Gary Cohn talks tax reform expectations; Rep. King says bill is unfair for New York

This is a rush transcript from "Sunday Morning Futures," November 12, 2017. This copy may not be in its final form and may be updated.

MARIA BARTIROMO, HOST: Good morning, tomorrow the Senate is beginning its markup on its version of tax reform plus the House gears up for a vote on its plan by weeks end. Then, President Trump nears the end of his 13 day trip across Asia.

Good morning I'm Maria Bartiromo, welcome to "Sunday Morning Futures." Republican lawmakers are getting ready to take another step towards tax reform this upcoming week but will the plan actually mean a tax increase for many Americans? I'll talk with the President's Chief Economic Advisor Gary Cohn this morning.

Plus, we will hear from Senate Appropriations Committee Member Roy Blunt coming up and Congressman Peter King of New York. Then, the president is getting close to the end of his first trip to Asia as Commander-in-Chief. Did he make progress in reining in North Korea? General Jack Keane will join me live. Disarray in the DCN, Donna Brazile blasting critics after her book revealed a big divide in the Democratic Party, Mike Huckabee will be here on that as we look ahead right now on "Sunday Morning Futures."

And tomorrow, the Senate is beginning its markup of its tax plan which we heard about last week. Meanwhile, the House is hoping to vote on its own version of the plan by the end of the week. Many questions still remain. One of the biggest being will the plan actually raise taxes on some Americans? I'm joined by -- right now by the President's Chief Economic Advisor Gary Cohn. Gary, it's good to see you.

GARY COHN, DIRECTOR, NATIONAL ECONOMIC COUNCIL: Maria, it's great to be here.

BARTIROMO: Thank you so much for joining us. So give us a status check. The Senate is going to start its markup this upcoming week. What does that mean in terms of your timing? Tell us how you visualize this moving forward?

COHN: So Maria, as you pointed out, that's exactly right but we had a really good week last week. The House got the bill through the Ways and Means Committee so the bill in the House is out of committee which means it will go to the full house next week or this week. I guess this week, right?

BARTIROMO: Yes, this upcoming week, right?

COHN: We're going this week to the full house. The full house will start debating their version of the tax bill this week. The Senate will be in committee for the entire week. We think by the time they leave by Friday and go home for Thanksgiving, we will have the bill out of the Senate Finance Committee. So hopefully by the time we get to Thanksgiving Recess, we will have the tax bill completely out of the House and through the Senate Finance Committee.

BARTIROMO: There are a couple of differences like for example, the Senate wants to delay the 20 percent corporate tax rate for one year. What do you think stays, what goes when you actually put these two bills together, the House and Senate?

COHN: Look, that's going to be up to the conferences or the Conference Committee. This is the normal way that bills are legislated in the House and the Senate. The House has their version, the Senate has their version, they will both get through a final voted version. We'll probably end up with the Conference Committee and those Conferences will decide what stays and what goes and they will pick and choose the different parts that they think are important and they'll pick the pay fors and they'll come up with a compromised bill and will go back to both chambers and both chambers will vote on the exact same bill. And that's how we will end up with a tax law.

BARTIROMO: Let me get down and dirty with you and on these details because you've got $1.5 trillion and that was agreed upon in the budget just to spend on tax cuts, 1.5 trillion. $900 billion of that $1.5 trillion is the business cuts. So is it fair to say that you are raising taxes on people like me, people like you, and millions of others in New York and New Jersey and California as a way to pay for a 20 percent corporate rate?

COHN: So Maria, what people are missing is we have a $1.5 trillion net. What's in this bill, what's hidden in this bill -- it's not really hidden, you just have to go through and do the math -- is there's over $5.5 trillion of tax cuts and then there's over$3 billion of base broadeners. So there are a lot of moving pieces within the bill to get to the trillion and a half dollars. So you have to look at the bill in its entirety. You can't just say oh, it's X or it's Y. It's a combination of everything that gets us to that trillion and a half dollars.

BARTIROMO: I understand that because the 20 percent corporate rate is going to impact everybody. You hope that it's going to move the needle on economic growth. The elimination of the AMT, you hope is going to hit a lot of people, but the fact remains when you -- when you eliminate the state and local income tax deduction, I'm getting a tax increase. If you're in New York, you probably are getting a tax increase. So I mean, you're raising taxes on some people to pay for corporate tax cuts.

COHN: Remember what our objective was. The President had two main objectives. Number one, a middle income, hardworking middle-income Americans deserve a tax cut. They deserve to keep more of their hard- earned income. Both bills do that. Number two is that we lower the business tax rate. We lower it for corporate and we lower it for pass- throughs. We lower it for small and medium-sized businesses in America. We need to do that because we're not competitive with the rest of the world. We need to be able to compete with the rest of the world. We need to allow our companies to be able to sell their products around the world. The tax rate that our businesses are paying today make them non- competitive.

When they become competitive with the rest of the world, you know what they do? You know this very well. They're going to grow -- they're going to grow their businesses, they're going to expand, they're going to buy more equipment and more importantly, they're going to hire more people and they're going to pay them higher wages. That's how we're going to grow the economy. That's how we're going to pay for the tax bill.

BARTIROMO: Maya MacGuineas from the Committee for a Responsible Federal Budget says that tax cuts that add to the debt do less to grow the economy than fiscally responsible reform and may even hurt the economic growth over the long term. She basically says sure you'll get some growth, but growth cannot pay for this. That's why you have you to raise taxes on some people right?

COHN: We believe we're going to get enough growth, we believe we're going to get more than enough growth to pay for this. Look, this goes back to how do you grow the economy. You grow the economy by making your businesses all businesses, small, medium and large businesses competitive, allow them to compete on a level playing field. Allow us to sell our products around the world and allow us to hire our people and pay them more money. That's how we're going to pay for the bill. That's how we're going to grow the economy. When we do that, the history shows us we grow our economy and we're able to start paying down our deficit when we do that.

BARTIROMO: I'm just wondering if this is going to mean a mass exodus out of places like New York which is what people are expecting because certain people are going to pay higher taxes when they lose that deduction. Do you expect a mobility? Do you expect mobility people moving out of New York because they're saying, why am I paying 53 percent when you include you know, state, local, and you go to Florida and you pay no income tax?

COHN: Well, Maria that's been happening already. If you look at the Texas and the Florida, those states have been growing at a much rapid rate, much more rapid rate. If you're a business person today looking to expand, you look at the states that provide you with competitive advantage because of the tax differential. So that's already been happening. So if businesses expand, they've been looking at the tax differential that's been going on already.

BARTIROMO: And you make a good point during the commercial by how come Florida has been able to manage itself so well with no state income tax? Here is your partner in all this Steven Mnuchin, Treasury Secretary had to say about this when I asked him a similar question this week.

(BEGIN VIDEO CLIP)

STEVEN MNUCHIN, SECRETARY OF THE TREASURY: For people who make over a million dollars in the high tax states, there will be a tax increase. The President's focus is this is on a middle-income tax cut. This is about businesses being competitive. Obviously, people in this room will benefit from the business tax. But this is not about tax cuts for the rich.

(END VIDEO CLIP)

BARTIROMO: And yet, you've got as a result of the elimination of that deduction people like Congressman King, Peter King of New York saying I'm a no vote. Do you have the votes here? Look what's going on. You've got Roy Moore facing incredible allegations, sexual allegations, you've got Rand Paul on the Senate side with broken ribs because of an attack by his neighbor. Once again we're faced with a situation of, is this dejavu health care again? Are you going to get the votes?

COHN: Maria, I'm confident that we're going to get the votes. You know, we've got the bill out of the Ways and Means Committee with 24 votes on Thursday last week. It's 24-16. So look, so far every vote has gone the way we thought it would go. We're optimistic that we're going to continue to get the votes. Look, time is going to tell but we'll be in -- we'll be in the Senate Finance Committee this week and we'll be in the full house this week.

BARTIROMO: How scary was last week's elections for your team when you see the Democrats taking New Jersey, taking Virginia, taking again de Blasio in New York City. Is this the signal of what's to come in the 2018 election?

COHN: I think the elections once again are screaming at Washington saying look, we want you in Washington to get things done and legislate. And this is again, a loud wakeup call for everyone in Washington that the electoral want Washington to legislate. This why we have to get tax reform done.

BARTIROMO: When you look at what's gone on in terms of the spending side of the story, half a trillion dollars overspending in the 18 budget, another half a trillion dollars overspending at the 19 budget. Obviously, at some point, something's got to give. You've got these entitlement programs going broke in the next 12 years. When does the debt become a priority? I know that your priority right now is growth, but when does the debt, the $20 trillion debt become a priority and does that mean you have to cut the spending on entitlements?

COHN: Look, right now the president is concerned about growing the economy. Our first three priorities as you know, are about growing the economy. We've started with reg reform, we're going into taxes, and when we get done with taxes we're going to be talking about infrastructure. As soon as we get done with taxes, I'm going to be right back here talking about infrastructure and spending money on infrastructure because our infrastructure is woefully behind where it should be. Those are the first three priorities of the administration. We do believe those three priorities are going to make us dramatically more competitive in the world which means we can grow our economy. When we grow our economy, we will have dramatically more revenue coming into the system. Hopefully, we can save that revenue and not spend that revenue and start paying down the debt.

BARTIROMO: Let me ask you this because you mentioned regulations. And this President has been really the least regulatory President. He's already pushed the number of federal pages, the federal register down by 30 percent so he's been cutting regs. And I do believe that's one of the reasons we seeing a 3.1 percent economy right now. When you look at the technology sector, the tech sector, the Googles of the world, the Facebooks of the world, they know more about us than ever before. They are incredibly powerful. Should they receive more regulation, a heavier hand from government?

COHN: Well, look I think Congress is looking at that right now. And they're talking about what should be the impact on these companies and what business model do these companies have and what business line are they in? If they're competing with businesses that are actually regulated, that's the question that Congress is trying to figure out right now. And I think that process is going through a normal process and we'll let that process continue to go.

BARTIROMO: Should the DOJ be forcing AT&T, Time-Warner to do something different in order to get that deal done?

COHN: Look the White House is not involved in that. That's a DOJ effort. And it's up to the DOJ what happens there.

BARTIROMO: Let me ask you, Gary, obviously you are on the short list of the chairman of the Federal Reserve. The President named Jay Powell as the next chairman of the fed. How do you feel about that? Did you want that job?

COHN: I'm really excited that Jay Powell is the next chairman of the Federal Reserve Bank. I'm excited to work with Jay. The President made the right selection in choosing Jay for that job.

BARTIROMO: And there's a lot of talk that you're going to get tax done and then you're going to leave the administration. Are you making plans for your next gig here?

COHN: I'm really happy executing the President's economic agenda. I think we're making an enormous amount of progress. As you just said, we had two consecutive quarters of over three percent GDP growth. And I think that's because of the President's economic agenda and I'm happy to be part of his plan.

BARTIROMO: Gary, if you get this done, this is going to be historic legislation. We're watching, the world is watching to see. Actually, this is going to have an impact on economic growth. When do you think people are actually going to feel it? Oh, the tax plan passed and I'm actually feeling different. I'm feeling like I have wiggle room in my life, my personal life because taxes just went down.

COHN: So Maria, we hope that people feel it beginning of next year. Look, one of the important aspects of the tax plan for every business is they can start 100 percent expensing next year. When companies can start expensing, they're going to think about spending money and building out factories, building out equipment, hiring people. When that starts running through the economy, we think people will feel that. We think that people will feel job creation and wage pressure starting next year.

BARTIROMO: They may not feel the 20 percent though. Does that save $100 billion just by delaying it one year?

COHN: But even if that gets delayed a year, everything else in the bill goes into effect January 1st. Full expensing goes into effect January 1st. So expensing becomes even more valuable if the 20 percent is delayed.

BARTIROMO: Gary, it's good to have you on the program.

COHN: Thanks for having me.

BARTIROMO: Thank you so much. Gary Cohen going through the tax plan with us, we appreciate that. We'll take a break. When we come back, former interim DNC Chair Donna Brazile fires back at Democrats slamming her now tale old book, governor Mike Huckabee joins me on that. Follow me on Twitter @MariaBartiromo, @SundayFutures. Let us know what you'd like to hear as we look ahead this morning on "Sunday Morning Futures." Back in a minute.

(COMMERCIAL BREAK)

BARTIROMO: Welcome back. Former Interim DNC Chair Donna Brazile on her book tour defending her decision to reveal Hillary Clinton's campaign was pulling the strings at the DNC for nearly a year before Clinton became the official party nominee. Brazile says she made the right decision to tell all and tell the truth and pointing out that she was only the very latest of several influential campaign players to release a tell-all on the Democratic Party. Let's bring in former Arkansas Governor Mike Huckabee a Fox News Contributor, former Republican Presidential Candidate to talk more about his. Good to see you, Governor. Thanks so much for joining us.

MIKE HUCKABEE, FOX NEWS CONTRIBUTOR: Thank you very much, Maria. When I saw the book and saw that it was called Hacks, I'm thinking she should have picked a different title. Hillary's book was called What Happened? Donna Brazile's book should have been named what really happened because that's what it's all about.

BARTIROMO: Well, it's interesting that she names it hack because they were hacked. But then instead of obviously giving their computer to the government, the might and power of the U.S. government, the FBI, the CIA to find out what the heck really happened during that hack, they gave it to a private company who answer only to them so that a private company could only answer to them and see what was on that laptop. So that still bothers me that they -- that they didn't use the might and power of the CIA to actually find out what happened. But that's a whole other conversation Governor. What is going on with the DNC right now? We saw this victories last week, they are feeling empowered. Does that signal something to come in 2018?

HUCKABEE: Look they had a good week and I think it would be disingenuous for me or any other Republican to pretend that it didn't matter. You bet it mattered. More so than the elections for Governor in both New Jersey as well as in Virginia were the fact that you saw a number of seats within the legislature flip. And that indicates something more important than simply you know, one statewide race. Neither of which were big surprises, neither of those states were expected originally to go to the Republican. But when you start seeing flips in the legislative branch, that means you're talking now local politics where it matters. Here is the question. Was that a repudiation of President Trump? I think not. I think it's a repudiation of a completely inept Congress who is so far failed to deliver on even the simple things like tax cuts and tax reform which ought be the easy layup for Republicans in Congress.

BARTIROMO: All right. Well, we just heard the blueprint for the tax plan. Gary Cohn seems to think this is going to happen over the near term. He's got the roadmap to take us there. But let me ask you this, even with all of the DNC disarray going on with Donna Brazile saying go to hell to her colleagues and the Podesta group apparently shuttering they may go out of business by the end of the year. The CEO on Thursday told staffers clean out your desk by November 15th, there's that and yet, the Republicans have been able to raise money despite all of their shortcomings and these terrible poll numbers on the Congress. You've got the Republicans raising money no debt, you've got the Democrats unable to raise money even though they did have these victories last week and they've got debt.

HUCKABEE: Well, the Republicans are in power. When you're in power you raise money. It doesn't mean the people love your ideas, they're defending themselves. I mean, let's be honest. Anybody that's in power gets money. It's one of the fundamental things that I hate about politics and hate about Washington and hate about the political system. It's driven more by self-interest money than it is ideology. Now, to be fair, one of the problems that the Democrats have is their meetings look more like a meeting of the advanced version of the AARP than they do of a political party of the future.

I mean, even Saturday Night Live is doing a parity now of the fact that the average age of leadership in the Democratic Party is somewhere just south of 80. I mean, that's hardly the party to say OK, kids, come along with us because we're hip, we're cool, we're with you. I mean, they've got a real problem in terms of attracting people for leadership because they've frozen people out. And I think Donna Brazile's book has a very important message to Democrats. I don't think they're listening. And frankly, as a Republican, I hope they don't. But the message is we got to get rid of some of these old codgers and geezers and replace them with some younger folks with new ideas.

BARTIROMO: Well, we will see about that Governor. It's always a pleasure to see you. Thanks so much. We'll talk more about that, Governor Mike Huckabee. Up next member of Republican leadership Senator Roy Blunt on whether GOP lawmakers can come together and actually pass tax reform. We're looking ahead on "Sunday Morning Futures" right next.

(COMMERCIAL BREAK)

BARTIROMO: Welcome back. Senate Republicans are set to begin marking up their version of the tax bill this upcoming week. There are some key differences between this plan from the Senate and the House GOP's version. Joining me right now is Missouri Senator Roy Blunt. He is Vice Chairman of the Senate Republican Conference, a Member of the Senate Appropriations Committee. Sir, it's good to have you on the program. Thanks so much for joining us.

SEN. ROY BLUNT, R-MO., SENATE APPROPRIATION COMMITTEE: It's good to be with you again Maria.

BARTIROMO: What are -- what are your most important items here that must be in this bill?

BLUNT: Well, I think the two overriding principles of what has to be in the bill is that hard-working families, hardworking individuals see more take-home pay right now and then, at the other end of the bill we're doing whatever we need to do to make our economy more competitive and the other way to get better take-home pay is to have better jobs to start with. If we meet those two criteria, this bill will be a great success. And I think based on the Senate bill and the House bill and those coming together, I think we can do that and a lot of economists are telling me that's exactly what's going to happen if we pass a bill that meets those criteria.

BARTIROMO: So you know, when you look at this bill you've got$1.5 trillion to spend in terms of tax cuts, 900 billion of that is the business cuts. Is it fair to say as I asked Gary Cohn a moment ago, is it fair to say that you are raising taxes on certain Americans as a way to pay for the business cuts of 20 percent on the corporate side?

BLUNT: Well, you've got a lot of shifting around going on where you know, $4 trillion or so of deductions -- of things get shifted one way or another. There's a lot of moving parts here but none of it is worth doing if we're not going to make our businesses more competitive and create better jobs. So if that 900 billion, if those two numbers are right, if the ultimate purpose of that is to create jobs for people that are paid at the individual rate, that's what we ought to be doing. More take-home pay now, more competition later and part of that competition is to get us more in line with all the countries we compete with. You can't have the highest tax bracket in the competitive world and expect to be as competitive as the people that are at 20 percent or below.

BARTIROMO: But I have to ask once again something I say continually and that is the highest earners the top 10 percent pay70 percent of the tax, so are you not cutting taxes on the people who pay taxes? You're cutting taxes on people who don't pay taxes?

BLUNT: Well, there are going to be more people in the individual -- in the zero bracket. There'll be more people that take advantage of the new deductions. About 70 percent of the -- of the taxpayers now that file don't file itemized anyway. The estimate on this bill is that 90 percent of the taxpayers that file will take advantage of that new double deduction which means the arguments about things like state and local tax, the deductibility, and million dollars of loans that whether that can be deducted or not, all are focused on the 10 percent that will still be filing the itemized returns.

BARTIROMO: Senator, let me -- let me read you something from the Committee for a Responsible Federal Budget. And that is Maya MacGuineas' group. He says, fundamentally, the Senate bill suffers from the same fail flaw as the House bill. It tries to cut taxes by $1.5 trillion over the next decade with no plan to pay for these cuts. As recent dynamic scoring has shown, there's no way economic growth can pay for more than a fraction of this cost. How are you going to pay for this?

BLUND: Well, a lot -- I saw Maya and visited her about it last week. A lot of other economists that I -- that I respect as well disagree with that. I had Larry Kudlow come in and have coffee with Republican Senators very excited about what this could do to grow the economy. Larry Lindsey whose frankly I always find as pretty negative on economic growth very positive, and it doesn't take much growth to offset any deficit. This is all based on growth that's well below the 70-year growth average so if we get anywhere near the 70-year growth average, there won't be a deficit. There will be a significant surplus and I think that will address the concerns that Maya and I both would have about deficits.

BARTIROMO: Well let me ask you a practical question and that is whether or not you have the votes, Senator. I mean, let's face it, we're not expecting Senator John McCain to vote yes on this. We're not expecting Jeff Flake. We're not expecting Bob Corker. You just have Senator Rand Paul now gotten beaten up by his neighbor. Unfortunately, what a terrible story that is. Poor Rand Paul has broken ribs right now. Do you have the votes to even get this going?

BLUNT: Well, we will have the votes and we're highly motivated to do this. I don't think your predictions on those individuals are right. And frankly, once we get 50 Republicans we'll have three or four Democrats vote for this as well. They're just not going to vote for it as long as there's a chance that Republicans will once again be embarrassed by not getting something this important to our agenda and the economy done. I think we will get this done, we will get the 50 votes and right now we're in the process of finding out how do you pass a bill in the House, how do you pass a bill in the Senate and then how do you take all those moving parts and put them together in a way that should be very focused on doing everything possible to get not just 50 but52 Republican votes and you'll add some Democrats to that if that happens.

BARTIROMO: And you think you'll get the Democrats that are representing the states that this President won, like in North Dakota?

BLUNT: I don't think we'll get all 10 of them but my guess is we'll get somewhere close to a handful of Democrats if we pass a bill.

BARTIROMO: Senator, it's good to see you this morning. Thanks so much.

BLUNT: Nice to be with you, Maria.

BARTIROMO: We'll be watching the developments, Senator Roy Blunt, there. Coming up the House side of tax reform, Congressman Peter King stops by, explains why right now, he's not on board with this house plan. He's voting no as we look ahead on "Sunday Morning Futures." Congressman Peter King is up next.

(COMMERCIAL BREAK)

BARTIROMO: Welcome back. The House is gearing up for a vote on its tax plan this week. Some lawmakers are not happy with the plan particularly those from high tax states like New York, New Jersey, California. Joining me right now is New York Congressman Peter King. Congressman, it's always a pleasure to see you. Thanks so much for joining us.

REP. PETER KING, R-N.Y.: Thank you, Maria.

BARTIROMO: You've heard the plan this morning. You heard Gary Cohn at the top of the program. Are you going to vote yes for this bill?

KING: Right now, I'm definitely voting no. And when I find infuriating is when I -- you know, people in the administration and the House and Senate leadership say that because we lost the suburbs in Virginia and in Long Island and in New Jersey, the answer to that is to pass a tax reform bill which is going to raise their taxes. They are the areas that are going to be hurt the most. My suburban district voted for Barack Obama twice, voted for Donald Trump by nine points. It was a 14-point turnaround and they are going to lose most of their property tax deduction, all of the state income tax deduction, the family of four will lose $18,000, the individual exemption.

If they have medical bills, you're going to lose that especially if they have someone with a long-term illness. Deductive (INAUDIBLE) all of that, this is going to have a devastating impact on areas like mine in Long Island and it's unfair -- and when people say it's a high tax state, one of the reasons we're high taxed is because so much of our revenue that goes to the federal government doesn't come back to us. We get $0.79 back on the dollar. Other states get well -- got much more back than they contribute into the federal government. New Jersey gets about $0.61 back on every dollar. So we get murdered on one end and now we're going to get it again by taking away the property -- most of the property tax deduction and all of the state income tax deduction, plus the individual exemption and those tax exemptions, they have been there those tax deductions have been there since 1913.

BARTIROMO: Right. I just wish they wouldn't call it the greatest American tax cut in history, when we know that so many people are actually getting a tax increase. Now, Congressman, I asked Treasury Secretary Steven Mnuchin about this and I basically said what you just said that New York gives $48 billion more to the federal government than it gets back and New York is getting a tax increase. Here's what he said Congressman, listen to this.

(BEGIN VIDEO CLIP)

MNUCHIN: I think fundamentally we believe that the federal government should get out of the business of subsidizing state taxes and that's the reason to do it. We're getting rid of the AMT for a lot of people in New York. They do pay the AMT, so that is an offset. And you know, we've run a lot of numbers. We're very sensitive to people who make two and $300,000, that they're going to get a tax cut in New York. You know, as I said, this room people have done very well for the last eight years. This is really focused on the American worker who has had no wage increases for the last eight years.

BARTIROMO: Is there any wiggle room on that in your view in terms of putting a cap on income so those people who make 300,000, $400,000 a year, maybe they can still deduct that state and local but maybe over a million you can't. Are you still working on that and is there room for wiggle there?

MNUCHIN: You know, the House has a version. My expectation is the House version will get passed and the House version, they added a deduction for real estate taxes that was something we were very focused on for the middle class.

(END VIDEO CLIP)

BARTIROMO: What about that, Peter? I mean, what did you think of his answer Congressman?

KING: It made no sense. First of all, families in my district making over $300,000, they could be police officers, firefighters, schoolteachers, two incomes in the family, usually at least one of them has a second job besides that and they again, very high expenses to begin with. And as far as the AMT, the fact is that three times more people take the real estate income tax deduction that are hit by the AMT, so that's not going to help them at all. And also, this is like a class warfare. I mean it was John Kennedy and Ronald Reagan who said that a rising tide lifts all boats. Since when did Republicans become the party of class warfare? We're falling into this Democratic trap so we're going to tax the rich but if you look at it, they're determining the rich to be hard working, middle and upper-middle-income people.

And yes, somebody -- a family may be making over $400,000, they're in their late 40s or over 50s, they've broken their neck for the last 20 years working their way up and they weren't born with a silver spoon in their mouth. They're not big hedge fund people, these are hardworking people and they're going to get screwed by this bill. And I'm not going to vote for that (INAUDIBLE). I didn't vote -- I didn't run for reelection so that I can go to my constituents and say I raised your taxes to help people living in other states that already get subsidized by New York.

BARTIROMO: Well, you make a really good point because for you this is not just about a tax plan and having a legislative victory on the board for the Republicans. This is about your seat. The Democrats have already targeted your seat in the next election. Your seat is on their list. They want New York that your Congressional seat to go Democrat.

KING: Listen, I felt this way before. I was targeted, I would feel this way no matter what. I've said all along that we should not be having this tax plan but you're right and it's going to be other members of Congress who may not have as much seniority may not have the same name I.D. who are Republicans living in suburban areas in New York, in New Jersey, they're going to get hit with this and it could be a tsunami against them. So -- and again, but that's just the politics, governmentally it's wrong. We should be the party who encourages hardworking middle-income people to work their way up, make extra money so their kids can go to school. And again since we are subsidizing the rest of the country that just annoys the hell out of me when I hear Republicans out there saying we can't be giving benefits to the high tax states. We wouldn't be so high if we didn't have to subsidize for the rest of the country.

BARTIROMO: Well, it is true. I mean, the Republicans have been the Party of lowering taxes and here you do have increasing taxes for a portion of the people and the Republicans have been the party of fiscal discipline. And I don't see the fiscal discipline certainly in this budget and in certainly in this plan in terms of getting your arms around the debt at some point. But let me ask you this Congressman because you had a really tough year, the entire party. I mean, you tried to get health care done. You came right up against the edge to get health care done and then it blows up in the Senate. You need a win legislatively on the board for the Republicans. Let's say you're the last vote that they need. You're still not going to vote yes for this bill? You just can't.

KING: If I'm the last vote then they better restore the state and local tax deduction, otherwise they're not getting my vote.

BARTIROMO: What about if they do--

KING: I didn't go --

BARTIROMO: What about --

KING: I didn't go to Congress to hurt my constituents.

BARTIROMO: Yes, I understand that. You didn't go to Congress to hurt your constituents. I get that but would you be willing to negotiate on some kind of a cap which allows some of your constituents to keep that deduction? Would that make you -- is there anything other than just (INAUDIBLE) the whole thing in there that would -- that would bring you to yes?

KING: Just so you know, six of the House Republicans from New York, we sent a letter to the House leadership saying that we could accept something which left in all of the state income tax for the next four years and then begin a certain phase down for those making over $400,000 and with property tax leave that in forever. Leave it in income on state income tax if they want to make some deduction after four years, but give us at least four years to get moving and after four years have some sort of phase down but again leave most of it in. We shouldn't be subsidizing. And no response at all, it's like talking to a blank wall.

BARTIROMO: No response. Wow. Congressman thanks very much for joining us.

KING: None.

BARTIROMO: Thank you for laying it all out there Congressman.

KING: You're welcome Maria.

BARTIROMO: We appreciate it very much. Congressman Peter King right there.

KING: Thank you, Maria.

BARTIROMO: We'll take a break. When we come back President Trump changing his tune on North Korea as he nears the end of his 13-day Asia trip trading insult with Kim Jong Un over the weekend on Twitter. Retired Four Star General Jack Keane will join me on the President's effort to show up support against the regime's nuclear program. We will take a look at the President's trip as we look ahead on "Sunday Morning Futures," next.

(COMMERCIAL BREAK)

BARTIROMO: Welcome back. President Trump trading barbs with North Korea once again as he wraps up his 13 day Asia trip with a visit to the Philippines. The President taking to Twitter overnight after a statement by the regime's foreign ministry called him an old lunatic. Mr. Trump fired back tweeting this. "Why would Kim Jong Un insult me by calling me old when I would never call him short and fat? Oh, well I try so hard to be his friend and maybe someday that will happen." Joining me right now is Jack Keane, he's a retired Four Star General, a Fox News Military Analyst and Chairman of the Institute for the study of war. General, great to see you. Thanks so much for joining us this morning.

JACK KEANE, FOX NEWS MILITARY ANALYST: Good to be here Maria.

BARTIROMO: And as we continue honoring our courageous and wonderful veterans, let me say to you, thank you so much, Sir, for your service to our great country.

KEANE: Well, thank you, Maria.

BARTIROMO: What's your take on the President's tweet on that? Look, I know that the President has been back and forth calling this guy Rocketman, whatever, but is it really necessary to make jokes like this? What do you think that gets him?

KEANE: I think they're pretty irrelevant statements on both sides. I don't think -- they certainly don't add to any policy formulation and they get people -- they make people nervous because it appears that you know, we're not measured, we're not deliberate, we're not in control -- when I really believe the President and his team truly are. So I don't think they matter all that much. I think we're quite used to them by now and it's just background noise

BARTIROMO: It does feel like they are getting a lot done though by the way. I mean, look, when you look at this trip, for example, he signed $250 billion in deals already between U.S. and Chinese companies when he was in Beijing?

KEANE: Yes. I think the trip is largely successful. The president went out there, the major thing he went out there to do is send a loud message that the United States leadership is back into Asia Pacific, that we are going to denuclearize North Korea without a catastrophic war, that we are going to push back on Chinese aggression which has been trampling on all of our allies in the region for a number of years now, and that we're going to correct the trade imbalances that exist out there. And this was a step in that direction, the number that you just mentioned with China. The rest of it on Korea and certainly on Chinese aggression in the region, we will not know for some time whether the President has been able to move the ball at all in those areas.

BARTIROMO: You know, I mean that's really where he needs them to move the ball and there was some speculation that after the Congress in China was finished, the big celebration of the country that the leader President Xi would actually focus on reining in North Korea. What do you want to see China do specifically that it hasn't done so far to actually show the world that yes, we are on board with this?

KEANE: Yes, I think what the president is probably asked them to do privately and what these discussions have got to be, I need you to do more, I need you to shut everything down with North Korea even though it risks economic collapse, and I need it to be done faster. Those are the two things, more and faster and we're going to see in time whether he's had any impact on that at all. What it really comes down to Maria, in my view does Xi really believe that President Trump, if China is not able to denuclearize North Korea will take military action? Does he think that is a serious policy decision for the President? If he believes that, then I believe President Xi is likely to move the ball and do it faster and do more towards denuclearizing North Korea. If he doesn't believe it, I think we're right back where we have been in the past that North Korea will have nuclearized missiles and they're going to bet the United States is going to accept them.

BARTIROMO: Incredible. Great analysis there. Let me switch gears for a moment before you go General and get you to talk a bit about the readiness of our Army, Navy, Air Force, et cetera, given the fact that we've been talking about budget issues all morning with the tax plan and the budget passed recently. Do you believe that there is sufficient money budgeted to modernize our military? I mean, you think about these accidents that we've had in terms of the Navy.

KEANE: Well, what's happened now is that the National Defense Authorization Act has just come out of conference this week and they have plussed up the president's budget by$30 billion. That's a little bit less than what we really need. We really need about a $100 billion-plus if the president added 54 billion to the Obama's base budget they've added another 30. That's a good start. That's a good down payment if we can get that passed but here's the problem. You can't pass that $84 billion plus up with the budget caps we have right now.

BARTIROMO: Right.

KEANE: They have got to be removed by the appropriations committee and it's got to be done by one January. If we don't do it by one January, that budget goes all the way back to 549 billion, not 640 billion. We lose almost $100 billion. That is an absurdity. We'll never going to rebuild military unless the Congress removes the budget caps so that we can grow the budget.

BARTIROMO: Yes. We'll be watching that. That's obviously very important. General, always a pleasure to see you. Thanks so much.

KEANE: Good talking to you Maria.

BARTIROMO: General Jack Keane there. Meanwhile, a busy week ahead for Republicans on Capitol Hill. This is going to be the week both houses of congress fine-tuning their tax plan, our panel will weigh in next as we look ahead right now on "Sunday Morning Futures."

(COMMERCIAL BREAK)

BARTIROMO: Big week ahead on Capitol Hill. I want to bring in our panel right now. Ed Rollins is former White House Advisor to President Reagan, he's a Fox News Contributor. Susan Ferrechio is Washington Examiner chief congressional correspondent. It is good to see you both.

ED ROLLINS, FOX NEWS CHANNEL CONTRIBUTOR: Thank you.

BARTIROMO: Your thoughts on the tax plan as it is?

ROLLINS: I don't see any Democrats to date. There weren't any Democrats in the Ways and Means with 24 votes which 24-16 was the vote. So I don't see the promise of the Democrats, even in Senate even if it passes. I think it's a fight. I think they may get it but it's a fight and they have to see what the final version is.

BARTIROMO: So the final version will look different than it is today right?

SUSAN FERRECHIO, CHIEF CONGRESSIONAL CORRESPONDENT, WASHINGTON EXAMINER: It will.

BARTIROMO: So what's your thoughts on what will look different?

FERRECHIO: The major differences I think will be the corporate tax phasing that the Senate is offering will somehow be changed because the House bill has it take effect immediately and they don't like the Senate delaying it and I think they will be negotiating there.

BARTIROMO: That saves a $100 billion by delaying it one year.

FERRECHIO: Until 2019.

BARTIROMO: OK.

FERRECHIO: So they need that for those offsets. But I also think the state and local tax issue which Peter King was just talking about is a really big deal in the House. The Senate strips out property tax deductions as well that will lose probably too many house members. I think what will happen is that will either be put back in or the state and local tax deduction phase out thing that King was talking about is possible too. That's going to have to change I think, so -- and then the other prediction I make is that the estate tax which is gone in the House will stay in permanently for the final version with the higher cap.

BARTIROMO: What happens in terms of the votes? Now you've got Roy Moore on ice with the sexual allegations. What are your thoughts on that Ed Rollins?

ROLLINS: My sense is that as the President said if there's any truth to this, I mean, he needs to step aside. He's not going to step aside obviously if they can't prove it. The Washington Post were down to have found the story. There's 20 newspapers in the state that haven't found the story. I'm sure they're looking for it. But the problem you have is the evangelical base is very, very strong. He's been a very significant player in that community so he may not go away. And if he doesn't go away, it's going to be a very close race. And we lose that race September 13, September 12 -- I'm sorry, December 12 is the election, September -- December 13 is the new senator so it's either him or a Democrat and that changes the dynamics dramatically after Democrats are --

FERRECHIO: Yes. And practically speaking, if they lose one seat they're down to 51 votes. They can lose one Republican and still have the Vice President as a tie breaker if it's a tied vote. So that is a big problem for them because they have a very small majority and there are people like Susan Collins of Maine and others who may not like the tax plan. So it makes it much harder in the Senate and that's where we lost the ObamaCare repeal.

BARTIROMO: Exactly. Do they get this done?

ROLLINS: I think they will but I think it's going to be awful, awful close and it's a long ways to go before it's all finished. I think the Thanksgiving vacation--

FERRECHIO: Far more likely than the health care because remember, they're giving things to people in this instance instead of taking away and it's always easier for Congress to do that.

BARTIROMO: All right, we go -- Ed final word?

ROLLINS: And the final word is that there are members who absolutely need this bill so they will basically -- just have something to run on.

BARTIROMO: All right, we will leave it there. Ed Rollins, Susan Ferrechio, great to see you both. Thanks so much. That will do it for us today in "Sunday Morning Futures." Have a great Sunday everybody. I'm Maria Bartiromo and I'll see you tomorrow morning bright and early. "Mornings With Maria" is 6:00-9:00 a.m. Eastern on the Fox Business Network. Join me there tomorrow morning. "MediaBuzz" right here right now, Howie Kurtz after the short break.


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