The David Rubenstein Show Rep Jason Smith

This is my kitchen table and also my filing system. Over much of the past three decades, I've been an investor. The highest calling of mankind I've often thought was private equity. And then I started interviewing. While I watch your interviews, I know how to do some interviews. I've learned in doing my interviews how leaders make it to the top. I asked him how much he wanted. He said 250. I said fine. I didn't negotiate with him. I did no due diligence. I have something I'd like to sell and how they stay there. You don't feel inadequate now because being only the second wealthiest man in the world. Is that right? Jason Smith of Missouri is chairman of the House Ways and Means Committee, which is responsible for drafting tax legislation. I had a chance to ask him how the new tax legislation is going to change the way the economy operates. Let's talk about the overall bill itself. Now, the bill is passed the House Ways and Means Committee. Now you need to get a rule from the Rules Committee, and then you take it to the floor. Is that the way it works? Pretty close to that. Since we're using the rules of reconciliation, which is a tool to help the Senate get the 51 votes to pass any legislation, there's certain parameters that we have to fall under. We had to pass the budget resolution. The budget resolution was passed by both the House and the Senate, and it gave us specific instructions. Within that budget resolution, it instructed 11 different committees in the House of Representatives. Ten of the 11 have marked up. The last one is finishing up right now, the Ag Committee. Once all 11 are done, their bills that they marked up, it goes to the budget committee. Let's talk about how we got to where we are today. In coming up with the bill that you have passed through the committee, did you meet with the Treasury, with the Senate Finance Committee people, and the President from time to time? How regularly did you meet with these people? We had the big six meetings, which was referred to as the Speaker of the House, the Leader of the Senate, so Mr. Thune, also Chairman Crapo of the Finance Committee, myself. It had Kevin Hassett, Economic Advisor, and then also the Treasury Secretary, Besson. The six of us met quite often. Typically, it's about every week to two weeks, and we've been doing that for several months right now, discussing different tax provisions. But in regards to my counterpart over on the Senate side, Chairman Crapo, we talk, our teams communicate nonstop, and we've been working pretty well hand in glove. Did the President get involved too? Did you meet with the President in the Oval Office, talk about the bill? Or how often does that happen? I do. Our President is very accessible, and he calls me when he wants to talk tax or trade or some other items that's within our committee's jurisdiction. And so I've met with him several times on this tax bill, twice in the last two weeks in the Oval Office. I shared with him the main priorities that he asked us to deliver on and what I could deliver on and what I couldn't deliver on. Okay, so let's go through some of those. So the main thing that he wanted, I thought, was to get the tax cuts that we'd had before extended for corporations and for individuals. So individuals will have their tax rate be the same as it's currently. Is that right? That's exactly right. The first thing, his first priority was permanency of his expiring 2017 tax cuts. And some of the main items that were expiring was all the individual rates would go up. This makes the current rates that you're paying taxes right now will stay the current rates, regardless of what tax bracket that you're in. The child tax credit was going to be slashed in half. It would have went from $2,000 to $1,000. We made permanent the $2,000 child tax credit. The guaranteed deduction, which 91% of Americans use to file their taxes, that got doubled in 2017. It's roughly $15,000 per person right now. And we made that permanent as well. So let's talk about things the president was famous for wanting in the bill. No tax on tips. Is that because people getting tips are paying a lot of taxes? The idea of the no tax on tips to the president was he was actually having dinner at one of his properties in Nevada during the campaign. And the waitress said, can you not tax my tips? And that's where the idea came from, from a waitress in Nevada to the president. And so what we've done within this bill is to eliminate the tax on tips altogether. What about no tax on overtime? Have you taken care of that? We did. We eliminated no tax on overtime. It affects about 80 million workers across the country. And we put special guidelines, both in no tax on tips and overtime, that it can't be high compensated employees. For example, by definition within statute, a high compensated employee is someone who makes more than $160,000 a year. What about, the president also talked about no tax on social security. What about that? So within the rules of reconciliation by statute, you cannot touch social security. And so we wanted to make sure we delivered on this priority in reconciliation. And if you want to know about the social security tax, in like 1981, it was created that you were tax free off your first $25,000 for an individual or 32,000 for a married couple. And that hasn't changed in 40, 43, 44 years. And so there is an item within the tax code that you get an added standard deduction if you're a senior, if you're 65 years old or older, it's currently about $2,000 that could be added on top of your guaranteed deduction. And so we've increased that $4,000 per person so that their deduction wouldn't be 6,000. And that equates to anyone who makes less than $75,000 per person. So 75 for an individual or 150 for a married, that they would not be paying any taxes on their social security because of the tax cuts from the income code. Let's talk about the famous carried interest provision. I've never heard of it. Yeah. Well, I should disclose, I don't collect carried interest the way I've structured my affairs because I didn't like being criticized for it so much. So I'm not a carried interest recipient any longer. It was reported in the press that the president of the United States likes to get rid of carried interest and you didn't do that in this bill. So is he going to be upset? So throughout this whole process, David, I've had to thread a needle. We have one of the smallest majorities in the history of Congress, both in the House and the Senate. And so I can only lose three people in passing this tax bill. And so trying to thread that needle where people are on the extremes in all areas, whether it's the green credits, whether it's salt, whether it's other various tax provisions, just trying to find that balance has been what I've been striving and trying to do in this bill. In regards to carried interest, I got a letter from 35 different members of our Congress for being committee chairman that was saying, do not put this in the bill. We can't support the bill. It was a priority. The president wanted it. The president had a lot of priorities and I delivered on most of them. What about the other one, which doesn't affect me either, the sports stadium exemption or something? Did that get in there or what? I delivered on that one. Oh, OK. But you're going to be fine. You're going to be fine, David, because you've purchased the team before it takes effect. OK, good. Thank you. So it's only new owners. OK, OK, good. So I'm glad to hear that. So, OK. I was thinking. Oh, thinking. OK, thanks very much. I appreciate it. So salt, which is a state and local tax deduction, it was limited to $10,000. Now you've increased it to $30,000? Yes, we increased it 300% because it was currently $10,000. Now it's at 300% increase. It's $30,000. Unless you have a larger income, in which case it goes down a bit. Yeah, it's $30,000 if you make less than $400,000 a year, and then it starts phasing back down to $10,000. So we've tried to find what is that good spot. Even talking to my ranking member, he's like salt's just, salt's an obstacle for both parties in that sense. And so we've checked numbers. I've got numbers from Treasury and the IRS of the different salt congressional districts within our conference. And this $30,000 cap that we have under $400,000 will provide more than 90% of every one of our salt members districts coverage under this. So it's a balance. It's not everything that some of the salt members want, but I have members of our conference that doesn't even think you should be able to deduct $1, let alone $30,000. But it's a fair and balanced approach. When do you think the bill will actually become law? Is it before the end of the year or before the end of the Congress? My goal is July 4th. July the 4th. I want the president to be able to sign into law on July 4th. That's my goal. And that's the president's goal. I'm a product of the working class. I am so grateful for how I was raised because it doesn't matter what family you're born into. If you get a quality education and you're determined to work hard and not give up, you can accomplish just about anything. You are from the great state of Missouri. Is there any other? And did you grow up in a city, a big city like St. Louis or something like that? The congressional district that I represent, David, my family's called it home for seven generations. My hometown is less than 5,000 people. It's called Salem, Missouri. It's the county seat. The population of my county is only about 16,000. What is the main business of your district? Is it farming? Agriculture. Agriculture, without a doubt. And manufacturing. I grew up working on my grandparents' farm. My father was an auto mechanic. And so where I lived was, we had a single wide trailer right next to his auto repair business, which was just a two bay unit. And my grandparents' farm was three miles away. And so I always spent the weekends, the summers, the evenings working on the farm. And now I own that farm. I purchased it when my granddad died. But you decided to get into politics. So you went to college where? University of Missouri in Columbia. Graduated with two degrees at 20. Business administration, emphasis finance, and agriculture economics. And then I went to law school three days later. All right. So you're a lawyer as well, but you did not practice law? I practiced law for just about a year and then got elected to the Missouri State House when I was 24. Was one of the youngest members in the Missouri State House. I became the majority whip, the youngest speaker pro tem in Missouri's history, and then ran for Congress at 32. 32. So you got elected. And what year did you get elected to Congress initially? It was June of 2013. I will never forget my first day I got sworn in. My predecessor was Congresswoman Joanne Emerson. And she led me down to the floor. She was there when I got sworn in entire with the Missouri delegation. And she's like, do you know how to get back to your office? Which my office was her old office at that time in the Rayburn House Office Building. And I was like, yeah, I can do it. So, okay. So now how do you go from being a young member of Congress to being the Ways and Means Committee? Used to be seniority. How did you become the chairman of the Ways and Means Committee? It's all about relationships. I go back to that first day. That when I was sworn into office, my senator at that time was Roy Blunt. And Roy Blunt pulled me aside. And he said, Jason, there's two ways you can be effective in Washington, D.C. One, you can be here for 20 years and just build natural seniority. Or two, you can build relationships. And so I made it a focus to schedule five to 15 minute meetings, coffees, teas with every member of Congress that would meet with me whenever I came up here. Because they all knew who I was being the new special election kid. But I didn't know who the other 434 were. And so I just started going through, getting to know them, not asking for anything, but just figure out where we have some common ground. All right. So it used to be on seniority. You work your way up and then you become a chairman of a committee. Now the members of each caucus decide who they want to have. And so you ran for an election as chairman of the Ways and Means Committee. I did. And you got elected the last Congress. I did. I've been elected twice now as chairman of the House Ways and Means Committee. I worked really hard. I traveled to 42 of the 50 states campaigning for my colleagues and for candidates in 87 different congressional districts. I did more than 300 TV appearances trying to push the Republican message. And I met with every one of the 30 plus members of the steering committee multiple times, giving them the pitch of why I should lead the Ways and Means Committee and under what leadership I would lead on. So what was your most effective argument for why somebody from a farming district in Missouri should be the chairman of the Ways and Means Committee at a relatively young age? I truly believe that our party is not the party of seniority or who's next in line, but it's the party who's best for the job. And I felt like I was the best person for the job. That's why I was running for it or I wouldn't have done it. And I said that if you elect me to be the chairman of this committee, that the policies that's within the Ways and Means jurisdiction, tax, trade, healthcare, social security, needs to be the policies that reflect the priorities of the working class. I'm a product of the working class. I grew up in a single by trailer most of my life and then we upgraded to a double wide. My mother was a factory worker just so that we had health insurance. That's how we made it by, but I am so grateful for how I was raised because it doesn't matter like what family you're born into. If you get a quality education and you're determined to work hard and not give up, you can accomplish just about anything. And that's how I view everything that I've done, whether it's becoming the Ways and Means chairman or when I ran for Congress, there were 26 other Republicans that I had to beat out in order to just become the nominee to take my predecessor spot. So when you were elected chairman of the Ways and Means Committee, did you call your mother and explain it to her? And was she ecstatic or what did you say? She's like, what does that mean? And does she tell everybody her son is the chairman of the Ways and Means Committee or she doesn't? She doesn't, like people don't care. They don't care. My friends and neighbors don't care. It's so funny. I woke up this morning with a text message from a high school classmate who's a school teacher in my hometown. She's like, why is your face continuing to pop up on the TV? Like, are you important? I was like, no, not at all. If you want to call the president of the United States, how long does it take before you get a call back? Most time when I call him, he answers. He is the most accessible executive I've ever worked with. I'll wake up in the morning sometimes from a text message from the president at 5.30 in the morning. And it's sent to me at like 2.30. And I'm like, oh no, he knows I was sleeping. So he's always working. He'll text you. I can text him. He is so productive in regards to talking policy. Now that you've got this bill behind you, what is the highest priority when you get the bill through the House and the Senate and you ultimately have these live fourth ceremony? Is it to deal with trade? Is that your next big issue? So multiple things. We have to get this bill signed into law, delivered for the American people. But after it's signed into law, I'm gonna hold Treasury accountable to make sure that they're implementing the tax bill, how Congress passed it. It's not always been fun. That's gonna be a big priority to make sure that the tax code's implemented as the priority that we're passing Congress. But trade, trade is super important. 96% of the world's consumers are outside of the United States. I represent a farming congressional district. We're dependent on trade. We grow rice, corn, cotton, beef cattle in my district. And so we need more markets. We need to eliminate those non-tariff barriers. Let's suppose you have all this in the big bill and let's suppose it passes. The total cost of the big, beautiful bill, your parts and the other things, is it $4 trillion or something like that? It was, the house number was, you could not exceed four and a half trillion. Four and a half trillion, okay. And then they had this ratchet item that if you didn't make $2 trillion worth of spending cuts, it would ratchet down to $4 trillion. And so our bill actually comes in below $4 trillion. But part of the big, beautiful bill is to have the increase of the debt limit. Right now we have a debt limit that's more or less, it's sort of expired a while ago. But you're gonna pass in this big, beautiful bill, is it a $5 trillion increase in the debt limit, something like that? So you're right, the debt limit, David, expired at the first of the year. We're operating under extraordinary measures right now is what they refer to. And it's projected that will last us sometime in July. And so we have to address that. And part of the bill that we voted out of committee increased the debt limit. It increased the debt limit $4 trillion, which was in the budget instructions that we were required to do. The Senate instructions is higher with a higher debt limit. And so that's one of those things that I'm sure that is going to be figured out throughout the process. Why not just get rid of the debt limit completely? We've raised it over 90 times since it first was put into effect in the early part of the 20th century. We've never really complied with it. Why not just get rid of it? I think President Trump said he would like to get rid of it at one point. I was about to say you, David, you and President Trump are exactly agreeing on that issue. And I think there's a lot of members of both parties that view the debt limit as like a very poison pill that individuals have to worry about. And when you think about defaulting on U.S. debt, that can create a big problem. So, well, you think it's unlikely that we're going to get rid of the debt limit in this bill. We're just going to increase it probably. I tell everyone, I've said this before, the bills were out there, is that pretty much everything's on the table because we don't know what is needed to thread that needle to get the votes. People would talk about different tax brackets or whatever. And I would just say everything's on the table. Is your expectation the Senate will take your bill and say it's really great and we're going to pass it or it's going to come back to you? So I'm sure they will make changes. We've been working with Senate Finance. I've been meeting with numerous senators. Senators have been calling me, telling me their priorities. We put a lot of the senators' priorities in this bill. So what is the best way to get something in the tax bill or was the best way? Is it to call you up personally, text you, certain lobbyists have access? What's the best way to convince a member of the Ways and Means Committee or the chairman to put something in the bill or take something out? So I changed how we run the Ways and Means Committee from my very first committee hearing. My first committee hearing as chairman was not in Washington. We did it in Petersburg, West Virginia at a lumber yard. And we brought in a restaurant owner, a coal miner, working moms and farmers just to hear of the issues that they were facing in today's economy. I set up 10 different tax teams where I picked 10 different members of my committee to chair for over the last year, where they traveled to more than 23 different states themselves, had more than 120 site visits. They met with stakeholders to listen to all items within the code. And then we brought that all back. But let's suppose I'm just a lobbyist. I have one provision. Is it to wait outside your office and as you're walking somewhere, talk to you? Is that a very effective way? Please don't. What I do want to say is we have a 300 and almost 400 page bill. And I'm sure there's things that we may have not saw all the facts in. And when you hit one domino here, it can really mess up some other dominoes. I want any American who feels like that there's an unintended consequence of what we're trying to do that we may not be aware of. Please let us know. And are you ever thinking of running for a statewide office? Would you ever consider running for the Senate or the governorship? I didn't originally plan when I came to Congress that I would be chairman of the Ways and Means Committee. And I've had such a great honor to do this. I just want to make a difference in the lives of the people who have trusted me and sent me to Washington. And so I haven't really planned ahead of anything other than let's pass this one big, beautiful bill. Thank you.