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welcome to "squawk alley," i'm carl quintanilla, sara eisen, john fortt on the new york stock exchange. we are moments away from the house ways and means committee set to officially release their long awaited tax reform bill we've already gotten some details, we are going to bring you that live as it begins as we await for the official rollout, let's bring in from washington steve liesman from the white house, with us from washington, as well, labor secretary under obama and with us at post 9, larry kudlow what an hour it's going to be. what a day it's going to be. it's the fiscal and monetary today as we await a fed chair

payment. >> theoretically cool. i don't know hold up it's going to work out. quick take from what i gather, it's dribbling in. i like the business side, from what i gather. i don't know every detail, but it's basically what we put together in the campaign two summers ago, lower corporate rate, needed expensing, repatriation those are the basic building blocks we think will be a booming supply side, investment side economy, which is not inflationary and will raise productivity and wages i like that. like trump, i still would have preferred 15% corporate rate, i still would. >> you would have paid for that in what different way? >> see, now that -- i don't understand yet i mean this. i don't understand the scoring math doesn't work for me doesn't work for them either apparently, apparently they are insisting on using the joint tax committee revenue estimates, which are nondynamic hang on a second

let me finish my point that means they are not going to get the big bang of the 3% growth, which is worth about 2.5 to 3 trillion dollars, and they are still using the bird rule, i understand, which none of that is necessary in my opinion they could have broken through that and offered at least on the personal side -- business side looks good, i hope for the best. >> tom perez, are democrats, any going to be onboard with the plan and able to vote for it >> it's been done in secret, so once again, this is like the health care bill, where it was done in secret that was also a tax cut for very wealthy people, and once again, we see that the 1% are going to do spectacularly and middle class folks, if you're trying to buy a house, it appears that the deductibility of your interest rates, of your interest, is going to be limited.

if you're saving for school or accumulated student loan debt, you're going to have a limit on your ability to deduct that. then the estate tax is eliminated appears the corporate taxes are permanent. the tax cuts, and the so-called middle class tax cuts, and again, a lot of people in the middle class are going to be paying more and the middle class tax cuts, they sunset. once again, this is a great day for the 1% for everybody else, it's a terrible day >> i just want to respectfully respond to former labor secretary. my due respect but look, we could have a good discussion about the individual side, because i don't think it's great, okay, but i must say,

sir, the work shows, research shows, and the basis of our own work for the trump campaign, the middle class wage earners are the biggest beneficiaries of slashing the corporate tax rate for large and small companies. the estimates may vary, but basically you're looking at a range of benefits between 45% and 80% of the benefits of that corporate tax cut will go to middle income and lower income wage earners, and i think that's what you all are missing this is a good thing for the middle class on the business side, and the democratic party -- look, if you're for redistribution, okay, that's it. up to you. but i'm just saying, this is a growth plan, and more growth is going to help everybody, everybody. >> with all due respect, that's exactly what george w. bush said in 2001, that these benefits will trickle down to everyone, and it brought us the great recession. so, fooled you once, shame on you. fooled you twice, shame on me. if you really want to help workers, why don't we help

businesses by allowing them when they are hiring workers to get the tax credits? why don't we help -- why don't we expand the earned income tax credit why don't we make sure the child tax credit is helping everybody? those are the things -- those issues enjoyed bipartisan support, but they are still leaving out so many people with children from eligibility for the child tax credit the earned income tax credit could be expanded dramatically, and that rewards work. that used to be a ronald reagan initiative, if my memory serves me, and yet we have to eliminate the estate tax and we all know, and i don't think there can be any doubt about it, that the beneficiary of the elimination of that estate tax are the 1%-ers. the very, very wealthy >> no question about who the estate tax elimination really benefits, but steve liesman, we want to get to you

there are a lot of natural enemies it seems like for elements of this tax plan on the individual side. if you look at a high tax state that are going to see deductibility go away, high property value states with the mortgage interest issues >> right >> people who have high student loan debt. what are the chances this is actually going to get through? >> that's a political question, but i think what you're talking about is an interesting sort of class of people who are not going to get the benefit of getting rid of the amt that helps some of the wealthy people and capping of deductions, which by the way i'd like to point out is thought to be excellent economics and this is something democrats and republicans can come together on this idea you have a concept called tax expenditures and it benefits the wealthy as surely as it does middle class and lower income people, so i think this idea of capping expenditures is something that we saw begin the obama administration and needs to continue and it does continue. that's good economics.

i want to just comment a bit on what larry said. i think he does not inaccurately characterize the debate over corporate taxes, but i think he needs to expand it a bit, because the debate about how much people get from those corporate taxes is anywhere from 10% of the tax up to 70% larry gave us a 45% to 80%, and i know -- let me finish, larry i know the research you're citing, but when you talk about what conventional wisdom is in economics right now, it's all the way down to almost nothing to 10%, and then the jcp -- hold on, larry, let me finish the jcp uses a 25% to 30% number that's been the conventional wisdom this idea that more than half goes to workers is a new idea. i'm not saying it's wrong. just characterizing the debate >> this research has been going on for ten to a dozen years, by the way. let's be fair.

kevin hatchet has been doing this research for years. >> most of the research doesn't agree with that. >> i don't agree, that's the point i don't agree. by the way, marty does not agree with you, steve liesman. furthermore, i could go to the democratic side, larry co cottlakof, he's a democrat, he agrees with us on our side it's all over the place. i'm just saying -- >> that's what i'm saying. >> ook, you either do it or yo don't, all right if it's not right, steve, then it will be fixed what i'm saying is, it's high time we had this kind of thing to make america competitive again. >> here's the problem -- >> guys -- >> develop 3% -- your first point on deductions is correct here i agree with you. it's a very sloppy bill, all right, no question we never did much on the individual side during the campaign we gave it over to kevin brady at ways and means.

here's some small stuff. if you were in the 28% bracket, you're now going to go down to 25 small potatoes if you're in the 15% bracket, you go to 12 here's something i don't like. if you're in the 33% bracket, you go to 35 that's a hike. i don't know what the income -- >> hang on, larry. >> finally, the top rate never came down. the deductions are a mixed bag the 401(k)s are going to survive, that's what we learned. the property tax deduction will survive, although the rest of us may not. something like that, yeah. this is all quite arbitrary. this is not real lower marginal rates. >> i want to bring in dick on this conversation, who has just joined us, as well, former wells fargo ceo. we need more opinions here we have a split, dick, so 20% corporate rate looks set to be permanent. does the middle class get the biggest benefit in terms of jobs and wages, as larry's arguing?

>> well, i think they will get a benefit, but i agree with larry on two points, that, one, the biggest item here is what's going on on the corporate side this is going to stimulate growth, it's going to be good for everybody, and that's a strong point the individual side is quite weak, because they don't have enough money to do much. but i think the biggest beneficiary of what little there is there is going to be the middle class i think when your top rate stays the same and deductions go away, that's going to cost you more, but i also agree that there's a -- it's not worth the political cost in my opinion to totally repeal the estate tax. that is not going to survive, and -- even though it's the right thing to do, the fair thing to do, it's just a political hot potato what you might be able to do is to reduce that rate from the 45%

to, say, 25, but i think you have -- i don't think you're going to get that passed i do think the doubling in the exemption makes a lot of sense, but the real sleeper here is the immediate write off of capital goods. the reason our economy has not been growing is that the consumer has been fine they are growing at 3% it's the industrial side that hasn't been doing their work, and this is going to start a boom in productivity and there is -- whatever you want to argue about tax cuts to corporations benefiting the middle class, there is inrefutable evidence of a strong correlation between the increase in productivity and wage growth. no one should disagree with that and this is going to increase productivity and growth rate and that's going to be good. >> that's been our key point from day one, okay, going back two years ago when steve moore

and i and many others started working on the comprehensive plan and rather than choose, you know, we kind of listened to people like yourself fred smith has been a mentor in this put it all together. drop the corporate rate to be more competitive we've had virtually no capital investment in 15 years, as you probably know, then invecentivi, allow the money to come back the fact is, growth is going to benefit everybody. this is the missing ingredient that's why this work >> if you agree the real bang for the buck is on the corporate tax and we see approvals for corporate tax cuts in the teens, right, what do we need to do to make it politically digestible >> you mean polling? >> approval ratings. >> that's tricky >> it's not high >> thauk to john and jack

mclaughlin, for example, seriously, this polling stuff depends on the sample. you know this. republicans, democrats, depends on the wording well, the mclaughlin poll show mid 50s to high 50s for the corporate tax cut. but it depends on the wording. i don't want to rest my case on that, but the wording -- >> tom perez, 30 seconds >> since when is growth bad? that's the whole point of this exercise >> larry, i just want to ask a very quick question, very quick. corporate profits have been very high the corporate profit margin has been very high it's sort of hard to understand why you argue that the tax is the wedge. i understand the overseas part of it, but the domestic part i'm having a hard time understanding, why tax is a wedge with profits so high between, a, even doing the investment, and, b, paying workers more i think there's people in favor of a lower tax rate, but the trouble is you go so far down

into the 20% range, it creates all the political issues that you really have a hard time -- >> i'm not going to let no one else speak i do want to get down to washington, d.c. >> i want to answer this >> additional details on the tax rollout. >> carl, what we are learning are the details of this 400-page tax bill we are finding out that the top tax rate will be 39.6% and will be applied to those who earn a million dollars or more. the limit on pretax 401(k) contributions unchanged in this bill in addition, the mortgage interest deduction, it will now be limited to $500,000 for a newly purchased home the corporate rate is going down to 20% immediately, and that would stay permanent the repatriation rate would be 12% for cash and 5% for noncash

assets the window for that happening is eight years. so there will be new guardrails for pass through businesses. simple way to do it is split income, 70/30. 70% is a considered wage income, 30% would qualify for the lower pass through rate, but there would also be a separate option for folks who try to qualify more of that incomeas pass through income a jcp score, joint committee on taxation, is expected to score the bill today chairman brady expects it to hit $1.5 trillion. that is the window they have to work with, so we'll see if the committee agrees that that number is, in fact, fresh. back over to you guys. >> thank you for that, who's going to be with us a lot more over the next hour as we watch this initially get rolled out. tom, i want to give you a chance to answer what steve and larry and dick were talking about and that is the impact on cap x on this country as a result of this

bill or plan >> i've been listening to this conversation intently and i don't have a ph.d in labor economics, but i have a ph.d in buffalo, that's where i grew up. what the people in buffalo and places like buffalo ask is, you told me this before, you know, you told me this back in the reagan era that these tax cuts are going to benefit everyone like trickle down. you told me this when george w. bush was president, and it's not hard to figure out why people are so skeptical, because this is -- >> tom, this is cnbc get off the talking points >> let's talk the economics. >> get off the talking points. >> the elimination of the estate tax benefits only wealthy people that is a fact come on, guys, the one percenters are making out big time on that >> i'd rather have steve liesman make the case for me >> legitimate debate, tom. >> very legitimate debate about why we need to eliminate the

estate tax permanently why these corporate cuts are permanent and middle class tax cuts sunset. we also know from this bill there are some folks who are middle class who are going to pay more why should anyone who is in the middle class or struggling to get to the middle class have to pay more if you're saving for college or you've accumulated college debt, you have to pay more if you have a home in the d.c. area, $500,000 is not a wealthy home in the d.c. metro area. >> all right, all right, we don't all live in d.c., but i agree with one of your points. i think the temporary nature of some of the directed tax credit and cuts for the middle class, that's bad i don't like credits i like permanently lower marginal rates i love you're from buffalo, because my mentor, who sort of invented or reinvented supply

side, jack kemp, was buffalo's greatest congressman down through the years and he promoted supply side >> he's an all-star, and by the way, he promised the voters of buffalo if they elected him to congress in the early '70s he would retire as quarterback and they voted him in unanimously and he developed the tax cut jfk is where i want to go. you need to read my book, with all respect. jfk and the reagan revolution. jfk was a democrat and he's the guy who initiated lower marginal tax rates across the board upper, middle, lower, corporations, he beat the new deal orthodoxy and triggered an eight-year boom and i disagree with you about reagan. reagan had a great boom and bill clinton, by the way, essentially was reagan's third term. as far as george w. bush was concerned, the 2005 tax cut was a bad tax cut, i don't think

that's relevant, but, but, but, no one can argue -- here's the thing, you either want redistribution, tom perez, or growth >> hang on i just want to bring in dick, because i know he wants in on this and i would also note the markets are coming back a bit. just turning positive. dick, go ahead >> the most important thing mr. perez has to understand is this. since 1950 and up into the beginning of the last administration, our gdp growth was over 3%. if our gdp growth had only been that of the obama administration over those years, the middle class would be a $25,000 in income versus $55,000. could you imagine our middle class at half the income they have today

if you want entitlements, if you want redistribution, we have got to get the economy growing at 3% and this program will help us get there and the existing program that's out there will never get there because we've been at 2% for nine years and we'll continue there that's why we have to make these things >> go ahead, i'm sorry >> i want to say, i agree we have to market this thing, and i believe that, as i said earlier, that it's not work repealing the estate tax for the market disadvantage of that i'd also say the way you have to explain this at the upper income level there should be no tax advantages, because they are going to gain as a result of the growth of the economy, so this one doesn't give any increases >> can i do something? steve liesman asked a very

important question steve? kevin hassett said this, great point, profits during this recovery have increased at 11% at an annual rate, very healthy. unfortunately, unlike almost every other recovery, wages have barely increased that difference is a big difference >> i agree with that >> here's the thing -- here's some reasons why here's some reasons why. first of all, tax avoidance has pushed so many of those profits offshore, overseas, and are not available for either investments or wages that's a fact. >> i agree >> or we've had the inversion. that's taken a big chunk out of it and in terms of the tax rate, steve, the rate on capital, right, this is about the cost of capital or the cost of investment after tax well, our after tax investment cost is way too low.

compared to everywhere else in the world, virtually so what we're trying to do is get the companies to stay home, secondly, take the money at home and invest it. we haven't had any capital investment in 15 years then you'll see the wages move in accordance with profits >> big reasons we're watching shares of eaton and all these companies, right >> i agree, larry. i agree with a lot of what you said >> hang on a second. this is amazing. 700 american companies are domicile for tax purposes in ireland. 700. that is unbelievable, and i don't like it one bit. that's why we need tax cuts to change it. >> go ahead. >> just on a slightly different point, i want to bring it to the individual taxpayer again on this the elimination of the amt here.

how is that going to play with households that make more than $100,000 because we talked about some of those households being at a higher tax bracket for income above that amount, but at the same time the amt is being eliminated, so on balance, does that group see a tax cut or tax increase >> it's going to be that group that gets rid of -- amt has eliminated for and also they have deductions caps they could end up even for wealthy people, i'm not precisely sure where the amt kicks in i think it's more than 100 i thought more like 200 or 250, so those people you'll have the state and local caps, but you get it back to the amt it's the people below that that might have taken advantage of the state and local and some of the other deductions and don't get the benefit of getting rid of the amt that could see their taxes go up. they are going to have a figure that out i want to say i talked to

somebody in the administration earlier and they were kind of cautiously optimistic about this they said the five principles the president was looking for are more or less addressed but they are going to let this process go through congress and see where they end up. >> one thing that's shocking, though, steve -- the details i want to raise a warning. i'm hearing from some people, and i don't know the details yet, that the possibility exists of a back door back tax, border adjustable tax and there's early reports about american companies who are located offshore who want to sell their goods to the united states and will have to pay a heavy tax, which is really a tariff, and there's some provisions there about foreign companies operating in the u.s. but they are domicile some place else will also have to pay a tax. so this business about subsidizing imports and

helping -- rather taxing imports but subsidizing exports, this is not over i have to find this out. i've had several e-mails and texts this morning i want to invite attention to it, because this is something we need to watch. this is a very bad idea. >> all right, tom, time for compromise i just want to get tom perez in here >> one of the panelists says we have a marketing challenge we have, you have a lipstick on a pig marketing challenge for a couple reasons, you did it behind closed doors, didn't involve anyone on the democratic side, then you say to the american people, trust us. that's a hard sell because they look at some of these provisions again, i keep coming back to the estate tax and we know who disproportionately benefit from that and then they tell us this is going to be good for everyone this is why the effort to repeal

the affordable care act failed i support the efforts of senator murray and senator alexander to come up with a bipartisan fix. there were areas where there was agreement between the obama administration and republicans on tax reform. this, unfortunately, isn't tax reform this is a massive give away, and that's why you see the polling that says people are so distrustful, because it's a fooled you once, shame on you, fooled you twice, shame on me. >> why do you hate rich people >> because we're about to get the official unveil. this is the speaker, of course, ways and means chairman kevin brady behind him take a listen. >> first, i want to thank these families for taking time out of their day to join us welcome, it is great to have you with us here today fantastic. you are who this is all about. this plan is for the middle class families in this country who deserve a break. it is for the families out there

living pay check to pay check who just keep getting squeezed you know, about half the country today is living pay check to pay check and more people are a pay check away from living pay check to pay in this country and this is going to give people relief, real relief for people in the middle, people who are also striving to get there. with this plan, the typical family of four will save $1,182 a year on their taxes. for many families, having an additional $1,182 more will make a real difference. this $1, 182 more covers about a year's worth of gas for your car, your family's phone bill for the year, depending how much data, of course, your kids use that $1,182 more can help you pay down your debts faster, help you start renovate your home faster that $1,182 more for the average

family will help you put more money away for college, help you save for retirement, help you save for a rainy day with this plan, we are getting rid of loopholes for special interest and we are leveling the playing field. we're making things so simple, making things so simple you can do your taxes on a form the size of a postcard. with this plan, we are making pro growth reform so that, yes, america can compete with the rest of the world. we're also making it so that families like these that are here can have more take home pay. this is it this is a very important and special moment for our country, for all americans. are we going to let the defenders of the status quo win and see our country continue down the downward spiral, or are we going to realize the promise of our country are we going to revitalize the american idea? this is our chance to make sure that generations to come don't just get by, they get ahead in

this country let me turn this over to the person who has led this effort i am so proud of this man and this committee in this room. i want to turn it over to the chairman of the ways and means committee and i want to thank all the members of the ways and means committee for getting us to this point. ladies and gentlemen, the chairman of the ways and means committee. >> thank you, mr. speaker. thank you, american families standing with us today, and thank you, as well, to ways and means committee members who have been listening and traveling across this country for this historic day this is an exciting day, and i think we all feel the excitement here in this room and here in this country i know the american people have got to be excited, as well real relief from today's complex, costly and unfair tax code is on the way

with this bill, there's relief for real american families there's relief for american workers, and there's tax relief for hard working job creators of all sizes. and with this bill, we will grow our economy by delivering more jobs, fairer taxes, and bigger pay checks to americans of all walks of life. that's especially true for low and middle income americans who are just sick of today's broken tax code, its impact on their jobs, their lives, and their paychecks. under the tax cuts and jobs act, that's going to change, and it's going to change right now. for a middle income family of four making $59,000 a year, as the speaker said, this bill delivers tax cut of nearly $1,200 to that main street business making $52,000 a year, working day and night and weekends, a tax cut of over $3,000 for that

main street business that's your money. you earned it. you deserve to keep it and you should be able to use it for whatever you want. that's exactly what this bill will do, and that's why the tax cut and jobs act has president trump's full support this is it, america, this is our opportunity to make tax reform a reality and deliver the most transformational tax cut in the generation so let's not let washington special interests, the tv pundits, or the pessimists fool you. none of them thought we'd even get this far with tax reform, and they are wrong now working together with president trump, our colleagues in the house and senate, and you, the american people, we're going to prove them wrong once and for all by getting pro growth tax reform to the president's desk this year thank you. >> all right, thank you,

chairman brady, for your tremendous leadership. >> all right, there it is, the big unveiling of the gop tax proposal, at least the first version of this. larry kudlow on set clapping from what he heard didn't hear anything new there, got a bunch of families in a nice photo op, babies behind them to emphasize the point they want to represent this as a middle class tax cut, more jobs, and pro growth >> pretty good messaging i think brady really nailed it i was clapping for kevin brady, he's a dear friend of mine he's just a great american and he's taken so much flak from all sides. this is a really hard thing to do what they put together. it is not a perfect bill, but i think the good should not be the enemy of the perfect, if i have that phrase right, and i think, again, on the business side is where the economic power is going to come from, and i believe the middle income folks are going to get a big chunk of it, but on the other hand, i want to make this point, i like rich people.

i don't want to penalize rich people they invest, they start companies, they are success. we should reward success in this country, not punish it, and everybody should benefit >> referring to the estate tax marginal rate doesn't change home interest deduction -- >> that's the disappointing part, that real reform is supposed to be slashing the marginal rate, slashing, and then getting rid of the deduction. that's not what this bill does, okay, this bill, as i said, chop, chop, chop, mush, mush, mush, i can't figure it out. generically, generically, the trick is to make the nonrich, rich the trick is not to attack rich people as evil villains who should be punished, and that's just my own personality los philosophy and lower taxes helps that >> let's talk about the economics. the typical family of four will

save $1,182 a year, according to house speaker paul ryan, steve liesman. where does that math come from >> my guess is through the jcp they are going to run everything through there, and i think larry, who was complaining about that, i think that's the law i don't think they have any choice but to score those tax cuts through the joint tax committee. i think that's what they have to do >> convention. >> right it's convention. >> not a real law. >> i thought it was something they had to do, that was the only way to score them the cbo doesn't do it, but the joint tax committee does and they've used pretty much the same models and i guess there is argument about the feedback there. that kind of money, sara, at least from an economic point of view, is thought of as money reasonably well spent in the way it ends up probably going directly into the economy in the sense when you give tax cuts or incentives or rebates to middle class and lower income people, they tend to otherwise spend them pretty quickly, whereas one

of the things about doing that for wealthy people is they tend to save it more. >> that's right. investors, they are investors. the top end are investors. but the stress of this bill, steve, let's put aside the score card issues and the rest of that minutia. the stress of this bill is to promote capital formation and business investment and start-ups and productivity and wages. that's where this bill is going. >> my problem with that idea, which by the way, i want to be clear. i'm in favor of taking steps to equalizing the u.s. tax relative to others, as well as simplifying. there's inefficiencies, all in favor of that. my issue, larry, it's not clear to me that with profits so high that the tax code, the tax rate, is the wedge between the profits and the wages and giving people higher wages >> as i've said -- >> can i make a statement on that >> yep, go ahead, dick, was that

you? >> so, i think another point that has not mentioned here that helps buffalo and will help steve, that we have not made that's extremely important, is the reduction for small businesses from the 39.3% to 25%. small businesses have been the leader in employment in this country for 50 years, except for the last ten years there are small businesses all over america, in every rural area and every big city. they now are -- >> completely agree. >> they'll now be taxed at a 25% rate versus 39.3% rate it's huge. we're in the weeds here. >> dick, how much of that is taxes, how much of that is regulation, the impact on loan growth demographics taxes don't operate in a vacuum. >> there's two things that

caused problems for small businesses that the reason is they haven't grown their employment one is taxes, but overregulation that's free. we have way too much regulation in this country that's totally unnecessary, and this administration is going to do something about, and that alone will probably be a big boost to every working person in the world, i mean in the united states, is to reduce our regulations, particularly on small businesses, particularly on small banks >> already happening you know, you see these confidence indexes, dick, i think that -- and the trump administration has acted through executive orders that's a huge part of their program. people say, you know, none of the legislation has gone through yet. that's true. the regulatory or the unraveling of regulatory -- >> hey, larry, can i ask tom a question i want to ask tom -- tom, i want to know if the democrats see

that confidence is high, that the market is high, that the president's come into office and you've had all these effects on things like confidence, and i'm wondering why the democrats have not really gloomed on to this issue to see what's happened with the change in the attitude in the white house i think that's been a powerful effect i think it has potentially powerful effects down the road the idea that -- just to quote one business executive, the waterboarding has stopped. that's a powerful idea in the economy, which have been significant. >> tom, you can't deny that. >> that's an interesting question look what barack obama walked into in 2009, the worst recession of our lifetime. hey, i've been listening the whole time, guys, will you listen to me for a moment? guys, will you listen to me for a moment i've been listening very respectfully, and if you give me the opportunity i just gave you, i would appreciate that. he walked into the worst economy of our lifetime.

look what the stock market was when obama left. wall street did well under the obama administration, and it was a result in no small measure of courageous investments like the recovery act, which garnered no republican support whatsoever. we took an economy that was in the tank, and we handed the longest private sector job growth in american history you look at the first time claims for unemployment, they are at historic lows that's what barack obama handed to president trump >> what happened in november 2016 when you look at all of the confidence charts, when you look at the stock market charts, we had a period of stagnation of about a year or so and then the election there's a breakpoint and an obvious breakpoint in the charts >> you look at the rate of -- you look at the unemployment rate right now, the rate of job growth in 2017, it slowed from 2016 you'll recall when we were doing the job numbers on the first

friday of the month, donald trump was saying those are fake news, it's a 40% unemployment rate now that he inherits what barack obama handed him, actually, those numbers are accurate now and i said on the show many times. so, i think they have to be fair about what the president, president obama inherited, and what we built in the course of the recovery there's undeniably unfinished business, folks. when i hear this -- when i hear speaker ryan talk about that average middle class family, i can't help but wonder what about that middle class family with a kid with college debt and another kid with diabetes? well, they've just said in their tax proposal that there's going to be a limit on deductibility for medical expenses the cost of student debt is not something that's going to be deductible in the fashion that it was now, so i really think the question presented is, what

is this do for the middle class, and, frankly, what does this do for folks who are really wealthy? they don't need more help. >> we're going to take -- >> we're going to take a q & a in a moment. richard fischer joins us, former fed president. richard, all this talk about the past eight years sort of brings up the notion of what the new fed chair will have to deal with and why yellen apparently isn't getting a second look. your thought on taxes and what we'll hear later on this afternoon? >> well, i just listened to this conversation first let me say about kevin brady, who is a close personal friend, he's the jose altuve of congress right now they are both 5'6" tall, but he has really pulled together, been a great infielder here, done a great job. here's the point, you can give any president you want credit, whether it's the former president or existing president. we're nine years into an economic expansion to get it continued, you can't

rely fully on monetary policy. you have to have fiscal policy and regulatory encouragement, and this is a step forward in that direction if you have a longer business cycle, people keep their jobs longer, earn more money, wages go up. this is what this is all about i wouldn't waste time saying this is great -- >> but inflation -- >> reserve comes in. >> new federal reserve chair, and i wonder is this fiscal policy stimulus will make it harder for him >> tell us about jay powell, dick >> i know jay, he's one of my closest friends. i served with him, he sat to my right at all the meetings from the moment he came onboard in 2012 to when i left in 2015. we are close friends and i'm biased in his favor. he's a moderate individual, very comfortable in his own skin. he's not trying to show off for anybody. he's thoughtful, and i wouldn't say as i said in "the new york times" yesterday, he's not a dove or hawk, he's the wise owl and that's how he tries to

position himself he did a good job in all of our debates. he wasn't there during the peak of the crisis, '08 and so on, but he was extremely helpful in helping us to articulate and actually get ben bernanke to make clear we would have an exit and now janet yellen has engineered the exit, i think, very gracefully without any financial disturbance. they've made it clear increments, shooting to 2.5, 2.75 i think they are going to continue on that they have the support of all the bank presidents. this is important, the bank presidents have the power, more votes than the governor. jay is very well liked by the bank president, works well with him. >> all right, we can discuss that -- >> go ahead. you've served your time and done it very well >> served my time. i was sentenced to ten years with the fed >> you served your time. you were paroled for good behavior, i think, as i recall >> fed is prison >> well, you know, i served --

anyway, sara began to ask a key question, does jay powell believe that a business-led supply side growth increase, which is what the tax cuts and regulatory cuts aim for, is inflationary that's what i want to know does he believe growth and higher wages cause inflation >> well, there are two different things here. economic growth is what is desired. the fed's job is to achieve full employment, to carry on as long as possible, and to contain inflation or stop deflation. so it's really a question of how the economy is geared here we are fully employed. we're going to try to extend the business cycle doesn't necessarily mean it's inflationary if you have a moderate monetary policy, and it's really a question of how you offset it, larry, with what you do on the policy lever at the fed. but this -- doesn't necessarily

mean this bill is inflationary what it means is it extends the business cycle, and that's good for anybody. anybody that's got a job >> but the board staff, richard, thinks we still live in an era where rising wages automatically causes inflation >> speaker's taking some questions. let's listen >> you said you worked hard last night to make the corporate rate reduction permanent, while also family credits are temporary how do you square this >> so we are focused on increasing paychecks in a major way, and we know the families who struggle the most have seen their paychecks leave for other countries. so we drove toward a 20% rate so our local businesses can compete and win anywhere in the world, especially here at home, so they can compete and create jobs, compete against china, europe, canada, mexico, create jobs here in america, as well.

it was critically important the rest of the world understands we're not going to be the doormat any longer we're not going to stand still for 30 years as they leave us in the dust we're going to compete and we're going to win, and our jobs and paychecks as middle class families are going to grow and so permanent for businesses, permanent for families matter. we did create in this new family credit, which i think you ought to take a close look at. i look at our neighbors, you know, not only getting more help with their child, getting more help for themselves, and that college kid, and i've got one at home, you know, or that parent coming back to live, and most important thing about that family credit, it doubles the amount of americans who can finally get help with their kids this is a family-friendly tax code and so i'm very excited about what this brings middle class

americans and i think permanent uncertainty drives that growth >> mr. speaker, can you talk about the political will for republicans to compromise among themselves to move forward with the health care bill and the way you did ultimately pass that was it messier and secondarily, for years you and other republicans have argued that all americans that pay taxes and work should get a tax cut, but with some of the elements of this bill and where your rhetorical focus is today, is clearly on people in a certain position on the income scale. and it steered away from the sort of argument you have with democrats over the past ten to 20 years, certainly under obama. can you talk about that? >> first off, political will is strong and you can see it right here we have not reformed the tax code since 1986. the world is passing this country by, and we're losing jobs and companies as a result of it. so the political will among the members here in the house, as shown by the members of the ways

and means committee, is ironclad to get this done, because if we don't do this, we'll not get the kind of economic potential we know we can reach. and the fact that people are living paycheck to paycheck in this country, about half the people, they need a break. so, yes, the focus is on middle class tax relief the focus is on directing that tax relief to the people in the middle and trying to get there that's why we put our emphasis on that tax relief for those people who are in the middle, working paycheck to paycheck, striving to get ahead, and what kevin just said, we've got to modernize our tax codes so we can be competitive again, so we can keep jobs in this country, so we can keep businesses in this country we have seen a flurry of u.s. companies moving overseas and becoming foreign companies that will only increase if we stay at the back of the pack that is why we have to work quickly to fix our tax system, clean it up, level the playing field, make it more fair so we can get bigger paychecks, more jobs, and keep businesses in america and get businesses coming back home we're the only country that says to a business, if you make money

overseas, keep it there because our tax law doesn't let you bring it back. so this levels the playing field and gets that money back into our country to invest in our jobs here. that's going to help paychecks, competitiveness, and that is why republicans are absolutely >> the bush tax cuts did not result in growth or higher wages or more jobs why are you so certain this will be different >> first, can i just comment, did the speaker just sound like a former chairman of the ways and means committee? i'm pretty sure. you were getting ramped up. >> i was getting going >> so the question was what? >> our last experiment with the bush tax cuts didn't lead to growth or higher wages or more jobs we had quite the opposite. so why are you southea-- >> this is a complete redesign of the code so we can simplify it so much that nine out of ten

americans can file using a port card-style system, lowering the rates, protecting the first dollars you earn, making sure we have strong middle class relief. but it's more than that. not just putting higher octane fuel in an old clunker of a tax car, we propose to drive a newer tax car that can compete and win against any country in the world. so that redesign for simplicity, fairness and competitiveness i predict under this tax reform plan, america will vault from 31st in the world among our competitors to the top three as the best places on the planet for that next new job, that next new manufacturing plant, that next new research headquarters that's what's different. >> kasie >> if republicans can't get this done, do you deserve to control

the congress >> what's your second uestion? we're going to get this done you know why because the american people are counting on us we told the american people this is what we're going to do if we get this majority. guess what, we're doing it thank you, everybody appreciate it. >> you've been listening to q & a there from house speaker paul ryan and chairman of the ways and means committee, the tax writing committee chairman brady there. i do want to get tom perez, your response as the dnc chairman with us. former labor secretary they're really painting this as a way to boost american competitiveness. and when you do look across the world in terms of corporate tax rates, ours are high maybe companies don't pay that effective tax rate, but certainly smaller businesses do and domestic businesses do and a way to keep tax revenue here in the u.s. is that at least an idea that democrats can get on board with? >> democrats would love to work in a bipartisan fashion.

again, i talked about patty murray before and lamar alexander. but once again, in a smoke-free private room, this is where they came up with their plan. you know, the question that was asked i think the second last question by the press is exactly what i pointed out before. we've been to this movie before in the bush administration and it didn't produce the results that you promised it would produce. that's why i think the american people are very skeptical moving forward. you know, when we talk about job creation, let me give you one data point that i invite you to fact check, which is if you go back to when ronald reagan was president, and you look at net new private sector job growth. that is jobs gained minus jobs lost in the 20 -- now almost 21 years of republicans in charge, there were roughly 17 million net new jobs gained in the private sector you look at the 16 years of democrats in the white house,

clinton and obama, and there were over 32 million net new jobs created so this notion that we have to move into republican orthodoxy of supply side trickle-down in order to create jobs, the facts just don't bear that out so i want to be grounded in the facts. i invite you to take a look at those facts because as labor secretary, we studied that job creation i think you've got a real problem telling people this is going to be different than the george bush era. >> i think bill clinton, who by the way, he raised the income tax top rate, but president clinton, who was a growth guy, slashed the capital gains tax rate for investors, and i think that helped a lot. and he reformed welfare. and he reformed trade. so i would say to you he was reagan's third term. but, tom, let me ask you this. i don't want to fight over the past president obama in his last two budgets proposed corporate tax rate of 28%.

is corporate tax reform very similar to what the rips are proposing today. i don't understand why the democratic party is so opposed to this. obama supported this why can't you? >> well, again, if there had been a genuine outreach, which t there wasn't in the affordable care act repeal and there wasn't in tax reform, we could resolve things like patty murray and lamar alexander are doing now with stabilizing the health care marketplace, but there wasn't an interest president obama didn't propose to eliminate the estate tax. president obama didn't propose to make it difficult for people to deduct their home interest, to make it less viable for people who have serious medical needs. >> obama did cut the top -- he cut the corporate rate he increased expensing and he was in favor of repatriation,

which are the building blocks of the trump plan and i know that because i helped write the darn thing president obama supported the basics here. you're going off the question. tom, if obama supported this, why can't you? >> because that's not the whole plan you've got to look at the whole plan, my friend. this is a plan that is providing massive relief in the form of -- i love that frame, they talk about the middle class family, but who disproportionately benefits from these reforms? it's not that middle class family, and you can't deny the fact that there are many middle class families that are going to pay more as a result of this bill and so if we would sit down and try and do this as opposed to what they're trying to do. they want to pass this in ten days this is really complex, we can all agree on that. that's one of the reasons it hasn't been done since 1986 but yet they want to ram it through because they don't want you to see the fine print the fine print is kind of killer on a lot of this stuff. >> we're definitely reading it now. i can't let you go, tom, without asking if you've read donna

brazile's piece about the dnc that's in politico today any comment at all >> hey, we're moving forward we're building -- i've been asked that question a number of times since i started. one of my goals here as dnc chair is to make sure that the nominating process for 2020 is a process that's totally fair and transparent for everybody. that's what we're fighting for and that's what we will do we're going to set the primary debate schedule well in advance of when we know who the candidates will be there we have to make sure that everything is fair and open and everybody has a fair shake that's what we're going to do. >> tom, we appreciate your time today for helping us understand this tax bill in the early innings. we want to check in once again with ylon who was in the room. good morning once again. >> good morning. i think that the debate you guys were just having on air speaks to the heart of what will be the critique of this republican tax

plan, which is is it a middle class tax cut or mainly a tax cut for corporations when i asked this question to house leadership, they once again made the connection between lower corporate rates resulting in higher worker wages. kevin brady saying that the u.s. will no longer being a door mat under this tax plan and that many workers who had suffered previously suffered because companies went overseas. now, i think it's also important to say this is just the opening salvo in what will be a very long process but again house speaker paul ryan saying that the political will here is iron clad they got the first step done we'll see what happens next week when this goes to committee. >> can i ask you a question, it's larry i think the timetable for the senate, the timetable for the senate is thanksgiving do you think they can make it? >> it depends on when they actually release the mark. what we're hearing is that the mark could be released next week that would be the senate finance

committee's first draft of when this tax bill will look like so it all depends on that timing they have to get the first step done too. >> all right, thank you very much dick, we'll give you the last word here and we're going to look ahead to what we are expecting to be the announcement of the new fed chairman, jay powell we're digesting what we just got from the house republicans bottom line, is 3% to 4% growth attainable this year or next under president trump, as we now see the contours of his economic policy >> well, i think it is and it has to be. i want to repeat, we cannot afford to continue the obama growth rate of 2%. it will not pay for entitlements, it will not increase the middle income earners. we need 3% growth. we can have 3% growth with tax reform and regulatory relief that's what the president and congress is working on and i think we must get that done. >> right on. >> i think that's the

fundamental question here, guys, because growth still has a lot of problem, like deficits and wages and other issues. >> yes, yes. >> we'll see. >> jfk, democratic tax cutter,i mean this, a rising tide lifts all boats. >> our thanks to you larry, dick, richard, to tom and steve. let's get over to the judge and "the half. >> all right, we'll continue, carl, our breaking news coverage of this gop tax plan, what all of it means to your money and the markets and we will do it with an all-star panel, include john najarian, rich sapperstein, kevin o'leary is with us as well the chairman of o-shares etf investments. markets, as you can see, not doing a whole lot now that we've gotten more details about the plan you just heard from ylon who was in the room with gop leadership. now let's hear from those who are putting money to work in this market about