From Where I Sit: Episode 7 With Chairman Kevin Brady Transcript

Tom McGee:

Welcome to From Where I Sit, I’m your host, Tom McGee, President and CEO of ICSC, the preeminent membership organization serving the commercial real estate and retail industries. Each episode, I’ll be joined by top experts to explore the trends impacting communities and commerce and the spaces where people shop, dine, work, play and gather.

In this episode of From Where I Sit, I spoke with Chairman Kevin Brady live at the ICSC Federal Fly-In in Washington, DC. For over three decades, Chairman Brady dedicated himself to public service, serving as the U.S. Representative from Texas's 8th Congressional District for 26 years and as Chairman of the House Ways and Means Committee for four years. It was a privilege to speak with Chairman Brady, who was the chief architect of the Tax Cuts and Jobs Act, which is set to expire at the end of this year.

It is such a privilege to have you here, and I can't think of anybody that would be better suited to talk about tax policy than you and not just about the specifics of tax policy, but also just about how we're going to get to the finish line around it. And I'll say Chairman Brady was wonderful to ICSC during his time as Chairman. Always, while we didn't always agree on every issue, we always had the opportunity to talk to you and you were always so well educated about everything related to business and tax policy and so forth.

Chairman Kevin Brady:

I just want to say thank you, by the way. ICSC was hugely helpful, great partner to us in 2017, as we were working through modernizing the tax code that had become very obsolete, high rates, uncompetitive around the world, driving really slow growth and flat paychecks. And we we were seeing about every other month another company move overseas or a purchase move overseas. So we had to make big strides, but you were so engaged, Tom, as an industry. Both you or members back home who'd built long-term relationships with members of Congress, policymakers. Engagement up here on the Hill, when we were going through tax reform. As you know, in the real estate area, we were looking at making some major changes. And what you did was bring solutions to the table, help educate both me and our tax writers. And at the end of the day, we didn't want to see a repeat of the ‘86 act that had not as positive outcomes as you would like.

So real estate really, think, and especially ICSC really was a model, I think, approach in engagement in 2017. As a result, we came out with a better product. So thank you.

Tom:

Thank you for that. We don't want to go back to 1986 and the impact of that. But before we talk about tax policy, I just want to ask you some questions just about how you got involved in politics. What caused you one day to wake up and say, hey, I'm going to run for Congress?

Chairman Brady:

Hadn't planned to. I think we're all affected by our families, I think, impact-I grew up in the Black Hills, South Dakota. A great place to grow up. Five of us kids, mom and dad. So dad was killed early in our lives. Our mom raised five of us by herself. She had us-I think her best defense against bad behavior was a good offense by having us involved in everything that walked and moved. If there was an organization in our community, we were in it, figuring she could just tire us out. But part of what she taught us, one, to be independent, think independently, to be optimistic, to have faith in God. But the most important thing she kept talking about was being involved in the community. So after college, I was a Chamber of Commerce executive in three different communities. So working with the business community, helping start businesses, recruit industry, create a business climate. From there, that led to a seat on city council back in Rapid City state legislature in Texas and ultimately to Congress and did not plan on any of that trajectory at all.

But yeah, that small business community experience really, I think, changed, in fact, helped me do tax reform knowing Main Street is different all across America. And you really need to think through how these policies create that. So yeah, it was, I'd like to say it was all carefully planned out and executed, but of course, like most life, it wasn’t.

Tom:

“Life is what happens when you're busy making other plans, right?”

Chairman Brady:

That's right.

Tom:

John Lennon's great quote. So becoming the Chairman of the House Ways and Means Committee, we see folks like yourself on television. And actually my daughter Emma, as we were leaving breakfast this morning, we had a chance to meet with Leader Jeffries. Oh yeah. And she said, how does somebody become the House Minority Leader? And I said, I don't know, that's a pretty good question. So let me ask you, how does somebody become the Chairman of the House Ways and Means Committee?

Chairman Brady:

One, it's the greatest job in Washington. You can lift everyone's life in America up through the jurisdiction you have in Ways and Means Committee. Taxes, trade, healthcare, welfare, social security, Medicare, huge impacts. So it's just a great committee to be on. I came from a region, in Houston region, that had had a history of leaders in Ways and Means Committee. President George H.W. Bush, a mentor, Bill Archer, who's Chairman of the Ways and Means Committee from Houston, a mentor.

And coming out of the Chamber of Commerce world, I just wanted to create jobs in a business climate. That's where they directed, they said, this is where you need to be. And so working to get on the committee, then you campaign and work your way up leading the key subcommittees, trade and taxes and healthcare, and then getting a chance to lead. You've got to convince your colleagues that you can best lead that committee. You do it through a steering committee. You get their votes, count the noses, prove yourself out over the years, and it's worth every moment getting a chance to lead because you can have just big impacts and the opportunity to help rewrite the entire tax code, which happens about once a generation. It was just made even more special.

Tom:

Do you miss it?

Chairman Brady:

No. So you miss the people you work with, both your colleagues and your professional staff, really great people. So you miss them and you miss the issues, the policies you worked on. But I still at Akin work on the things I love, taxes, trade, healthcare, and energy, the economic issues where I, the space I love to be in. Yeah. And I still get to engage and help shape where I can these policies. And we've got a lot of, we've got a lot of new people in Washington that weren’t around in 2017. We spent a lot of time being invited to educate lawmakers. What did we do? More importantly, why did we do it? What should we be thinking about going forward? So by one way the other, I've had my passion sort of fed in just being able to support this new team as they go through a really challenging task.

Tom:

You mentioned there's a lot of new people. I think 50% of the members of the House are new. I think over a third of the Senate is new since 2017. So you have a lot of new players that someone like yourself, Speaker Ryan, you guys had a long history speaking out about tax policy. You were known as a leader and very thoughtful around that. I think one of the concerns that not just ICSC, the business community in general has, is you have a lot of new folks there. Do you feel that they have the experience to know what-the impact of what some of the things that they're proposing could have on the business?

Chairman Brady:

So they are, if think about it, since 2017, if this were a college football team, you'd say you've got new players, new coaches, and new college presidents too, by the way, new leaders. But they have been moving fast to build that foundation. I think Chairman Jason Smith was right on target to do these field hearings around the country so you could find out from real people how the tax code was working or not, the tax teams they put together, the briefings they did, certain Chairman Crapo has been trying to lead and accelerate that learning at the Senate level as well. I think they've made up a lot of ground in an incredibly short time to their credit.

Tom:

So now let's get into the meat of tax policy, shall we?

Chairman Brady:

Yes.

Tom:

All right. So let's first talk about the 2017 act. Just do a reflection about that act and how you feel it's impacted kind of the U.S. economy, the business environment, since it was enacted.

Chairman Brady:

Yeah, it helps to know what we did there because it impacts what the Congress is doing now. So in 2017, it was different in the sense that our tax code had become obsolete, outdated as corporate rates in the world. As a result, for a decade before 2017, our economy had been incredibly slow, about 1.5% growth a year. Paychecks had been stagnant for a decade. And as we were talking about, these companies were picking up and moving overseas or investing overseas because the tax code basically told them to do that. So our goal was to create a tax code built for growth of jobs, paychecks, and the U.S. economy. Do it in a way that our U.S. companies could compete and win anywhere in the world, including here at home. And when they did compete and win around the world, be able to bring those profits home to reinvest here in America. And do all of that in a way that America would leapfrog to be not just one of the most competitive economies on the planet, but also be one of the most desirable places for new investment.

And that's exactly what we saw because incentives in the code on average investment from companies grew 20%. We brought I think $2.5 trillion of stranded profits back from overseas, a ton of intellectual property innovation back here as well. And what the record shows is that now our U.S. companies that are here and abroad, their investment, sales, employment, expenditures all grew more here than overseas. So in effect, we had a giant sucking sound back toward the United States in a big way.

But I will tell you, Tom, the thing I'm proudest of was what we noticed in 2019. So three things happened in that year, and that was after a full year of the new tax code was in place. We could see what was working and how it was working. So in 2019, three things happened that we noticed. One, paychecks grew more in 2019, like real wages. So how much better than inflation are you doing? Real wages grew more in one year in 2019 than in all eight years before it combined. So people were getting ahead for the first time in a long time. Secondly, as we all know, poverty just dove down and especially in areas where I think people had been left behind in the old tax code, which is those without a high school degree even or many skills, disabled, people of color, women, a lot of areas where people now are seeing job opportunities and rising paychecks. But the third thing, incredibly, income inequality began to shrink in 2019 for the first time in half a century, and it is because the growth opportunities were coming up from the bottom versus from the top.

And I think my only regret is COVID cut off that growth. I would have loved to see where that momentum would have taken us longer term, but nonetheless, no tax reform was perfect. There's plenty of things I would have-Building a home. There's things the day you move in, you would want to do differently, had the same belief. And so this is in 2025, the opportunity to see in a different economy, really, global competitiveness, not just to extend these cuts, but to make them better. Every chance you get a chance to improve. I've been encouraging our policymakers now, leave your mark.

This is a super competitive economy worldwide. China is very aggressive. We know the country that wins the innovation race wins the future. So things like AI, incredibly expensive, innovation, competitiveness really matters. Yeah, they've got an opportunity with whole new fresh eyes to be able to make them better.

Tom:

So you mentioned it was like building a house and there's some things you might do differently or tinker with. What would you have done differently?

Chairman Brady:

I was really overall very pleased. We had proposed some bold ideas that didn't make it all the way through. We thought-most people when you heard me talk about a postcard thought it was just a marketing gimmick. But in truth, the postcard was about dramatically simplifying the tax code. So that 95% of Americans-

Tom:

You want to be-most people to be able to basically complete their tax return on the size of a postcard.

Chairman Brady:

Yeah, 13 lines total, and then what you pay. There's power in simplicity and knowing not just how you're taxed, but how almost all your neighbors are taxed is really powerful. We passed it through the House, didn't make it through the Senate. We had proposed a border adjustment tax truly to dramatically simplify the international code, but to make American companies super competitive around the world. Didn't make it again, new concept. And that's the part of tax code. You've just got to reform, you have to understand not every ideas, are people ready for. Some you just need more time to work through it. But at end of the day, President Trump was incredibly helpful. We had Senate leaders. This was a team, when I say team effort, I'm just saying to the best degree of what Washington can do. So that I was really proud of just the effort everyone made to make that

Tom:

Talk a little bit about that and the process of getting to a completed bill. As I mentioned, you’re quite experienced, Speaker Ryan was quite experienced. You had a lot of folks around. There's a lot of balls in the air this year, right? You've got the debt ceiling conversation. You've got different perspectives around budget resolutions in the House and the Senate, but there's a deadline and the deadline is the end of the year. So how do you envision this all coming together this year? How's this going to happen?

Chairman Brady:

Yeah. So the first step is reconciliation because that's the way you can get this passed on a simple majority in the Senate. It's really key. It's the runway that you land tax reform on. And I'll tell you, it's difficult. There were two or three times 2017, I worried we would lose tax reform during the reconciliation process because it's really hard. And it is, everyone's got a strategy, one bill, two bills, three bills, whatever it is. I'll just tell you, reconciliation is just like the Mike Tyson quote about preparing for a fight, “Everyone's got a plan until you get punched in the face.” So reconciliation is the same thing. Everyone's got a strategy until you sit down with your members, find out where they're at. And with a near zero majority, some days in the House, it is a degree of difficulty, multiple degrees of difficulty, hard. That's a tough process. Don't underestimate how important the House action here, three weeks ago, four weeks ago, was because it added incredible momentum, showed people that the House could do it.

Tom:

The budget resolution.

Chairman Brady:

Yeah, the budget-So now the House and Senate are going to sit down work through those issues at the end with the White House, as we did in 2017. I think at the end of the day, there's advantages to one or two bill strategies, but Chairman Smith is reading the House correctly, in my view, with almost no room to move forward. What they figured out was that tethering at a time where deficits, as you pointed out, so much different than they were in 2017. Deficits really matter, important to the House of Republicans. So finding a design that basically, like two rock climbers, tethers savings in those cuts to tax reform in those cuts. So the higher savings climbs, the higher the tax cut space becomes as well. I think that was the key to what the House did. And I think at end of the day, the key to reconciliation will be a compromise that marries the current policy baseline of the Senate that allows more permanence or permanence of more of the code to that savings tether with a pretty meaningful number. I mean, that $1.5 trillion or higher, it's going to end up somewhere there. That's going to be the key to unlocking reconciliation and allowing the tax writers and the border writers and the energy writers to move, to produce their work. And I'd like to tell you every step in reconciliation is easier. It's not, it’s just a different type of difficult. So yeah, they're doing the right things on the approach that they're taking here.

And again, you're hearing very aggressive timetables that don't seem realistic. I loved unrealistic timetables. They were hugely helpful in getting people to make a decision and get to the table. President Trump was really demanding that way. Yeah, it actually helps the process.

Tom:

You mentioned the timetable and there are some pretty aggressive perspectives about that. Do you see any of those actually coming to fruition or do think this thing will end up coming down to the holidays again?

Chairman Brady:

I hope not. I hope not. Because if it comes down the holiday-

Tom:

It's a better spot now than it was then though if it comes down to the holidays. At least it won't disrupt your holidays. Unless people like ICSC call you and say, pick up the Batphone and call you.

Chairman Brady:

Yeah, we’ll I’ll tell you, you picked up the Batphone a lot in 2017. In fact, no one provision had more meetings with me than like-kind exchanges. And if you told me that heading into tax reform, that I'd be living with that issue, I would have never guessed it produced the right outcome there as well. I think what the House did significantly lowers the risk that it's going to stall out, fall apart, end of the year rescue mission. It didn't go away, but it dramatically lessened. The next key is if they can land on that run, create a runway with that one bill, compromise with the Senate, is going to increase again the likelihood we don't end up there and it's more time.

Tom:

So let's talk about some of the provisions that you mentioned. The Senate, they're at least proposing that the current bill be the policy baseline. So you don't have as much, you don't really have to find the cuts where the House is not taking that position. They're going back. So let's operate on the presumption. We do have to find significant revenue dollars. One of the things that's being proposed that, it's not in writing per se, but it's being discussed, is corporate SALT or B-SALT or business state and local tax, basically providing a similar type of mechanism that exists on the individual side, which is either capping or eliminating the deduction for state and local taxes for corporates, for business. Real estate being a very long-term asset and property taxes are a huge part of the expense basis, some of us might say they're not really a property tax, they're an operating expense to operating a real estate business.

What's in the minds of folks, because quite frankly, in a group of a lot of folks here that invest a lot of capital in real estate, we look at that and think just on the surface, that just seems like an incredibly silly idea. It's going to blow up commercial real estate, which is not a smart thing. How does that even get legs?

Chairman Brady:

Yes. So here's the situation. One, I think there's going to be a very meaningful savings number, deficit reduction number, how they get there, what that final number I think is going to be significant. Unlike 2017 where we didn't do $1.5 trillion of tax cuts, we did $5.5 trillion, but we, meaning you, helped pay, offset $4 trillion of it. At the very beginning, we'd already paid for 72% of the tax cuts, corporations paid for most of the corporate rate. There were a lot of changes, interest deductibility. Remember, we found a good compromise on the building expensing length versus interest deductibility. But with deficits such a higher priority now, I think there's going to be significant number.

And what the tax writers are doing, which is right, they don't know what that number is going to be yet with the Senate. They don't know if they will be allowed to pursue some of the Medicaid reforms the House is looking at. So they don't know what the individual SALT number is going to be. It could go really high, really fast. So they don't know yet what they have to bring to the table. So they are creating a menu of different items that could raise revenue and corporate SALT being one of those because it raises big numbers fast.

The issues are not related, corporate SALT, individual SALT, dramatically different. We didn't go there because those are just normal business operating expenses, unrelated to just a gigantic subsidy on the individual side. They are in this whole menu trying to figure out who's impacted, how do they design it, if they need it, what should it look like?

And so everyone should be in a big education mode because there's been no policies laid. So both for members, tax teams or individual tax offices ought to be, everyone needs to be saying, this is the impact if you go this direction. And I think the connection with real estate has been made faster in this conversation. I think people, it's easier to understand that impact back home on real estate. So I think the industry's got out early, been laying this foundation fast on the income side. It's harder for lawmakers to know which states are impacted, which industries are impacted. It's a little vaguer, but we know on the, for example, on the real estate side, Texas has a major impact in all the studies we've seen from it. But the growth states all have big impacts, individual-

Tom:

Major impact in regards to the impact of-

Chairman Brady:

Yeah, who pays more? Who's going to have a bigger economic impact from that? And then on the income side, think 10 of the 14 or 15 states impacted the most there are red states, Republican states. But here's my point. When you're going up on the Hill, you should be educating lawmakers. They are hungry to know how this impacts us, you know what I mean, economically, because again, I don't know if they necessarily want to bring those pay-fors forward. Right now is uncertain, it'd be irresponsible if they don't have a menu, work through design thought through when the time comes. So yeah, your timing for coming up on the Hill could not be any better than right now.

Tom:

Is there any particular guidance, Chair Brady, in regards to-there's a litany of things that we could say on how this would impact our industry. Are there particular trigger words or trigger phrases that lawmakers go, I get it, I get it. Are there things that we should be leaning in on more than others? You understand our industry and the impact. What do you think resonates with lawmakers?

Chairman Brady:

So I think the three things popped in mind, obviously growth, economic growth. We've got a lot of Republicans, high growth states, so want to see that continue. So what's the impact there?

What's the impact on investment back home in our regions to new retail facilities, new shopping centers, new jobs and growth, I think are very key there.

And then the other thing is these are new players and so they are less interested in if a corporation or a large company benefits. They're far more interested in what happens to small businesses and mid-sized businesses. So they want to know your footprint. They want to know where you're invested, what those jobs are, how are my small businesses and mid-sized suppliers? How are they impacted by these provisions? That is, especially in the House, I think that is at the forefront of their mind.

Tom:

That’s good counsel. You know, industry is one that by definition, it's very domestically big. You're not picking up a piece of property and moving it offshore. We're invested in local communities across the country. Let's talk about another item that Betsy made a reference to in her opening comments, carried interest. We've been fighting that battle. Some of the folks in this room have been fighting that battle for decades. And there's always this, I think, misconception that carried interest is just used by Wall Street players. That may be true, some may use it, but clearly in real estate, which is the vast majority of partnerships in this country, there's a significant amount of carried interest that is important in this industry, particularly in projects that are harder to do, harder to make the math work, urban renewal kind of projects in particular. How do we-and you sat in the seat, we had conversations around carried interest and it's always a difficult, tricky conversation to have because immediately folks go to a private equity of hedge fund guys. We're saying, no, it impacts us. How do we make that conversation resonate?

Chairman Brady:

Yes, as we were looking at the tax code 2017, I mentally always had a, what I called, the investment infrastructure. So what parts of the tax code drive investment risk? You have a dollar. There are only three things you can do with it. You spend it. Good. You can save it, economically better. You can invest. The most risky thing you can do is also the most pro-growth. That's why we have a lower rate for that. Drive, incentivize people to take that risk. And oftentimes it doesn't pan out for them. And even that's pro-growth, frankly, going forward. Carried interest was seen by me as another source of capital that would recognize and reward that risk. We made changes to it, length in that holding period and all that. It was a difficult negotiation with the President because like-kind exchanges were what you were battering me with, but the President was calling me all the time about carried interest.

Tom:

We did a really good job.

Chairman Brady:

You really did.

Tom:

You remember the conversations-

Chairman Brady:

I do, my God. I still wake up at night. I have a twitch in my eye from it all. But the President felt that same way about carried interest. So we had a lot of conversations about the compromise, which worked in my view, because it kept that capital flowing, addressed some perceived abuses, created a longer term. But here's I think the point, the difference now is he is still serious about this. So the risk is very high.

Tom:

Why does he care about carried interest in the way that he seems to? What is it about carried interest that the President has made up-on a fairly small piece of the tax code?

Chairman Brady:

Yeah, it’s tiny.

Tom:

Yeah, it's $15 billion or something for a 10-year period.

Chairman Brady:

I think at the end of the day, he wants to deliver tax reform that really benefits clearly the middle-class, blue collar workers, people who are working their tail off. He's less interested in provisions that are perceived to help only the wealthy and the biggest corporations. I think it's genuine there.

What's different between 2017 and now? Is 2017, Tom, it’s just what you said. Everyone assumed the narrative was big bucks for big corporations and no other impact. That's all changed. Now you've seen carried interest, private equity down on small, medium-sized businesses across the country. I think that narrative has changed. More and more lawmakers can actually look down the street and go-which I can, like three blocks from my house, look at the energy company, wouldn't have survived COVID, really well run energy company, but for carried interest and private equity jumping in where, at times, especially in the energy area, other capital wasn't really being rewarded for jumping into that type of industry.

And so I think it's in a stronger position politically among lawmakers, but I think in a more precarious position with President Trump. Because I will just tell you, when I was Chairman of Ways and Means Committee, every day the press would ask me about the President's tweets every morning. The truth of matter is, I wasn't paying attention to the tweets. I was paying attention to his campaign promises because that's what he was calling me about all the time. And he wasn't dogmatic about what you did. He wanted to make sure he had followed through on everything he talked about. So when he makes this an issue, a little surprisingly, upfront on this, we're about that being addressed. I think Chairman Smith has said, the President's priorities really matter.

And so I think this too is an area where, you know, really full education of what this provision is, who's benefited by it, why that private capital has grown in size, but grown in need over the years for those small, medium-sized, Main Street businesses that Republicans really care about. I think that education effort is really crucial.

Tom:

It sounds like we got a little bit of a battle on our hands.

Chairman Brady:

You know, it's not a big number. Like you said $13 to $15 billion, it wasn't back then as well. It could be for a compromise as well. I think so the President just wants to make sure he's delivering those middle-class tax cuts.

Tom:

So another item that's being—important to our industry and in small business in general, because you mentioned the importance of small business is the pass-through-

Chairman Brady:

Yeah.

Tom:

That was an effort to try to get some sense of equalization between the corporate tax rate of 21% and the higher individual tax rate. Any advice for us in regards to that and any inside baseball in regards to how you think the minds of lawmakers are looking at that right now?

Chairman Brady:

Yeah, I think I was really proud of the past-through deduction, way too complicated for what we had envisioned. Nonetheless, I think achieved exactly what we wanted, which is a little better parity between C Corps and the pass-through communities. I think there's a lot of popular support for extending that deduction. I don't think—we have reams of economic data about corporations. We have very little on pass-throughs. People don't understand that their neighbors are pass-throughs or could be a combination of corporation and pass-throughs. And so educating them again about the important role that plays back home for workers, local Main Street-

Tom:

Local jewelry shop is likely a pass-through-

Chairman Brady:

Yeah, absolutely. What we want to avoid is any collapse of the reconciliation discussions that create the need for Republicans to do a bipartisan end of the year bill, because you will see likely a capping of who can get those pass-throughs and narrowing of them, more net investment taxes on pass-throughs. So a lot of things we don't need to see in this economy, they would be very damaging. Yeah, think it's—pass-throughs are in a good position as long as you keep educating and they can keep a reconciliation, they can deliver on a reconciliation bill.

Tom:

So you mentioned still having a little bit of post-traumatic stress on us and the like-kind exchange conversation. Is there—do you see that as something that, do we need to talk to Chairman Smith as often as we did with you about like-kind exchanges?

Chairman Brady:

So the answer is, doesn't hurt to do that because every chance you get to explain the importance of that and unlocking investment going forward. As you remember, we had proposed initially to eliminate it on the, just on the policy belief of you sell your property. Washington shouldn't be telling you what to do with it, whether it's buying another piece or putting your folks in a nursing home or paying for college, nonetheless.

You made a very compelling economic argument for why that provision was so crucial. So don't take it for granted. It's not on the radar right now. It could. I don't think the chances are high, but why take any chances? If it's a priority from your tax team and your members, even if it's far-fetched, at least spend a moment to reinforce the importance. That would be my advice.

Tom:

Couple of final questions. One, the slide that I showed around the national debt and deficits and so forth. There's really only three ways to deal with it at the end of the day, either raise taxes, cut spending, or you grow your way out of it. You grow the economy, which is a little bit of what happened in the ‘90s. That is a problem. It's certainly inflationary and certainly additive to putting upward pressure on interest rates, long-term rates, which are important to our industry. Any guidance or perspective around how Congress will eventually deal with that?

Chairman Brady:

The debt's real. We need to be paying attention to it as a country. Certainly policymakers do. How much debt you have compared to your economy is the right measurement, I think, in a big way. And the truth is, since COVID, our government, which was big before, has just exploded. It's went from $4.5 trillion to almost $7 trillion almost overnight. That's why we're running nearly $2 trillion debts. You've got to right-size it. It doesn't have to happen overnight, but you've got right-sizing back to the size of our economy. It's really crucial to do that. Growth is not only good for the economy, it's a budget tool. Growth generates revenues in a significant way. We saw $1.5 trillion more revenues. The two or three highest years in revenue record came after the Tax Cuts and Jobs Act. In fact, corporations right now are paying more as a percentage of the economy and in total more than ever in history. So growth matters, but you have to constrain the growth of government. You have to do both. It's like in business. And so finding ways to do that is going to be important. Some of it is that waste, fraud and abuse, which is crucial.

I think the Elon Musk effort, the most important part of that is simply answering the question, where's our money going? Who are you paying with the money? Usually helpful for committees to figure out are those priorities, but at end of the day, to do it right, you got to find a way to save social security, Medicare, Medicaid for the long-term financially. They are not set for that longer term. It's going to take some reforms to do it. It's the only way long-term to be fiscally sound again. So hard stuff. No question about it. I think a lot of the Medicaid cuts we're reading about are long overdue, have been, frankly, been talked about quite a while. Some of them are going to be—are going to have a big impact. Others are really going to trim that back to what the Medicaid should be.

Tom:

I'd love to have a conversation at one point around entitlement reform and so forth. There's a lot to that. Social Security, all the actuarial kind of assumptions and so forth, which can impact that. We're almost at the end of our time. I want to ask you one question and then give you an opportunity to make some closing comments. It's a really important question.

Chairman Brady:

Oh Lord, here it’s coming.

Tom:

You're a baseball fan, Houston Astro fan. I'm not going to go to the negative part of the Houston Astros. I'm not going to do that. Even though they beat my Dodgers, that's okay. I'm not going to-

Chairman Brady:

Oh, I knew you were—too soon. Too soon.

Tom:

Your favorite Astro of all time.

Chairman Brady:

Altuve.

Tom:

Really?

Chairman Brady:

Yeah-

Tom:

I thought J.R. Richard. I thought you were going to go J.R. Richard.

Chairman Brady:

Biggio and Bagwell, those are really good, really good. Yeah. And good people too. And we're really fortunate. I think you feel this way about the Dodgers. We've got a great team owner. They are just embedded in the community. It's fun to root for the good guys. And in your community—I wasn't looking at you when I did that. I could have, but no, in your own community.

So I love baseball. It's the greatest sport ever played it for many years through college and they have a congressional baseball game-

Tom:

You hurt yourself in a congressional baseball game and wouldn't take yourself out, you kept playing.

Chairman Brady:

Yeah, that was—our coach.

Tom:

Die hard.

Chairman Brady:

Our coach knew—so the first inning at bat, I tore the bicep off my bone, which that was a problem. But then the first inning in the field, I dove for a ball and then I cracked my rib. So I'm thinking my arm doesn't hurt as much because now I can't breathe. But I didn't tell the coach. So in the innings, I hit out back on the far end of the dugout. So he couldn't see me because he would have pulled me out in a second. At my age, every inning matters. You know what mean? Yeah, I love that game. We raised, what's neat is we raised almost $2 million that night for charity. Like Boys and Girls Club, reading, youth sports, I mean, really good things. People, it's a great tradition up here. And Tom, you make friends in the other dugout because you have something you share.

And the point being, you wouldn't know it, but there is a middle-class in Congress in both parties. Really solid people. They work incredibly hard. They do their homework. They're trying to do the right thing. But you don't hear about them or see them because they don't do outrageous things. They don't say outrageous things. They just go to work. That's who solves these problems in Congress. I always wished I could introduce America to more of that middle-class. You'd have a greater confidence in this. Today, social media tears the whole nation apart, including Congress. There's a loss of trust in institutions that wasn't there when I started that is there today. So it makes that common ground harder to find.

And then the Ways and Means Committee, I’ll finish with this. The culture I tried to extend was wake up every day to my Republican colleagues, wake up every day stopping bad ideas. Because there's a lot of those in Washington D.C. that will keep you busy, but wake up each day working equally hard to find common ground. You do both of those full out, you'll be doing your job, both for your district and for the country.

And there are a lot of good people I really treasure. Rich Neal was my counterpart on the Democrat side, he’s a ranking member and Chairman. Word was good. He believed in the committee and the institution. And so I was really blessed to have someone of his caliber who felt just like I did about the importance of finding those solutions. There are, I'm just telling you, there's a lot of really good people in that middle-class that we can have confidence in.

So you're going to be meeting with them tomorrow and I'll just tell you that engagement, the messenger matters. You taking the time to come up here to sit down, either with lawmakers or their young staff, who is equally important here. The opportunity to educate them, create a relationship, be a resource. They're not real estate experts. They don't know shopping center. Be that resource for them and have that long-term relationship. Don't get a divorce unless you can never work with someone again. Like stick with them, continue to be that relationship, that's why you succeeded in 2017. I'll just tell you that. Those actions built up over a long time, but now renewed when you come up here and back home. Yeah, that's the model that you used to persuade and educate and influence.

Tom:

Thank you. And you're one of the good guys. Thank you for taking the time today to talk to us.

Chairman Brady:

Thank you.

Tom:

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