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Sen. Toomey: Tax reform possible, Obamacare fight will continue; he also discusses North Korea

By Dan Miller

danmiller@pressandjournal.com

717-944-4628
Posted 9/1/17

Sen. Pat Toomey is “cautiously optimistic” of major tax reform getting done in 2017, and that the fight to repeal Obamacare is not over, Toomey told a group of business leaders in Lower …

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Sen. Toomey: Tax reform possible, Obamacare fight will continue; he also discusses North Korea

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Sen. Pat Toomey is “cautiously optimistic” of major tax reform getting done in 2017, and that the fight to repeal Obamacare is not over, Toomey told a group of business leaders in Lower Swatara Township on Thursday, Aug. 31.

“I think it takes the form of simplification, lower rates and consolidation of brackets,” the Republican said of the tax reform he hopes to see.

Toomey spoke at The 903 in Lower Swatara Township, at

a roundtable put together by Harrisburg Regional Chamber and CREDC. Business leaders from the region were on hand to hear Toomey, who serves on the Senate’s Banking, Budget, and Finance committees.

He said the Senate needs to pass a budgetary resolution that gives the Senate the ability to pass tax reform with a simple majority of 50 votes — with the vice president breaking the tie if necessary.

Second, Senate Republicans must decide if tax reform is to be “revenue neutral” or if it is OK “in the short run” to pass a tax reform package that generates less money to the government.

A package resulting in less revenue in the short term will maximize economic growth and lead to more revenue to the government in the long run, Toomey said.

“The growth is going to give us a new piece of a bigger economy that the federal government gets to tax,” he said. “This is what happened in the 1980s. The Reagan tax reform package scored as a huge revenue loss, but by the end of that decade within less than 10 years revenue collected by the federal government had more than doubled despite lower rates, because it was a much bigger economy that the government got to tax. The big fight that we Republicans have to fight is are we going to put ourselves in a narrow box.”

“You will know a lot (about) how powerful our tax reform is going to end up (by) watching how this question gets resolved,” Toomey added.

President Donald Trump and the White House is “in the camp that says it’s OK if it’s not revenue neutral, because over time we will generate enough revenue through more growth. They are in what I think is the right spot.”

A majority of Republican senators agree, Toomey said, but “we’ve got some who skeptical about this approach. We cannot lose two, cannot lose three. We need to have nearly unanimous Republican support” for the package to succeed in the Senate.

On Obamacare, Toomey acknowledged the “huge setback” that occurred in the summer when the Senate could not pass legislation. The fight is not over, but the strategy has changed.

“I can assure you there are groups of senators meeting virtually daily to try and find a way to get to 50 (votes) on what will be a step in the right direction,” Toomey said. But “don’t expect a single bill that does everything in one fell swoop. That’s not possible and probably wouldn’t be a good idea. But I do think we need to make progress.

Obamacare has “failed, and is failing,” Toomey said. “There are places across the country where there are no insurance companies participating, there are no choices. There are markets everywhere, including in Pennsylvania, where consumers have a grand total of one choice, which is to say no choices. Premiums have risen, deductibles have gone up — this is not working.”

In place of Obamacare he called for reforms that move health care “in the direction of a consumer-controlled consumer-oriented process and product, rather than a government controlled process.”

Reflecting on the progress so far, Toomey noted that 14 separate bills have gotten through Congress allowing for the repeal of recently-passed regulation with a simple majority vote in the Senate.

“We have done that, the president has signed that, the president has signed a number of executive orders pushing back excessive regulation,” Toomey said. “I think it is going to help create an environment where it’s more likely that people are going to invest in new businesses, expanding existing businesses, hiring more workers, the kind of growth that happens when there is more economic freedom. Some progress has been made but more needs to be done.”

Asked to comment on North Korea, Toomey said “this is a huge challenge” in that while there is no question the U.S. would defeat North Korea militarily, the question is “the damage” the regime could do to the roughly 20 million people in the greater Seoul region of South Korea who are “all easily within striking distance of conventional artillery aimed at them from the north.”

Toomey called for putting “the absolute maximum economic pressure” on the North Korean regime, and referred to a bill he has co-sponsored with Democratic Sen. Chris Van Hollen of Maryland that would impose sanctions to “completely exclude from the entire American banking system … any financial institution that is in any way facilitating business with North Korea.”

Among others, the bill would target Chinese banks that are enabling Chinese companies to continue doing business in North Korea, Toomey said.

The U.S. needs to be sending “a very clear message to the Chinese government — ‘we’re not kidding around anymore. This is going to start to hurt you if you are not doing everything you can to help us with this situation.’ ”

Remarkably, the North Korean economy grew 3 percent in 2016 — outpacing the rate of U.S. economic growth last year, Toomey said. North Korea is doing this through exports, including the exporting of conscripted slave labor for which the government gets paid.

In a line that drew enthusiastic applause, Toomey also called “a no-brainer” the need for “massive investment” in missile defense systems to shore up both South Korea and Japan.

“That will help diminish the leverage that North Korea has, if the surrounding countries have the ability to defeat missiles,” Toomey said.

Among the “urgent” priorities facing the Senate when it returns Tuesday will be providing disaster relief for Texas in the wake of Hurricane Harvey.

Toomey said Congress needs to avoid “the mistake” that occurred in 2012 after Hurricane Sandy, when Congress “used the tragedy of that disaster to load up a bill … with tens of billions of dollars of completely unrelated spending. It was just an excuse to have a pork barrel spending binge, and that’s really bad policy.”

On a related note, Toomey agreed with a questioner in the audience who called for reforming the national flood insurance system, which is due to expire at the end of September unless Congress acts.

But he disagreed with the questioner’s opinion that major disasters like Katrina, Rita, Sandy and Harvey be separated out in order for premiums to be affordable and for the insurance to “adequately cover the losses” resulting from such storms, as the questioner put it.

The flood insurance program lost money last year, despite there being “no major hurricanes” in 2016, Toomey countered.

“In my view we need to more in the direction of more actuarially sound pricing” so the federal program “can stand on its own” without taxpayers having to bear the cost,” Toomey said. He also favors private insurance companies playing a bigger role in writing flood insurance policies.

Congress will likely pass “a short term extension of the status quo” to keep the program going, followed “relatively soon” by a reform packages “so there will be some changes.”

Asked after the event by media to comment on how Trump can “unify” the country, Toomey said he believes that the President “missed an opportunity” immediately following the violence in Charlottesville, Virginia.

“He did not handle that well,” Toomey said of Trump’s response to the violence. “That was a chance to send a strong message about a unified country, irrespective of race, and instead it became a moment when racial tensions were exacerbated. A president needs to look for opportunities as they inevitably occur to set a good example and send a good message.”

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