Latest / Trumponomics / Stephen Moore Is Bullish on America. Is He Right To Be?

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Stephen Moore Is Bullish on America. Is He Right To Be? · Trumponomics

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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
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Speaker 2: If we can get these trade deals done, if we
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Speaker 2: can get the tax cut down, those two things, if
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Speaker 2: they happen in the next three to six months, we're
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Speaker 2: going to see the biggest boom you ever saw. You're
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Speaker 2: going to see the stock marker go through the roof.
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Speaker 2: You're going to see the United States as sucking capital
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Speaker 2: in from the rest of the world. I'm bullish.
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Speaker 3: I'm Stephanie Flander's head of Government and Economics at Bloomberg.
0:37
Speaker 3: Welcome to Trumponomics, the podcast that looks at the economic
0:40
Speaker 3: world of Donald Trump, how he's already shaped the global economy.
0:44
Speaker 3: What on earth is going to happen next? This week,
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Speaker 3: we're stepping back from the string of trade deals, pauses,
0:50
Speaker 3: and all round events of the past week or so
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Speaker 3: to ask where are we in Donald Trump's grand strategy
0:56
Speaker 3: for the US economy? What comes next? We've had a
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Speaker 3: kind of trade piece breakout between the US and China
1:04
Speaker 3: just this weekend, which in turn has produced a kind
1:06
Speaker 3: of recovery in the US stock market. Of course, there's
1:09
Speaker 3: plenty of unanswered questions about this ninety day pause in
1:13
Speaker 3: the very high tariffs that both countries had imposed on
1:15
Speaker 3: each other, US and China, and we had that other
1:18
Speaker 3: ninety day pause. Won't last that much longer on the
1:21
Speaker 3: tariffs imposed on everyone else. But for now we're forgetting
1:24
Speaker 3: about tariffs, or at least the world seems to be,
1:26
Speaker 3: and it's onto the next big thing, which is tax cuts.
1:30
Speaker 3: Hours after that US China truce was announced, House Republicans
1:34
Speaker 3: in Congress released a multi trillion dollar draft tax bill
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Speaker 3: containing many of Donald Trump's campaign tax pledges, things like
1:42
Speaker 3: no taxes on tips and overtime pay, and new tax
1:46
Speaker 3: breaks for car buyers and seniors. Also, crucially, that bill
1:54
Speaker 3: makes permanent the lower individual tax rates that were passed
1:57
Speaker 3: in Trump's first term in twenty seventeen. Well, we recorded
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Speaker 3: this conversation on Tuesday morning, US time, just as people
2:05
Speaker 3: in Washington were still getting to grips with a detail
2:08
Speaker 3: of that big bill. But we had exactly the right
2:11
Speaker 3: guests to help us put all of this in context.
2:14
Speaker 3: Josh Wingrove, senior reporter for Bloomberg's White House team, who
2:18
Speaker 3: can tell us something of the mood in Washington in
2:20
Speaker 3: Congress and the West Wing. And Stephen Moore, economist and
2:24
Speaker 3: the author most recently of the book The Trump Economic
2:27
Speaker 3: Miracle and the Plan to Unleash Prosperity Again, among other things.
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Speaker 3: Stephen has advised Donald Trump's twenty sixteen presidential campaign, and
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Speaker 3: he's now serving as a Senior Fellow in economics at
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Speaker 3: the Heritage Foundation. Stephen, thank you very much for doing this.
2:48
Speaker 3: I know it's a very busy week. So if you
2:50
Speaker 3: just sort of stepped back on these first few months,
2:53
Speaker 3: how do you think he's doing well.
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Speaker 2: I like most of what Trump has done. I'm a
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Speaker 2: big fan of the tax cut. In fact, Lary Cudler
3:00
Speaker 2: and I wrote the very first version of the Trump
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Speaker 2: tax cut back in twenty sixteen when he first started
3:05
Speaker 2: running for president, and of course in the weeks and
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Speaker 2: maybe months ahead, we're going to try to finalize making
3:11
Speaker 2: that tax cut permanent and making other changes. So I'm
3:13
Speaker 2: a big fan of that. I like what he's doing
3:15
Speaker 2: potentially saving a trillion dollars in deregulation costs. I like
3:19
Speaker 2: the fact that he's promoting pro American energy policy that
3:23
Speaker 2: uses oil or gas or coal or nuclear power, everything
3:25
Speaker 2: we've got. So I'm very supportive of most things Trump
3:29
Speaker 2: has done. As you know, i'm a kind of old
3:32
Speaker 2: fashioned Milton Friedman, free trader. So I'm not a big
3:35
Speaker 2: fan of tariffs. But if Trump can pull this off
3:38
Speaker 2: and can get other countries to reduce their TIFFs, which
3:41
Speaker 2: is his objective, that would be a very positive thing
3:45
Speaker 2: for growth and for trade. But boy, it's been a
3:47
Speaker 2: bumpy road.
3:48
Speaker 3: We will get onto some of the tax side of
3:50
Speaker 3: things and maybe deregulation. But because you had raised publicly
3:53
Speaker 3: some concerns about the economic impact of those tariffs, how
3:57
Speaker 3: are you reading the last few weeks do you think
3:59
Speaker 3: or the last few days do you think there has
4:01
Speaker 3: been a real change of approach from the administration. You know,
4:05
Speaker 3: we're having a deal with certainly the Chinese feel they
4:07
Speaker 3: got everything that they wanted in that initial negotiation with
4:10
Speaker 3: Scott Besson or is it too soon to say?
4:14
Speaker 2: Maybe a little too soon to say. But the last
4:16
Speaker 2: couple of weeks have been enormously successful for Trump. We've had,
4:19
Speaker 2: as you know, we've had a major, major comeback in
4:23
Speaker 2: our stock market, so that's been good. A lot of
4:26
Speaker 2: people lost a lot of money in March. In April,
4:28
Speaker 2: it may has been a pretty good month. You know,
4:30
Speaker 2: you never know what Trump, whether this was the grand design,
4:33
Speaker 2: He's a very good negotiator. He's a very clever guy.
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Speaker 2: He's always underestimated by his political opposition. So I think that,
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Speaker 2: for example, when he said, well, we're going to put
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Speaker 2: one hundred and twenty five percent tarosun China, and then
4:45
Speaker 2: when he said, well, maybe we'll go down in the
4:47
Speaker 2: press at oh, there is is retreating, but that may
4:50
Speaker 2: have been part of the plan all along, is to
4:52
Speaker 2: start with a very high number and bring it down
4:54
Speaker 2: as a negotiating tactic. I do believe that the UK
4:59
Speaker 2: deal betwe in the US and the UK was a
5:01
Speaker 2: great deal for both sides of the Atlantic. And I
5:05
Speaker 2: think if this China thing can be consummated I don't
5:07
Speaker 2: know where exactly it is in its negotiating phase, then
5:11
Speaker 2: I think you're getting got a domino effect, and I
5:13
Speaker 2: think you'll get a lot of other countries knocking on
5:16
Speaker 2: the door and saying let's make a deal. And that's
5:18
Speaker 2: exactly what Trump has always wanted to see.
5:21
Speaker 3: As you point out, the markets have certainly responded well
5:24
Speaker 3: in the last week or so. The line is this
5:26
Speaker 3: trade war was all the ninth series of Dallas. It
5:28
Speaker 3: was all why it was all well, you know, Bobby
5:30
Speaker 3: Ewing was the was in the shower, But as Josh
5:33
Speaker 3: was reminding me as we were speaking earlier, I mean,
5:35
Speaker 3: the effective tariff rate that we're left with even now,
5:38
Speaker 3: at these kind of ceasefire levels, is very similar or
5:42
Speaker 3: higher to the Smoot Hawley level. Even that UK trade
5:46
Speaker 3: deal quote unquote leaves trade between the two countries kind
5:51
Speaker 3: of in many ways less open than it was before
5:54
Speaker 3: Donald Trump came to office. Our own economists think that
5:57
Speaker 3: the tarifs in place now even and if they stay
6:00
Speaker 3: at these lower levels, would mean over time a seventy
6:03
Speaker 3: percent fall in Chinese exports to the US. Are we
6:07
Speaker 3: underestimating how much damage could still be done by these tariffs?
6:11
Speaker 2: Boy, that's a good question. It's a tough question to answer,
6:14
Speaker 2: because I do think there may be a little bit
6:17
Speaker 2: of a rational exuberance here. The market so much wanted
6:20
Speaker 2: to see a deal and end to this turbulence that
6:23
Speaker 2: maybe they're reading too much. I don't know if they
6:26
Speaker 2: are or not, but it's certainly a possibility. I do
6:28
Speaker 2: think there's still going to be a lot of turbulence
6:31
Speaker 2: in the months to come as we start to try
6:34
Speaker 2: to hopefully finalize these things. But I also think that
6:37
Speaker 2: the Trump administration was a little bit taken aback by
6:40
Speaker 2: how negatively the international markets responded to the tariff wars,
6:46
Speaker 2: and therefore they strategically tried to cut these deals as
6:51
Speaker 2: a way to stop the turbulence. They're not stupid. They
6:54
Speaker 2: realized that you had a falling dollar, hat a falling
6:57
Speaker 2: stock market. You had a lot of factories in the
7:00
Speaker 2: which were only running at fifty percent capacity because they
7:03
Speaker 2: couldn't get the inputs and the raw materials they needed
7:06
Speaker 2: to produce their products. Hopefully the worst of the turbulence
7:10
Speaker 2: is over. I'm still hopeful that at the end of
7:13
Speaker 2: the day, which would be in the next say, six months,
7:16
Speaker 2: that we're going to see freer and fairer trade. In
7:18
Speaker 2: other words, I do think that these other nations, the Europeans,
7:23
Speaker 2: the Koreans, India, Japan, are going to have to lower
7:27
Speaker 2: their terrifts, and Trump is kind of flexing our muscle
7:30
Speaker 2: as a way to force these countries to do that.
7:34
Speaker 3: Josh, you and nodding when we're talking about irrational exuberance.
7:38
Speaker 1: I think Trump has shifted the conversation a lot here, right, So,
7:41
Speaker 1: even when he's retreating back to levels that when he
7:44
Speaker 1: said them campaign right were I popping to people, he
7:47
Speaker 1: talked about ten percent global tariffs and maybe a sixty
7:50
Speaker 1: percent tariff on China. In the campaign. He's sort of
7:53
Speaker 1: generally in the ballpark of that. So I think I
7:57
Speaker 1: would just say a couple points. Steve, I'm sure would
7:59
Speaker 1: agree with the first one. Trump loves tariffs. Some people
8:03
Speaker 1: are trying to parse the logic and strategy, and there
8:07
Speaker 1: might be some, but the guy just likes them. He
8:09
Speaker 1: talks about them both as a revenue tool. He talked
8:12
Speaker 1: about them as an incentive to push things back, and
8:15
Speaker 1: when business groups who've been very silent comparatively throughout the
8:19
Speaker 1: process of this come to him and say, our factories
8:22
Speaker 1: in the American heartland cannot get their inputs right now
8:25
Speaker 1: because right right they just don't seem particularly a responsive,
8:28
Speaker 1: at least publicly to those concerns. So he likes tariffs.
8:31
Speaker 1: And the other thing that I would mention is like,
8:35
Speaker 1: there's more to come still right now as we right
8:38
Speaker 1: we've got these outstanding two three two investigations. We're expecting
8:42
Speaker 1: those tariffs speak of like, you know, exuberance. When he
8:46
Speaker 1: exempted so many consumer goods, particularly in China from that
8:50
Speaker 1: China tariff, including you know, I.
8:51
Speaker 3: Feel like the electronics electronics, right.
8:54
Speaker 1: The stated reason for that is because he plans to
8:56
Speaker 1: hit them with a different caraff which seems like it
8:59
Speaker 1: will be twenty five percent, if only because that's what
9:00
Speaker 1: every other sectoral tariff has been, which of course is
9:03
Speaker 1: higher than the current ten percent pause level on China.
9:06
Speaker 1: So it's it's a break. But he's planning on hitting
9:09
Speaker 1: these industries with that semiconducted tariff, a lumber tariff, copper
9:13
Speaker 1: tariff is still to come. These things are still coming
9:16
Speaker 1: down the pipe here, and so I think that people
9:19
Speaker 1: who are looking at this as the sort of level
9:22
Speaker 1: set moment. Secretary Beson of course talked about ten percent
9:26
Speaker 1: as a floor. He's also talked about those April second
9:29
Speaker 1: numbers as a ceiling if people don't de escalate. But
9:32
Speaker 1: there's other stuff to come in other streams, and the
9:34
Speaker 1: overall effect of tariff it is probably going to go up,
9:37
Speaker 1: not damp from where it is today.
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Speaker 4: Well, I'm getting dizzy from all these numbers you're throwing
9:42
Speaker 4: top of the different rafy. Oh he's a different thing.
9:46
Speaker 4: And actually there's a serious point here though, and you're
9:48
Speaker 4: quite right, Trump has a different view of tariffs than say,
9:51
Speaker 4: a free trader like I do what he wants to do.
9:54
Speaker 4: And I think there is something to this as an American,
9:58
Speaker 4: which is that for the first one hundred years of
10:00
Speaker 4: our country or more, we did not have an income tax,
10:03
Speaker 4: you know, and we made a big mistake in nineteen
10:05
Speaker 4: sixteen we adopted an income tax. I think that was
10:08
Speaker 4: one of our greatest mistakes as a nation. And what
10:10
Speaker 4: Trump is saying is, wouldn't it be better if our
10:13
Speaker 4: tax system was through tarifsts, not taxes, income taxing? And
10:16
Speaker 4: he's right, yes, that would be better.
10:18
Speaker 2: Income taxes have very negative effects on the economy, much
10:21
Speaker 2: more so than terrorists do. And so what he wants
10:24
Speaker 2: to do is he wants to reduce the taxes that
10:28
Speaker 2: are imposed on things that are made in Michigan or
10:31
Speaker 2: Maine or Montana and increase the taxes on things that
10:34
Speaker 2: are made in China or Japan and Korea and other nations.
10:38
Speaker 2: And as American, yeah, that seems to make a lot
10:40
Speaker 2: of sense. Why would we punish our own producers. Why
10:43
Speaker 2: not put a higher tax on the things that are
10:45
Speaker 2: coming into the country. And Trump is also right, by
10:47
Speaker 2: the way, that for the first one hundred and twenty
10:49
Speaker 2: five years of our country. That's essentially how we tax.
10:52
Speaker 2: Now that being said, one of the things I object
10:55
Speaker 2: to about the Trump strategy is exactly kind of embedded
10:59
Speaker 2: in your question. You mentioned ten different teriff rates, and
11:03
Speaker 2: I don't like this idea of picking winners and losers.
11:05
Speaker 2: If we're going to have a terrraff policy, let's just
11:07
Speaker 2: have a fifteen percent across the board tariff import tariff.
11:10
Speaker 2: Anytime something comes in the United States, you're going to
11:13
Speaker 2: pay a tax on it. I don't like this idea
11:15
Speaker 2: of saying, Okay, well we like this industry, we're going
11:18
Speaker 2: to protect that protect that industry. And by the way,
11:20
Speaker 2: if you get a meeting in the White House, we
11:22
Speaker 2: could lower your terraff for you. I don't think that's
11:24
Speaker 2: the way tax system should work.
11:26
Speaker 3: Steve, you just touched on it. And of course, the
11:28
Speaker 3: suspicion is that one of the reasons that he not
11:31
Speaker 3: only likes tariffs which are changeable by executive action and
11:36
Speaker 3: not only by Congress, but specifically these very variable country
11:41
Speaker 3: by country tariffs, even company by company in some cases
11:45
Speaker 3: in effect, is the power that it gives Donald Trump
11:48
Speaker 3: to be doing these favors for people and doing deals.
11:51
Speaker 3: I mean, knowing him as you do, is that a
11:53
Speaker 3: big part of what he likes about this strategy.
11:56
Speaker 2: I can really answer that, but I will say this
11:58
Speaker 2: that I don't think it's a good way to make policy.
12:01
Speaker 2: Let's say that Kamala Harris had won the election, and
12:03
Speaker 2: let's say she said, Oh, you know, we have to
12:06
Speaker 2: worry about climate change, so we're going to put all
12:07
Speaker 2: these tariffs. I'm just going to unilaterly declare an emergency
12:11
Speaker 2: and we're going to have tariffs on this. That the
12:13
Speaker 2: other thing, Well, the Republicans would be going crazy. Oh,
12:15
Speaker 2: she'd the dictator. She can't just impose this tax. Look,
12:19
Speaker 2: our constitution very clear taxes start in the House of Representatives.
12:22
Speaker 2: That's in our constitution. And so what Congress has done
12:25
Speaker 2: is essentially delegated this so called emergency powers to the president.
12:30
Speaker 2: And I don't think that's good for our system of government.
12:32
Speaker 2: I think that these should be approved by Congress. It's
12:35
Speaker 2: just a matter of accountability. I'd probably a minority of
12:38
Speaker 2: my party on that, because Trump is a very powerful
12:41
Speaker 2: president and the party does what he wants. But I'm
12:44
Speaker 2: not so sure in the long run. So that's a
12:46
Speaker 2: good way to make tax policies.
12:48
Speaker 1: You're not alone entirely in your party on that right,
12:50
Speaker 1: including Chuck Grassley and other Republican senators have lent their
12:53
Speaker 1: name to a bill reclaiming some of this tariff power.
12:57
Speaker 1: Trump has really pushed the limits or tested them, shall
13:01
Speaker 1: we say, like what a president can do unilaterally on tariffs?
13:05
Speaker 1: By the way, I think there is a little kinton
13:06
Speaker 1: his strategy here because he's using AEPA to do a
13:09
Speaker 1: lot of these across the board country tariffs. Trade lawyers
13:12
Speaker 1: say that that is flimsier than other ways, like the
13:15
Speaker 1: two three two tariffs are the three oh one tariffs,
13:18
Speaker 1: Those are more bulletproof, and those are the ones he's
13:21
Speaker 1: using for the sectoral tariffs on steel cars, that kind
13:24
Speaker 1: of thing.
13:24
Speaker 3: Stephen, I know you want to come in, but just
13:26
Speaker 3: in case people didn't know, so that IPA, that's the
13:28
Speaker 3: International Emergency Economic Powers Act, which lets the president impose
13:32
Speaker 3: tariffs in times of economic emergency. So he's citing an
13:36
Speaker 3: emergency relating to the trade deficit.
13:39
Speaker 2: Let me just say one thing in response to that
13:42
Speaker 2: both of your questions, which is that to defend Trump
13:45
Speaker 2: on this for a moment, and again I'm not a
13:47
Speaker 2: big fan of the terror policy, but it is true.
13:50
Speaker 2: I mean when Trump ran for president, he ran around
13:52
Speaker 2: the country saying, tariff is my favorite word, and if
13:54
Speaker 2: you will like me, I'm going to put these tariffs on.
13:56
Speaker 2: And guess what middle class blue collar America kind of
13:59
Speaker 2: like that idea. They are concerned about the factories leaving
14:03
Speaker 2: and the jobs leaving. One of my concerns is, you know,
14:06
Speaker 2: with the terror strategy, is are we chasing the jobs
14:08
Speaker 2: of the twentieth century not the jobs of the twenty
14:10
Speaker 2: first century, because let's face it, in ten years, there
14:13
Speaker 2: won't be factory jobs. Everything will be done by robots.
14:15
Speaker 2: So you know, I want to make sure that we
14:17
Speaker 2: have an economy that's retro fitted for you know, the
14:21
Speaker 2: twenty twenties and twenty thirties, not for the nineteen twenties
14:24
Speaker 2: and nineteen thirties.
14:26
Speaker 3: Let's get onto the tax bill, because of course, journalists,
14:29
Speaker 3: we're also kind of turning our eyes to the next
14:31
Speaker 3: big thing. You know, US China trade will all over
14:33
Speaker 3: at least for a couple of months. So now we're
14:36
Speaker 3: focused on the tax bill that we saw come through
14:39
Speaker 3: late on Monday this week, and it has a lot
14:43
Speaker 3: of the things that Donald Trump campaigned, or not just
14:46
Speaker 3: making those individual tax cuts that you mentioned, Steve permanent,
14:50
Speaker 3: but some of the other measures, like eliminating some of
14:54
Speaker 3: the taxes on tips and other things. Using some fairly
14:58
Speaker 3: creative or at least non stand accounting, it supposedly adds
15:02
Speaker 3: to the deficit three point seven trillion dollars over ten years.
15:08
Speaker 3: I know you're a fan of doing many of those things,
15:10
Speaker 3: but you're also a fan of smaller government and lower deficits.
15:13
Speaker 3: So I just wonder how you're feeling about that big,
15:15
Speaker 3: beautiful bill.
15:17
Speaker 2: Well, first of all, it's this just so your audience
15:20
Speaker 2: understands failure is not an option here, because if this
15:23
Speaker 2: does not get done by December thirty, First, you know,
15:26
Speaker 2: we're facing the biggest tax increase in American history. Every
15:29
Speaker 2: middle class family would pay more, every small business would
15:32
Speaker 2: pay more taxes, a lot of our corporations would pay more.
15:35
Speaker 2: So they have to get this done. And most of
15:38
Speaker 2: the tax bill is really just extending what's already in law.
15:42
Speaker 2: And so now you're right, there are other things that
15:45
Speaker 2: Trump wants to add to that that no tax on tips,
15:48
Speaker 2: which is actually from a fiscal point of view, pretty irrelevant.
15:52
Speaker 2: You don't raise a lot might be taxing tips anyway,
15:54
Speaker 2: but you know, not taxes not.
15:56
Speaker 3: Now you may find you use a lot of money
15:58
Speaker 3: when everyone decides their entire commentaries.
16:00
Speaker 2: Everywho's going to be a tip to boy because taxes
16:04
Speaker 2: do affect people's behavior. But one of the ones that
16:06
Speaker 2: I think is most important is the fifteen percent tax
16:10
Speaker 2: rate for businesses. You know, he wants to cut our
16:12
Speaker 2: corporate tax rate to fifteen percent, which I think would
16:15
Speaker 2: be enormously beneficial from a strategic point of view. So
16:18
Speaker 2: I'm a big fan of this bill. I don't believe
16:21
Speaker 2: the numbers that you cited. I mean, I know those
16:23
Speaker 2: are the right numbers, but I don't believe that it's
16:25
Speaker 2: going to cost money. And I know that because the
16:27
Speaker 2: same people forecast is going to lose three trillion or
16:30
Speaker 2: whatever the number is. These are the same people who
16:32
Speaker 2: said when we passed the tax bill in twenty seventeen,
16:35
Speaker 2: you know, that could cost several trillion dollars, and we
16:38
Speaker 2: now know just from a look back that they were
16:40
Speaker 2: wrong by about one point five trillion. Because our tax
16:43
Speaker 2: estimators always overestimate the revenue losses from cutting tax rates,
16:48
Speaker 2: and they always overestimate the revenues that are going to
16:51
Speaker 2: gain by raising taxes because they use a kind of
16:54
Speaker 2: static analysis that doesn't take into account. You know, when
16:57
Speaker 2: you cut taxes, good things for happen for the enemy.
17:00
Speaker 3: Josh, I know you were. You were also looking at
17:03
Speaker 3: some of the details of this bill, and also, I
17:05
Speaker 3: guess as a sign of a kind of relative influence
17:08
Speaker 3: of the president over his party.
17:11
Speaker 1: Well, the fact that it's one big, beautiful bill is
17:13
Speaker 1: itself a sign of the influence of the party because they,
17:16
Speaker 1: you know, going back a couple of months, Republicans were
17:18
Speaker 1: divided on that, namely, the House and the Senate were
17:21
Speaker 1: divided on that. So Jason Smith, the ways means Chairman,
17:23
Speaker 1: has come out with this bill that does maintain several
17:26
Speaker 1: of Trump's priorities, including on taxation of tips, social Security one,
17:31
Speaker 1: on auto loan interest deductibility, which is a one that
17:34
Speaker 1: Trump loves, which allows you to write off the interest
17:37
Speaker 1: payments on your car if you buy an American made car.
17:41
Speaker 1: So that's in there. What isn't in there, interestingly, is
17:44
Speaker 1: the very thing Steve mentioned that Trump has been calling
17:47
Speaker 1: for the fifteen percent corporate tax rate on American manufacturers
17:51
Speaker 1: down from the current twenty one percent. Trump had talked
17:54
Speaker 1: about that. He'd also talked about lowering the twenty one
17:57
Speaker 1: to twenty regardless of whether you manufacturing in the US. Instead,
18:01
Speaker 1: they're doing a one hundred percent depreciation, which is essentially
18:04
Speaker 1: a big carrot on a stick to build new factories
18:07
Speaker 1: in America. The manufacturers group seem jazzed about that. You know,
18:11
Speaker 1: they'll take it. They don't seem too concerned about the
18:13
Speaker 1: lack of the corporate tax rate. But they are having
18:15
Speaker 1: to pick and choose. And remember, as we sit here,
18:18
Speaker 1: the US budget devicit is hovering it a shade under
18:21
Speaker 1: two trillion annually, something like twenty one trillion over the
18:25
Speaker 1: ten year budget window. And when we talk about three
18:27
Speaker 1: point seven trillion, that's over that ten years for the
18:29
Speaker 1: people that might be listening to us outside of the US,
18:32
Speaker 1: And so you know, we're talking about a quite wide
18:35
Speaker 1: budget gap over the coming decade. Now. Trump wants to
18:37
Speaker 1: narrow that through the deregulation that Steve mentioned. He wants
18:40
Speaker 1: to narrow that of course with tariff revenue. But you
18:43
Speaker 1: still got a significant, significant budget shortfall, and of course
18:47
Speaker 1: that's why Secretary Besson is watching that ten year to
18:49
Speaker 1: try to see how markets are going to be digesting all.
18:52
Speaker 3: Of US, which has not come down.
18:53
Speaker 1: It has come down a bit if you've measured back
18:55
Speaker 1: to January twentieth, when Trump took office, but it has
18:57
Speaker 1: been rising pretty steadily here for a while. There are
19:00
Speaker 1: concerns clearly in the bond market about the US direction
19:03
Speaker 1: right now.
19:04
Speaker 3: Steve, you mentioned that the numbers will turn out to
19:06
Speaker 3: be better than expected, but if you look at really,
19:10
Speaker 3: on any assumptions, the US debt relative to GDP is
19:16
Speaker 3: looking pretty unsustainable. I mean, the line keeps going up
19:19
Speaker 3: no matter what you make. You know, almost any assumption
19:21
Speaker 3: you would make, not least because of the higher cost
19:24
Speaker 3: of money that we have now, even if it doesn't
19:26
Speaker 3: go up so much from here.
19:28
Speaker 2: Well, there's no doubt about it that our national debt
19:31
Speaker 2: is a clear and present danger, no question about it.
19:33
Speaker 2: And you're also right that you know we're vulnerable to
19:36
Speaker 2: an interest rate shot. As the world's biggest borrower, every
19:38
Speaker 2: time interest rates go up, our borrowing expenses go up.
19:42
Speaker 2: But I'm a growth hoart. What I care most about,
19:44
Speaker 2: that's the overriding factor that drives all these numbers is jobs.
19:49
Speaker 2: Economic growth and prosperity. And so what I've told the President,
19:53
Speaker 2: I've told the speak of the House in Republicans, anything
19:57
Speaker 2: that makes the economy grow faster, do you do it?
20:01
Speaker 3: Do it?
20:02
Speaker 1: Do it.
20:02
Speaker 2: Anything that makes the economy grow slower is going to
20:04
Speaker 2: make our debt situation worse. So I want Republicans to
20:08
Speaker 2: be focused on one thing, getting the keeping our economic
20:11
Speaker 2: growth rate, which has been hovering at about one point
20:13
Speaker 2: five one point six percent, get it back to the
20:16
Speaker 2: three to three and a half percent growth rate, which
20:18
Speaker 2: is our America's you know, normal growth rate. And if
20:22
Speaker 2: you do that, if you get that economic growth rate
20:25
Speaker 2: and that productivity up, then guess what that debt that
20:28
Speaker 2: you're talking about is a share of our economy. It
20:31
Speaker 2: doesn't go up from you know, currently one hundred percent
20:33
Speaker 2: of GDP to two hundred percent of GDP, it actually
20:36
Speaker 2: starts to fall. So growth is everything. We have a
20:40
Speaker 2: president who's hyper focused on growing the economy, bringing jobs
20:43
Speaker 2: back home, making our economy as efficient as possible through
20:46
Speaker 2: things like deregulation. We're going to produce a lot more oil, gas,
20:50
Speaker 2: and coal, so we can be the number one producer
20:52
Speaker 2: of energy in the world, and all of those things
20:55
Speaker 2: I think are good for growth, good for jobs, and
20:57
Speaker 2: we'll make our deficit situation less hazardous in the future.
21:02
Speaker 3: Okay, but if you think of just the balance of
21:04
Speaker 3: policies and where the emphasis has been in the last
21:07
Speaker 3: few months, do you feel like there has been enough
21:09
Speaker 3: focus on growth? A lot of the growth rate that
21:10
Speaker 3: you talked about just now came from immigration, came from
21:16
Speaker 3: the tax cuts that we're just making permanent. As you
21:18
Speaker 3: pointed out, there's no change of policy, so it's just
21:20
Speaker 3: keeping things as they are, which doesn't necessarily give you
21:23
Speaker 3: an extra burst. And also from some of the trade
21:26
Speaker 3: that has happened back and forth between Mexico and Canada
21:29
Speaker 3: and other things, some of these industries that are now
21:31
Speaker 3: going to be disrupted by the tariff. So if you
21:33
Speaker 3: think about deregulation, you know, has there been enough focus
21:36
Speaker 3: on that?
21:37
Speaker 2: As I said earlier, I really do believe if we
21:40
Speaker 2: can get these trade deals done, if we can get
21:42
Speaker 2: the tax cut down, those two things, if that happen
21:45
Speaker 2: in the next three to six months, and you heard
21:48
Speaker 2: it first here on your show on Bloomberg, We're going
21:51
Speaker 2: to see the biggest boom you ever saw. You're going
21:53
Speaker 2: to see the stock marker go through the roof, you're
21:55
Speaker 2: going to see the United States a sucking capital in
21:57
Speaker 2: from the rest of the world has happened like in
22:00
Speaker 2: the Reagan era. So I'm bullish. I'm bullish out America
22:04
Speaker 2: right now now that those are the two big ifs though.
22:07
Speaker 2: If we can get the trade deals done and if
22:10
Speaker 2: we can get the tax cut done, those are the
22:12
Speaker 2: two highest priorities for Trump. And I wouldn't better gun Stem.
22:16
Speaker 3: You have always been someone who was focused on the
22:18
Speaker 3: business agenda and the agenda for growth, and you just
22:20
Speaker 3: talked about it here. The judgments that investors have made,
22:24
Speaker 3: even as the S and P has gone back up
22:25
Speaker 3: in the last few weeks, is the dollar is still
22:28
Speaker 3: weaker and the other markets are actually doing better because
22:31
Speaker 3: they think fundamentally the US is going to go backwards
22:35
Speaker 3: with these policies that are trying to take them out
22:37
Speaker 3: of a globally integrated economy. Do you not worry that
22:40
Speaker 3: when the dust settles, you might be okay, but you're
22:43
Speaker 3: still going to be a step back from where you
22:45
Speaker 3: would have been because of this effort to pull you
22:47
Speaker 3: out of an integrated global economy.
22:50
Speaker 2: I do worry about that. And I think actually one
22:52
Speaker 2: of the things that's that some of my friends in
22:54
Speaker 2: the Trump administration not fully appreciate is one of the
22:56
Speaker 2: things that's made the American account on me so strong
23:00
Speaker 2: over the last forty years since you know, the running
23:02
Speaker 2: of the Reagan era, is that we are are incredibly
23:06
Speaker 2: globally integrated. And you know that, I think a lot
23:09
Speaker 2: of people don't appreciate. You know why it is that
23:12
Speaker 2: the factories here are being harmed by the terrorists because
23:16
Speaker 2: actually this was supposed to bring jobs back to the
23:19
Speaker 2: United States, and in fact instead that factories have had
23:22
Speaker 2: to layoff workers because we you know, as I talked
23:25
Speaker 2: one manufacturer said, look, I get we get our seal
23:27
Speaker 2: from Japan, we get our we get our copper from Vietnam,
23:31
Speaker 2: we get our parts from Mexico. We got our lumber
23:34
Speaker 2: from Canada. So we are incredibly globally integrated. It makes
23:37
Speaker 2: our economy very efficient, and we don't want to lose
23:40
Speaker 2: that edge. And that's why we've got to get these
23:42
Speaker 2: trade deals done in a way that benefits America but
23:46
Speaker 2: also benefits global growth. And I can't guarantee it, but
23:50
Speaker 2: I think over the next three to six monitor to
23:52
Speaker 2: see a lot of improvement in the trade turmoil that
23:56
Speaker 2: right now is dominating the markets.
23:58
Speaker 3: Steven, we will remember that in a few months time.
24:00
Speaker 3: Thank you very much for joining us.
24:03
Speaker 2: And when I'm right, I watch you to help me
24:05
Speaker 2: back on it.
24:07
Speaker 3: We will any time. Josh, having interviewed him a million
24:11
Speaker 3: years ago, he's always very enthusiastic and bullish, which makes
24:14
Speaker 3: for a good interview. But when you're talking to people
24:18
Speaker 3: in and around the White House and on the Hill,
24:20
Speaker 3: are people feeling that bullish now that you've got some
24:23
Speaker 3: of these trade deals under way.
24:25
Speaker 1: I think Republicans have exhaled a little bit, but the
24:28
Speaker 1: bullish thing is I think a step too far yet,
24:31
Speaker 1: because the deals that we've seen have been pretty modest.
24:35
Speaker 1: Some cans have been kicked down the road, and of
24:37
Speaker 1: course big deals hang in the air. Steve talked about
24:41
Speaker 1: Japan and South Korea. Those are really two big tests
24:45
Speaker 1: because the UK deal had way few thornier issues than
24:49
Speaker 1: those ones will. And you know, it's difficult to see
24:53
Speaker 1: how a fundamental deal comes together if Trump wants to,
24:56
Speaker 1: for instance, keep it twenty five percent auto tariff on
24:59
Speaker 1: two crucial sectors for those two economies. And so I
25:02
Speaker 1: think right now, the Republican complaints about this have quieted.
25:09
Speaker 1: The sort of subtle momentum towards a bill to recapture
25:12
Speaker 1: some of the tariff power in Congress has abated, and
25:16
Speaker 1: the focus is on getting this tax bill passed. Bessen
25:19
Speaker 1: talks about it the Treasury Secretary about three legs of
25:21
Speaker 1: the stool, right, not only tariffs, but the tax cuts
25:25
Speaker 1: and the deregulation. They're really racing to get these tax
25:29
Speaker 1: cuts done by July fourth, by the way, right, so
25:31
Speaker 1: we had Liberation Day on April second, we're going to
25:34
Speaker 1: celebrate Independan's Day allegedly by signing a big tax cut package. Here,
25:38
Speaker 1: they're sort of just biting their tongue and holding their
25:41
Speaker 1: breath in a lot of cases that this is all
25:44
Speaker 1: going to work out. But clearly there's unease, and I
25:47
Speaker 1: should not leave any suggestion that I'm saying that some
25:50
Speaker 1: revolt is coming. President Trump continues to have very strong
25:54
Speaker 1: support in his party. People are not speaking out emphatically
25:59
Speaker 1: against him. You get sort of comments about tariffs here
26:01
Speaker 1: and there, but right now he's sort of full steam ahead.
26:05
Speaker 3: Well, I guess we will see. I will certainly be
26:07
Speaker 3: checking in with you and maybe we should check in
26:09
Speaker 3: with Stephen Moore in a few months time see if
26:11
Speaker 3: his bullish predictions have turned out. But Josh Wingo, thanks
26:15
Speaker 3: very much, Thank you for having me, Thanks for listening
26:21
Speaker 3: to Trump andomics from Bloomberg. It was hosted by me,
26:24
Speaker 3: Stephanie Flanders, and I was joined by Bloomberg's Josh Wingrove
26:27
Speaker 3: and the Heritage Foundation Stephen Moore. Trump and Noomics is
26:33
Speaker 3: produced by Summer Sadi and Moses and Am with help
26:36
Speaker 3: from Chris martinlu Tala Amadi and Amy Keen. Sound design
26:40
Speaker 3: is by Robert Williams and special thanks to Jared Rudderman.
26:43
Speaker 3: Brendan Francis Newnan is our executive producer. To help others
26:47
Speaker 3: find the show, please rate and review it highly wherever
26:50
Speaker 3: you find your podcasts.