- "This whole bill was cooked up in secret. Folks like me who spent years being interested in this subject were not invited into the room," Warner told CNBC.
- "What I find so disheartening is, we're looking at the last five or six quarters at record-high corporate tax profits."
- "We've not seen that translate into investments in American factories or American workers."
Sen. Mark Warner, who has served in the Senate since 2009, sat down with CNBC's John Harwood to discuss a range of topics, including the GOP's tax plan. What follows is an edited, condensed excerpt of the conversation.
CNBC's John Harwood: You're a business guy with a centrist reputation. Is this tax bill that your Republican colleagues are all-in on going to be a big boost to economic growth?
Sen. Mark Warner: It will not only be not a boost, but I believe it's the single worst piece of legislation that I've seen since I've been in the Senate. And let me tell you why.
This whole bill was cooked up in secret. Folks like me who spent years being interested in this subject were not invited into the room. And because it's been done in secret, I believe tax lawyers and accountants will spend a decade finding some of the loopholes and problems, particularly in the pass-through area and in some of the corporate tax reform. As someone who did support the basic premise — that we need to make our corporate tax rates competitive with the rest of the world and bring back some of those profits that have been caught offshore — I believe because they didn't have the test of time and the test of public review, I think they messed up some of that.
For example, they've allowed companies to still place their intellectual property in a low-tax or no-tax haven, build their factory in a country like Germany, average their tax across the two, and end up potentially not paying any American taxes at all. Alan Greenspan is not someone I always cite, but Chairman Greenspan has shown that if you have close to a full economy, where we have right now with virtually full employment, and you do a massive tax cut with all borrowed money, you don't see any of the growth projections they've called upon.
It's why economists from left to right have said, "We're not going to see the growth numbers that the Republicans themselves have cooked up." So what we're seeing now is a nation where we've already built up $20 trillion in debt — and that's has been built up by both political parties over the last 70 years.
You add that $2 trillion to the $20 trillion, and now you've got a level of debt that, frankly, if interest rates simply go up 1 percent, you're going to see $160 billion a year of additional debt payments right off the top) before we pay for a dime in the military or a dollar of Social Security.
For every tax dollar you send to Washington, only about 7 cents is spent on education, infrastructure and research and development. Now I've been a business guy longer than I've been a politician. Any business that spends 7 percent of its revenues on its workforce, plant and equipment and staying ahead of the competition, which for a government is education, infrastructure and R&D, that is not a business plan that I'd invest in.
Harwood: You, like other Democrats, have used on Twitter, the moniker "tax scam" for this bill. Independent analysis has echoed a lot of the criticism that you've talked about. Since your Republican colleagues are friends of yours, why are they doing it? Do they sincerely believe in this bill? Or are there other reasons for it?
Warner: I think there are a number that believe, as kind of an article of faith, that tax cuts will provide growth if you bring more profits to a business. And I believe they would be right if this was a period of high unemployment. I think history has shown: High unemployment, you give a tax cut, you get a burst.
What I find so disheartening is, we're looking at the last five or six quarters at record-high corporate tax profits. We've not seen that translate into investments in American factories or American workers.
Harwood: Fundamentally you think they believe in this bill. You don't think it's for donors or partisan gain.
Warner: I think there is a mix. There is a rush to get this done before Christmas, purely driven by a Trump request. I think many of them know that if they had built this on a bipartisan basis, if they'd allowed a little more time and a little more sunshine into the process, they would have a better product.
For example, one of the things that would've made this much more palatable to me was if these companies are going to bring back their profits they generated in foreign countries at extraordinary low rates, why not say, "Fine, company. Bring it back. But part of the price of bringing it back at that low rate is, you've got to put in place a meaningful training program, not for everybody but for everybody in your company that makes less than $80,000 a year."
Because the one thing we know in a 21st century economy is, no matter how skilled you are, you're going to have to continue to upgrade your skills because no job is going last for 30 years the way my dad worked for the same company for 30 years. Unless you upskill, you're going be left behind.
Harwood: You talked about the rush to do this at Trump's request before Christmas. As you recall, after Scott Brown was elected in 2010, your colleague Jim Webb stood up and said, "Stop health care (debate) until Scott Brown becomes a senator." Do you have any reason to expect that any of your Republican colleagues now, Mitch McConnell, who echoed those same calls then, are going to stand up and do that?
Warner: Alabama ought to have their newly elected representative, Doug Jones, weigh in on this tax policy that's going to affect the country for the next decade.
Harwood: But you don't think anybody's going to do that.
Warner: I'm not holding my breath. But nobody would love to be more surprised than to see Leader McConnell say, "Hey, we're going to take a timeout, let this bill have a little more public exposure, wait for Mr. Jones to be seated and then build on this legislation."
Harwood: Do you think Chuck Schumer would do precisely the same thing that McConnell's doing if their roles were reversed?
Warner: I would hope he would do something different. I would hope that I would have also the courage to call him out. I try not to get overwrought sometimes, because I do wonder if the shoe was on the other foot. I do know this: I spent a lot of years taking on my own party around entitlement reform, around the need for additional revenues. None of these that were items that were very popular, but that were items where I'd reached a conclusion, as a business guy looking at our country's balance sheet, realizing that business as usual when we're generating $500, $600, $700 billion a year in annual deficits is not and cannot be sustainable.
And I was willing to take that on. I do wish more members would. I was concerned that many of my Republican colleagues, who were with me in the trenches when Obama was president and we were trying to fight on debt and deficit, were absent when this most recent battle took place.
"Speakeasy with John Harwood" is now available as a podcast. Subscribe on iTunes and listen to Harwood's extended conversations with political decision-makers.