gop lawmakers are one step closer to enacting president trump's tax overhaul. it promises big breaks for businesses and the wealthy, but the question is at what cost to the middle class? >> robert mercer is a hedge fund tycoon, a friend of the president and a big supporter of his agenda. never heard of him? his money, influence and of all things his tax disputes make him a controversial figure in washington. i'm ali velshi. >> i'm stephanie ruhle.

president trump calling for the biggest tax overhaul since the '80s, with a key vote in congress, republicans are poised to release the much anticipated tax bill. >> anticipated by us at least. the details are only starting to trickle out of capitol hill. already generating some debate. let's start there. >> the house followed the senate's lead and passed a budget resolution by a narrow margin earlier this week, with these votes in place, republicans can now get a tax bill through with just 50 votes in the senate, effectively sidelining democrats. but the math behind tax cuts that would add $1.5 trillion over the next ten years to the national debt will be difficult. some republicans are already saying they need to close $4 trillion worth of loopholes to make things work for them. so slashing the taxes on businesses will need to be offset somehow as will eliminating the estate tax. both are pillars of president trump's tax plan. ali, we understand the argument

for tax cuts for businesses, but at this point it seems like -- look at the stock market. look at their balance sheets. they're doing pretty well without them. >> i think it's important for us to say that we don't think anybody should pay more tax than they have. we would love if businesses and individuals got tax cuts. the argument is that businesses will do so much better with these tax cuts, and i guess my response is, like you said, look at the stock market which has been going up steadily since the beginning of 2009. look at corporate profitability. all these things indicate that interest rates are so low, they can raise it. why do we think lower tax, not a bad thing, will invest in the money. >> we have to point out this is not tax reform. it's a cut. tax reform will be closing the loopholes. most businesses, it's hard to find any, that pay that $35% statutory rate. >> because of loopholes. >> correct. now the loopholes aren't going

away. currently they spend millions and millions of dollars on tax shelters and accountants and lawyers so they can avoid paying taxes and they do. >> if you take that 35% down to 20 which the government wants to do, but you don't fix the loopholes, then instead of paying 20, companies will pay yet less. >> correct. the idea is they won't need the lawyers, won't need the loopholes because they're paying less. but with the loopholes still existing, they'll keep all that in place and pay even less. >> staying with taxes as we just mentioned, a big break that may be on the chopping block for other cuts are the tax-deferred contributions to 401(k) retirement plans. they are the foundation of retirement savings in this country. there is, however, some debate over their benefit for the average american. so for fact's sake, here is why 401(k)s fall short when it comes to retirement planning. 401(k) plans are by far the dominant way americans save for

retirement. lawmakers working on president trump's tax plan floated a controversial idea, they want to cap all tax deferred contributions to 401(k)s at just $ $2400 a year. that's down from the current $18,000 a year. the president reacted swiftly with this tweet. there will be no change to your 401(k). this has always been a great and popular middle class tax break that works and it stays. 401(k)s are popular with the middle class, sure. but only 32% of american workers today put money into workplace retirement accounts. whether they work for the middle class, that's up for debate. 401(k)s as originally conceived were never meant to be the primary vehicle paying for our retirement. in 1979 an estimated 38% of all private sector workers had a traditional pension through their companies. today it's just 13%. once they retire they receive guaranteed paints for life to help them with living expenses. by 1980 companies were taking

notice of a new addition to the tax code, section 401(k) offered workers a tax-freeway to defer compensation from bonuses and stock options. when a benefits consultant suggested companies extend those benefits to retirement savings accounts, the idea took off. as originally conceived, these new 401(k) retirement plans were meant to complement worker pensions. but then companies looking for an easy way to save a buck, started shifting their workers into 401(k)s and away from pensions. for workers, 401(k)s have moved the onus of planning for retirement from professional pension managers to the workers themselves. what's more, 401(k)s expose workers to the ups and downs of financial markets and can conceivably run out, depending on how well a worker has done his or her retirement planning. 401(k)s only work for the middle class to a point. they were never meant to be the dominant way americans save for

retirement, but it's the system we have and the one we all need to take more seriously. >> stephanie, when i say take more seriously, it's important for you out there to log into your 401(k). when you log into it, here are numbers to look for. by the time you're 67 years old, you should have saved eight times your salary, for someone making $75,000 a year, that should be around $600,000. let's take a look at the median savings are, half saved more, half saved less. for people 65 to 70 years old, $140,000. >> 401(k) may not be the best retirement plan. but it's what we have. if you take away the tax benefit it's going to be even harder for people to save. so if you think of this argument that the administration continues to make, that this is a tax cut across the board for the middle class, i can't see it. the estate tax, cutting corporate taxes, cutting the tax

for the highest earners, that clearly helps the highest level, but people who day in and day out dead pepped on things like their retirement, like their 401(k), it's unclear where this plan is such a hook-up for the middle class. >> we know where it helps people out. if people in the middle class are not saving enough for retirement -- by the way, we're all living a little longer than we used to, this will become a problem for taxpayers and the government in the end. it's really important for all of us and the government that people take their retirement savings seriously and the government encourages it as much as they can. >> the sad thing is people might make the argument i'd love to contribute more, i'd love to save more but my wages haven't gone up. it's a complicated problem. >> that's a fact. >> another tight vote in congress this week. republican senators needed a tie-breaking vote from vice president mike pence to kill a rule set by the consumer financial protection bureau that allows consumers to bring class action lawsuits against financial terms. it was seen as a challenge to

mandatory arbitration clauses that consumers must sign every time they do business with a bank or credit card company. >> we all do that. every time you take out a loan or credit card, you sign away certain rights. >> unfortunately people don't always pay attention to the details. president trump and republicans on the hill complained that that rule amounted to a boone for trial lawyers. it actually did very little to help consumers. the cfpb chief head richard cordray disagreed. he said, quote, wall street won and ordinary people lost. >> i'd like to point out in the middle of the night. i'm just not understanding the argument that said taking away the right of consumers to join class action suits against banks is good for anybody but banks. remember, people they say, can still enter into lawsuits and they can go into arbitration. i think arbitration is something we should do more in life, for divorces, family arguments i where so much of the money goes

to lawyers. i agree with that. you're here and your bank is here when you're in a fight. >> stay here. even if it's small and mid-sielzed banks. republicans say this is for small banks. even a small bank is much bigger than the little guy. >> 800-pound gorilla and a mouse. we've been talking about equif x equifax, talking about wells fargo. we know this happens. this is not a good plan but it has been something that congressional republicans have been doing for a while. >> i want to bring up on the screen a cfpb study of the value of class action lawsuits. take a look at this. 34 million consumers received a billion in payments from lawsuits over the last five years. to say only lawyers won, they didn't win. when companies are paying out a billion dollars, they change their behavior. >> republicans will tell you that per capita, if you look at the bottom of the screen, people get more money from a payment under arbitration.

this issue is not what the per capita payout is. it's that when companies pay out a lot of money, more than a billion dollars, that is when they change. when they pay out smaller settlements, they're less inclined to change. that's something to keep an eye on. let's talk about climate change. how much does climate change really cost taxpayers? we can put a number on it now. >> and the mystery of the missing $7 billion. a senate subcommittee accuses a hedge fund run by a major trump booster of dodging a massive tax boone three years later. does anything come of it?

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>> the company is hedge fund renaissance technology. a senate subcommittee investigated their tax practices back in 2014. questions are beginning to reemerge about whether anything ever came of its accusation that the company may have dodged more than $6 billion in taxes. >> meet robert mercer, the 71 co-ceo of hedge fund renaissance technologies and a major donor to president trump's campaign, pouring millions into conservative super pacs. >> robert mercer is one of the most important donors for conservative causes. >> named one of the top ten most influential billionaires in politics, also part owner of conservative website breitbart.com, run by steve bannon, trump's one-time senior advisor. while robert mercer may not be a household name, he's well known in trump circles. >> mercer has his hand in so

many conservative causes, whether it's steve bannon, breitbart news or other efforts aimed right at the republican establishment. >> it turns out he's been on one senate subcommittee's radar for years. thanks to renaissance technologies's use of what's known as basket options, a loophole strategy some financial firms have utilized. here is how basket options work, when a firm holds investments for less than a year, they're taxed at a pretty high rate of 39.6%. if a firm holds on to those investments for more than two years, they only have to pay long-term capital gains taxes or 20%. in order to make a short-term investment look like a long-term one, the firm sells a basket of investments to a bank and then that bank turns around and hires the firm to oversee those investments. the firm gets to manage the investment while keeping it off their books. the irs says these basket options are not illegal, but they could amount to a tax

avoidance transaction. the senate's permanent subcommittee on investigation agrees. back in 2014, it released the findings of its investigation into basket options and the companies that use them. it determined that basket options were, quote, misused to dodge billions in taxes. senator jain's opening statement targeted mercer's company specifically and the estimated $6.8 billion in taxes it avoided paying through its use of basket options. >> today's hearing sheds light on how wren nance technologies was able to avoid paying more than $6 billion dollars in taxes by disguising its date today stock traesds as long-term investments. >> i sat down with daniel shabiro, professor of new york university's law school to ask him if mercer's company might owe billions in back taxes because of its use of basket options. >> first, can you walk us through the transaction, these

basket trades? >> you have a hot shot trader who hopefully for himself and everyone else makes a lot of money by sophisticated trading strategies that i certainly don't understand, and they're buying a selling stocks all the time and if they didn't do something tricky they would be taxed at it at a rate that would go up to 39.6% pretty fast. what they do is arrange to pretend only they own some sort of an option rather owning the stuff they're really making money from. >> i asked if the basket options by renaissance technologies and the banks was legal? >> the irs concluded it didn't work. if you try and the courts don't buy it, then you should pay what the courts found as the right amount of tax. i think a lot of people would agree with the irs analysis that the kind of veneer here was too thin for them to get the tax result that they wanted.

>> renaissance technologies declined to comment on their story. in the end we have no way of knowing whether mercer's company owes back taxes unless the irs tells us. the irs is under no obligation to do so. the records are treated as confidential. >> we don't know whether renaissance paid back taxes or not. the tax liability of the taxpayer to the irs and any settlement of that liability is confidential information which rarely emerges. so it's rather that there's any public notification. >> so for now no an store the $6.8 billion question. >> robert mercer and his daughter rebecca, huge trump supporters, investors in breitbart news. they're the force behind steve bannon. when bannon gets on the podium and talks about globalists and capitalists, you need to pay attention to who backs him. what is the price tag on

president trump's inaction on climate change? if you pay taxes, you'll want to know this. >> trump takes credit for the stock market. the federal reserve has more to do with it than he does. who he picks to be the next fed chair, that's going to make a difference. comfortable you are in it. so find a venus smooth that contours to curves, flexes for comfort, and has a disposable made for you. skin smoothing venus razors.

welcome back to "velshi & ruhle." stock prices are at record highs, thanks in part to the federal reserve. you see, the fed sets policies that include interest rates, and interest rates, as you know, if you've got a savings account or a mortgage, are at historic lows. that means from an investor perspective, you've got very few options other than the stock market to plant your money. you could buy real estate, but how much does a person want to buy. even though president trump takes a lot of credit for the market's bull run, whomever he nominates for fed chair will affect investment decisions, the very decisions driving the market higher right now.

there are three finalists, in the running. jerome powell is reportedly the front-runner. janet yellen could stay on for another term and john taylor is said to be the outside possibility in the race. i can't underscore enough a point you always make. this is not designed to take away from donald trump and whatever contribution he has made, but this stock market has been up for many, many years because of low interest rates. >> because of low interest rates. don't get me wrong, there is a real trump bump. deregulation, tax reform. if you talk to ceos big and small, they are far more enthused today than they were ten months ago. but it is interest rates, the actions of janet yellen and central bankers around the world. one would think trump would keep her except for one thing. >> she's an obama appointee. >> that's one thing he's done, dismantled, dismantled,

dismantled, anything that touches obama. >> low interest rates is what janet yellen has done and kept this stock market going. >> ali, this is the age of hypocrisy. simply saying they felt this way and now they feel that way, that's everybody all the time. welcome to 2017. moving on, the commerce department reported a cool 3% growth in the economy. >> i feel like that's hot! >> listen, for three months ending in september. expectations were lower because of course of the hurricanes. that comes off a 3.1% growth in the previous three months, the best back-to-back quarters since 2014. no doubt you're going to see a tweet from the president, probably his sons, about the growth under his presidency. but there's a few things to remember. while 3% quarterly growth is fantastic, we have not seen that kind of growth for an entire year since 2015. >> right. in fact we saw quarterly growth hit 3% or more eight times under president obama. so in case you see any tweets

about how this hasn't happened before, it's happened a lot. but it still fell short on annual growth. donald trump is promising annual growth, he said 3%. he's also said 4, 5 and even 6%. >> i think i also said 2015. i meant since 2005. it has been quite some time. >> so look, credit where credit is due. there is good economic growth right now. we are looking for annual 3% growth and that's something that is hard to get. 4%, 5% and 6%, like stephanie likes to say, i'll eat my hat. >> business sentiment and business investment is up. president trump talks a good game. the game may be following suit. finally, if you've ever wondered how much climate change actually costs us, we've got a bit of an idea now. the u.s. government accountability office said the past decades extreme weather and fire events made worse by climate change added more than $350 billion in costs to taxpayers. the report went on to say president trump's inaction on climate change will carry an

even bigger price tag. trump scrapped an obama-era rule that federal agencies work together for prepare for warming, leaving no concrete plan for action in place. the gao has said that the already hefty cost of flood insurance, firefighting, infrastructure and public landry pairs could increase by up to $35 billion a year by mid-century. so it doesn't matter what you think about the environment, this is a money issue. >> this is a money issue. people talk about climate change in the abstract. that's not abstract, that's front and center. >> right. so remember, one of the things we've studied here is that if you deal with climate change effects on the front end, like when you're building or doing things like that. >> preventive measures. >> it's actually cheaper. in the case of flooding, it's $1 at the front end versus $4 at the back end when you're remediating something that's gone wrong so we have to think about it in those terms. >> you know what else you think about today, wish this guy happy birthday. happy birthday, ali velshi.

that will do it for us. you can see us every weekday at 11:00 a.m. or me at 9:00 a.m. and this guy 3:00 p.m. maybe he'll be tired from partying from his birthday all weekend. >> you have a great rest of your weekend while i celebrate my birthday. see ya. the u.s. needs to develop more renewable and clean energy resources because there are limits to the amount of fossil fuels that we can burn. since 1925, we have depended on diesel generators, burning approximately a million gallons of diesel fuel a year. our mission is to make off-shore wind one of the principle new sources of energy. not every bank is willing to get involved in a "first of its kind" project. citi saw the promise of clean energy and they worked really closely with us, the wind farm will lower power prices.

we're polluting the air less. businesses and homes can rely on a steady source of power. block island wind farm is a catalyst- - this will be the first of may off-shore wind farms in the u.s.

good day, everyone. i'm alex witt here in new york. it is 1:00 in the east and 10:00 a.m. out west. it's a first in the mueller probe, charges filed, but the who and the what still a mystery. president trump is tweeting, but what he's not tweeting about raises questions. plus the jfk files, the hidden gems of intrigue in this week's release. will it finally silence all the conspiracy talk? and trickle-down tax cut. a reagan economist says cutting taxes failed in the '80s and it won't work now. we'll talk with him straight ahead. but we begin with new reaction to