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Tax Cut Proposal; Business Tax Rate Cut; Tax Bracket Reduction; Individual Tax Breaks Eliminated; Standard Deduction Doubled; Senators get North Korean Briefing; Interview with Sen. Chris Murphy. Aired 2- 2:30p ET

Aired April 26, 2017 - 14:00   ET


[14:00:00] BROOKE BALDWIN, CNN ANCHOR: Treasury secretary and his chief economic advisor there unveiling his tax outline that will lead to, quote/unquote, "the biggest tax cut in the history of this country." That was the words from Steve Mnuchin himself, the secretary of Treasury, there debuting the tax draft as the president is closing in on 100 days in office.

So let's walk through what exactly we heard and talk about all of this.

First, Jeff Zeleny was there in the briefing. Jeff Zeleny - we're - OK, hang on, we're getting a microphone on Jeff Zeleny.

Gloria Borger, I'll just begin with you here, our CNN chief political analyst. And we'll get Jeff to walk through the headlines of the simplification of the taxes.


BALDWIN: You know, and going down from seven brackets to three.


BALDWIN: But what I didn't hear is how they're going to pay for it. Did you?

BORGER: No, other than this will create such economic growth in the country that it will effectively pay for itself. That's the argument. It is an argument -

BALDWIN: Economic growth.

BORGER: It is - right, that it will create such a boom in this country that it will create economic growth and therefore reduce the deficit that way. And this is, you know, this is something that Republicans are concerned about because they believe that this could blow a hole in the deficit.

We also didn't hear a tremendous amount of detail. It seems to me, quite honestly, as we approach the first 100 days on Saturday, that this was something they wanted to get on the record before you reach that milestone of 100 days, that they wanted to say that they had proposed the biggest tax cut in American history and that we are working out the details with Congress, some of which we heard about on the campaign trail. You know, for example, you know, repealing the estate tax, lowering individual rates, which they apparently intend to do, doubling the standardized deduction, for example. And I think that that idea of Donald Trump wants to create jobs, wants to lower your taxes, wants to create a boom (ph) in this country, that's what we're hearing today from Gary Cohn and Steve Mnuchin.

BALDWIN: Gloria, stay with me.

I've got Jeff Zeleny now with us.


BALDWIN: In the press briefing room.

And, Jeff, to Gloria's point, it all seemed pretty surface level. Lacking in specifics in the plan.

JEFF ZELENY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well, Brooke, this is the handout from the White House on their tax policy. It is right here. It is a single sheet of paper. It has maybe a dozen or maybe 15 or so bullet-point items. It is much more like a sort of a statement of principles you would see from a campaign during a presidential campaign as opposed to something that would be presented at the beginning really of what is the second phase of an administration as we move beyond the first 100 days.

The White House made no apologies for that. They said, look, a legislation will come when it's ready with the House and the Senate. But, Brooke, the reality here is that we are essentially - the White House is now just getting behind what candidate Trump basically promised on the campaign trail. They're a long way from any legislative meat on this.

And the challenge here is, of course, the president is coming to this with not, you know, as much popularity, as much strength as he had politically speaking, as he had at the beginning of the administration. Of course the big health care defeat, you know, is looming over him. That could change, of course, if there's a health care vote. But the reality of this is, Republicans are going to be among the skeptics of this bill. A, they believe that they were not fully informed and brought up to speed on this, but, b, they believe that this is not revenue neutral. That this will, in fact, raise the debt.

Now, as Gloria was saying before, it can be potentially revenue neutral if the economy grows, but there is no certainty of that before. In fact, that has not happened over the last couple of decades or so through these tax cuts. But I think one of the biggest challenges here for this president, Brooke, you heard throughout the briefing, the president's tax returns himself. Secretary Mnuchin was asked repeatedly, he appeared to grow a little agitated and weary at these questions, will the president change his stance and indeed release his tax returns. Secretary Mnuchin, who is close to this president, who has worked on these proposals, he said no indeed he will not. Americans have enough information about that. I tried to ask a question at the end of the briefing and he walked away.

The president has shown his flexibility on many things. He's changed his view on many things. He embraces that. He wears that as a badge of honor. Would he do that on this? We are not getting a sign that the president will release his tax returns.

Brooke, the reason that matters, that is going to be a ready-made talking point for critics of this plan. What does it do to the president's bottom line? We simply will not know that. But going forward here, Brooke, this is very much the beginning of this. Tax reform, so hard in 1986, took some 1,000 days. This is at the very, very beginning of a long process. But as Gloria and others were saying, they want a headline saying tax reform is on the way and indeed it's being announced today, but this is far from the end of this, Brooke.

[14:05:13] BALDWIN: Well, you had said it earlier, part of your reporting, that officials - you know, administration officials said that the -

ZELENY: Right.

BALDWIN: White House wanted to get the lead on this and then wait for The Hill, right?

ZELENY: Right.

BALDWIN: They wanted the great headlines that Trump proposes big tax cuts. And you heard even Secretary Mnuchin saying, hey, we're having these robust conversations with folks over on The Hill.

Stay with me, Jeff. I've got a couple of other great voices.

Stephen Moore is with me, CNN's senior economic analyst with The Heritage Foundation, used to advise the Trump campaign on all things economic.

So, Stephen Moore, I understand you also took a spin by the White House today. So maybe you can share what you would like. But, you know, again, I come back to my original question, how do they pay for this?


And, look, I'm very happy about this plan. I think it's very much in line with what we ran on when Donald Trump ran for president. The 15 percent business tax cut is really the heart and soul of this plan. We can't go forward in the world with the highest tax rate in the world. It's just a simple truism. And almost everyone agrees that we're putting us - ourselves in a real bind in a uncompetitive situation, frankly, when we're at 40 percent and the rest of the world's at 20 percent. It's like a head start program for every country that we compete with.

But I was also happy to see that it does increase the standard deduction. And, by the way, that has two benefits, just so your viewers know. One of the benefits is it puts more money into their pockets because you get to write off more of your income. But the second thing is, it makes it - it really adds to simplicity. We estimate about 90 percent of tax filers will now no longer have to itemize their deductions. They're not going to have to keep those shoeboxes full of receipts on their mortgage, on their charitable deductions, on their state and local taxes. They'll just check the box for the standard deduction and that's one of the ways you get to this postcard return, which Americans really love that idea.

BALDWIN: Now I've got you on the simplification and the postcard, that would - that would, I know, ring well for a lot of Americans who have recently just had to pull their hair out over doing their taxes. But at the same time, again, it's the economic growth thing that I think Alexis Goldstein -


BALDWIN: I saw you shaking your head about. You're not buying that?

MOORE: Well, I think this -


BALDWIN: Alexis. Alexis.

MOORE: Sorry. OK.

BALDWIN: No worries.

GOLDSTEIN: It's good to be with you.

MOORE: Are you asking me or -

GOLDSTEIN: I think it's not accurate to say that the United States is the highest tax rates in the world because if you look at what people actually pay at the end of the day, Americans for Tax Reform (ph) has pointed out that only $1 out of every $9 in tax revenue is currently coming from corporations because they have so many methods of dodging taxes, shifting them overseas.

I also think it's important to look at the optics of this announcement. In addition to not having very many details, in addition to not having Donald Trump's tax returns, we have two former bankers from Goldman Sachs announcing a tax plan that, from the details we do know, will dramatically cut taxes for big banks like Goldman Sachs. I think this tax plan is a huge giveaway to corporate America. It's not going to put more money in the pockets of American workers. What it's going to do is it's going to enable giant corporations to do more mergers, to get even bigger, to extend their concentration of power and it's going to enable them to pour more money back into their already wealthy shareholders' pockets. So I think that this deal from the small amount of details that we currently have is a really bad deal for hardworking American workers. BALDWIN: You heard the question asked to both of those gentlemen. And

so, you know, when, you know, hardworking middle class Americans hear about this on the evening news and they're making maybe $40,000, $50,000, $60,000 a year, how does this help them?

Stephen, I want your response to that, but, Chris Cillizza, last but not least, I want you to jump in, CNN politics reporter and editor at large. I also thought noteworthy some of the phrases that Gary Cohn was dropping, "once in a lifetime opportunity," -


BALDWIN: "I'd never bet against this president," "we're at an historic moment." What did you make of that?

CILLIZZA: This president is a very good listener from Steve Mnuchin -

BALDWIN: Exactly.

CILLIZZA: Which I would guess would probably raise some eyebrows, even among Donald Trump's allies.

Look, as someone who keeps a shoebox full of itemized deductions, if Stephen is right and simplification is something that will happen with this tax plan, I think many people will be in support of it. But the problem I think exists is, can they get it to that phase? And I thought Jeff hit the nail on the head, Brooke, which is, this is sort of an opening gamut. The broadest outline. This is not legislation yet. And I just think you just saw with health care, these are not things that can be done quickly or easily. As Steve Mnuchin said, he'd like to see it done by the end of the year.

I wonder if we don't have more information beyond, well, we'll just have - the economy will just grow. If we don't have some sense of how it's paid for, I think Democrats are going to oppose it, period, tax cuts. He hasn't released his tax returns. There's lots of reasons they can oppose it.

The problem really is conservative fiscal hawks. Is this enough - deficit hawks. Is this enough? Is this plan enough for them? Is there enough explanation for how it's being paid for? Do they feel satisfied enough with it? Because, remember, Republicans have the majority in the House and the Senate. They could pass, certainly through the House, a piece of legislation, but they need those deficit hawks on the right and I don't know and I don't think we can know yet because there's not enough details whether they're going to be for this.

[14:10:20] BORGER: So, Brooke, you know, this is supposed to be revenue neutral if you pass it under the budget act and that means you'd only need a majority of vote. You'd only need 51 votes. And it seems to me that there is absolutely no way they could have revenue neutrality. And what that would mean, I mean, remember the Bush tax cuts expired after 10 years and so I think if this package is passed in any way, shape or form, what's going to happen is it's going to pass with the notion that it would expire and that - leave it to the next president, whoever that may be, to deal with the renewal of the tax cuts.

BALDWIN: Well, let me jump in and, Stephen and Alexis, I really want to hear from both you, just also back on Alexis' point, you know, how does this help all of the American voters, the hardworking middle class folks who voted for Mr. Trump.

MOORE: Yes. Sure.

BALDWIN: How will this help them?

MOORE: It's a great question. This is the - this is a jobs bill, it's not a tax cut. In fact, I just met with the Senate Republicans and I said, you know, don't call this a tax cut or a tax reform. This is a jobs bill. How do you help create jobs? You help businesses. I mean I just think Alexis is totally wrong. I mean if businesses have more money - and I've talked to a lot of small business owners and CEOs of companies, what they say is, you give us more money after tax, we're going to plow that money back into the business, to hire more workers, to pay them more, to bring factories back to the United States, to buy more equipment. Look, you can't have healthy jobs without businesses. It's that simple.

And, by the way, the Congressional Budget Office, which I think we'd all agree is pretty much a, you know, a nonpartisan arbiter here, they say that Alexis is wrong, that 70 percent of the benefit from a business tax cut go to workers, not the owners of the businesses, to the workers who work for the businesses.

GOLDSTEIN: So it's interesting you say 70 percent because 70 percent of small businesses are already paying tax rates that are lower than those that are proposed by this plan. This is not a plan that's going to help small businesses. It's not a plan that's going to help workers. This is a plan that's going to help large corporations where we consolidate -

MOORE: Yes, but they're not the major employer. But those companies aren't - Alexis, hey, those companies you're talking about don't employee people.

BALDWIN: Hang on, guys. One voice. One voice. Go ahead. Let Alexis finish.


This is not a plan that's going to help small businesses. We see all the time people talking about small businesses. Small businesses are already able to take advantage of lower tax rates. This is a plan that's going to help large corporations. This betrays the campaign promise. This betrays the promise that Steven Mnuchin made that there would be no absolute tax break for the wealthy.

This is a tax break for the wealthy. This is tax break for large corporations. This is a tax break for real estate developers like Donald Trump. It's a tax break for hedge fund managers. And this is not happening in a vacuum. At the same time, right now, House Republicans are talking about in committee a bill that would tear up the Wall Street forms (ph) from the last crisis. So we're talking about slashing taxes for big banks, we're talking about tearing up Dodd/Frank. Both of those things are a disaster for the ordinary American worker.

BALDWIN: Go ahead, Stephen.

MOORE: Well, look, this is with - Trump ran on this. It's not as if he's making this up out of thin air. He told the American -

GOLDSTEIN: Trump said that Wall Street was getting away with murder and this is a tax break for Wall Street.

MOORE: He told - no, now, listen, he told the America people he's going to cut business taxes to 15 percent and he won the election. And as Barack Obama would say, elections do have consequences.

Now, look, you're right, that a lot of businesses don't hire any workers. They're just one or two people. That - and they're at a low tax rate. I'm talking about the businesses that are hiring 50 or 100 or 250 workers that are in a - at a 35 or 40 percent tax bracket. Those are the ones that are going to benefit from it.

GOLDSTEIN: Those are still small businesses and those are still businesses that make up to 70 percent who would not benefit from this plan. They are already at the low rates.

MOORE: But those - well, that's my point. But those are not companies that are employers. I'm talking about major employers in this country.

GOLDSTEIN: So you're talking about Walmart. You're talking about Goldman Sachs. And these are the companies that are not going to put money in the pockets of the American worker. They're going to hand it back to their shareholders. They're going to merge and they're going to put out of business the small businesses when Walmart moves into their community and destroys the local family mom and pop shops.

MOORE: No, I'm not. I'm talking about - there a lot of people listening to this show with 50 or 100 workers that will benefit. Wow. Wow.

BALDWIN: OK. OK. OK. Hang on.

MOORE: What a statement.

BALDWIN: Chris, let me - let me veer to you for a second.

How does this get - how does this get through? Because, you know, in reading some of our reporting this morning, A Republican aide on The Hill, what did he call it, he said it's a cuts only plan. All of the goodies, none of the pain.

BORGER: Right.

BALDWIN: I mean you heard Steve Mnuchin say we're having these robust discussions with leadership on The Hill -


BALDWIN: Yet I'm hearing something different from some of our reporting that the White House really wanted to get ahead of this themselves.

CILLIZZA: Well, look, I don't want to draw too many parallels to the health care proposal because they are different things, but they are both hugely complex matters. Overhauling the tax code and - or tax cuts and tax reform, lowering the brackets, and health care. But the big problem with health care was the initial proposal offered by Donald Trump was essentially all the things you don't like about Obamacare. We're getting rid of those. The things you do like, you can stay on - kids can stay on their parent's until 26, on their parent's plans, no discrimination for pre-existing conditions, we're keeping those.

[14:15:04] Now, the problem is, the stuff you don't like tends to, in government, pay for the stuff you do like. So you take away the stuff you don't like and there's not any money there. And that, to me, is the issue. A reporter asked Steve Mnuchin in that press conference, how flexible are you going to be? Jeff Zeleny mentioned the president prizes his flexibility. How flexible are you going to be when this goes to The Hill and they say, well, we don't want these three tax brackets, but what about these four or we want to make an adjustment here? That, to me, is sort of what we don't know and the key point here is, where is Donald Trump and Steve Mnuchin and Gary Cohn inflexible? What are the things they care the most about? Presumably, I think Stephen's right, presumably the 15 percent business tax is the thing they're going to sort of stand on that hill. But are there other things? Is there room for debate and compromise because if there is, then it's not going anywhere.


BALDWIN: Let me go back to Stephen. Let me go back to Stephen. Stephen, quickly on this, because you know the president, you advised the president. You know, on his flexibility or his negotiation stills, right, if the president starts these negotiations at the extreme end, then where really is his middle ground? What would make him - what would make him happy?

MOORE: Well, I'm not going to negotiate with you on this show, but I will say that -

BALDWIN: I mean I'm not trying to get you to do that, but you know the president. Let's talk tactics.

MOORE: No, I'm just teasing. But I will say this - look, I think actually you characterized this bill in a good way. This is an opening bid, you know, and there is going to be negotiation.

BALDWIN: It is an opening bid.

MOORE: This is a negotiation.

And, by the way, I think Chris really nailed it. You know the way - we can't wait until next year to get this done. This has to get done this year. The business community, the investors, they're all waiting for this. And, in fact, one of the reasons the economies leveled out in the last couple of months is a lot of nervousness about whether this is going to happen or not. So, Chris, this has to happen this year. And, you're right, the more complicated they make it, the less likely. So I'm for scaling it down, get something passed that helps business. If you have to throw in some infrastructure spending for - to get some Democrat votes, do it, but let's get this jobs bill passed right - right away.

BORGER: Well, but this isn't - you know -

BALDWIN: What about - hang on. Sorry, Gloria. Just - just off of Stephen, Alexis, where in this plan or what was thrown out, let's say this is his opening move - where would liberals agree with the proposal laid out by Cohn and Mnuchin?

MOORE: I think actually -

GOLDSTEIN: I mean I think -

BALDWIN: Alexis. Alexis.

MOORE: Oh, sorry.

GOLDSTEIN: I think it's just a nonstarter. I think it's the president -

BALDWIN: A nonstarter?

GOLDSTEIN: I think if the president is interested in helping ordinary families, then detach the corporate tax breaks from the tax breaks that he wants to talk about for ordinary American families. Look, he's insisting on combining the two and I think that that makes it a nonstarter and I also think that even Steven Mnuchin himself said in his announcement just now that we were watching, he talked about deregulation, he talked about undoing the rules on Wall Street. So, to me, this is all a part of a larger package that's going to make things very dangerous. We - America has not forgotten about the 2008 financial crisis and, again, that's why I think it's a nonstarter.

BALDWIN: Stephen, she says it's a nonstarter.

MOORE: Look, I think - look, Democrats are in a mode right now where they're "no" to everything, so that may be true. And, by the way, Gloria, it may mean that Republicans are going to have to pass this with only Republican votes. I hope that doesn't happen. I think you're probably right, Gloria, that this may end up a bill that's a 10 year tax cut. I wouldn't like to see that, but that may be where we're headed. But, look, if we got the business tax rate down from 40 to say 20 percent, in 10 years, does anybody want to go back up to 40 percent. I wouldn't think that's very likely.

BALDWIN: Go ahead, Gloria.

BORGER: No. And I think - I think that's - I think that is where you're going to end up. Look, there were some proposals for a border adjustment tax, for example, to help pay for this and that didn't end up going anywhere. And I think the big - you know, I think the big question is going to be, there are a lot of goodies here, OK. There are tons of goodies here. Some goodies for middle class people who - and some - a lot of goodies, I would argue probably more goodies, for corporate America and maybe a rising tide does lift all boats.

I think the big question here is going to be, how do you pay for all of this and repeal and replace Obamacare? That - that - those two questions are not mutually exclusive here because, you know, I think that the administration was counting on some money from repealing Obamacare and they don't have it. And I think that you're going to blow a huge whole here in the deficit, which a lot of Republicans really care about. And I think there is a question - there is a question about that, as there was back with tax reform in 1986.

You know, Ronald Reagan faced the same questions about that and I think he's going to - you know, Donald Trump is going to face it now and everybody's going to look at this through the lens of Donald Trump, not only the fact that it was the Goldman Sachs guys up there talking about the little guy, but people are going to start asking the question, does this benefit real estate? What's the benefit to that? The repeal of the Alternative Minimum Tax, how does that affect the wealthy, for example? And on and on and on. And it's also going to be a difficult, political problem because it will be seen through the lens of Donald Trump's business, which we do not know a lot about because we don't have his tax returns. So it shines the light on that again.

[14:20:17] BALDWIN: Stephen, you get my last question, and just on the president. I mean this could have been a real opportunity for the president to get out there with Secretary Mnuchin and Gary Cohn. Where is - where is President Trump on the rollout? Why wasn't he, you know, front and center through this whole thing or at the briefing?

MOORE: I wish he had been out there. I wish it had been he who had rolled this out.

BALDWIN: You do?

MOORE: I mean I thought Mnuchin and Cohn did a fine job. But I think you're right, Donald Trump has to take leadership on this. He's got to basically do a press conference in front of the nation and say, this is a very high priority to rebuild our economy and say, look, Congress, I want this done by July or August or September. That's what's going to be needed, some presidential capital, to get this done.

And in answer to your question about how we're going to pay for this, Gloria, a big way we're going to pay for it is grow this economy. Get more growth. Every percentage point more growth, we get $3 trillion more revenue.

BALDWIN: OK. All right. Stephen and Alexis, and Chris and Gloria, thank you all so very much on all things taxes.

But let's talk about this -

MOORE: Thank you.

BALDWIN: Thank you.

Let's talk about this surreal scene up on Capitol Hill. More breaking news here. You've got senators - I mean, look at these pictures here. These are senators loading up on buses heading to the White House. They're going to all head into this auditorium adjacent to the White House for a briefing on North Korea. We're on bus watch. We'll take you there, coming up.


[14:25:34] BALDWIN: Right about now, something very unusual is happening in Washington. Virtually every single United States senator filing onto seven chartered buses and making their way from the Capitol to the White House grounds for a briefing, just to make sure they're all on the same page, the standoff with North Korea. To be clear, this kind of thing usually happens up at the Capitol within a classified room. It's known as a sciff (ph). The critics calling this just a dog and pony show. We're now hearing President Trump himself might actually - will likely drop by.

So let's go to Jim Sciutto. He's standing outside some of those buses with a guest.

Jim, who do you have?

JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: Brooke Baldwin, we have Senator Chris Murphy here, of course, one of the 100 going up there.

Do you have any sense before you go that you're going to hear something new about the North Korea threat?

SEN. CHRIS MURPHY (D), FOREIGN RELATIONS COMMITTEE: I don't have a sense of what we're going to understand. As you know, normally these briefings take place at the Capitol where we have a secure facility. I'm not really sure how secure this facility is. I'm not sure whether we're going to be able to receive the kind of classified information that we would here. That's a little concerning to those of us who are making this trip. But, obviously, the situation is serious to the extent that there's intelligence that they can share with us to explain why the rhetoric has gotten a little bit more militaristic than we have heard before, then we want to hear that.

SCIUTTO: I've heard from some senators who feel that they're being - that this is a bit of a dog and a pony show, to - kind a show of force, as it were, by bringing you to the White House to show the serious the White House is taking this threat with. Do you think there's something more, some substantively on that?

MURPHY: Well, I hope there's something substantive here. I mean of course this is a show. I mean these briefings always happen here at the Capitol. We're being brought over to the White House to be briefed, I think, by people who don't work at the White House, who also have to travel there, so that all of you are here with your TV cameras to cover it all. So there's, of course, showmanship to this, which, you know, I worry degrades some of the conversation around the seriousness of the North Korean threat. But we're adults. We'll go wherever the president wants us to go to get a briefing and try to talk about a path forward.

SCIUTTO: Admiral Harris, commander of the Pacific forces, said today in testimony on The Hill that his forces are ready to fight if called upon. Is there a real military option for dealing with the North Korean military threat?

MURPHY: Well, our forces are always ready to fight and the deterrent has to exist. But this cannot be solved by a U.S. invasion of North Korea. This ultimately has to be solved diplomatically and, you know, we really worry that the president doesn't have the ability to do that, with no deputy secretary of state, no assistant secretary of state for Asia, no one in the White House who has experience working this problem, that a diplomatic solution is hard. Military threats, sounding tough, is easy. Hopefully we'll get some questions answered today about what our actual strategy is beyond just making these threats.

SCIUTTO: Final question, because I don't want you to miss the bus. Is there something different about the nuclear threat from North Korea today that wasn't there a month ago or three months ago or six months ago?

MURPHY: Well, we'll hopefully learn the answer to that question at the White House today. But, you know, we all see in open source reporting that they are moving and, you know, arguably moving pretty fast towards ultimately having the ability to put one of these warheads on to an ICBM that could reach the United States. So we don't have a lot of time to waste here. Ultimately, like I said, it's going to be a diplomatic path, not a military path, that gets this done and hopefully we're going to be talking about that as well.

SCIUTTO: We look forward to hearing what you hear when you come out of that meeting. Thanks so much, Senator Murphy.

MURPHY: All right, thanks, Jim. Yes.

SCIUTTO: Brooke Baldwin, back to you.

BALDWIN: That was great. Jim, thank you. And to Senator Murphy, thank you as well.

I've just been marveling at the onlookers behind you. This is a combination of, you know, tourists on Capitol Hill mingling with U.S. senators jumping on buses and heading to the White House.

When we come back, we've got a former Secret Service agent who's going to chat with us about how you get 100 senators on these buses and keep them safe and protected down along Constitution, right, as they're heading to the White House for this top secret briefing over at the Eisenhower Executive Office Building. How this is supposed to work, coming up next.