Senators return from thanksgiving break next week. Former texas senator phil graham, visiting scholar in American Enterprise institute. Senator, great to see you. Thanks for coming in. Great to see you, paul. Paul you have seen a lot of tax legislation in your day, helped pass good legislation, how do you see the two bills now just as policy, as tax and Economic Policy good or bad . I think they are both good represent good policy. I think the debate is that a lower level than i have before seen, people forget that 56 democrats in the house voted for the reagan tax cut. The tax reform in 1986 got huge bipartisan votes. Its ashame that things are as partisan as they are. Paul yeah, thats where we are right now. I think they will get no democratic votes in the Senate Unless republicans show they can pass it. But do you think theres enough progrowth policy in these bills to energize the economy over next two or three years, get up to 3 growth annually plateau . Well, first of all, the economy in the last two quarters has grown by 3. 04 . The new york fed came out yesterday and projected a growth rate in the Third Quarter of 3. 75 . Paul wow. So just taking the foot of government off the throat of the economy where its been for the last eight years is already showing a positive effect and one of the points i have tried to make to people who are legitimately concerned about the deficit. Let me say legitimately concerned because its hard to take democrats seriously when they talk about the deficit when in the last eight years they doubled the debt of the country. Paul right. But i do take people like corker seriously about the debt. Paul senator bob corker of tennessee. Yeah. I think the good news is that not only are we currently growing at a rate that would create enough new jobs and enough new growth to pay for the tax cut as it is now structured but i think we have a real opportunity to outperform it, to pay for it we have to generate 2. 6 real growth over the next ten years, from 1946 to 2009 the economy grew to ten recessions and the beginning of the 11th recession by 3. 4 . Only during the Obama Presidency in the whole post war period did we fail to achieve a level of growth that would pay for this tax cut. Paul all right, now the question is, is this a new norm or was that bad policy . Paul well, that is the big question. 3 growth on annual basis since 2005 which has never happened before since the bureau of Economic Analysis kept statistics going back to 1930 as i can see it. But lets look at the individual parts of some of the parts of this bill, as i look at it, i think the two bills, the corporate and business side tax reform is a lot better and stronger than the individual side which is frankly kind of a mess with a lot of tax credits mixed in, not a real cut in marginal rates very much, how do you see it . Well, i think this is basically a Corporate Tax cut. Paul okay. But theres a lot of reform in here. As i measure it, 6. 5 trillion tax cut over ten years, there are about 5 trillion of revenue increases for a net of about 1. 5 trillion. And i think its important to note that what you take out is about as important as what you put in, so i think that not only do i believe the lowercorporate rates are very important and very progrowth, but i think eliminating all of the special interest provisions in the tax code will help the economy by eliminating a system that misallocates resources. I do think the personal income tax, part of this change is weaker, but basically because youve got 1. 5 trillion to work with, i think thats a very conservative number. The good news is i believe that we are going to outperform it and perhaps outperform it substantially. The bad news is it makes it harder to do this but thats the constraint we have imposed and we have to live with and i think we can still pass a good tax cut that will give us 3 plus growth again. Paul and if you get 3 growth with the economy, the labor market very tight now in much of the country, you really do have low unemployment rate, you are going to see that flow through wages, will you not . Well, dont forget, weve got very close to historically lowLabor Force Participation in the country, weve got huge numbers of people who have been pulled out of the labor force by government policy over the last eight years, dont forget during the reagan years not only did Labor Force Participation go up, but remarkably the number of people on disability declined dramatically. Paul yeah. As i used to say president reagan, people are getting up out of the wheelchairs and going to work. [laughter] when the economy is good, the labor force the labor market response responds to it. Its true under the policies of the previous eight years, the labor force is very tight, but if you go back to the policies that existed in america for 200 years prior to that, weve got a lot of slack in the labor force. There are a lot of people who could and would come back into the labor force. Productivity has been stagnant during the obama era, investment was so low that it hardly replaced depreciation, so it didnt contribute to Economic Growth. Those are the things we can improve on dramatically. The problem in the economy is not that the gods have turned against us, the problem is weve had policy that was antigrowth and had other objectives, maybe they were good and maybe they were bad depending on your perspective, but they werent progrowth, projob. Paul all right, thank you, senator, i appreciate you being here. Thank you. Paul when we come back, the great tax escape with top earners threing hightaxed states, all eyes on the republican plans to cast or eliminate the state and local deduction. A look at what that could mean for bluestate governors and legislators next. As far as im concerned, this is President Trump saying drop dead to new its terrible for new york. It would, number one, cause most new yorkers to pay a higher tax bill. Number two, it affects the competitiveness of our state because of the extent you raise taxes in new york, you push people and push businesses to other states. Paul that was new York Governor Andrew Cuomo earlier this month attacking the republican plan to overhaul the tax code. Gop push today cap or eliminate the federal deduction of state and local taxes, has officials in hightaxed states like new york, new jersey and california seeing red, worried that residents will be left paying even more. Lets bring in wall street journal columnist dan henninger, editorial member alyssia finally and james freeman. Allysia coming as you do coming from california, you know that well, but its interesting to see the politicians like cuomo basically blame feds for their own tax policy . Right. Federal taxes on wealthy residents. What you say in california, in new york about 12. 7 and youre seeing a lot of the high earners moving to florida where there is zero income tax especially recently when they raised taxes. Paul you looked through the data in irs statistics recently and you monitored that. Its really dramatic how much people who pay a lot of income tax are moving. Right. Just florida gained about 40 billion in adjusted gross income between 2012 and 2015. Paul and florida has no income tax . Again, 57 of those were highearners. Paul wow. Thats pretty amazing. Dan, another hightaxed state, gentleman we are all here. Paul we are all here, but do you think maybe the byproducts of this that we are hoping for is maybe these states will have to adjust their tax policy, so maybe one result federal tax reform could be state and local tax reform. Well, i think thats true, we saw andrew cuomo himself suggesting that highincome people may leave the state, not may, they will, they have been and this could spur the outflow as well and, you know, youve got governor elect in new jersey, bill murphy, wants to impose millionaires tax. Paul 8. 97 to 10. 57. Yeah, they they need the money. The president of the senate who is a democrat has said, whoa, we have got to think about the millionaires tax because this could do more damage than good to us. Hes voted for it, at this point we have to rethink it. I believe that presumably atrisk republican members of congress in those states should say, look, i voted against tax bill, i tried to protect this, now we have got to fix our own and put the blame back on democrats in those states. Paul in the house, james, they eliminate state and local tax except for property tax exception, capped at 10,000, most of the country dont have more deduction in 10,000 in property taxes. The senate eliminates entirely. Is this going to pass, what do you think . Yeah, i dont think you are going to get much of anything of state and local deduction out of this process and part of it is democrats in the senate representing these blue states have decided not to play the game, not to engage and not to negotiate at all, they are not participating in the tax reform effort. Paul if they had participated, if Chuck Schumer said, we want to sit down and negotiate, paul ryan, we want to negotiate, do you think they could have made accommodation . No question. A lot of ways to get growth, incentivize individuals, incentivize businesses to invest more. If schumer and the other democrats said protecting this is important to us, but we are willing to grow with you on growing the economy, they could have cut a great deal. Its so progressive, the top 100 filers generate more than 5 of jersey tax revenue. 100 people. [laughter] Hedge Fund Guy david leaves in a few years ago, its a big deal for state budget. One guy makes a lot of money, the point is what we are doing in new jersey is driving out highly successful people and thats one of the reasons we grow slower than the rest of the country. Paul are you considered a commute from pennsylvania . No, a lot of people are considering that. [laughter] its the long way to go but you are starting allisia wrote about the move to florida, if only state Senate President could put brakes which by the way, its 500,000 if youre in new jersey politician and want to take your money. [laughter] paul i assume allysia, some of the democrats, nancy pelosi and schumer, given up influence the bill against republicans specially in suburban districts, california, walters, orange county, where they have highproperty taxes in part because its high Property Values but also in new york, the swing districts. Paul up in winchester. Thank you all, when we come back, President Trump and russian president Vladimir Putin speaking by phone this week by byabout the conflict in syria, could russian and iranian interest prevail in the its all popculture trivia, but it gets pretty intense. Ahh. The new guy. Whoa, he looks he looks exactly like me. No. Separated at birth much . We should switch name tags, and no one would know who was who. Jamie, you seriously think you look like him . Uh, im pretty good with comparisons. Like how progressive helps people save money by comparing rates, even if were not the lowest. Even if were not the lowest. Whoa wow. I mean, the outfit helps, but pretty great. Look at us. Paul President Donald Trump and Vladimir Putin speaking by phone for more than an hour tuesday. The russian president reportedly briefing trump on his push for political solution to the civil war in siria. The call came just one day after putin met with dirrian dictator Bashar Alassad in the black say resort. Syrian conflict with leaders of russia, turkey and iran. We are back with dan henninger, wall street journal mary cisel and Columnist Bill mcgurn. Mary, more than an hour with putin, what were they trying to work out . Nothing good comes from over an hour with vlal, paul. Syria, iran and turkey, they set up the socalled surrender zones, what happens is the force that is the United States is back in syria to get rid of Islamic State, they are going to be wiped out by russian and Iranian Forces and Syrian Government forces. Paul the whole idea vendor, to make sure surrender that the fights stops. The big question paul thats almost done. We should give him credit for that, the question is what comes next . Is assad going to stay . Certainly looks like it. How are syrians going to return . Paul this is how trump would respond, i campaigned to get rid of isis, i didnt campaign to you know what they say, its obamas failure. He has no agency as the United States president. Just last month, President Trump came out that iran is a fan at call regime. We have to contain iran and hes going to cede syria, makes no sense. I agree with mary, this isnt a political solution, this is a russian solution. Russia is in the area because of assad. Paul assad invitation. Thats an important distinction. Syria is the russian entry way to the middle east to have basis and so forth. Theres no bringing syria together as long as assad stays, look at how he has played his cards, he played them well. James mattis once gave a speech that he said the single biggest thing that we could do to check irans ambitions is to deny them syria as a client state. There are people that know this and, again, the president sounds good notes but the policy so far in iran, we dont have an iran policy in the middle east yet and hes going to find thats going to create a lot of problems down the line. Paul dan, another move recently, the russians veto mandate of chemical Investigation Team that was supposed to go in and investigate who is using chemical weapons in syria. The United States very much wanted that to be renewed, russia said, no because, of course, assad didnt want it because hes the guy who has used chemical weapons. Yeah, and therefore, i think, that the white house really should have been giving us a readout of this conversation between Vladimir Putin and mr. President the other day because we have to get some sense of where the president is going. Look, paul, whatever his desirele desires to stay out, we cannot withdraw from the region. Russia currently serves as irans air force in syria, the iranians in deconfliction zone where they are not fighting, the iranians sit within an hours drive, the israelis are acutely aware of that. You have transition going on in saudi arabia. The saudis are supposed to be allies but if they see us pulling back in the midst of all this, they are going to start looking towards the russians or even the turks. Paul are we seeing the seeds being planted of israeliiranian conflict over syria, parts of syria . I think you are. We are alienating the very people in syria and in iraq, the moderate sunnis, the kurds, the people who fought with us to eliminate the Islamic State to say where are we supposed to go now. Trump may proclaim that he has eliminated isis, he may give tehran that show it is seeds for much more conflict to come. Paul we cant commit more forces, thatll be military commitment, minimum air power and maybe more. I dont think we have a choice. First of all, we have a lot of assets there. One of the things about iran is that the saudis in the arab world are on our side on this, they are not asking for u. S. Troops but like support and checking iranian ambition. We dont want to lose iraq. Iraq wants to stay aligned with the United States than iran. Paul still ahead, President Trump looking to keep campaign promise, fears are growing that the u. S. Will pill out all of the pack altogether, what it would mean for the u. S. Economy next paul representatives from the United States canada and mexico concluded a fifth round of nafta talks this week ahead of a march deadline to renegotiate the trade deal, President Trump who has called a north American Free trade agreement a disaster has threatened to pull out of the pack altogether unless big changes are made. Something my next guest has said would be a political and economic debacle. John murphy is Senior Vice President for International Policy at the u. S. Chamber of commerce, thank you very much for being here. My pleasure. Paul so you saw the fifth round of talks, didnt seem to go well. U. S. Came out complaining about mexico and canada. Where are we on the talks . Well, the talks are not going very well and theres blame to share around. But i think many in the u. S. Business community are most concerned is a series of poisonpill proposals that the u. S. Has put forward right now. These are ideas that dont enjoy support across the u. S. Business and Agriculture Community that dont really have identifiable constituencies or really anyone who would benefit from them. And at a time when it makes a lot of sense to modernize nafta and bring it to 21st century, we are concerned that this would instead lead to breakdown in the path. Paul you used pill, motive to provisions is to basically not get a deal so that the u. S. Has excuse to pull out. One of those provisions the fiveyear end to the renewed pack every five years, how can you make Business Decisions if you dont think the pack will last more than five years . Well, thats exactly right. At a time when negotiate, when we are trying to find ways to boost Economic Growth through tax reform or pulling back on regulatory overreach, blowing up this trade agreement which is our most important one is a real concern and having this sort this idea that within five years the agreement could simply go away, thats not what the Business Community needs, businesses need to have the confidence and certainty that will allow them to make longterm plans to invest in brick and mortar and to hire and invest and thats what this kind of a proposal would undermine. Paul okay, one of the other provisions thats been criticized by business folks that i know, the rules of origin for content here in north america moving under the pack from now 62. 5 , the United States wants to bring it to 85 as i have read it. That would that would really toss supply chains globally particularly for automobile sector into real disarray, would it not . Absolutely, thats why there is an incredible united front among not just the big three gm, ford and chrysler but foreignnamed plates, toyota, volkswagen that have invested in the United States and mall manufacturers that are suppliers to all of those companies, they formed a united front to oppose this proposal, the only thing that it would accomplish would be to raise the cost of manufacturing here in the United States. It would create incentive for manufacturing to go outside of north america instead and so we are pushing back hard on that. Its a proposal that has no identifiable beneficiary in the United States. Paul all right, i interviewed wilbur ross, the commerce secretary last week and i asked him about nafta pulling out, look, dont worry, mexico and canada will be hurt much more economically by Us Withdrawing than we would, so they are going to get with it and agree to our terms, so dont worry, we will get a deal but itll be on our terms, what do you make of that analysis of the psychology of mexico and canada . So i followed those comments closely, paul, and, you know, theres acknowledgment there that pulling out of nafta would hurt the United States, so i suppose thats a bit of progress, what kind of a proposal is it that would hurt us even if it is hurting us some, studies show that withdrawing from nafta would cost 1. 2 million american jobs, so it doesnt make a lot of sense. Another thing thats missed in this analysis is that canada and mexico are sovereign states with their own domestic politics, the ability of mexico in particular to just say yes to anything that the Trump Administration asks for are things that are not in interest is pretty limited at this point with elections looming next july. Paul you think that they, indeed, for domestic political purposes particularly in mexico basically say even if it hurts us we cant say yes to uncle sams dictates . A lot of hot rhetoric in the United States over the past couple of years about mexico and for any politician in mexico to stand up and stand with the United States at a time when the United States is pushing proposals that could be damaging to mexico and to the United States, its just not a lot of wiggle room there for them. Paul hawaii do you see this . Do you really think that this may end up breaking down and we dont get a deal and the u. S. Withdraws . I think its a real possibility, thats why we are hearing so much concerned particularly from states across the heartland, industrial states like michigan, wisconsin, agriculture states like iowa, missouri and border states like texas and arizona. These are some of the state that is would be hurt the most be withdrawing from nafta. Paul those sounds like trump states . Thats the irony. We have analyzed these and ranking the state that is would suffer the most from withdrawing from nafta and what we found that its overwhelming those industrial states. Its american manufacturers who export more made in the usa goods to canada and mexico than they do to the next ten countries combined and its farmers and ranchers who have seen exports to canada and mexico quadruple under nafta. Governors have gotten earful about this and people in congress as well. Paul appreciate it. Fascinating. Still ahead as rumors swirl for retirement next year, President Trump adds five new names to Supreme Court short list, closer look at who made the cut and who they might replace on the nations highest court next do i use a toothpaste that whitens my teeth or. One thats good for my teeth . Now i dont have to choose from crest 3d white comes new whitening therapy. Its our best whitening technology. Plus, it has a fortifying formula to protect your enamel. Crest. Healthy, beautiful smiles for life. Aand its now just 59 of the season. But the real gift isnt whats inside the box. Its whats inside the person who opens it. Give ancestrydna, the only dna test that can trace your origins to over 150 ethnic regions and open up a world of possibilities. Save 40 at ancestrydna. Com. The lowest price of the year ends monday. Paul President Trump added five new names to list of potential Supreme Court nominees last week as rumors swirl of possible retirement early next year. The 81yearold Justice Anthony kennedy seen likely justice to step down, would be President Trumps second appointment. We are back with dan henninger, allysia finally and bill mcgurn. I think its a good list. Two of them i know. Bret and amy i know from notre dame law school. I think we have ted cruz to thank for this. Paul ted cruz, why . In debates ted cruz said that trump would appoint bad justices. I think this is a good precedent i think he can claim a mandate and put it out there. We all have mysterious views on this. We have to thank the late Justice Scalia who trump was talking a fair amount during the campaign and i think he got to like her and decided he we wanted to appoint people in the mold of Justice Scalia and with the federal society and people like leonard, thats precisely what he is doing. Paul the sixth Circuit Court of appeals was clerked for Justice Scalia, favored of Justice Scalia and tremendous jurist and puzzling to me that hes not on the list. But allysia, amy barrett. She was criticized by Diane Feinstein if before too dogmatic. Are you orthodox catholic . That was a stunning question at a con confirmation hearing and basically said if you are too orthodox in your religious belief maybe you dont have the ability to serve on the nations highest court but now trump is raising raising raising raising the ante and has been confirmed to Appellate Court bimpleg. Now on the list for the higher court and i think in part the democrats gave her such a hard time because they feel she may be elevated. Trump is taunting the democrats about this. What you also see is the justices that made the list are also very young, most of them are in their 30s, early 40s, bret is 52 and that also goes well for the binge. The rule of thumb you dont want somebody to serve 40 years, mid50 seems to be the cutoff. Unfortunately for those of us we must give up aspirations to serve. You cant have everything. [laughter] lets extend this point. There are a lot of people who have problems with donald trump personally during election it was expected that he couldnt possibly beat hillary clinton. This issue was one of the primary reason that is people voted many people voted for donald trump, not just the Supreme Court but Appellate Court appointments as well. We are seeing the importance of that decision. I think the democrats have only themselves to blame because as we were just pointing out and allysia said, senator feinstein questioning amy about her religious beliefs. The left has pushed the culture so far to the left that they are now paying a price and the voters out there saying, we need a balance, what we needed a balance like the justices. A lot of rumors out there that Justice Kennedy could resign, he would step down after many, many years, that was what we heard last year. Right. Paul in 2018 republicans have a real chance to lose the senate, i think tough year for republicans, if you want any Supreme Court justice by donald trump approved, nominee approved you really have to do it this year if youre kennedy because theres no guaranty next year. The democrats take over the senate, there wont be a single nominee. Shouting merrick garland. Specially important for republicans because the court and especially the Supreme Court, thats a democratic legislature. Thats where they go because they cant get votes in state legislatures and so forth. Its very important to get jurors who are constitutionalists and not people who want to make up the law. Paul President Trump sues to stop merger, could the president s own words complicate the case . If your moderate to Severe Ulcerative Colitis or crohns symptoms are holding you back, and your Current Treatment hasnt worked well enough, it may be time for a change. Ask your doctor about entyvio, the only biologic developed and approved just for uc and crohns. Entyvio works at the site of inflammation in the gi tract and is clinically proven to help many patients achieve both symptom relief and remission. Infusion and serious allergic reactions can happen during or after treatment. Entyvio may increase risk of infection, which can be serious. Pml, a rare, serious, potentially fatal brain infection caused by a virus may be possible. This condition has not been reported with entyvio. Tell your doctor if you have an infection, experience frequent infections or have flulike symptoms or sores. Liver problems can occur with entyvio. If your uc or crohns treatment isnt working for you, ask your gastroenterologist about entyvio. Entyvio. Relief and remission within reach. At t is buying time warner thus cnn, a deal we would not approve in my administration because theres too much concentration of power in the hands of too few. Paul that was then candidate donald trump during last years president ial campaign promising to block proposed merger between at t and time warner, Parent Company of cnn and this week the Justice Department filed suit in federal court to block the 85 billiondollar deal saying it violates antitrust law and result in, quote, fewer offerings and higher bills for american families. Lawsuit is an unusual move for the doj but one official says its not related to the president s stand during the campaign or frequent criticism of cnn. We are back with dan henninger, allysia finally and james freeman. James, what do you make to have law case, antitrust case . Its stunning and we have been enjoying the new era of the government pulling back from its arbitrary and ta capricious constant and you look at the turner capable channels and hbo, i dont know how you see dominance here. Mr. Trump was calling cnn fake news and now we say its a bundle of channels we cant live with out or something . Its mindbogglingly. Paul dan, we go way back to antitrust policy, the at t breakup and imbm case, this is stunning news to me. Im really surprised at this. Yeah, one of the interesting assets of this is that the last time the Justice Department brought antitrust suit against a vertical integration. Paul dont compete directly against one another. Right. They lost that one. People like, indeed, justice robert, developed theory of antitrust, there has been in real theory develop today replace it. With the Justice Department sue thong base issue, you have to ask, what is the idea, whats the argument going to take in to a judge which is who is going to decide this and make against this merger . I want to zero in, allysia, on one of the points trump made, too much power concentrated in too much place, is that how you look at the marketplace for content distributed content over the immediate marketplace . Look, the marketplace for content and distribution has never been more competitive. Paul give us some examples. For example, at t direct tv has 25 million customers. Netflix 10 million. Amazon prime 9 million. Both netflix, apple is now pouring 1 billion in original content because original content is a cash cow. Paul google is also getting in streaming product. Paul you have the cable markets big giants like comcast which joined with nbc. Are you saying that at t if it joins with time warner could actually be more competitive with these giants . I think thats exactly the goal. Is that this would allow it to actually monetize, better target ads to compete with facebooks and googles and reduce prices to customers. Deals like this is threats to democracy. Paul what does that mean . Thats a good question what does that mean, theres idea of threat of bigness here and concede that the Media Companies have become very big but theres a lot big Media Companies but trump seems to feel that the very idea of combinations is threatening to democracy. Thats not a legal issue. Paul do you feel theres a shortage of voices in the american political debate . I mean, i dont. And i think his voters, i think, have a distrust of Big Government and also big business. Paul they hate cnn. The political left really hates big business. Thats the problem here. Youve got a populist politics on both left and right and why should that influence antitrust division. They should focus on the law . One would hope. Particularly bizarre as youre trying to figure out whats happening here. History really of being until this moment of being a rule of law small government guy, so its its really hard to understand where this thinking comes from which, obviously, is way out of step from juris prudence. They would be beneficiaries if this merger busted up. Jeff bezos would be one of trumps enemies. Whoooo. Looking for a hotel that fits. Your budget . Tripadvisor now searches over. 200 sites to find you the. Hotel you want at the lowest price. Grazi, gino find a price that fits. Tripadvisor. Them. Another. Paul time now for hits and misses of the week. James. Paul, this is a miss to our secretary of treasury steven much who mnuchin who is making a mistake that homeowners make, lowinstructory rate on treasury debt. Shortterm borrowing and missing the big opportunity. We have historically low rates. He should lock in financing for the longterm. Issue longterm bonds for whatever reason he doesnt want to do that. I hope its not because they want the shortterm political gain of showing a smaller deficit. I want to give a hit to department of justice for investigating allegations that Harvard University discriminates against Asian Americans in admission policies. Paul, you can call it the bigotry of High Expectations given how well the students typically do. Let me give you one example here, harvards asian admission hovering 20 or so for many, many years and you look at a state like california which explicitly cannot consider race in admissions, uc schools over 30 , cal tech more than 40 , i think its a good cause here, asian students matter. Paul bill. Hit to taylor swift, i confess as father of three girls i know more taylor swift lyrics. Looks like she knew what she was doing. She just released her album reputation, became the topselling album of the year. This is the lady who knows what her business is and what it isnt. Paul all right. Thank you all. Remember, if you have your own hit or miss b sure to tweet it to us. Thanks for watching, im paul gigot, i hope to see you next democratic senator breaking silence for the first time. An interview with senator frank and apologized to his accusers and says he will focus on helping victims of sexual harassment. I would never intentionally do that. But, that does not negate my intention is what is important. What is important is that we have to listen to wen