THIS IS A RUSH TRANSCRIPT FOR 'THIS WEEK' on December 17, 2017 and it will be updated.
ANNOUNCER: THIS WEEK WITH GEORGE STEPHANOPOULOS starts right now.
GEORGE STEPHANOPOULOS, HOST: On the verge of victory.
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DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I have seen it. I think it's going to do very, very well.
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STEPHANOPOULOS: President Trump and the GOP poised to deliver on a big promise.
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REP. KEVIN BRADY (R-TX), CHAIRMAN, WAYS & MEANS COMMITTEE: Americans deserve a new tax code for a new era of American prosperity.
TRUMP: We want to give you, the American people, a giant tax cut for Christmas. And when I say giant, I mean giant.
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STEPHANOPOULOS: Democrats powerless to stop it.
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SEN. RON WYDEN (D), OREGON: What's there for the middle class is written in disappearing ink.
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STEPHANOPOULOS: So if the tax cut a done deal, what will it mean for the economy and you? And does Trump's biggest victory yet spell trouble or guaranteed survival for Republicans in Congress?
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DOUG JONES (R-AL), SENATOR-ELECT: Alabama has been at a crossroads.
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STEPHANOPOULOS: Democrat Doug Jones defeats Roy Moore in Alabama. A seismic wake-up call for the GOP as their Senate majority shrinks.
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TRUMP: He tried. I want to support the person running. We need the seat. We would like to have the seat.
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Big questions THIS WEEK for Senate Republican Whip John Cornyn, the Democrat leading their campaign to take back the Senate, Chris Van Hollen, and our powerhouse "Roundtable." We'll break down the politics, smoke out the spin, the facts that matter THIS WEEK.
ANNOUNCER: From ABC News, it's THIS WEEK. Here now, chief anchor George Stephanopoulos.
STEPHANOPOULOS: Good morning. As we head into the holidays, it sure looks like President Trump and the GOP will get what they want for Christmas. The votes lined up for the largest tax cut in years in Trump's biggest legislative victory yet. So what will it really mean for the economy and the middle class? That may take years to determine. And we're going to have two of America's most prominent economists to analyze that impact ahead.
For now, passing the tax plan a political boost the Republicans need after their worst political loss of the year in Alabama. But will it look like a win one year from now?
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TRUMP: This is where it all began.
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STEPHANOPOULOS: This time last year, Donald Trump was thanking Alabama voters on his victory tour. Not this week. Despite the president's late push for the GOP candidate...
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TRUMP: Get out and vote for Roy Moore. Do it. Do it.
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STEPHANOPOULOS: Moore's baggage was just too heavy.
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TRUMP: As the leader of the party, I would have liked to have had the seat.
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STEPHANOPOULOS: And Trump's clout a little light. The president won Alabama by 28 points. Now his approval rating has dropped below 50 in the reddest of red states. And he's caught in the cross-fire of a GOP civil war with his former strategist Steve Bannon...
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STEVE BANNON, GOP STRATEGIST: To Mitch McConnell and Senator Shelby, there's a special place in hell...
BANNON: … for Republicans who should know better.
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STEPHANOPOULOS: … waging an all-out assault on the Republican leaders in Congress who the president needs to work with every day.
For Democrats, Tuesday, the best day of 2017.
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JONES: We have come so far. And the people of Alabama have spoken.
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STEPHANOPOULOS: Young people, African-Americans, women, energized by Trump and the #metoo movement made Doug Jones the first Democratic senator from Alabama in 25 years, and gave Democrats hope that taking back the Senate just might be possible. But the midterm map favors Republicans. Democrats defending 24 seats, 10 from states that went to Trump last year, only eight Republican seats are up for reelection, and only Dean Heller of Nevada is running in a state won by Clinton.
And the GOP is betting that their new tax bill is the insurance policy they need.
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TRUMP: Jobs are going to come pouring back into this country, which we need very much.
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STEPHANOPOULOS: Convinced that defeat on the tax bill would doom them in 2018, Mitch McConnell, Paul Ryan, and the president have pulled out all the stops, claiming a promise kept to the middle class.
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TRUMP: Everybody is going to benefit. But I think the greatest benefit is going to be for jobs and for the middle class.
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STEPHANOPOULOS: But independent analysts show the big winners from the bill are corporations and the wealthy. Polls show that less than a third of the country supports it, one of the most unpopular bills in years, which has Democrats hoping that the legislative defeat they expect this week will bring political victory come November.
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REP. NANCY PELOSI (D-CA), MINORITY LEADER: I think they're in a lose-lose situation. If they don't pass the bill, they lose with their pay masters. If they do pass the bill, they lose with the American people.
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STEPHANOPOULOS: Let's bring that to the number two Republican in the Senate, GOP whip John Cornyn of Texas.
Senator Cornyn, thank you for joining us this morning. You just heard Leader Pelosi right there, lose-lose for the Republicans. Your response?
SEN. JOHN CORNYN (R-TX), MAJORITY WHIP: This is good news for the American people. We're going to get the economy roaring back again, and improve pay, and increase jobs, and make America more competitive in the global economy, as well as simplifying the tax code and giving everybody in every tax bracket a tax cut.
So this is good news any way you cut it.
STEPHANOPOULOS: Is this a done deal? Do you have the votes even if Senator McCain is not able to vote this week?
CORNYN: Well, I won't speculate on Senator McCain's health. We hope he comes back. But I'm confident we'll pass this bill, probably on Tuesday.
STEPHANOPOULOS: So you think you have the votes right now. There's a lot more scrutiny of the bill which was just released on Friday in these final hours, including an article in the International Business Times which just came out yesterday showing that a last-minute tax break which was not included in either the House or the Senate provision could bring millions of dollars to President Trump and other Republicans who get a lot of money from the real estate income through LLCs.
Our next guest, Senator Chris Van Hollen, has responded to that saying that slipping "in a last-minute provision that could give even more of a windfall to people like President Trump and some Republicans in Congress is unconscionable, it's not too late for my colleagues to do the right thing."
Will you remove that provision?
CORNYN: Well, our Democratic colleagues simply refused to participate in the process. We probably could have made it better if they had. But we were determined to get this job done, to cut taxes, to reform the tax code for the first time in 30 years. This will benefit hard-working American families, people in the lower income tax brackets, and everybody in every tax bracket will see a tax cut.
So picking out one piece in a 1,000-page bill and saying, well, this is going to benefit somebody, I just think that takes the whole bill out of context.
STEPHANOPOULOS: Well, but except that this provision wasn't included in either the House or the Senate bill and apparently was added at the last minute. Why was that done? Why was it necessary to include that provision?
CORNYN: Well, we were working very hard. It was a very intense process. As I said, the Democrats refused to participate. And what we've tried to do is cobble together the votes we needed to get this bill passed, at the same time, maintaining the integrity of the largest tax cuts we're going to be seeing since 1986.
STEPHANOPOULOS: So is that how you got Senator Corker with this provision?
CORNYN: Well, the particular provision you're talking about, honestly, is just one piece of a 1,000-page bill which is going to grow the American economy. And, what we are seeing is that American corporations and businesses are not competitive in the global economy because we have the highest tax rate in the industrialized world.
All we did is adopt ideas that people like Barack Obama and other Democrats have proposed when it comes to the business tax rates and should try to get our businesses more competitive, to increase take-home pay and to grow the number of jobs available for working class families.
STEPHANOPOULOS: I don't think they proposed that provision. But meanwhile, the Democrats are also warning this is going to trigger a mandatory cut in many government programs, including a $25 billion cut in Medicare. Leader Pelosi has written a letter to the Senate and House leaders in the Republican Party saying "given the lack of bipartisanship to date in your effort to provide massive tax cuts to the wealthy at the expense of the middle class, while adding $1.5 trillion to the deficit, it will be your responsibility to deal with the consequences."
She's essentially saying, you won't get any Democratic votes to waive those cuts, so $25 billion in Medicare cuts are coming. Can you prevent that on your own?
CORNYN: Well, that's just a false statement. We don't touch Medicare at all. We don't touch any of the entitlement programs in this bill. And so for Ms. Pelosi to make that statement, it's just fabricated.
STEPHANOPOULOS: But this proposal, the tax bill, because it increases the deficit, does trigger these pay-go provisions which will mandate a $25 billion cut in Medicare unless you have the votes to waive it. Do you to have the votes to waive it?
CORNYN: We will deal with that later this week. And I believe we will protect Medicare. And if Ms. Pelosi and her party will join us, that will be a done deal.
STEPHANOPOULOS: The Democrats say they're not going to join. And that leads to the question about Senator Susan Collins. This was one of her conditions for passing the bill, along with the the passage of the Alexander-Murray bill to stabilize the health insurance markets. Do you have her vote even if those provisions are not guaranteed?
CORNYN: Well, Senator Collins has been very constructive throughout this process. And she has vastly improved this bill by protecting taxpayers in the states their state and local tax deduction, a $10,000 cap which benefits everybody. And she has been a champion of trying to stabilize the Affordable Care markets and to bring premiums down. And we will all join her in that effort to bring those premiums down and stabilize the market.
And we will not trigger a cut in Medicare. We will deal with that this week. And, again, I invite our Democratic friends to join us in protecting Medicare.
STEPHANOPOULOS: It looks like the Democrats are not going to be there on the tax bill. And back in 2010, when Republicans did not vote along with Obamacare, you warned the Democrats against passing the Obamacare on a party line vote in reconciliation. Let's take a look.
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CORNYN: Well, if they try to jam it through, as they have so far, with strictly along partisan lines, then I think November 2010 will be a very good month for us. I think we will gain a lot more seats.
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STEPHANOPOULOS: Are you concerned that history might repeat itself in 2018?
CORNYN: Well, we did pick up seven seats, as I recall, in 2010 following the jamming through of Obamacare. But this was done through the regular legislative process, mark-up in the Finance Committee and on the floor of the United States Senate. As I said, our Democratic colleagues had every chance to participate and simply refused.
And it's not too late for them to join us in passing this massive tax cut and tax reform bill which will help awaken the sleeping giant of the American economy. They can do that on Tuesday, and I hope some of them will.
STEPHANOPOULOS: It doesn't appear that any of them will. And they are banking on the fact that they think this is going to help them this 2018. Also looking to those results on Tuesday out of Alabama where Roy Moore, the Republican candidate, lost. Of course, you were not a fan of Roy Moore in that campaign. Do you think the GOP dodged a bullet with that loss?
CORNYN: Well, I think the explanation for Alabama was we had a flawed candidate who won the Republican primary and who couldn't win the general election. That's really not a new lesson. That's an old lesson remembered or demonstrated once again. So, what we need to do is -- my party needs to do is make sure we nominate electable candidates, good candidates who can win general elections.
I don't think the lesson of Alabama is any more complex than that, flawed candidate, couldn't win the general election.
STEPHANOPOULOS: Does that mean that Steve Bannon has to back off?
CORNYN: Mr. Bannon can do whatever he sees fit. It's a free country. But I don't think his track record, particularly now in losing Alabama, one of the reddest states in the country, particularly commends him for his expertise.
STEPHANOPOULOS: One of the other X-factors heading into 2018, of course, is the Russia investigation led by special counsel Robert Mueller. You have been active on Twitter over the weekend responding to the former attorney general, Eric Holder. In one of your tweets you said that Mueller needs to clean house of partisans. And then you were asked in another tweet, will you accept the findings in the Mueller probe as legitimate by Greg Sargent of The Washington Post.
You say that "makes sense to me to wait and see what they are first." That sounds like you're saying that you're going to believe that Mueller's conclusions are legitimate only if you like them.
CORNYN: Well, no, that's not true. I have a lot of admiration and respect for Director Mueller. But I would think he would want to eliminate challenges to the integrity of his investigation by eliminating agents who have taken positions either in text messages or through their political activity that undermine the integrity of...
STEPHANOPOULOS: Well, those people have been taken off the investigation.
CORNYN: … the results of the investigation. So I think he should want to do that because not only is an objective investigation and justice needs to be done, the appearance of justice needs to be done. And I think these conflicts of interest jeopardize the integrity of his investigation.
STEPHANOPOULOS: The FBI agent who was engaged in those text messages, both of them have been taking off the investigation. They were taken off apparently as soon as special counsel Mueller found out about them.
CORNYN: And I commend him for that. He should. And but there ought to be -- there are others who -- he needs to make sure he vets that team. There are plenty of FBI agents and prosecutors who have not been politically involved on behalf of Democrats or overtly critical of the president that can serve in this important investigation.
So I have confidence in Director Mueller. I would just think he would be concerned about the appearance of conflicts of interest that would undermine the integrity of the investigation.
STEPHANOPOULOS: It appears that some of the president's allies in the Congress are starting to lay the groundwork for him to fire Robert Mueller. What would that mean if the president fired the special counsel?
CORNYN: Well, I read that the president's own lawyer says that's not going to happen. I think that would be a mistake myself.
STEPHANOPOULOS: Senator Cornyn, thanks for your time this morning.
CORNYN: Thank you.
STEPHANOPOULOS: Let's go now to the man heading up the Democrat's campaign to take back the Senate next year, Senator Chris Van Hollen of Maryland.
Senator Van Hollen, let me pick up right where Senator Cornyn left off right there. He says he still has confidence in Robert Mueller, but that Mr. Mueller should take further steps to erase any perception of partisanship on his team. Do you think that's advisable?
SEN. CHRIS VAN HOLLEN, (D) MARYLAND: Well, I think Republicans should end their concerted effort to undermine the credibility of the Mueller investigation.
You have got somebody who by all accounts is an independent person, somebody who has got lots of integrity. And you see a concerted effort out of the White House to undermine the investigation. I really hope our Republican colleagues will not join in subverting that process and trying to end this investigation.
The question is, what are they afraid of? What is the White House afraid of? Let's let them finish the job and get the facts.
STEPHANOPOULOS: But why isn't it a problem, if several members of Mueller's team have given contributions solely to Democrat if they seem to have text messages or other information in their past, which suggests that there may be a political bias there?
VAN HOLLEN: Well, because Mueller has already taken actions with respect to those individuals. Beyond that, you will find that -- there are many contributions made by folks like FBI director to President Trump or Republicans. And the reality is that people in these jobs have integrity. They're under the leadership of Mueller, who is known for being a straight shooter. He'll do a job. He'll get to the facts. And I strongly believe that people will have confidence in his judgment.
STEPHANOPOULOS: Do you take the president's team at their word where they say that right now that firing Special Counsel Mueller not on the table?
VAN HOLLEN: Well, I certainly hope that is the case.
STEPHANOPOULOS: Let's move on to the tax bill right now. You heard Senator Cornyn right there inviting Democrats to come to the table for what he says will be a big boom to the middle class. Your response?
VAN HOLLEN: Look, George, this is a total betrayal of President Trump's economic populist message on the campaign trail. It's a huge giveaway to big corporations. Millions of middle class tax payers will see their taxes go up, even though Republicans promised that would not happen. Millionaires will get an average annual tax break of $35,000 a year. And the big winners are those corporations. And I think many people haven't focused on the fact that 35 percent of the shareholders of those corporations are actually foreign stock holders, who in the year 2019, are going to get a $31 billion tax break.
So millions of American taxpayers handing over money to foreign stock holders. It doesn't sound like America first to me. It doesn't sound like the middle class first.
STEPHANOPOULOS: You heard the senator's response to that provision I asked him about which had caught your eye earlier as well, a special carve-out for real estate LLCs, which could mean tens of millions of dollars to President Trump and other Republicans. Do you have any idea how that got in? Any chance it could be taken out?
VAN HOLLEN: I don't know how it got in. What we do know is they're behind closed doors. There are a whole army of lobbyists who were surround them, and the longer they're in there, the more you see these special interest provisions, George, which as you indicate would be a windfall to Donald Trump based on everything we know. Of course, he hasn't released his tax returns.
It remind mes of the fact that during the campaign, the one issue Donald Trump used as exhibit "a" for why this tax code was broken was the carried interest loophole for hedge fund managers. He said during the campaign that hedge fund managers are getting away with murder. You just heard Senator Cornyn, they have got a 1,000-page bill. Nowhere in it do they get rid of the one tax giveaway special break that Donald Trump focused on most during the campaign. And that is why this is a total betrayal of that economic populist message and people are catching on. That's why it's so unpopular
STEPHANOPOULOS: You also heard Senator Cornyn's response to the possibility that Medicare cuts would be triggered by this bill. He certainly invited Democrats to prevent those, expects Democrats to come on board. Will Democrats allow $25 billion in Medicare cuts to take effect? You won't vote for the waiver?
VAN HOLLEN: No, Democrats are not going the allow those cuts to go in place. And it is fact that when Republicans voted for this tax bill that increases the debt by $1.5 trillion, in doing so they automatically triggered this provision that would cut Medicare by $25 billion. Now that we hope that they will join us in turning it off.
But if you look forward next year, you have got a lot of Republicans who used to care about the debt. I used to be the senior Democrat on the the budget committee. Paul Ryan used to talk always about the dangers of the debt. We actually agreed on that issue. Now they have blown a big hole in the debt. And if you look air their budget, it's right there, their plan for dealing with that is to cut Medicare by $500 billion and Medicaid by over $1 trillion. It's right there in the Republican budget. And this is step two of their plan, because they just increased our debt by over $1 trillion.
STEPHANOPOULOS: But House Leader Pelosi in that letter I showed you suggested Democrats will not go along with the waiver. You're taking a different position?
VAN HOLLEN: When it comes to protecting Medicare, Democrats have always been front and center. Doug Jones talked about that in his Alabama race. There are many other provisions now that Republicans may try to get into these bills the Democrats will not support.
We need to make sure that we're investing in our kids' education and infrastructure as well as investing in our military strength. And so there are a whole lot of issues, George, with respect to the budget bill coming down to the wire here.
STEPHANOPOULOS: You're heading up the Democrat's effort to take back the Senate in 2018. Got that unexpected win in Alabama, not a seat you were expecting -- counting on for 2018.
But is that really a model for the year ahead, or is Roy Moore just such a flawed candidate that it doesn't tell you that much about what is going to happen in 2018?
VAN HOLLEN: No, I think it tells you quite a bit, if you take what happened in Alabama combined with what happened last month in Virginia and other races. You find a couple of things.
One, a hugely energized grassroots Democratic base plus, and very importantly, independent voters voting for the Democratic candidate and a lot of moderate Republicans crossing over in Alabama and other races. And I will tell you this tax giveaway to big corporations that's going to be paid for by millions of Middle Class taxpayers is only going to further inflame those moderate Republicans and b ring more people over to Democratic candidates.
You have got this civil war in these Republican primaries. They flock forward Donald Trump in the primaries. That's not going to be a winning message for them in the general.
STEPHANOPOULOS: Are you worried that Al Franken's resignation has put that Minnesota seat at risk?
VAN HOLLEN: No, we have a terrific candidate, as you konw, the lieutenant governor is now going to be appointed and going to run for that seat. She's going to be a terrific member of the Senate and a terrific candidate.
STEPHANOPOULOS: Chris Van Hollen, thanks for your time this morning.
VAN HOLLEN: Thank you, George.
STEPHANOPOULOS: When we come back, two of America's most prominent economists debate what the tax plan will mean for you and our economy.
And later, all the week's politics on our roundtable.
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TRUMP: Pensions and retirement accounts are soaring as the stock market hits 85 new record highs since the election. How are we doing? Are we doing okay? Not bad, right?
VLADIMIR PUTIN, PRESIDENT OF RUSSIA (through translator): Look at the markets, how they have grown. This tests the the trusts investors show in the American economy. They have trust in what President Trump is doing in this particular field.
(END VIDEO CLIP)
STEPHANOPOULOS: An endorsement of President Trump's economy from President Vladimir Putin of Russia right there.
We're going to talk about the economy right now and the impact the tax bill have on it with two of America's most prominent economists, Paul Krugman Nobel Prize-winning economist, now a columnist for The New York Times, distinguished professor at City University of New York; and Glenn Hubbard, dean of the Columbia Business School, chair of the Council of Economic Adviser under George W. Bush.
We just saw President Trump right there. He also put a tweet yesterday saying that tax cuts will increase investment in the American economy and in U.S. workers, leading to higher growth, higher wages and more jobs.
Paul Krugman, your response.
PAUL KRUGMAN, NOBEL PRIZE-WINNING ECONOMIST: Lots of people -- basically all serious studies say, oh, not so much. There's going to maybe a little boost, but not so much. We had the University of Chicago surveyed 42 economists from all political persuasions, only one thought it was going to have a significant effect on economic growth. And I have been looking what do the markets think, which is kind of interesting. So, we have a chart here, if you can show it.
So, never mind the stock market, right. If you're going to cut taxes on corporations, you would expect stocks to go up. Better judge would be look at the dollar. Because if this bill does what they say it's going to do, you know scads of money will pour in. Corporations will bring money back home, invest it here, all of that should lead to a surge in the dollar.
In fact, the dollar has done nothing. The dollar rose when Trump was elected, because they thought, that people thought the infrastructure plan was going to happen. And then it went back down again. It's actually lower than it was on election day.
And what the markets are saying is a big nothing burger. The markets are saying they don't really expect any significant economic boost from this, certainly not enough to actually move the important asset values, so it doesn't look like much of anything.
STEPHANOPOULOS: How much of a difference can a tax cut make when the economy seems to be burning on all cylinders right now?
GLENN HUBBARD, COLUMBIA BUSINESS SCHOOL: Well, I think it will do two big things, George. One, in the short run, it will provide some boost to demand. I think the fed would probably look forward to that. In the longer run, the issues on the supply side. The tax bill could probably raise GDP by about 3 percent in the long run. That's not the beginning of a new era, but it is certainly very, very positive for the economy.
Economists have long campaigned on tax reform as the biggest single policy weapon.
STEPHANOPOULOS: Is this tax reform?
HUBBARD: I think it is, because you're cutting business tax rates, which is the core of any tax reform. You're broadening the base. It's a $5.5 trillion tax cut, $4 trillion in base...
KRUGMAN: It's not really. I mean, it's the base broadener is -- it's raising taxes on individuals. If we look at what this does in the long run, it raises taxes on individuals through -- partly through back channel changes.
HAYES: After 2025?
KRUGMAN: That's right. Some sweeteners, some loss leaders that go away. And then what you have is, because of a variety of measures, individuals are going the lose health care expenditures are supposed to be cut. That's a big part of it, too. And then there is corporate tax cut, that 3 percent number, that's a -- that's a complete outlier. Very few people who have seriously studied this stuff think that's right. And even that doesn't take account, I was interested to see Van Hollen bring this up, how much of the growth in GDP will actually go to foreigners, both because of this -- this is a big tax cut for foreign ownership of corporations in the United States, and because a lot of that money is supposed to come from overseas. And they're not going to give us that money for free, they're going tobe taking retained earnings abroad.
So, this is actually -- if we work out what this is worth to the U.S. economy, you know, even liberals think, I don't know. But it's not worth very much. And is it worth $1.5 trillion of debt?
HUBBARD: Actually, it is. And I think 3 percent number is well within the middle of what economists have been saying for years, whether it was the 2005 Bush commission, economic studies, a lot of economists looking at this.
But the real question is, do we want a pro-growth tax bill? Certainly with a recent piece by Martin Feldstein (ph) that the deficit effect of this, which is clearly there, is more than offset by the impact in growth.
STEPHANOPOULOS: There is also going to be some impact on health care. One of the things included in this was the repeal of the Obamacare mandate. We also talked to Senator Van Hollen and Senator Cornyn about these other health care provisions, which looks like they are not going to necessarily be passed coming out of this tax bill.
KRUGMAN: Yeah, well, I mean, it's an interesting thing. The Congressional Budget Office says that 13 million people will lose health insurance because of the elimination of the individual mandate.
Now, Republicans want you to believe that is not going to happen, but if it doesn't happen, their numbers don't add up, because their bill counts on the savings that come from 5 million people losing Medicaid and another 5 million dropping off the Obamacare-subsidized exchanges. So, this really is -- tax cuts for corporations paid for taking away health care from people, by raising taxes on individuals. Is this something that ought to be a priority? Is this something that makes sense?
And we haven't even gotten into the pass through business thing, which is the worst measure in any tax bill in U.S. history.
HUBBARD: On the health care piece, I think we need a more serious discussion of health care reform. I don't think it's about the individual mandate as much as it is what do we do to help low-income people get health insurance and how do we finance that? That's a bigger discussion that is going to have to happen. I certainly agree that that's very, very important.
STEPHANOPUOLOS: But let's talk about the pass through here right now. We talked a little bit about that with Senator Cornyn and Senator Van Hollen. You say this is tax reform, but this seems to be similar to something that happened in the state of Kansas, giving an incentive to people to come off of salaried work and create businesses so they get a tax cut.
KRUGMAN: It's a full employment for accountants and lawyers.
HUBBARD: I don't think so.
First of all, I don't think even on the corporate you can call this a tax cut for corporations. Corporations are shareholders, they're workers, they're suppliers, they're all people. So people get these cuts.
STEPHANOPOULOS: Most of it...
HUBBARD: Right, share holders are people, too. And when you get to the pass throughts, more than half of Americans who work in business work in non-corporate business. So, you do want some leveling of the playing field.
Now, it is complicated. It is very hard to...
STEPHANOPOULOS: So, that's not tax reform or simplification is it?
HUBBARD: Well, it's not simplification. I think it is tax reform. It's going to be complicated. The rules are designed to police behavior. I expect Paul and I are policed out of it.
We are textbook authors.
KRUGMAN: By the way, this is unleveling the playing field. Right now, anybody who wants to form a -- turn themselves into a C corporation and pay corporate taxes can do that. What this is doing it's tremendously privileging people who own businesses of a certain kind, and it's -- you know, who are really basically just workers, but happen to have the right kind of business that earns enough money. It's a crazy thing. It's creating a nightmare of loopholes, possible exploitable things, possible ways in which certain people -- you know, there's even a specific provision that says that architects and engineers get a special tax break that other service providers don't get. So this is insane tax policy.
HUBBARD: Money is the architects of the economy.
STEPHANOPOULOS: I guess bottom line, is this sustainable. Will we be back a year or two from now with a major fix of this bill?
HUBBARD: Look, it is certainly sustainable as good tax policy. We needed a more competitive tax system on the corporate side.
But we will be back with another tax bill in a few years. There's much more the American tax code. And frankly, the budget needs to do. This is not a last discussion on tax...
KRUGMAN: I think this will be a wave of outrageous tax avoidance. And there will be mass demands that people do something, because this is nightmare bill.
STEPHANOPOULOS: We will find out. Thank you both.
The Roundtable is standing by. We'll be right back.
STEPHANOPOULOS: We will be right back with the "Roundtable," and you can get the latest breaking news alerts on politics all week long by downloading the ABC news app. We'll be right back.
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OMAROSA ONEE MANIGAULT-NEWMAN, FORMER REALITY SHOW CONTESTANT, FORMER WHITE HOUSE AIDE: As the only African-American woman in this White House, as a senior staff and assistant to the president, I have seen things that have made me uncomfortable, that have upset me, that has affected me deeply and emotionally, that has affected my community and my people.
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STEPHANOPOULOS: Omarosa out at the White House. Will she be the first at the end of the year? Many more to come? We will find out. And we're going to be looking for her book, I guess, as well.
But we're going to talk now on the "Roundtable." Let me bring in our chief political analyst Matthew Dowd, our senior congressional correspondent Mary Bruce, also Julie Pace, the Washington bureau chief for the Associated Press, Sara Fagen served as political affairs director in the Bush White House, now a CNBC contributor, and Patrick Gaspard, political affairs director in the Obama White House, incoming president of the Open Society Foundation.
Matt, let me begin with a (INAUDIBLE). I'm going to put up a chart to begin with. It shows polling averages for major legislation over the last generation. I want to show you, you look back, and you keep scrolling and scrolling and scrolling down, you finally get to that GOP tax bill, 32 percent support right now, bottomed out only by the GOP health care bill. That would suggest Democratic hopes even if this bill passes.
But I'm also struck this morning, President Trump's approval rating ticking up in the NBC/Wall Street Journal poll up to 41 percent. Republicans coming home excited by the idea of tax cuts. So a year from now, plus or minus for the GOP?
MATTHEW DOWD, ABC CHIEF POLITICAL ANALYST: Minus, big minus. And you just look at the polling of this. I think what has happened is the American public has obviously figured out that this tax bill is not tax simplification. It's not fundamentally tax reform. And it's not fundamentally helping the middle class or the working class of the country.
They figured that out, which is why they're overwhelmingly negative about this. When you look at this as a dynamic, politically, just even taking away the substantive problem of it, politically you have an -- a very unpopular president, the president that's at lowest that any president has been at this point in his term, pushing a very unpopular bill through a very unpopular Congress.
That is not a recipe for success in a midterm.
SARA FAGEN, REPUBLICAN STRATEGIST: I don't agree with that at all, that analysis. I think some of the numbers that you put up about the GOP tax bill, there is a problem in the party which is that the party is not popular. When you test the individual provisions that are about to pass, they are quite popular. It is simplification. It will grow the economy.
You're going to have significant infusion of capital, which is going to lead to more workers and higher wages. And that will help. The question is, is it enough? And will it happen quickly enough? And, where Matt and I do agree is that I think even with this tax bill, Republicans are in for a very tough 2018.
STEPHANOPOULOS: Well, and that is the question. It's a tough environment, Patrick Gaspard, already, and even if this bill goes through, the economic impact won't necessarily be felt right away.
PATRICK GASPARD, INCOMING PRESIDENT, OPEN SOCIETY INSTITUTE: That's right. And it's not altogether clear what the problem is that Republicans are trying to solve for with this tax bill. At least Ronald Reagan could point to a steep recession when he passed his tax cuts and George Bush could point a budget surplus that indicated that there would not be a strain on deficits.
Right now, if you are a Republican who voted for Donald Trump and you see this bizarre LLC provision that's put into this bill, and you recognize that this is eventually going to hurt schools, hurt students, makes it more difficult to invest in infrastructure, it's not altogether clear how this benefits you and why you should come home and vote Republicans.
STEPHANOPOULOS: Mary, it became pretty clear in these final days and hours that Republicans just decided they had to fall in line and get this passed. Not only did Senator Susan Collins, who had some questions about early on, come on board, Senator Corker, who said there was no way he was going to vote for a bill that increased the deficit, now on board.
MARY BRUCE, ABC SENIOR CONGRESSIONAL CORRESPONDENT: Never, ever, ever would -- Bob Corker said, that would he ever sign on to a bill that would do what this bill does, which is projected to add $1.5 trillion to the deficit. Just two weeks ago Bob Corker told me he's a "deficit dinosaur," those were his words, that he is one of those holdouts in the party.
But he has come around. And he says it's simply because when he looks at the big picture, he realizes that Americans are better off with this bill than without it. And to get at this, the broader conversation of who ultimately wins here, look, Republicans that I've talked to are making the argument of trust us. They insist that Americans will see the results here, that it will pay off for them ultimately.
But it is a big gamble given how unpopular this bill is, and how it's not clear if it's actually going to do what it claims it's going to do for the middle class.
STEPHANOPOULOS: Comes just in time for President Trump.
JULIE PACE, WASHINGTON BUREAU CHIEF, ASSOCIATED PRESS: It does. He's facing the prospect of ending this year without a major piece of legislation. You're in your first year as president is when you're supposed to have the most political capital. He's got full control of congress for the Republican Party, so politically he needs a victory to end this year.
But, you know, Mary is right, Republicans have really gone out on a limb in terms of what they have promised people they will see. Trump talks about this bill in grand historic terms. He talks about middle class families seeing a ton of money ending back up in their pockets. We will see -- start seeing a little bit next year of the impact of this, but this is going to be a long-term trend that I think could potentially be problematic for Republicans based on the way they've sold it.
STEPHANOPOULOS: And Matt, I have to say, it still amazes me. We're now -- this is on the verge of passing. It's likely to pass Tuesday, Wednesday maybe at the latest. The president will sign it into law by all accounts based on everything we know about the president's past tax you returns this is a huge -- it's almost as if it was written to give the president a benefit. We still haven't seen the tax returns, yet that seems to have had no political impact at all.
DOWD: Besides the substantive I think serious problems with this, that it doesn't simplify and it's -- it's going to primarily benefit the wealthy and all of that. I think there actually ought to be a provision, talk about provision ought to be in existence in this, is that if you either have to voluntarily say how you're going benefit from a bill like this if you're voting on it or going to sign it, or ought to be a provision in this bill that says, if you're going to benefit, that you do not get the benefit from something you actually voted on.
To me, when the Republicans do this, they have abdicated any responsibility on fiscal conservativism. They can't run on that anymore. After they pass a bill that raises the debt by $1.5 trillion and doesn't help the middle class, they can no longer run as the fiscal conservatives.
FAGEN: And all this conversation, though, about the deficit, their -- it fails to give any credit for growth in the economy and higher tax revenues off a broader base and people making more money. and so I think that's just...
DOWD: There is no evidence that that will happen in history. None.
FAGEN: That's not true.
DOWD: Yeah, it is.
FAGEN: I mean, there is evidence of it. And to you point...
DOWD: There's no growth after the Reagan 1986 tax bill, there was no growth.
FAGEN: There were more people went to work and more people had higher wages. And also on the point of simplification, it will simplify it. When you double the standard deduction to almost $24,000 for married couples, that means 95 percent of the population is not going to itemize. That is simplification.
GASPARD: There are some temporary gains here for workers, temporary. Long-term permanent gains for corporations. But I don't want to lose the point of George's question about how this directly benefits Donald Trump. I have to -- the blessing to serve overseas representing our country, this is the kind of thing that we criticize autocrats for in other countries.
No transparency here. The president is pushing a bill that he personally benefits from. We don't see his taxes, and we have this provision that seems to be a carve-out for him, his son-in-law, and others who happen to -- be sitting on top of LLCs.
FAGEN: It is not...
GASPARD: That is not an insignificant thing here in the politics going to...
FAGEN: It is not a perfect bill, and there are provisions in it that probably shouldn't be in there. However, when everybody gets a tax cut, that includes the president, that includes members of congress.
STEPHANOPOULOS: I suppose. But not everybody has real estate LLCs. And that's how he gets the majority of his income.
DOWD: And not everybody has an estate worth over $10 million.
FAGEN: These are fair points. But when you think about the way our economy is structured, the average person understands that people who make more money pay more taxes, and when there's a tax cut, they themselves tend to get more relief.
Now, that is not going to be the case in states like California and New York. And there are many people frustrated by that.
GASPARD: But the average person understands that the wealthier you are in America, the lower percentage your tax payments are.
FAGEN: It's not a perfect bill, but it will grow the economy and help everyone.
GASPARD: Perfect for Donanld Trump.
PACE: One of the the big risks for the president, when you look at that bill in a political context, which we have to, is this president made real promises to real Americans who have been struggling economically for years. And I was always struck when I would go out on the campaign trail last year by how much people believed in what he was saying. And so I don't think you can discount the idea that if he, and other wealthy Americans, big corporations, are seen as being the big winners in this and average Americans are getting $1,500 or $2,000 in tax breaks, that is going to have a political impact. People in the country really have looked to Donald Trump to solve a lot of their problems. And I'm not sure that's going to be the takeaway from this bill.
STEPHANOPOULOS: Mary, the other reason it had to happen now is because of course what happened in Alabama on Tuesday. Republicans lose another seat. Doug Moore -- Doug Jones is going to be coming in probably January 2 or 3. 51-49. It changes the entire calculus next year.
BRUCE: The margin for Senate Republicans is now just one vote. It means that they had no choice but to do this now. It's why everyone now is scrambling to digest a 1,000 page bill that was just released on Friday and they plan to vote on on Tuesday.
But what's interesting about the aftermath of this election on Tuesday is that I can't remember the last time you had Republicans, even though it puts them at such a disadvantage, celebrating a loss like that.
STEPHANOPOULOS: John Cornyn didn't look all that upset about it.
BRUCE: No, they are not because they knew that Roy Moore was going to be such a headache for them both on the Hill and on the campaign trail going forward that they would rather deal with the -- a Democrat in that seat than deal with that.
STEPHANOPOULOS: What they can't be excited about is the turnout numbers among African-Americans, young people, women in Alabama.
DOWD: I think what's happening -- if you look at what happened in Alabama from the exit polling and from the election results, what you see is the number one indicator of how people voted, and why they turned out wasn't anything to do with Roy Moore and wasn't nothing to do with the sex allegations, it had everything to do with Donald Trump. That was the number one indicator of somebody would vote and whether they were enthusiastic. And so when you move into a midterm election year, when you -- after watching what happened in Alabama and taking also what happened in New Jersey and Virginia. What's happened, what's going to happen in this is the wave now that is coming, which I thought was about 7 or 8 feet it now at about 11 or 12 feet wave. And when you have an 11 or 12 feet wave in a mid-term election, you not only have the Democrats win the House of Representatives, and you not only have them pick up maybe a seat or two, you now open the territory for places that did not think they could win.
STEPHANOPOULOS: It's tough for the House, because of the way that the districts are so protected by gerrymander.
But, Sarah, the 11-point wave that Matt is talking about, that's the latest NBC/Wall Street Journal poll showing an 11 point advantage for Democrats over Republicans on the generic ballot next year.
FAGEN: That will be catastrophic for House majorities and probably the Senate. If it's really, truly 11 points at the end of the day.
You know, since 1942, presidents who are under 50 percent in their job approval rating typically lose about 32 seats in the House. That's the majority.
STEPHANOPOULOS: There's no way President Trump is going to be above 50 a year from now, is there?
FAGEN: Oh, he's not going to be above 50. There question is if he's in the low 40s, you know, has the paradigm shifted, and is that enough? But I don't think it is.
GASPARD: Just quickly, those African-American numbers were really impressive. In 2016, African-American turnout was down 4.3 percent across the country, over 5 percent in key battleground states. But African-American women have proven to be the bullwark of democracy in places like Alabama and in Virginia, and that's only going to increase going forward, not because of people like Roy Moore, but because Americans saw what happened in Charlottesville and African-American women in particular have responded.
STEPHANOPOULOS: They're also watching this #metoo movement. I want to bring this to you, Mary Bruce, what have see seen seven members of congress and the Senate resign or say they're not running again just over the last two weeks.
And this wave is likely still at the beginning.
BRUCE: And lawmakers that I talked with, sources that I have talked with, they know that there is more of this come.
Look, you had three members of congress quit in the matter of just one week over these allegations. And they're braced for that. I think they realize that what we're seeing now may just be the tip of the iceberg. You have congress working very quickly to put in place some kind of a legislative solution here at least going forward to increase transparency and accountability to the reporting process here, which is very archaic. But also you have members of congress, just like journalists, trying to find more information here, because given the way that the system is set up, they're trying to figure out who received settlements. How much money was paid out on behalf of whom. It is not an easy thing to do, and even members of congress are frustrated by it.
STEPHANOPOULOS: Secret settlements paid for by taxpayers. Talk about outrageous right there.
This could lead to a kind of purge. And regardless of whether Democrats are controlling next year or Republicans, you're going to see the kind of turnover we haven't seen in generations.
PACE: Right, this is affecting both sides of the aisle. This is not a Republican problrm or a Democratic problem. I think what has been so stunning is the lack of transparency involving people who are elected representatives using taxpayer dollars to make settlements. It has put the White House in an incredibly uncomfortable position in part because of the allegations that were made against President Trump in the closing weeks of the campaign. They've taken a strategy of essentially doubling down on the idea that they don't believe these women, that they came forward and were not telling the truth.
I think you're going to see those women be more prominent particularly heading into an election yaer.
GASPARD: And we're seeing a greater number of women who are running for House and Senate seats next year then we've ever seen before. And we're also seeing significant belief from Republicans in the suburbs, right. So, this is the season for the Star Wars release, so the suburbs are striking back in Virginia and Alabama...
DOWD: This may be a bipartisan -- it is a bipartisan virus. It's affected Washington, D.C. But keep in mind, the Republicans may not have a Roy Moore problem in this regard, but they have a Donald Trump problem in this regard.
BRUCE: And it does put Republican leaders in a very tricky position for exactly that reason. While they want to make clear that they are taking seriously any allegations against members of congress, it forces them to have to answer the question about comparisons to the president. And when that question is asked of Republican leaders, it's -- the answer is sort of well, that's a different story. We only have jurisdiction over congress.
FAGEN: I thought the president's support for Roy Moore was really calculated. You know, Roy Moore, you know, he denied all his allegations. Donald Trump denies all his allegations. By definition, Donald Trump had to support Roy Moore, because if you deny your allegations, then they must not be true.
STEPHANOPOULOS: But is denial enough? Does that mean they go away?
FAGEN: They don't go away. And they won't go away. But they may not cause him any more of a headache than they have in terms of PR until and in which the House of Representatives turns, in which case, not only is he going to have investigations more intense on Russia, he's going to have very aggressive investigations on...
STEPHANOPOULOS: And we're already hearing -- Democrats talked about impeachment, Democrats talked about resignation. Patrick Gaspard, remember back in 1998, the Republicans pushed the impeachment card far, as far as you can go. They impeached President Clinton in a year where the -- President Clinton and the Democrats actually gained seats.
Could the Democrats go too far here?
GASPARD: It's always -- it's politics. It's Washington, D.C. So there's an instinct towards overreaching. But it -- but let's just talk about where we really are here. It's hard to go too far against somebody who releases a tweet against a standing U.S. senator and basically tries to, pardon my language, slut-shame Senator Kirsten Gillibrand from New York State.
So Donald Trump has stretched all the boundaries of what might be too far in the politics today.
DOWD: The base of the Democratic Party is not going to let them not impeach Donald Trump, 81 percent or 82 percent of Democratic voters...
STEPHANOPOULOS: If they take control of the House.
DOWD: The last poll I saw said that Donald Trump should be impeached. There is no way that the Democrats are not going to be able to start -- have to start holding impeachment hearings with their base the way they feel.
STEPHANOPOULOS: Seventy percent of the public believes the president should be investigated.
PACE: And I think that's because there is a lot of smoke swirling around these investigations. There hasn't been a smoking gun at this point. But when you certainly look at the...
DOWD: There are fingerprints.
PACE: There are fingerprints. When you look at the information that came out during the Flynn plea deal, that there was contact happening with Russia, and that it with was more than just Mike Flynn, who knew about what was going to be in those calls with the ambassador.
And then every piece of reporting that we have done and that others have done points to a lot of focus on what happened with the Comey firing. I think obstruction is where a lot of this investigation is going to go to. So, yes, it's not surprising to me that 70 percent of the public would at least feel like there is a worthwhile investigation to be done.
STEPHANOPOULOS: That is all we have time for today. Thank you all very much. We'll be right back.
STEPHANOPOULOS: That is coming up this week. That is all for us today. Thanks for sharing part of your Sunday with us. Check out "World News Tonight." And I'll see you tomorrow on GMA.