Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: I want to get right now to former Treasury Secretary
Speaker 2: Steve Manuchin sitting down with David Rubinstein here at the
Speaker 2: invest conference.
Speaker 3: If you want, let's.
Speaker 1: Listen in something I like the idea of the ten
Speaker 1: percent tariff across the board. It's a consumption tax on
Speaker 1: foreign goods. But if you were to do that, he
Speaker 1: should do that through the reconciliation process so that can
Speaker 1: be scored.
Speaker 3: I think would raise about two and a.
Speaker 1: Half trillion dollars and could be used to pay for
Speaker 1: tax cuts.
Speaker 3: As an example.
Speaker 2: Speaking of tax cuts, you engineered with President Trump the
Speaker 2: very large tax cut of his first term. Do you
Speaker 2: think a similar sized tax cut is essential now?
Speaker 1: Well, the biggest focus for them is just extending the
Speaker 1: personal side of the tax cuts, which which are going
Speaker 1: to expire.
Speaker 3: And I think.
Speaker 1: That that was a signature part of his first term
Speaker 1: and I think that's got to be the priority to
Speaker 1: continue now. On top of that, I know he wants
Speaker 1: to do additional tax cuts, and that'll be a little
Speaker 1: bit more challenging with the pay force.
Speaker 2: Or then the campaign, he talked about a couple other
Speaker 2: tax cuts.
Speaker 3: One is no tax on tips.
Speaker 2: Are people getting tips actually paying a lot of taxes?
Speaker 3: I don't know.
Speaker 2: I mean cash they're getting out today, I don't know
Speaker 2: how much they're paying, And maybe they're paying a lot
Speaker 2: of tax Is that a big source of revenue? If
Speaker 2: you are loss of revenue if you don't have tax
Speaker 2: on tips, well.
Speaker 1: You know we're not in as much as a cash
Speaker 1: society as we used to do. So there's a lot
Speaker 1: of tips that go through an electronic mechanism. I think
Speaker 1: if he wants to have a small carve out for
Speaker 1: tax on tips.
Speaker 3: I think that makes sense.
Speaker 1: I think obviously, if you start giving tips to investment
Speaker 1: bankers at the end of the year instead of bonuses
Speaker 1: and they don't get taxed, that would be.
Speaker 3: A little bit more problematic.
Speaker 1: And you know, you could tax your lawyers, and so
Speaker 1: I think if he does that, it needs to have
Speaker 1: a small carve out.
Speaker 2: In the campaign, he also talked about I think no
Speaker 2: tax on Social Security. Wouldn't that be pretty expensive? Very expensive?
Speaker 2: And no tax on overtime too. I think he talked
Speaker 2: about does that be expensive too? It would be okay.
Speaker 2: So when you were working on the tax cut, when
Speaker 2: you were Secretary of Trategy, how did you find the
Speaker 2: intellectual level of the Ways and Means Committee members where
Speaker 2: they really everyone understand everything you guys wanted to do.
Speaker 2: And how was it like to engage with the Way
Speaker 2: Means Committee?
Speaker 1: Well, I mean, there's no question, you know, when we
Speaker 1: passed the tax cuts, and this was a lot of work,
Speaker 1: we were very engaged with both the House and Senate,
Speaker 1: and actually we had weekly meetings which was called the
Speaker 1: Big Six. It was me and Gary Cohne from the
Speaker 1: White House, it was the Senate, and it was the House.
Speaker 1: And literally every week we sat down and went through details.
Speaker 1: So I mean, as you know, I mean, we had
Speaker 1: sweeping tax reform across everything. This time it is actually
Speaker 1: a lot simpler. But I do think Secretary Besett needs
Speaker 1: to be very focused on working with the House and
Speaker 1: the Senate to get this across the finish line.
Speaker 2: In recent decades, the annual deficit has been fairly high.
Speaker 2: I think under President Trump's first four years, I.
Speaker 3: Don't know exactly.
Speaker 2: I think it was maybe six to eight trillion dollars
Speaker 2: of additional debt added to the total debt. We have
Speaker 2: that thirty six trillion. Now, how are we going to
Speaker 2: get the debt down? And the deficit down if we
Speaker 2: have these big tax cuts.
Speaker 1: Well, David, let me just say I think the deficit
Speaker 1: is probably the most important issue today in terms of
Speaker 1: the long term impact on the economy. And just to
Speaker 1: put this in perspective, in the first term, we had
Speaker 1: debt to GDP ratio of about one hundred percent, and
Speaker 1: with the tax cuts and the economic growth before COVID,
Speaker 1: we were growing the economy faster than we were growing
Speaker 1: the debt, so that ratio would have come down, and
Speaker 1: I think we were trying to get it down to
Speaker 1: ninety to ninety five. The big focus on the first
Speaker 1: term was military spending. We unfortunately had to increase non
Speaker 1: military spending to get it through the Huston's Senate. But
Speaker 1: what really impacted us was COVID, and I think as
Speaker 1: you know firsthand, you know, we had to spend a
Speaker 1: lot of money in COVID or we would have had
Speaker 1: a worldwide depression, not recession. I think the problem was,
Speaker 1: you know, the first two trillion dollars was well spent,
Speaker 1: the next two trillion we never should have spent, and
Speaker 1: then the Biden administration kept on spending, so you know,
Speaker 1: we have debt to GDP of close to one hundred
Speaker 1: and twenty five percent today. That's a gigantic problem. Secretary
Speaker 1: Besent has talked about getting the deficit down from six
Speaker 1: percent to three percent of GDP, and that's got to
Speaker 1: be a major focus. So if we're going to do
Speaker 1: the tax cuts, we need to make sure there's pay
Speaker 1: for us and we need to make sure there's economic growth.
Speaker 2: When Bob Rubin was Secretary of the Treasury, he once
Speaker 2: talked about the value of the dollar, and he made
Speaker 2: a mistake, he later would say, by talking about saying
Speaker 2: something other than we want a strong dollar. And now
Speaker 2: every Treasury secretary is told you can only say one
Speaker 2: thing about the dollar, we want a strong dollar. But
Speaker 2: what can former secretaries and Treasury say about that? Can
Speaker 2: they say we want a strong dollar. Can you say,
Speaker 2: maybe it should weeke in a little bit and to
Speaker 2: make our exports easier to sell.
Speaker 1: Well, you know, it's funny that you say that, And
Speaker 1: Bob really was kind of credited with the strong dollar policy,
Speaker 1: and I think it's kind of every Treasury secretary after
Speaker 1: that kind of you know, you got Treasury one oh
Speaker 1: one training, and the first thing they told you was
Speaker 1: just talk about a strong dollar. You know, actually, when
Speaker 1: I was at Davos, I made a comment that I
Speaker 1: come into it on a balanced, stable dollar as opposed
Speaker 1: to saying a strong dollar, and all of a sudden,
Speaker 1: the dollar moved significantly. Look, I think and now I
Speaker 1: can talk a little bit more freely about this, But
Speaker 1: I think on the long term it is important that
Speaker 1: we have a strong dollar. The dollar is the reserve
Speaker 1: currency of the world, and a strong dollar affects a
Speaker 1: strong economy. In the short term, particularly because of trade.
Speaker 1: You know, the strength of the dollar can have a
Speaker 1: negative impact.
Speaker 3: But I think the most important thing.
Speaker 1: Is actually a stable dollar so that there's not volatility.
Speaker 2: Speaking of stable, what do you think about the Secretary
Speaker 2: of Treasury or the US government supporting cryptocurrencies. They didn't
Speaker 2: really have them so much when you were Secretary of Treasury,
Speaker 2: but now cryptocurrencies seem to be very heavily supported by
Speaker 2: President Trump and his administration.
Speaker 3: Do you have any comment on whether that's a good
Speaker 3: or bad thing.
Speaker 1: Look, my view on crypto has been pretty consistent. We
Speaker 1: did a lot of work on this in the first term.
Speaker 1: If people want to buy crypto as an asset class
Speaker 1: like they buy gold, that's fine. I personally don't wouldn't
Speaker 1: invest in it, but that's fine to me. The bigger
Speaker 1: issue has been making sure that crypto is not used
Speaker 1: for illicit activities. And you know, we spent a long
Speaker 1: time getting rid of Swiss numbered bank accounts, making sure
Speaker 1: that we have a mechanism that crypto can be compliant
Speaker 1: with BSA and all of our money laundering regulations, and
Speaker 1: I have concerns today about that.
Speaker 2: You know, in the business world, investment world, if you
Speaker 2: hire more fundraisers, you usually raise more money. In the
Speaker 2: IRS world, if you get more agents, you usually raise
Speaker 2: more money.
Speaker 3: But for some reason, the.
Speaker 2: Republican Party seems to want to have fewer agents, and
Speaker 2: therefore they reduce the number of agents, and therefore maybe
Speaker 2: they're not going to raise as much money. Do you
Speaker 2: have a view on whether cutting back the IRS agents
Speaker 2: that were put in under a President Biden is a
Speaker 2: good thing to do or not.
Speaker 1: Well, I have a strong view on this. I spent
Speaker 1: a lot of time overseeing the IRS. I mean, the
Speaker 1: reason why Biden administration added so many agents, this is
Speaker 1: the silly part of government math.
Speaker 3: So if they added all these agents.
Speaker 1: They were able to score it that they were going
Speaker 1: to able to raise revenue in the future, sure, and
Speaker 1: they spend that revenue today. So I actually don't think
Speaker 1: we need more agents. What we need is a bigger
Speaker 1: investment in technology in the irs.
Speaker 3: The systems are outdated.
Speaker 1: And I think in this day and age, there's a
Speaker 1: lot we can do with technology that we don't need
Speaker 1: physical agents auditing people. It can be done electronically.
Speaker 2: Now, is it possible for the DOOSE people to get
Speaker 2: the individual tax returns of a particular person to who
Speaker 2: they might not like or that's pretty impossible to do, well.
Speaker 3: It's not allowed.
Speaker 1: So the people are not allowed to get individual taxpayer information.
Speaker 1: My understanding is that they can get access to anonymized information. Again,
Speaker 1: I think it's it would be helpful for those to
Speaker 1: help look at modernizing the technology. But obviously, you know,
Speaker 1: looking at specific taxpayer information should not be allowed and
Speaker 1: isn't allowed now.
Speaker 2: President Trump and his administration are very focused on the
Speaker 2: trade deficit, which is very, very high these days. But
Speaker 2: is the trade deficit that big a problem compared to
Speaker 2: the budget deficit? If you were to worry about which deficit,
Speaker 2: wouldn't be budget deficit be more important than a trade deficit.
Speaker 1: Well, as you said, we have what's called the twin deficits.
Speaker 1: In my opinion, the budget deficit at two trillion dollars
Speaker 1: annually is a much bigger problem.
Speaker 3: And I think, by the way, if you brought.
Speaker 1: Down the budget deficit, by definition, you'd bring down the
Speaker 1: trade deficit because you'd have less demand for goods in general.
Speaker 1: And I do think the idea of resetting trade relationships.
Speaker 1: I mean, President Trump is right that the US market
Speaker 1: has been opened for foreign trade, and foreign markets have
Speaker 1: not been opened in the same way. You know, we
Speaker 1: spent a lot of time with China on the Phase
Speaker 1: one deal. They haven't lived up to that. But the
Speaker 1: whole idea was if we could allow access to our
Speaker 1: business to a growing China middle class, that's an enormous
Speaker 1: opportunity for US business. And I do think kind of
Speaker 1: a big part of the trade deficit is we don't
Speaker 1: have fair trade in both directions.
Speaker 2: Now, President Trump has made a big push on getting
Speaker 2: American companies and foreign companies to invest in the United
Speaker 2: States manufacture things that would probably be somewhat inflationary because
Speaker 2: by definition, if you have people producing things overseas, probably
Speaker 2: because it's the lowest cost producer. If you bring them
Speaker 2: back to the United States with higher labor costs, it'll
Speaker 2: be a higher cost production, therefore maybe more inflationary. Despite that,
Speaker 2: you think it's a good idea to have more things
Speaker 2: manufacturing United States.
Speaker 1: Well, I definitely think US manufacturing jobs has always been
Speaker 1: a big focus of his. I think you know, there
Speaker 1: was a large part of the economy that was left behind,
Speaker 1: and I.
Speaker 3: Do think that's a focus now.
Speaker 1: Obviously, there are different markets that can be competitive, so
Speaker 1: I think we can have the same thing, but his
Speaker 1: focus should be US investment.
Speaker 2: So when you became a Secretary of Treasury, there was
Speaker 2: somebody on the Federal Reserve Board who had been appointed
Speaker 2: by Obama, James J. Powell, who used to work at
Speaker 2: my firm, and then you recommended him to President Trump,
Speaker 2: I think, to be the chairman of the Federal Reserve.
Speaker 2: President Trump was not happy with him at the beginning,
Speaker 2: I guess, but I think he's going to keep him now.
Speaker 2: I guess any regrets about recommending J. Powe or how
Speaker 2: kind of job you think he's done.
Speaker 1: Well, let me first say, despite the fact that Obama
Speaker 1: did appoint him, Jay was a Republican and is a Republican.
Speaker 1: I had the opportunity to work with him really on
Speaker 1: a lot of the regulatory issues at first when Jenny
Speaker 1: Allen was chair and I do think Jay's done a
Speaker 1: very good job.
Speaker 3: You know.
Speaker 1: As President Trump, he had a bunch of issues with
Speaker 1: him raising rates. But then during COVID he did give
Speaker 1: him the Most Improved Player Award when he dropped trades
Speaker 1: down to zero at the time.
Speaker 2: So it generally the President of United States is not
Speaker 2: supposed to talk to or lobby the Chairman of the Fed,
Speaker 2: but the Secretary of treasurer usually meets regularly with the
Speaker 2: Chairman of the Fed. They kind of talk about things
Speaker 2: to some extent. Did you meet with him fairly regularly
Speaker 2: and how would those conversations go when you met with
Speaker 2: j Powe?
Speaker 3: I did?
Speaker 1: I mean we inherited a tradition which has been kept
Speaker 1: up is that the Secretary of the Treasury and the
Speaker 1: Chairman of the Fed meet weekly. It alternates every week
Speaker 1: between being at the Treasury and the FED. And I
Speaker 1: found those meetings very helpful. I mean a big focus
Speaker 1: was obviously what we were doing on regulation monetary policy.
Speaker 1: I never talked about monetary policy publicly, but yes, of course,
Speaker 1: we did talk about those types of things. We talked
Speaker 1: about the economy, and I think we had a very
Speaker 1: good working relationship.
Speaker 3: So today, if you were J. Powe, would you lower
Speaker 3: interest rates in the next six months or so?
Speaker 1: I think it's pretty clear the FED is going to
Speaker 1: lower rates. So I mean, if you look at the
Speaker 1: dot plot, which is what the FED governors have publicly said,
Speaker 1: you do see rates coming down to about three in
Speaker 1: a quarter, and you see the long term rate at
Speaker 1: about two point eight. I do think the long term
Speaker 1: rate between being closer to two and a half than three,
Speaker 1: and I think we're going to see rates lowered next year.
Speaker 1: And by the way, I think the ten year has
Speaker 1: that already built in to the market. So I think
Speaker 1: we're going to see three in a quarter three and
Speaker 1: a half percent funds, and I think we'll see about
Speaker 1: four percent ten year treasuries.
Speaker 2: So if President Trump were to call you and say
Speaker 2: I need to have a new chairman of that FED
Speaker 2: in May of twenty six, who would you recommend.
Speaker 1: Well, I have a bunch of ideas, but I'm not
Speaker 1: going to say that publicly.
Speaker 3: I would say that privately to.
Speaker 2: Okay, So let's go to the next subject then, more
Speaker 2: important than the policy of the economic policy of the
Speaker 2: United States government is a subject called private equity. So
Speaker 2: you left Secretary of Treasury and you start a private
Speaker 2: equity firm, Liberty Strategic Capital. So is private equity as
Speaker 2: fulfilling as you thought? I know you were in it
Speaker 2: a bit before you became Secretary Treasury, But how do
Speaker 2: you enjoy the private equity world?
Speaker 1: Well, David, you know, I've been in the investment business
Speaker 1: and the markets businesses now for forty years, and I
Speaker 1: think kind of every job I did kind of prepared
Speaker 1: me more for the future. And when I became Treasury
Speaker 1: as secretary, I think it was helpful that I had
Speaker 1: a background in markets and risk. I had a background
Speaker 1: I had been CEO of a bank.
Speaker 3: So that you know, I understood a lot of these issues.
Speaker 1: You know, we're small enough that we focus on a
Speaker 1: handful of investments. We've done about ten investments to date.
Speaker 1: And you know, I find it very interesting.
Speaker 2: You agree with my view that the highest calling of
Speaker 2: mankind is private equity.
Speaker 3: I do not. You don't think so there's something more important,
Speaker 3: but I don't know what it is. But okay, I.
Speaker 1: Would have thought you were going to tell me the
Speaker 1: highest calling was to own a baseball team if.
Speaker 3: It's a winning team.
Speaker 2: Yes, But so let me ask you, when you your
Speaker 2: Secretary of Treasury and you know, you're a very powerful person,
Speaker 2: and then when you're on the private sector, you're going
Speaker 2: and asking people for money who used to ask you for,
Speaker 2: you know, information about what's going on. What is it
Speaker 2: like to kind of make that switch to kind of
Speaker 2: asking people for money who used to ask you for
Speaker 2: not favors but more information or help.
Speaker 1: No, I mean, I mean, first of all, fortunately we're
Speaker 1: we're not in the fundraising business.
Speaker 2: And you raised for your first fund about four billion
Speaker 2: plus or something.
Speaker 1: Well I can't comment on the size of it and
Speaker 1: things like that, but yes, we did raise our fund.
Speaker 1: But you know what I find interesting now is actually
Speaker 1: it's it's you know, when your Treasury secretary, and it's
Speaker 1: extraordinary experience. But you can't publicly talk about a lot
Speaker 1: of things, and there's limitations on what you can do.
Speaker 1: So I find it actually quite interesting being involved in
Speaker 1: different things now from the outside.
Speaker 2: Well, one of the pleasures of being Secretary of the
Speaker 2: Treasury is you get your handwriting on the dollar bill
Speaker 2: something like that. So some Secretary of Treasures had incomprehensible,
Speaker 2: indecipherable handwritings, and they couldn't figure out who actually was
Speaker 2: finding it. But what was the pleasure like of getting
Speaker 2: a bills one hundred dollar bills or dollar bills and
Speaker 2: having your.
Speaker 3: Signature on it? Was that fun or not?
Speaker 1: You know, David, I changed my signature because my signature
Speaker 1: was completely illegible, okay, And I thought, if I'm going
Speaker 1: to have my signature on the money forever, it would
Speaker 1: be nice if you could see it and read it.
Speaker 3: So I simplified my signature a lot.
Speaker 1: I guess the question is is you know, I wonder
Speaker 1: if President Trump wants his signature on the money.
Speaker 2: By the way, I have a similar problem, don't. I
Speaker 2: can't do cursive because I think that was being taught
Speaker 2: in the second grade when it was Jewish holidays and
Speaker 2: I wasn't in school, so I can't really like cursive.
Speaker 3: So I don't have to worry about this. I'm not
Speaker 3: gonna be Secretary and Treasury.
Speaker 2: But there is a proposal now to have a two
Speaker 2: hundred and fifty dollars bill, a law of bills proposing
Speaker 2: Congress with President Trump's picture on it. Usually you're supposed
Speaker 2: to have passed away before you get your picture on it.
Speaker 3: But ye, many comment on that, or well.
Speaker 1: My only comment is, why would he pick two fifty.
Speaker 1: Let's go for a thousand if they're going to pass
Speaker 1: the law.
Speaker 2: Okay, Well, when you were Treasuring secretary, you did work
Speaker 2: on I think having a woman on the dollar bill.
Speaker 2: Was it the twenty dollars bill or or something. It
Speaker 2: was going to be somebody, but it took years to
Speaker 2: get it done. It hasn't happened yet. You actually think
Speaker 2: there will be a woman on the dollar bill in
Speaker 2: our lifetime?
Speaker 1: Well, David, you know what I was focused on, and
Speaker 1: I knew it wasn't going to be my decision. It
Speaker 1: was going to pass over. I don't know if it'll
Speaker 1: be Scott Besson's or not. But what we were very
Speaker 1: focused on the time is the issue around the dollar
Speaker 1: and so that you couldn't replicate it, and the security
Speaker 1: features of the dollar. And there are changes that I
Speaker 1: can talk about that are in the works around the printing,
Speaker 1: so that takes time, and that's the most important part
Speaker 1: of the change.
Speaker 3: Now.
Speaker 2: One of the most important parts of the Treasury Code
Speaker 2: i RS code is something called carried interest taxation. You're
Speaker 2: probably familiar with that. I've heard about it a few
Speaker 2: time times. I heard about it during the first I know,
Speaker 2: I talked to you about it maybe a few times.
Speaker 2: I don't remember exactly. But President Trump has never been
Speaker 2: a big fan of that. I think you know, and
Speaker 2: I think in this current speeches he's made about he
Speaker 2: said he wanted to get rid of current carried interest
Speaker 2: taxation and whatever benefit sports owners gets as well.
Speaker 3: I don't know exactly what they are.
Speaker 2: But so do you have a view on carried interest
Speaker 2: now that you were in the private ecuy world. Do
Speaker 2: you think we should preserve it or not preserve it
Speaker 2: or you don't want to comment on it. Well, David,
Speaker 2: there's going.
Speaker 1: To be a lot of pay fors in have to
Speaker 1: be in the tax code, and they're going to look
Speaker 1: at a lot of different things. I will say, first
Speaker 1: of all, in the carried interest it doesn't raise a
Speaker 1: lot of revenue. I mean, look, one of the issues,
Speaker 1: as you know, on carried interest is if you have
Speaker 1: two investors and we invested you know, fifty percent, you
Speaker 1: invested fifty percent, we'd need to pay a.
Speaker 3: Certain amount to tax to the extent in it.
Speaker 1: You create a fund and we decide as opposed to
Speaker 1: it being fifty to fifty, we're going to exchange profits.
Speaker 1: It doesn't change the tax that the government collects. So
Speaker 1: I think from an academic standpoint, you know there's a
Speaker 1: reason behind this.
Speaker 3: From a revenue.
Speaker 1: Standpoint, that'll have to be something that Congress looks at.
Speaker 2: So what is the biggest pleasure you've gotten out of
Speaker 2: having a private equity fund? Now you raised the fund,
Speaker 2: You've made a number of investments. Are you enjoying us
Speaker 2: as much as being Secretary treasurer or being a partner
Speaker 2: at Goldman Sachs or not as much?
Speaker 1: I mean, David, all these experiences were really extraordinary. I mean,
Speaker 1: what I find interesting about this is investing in businesses
Speaker 1: and being able to impact certain businesses. You know, I've
Speaker 1: had a long experience in banking. We made a big
Speaker 1: investment that we bailed out and saved what was a
Speaker 1: Flagstar bank. It was called New York Munity Bank at
Speaker 1: the time. And you know, banking is something that's been
Speaker 1: very interesting to me. So this is the second time
Speaker 1: I did this. During the financial crisis, we bought several banks.
Speaker 3: Indie BFD, I see Indie Bank Bank.
Speaker 2: Okay, So what are the areas you're focused on? Is
Speaker 2: the financial services? Cyber what of.
Speaker 1: The area technology and financial services are to major focus?
Speaker 3: Okay?
Speaker 2: And entertainment you did a lot of that when you
Speaker 2: were before you were Secretary Treagery.
Speaker 3: Doing any of those kind of innesement. We do a
Speaker 3: little bit of it.
Speaker 1: I mean we've been, you know, big investors over time
Speaker 1: in content. When I was investing in movies, it was
Speaker 1: more actually a technology play and understanding bandwidth to the
Speaker 1: home and the demand for content.
Speaker 2: Hey, so today when people invest in private equity, the
Speaker 2: kind of rates of return they expect are probably lower
Speaker 2: than they were twenty years ago when more leverage was
Speaker 2: used and whole writing of other things. But you think
Speaker 2: somebody investing in private equity today with a reputable firm
Speaker 2: should get a rate of return in the load of
Speaker 2: mid teens.
Speaker 3: Something like that, a little bit higher higher than that. Yes,
Speaker 3: with you, well, I can't comment on me, but i'd
Speaker 3: say I would say in just mid to higher teams. Yes, okay.
Speaker 2: And today, in your view, is Congress likely to deal
Speaker 2: with the budget deficit in a way where we won't
Speaker 2: have to deal with the government shutting down, and do
Speaker 2: you think that's a real risk that the government could
Speaker 2: shut down again?
Speaker 1: Look, I'd say, you know, there's two issues that again
Speaker 1: that I spent a lot of time on, both the
Speaker 1: debt ceiling in government funding and you know the issue
Speaker 1: here and you know the government. So as treasury, we
Speaker 1: could have the money and not be able to spend
Speaker 1: it because of government funding, or we could have the
Speaker 1: government funding but not have enough money because.
Speaker 3: Of the dead ceiling.
Speaker 1: My major focus was the debt ceiling, and one of
Speaker 1: the things I think now is the most important issue
Speaker 1: is the Republicans need to get the dead ceiling into
Speaker 1: a reconciliation quickly and raise the dead ceiling.
Speaker 2: In nineteen seventeen, the death ceiling was first imposed, and
Speaker 2: we've now raised it more than ninety times. President Trump
Speaker 2: has said before we should get rid of the dead ceiling,
Speaker 2: and we're the only country in the world with one
Speaker 2: other than Denmark. So what is your view on do
Speaker 2: we need a dead ceiling because we can we changed
Speaker 2: it all the time anyway, or should we just keep
Speaker 2: the death ceiling.
Speaker 1: Well, given the side of the debt that we have
Speaker 1: today and the focus on the debt, I would keep
Speaker 1: the dead ceiling. I think it's an important mechanism. It's
Speaker 1: become too political. But I think spending and the dead
Speaker 1: ceiling should be passed at the same time. So whenever
Speaker 1: Congress passes whatever the spending is, they should simultaneously pass
Speaker 1: the dead ceiling so that you can afford to pay
Speaker 1: for that. But I don't think, you know, unlimited spending
Speaker 1: is a good thing. As I mentioned earlier, you know COVID,
Speaker 1: we had to do trillion dollars spending. We then got
Speaker 1: spending out of control, and we need to get that
Speaker 1: back into control.
Speaker 3: Now.
Speaker 2: Many countries around the world have something called a sovereign
Speaker 2: wealth fund, and the United States doesn't have that. We
Speaker 2: have the printing press, we print dollars and people buy
Speaker 2: those dollars, but we don't have a sovereign wealth fund.
Speaker 2: President Trump has signed an executive order I think, creating
Speaker 2: a sovereign wealth fund. But where will the money come
Speaker 2: from for that sovereign wealth fund?
Speaker 1: Well, David, as you know, most countries that have sovereign
Speaker 1: wealth funds are because they have certain resources today that
Speaker 1: are going to be limited. Obviously, oil and energy is
Speaker 1: a big focus and the purpose of the sovereign Wealth
Speaker 1: Fund is to capture a huge amount of those revenues
Speaker 1: today so that it can be spent over generations.
Speaker 3: The US is not in that situation.
Speaker 1: So if we're going to have a sovereign wealth fund,
Speaker 1: I think obviously we'd have to borrow to put the
Speaker 1: money in the sovereign wealth fund since we don't have
Speaker 1: a surplus. And if we did that, I think you
Speaker 1: should be very limited in scope. For are there certain
Speaker 1: areas that we need government support. It shouldn't be used,
Speaker 1: obviously to crowd out private investments.
Speaker 2: The third rail of American politics was thought to be
Speaker 2: the social security system and medicare. Some people say, ultimately
Speaker 2: we were running out of money to fund the social
Speaker 2: security system because people are living longer and so forth,
Speaker 2: and we have more people retiring and then living longer.
Speaker 2: Are you worried about the security of the subsecurity.
Speaker 1: System, David, One of the big titles I had in
Speaker 1: government was managing Trustee of the Social Security Trust Fund.
Speaker 1: And when I got there, I thought I actually could
Speaker 1: do a lot of good. And one of the things
Speaker 1: I was actually very focused on. Social Security still has
Speaker 1: paper cards, and I thought one of the most ridiculous
Speaker 1: thing is the Social Security number is the identifier most
Speaker 1: people use. I wanted to focus on creating electronic ID
Speaker 1: and I think that's still something we should do now.
Speaker 1: As it relates to the Trust Fund, we did sure
Speaker 1: report every year. The Trust Fund is going to run
Speaker 1: out of money, and I think it's something that Congress
Speaker 1: has to deal with. I hope that in the second
Speaker 1: half of the president's term he can focus on social
Speaker 1: security reform because it's a problem. The fund is going
Speaker 1: to run out of money and there's lots of people
Speaker 1: who alive upon it, so it needs to be fixed.
Speaker 2: In the second half of this term, he might have
Speaker 2: a different House of Representatives. Historically, the first midterm election
Speaker 2: a president usually loses about twenty five seats in the House.
Speaker 2: There's no evidence in what will happen now, but if
Speaker 2: President Trump were to lose control of the House, do
Speaker 2: you think that would affect his agenda great deal in
Speaker 2: terms of sociecurity reform other things, And therefore he needs
Speaker 2: to get everything done in the first two years that
Speaker 2: he really wants to get done well.
Speaker 1: First of all, as you know, the House with a
Speaker 1: very small majority in the House, So yes, I do
Speaker 1: think for the first two years, he has to focus
Speaker 1: on what are the most important legislative agendas. Obviously, border
Speaker 1: security something he's very focused on. I know there's been
Speaker 1: this talk of one bill or two bills. Personally, I
Speaker 1: would do two bills. I think he can have a
Speaker 1: very quick win on border security and get that done
Speaker 1: through the reconciliation. Tax reform is more complicated, so I
Speaker 1: think that's going to take a good part of the year.
Speaker 1: He could get the debt ceiling into the first bill.
Speaker 1: He can then get all his taxes done in the
Speaker 1: second bill. I think on something like social Security, you're
Speaker 1: going to need bipartisan support.
Speaker 3: You're not going to want to attack that.
Speaker 1: Now that's something so it doesn't matter who controls Congress
Speaker 1: for that.
Speaker 2: You know, a bus mark. I think it used to
Speaker 2: said that there's two things you don't want to see
Speaker 2: being made are sausage and legislation. And what is it
Speaker 2: like when you're doing tax bills. You're sitting in a
Speaker 2: smoke filled room and you're sitting there with the members
Speaker 2: of Congress and they say I'll give you this and
Speaker 2: you give me this, And how.
Speaker 3: Does that really work? Is a trade offs er?
Speaker 2: Everybody says, we just have to do what's best for
Speaker 2: the American peer people, and we're not going to do
Speaker 2: any trade offs or deals.
Speaker 1: Well, first of all, there are no smoke filled rooms.
Speaker 1: That may have happened in the past, but at least
Speaker 1: when I was there, nobody was smoking. No, I think
Speaker 1: that you know it said, you know, we worked very
Speaker 1: closely with the House and Senate. These are huge complicated issues.
Speaker 1: Of course there have to be trade offs. You have
Speaker 1: to think of how they were paid for us. I
Speaker 1: mean when we did this the first time, it was
Speaker 1: a trillion and a half dollars static, trillion dollars dynamic,
Speaker 1: and we had about five hundred billion in what we
Speaker 1: considered to be baseline issues. So of course there have
Speaker 1: to be trade offs. And then I would just comment
Speaker 1: on even once the tax reform was passed, we spent
Speaker 1: the next year writing tax regulations and Treasury which is
Speaker 1: a very important function to institute the law.
Speaker 2: So if you were king for today and you can
Speaker 2: make any change in the way the economy, the finance
Speaker 2: structured the United States is based, the spending is done.
Speaker 2: What would be the one thing that you think we
Speaker 2: should do to make our economy better or make our
Speaker 2: financial system better than it is today.
Speaker 3: One thing, I would reform.
Speaker 1: The spending process and the debt sealing process so that
Speaker 1: there was a real process of the administration having a budget,
Speaker 1: that budget going through Congress every year, and that kind
Speaker 1: of the focus around spending.
Speaker 2: Okay, so for the time being, you're going to be
Speaker 2: in the private sector, you're not going to be drafted
Speaker 2: back in the government, and you're happy with the highest
Speaker 2: calling of mankind that you're now pursuing private equity.
Speaker 1: Right the highest calling was serving the people in the environment.
Speaker 1: I know you think this is the highest time, David.
Speaker 1: I know you've been terrific in advising and helping presidents,
Speaker 1: and I'm sure you'll also give President Trump a bunch
Speaker 1: of advice.
Speaker 2: Well, I don't know if he needs my advice. Certainly
Speaker 2: not on the Kenney Center, probably, but we'll see. Okay, Okay,
Speaker 2: I think we're out of time. So we're out of time, right, Okay, see,
Speaker 2: thank you very much, thank you,