1 00:00:01,080 --> 00:00:04,120 Speaker 1: You're listening to Taking Stock with Kathleen Hayes and Pimp 2 00:00:04,160 --> 00:00:09,119 Speaker 1: Box on Bloomberg Radio. This is taking Stock the Republican 3 00:00:09,160 --> 00:00:13,280 Speaker 1: presidential candidate Donald Trump. He put new details on his 4 00:00:13,560 --> 00:00:17,480 Speaker 1: uh scale back tax plan today, one that is projected 5 00:00:17,520 --> 00:00:20,040 Speaker 1: to cost the federal government less money but also to 6 00:00:20,120 --> 00:00:25,400 Speaker 1: deliver perhaps fewer benefits to taxpayers than Donald Trump's original proposal. 7 00:00:25,800 --> 00:00:30,680 Speaker 1: He was speaking today and UH the tax plan is 8 00:00:30,720 --> 00:00:34,159 Speaker 1: of course one of intense interests to voters. Here to 9 00:00:34,159 --> 00:00:36,400 Speaker 1: tell us more is Wilbur Ross. He is the chairman 10 00:00:36,440 --> 00:00:40,040 Speaker 1: of the chief executive of W. L. Ross and a Company. 11 00:00:40,280 --> 00:00:45,120 Speaker 1: He is a noted investor collector, and he is an 12 00:00:45,159 --> 00:00:48,440 Speaker 1: advisor to Donald Trump. Mr Ross, thank you very much 13 00:00:48,479 --> 00:00:52,120 Speaker 1: for being here give us, give us your reaction and 14 00:00:52,200 --> 00:00:55,320 Speaker 1: your your thoughts and perspective on Donald Trump's speech about 15 00:00:55,360 --> 00:00:58,440 Speaker 1: the economy. Well, I thought both the substance and the 16 00:00:58,520 --> 00:01:02,400 Speaker 1: delivery of it were exemplary. I thought he did a 17 00:01:02,520 --> 00:01:05,119 Speaker 1: very good job in both, even though at the very 18 00:01:05,160 --> 00:01:08,720 Speaker 1: beginning the teleprompter didn't work. He was about five minutes 19 00:01:08,760 --> 00:01:12,319 Speaker 1: into his speech before the turn of the teleprompter on 20 00:01:12,840 --> 00:01:16,280 Speaker 1: didn't seem to phase him. I thought the most interesting 21 00:01:16,360 --> 00:01:19,520 Speaker 1: line in the whole speech was he said, it used 22 00:01:19,560 --> 00:01:23,480 Speaker 1: to be that automobiles were made in Flint, Michigan, and 23 00:01:23,520 --> 00:01:26,800 Speaker 1: you couldn't drink the water in Mexico. Now you can 24 00:01:26,880 --> 00:01:30,520 Speaker 1: drink the water, and you can't drink the water in Flint, Michigan, 25 00:01:30,840 --> 00:01:33,600 Speaker 1: and the cars are being made in Mexico. Well, you know, 26 00:01:33,680 --> 00:01:36,880 Speaker 1: wilber I was over the weekend coincidentally, I was. You know, 27 00:01:36,920 --> 00:01:38,959 Speaker 1: you start looking at tweets and all these different things, 28 00:01:39,000 --> 00:01:41,839 Speaker 1: and you just land on all kinds of interesting information. 29 00:01:41,880 --> 00:01:44,200 Speaker 1: And someone had tweeted out a clip of Donald Trump 30 00:01:44,680 --> 00:01:47,480 Speaker 1: at least twenty maybe thirty years ago, judging by the 31 00:01:47,560 --> 00:01:49,880 Speaker 1: difference in here and everything else, right, And he was 32 00:01:49,920 --> 00:01:52,560 Speaker 1: doing an interview with on a on a local broadcast 33 00:01:52,600 --> 00:01:55,360 Speaker 1: in New York City, and he was talking quite adamantly 34 00:01:55,880 --> 00:01:59,680 Speaker 1: about um us giving away too much, sending too much 35 00:01:59,680 --> 00:02:04,320 Speaker 1: money overseas for military purposes, etcetera, and not keeping enough 36 00:02:04,360 --> 00:02:07,240 Speaker 1: money here in the United States to to build up schools, 37 00:02:07,360 --> 00:02:11,880 Speaker 1: build up housing, etcetera. UM So this is not something 38 00:02:11,960 --> 00:02:15,079 Speaker 1: that Donald Trump just thought about a year ago. No, 39 00:02:15,280 --> 00:02:18,280 Speaker 1: that's true. And and when it comes to trade, it 40 00:02:18,320 --> 00:02:21,480 Speaker 1: seems to me that there is an ever more vocal 41 00:02:21,600 --> 00:02:24,960 Speaker 1: minority of economist not hewing the conventional line, which is, oh, 42 00:02:25,000 --> 00:02:27,240 Speaker 1: trade deals are good and they increase our prosperity, but 43 00:02:27,280 --> 00:02:30,000 Speaker 1: saying there are certain kind of trade deals that actually 44 00:02:30,000 --> 00:02:33,480 Speaker 1: do the opposite. Well, first, so, all the conventional economists 45 00:02:33,520 --> 00:02:36,040 Speaker 1: have generally been wrong on the economy. I don't know 46 00:02:36,160 --> 00:02:38,240 Speaker 1: one of them who has been very accurate in the 47 00:02:38,320 --> 00:02:42,840 Speaker 1: last ten years. So I think we can overdeify the 48 00:02:42,960 --> 00:02:47,920 Speaker 1: professional economists. But anybody economists or not who thinks that 49 00:02:48,000 --> 00:02:52,320 Speaker 1: trade deficits helped the country just can't add and subtract. 50 00:02:53,000 --> 00:02:56,720 Speaker 1: It's true that treaties like enough to make for more 51 00:02:56,800 --> 00:03:00,720 Speaker 1: trade going back and forth, but that is in the point. 52 00:03:00,800 --> 00:03:04,120 Speaker 1: The only thing that rubs off is the difference between 53 00:03:04,200 --> 00:03:07,840 Speaker 1: what you export and what you import. So I've never 54 00:03:07,960 --> 00:03:12,840 Speaker 1: understood why so many of them are ideological as opposed 55 00:03:12,840 --> 00:03:16,480 Speaker 1: to looking at the numbers and saying, how can we 56 00:03:16,560 --> 00:03:19,280 Speaker 1: really say we like the idea of an eight hundred 57 00:03:19,280 --> 00:03:23,200 Speaker 1: billion dollar trade deficit in goods between the US and 58 00:03:23,240 --> 00:03:26,799 Speaker 1: the rest of the world. Every economist says she, look 59 00:03:26,840 --> 00:03:31,240 Speaker 1: at the great job China has done. They've grown by exports. Well, 60 00:03:31,280 --> 00:03:35,680 Speaker 1: if trade balance positive is a good thing for an economy. 61 00:03:36,040 --> 00:03:39,000 Speaker 1: How can a negative trade balance also be a good 62 00:03:39,040 --> 00:03:42,480 Speaker 1: thing for an economy? It's silly. I have truly never 63 00:03:42,640 --> 00:03:45,480 Speaker 1: understood why they don't get it. But I'll tell you what. 64 00:03:46,080 --> 00:03:48,760 Speaker 1: The man in the street does get it. And the 65 00:03:48,760 --> 00:03:51,440 Speaker 1: man in the street and woman in the street knows 66 00:03:52,000 --> 00:03:55,600 Speaker 1: we're exporting jobs instead of products. We need to keep 67 00:03:55,640 --> 00:03:59,120 Speaker 1: the jobs and export products. Tell us a little bit 68 00:03:59,160 --> 00:04:01,760 Speaker 1: about his tax plans, because I understand that he says 69 00:04:01,760 --> 00:04:05,080 Speaker 1: he would reduce taxes on all business income, including both 70 00:04:05,080 --> 00:04:08,840 Speaker 1: traditional corporations as well as so called pass through entities, 71 00:04:08,880 --> 00:04:12,120 Speaker 1: to fifteen percent. And he also says that US based 72 00:04:12,200 --> 00:04:15,640 Speaker 1: manufacturers would be allowed to fully right off the costs 73 00:04:15,640 --> 00:04:18,920 Speaker 1: of new plants and equipment from their taxes, UH, in 74 00:04:19,080 --> 00:04:23,200 Speaker 1: order to spur investment. Do you agree with that? Yeah, Well, 75 00:04:23,279 --> 00:04:26,840 Speaker 1: let's talk first about the pass through one of the 76 00:04:26,880 --> 00:04:30,839 Speaker 1: groups that he's excluded from the fifteen percent. Writer people 77 00:04:30,920 --> 00:04:34,640 Speaker 1: like me because he has specifically told us that carried 78 00:04:34,680 --> 00:04:37,480 Speaker 1: interests will now be taxed at the full thirty three 79 00:04:37,600 --> 00:04:40,960 Speaker 1: percent rate. So and that's all right. It's a pretty 80 00:04:41,000 --> 00:04:44,520 Speaker 1: good business in any event. So I'm here as a 81 00:04:44,600 --> 00:04:48,479 Speaker 1: personal victim saying I don't mind being victim uz because 82 00:04:48,520 --> 00:04:52,039 Speaker 1: I think he'll spend the money wisely. Now, what does 83 00:04:52,040 --> 00:04:56,200 Speaker 1: the tax plan really mean? A married couple with two 84 00:04:56,279 --> 00:05:00,719 Speaker 1: children earning fifty thousand a year and paying eight thousand 85 00:05:00,839 --> 00:05:04,640 Speaker 1: a year for childcare will have a thirty five percent 86 00:05:04,839 --> 00:05:09,720 Speaker 1: reduction in their taxes. That's a big number. Go up 87 00:05:09,760 --> 00:05:13,719 Speaker 1: the bracket a little bit. A couple earning seventy thousand, 88 00:05:14,120 --> 00:05:19,560 Speaker 1: again with two children and now paying twelve thousand for childcare, 89 00:05:20,160 --> 00:05:24,880 Speaker 1: they will have a thirty percent reduction. Let's go to 90 00:05:24,960 --> 00:05:29,880 Speaker 1: the extreme opposite end of the spectrum. Married couple, two children, 91 00:05:30,279 --> 00:05:34,760 Speaker 1: five million dollars a year of income and the same thing, 92 00:05:35,080 --> 00:05:40,080 Speaker 1: paying even more for childcare. Their taxes will go down three. 93 00:05:40,760 --> 00:05:45,560 Speaker 1: So this is a very progressive tax system that he's got. 94 00:05:45,960 --> 00:05:49,240 Speaker 1: And the incorrect notion that some people have tried to 95 00:05:49,279 --> 00:05:52,400 Speaker 1: put forward that this is just for rich people is 96 00:05:52,440 --> 00:05:55,240 Speaker 1: really quite foolish and quite inaccurate. How are we going 97 00:05:55,279 --> 00:05:57,800 Speaker 1: to pay for it? You gonna issue more bonds? And no, no, 98 00:05:57,960 --> 00:06:00,640 Speaker 1: here's how he's going to pay for it. First of all, 99 00:06:01,160 --> 00:06:05,279 Speaker 1: the the you'll see some of the independent scorers going 100 00:06:05,360 --> 00:06:08,760 Speaker 1: to say that the dynamic cost of the tax plan 101 00:06:09,360 --> 00:06:14,040 Speaker 1: is about two point six trillion. That's a pretty big number. 102 00:06:14,520 --> 00:06:17,120 Speaker 1: But the part of it that I worked on along 103 00:06:17,120 --> 00:06:22,039 Speaker 1: with Peter Navarro, namely developing the regulatory and the trade part, 104 00:06:22,680 --> 00:06:27,200 Speaker 1: will be able to take back into federal tax revenues 105 00:06:27,279 --> 00:06:31,640 Speaker 1: about a trillion eight of the two six That leaves 106 00:06:31,960 --> 00:06:36,159 Speaker 1: eight hundred and Donald's plan is to take one cent 107 00:06:36,400 --> 00:06:41,040 Speaker 1: per year out of the discretionary spending, one cent more 108 00:06:41,120 --> 00:06:45,520 Speaker 1: per year out of discretionary spending other than military. That's 109 00:06:45,560 --> 00:06:49,960 Speaker 1: a huge number over the ten year period. And then 110 00:06:49,960 --> 00:06:53,960 Speaker 1: the rest will come from just running it more efficiently now. 111 00:06:54,080 --> 00:06:57,760 Speaker 1: Donald Trump has also said that he's including a ten 112 00:06:57,880 --> 00:07:04,000 Speaker 1: percent tax on repay creation of profits overseas by US 113 00:07:04,080 --> 00:07:07,160 Speaker 1: corporations and also put together a sort of an incentive 114 00:07:07,560 --> 00:07:11,320 Speaker 1: plan uh for US based manufacturings to expense the cost 115 00:07:11,400 --> 00:07:14,440 Speaker 1: of their plants and equipment. Yes, the way the cost 116 00:07:14,480 --> 00:07:18,240 Speaker 1: of expensing the plants will work is that corporations and 117 00:07:18,280 --> 00:07:21,920 Speaker 1: other businesses will make a choice. They can either fully 118 00:07:21,960 --> 00:07:26,640 Speaker 1: depreciate the property or they can get an interest deduction. 119 00:07:26,720 --> 00:07:31,480 Speaker 1: They can't get full depreciation right off and full interest 120 00:07:31,680 --> 00:07:34,400 Speaker 1: right off, and more or less, the purpose of that 121 00:07:34,880 --> 00:07:38,840 Speaker 1: is to foster capital investment, not so much to Foster 122 00:07:39,120 --> 00:07:42,160 Speaker 1: l b O s Well, there's certainly a lot of 123 00:07:42,200 --> 00:07:45,480 Speaker 1: economists and federatory officials that would agree that investment spending 124 00:07:45,520 --> 00:07:48,560 Speaker 1: has been extremely weak and most of its short term 125 00:07:48,760 --> 00:07:52,360 Speaker 1: and business people seem unwilling to go, you know, buy 126 00:07:52,360 --> 00:07:56,320 Speaker 1: back shares. We've seen a lot of that with cheap funding, right, 127 00:07:56,480 --> 00:07:58,680 Speaker 1: but we haven't seen a lot of investment. As as 128 00:07:58,680 --> 00:08:00,920 Speaker 1: someone who has been a distressed investors saying, who has 129 00:08:00,960 --> 00:08:03,200 Speaker 1: worked with banks and other kinds of companies, what do 130 00:08:03,200 --> 00:08:05,320 Speaker 1: you think is holding back investment? Well, I think it's 131 00:08:05,360 --> 00:08:11,520 Speaker 1: pretty clear gross domestic private investment other than residential, namely 132 00:08:11,560 --> 00:08:15,960 Speaker 1: the basically the corporate investment used to be three quarters 133 00:08:16,000 --> 00:08:19,040 Speaker 1: of a percent of g d P. Now it's around 134 00:08:19,080 --> 00:08:22,239 Speaker 1: one quarter of a percent. There's a half a point 135 00:08:22,240 --> 00:08:27,160 Speaker 1: off g d P because of less investment. And it 136 00:08:27,720 --> 00:08:31,520 Speaker 1: all started in two thousand and one and two when 137 00:08:31,600 --> 00:08:35,680 Speaker 1: China was admitted to the w t O. F DI 138 00:08:35,800 --> 00:08:40,040 Speaker 1: has gone up very, very rapidly. And what's really happened 139 00:08:40,480 --> 00:08:45,520 Speaker 1: is instead of corporations fixing their domestic factories and putting 140 00:08:45,559 --> 00:08:48,960 Speaker 1: capital in to make them more efficient, they're closing the 141 00:08:49,000 --> 00:08:52,360 Speaker 1: factory and moving the whole thing to some less developed country. 142 00:08:52,920 --> 00:08:57,720 Speaker 1: So the corporations are still getting productivity increase. And that's 143 00:08:57,720 --> 00:09:01,920 Speaker 1: why Corporate America doesn't oppose all these trade deals. But 144 00:09:02,040 --> 00:09:05,360 Speaker 1: what about Mr and Mrs America. They're the ones who 145 00:09:05,400 --> 00:09:10,320 Speaker 1: are left at home with either no job or flipping Hamburgers. 146 00:09:10,360 --> 00:09:13,680 Speaker 1: Just the last point to Wilbert Ross. Some estimates, according 147 00:09:13,679 --> 00:09:16,400 Speaker 1: to Bloomberg Politics, the new cost of the Trump tax 148 00:09:16,400 --> 00:09:19,640 Speaker 1: plan could be around three trillion dollars over a decade. 149 00:09:19,679 --> 00:09:22,120 Speaker 1: Do you buy that? Well, it is in the static model, 150 00:09:22,520 --> 00:09:25,240 Speaker 1: but it's not meant to be a static model. And 151 00:09:25,400 --> 00:09:30,480 Speaker 1: just so that your listeners can understand, static model assumes 152 00:09:30,760 --> 00:09:33,960 Speaker 1: that the cuts and taxes have no favorable impact on 153 00:09:34,040 --> 00:09:37,520 Speaker 1: the economy. I don't think there's anybody who should logically 154 00:09:37,600 --> 00:09:42,160 Speaker 1: believe that they'll have no impact. The dynamic model shows 155 00:09:42,240 --> 00:09:45,959 Speaker 1: the two point six trillion minus the one point eight 156 00:09:46,080 --> 00:09:48,880 Speaker 1: that will get from trade and regulatory and then minus 157 00:09:48,960 --> 00:09:51,560 Speaker 1: the other saving. So there you go. You gotta look 158 00:09:51,600 --> 00:09:54,600 Speaker 1: at it dynamically if you want to understand Donald Trump's 159 00:09:54,600 --> 00:09:56,640 Speaker 1: tax plan. Wilbert Ross thank you so very much for 160 00:09:56,720 --> 00:09:59,280 Speaker 1: joining us chairman and CEO of W. L. Ross and Co. 161 00:10:00,040 --> 00:10:00,319 Speaker 1: One