Steve Forbes thinks Republican lawmakers are going to cut taxes, and their success in doing so will be a question of D.C. survival.
"I think we'll see tax cuts more than overhauling the tax code. It's too late to do an overhaul," he said. "It's the instinct of self preservation."
Forbes, 70, spoke with TheStreet at a celebration of his publication's centennial celebration in Manhattan on Tuesday evening. The two-time candidate for the Republican nomination for the presidency discussed tax reform, Trump, and whether the billionaires his magazine celebrates are a corrupting force in American politics.
Forbes, an advocate of a flat tax system, is focused on the promise of tax cuts from Republicans in Congress and the Trump White House. He expects yet-to-be-detailed legislation to include rate cuts for individuals and corporations, increased deductions for middle-class and deliver a "good boost" for the economy.
"I think right now you give an incomplete right now until we see what kind of tax cut we get," he said of grading the Trump administration. "They've made some very good moves on deregulation, it's not the sexiest thing in the world, it doesn't get many headlines, but removing burdens, especially for small business, that's critical. But the big thing will be: How big is the tax cut?"
The GOP has yet to provide much in the way of detail on potential tax legislation. The so-called "big six" negotiating tax reform plan to release more information on their proposal next week; however, it is unclear how specific they will be. The most detailed Republican tax plan currently out there is the roughly 35-page proposal put forth by House Republicans in 2016.
President Donald Trump often touts the stock market as a measure of his success, and his ability to do so will depend on success on taxes, Forbes said. "If he gets the big tax cut, he'll be fine. If he doesn't, then the stock market will take a hit," he said.
Forbes also emphasized that it's not just the president who is under pressure to deliver. "The thing about 2020, I think everybody is assuming that he will stumble, but I hope the members of Congress realize that if they don't get a tax cut, they are going to get the blame more than him," he said. "They realize that it's their necks on the chopping block."
Senate Republicans are considering writing a budget that would allow for up to $1.5 trillion in tax cuts, The Wall Street Journal reported on Tuesday. Such a maneuver could blow a big hole in the deficit.
Forbes said he's not concerned about it and thinks the example of the Bush tax cuts enacted in the early 2000s don't apply.
"The only way you get the deficit under control is if you have a vibrant economy. We should have learned that from the late '80s and the '90s when revenue came in because things were being done right and voila, the deficit goes down," he said. "The challenge with the Bush era was, one, they had to ramp up defense spending, and, two, the Treasury Department and Federal Reserve started to undermine the integrity of the dollar, which started to distort the credit market and led to the crisis of 2008."
Forbes has something in common with Trump in envisioning parlaying his business success into the presidency. He twice ran for president in 1996 and 2000. But on the living example of corner office to the Oval Office that is Trump, he said the president's business background no longer matters once he lands a the White House.
"The key thing is what he is able to get done," he said. "People are less concerned when you're elected with your background, it's what are you able to do to get things moving forward?"
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Editors' pick: Originally published Sept. 20.