There is a really big debate happening Washington, DC right now. And this is why I love doing the show, because reconciliation is already underway, the debate how it's going to be done, even before Donald Trump is inaugurated. And you have a lot to say about what happened in DC.
Well, there's a major strategic decision, a major battle that is playing out right now in Washington, d C. And it concerns how do we win the biggest legislative victories of the Trump presidency. They are two paths to doing it. What's called one bill or two bill. Now that may sound our cane, but I think it's the difference between failure and success. This week, Donald Trump came and spent two two and a half hours with all the Republican senators.
It's all we talked about that time together. I'm going to break it down and explain it to you because it matters enormously if you want to see President Trump and this Republican Congress deliver on our promises. How we do it, how we get to success matters a lot.
We're going to deal with all that, but first I want to talk to you real quick about this new year and help that is needed for the people in Israel. On January the twenty seventh, the International Holocaust Remembrance Day will be here, and we're going to remember the great evil of the Holocaust, when millions of Jews were slaughtered during the Nazis regime and the reign that they had
over people with just pure terror. Today, the rise in global anti Semitism and the constant attacks on Israel show us that it's more important than ever to remember the atrocities of the Holocaust to ensure it never ever happens again. And that's why I've partnered with the International Fellowship of Christians and Jews. They provide food, shelter, and safety to Jews in Israel and around the world, including those remaining
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Twenty five or SUPPORTIFCJ dot org. So center a lot of the news and we talked about that. This week on Verdict has been around the wildfires and all the politics are going on in California. But what you guys have been working on in Washington, d C. Is a massive, not only just strategy of how we're going to move forward with the Republicans having control of the House and the White House, but also this could be a big failure if we get it wrong. So break it down,
explain people. There seems to be two pathways here people are fighting over and you have this conversation Donald Trump for several hours.
Yeah. So, look, we had an incredible election in November. We have a mandate from the voters. It's now our job to deliver on that mandate, to deliver on the promises we made to the American people. How do we get it done? This week, Donald Trump came to Capitol Hill, he came up to DC for Jimmy Carter's funeral. He spent over two hours with all of the Republican senators up on the Capitol talking, and what we talked about virtually the entire time was how to proceed to enact
his legislative agenda. Now, as you know, in the Senate, we have a filibuster. What is the filibuster? The filibuster is the requirement that you need sixty votes to take up major legislation. The effect of the filibuster is, because we have a fifty three vote majority of Republicans, you cannot take up major legislation in the Senate unless you get seven Democrats to support us. So the bulk of the mandate from the voters, things like securing the board,
they're not going to get seven votes from Democrats. So we can't get it done through ordinary legislation. So how are we going to get it done. We're going to get it done using something called reconciliation. What is reconciliation. Reconciliation is a process that comes from a specific statute, the Budget Act of nineteen seventy four, and the Budget Act sets up that when both chambers pass a budget, they come together and you reconcile the budget. By the way,
none of that matters. That's all gobledygook. Here's what matters. Under budget reconciliation. You only need fifty votes to pass it, not sixty. So budget reconciliation is the vehicle that you can get around the filibuster and pass our agenda. So the reconciliation matters enormously. Now, there are a whole series of rules for what's permissible on reconciliation and what isn't,
and they're laid out in the statute. The basic idea is that on reconciliation, you can pass things that are budgetary, but you cannot pass things that are policy. Now, how should we perceive The House of Representatives and the Senate are having a big argument right now, and the House and Senator are on different places. What the House has argued for is that we should do one gigantic reconciliation bill. We should do a bill that secures the border. We
should do a bill that rebuilds the military. We should do a bill that unleashes American energy. We should do a bill that extends the twenty seventeen Trump tax cuts and makes them bigger and bolder. And we should do all of that gigantic bill as part of one bill, one big, beautiful bill. It is how Speaker Johnson has said that Donald Trump has put.
In And by the way, there's a lot of people that just heard what you said and go that sounds amazing.
So what's the problem.
The problem is it is a path that I think is almost certain to fail.
Explain why.
Yes, Look number one, doing a massive bill, complicating things, doing a ton of things all all at the same time makes it harder to accomplish. We just had a couple of weeks ago a big fight in Washington over a CR, a continuing Resolution. The first version of it fell. Why did the first version of it fall because a bunch of people criticized it, said it's too damn big. It's fourteen hundred pages, this is too much, and everyone
went nuts and the whole thing collapsed. Apparently, the lesson we've taken from that is that CR was too big, and our solution is, let's have something ten times bigger. Let's have something so massive, because that's what it'll take
to get the votes on board. I believe if we end up trying to put everything in one bill, it'll drag on for seven eight months and it'll collapse in August, and we risk losing all of the momentum we have right now to accomplish and deliver results on Trump's legislative agenda. So what's the alternative. When we were with President Trump, this is the case I made to him, and I argued this forcefully. The alternative is to do two reconciliation bills. The first bill we would take up right now, and
it would do three things. Number one, it would secure the border. Number two, it would rebuild the military, and number three, it would unleash American energy. Why do we start with those three because those three are relatively easy among Republicans. We have widespread consensus on all three of those. On those issues. In the Senate, we got fifty three Republicans. We can get fifty three Republicans to come together through.
Do you think that those three are unanimous?
Yes, I think all three of those.
So that's why it's a no brainer in the sense of, like, we get this done, and we can get done quickly.
For that reason, it's a quick early win number one.
And that's important. Momentums everything.
Quick early wins matter. But more importantly, let's take the border, the number one mandate out of the election.
Is secure the border.
Now. Trump is going to show up on January twentieth, and he's going to issue a whole series of executive orders. I think we may see up to one hundred executive orders issue on day one. It is going to be shock and awe that is going to come, and I expect a lot of that to focus on the border, and we will see the border crossing numbers plummet. All of that is good. The biggest driver of that will be Trump ending catch and release and actually deporting people
who are here illegally. However, you still need resources. You need Congress to come in and appropriate likely one hundred billion dollars to build the wall, to hire more border patrol agents, to hire more ice agents, to build more detention facilities and more detention beds, to purchase more assets like fixed wing and rotary wing aircraft and infrared and drones, all of the material you need to secure the border.
To back up the policy. We can get all the Republicans on one page to do that and get that done quickly.
That's a day one thing.
It's not day one, but it's it's a month or two or three. It's early border security. We can come together and do that quickly. Secondly, the military, We have got to invest and rebuild our military. With the threat of China abroad, every enemy has gotten stronger. We need a serious investment in our military to enhance our ability to defend ourselves, in particular to rebuild our navy. China
is kicking our ass. They are investing in their navy, and under Joe Biden and the Democrats, they have allowed our investment into our navy to wither dramatically. Now why is it important to do the military bill in an early reconciliation. Well, this is where strategy and the realities of legislation matter.
By the way, this is a moment in the podcast where I would say everybody listening pay very close attention so you can advocate for because this might be the most brilliant thing set all day.
In the middle of March, the Continuing Resolution is going to expire. That is what funds the government. When that happens, Chuck Schumer and the Democrats are going to use the expiration of the funding to hold Donald Trump hostage. Chuck Schumer wants to force a government shutdown. The biggest reason a government shutdown is really, really painful for Republicans is it shuts down much of the military, and Republicans care about defending this nation. Democrats, many of them simply don't.
They're happy to shut the military down. They do it because it drives Republicans crazy. If we pass military funding as part of the reconciliation before March, we take it off the table. It's done, it's funded. It's not depending on the cr for funding.
So even if there is a government shutdown, and this is where it gets complicated by what people understand, you do it early before there could be the threat of the government shutdown. If once you funded the military, regardless of a quote shutdown, the military still has everything they need to operate on normal term.
It means we would have fully funded the military. It means we would have fully funded border security. So both of those continue. And now Chuck Schumer is saying, damn it, I'm going to shut the government down and we're not going to pay our s agents and the EPA will shut down.
You're like, okay, not a bad deal.
And suddenly Republicans are like, okay, Chuck, let us know when you're done with this little shutdown thing. It shifts the entire leverage, and it's how Trump wins that is hugely important. A third component is energy, and again you've got absolute consensus among Republicans that we want to unleash American energy. America is the world's energy superpower, with the number one producer of oil and gas. The Biden administration has been waging war on text energy, on oil and
gas for four years. That's going to end January twentieth. But we can pass major legislation to really unleash energy, which a drives down prices and tackles inflation. The second huge mandate that came out of the election, secure the border, drive down inflation. We can do both of those early early on. And unleashing energy also drives job creation, which is another huge mandate. So all of this we can get done and done quickly. The second bill, I believe
should be another reconciliation. We can take up more than one, and that should be tax reform. That should be taking the twenty seventeen Trump tax cuts that are expiring this year and extending them, making them permanent, and I hope making them bigger and bolder. Now, why should that be broken into a separate piece rather than combined with the first one. Because tax reform is really damn complicated. There
are lots of trade offs that happen. They're trade offs that are trade offs between all of the different interest effects affected. So you have trade offs between C corporations and S corporations, big companies and little companies. You have trade offs between employers and employees. You have trade offs between individuals and families. You have trade offs between parents and kids. You have trade offs between how you handle seniors. You have trade offs between how you handle capital gains
and dividends. And will resolve all of that, but that takes a lot of time. When we did this in twenty seventeen, I spent literally hundreds of hours negotiating all of these trade offs. You can't get that done in a month or two or even three.
So what is that? Is that an eight month nine month timeline?
Yeah, it'll be the way we ought to do it. I think we ought to pass the first reconciliation and get it done by say, March one. We can do border security, rebuild the military, and energy by.
February or March, and then it's done, and then then it's off the table, and that's a big win.
And then do tax reform. Look, if we leaned in, we could do tax reform by the end of July, right before the August recess. I think we either do it then or in September. Those are the two times on either side of the August August recess. But the trade offs you got to understand when when tax reform is happening, every single lobbyist in Washington is engaged because the tax code affects everything, and that process of trade offs just takes time.
And when you say it takes time, can you paint a picture of what it looks like on Capitol Hill? Because there's certain let's say you're a hardcore lefty, you're gonna have certain lobbyists are coming to you saying we need X, Y and z. Then that office takes it up on their day to say we're gonna get this in there.
Is that how that works?
And there's conservatives saying we need this over here, and then there's radoffs.
Is that how this is?
Yes? Yes, but remember this is during reconciliation. So this is almost certainly a republican's only play.
Okay, so it's only Republicans.
In all likelihood, all of the Democrats will vote. Now, maybe they'll surprise us. But the last time we passed the Trump tax cuts. So you look at something like tax cuts, Historically tax cuts have been bipartisan.
Yeah, not anymore.
Not anymore. The Trump tax cuts in twenty seventeen and the House of Representatives zero Democrats voted for them. In the Senate, zero Democrats voted for them. By the way, that's a big shift from you go back to the eighties when Ronald Reagan was president, the nineteen eighty one tax cut. The lead author of the nineteen eighty one tax cut was Phil Graham, who was then a conservative Democrat in the House from Texas. Later became a Republican, but he was a Democrat. Then you look at nineteen
eighty six, Reagan's major tax simplification. One of the leading authors of that was Bill Bradley, a liberal Democrats senator from New Jersey. It used to be that when you're cutting people's taxes, you could get both parties together. Today's Democrat party is so radical that, at least in twenty seventeen, they weren't willing to do it. So that's part of what makes this so complicated. The House of Representatives has a two vote majority, and you can lose votes on
all sorts of things. Now here is the argument of the House for why they say they want one big beautiful bill. They say, well, we got to get the votes, and we need all of the elements in there to get the votes we need to get to two hundred and eighteen. And I got to say, I think that argument makes no sense whatsoever. So they're claiming we got to have border security in there because they're people who wouldn't vote for the tax cut unless border security was
part of it. And they're also claiming we got to have the tax cut in there because they're people who wouldn't vote for border security, but.
They vote for that unless the tax cut's there.
I'm gonna call bs on all of that, and I'll tell you We sat down and I made this point to President Trump. So I spoke very forcefully making this case out. I said, mister President, I went because the House had leaned in. They said this is the only way we can get it past one big beautiful build. And so Trump came in and said, hey, that's what the House has told me.
Let me ask you this, just to paint the picture of the room. When you guys meet with him. Are you seated yep? And then when you talk to him when you're making your points, do you stand? How does it what does it look like? Is it very chill room? Is it a is a casual room or very formal.
So we're in a room called the Mansfield Room, which is a room named for Mike Mansfield, former Senate majority leader Democrat senator from Montana. Has a big picture of Mike Mansfield holding a pipe, the big painting on the wall. It is a large room in the Capitol and when we met with him, there's a table that's basically a giant table set in a rectangle, so we're all facing each other. Okay, so you know, fifty three of us plus the president around a table looking at each other.
And it's a very nice room, and it's where we have lunch every day. It is it's actually one of the perks of being in the majority. So the majority has lunch in the Mansfield Room. The minority has lunch in the lbjroom, which is smaller. So when we became a majority, we got into the bigger room, which is nice because the LBJ room it's pretty tight quarters. And so there's a lot more space in the Mansfield room.
So look, I made a case to him because he came in and he'd been told by the House, Hey, this is the only way we can get it done. And I said, miss President, I want you to understand something.
I said.
We had a meeting earlier today of all of the Senate committee chairs, all of us, every single one of us agrees that doing this with two bills is the only way to get it done. And one bill has a massive, massive risk of failure.
And extending it to eight months.
And I pointed out to him, I said, look, there are fifty three of us in this room. I want you to look around the room. Every single one of us agrees. All of us I agree, John Thune agrees, Lindsey Graham agrees. Said look, you've got Susan Collins and Ran Paul. They agree on nothing. They agree on this. I want you to understand why. And one point that I made to him is I said, look, you need to understand. I love the House of Representers. I love Mike Johnson. He's a great man, he's a good friend.
He has a nearly impossible job. So I feel for how difficult that job is. The House of representatives. More than sixty percent of the House was not here when we pass twenty seventeen texts.
Wow, that a significant number.
So they do not understand what goes into it. They do not understand these thousands of hours of back and forth. Look, they're passionate, they believe in what they're saying, but they don't have the experience of having gone through this. By the way, they also many of them don't understand the rules of records faciliation of what the Senate could do. Remember I talked about we can do budgetary things and
not policy things. There's always a battle between the House and Senate because the House gets mad at the Senate. You damn senators, you won't do what we want. It's like, well, there's a statue that governs what we can do, and it does limit what the Senate could do. On reconciliation, that'll be a back and forth. It always is. Every reconciliation there's a battle between the House and Senate because the House wants to do things that the Senate is not allowed to do under the terms of the statue.
What I told President Trump is I said, listen, if we put this all in one bill, we have a massive risk of failure. If we do it in two bills, we can start with a huge victory, securing the border, rebuilding the military, unleashing American energy, and then we will get tax cuts past. It's just going to take longer. And you know, on the argument that, well, gosh, this is the House leadership's argument, we need each piece as
a sweetener to get the votes. What I've said in response is, Okay, show me this magical unicorn of a House member. Cause I know most of these guys. Yeah, so show me. Don't talk about well, I got members, I can't get their vote without it. All right, tell me who you're talking about, crazy right wing knuckle draggers. Okay, I'm a crazy right wing knuckle dragger. Those are my peeps.
I'll go talk to them.
I'll go talk to them. But when I'm talking to them, they're not saying that. Are you talking about really moderate Republicans? All right, Fine, that's a different that's a different, different problem to solve. But we talk about that. One of the issues that complicates this is what's called the salt tax.
Explain that.
Okay, so the salt tax is state and local tax deduction. So One of the things that happened when we passed the twenty seventeen tax cut is we eliminated. Initially, we eliminated deducting state and local taxes. So it used to be before twenty seventeen, if you're in California and you pay a crap ton of taxes to the state of California,
you could deduct all those taxes on your federal taxes. Now, what that ended up doing was having the federal government subsidize big blue states that tax the hell out of their constituents, and big blue states that have massive taxes. You just got it deducted from your federal taxes. And so we were, like Gavin Newsom, keep raising taxes, the Feds will subsidize you on that. So in twenty seventeen we eliminated that. Now we eliminated it, but we actually
allowed some deduction. We put a cap of ten thousand dollars, so you can deduct up to ten thousand dollars of state in local taxes. So you and I are both homeowners in Texas, the biggest state tax we pay is property tax. So you and I deduct our property tax on our federal income tax. But it's capped at ten thousand dollars. So if you're paying more than ten thousand dollars, it's on you. It's on you. Now, what's the political problem.
The political problem is there are a number of House Republicans who come from blue states, in particular New York and California, and the blue state Republicans, the New York and California Republicans, have a problem because eliminating the salt deduction really impacted people in high tax states because unfortunately, their big government democrats keep taxing the hell out of them.
We talked about this in California this past week.
Those New York and California Republicans feel an obligation to do something to help the problem of not being able to deduct more than ten more than ten now, and so the argument is, well, if we add border security to it, they'll have to vote for it because they can't vote against border security. So this is where the argument makes no sense. I'm like, all right, first of all, we tee up the first bill, secure in the border, rebuilding our military, unleashing American energy. I don't know a
Republican is voting against that. The mandate out of this election was secure the border. Show me the idiot Republican who is going to say, no, I'm for open borders. That is a recipe for disaster. You're retiring when you're doing that, because you ain't running again.
And if you do, you're gonna get primary, You'll get killed.
None of them will vote against border security. They're just not going to.
They know the American people, they know what they want.
On the salt issue. Look, will there have to be an accommodation for New York and California Republican? Sure, there will. There will have to be an accommodation. I understand that that's part of why this takes a while. You got to negotiate. There are geographic and regional issues that you have to negotiate, and there's a trade off. Now, will the accommodation be restoring in full the state and local tax deduction? I don't believe it will be, because that's
terrible tax policy. That means the red states are all subsidizing the blue states, and they're bad tax policy. Here's what I think the resolution will be. This action idea I got from Norquest. Grover Norquist runs Americans for Tax Reform. He's a longtime friend of mine, one of the eating thinkers when it comes to tax policy and Grover's idea. So, right now, there is a marriage penalty in how you
deduct state and local taxes. You as an individual, if you file your tax return, you could deduct up to ten thousand dollars of state and local taxes. If you are married, as you are, you and your wife can deduct a total love ten thousand dollars on state and local taxes. What Grover suggests it as a fix is eliminate the marriage penalty, which means you and your wife would be able to deduct not ten thousand, twenty thousand, so it doesn't hurt you.
You're not being penalized forhur being married.
Right now, that's good tax policy as well, getting rid of the marriage penalty. One of the negative things federal law does is discourages marriage, and marriage is a very good thing for our society. I think will end up, if I were to predict the bill that gets enacted, I think will end up eliminating the marriage penalty on the salt deduction, which lets the California and New York Republicans go back and say, hey, big win, big win, We doubled the deduction. Now, what it doesn't do is
give a multimillion dollar tax break to Michael Bloomberg. What it doesn't do is give a massive benefit to billionaires in New York and California who have massive taxes. And I think that's where we'll end up. But again, that takes time, and so I don't know how we resolve this. I think we'll end up seeing the two proceeed on parallel tracks. I think we're gonna see the set the house for a while, go forward and say we're doing
one big, beautiful bill. Yeah, And I think the setate's gonna say, yeah, that's fine, We're moving forward.
We're not wasting time.
You're going to go forward with our bill on the border, on the military, and on energy because we can get it done. We want a victory and this is how you win. And look, I don't know how it resolves, but I can tell you I think it is an enormously consequential question. And frankly, this this is exactly the reason I think people listen to Verdict for sure, because there is not another show. There's not a news.
No one's talking about this or covering it or not a podcast.
People don't understand this, and I will tell you this is the single biggest topic that the Senate and House and President Trump are discussing right now, and nobody is covering it in the news. But the reason it's the single biggest topic is I believe it is the difference between succeeding on Trump's legislative agenda and winning massive victories or losing and having a crushing failure. And in my view of failure is not an option. We cannot fail, which means we've got to do it right.
So let's talk strategy to wrap this up, because I think this is an important point. I go back to one of the best I think PR moves I've ever seen was in nineteen ninety four, Contract with America. Firste hundred days, We've got a contract with the American voters, New Gingers comes in, we get the House for the first time in forty years.
We're delivering quickly.
I believe a lot of voters feel like that is the mentality right now, and if we wait eight months, I think there's a lot of people going to be very angry that just took so long to get it done. And this is about momentum because and you've been in Washington for a while, how important is momentum out of the shoot here to get the win early to then have momentum on other issues. Because I also think that helps people get along. I think that helps conservatives go, hey,
we just had a big win. We just got along, we just worked out this last deal. Let's do it again.
Look a quick win. Momentum helps when winning produces winning. There is an argument from the House, well, we can't do two reconciliations. It's too hard for us. We only get one bite at the apple. I don't find that remotely plausible. Again, show me the hypothetical Republican that all right, we passed the bill security of the border, and then the Republicans says, all right, I don't want to do
tax reform. I'm out. And by the way, if we do nothing on tax reform on December thirty, first, there is a four and a half trillion dollar tax increase that happens automatically. There is not a Republican in the House or Senate that is willing to vote for a four and a half trillion dollar tax increase. So we have to get this done. So in my view, yes, momentum. If you score victories, you win victories, That helps you win more victories, That helps you win more victories to say, hey, wait,
we can get this done. This is good. Let's get another victory. Let's get another victory. Let's get another victory. But there's an even broader risk if the one big beautiful bill would happen, and it would happen in say eight months. Okay, fine, that would be okay. I'm very concerned we get to eight months and the whole thing collapses because when you make something so complicated, you put so many pieces in there, you just increase the risk
of people bailing for one reason or another. It becomes much harder to resolve the trade offs when you complicated. I think one of the keys to getting things done is simplifying and focusing on where you can come together. And I think breaking it up and doing a big victory on the border of the military and energy, and a big victory then next on taxes. I think that's the path to success.
Final question for you on this, and that deals with the listeners. They're going to say, what do I need to do? Is this one of those moments where you encourage your member of Congress to get a quick win and you say, hey, I sent you there. I want to secure border. I want to encourage you to do this.
Now, Look, I don't know that this is the kind of issue that you will. I mean, if you want to call your congressman, you can. I don't know that this is the kind of issue that that is needed. This is more just look deliver wins. This is for you to understand what's going on because these are the discussions and fights that are happening behind the scenes and what the stakes are. And what we try to do in Verdict is explain things that the media won't explain to you.
Yeah, they're not touching this in at all.
Don't forget. We did this show Monday, Wednesday, and Friday. This is why it's going to be a very fun year here on Verdict. So make sure you grab this podcast. Hey that subscribe auto dalwo button. Many of you maybe watched this on YouTube. Make sure you hit that follow on YouTube as well so you don't miss one of these video episodes as well. And the Center and I will see you back here on Wednesday morning.