:00:00. > :00:00.football club Jared has played again after last month. They were
:00:00. > :00:00.presented with the trophy that they were on their way to play in, in
:00:00. > :00:15.Colombia. Now, Talking Business. Hello from Washington, DC, I am
:00:16. > :00:21.Michelle Fleury, Donald Trump said he wanted to and do stupid trade
:00:22. > :00:25.deals, cut tax and establish structure, we examine the economic
:00:26. > :00:46.consequences of the Trump presidency.
:00:47. > :00:51.Welcome to the programme. Both before and after his election
:00:52. > :00:56.victory, Donald Trump has ruffled feathers at the highest levels. And
:00:57. > :01:01.yet he won in the places that mattered. His message was music to
:01:02. > :01:07.the ears of millions of blue-collar workers, who had felt ignored for
:01:08. > :01:12.years. He made promises about jobs and small businesses, trade deals
:01:13. > :01:16.and tax rate. So can he get the job done, and how do Americans feel know
:01:17. > :01:22.he's in charge? I think it's going to be good because he's a good
:01:23. > :01:26.businessman. We know he's got smarts, business-wise. Meijer I
:01:27. > :01:39.think that is what will help make America great game, keeping our jobs
:01:40. > :01:42.here. Our people need to be working. They need jobs here. And not
:01:43. > :01:45.convinced they will help the people that voted for him. I think the
:01:46. > :01:48.wealthy people will get wealthier and those who don't have money will
:01:49. > :01:50.soon not have a lot of money. I think the gap between rich and poor
:01:51. > :01:53.will continue. I think his economic policy may be good, he has a good
:01:54. > :01:56.head on his shoulders. If you might think the wealthy will prosper under
:01:57. > :02:01.his reforms yet as far as the middle class I don't see that happening and
:02:02. > :02:05.as far as the average Joe experiencing any benefit I don't see
:02:06. > :02:09.that happening either. Candidates promise all kinds of things on the
:02:10. > :02:14.campaign Trail, a lot of it gets done, a lot does not. Can Trump do
:02:15. > :02:19.some of the things he's pledged, helping me figure this out is Jared
:02:20. > :02:24.Bernstein, a senior fellow in the centre of policy and budget
:02:25. > :02:26.priorities, he worked in the Obama administration and was chief
:02:27. > :02:31.economist and economic adviser to the former Vice President Joe Biden.
:02:32. > :02:35.We are also joined by one member of Donald Trump 's transition team,
:02:36. > :02:40.Diana Furchtgott-Roth, senior fellow at the Manhattan Institute. And last
:02:41. > :02:45.but not least I am pleased to be joined by Laurie Waller, director of
:02:46. > :02:49.public Citizen 's global trade watch, national nonprofit advocacy
:02:50. > :02:52.group that looks at government and corporate accountability in
:02:53. > :03:01.globalisation and trade. Laurie, if I could start with you, I want to
:03:02. > :03:04.talk about the issue of trade. One of the promises Trump made on the
:03:05. > :03:10.campaign trail was to repeal Nafta, is their president that this? It is
:03:11. > :03:14.possible. A president can't unilaterally withdraw from a trade
:03:15. > :03:17.agreement and all that remains is whatever was permitted by Congress
:03:18. > :03:23.which in the case of Nafta is a very small part of the problematic
:03:24. > :03:29.provisions of Jared. He could do it. It has not been done before but the
:03:30. > :03:33.reason why it seems so urgent is that just under one government
:03:34. > :03:37.programmes that are over 900,000 American workers certified by the
:03:38. > :03:43.government as having lost their jobs to Nafta trade. And in the context
:03:44. > :03:48.of getting the model of trade right Nafta is a well known hot target. It
:03:49. > :03:54.sounds like you agree with Trump that America has lost jobs to Mexico
:03:55. > :03:59.because of Nafta. There is no doubt about it. We went from having a
:04:00. > :04:05.combined trade deficit with Mexico and Canada of about $9 billion
:04:06. > :04:12.before Nafta went to a fact to the last full year of Nafta trade, it is
:04:13. > :04:16.just simply that we went from not having and a visit to an enormous
:04:17. > :04:23.one and we have a list of the jobs that were lost. Certified by the
:04:24. > :04:28.government. Diana, how will this help American workers because this
:04:29. > :04:33.is not part of the problem, that the face of manufacturing is changing?
:04:34. > :04:38.-- is it not? That is definitely part of the problem. Also one reason
:04:39. > :04:41.that jobs are moving to Mexico is the corporate tax rates in the USA
:04:42. > :04:46.are so high compared with other countries. We have a corporate tax
:04:47. > :04:52.rate of 39% federal and state compared with an OECD average of
:04:53. > :04:55.25%. You are right that the statutory rate is as high as you say
:04:56. > :05:01.and it probably should come down, we probably agree on that but
:05:02. > :05:06.corporations pay their average effective rate, what they actually
:05:07. > :05:10.paid to the eye and are as is 26%, so very much what Diana said as the
:05:11. > :05:15.international rate. The problem is to get that they take advantage of
:05:16. > :05:19.so many loopholes that all of us would agree are a mess and should be
:05:20. > :05:24.fixed. They are not going overseas to games the tax system, they are
:05:25. > :05:28.gaming and here. I want to bring up something Donald Trump has talked
:05:29. > :05:32.about, tariffs. If you look at the auto industry, he has said that
:05:33. > :05:36.American car companies should be producing the cars in the US,
:05:37. > :05:41.otherwise they face tariffs. What do you think of that idea of tariffs?
:05:42. > :05:47.Is there a danger of a trade war of other countries retaliating? Tariffs
:05:48. > :05:50.always have to be kept in the back pocket. The fundamental problem is
:05:51. > :05:55.that we have so many regulations that this encourages companies to go
:05:56. > :06:00.offshore. Plus there is the mandate to produce small fuel efficient cars
:06:01. > :06:08.that no one wants to buy. So to make those in a cheaper fashion companies
:06:09. > :06:12.have incentives to go offshore. The problem with the tariff idea, as
:06:13. > :06:17.much as you suggested, is retaliation. If you start talking
:06:18. > :06:21.about tariffs of 45%, the numbers Donald Trump has thrown about, I
:06:22. > :06:24.think you do invite retaliation and at the end of the day that will not
:06:25. > :06:32.target the trade deficit the way we need to. It seems that as we're
:06:33. > :06:41.thinking about what would be good trade rules, that would be the core
:06:42. > :06:46.reason by off shoring, because a bunch of shoring happened to Canada,
:06:47. > :06:51.this is much Morpheus standards than ours. The agreements themselves have
:06:52. > :06:56.rules that incentivise off shoring by lowering the risk premium of
:06:57. > :07:01.leaving the inspector privileges if you relocate investment and jobs to
:07:02. > :07:05.another country in the Nafta son. Those rules that are in there
:07:06. > :07:10.because Jared was negotiated behind closed doors with literally hundreds
:07:11. > :07:13.of official corporate advisers who wrote the rules lots of often
:07:14. > :07:21.protectionist privileges and for that. So if you cut out these
:07:22. > :07:26.incentives to do the wrong thing, which even in a free trade agreement
:07:27. > :07:31.includes expanding monopolies and blocking competition, they would
:07:32. > :07:34.bring down consumer prices are medicines, this is packed into
:07:35. > :07:39.Nafta, if you cut out the garbage that was frozen forcing its way
:07:40. > :07:44.through and put some basic standards of competition, the way we have
:07:45. > :07:47.national law, you could have a very different dynamic about when
:07:48. > :07:51.investment would happen and who would benefit and it would be much
:07:52. > :07:56.more beneficial for people. I want to bring it back to jobs. Donald
:07:57. > :07:59.Trump has said he would like to grow the economy faster to create 25
:08:00. > :08:06.million jobs in the next decade. Diana, how does he do this? Trade
:08:07. > :08:09.one part of it, what else? One part is bringing companies back from
:08:10. > :08:18.abroad, bringing earnings back from abroad. There's $2 trillion worth of
:08:19. > :08:22.earnings abroad that have been kept there because of high tax rates,
:08:23. > :08:27.that would be one step, another step would be reforming regulations, to
:08:28. > :08:31.make it easier for employers to hire and promote, getting rid of the
:08:32. > :08:37.affordable care act which keeps company sizes low, and has an undue
:08:38. > :08:40.burden, so there are many, many ways to encourage companies to increase
:08:41. > :08:46.their hiring that we don't have now. Rolling back a lot of the Obama
:08:47. > :08:49.politics that Jared helped with! The problem with the Trump
:08:50. > :08:54.administration now talking and policy level is that they are just
:08:55. > :08:59.getting started. So by definition this is all speculative. But the two
:09:00. > :09:04.policies that they have really articulated and leaned into heavily
:09:05. > :09:08.art repealing of the Affordable Care Act that you had Diana mention and
:09:09. > :09:13.these tax cuts that are massively tilted towards the wealthy. They
:09:14. > :09:26.significantly reduce the tax burden on those at the top of the scale and
:09:27. > :09:28.increase it on those at the bottom. And I think this goes exactly in the
:09:29. > :09:31.wrong direction in terms of job creation. You mentioned the
:09:32. > :09:35.Affordable Care Act, opponents of it to say it is a job killer. The
:09:36. > :09:41.evidence is the opposite. The Affordable Care Act created
:09:42. > :09:45.something that 20 million more people got health care so that will
:09:46. > :09:51.involve doctors and hospitals. We cannot find evidence that it has
:09:52. > :09:55.hurt employment at all. When employers are required to provide an
:09:56. > :09:59.overly generous plan it increases the cost of employment and they hire
:10:00. > :10:04.fewer people. At this point we will say goodbye to Lori Waller, thank
:10:05. > :10:10.you for joining us. Diana and Jared are staying. Before we return to
:10:11. > :10:14.them will American companies parking many overseas be persuaded to return
:10:15. > :10:20.that cash to the United States? Let's listen to our comedy
:10:21. > :10:24.consultant. Ireland and global companies paying tax. Context tax
:10:25. > :10:28.arrangements are a speciality here in Dublin. So if President elect
:10:29. > :10:39.Trump has some new plans it seems things could get messy. Now
:10:40. > :10:45.obviously I am not qualified in any legal sense or indeed any practical
:10:46. > :10:49.sense to offer tax planning advice to large global multinationals.
:10:50. > :10:53.However, I am Irish and tax planning is in our DNA. For years before the
:10:54. > :11:00.special relationship with global tax. So when I heard that new Donald
:11:01. > :11:04.Trump planned to cut American companies return the money to the US
:11:05. > :11:07.by offering them a tax holiday I thought, maybe there's an
:11:08. > :11:13.opportunity for me to open up a temporary global tax planning office
:11:14. > :11:16.here in Dublin. I may need, before I welcome clients, to do a bit of
:11:17. > :11:25.refurbishment around the office. That will do. No, no, you are not my
:11:26. > :11:29.first client, no, no. I would say that with lottery tickets, they are
:11:30. > :11:34.an investment, so you probably could write them off as an expense. One of
:11:35. > :11:39.the questions people ask me is if Donald Trump does offer a tax
:11:40. > :11:43.holiday or some other tax incentive, will American companies take
:11:44. > :11:53.advantage of it? What are the implications for the Irish economy?
:11:54. > :11:59.Let me see. Implications. Maybe I should talk to an actual expert.
:12:00. > :12:04.Trump created a tax holiday, my best guess of what would happen would be
:12:05. > :12:08.the experience we sought when Bush did it in 2005. A lot of investment
:12:09. > :12:16.flooded back into the US because they did not pay as much in tax, so
:12:17. > :12:20.FTI and Ireland fell which seems like a scary prospect especially for
:12:21. > :12:24.a country so dependent on foreign firms but in the same year we saw
:12:25. > :12:31.jobs by multinationals increased by 3%. How does that work? They send
:12:32. > :12:36.the money home yet we get more jobs. Money is investment. It is very
:12:37. > :12:42.mobile. Jobs are a different aspect of it. It's a much more permanent
:12:43. > :12:46.decision process. US multinationals who come to Ireland have generally
:12:47. > :12:50.made long-term investments and are here to serve the European market
:12:51. > :12:54.and get access to European consumers, and the tax rate is
:12:55. > :12:59.relevant in terms of why do they pick Ireland, compared to choosing a
:13:00. > :13:02.different country in Europe? They are not particularly in Ireland
:13:03. > :13:08.because Ireland's tax rate is lower than the US tax rate. If the US took
:13:09. > :13:14.a more protectionist angle and started to increase tariffs and
:13:15. > :13:18.trade from other countries, to renege on various trade deals, it
:13:19. > :13:31.would likely reduce the US demand for exports from those countries.
:13:32. > :13:35.None of the countries are putting forward things really directed at
:13:36. > :13:42.Europe so it's all a question of whether they would have trickle on
:13:43. > :13:46.effects. Physio's big tax story is sure to be Donald Trump 's big tax
:13:47. > :13:50.plan. We don't know how exactly it will work. One thing is for sure, it
:13:51. > :13:58.will all be horribly complicated which means more work for global tax
:13:59. > :14:08.planners like me. Colum Reagan. And you can see more of his short films
:14:09. > :14:16.on our website. Back with us Roger Redburn Steyn, Diana Furchtgott-Roth
:14:17. > :14:23.and I'm also joined by Eugene sturdily, author of Dead Man Ruling.
:14:24. > :14:28.He helped lay the groundwork for US tax reform and served as an
:14:29. > :14:31.assistant to the Treasury Secretary during the second term of President
:14:32. > :14:37.Ronald Reagan. If I could start with you, there's been a lot of talk
:14:38. > :14:42.about what to do with American corporate profits that are parked
:14:43. > :14:47.overseas. How to bring them back to the United States. One thing floated
:14:48. > :14:54.is the idea of a tax holiday to tap into more than $2 trillion in
:14:55. > :15:00.profits parked overseas. How would it work? Repatriation of earnings
:15:01. > :15:06.from abroad as part of a bigger puzzle. By itself I don't think it
:15:07. > :15:10.does a lot. We have a corporate tax in the United States, worldwide that
:15:11. > :15:14.does not work very well. It has been falling apart for decades and a
:15:15. > :15:18.gradual rate. We collect mature revenues these days in corporate
:15:19. > :15:22.taxes and one reason for this is because corporations keep a lot of
:15:23. > :15:27.their earnings abroad. It's sort of a shell game. They keep money
:15:28. > :15:31.abroad, technically, it may not prevent them from doing too much
:15:32. > :15:35.because they can always borrow the same money but it does create
:15:36. > :15:40.certain legal problems in terms of bringing money back. If we give
:15:41. > :15:44.repatriation holiday it would bring back 20% of it, the people who don't
:15:45. > :15:51.want to keep it abroad because it's just not efficient to give it there,
:15:52. > :16:00.it tries to get it to a broader issue. In some ways it makes sense
:16:01. > :16:06.to wipe the slate clean. You are seeing positive and negative in some
:16:07. > :16:09.of it? I think if we could get a good corporate tax reform a
:16:10. > :16:13.repatriation holiday would make sense but by itself it doesn't do a
:16:14. > :16:19.lot. You are both keen to talk about taxes, this is the moment, Jared,
:16:20. > :16:22.what do you think about what you heard? Repatriation holidays lose
:16:23. > :16:27.money and you can't pay for something that loses money. It is a
:16:28. > :16:32.lousy idea and much smarter to do tax reform top to bottom. The
:16:33. > :16:40.problem is in this time the minute you start to do corporate tax
:16:41. > :16:42.reforms you are closing loopholes, this deferral of holding earnings
:16:43. > :16:46.abroad is a classic example of a loophole in the corporate tax rate.
:16:47. > :16:52.Everyone starts complaining loudly, therein lies the challenge.
:16:53. > :17:00.Republicans and Democrats do agree that our corporate tax rate is far
:17:01. > :17:05.above the other countries, and both agree it should be lower. We have
:17:06. > :17:12.very few opportunities for tax reform, we had the one that Eugene
:17:13. > :17:17.was an integral part of constructing and we had tax reform in 2001 under
:17:18. > :17:24.President George W Bush and we must hope we get it this time. What about
:17:25. > :17:26.the criticism that it will push up the deficit? Something Republicans
:17:27. > :17:35.have been concerned about in the past. Donald Trump is committed to
:17:36. > :17:39.keeping spending even. He would counter this with spending cuts. Tax
:17:40. > :17:43.reform would act as a stimulus and would bring in increased amounts of
:17:44. > :17:47.tax revenue, both especially in terms of the corporate rate and the
:17:48. > :17:54.individual rate. To the numbers add up? What is unique is that the
:17:55. > :18:02.government is so overcommitted, committed to raising spending
:18:03. > :18:09.permanently way above the rate that revenues are rising so we have not
:18:10. > :18:13.only deficits, but having built into the law future deficits. So what
:18:14. > :18:17.this does politically is put Congress and the president in this
:18:18. > :18:21.huge bind, so sometimes somewhere they have to start cutting back on
:18:22. > :18:29.these promises made to the public. I am being bipartisan about it, taxes
:18:30. > :18:32.too low to pay the bills which raises interest costs. So they are
:18:33. > :18:40.in this horrible bind where they have to go back on promises. It's a
:18:41. > :18:44.monstrous task which faces them. On a budget that is so out of work
:18:45. > :18:48.already, that's the dilemma, if you can get good spending cuts and good
:18:49. > :18:53.tax cuts together, make leaner government, I say good, it is
:18:54. > :18:59.pro-growth but that will be harder to do in this current climate. Just
:19:00. > :19:02.to be clear, you have the Trump administration significantly cutting
:19:03. > :19:07.taxes to the tunes of trillions of dollars over a 10-year budget
:19:08. > :19:11.window. Diana said, if you cut spending you can help account for
:19:12. > :19:16.that but Trump has said he will not touch Social Security or Medicare.
:19:17. > :19:21.That takes off the table one of the solution is just mentioned. If you
:19:22. > :19:24.take that off the table and you cut taxes to the extent they say that
:19:25. > :19:30.they will do, the numbers don't add up. Can I give you some numbers to
:19:31. > :19:35.back that up? We have done an estimate, two years from now, going
:19:36. > :19:39.by modest growth rates, real revenue will increase by $850 billion.
:19:40. > :19:47.That's significant. That's just a couple of percent a year. Committed
:19:48. > :19:51.already to interest on that alone is $1.3 trillion. So we have
:19:52. > :19:55.commitments way beyond the revenue growth meanwhile everything else
:19:56. > :20:01.under current law is going into a tailspin. Donald Trump has pledged
:20:02. > :20:07.between three and 4% sustainable growth. How much can he control
:20:08. > :20:12.that, he inherits an economy with near full employment, how many years
:20:13. > :20:17.we have seen of the recovery, how much can he shared the economy? You
:20:18. > :20:20.cannot control growth but you can put in place policies that will
:20:21. > :20:25.encourage investment and work and that is what he plans to do with his
:20:26. > :20:29.regulatory reform and tax reform. And when Congress passes the tax
:20:30. > :20:36.reform, we will just have to see what happens. I am certain we will
:20:37. > :20:43.not see growth rates of 3-4%. I could be wrong... You'd better be
:20:44. > :20:48.careful, Jared! I don't care what you do, you won't get to 3-4%
:20:49. > :20:53.sustained growth rates and this is the reason. All the stuff Diana
:20:54. > :20:58.talked about sounds good, I don't really know what we mean by tax
:20:59. > :21:02.reform and deregulation, that the kind of things Diana is talking
:21:03. > :21:07.about is what I call after the decimal point. That is a few tenths
:21:08. > :21:12.of a percent one way or the other. Doubling the growth rate calls for
:21:13. > :21:17.one two things. Faster growth in the Labour force and foster productivity
:21:18. > :21:21.growth. The Labour force has slowed considerably and of Donald Trump has
:21:22. > :21:24.his way with immigrants it will slow even more, and productivity growth
:21:25. > :21:39.which has been slow, we don't know what will happen, if it doubles the
:21:40. > :21:42.troubles in the next few years. Are not going to commit to doubling the
:21:43. > :21:46.growth rate that I will say that in the past eight years we have not had
:21:47. > :21:50.a growth rate of more than 2%, to slow for the number of people who
:21:51. > :21:55.want jobs and the growth we need. We are pretty much out of time. One
:21:56. > :22:00.last question, or a prediction from each of you, which policies will
:22:01. > :22:04.Donald Trump gets done? I believe there will be a tax reform, how big
:22:05. > :22:08.is another question. Biggar there will be tax reform and regulatory
:22:09. > :22:12.reform which will stimulator the economy. I'm afraid the Trump
:22:13. > :22:16.administration will be able to repeal the affordable care act and
:22:17. > :22:22.have no viable replacement. That is where we will leave it. All that is
:22:23. > :22:26.left is for me to thank my guests, Jarrod Burneston, Diana
:22:27. > :22:30.Furchtgott-Roth, and Eugene Stilley. Next week my colleague will be in
:22:31. > :22:34.Bangalore to examine how a country with the fastest growing workforce
:22:35. > :22:38.in the world is coping with the slowdown in jobs growth. For now,
:22:39. > :22:54.though, from Washington, DC, goodbye.
:22:55. > :23:01.A weekend of huge variety in the UK with one common denominator, I'll
:23:02. > :23:02.show you what I mean with the help of some weather watcher