Sen. Mike Lee Says the GOP Tax Reform Bill Will Pass

Unsure about what’s happening with tax reform? This may help. Sen. Mike Lee joined Glenn and Stu today to help them understand what’s going on with the GOP tax reform bill, which headed to the Senate today for 20 hours of debate.

Lee explained how the tax plan will help American families with a provision for an expanded child tax credit.

“It’s going to pass because it has to pass,” he said of the bill. “I and my Republican colleagues in the Senate will make sure of it.”

This article provided courtesy of TheBlaze.

GLENN: Hopefully we'll have Mike Lee on with us for a second. He has a tax proposal that he's working on. We'll talk to him about it.

STU: There's some ridiculous things going on, arguments against the tax bill. And there are arguments against it. Good ones, in that, it's not as good as it should be. It's not as bold as it should be. Mike Lee is trying to do some things to it, that may help depending on your perspective. But some of the arguments against it, are also unfair. National Review has four of them that they feature today. People are calling it a middle class tax hike. This is an interesting thing. Because what they're trying to do with this is play with the numbers.

Tax policy center analysis on the Senate bill reveals that three-quarters of all families would get a tax cut. Twelve percent will see a tax increase, and they're concentrated around the rich. Now, to me, that's annoying because no one should be getting any increase. But the idea it's a middle class tax cut, you're seeing that on Facebook. You're seeing that on mainstream media. The average middle income family would receive a tax cut of approximately $850 through 2025. Now, what they're doing is, they're looking at the year 2027, and they're seeing lots of tax increases in that year.

The Senate bill is structured to make these middle class tax cuts expire in 2025. They do this for a dumb budgeting gimmick. The idea is, in 2025, no one is going to say, well, we should raise taxes on the middle class. No one will want to take that position, so they'll all keep the tax cuts. That's risky. I don't like it. But even if you say that they don't extend them, what you would have is a 7,000-dollar tax cut in the earlier years, followed by a 100-dollar annual tax increase later.

GLENN: I'll take it.

STU: It's still a big cut over time, they're just focusing on --

GLENN: No one is going to do it at that time anyway.

Mike Lee is with us. Senator Mike Lee, how are you, sir?

MIKE: Doing great, Glenn. Good to be with you.

GLENN: Can you help us make sense and heads or tails of the tax plan and tell us what's going to happen. And I want to talk about, you and Rubio have gotten together. And you're asking exactly, what?

MIKE: We're asking to make the child tax credit more meaningful to everyone that works and everyone who pays taxes. What we want is a tax credit. People can take advantage of up to 13.3 percent of their earnings. This is a tax -- payroll tax is something that almost every American worker pays. And our tax system fails to take into account what we call the parent tax penalty. Our child tax credit proposal, would address that.

Now, Glenn, I've been accused justifiably in the past of being really poor on your show. Talking about this proposal subjects me to that accusation.

GLENN: No. We're going to let you go. It's just that you get turned on by numbers and clauses in the Constitution, that most people don't --

MIKE: Don't we all?

GLENN: No, we don't. But I appreciate that in a senator.

MIKE: Well, thank you. And I appreciate the chance to come over and talk about it. Because it's really important.

Look, America's working moms and dads contribute to our senior entitlement programs, Social Security and Medicare twice, once as they pay their taxes and a second time to incur the cost of child rearing.

Because of the pay-as-you-go nature of Social Security and Medicare, working parents are contributing to Social Security and Medicare twice. By increasing the child tax credit and making it refundable, up to 15.3 percent of earnings, what we're doing is we're making sure we provide necessary tax relief to offset this penalty.

GLENN: Mike, is this going to pass?

MIKE: It will. And we'll make sure. Look, it will pass because it has to pass. And I'm not sure what form the tax bill is going to pass. But it's going to pass. I and my Republican colleagues in the Senate are going to make sure.

STU: Mike, they were talking about potentially as an offset to an increase child tax credit of having to increase the -- the proposed corporate tax. So it was 20 percent. They're talking about 21, 22 percent. Is that going to be necessary to do the changes you're talking about?

MIKE: This is one method of paying for it. We're not necessarily wedded to that method of paying for it. We're open to other suggestions. I'd love to leave the corporate rate at 20 percent rather than 22.

But as of right now, we got to keep in mind, that as President Trump himself explained to us at lunch the other day, 70 percent of tax relief in this bill is for corporations, leaving 30 percent of the bill for individuals.

This is one way of shifting more of that relief to individuals, especially to America's most important entrepreneurial class of investors, that is America's parents.

GLENN: Do you believe that America's corporations feel comfortable enough in investing that money in -- in capital expenditures or investment and employees, or are they just going to roll those tax savings into the market?

MIKE: I think they will invest in a lot of things that will create jobs. That's why I'm pleased of corporate tax relief. The corporate tax itself is kind of a devious thing because it disguises the cost of government. People think taxes on corporations don't cost workers any money. They do.

In fact, according to some economists, it may well be that half or so of corporate taxes end up coming out of workers wages. In any event, we know that taxing corporations would slow economic activity. And that affects everyone, including America's middle class taxpayers.

GLENN: Is McCain going to stick with you guys? I saw a story yesterday afternoon. Looks like McCain is at it again was the headline. Is McCain --

MIKE: Yeah. I saw that story too. It gives me nightmares, had nightmares ever since that fateful night in July when he left his thumb hanging in suspended animation, leaving us in -- turned the thumb down. Want to make sure that doesn't happen again.

Look, I think he'll vote with us at the end of the day. Even if he doesn't, we can lose him and still pass the thing without him.

STU: Mike, I'm glad you're talking about the payroll tax. I think it's something that conservatives don't get fired up enough about.

Here's a tax that is a regressive tax, meaning that people on the poor end of the scale pay more than people on the high end of the income scale, which is something I can't believe any progressive ever defends. But they seem to defend it. And not only it locks us into this -- this idea, and a lot of conservatives, I think, fall for it, which is, these long-term giant programs that are supposedly funded through this, when in reality, it kind of all goes into a big pot anyway. These big programs are owed to us because of this separate tax. We don't look at any other giant program the way we look at these entitlement programs. And I think it's a real problem. Is there any hope of attacking this payroll tax even more boldly?

MIKE: Well, I think you made the point well. And this leads to a point I've been meaning to use in messaging with this, which is the best way to understand the Rubio/Lee amendment is that it basically provides a tax cut with respect to payroll taxes. And for some of the reasons you identified. We have to focus on this more than we do. And just as importantly, a related point is that the people who would benefit most acutely from the Rubio/Lee proposal would be those workers who are perhaps most at risk of falling out of the work force and choosing instead to go on welfare. You know, parents with young children, who are right at the edge economically of whether or not they're going to decide, make sense to continue working and instead stop and take welfare benefits. We want to keep them in the workforce. We want to give them plenty of opportunity to stay in the workforce so they can benefit themselves and their families so that they can get promotions, and continue to make more and be contributing members of society. This would incentivize them to do that remove some of the incentives for them to just go on welfare and SNAP.

GLENN: Mike, I want to switch gears with you, and then I'll let you go. You know, Matt Lauer was just let go. Garrison Keillor was just let go. And it's -- it's a little disturbing to me that, A, we're letting people go without any kind of real due process. It seems like this could get out of hand quickly, if we're not really careful. I mean, I'm glad bad guys are going away, and I want this to be solved, but it concerns me that there's no due process here.

However, the only ones that don't seem really affected by it are those in politics. You know, on the Republican side, Roy Moore and Donald Trump. On the liberal side, it's John Conyer and Al Franken.

They're not going anywhere. Does that concern you, Mike?

MIKE: Yeah. In politics, some things operate differently, quite tragically. The meaning of the word "politics," break it down to its Greek roots, poly, which means many, and ticks, which are blood-sucking parasites. A lot of what happens here.

Look, as to your first point about due process, in the case of Matt Lauer, for instance, look, he was fired by a private, for-profit corporation. I assume he was an at-will employee, or if he wasn't an at-will employee, that he had some kind of provision in his contract, allowing his employer to take this action when they did this.

So speaking literally, in constitutional terms, that means there isn't a due process issue. Due process in the lowercase sense of the word, I assume that NBC, being well-represented by capable attorneys, made sure that they dotted their i's and crossed their t's and that they made sure the facts were adequately substantiated before taking this step. Firing someone who holds public office is a little bit different because normally, in most circumstances, to fire them, you have to wait until the next election.

But I suspect that there will be a whole lot of people getting fired by their voters as these things continue to come out.

GLENN: You believe there's more to come out, Mike? You've been there a while.

MIKE: Sadly, I come to suspect that there are. I've been saddened and surprised by some of the horrible things that have been happening. And it seems to arise in circumstances where men will do really bad things in circumstances where they think they can get away with it. There aren't enough reasons that they see not to do it. And it's tragic. It should not be that way.

GLENN: Which makes --

MIKE: But we've seen that -- news entertainment, media entertainment, and government and politics. And it's really sad.

GLENN: And it makes me a little nervous that if the people don't vote those people out, if they decide that it doesn't matter, we're going to end up with some of the worst people in the world, even worse than we have now in Washington, showing up, because you'll literally be able to get away with anything.

MIKE: Yeah. I think that's right. And that would be an absolutely unacceptable outcome. Fortunately, Glenn, I don't think that will happen for two independent reasons. First, I think a lot of people are going to take themselves out of contention. Perhaps most or all of those people who are in government right now, who are subject to these accusations are going to decide, it's time to hang it up. Secondly, I really don't think their voters are going to put up with it. This is unacceptable. They shouldn't elect people who will do awful things like this.

GLENN: Senator Mike Lee, thank you very much. Good luck.

Rapper Kendrick Lamar brings white fan onstage to sing with him, but here’s the catch

Matt Winkelmeyer/Getty Images for American Express

Rapper Kendrick Lamar asked a fan to come onstage and sing with him, only to condemn her when she failed to censor all of the song's frequent mentions of the “n-word" while singing along.

RELATED: You'll Never Guess Who Wrote the Racist Message Targeting Black Air Force Cadets

“I am so sorry," she apologized when Lamar pointed out that she needed to “bleep" that word. “I'm used to singing it like you wrote it." She was booed at by the crowd of people, many screaming “f*** you" after her mistake.

On Tuesday's show, Pat and Jeffy watched the clip and talked about some of the Twitter reactions.

“This is ridiculous," Pat said. “The situation with this word has become so ludicrous."

What happened?

MSNBC's Katy Tur didn't bother to hide her pro-gun control bias in an interview with Texas Attorney General Ken Paxton in the wake of the Santa Fe High School killings.

RELATED: Media Are Pushing Inflated '18 School Shootings' Statistic. Here Are the Facts.

What did she ask?

As Pat pointed out while sitting in for Glenn on today's show, Tur tried to “badger" Paxton into vowing that he would push for a magical fix that will make schools “100 percent safe." She found it “just wild" that the Texas attorney general couldn't promise that schools will ever be completely, totally safe.

“Can you promise kids in Texas today that they're safe to go to school?" Tur pressured Paxton.

“I don't think there's any way to say that we're ever 100 percent safe," the attorney general responded.

What solutions did the AG offer?

“We've got a long way to go," Paxton said. He listed potential solutions to improve school safety, including installing security officers and training administrators and teachers to carry a gun.

Pat's take:

“Unbelievable," Pat said on today's show. “Nobody can promise [100 percent safety]."

Every president from George Washington to Donald Trump has issued at least one executive order (with the exception of William Harrison who died just 31 days into his presidency) and yet the U.S. Constitution doesn't even mention executive orders. So how did the use of this legislative loophole become such an accepted part of the job? Well, we can thank Franklin Roosevelt for that.

Back at the chalkboard, Glenn Beck broke down the progression of the executive order over the years and discussed which US Presidents have been the “worst offenders."

RELATED: POWER GRAB: Here's how US presidents use 'moments of crisis' to override Constitutional law

“It's hard to judge our worst presidential overreachers on sheer numbers alone," said Glenn. “However, it's not a shock that FDR issued by far the most of any president."

Our first 15 presidents issued a combined total of 143. By comparison, Franklin D. Roosevelt issued 3721, more than twice the next runner up, Woodrow Wilson, at 1803.

“Next to FDR, no other president in our history attempted to reshape so much of American life by decree, until we get to this guy: President Obama," Glenn explained. “He didn't issue 3000, or even 1800; he did 276 executive orders, but it was the power of those orders. He instituted 560 major regulations classified by the Congressional Budget Office as having 'significant economic or social impacts.' That's 50 percent more regulations than George W. Bush's presidency — and remember, everybody thought he was a fascist."

President Obama blamed an obstructionist Congress for forcing him to bypass the legislative process. By executive order, President Obama decreed the U.S. join the Paris Climate Accord, DACA, the Clean Power Plan and transgender restrooms. He also authorized spying in US citizens through section 702 of FISA, used the IRS to target political opponents and ordered military action in Libya without Congressional permission.

All of these changes were accepted by the very people who now condemn President Trump for his use of executive orders — many of which were issued to annul President Obama's executive orders, just as President Obama annulled President Bush's executive orders when he took office … and therein lies the rub with executive orders.

“That's not the way it's supposed to work, nor would we ever want it to be," said Glenn. “We have to have the Constitution and laws need to originate in Congress."

Watch the video above to find out more.

Six months ago, I alerted readers to the very attractive benefits that the TreasuryDirect program offers to investors who are defensively sitting on cash right now.

Since then, those benefits have continued to improve. Substantially.

Back in November, by holding extremely conservative short-term (i.e., 6-months or less) Treasury bills, TreasuryDirect participants were receiving over 16x more in interest payments vs keeping their cash in a standard bank savings account.

Today, they're now receiving over 30 times more. Without having to worry about the risk of a bank "bail-in" or failure.

So if you're holding cash right now and NOT participating in the TreasuryDirect program, do yourself a favor and read on. If you're going to pass on this opportunity, at least make it an 'eyes-wide-open' decision.

Holding Cash (In Treasurys) Now Beats The Market

There are many prudent reasons to hold cash in today's dangerously overvalued financial markets, as we've frequently touted here at PeakProsperity.com.

Well, there's now one more good reason to add to the list: holding cash in short-term Treasurys is now meeting/beating the dividend returns offered by the stock market:

"Cash Is King" Again - 3-Month Bills Yield More Than Stocks (Zero Hedge)
'Reaching for yield' just got a lot easier...
For the first time since February 2008, three-month Treasury bills now have a yield advantage over the S&P; 500 dividend yield (and dramatically lower risk).
Investors can earn a guaranteed 1.90% by holding the 3-month bills or a risky 1.89% holding the S&P; 500...

The longest period of financial repression in history is coming to an end...

And it would appear TINA is dead as there is now an alternative.

And when you look at the total return (dividends + appreciation) of the market since the start of 2018, stocks have returned only marginally better than 3-month Treasurys. Plus, those scant few extra S&P; points have come with a LOT more risk.

Why take it under such dangerously overvalued conditions?

If You Can't Beat 'Em, Join 'Em

In my June report Less Than Zero: How The Fed Killed Saving, I explained how the Federal Reserve's policy of holding interest rates at record lows has decimated savers. Those who simply want to park money somewhere "safe" can't do so without losing money in real terms.

To drive this point home: back in November, the average interest rate being offered in a US bank savings account was an insutling 0.06%. Six months later, nothing has changed:

(Source

That's virtually the same as getting paid 0%. But it's actually worse than that, because once you take inflation into account, the real return on your savings is markedly negative.

And to really get your blood boiling, note that the Federal Reserve has rasied the federal funds rate it pays banks from 1.16% in November to 1.69% in April. Banks are now making nearly 50% more money on the excess reserves they park at the Fed -- but are they passing any of that free profit along to their depositors? No....

This is why knowing about the TreasuryDirect program is so important. It's a way for individual investors savvy enough to understand the game being played to bend some of its rules to their favor and limit the damage they suffer.

Below is an updated version (using today's rates) of my recap of TreasuryDirect, which enables you to get over 30x more interest on your cash savings than your bank will pay you, with lower risk.

TreasuryDirect

For those not already familiar with it, TreasuryDirect is a service offered by the United States Department of the Treasury that allows individual investors to purchase Treasury securities such as T-Bills, notes and bonds directly from the U.S. government.

You purchase these Treasury securities by linking a TreasuryDirect account to your personal bank account. Once linked, you use your cash savings to purchase T-bills, etc from the US Treasury. When the Treasury securities you've purchased mature or are sold, the proceeds are deposited back into your bank account.

So why buy Treasuries rather than keep your cash savings in a bank? Two main reasons:

  • Much higher return: T-Bills are currently offering an annualized return rate between 1.66-2.04%. Notes and bonds, depending on their duration, are currently offering between 2.6% - 3.1%
  • Extremely low risk: Your bank can change the interest rate on your savings account at any time -- with Treasury bills, your rate of return is locked in at purchase. Funds in a bank are subject to risks such as a bank bail-in or the insolvency of the FDIC depositor protection program -- while at TreasuryDirect, your funds are being held with the US Treasury, the institution with the lowest default risk in the country for reasons I'll explain more in a moment.

Let's look at a quick example. If you parked $100,000 in the average bank savings account for a full year, you would earn $60 in interest. Let's compare this to the current lowest-yielding TreasuryDirect option: continuously rolling that same $100,000 into 4-week T-Bills for a year:

  1. Day 1: Funds are transferred from your bank account to TreasuryDirect to purchase $100,000 face value of 4-week T-Bills at auction yielding 1.68%
  2. Day 28: the T-Bills mature and the Treasury holds the full $100,000 proceeds in your TreasuryDirect account. Since you've set up the auto-reinvestment option, TreasuryDirect then purchases another $100,000 face value of 4-week T-Bills at the next auction.
  3. Days 29-364: the process repeats every 4 weeks
  4. Day 365: assuming the average yield for T-Bills remained at 1.68%, you will have received $1,680 in interest in total throughout the year from the US Treasury.

$1,680 vs $60. That's a 27x difference in return.

And the comparison only improves if you decide to purchase longer duration (13-week or 26-week) bills instead of the 4-week ones:

Repeating the above example for a year using 13-week bills would yield $1,925. Using 26-week bills would yield $2,085. A lot better (34x better!) than $60.

Opportunity Cost & Default Risk

So what are the downsides to using TreasuryDirect? There aren't many.

The biggest one is opportunity cost. While your money is being held in a T-Bill, it's tied up at the US Treasury. If you suddenly need access to those funds, you have to wait until the bill matures.

But T-Bill durations are short. 4 weeks is not a lot of time to have to wait. (If you think the probability is high you may to need to pull money out of savings sooner than that, you shouldn't be considering the TreasuryDirect program.)

Other than that, TreasuryDirect offers an appealing reduction in risk.

If your bank suddenly closes due to a failure, any funds invested in TreasuryDirect are not in your bank account, so are not subject to being confiscated in a bail-in.

Instead, your money is held as a T-Bill, note or bond, which is essentially an obligation of the US Treasury to pay you in full for the face amount. The US Treasury is the single last entity in the country (and quite possibly, the world) that will ever default on its obligations. Why? Because Treasurys are the mechanism by which money is created in the US. Chapter 8 from The Crash Course explains:

As a result, to preserve its ability to print the money it needs to function, the US government will bring its full force and backing to bear in order to ensure confidence in the market for Treasurys.

Meaning: the US government won't squelch on paying you back the money you lent it. If required, it will just print the money it needs to repay you.

So, How To Get Started?

Usage of TreasuryDirect is quite low among investors today. Many are unaware of the program. Others simply haven't tried it out.

And let's be real: it's crazy that we live in a world where a 1.68-2.09% return now qualifies as an exceptionally high yield on savings. A lot of folks just can't get motivated to take action by rates that low. But that doesn't mean that they shouldn't -- money left on the table is money forfeited.

So, if you're interested in learning more about the TreasuryDirect program, start by visiting their website. Like everything operated by the government, it's pretty 'no frills'; but their FAQ page addresses investors' most common questions.

Before you decide whether or not to fund an account there, be sure to discuss the decision with your professional financial advisor to make sure it fits well with your personal financial situation and goals. (If you're having difficulty finding a good one, consider scheduling a free discussion with PeakProsperity.com's endorsed financial advisor -- who has considerable experience managing TreasuryDirect purchases for many of its clients).

In Part 2: A Primer On How To Use TreasuryDirect, we lay out the step-by-step process for opening, funding and transacting within a TreasuryDirect account. We've created it to be a helpful resource for those self-directed individuals potentially interested in increasing their return on their cash savings in this manner.

Yes, we savers are getting completely abused by our government's policies. So there's some poetic justice in using the government's own financing instruments to slightly lessen the sting of the whip.

Click here to read Part 2 of this report (free executive summary, enrollment required for full access)

NOTE: PeakProsperity.com does not have any business relationship with the TreasuryDirect program. Nor is anything in the article above to be taken as an offer of personal financial advice. As mentioned, discuss any decision to participate in TreasuryDirect with your professional financial advisor before taking action.