Tax Reform

HUGH HEWITT: Morning glory, America. It's Hugh Hewitt. It is the last radio hour of the week. That means it is time for the Hillsdale Dialogue. Each week at this time I'm joined by Dr. Larry Arnn, President of Hillsdale College, or one of his colleagues. Today, Dr. Matthew Spalding who leads the Kirby Center in the shadow of the Capitol, Hillsdale's flagship in Washington, DC. All things Hillsdale are available at hillsdale.edu. Every one of my Hillsdale Dialogues going back to 2013 are available at hughforhillsdale.com. Matt Spalding, welcome back. Good to talk to you.

DR. MATTHEW SPALDING: Good to talk to you, Hugh. How are you?

HUGH HEWITT: I am terrific. I want to get to the tax reform issue. But first, a lot of time spent this week on Bob Corker and Jeff Flake and their very public fight with Donald Trump. How do you assess this?

DR. MATTHEW SPALDING: Well, I think you ought to put it in the broader context of this particular individual and what he's done to politics. I mean, he has blown open all the normal alliances, and forums, and I what I like to call open field politics.

And I think we're seeing reactions in a number of ways. I mean, it's no coincidence Corker is resigning or retiring at the end of the term, and Flake's announced his retirement. I think they're upset about his politics and what that means, and they're looking for a way out. But I see this as politics.

I don't necessarily see it anything deeper than that. I don't think it actually adds to a more important narrative about the president or about Congress, for that matter. This is the kind of destructive things that happen. I think the natural friction, the separation of powers, and we're seeing it happen. Unfortunate that it's gotten more personal than I would like.

But you know, if you look back historically, this is how it plays out. I mean, there are strong disagreements oftentimes. I've just been reading about Henry Clay, and Andrew Jackson, and Webster. And they all disliked each other, and they all attacked each other vehemently, but they also had very serious policy disagreements.

HUGH HEWITT: You know, I have been reading the Destiny of the Republic by Candace Millard. It's about James Garfield's election in 1880 and the deep animosity between what were called the stalwarts-- they were the grant people in favor of patronage-- and the so-called half breeds who wanted civil service reform. And basically, they cut Rutherford B. Hayes to pieces.

And then Conkling of New York went at it with Blaine of Maine, and they ended up with Garfield. It makes this look like beanbag.

DR. MATTHEW SPALDING: No, that's right. If you go back and look at 19th century politics, this really is nothing. This is why I've never been quite surprised by all the goings on. And I don't actually see this presidency and the back and forth as something that unusual.

I think the problem is that since the, gosh, since the 1970s, especially the post-Reagan era, we got very doctrinal and stilted in how we understood things worked, and we assumed that party cooperation meant that no one ever raised disagreements to a more serious level. Especially the one that got involved with the personalities.

But that's really the way politics has traditionally worked. I think the challenge now, especially going to this tax reform, a big legislative operation, is how does that play itself out? How does it work out with his own party? But also at a time when-- my sense is they've got to be able to pick up some Democrats here and there. How do you break through that?

What Trump wants to do is revive politics in the old way. Let's make some deals. Let's cut across party lines. Let's do some horse trading. Republicans especially aren't really used to that kind of thing, because it really requires you to put things on the table and argue it out.

HUGH HEWITT: Do you believe that there is a chance that either Senator Corker or Senator Flake would put their personal animus ahead of their ideological designs and vote against tax reform as a get back at Donald Trump moment?

DR. MATTHEW SPALDING: Well, you know, that's one of the big questions, right? I think that if you start looking at-- I work backwards. If you look at the numbers from the health care reform and who didn't vote for that-- if you start thinking about Collins and McCain-- McCain should be OK on tax reform. Murkowski, they put something in there in the Arctic wildlife drilling, probably could pull her in.

The president, I have to give him credit. He has been working with Rand Paul, pulling him in. But now you have the outliers, right? Now you've added to this equation Flake and Corker. Corker, I think, is probably the more likely one not to go along.

This argument goes back to the fact that Corker never endorsed Trump in the first place. Corker's also made it clear that he doesn't want to vote for anything that is perceived to increase the deficit, and the math numbers here are going to be hard for him. So I could see him going up. Flake, that would be pure animosity.

HUGH HEWITT: Yup, that's right. I agree. Because Bob Corker has been a deficit hawk for a long time.

DR. MATTHEW SPALDING: Right.

HUGH HEWITT: And Jeff Flake has been a deficit hawk as well. So they could clothe this in terms of ideological opposition. But if this doesn't pass, it will be profoundly destructive of the House Majority. At some point you have to say, what are my first principles? Do I want a conservative Supreme Court? Do I want an originalist court? Do I want the rule of law? In which case, you just have to swallow personal dislike and vote for the party.

DR. MATTHEW SPALDING: Well, so the problem is they've put themselves into another bind. We should talk at some point about the parallel with '86 tax reform of Ronald Reagan, which worked differently, but it's the model. But here they've put themselves into a bind. They didn't get health care, no major legislation. They're going into an election year, and this is on the table.

And you've got a situation where the House Majority right now is actually the number of the average lost for first term, midterm elections to a president, right? Which means on paper, they should be very close to losing the House. There's some mitigating factors, especially given the redistricting the lines and how that works. But having said that, it will be close. If they don't get tax reform, they're going to be in a really, really bad bind.

HUGH HEWITT: I agree with that. Now, let's go back and take a look at the tax reform and set it up by what you referenced, the 1986 law. It's been 31 years since a major overhaul of the IRS code. I mean, 31 years.

DR. MATTHEW SPALDING: And that in '86, that was the first one for a long time prior to that. It was an amazing achievement of the Reagan presidency.

HUGH HEWITT: And what they saved then was the state and local tax deduction. They saved the mortgage interest deduction. And they saved the charitable deduction. It looks like two of three of those are being saved. But a lot of my friends in the accounting world say when you double the standard deduction, which the Republicans propose to do, you're going to cripple charitable giving. What do you make of that argument, Matthew Spalding?

DR. MATTHEW SPALDING: Well, the general problem I have with the way we're going forward is there's so many things right now we don't know the details of.

HUGH HEWITT: Right.

DR. MATTHEW SPALDING: We don't know how this is going to play out. The big parallel-- if I can back it up to a larger point for a moment. The bigger lesson I think from the '86 deal is that Reagan started this with his 1984 State of the Union Address. There were a couple of years to get there in his administration. They had two full rounds of draft tax reform bills. They put things on the table. There was a lot of haggling.

What I'm concerned about here is this is all-- the timeline is very, very short. They're moving very rapidly. But we actually don't know a lot of the details as to exactly what they are or are not going to do. I think from what I can tell, the stuff at the state and local, that's unclear.

HUGH HEWITT: Everything is unclear. And in fact, until they get to a conference committee, nothing really matters. And that's what bothers me so much about the process, Matthew Spalding. Has anyone called you to solicit your opinion?

Let me start with a very basic question. Has anyone called you to say, hey, Matt Spalding. You run the Kirby Center. You were deeply involved in welfare reform. You're known around town. What do you think we ought to do? Has anyone called Matt Spalding?

DR. MATTHEW SPALDING: I've talked to a lot of staffer friends who are deeply concerned about this. But the problem is that modern legislation-- that goes to another big problem into how this is done. Modern legislation even in, like, the '80s is largely done within the leadership. It's not done in an open process. And so you don't have that room and ability for the give and take.

Here I actually will give John McCain, who I'm a big critic of, a little bit of credit. He wants to go back to some sort of normal order where you have that kind of process going on. And he's got a point there. We don't actually budget anymore. We don't do things the way they're supposed to be done.

Remember, one of the advantages Reagan had in '86, which actually worked out to be an advantage, is that Democrats-- the Congress was divided. Which means he went in and he went to the Speaker of the House, Tip O'Neill, and the Ways and Means Chairman, Dan Rostenkowski-- Ted Kennedy even in the end voted for the '86 deal. Right? The process forced him to do that. And the result, it actually came off pretty well. Not perfect, but good enough for Reagan to get his 80% and go home.

HUGH HEWITT: We're going to come back after the break and continue talking with Dr. Matt Spalding. He is the director of the Kirby Center, Hillsdale College's flagship in Washington DC. For all things Hillsdale, go to hillsdale.edu. That's hillsdale.edu. And if you want to listen to any of our conversations going back to Homer right up to the moment of this tax bill markup coming up next week, go to hughforhillsdale.com. That's hughforhillsdale.com.

We started these in 2013 for the purpose of having extended conversations on matters of importance. And the tax code, for reasons that we'll talk about when we come back-- that which gets rewarded gets repeated. Ought that to be the way we approach taxes? Matt Spalding returns right after this.

22 minutes after the hour, America. It's Hugh Hewitt with Dr. Matt Spalding, Director of the Kirby Center, Hillsdale's flagship outpost. It's the Hillsdale Dialogue, my weekly conversation with either Matt Spalding, or Dr. Larry Arnn, or one of their colleagues at Hillsdale College. They're all collected for binge listening purposes at hughforhillsdale.com.

Matt Spalding, when we went to break I raised this question-- the tax code is very complicated because the world is complicated. We need a casualty loss deduction. For example, if a fire or a flood destroys your home, you've just got to be able to deduct the whole thing. That's something that we need, and it will be in the tax code at the end.

And we have lots of different kinds of ways to make income, but we also encourage certain behaviors and discourage behaviors with the tax code. What do you think of that as a general matter of policy?

DR. MATTHEW SPALDING: Well, look, I think that where we get off in the wrong shoe is we assume that tax policy is merely economic matter. It is a political question. How we tax determines what things we favor and what things we disfavor.

HUGH HEWITT: Yes.

DR. MATTHEW SPALDING: That's the nature of it. That's always been the nature of it. If you go back to throughout the 19th century and most of American history, what was the biggest debate? It was over tariffs, right? Tariffs are all about tax in terms of what we like and don't like. We can't get around that by ignoring the facts.

So we're having a big debate about the child tax credit. We're having a big debate about these things. That's part of policy making. I have no objections to that. The problem, however, is there is a-- the extent to which we've talked many times on this program and Hillsdale does elsewhere-- about the massive growth and complications of the modern administrative bureaucratic state.

It is true that the tax code and its inner workings have become so complicated that it's hard for anybody to see the whole. Which means it's hard for there to be a national policy on many of these questions. This, again, was a key thing in '86. At some point, there's got to be a breakthrough, the narrower, smaller interest questions to a larger objective. Which I think there's today a great sense of need, which is to lower rates, simplify the tax code, to broaden the base, and affect economic growth.

HUGH HEWITT: Now, Matt Spalding, when I wrote The Fourth Way, I spent a lot of time on this, because I don't really get involved too much in tax policy, but I do worry about what I call reliance damages. People build their lives based upon the assumptions that they are given in the tax code. They buy a house, for example, because you can deduct it.

Or they move to a high tax state knowing that they won't be screwed if they live in California or New York. If we change those, we're in some respect injuring people who relied upon the tax code, and many of our colleagues are deaf to that concern. Is it a legitimate concern in your view?

DR. MATTHEW SPALDING: Sure, it's a legitimate concern. That's the bread and butter of politics, right? That's why you've got to make these deals. So from a broader point of view, getting rid of state and local deductions, I like that idea because it punishes those high tax states which are using that as cover for expanding their own spending and government.

The flip side is that you're absolutely right. People have made long-term plans based on these things. This is why the mortgage deduction is never going to go away unless they figure out some way to correct for it and grandfather it in at a very slow rate.

HUGH HEWITT: Well, that's like when the government-- when I was in the government 30 years ago, we got rid of the defined benefit plan for federal employees, but we did it over 30 years.

DR. MATTHEW SPALDING: Right.

HUGH HEWITT: And so if you want to get rid of the home mortgage interest deduction, you do so over 30 years. Or if you want to get rid of the state and local income tax deduction, you declare that that's going to be there in five years not tomorrow.

DR. MATTHEW SPALDING: So this points us back to another large problem we have today with how Congress legislates. How we think politically more broadly but especially Congress. Are we capable of having long-term planning about something like this? The window for tax reform, which is in the Senate resolution, and this is the Byrd Rule, everything covers. It's a 10-year window. Well, everything depends on that 10-year window. And we know full well that if you make decisions now, is it going to be carried out over the next nine years? And what happens beyond that?

HUGH HEWITT: Yeah. When we come back, Matt Spalding, I want him to expand on that. Because this Byrd window is deeply distorting of politics. And we'll talk about why when we come back. Dr. Matthew Spalding leads the Kirby Center at Hillsdale College's outpost in the shadow of the Capitol. All things Hillsdale, hillsdale.edu. Stay tuned.

Welcome back, Americans. Hugh here with Dr. Matthew Spalding, President of the Kirby Center, which is the Hillsdale College flagship institution in Washington DC where gather almost weekly members of the House and Senate for seminars. Always the students of Hillsdale College are busy as beavers there. The intellectual life of the Capitol revolves a lot around the Kirby Center, and Matt Spalding is in the center of all that.

And we're talking about the biggest deal right now is the tax deal and whether there will be one. The house will act this week. They passed the budget resolution, but now it gets down to brass tacks. And so Matt Spalding, let's go back and talk about what you think they ought to have front of mind when they sit down to consider any particular deduction.

DR. MATTHEW SPALDING: Well, this process has to be something that looks over the long-term and how this is going to play out. And they've got to think about how we maintain it. So they have very difficult situations. They have an immediate objective. How do we pass this? We're going into an election.

I think they're going to pull in a couple of Democrats to get the votes. Probably then still need Pence to break the tie. But they've got to put something on the table that actually makes sense over the long haul. And there are a lot of assumptions here they're making, a lot of details we don't know yet in that Senate resolution.

They're doing it through reconciliation, which is a legitimate process, because it's a budgeting process, but that put some binders on it. And if these are going to be cuts, if it adds to the deficit beyond the amount in the budget resolution, they can't do it beyond 10 years. This is why, if you recall, the Bush tax cuts--

HUGH HEWITT: Expired.

DR. MATTHEW SPALDING: --had to go away. They expired.

HUGH HEWITT: Well, see my first assumption is--

DR. MATTHEW SPALDING: They have to have long-term planning here. And that's where, again, there's a good lesson there from the '86 budget deal. They had a much more longer term view. They went into it. This is going to be a radical restructuring of the tax code, and we're going to do it in a way that's going to last for a while.

HUGH HEWITT: Ideologically, that's not possible. And I think that's not possible because of the sorting out of the parties. There aren't any centrist Democrats. There aren't any center-left Republicans left, like Jacob Javits was for forever. There aren't any Moynahans to sit down and do the Social Security Commission with.

And that's OK in my view, if we keep in mind that we need economic growth before everything else. Everything depends on economic growth. And so this tax bill has to be judged on whether or not it will get us back to 4%. What you've seen, do you think it advances that objective? And again, the details are not out there so we're guessing. But from what you've seen, do you think it will?

DR. MATTHEW SPALDING: Well, the potential is clearly there. Look, they want to lower the corporate rates. They want to get rid of some-- go down to three brackets. They're lowering the top bracket 39.6 to 35. The pieces are all there.

I think the key will be, can they do those things? Can they meet their long-term numbers in a way that, for instance, keeps Corker and others on board? And if this plays out so that in the meantime they get that growth going.

Because if they can get that growth going and get that percentage up-- we already know it's risen some. If they can get that up over time, they can come back and add to this and do more in a future Congress. Which of course was, if you recall, in the '80s, right? The tax reform bill was the third major tax thing that came under the Reagan administration.

HUGH HEWITT: That's right. And George W. Bush--

DR. MATTHEW SPALDING: The idea if this is a one time thing and you're one and done, that's also another big problem with how Congress currently thinks. It's got to be the fundamental thing. We do it once and we don't do it again. We've got to learn to legislate.

HUGH HEWITT: And George W. Bush actually passed a tax reduction each year of his presidency every single year. It wasn't always a big one. Sometimes it was a small one. But we are now locked into these rules in a hyper-partisan era which you referred to as the Byrd Rule and the Reconciliation Rule, which means only 50 votes are necessary.

However, and Matt Spalding, we get to the nub. Harry Reid adopted a new rule, the Reid Rule, which means you can change the rules of the Senate with 50 votes. That's what it means. It doesn't mean that you confirm judges by a majority. It means that you can change the rules of the Senate.

Are we at the point, in your view, that the Senate is so dysfunctional that we do need to change the rules of the Senate?

DR. MATTHEW SPALDING: I mean, going back towards the filibuster question?

HUGH HEWITT: Yes, to break the filibuster. In that sense, we cannot plan long-term because it is impossible to find 10 Democrats who are reasonable.

DR. MATTHEW SPALDING: No, I completely agree. Look, these are artificial rules-- the filibuster among them. Reconciliation is a budget rule. The blue slips, which we talked about before, that's not even a rule. That's merely a tradition.

These things are crippling us from not only creating the kind of growth we're talking about, but also going after the larger objectives of reforming this government and getting control of it. It's literally out of control. And the only way Congress is going to get control is get Congress back in the game. And to get Congress back in the game, we've got to fix the Senate.

I don't know what the current numbers are, but last I checked, the House has passed hundreds of--

HUGH HEWITT: Yes.

DR. MATTHEW SPALDING: --wonderful pieces of legislation--

HUGH HEWITT: Yes.

DR. MATTHEW SPALDING: --which are sitting in the Senate and nothing is happening because of the filibuster. And so now you try to do health care through reconciliation, you didn't get it. Now you're going to try to do tax reform through reconciliation. It's going to be a very close game. But the bigger question here is how do you get the Senate back into the legislation game?

HUGH HEWITT: And I want people to hear you answer. Leader McConnell, of whom I am a huge fan-- he's the most effective leader we've had in my lifetime in the Senate. And I'll defend him forever for saving the Supreme Court from a five liberal majority. The senator is attached to the filibuster, as is Lindsey Graham, as are a number of people because they say it protects the minority.

Now, however, it has come to consume the Senate. And it was not in the constitutional design, Matt Spalding. You know The Federalist Papers. I know The Federalist Papers. We can read the document. It's not there. I would argue that it had its place, but its place is now frayed.

DR. MATTHEW SPALDING: Look, it wasn't there until the 20th century. But there is a way to solve this which can appeal to Senator McConnell, which is let's keep the filibuster. The idea that the minority should be able to deliberate and argue until they're done is an important aspect of a deliberative Senate. I'm in favor of making sure that it is protected.

The problem is we don't have a filibuster right now. The filibuster is essentially a pocket veto for any--

HUGH HEWITT: Yes.

DR. MATTHEW SPALDING: --for a minority. That's not the filibuster. The majority leader, Senator McConnell at any time without even touching the rules can change how debate proceeds in the Senate and how things-- like what is a legislative day? What accounts for debate? Every member gets two times to participate in a debate. And once you're done with that, once that's played itself out, you go to a vote.

You can get around this without actually changing those filibuster rules, which is to say you appeal to Senator McConnell and others. Let's make the filibuster. Let's strengthen it. Let's make it a real filibuster. That would solve your problem, too.

HUGH HEWITT: But for him to do that would require a rule change, which would be invoking the Reid Rule of an appeal to the chair. And that's radical.

DR. MATTHEW SPALDING: It would appeal to the majority leader about how debate proceeds, but it wouldn't actually change the underlying rule about the filibuster itself.

HUGH HEWITT: Well, there is a rule about the 30 hours. There are a bunch of rules that are written down that would need to be vacated.

DR. MATTHEW SPALDING: Well, they would have to be enforced is my point.

HUGH HEWITT: Well, right now, the Democrats are running the clock on every nominee, for example.

DR. MATTHEW SPALDING: And that's a different one. You're right. That would have to be a change to get around that problem.

HUGH HEWITT: And so I just think that, fundamentally, Republicans and Democrats alike are underestimating public disgust with Washington DC.

DR. MATTHEW SPALDING: Also, what's the larger thing here, right? Everyone, we have these conversations. You start getting down in the weeds. These are rules. These are ways that Washington works.

This is precisely why Americans are fed up with elite rule. This is not the way it's supposed to work. This makes no sense. You have a majority. Majorities rule.

You have control of the Congress and a president who's going to sign things. The difference is, I think, the problem here is that Senator McConnell and many of the other senators and some outside groups, who are my friends but I disagree with, are maintaining these rules and traditions because they assume in a matter of time they're going to be in the minority. Nothing big is going to happen. So we might as well protect our power for the future. And I think they're missing the fact that there's a larger tectonic shift going on in the country in which things have to get done. And this is a moment, if we don't see it as a moment-- I mean, this is building towards a grave constitutional crisis.

That's what produced Donald Trump. If you think he's perfect or not, he's signing things. He will sign it. He's making the right moves. Congress has got to get their act together.

The House is moving forward. Ryan, I think, is doing the right stuff. The Senate is a problem. And at this point, the Senate, because of those rules and traditions, is not fulfilling its constitutional responsibilities.

HUGH HEWITT: Yeah, our friend, Larry Arnn, likes to say "fundamental matters are afoot." I believe that's very true. And I believe four senators, Senators McCain and Paul-- I always like to name people-- Senators McCain and Paul, Senators Murkowski and Collins, killed Obamacare repeal and replace for reasons of their own. They could be legitimate or not. They did. But the rest of the country looks and blames McConnell and 46 other Republicans.

And it's just not fair, because the Senate is dysfunctional. It is so maddening. And the same thing is going to happen, by the way, on tax reform, unless they get it to the Senate. To a certain extent, I don't even know why we're bothering with the House, because it all depends upon the Senate, Matt Spalding.

DR. MATTHEW SPALDING: It all depends on the Senate. No, that's absolutely right. As I like to say, what we need today is more politics, not less politics. And that, I would argue, is the Madisonian solution, which is a political pressure. And as long as senators can hide behind these tradition and processes and supposed rules, they don't actually have to be a legislative body. We've got to force them to be a legislative body, which means they are responsible to their constituents and to politics.

HUGH HEWITT: But of course, they--

DR. MATTHEW SPALDING: But until that happens, I think we don't-- none of this moves.

HUGH HEWITT: The response of throwing the bums out, if they throw out-- you know, Jeff Flake is not running for re-election, because he was going to be replaced by Kelli Ward. I can say this. You can't, because you are not political. Kelli Ward is a disaster.

She will lose that Senate seat. So we have to nominate people who can win. Mitch McConnell is fond of saying, "losers go home and winners legislate." Maybe they don't legislate enough, but we've got to win first. You see the Republicans courting electoral disaster.

DR. MATTHEW SPALDING: No, that's right. Look, the broader problem-- this has been brewing for tens and twenties of years-- is we have this divide in our politics between those who want to be perfect in all circumstances, and most of the times, they don't win, both in elections and when they get to a legislative body. I like to have them. They're on my side. They're allies. That's great.

But in order to get things done, you've got to have a majority that will vote with you. McConnell knows that. I think McConnell is really on the edge in terms of how and when he moves on these things. But they're going to miss this moment if they don't get their act together and show they understand why this is important and what needs to be done. Trump is making a bigger political argument than the Congress is. Congress needs to up their game.

HUGH HEWITT: But that argument-- and we'll come back and talk about that-- that argument is often lost in the anti-Trump movement that has consumed a lot of Washington DC. And we'll talk about that after the break. Hopefully it will not consume tax reform. I'll be right back. Don't go anywhere. Matt Spalding is my guest. Hillsdale.edu.

Welcome back, America. Final segment of the radio week with Dr. Matt Spalding from Hillsdale College. Hillsdale.edu for all things Hillsdale. You can also subscribe to the speech digest, Imprimis, there at hillsdale.edu.

Matt Spalding, when we went to break, tax reform is on. We get the details today or tomorrow. And over the weekend, Kevin Brady will be letting them out, and then we'll debate them in the Ways and Means Committee. And then we'll debate them in the House, and then they'll go to the Senate, and we'll debate them again. But everything is being torqued by Donald Trump.

There is such a profound influence that he is having. People are actually changing their ideology because of his personality. That is, to me, profoundly wrong. But do you agree with me that that is happening?

DR. MATTHEW SPALDING: Oh, it's definitely happening, and it is profoundly wrong. And it creates a real problem. Look, if you go back and study politics, there's nothing unusual here. I referred earlier to the era when Jackson is president. That was also the period in which you had the greatest senators and the greatest debates in American history and some of the greatest compromises in American history.

This should not at all prevent the Senate, in particular, and Congress in general, from proceeding with its business. If anything, it should make Congress much more serious and wanting to defend its institutional prerogatives vis-a-vis the president. If you disagree with him, so be it. Let's talk about it in legislative form.

The animosity and the kind of anti-Trump sense about people is preventing them from being rational in a political sense, which I am very worried about, as it's going to prevent this moment from being taken advantage of, and the opportunity is gone. Donald Trump is the one that broke through that. The things that are going on within the administration, the stuff on his executive orders and on the administrative state, the judicial appointments, the guidance on religious liberty that came out recently, all these things are great things that we should be cheering.

HUGH HEWITT: Yeah, the Clean Power Plan--

DR. MATTHEW SPALDING: Yet we're somehow incapable of engaging.

HUGH HEWITT: Yeah, the Clean Power Plan put forward by Scott Pruitt, that's a rule making, so it's not done yet. Or the Waters of the United States' rule put forward by Scott Pruitt.

DR. MATTHEW SPALDING: The list goes on and on. If this were anybody else, we would be cheering on the sidelines every day.

HUGH HEWITT: So how does that change? Because the president isn't going to change. He is the most abrasive guy in American politics. There's just no getting around it. That's the New Yorker. That's Donald Trump. There's no getting around it. But is it beyond expectation to ask ego-driven politicians to put aside their ego to take the moment?

DR. MATTHEW SPALDING: Well, I think the problem is that a lot of these individuals have, over time, become so individually centric on how they operate. The test here is, can they operate outside that bubble? And we're seeing it. I think the examples of Corker, of Flake, and some others earlier during the elections and now and then on the outside, outside of Congress, we're seeing the answer to that. Some of them can't deal with it.

Well, we've got to get around that problem, because we've got a country to save. And Congress has got to get back into it. They've got to step up. They've got to get legislation through. The fear here is that this administration is going to do a lot of good things.

But I can tell you, because I was over with friends in the Domestic Policy Council just a few days ago, they know all the things they are doing, all the executive orders, all these things on the administrative apparatus that they're changing. The other side are watching these things very carefully, and they're going to know how to reverse them very quickly if these are not put into legislation.

HUGH HEWITT: Which is why the Republican Party has to be a party. It has to actually act as-- Disraeli was the one who originally articulated this. No one should decry party who rises by party. And we've seen two retirement of anti-party people.

Bob Corker was never a party guy. Jeff Flake has never been a party guy. And to a certain extent, I like them both. They're nice people. But I'm glad that the non-party people are leaving, because you need parties. That's how this country is governed.

DR. MATTHEW SPALDING: No, that's right. And this, in the context where you've got a president who is not a party man in the traditional sense, he's broken up the old alliances. He's dealigned. We need a new alignment, which means a stronger political party to represent that alignment.

But the difference is we don't need a party which is merely funding people in elections and doing practical things, we need a party that has an idea of what they're about. What's their purpose? And what are they going to accomplish?

HUGH HEWITT: And part of that's got to be tax reform. Let's finish where we began.

DR. MATTHEW SPALDING: Absolutely.

HUGH HEWITT: Are you an optimist that come Christmas or New Year's Eve we have a new tax code?

DR. MATTHEW SPALDING: I am cautious but somewhat optimistic. It's a long-- it's a hard row to hoe. The '86 model does not make me overly optimistic. But under the circumstances, the pressure of the moment, I'm very optimistic that Trump is engaged.

And if he's engaged, remember, '86 happened because Reagan was engaged. If Trump is engaged in this and puts that political pressure on it, and it becomes a political issue, I think I will be more optimistic. And if this plays out that way, details to come, this could be very successful.

HUGH HEWITT: I agree with you. I also think he's going to get some Democrats. And we will turn to that into the future, because this is not a time when Democrats can take for granted that elite anger with Donald Trump means a wit at home. I just don't think it does.

DR. MATTHEW SPALDING: Six members of the Finance Committee up for re-election in Trump won states. Those are opportunities.

HUGH HEWITT: Interesting. Matt Spalding, director of the Kirby Center. Thank you, thank you all for listening. And a generalissimo thank you. Adam, thank you. Ben, you're gone, but we miss you already. Don't miss, however, we'll be back next week, America, on this, The Hugh Hewitt Show.