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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: I want to get right now to former Treasury Secretary

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Speaker 2: Steve Manuchin sitting down with David Rubinstein here at the

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Speaker 2: invest conference.

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Speaker 3: If you want, let's.

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Speaker 1: Listen in something I like the idea of the ten

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Speaker 1: percent tariff across the board. It's a consumption tax on

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Speaker 1: foreign goods. But if you were to do that, he

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Speaker 1: should do that through the reconciliation process so that can

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Speaker 1: be scored.

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Speaker 3: I think would raise about two and a.

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Speaker 1: Half trillion dollars and could be used to pay for

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Speaker 1: tax cuts.

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Speaker 3: As an example.

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Speaker 2: Speaking of tax cuts, you engineered with President Trump the

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Speaker 2: very large tax cut of his first term. Do you

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Speaker 2: think a similar sized tax cut is essential now?

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Speaker 1: Well, the biggest focus for them is just extending the

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Speaker 1: personal side of the tax cuts, which which are going

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Speaker 1: to expire.

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Speaker 3: And I think.

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Speaker 1: That that was a signature part of his first term

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Speaker 1: and I think that's got to be the priority to

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Speaker 1: continue now. On top of that, I know he wants

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Speaker 1: to do additional tax cuts, and that'll be a little

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Speaker 1: bit more challenging with the pay force.

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Speaker 2: Or then the campaign, he talked about a couple other

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Speaker 2: tax cuts.

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Speaker 3: One is no tax on tips.

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Speaker 2: Are people getting tips actually paying a lot of taxes?

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Speaker 3: I don't know.

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Speaker 2: I mean cash they're getting out today, I don't know

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Speaker 2: how much they're paying, And maybe they're paying a lot

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Speaker 2: of tax Is that a big source of revenue? If

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Speaker 2: you are loss of revenue if you don't have tax

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Speaker 2: on tips, well.

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Speaker 1: You know we're not in as much as a cash

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Speaker 1: society as we used to do. So there's a lot

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Speaker 1: of tips that go through an electronic mechanism. I think

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Speaker 1: if he wants to have a small carve out for

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Speaker 1: tax on tips.

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Speaker 3: I think that makes sense.

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Speaker 1: I think obviously, if you start giving tips to investment

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Speaker 1: bankers at the end of the year instead of bonuses

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Speaker 1: and they don't get taxed, that would be.

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Speaker 3: A little bit more problematic.

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Speaker 1: And you know, you could tax your lawyers, and so

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Speaker 1: I think if he does that, it needs to have

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Speaker 1: a small carve out.

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Speaker 2: In the campaign, he also talked about I think no

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Speaker 2: tax on Social Security. Wouldn't that be pretty expensive? Very expensive?

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Speaker 2: And no tax on overtime too. I think he talked

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Speaker 2: about does that be expensive too? It would be okay.

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Speaker 2: So when you were working on the tax cut, when

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Speaker 2: you were Secretary of Trategy, how did you find the

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Speaker 2: intellectual level of the Ways and Means Committee members where

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Speaker 2: they really everyone understand everything you guys wanted to do.

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Speaker 2: And how was it like to engage with the Way

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Speaker 2: Means Committee?

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Speaker 1: Well, I mean, there's no question, you know, when we

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Speaker 1: passed the tax cuts, and this was a lot of work,

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Speaker 1: we were very engaged with both the House and Senate,

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Speaker 1: and actually we had weekly meetings which was called the

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Speaker 1: Big Six. It was me and Gary Cohne from the

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Speaker 1: White House, it was the Senate, and it was the House.

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Speaker 1: And literally every week we sat down and went through details.

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Speaker 1: So I mean, as you know, I mean, we had

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Speaker 1: sweeping tax reform across everything. This time it is actually

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Speaker 1: a lot simpler. But I do think Secretary Besett needs

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Speaker 1: to be very focused on working with the House and

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Speaker 1: the Senate to get this across the finish line.

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Speaker 2: In recent decades, the annual deficit has been fairly high.

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Speaker 2: I think under President Trump's first four years, I.

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Speaker 3: Don't know exactly.

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Speaker 2: I think it was maybe six to eight trillion dollars

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Speaker 2: of additional debt added to the total debt. We have

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Speaker 2: that thirty six trillion. Now, how are we going to

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Speaker 2: get the debt down? And the deficit down if we

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Speaker 2: have these big tax cuts.

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Speaker 1: Well, David, let me just say I think the deficit

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Speaker 1: is probably the most important issue today in terms of

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Speaker 1: the long term impact on the economy. And just to

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Speaker 1: put this in perspective, in the first term, we had

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Speaker 1: debt to GDP ratio of about one hundred percent, and

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Speaker 1: with the tax cuts and the economic growth before COVID,

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Speaker 1: we were growing the economy faster than we were growing

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Speaker 1: the debt, so that ratio would have come down, and

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Speaker 1: I think we were trying to get it down to

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Speaker 1: ninety to ninety five. The big focus on the first

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Speaker 1: term was military spending. We unfortunately had to increase non

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Speaker 1: military spending to get it through the Huston's Senate. But

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Speaker 1: what really impacted us was COVID, and I think as

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Speaker 1: you know firsthand, you know, we had to spend a

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Speaker 1: lot of money in COVID or we would have had

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Speaker 1: a worldwide depression, not recession. I think the problem was,

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Speaker 1: you know, the first two trillion dollars was well spent,

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Speaker 1: the next two trillion we never should have spent, and

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Speaker 1: then the Biden administration kept on spending, so you know,

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Speaker 1: we have debt to GDP of close to one hundred

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Speaker 1: and twenty five percent today. That's a gigantic problem. Secretary

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Speaker 1: Besent has talked about getting the deficit down from six

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Speaker 1: percent to three percent of GDP, and that's got to

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Speaker 1: be a major focus. So if we're going to do

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Speaker 1: the tax cuts, we need to make sure there's pay

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Speaker 1: for us and we need to make sure there's economic growth.

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Speaker 2: When Bob Rubin was Secretary of the Treasury, he once

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Speaker 2: talked about the value of the dollar, and he made

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Speaker 2: a mistake, he later would say, by talking about saying

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Speaker 2: something other than we want a strong dollar. And now

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Speaker 2: every Treasury secretary is told you can only say one

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Speaker 2: thing about the dollar, we want a strong dollar. But

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Speaker 2: what can former secretaries and Treasury say about that? Can

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Speaker 2: they say we want a strong dollar. Can you say,

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Speaker 2: maybe it should weeke in a little bit and to

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Speaker 2: make our exports easier to sell.

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Speaker 1: Well, you know, it's funny that you say that, And

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Speaker 1: Bob really was kind of credited with the strong dollar policy,

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Speaker 1: and I think it's kind of every Treasury secretary after

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Speaker 1: that kind of you know, you got Treasury one oh

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Speaker 1: one training, and the first thing they told you was

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Speaker 1: just talk about a strong dollar. You know, actually, when

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Speaker 1: I was at Davos, I made a comment that I

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Speaker 1: come into it on a balanced, stable dollar as opposed

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Speaker 1: to saying a strong dollar, and all of a sudden,

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Speaker 1: the dollar moved significantly. Look, I think and now I

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Speaker 1: can talk a little bit more freely about this, But

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Speaker 1: I think on the long term it is important that

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Speaker 1: we have a strong dollar. The dollar is the reserve

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Speaker 1: currency of the world, and a strong dollar affects a

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Speaker 1: strong economy. In the short term, particularly because of trade.

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Speaker 1: You know, the strength of the dollar can have a

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Speaker 1: negative impact.

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Speaker 3: But I think the most important thing.

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Speaker 1: Is actually a stable dollar so that there's not volatility.

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Speaker 2: Speaking of stable, what do you think about the Secretary

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Speaker 2: of Treasury or the US government supporting cryptocurrencies. They didn't

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Speaker 2: really have them so much when you were Secretary of Treasury,

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Speaker 2: but now cryptocurrencies seem to be very heavily supported by

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Speaker 2: President Trump and his administration.

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Speaker 3: Do you have any comment on whether that's a good

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Speaker 3: or bad thing.

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Speaker 1: Look, my view on crypto has been pretty consistent. We

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Speaker 1: did a lot of work on this in the first term.

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Speaker 1: If people want to buy crypto as an asset class

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Speaker 1: like they buy gold, that's fine. I personally don't wouldn't

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Speaker 1: invest in it, but that's fine to me. The bigger

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Speaker 1: issue has been making sure that crypto is not used

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Speaker 1: for illicit activities. And you know, we spent a long

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Speaker 1: time getting rid of Swiss numbered bank accounts, making sure

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Speaker 1: that we have a mechanism that crypto can be compliant

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Speaker 1: with BSA and all of our money laundering regulations, and

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Speaker 1: I have concerns today about that.

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Speaker 2: You know, in the business world, investment world, if you

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Speaker 2: hire more fundraisers, you usually raise more money. In the

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Speaker 2: IRS world, if you get more agents, you usually raise

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Speaker 2: more money.

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Speaker 3: But for some reason, the.

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Speaker 2: Republican Party seems to want to have fewer agents, and

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Speaker 2: therefore they reduce the number of agents, and therefore maybe

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Speaker 2: they're not going to raise as much money. Do you

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Speaker 2: have a view on whether cutting back the IRS agents

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Speaker 2: that were put in under a President Biden is a

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Speaker 2: good thing to do or not.

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Speaker 1: Well, I have a strong view on this. I spent

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Speaker 1: a lot of time overseeing the IRS. I mean, the

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Speaker 1: reason why Biden administration added so many agents, this is

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Speaker 1: the silly part of government math.

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Speaker 3: So if they added all these agents.

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Speaker 1: They were able to score it that they were going

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Speaker 1: to able to raise revenue in the future, sure, and

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Speaker 1: they spend that revenue today. So I actually don't think

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Speaker 1: we need more agents. What we need is a bigger

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Speaker 1: investment in technology in the irs.

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Speaker 3: The systems are outdated.

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Speaker 1: And I think in this day and age, there's a

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Speaker 1: lot we can do with technology that we don't need

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Speaker 1: physical agents auditing people. It can be done electronically.

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Speaker 2: Now, is it possible for the DOOSE people to get

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Speaker 2: the individual tax returns of a particular person to who

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Speaker 2: they might not like or that's pretty impossible to do, well.

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Speaker 3: It's not allowed.

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Speaker 1: So the people are not allowed to get individual taxpayer information.

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Speaker 1: My understanding is that they can get access to anonymized information. Again,

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Speaker 1: I think it's it would be helpful for those to

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Speaker 1: help look at modernizing the technology. But obviously, you know,

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Speaker 1: looking at specific taxpayer information should not be allowed and

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Speaker 1: isn't allowed now.

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Speaker 2: President Trump and his administration are very focused on the

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Speaker 2: trade deficit, which is very, very high these days. But

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Speaker 2: is the trade deficit that big a problem compared to

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Speaker 2: the budget deficit? If you were to worry about which deficit,

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Speaker 2: wouldn't be budget deficit be more important than a trade deficit.

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Speaker 1: Well, as you said, we have what's called the twin deficits.

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Speaker 1: In my opinion, the budget deficit at two trillion dollars

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Speaker 1: annually is a much bigger problem.

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Speaker 3: And I think, by the way, if you brought.

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Speaker 1: Down the budget deficit, by definition, you'd bring down the

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Speaker 1: trade deficit because you'd have less demand for goods in general.

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Speaker 1: And I do think the idea of resetting trade relationships.

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Speaker 1: I mean, President Trump is right that the US market

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Speaker 1: has been opened for foreign trade, and foreign markets have

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Speaker 1: not been opened in the same way. You know, we

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Speaker 1: spent a lot of time with China on the Phase

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Speaker 1: one deal. They haven't lived up to that. But the

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Speaker 1: whole idea was if we could allow access to our

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Speaker 1: business to a growing China middle class, that's an enormous

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Speaker 1: opportunity for US business. And I do think kind of

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Speaker 1: a big part of the trade deficit is we don't

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Speaker 1: have fair trade in both directions.

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Speaker 2: Now, President Trump has made a big push on getting

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Speaker 2: American companies and foreign companies to invest in the United

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Speaker 2: States manufacture things that would probably be somewhat inflationary because

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Speaker 2: by definition, if you have people producing things overseas, probably

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Speaker 2: because it's the lowest cost producer. If you bring them

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Speaker 2: back to the United States with higher labor costs, it'll

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Speaker 2: be a higher cost production, therefore maybe more inflationary. Despite that,

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Speaker 2: you think it's a good idea to have more things

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Speaker 2: manufacturing United States.

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Speaker 1: Well, I definitely think US manufacturing jobs has always been

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Speaker 1: a big focus of his. I think you know, there

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Speaker 1: was a large part of the economy that was left behind,

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Speaker 1: and I.

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Speaker 3: Do think that's a focus now.

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Speaker 1: Obviously, there are different markets that can be competitive, so

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Speaker 1: I think we can have the same thing, but his

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Speaker 1: focus should be US investment.

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Speaker 2: So when you became a Secretary of Treasury, there was

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Speaker 2: somebody on the Federal Reserve Board who had been appointed

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Speaker 2: by Obama, James J. Powell, who used to work at

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Speaker 2: my firm, and then you recommended him to President Trump,

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Speaker 2: I think, to be the chairman of the Federal Reserve.

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Speaker 2: President Trump was not happy with him at the beginning,

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Speaker 2: I guess, but I think he's going to keep him now.

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Speaker 2: I guess any regrets about recommending J. Powe or how

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Speaker 2: kind of job you think he's done.

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Speaker 1: Well, let me first say, despite the fact that Obama

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Speaker 1: did appoint him, Jay was a Republican and is a Republican.

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Speaker 1: I had the opportunity to work with him really on

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Speaker 1: a lot of the regulatory issues at first when Jenny

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Speaker 1: Allen was chair and I do think Jay's done a

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Speaker 1: very good job.

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Speaker 3: You know.

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Speaker 1: As President Trump, he had a bunch of issues with

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Speaker 1: him raising rates. But then during COVID he did give

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Speaker 1: him the Most Improved Player Award when he dropped trades

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Speaker 1: down to zero at the time.

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Speaker 2: So it generally the President of United States is not

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Speaker 2: supposed to talk to or lobby the Chairman of the Fed,

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Speaker 2: but the Secretary of treasurer usually meets regularly with the

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Speaker 2: Chairman of the Fed. They kind of talk about things

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Speaker 2: to some extent. Did you meet with him fairly regularly

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Speaker 2: and how would those conversations go when you met with

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Speaker 2: j Powe?

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Speaker 3: I did?

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Speaker 1: I mean we inherited a tradition which has been kept

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Speaker 1: up is that the Secretary of the Treasury and the

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Speaker 1: Chairman of the Fed meet weekly. It alternates every week

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Speaker 1: between being at the Treasury and the FED. And I

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Speaker 1: found those meetings very helpful. I mean a big focus

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Speaker 1: was obviously what we were doing on regulation monetary policy.

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Speaker 1: I never talked about monetary policy publicly, but yes, of course,

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Speaker 1: we did talk about those types of things. We talked

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Speaker 1: about the economy, and I think we had a very

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Speaker 1: good working relationship.

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Speaker 3: So today, if you were J. Powe, would you lower

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Speaker 3: interest rates in the next six months or so?

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Speaker 1: I think it's pretty clear the FED is going to

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Speaker 1: lower rates. So I mean, if you look at the

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Speaker 1: dot plot, which is what the FED governors have publicly said,

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Speaker 1: you do see rates coming down to about three in

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Speaker 1: a quarter, and you see the long term rate at

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Speaker 1: about two point eight. I do think the long term

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Speaker 1: rate between being closer to two and a half than three,

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Speaker 1: and I think we're going to see rates lowered next year.

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Speaker 1: And by the way, I think the ten year has

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Speaker 1: that already built in to the market. So I think

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Speaker 1: we're going to see three in a quarter three and

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Speaker 1: a half percent funds, and I think we'll see about

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Speaker 1: four percent ten year treasuries.

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Speaker 2: So if President Trump were to call you and say

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Speaker 2: I need to have a new chairman of that FED

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Speaker 2: in May of twenty six, who would you recommend.

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Speaker 1: Well, I have a bunch of ideas, but I'm not

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Speaker 1: going to say that publicly.

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Speaker 3: I would say that privately to.

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Speaker 2: Okay, So let's go to the next subject then, more

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Speaker 2: important than the policy of the economic policy of the

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Speaker 2: United States government is a subject called private equity. So

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Speaker 2: you left Secretary of Treasury and you start a private

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Speaker 2: equity firm, Liberty Strategic Capital. So is private equity as

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Speaker 2: fulfilling as you thought? I know you were in it

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Speaker 2: a bit before you became Secretary Treasury, But how do

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Speaker 2: you enjoy the private equity world?

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Speaker 1: Well, David, you know, I've been in the investment business

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Speaker 1: and the markets businesses now for forty years, and I

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Speaker 1: think kind of every job I did kind of prepared

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Speaker 1: me more for the future. And when I became Treasury

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Speaker 1: as secretary, I think it was helpful that I had

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Speaker 1: a background in markets and risk. I had a background

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Speaker 1: I had been CEO of a bank.

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Speaker 3: So that you know, I understood a lot of these issues.

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Speaker 1: You know, we're small enough that we focus on a

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Speaker 1: handful of investments. We've done about ten investments to date.

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Speaker 1: And you know, I find it very interesting.

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Speaker 2: You agree with my view that the highest calling of

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Speaker 2: mankind is private equity.

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Speaker 3: I do not. You don't think so there's something more important,

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Speaker 3: but I don't know what it is. But okay, I.

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Speaker 1: Would have thought you were going to tell me the

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Speaker 1: highest calling was to own a baseball team if.

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Speaker 3: It's a winning team.

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Speaker 2: Yes, But so let me ask you, when you your

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Speaker 2: Secretary of Treasury and you know, you're a very powerful person,

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Speaker 2: and then when you're on the private sector, you're going

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Speaker 2: and asking people for money who used to ask you for,

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Speaker 2: you know, information about what's going on. What is it

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Speaker 2: like to kind of make that switch to kind of

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Speaker 2: asking people for money who used to ask you for

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Speaker 2: not favors but more information or help.

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Speaker 1: No, I mean, I mean, first of all, fortunately we're

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Speaker 1: we're not in the fundraising business.

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Speaker 2: And you raised for your first fund about four billion

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Speaker 2: plus or something.

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Speaker 1: Well I can't comment on the size of it and

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Speaker 1: things like that, but yes, we did raise our fund.

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Speaker 1: But you know what I find interesting now is actually

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Speaker 1: it's it's you know, when your Treasury secretary, and it's

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Speaker 1: extraordinary experience. But you can't publicly talk about a lot

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Speaker 1: of things, and there's limitations on what you can do.

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Speaker 1: So I find it actually quite interesting being involved in

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Speaker 1: different things now from the outside.

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Speaker 2: Well, one of the pleasures of being Secretary of the

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Speaker 2: Treasury is you get your handwriting on the dollar bill

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Speaker 2: something like that. So some Secretary of Treasures had incomprehensible,

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Speaker 2: indecipherable handwritings, and they couldn't figure out who actually was

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Speaker 2: finding it. But what was the pleasure like of getting

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Speaker 2: a bills one hundred dollar bills or dollar bills and

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Speaker 2: having your.

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Speaker 3: Signature on it? Was that fun or not?

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Speaker 1: You know, David, I changed my signature because my signature

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Speaker 1: was completely illegible, okay, And I thought, if I'm going

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Speaker 1: to have my signature on the money forever, it would

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Speaker 1: be nice if you could see it and read it.

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Speaker 3: So I simplified my signature a lot.

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Speaker 1: I guess the question is is you know, I wonder

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Speaker 1: if President Trump wants his signature on the money.

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Speaker 2: By the way, I have a similar problem, don't. I

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Speaker 2: can't do cursive because I think that was being taught

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Speaker 2: in the second grade when it was Jewish holidays and

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Speaker 2: I wasn't in school, so I can't really like cursive.

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Speaker 3: So I don't have to worry about this. I'm not

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Speaker 3: gonna be Secretary and Treasury.

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Speaker 2: But there is a proposal now to have a two

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Speaker 2: hundred and fifty dollars bill, a law of bills proposing

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Speaker 2: Congress with President Trump's picture on it. Usually you're supposed

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Speaker 2: to have passed away before you get your picture on it.

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Speaker 3: But ye, many comment on that, or well.

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Speaker 1: My only comment is, why would he pick two fifty.

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Speaker 1: Let's go for a thousand if they're going to pass

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Speaker 1: the law.

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Speaker 2: Okay, Well, when you were Treasuring secretary, you did work

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Speaker 2: on I think having a woman on the dollar bill.

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Speaker 2: Was it the twenty dollars bill or or something. It

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Speaker 2: was going to be somebody, but it took years to

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Speaker 2: get it done. It hasn't happened yet. You actually think

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Speaker 2: there will be a woman on the dollar bill in

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Speaker 2: our lifetime?

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Speaker 1: Well, David, you know what I was focused on, and

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Speaker 1: I knew it wasn't going to be my decision. It

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Speaker 1: was going to pass over. I don't know if it'll

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Speaker 1: be Scott Besson's or not. But what we were very

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Speaker 1: focused on the time is the issue around the dollar

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Speaker 1: and so that you couldn't replicate it, and the security

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Speaker 1: features of the dollar. And there are changes that I

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Speaker 1: can talk about that are in the works around the printing,

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Speaker 1: so that takes time, and that's the most important part

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Speaker 1: of the change.

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Speaker 3: Now.

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Speaker 2: One of the most important parts of the Treasury Code

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Speaker 2: i RS code is something called carried interest taxation. You're

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Speaker 2: probably familiar with that. I've heard about it a few

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Speaker 2: time times. I heard about it during the first I know,

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Speaker 2: I talked to you about it maybe a few times.

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Speaker 2: I don't remember exactly. But President Trump has never been

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Speaker 2: a big fan of that. I think you know, and

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Speaker 2: I think in this current speeches he's made about he

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Speaker 2: said he wanted to get rid of current carried interest

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Speaker 2: taxation and whatever benefit sports owners gets as well.

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Speaker 3: I don't know exactly what they are.

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Speaker 2: But so do you have a view on carried interest

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Speaker 2: now that you were in the private ecuy world. Do

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Speaker 2: you think we should preserve it or not preserve it

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Speaker 2: or you don't want to comment on it. Well, David,

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Speaker 2: there's going.

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Speaker 1: To be a lot of pay fors in have to

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Speaker 1: be in the tax code, and they're going to look

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Speaker 1: at a lot of different things. I will say, first

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Speaker 1: of all, in the carried interest it doesn't raise a

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Speaker 1: lot of revenue. I mean, look, one of the issues,

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Speaker 1: as you know, on carried interest is if you have

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Speaker 1: two investors and we invested you know, fifty percent, you

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Speaker 1: invested fifty percent, we'd need to pay a.

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Speaker 3: Certain amount to tax to the extent in it.

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Speaker 1: You create a fund and we decide as opposed to

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Speaker 1: it being fifty to fifty, we're going to exchange profits.

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Speaker 1: It doesn't change the tax that the government collects. So

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Speaker 1: I think from an academic standpoint, you know there's a

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Speaker 1: reason behind this.

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Speaker 3: From a revenue.

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Speaker 1: Standpoint, that'll have to be something that Congress looks at.

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Speaker 2: So what is the biggest pleasure you've gotten out of

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Speaker 2: having a private equity fund? Now you raised the fund,

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Speaker 2: You've made a number of investments. Are you enjoying us

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Speaker 2: as much as being Secretary treasurer or being a partner

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Speaker 2: at Goldman Sachs or not as much?

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Speaker 1: I mean, David, all these experiences were really extraordinary. I mean,

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Speaker 1: what I find interesting about this is investing in businesses

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Speaker 1: and being able to impact certain businesses. You know, I've

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Speaker 1: had a long experience in banking. We made a big

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Speaker 1: investment that we bailed out and saved what was a

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Speaker 1: Flagstar bank. It was called New York Munity Bank at

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Speaker 1: the time. And you know, banking is something that's been

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Speaker 1: very interesting to me. So this is the second time

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Speaker 1: I did this. During the financial crisis, we bought several banks.

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Speaker 3: Indie BFD, I see Indie Bank Bank.

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Speaker 2: Okay, So what are the areas you're focused on? Is

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Speaker 2: the financial services? Cyber what of.

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Speaker 1: The area technology and financial services are to major focus?

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Speaker 3: Okay?

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Speaker 2: And entertainment you did a lot of that when you

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Speaker 2: were before you were Secretary Treagery.

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Speaker 3: Doing any of those kind of innesement. We do a

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Speaker 3: little bit of it.

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Speaker 1: I mean we've been, you know, big investors over time

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Speaker 1: in content. When I was investing in movies, it was

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Speaker 1: more actually a technology play and understanding bandwidth to the

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Speaker 1: home and the demand for content.

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Speaker 2: Hey, so today when people invest in private equity, the

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Speaker 2: kind of rates of return they expect are probably lower

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Speaker 2: than they were twenty years ago when more leverage was

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Speaker 2: used and whole writing of other things. But you think

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Speaker 2: somebody investing in private equity today with a reputable firm

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Speaker 2: should get a rate of return in the load of

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Speaker 2: mid teens.

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Speaker 3: Something like that, a little bit higher higher than that. Yes,

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Speaker 3: with you, well, I can't comment on me, but i'd

447
00:21:01,840 --> 00:21:05,719
Speaker 3: say I would say in just mid to higher teams. Yes, okay.

448
00:21:06,240 --> 00:21:12,320
Speaker 2: And today, in your view, is Congress likely to deal

449
00:21:12,400 --> 00:21:15,760
Speaker 2: with the budget deficit in a way where we won't

450
00:21:15,800 --> 00:21:18,760
Speaker 2: have to deal with the government shutting down, and do

451
00:21:18,560 --> 00:21:20,520
Speaker 2: you think that's a real risk that the government could

452
00:21:20,520 --> 00:21:21,240
Speaker 2: shut down again?

453
00:21:22,280 --> 00:21:26,480
Speaker 1: Look, I'd say, you know, there's two issues that again

454
00:21:26,480 --> 00:21:29,520
Speaker 1: that I spent a lot of time on, both the

455
00:21:29,560 --> 00:21:33,919
Speaker 1: debt ceiling in government funding and you know the issue

456
00:21:33,960 --> 00:21:38,600
Speaker 1: here and you know the government. So as treasury, we

457
00:21:38,640 --> 00:21:41,439
Speaker 1: could have the money and not be able to spend

458
00:21:41,480 --> 00:21:45,760
Speaker 1: it because of government funding, or we could have the

459
00:21:45,760 --> 00:21:48,680
Speaker 1: government funding but not have enough money because.

460
00:21:48,480 --> 00:21:49,240
Speaker 3: Of the dead ceiling.

461
00:21:49,680 --> 00:21:52,760
Speaker 1: My major focus was the debt ceiling, and one of

462
00:21:52,800 --> 00:21:55,360
Speaker 1: the things I think now is the most important issue

463
00:21:55,840 --> 00:21:58,680
Speaker 1: is the Republicans need to get the dead ceiling into

464
00:21:58,760 --> 00:22:02,440
Speaker 1: a reconciliation quickly and raise the dead ceiling.

465
00:22:02,920 --> 00:22:06,560
Speaker 2: In nineteen seventeen, the death ceiling was first imposed, and

466
00:22:06,600 --> 00:22:10,320
Speaker 2: we've now raised it more than ninety times. President Trump

467
00:22:10,400 --> 00:22:12,679
Speaker 2: has said before we should get rid of the dead ceiling,

468
00:22:13,119 --> 00:22:15,040
Speaker 2: and we're the only country in the world with one

469
00:22:15,040 --> 00:22:17,439
Speaker 2: other than Denmark. So what is your view on do

470
00:22:17,480 --> 00:22:19,960
Speaker 2: we need a dead ceiling because we can we changed

471
00:22:19,960 --> 00:22:21,840
Speaker 2: it all the time anyway, or should we just keep

472
00:22:21,840 --> 00:22:22,520
Speaker 2: the death ceiling.

473
00:22:23,240 --> 00:22:26,199
Speaker 1: Well, given the side of the debt that we have

474
00:22:26,320 --> 00:22:29,080
Speaker 1: today and the focus on the debt, I would keep

475
00:22:29,080 --> 00:22:32,080
Speaker 1: the dead ceiling. I think it's an important mechanism. It's

476
00:22:32,119 --> 00:22:35,560
Speaker 1: become too political. But I think spending and the dead

477
00:22:35,600 --> 00:22:39,320
Speaker 1: ceiling should be passed at the same time. So whenever

478
00:22:39,440 --> 00:22:44,399
Speaker 1: Congress passes whatever the spending is, they should simultaneously pass

479
00:22:44,480 --> 00:22:46,920
Speaker 1: the dead ceiling so that you can afford to pay

480
00:22:46,920 --> 00:22:51,080
Speaker 1: for that. But I don't think, you know, unlimited spending

481
00:22:51,359 --> 00:22:54,440
Speaker 1: is a good thing. As I mentioned earlier, you know COVID,

482
00:22:54,520 --> 00:22:57,280
Speaker 1: we had to do trillion dollars spending. We then got

483
00:22:57,320 --> 00:23:00,199
Speaker 1: spending out of control, and we need to get that

484
00:23:00,320 --> 00:23:01,280
Speaker 1: back into control.

485
00:23:01,760 --> 00:23:01,920
Speaker 3: Now.

486
00:23:01,920 --> 00:23:04,720
Speaker 2: Many countries around the world have something called a sovereign

487
00:23:05,119 --> 00:23:08,159
Speaker 2: wealth fund, and the United States doesn't have that. We

488
00:23:08,200 --> 00:23:11,000
Speaker 2: have the printing press, we print dollars and people buy

489
00:23:11,000 --> 00:23:13,120
Speaker 2: those dollars, but we don't have a sovereign wealth fund.

490
00:23:13,160 --> 00:23:16,120
Speaker 2: President Trump has signed an executive order I think, creating

491
00:23:16,200 --> 00:23:18,720
Speaker 2: a sovereign wealth fund. But where will the money come

492
00:23:18,760 --> 00:23:20,280
Speaker 2: from for that sovereign wealth fund?

493
00:23:21,080 --> 00:23:23,760
Speaker 1: Well, David, as you know, most countries that have sovereign

494
00:23:23,800 --> 00:23:28,440
Speaker 1: wealth funds are because they have certain resources today that

495
00:23:28,560 --> 00:23:31,200
Speaker 1: are going to be limited. Obviously, oil and energy is

496
00:23:31,240 --> 00:23:33,840
Speaker 1: a big focus and the purpose of the sovereign Wealth

497
00:23:33,880 --> 00:23:38,080
Speaker 1: Fund is to capture a huge amount of those revenues

498
00:23:38,119 --> 00:23:40,840
Speaker 1: today so that it can be spent over generations.

499
00:23:41,520 --> 00:23:43,280
Speaker 3: The US is not in that situation.

500
00:23:43,480 --> 00:23:45,840
Speaker 1: So if we're going to have a sovereign wealth fund,

501
00:23:46,280 --> 00:23:49,320
Speaker 1: I think obviously we'd have to borrow to put the

502
00:23:49,359 --> 00:23:51,399
Speaker 1: money in the sovereign wealth fund since we don't have

503
00:23:51,440 --> 00:23:53,679
Speaker 1: a surplus. And if we did that, I think you

504
00:23:53,720 --> 00:23:57,680
Speaker 1: should be very limited in scope. For are there certain

505
00:23:57,800 --> 00:24:01,040
Speaker 1: areas that we need government support. It shouldn't be used,

506
00:24:01,119 --> 00:24:03,360
Speaker 1: obviously to crowd out private investments.

507
00:24:04,119 --> 00:24:06,520
Speaker 2: The third rail of American politics was thought to be

508
00:24:06,600 --> 00:24:11,240
Speaker 2: the social security system and medicare. Some people say, ultimately

509
00:24:11,280 --> 00:24:13,520
Speaker 2: we were running out of money to fund the social

510
00:24:13,520 --> 00:24:18,000
Speaker 2: security system because people are living longer and so forth,

511
00:24:18,000 --> 00:24:21,320
Speaker 2: and we have more people retiring and then living longer.

512
00:24:21,480 --> 00:24:25,240
Speaker 2: Are you worried about the security of the subsecurity.

513
00:24:24,640 --> 00:24:27,600
Speaker 1: System, David, One of the big titles I had in

514
00:24:27,680 --> 00:24:32,159
Speaker 1: government was managing Trustee of the Social Security Trust Fund.

515
00:24:32,960 --> 00:24:36,000
Speaker 1: And when I got there, I thought I actually could

516
00:24:36,160 --> 00:24:38,320
Speaker 1: do a lot of good. And one of the things

517
00:24:38,359 --> 00:24:41,680
Speaker 1: I was actually very focused on. Social Security still has

518
00:24:42,040 --> 00:24:45,320
Speaker 1: paper cards, and I thought one of the most ridiculous

519
00:24:45,359 --> 00:24:48,440
Speaker 1: thing is the Social Security number is the identifier most

520
00:24:48,440 --> 00:24:53,160
Speaker 1: people use. I wanted to focus on creating electronic ID

521
00:24:53,520 --> 00:24:55,399
Speaker 1: and I think that's still something we should do now.

522
00:24:55,480 --> 00:24:57,720
Speaker 1: As it relates to the Trust Fund, we did sure

523
00:24:57,800 --> 00:25:00,000
Speaker 1: report every year. The Trust Fund is going to run

524
00:25:00,119 --> 00:25:02,920
Speaker 1: out of money, and I think it's something that Congress

525
00:25:03,320 --> 00:25:07,720
Speaker 1: has to deal with. I hope that in the second

526
00:25:07,800 --> 00:25:10,679
Speaker 1: half of the president's term he can focus on social

527
00:25:10,720 --> 00:25:15,080
Speaker 1: security reform because it's a problem. The fund is going

528
00:25:15,160 --> 00:25:16,960
Speaker 1: to run out of money and there's lots of people

529
00:25:17,000 --> 00:25:19,360
Speaker 1: who alive upon it, so it needs to be fixed.

530
00:25:20,160 --> 00:25:23,000
Speaker 2: In the second half of this term, he might have

531
00:25:23,040 --> 00:25:27,600
Speaker 2: a different House of Representatives. Historically, the first midterm election

532
00:25:27,720 --> 00:25:30,560
Speaker 2: a president usually loses about twenty five seats in the House.

533
00:25:31,440 --> 00:25:34,600
Speaker 2: There's no evidence in what will happen now, but if

534
00:25:34,800 --> 00:25:37,399
Speaker 2: President Trump were to lose control of the House, do

535
00:25:37,440 --> 00:25:40,119
Speaker 2: you think that would affect his agenda great deal in

536
00:25:40,200 --> 00:25:42,360
Speaker 2: terms of sociecurity reform other things, And therefore he needs

537
00:25:42,359 --> 00:25:44,280
Speaker 2: to get everything done in the first two years that

538
00:25:44,320 --> 00:25:46,200
Speaker 2: he really wants to get done well.

539
00:25:46,200 --> 00:25:48,159
Speaker 1: First of all, as you know, the House with a

540
00:25:48,280 --> 00:25:52,159
Speaker 1: very small majority in the House, So yes, I do

541
00:25:52,280 --> 00:25:54,520
Speaker 1: think for the first two years, he has to focus

542
00:25:54,560 --> 00:25:59,040
Speaker 1: on what are the most important legislative agendas. Obviously, border

543
00:25:59,119 --> 00:26:02,360
Speaker 1: security something he's very focused on. I know there's been

544
00:26:02,400 --> 00:26:05,159
Speaker 1: this talk of one bill or two bills. Personally, I

545
00:26:05,200 --> 00:26:07,240
Speaker 1: would do two bills. I think he can have a

546
00:26:07,359 --> 00:26:11,280
Speaker 1: very quick win on border security and get that done

547
00:26:11,320 --> 00:26:15,800
Speaker 1: through the reconciliation. Tax reform is more complicated, so I

548
00:26:15,840 --> 00:26:18,240
Speaker 1: think that's going to take a good part of the year.

549
00:26:18,680 --> 00:26:21,840
Speaker 1: He could get the debt ceiling into the first bill.

550
00:26:22,200 --> 00:26:24,119
Speaker 1: He can then get all his taxes done in the

551
00:26:24,160 --> 00:26:27,200
Speaker 1: second bill. I think on something like social Security, you're

552
00:26:27,200 --> 00:26:29,000
Speaker 1: going to need bipartisan support.

553
00:26:29,440 --> 00:26:30,840
Speaker 3: You're not going to want to attack that.

554
00:26:31,000 --> 00:26:34,480
Speaker 1: Now that's something so it doesn't matter who controls Congress

555
00:26:34,480 --> 00:26:34,760
Speaker 1: for that.

556
00:26:36,359 --> 00:26:38,760
Speaker 2: You know, a bus mark. I think it used to

557
00:26:38,840 --> 00:26:40,480
Speaker 2: said that there's two things you don't want to see

558
00:26:40,560 --> 00:26:46,840
Speaker 2: being made are sausage and legislation. And what is it

559
00:26:46,920 --> 00:26:49,080
Speaker 2: like when you're doing tax bills. You're sitting in a

560
00:26:49,320 --> 00:26:52,000
Speaker 2: smoke filled room and you're sitting there with the members

561
00:26:52,040 --> 00:26:54,200
Speaker 2: of Congress and they say I'll give you this and

562
00:26:54,280 --> 00:26:55,440
Speaker 2: you give me this, And how.

563
00:26:55,359 --> 00:26:57,000
Speaker 3: Does that really work? Is a trade offs er?

564
00:26:57,200 --> 00:26:59,439
Speaker 2: Everybody says, we just have to do what's best for

565
00:26:59,440 --> 00:27:01,800
Speaker 2: the American peer people, and we're not going to do

566
00:27:01,840 --> 00:27:03,320
Speaker 2: any trade offs or deals.

567
00:27:03,920 --> 00:27:05,920
Speaker 1: Well, first of all, there are no smoke filled rooms.

568
00:27:05,960 --> 00:27:07,840
Speaker 1: That may have happened in the past, but at least

569
00:27:08,000 --> 00:27:11,480
Speaker 1: when I was there, nobody was smoking. No, I think

570
00:27:11,520 --> 00:27:13,840
Speaker 1: that you know it said, you know, we worked very

571
00:27:13,840 --> 00:27:17,800
Speaker 1: closely with the House and Senate. These are huge complicated issues.

572
00:27:17,840 --> 00:27:20,240
Speaker 1: Of course there have to be trade offs. You have

573
00:27:20,320 --> 00:27:21,879
Speaker 1: to think of how they were paid for us. I

574
00:27:21,880 --> 00:27:23,800
Speaker 1: mean when we did this the first time, it was

575
00:27:23,840 --> 00:27:28,040
Speaker 1: a trillion and a half dollars static, trillion dollars dynamic,

576
00:27:28,160 --> 00:27:30,320
Speaker 1: and we had about five hundred billion in what we

577
00:27:30,440 --> 00:27:34,800
Speaker 1: considered to be baseline issues. So of course there have

578
00:27:34,880 --> 00:27:36,600
Speaker 1: to be trade offs. And then I would just comment

579
00:27:36,680 --> 00:27:39,400
Speaker 1: on even once the tax reform was passed, we spent

580
00:27:39,480 --> 00:27:43,040
Speaker 1: the next year writing tax regulations and Treasury which is

581
00:27:43,080 --> 00:27:45,920
Speaker 1: a very important function to institute the law.

582
00:27:46,359 --> 00:27:49,119
Speaker 2: So if you were king for today and you can

583
00:27:49,200 --> 00:27:52,719
Speaker 2: make any change in the way the economy, the finance

584
00:27:52,760 --> 00:27:55,360
Speaker 2: structured the United States is based, the spending is done.

585
00:27:55,480 --> 00:27:57,119
Speaker 2: What would be the one thing that you think we

586
00:27:57,160 --> 00:27:59,760
Speaker 2: should do to make our economy better or make our

587
00:27:59,800 --> 00:28:01,679
Speaker 2: financial system better than it is today.

588
00:28:01,720 --> 00:28:04,320
Speaker 3: One thing, I would reform.

589
00:28:04,240 --> 00:28:09,520
Speaker 1: The spending process and the debt sealing process so that

590
00:28:09,600 --> 00:28:13,680
Speaker 1: there was a real process of the administration having a budget,

591
00:28:13,720 --> 00:28:17,920
Speaker 1: that budget going through Congress every year, and that kind

592
00:28:17,960 --> 00:28:19,440
Speaker 1: of the focus around spending.

593
00:28:20,200 --> 00:28:23,399
Speaker 2: Okay, so for the time being, you're going to be

594
00:28:23,400 --> 00:28:25,760
Speaker 2: in the private sector, you're not going to be drafted

595
00:28:25,800 --> 00:28:28,320
Speaker 2: back in the government, and you're happy with the highest

596
00:28:28,320 --> 00:28:30,520
Speaker 2: calling of mankind that you're now pursuing private equity.

597
00:28:30,560 --> 00:28:36,000
Speaker 1: Right the highest calling was serving the people in the environment.

598
00:28:37,119 --> 00:28:39,160
Speaker 1: I know you think this is the highest time, David.

599
00:28:39,200 --> 00:28:42,560
Speaker 1: I know you've been terrific in advising and helping presidents,

600
00:28:42,600 --> 00:28:44,880
Speaker 1: and I'm sure you'll also give President Trump a bunch

601
00:28:44,920 --> 00:28:45,400
Speaker 1: of advice.

602
00:28:45,560 --> 00:28:47,920
Speaker 2: Well, I don't know if he needs my advice. Certainly

603
00:28:47,920 --> 00:28:51,640
Speaker 2: not on the Kenney Center, probably, but we'll see. Okay, Okay,

604
00:28:51,720 --> 00:28:56,320
Speaker 2: I think we're out of time. So we're out of time, right, Okay, see,

605
00:28:56,440 --> 00:28:58,080
Speaker 2: thank you very much, thank you,