Democratic Rep. Ron Kind was just elected to a 10th term in his LaCrosse-based western Wisconsin district. He spent four years leading the centrist New Democrat Coalition, and was recently rated the eighth-most moderate member of the House by Georgetown University’s Lugar Center, named for former Sen. Richard Lugar, R-Ind.
He is also a senior member of the Ways and Means Committee. He sat down with the Washington Examiner to discuss bipartisanship and what he would like to see in a tax reform package.
Washington Examiner: What do you think earned you such a high spot on the Lugar Index?
Kind: Obviously I’ve figured out being in the minority as long as I have, in order to get something done you got to find a partner in the majority, so we’ve done that very well. If it’s our idea, we approach a Republican and see if we can get him on board. And then, I don’t have a big ego; I know how the majority operates, so if you put their name first on a bill, chances are you’ll have a better chance of it moving forward faster.
Washington Examiner: What is the status of bipartisanship on Capitol Hill today?
Kind: Obviously the middle’s getting squeezed. But there is a growing segment in both Democrat and Republican caucuses that are interested in trying to get something done, trying to find some common ground, find that bipartisanship. And we need more of that these days because I think there’s a growing frustration and an eagerness not to let the far Right and the far Left drive this place.
Obviously given my leadership role in the New Democrat Coalition, chairing that the last four years, we work closely with the [moderate Republican] Tuesday Group. [Recently] we had both groups together for a policy lunch session. We do that from time to time.
And that’s just an attempt to get members in the same room together talking and listening to each other and then trying to discover where there are areas of overlap that we can work on … what issues there can be bipartisan work on … Let’s focus on some items that really do unite us as a country.
Washington Examiner: Do you see more willingness among new members to work together?
Kind: Our group has grown … We’ll probably be at 60 this year, and there are more members, including new members, who are looking to join the group. And the same is true with [Rep.] Charlie Dent’s group, the Tuesday Group. Their numbers have been growing a little bit — of course we are up against some institutional forces, gerrymandering being one [that] just makes it difficult for some members to be more moderate and centrist given the districts they represent.
The role of the dark money — I already have attack ads about Obamacare being run against me in my congressional district in western Wisconsin … in February during an off-election year, of all things. So it just shows you the tremendous role that this big money is trying to play in the election process.
Washington Examiner: Are Republicans including Ways and Means Democrats in formulating tax reform?
Kind: First of all, there’s been a lot of work in the committee for the last four or five years trying to come up with comprehensive tax reform. What is somewhat discouraging, from the minority point of view, is they’re keeping it very close to the vest right now. There has been very little engagement with us. They haven’t shared much details of what they would like to propose … so that makes it difficult to find those areas of cooperation.
I hate to speak for them, but knowing how these things work, I’m sure they’re trying to develop internal consensus first before they start reaching out to the wider world. They may be struggling to develop that type of consensus because I’m sure that there are Republican members who are asking the same questions that I am.
Washington Examiner: What do you think of the proposed border-adjusted tax?
Kind: There aren’t many details, and details do count when it comes to tax policy. It counts tremendously. Therefore, [Republicans] could get themselves into trouble quickly if other people start defining what the narrative will be and that’s going to happen as long as there is a dearth of detail, a vacuum waiting to be filled. So we’re still not clear what their timetable is.
I would hope we’ll have some hearings on something as important as a border adjustment tax that would be a huge change in the tax code with a lot of consequences and especially unintended consequences. And from what I know about it right now, representing a large, rural district, this would be devastating to rural America. Family farmers in particular … and to some of our manufacturers as well.
I think what we’re hearing from some of our neighboring countries is they will retaliate in kind, and that would be devastating to production agriculture in Wisconsin, which does export a lot to Canada and Mexico.
If their plan is to reduce the burden on consumers, and the price that consumers are paying for products that would get hit with this tax, my guess is this is going to be a pass-through tax that will be the end-buyer that pays the tax and [Republicans will] say, “Well that will be offset by an appreciation of the dollar.” Anything that relies upon a currency doing a certain thing that you hope it will do is already on treacherous ground.
But also, if you’re expecting the dollar to strengthen to offset the cost of imports, well that’s going to devastate our export market then. It’s just going to make the cost of us exporting that much more expensive and that could hurt, again, production agriculture. It will hurt manufacturers. And so it’s almost as if they have countervailing goals here: having a border tax to raise revenue that consumers will ultimately have to pay, but that will be offset by a strengthening dollar, which will make it harder for us to export.
Washington Examiner: House Speaker Paul Ryan, R-Wis., insists a border-adjusted tax is not a trade issue. Do you agree?
Kind: Until we get the details, this could be in jeopardy with [World Trade Organization] compliance and that could open up a whole slew of challenges through the WTO, and we could get hit with a trillion-dollar penalty.
Washington Examiner: What would you like to see included in a tax reform package?
Kind: There are some border goals here that we do share. There is a general feeling that we’re long past due for comprehensive tax reform. We ought to strive for simplification of the tax code. We ought to strive for making it more competitive globally — it’s not right now. We ought to strive for trying to broaden the base and trying to make it fair at the same time. So on those larger principles, I think there is wide agreement how you get there is one reason we haven’t had tax reform since the late 1980s.
[Additionally], there’s just a whole lot of underbrush that needs to be cleared out. This is years and years of build up — special loopholes, special provisions getting included in the tax code that the typical small business owner in my district can’t take advantage of, and they don’t have a legion of lawyers or accountants to continue to scrub the code for their advantage like Fortune 500 companies do around here.
Washington Examiner: Should Congress just tear it all up and start over?
Kind: I’d also like to us maintain progressivity in the tax code. I think it is fair that if you’ve got a lot more, then you’re expected to contribute a little bit more. If you don’t have as much, you’re not expected then to contribute because you’re struggling to make ends meet. So maintaining that progressive element of the tax code I think has worked well and has been fair.
Washington Examiner: Are you willing to work with Republicans?
Kind: There might be an opportunity for us to work together, which I think ultimately is going to [happen] because taking on something as large and controversial as the tax code, you’d like to see it done in a bipartisan fashion. But we’re also getting contradictory signals from the new administration.
The president the other day came out and kind of pooh-poohed the border adjustment tax saying, “Well that’s too complicated.” And then he kind of walked back and we’re not sure where his Treasury might end up and quite frankly, the stars need to align. We need an administration that’s all in, a Treasury that’s fully committed, the House and Senate all working together. We’ve lacked that in the past. That has yet to materialize right now, and it may not for a while.
We [also] haven’t really talked about the hardest part of tax reform, and that is doing it in a fiscally responsible manner so we’re not blowing a hole in deficits and debts in the future. I’m in the category of if we’re going to do it, we’ve got to pay for it. And that’s where it gets really hard, trying to find offsets within the tax code in order to pay for the lowering of rates.
Republicans are claiming the [border-adjusted tax] will raise $1.2 trillion over 10 years, but their broader tax reform proposal would cost closer to $9 trillion, so there’s a huge shortfall there, and we’d have to look at other so-called tax expenditures in order to help pay for that shortfall.
I hope we [can work together, but] the track record of Congress in recent years has not been good when it came to paying for tax cuts. We did the extension of the Bush tax cuts … None of that was paid for. Then we did the 2015 tax cut that was close to $900 billion; again none of that was paid for. And late last year, I went to the Congressional Budget Office asking them to do an analysis and they came back and said, “If we had just paid for those two things … we’d be virtually balanced right now.”
Washington Examiner: Are details sparse because congressional Republicans are waiting for Trump?
Kind: I’m sure they don’t want to get out too far ahead of the president or his administration on this only to be pushed back upon. But then again, truth be known, I don’t think President Trump has given much thought or any deep analysis of where he’d like to see the tax code go. And therefore, I think to be fair, Chairman [Kevin] Brady and the committee think that they have kind of a leadership role to play right now, see if they can bring the administration along in the direction that they want to go.
Washington Examiner: What about the Affordable Care Act taxes?
Kind: They claim that they want to repeal Obamacare, and part of their repeal would be taking away all the revenue that was raised in order to pay for healthcare reform. I’m afraid if they do that, if they just repeal the revenue, that will leave them with no tools, no resources, in order to do coverage, in order to do the other things that you need to do healthcare reform properly. And I don’t know how they cover low-income individuals and families then.
I don’t know how they’d maintain the commitment to Medicaid funding to all the states, or even the changes that we made in the Medicare program under the Affordable Care Act or closing the doughnut hole. If you take all that revenue away, I don’t know how they continue those.
Washington Examiner: Are there Republicans who share your concerns?
Kind: I think they’re worried. I think they want to do healthcare reform responsibly without leaving people out. There are many of my Republican colleagues who don’t want to backtrack now when it comes to coverage that’s been extended already. In order to maintain that commitment, you’re going to need resources because you’re talking about people who are very hard to cover without help.
If you talk to any Democrat, they’re not going to tell you that the Affordable Care Act is the perfect answer to the complexities of the healthcare system, and we need to be smart enough to know what is working and what isn’t and fix what’s not working.
And if Republicans want to approach it that way, be honest with the American people that there are a lot of good and important things in the Affordable Care Act that should not be touched or changed, there are aspects of it we can work on together to improve with the eye toward cost containment, make it more affordable for all Americans. The New Dems are very interested in engaging in that fashion.
