Mulvaney: We want biggest tax reform we can pass into law

This is a rush transcript from "Your World," September 7, 2017. This copy may not be in its final form and may be updated.

NEIL CAVUTO, "YOUR WORLD" HOST: Man, oh, man, it was all a lot of Republicans were talking about today, the president shockingly reaching across the aisle, dealing with Chuck Schumer and Nancy Pelosi to score a deal that would call for postponing this whole budget ceiling debate until -- until, what, the middle of December, and stapling it to a relief package for Harvey victims.

But the fact of the matter is, the budget director said it saved ground for a lot of good things the president still wants to do.

Mick Mulvaney from earlier today.


MICK MULVANEY, WHITE HOUSE BUDGET DIRECTOR: The debt ceiling right now needs 60 votes in the Senate. The continuing resolution to keep the government open needs 60 votes in the Senate.

The funding for the hurricanes, for Harvey and Irma, needs 60 votes in the Senate. So, I think it's kind of absurd to think that we're not going to be talking to the majority leader in the Senate, the Democrat leader in the Senate in order to get these things done.

So, no, I think we continue to work with both folks. Certainly, the media has focused the fact that he's actually met with Mr. Schumer and Mr. Pelosi-- excuse me -- Mrs. Pelosi. But certainly we're talking to everybody on both sides of the aisle, because we have to.

CAVUTO: No, I definitely can relate to what you're saying. Of course, he is damned if he does, damned if he doesn't.

The media was at first saying, you have got to work with the other side. So, he works with the other side, and they say, look what you're doing to your own side. So, I understand that.


CAVUTO: But you're also one of the biggest fiscal hawks I know, and you don't like waste anywhere you see it.

It just seems odd to me, sir, that in agreeing to increase the debt ceiling that attached to it was a spending measure, albeit an important one, for emergency relief. But, nevertheless, that could have been just a clean bill, a clean vote, and it would have gotten bipartisan support anyway.

So, are you troubled that this sets the stage for similar such attachments, in this case for spending, not for cutting that spending?


Look, actually, I think one of your basic premises there, Neil, is not entirely accurate.

We actually sent a letter last week to the Hill asking for the additional spending, what we call the supplemental spending for FY17.

CAVUTO: Right.

MULVANEY: And in that same letter said, and, by the way, we think you need to address the debt ceiling at the same time, because we were cutting it so close anyway on the debt ceiling.

I think Secretary Mnuchin has been on the show several times saying how close we were cutting it already just getting to the end of September, when the reality is, September 14, 15, right before those tax payments come in, was actually cutting it close as well.


MULVANEY: So, we think the responsible thing to do was to look at the supplemental spending and the debt ceiling at the same time.

CAVUTO: Director, it's thought that the president might secure more Democratic support than would normally be thought of for this tax plan, whatever it is. And it has tongues wagging that maybe, maybe that's because it leaves out provisions that, let's say, liberals or Democrats would find objectionable.

A tax cut for the wealthy might not be in there, that the lower taxes for corporations might not be as low as was originally talked about.

Can you outline any of that?

MULVANEY: I can say what we have said 100 times before. Our policies of the administration have not changed.

We want the biggest, most aggressive tax cuts, tax reforms that we can pass into law.

CAVUTO: For everybody, Director?


MULVANEY: And there's no benefit -- well, there's no benefit to being right and not getting anything passed.

We want stuff that can pass into law that will help get to us to that 3 percent sustained economic growth that is the target for this administration.


CAVUTO: The reason why I mention it, sir -- I'm sorry to jump on you there...

MULVANEY: No. That's fine.

CAVUTO: ... is that your definition of what would be an adequate tax cut for corporations might not be jibing with the speaker, Paul Ryan.

Here's what he said on the corporate tax rate. And I want you to react to this, Speaker Ryan.


REP. PAUL RYAN, R-WIS., SPEAKER OF THE HOUSE: The numbers are hard to make that work. He obviously wants to push this as low as possible. I completely support doing that.

But at the end of the day, we have got to make these numbers work. I think our goal is to be at or below the industrialized world average, and that's 22.5.


CAVUTO: All right, I should put that in some context.

The report was that the president wants to, maybe you want to, lower that corporate rate to 15 percent from roughly 35 percent now.


CAVUTO: It would be still much lower under Paul Ryan's thinking, but not nearly that low. What do you think?

MULVANEY: I think what you are seeing, Neil, is actually the way the law is supposed to get made.

The president has staked out his position. The leader of the Republicans in the House has as well. And now what they're going to go through is what we call the ordinary process, regular order. They're going to go to committee. They're going to have hearings.

They are going to mark up a bill. And we will continue to advocate for the biggest reforms and the biggest reductions that we can possibly get. At the end of the day, the president doesn't get to make law. The House and the Senate do.

So, we will be working with them, as we have, to try and get the best possible package that can pass. I just think what's being lost is how many things we agree on at this point in the tax policy. That two- or three- pager that the big six put out a couple of weeks ago was actually quite noteworthy in the number of places that we agreed on, and things that, for example, the border adjustment tax was out of the picture at that point.

We all agree to try and get corporate rates down as much as we possibly can. So, I think it's better to start focusing on what we agree on and not the things that might divide us. That's the way we get the best piece of legislation we can.

CAVUTO: Director, is it fair to say, as I think Treasury Secretary Mnuchin hinted -- I'm just saying hinted -- that the wealthy are not going to share in this tax cut, they might see their rates cut a little bit, but with offsets by limiting deductions, et cetera? They might not be part of this?

Now, by the way, they might be fine with that if everyone else is getting it. But is it your sense in the end that that is what we are looking at?

MULVANEY: Well, again, I don't know what we are looking at in the end, because this is going to go through the process.


CAVUTO: But you know what is being proposed in that building behind you. Right?

MULVANEY: Don't worry. I'm not going to dodge your question. I'm going to tee that up and then say this.

Look, there's going to be time -- every time you reduce taxes on the middle class, you also by definition reduce taxes on the upper class, because the folks who pay taxes at that higher rate also pay taxes at that middle-class rate as they move up our progressive system.


MULVANEY: Balance that against some of the proposals that we have talked about previously, such as getting rid of the deduction for state and local income taxes.

If you live in a high-tax state, if you in New York, New York City, if you live in California, you could see your tax bill go up fairly dramatically. So, I don't think it's fair to say that everyone is going to be treated this way, everyone is going to pay higher taxes, everyone is going to pay lower taxes.

The middle class, absolutely, those taxes are going down. Corporations, yes, taxes are going down.

CAVUTO: But even if you're in the middle class and you're in those high-tax states, you would be affected by that. Right?

MULVANEY: You could.

And, again, that's part of this discussion. That's why I think what you are seeing is the right way to handle it. It's not a precooked bill. It's not coming down from the mountain and saying, look, here's the tax plan.

We are going to work with all of the folks in Congress. Keep in mind all of the people we just talked about have representation on the Hill. And those folks are going to represent the folks back home to the best of their ability. And, together, together, we come up with the best tax plan we can pass.

CAVUTO: Do you think it will pass by the end of the year and that it will be retroactive to the beginning of the year?


In fact, when I think it passes -- secondly, yes, if it passes by the end of the year, it will be retroactive.

But as to the first question, I do. And I think, in mid-December, when the tax bill passes, people will look back at what the president did this week and say, you know what? Maybe he was right, cutting that deal in September was a big part of getting these taxes before the end of the year.

CAVUTO: Do you know whether the president is genuinely annoyed at Republicans in the aggregate, the leadership, and that's why he's reaching across the aisle, because he's fed up with them?

I just read into what he did with Chuck Schumer and Nancy Pelosi on this debt thing as a sign, I'm sick of you guys.

MULVANEY: I will answer half your question, which is, is he annoyed with the Republican leadership?


MULVANEY: Yes, I think he probably he is. And, believe me, as a Republican, so am I. As a citizen, I am, too. I was promised that they would have repealed and replaced Obamacare by now.

I'm a voter. I have a member of Congress. I have a senator. I not only made those promises to people for the last seven years when I was running for office. People made them to me.

And I was disappointed and somewhat annoyed that we haven't followed through on that promise. I don't think that's an unnatural reaction at all. And to the extent the president was annoyed by that, I think he's simply reflecting the opinion of many of the people in the country.

CAVUTO: Are you worried that he might be losing friends if he's embracing the Democrats who aren't keen on him and Republicans who feel that he always picks on them, that he's going to be last man standing?

MULVANEY: Face it. Any self-respecting Republican worth his or her salt is probably annoyed at the party as well. Not being able to follow through on the major promise is a major problem for us, and they need to fix it.

CAVUTO: All right.


CAVUTO: All right, the budget director, Mick Mulvaney.


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