This is a rush transcript from "Your World," October 26, 2017. This copy may not be in its final form and may be updated.
NEIL CAVUTO, "YOUR WORLD": Now, back to this budget issue today, the House voting on the Senate measure essentially as is, 20 Republicans voting against it.
What a lot of them have problems with is this plan to wipe out local and state tax deductions, which doesn't fly for those who come from very high tax-states.
I raised that issue with Florida Marco Rubio just a short time ago.
CAVUTO: Is it your sense that that provision will be in the final tax package? Should it be? What do you think?
SEN. MARCO RUBIO, R-FLORIDA: Well, that's what they're going to work through on the committees.
It's not a reason to vote against the budget. The budget is just the vehicle that is being used for tax reform. That might be a reason for them to come out against tax reform or try to change the details of tax reform, but that shouldn't be a reason to vote against the budget.
So, again, that's one -- look, there's going to be real committee hearings here in front of the public and there's going to be debate and there are going to be votes. And we're going to get to a place we need to get to. But we got to get it done. There's no alternative.
And you cannot let sort of the enemy be the perfect -- the -- the -- the -- the perfect be the enemy of the good here. We have got to do tax reform.
CAVUTO: One of the things you have espoused, with Senator Mike Lee, is this idea to significantly up the child tax credit from $500 to $2,000.
But what struck me with that, and maybe I misread it, Senator, would that apply to families as well who don't pay any federal taxes at this point, federal income taxes?
RUBIO: I want it to apply towards payroll tax. And here's why.
The family is the most important institution in society. And parenting is the most important job any of us will do. And, number two, something that Mike Lee talks about and does very well, there's a parent penalty.
So, all of us, when we retire, we want Social Security, we want Medicare. Who pays for that? Today's workers pay for today's retirees.
So, when I retire, tomorrow's workers will be paying for my Medicaid and Social Security. If I have four children, and someone has no children, and we both retire, I just spent basically $250,000 per child to raise four taxpayers that are going to pay for your retirement, and you have no children.
So, the tax code should account for that. Now, the $2,000 per child doesn't even come close to making up for the gap, but it most certainly accounts for the increase and most certainly is a way to help families move ahead. And, by the way, if we don't do the child tax credit and we don't make it refundable, then you're actually going to see some middle-class families get tax increases.
And the president is not going to sign that. And I'm not -- we're not -- people aren't going to support a middle-class tax increase. It won't pass. So, we have to do it.
CAVUTO: Do you think that it opens up, with the very best of intentions, Senator, but a slippery slope here where we end up giving tax breaks to those who don't necessarily -- you're quite right. They pay FICA and related taxes, but they are not paying federal income taxes.
So now we're in a battle to provide benefits to those who are not kicking in for federal income taxes?
RUBIO: Well, first of all, when you work, and they take that money out of your paycheck, it doesn't matter if it's income tax or FICA. It's less money. That's number one.
It's a tax to the federal government, just in a different bucket. Number two, hopefully, the growth in the economy, which is the other part and the big part of this tax reform, is going to move people into income brackets over time that they are going to actually be making more, and they will be, not because the rates are higher, but they will be in those brackets that are paying income tax, and so, again, at a lower rate, because we're going to do that as well.
That's the second part. And the third part is, you don't get it unless you're working. You have got to be working. It's a pro-work endeavor here. It is certainly -- it's certainly better for families and for our country than stay home and be eligible to collect government benefits at an amount or greater than the tax credit.
CAVUTO: If this credit were not included, though, Senator, would you be a no vote on the tax package?
RUBIO: Well, let me -- I think if this credit and it wasn't refundable and it raised taxes on middle-class families, the president wouldn't sign it. So, it's a nonstarter. We have to do it. We will do it.
CAVUTO: Because it's not in there now.
RUBIO: Well, it's in the framework. Obviously, there's no bill because the details are going to get worked on now. And that's the way it should be.
CAVUTO: Right. So next week, when we get the details, it will be in that, you're told?
RUBIO: It's either going to be there or it's going to be there at the end.
RUBIO: But it will be there, because the president, I believe, will not sign it. The president is not going to sign a tax increase, especially on working families. Of that, I'm confident.
CAVUTO: How is your relationship with the president, sir?
The reason why I ask -- and you have addressed it with reporters, the dust- ups he's had with Senators Flake and Corker. You said, I believe it was yesterday, I hope I got the date right: "The Republican Party is going through a moment of realignment internally, an internal debate about what the party is going to be about and what is going to represent in the years to come."
Are you saying that those senators are the old party and Donald Trump is the new? What are you saying?
I'm saying that that's what everyone is going through. The rest of that statement was, so is the Democratic Party. So is the media and academia and virtually every institution in our society.
The world has changed. The economy has changed. It's challenged all of us to reexamine what the role of our institutions are and what the right way forward is.
CAVUTO: Well, Senator Flake seems to not like the change in that direction, that the president is debasing the party and the nation. Do you agree with him?
RUBIO: You know what? Well, everyone is going to express themselves. Jeff Flake is a friend of mine and someone I admire. We agree on a lot of things. We disagree on a few. That's the way the world is. The same is true with the president.
You asked about my relationship. It's pretty straightforward. If I agree with him, I'm going to support him. If I disagree with him, I'm going to tell him and try to change his mind. And if he still does something I don't agree with, I'm going to say it.
But he was elected president. I'm going to work with him for the good of our country. And we're going to try to get good things done.
And, in the end, I try to focus almost all of my time on helping the people watching this, not the people covering this. I know that, for many, the sort of daily back and forth is interesting. And everyone has a right to do it. And some of it is very valid stuff that is being talked about.
But I choose to spend the majority of my time trying to get tax reform done, and when we got the VA reforms and strengthening our military and helping pediatric cancer issues and helping Florida recover from a hurricane.
CAVUTO: So you think this tit for tat, even on the president's part, is counterproductive?
RUBIO: I think it just wastes a lot of time on things that are not relevant to what we should be working here on. That's what I believe.
But everybody is going to do what they are going to do. I can't control what other people do. I can only control what I do. And what I do is -- try to do every -- anyway is kind of focus on what people have sent me up here to do. And that is make the country and their lives better.
CAVUTO: Senator, there's a lot of back and forth on the legitimacy of this growing scandal around Hillary Clinton and Barack Obama regarding the so- called Uranium One issue, and whether the Russians were able to curry favor with the Obama administration and more in the role of Hillary Clinton as secretary of state benefited the Clinton Initiative, the Clinton Foundation.
Do you think she had to have been aware of a lot of these details she says she was unaware of?
RUBIO: I don't know.
And that's why I think it's probably within the scope of Mueller's special prosecutor investigation on what role that could have had in the election. I believe that's within their scope. And they should look at it. It should be investigated. Anything like that is concerning.
CAVUTO: Do you think he is and he will? And if he doesn't look at that...
RUBIO: I don't know. I wouldn't know.
RUBIO: Well, I don't know. I think, if he doesn't look at it, he better have a good reason why they didn't look at it.
But, again, they're called independent for a reason. They don't coordinate with us. They don't tell us what they're looking at. And they don't tell us what they're going to work on. But I believe it should be.
It's a legitimate issue to focus on. And suffice it to say, if that were us or that was about the Trump administration, there would be a tremendous of coverage on it right now on some of the other networks. So, just kind of seeing it as I see it there.
CAVUTO: Quickly, sir, on that same issue, a number of Democrats have said there's no equating these largest charges with Donald Trump Jr. meeting with Russians for a meal and discussing dirt on his opponent.
Republicans argue, well, that's essentially what is arguing here. Your thoughts.
RUBIO: Well, I don't know who said that. I don't know.
A deal to purchase radioactive material in exchange for cash and other things I think is a little bit more relevant, in my view. That doesn't make anything else irrelevant. But I think that's a pretty big deal, certainly more important than opposition research in a campaign, in my view.
CAVUTO: Senator, this tax package, the timeline seems to be, since the House went ahead and voted on the Senate budget, that saved some days to get this done. Are you confident this will get done by the end of the year?
RUBIO: I am.
It's not going to be easy. It shouldn't be easy. Tax reform is a big -- and it's important and so it should be hard and it should be debated and it should be well-understood. And we don't want any unintended consequences.
But I'm confident that we can get it done, because I just can't imagine not getting it done. Like, what it would mean to our economy? What would that mean -- why are we here? Like, why would you elect people to the House -- majorities in the House and Senate and the White House who support tax reform and then they can't do tax reform?
I think people have a reason to ask, well, then what is the point? I just can't imagine not doing it. I think it would really hurt our economy and confidence. But I think it would be devastating politically as well. And I imagine most people around here understand that, too.
CAVUTO: And in the end, the two things that have been kicked around like the deduction for state and local taxes, the deductions for 401(k) contributions, are you opposed to either, both being played with?
RUBIO: Yes, I don't think those are -- those are just -- somebody is out there talking about what are the options. What are the things that you could go after, and then they just start floating these to see what the reaction to them are.
In the end, I want tax reform passed. And to do that, we are going to have to make some difficult and unpopular decisions. I have no idea -- the president has already said he doesn't want the 401(k) thing. Maybe the House will produce something different that has it in there.
But in the end, that is all going to be debated through. But there's going to be things in there that people don't like. I don't think it will be the 401(k) provision. But that's what the debate will be about.
But in the end, not doing anything is not an option. So there's no way this tax reform is going to have everything I want. OK? It's not. But the question is, does it make things better or does it make things worse? And if it makes things better, I'm going to be for it.
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