Rep. Kevin Brady, R-Texas, says voter unhappiness with President Biden's economic policies are being reflected in the results of recent elections.

Video Transcript

ADAM SHAPIRO: So voters in key states like Virginia, New Jersey, sent a message to both political parties yesterday with the victory in Virginia of the Republican candidate to become governor. And although right now, it looks as if the Democrat will be re-elected in New Jersey, the turnout for Republicans was much higher, and the race was much closer than people expected. We're going to hit all of that because it seems to be a referendum as well on the Democrats and President Biden's economic agenda.

To help us break this down, we invite back into the program, into the stream, Representative Kevin Brady, the ranking member of the House, Ways, and Means Committee. It's always good to have you here, representative. Thank you for joining us.

KEVIN BRADY: Oh, thanks, Adam.

ADAM SHAPIRO: I want to get off, actually, with-- I want to talk about the victories and the messages that it's sending to politicians. But Bernie Sanders is out within the last 20 minutes, talking about the agenda the Democrats have to push through the other spending bill, the social spending bill, Build Back Better. And they said they have got a compromise now to eliminate the SALT deduction, the cap for families making about $400,000 a year, not on millionaires or billionaires.

This was a key part of the historic tax reform that when you were ranking member, when you were the chair of the committee, helped the Trump administration get through. So what do you want people to know about what Sanders is saying and the ability of the Democrats to pull this off?

KEVIN BRADY: Yeah, you know, I think it is to be kind of-- I think it's a bit hypocritical in the sense that this SALT cap repeal or raising it to 72,000 provides zero tax relief for the middle class, almost 40% that goes to the upper wealthy 1%. And it essentially subsidizes high tax states. In fact, the low tax states will subsidize them. And the 90% of Americans who aren't itemized, or who don't itemize their taxes, will pay for huge tax breaks for the wealthy, who do itemize. So, look, I think the penthouse occupants are very happy. I think the building janitor doesn't understand why he gets zero tax break here.

SEANA SMITH: And representative, you've been critical of the economic recovery, or at least, where we stand right now, under the Biden administration, because you said last week's GDP number was, quote, the worst economic news of Biden's presidency. We have over 10 million jobs that are still open nationwide. What do you think the Biden administration is missing when it comes to boosting this recovery?

KEVIN BRADY: Yes, so I think that the best thing they could do is stop making it worse. Clearly, the labor shortage is a real problem. They were in denial for many, many months there. And this new tax and spending bill actually makes it worse. By two analysis, it could remove two million more workers out of the workforce. That's one change. They can make it stop creating barriers between the jobless and reconnecting to work.

Secondly, these impending tax increases without a question are going to slow the economy further. It's over $1.2 trillion. So imagine the size of the tax cuts. Now all tax hikes mainly on job creators, small businesses, and on investors, I think the international tax changes will no doubt drive US jobs overseas, including investment in intellectual property. I think that, too, is a huge mistake. And of course, part of the reasons Americans have lost confidence that the president is competent to heal the economy is inflation. And I think this spending, combined with fewer workers, are going to drive prices up higher and longer, and no one really wants that final point.

The last quarter, if you subtract, it was awful. The report, if you subtract inventories out of there, economic growth was essentially zero. That's not what anyone wants in this economic recovery. So I think for the president to continue the status quo and then make even more of these policy, I think, mistakes, it really hurts the economy in a big way.

ADAM SHAPIRO: I just want to follow up on something about the international taxation. Many of us are not tax experts. You have expertise in this field. This 15% minimum tax that they talked about at the G20, if all of the-- if many countries are taking part in that, would you still expect to see companies here in the States flow out?

KEVIN BRADY: Yeah, and here's why. It isn't quite, I think, as onerous now that the corporate tax rate isn't being raised to one of the worst levels in the developed world at 28%. But the international tax changes, which are $300 billion, significant tax hikes on businesses will, in my view, make it better to be a foreign company than a US one, really drives-- takes incentives we created to bring intellectual property, investment, manufacturing and research back to the United States, I think reverses those flows in a significant way.

The changes aren't as bad as the president's first run at the international tax changes, but they're significant both in volume and the design. I don't understand why we're essentially moving first when other countries haven't agreed to a timetable. I do think it's going to drive investment out. And I think that even Democrats are worried about the US economically surrendering first without firm commitments and timetables from the other countries.

SEANA SMITH: Well, congressman, speaking of where, I guess, the US stands globally, one thing that was reached over this past week and the new agreement with the EU on steel and aluminum tariffs, I'm curious to get your thoughts on this. Does this approach make sense in your view?

KEVIN BRADY: You know, I think it does. I think it's a pretty important step here on those tariff goods. I think it's good for the US on exporting. I think it strengthens our relationship with Europe. I think managed trade-- and this is extremely complex managed trade-- is better or can be better than tariffed trade. You know, I want to see less of both managed and tariffed trade that I can give.

But yeah, I think this is an important first step. I don't think in the US, as I look at it, no one is made worse by this. And I think many industries are made better. And we're going to work with the administration to have a very talented US trade representative in Ambassador Tai here. This is a big challenge. But I think this was a very good first step.

ADAM SHAPIRO: I want to wrap up with what the voters are saying and looking at different races. In Virginia, the Republican wins. In New Jersey, the Republican did incredibly better than anybody expected. In upstate New York, in Buffalo, the Democrat, who was a socialist, lost to the person she beat in the primary who won on a write-in, essentially, candidacy. What's the message that politicians need to pay attention to from those results?

KEVIN BRADY: Yeah, so it can't be anything other than we don't like President Biden's policies. We don't like what we see in Congress with this just one party disarray up here. You look at the border crisis, which is real. The economic crisis, which is continuing. You look at the mistakes in Afghanistan and rising crime around the country.

And I think this was the first opportunity for frustrated parents, you know, who've had to deal with local school boards and a president who hasn't done much to get kids safely back in school, you know, I think this was their first opportunity to weigh in there. So I don't know how you see this other than a referendum on the president's leadership and policies.

ADAM SHAPIRO: Representative Kevin Brady from the great state of Texas, thank you so much for joining us here on Yahoo Finance Live.