Larry Kudlow, the economist and former adviser to the Reagan White House, said he is optimistic that Congressional Republicans can approve business tax cuts this year to help boost economic growth. He said lawmakers should include the cuts as part of a healthcare reform bill, then work on personal income tax cuts later, if necessary.
“My old boss Ronald Reagan used to say, ‘Give me half of the loaf now, and I will get the other half later’,” Kudlow said on CNBC. “I would do the business tax cuts right now and put it on the healthcare House reconciliation. It is legal and it works.”
Kudlow was an economics adviser to the presidential campaign of Republican Donald Trump, who ran on a pro-business platform of cutting taxes and regulation to create greater incentives to work and invest. Trump also pledged to undo Obamacare, his predecessor’s signature healthcare plan that sought to make health insurance more affordable to millions of uninsured people.
The House passed Obamacare repeal earlier this year, and Senate Republicans are now writing their own repeal bill behind closed doors, according to CNN. Trump met with Republican senators last week at a luncheon that was intended to check in on the bill’s progress and urge quick action. Lawmakers face a looming deadline if they want to complete the legislation before the August recess.
During the campaign, Kudlow and economist Stephen Moore advised Trump on a plan of tax cuts and other reforms.
“Lower the corporate tax rate from 35 percent to 15 percent. Grant immediate expensing for new business investment. And establish a one-time 10 percent rate for the repatriation of offshore cash,” Kudlow said he and Moore recommended to senior White House officials this month. “It's a simple tonic that will restore capital formation, productivity, real wages and economic growth. And, in terms of political expediency, it's practical. It's about getting done what you can get done.”
Kudlow said he’d like to see some kind of tax reform get done before Congress leaves for its August recess.
“There is widespread agreement in Washington, D.C., about the need for a business tax cut,” Kudlow said. “And legislators can legally and technically attach corporate-tax-rate reduction to the health care reform bill in reconciliation in 2017.”
Washington's budget rules say lawmakers first have to pass an overall fiscal blueprint called a budget resolution before focusing on annual spending bills. This year, that budget plan is a key step in advancing legislation to overhaul the tax code, a top GOP priority.
Republicans are split into three camps on spending: defense hawks who want more money for the military than proposed by Trump; pragmatists who support domestic programs; and conservatives who back Trump's plan to cut domestic spending while boosting the Pentagon’s budget.
“Russiagate. Comeygate. Whatever-the-media-invents-today-gate. These only distract from the real reasons Donald Trump was put in office and congressional Republicans were given one more chance,” said Kudlow, the author of "JFK and the Reagan Revolution: A Secret History of American Prosperity," written with Brian Domitrovic and published by Portfolio. “American voters want the policy results that will deliver a return to economic prosperity.”
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