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