January 26, 2017
WASHINGTON — There is hardly a Texan to be found in Washington who is more at the center of this new world Trump order than U.S. Rep. Kevin Brady.
The 11-term congressman from the Woodlands is the chairman of the U.S. House’s tax-writing Ways and Means Committee, putting him in the driver’s seat amid the biggest economic issues of the day: trade deals, overhauling the tax code, the repeal of the 2010 health care law and the national deficit.
“This won’t happen but once a generation,” he told The Texas Tribune from his chairman’s office at the U.S. Capitol. “We can’t tweak a few things and call it a day. We really need to go bold.”
Brady took the committee gavel a little over a year ago. But back then, the Republican-controlled Congress was in a perpetual stalemate with former President Obama. Now a Republican, albeit one who can be at odds with his own party, is president — and Brady has his best opportunity to move legislation that could dramatically change the American economy.
House Republican rules dictate Brady is term-limited at the post. This, plus the momentum behind Trump and Republicans will make this moment the peak of his power and activity at Ways and Means.
For he and his Republican colleagues, overhauling the tax code is a top priority. In their characterizations, they will simplify the tax code for average Americans and cut taxes in a way that will bring back jobs from overseas.
“At the end of the day, what we hope to do is replace the current code, which is very costly, complex and very unfair, with a tax code designed for growth, literally built for the growth of jobs and wages in the U.S. economy,” he told the Tribune.
But can he assure Americans these tax cuts will not increase the deficit?
“Our Republican blueprint … is designed to break even on the budget, counting on economic growth, which means we will lose some tax revenues in the early years, and we will make it back in the following years and essentially break even in a 10-year period as far as federal revenues,” Brady said.
That idea that cutting taxes could actually increase revenue through economic growth, a central tenet of supply-side economics, is one that many economists on the left do not buy. Brady said such criticism is “not at all” valid.
“What we know is tax rates matter,” he said. “Since President Reagan reformed the tax code 30 years ago, our competitors around the world have lowered their taxes, simplified how they tax. They no longer double tax around the world … They are leaving America in the dirt, and as a result, American businesses today and Texas businesses are fighting with one hand tied behind their back.”
But this overhaul will occur with a billionaire president who refuses to release his tax returns, leading to questions about how a revamp of the tax code could drastically affect his own wealth. Brady said that controversy rests between individual citizens and the president.
“I’m convinced the discussion about President Trump trump’s tax returns made public are really one between him and the American public,” he said. “Clearly, he was elected, saying he was not going to release them.”
“Voters knew that was his position, and so I think any change in that is really part of the discussion about whether the American people want to see them or not.”
Even amid his optimism, it is an odd moment for the likes of Brady and his free-trade supporting House colleagues.
Only the day before Brady’s interview with the Tribune, Trump hosted a dozen union leaders at the White House and bragged about the end of the Trans-Pacific Partnership, a sprawling trade deal among Pacific Rim countries aimed at countering Chinese economic influence. Brady was a chief congressional proponent of the TPP. Trump effectively killed the deal earlier this week.
Brady telegraphed concern but praised the president.
“You’ve got to commend the president on following through promptly on his campaign pledge [of] withdrawal from TPP,” he said. “I’m convinced there were many elements in that agreement [that were] very beneficial to Texas and to the United States, but it does have flaws. That’s why there wasn’t the support to pass it in Congress last year.”
“It’s critically important that America not abandon the Asia-Pacific region because China will win, and our U.S. workers and companies will lose out in a big way,” he added, pointing particularly to Texas farmers, ranchers and business.
And there is another trade deal that could be in jeopardy in the Trump era: NAFTA. Brady concurred with the bipartisan refrain currently coming out of many others in Texas delegation: Given that the trade agreement between Canada, the United States and Mexico dates back to 1994, there is an opportunity to modernize the deal.
Brady said he is not worried about NAFTA, but he said “a good, thorough analysis is appropriate.”
Both the new president’s protectionist stances and the GOP-led House’s tax ideas – which include potential changes on how imports and exports are taxed – worry many economists that a trade war with other countries could be on the horizon. Under such an outcome, few states would take the hit harder than Texas.
Brady seems confident that such scenarios will be averted though the tax overhaul.
“Well, I hope no trade wars occur,” he said. “I also am convinced that a lot of the public concern about trade is really the sins of our tax code,” Brady said.
“I think getting tax reform right will allow Mr. Trump to pursue trade without all the really backward incentives that are in the code today.”
This article originally appeared in The Texas Tribune at https://www.texastribune.org/2017/01/26/brady-tax-reform/.