WEBVTT - Wilbur Ross on Trump's Economic Speech (Audio)

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<v Speaker 1>You're listening to Taking Stock with Kathleen Hayes and Pimp

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<v Speaker 1>Box on Bloomberg Radio. This is taking Stock the Republican

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<v Speaker 1>presidential candidate Donald Trump. He put new details on his

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<v Speaker 1>uh scale back tax plan today, one that is projected

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<v Speaker 1>to cost the federal government less money but also to

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<v Speaker 1>deliver perhaps fewer benefits to taxpayers than Donald Trump's original proposal.

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<v Speaker 1>He was speaking today and UH the tax plan is

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<v Speaker 1>of course one of intense interests to voters. Here to

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<v Speaker 1>tell us more is Wilbur Ross. He is the chairman

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<v Speaker 1>of the chief executive of W. L. Ross and a Company.

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<v Speaker 1>He is a noted investor collector, and he is an

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<v Speaker 1>advisor to Donald Trump. Mr Ross, thank you very much

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<v Speaker 1>for being here give us, give us your reaction and

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<v Speaker 1>your your thoughts and perspective on Donald Trump's speech about

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<v Speaker 1>the economy. Well, I thought both the substance and the

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<v Speaker 1>delivery of it were exemplary. I thought he did a

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<v Speaker 1>very good job in both, even though at the very

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<v Speaker 1>beginning the teleprompter didn't work. He was about five minutes

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<v Speaker 1>into his speech before the turn of the teleprompter on

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<v Speaker 1>didn't seem to phase him. I thought the most interesting

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<v Speaker 1>line in the whole speech was he said, it used

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<v Speaker 1>to be that automobiles were made in Flint, Michigan, and

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<v Speaker 1>you couldn't drink the water in Mexico. Now you can

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<v Speaker 1>drink the water, and you can't drink the water in Flint, Michigan,

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<v Speaker 1>and the cars are being made in Mexico. Well, you know,

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<v Speaker 1>wilber I was over the weekend coincidentally, I was. You know,

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<v Speaker 1>you start looking at tweets and all these different things,

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<v Speaker 1>and you just land on all kinds of interesting information.

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<v Speaker 1>And someone had tweeted out a clip of Donald Trump

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<v Speaker 1>at least twenty maybe thirty years ago, judging by the

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<v Speaker 1>difference in here and everything else, right, And he was

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<v Speaker 1>doing an interview with on a on a local broadcast

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<v Speaker 1>in New York City, and he was talking quite adamantly

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<v Speaker 1>about um us giving away too much, sending too much

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<v Speaker 1>money overseas for military purposes, etcetera, and not keeping enough

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<v Speaker 1>money here in the United States to to build up schools,

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<v Speaker 1>build up housing, etcetera. UM So this is not something

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<v Speaker 1>that Donald Trump just thought about a year ago. No,

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<v Speaker 1>that's true. And and when it comes to trade, it

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<v Speaker 1>seems to me that there is an ever more vocal

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<v Speaker 1>minority of economist not hewing the conventional line, which is, oh,

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<v Speaker 1>trade deals are good and they increase our prosperity, but

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<v Speaker 1>saying there are certain kind of trade deals that actually

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<v Speaker 1>do the opposite. Well, first, so, all the conventional economists

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<v Speaker 1>have generally been wrong on the economy. I don't know

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<v Speaker 1>one of them who has been very accurate in the

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<v Speaker 1>last ten years. So I think we can overdeify the

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<v Speaker 1>professional economists. But anybody economists or not who thinks that

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<v Speaker 1>trade deficits helped the country just can't add and subtract.

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<v Speaker 1>It's true that treaties like enough to make for more

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<v Speaker 1>trade going back and forth, but that is in the point.

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<v Speaker 1>The only thing that rubs off is the difference between

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<v Speaker 1>what you export and what you import. So I've never

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<v Speaker 1>understood why so many of them are ideological as opposed

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<v Speaker 1>to looking at the numbers and saying, how can we

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<v Speaker 1>really say we like the idea of an eight hundred

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<v Speaker 1>billion dollar trade deficit in goods between the US and

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<v Speaker 1>the rest of the world. Every economist says she, look

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<v Speaker 1>at the great job China has done. They've grown by exports. Well,

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<v Speaker 1>if trade balance positive is a good thing for an economy.

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<v Speaker 1>How can a negative trade balance also be a good

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<v Speaker 1>thing for an economy? It's silly. I have truly never

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<v Speaker 1>understood why they don't get it. But I'll tell you what.

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<v Speaker 1>The man in the street does get it. And the

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<v Speaker 1>man in the street and woman in the street knows

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<v Speaker 1>we're exporting jobs instead of products. We need to keep

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<v Speaker 1>the jobs and export products. Tell us a little bit

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<v Speaker 1>about his tax plans, because I understand that he says

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<v Speaker 1>he would reduce taxes on all business income, including both

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<v Speaker 1>traditional corporations as well as so called pass through entities,

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<v Speaker 1>to fifteen percent. And he also says that US based

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<v Speaker 1>manufacturers would be allowed to fully right off the costs

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<v Speaker 1>of new plants and equipment from their taxes, UH, in

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<v Speaker 1>order to spur investment. Do you agree with that? Yeah, Well,

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<v Speaker 1>let's talk first about the pass through one of the

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<v Speaker 1>groups that he's excluded from the fifteen percent. Writer people

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<v Speaker 1>like me because he has specifically told us that carried

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<v Speaker 1>interests will now be taxed at the full thirty three

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<v Speaker 1>percent rate. So and that's all right. It's a pretty

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<v Speaker 1>good business in any event. So I'm here as a

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<v Speaker 1>personal victim saying I don't mind being victim uz because

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<v Speaker 1>I think he'll spend the money wisely. Now, what does

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<v Speaker 1>the tax plan really mean? A married couple with two

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<v Speaker 1>children earning fifty thousand a year and paying eight thousand

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<v Speaker 1>a year for childcare will have a thirty five percent

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<v Speaker 1>reduction in their taxes. That's a big number. Go up

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<v Speaker 1>the bracket a little bit. A couple earning seventy thousand,

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<v Speaker 1>again with two children and now paying twelve thousand for childcare,

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<v Speaker 1>they will have a thirty percent reduction. Let's go to

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<v Speaker 1>the extreme opposite end of the spectrum. Married couple, two children,

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<v Speaker 1>five million dollars a year of income and the same thing,

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<v Speaker 1>paying even more for childcare. Their taxes will go down three.

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<v Speaker 1>So this is a very progressive tax system that he's got.

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<v Speaker 1>And the incorrect notion that some people have tried to

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<v Speaker 1>put forward that this is just for rich people is

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<v Speaker 1>really quite foolish and quite inaccurate. How are we going

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<v Speaker 1>to pay for it? You gonna issue more bonds? And no, no,

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<v Speaker 1>here's how he's going to pay for it. First of all,

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<v Speaker 1>the the you'll see some of the independent scorers going

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<v Speaker 1>to say that the dynamic cost of the tax plan

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<v Speaker 1>is about two point six trillion. That's a pretty big number.

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<v Speaker 1>But the part of it that I worked on along

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<v Speaker 1>with Peter Navarro, namely developing the regulatory and the trade part,

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<v Speaker 1>will be able to take back into federal tax revenues

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<v Speaker 1>about a trillion eight of the two six That leaves

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<v Speaker 1>eight hundred and Donald's plan is to take one cent

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<v Speaker 1>per year out of the discretionary spending, one cent more

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<v Speaker 1>per year out of discretionary spending other than military. That's

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<v Speaker 1>a huge number over the ten year period. And then

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<v Speaker 1>the rest will come from just running it more efficiently now.

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<v Speaker 1>Donald Trump has also said that he's including a ten

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<v Speaker 1>percent tax on repay creation of profits overseas by US

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<v Speaker 1>corporations and also put together a sort of an incentive

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<v Speaker 1>plan uh for US based manufacturings to expense the cost

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<v Speaker 1>of their plants and equipment. Yes, the way the cost

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<v Speaker 1>of expensing the plants will work is that corporations and

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<v Speaker 1>other businesses will make a choice. They can either fully

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<v Speaker 1>depreciate the property or they can get an interest deduction.

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<v Speaker 1>They can't get full depreciation right off and full interest

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<v Speaker 1>right off, and more or less, the purpose of that

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<v Speaker 1>is to foster capital investment, not so much to Foster

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<v Speaker 1>l b O s Well, there's certainly a lot of

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<v Speaker 1>economists and federatory officials that would agree that investment spending

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<v Speaker 1>has been extremely weak and most of its short term

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<v Speaker 1>and business people seem unwilling to go, you know, buy

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<v Speaker 1>back shares. We've seen a lot of that with cheap funding, right,

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<v Speaker 1>but we haven't seen a lot of investment. As as

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<v Speaker 1>someone who has been a distressed investors saying, who has

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<v Speaker 1>worked with banks and other kinds of companies, what do

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<v Speaker 1>you think is holding back investment? Well, I think it's

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<v Speaker 1>pretty clear gross domestic private investment other than residential, namely

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<v Speaker 1>the basically the corporate investment used to be three quarters

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<v Speaker 1>of a percent of g d P. Now it's around

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<v Speaker 1>one quarter of a percent. There's a half a point

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<v Speaker 1>off g d P because of less investment. And it

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<v Speaker 1>all started in two thousand and one and two when

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<v Speaker 1>China was admitted to the w t O. F DI

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<v Speaker 1>has gone up very, very rapidly. And what's really happened

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<v Speaker 1>is instead of corporations fixing their domestic factories and putting

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<v Speaker 1>capital in to make them more efficient, they're closing the

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<v Speaker 1>factory and moving the whole thing to some less developed country.

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<v Speaker 1>So the corporations are still getting productivity increase. And that's

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<v Speaker 1>why Corporate America doesn't oppose all these trade deals. But

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<v Speaker 1>what about Mr and Mrs America. They're the ones who

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<v Speaker 1>are left at home with either no job or flipping Hamburgers.

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<v Speaker 1>Just the last point to Wilbert Ross. Some estimates, according

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<v Speaker 1>to Bloomberg Politics, the new cost of the Trump tax

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<v Speaker 1>plan could be around three trillion dollars over a decade.

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<v Speaker 1>Do you buy that? Well, it is in the static model,

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<v Speaker 1>but it's not meant to be a static model. And

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<v Speaker 1>just so that your listeners can understand, static model assumes

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<v Speaker 1>that the cuts and taxes have no favorable impact on

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<v Speaker 1>the economy. I don't think there's anybody who should logically

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<v Speaker 1>believe that they'll have no impact. The dynamic model shows

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<v Speaker 1>the two point six trillion minus the one point eight

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<v Speaker 1>that will get from trade and regulatory and then minus

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<v Speaker 1>the other saving. So there you go. You gotta look

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<v Speaker 1>at it dynamically if you want to understand Donald Trump's

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<v Speaker 1>tax plan. Wilbert Ross thank you so very much for

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<v Speaker 1>joining us chairman and CEO of W. L. Ross and Co.

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<v Speaker 1>One