The Top Democrat on Taxes Hasn’t Given Up on a Deal With Trump

Rep. Richard Neal (D-MA), the ranking Democrat on the House Ways and Means Committee, isn’t happy with President Donald Trump’s broad proposal to cut individual and corporate taxes by trillions of dollars. But he isn’t walking away from the table either and, in striking contrast to many of his colleagues, he thinks there’s still a chance to cut a deal.

Image: Rep. Richard Neal, D-Mass., testifies during the House Rules Committee meeting to formulate a rule on H.R.1628, the "American Health Care Act of 2017" on March 22, 2017.
Rep. Richard Neal, D-Mass., testifies during the House Rules Committee meeting to formulate a rule on H.R.1628, the "American Health Care Act of 2017" on March 22, 2017. Bill Clark / AP

“I’ve earned a reputation for being a negotiator, and I tend not to bring a lot of emotion to these arguments at the outset, because you don’t know what the endgame is going to look like,” Neal told NBC News on Friday.

Neal talked to NBC News in between House votes about Trump’s tax plan, the Democrats’ economic message, and why he thinks there’s hope for bipartisan cooperation. Below is our conversation, edited for length and clarity. President Trump put out a giant ambitious tax proposal for individual and corporate and estate taxes.

Rep. Richard Neal (D-MA): On one page, double-spaced. What do you make of it?

NEAL: I think it’s less than architecture. I think it could best be summed up as starting the discussion. I don’t see much chance that we’re going to a 15% corporate rate. All we heard during the years of Obama was “the debt, the debt, the debt” and apparently if it’s George W. Bush or Donald Trump, they’re less interested. Are there specific items that might actually be appealing or others that might be obvious deal breakers?

NEAL: I think the Child Care Credit expansion, the Earned Income Tax Credit expansion. I think there’s a full acknowledgment that the American corporate tax rate is too high. But after that, I think it’s very hard to respond to what really is nothing more than one page of paper. It sounds like you’re not ready to write this off.

NEAL: I think there’s a full acknowledgment that when you haven’t looked at the tax system in America since 1986, that we should continue the conversation. [Senate Majority Leader] Mitch McConnell says they shouldn’t bring in Democrats at all on taxes, because you guys are only concerned with what he called “wealth transfer” from the well-off to the less well-off. Do you think that’s a fair assessment?

NEAL: I think it would probably be a good idea if I sent over the Pew Research study completed on greater concentration of wealth now in America. What do you think is the main cause of that concentration? Is it government policy?

NEAL: Part of it, I think, is education, part of it is tax policy. Part of it is that 50 years ago people who made a lot of money were producers, I think today increasingly they’re speculators. I think the technological revolution has caused part of the issue. I think skill set — I mean right now you have 600,000 jobs in America in the tech field that go unanswered. Right now you have 16,000 precision manufacturing jobs in New England that go unanswered. Six percent of the private sector in America is now organized.

This has all contributed to downward pressure on wages and this is the kind of conversation we should have rather than the much-derided supply side economic theories that tend to permeate the debates. Obviously, a lot of that debate runs through taxes. Do you see this as one of the principle ways you fight inequality?

NEAL: I think we need to invest in community colleges and apprenticeship programs and middle-class opportunities that would give greater opportunities for people who feel, accurately, that the concentration of wealth has left them behind. Why do you think Trump was able to connect with people on the specific idea of inequality, of the middle class being left behind, given his own policies and style?

NEAL: Sometimes there’s a gap between campaign rhetoric and governing and I think they’re now discovering it’s a lot harder to govern than it is to campaign. Do you feel like you have a good working relationship with the White House?

NEAL: I feel comfortable talking to [Secretary of Commerce] Wilbur Ross, who I’ve talked to many times now. I feel comfortable talking to Gary Cohn. [I’m] awaiting a conversation with the Secretary of the Treasury. But I think that so much of this at this point is just a wish list. It’s hard to wrap your arms around it. One page? I could say a lot of things myself on one page about what I intend to do, the question is do I know how to [do them] and will they get done?; So for you going forward, you just assume that whatever actual legislation comes out will look nothing like this.

NEAL: Yes I do. I really do. I’ve earned a reputation for being a negotiator and I tend not to bring a lot of emotion to these arguments at the outset because you don’t know what the endgame is going to look like. A lot of your colleagues have raised the issue of Donald Trump’s tax returns and how he might personally benefit from a tax proposal. Is this a particularly important line of thinking?

NEAL: It’s apparent to me right now that he is not going to release his tax returns. And, as a result, I think that we should continue the conversation about fundamental tax reform. Is it a prerequisite for negotiating with Republicans on taxes that you know what it would do for his finances?

I think you’re going to see a lot of verbiage that points in that direction. What it means in the end, I’m not sure. One thing I’ve heard from some skeptics [of bipartisanship] is that they think it’s clear Donald Trump can’t govern with the Freedom Caucus because in a lot of ways he’s more centrist on issues instinctively. But they argue there’s no way Democrats will work with him given what he’s said and what he’s done already. Do you think that’s true?

NEAL: No, I don’t. I think there’s an opportunity here on tax reform to get some work done. So you think people in your party could look past their other disagreements if they have common ground?

NEAL: If you start from the supposition that the current tax system is underproductive and inefficient and that the rest of the world is changing tax mechanisms to accommodate changes in the global economy, yeah, I think we have to stay in the room and talk. I want to shape this legislation to my liking. Let’s say this was a reverse situation: Democratic president, similar majorities. What would Democratic tax reform probably look like?

I think you would see an expansion on the individual Earned Income Tax Credits side. I think you would see an increase in the child care credit. I think you would see Build America bonds. I think you would see an expansion of New Markets Tax Credits. I think you would see pro-growth economic policies that go beyond the simple argument that cutting taxes guarantees growth, which did not occur in the Bush years. If you had to sum up the Democratic philosophy, how you would describe it on a bumper sticker in a campaign?

NEAL: Middle-class tax relief. Focused on that and nowhere else?

NEAL: For the moment. How much more should the rich be expected to pay in an ideal system that combats inequality?

NEAL: I don’t think the argument at this stage is about what the rich should pay as much as the idea they shouldn’t get a tax cut.

Gary Cohn told me that the tax cuts they were proposing were going to be paid for by shutting down exclusions, deductions, and preferences in the code that he said were concentrated at the top of the income scale in America. And that sounds like a pretty good start to you.

NEAL: He said to me he thought Democrats would be happier than some Republicans when they got done. I want to hear what he’s got to say specifically. It’s very hard to respond to a vacuous one-page statement.