Proft: Dan and Amy, good morning. And Amy, we had the chance to have a little holiday lunch with Steve Moore...just before Christmas.
Jacobson: Yeah, we sure did!
Proft: That was nice.
Jacobson: Well it took me a little longer to get there, I was supposed to be on time because I'm a punctual person but I had the wrong address emailed to me by Stephen Moore! I'm sure it was just an oversight.
Jacobson: So I got there when you guys had had your food delivered, but it was a nice event.
Proft: It was, it was too...*Jacobson chuckles* no, what? It was to celebrate the passage of tax cuts, and what Steve Moore and other supply-side economist types think will be the result, which will be a strong economy in 2018, 4% GDP growth, and economic opportunities and job creation associated with that kind of growth. For more on the topic, and an opportunity to apologize publicly to you, Amy, we're pleased to be joined by Heritage Foundation economist Steve Moore. Steve, thanks for being with us, appreciate it.
Moore: *laughing* Good morning, guys, Happy New Year. You know, one thing I learned from that lunch...you guys have faces for TV, not radio! You guys are just a good looking couple!
Proft: Well, thank you so much, thank you very much.
Jacobson: Well, you know, I really meant Amy...
Proft: Ahh, well...
Jacobson: Yeah, Dan! He just didn't want to discriminate against you.
Moore: Yeah but thank you, it really meant a lot to me that you guys came...
Proft: Yeah, it was great.
Moore: And Amy, sorry that I sent you to the wrong place, my bad. I owe you a lunch.
Moore: Yeah but look you know, 2018 is off to a great start. We're pushing on with Dow 25,000, something that no one expected or thought was possible...got into an online argument with a bunch of these liberal economists who now say "Well, this is the Obama economy, it's not the Trump economy! It's Obama who drove the economy up to 25,000 on the Dow, and up to 3% GDP growth." That's kind of nonsensical because everything we've been doing under Trump has been basically been throwing Obama's policies into reverse.
Proft: Yeah...that doesn't mean that the Left is not still advancing their case. And I'm going to give you an opportunity to restore your good name in the female community, Steve Moore, by agreeing with feminist Susan Faludi, who wrote about, over the holidays in the New York Times...
Moore: Now, who is this again?
Proft: Susan Faludi, Susan Faludi of...ya know...great feminists like Gloria Steinem and Naomi Wolf and others like that.
Moore: Oh, okay. Got it.
Proft: She suggests that what you and your friends did in DC, Steve, was to reinforce the patriarchy that oppresses women...
Jacobson: *shaking head* It has NOTHING to do with gender...wow.
Proft: ...that's what this plan does...
Moore: How's that?
Proft: Let me give you an example. "The Tax Cuts and Job Act systematically guts benefits that support women who need support the most. It means an end to the Personal and Dependent exemptions, a disaster for minimum wage workers, nearly 2/3 of whom are women," Steve.
Moore: Well...no, I think she's confused about the numbers. So we basically dramatically increased the standard deduction, so let's say that you're a single, and you have no kids and you're not married. Your standard deduction goes up to about $12,000 from a little over $6,000 last year. And let's say you're a single woman with kids, 2-3 kids and you're a single mother. Not only do you get a $24,000 standard deduction, but you would also get $1,000 increase credit, which is refundable, against your payroll tax...per child! Per child. You know, if you're a single mother with two kids, you get an extra $2,000 right off the top! So, I don't really understand her math.
Proft: Her math is WRONG, but I just want to advance the argument.
Jacobson: "Math is hard..."
Proft: No, but it...it...point of fact, minimum wage earners end up AHEAD in this because of what you just explained. But these are the arguments that are being put out, and oh by the way we were just having this discussion before you joined us, but GOP...
Moore: My...my only question is, when someone writes something like that...are they just lying? Or are they ignorant of the bill? And don't they have fact checkers at the New York Times?
Proft: Yeah, and...although, lying and being ignorant, not mutually exclusive...but here's the thing. 62-30, we've got a 32-point deficit, Republicans do, among college-educated women, and 20-point deficit generally. And this is gonna...
Moore: Among women?
Proft: Yeah, among women.
Proft: And this is something that's going to have to be addressed.
Moore: It's a big problem! It is a BIG problem. When I walk down the street, I often get frowns from upscale women, who feel like Trump is some kind of demon. But you look...my feeling is about Donald Trump is pretty simple...don't look at what he says, don't pay attention to his tweets, just always pay attention to what he's doing. Take a look at the actions he's taking and the impact they're having on the economy and they're universally positive! I mean look, I don't like a lot of his tweets, I think sometimes he acts more. Yes, he exaggerates, "I WILL BE THE GREATEST PRESIDENT IN THE HISTORY OF THIS COUNTRY!" kind of thing. But you look at what he's done to rebuild the economy, rebuild the stock market, confidence is up everywhere I go, I talk to business men and women, they say "we're feeling good about 2018", so just ride...ride on this rising tide!
Jacobson: But the sad thing is we live in this state where our Federal taxpayers...we're gonna have a cap on state and local tax deductions at $10,000, so...you should have SEEN the lines in DuPage County, Will County Treasurer's Office, Cook County...Cook County, normally $13 million prepaid, this year, it was $529 MILLION. That's what the total was, before the stroke of midnight.
Moore: WOW. So you know what I find interesting about that...I'm glad you brought that up, Amy, because I just wrote my column this week on this whole (?), because the whole kind of...the liberal's philosophy on taxes is taxes don't really matter, right? They don't really affect people's behavior, they don't change their behavior based on a change in tax policy. Well, of course that's visibly wrong now! People are waiting in lines for hours and hours to prepay their property taxes, so they can shave a little bit off of what they're going to have to pay. Yes, taxes DO matter, they DO affect behavior. And people say "Well gee, if taxes will affect the behavior of people to prepay, why wouldn't lowering taxes on people when they work, when they start a business, when they save, why...when they invest...why wouldn't we believe that's gonna increase the amount of saving and investment and work that people do?" That's the whole philosophy behind this bill, is to bring money back from overseas, to make America more competitive. You know, the people that are really pissed off about this tax cut are...you know, you talked about some liberals that are pissed off, the real people that are really nervous about it are the Germans, and the Chinese, and the Mexicans, and all these other countries that have been stealing jobs from America...it's not gonna be so easy anymore, because our tax rates are now lower than theirs are!
Proft: Yeah, and I mean, Illinois is kind of a special case, as you know, hailing from here, Steve. And people here, in terms of the political class, not understanding that people respond to incentives, they still can't figure out why Illinois yet again this year led the nation in outmigration. They think it has something to do with the balmier weather in Wisconsin.
Moore: Well the uh...*laughs*...yeah, and the good schools down in West Virginia and that sort of thing! I think...this is my point, and I think it's a very serious point; Illinois now, now that we did limit the state and local tax deduction, Illinois really does have a choice now. I mean, you are going to have to cut your property taxes! There's no question about it. If you don't cut your property taxes at the state and local level in Illinois, that outmigration we've been talking about, Dan, of people moving out of Illinois to Wisconsin or Florida or Texas or even West Virginia or Kentucky, that outmigration is going to increase! And, and, then Illinois is...you think you're in a boatload of trouble NOW? Wait until you get more and more people who are taxpayers leave the state. You're going to have mountainous deficits unless something is done. And I mean, I don't know, do you think that they will respond in that way?
Moore: Now I mean, I'm talking about the officials.
Moore: I'm talking about the elected officials. Do you think they will cut property taxes?
Proft: No. No!
Jacobson: No, they'll try to use this to say "President Trump is bad, Republicans are bad, vote Democratic."
Proft: Yeah I mean...that is what they will...
Moore: But I mean you...you already vote Democrat!
Proft: Yeah, I know.
Jacobson: Well, they're secure their base.
Proft: Obviously, if there's not a change...this is something that the voters have to decide first, before the elected officials make that decision, because the balance of power in Illinois at this point? No, it won't happen. It won't happen.
Moore: Well, I have an idea for you guys.
Jacobson: Please. Help. Yes.
Moore: And this is a very serious idea, it was in the New York Times. Do you know what they're talking about in New York and California now? Because they have sky-high income tax, you have sky-high property taxes. They want to...they are investigating if they can make the income taxes that they pay in New York and California, where the rate is 13.5%, charitable contributions.
Moore: *laughing* Did you see that?
Proft: Yeah. Yeah.
Moore: *still laughing* So you could actually get a deduction, for writing a charitable contribution to the...so maybe people in Illinois will make a charitable contribution...
Proft: Yeah! They'll make a charitable contribution of their HOME, here, because that's what's happening here. Let me ask you another question before we go, getting back to national policy. Ovie Croix had a good piece in the Wall Street Journal about Obamacare, and the Republicans, you know, can't avoid dealing with Obamacare in 2018...because of course, the repeal of the individual mandate. But he points out that the Trump executive order, reviving alternative forms of short-term health insurance, gives Americans an imperfect but real escape valve from Obamacare's costliest regulation. He suggests the focus should be, this year with respect to Obamacare, not dealing with the exchanges but doing something with respect to the Medicaid program, doing a version of Graham/Cassidy focused solely on Medicaid. Do you think that's where Republicans should spend their political capital?
Moore: Yeah, I do. I mean, I love the idea of letting states experiment with how to control costs for health care under Medicaid. Basically what you would do under this kind of background is basically give a state like Illinois, or a state like Utah, or say any state...a pot of money, you know, that will cov...that is enough to cover the, you know, people who are qualified for Medicaid, but saying "Look, you spend this money in the way you think is the most efficient, will provide the best quality of care for your people, and this is all you got!" So, I'll show you, you go over this amount...and we've done this in several states, where states got waivers to experiment, and they found INCREDIBLE ways to save money. I'll just give you one example, I may have mentioned this on your show before, but it's just my favorite example. In Rhode Island, where they had a waiver where they got a block grant and said "You spend the money and spend it efficiently," they added a $20 co-pay. So any time someone went to an Emergency Room that was on Medicaid? They had to pay $20 out of pocket. You know how much their...how dramatically their Emergency Room visits went down? By 40%. Just by charging people $20, so it wasn't free to people. If you do those kinds of things, states will find incredible ways to save money. Now under...you could not devise a stupider system than Medicaid. Right now, when Illinois wastes a dollar on Medicaid payments, you get 90 cents from the Federal Government, and you pay 10 cents of it. So states like Illinois actually have an incentive to waste money on Medicaid. I mean, there are states that actually INTENTIONALLY waste money, so they can get more money from Washington. It's the craziest system.
Proft: Yeah, well no, that's exactly it. Going back to your point before about incentives, and how people respond to them. He is Steve Moore, Wall Street Journal columnist, Senior Economist for CNN, economist at the Heritage Foundation. Steve, thanks as always for joining us, appreciate it.
Moore: Alright, have a great week guys, Happy New Year!
Proft: Happy New Year!