Introduction. You know who kevin brady is. You know him as the chairman of the house ways and Means Committee. The panel so important that when i write in washington i thought the word powerful was part of the title. In the black hills of south dakota kevin brady still remember as slugging outfielder who played football, ran track, russell at central high school, playford legendary david blue who died earlier this year. American legion coach a 133 or 34 state championships, two of which when you were there. In his early 60s chairman brady still plays baseball, hardball, fast pitch baseball. Im talking facebook, not politics epic is a twotime mvp for the republicans at the congressional game. He played this last summer. Some of you made seen in in his jersey. He was in the lineup at second base picky lost his job to a man ten years younger who beat him out, and he left the practice field before the game because he was asked to the skipper to take some grounders. He said no, Steve Scalise has won the job selecting be there. Look, im glad youre here and im glad you are here. Thank you. And thank you for coming. As you all know hes trying to do something now that republicans, its harder than hitting off richman and that is enacting tax reform. Are you ready for hardball questions . Im wearing my astros tie today. So feel free to cheer whenever you want. [applause] the world series tonight. Lets start with the easy one. Is the house going to pass the Senate Version of the budget on thursday . The answer is yes. We are in a good position. I think the work the senate did ought to be applauded, and chairman black richard our Budget Committee worked with the senate in a corporate in some of our ideas. I feel real good about where we are headed on this, this week, which, carl, accelerates for us several weeks by getting this budget and because that is, once it is signed, sealed and delivered will announce the date of the market and the date the tax reform bill, tax would be released. Once thats done were going to move. I shouldve introduce my self. Im carl cannon from washington dont you put real clear politics and if you know real clear politics you know that we are nonpartisan. So let me ask the course of the sort of in our wheelhouse. The budget, you know, passing the budget so you get tax reform is a can use the reconciliation process of what is a filibuster in the city. Reconciliation is a washington word. The process doesnt in normal english reconciliation is not what it is pure what it is is one party rule, and the budgets have been passed this way since 1993. 1993. And a masking you a sort of a good company question here shouldnt it be both parties . Theres nothing moral, theres no moral equation if the tax that is 30 or or 37 so why shouldnt both parties participate in it . Moving reconciliation doesnt preclude democrats or engagement in this process. It just ensures no one party in the senate can block this from getting this to the president s of desk. Im hopeful that we can, i know white house side we spent the last year reaching out and listening to our democrats about whats important to them. In tax of one because theyre saying the same thing we are, which is a lot of in people come out of school, cant find good paying jobs, they are seeing the same companies we see live in the jobs and headquarters and research overseas. So i think we share a lot of the goals and getting this economy moving again. I dont want to predict that we will attract democrat votes in the end, but i think the time we are spending with Suzan Delbene and others who are bringing i think terrifically good ideas to discussion, i think its time well spent. So right now the white house has endorsed a plan, with these three tax brackets. I i guess 12 , 25, 35 . On friday your predecessor of the powerful house ways and Means Committee paul ryan throughout the i get there would be a fourth bracket. This is something thats been floated. I guess we could call it the max or george soros, the donald trump family bracket, but my question, where does it start works one building, 2 million, what are we talking about . I dont want to get ahead of our committee sort. Well, i want you to. [laughing] soda jiggling in this room. So i dont want to get ahead of so does everyone industry. We are considering it as a framework the president and the tax writers laid out. We are looking at these brackets. Our focus is on delivering a very progrowth, middleclass taxcut, and a design of the code that grows the economy and paychecks in an major way. So we are looking at it from that perspective. Could a fourth rate help us deliver that growth in the middleclass taxcut . We are still in the work and still thinking through the design. Paul ryan hinted that the rate would be 39. 6 for the fourth bracket which is a top bracket no. Does that number sound about right to you . Said no decisions have been made on that. Well, you have declined, politely as you doing here, to say where these bracket starts exactly. I guess one question i have, is that because you dont know when youre still working at the numbers to make the nevis come out or is it because you do what people taking potshots at your plan . Its because unlike the reagan style reforms, which we model a lot of this after, the rates alone dont tell the whole story. Because we are eliminating a empty, because we are eliminating amt estate tax and because we are making sure our Small Businesses, our passthroughs are not left behind, those interact with those higher rates differently than just the rate cut. So we want to make sure that we are delivering top to bottom relief so that americans keep more of what they earn. We want to make sure we know the interaction of all that. So its just a case of being thoughtful and vacation we know the real impacts before we set the levels in whether brackets begin. When democrats talk about this, they talk about fairness, and that something that i think most people care about. But it gets comforted as you point out. If you make 400,000 a year in rapid city, south dakota, where you grew up thats more money than if you made 400,000 in new york city. Absolutely. So what, how are you goingo finesse this . And thinking out of course of several things, but one of them is the deduction for state et cetera the question. So there is, so we are focus on growth for paychecks and jobs and leapfrogging america into the lead pack worldwide in keeping us there. Surprisingly fairness plays a big role in that growth. Because you just imagine the tax code so fair and simple, nine out of ten americans could file using a postcard style system. There is a fairness to knowing what everyones deductions are. Because we have, using the exact same ones. Another reason we havent set those brackets yet and the rates are that. We are working with lawmakers from the high tax states to ensure that their taxpayers are better off from tax reform than before. And so because where it eliminating a number of those deductions. That, too, placing to what will those final rates in the back brackets be. Its a matter of making sure we have come were hitting our goals, including fairness and growth before we set them. Lets take, if you live in West Virginia in harpers ferry, and your coworker, you work aa plant, your coworker in loudoun county, your coworker lives right across the river in maryland. It you get rid of the state and local tax break, then one person has gotten a tax cut and the other has got a tax increase. These two people work sidebyside. One face a federal rate. That just doesnt seem fair. You describe the current tax code. If you eliminated spitters actually i think you are. Theres my point. Depending on whether youre itemizing or not, so this is ta really good question for tax reform. We can stick with the status quo where we keep the federal tax rates artificially high for all americans, so some can use their itemized deductions including state and local. And while we do that we just subsidize each other. Several communities, taxpayers subsidize it is. Worldclass low tax state subsidize higher tax states. Thats the status quo. Or we can do something different. We can lower the taxes for all americans and we just pay our own. So for the first time washington doesnt punish or reward you based on where you choose to live and work. It is a big change from where we are at today, and the reason why, i think its critical we find Good Solutions for lawmakers in the high tax states. We want the family to be better off due to tax reform. Let me ask a philosophical question about it. After were done Suzan Delbene who is on your, a democrat, shes from a blue state, Washington State. On the panel after that steve mauro is on the panel, a fiscal conservative. We are going to ask them, but there seems to be comp used in the coverage of the creek are we punishing the blue state voters . Are you sure that theres nothing in this tax code, the politics are completely eliminated, that we are not rewarding states that supported the republican ticket, and conversely, punishing, trying, using an assent to get state and local taxes to come down because those will no longer be deduction. Is that a fair question . Well, i think this is a political counsel people go to political motives. I think in this case they are wrong. Because from afghanistan. , construction workers from a fairness standpoint, a construction worker doesnt is being paying higher tax ratr the investment banker renting the highest floor can get a tax break. Why dont we stop doing that . Why do we treat an equally in the tax code . Why dont we lower those rates for everybody . So it is in my view certainly not from our viewpoint, ways and Means Committee or the house conference would put the bedouin agenda tax plan beginning to go read a blue state, we want to dramatically grow jobs, paychecks and this economy, leapfrog us to that lead back and do it in way people are better off. One of the ideas this been floated in the last few days about trying to make the state of local income Tax Deduction more fair, to try to raise the revenue but not have effects were tucked but that is to put a cap on it. 400,000 was the number i heard. Does that sound about right to you . 400,000 middleclass family . In new york city. Ill tell you, it stuns me how high property taxes and sales taxes, income taxes are in high tax states. Im amazed i dont know of families get by, and im always suspect of the same local politicians whove been assessing these high tax are suddenly concerned about taxpayers. My belief is that for those families, when we lower the tax rates, we would increase the child tax credit, when we set those brackets, altogether we can lower their overall burden. Without having that specific deduction in their. We are listening, carl, right now to lawmakers from both states on how best to do that. So im hopeful, no, im confident over the next ten days we will find some good solution solutions. So when republicans talk about tax reform, kiting corporate rate seems to be one of the most animating issues. You know the arguments, youve heard them, you made them, trillions of dollars are part of broad because ceos dont want to pay, the Company Still want to pay the 35 tax rate. Donald trump always reminds us that american corporations are the highest taxed in the world, and factcheck. Org check out and said yeah, thats pretty close to being right. But do you think, whats the evidence that cutting the rate will really bring all that money back here that sparked overseas and that it will convert to new, and increase workers wages . Thats a fair question. What we know is your tax wriggly berries to be on where your business is at. If your allamerican stager, celtic, your painful fright at 35 . 35 . If youre globe they can vary dramatically in those rates. At the end of the day they are all uncompetitive compared to china, europe, canada and mexico. The Business Roundtable just released a study that showed if that our tax rate had been 20 over the last decade we would have 4700 more businesses in America Today than we have because when have been acquired or moved or shifted overseas in a major way. We know, too, that we have to change what we are doing if we want paychecks to grow. They have essentially been for decades. And even this last round, carl, which showed i think maybe 2. 5, 3 growth in wages and you think its coming back, look closely. Because what it showed people who work fulltime in america, their paychecks increased again was a zero. So we know if we make businesses competitive, whether theyre competing around the world are on main street, when you do for an unlimited expensing so they can invest into plants, equipment, software and technology, although productivity, that dries wages in a major way. We really are in each of these designed to focus on that growth of paychecks and jobs. And im really optimistic that this design does leapfrog us back to that lead back and makes our local companies so much more competitive. One more question and then i will open up to the audience. Are you worried if this doesnt work that its a gamble . That the National Debt doubles and eight years of george w. Bush, the double again in barack obama. If this doesnt. Be noted dedicated and growh youre talking about, you could double the debt against. Im pretty sure the debt will double if we dont enact tax reform. I think we stick with his slow growth economy, we are not going to generate the revenues and growth that we need for the country. He also left a couple with restraining come spend more important we got to make the Entitlement Program solvent for the longterm. This is one key part of getting our financial house in order, but i know this. We get growth back on track, to our traditional level or better, it generates significant revenues. Not just at the federal level, carl, we know from the candidate cuts, we know from the reagan cuts as well, the communities that saw the greatest Revenue Growth with a stellar level, when people go back to work and the wages are higher, thats with the growth. I know there are some states i wonder how will we be affected. What we know is growth gains at every level. I promised the chairman we would get them at it in a timely way that we have a few questions. You have the mic, all right. This hand went up here. Was there another one . And right here. Why dont we start right here . Hes close and then back there. He looks loaded for bear. My name is peter, im with capital intelligence. I just came back from puerto rico with the president. The question everybody in puerto rico as is whether you will come if we could bring back the 936 section of the Tax Exemption for puerto rico. That would be the biggest hell. Bill clinton killed it and thats basically been like the root cause of all the problems. Said no decision has been made yet but weve been visiting with the delicate delegate. She has been, what the tax design should be for puerto rico from an economic standpoint. I think the hurricane which we experienced in houston as well has made that situation even more dire. So well continue to work with her on trying to shape this in a good, positive way in tax refor reform. Thanks. Ben evans with the alliance to save energy. I know a lot of talk is about supplying the tax code, but traditionally conquers has done a lot in a very bipartisan way, particularly and energy space to encourage certain things through the tax code. Right now we dont have any incentives for Energy Efficiency in the tax code, and they expire at the end of the year. All the benefits that come with encouraging that activity in terms of its best solution we have for carbon, its the job agreed in terms of creating weatherization work and all the Energy Efficiency work there is. Saving consumers and businesses money when they become more efficient. How do we ensure that the tax code continues to support those things and isnt something you are looking at . So i think the best thing we can do, cut Business Rates on average of 40 , create in effect taxfree investment in the type of Energy Efficient technology that drives these gains, all of which are part of our tax reform approach. I think thats the very best thing we can do. One of the challenges, i want to glide past many of our energy incentives, specific ones, to the free market over time, and create a tax code that encourages new investment in new technologies. Not single them out but encourages them in a broadway across the economy. Congressman, when, mr. Chairman, when word leaked out that the 401 k deduction, donald trump tweeted out no, that wont change. When you does things like that, thats a complicated your life . Well [laughing] everything complicates my life just legal. Look, i love working with him on this. He calls me regularly about tax of four. Talk about specific areas of it, and so, and hes out selling this not just in a reagan stuff before but it trump style cells with you. Its incredibly helpful. In the 401 k area, look, we have a goal. We want americans to save more in the earlier period we think progrowth tax reform done right can achieve that. I will let you go, but one question, baseball and politics, theres advanced metrics in baseball these days. Whats the favorite metrics, tax reform. Lets have you put a percentage on it. What are the odds you get tax reform by christmas . Or even thanksgiving, which the president said he would like to see something rep thanksgiving to give us the odds. So ive learned my lesson on thinking and data on anything. So i have one date, 2017. I i think the odds are very good we get to the president desk by the end of the year. Very good is okay, but 70 . Very good is very good, okay . It just is. And look, think about this, just put in perspective, its been 31 years. President reagan, janice and i i were talking about this before the discussion. Look at, the reagan reform is where we met up a number of years and the final push was two and half years long. We are accelerating that in one year. It is ambitious timetable but im confident we can get this done for a lot of work left to be done. And by the way, carl, as we finish the budget, lay out the tax reform bill from the ways and Means Committee, we will continue to look to improve it at every step of the way. So we will be asking families and businesses, take a look at this, identify w