WHEN: Today, Tuesday, November 28, 2017
WHERE: CNBC's "Squawk on the Street"
Following is the unofficial transcript of a FIRST ON CNBC interview with House Ways & Means Committee Chairman Rep. Kevin Brady on CNBC's "Squawk on the Street" (M-F 9AM-11AM) today, Tuesday, November 28, 2017. Following is a link to video from the interview on CNBC.com: https://www.cnbc.com/video/2017/11/28/rep-kevin-brady-on-tax-reform-im-confident-the-senate-will-stand-and-deliver.html.
All references must be sourced to CNBC.
CARL QUINTANILLA: JOINING US THIS MORNING FIRST ON CNBC IS AN ARCHITECT OF THE PLAN, HOUSE WAYS AND MEANS COMMITTEE CHAIRMAN, TEXAS REPUBLICAN CONGRESSMAN KEVIN BRADY. MR. CHAIRMAN, GOOD TO HAVE YOU, WELCOME.
REP. KEVIN BRADY: GOOD, CARL. THANKS FOR HAVING ME.
QUINTANILLA: SO YOU'VE GOT CORKER AND RON JOHNSON, BOTH ON BUDGET, BOTH WITH DIFFERENT CONCERNS. HOW MUCH OF THIS IS SORT OF ROUTINE WRANGLING AND HOW MUCH OF THIS COULD REALLY MAKE THINGS COMPLICATED?
BRADY: LOOK, THE BALL IS IN THE SENATE'S COURT. CHANGE IT AS THEY WILL, MAKE IT BETTER AT EVERY STEP. THAT'S CERTAINLY THE WAY THE HOUSE, WHICH HAS DELIVERED, LOOKS AT THIS. WE'RE REPUBLICANS, LET'S MAKE IT BETTER AT EVERY STEP. LOOK, I'M CONFIDENT THE SENATE IS GONNA FIND A WAY TO STAND AND DELIVER ON TAX REFORM, AND THEN WHEN THE HOUSE AND SENATE MOVES TO A CONFERENCE COMMITTEE, WE'RE GOING TO MAKE IT EVEN BETTER. AND, SO EVERY STEP IS ABOUT IMPROVING THE – AND GETTING RID OF THIS CURRENT MESS OF A TAX CODE.
QUINTANILLA: CORKER BROUGHT UP THESE TRIGGERS OR THESE BACKSTOPS THAT WOULD CREATE A NEW TAX RATE, IF IN FACT ECONOMIC GROWTH WAS NOT PAYING FOR THE COST OF THE LEGISLATION. IS THAT SOMETHING YOU COULD SELL ON THE HOUSE SIDE?
BRADY: WELL, LOOK, LET THE SENATE DO THEIR WORK. YOU KNOW, MY REQUEST IS THIS, MAKE SURE YOU MEASURE ALL OF TAX REFORM. MAKE SURE YOU'RE MEASURING THE GROWTH, NOT JUST IN FEDERAL REVENUES BUT IN STATE AND LOCAL, PAYCHECKS INCREASING, JOBS COMING BACK FROM OVERSEAS. MAKE SURE YOU'RE MEASURING PRODUCTIVITY AND EVERYTHING GOOD THAT COMES FROM TAX REFORM DONE RIGHT. AND SO THE SENATE, LOOK, AGAIN, I ENCOURAGE THEM, DO THEIR BEST WORK. LOOKING FORWARD TO WORKING WITH THEM IN CONFERENCE COMMITTEE. WE START, CARL, WITH A LOT OF COMMON GROUND. I THINK WE'RE GOING TO FIND EVEN MORE COMMON GROUND IN A CONFERENCE COMMITTEE.
JIM CRAMER: MR. CHAIRMAN, JIM CRAMER HERE, THANK YOU FOR COMING ON OUR SHOW, IT'S TERRIFIC TO HAVE YOU.
BRADY: YEAH, JIM. THANKS.
CRAMER: IT'S TERRIFIC. SO, MR. CHAIRMAN, I KNOW THAT THERE'S SOME PEOPLE IN THE SENATE THAT WANT TO DO EVEN BIGGER BREAKS FOR PASS THROUGHS, I'VE STARTED FOUR BUSINESSES, SIR. IN THE FIRST TWO YEARS I ALMOST ALWAYS LOSE MONEY. WHY WOULD A TAX BREAK HELP ME?
BRADY: SO AS A PASS THROUGH OR CORPORATION, LOOK, YOU KNOW, WE IN THE HOUSE START WITH THE SUPER LOW RATE WITH THE FIRST $75,000 OF EARNINGS, REGARDLESS OF WHAT TYPE OF MAIN STREET BUSINESS YOU ARE. WE THINK THAT'S REALLY IMPORTANT IN THE STARTUP YEARS. FULL AND UNLIMITED EXPENSING WHICH IS REALLY COMPLICATED FOR THOSE STARTUP BUSINESSES, WE'VE HAD LOCAL BUSINESSES THAT GET CAUGHT IN THAT DEPRECIATION SCHEDULE TRAP, END UP WITH HUGE TAX BILLS WHEN THEY NEVER ANTICIPATED. AND THEN HAVING THE LOW RATE ITSELF, THE ZERO TAX RATE ON NEW INVESTMENT, ALL OF THAT WE THINK MAKES STARTUPS AND EXISTING BUSINESSES DRAMATICAL MORE COMPETITIVE.
DAVID FABER: CHAIRMAN BRADY, DAVID FABER HERE. I'D LIKE TO TAKE A STEP BACK AND CONSIDER THE BIGGER EFFECTS YOU'RE HOPING FOR FROM THIS BILL, NAMELY HIGHER ECONOMIC GROWTH, A CORPORATION SPENDING MORE HERE IN THE STATES, POTENTIALLY INCREASING HIRING, WAGES. WE HAVE AS YOU KNOW A NUMBER OF CEOs FROM MULTINATIONAL COMPANIES WHO JOIN US HERE EVERY DAY. LAST WEEK, OR TWO WEEKS AGO, CHUCK ROBBINS, FOR EXAMPLE, FROM CISCO CAME ON WE ASKED HIM QUITE A FEW TIMES IN A LOT OF DIFFERENT WAYS, "WHAT ABOUT THE MONEY YOU HAVE OVERSEAS AT CISCO? ARE YOU GOING TO REALLY INCREASE SPENDING HERE IN THE STATES?" AND LIKE A LOT OF THESE CEOs, CHAIRMAN, HE DIDN'T NECESSARILY COME DOWN AND SAY SPECIFICALLY THAT THAT WOULD BE THE CASE. SO, MY QUESTION, IN A LONG WINDED WAY, IS WHAT GIVES YOU THE CONFIDENCE THAT THIS IS GOING TO RESULT IN THE END EFFECTS YOU'RE HOPING FOR OF INCREASED SPENDING BY CORPORATIONS THAT ACTUALLY INCREASE JOBS AND WAGES?
BRADY: YEAH, YOU KNOW, HERE THE CERTAINTY IS THIS. WE KNOW WHAT DOESN'T WORK, WHICH IS THE CURRENT TAX CODE, WHICH IS UNCOMPETITIVE, WHICH LOCKS OUT THOSE DOLLARS – ACTUALLY PUNISHES COMPANIES LIKE CISCO AND OTHERS FOR BRINGING REVENUES BACK TO BE REINVESTED IN THE UNITED STATES. WE NOW WILL HAVE UNDER THIS NEW TAX CUT AND JOBS ACT A COMPETITIVE CODE, A ZERO RATE TO BRING YOUR PROFITS BACK AND BE REINVESTED IN THE UNITED STATES, WHETHER IT'S IN RESEARCH OR JOBS OR GROWTH, OR JUST SIMPLY STRENGTHENING THE BOTTOM LINE SO YOU CAN COMPETE AND WIN. WE KNOW WITH THE NEW TAX CODE THE ABILITY TO BRING REVENUES HOME WILL BE GREATLY ENHANCED. I'M CONFIDENT THAT GROWS JOBS HERE IN AMERICA AND MAKES US MORE COMPETITIVE.
FABER: YOU KNOW, WITH CORPORATE PROFITS AT AN ALL TIME HIGH AS A PERCENTAGE OF GDP, SOME WOULD SAY OUR CORPORATIONS HAVE PLENTY OF FLEXIBILITY ALREADY TO MAKE THE INVESTMENTS WHERE THEY THINK THEY ARE BEST MADE. AND THAT YES, BRINGING THE MONEY BACK IS CERTAINLY HELPFUL, NO DOUBT AND TERRITORIAL SYSTEM IS. BUT THAT IT WON'T NECESSARILY TRANSLATE INTO INVESTMENTS THAT OTHERWISE WOULDN'T HAVE BEEN MADE ANYWAY GIVEN OUR COMPANIES ARE CREATING GREAT DEAL OF CASH FLOW ALREADY.
BRADY: YEAH, SO I JUST SEE A DIFFERENCE BETWEEN THIS -- THE OLD TAX SYSTEM, THAT LOCKS DOLLARS OUT AND A NEW COMPETITIVE SYSTEM THAT ALLOWS COMPANIES TO BRING IT BACK TAX FREE TO BE REINVESTED HERE IN THE UNITED STATES. WE SAW IN 2004 AND 2005 ABOUT $300 BILLION COME BACK TO THE UNITED STATES, COMPANIES HERE IN AMERICA, INVESTED IN NEW MANUFACTURING AND BUYING NEW COMPANIES AND EXPANDING. WE SEE THAT IN A PERMANENT WAY GOING FORWARD AS VERY POSITIVE TO THE ECONOMY. AND AGAIN, AT THE END OF THE DAY, NO ONE HAS CONVINCED ME A DOLLAR LEFT STRANDED OVERSEAS IS BETTER THAN THE DOLLAR BROUGHT BACK TO THE UNITED STATES FOR ANY REASON.
CRAMER: MR. CHAIRMAN, I TOTALLY AGREE THAT IF THAT MONEY CAME BACK, IT WOULD BE TERRIFIC. I DO BELIEVE A LOT OF IT WOULD BE SPENT ON DIVIDENDS AND BUY BACKS BECAUSE THAT'S HOW CEOs ARE REWARDED IN THIS COUNTRY. I'M ALSO CONCERNED THAT ALL THAT'S HAPPENED -- I HAVE SEEN IN THE LAST DECADE, IS THE RICHER HAVE GOTTEN MORE RICH. I MEAN AMAZON'S WIPING OUT SO MANY SMALL BUSINESSES, WALMART WIPES OUT SMALL BUSINESSES, I MEAN THE MINIMUM WAGE IS WIPING OUT SMALL BUSINESSES AND MAKING IT SO YOU DON'T WANT TO OPEN A NEW BUSINESS. I MEAN, THESE FORCES ARE – ALL YOU'RE DOING IS MAYBE IS ACCENTUATING THE FIRST TWO, WHICH IS ALLOWING THESE COMPANIES TO HAVE SO MUCH MORE POWER OVER THESE SMALLER COMPANIES THAT WE KNOW CAN REALLY PRODUCE THE JOBS.
BRADY: WELL, I DO AGREE ON THIS AREA THAT THE MINIMUM WAGE AND OTHER GOVERNMENT INTERVENTIONS HAVE REALLY HURT LOCAL BUSINESSES AND LOCAL FAMILIES IN A BIG WAY. BUT I'LL TELL YOU THIS, WHILE A LOT OF FOCUS HAS BEEN ON PROFITS, I THINK THIS TAX CODES INCENTIVE IS FOR PRODUCTIVITY, THAT'S WHY THIS FULL AND UNLIMITED EXPENSING, THE ABILITY TO IN EFFECT TAX FREE NEW INVESTMENTS IN PLANTS, EQUIPMENT AND SOFTWARE TECHNOLOGY, DRIVE THOSE PAYCHECKS. THEY DRIVE PRODUCTIVITY. AS YOU KNOW THEY DRIVE THE ECONOMY IN A MAJOR WAY. SO MY VIEW IS THAT WE'RE LOOKING AT THE WRONG "P" WORD, PROFITS – THE REAL FOCUS SHOULD BE PRODUCTIVITY OF WORKERS AND AMERICAN BUSINESSES. THAT'S WHERE I THINK THIS NEW TAX CODE HITS A HOME RUN.
QUINTANILLA: THERE'S A LOT OF DISCUSSION IN THE EARLY DAYS OF THIS BILL, MR. CHAIRMAN, AS YOU KNOW, THAT YOU SHOULD HAVE JUST TACKLED CORPORATE. DO CORPORATE AND LEAVE THE INDIVIDUAL SIDE ALONE. WE PLAYED THAT SOUND BITE FROM CORKER A FEW MOMENTS AGO, WHERE HE SAID YOU COULD PUT THE WHOLE INDIVIDUAL PART IN THE INCINERATOR AND NOT BE THRILLED. DOES ANY PART OF YOU WISH YOU COULD HAVE DONE THAT?
BRADY: ABSOLUTELY NOT AND HERE'S WHY. WITH OUR CORPORATIONS, WE DID JUST THAT, WE WOULD LEAVE SMALL BUSINESSES AND PASSTHROUGHS BEHIND THE BIG JOB CREATORS, THAT'S NOT ACCEPTABLE. SECONDLY, WE GET GROWTH WHEN COMPANIES KEEP MORE OF WHAT THEY EARN AND PAYCHECKS INCREASE. THAT'S WHAT A NEW PRO-GROWTH TAX CODE IS ALL ABOUT. I ALWAYS SAY THIS BUT LOOK, WE CAN LOWER THE RATES TEMPORARILY AND IT WOULD BE LIKE PUTTING SUPER CHARGED FUEL IN AN OLD KLUNKER OF A TAX CAR. YEAH, IT WOULD GO FASTER BUT CAN'T COMPETE WITH NEWER MODELS ON THE ROAD TODAY. WE KNOW THE MODELS THAT CHINA AND EUROPE AND CANADA AND MEXICO AND OTHERS USE TO BEAT US AS A COUNTRY. FRANKLY, WE HAVE TO BE COMPETITIVE WITH THEM AGAIN. THAT'S WHY AN OVERALL PRO-GROWH TRANSFORMATIONAL TAX REFORM IS ABSOLUTELY NECESSARY.
QUINTANILLA: MR. CHAIRMAN, WE'RE GONNA WATCH BUDGET TODAY AND SEE WHAT THE WEEK BRINGS US. WE APPRECIATE YOUR TIME. WE HOPE YOU'LL COME BACK.
BRADY: YES, YES SIR. HAPPY TO BE BACK. THANK YOU.
QUINTANILLA: KEVIN BRADY JOINING US. CHAIRMAN OF HOUSE WAYS & MEANS
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