Latest / Trumponomics / Bonus: How Is Trump Changing US Economic Competitiveness?

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Bonus: How Is Trump Changing US Economic Competitiveness? · Trumponomics

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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
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Speaker 2: I'm Stephanie Flanders, head of Government and Economics at Bloomberg,
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Speaker 2: and welcome to a bonus episode of Trumpanomics, the podcast
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Speaker 2: that looks at the economic world of Donald Trump, how
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Speaker 2: he's already shaped the global economy and what on earth
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Speaker 2: is going to happen next. And we thought we would
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Speaker 2: just throw your way another panel I did at the
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Speaker 2: twenty eighth annual Milken Institute Global Conference called US Economic
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Speaker 2: Competitiveness in a Changing World, with guest Gary Cone, vice
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Speaker 2: chairman of IBM but former senior player in the first
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Speaker 2: Trump administration, Peter Orsag, CEO and chairman of Blazard, but
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Speaker 2: also previously budget director for Barack Obama, and Kevin McCarthy,
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Speaker 2: the former Speaker of the US House of represent Sentives.
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Speaker 2: My opening question, given the title of the panel, was
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Speaker 2: what kind of US economy did they think would emerge
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Speaker 2: from the policies of Donald Trump? Would it be more
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Speaker 2: or less competitive and resilient than the US economy that
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Speaker 2: Donald Trump inherited at the start of the inn.
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Speaker 1: So, look, we're going to come out of this just fine,
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Speaker 1: go back and take a reflection on the US economy
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Speaker 1: let me see. We've lived through depressions, We've lived through recessions,
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Speaker 1: we've lived through COVID, we've lived through the financial crisis,
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Speaker 1: and every time when we thought it was really bad,
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Speaker 1: it got a lot better. If you go ten years forward,
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Speaker 1: twenty years forward, if you have any duration of time,
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Speaker 1: this is an unbelievably resilient economy. The United States where
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Speaker 1: the reserve currency of the world. We're going to stay
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Speaker 1: the reserve currency of the world. We have huge capital here.
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Speaker 1: We've got a great corporate system that wants to invest
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Speaker 1: in this country. Look, we all have short term concerns.
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Speaker 1: Long term, we should be really excited where.
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Speaker 3: We're going with this country, Miss Speaker Kevin mccaffee.
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Speaker 4: Look, they all talk economics. I think you ought to
2:08
Speaker 4: get in the brains of the president. He's different this
2:11
Speaker 4: time than the last time. Trump is a populist, but
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Speaker 4: there's two things that are principal to him. I always
2:20
Speaker 4: have been tariffs and drugs cost too much. When he
2:25
Speaker 4: says he's going to put a ten percent tariff on,
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Speaker 4: he'll put a ten percent terrify when he says it's
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Speaker 4: going to be twenty five or higher. That's all about negotiations.
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Speaker 4: We are in the middle of negotiations. He's also not
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Speaker 4: a rigid person that will not adapt. He's always negotiating.
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Speaker 4: So if you take him exactly what he's saying, you're
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Speaker 4: going crazy. But what's happening is at the end of
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Speaker 4: the day, he's not going to have the shelves empty.
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Speaker 3: He knows he's got about sixty days to do something.
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Speaker 3: I actually think we're.
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Speaker 4: Going to be a lot better off, And I would
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Speaker 4: point to one part of the history for the same
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Speaker 4: reason we open the three communicates with China when we're
3:01
Speaker 4: dealing in a cold war. This is going to be
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Speaker 4: a reset in China. When we get an agreement with
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Speaker 4: India and Japan and the UK, it's going to be
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Speaker 4: much more positive for America.
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Speaker 3: Is their adjustment.
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Speaker 4: Is there disruption, yes, but in the long run it
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Speaker 4: will make us stronger.
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Speaker 2: Feed site.
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Speaker 5: Let's see three four really quick points on resilience. I
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Speaker 5: think we will be more micro resilient and less macro resilient,
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Speaker 5: by which I mean certain supply chains in pharma, etc.
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Speaker 5: Will be more secure, but from a macro perspective in
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Speaker 5: terms of our ability to project power abroad and our
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Speaker 5: ability to sustain the fiscal trajectory that we're on and
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Speaker 5: so on, I think.
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Speaker 3: We will be more vulnerable.
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Speaker 5: Second, we will have marginally higher manufacturing activity and manufacturing employment,
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Speaker 5: but nothing like the nineteen fifties shares of either.
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Speaker 3: The economy or employment.
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Speaker 5: Third, I think we need to be a bit careful
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Speaker 5: about I saw Simon Johnson in the hallway. The Nobel
4:08
Speaker 5: Prize in Economics was awarded for the last year for
4:13
Speaker 5: what drives long term growth?
4:15
Speaker 3: And rule of law.
4:18
Speaker 5: Inclusive rather than extract of approaches to policy making are
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Speaker 5: all core to long term economic growth. And so we
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Speaker 5: just need to keep that in mind. And then final
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Speaker 5: point is, despite all of the discussion about tariffs, as
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Speaker 5: Nuriel Rabini put it, tech Trump's tariffs, if you look
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Speaker 5: out over the next three to five years, so what
4:41
Speaker 5: is happening on the digital payment stack, what is happening
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Speaker 5: on the AI race, What is happening in quantum that
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Speaker 5: is going to turn out to be more important than
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Speaker 5: the next two or three months.
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Speaker 2: Gary Kahn, whether it's IBM or anywhere else, can you
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Speaker 2: respond into this changing incentives and support the kind of
5:04
Speaker 2: investments that the government administration wants to see. When you
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Speaker 2: have zero clarity about what the twists rates are going
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Speaker 2: to be and what the future is going to be.
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Speaker 1: Look, I think all of us who run big companies,
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Speaker 1: who have run big companies, we have to think long term,
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Speaker 1: like no one's thinking of like we're thinking about the
5:20
Speaker 1: next ninety days because we have to. But honestly, we're
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Speaker 1: making investments for a generational cycle. You know, everyone's talking
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Speaker 1: about AI today AI. A lot of the investment that
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Speaker 1: you're seeing in AI today didn't happen the last two,
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Speaker 1: three or four years. We'll get the quantum. I mean,
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Speaker 1: the amount of money that IBM and others are putting
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Speaker 1: in the quantum today is just extraordinary. Quantum will pay
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Speaker 1: results five years I'll say, five years from now. So
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Speaker 1: we are making extraordinary investments in this country, in this economy.
5:49
Speaker 1: The one place I'll caution, because I think we need
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Speaker 1: to talk about this to some extent, tax policy drives
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Speaker 1: investment decisions in this country. It's if you want to
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Speaker 1: boil down to any one major factor that drives decision
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Speaker 1: making in this country, it is tax policy. When we
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Speaker 1: changed our taxes in twenty seventeen, we affected corporate policy
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Speaker 1: more than anything else that's happened in this country in
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Speaker 1: the last thirty or forty years, when we deemed repatriation
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Speaker 1: of money back to the United States, we forced a
6:17
Speaker 1: lot of this money back. When we changed the corporate
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Speaker 1: tax rate, we became competitive with the OECD. We changed
6:23
Speaker 1: the way people thought about manufacturing and building businesses in
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Speaker 1: the United States. When we look at accelerated appreciation, when
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Speaker 1: we look at R and D credits, all of these
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Speaker 1: things matter and they will drive policy more than anything
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Speaker 1: else we're actually talking about. Because at the end of
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Speaker 1: the day, when you're running big companies, you're a fiduciary
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Speaker 1: for shareholder. You're trying to maximize the turn over a
6:44
Speaker 1: long period of time, and taxes will drive a lot
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Speaker 1: of those decisions. So, look, one of the most important
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Speaker 1: things that has to happen this year is we have
6:52
Speaker 1: to at a minimum extend the Trump tax cuts the job.
6:56
Speaker 1: So that to me is a minimum. If we can
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Speaker 1: put something additional, they're great. If we can bring back
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Speaker 1: we have, bringing back the R and D credits, bringing
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Speaker 1: back to acceler depreciation, those have more impacts than anything
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Speaker 1: else we're actually talking about here.
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Speaker 5: No, Gary won't be Look, I think there's a large
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Speaker 5: empirical literature on this question, and taxes matter, but it's
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Speaker 5: not even close to the most important factor. A lot
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Speaker 5: of things go into the future cash flows and expectations
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Speaker 5: of future cash flows, part of which is taxes, but
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Speaker 5: there are lots of other pieces that are arguably more important.
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Speaker 5: And on that point, I do think we need to
7:36
Speaker 5: also highlight that a lot of the benefits that we
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Speaker 5: are we have experienced historically in the United States comes
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Speaker 5: from being the world leader in technology in particular, that
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Speaker 5: is where a disproportionate share of the productivity growth has occurred.
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Speaker 5: That is where, to the extent there are any differences
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Speaker 5: with Europe.
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Speaker 3: That is where the differences have shown up most.
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Speaker 5: Prominently, and we need to be cognizant of that because
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Speaker 5: there is some risk that we will disrupt the apple cart.
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Speaker 5: I completely understand and empathize with the perspective that our
8:14
Speaker 5: leading universities went far off Kilture and how they handled
8:20
Speaker 5: the aftermath of October seventh in particular, But I think
8:24
Speaker 5: slashing the NIH budget, slashing funding to the leading universities
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Speaker 5: of the United States, risks exactly what we're already seeing,
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Speaker 5: which is Europeans and others are saying, come here, we
8:37
Speaker 5: will invest in science.
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Speaker 3: We don't want that, So.
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Speaker 5: That is just as important, if not more important, than
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Speaker 5: tax policy.
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Speaker 3: But obviously everything matters.
8:47
Speaker 2: Since we've got onto AI and technology. What outcomes were
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Speaker 2: you hoping for from the Chips Act and was it
8:53
Speaker 2: successful and revitalizing US microchip manufacturing at Sir Georgia's posito,
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Speaker 2: and also wondering what the next act like that would be.
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Speaker 2: I think, I mean you a speaker, when the Bipartisan
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Speaker 2: Chips Act was passed, there's been sort of different signals
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Speaker 2: around it. But as far as you're concern, was it
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Speaker 2: successful in doing what it was supposed to do?
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Speaker 3: Not completely?
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Speaker 4: No, I mean the company government invested in the most
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Speaker 4: I don't know is going to make it all the way.
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Speaker 3: AI is going to do.
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Speaker 4: One thing for America is going to get our energy
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Speaker 4: policy right, because we'll never capture AI without getting energy
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Speaker 4: policy right. You'll do more than any climate change has
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Speaker 4: ever done to our energy policy. Getting chips made in
9:35
Speaker 4: America is going to be an agreement with government and Taiwan.
9:40
Speaker 4: Taiwan is never going to give the full fobs here
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Speaker 4: unless they get an agreement that they're going to get
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Speaker 4: some type of support and that's actually happening now.
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Speaker 3: So I believe there is enough capital out there.
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Speaker 4: It's more a government view that in the Senate if
9:56
Speaker 4: they just throw money at Chips. I think there's a
9:59
Speaker 4: lot of capital in the market to get money for Chips.
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Speaker 3: I don't think government needed to make that investment.
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Speaker 4: This isn't normal. I tell my friends in Congress, China
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Speaker 4: has a congress too. No one knows who they are.
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Speaker 4: All the power has usurped to the White House. Trump
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Speaker 4: has one term. You can tell them, oh, if you
10:18
Speaker 4: went really smooth. None of that's going to matter to him.
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Speaker 4: He's got one term to get something done. He has
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Speaker 4: his ten thousand hours that he knows how to do
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Speaker 4: the job. He picked the cabinet that he wants that
10:28
Speaker 4: will follow what he wants to do. I believe investment
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Speaker 4: is important, but under Republicans we increased in IH. But
10:35
Speaker 4: I don't think any of these colleges have been audited.
10:38
Speaker 4: Did you really think taxpayer money should give Harvard nine
10:42
Speaker 4: billion dollars? What are they doing with it? I actually
10:45
Speaker 4: believe coming after him will make every single college to
10:50
Speaker 4: start auditing.
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Speaker 3: What are we doing with this money?
10:53
Speaker 4: And it will drive more towards research and development than prior.
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Speaker 4: I firmly believe in the tax and it will get done,
11:01
Speaker 4: but it won't get done perfectly on the timeline that
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Speaker 4: Congress does right now, but it's too much pain that
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Speaker 4: they not do it. But Trump will cut regulation he
11:14
Speaker 4: did last time, even faster than Reagan. That combination will
11:18
Speaker 4: help energy more and AI will drive energy to do
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Speaker 4: it more than anything of it.
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Speaker 3: Yeah.
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Speaker 5: Look, I think there is a very positive agenda here
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Speaker 5: that has to do with expanding the supply, not only
11:32
Speaker 5: of energy, where honestly, the myth of the immaculate transition
11:37
Speaker 5: has dominated for too long, and I'm glad, I am
11:40
Speaker 5: glad we are past that in housing, which admittedly is
11:44
Speaker 5: mostly local, but is a huge impediment to the upward
11:48
Speaker 5: mobility of many families. By the way, people have not realized,
11:52
Speaker 5: but the mobility rates in the United States have been
11:55
Speaker 5: declining over the past two to three decades.
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Speaker 3: And you know part of that is is.
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Speaker 5: The rock and effects and the difficulty of finding housing
12:05
Speaker 5: and wherever you want to move to.
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Speaker 3: This is a problem that needs to be addressed.
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Speaker 5: And you can go down the list of expanding supply
12:13
Speaker 5: as a I mean EZRA client and Derek Thompson just
12:16
Speaker 5: wrote a book called Abundance, which is fundamentally about let's
12:19
Speaker 5: stop subsidizing demand and let's really focus on expanding supply.
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Speaker 5: That is an agenda that you know, I'm one hundred
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Speaker 5: percent behind.
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Speaker 2: I just wanted to want to shift a little bit
12:30
Speaker 2: of that follows on from that, if you have a
12:32
Speaker 2: supply side approach to the economy. One of the things
12:35
Speaker 2: that investors and others were very were excited about in
12:39
Speaker 2: looking at this incoming administration was around deregulation and that
12:45
Speaker 2: whole agenda. But we also saw in the previous administration
12:48
Speaker 2: quite an aggressive approach to corporate power, which actually was
12:51
Speaker 2: also associated with an analysis of what was reducing labor moability,
12:55
Speaker 2: non compete clauses. You know, the corporate concentration was itself
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Speaker 2: imped being economic competitiveness. So I just wonder how would
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Speaker 2: you judge where the administration is on that and whether
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Speaker 2: it's right to kind of be more relaxed about corporate
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Speaker 2: concentration if that's if that's the case.
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Speaker 4: The frustration I've had in past administrations, if one administration
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Speaker 4: did something, the other one has to be opposed to it,
13:22
Speaker 4: which I didn't think good.
13:23
Speaker 3: Was when it comes to China.
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Speaker 4: Maybe China has united everybody, and this isn't about preparing
13:28
Speaker 4: for war. We've become too dependent. This is about making
13:32
Speaker 4: sure we don't go to war and pure dependency. And
13:35
Speaker 4: it's the most bipartisan committee. And when the President of
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Speaker 4: Taiwan came to see me, I held the meeting at
13:40
Speaker 4: the Reagan Library simply for the symbolism of defeating communists
13:44
Speaker 4: without going to war. And when we sat and had
13:46
Speaker 4: a press conference together with the Berlin Wall behind us,
13:49
Speaker 4: Andrew Mitchell gave the first question and she said, I cried,
13:53
Speaker 4: and I was with Reagan. We said, tear down this wall.
13:55
Speaker 4: And I feel just emotional as today that you are
13:58
Speaker 4: so united without Paul.
14:00
Speaker 3: And I think it's been one of the most positive things.
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Speaker 3: And dependency.
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Speaker 4: Just like they control ninety percent of the critical minerals,
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Speaker 4: but ninety five percent of the processing, and that really
14:09
Speaker 4: comes down to Congress. Are they going to allow us
14:11
Speaker 4: if we have our own resources to be able to
14:14
Speaker 4: do that? And I think this is a place, this
14:16
Speaker 4: is where the TikTok band came from. This is going
14:19
Speaker 4: to be a very positive situation.
14:21
Speaker 2: Well happn't to that, but I did actually distract you
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Speaker 2: from Kary Kayan? Do you want or do you want
14:26
Speaker 2: to take on the Batsy trust question.
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Speaker 1: Look, I'm always troubled by this topic to some of
14:36
Speaker 1: the great because, look, we clearly want our companies to
14:38
Speaker 1: play within the rules. We don't want anyone to have
14:40
Speaker 1: an unfair advantage. So that's that's a given. On the
14:43
Speaker 1: flip side, you know, we sit here and we talk
14:46
Speaker 1: about we have to compete against China, which we do,
14:48
Speaker 1: and we have to win the battle. China's trying to
14:51
Speaker 1: build the largest companies in the.
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Speaker 3: World to take over the world.
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Speaker 1: We're trying to break up the larger companies they're successful
14:57
Speaker 1: in the United States. I think we got to decide
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Speaker 1: which side this equation we want to come out on.
15:02
Speaker 1: I think we want to be able to compete globally.
15:05
Speaker 1: And if some of our companies are really successful, it
15:09
Speaker 1: happen to be very large, it's okay. It's probably good
15:12
Speaker 1: for us in this country, and they probably bring home
15:14
Speaker 1: a lot of tax revu and they probably employ a
15:16
Speaker 1: lot of people. As long as they're not prohibiting other
15:19
Speaker 1: people from competing in the space. I don't think we
15:22
Speaker 1: as Americans to that problems with it. We should actually
15:24
Speaker 1: be very prideful in the fact that we can build
15:27
Speaker 1: these companies from nothing. And the companies we're talking about,
15:29
Speaker 1: and I know we're smiling, a lot of these companies
15:31
Speaker 1: didn't exist thirty years ago, forty years fifty years ago,
15:35
Speaker 1: none existed. So you think about the creativity and this
15:39
Speaker 1: is why I started out being so bullish on this economy.
15:41
Speaker 1: You think of the creativity and the entrepreneurial spirit that
15:45
Speaker 1: exists in this country. We've built some of the largest
15:48
Speaker 1: companies in the last twenty years. Let's allow them to
15:51
Speaker 1: continue to thrive as long as they're playing within the laws.
15:54
Speaker 1: That's why we have loss in this country.
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Speaker 5: So the biggest divergence that the biggest bad crowd had
16:03
Speaker 5: was because it's easy to kind of just say it's
16:06
Speaker 5: across the board, it's really quite specifically with regard to
16:09
Speaker 5: vertical integration. So that is a firm that is buying
16:12
Speaker 5: something that's a supplier or a distributor as opposed to
16:17
Speaker 5: merging horizontally. And there I think, honestly, there was a
16:22
Speaker 5: lot of rhetoric, often without a lot of evidence, and
16:24
Speaker 5: you're going to find that's where the differences will be.
16:28
Speaker 5: The most significant is a little bit of backing off
16:30
Speaker 5: from the all vertical integration is bad.
16:34
Speaker 3: And let me just.
16:35
Speaker 5: Highlight one area where this tension is paramount.
16:38
Speaker 3: I saw doctor Oz yesterday. He's here.
16:43
Speaker 5: I believe that CMS under doctor Oz will push very
16:46
Speaker 5: hard on value based care and healthcare, which is fantastic.
16:49
Speaker 3: We should pay for value and not for quantity.
16:52
Speaker 5: But as you do that, you're creating incentives for insurance
16:56
Speaker 5: companies and providers to act as one because that's effectively
17:00
Speaker 5: what most of the incentive undervalue based care does.
17:03
Speaker 3: And we have evidence.
17:04
Speaker 5: We're here in California, Kiser Pernaminity is a good example
17:08
Speaker 5: of fully vertically integrated healthcare players that perform better than others.
17:14
Speaker 5: So if you go after vertical integration, but you also
17:17
Speaker 5: want value based healthcare, which, by the way, the administration,
17:20
Speaker 5: the prior administration was saying simultaneously you have massive cognitive dissonance.
17:25
Speaker 5: One arm of the government saying don't do this, in
17:28
Speaker 5: the other arm saying do it. I think that will
17:30
Speaker 5: be better going forward.
17:32
Speaker 2: I'm going to change the subject, but I did mention
17:34
Speaker 2: the start. I mean, one of the things that economists
17:36
Speaker 2: had been quote unquote concerned about given how much it
17:41
Speaker 2: had been part of the growth model in the last
17:43
Speaker 2: few years. Was the much tougher stance towards immigration of
17:47
Speaker 2: this administration. Now, obviously the focus has been illegal administration
17:51
Speaker 2: immigration and companies don't tend to kind of stand up
17:55
Speaker 2: for the right to have loads of illegal immigrants working
17:57
Speaker 2: for them, and really want to get past that and
17:59
Speaker 2: just to a sort of core of what has been
18:03
Speaker 2: a source of economic strength for the US over the
18:05
Speaker 2: last few years, which is to be a very opening.
18:09
Speaker 1: Environment for legal immigrations.
18:11
Speaker 2: So foreign citizens, no, But if we have people who
18:14
Speaker 2: are now being we have foreign if foreign students who
18:17
Speaker 2: are studying here, maybe contributing potentially to entrepreneurship and inventions
18:22
Speaker 2: in the US and down the road, are being intimidated.
18:25
Speaker 2: If people are worried about I mean, we will know
18:28
Speaker 2: people here who have been told actually, if you don't
18:31
Speaker 2: need to come to the US, don't come, or do
18:33
Speaker 2: just take a burner phone. I mean, all of this
18:35
Speaker 2: is I'm sure exaggerated, but just about the sort of
18:37
Speaker 2: atmosphere that it creates for a country that's trying to
18:40
Speaker 2: attract foreign talent. I mean, Peter, do do you worry
18:43
Speaker 2: about it? It's not about these specific cases.
18:46
Speaker 5: There is I agree that we need to have secure borders,
18:50
Speaker 5: and I agree that you know no one can or
18:53
Speaker 5: should be in favor of a legal immigration. So let
18:55
Speaker 5: me just say that, However, even if the burner phone
18:59
Speaker 5: finalmon is anecdotal, anecdotes can become the telephone game and
19:07
Speaker 5: affect our ability to attract top talent. The number of
19:10
Speaker 5: foreign CEOs with whom I've spoken who say that they
19:14
Speaker 5: are going to be bringing a burner fund to the
19:16
Speaker 5: US is much higher than it should be.
19:18
Speaker 3: So I very much hope.
19:20
Speaker 5: That whatever's causing that changes because that is not good
19:23
Speaker 5: for our economy.
19:25
Speaker 2: Misspeaking, do you think do you just worry about the again,
19:29
Speaker 2: the tone of what's happened over the last few months,
19:32
Speaker 2: and maybe the overreach by some people in individual bits
19:36
Speaker 2: of homeland security, which then contributes to these stories.
19:41
Speaker 4: Look, I think the greatest strength of America is not
19:44
Speaker 4: our aircraft carri is the idea of America. Okay, But
19:49
Speaker 4: President Trump got elected on two main factors, the border
19:52
Speaker 4: and the economy, and I think eighty percent of America
19:55
Speaker 4: believes the border was out of control. So just like
19:58
Speaker 4: everything else, you have to actually make this statement to
20:01
Speaker 4: stop the illegal from coming. We're the most generous nation
20:06
Speaker 4: in the world. More than a million people go. Now
20:08
Speaker 4: you're going to get a gold cart, so you're going
20:09
Speaker 4: to get a whole other set. I think this is
20:12
Speaker 4: a small part. I think it'll make people rethink. I'm
20:17
Speaker 4: more concerned the relationship with Canada and Mexico because I
20:21
Speaker 4: believe that's a great deal of strength, and I think
20:24
Speaker 4: that has to be we have an agreement with them.
20:26
Speaker 3: We need to work through it.
20:27
Speaker 4: Because if you can't work with your neighbors that you
20:29
Speaker 4: have in agreement with, it's hard to make agreements with
20:32
Speaker 4: other people.
20:35
Speaker 2: Okay, and I want to go back to we started
20:37
Speaker 2: right at the beginning. You mentioned about debt, and you
20:39
Speaker 2: also about the importance of making the tax cuts permanent.
20:43
Speaker 2: You know, that is one of the things that if
20:46
Speaker 2: you're again just doing a sort of classic economic health
20:48
Speaker 2: check of the US, you'd say, that's the kind of
20:51
Speaker 2: scariest bit of the scariest chart is what happens to
20:54
Speaker 2: debt under any reasonable assumptions. So do you see a
20:59
Speaker 2: path given the relatively modest gains of DOGE, given the
21:04
Speaker 2: kind of cuts that are on the table in Congress,
21:09
Speaker 2: do you see a path to meaningfully flattening the US trajectory.
21:16
Speaker 1: There's always a path. Do we want to take the path?
21:20
Speaker 1: We're going to have no choice. I think we're going
21:22
Speaker 1: to have to get to the point where we take
21:24
Speaker 1: the path. So if you look at what DOE is
21:27
Speaker 1: trying to do in like waste frauden abuse, as the
21:31
Speaker 1: Governor said, as the Speaker said, there's waste broaden abuse everywhere,
21:34
Speaker 1: it's hard to go in and find those pieces. I
21:37
Speaker 1: actually think we'd be better off to take a step
21:40
Speaker 1: back and figure out what can we actually eliminate. It's
21:44
Speaker 1: a lot more cost effective to start eliminating things. So
21:47
Speaker 1: I'll go back to my former former former life. You know,
21:51
Speaker 1: when you look at the banking sector in the United States,
21:54
Speaker 1: I think we have eight to eleven regulators in the
21:57
Speaker 1: banking sector in the United States. If you look at
21:59
Speaker 1: the UK, you look at Hong Kong, you look at Japan,
22:03
Speaker 1: you look at Singapore, you'd say, all they have pretty
22:05
Speaker 1: good markets, pretty good banking systems. They have a maximum
22:08
Speaker 1: of three regulators in each of those countries. They don't
22:11
Speaker 1: have an SEC, they don't have a CFTC, they don't
22:14
Speaker 1: have an OCC. I could keep naming names of things
22:16
Speaker 1: they don't have. They have a potential regulator and a
22:19
Speaker 1: market in a central bank, and they have a regulator
22:22
Speaker 1: that protects the public. We could do that really efficiently
22:26
Speaker 1: in this country, and we could cut out real, real
22:29
Speaker 1: spending long term. Now, look, it will take my friend
22:33
Speaker 1: over here and his colleagues in the Capitol to get
22:36
Speaker 1: rid of a bunch.
22:37
Speaker 3: Of these agencies.
22:38
Speaker 1: But these agencies in many respects I think have probably
22:40
Speaker 1: outlived their needs, outlived their services. So if we're gonna
22:44
Speaker 1: get serious about taking money out and keeping it out,
22:48
Speaker 1: because the dose money, I hate to say it, in
22:51
Speaker 1: the next administration could come back in the way to
22:54
Speaker 1: keep it out. Take it out is the remove part
22:56
Speaker 1: of the organization that actually doesn't need to be there today.
23:00
Speaker 2: I guess you only find out if you needed it
23:01
Speaker 2: once you get rid of it.
23:02
Speaker 5: But Pisa, Look if I told all of you that
23:07
Speaker 5: there was a country running seven percent of GDP deficits,
23:11
Speaker 5: as far as I can see, that the debt to
23:14
Speaker 5: GDP of that country was one hundred percent, that the
23:18
Speaker 5: political system was deeply polarized, that the country was arguably
23:25
Speaker 5: alienating a third of its investor class, and that that
23:29
Speaker 5: country was also toying with the idea of whether the
23:34
Speaker 5: central bank should remain fully independent or not. That would
23:37
Speaker 5: not be a combination of factors that would be confidence inspiring.
23:42
Speaker 3: So I agree with Gary this is in my opinion.
23:45
Speaker 5: Now there was a decade and now I will say
23:48
Speaker 5: even I, as a former CBO director and a former
23:51
Speaker 5: budget director, sort of had just tuned out all the
23:54
Speaker 5: chicken little kind of the sky is falling fiscal stuff
23:57
Speaker 5: because all of the dire predictions were not happening, and
24:01
Speaker 5: it kind of got a little tiresome to keep hearing them.
24:04
Speaker 3: But if you.
24:05
Speaker 5: Compare where we are now to where we were a
24:07
Speaker 5: decade ago, it's a lot different. The deficits twice as
24:10
Speaker 5: high interest rates are dramatically higher. I am particularly pleased
24:15
Speaker 5: that Secretary of Bison has cleaned up the question of
24:19
Speaker 5: whether the administration is doubting whether it being the reserve
24:22
Speaker 5: currency is a benefit or not. I think there were
24:25
Speaker 5: statements from other administration officials which were not helpful. That
24:29
Speaker 5: is a very dangerous thing to be doing, given the
24:31
Speaker 5: combination of facts that I had. So this is I
24:34
Speaker 5: think it's time to worry again about this trajectory and
24:38
Speaker 5: I do hope that we get serious about what we're
24:41
Speaker 5: going to do, because you don't want to be in
24:42
Speaker 5: a situation where it gets away from you. And I
24:45
Speaker 5: think the risk that it gets away from us are
24:48
Speaker 5: higher now than it was over the past decade.
24:51
Speaker 2: Mister speakers, as Gary said, it's all down to your colleagues, Well.
24:56
Speaker 4: Then I'd be really worried. Structure dictates behavior. There is
25:03
Speaker 4: not one person who gets elected that they're going to
25:05
Speaker 4: go in and cut It doesn't show up on any poll. Now.
25:09
Speaker 4: We had this exact same problem in nineteen ninety with
25:12
Speaker 4: the collapse of the Soviet Union, and there's not one
25:16
Speaker 4: member of Congress who's going to raise their hand that
25:18
Speaker 4: we've spent the last forty years developing a military to
25:21
Speaker 4: fight the Soviet Union. Who's going to raise their hand
25:23
Speaker 4: and said close my base. So they know the structure
25:26
Speaker 4: wouldn't work. So what did they do. They created bract
25:28
Speaker 4: base re Alignment Enclosure, so every leader got to appoint
25:32
Speaker 4: to it. If they came up with the plan, this
25:35
Speaker 4: is all they were promised. They'd get a vote on
25:38
Speaker 4: the floor in the House and no amendments.
25:40
Speaker 3: You know what happened.
25:41
Speaker 4: It would pass and it would be bipartisan, because then
25:45
Speaker 4: you're boxed in. I actually made this offer to Biden
25:49
Speaker 4: during the debt ceiling. I said, let's do it and
25:52
Speaker 4: let's vote after the election. You got the tax bill,
25:56
Speaker 4: and you've got some provision in some Obamacare coming due.
25:59
Speaker 4: So technically, in the tax bill, if you took some revenue,
26:04
Speaker 4: you're not raising taxes because they're all going up automatically.
26:06
Speaker 4: You're actually decreasing them. In Obamacare, some of them are
26:10
Speaker 4: going to go. Provisions were leaving, So if you reform
26:13
Speaker 4: that from a Democrat, you weren't destroying Obamacare. And if
26:17
Speaker 4: you did it after the election, you got a little
26:21
Speaker 4: aim duck. The greatest strength any politician has is the
26:25
Speaker 4: first day they're elected, and it goes down each day
26:27
Speaker 4: to the next election, then it goes back up. So
26:30
Speaker 4: and if you did it together, no one will lose
26:32
Speaker 4: their job over it. Now you can eliminate things in
26:35
Speaker 4: government that's not going to do anything for you. The
26:38
Speaker 4: drivers today are the government programs, and if you do
26:43
Speaker 4: nothing eight years and nine years, they'll automatically be double
26:48
Speaker 4: digit cuts to them and few options. It's the greatest
26:52
Speaker 4: threat we have.
26:53
Speaker 2: Okay, but help me out here because when you look
26:56
Speaker 2: at the only serious cut in a non discretionary that's
27:01
Speaker 2: on the table that is actually gaining some momentum in
27:03
Speaker 2: Congress never been not medicaid. But the President has said
27:07
Speaker 2: multiple times he doesn't want to see cuts the many
27:09
Speaker 2: without that number. Without that cut, it's very hard to see, say,
27:13
Speaker 2: how you start to pay for the tax cuts. So
27:15
Speaker 2: I'm just wondering, how do you've given your history, your experience,
27:18
Speaker 2: how do you think that's going to be resolved?
27:20
Speaker 4: Okay, my experience in the dead saying I got two
27:22
Speaker 4: trillion dollars and I lost my job over it. Even
27:26
Speaker 4: in this reconciliation, they're not coming anywhere near that. And
27:29
Speaker 4: it's a Republican White House or Republican Senate, Republican House.
27:33
Speaker 4: So that's why I say I don't put my trust
27:35
Speaker 4: in them. Getting it's kinna becomes such a big problem
27:37
Speaker 4: that no longer anybody can ignore it. But you have
27:40
Speaker 4: to change the structure otherwise the members will just the
27:44
Speaker 4: minority will fight who's ever in the majority. Take it
27:47
Speaker 4: out of the argument, and bring it back in one vote,
27:51
Speaker 4: and that's the way you have to get it done.
27:53
Speaker 2: Thank you very much, thank you, Thanks for listening to
28:10
Speaker 2: Trumpnomics from Bloomberg. It was hosted by Me, Stephanie Flanders
28:13
Speaker 2: and I was joined by Gary Cohne, Peter Orsac, and
28:16
Speaker 2: Kevin McCarthy. Trumponomics is produced by Samasadi and Moses and
28:20
Speaker 2: Them with help from Chris Martlou and Amy Keen. Sound
28:23
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28:27
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