy Moore even before these allegations of him having -- dating teenagers came out. You have that on one side and then you have the establishment on the other.
And what is interesting about Mitt Romney is that he has not a lot to lose here. Mitch McConnell has to manage a divided majority, so to speak. And he's on the outside.
CAVUTO: Right. Well, maybe not. Romney could be entertaining, you know, Orrin Hatch's seat if Orrin Hatch were to retire.
And I raised that with John Thune, of course, who is a friend of both, said he would be a good candidate, but he hopes Orrin Hatch stays.
CAVUTO: But, obviously, Mitt Romney, if you think about it, whatever his overtures to the president-elect at the time to be his secretary of state, something has gotten a little chillier since.
I mean, listen, there was no love lost between Trump and Romney. It was kind of odd that Romney would do that dance with him after saying he was unfit for office.
Then again, Romney is a man of -- pretty much of integrity. The worst thing you could say about him -- in the past is that he lost to Obama. He ran an exemplary business life. He gave a lot of money to charity. He...
CAVUTO: Well, I guess he's off the list too for being considered for secretary of state now, given all this.
GASPARINO: Yes, exactly.
CAVUTO: But what do you make of all this and where this is going?
GASPARINO: Well, you know, Neil, we have said this in the past on the show. This is -- this is just another example of a battle royal within the Republican Party. It's a very fractured party.
It's divided between the populists, led by Bannon still on the outside.
Full disclosure, I'm going to go to a book party tonight that Steve Bannon is putting up for Corey Lewandowski. I will see him there.
On one side and the establishment on the other, which feels embattled.
GASPARINO: I wonder if this is a smart part, though, on Romney's part.
You know, Doug Jones -- I believe that is the gentleman's name who is running against Roy Moore -- is very, very left-wing, I mean, partial-birth abortion, the whole thing. Now, as noxious as Roy Moore is...
CAVUTO: Well, he's opening up other possibilities, but not this one.
You know, but you're right. It's exposing that...
GASPARINO: As noxious as Roy Moore is, Doug Jones is a far-left liberal.
CAVUTO: All right, we will watch very, very closely.
Again, this just shows again, as Charlie pointed out, some of the schism in the party among establishment types, the rabble-rousers, the Bannon types, whatever the case right now. You have Mitt Romney, the former standard- bearer for the Republican Party, saying, this guy doesn't belong in our party.
And so we go. More after this.
CAVUTO: All right, we are just getting word that Congressman John Conyers, all of this scandal talk here, will make an announcement tomorrow at 10:15 a.m. We don't know what it's about.
We know that a number of his colleagues have said he should step down. Maybe we will see tomorrow.
See you then.
Content and Programming Copyright 2017 Fox News Network, LLC. ALL RIGHTS RESERVED. Copyright 2017 CQ-Roll Call, Inc. All materials herein are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of CQ-Roll Call. You may not alter or remove any trademark, copyright or other notice from copies of the content.
Source : http://www.foxnews.com/transcript/2017/12/04/anticipation-builds-with-gopers-ready-to-hammer-out-tax-bill.html