2017 WASHINGTON, DC TRIP REVIEW
By Dan Cunningham, Forward Janesville Vice President
Forward Janesville’s fourth annual journey to Washington, DC took place on March 8-10, 2017. A great cross section of 45 business, civic and community leaders participated in the trip.
The trip’s official events began with dinner with House Speaker Paul Ryan, who always rolls out the red carpet for our group. Given the fact that Paul is one of busiest people on the planet, he spent an extraordinary amount of time with our group. After dinner, he gave what one trip participant quipped was a “mini-State of the Union Address.”
The next day, we made our way up to Capitol Hill for a day’s worth of meetings. We had several issues to discuss, as outlined on our 2017 Federal Issues Agenda. (Click here to read the agenda.)
We met with several interesting people on Capitol Hill, including David Goodfriend, a lawyer, pundit and Beloit College graduate who started his own government relations firm. David told us his personal story, gave us the lay of the land, and ended with a fascinating story of how he was able to create a coalition to defeat the NFL’s television blackout rule. David was riveting; we will definitely ask him to join again us next year.
The day continued with a frequent visitor of ours, Jack Howard from the U.S. Chamber of Commerce. Jack gave us a broad overview of what’s going on inside the beltway, and provided some interesting historical context about where the Trump Administration stands compared to other administrations. While the jury is still out on President Trump’s young administration, he has a steep hill to climb in terms of public opinion.
Next up, we met with the members of our area legislative delegation: Speaker Ryan, Senators Baldwin and Johnson, and Congressman Mark Pocan. Here is some of what we learned:
• Governing is tough. Speaker Ryan noted that over half of the Republicans in Congress have never served as the majority party before. Going from being the “party of opposition to the party of proposition,” in his words, has been a challenge. The President clearly has a strong desire for quick legislative accomplishments, but Congress is Constitutionally designed to move at the speed of an 89 year old grandmother. (Heck, in many ways, Congress is the nation’s 89 year old grandmother…deliberate, occasionally grumpy, and tight with money.) Checking big items off of the Congressional to-do list has proven difficult, and this trend should continue.
• No one is really ready to talk about what the $1 trillion Trump infrastructure package might looks like…and the size and scope of the package will depend on how broadly the administration wants to define infrastructure. A broadly written measure containing non-transportation items (think rural broadband access, etc.) could become a bloated mess. When the time comes, we will encourage the administration to develop a package that focuses on our nation’s transportation network.
• The issue of how to charge sales tax on internet purchases—a longstanding problem for many small businesses—may be nearing a solution. The issue is that online-only retailers have enjoyed a price advantage (5.5 percent in Rock County) over brick-and-mortar businesses for decades. Congressional failure to act on this issue has led to a patchwork of state regulations, and we have pushed for a national standard for years. Senator Baldwin and Representative Pocan support a national solution, while Senator Johnson seems to be softening his opposition to a federal standard. For his part, Speaker Ryan has encouraged Republican Members of Congress to work amongst themselves to find a compromise on this issue.
• The issue we discussed the most during the trip was tax reform. This deserves a broader discussion:
This story began last year, when Speaker Ryan and House Ways and Means Chairman Kevin Brady introduced a tax reform plan called “A Better Way for Tax Reform.” This blueprint contained the ideas that have become the framework for the GOP tax plan, including lower tax rates on wage, investment, and business income; the elimination of gift and estate taxes; an overall simplification of the tax code; and a reduction in the corporate income tax rate to 20 percent. The Republican plan is expected to reduce federal tax revenue by as much as $3 trillion over the next decade, but many believe this will be partially offset by economic growth.
The billion (trillion?) dollar question is how to pay for all of this tax relief. Speaker Ryan’s answer is through border adjusted taxes (BAT). Under a BAT system, all imported goods would be subject to a tax, while exported goods would be exempt from taxation. BAT opponents argue that the plan would create winners and losers within the American business landscape; industries that rely heavily on exports would benefit, while corporate retailers who rely on imports (Wal-Mart, etc.) would pay more, and might decide to pass the costs of the tax onto consumers.
Supporters of the BAT concept argue that it will increase the foreign demand for U.S. exports, which will lead to a stronger dollar and offset the tax’s impact. This is a complicated concept, so I defer to Forward Janesville President John Beckord, our resident economist. John says:
“The BAT imposes a 20% duty on imports and grants rich tax benefits for exports. If the BAT works as advertised, the value of the dollar will spike by exactly the amount of the tax, or 20 percent. That's because importers will collect fewer after-BAT dollars to purchase the Pesos and Yuan they send back to Mexico and China. The lower demand for foreign currencies will depress their value versus the greenback. The dollar's rise would then lower the cost of the components and labor that go into Mexican or Chinese-made goods, precisely offsetting the burden of the BAT duties.” Speaker Ryan noted that the currency adjustment noted above has occurred in the 160-plus countries that already levy border adjusted taxes.
While Speaker Ryan is strongly committed to the BAT concept, others are not sold. Senator Ron Johnson has floated a proposal to cut taxes on corporations while raising taxes on their owners. Raising taxes on a corporation might cause it to shift operations or income abroad, but raising taxes on shareholders (think Warren Buffett or Tim Cook) isn’t likely to cause them to flee the country. Other alternative plans will emerge as this debate evolves; Republicans are hoping to enact a plan before the August Congressional recess.
After hearing so much about the legislative side of things, we wrapped up our day on the Hill with a perspective from inside the White House. Our final speaker was Jeremy Katz, who is the Deputy Director of the National Economic Council and a senior economic advisor to the President. Mr. Katz has Wisconsin roots, as he worked for Hendricks Holding Company for several years between White House stints for George W. Bush and President Trump.
Mr. Katz gave a thoughtful, pragmatic and, at times, stirring account of why he has chosen to put his life on hold to serve in this administration. His story was funny and surprisingly candid; in fact, halfway through a sentence, he stopped and nervously exclaimed, “All of his is off the record, right? I forgot to ask.”
Ever since Donald Trump was elected President, I’ve been dying to someone—anyone—who knows the President: “what is he really like?” Full disclosure: all personal issues aside, I’m pulling for Donald Trump, and I think all of us should be. (See my post-election article for more on this topic). Moments like the President’s first address to Congress in late February gave me a lot of hope for this administration. So I asked Mr. Katz what the President is really like, and his answer—funny, smart, tough, determined—gave me even more hope. (Next year, I promise I’ll ask about all the Tweets.)
“Hope” is probably a good byline for this story. Despite splashy, scary headlines about the Trump Administration, I am pleased to report that Washington is what it has always been. It is still the same city that I came to as an idealistic (and scared) 22 year-old with stars in my eyes. It is still the same town where Democratic and Republican Hill staffers often meet, acknowledge their differences, and end up getting married. It is still the city where you can go into pretty much any bar and overhear bureaucrats haggling over the latest set of EPA rules. It is still the place where America’s best and brightest minds (like David Goodfriend, Paul Ryan, Jeremy Katz and thousands of others) come together to solve the world’s problems. It is still, to me, the greatest city in the world.
Thanks to those who shared this journey with us. We have already started thinking about our 2018 Washington trip, which will take place in early spring. If you’ve never been on this trip, it is an experience worth considering. Stay tuned for details later this year.
Click here to see our trip photos, courtesy of Dennis McDougall!