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Winners And Losers Of GOP Tax Bill; U.S. Military On The North Korean Threat. Aired 7:30-8a ET
Aired November 3, 2017 - 07:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[07:31:30] ALISYN CAMEROTA, CNN ANCHOR: House Republicans rolling out their tax plan. President Trump wants a bill by the end of the year, calling the measure a big, beautiful Christmas present for the American people.
CNN chief business correspondent Christine Romans is here to make sense of it all. She's going to tell us who really wins and loses -- Christine.
CHRISTINE ROMAN, CNN CHIEF BUSINESS CORRESPONDENT: All right. So this tax reform package is branded as a tax cut for the middle-class, so let's start with what it means for average Americans.
It's going to cut all of these tax brackets from seven to four -- cutting that to four. Couples making up to $90,000 a year, individuals making up to 45 grand, you're going to pay a 12 percent rate. Then, 25 percent and 35 percent as incomes rise. And the plan keeps the top rate of 39.6 percent for families making more than $1 million a year.
This bill also nearly doubles the standard deduction. Twelve thousand dollars for single filers, 24 grand for couples. The idea here, fewer people will itemize, claiming fewer deductions.
But it also eliminates personal exemptions. That could hurt families with three or more kids.
There are some goodies for the middle-class in this bill, no question. Aside from the lower tax rates the plan would increase the child tax credit to $1,600. There will also be a $300 tax credit for non-child dependents and a spouse. And, the 401(k) plans will be left alone.
So who are the winners and losers?
Corporations, clearly, the big winners here. The bill lowers dramatically the corporate tax rate to 20 percent from 35 percent.
The ultra-rich are also big winners. This bill repeals the estate tax by the year 2024 and doubles the exemption to $10 million before that.
The bill also repeals the AMT. That's another plus for wealthy taxpayers, although not everyone who pays the AMT is super rich anymore, one of the problems with that provision.
Now, as for the losers, people who live in high tax states -- California, New York, New Jersey -- no more state and local state deductions for income or sales tax. And they can only deduct property tax up to $10,000.
Homebuilders, realtors, the home industry -- homebuilder stocks actually tanked yesterday. For new home purchases, the mortgage interest deduction is now cut in half to $500,000.
There are a lot of other changes to popular deductions that could help or hurt homeowners. The bottom line, guys, it depends on where you live, how much money you make, and what deductions you take.
The goal here is to cut taxes for individuals and for businesses. That's really a centerpiece of this here and the White House says -- the Republicans say that will grow the economy.
JOHN BERMAN, CNN ANCHOR: The real question there, is the goal more to cut businesses -- taxes for businesses and individuals? Let's talk about that.
Joining us now is CNN senior economics analyst, former senior economic adviser to the Trump campaign, Stephen Moore. And, the managing director and chief economist at JPMorgan Chase, Anthony Chan.
Anthony, to you first. Is this primarily a middle-class tax cut?
ANTHONY CHAN, MANAGING DIRECTOR AND CHIEF ECONOMIST, JPMORGAN CHASE: It clearly is not. I mean, when you look at the numbers, $1.5 trillion worth of tax cuts, you essentially have the estate tax taking about 34 percent of the personal tax cuts. And the estate tax really only hit the top two -- 0.2 percent of all the estates out there.
To me, when you look at these numbers it basically tells us that when you look at individuals per se, it's like telling individuals I want to start a party and buy a pizza pie of 10 slices, but you only get to keep two slices. The other folks get to keep eight slices.
There is no reason why 34 percent of all the benefits of the individual tax go to the estate tax when you're really impacting people that are not middle-income individuals.
[07:35:06] Now, I don't want to say that this tax package is bad because there are a lot of beneficiaries. And, in fact, a lot of the bipartisan think tanks are suggesting that things are, in fact, moving in the right direction.
But some of the conservative think tanks out there are a little bit upset about the federal tax revenues that are going to be falling and the fact that the deficit is going to go up by $1.5 trillion over the next 10 years.
And, by the way, I've done some research looking at whether or not federal taxes as a percentage of revenues actually increase when you have these tax cuts, and they don't. During the Reagan administration, you had a 1.6 percent decline in the federal tax to GDP numbers, and during the Bush administration, 1.4 percent.
CHAN: So it is going to make a hole in the deficit.
BERMAN: So, Stephen, let's go back to the beginning of this and talk about it. Whether or not this is primarily -- mostly a middle-class tax cut or again, if you look at the numbers really, for businesses.
STEPHEN MOORE, CNN SENIOR ECONOMICS ANALYST, DISTINGUISHED VISITING FELLOW, THE HERITAGE FOUNDATION, FORMER SENIOR ECONOMIC ADVISER, TRUMP CAMPAIGN: Well, John, you know, the plan that came out yesterday is not too different, really, from the plan that I worked with Donald Trump on in the campaign. You know, there's some nuance differences
But the heart and soul of this plan, just so folks understand, really is the business tax cuts. And Trump said it very well the other day when he said look, we want to make America have the most competitive taxes in the world so that jobs are located and businesses and capital come here and they don't leave here.
And, you know, we know that's happening, by the way, John. We've seen what's happened over the last 10 years with a lot of major iconic American companies like Burger King, Medtronic, Pfizer, one of our great drug companies leaving the United States or wanting to leave and going to places like Ireland, and Canada, and China. We want to bring those jobs -- those jobs back.
And I would make the case to you, John, that if we are able to do that, in no small part by cutting those rates on corporations -- and, by the way, 27 million small businesses will get a cut -- that's going to help -- this is where I sort of disagree with that analysis. That's -- we believe the primary beneficiaries of that will be workers because they'll be more jobs and higher wages.
BERMAN: We don't know. It depends on the behavior --
BERMAN: -- that corporations choose. And we were talking with Christine Romans --
MOORE: Yes, that's correct.
BERMAN: -- our mutual great friend, who says that she's been talking to a lot of these business leaders and one of the things that they say they will do first with some of the money that they save is share buybacks. You know, its internal reinvestments --
BERMAN: -- which doesn't necessarily mean jobs. I'm not saying it won't lead to jobs.
MOORE: No, no, I -- it's a fair point. Let me just address that because a couple of things.
First of all, there's no question shareholders are going to benefit a lot from this. I mean, it's no accident, John, we've seen this booming stock market and an unbelievable -- and $5 trillion of wealth.
One of the points I've made to Republicans is if they don't get this done, actually there's probably going to be a sell-out because there's some anticipation effect here.
But think about this, John, just from the perspective of shareholders. You know, there's 55 million Americans who have 401(k) plans. There's another 20 million people who have IRAs. There's, you know, millions more who have pension plans.
MOORE: That money is all invested in the stock market.
And, you know, the main point that the White House has made and a lot of other economists have made is that when you reduce these business taxes, businesses invest more, and that does benefit workers.
One other quick point --
BERMAN: Well --
MOORE: -- just in terms of what it means for the middle-class.
I was writing these numbers last night.
MOORE: You know, if you make about $80,000 to $90,000 for a family -- and, you know, for most of the places that's a middle-class family -- you're going to save about $2,500 or $3,000 on your taxes.
BERMAN: It just depends -- but again -- and again, you might if you live in Texas and don't have three kids.
BERMAN: I mean, it just depends on your personal situation.
MOORE: That's true.
BERMAN: That part is less clear.
MOORE: That's right.
BERMAN: What isn't clear is what you said before. I mean, the corporate tax cuts are crystal clear. Those are big and they may be necessary. Those should be debated on the merits.
Anthony, back to you about the deficit talk. Again, by the wage this budget is written, even before the tax plan, it can be in the red. It could have a $1.5 trillion deficit. That's best case scenario.
Are you concerned that it could blow a hole in the budget even bigger than $1.5 trillion, and what would that do to the economy, Anthony?
CHAN: Well, there's no question that this deficit is going to hurt. In fact, academic studies show that whenever the debt to GDP ratio is over 90 percent, and that includes the Social Security debt, it slows our ability to grow, it doesn't enhance it. And we're over 100 percent. We're close to 106 percent of GDP.
But getting back to that point about helping businesses. You want to help the heartbeat of America, small and medium-sized businesses.
And guess what happened yesterday? The National Federal of Independent Small Business came out against this tax reform plan because they say that more than half of all the businesses out there that already go through the pass-through rate, they have an effective tax rate that's 25 percent or lower.
[07:40:00] Guess what? We're lowering that corporate tax rate for large corporations of 20 percent, but we're telling small and medium- sized businesses you're not good enough to get that 20 percent.
BERMAN: All right.
CHAN: -- on par with the large corporations.
BERMAN: Just let me say this. It's clearly --
CHAN: Small and medium-sized businesses.
BERMAN: It's clearly just the beginning of this discussion although if the Republicans in Congress have their way it will be a very short discussion. We're going to get this all through very quickly. We will see.
Stephen Moore, Anthony Chan, thanks so much for being with us. Appreciate it.
CHAN: Thank you.
MOORE: OK, thank you.
BERMAN: Alisyn --
CAMEROTA: A big win followed by a big loss. The football injury bringing Houston fans back down to earth after the World Series win. That's next.
CAMEROTA: It's a warm start to November. How long will that last?
CNN meteorologist Chad Myers has our forecast. What do you see, Chad?
CHAD MYERS, AMS METEOROLOGIST: Probably not until Thanksgiving but for a few more days, for sure. It is already in the sixties in New York for you right now there. It's going to be a beautiful day across the country today, in most spots anyway.
[07:45:00] The weather is brought to you by Humana. Start with healthy.
Look at the high in D.C. today. Almost breaking a record there. It was over 90 degrees in Dallas for the first time in November ever yesterday, breaking an old record there.
Now, it's cold to the north, warm to the south, as you'd expect, but that front doesn't move very much. Now, it does cool down slightly for the Boston -- or the New York Marathon for this weekend. So I'm thinking about you, John, because of Boston.
But otherwise, the cold air sinks into our forecast by Wednesday. But I'll tell you what, we're back up into the sixties and seventies for next week. Atlanta, 80 degrees on Monday. New York City, 55 for Saturday, 64 on Sunday.
And if you're running for the marathon, still in the sixties. A little bit damp but good times, I think, with this type of temperature.
BERMAN: Chad Myers thinking about me not just because of Boston but also because of my hair. I know these things. Thanks, Chad, so much.
MYERS: Very good.
BERMAN: All right. So the sports Gods giveth and taketh away. Houston wins the World Series and then loses the most exciting young quarterback in football.
Houston native Andy Scholes with more in the "Bleacher Report." Hey, Andy.
ANDY SCHOLES, CNN SPORTS CORRESPONDENT: Yes, good morning, John.
You know, had the Astros not won the World Series this Deshaun Watson news would have been infinitely worse for Houston fans.
It's still really sad though for Watson who was enjoying, you know, a breakout rookie season. And according to reports, Watson suffering a torn ACL on a non-contact play during practice yesterday. He's going to miss the rest of the season.
Watson, he was leading the NFL in passing touchdowns and really turned the Texans into the highest-scoring team in the NFL.
The Texans will reportedly sign quarterback Matt McGloin. And according to Jason La Canfora of CBS, they did not consider signing Colin Kaepernick.
All right. The World Series champion Houston Astros, meanwhile, returning back home yesterday to a hero's welcome. World Series MVP George Springer still has that trophy in hand. I actually saw him leave the team hotel in L.A. with it yesterday. Today, the team's going to hold a big parade through the streets of downtown Houston. And schools in Houston are canceled today so that all the kiddos can get out there to the parade -- Alisyn.
CAMEROTA: John likes -- yes.
CAMEROTA: Whatever his priorities, he likes that a lot. Andy, thank you.
SCHOLES: Hey, you win in 55 years you've got to do it.
CAMEROTA: That's true. I agree. I support that.
All right. Meanwhile, what is it like for American military families living in South Korea today? Saber-rattling, threats of nuclear war, and frequent missile tests by North Korea, they have to live with?
So, our Brooke Baldwin traveled to the region and she's going to introduce all of us to one family and how they live, next.
[07:51:48] CAMEROTA: President Trump is getting ready to head to Asia this morning as North Korean state media slams what it calls the gangster-like U.S. military for a flyover with South Korea and Japan near the Korean Peninsula. This comes as South Korea intelligence suggests that Pyongyang may be planning more missile tests.
CNN's Brooke Baldwin went to South Korea and spoke with a family about what it is like to live under this tension and she joins us now. Great to have you.
BROOKE BALDWIN, CNN ANCHOR: Good morning, guys.
Yes, you know, we've been covering so much of the ratcheted up tensions, especially between Washington and Pyongyang.
And I remember the day, a couple of months ago, sitting in my office and thinking -- saying out loud to my producer, you know, I wonder what life is like for Americans, you know -- 30,000 or so members of the military in South Korea and more than 100,000 civilians. What is life like, given what's happening in the region?
And I especially was thinking about our men and women in the military. And so it is my honor this morning to present to you the Bright family.
LT. COL. AARON BRIGHT, COMMANDER, 1ST BATALLION, 38TH FIELD ARTILLERY REGIMENT: We're in Camp Casey and we call this my house. We call the one in Yongsan my home. BALDWIN (on camera): Because it's where your family is?
AARON BRIGHT: Right, in a words -- in a words matter kind of way.
Here in Casey, I'm what's called area one. They have South Korea divided into areas based on how far away you are from North Korea, so this is as close as you can get.
And then area two encompasses Seoul and they live in Yongsan, which is the base right in the center of Seoul.
BALDWIN: When did he have the conversation with you? Honey --
SHARON BRIGHT, WIFE, MOTHER OF THREE: I was --
BALDWIN: -- we're moving to Seoul.
S. BRIGHT: We knew that we were finding out soon, so we knew he was getting a command. We were so happy about that.
He called and he was like OK, we know. So I knew like -- it was one of those I'm going to ease into it kind of things, you know. So he told me South Korea and I was like whoa.
AARON BRIGHT: This training exercise is all rockets pods and each one's got a total of six rockets in it or you'd have one big missile and that would take up the whole thing.
BALDWIN: How much of your day is consumed by thinking about North Korea?
AARON BRIGHT: Quite a bit of it, just trying to think one step ahead. A step ahead of the enemy.
BALDWIN: Do you worry?
AARON BRIGHT: In terms of worry, I don't worry about myself or my unit because it's ready. It's trained and we can do our job. That part doesn't worry me.
The only part that worries me is just --
BALDWIN: Your family.
AARON BRIGHT: Sure, and getting them out in a -- in a timely manner.
S. BRIGHT: We know, as a family of four -- you know, I would know that his job would take him one way and I would be responsible me, and the girls, and the dog.
BALDWIN: What is the plan if he were to get that call?
S. BRIGHT: We would have a meeting point with the rest of the post and we would have our things that we've been kind of encouraged to have -- whatever you want to take with you. And then you go through a process of they would fly you here, they would take you here, they would take you there. And eventually, you would be safe and maybe, back home.
[07:55:05] BALDWIN: How would you describe a typical day in South Korea?
PRISCILLA BRIGHT, DAUGHTER: It's pretty normal.
BALDWIN: Pretty normal.
P. BRIGHT: Yes. I go to school. We all go to school for seven hours, come back, do homework. On the weekends we can go out. There's little karaoke things that I do with my friends and we'll Korean barbecue dinner.
UNIDENTIFIED FEMALE, DAUGHTER: Normally, sometimes we have like sleepovers with our friends.
ANNABELLE BRIGHT, DAUGHTER: There's a park just right there and we go there a lot.
BALDWIN: What's it like when you're waiting for your dad to come home on a Friday?
ANNABELLE BRIGHT: It's kind of like is he home yet, is he home yet, is he home yet?
AARON BRIGHT: It was a ticker tape parade, you know --
S. BRIGHT: Every Friday.
AARON BRIGHT: -- every Friday, and it just started to wear. It would wear on both of us.
S. BRIGHT: It did feel like a welcome home party every Friday and I was like OK, look, I need some normalcy. I personally asked on a Friday night let's keep it light on Fridays. It just gives us a minute just to connect again, to ease back into being around each other.
And then on Saturday mornings we try to have our moment because then on Sunday mornings, I'd be like that's the girls' moment --
AARON BRIGHT: Yes.
S. BRIGHT: -- with pancakes. I stay out of that. Like, I usually don't even partake in the pancakes. It's all them and daddy.
AARON BRIGHT: They're delicious, though.
S. BRIGHT: So -- and then, we see what we have. A lot of times it's just we want simplicity.
BALDWIN: We cover so much of the heated up rhetoric, right, between Washington and Pyongyang. Can you feel that day-to-day over here?
AARON BRIGHT: A little. The South Korean people are very -- you know, it's just another day. They've seen worse. And it's infectious to us. We know what to do if it does happen. And this is -- this is kind of --
BALDWIN: What's the 'it happen'?
AARON BRIGHT: This is kind of our job. Just, you know, full-on war. And we know -- my soldiers know -- we know exactly what to do.
BALDWIN: If and when that call came in to you and you're ready to roll, what does the call look like between you and your wife?
AARON BRIGHT: Well, I don't even think about that. I guess it's a phone call. Hey, see you later, get out.
BALDWIN: Get out.
AARON BRIGHT: Yes.
BALDWIN: Is it tough for you to think about?
AARON BRIGHT: Yes, it is. That part's hard.
AARON BRIGHT: Because I'm -- I'm the protector.
BALDWIN: It's your job to protect your family.
AARON BRIGHT: Right, and I can't. They have to go. I have to protect these guys.
It's hard. The thing about that part is hard.
BALDWIN: What does your dad mean to you?
P. BRIGHT: He means a lot. He's a great father. I'm glad that he's around with us. He's an amazing person to have.
You know, it's -- he works and makes sure that we're safe and we're good.
BALDWIN: Tell me about your mom.
ANNABELLE BRIGHT: She helps a lot. She has to put with so much like taking care of us during the week when daddy's not here.
P. BRIGHT: Since we move so much, family is the thing that keeps constant. Like we always have mom and dad, we always have each other.
CAMEROTA: Wow, that was beautiful. I mean, I so admire Col. Bright's candor there with you.
BALDWIN: On my gosh, there was not a dry eye in the room. BERMAN: Look, I understand that there's two fascinating aspects to
this. One is the sacrifice that our servicemen and women make, and the families make as well.
But the other is that when we deal with North Korea and the situation that this is not some abstraction. This is not happening on the other side of the earth. I mean, there are tens of thousands of Americans --
BERMAN: -- who are right in the middle of it.
BALDWIN: In harm's way, right. I mean, as he pointed out, he's in area one so if something were to happen, Col. Bright would be leading that charge. He would be on the front lines.
And, you know, he talked to me about some really close calls he had had in the Middle East for a number of different deployments he's been a part of.
But, you know, it's -- it was fascinating to me because we talk so much about it over here and people have been so worried about well, what could happen, and what could happen with North Korea.
To meet these people, to feel it there, they have to -- they take a note from the South Koreans. Listen, we've got to continue on with our lives but at the same time, you know, in that moment when he sat there with me and broke down and was so candid and emotional, obviously they feel that. They feel that threat.
But I am just -- it was humbling. The whole week in Korea was humbling for me and we met -- we met another soldier who I'm introducing on my show later today. We were on the DMZ -- had extraordinary access there.
And just a different sort of story of a 19-year-old who'd never left the country and is now living a stone's throw from North Korea. So please tune in today at 2:00 eastern for that.
CAMEROTA: I mean, you --
BERMAN: I tune in every day.
CAMEROTA: As we do every day.
BALDWIN: Of course.
CAMEROTA: You all just captured the sacrifice of the family so beautifully and so, thank you.
BALDWIN: Thank you for letting me share it on your show.
CAMEROTA: Thank you for bringing it. We'll be watching.
BALDWIN: Thank you. BERMAN: We've got a lot of new this morning so let's get to it.