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Sept. 28 — Overhauls to the government's tax and regulatory systems as well as its entitlement programs are at the top of House Speaker Paul Ryan's (R-Wis.) agenda for the next Congress.
Speaking at a breakfast sponsored by the Economic Club of Washington, D.C. Sept. 28, Ryan said he thinks the economy remains sluggish and expansionary fiscal policy could be used to offset the need for a tighter monetary policy by the Federal Reserve.
“Our fiscal policy is on a direct collision course with our monetary policy. If we can get our fiscal policy to carry the load for the economy, that will take pressure off of our monetary policy,” Ryan said. “What that means in my mind is number one, the tax code has got to be reformed. We've spent time on this. We have an actual tax reform bill that we're proposing,” he said.
“I think tax reform is number one. I think regulatory relief for business development is extremely important. And this all goes into a budget. And I think you need to have some entitlement reform if you want to get our debt horizon under control.”
Ryan again stressed the need to switch over corporate taxation to a territorial basis instead of the current worldwide system which seeks to tax corporate earnings regardless of where they are made. And with dynamic budget scoring, which attempts to include estimates of changes in the economy to a bill's cost, Ryan said a tax overhaul that included personal and corporate taxes would be close to revenue neutral.
“We have a bill ready to go. We have it perfectly scored. We know how to do it. and we believe that, the way we designed it, if you switch over to a territorial system, that's going to be very good for capital, it's going to be very good for economic growth and jobs,” he said.
Ryan said Democrats had rejected a corporate tax change linked with extra money for infrastructure that Republicans had offered them in 2015.
“My guess is they will think twice about rejecting that offer again,” he said.
House Democratic Leader Nancy Pelosi (D-Calif.) sounded a similar note in talking to reporters at a lunch Sept. 27. She said there was “general agreement” on the need for tax changes such as closing narrowly-targeted provisions and lowering overall rates. “It would be better if we could do it comprehensively, but if we could do it piecemeal—that is to say, repatriation of money with a lower rate coming back to our country with the purpose of investment in infrastructure, a bank to leverage the money or just into infrastructure, initiatives like that,” she said (188 DTR G-6, 9/28/16).
Ryan also said he wants to change the federal budget system, endorsing strongly moving to a biennial process instead of the current annual one.
“I'm actually now a big fan of going to a biennial budgeting system. It's what states do. I think it will lead to more certainty and predictability,” Ryan said. “So we're actually working on bipartisan biennial budgeting legislation, among some other things, to redesign this budget process so that we actually have real enforceable spending caps, but we actually have a process where we actually don't just keep kicking cans down the road.”
“It seems these days the only time you get a real appropriations process is when you have totally unified government. We have to have a process that will endure divided government moments like what we typically have and that is not the way this budget process is wired right now.”
Ryan also reiterated his stance that he does not expect to bring up the Trans-Pacific Partnership trade pact during the post-election lame duck legislative session, saying it lacked the votes to be approved. “You have an agreement here which I think was designed to cater toward more to Democrats, curtailing intellectual property protection for biologics, singling out commodities from what we call ISDS protections. I could go on and on. Those votes are not there,” he said. “So we are down a significant amount among Republicans because of the quality of this agreement and they did not pick up any single additional Democrat votes.”
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