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Wilbur Ross on Trump's Economic Speech (Audio) · Bloomberg Intelligence

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  Speaker 1: You're listening to Taking Stock with Kathleen Hayes and Pimp
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  Speaker 1: Box on Bloomberg Radio. This is taking Stock the Republican
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  Speaker 1: presidential candidate Donald Trump. He put new details on his
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  Speaker 1: uh scale back tax plan today, one that is projected
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  Speaker 1: to cost the federal government less money but also to
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  Speaker 1: deliver perhaps fewer benefits to taxpayers than Donald Trump's original proposal.
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  Speaker 1: He was speaking today and UH the tax plan is
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  Speaker 1: of course one of intense interests to voters. Here to
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  Speaker 1: tell us more is Wilbur Ross. He is the chairman
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  Speaker 1: of the chief executive of W. L. Ross and a Company.
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  Speaker 1: He is a noted investor collector, and he is an
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  Speaker 1: advisor to Donald Trump. Mr Ross, thank you very much
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  Speaker 1: for being here give us, give us your reaction and
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  Speaker 1: your your thoughts and perspective on Donald Trump's speech about
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  Speaker 1: the economy. Well, I thought both the substance and the
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  Speaker 1: delivery of it were exemplary. I thought he did a
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  Speaker 1: very good job in both, even though at the very
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  Speaker 1: beginning the teleprompter didn't work. He was about five minutes
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  Speaker 1: into his speech before the turn of the teleprompter on
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  Speaker 1: didn't seem to phase him. I thought the most interesting
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  Speaker 1: line in the whole speech was he said, it used
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  Speaker 1: to be that automobiles were made in Flint, Michigan, and
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  Speaker 1: you couldn't drink the water in Mexico. Now you can
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  Speaker 1: drink the water, and you can't drink the water in Flint, Michigan,
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  Speaker 1: and the cars are being made in Mexico. Well, you know,
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  Speaker 1: wilber I was over the weekend coincidentally, I was. You know,
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  Speaker 1: you start looking at tweets and all these different things,
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  Speaker 1: and you just land on all kinds of interesting information.
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  Speaker 1: And someone had tweeted out a clip of Donald Trump
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  Speaker 1: at least twenty maybe thirty years ago, judging by the
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  Speaker 1: difference in here and everything else, right, And he was
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  Speaker 1: doing an interview with on a on a local broadcast
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  Speaker 1: in New York City, and he was talking quite adamantly
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  Speaker 1: about um us giving away too much, sending too much
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  Speaker 1: money overseas for military purposes, etcetera, and not keeping enough
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  Speaker 1: money here in the United States to to build up schools,
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  Speaker 1: build up housing, etcetera. UM So this is not something
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  Speaker 1: that Donald Trump just thought about a year ago. No,
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  Speaker 1: that's true. And and when it comes to trade, it
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  Speaker 1: seems to me that there is an ever more vocal
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  Speaker 1: minority of economist not hewing the conventional line, which is, oh,
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  Speaker 1: trade deals are good and they increase our prosperity, but
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  Speaker 1: saying there are certain kind of trade deals that actually
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  Speaker 1: do the opposite. Well, first, so, all the conventional economists
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  Speaker 1: have generally been wrong on the economy. I don't know
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  Speaker 1: one of them who has been very accurate in the
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  Speaker 1: last ten years. So I think we can overdeify the
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  Speaker 1: professional economists. But anybody economists or not who thinks that
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  Speaker 1: trade deficits helped the country just can't add and subtract.
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  Speaker 1: It's true that treaties like enough to make for more
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  Speaker 1: trade going back and forth, but that is in the point.
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  Speaker 1: The only thing that rubs off is the difference between
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  Speaker 1: what you export and what you import. So I've never
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  Speaker 1: understood why so many of them are ideological as opposed
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  Speaker 1: to looking at the numbers and saying, how can we
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  Speaker 1: really say we like the idea of an eight hundred
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  Speaker 1: billion dollar trade deficit in goods between the US and
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  Speaker 1: the rest of the world. Every economist says she, look
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  Speaker 1: at the great job China has done. They've grown by exports. Well,
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  Speaker 1: if trade balance positive is a good thing for an economy.
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  Speaker 1: How can a negative trade balance also be a good
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  Speaker 1: thing for an economy? It's silly. I have truly never
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  Speaker 1: understood why they don't get it. But I'll tell you what.
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  Speaker 1: The man in the street does get it. And the
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  Speaker 1: man in the street and woman in the street knows
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  Speaker 1: we're exporting jobs instead of products. We need to keep
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  Speaker 1: the jobs and export products. Tell us a little bit
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  Speaker 1: about his tax plans, because I understand that he says
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  Speaker 1: he would reduce taxes on all business income, including both
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  Speaker 1: traditional corporations as well as so called pass through entities,
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  Speaker 1: to fifteen percent. And he also says that US based
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  Speaker 1: manufacturers would be allowed to fully right off the costs
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  Speaker 1: of new plants and equipment from their taxes, UH, in
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  Speaker 1: order to spur investment. Do you agree with that? Yeah, Well,
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  Speaker 1: let's talk first about the pass through one of the
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  Speaker 1: groups that he's excluded from the fifteen percent. Writer people
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  Speaker 1: like me because he has specifically told us that carried
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  Speaker 1: interests will now be taxed at the full thirty three
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  Speaker 1: percent rate. So and that's all right. It's a pretty
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  Speaker 1: good business in any event. So I'm here as a
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  Speaker 1: personal victim saying I don't mind being victim uz because
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  Speaker 1: I think he'll spend the money wisely. Now, what does
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  Speaker 1: the tax plan really mean? A married couple with two
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  Speaker 1: children earning fifty thousand a year and paying eight thousand
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  Speaker 1: a year for childcare will have a thirty five percent
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  Speaker 1: reduction in their taxes. That's a big number. Go up
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  Speaker 1: the bracket a little bit. A couple earning seventy thousand,
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  Speaker 1: again with two children and now paying twelve thousand for childcare,
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  Speaker 1: they will have a thirty percent reduction. Let's go to
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  Speaker 1: the extreme opposite end of the spectrum. Married couple, two children,
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  Speaker 1: five million dollars a year of income and the same thing,
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  Speaker 1: paying even more for childcare. Their taxes will go down three.
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  Speaker 1: So this is a very progressive tax system that he's got.
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  Speaker 1: And the incorrect notion that some people have tried to
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  Speaker 1: put forward that this is just for rich people is
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  Speaker 1: really quite foolish and quite inaccurate. How are we going
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  Speaker 1: to pay for it? You gonna issue more bonds? And no, no,
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  Speaker 1: here's how he's going to pay for it. First of all,
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  Speaker 1: the the you'll see some of the independent scorers going
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  Speaker 1: to say that the dynamic cost of the tax plan
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  Speaker 1: is about two point six trillion. That's a pretty big number.
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  Speaker 1: But the part of it that I worked on along
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  Speaker 1: with Peter Navarro, namely developing the regulatory and the trade part,
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  Speaker 1: will be able to take back into federal tax revenues
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  Speaker 1: about a trillion eight of the two six That leaves
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  Speaker 1: eight hundred and Donald's plan is to take one cent
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  Speaker 1: per year out of the discretionary spending, one cent more
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  Speaker 1: per year out of discretionary spending other than military. That's
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  Speaker 1: a huge number over the ten year period. And then
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  Speaker 1: the rest will come from just running it more efficiently now.
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  Speaker 1: Donald Trump has also said that he's including a ten
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  Speaker 1: percent tax on repay creation of profits overseas by US
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  Speaker 1: corporations and also put together a sort of an incentive
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  Speaker 1: plan uh for US based manufacturings to expense the cost
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  Speaker 1: of their plants and equipment. Yes, the way the cost
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  Speaker 1: of expensing the plants will work is that corporations and
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  Speaker 1: other businesses will make a choice. They can either fully
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  Speaker 1: depreciate the property or they can get an interest deduction.
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  Speaker 1: They can't get full depreciation right off and full interest
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  Speaker 1: right off, and more or less, the purpose of that
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  Speaker 1: is to foster capital investment, not so much to Foster
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  Speaker 1: l b O s Well, there's certainly a lot of
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  Speaker 1: economists and federatory officials that would agree that investment spending
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  Speaker 1: has been extremely weak and most of its short term
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  Speaker 1: and business people seem unwilling to go, you know, buy
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  Speaker 1: back shares. We've seen a lot of that with cheap funding, right,
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  Speaker 1: but we haven't seen a lot of investment. As as
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  Speaker 1: someone who has been a distressed investors saying, who has
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  Speaker 1: worked with banks and other kinds of companies, what do
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  Speaker 1: you think is holding back investment? Well, I think it's
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  Speaker 1: pretty clear gross domestic private investment other than residential, namely
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  Speaker 1: the basically the corporate investment used to be three quarters
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  Speaker 1: of a percent of g d P. Now it's around
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  Speaker 1: one quarter of a percent. There's a half a point
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  Speaker 1: off g d P because of less investment. And it
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  Speaker 1: all started in two thousand and one and two when
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  Speaker 1: China was admitted to the w t O. F DI
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  Speaker 1: has gone up very, very rapidly. And what's really happened
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  Speaker 1: is instead of corporations fixing their domestic factories and putting
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  Speaker 1: capital in to make them more efficient, they're closing the
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  Speaker 1: factory and moving the whole thing to some less developed country.
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  Speaker 1: So the corporations are still getting productivity increase. And that's
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  Speaker 1: why Corporate America doesn't oppose all these trade deals. But
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  Speaker 1: what about Mr and Mrs America. They're the ones who
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  Speaker 1: are left at home with either no job or flipping Hamburgers.
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  Speaker 1: Just the last point to Wilbert Ross. Some estimates, according
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  Speaker 1: to Bloomberg Politics, the new cost of the Trump tax
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  Speaker 1: plan could be around three trillion dollars over a decade.
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  Speaker 1: Do you buy that? Well, it is in the static model,
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  Speaker 1: but it's not meant to be a static model. And
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  Speaker 1: just so that your listeners can understand, static model assumes
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  Speaker 1: that the cuts and taxes have no favorable impact on
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  Speaker 1: the economy. I don't think there's anybody who should logically
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  Speaker 1: believe that they'll have no impact. The dynamic model shows
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  Speaker 1: the two point six trillion minus the one point eight
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  Speaker 1: that will get from trade and regulatory and then minus
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  Speaker 1: the other saving. So there you go. You gotta look
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  Speaker 1: at it dynamically if you want to understand Donald Trump's
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  Speaker 1: tax plan. Wilbert Ross thank you so very much for
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  Speaker 1: joining us chairman and CEO of W. L. Ross and Co.
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  Speaker 1: One