looking at tv spending alling the anthem protest a debacle. that is wake-up call. >> go seagulls. stuart: our viewers don't know you were almost a professional soccer player. >> almost. >> i'm connell mcshane here for neil cavuto on "cavuto: coast to coast." we're following a number of breaking stories. negotiations are underway, as a matter of fact right now the house ways and means committee begins markup. speaker paul ryan came out and said lawmakers planning a whole host of changes to their tax reform bill. that is where we start. on capitol hill. see what the changes may be. adam shapiro is covering throughout. joins us now. what is the latest, adam? reporter: well, they're starting markup of the tax cuts and jobs act and kevin brady is about to deliver his opening statement on

this markup. he will reiterate that for the average family of four with joint income of $59,000, this is roughly a $1200 tax cut, put the money back in their pockets. there are several issues as we talked about on fox business. the repeal for deduction in state and local taxes. as well as lowering the pass-through tax. pass-through entity tax, that a lot of legislators have questions about. but here's what vice president mike pence had to say about what you might call the negotiations over pushing this bill forward, when he spoke to maria bartiromo >> is think any room for compromise? even your own party says this does not reflect republican principles of tax cutters? >> there is always room for compromise, but what the president is not going to compromise his determination to see this congress pass historic tax cuts and pass them this year. and the president is absolutely

committed, maria, to make sure as he said this, is middle class miracle. reporter: remember, gary cohn, advisor to the the who help the craft this legislation reiterated on friday on fox business the 20% corporate tax rate is not negotiable. the president wants 20% immediately. there are rumors the senate when it gets there may try to phase in the tax rate deductions or cuts to the corporate tax rate. also, kevin brady, who will oversee the markup between now, we expect this to finish late thursday, send it to the house for a vote. he is working with the so-called compromises. for instance, you have the new york republicans, the new jersey republicans and pennsylvania republicans in the house worried about the cap on mortgage interest. that cap at $10,000 on a mortgage up to $500,000. tom macarthur actually told fox business's brian schwartz he is now in favor. he was opposed to cap. he wanted it higher.

he is willing to vote yes on a cap at $10,000 on the mortgage interest deduction. so this is now evolving. they will begin the markup. a lot of questions will be how you pay for it. joint committee on taxation, the cleave will be in the chamber answering a lot of questions. connell. >> thank you, adam. we have congressman rice from capitol hill. there are going to be changes right? what is the biggest area before getting this thing through. >> good afternoon, connell. thank you for having me on your show. my heart goes out to the folks in texas, the tragedy they suffered. my friend, i am on pins and needles, so excited about the tax reform package that will reinvigorate the economy. i want to share details with you. i'm chomping at the bit to get over to the markup meeting to start the process of tax reform.

>> excited about it, thattably so in terms of reinvigorating economy, one of the questions comes up how do we get back to growth if we in effect raising income taxes on high earners around the country? that does not stimulate the economy. what do you say? >> there will be tax cuts up and down the income spectrum. yes, we retain 39.6% rate. the bracket moves up. doesn't start until you have over a million dollars in income. the truth is, my friend, the last time we did tax reform was 1986. the middle class today make smaller than it was in 1986. it makes about the same money as it did 30 years ago. when we did the tax reform package we were competitive in the world. but we sat here for 30 years with that same old stale tax code and rest of the world has left us behind. taking a lot of our american jobs and our companies. this tax code with its corporate

tax cut, with the small business tax cut, with the full writeoff of capital assets to stimulate the economy it, will make this country competitive. you will see our, every, every economist that we had in front of our committee says our economy will grow from the lower end of the estimates at .4% to the upper end at .9%. that will raise trillions of dollars. >> on corporate side i understand the argument there. especially getting down to 20% right away, not phased in over time how that can help to stimulate the economy, but are you open to changes say on the state and local deductions? that is where many of the complaints come in

are you willing to make changes or open to it? >> we're allowing a property tax deduction up to $10,000 in deference to the high-taxed states. connell: right. >> the truth is, my friend, "the washington post" of all conservative bastions has confirmed this, they, they say 90% of folks in every income quintile will receive a tax cut from this, even considering the abolition of state and local income tax deduction. we're allowing for $10,000 in property taxes. every income quintile there will be a tax reduction. in terms of percentages, most of that tax reduction is at the lower end. my goal in this was to stimulate the economy. that is my number one goal. connell: right. >> i'm really proud of this product but the secondary goal is the tax benefits of this which in my opinion are small potatoes next to the economic growth that this will create.

but i want to see the tax benefits are spread among the income quintiles. we have done a masterful job in my opinion of threading that needle. connell: mortgages on 10,000, congressman, as adam said, you were able to get congressman tom macarthur on board. he was a no turned into the yes. is there some others coming around that you heard. >> you're conflating it a little bit. we limited it to a mortgage of $500,000 or less. connell: right, right. >> it had been a million or less. we lowered it to five. we grandfathered everybody over a million. but the $500,000 or more mortgages is 2% of the american population, number one. connell: right. >> in addition to that we put back in a deduction for property taxes of high-taxed states up to $10,000. i think we reach ad compromise. connell: i misspoke on the property versus the mortgage. there are more where that came from, possibly with congressman macarthur coming around? >> i hope that we're, i hope

that we are where we're going to stay. you know, with any complicated bill like this, this is like, this is like a big diamond with a thousand facets and other one of those facets bothers somebody. connell: i know. >> we'll have to do the best job we can to hold together this package, which again stimulates the economy and spreads the tax cuts among the income quintiles. i think it will be very beneficial. my friend, we have tried for the last eight years, the obama administration's plan of bigger government, more taxes and more regulation. in not one single year in those eight years did we have 3% gdp growth. that hasn't happened in modern history. that hasn't happened in any administration since 1945. the tax foundation on the low end we'll have .4 increase in gdp. we're pushing up on 3% now. we could get to 3 1/2 or even 4% perhaps with this plan. i don't want to back up on it.

i don't want to change it in any way to lower the stimulus that was my number one goal. make america competitive. put people back to work. connell: we appreciate you giving as you few minutes when that is just beginning. congressman, thanks. >> thank you, congressman tom rice. republicans hoping as the congressman talked about they will able to get enough growth to fill the tax gap. committee for responsible budget, the president, maya maginnis, i'm sure there are concerns. we don't hear about the concerns you're about to tell us anymore. nobody worries about the debt and deficit, right? >> absolutely. the whole concern about the deficit and debt kind of got cast aside when we adopted a budget for this year. people talk about controlling spending and fiscal constraint, remember what is in the budget guiding the country. it is no spending cuts, not one. no entitlement reforms, not one.

and a tax plan that instead of being revenue neutral which is the best way to grow the economy, which is one of our number one objectives, actually would add 1 1/2 trillion dollars to the debt. connell: that is how they wrote it. one 1/2 trillion was in there 10 years. >> that's right. connell: you hear a number of republicans, chris wallace, had speaker of the house paul ryan on over the weekend, people who have a history like paul ryan does speaking out against deficits going along with this plan. their essential argument, be it speaker or anybody else, we're in a different time now. we have, we have low interest rates. we're getting to the point where we have higher growth. if we cut taxes, particularly corporate taxes getting the rate down to 20% the growth will make up for it. the growth will, for lack of a better term pay for it. you say? >> not a chance, unfortunately. i would like to be as optimistic as possible what tax reform can do for the economy but two main points. the growth that will come from tax reform, the congressman talked about numbers,

unfortunately haven't been shown by any models. the growth from tax reform can increase our gdp by a couple tenths of percentage point. that is exactly what we need to do. but, and this is a huge, if, if, only if it is paid for. if tax reform adds to the debt, the higher levels of debt may bring the growth down to may be negative. you talked about in terms of tax reform in terms of growth, lower corporate rate, full expensing, shouldn't expire. changing the way we treat our international taxation. those things can grow the economy. that is focus of what a tax reform plan could and should be but it has to be paid for and right now instead of really paying for the tax plan honestly, there are a lost budget gimmicks in it. more growth, fewer gimmicks. connell: some people say the pay-fors in there countering the benefit from a lower corporate rate. take away state and local deductions people in high-taxed states might ordinarily spend

more would spend in higher taxes and that is not going to stimulate the economy. the old supply side argument, cut everybody's tax, right? >> first we should all understand, we tried tax cuts many, many times but they can grow for the economy, tax cuts do not pay for themselves. really importantly, the whole point of tax reform, if you bring down rates by broadening the base you can unleash something impressive. broadening the base means getting rid after lost tax breaks, $1.6 trillion in tax breaks in the tax code a year. as soon as you start talking about, oh, no, no, not my tax break. if you're willing to tackle those, we can get those rates down low enough we could improvement. borrowing, adding to the debt, will undermine that, could in fact make growth negative. that is the cheap way out and it won't work. we need to offset the cost of this plan.

connell: maya maginnis feels more lonely. thanks for coming on with us. >> appreciate it, thank you. connell: saudi arabia, what a story, they're calling it a antsy corruption sweep. what is going on what it means for you with all the arrests over the weekend. a shocker to see the headlines, people like this man thrown in there. we'll have more on that coming up. then amazon, amazon, with very interesting move. it's making a move that will impact the millions of holiday shoppers. it will be affected by this we'll talk about it when we come back on "cavuto: coast to coast."

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connell: wow, this anti-corruption sweep as they're calling in saudi arabia, and the talk is now, that just may be the start of things. tracee carrasco joins us from the newsroom. what is the latest? reporter: good afternoon, connell. reuters are reporting that saudi arabian banks began freezing accounts of those involved in the anti-corruption probe. at least 11 princes including prominent billionaire and investors prince alwaleed bin talal were arrested over the weekend. they were carried out by the powerful new anti-corruption

committee, headed by the crown prince salman, the country's future king. walid is the one of the world's richest hest men. previously he held a 5% stake in twenty-first century fox, parent company of fox business network. as of yesterday he held zero percent. following the prince alwaleed's arrest, they say they have confidence in the company, writing in part, i'm not surpised by the government's vote of confidence as khc pursues the investment strategy and global business operations. i would also like to emphasize that khc's experienced and seasoned team of and experienced executives leaders in their respective fields are focused on the unwaivering responsibility to khc shareholders and stakeholders. some of those arrested are reportedly being held in riyadh's ritz-carlton, which stopped accepting new bookings, and told paying guests, to leave.

connell: another interesting part of the story, gee, not exactly rikers island. we'll say what it means for our relationship with saudi arabia. let's bring in forkerly with shell oil, john hofmeister. john, dealt with saudi arabia over the years in a business sense. we can get into the why, what they are going after here. boy as trace see says, freezing accounts what is the immediate fallout? >> there is no room for opposition in the kingdom of saudi arabia. it is not a kingdom like the uk where you have two parties. this is a kingdom with one party, that is the royal family. if you don't like it, you shut up or get out of the way, one or the other. in this case people did not get out of the way so they were taken out of the way. i think there will be more of that, because momentum building behind mohammed bin salman is

huge. he is supported enormously by the millenial population which is one of the largest groups, from demographic standpoint, one of the largest interest groups in the king many do. they want to see change. they're tired of the traditional way of doing things. so i think this is going to be very interesting to observe over the next few months. connell: it is interesting, from the point of few of americans to watch this as you say you have a 32-year-old crown prince. there may be changes that are beneficial to the society there already. there has been big headlines about the fact that women will be allowed to drive, that type of thing. but not exactly most democratic may to modernize, rounding up the guys throwing them in prison albeit the ritz-carlton. >> there is nothing democratic about the kingdom of saudi arabia. that's my point. connell: right. >> we shouldn't expect it. we have this wonderful democratic culture of our own but if you go to the king dom it doesn't exist. from a business standpoint i'm not particularly worried. because what the conference brought out in the last two

weeks ago, was this tremendous investment that is going to take place in the kingdom and, that is all about business. business under saudi terms however. business has huge opportunity to help remake the country into what it is going to become. whether oil and gas business and ipo of saudi aramco, whether the building out of infrastructure, all businesses associated with that or the new sectors of the economy they're working on. connell: right. >> such as technology. and information management and so forth. connell: that is the key. they have to diversify what they're doing here. can't just be all oil all the time forever. you're getting into new businesses. i guess the quote once you get past the shock of these headlines, right? >> the goal is to diversify. that is very important. connell: yeah. >> it is also to provide employment opportunities in fields different than have historically been the case. not just the low income menial task of service organizations

and cleaning organizations but really, meaningful, conceptual, intelligent work that really puts to, puts to work the society in people who haven't had those kinds of enriching jobs. i think it is brilliant move for the future. connell: yeah. you seem to be very positive. and many people are, i read both sides of this. when we were looking over the weekend, news first came out all of arrests, monday morning, how markets will do? markets are flat by the way. they're not doing anything. your point long term this is good for business, at first, boy, doesn't exactly make things more stable in the near term, might be a little rocky, how does iran respond, that kind of thing? >> well if you have done business with the saudis over the years, they want what they want and they are going to get what they want because they're in charge. the government is in charge and so, the notion that there's an opposition or people resisting mohammed bin salman, that is going to go away or he is going

to go away and i don't think he has any inclination for himself to go away. he's the man and he's in charge, given, with due respect to his father. connell: right. >> and that's the way it is going to progress from here. get used to it, the message i would send to a whole lot of people. connell: don't think of these things always in american terms, right? that is sometimes the way we think of it immediately when things happen overseas. they're different. >> it's a different part of the world, we have to recognize, we're not going to change them, they will be who they are. we learn to work with them. connell: john hofmeister, we think this is a positive. we'll see if time will tell cliche. thank you, sir. always good to talk to get insight. you know a lot about it. thank you. >> thank you. connell: another part of the world we're watch is north korea as the president continues his trip in asia. will we get our allies on board

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>> the united states of america stand in solidarity with the peel of japan against the north korean menace. history has proven over and over that strong and free nations will always prevail over tyrants who open press their people. connell: president trump with the remarks in tokyo as he begins his trip to asia. the question with the tough talk on north korea, will our allies really step up in the fight? from the heritage foundation we have dean chang, asian studies senior fellow. thanks very much for coming on here. president said, hey, my rhetoric, people say it is tough but i'm sticking with it, paraphrasing it of course but he is taking that show on the road. what is the goal do you think? what can he accomplish on this trip when it comes to north korea? >> i think the goal is to one, reaffirm to our allies the

firmness of our commitment. it is trying to get the chinese on board to sustain the pressure that they're putting on north korea. they have done a couple of things that we have never seen before. but above all, it is to send a warning to pongyang, basically they can't go down this sustained path. basically it has to come to terms with us and its neighbors. connell: come back to china. they have done some things you have never seen before. talk about what has been done so far what more we need from the chinese what more they might be willing to give and what the president might be pushing for once he goes there. >> this administration imposed a number of sanctions, secondary sanctions on chinese entities, chinese banks, chinese businessmen. as a result the chinese government ordered all joint ventures between chinese and north korean companies suspended. pretty much it warned chinese banks to stop dealing with north korea. the question here, how long will china keep those measures in

place? in the past they have imposed similar sorts of things, never on the joint venture side but they tried to restrict business and about six months to a year later they quietly sort of fade away. so i think if president trump can get the chinese to keep pressure on for a full year, better yet, two or three, that will definitely leave a mark on north korea. connell: i guess they hope we take our eye off the ball, stop paying attention to it? that worked in the past? >> that is exactly right. in the past, yeah, we basically haven't kept up the pressure. in the past we always hailed, oh, my gosh the chinese hailed announcement. that is all that matters. when the chinese stops enforcing it, nobody reminds the chinese that north korea is developing nuclear weapons. connell: give your sense how the president is handling all of this. a lot of the conversation at the top was about his rhetoric what he tweeted what he said, but what about policywise? there have been some things tangible when it comes to china.

how has the administration handled this problem, really big problem? >> when we look at what the administration actually has done, it is actually fairly impressive t has put in place a series of economic sanctions. it has pushed north korea's banks off the international finance network, so they can't transfer money around. it has really put sanctions on to the chinese and north korean businessmen, something congress demanded the previous administration do and the previous administration refused. connell: right. >> we're seeing a bite taken out of north korea's businesses. it is also, managed toker persuade a number countries in africa, southeast asia and suspend business relations with north korea. they have a business relation. they use those conduits, to bring badly-needed hard currency to fund its nuclear and missile program into north korea. connell: dean, how will we know that the policy, quote, unquote

worked, that we won this round? how do we know that? >> we saw kim jong-un for example, at one point threaten to fire missiles at graham. in a very rare display of common sense, he actually pulled that measure back. now he talked about doing above-ground nuclear test. something nobody has done since the late '60s, or early '70s. if we don't see that kind of a test, which could lead to radiation around the world, that should be considered a step back because they have recently said, oh, no, we might actually do this. connell: right. that will be the test. we have to move on but thank you. dean cheng on on the president's trip to south korea and china. next up, this move amazon made, this could impact a lot of people shopping over the holiday, as usual with amazon, could have a big impact as well on its competition, the other retailers. we'll tell you what it is, what

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connell: talk about amazon as we come back here. what amazon is doing, it is cutting prices on third party sellers. trying to give itself an advantage over its rivals. barrons.com editor, jack otter here in the studio. good to see you here, by the way. >> good to see you. connell: amazon thinks it can afford to do this to gain more market share. what do you think of this, on the third party? it is interesting. >> it can, because investors in amazon are unlike investors in everything else, they're willing to say, fine, jeff, i don't care about profit, keep on funneling money into growth. this is one of the advantages amazon has, it can sell anything it wants to and not the things

it doesn't. it looks around the landscape. the little margin in hdmi cables. rugs are expensive to ship. we won't do that. they have ability to take money in web services and undercut all the retail competition and market share keeps on growing. connell: what is a retailer to do? if you're a third party and selling items through amazon and amazon is willing to take the hit, essentially lose money selling someone else's products are you going to say, i won't sell through amazon anymore? what is the other retailer's take? >> amazon is taking the hit. if you're selling jackets, you get whatever price you demand of amazon. i don't think you have a whole lot of choice. connell: you don't. >> they are wholing a lot more retail business but i think you have to hope this become as good partner in the future. connell: the other option, let me do it myself, direct sell, do it through my website then

giving up your business. >> that is what everyone is trying to do. amazon was the first mover. an incredible company, eventually walmart buys jet, they will figure out how to compete. but in factual mart, amazon's share is actually increasing, in 2013 they were 20% of online sales. now they're more than 30% of online sales. as everyone else tries to catch up, amazon is growing faster. connell: this move do you think it hurts big-time retailers at low end? walmart you mentioned. companies like dollar general and get hurt by this and some others? >> i don't know about dollar general. they are stores people go to, they don't have item in mind. they want to shop for fun. tj maxx, coach, burr ring ton coat factory -- burlington coat factory. they may survive. best buy, may suffer because they can go to amazon and get it cheaper. connell: jeff bezos, richest guy in the world or taking on other

industry, but first your their web services businesses is so successful but you can take business. >> everybody thought it was commodity business but it was profitable for them. they're taking money and plow it into growth. connell: i don't think people know what they do there. they have this business. they're helping companies and businesses. >> ibm, microsoft, amazon are the big three. tabooing fell is doing -- google as well. all that stuff on the iphone, back it up on the cloud. they are helping companies like intel because they provide chips for these companies. >> it is lucrative. it is lucrative stuff, right? >> it is lucrative, more and more life is moving into the cloud. that is little scary. that is a difficult conversation. connell: a security conversation. >> that is business opportunity for amazon. connell: they're taking advantage of it. jack, we'll come back to you in a second. we were talking about tax reform, get to your thoughts about it. gerri willis, in the newsroom,

of speaking after tax reform, 46% rate hidden in this whole deal? a lot of talk talking about it over the weekend. what is the deal. >> it is like a crackerjack box. new tax bracket of 45.6%. that is level not seen before ronald reagan's tax reform. here is how it would work. would apply to singles earning one million dollars, and couples that make to $1.2 million. it's a way for gop to claw back on 12% rate on individuals and 90,000 for couples. those in the high taxed will give. until 12% rate relief is clawed back. once achieved, the rate returns to 39.6%. some are calling that a bubble rate. here is what vice president mike pence told our own maria bartiromo this weekend. >> that is a part of the house proposal that has been talked about and i know the intention

of house leadership there was to recapture some of the lower brackets savings, upper income americans experienced. >> that's a tax increase? >> well, let me say, we think the house bill is a great start. reporter: that leads to the question, wasn't this all supposed to be really, really simple? back to you. connell: that is interesting, gerri. i read the piece the journal wrote this weekend. i had to read it five times to figure out what is going on. is that part of the strategy, to confuse them we don't know what they're doing here? >> well, there were a ton of surprises here. taking away alimony deduction. taking away the medical cost deduction, lots of things, small things that mean a lot to peel. you can't pay for your tax accountant using deduction. so go figure. there is lots of surprises affect people who don't make one million dollars. connell: although that group will get hard, especially in new york, new jersey, other states. >> yep. connell: jack otter still with

us, to gerri's point we thought accountants will be put out of business. i don't think so by the tax reform bill. where are we, do you think? >> that is one of the most shocking things. it might be more confusing than the old one. maybe because we're used to the old way. certainly not simplifying it. one of the thing cracks me up, idea of having fewer brackets is simpler. it is simpler in a pie chart but computers do the work for you now. you don't have to figure out the math. all of these deduction changes, there are a lot of tradeoffs here i suspect if people really tout, if i had only two options, let people who have very, very high medical costs deduct those, or, give couples earning more than 22 million a tax break, you probably go with the medical. most people would i suspect. there is all sorts of tradeoffs getting rushed through. it is not tax reform. it is a tax reduction. connell: not for everybody on the individual side. >> really mostly for corporate level. connell: that way they have to

sell it. 20% corporate tax rate equals growth. do you think they can? do you think it goes through from people you're talking to? >> i think that alone is a good selling point. we agree, "barron's" suggested a 22% rate on corporate, pretty close but the question is are you willing to frankly pay higher taxes in order to get that corporate tax break? some people say it will help growth. some people say it will trickle down to wages but that is a tradeoff people will be asked to make. i think it will be very difficult. you referred to the property tax and state tax. connell: right. >> you have florida, texas, new york, new jersey, california, a lot of congressman, republican congressman will tough time selling that to their constituents. connell: they have no state taxes in florida or texas but maybe -- >> but property tax. they have had property taxes. connell: they have very high property tax. >> if you can't deduct more than 10,000 -- connell: that is the new limit of 10,000. it seems like, maybe i'm wrong,

seems like they could push it through the house, even with some of these republican congressman coming around. i think they can afford to lose 22 votes, i think that is the number. but in the senate, same old names we hear coming up. there is not much margin over there. >> exactly. i think this will be a very tough sell. i'm not sure what the horse-trading can be here, other than simply less revenue. connell: right. >> and then that will be tough. so -- connell: although only thing they have, they keep saying it, they need a win, republicans. >> absolutely. connell: i don't know what that means. >> i said it myself. connell: seems like we're willing to pass something that is eh, but we need a win. you are not getting a great bill but getting something passed. is 20% corporate tax, a little bit higher, much lower corporate tax rate, is that enough? that might be what we get, right? >> that is a very tough sell. you're right, maybe better to go back with something, hey, i don't like it, but i broke

gridlock in washington, might be easier line to take home to constituents, no, we failed home again. connell: bring you back tomorrow, there will be five or six twists. >> that will change a lot. connell: good to see you there, jack otter. "barron's." newly-released paradise papers. it sounds better than it is. hidden wealth on both sides of the aisle, they can as you can see big-name people behind it. we'll break it all down when we come back. stay with us. ♪

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to help you keep rolling with confidence. go long™. ♪ ♪ connell: all right. we're back with the latest on this harvey weinstein debacle. nypd detectives now say they may have enough evidence to actually arrest weinstein. to the newsroom, lauren simonetti with latest on that. hey, lauren. reporter: good to see you, connell. these would be the first criminal charges against harvey weinstein. the new york police department is working to arrest the disgraced movie mowing fell thanks to evidence brought to them from "boardwalk empire" actress, paws day paz day la huerta. she says he raped her go times in two months in 2010. the nypd was impressed by

specific recollection, what went down. before they brink weinstein to justice, connell, they have two obstacles. he is out of jurisdiction. he is in arizona for rehabilitation. second this case is seven years old. the special victims unit is working to get precise as evidence. "vanity fair" reporting that day la huerta gave proof from the therapist she talked about the rapes in the past. to be clear, there is no arrest warrant at this time. i spoke with a criminal defense attorney, they make the point over and over again, prosecutors have to be 100% certain they have what they need before prosecuting for a rape, especially in a high-profile case like this. in fact, you remember this, a few years ago the manhattan d.a. had evidence from the italian model? they had a whole sting operation went down and they decided two years ago not to press charges. connell: cy vance didn't think there was enough evidence. another thing for the cops or

detectives to say but another thing for the lawyers. lauren, thank you for following that. these paradise papers, as they're called, they shined light on offshore tax avoidance. deirdre bolton is following the story. she is here to report to us, there is a difference, people sometimes don't realize this between tax avoidance and tax evasion. reporter: yes, tax avoidance, okay. tax evasion, not okay. connell: thanks for joining us, we'll be back. give us a little bit more. >> tax avoidance, what all of these people are doing, political, all stripes, all colors from the queen of england to bono, that is okay. it is bad pr, which is why this is damaging. tax evasion means you are, really hiding and then not paying any tax whatsoever. tax avoidance is often just paying lower taxes, fewer taxes but some analysts say listen, the world ultrawealthy has 10% of gdp, global gdp in tax havens

and there are a lot of critics of even this tax avoidance saying this is what is causing populist outcry in so many countries, hey, how come i'm paying everything i'm told to pay if you're rich enough, you can just find another country and a safer spot that is usually politcally stable or friendly and pay less? connell: one thing with all the celebrities, showing some on the screen while you're speaking attached to all this, you're right, maybe not a shocker, some people with a lot of money able to do that. wilbur rossum there, commerce secretary. he was mentioned in this, and linked in some of the reporting with a russian entity. people are asking what is going on? what did the commerce secretary do? >> he had a stake in a company which does business with a gas producer in part owned by vladmir putin. so the russian president's son-in-law. connell: right. >> now the truth is, what has come out from the commerce

spokesperson saying that secretary ross did not actually negotiate that investment personally. this was all going through investments. that company is publicly-traded. it has never been on a u.s. sanctions list. it is currently not on a u.s. sanctions list. connell: did we know about it before now? >> i don't -- it is public in the sense it is in filings. so if you had taken the time to go through all of these public filings -- connell: we could have known about it. >> we could have known about it. but it is always like fine print n fairness to secretary ross, when he took that position he diddies close through his financial advisors, every single thing that he owned. this was actually noted. connell: so any fallout from all of this? or to your larger point this is way the world works and nobody is breaking any laws here? >> it is bad pr. apple, nike, maybe these companies, that have in some ways said, hey, you know, we're here for you. yes we're building products that you like but warm and fuzzy as

consumers, okay, maybe that company is little less warm and fuzzy. that they are out for themselves and destroying their image. at end of the day it may affect someone's purchasing issues but, legally no. this tax avoidance should be dealt with. there should be laws. this argument made extra layer of secrecy encourages illegal activities. to be clear, none of these people, bono, queen of england, et cetera, et cetera, have not done anything wrong but certainly a lot of voices clamoring for the law to change. connell: you're telling us we don't have anything on the queen. no big scandal. >> our courtees, can rest easy. they will be well-fed by the taxpayer. >> not telling us that the queen is in trouble. last thing we need. good see you, deirdre. >> sure. connell: as part of that the tax reform they want to bring money back from overseas in the tax

package. but in the capitol hill they are marking whole thing up. the house ways and means committee debating the bill. there will be changes. the question is, what are the changes and will the changes get past the house and if that happens, hypothetically on to the senate. we're back with latest from washington. back in a moment. we give you research and data-visualization tools to help identify potential opportunities. so, you can do it this way... or get everything you need to help capture investment ideas and make smarter trading decisions with fidelity for just $4.95 per online u.s. equity trade. fidelity. open an account today. ♪ open an account today. did yon the national debt?ssman get elected by talking tough will they stay true to their words?

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connell: we're back here for

hour numb two of cavuto coast to ohs, i'm connell mcshane filling in for neil. the house ways and means committee starting the first of many marathon sessions to mark up some of this gop tax bill. some of the things we're watching for, attempts to amend the bill, to repeal the individual health care insurance mandate in obamacare and also certain fixes that may or may not happen when it comes to state and local taxes to get the votes that may or may not be needed from the likes of new jersey and new york republicans. so with that, vice president mike pence says this will not, this bill, look the same way it does now once it gets, eventually, to the president's desk. listen. >> there will be changes between the two and changes in the course of the legislative process. but we think the house bill is a great start. we look forward to the senate bringing forward its tax cut bill. but the key here is that whatever is accomplished reflects the president's commitment to cutting taxes on working families.

connell: the other thing is as you make changes to any type of bill, there's the risk that you take a yes vote and make it into a no, that there's give and take the other way around as well. republican congressman from the state of washington, also a member of the ways and means committee, congressman dave reichert joins us now. know it's a busy day with the mark-up beginning. what about some of these changes that are being considered as the vice president says, and i'm sure he's right, there will be some changes. will there be big ones? >> well, i think one of the big changes that's being discussed is, of course, the health care mandate. that is probably the largest change that i've heard talked about. but i think the thing to remember here is that we have been working together with the white house, with the senate, we have agreed on this, this general structure, and we have moved ahead together. so we sort of anticipate what some of those changes might be. others will come as a little bit

of a surprise, but the process starts today. it's the first step in the process as far as getting the ball moving to see the legislation move through the house, through the senate and finally being signed by the president. connell: what's the give and take on the health care mandate? you're saying something that's being discussed in exchange for -- >> there's some revenue connected with that, obviously. the senate's looking closely at maybe considering including the employer mandate. health care language in their bill. i think it's about a $300 billion cost that they can apply to other parts of the bill and structure it a little bit differently, but we'll be involved in that process as they move forward also. connell: right. >> and they're watching us this week. connell: do you need that revenue? i know you're right around that $3.5 trillion to -- 1.5 trillion to the deficit, so you're just saying you need some extra

revenue to get there or you're willing to give on other things, and we're trashing those -- flashing those, quote-unquote things on the screen as you and i are speaking. in other words if you get the mortgages or you get something on obamacare, you give somewhere else. >> yeah. i think that, i mean, those are some of the trade-offs right now. we think we're in a good place. we're almost at that $1.5 trillion figure, we're right in that ballpark. again, you know, the senate and the white house may want to restructure the numbers just a little differently, but, you know, i think we're all on the same page as far as where we want to go, and that's getting this economy moving again, booming again, creating jobs and cutting taxing for people. connell: yeah, as you know, congressman, anytime an actual piece of legislation is introduced and now there's a chance to develop elements of it, people are going to start hitting you, right? [laughter] the special interests are going to come from all sides, sometimes the up expected sides. i -- unexpected sides.

i saw some small business interests not exactly thrilled with this. what'd you make of that? >> yeah, that's part of the process. anytime you make changes in law it creates a lot of activity. well, this is a lot of changes in a 700,000-page tax law that needs to be accomplished. so we're looking for that inputment some of it's good, some not so good, some very welcome input. connell: okay. before i let you go then, give me the short argument as to why this should pass even if certain americans end up on the individual side paying higher taxes. that's what we've been told, that there'll be some individuals -- maybe it's a small amount percentage wise -- that'll pay higher taxes. what's the biggest reason? >> well, the biggest reason is this puts -- look, americans have had their pockets picked for decades here, and this is about getting more money back into the taxpayer's pocket. $3,000 on average in my state tax relief per family.

i think that's a good thing. and it creates jobs, raises wages, makes us more competitive across this globe. connell: right. the corporate side, i know -- >> the corporate side, yep. connell: okay, congressman, thanks for joining us. >> thank you for having me. connell: this gop tax plan's relying on a big corporate tax cut to spark growth, that 20% number that you see there and the co-host of "after the bell" is here, david asman. good to see you, david. >> good to see you, connell. connell: some individuals in certain places may have to pay a little more on the individual side, but they think this corporate rate is enough, right? is it? >> well, that's why "the wall street journal" on friday had an editorial saying half a tax reform which a lot of people say, well,en isn't that better than none? yes, but you have to remember on the income tax side 70% of all income taxes are paid by the top 10%. it looks like they're not going to get a cut. if they get a cut, if that 70% of the revenue that comes from

income tax, if they don't get a cut, you're not going to have of that extra capital for private investment. now, private investment, the cuts in the top marginal rate during the reagan years had a lot to do with the technological revolution we had in the 1980s. connell: right. >> they funded a lot of that private capital, private equity, funded a lot of the smaller companies that turned into huge, mega-companies now. i think we have a chart during the reagan years we had this huge increase of funding. now, notice it wasn't until 1983 that the economy began to take off because they delayed the income tax. they delayed the implementation of it. they phased it in. one thing that worries me about the senate's version of the corporate rate is they want to phase in the corporate tax rate cut for over a five-year period. we could have the same thing that happened back in the 1980s happen now if they phase that in. so there's not only the problem of the mark-up this week, but it's a problem of what happens

when the senate gets their hands on this bill. connell: to be as stimulative as possible, especially if you're going to have certain individuals pay a higher rate, the immediacy of the corporate tax cut becomes even more important. >> if it is immediate. if they phase this thing in over five years, what happens is people and corporations who see a phase-in say, hey, i'm not going to invest anything until i can make sure i'm paying taxes at the lower rate. they hold off their investment until the final year of the phase-in. that's what happened in the 1980s as you can see from the chart, and that's what could happen now if the senate -- now, in fairness to vice president pence this morning with maria, he emphasized, he said the president and i want immediate tax reduction on the corporate rate. connell: yes. >> we don't want the phase-in. he specified that. the question is whether he'll stick to his guns in a negotiation. connell: they're so tight over there in the senate, they can lose more than 20 votes in the house, but if they had more votes in the senate, they could do essentially whatever they want. >> true. connell: i guess people

understand this, they kind of box themselves in because of the tight spread of the senate, and that's why they're in this budget process where you can only raise the deficit on the books $1.5 trillion over ten years. they're stuck with that. >> and usually it's the house that's more sensitive to political leanings because of the fact they're voted in every two years, the senate has a six-year term. but this year there's so many races that are on the line, and that margin between democrats and republicans in the senate is so fine, it's only two extra votes in the senate, they are very sensitive to political pushbacks from people, particularly the democrats who say your tax cuts just favor the rich. and it should be emphasized wall street journal poll came out about a month and a and a half , 55% of americans wanted to increase taxes on corporations, not decrease it. so they're fighting a popular trend against cutting, that's why the vice president was so insistent on the middle class tax cuts. that's why they don't want to give a penny of tax cuts to the richest americans, why they want to focus on the middle class.

vice president, every time maria tried to say you're not lowering the top marginal rate, he kept saying it's the middle class -- connell: yes. >> most americans don't want a cut at the corporate rate. they don't see it benefiting them or the economy, that's why this administration is focused on that middle class -- connell: it's more mentality than anything else -- >> it's politics. connell: right. getting to someone and saying, well, overall growth in the economy is going to pick up, that's a tougher argument than saying you personally -- >> to make politically, but economically it's not a tougher argument -- connell: [inaudible] it's that simple. >> the economy would grow if the corporate tax rate comes down. connell: that's actually going to be their big sales pitch now. >> it is. connell: it'll have to be. we'll see if they win on this. i wonder if they get any democrats to jump on board. >> right. i doubt it. more than that, as you just heard from the congressman, all of those special interests, all

of the lobbyists are just filling the halls of congress right now in this mark-up period trying to get their piece of the pie protected. and we'll see whether congress has the gumption to fight the swamp. connell: it's crazy. ooh, that's very deep. the gumption to fight the swamp. we'll see you at 3:00, david. >> thank you. connell: president trump, meantime, overseas saying he'll be heading to south korea later today. it actually might be the most-watched leg of his trip to asia. all these countries are important though. blake burman left behind at the white house. things look quiet on the north lawn, but has an update on the trip so far. >> reporter: i'm the only one here, connell. everybody's overseas right now. the president has wrapped up the diplomatic portion at least so far of his first leg of the trip to japan. he will arrive in about seven or eight hours in south korea. let me walk you through what he's going to do. he will meet with troops just outside of seoul or so from the

dmz. the president will not head to the dmz, in fact, white house officials earlier this month had basically called that cliche. they said the president wanted to meet with troops, and he will do just that. later today he will also meet with the south korean president, and he will be the recipient, president trump will be, of a state dinner later tonight. of course, all of this centers around north korea and what to do with the rogue nation. earlier today in japan president trump vowed that the u.s. will continue arming that region to keep it safe, standing alongside the japanese prime minister shinzo abe. the president saying that japan will be beefing up with u.s. defense systems. >> he will shoot them out of the sky when he completes the purchase of lots of additional military equipment from the united states. he will easily shoot them out of the skies. >> reporter: now in different events in japan earlier today, the president also took time out to give his condolences to the shooting victims in texas. there was a news conference in japan as well, and the president

was asked whether or not he thought that more gun control is needed to reduce the violence of the continued shootings that we see all across this country, and the president instead said that he feels this is a mental health issue. >> this isn't a guns situation. i mean, we could go into it, but it's a little bit soon to go into it. but fortunately, somebody else had a gun that was shooting in the opposite direction, otherwise it would have been much worse. but this is a mental health problem at the highest level. >> reporter:com, you heard the president say it's a little too soon to get into this issue. the president and the white house would not weigh in on gun control either after the horrific massacre in las vegas, however, critics point out the president just last week was quick to weigh in on immigration reform after the terrorist attack in new york city. connell: all right. blake, you don't leave these issues behind when you head

overseas, and that's what president trump's been dealing with at the start of this very important trip. blake burman there. more details on saudi arabia coming in and this big sweep, these arrests that were made of all the princes over the weekend. now, there are implications potentially for u.s. companies s and we're following that. the fallout from that when we come back. ♪ our recent online sales success seems a little... strange?nk na. ever since we switched to fedex ground business has been great. they're affordable and fast...

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♪ ♪ neil: do you have any u.s. bonds, any treasuries at all? >> no. neil: really? >> no, we only get to invest in stocks. neil: so that's not -- you're not say yowrg not investing because you have very little faith in the country. >> no, no. my faith is in the united states through investing in the stock market. connell: well, the prince was a big investor of the u.s. success market, big american companies the likes of apple, twitter, citigroup and did have a stake in our parent company, 21st century stock. from what we understand now, he does not. charlie gasparino and ashley webster here to talk about this story on saudi arabia. boy, so what's the fallout, number one, on american business, especially with the prince -- not behind bars, by the way, locked up at the ritz

carlton. >> right. it's hard to underplay how big of a player he is in the u.s. financial scene. i covered citigroup for many years when i was at "the wall street journal" and cnbc, and citigroup is less of a player today, but back then it was the biggest bank in the world. it was what everybody followed, and whenever the prince said something, you wrote it down, and he was very supportive of sandy wylde, the ceo of citigroup -- connell: it was a big deal to get an interview with him. >> to get his nod of approval was huge. some people thought -- jamie dimon, for instance, he now runs jpmorgan chase, but he also worked at citigroup for a time before he was fired, he thought that wylde and these other ceos gave him too much prominence. when he spoke, you listened, and it still carries on to today. finish. connell: any companies we should watch? >> citigroup, twitter, lyft. connell: so what happened?

>> i don't know. does the saudi government take this over? who knows where this is going. here is the weird thing as it's played out, and i'll tell you, i didn't see him getting nailed on this thing in in this anti-corruption probe. it's occurring while the saudi, aramco, their big oil company which wants the transform itself into a much more diversified company so it can pay down debts, by the way, there's a huge unfunded liability in saudi arabia's pension fund, is looking to do an ipo here, so it's weird. as donald trump is over there, was over there praising -- and he's often praising this new saudi -- >> pushing for that ipo to be done at the exchange. >> he's actually pushing for it to go out in the u.s. exchange, the nyse. at the same time, you've got this thing and a huge sort of tumultuous development involving the saudi financial sector. this is -- connell: it's weird.

it's not just the prince, actually, because all these other crown princes as well, and they're doing it under the auspices of modernizing the country -- >> it's almost out of the chinese playbook, isn't it? in order to sideline your rivals, you launch a investigation, and then you can -- a corruption investigation, and you can peat to the side -- put people to the side. i do believe the crown prince wants to clean up corruption because it's better for the cup, but this has put so much power into the crown prince's hands -- connell: it could work to our interests also, by the way, i don't know. >> it's also a playbook that most of these sort of semi-totalitarian regimes use, i mean, right? russia, when putin put all his -- >> of course. >> -- often put his business, you know, putin, let's be clear, has some degree of business dealings, and his acolytes do. he's been known to use the jail cell as a way or their new form

of siberia as a way to quell those business interests and those dissidents. china does it, they're doing it. listen, i don't think this is actually a good thing. connell: right. that's what i'm asking. well, we're going to move on to something else in a second, but that's what i'm asking, ashley. at the end of the day, we look at it from our point of view, john hofmeister thinks long term this works out for us, and even if it's not the way we think as americans that you do things this way -- >> well, it creates instability. it shakes the foundation which perhaps in the short term is not good for -- >> so would you buy the aramco ipo when it comes? connell: that'd be interesting. >> by the way, it could list on any exchange -- do -- >> one of the board members was arrested or detained, by the way. connell: i know you have something for us on tax reform, charlie. what are you hearing? >> these are the initial

rumblings from senate gop sources, that the house plan -- as i put it with neil the other day, there's the good, the bad and the ugly, and there's a lot of bad and ugly particular particularly on the political side, is now facing resistance. senator john mccain hates it -- connell: here we go again. >> you would think he would, right? that's kind of something you have baked in. he calls it doa, from what i understand. tom cotton is another name -- connell: that's two. >> we've reached out to them. neither of them really deny the fact that they dislike the man, to be honest. connell: you're not saying they're no votes -- >> no, but if you add lisa murkowski -- >> collins. >> who's the guy from tennessee that trump always -- >> corker. >> maybe flake. connell: well, yeah, the math's tough in the senate. then you've got to start talking about bringing in democrats like manchin and, oh, i don't know,

manchin. [laughter] heitkamp maybe. >> why doesn't manchin, if he really would support this -- i don't think he will, but maybe he will. i mean, my gut says why doesn't he just become a republican if he's going to support this. connell: wouldn't be the first time we've seen that. >> the reason why he's a democrat, you know, he might -- i don't think he's, like, trump thinks he's kind of a lock. >> maybe not. connell: nothing's a lock in washington, we've learned, right? i mean, they're hoping, again, that the corporate side weighs i out. we were just talking to david asman about this. get corporate taxes down to 20% -- >> not on the individual side, a lot of people very upset. >> here's what they did, connell -- connell: what? >> what did i call you? >> connell. >> at least i didn't call you george or neil. [laughter] here's what they did, they did real reform on the corporate side, but they did something on the individual side like obama might do. a real sort of --

connell: democrats on the individual side, republicans on the corporate. >> yeah. that's pretty much it. connell: what you guys were saying on varney this morning. connell: thanks a lot, ashley, right? >> you got it. george. [laughter] connell: this guy, is he getting anywhere close? >> it was in the neighborhood. connell: it really was. meantime, gas prices are climbing in the united states. poor jeff flock had to sit through that last segment, oil hitting a two-year high. what do you have for us, jeff? >> reporter: well, first, thanks for getting my name right, that's wonderful. [laughter] we have today been looking for the most expensive gas in chicago, and that's no small thing because, i'll tell you, illinois has some of the highest gas prices in the nation right now. and this station is supposed to be -- yeah, there it is. look at that. regular, if you get a wash, it's $3.49, if you don't, it's $3.69 at this bp station. you look at the national

average, $2.53. illinois average is $2.78 now. and indiana, with all the oil refineries right next to it, $2.73 also. illinois is up 16% in the last month, and do the math, $2.70 a gallon, that's about 25 cents in just the last week. the reason for this, refineries in illinois and in the midwest had been scheduled to do maintenance during harvey. well, because there was a need for gas at that time, they actually had to put that maintenance off. so now they're having to do it and catch up, switch to that winter blend, and now there's not enough gas out there. if you look nationally, the most expensive gas still in the lower 48 is california, i think it's $3.21 if i'm not mistaken. illinois, second highest. if you want cheap gas, go to alabama. i don't know what other reason you'd have for going to alabama -- i'm just kidding --

$2.21 there. there you go. now we're under a bridge. connell: it's all right. you made a whole state angry, so at least you have that. >> reporter: yeah, that's fine. just one. [laughter] alabama, they've got the swampers. connell: 1 out of 50. be careful out there. jeff flock on the move in chicago. now, on the tax story, will these tax cuts, if they go through -- or even, actually, if they don't, even the expectation -- spark more m&a activity, more bids like broad come and qualcomm? we're going to talk about that coming up. stay with us, ""cavuto coast to coast"" will be right back. ♪ ♪at t it was a fire. t it was a fire. it was worse. a sinkhole opened up under our museum. eight priceless corvettes had plunged into it. chubb was there within hours. they helped make sure it was safe.

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connell: we're back with a business alerr you. in the news today, we have this idea that broadcom wants to buy qualcomm for $103 billion. now, that leads to the question, could low interest rates and tax cuts -- if they ever come -- maybe spark more deals like this? we have lenore hawkins with us

and jeff sott, jeff, to you first. we have relatively low interest rates, and before they go up, the the argument would be, you want to get more business activity done and maybe we are going to see much lower business taxes, so that's a good environment to be in business. what do you make of it, more merger and acquisition activity or -- >> yeah. i think there's going to be a lot more m&a business out there. i would note that i don't think -- and you don't know this about me, but i was very much connected to the hill in washington, d.c. because i ran capital markets for a brokerage firm based there. i'm still pretty well connected. i don't think you're going to get tax reform. i do think you're going to get lower corporate taxes, and i do think you're going to get repatriation of the offshore profits which could be a boost -- exshed be a boost to m&a activity. connell: to your point, it would help m&a activity.

that's going to be the argument, right, lenore? even if there are certain elements of this tax reform package that we don't get, or to jeff's point if we don't get reform, lower business taxes should help the economy if we somehow get that. do you think we will? >> i think it's going to be really tough. it took reagan five years, and he had a lot of friends across the aisle. right now d.c. is so, so fractionalized, and there's not a whole lot of support from the democrat side to come, to reach across the aisle and work with trump. when you've got a president with such low approval ratings, it's going to be more difficult. connell: and on the question of doing more details, what do you think after that? >> like you said, we've got super low interest rates, and we also still have an awful lot of regulatory burden, and then you have really complex tax laws and very complex regulation, it's easier to be bigger, right? you're spreading all that complexity over a bigger base, so it makes bigger companies

more competitive. and right now we're just seeing where little guys, it's too difficult to go public, too difficult for them to grow. so, yeah, more and more of the big guys buying the little guys which is not so great for the economy because we get more employment out of those little guys. connell: various charts of the markets, every day of the week, jeff, we're hitting record highs in this market. and it doesn't seem to matter what the discussion is. maybe a little bit out of washington. but what's priced into this? you started this conversation by saying there was something we didn't know about you, so that always scares you. maybe there's more we don't know about jeff, but what's priced into this market in terms of washington tax cuts? if we don't get something done, can we still go higher? >> it has much more to doen than with just washington d.c. you are in the second leg of a secular bull market. secular bull markets have three legs. the first began in october of

'08 and ended in may of 2015. the second leg began in february of 2016 when royal bank of scotland told investors to sell everything. the second leg is the longest and strongest. it's driven by the accommodative monetary policy that drove the first leg. and the second leg, however, the economy improves, and you have transitioned from an interest rate driven to an earnings driven bull market, and earnings continue to come in better than people expect. connell: thank you very much, jeff and lenore. i want to go back to the charlie gasparino story that he was reporting that senator john mccain has privately been criticizing the house tax reform bill. now, we do have a statement that i want to pass along from the senator to fox business, this from mccain's spokesperson saying: as he does with every bill, senator mccain will carefully review the details of the senate tax reform legislation once it's finalized to insure it benefits the people of arizona. now, we have a member of the house ways and means committee,

another one with us, republican congresswoman from south dakota, kristi noem. it's not actually a no from senator mccain, although on the senate side people are already saying, as you know, that this is going to be tougher than what you guys are going through in the house. not that it's a cake walk, but once you get to the senate, you might have some trouble with this bill. what do you think? >> you know, the senate, i'm sure, will come forward with their own bill. we're busy working on ours going line by line through the legislative text making sure it's going to benefit hard working taxpayers, that it's going to help families that are struggling from paycheck to paycheck. i ran into a woman the other day that just was wondering when it was going to get better. so this is what this bill does. it's going to make sure that they have more money in their paychecks and that they have some areas that they can prepare better for their future and provide for their kids. connell: the big picture questions, maybe you could call them complaints depends on who you're talking to, whether it's in "the wall street journal"'s editorial page or just the

conversations we've been having today is that, you know what? it'll be great on the corporate side, help the economy get running again and growing at a faster rate you get corporate taxes down to a 20% rate. but on the individual side, people are not so thrilled with the fact that some americans may end up paying higher taxes. what do you say about that? >> well, i don't know, the majority of americans are going to get a big tax cut -- connell: but not all. >> all of them will get a tax cut if you look into the future, in ten years they will have more money in their pockets and more opportunity toss provide for those future plans that they have. connell: so you're saying every american will pay fewer dollars in taxes on a net basis than they do now? >> yeah, we've been working on this legislative text for years. in fact, i've billion on the committee for two years -- been on the committee for two years. we've had hundreds of hours putting in looking at each analysis of each provision to make sure that every american

benefits from a simpler tax code. the vast majority will be able to do their taxes on a postcard. they will no longer have to pay someone to help them pay their taxes. while they're able to get some tax credits for their families, for their children, for their mortgage to put a roof over their heads, they'll be able to save for an education and retirement. all of these are priorities that we put into this much simpler tax code that's going to raise their paychecks too. connell: where's the biggest area today for horse trading or the biggest proposals that are coming forward in this mark-up as it begins? we're showing some of the back and forth that i'm sure is out there now just with details that are in the bill that we saw introduced last week, but when's the biggest area up for debate today that you've been hearing? >> you know, we all specialize in different areas. i specialize in areas that focus on agriculture because of my faith and background, but also on families. i worked hard on the family tax credit and the flexible savings account, the mortgage interest rate but also interest deduction and small businesses.

i'd say in the house as it moves forward we're still debating those state and local taxes, still looking at the small business provision. but what's great about our committee is we did a managers' amendment in committee today recognizing we needed to make a few tweaksful we'll continue to look at that before we go to the floor, so these members of congress if they're hearing things from their district on ways we can better serve the families and the people they represent, we're taking all of that -- connell: well, they're hearing from their lobbyists too. the small business lobby and the state and local issue's a big one. maybe we hear more about it because it's up in the northeast where we're broadcasting from today. >> you know -- connell: that's something that's got to be looked at, no? is there a fix there? >> i think that we're still continuing to work on that issue. you talk about lobbyists, and that's one thing we have to be careful of because we're making this tax code much more fair. those lobbyists have been extremely successful over the years getting special provisions that have created loop holes and special benefits that the average person in america

doesn't enjoy. and that's why we're fixing this tax code and repealing things like the death tax, a double tax. we cannot continue a tax code that picks winners and losers. if members of congress are listening to lobbyists that represent big corporate america, they're doing the wrong thing. go home, go to a basketball game, go to church, stand at a gas station, talk to the people about a -- what they need. connell: we have to go here time wise, but the thing about winners and losers, the argument back on that is this whole thing is being paid for by the well-to-do up in the, especially in the high-tax states, that they're essentially the losers while everybody else becomes a winner. isn't that part of it? >> what we focused on is looking at growth and and how do we help families and how do we make sure that people in america are going to have more opportunities in the future. connell: okay. >> that's the priorities. and when we get into complicated discussions, we always come back to those priorities. what's going to help to get this country to grow, and our

proposal says we'll grow our gdp by 3.1%, create up to a million jobs, raise wages, create thousands of jobs in my small state of south dakota and raise the average family's income by almost $4,000 per household n. a state where the average family income is $54,000, that's life-changing. that's why this is important. connell: we appreciate all the time. know you have to get back in there, kristi noem, south dakota. we'll get on to the president's trip. south korea looks to be doing more in the fight against north korea. what about china though? we'll talk about that when we come back. ♪ ♪ whoooo.

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connell: so as president trump's trip continues in asia, he'll be heading to south korea tonight, seems they're stepping up the fight against north korea. what about china though? fox news foreign policy analyst analyst -- [inaudible] skinner is our next guest.

that's always the next question, what is china doing. to the point of south korea, they have a relatively new leader, so you do wonder how the president will get along with this leader as well. seems to be pretty much in step with shinzo abe in japan. what about south korea before we talk about china? >> i do think that the liberal leader who's relatively new, about six months in south korea, is going to be more in step with the united states and japan than we would have expected given his campaign rhetoric and his discussions earlier in his term where he was going to kind of lean toward north korea -- connell: yeah. he was open to dialogue, he wanted to talk to them more, right? >> he still does. however, the reality of north korea's missile tests and nuclear test, its provocations has made him, i think, realize that, you know, aligning himself more with the west is central to

south korea's survival in this very unstable region of the world. connell: right. >> and the fact that we do have the t.h.a.d. missile system moving forward, there has been discussion between the south korean leadership and the chinese about making sure that south korea does not take part of a larger regional missile defense system that would be targeted against china. but still the united states is the military partner of the south koreans, and that will drive the discussions between the leaders. connell: all right. so maybe he's coming around. that's the hope from the u.s. point of view. now, as i said, china's always the big question. and, you know, it does appear that this administration, we talked about it earlier in the show, may be making some progress when it comes to xi jinping in china and north korea. what's the goal of this particular tripp? what can the president accomplish, do you think? >> the big goal in this trip is to underscore that north korea is the source of instability in east asia and to make sure that

the chinese understand it with a level of clarity that they haven't before, that they adhere to the u.n. security council unanimous sanctions that they agreed to in the past couple of months, that they work hard with the united states and other regional partners to make sure that north korea gets itself on a path toward denuclearization. and is so i think that's the high altitude goal for president obama on this long asian tour. connell: for president trump. >> yes, oh, trump. of course. connell: we know. yeah, he heads there first tonight, south korea. tonight our time. kiron, it's good to see you, thanks for the analysis, always appreciate it. >> thank you. connell: we're going to talk about elections, right? tomorrow's election day and what will these big races -- such as they are, a couple of governors'

races -- determine about the midterm? a referendum or anything? we'll talk about it in just a moment. who knew that phones would start doing everything?

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trailing the democrat, ralph northam. there are the number, 38-43 -- 48-43. by the way, neil is on tomorrow night right after dobbs, fox business special live coverage on election day. let's bring in from the washington examiner to talk about this, new jersey -- hey, phil -- does not seem to be as close. murphy supposedly has a double-digit lead over guadagno, but my question would be this: if i were to give you a binary choice which, by the way, may not be fair, but we only have these two gubernatorial races tomorrow, are they a referendum on president trump and the job he's done in office so far or the republicans in congress, which would you choose? >> i think more than anything it's got to be very. that's where all the eyes are here. more than anything, this is a referendum on whether or not you can insult the electorate and still get elected. ralph northam has taken every opportunity not just to attack edgy withless by, but he's -- ed

gillespie, but really his supporters. not only did he really in his f rating from the nra, he also did not condemn that ad from the latino victory fund which painted all republican voters as racist. so if he can win tomorrow, the rulebook's over. connell: kind of interesting, because hillary clinton didn't seem like she was helped out by the whole deplorables thing on the national level. >> yeah, absolutely. barack obama talked about voters who were bitter clingers, people who clung to their guns and religion. and hillary clinton described those voters as a basket of deplorables, and it's almost like northam is taking it a step farther, he's leaning into that opposition. and while clinton won virginia by five points, i don't think you want to kick a hornets' nest like that ahead of election day. connell: i wouldn't think so. to get back to the original point, say that the democrats win both -- i know virginia's a

much closer race, it appears, than new jersey is, is that worse news for the president or the republican leadership and mitch mcconnells of the world? >> it depends on how close gillespie finishes second. if gets blown out of the water, i think it's an indicator that republicans need to change something. but if he finishes a close second or if he actually wins, i think what this will show is that he's really written the template for moderate republicans in 2018. his strategy has been to kind of run as that chamber of commerce republican -- connell: right. >> -- but then adopt president trump's talking points when it comes to immigration while avoiding his endorsement. connell: a strong performance there wouldn't exactly be a big win for the bannon wing of the party, right? going into the midterms, i mean. >> yeah. connell: does that change anything for them in terms of how, will they be looking at this and calculating how they go forward into the bigger races next year? the congressional midterms? >> yeah, absolutely. absolutely. and virginia, i don't think as

virginia goes so goes the nation, i don't think we're there yet. but what we're seeing is you've got operatives on both sides trying to figure out what's working and what's not working. so virginia and new jersey are definitely laboratories, and i think what they're trying out now we're going to see it later come 2018. connell: yeah. we didn't talk as much about new jersey only because phil murphy appears to have a bigger lead. until you have the votes come in, he's running against chris christie's lieutenant governor, kim guadagno, so that's been a tough one for her. christie's not popular in the state. phil wegman, washington examiner, and check out our special coverage with neil tomorrow night on these races. now, as we continue here in a moment, stocks continuing -- no matter what happens, it appears -- to hit new highs. up we go. we'll be back with more in just a moment. ♪ ♪

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gasparino is happy because he gets his name right. i will be in jersey covering the gubernatorial race. that is 8:00 tomorrow night. there are the markets. keep going up, trish regan no matter what. thanks to you. trish: breaking right now everyone, mark up of republican tax reform bill. while there are really great things in there, lots of good things in there, lower taxes for some americans. lower taxes for business, the ability to repatriate, corporate overseas income, all good stuff, this tax bill is not perfect by any reasons. why are we penalizing people for earning more money while half the country pays absolutely nothing? why aren't they closing the private equity loophole like they promised? we're on it for you, trish regan, welcome to the intelligence report. president trump promising massive tax cuts to millions of americans, you know i took a look at this b