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football club Jared has played again after last month. They were


presented with the trophy that they were on their way to play in, in


Colombia. Now, Talking Business. Hello from Washington, DC, I am


Michelle Fleury, Donald Trump said he wanted to and do stupid trade


deals, cut tax and establish structure, we examine the economic


consequences of the Trump presidency.


Welcome to the programme. Both before and after his election


victory, Donald Trump has ruffled feathers at the highest levels. And


yet he won in the places that mattered. His message was music to


the ears of millions of blue-collar workers, who had felt ignored for


years. He made promises about jobs and small businesses, trade deals


and tax rate. So can he get the job done, and how do Americans feel know


he's in charge? I think it's going to be good because he's a good


businessman. We know he's got smarts, business-wise. Meijer I


think that is what will help make America great game, keeping our jobs


here. Our people need to be working. They need jobs here. And not


convinced they will help the people that voted for him. I think the


wealthy people will get wealthier and those who don't have money will


soon not have a lot of money. I think the gap between rich and poor


will continue. I think his economic policy may be good, he has a good


head on his shoulders. If you might think the wealthy will prosper under


his reforms yet as far as the middle class I don't see that happening and


as far as the average Joe experiencing any benefit I don't see


that happening either. Candidates promise all kinds of things on the


campaign Trail, a lot of it gets done, a lot does not. Can Trump do


some of the things he's pledged, helping me figure this out is Jared


Bernstein, a senior fellow in the centre of policy and budget


priorities, he worked in the Obama administration and was chief


economist and economic adviser to the former Vice President Joe Biden.


We are also joined by one member of Donald Trump 's transition team,


Diana Furchtgott-Roth, senior fellow at the Manhattan Institute. And last


but not least I am pleased to be joined by Laurie Waller, director of


public Citizen 's global trade watch, national nonprofit advocacy


group that looks at government and corporate accountability in


globalisation and trade. Laurie, if I could start with you, I want to


talk about the issue of trade. One of the promises Trump made on the


campaign trail was to repeal Nafta, is their president that this? It is


possible. A president can't unilaterally withdraw from a trade


agreement and all that remains is whatever was permitted by Congress


which in the case of Nafta is a very small part of the problematic


provisions of Jared. He could do it. It has not been done before but the


reason why it seems so urgent is that just under one government


programmes that are over 900,000 American workers certified by the


government as having lost their jobs to Nafta trade. And in the context


of getting the model of trade right Nafta is a well known hot target. It


sounds like you agree with Trump that America has lost jobs to Mexico


because of Nafta. There is no doubt about it. We went from having a


combined trade deficit with Mexico and Canada of about $9 billion


before Nafta went to a fact to the last full year of Nafta trade, it is


just simply that we went from not having and a visit to an enormous


one and we have a list of the jobs that were lost. Certified by the


government. Diana, how will this help American workers because this


is not part of the problem, that the face of manufacturing is changing?


-- is it not? That is definitely part of the problem. Also one reason


that jobs are moving to Mexico is the corporate tax rates in the USA


are so high compared with other countries. We have a corporate tax


rate of 39% federal and state compared with an OECD average of


25%. You are right that the statutory rate is as high as you say


and it probably should come down, we probably agree on that but


corporations pay their average effective rate, what they actually


paid to the eye and are as is 26%, so very much what Diana said as the


international rate. The problem is to get that they take advantage of


so many loopholes that all of us would agree are a mess and should be


fixed. They are not going overseas to games the tax system, they are


gaming and here. I want to bring up something Donald Trump has talked


about, tariffs. If you look at the auto industry, he has said that


American car companies should be producing the cars in the US,


otherwise they face tariffs. What do you think of that idea of tariffs?


Is there a danger of a trade war of other countries retaliating? Tariffs


always have to be kept in the back pocket. The fundamental problem is


that we have so many regulations that this encourages companies to go


offshore. Plus there is the mandate to produce small fuel efficient cars


that no one wants to buy. So to make those in a cheaper fashion companies


have incentives to go offshore. The problem with the tariff idea, as


much as you suggested, is retaliation. If you start talking


about tariffs of 45%, the numbers Donald Trump has thrown about, I


think you do invite retaliation and at the end of the day that will not


target the trade deficit the way we need to. It seems that as we're


thinking about what would be good trade rules, that would be the core


reason by off shoring, because a bunch of shoring happened to Canada,


this is much Morpheus standards than ours. The agreements themselves have


rules that incentivise off shoring by lowering the risk premium of


leaving the inspector privileges if you relocate investment and jobs to


another country in the Nafta son. Those rules that are in there


because Jared was negotiated behind closed doors with literally hundreds


of official corporate advisers who wrote the rules lots of often


protectionist privileges and for that. So if you cut out these


incentives to do the wrong thing, which even in a free trade agreement


includes expanding monopolies and blocking competition, they would


bring down consumer prices are medicines, this is packed into


Nafta, if you cut out the garbage that was frozen forcing its way


through and put some basic standards of competition, the way we have


national law, you could have a very different dynamic about when


investment would happen and who would benefit and it would be much


more beneficial for people. I want to bring it back to jobs. Donald


Trump has said he would like to grow the economy faster to create 25


million jobs in the next decade. Diana, how does he do this? Trade


one part of it, what else? One part is bringing companies back from


abroad, bringing earnings back from abroad. There's $2 trillion worth of


earnings abroad that have been kept there because of high tax rates,


that would be one step, another step would be reforming regulations, to


make it easier for employers to hire and promote, getting rid of the


affordable care act which keeps company sizes low, and has an undue


burden, so there are many, many ways to encourage companies to increase


their hiring that we don't have now. Rolling back a lot of the Obama


politics that Jared helped with! The problem with the Trump


administration now talking and policy level is that they are just


getting started. So by definition this is all speculative. But the two


policies that they have really articulated and leaned into heavily


art repealing of the Affordable Care Act that you had Diana mention and


these tax cuts that are massively tilted towards the wealthy. They


significantly reduce the tax burden on those at the top of the scale and


increase it on those at the bottom. And I think this goes exactly in the


wrong direction in terms of job creation. You mentioned the


Affordable Care Act, opponents of it to say it is a job killer. The


evidence is the opposite. The Affordable Care Act created


something that 20 million more people got health care so that will


involve doctors and hospitals. We cannot find evidence that it has


hurt employment at all. When employers are required to provide an


overly generous plan it increases the cost of employment and they hire


fewer people. At this point we will say goodbye to Lori Waller, thank


you for joining us. Diana and Jared are staying. Before we return to


them will American companies parking many overseas be persuaded to return


that cash to the United States? Let's listen to our comedy


consultant. Ireland and global companies paying tax. Context tax


arrangements are a speciality here in Dublin. So if President elect


Trump has some new plans it seems things could get messy. Now


obviously I am not qualified in any legal sense or indeed any practical


sense to offer tax planning advice to large global multinationals.


However, I am Irish and tax planning is in our DNA. For years before the


special relationship with global tax. So when I heard that new Donald


Trump planned to cut American companies return the money to the US


by offering them a tax holiday I thought, maybe there's an


opportunity for me to open up a temporary global tax planning office


here in Dublin. I may need, before I welcome clients, to do a bit of


refurbishment around the office. That will do. No, no, you are not my


first client, no, no. I would say that with lottery tickets, they are


an investment, so you probably could write them off as an expense. One of


the questions people ask me is if Donald Trump does offer a tax


holiday or some other tax incentive, will American companies take


advantage of it? What are the implications for the Irish economy?


Let me see. Implications. Maybe I should talk to an actual expert.


Trump created a tax holiday, my best guess of what would happen would be


the experience we sought when Bush did it in 2005. A lot of investment


flooded back into the US because they did not pay as much in tax, so


FTI and Ireland fell which seems like a scary prospect especially for


a country so dependent on foreign firms but in the same year we saw


jobs by multinationals increased by 3%. How does that work? They send


the money home yet we get more jobs. Money is investment. It is very


mobile. Jobs are a different aspect of it. It's a much more permanent


decision process. US multinationals who come to Ireland have generally


made long-term investments and are here to serve the European market


and get access to European consumers, and the tax rate is


relevant in terms of why do they pick Ireland, compared to choosing a


different country in Europe? They are not particularly in Ireland


because Ireland's tax rate is lower than the US tax rate. If the US took


a more protectionist angle and started to increase tariffs and


trade from other countries, to renege on various trade deals, it


would likely reduce the US demand for exports from those countries.


None of the countries are putting forward things really directed at


Europe so it's all a question of whether they would have trickle on


effects. Physio's big tax story is sure to be Donald Trump 's big tax


plan. We don't know how exactly it will work. One thing is for sure, it


will all be horribly complicated which means more work for global tax


planners like me. Colum Reagan. And you can see more of his short films


on our website. Back with us Roger Redburn Steyn, Diana Furchtgott-Roth


and I'm also joined by Eugene sturdily, author of Dead Man Ruling.


He helped lay the groundwork for US tax reform and served as an


assistant to the Treasury Secretary during the second term of President


Ronald Reagan. If I could start with you, there's been a lot of talk


about what to do with American corporate profits that are parked


overseas. How to bring them back to the United States. One thing floated


is the idea of a tax holiday to tap into more than $2 trillion in


profits parked overseas. How would it work? Repatriation of earnings


from abroad as part of a bigger puzzle. By itself I don't think it


does a lot. We have a corporate tax in the United States, worldwide that


does not work very well. It has been falling apart for decades and a


gradual rate. We collect mature revenues these days in corporate


taxes and one reason for this is because corporations keep a lot of


their earnings abroad. It's sort of a shell game. They keep money


abroad, technically, it may not prevent them from doing too much


because they can always borrow the same money but it does create


certain legal problems in terms of bringing money back. If we give


repatriation holiday it would bring back 20% of it, the people who don't


want to keep it abroad because it's just not efficient to give it there,


it tries to get it to a broader issue. In some ways it makes sense


to wipe the slate clean. You are seeing positive and negative in some


of it? I think if we could get a good corporate tax reform a


repatriation holiday would make sense but by itself it doesn't do a


lot. You are both keen to talk about taxes, this is the moment, Jared,


what do you think about what you heard? Repatriation holidays lose


money and you can't pay for something that loses money. It is a


lousy idea and much smarter to do tax reform top to bottom. The


problem is in this time the minute you start to do corporate tax


reforms you are closing loopholes, this deferral of holding earnings


abroad is a classic example of a loophole in the corporate tax rate.


Everyone starts complaining loudly, therein lies the challenge.


Republicans and Democrats do agree that our corporate tax rate is far


above the other countries, and both agree it should be lower. We have


very few opportunities for tax reform, we had the one that Eugene


was an integral part of constructing and we had tax reform in 2001 under


President George W Bush and we must hope we get it this time. What about


the criticism that it will push up the deficit? Something Republicans


have been concerned about in the past. Donald Trump is committed to


keeping spending even. He would counter this with spending cuts. Tax


reform would act as a stimulus and would bring in increased amounts of


tax revenue, both especially in terms of the corporate rate and the


individual rate. To the numbers add up? What is unique is that the


government is so overcommitted, committed to raising spending


permanently way above the rate that revenues are rising so we have not


only deficits, but having built into the law future deficits. So what


this does politically is put Congress and the president in this


huge bind, so sometimes somewhere they have to start cutting back on


these promises made to the public. I am being bipartisan about it, taxes


too low to pay the bills which raises interest costs. So they are


in this horrible bind where they have to go back on promises. It's a


monstrous task which faces them. On a budget that is so out of work


already, that's the dilemma, if you can get good spending cuts and good


tax cuts together, make leaner government, I say good, it is


pro-growth but that will be harder to do in this current climate. Just


to be clear, you have the Trump administration significantly cutting


taxes to the tunes of trillions of dollars over a 10-year budget


window. Diana said, if you cut spending you can help account for


that but Trump has said he will not touch Social Security or Medicare.


That takes off the table one of the solution is just mentioned. If you


take that off the table and you cut taxes to the extent they say that


they will do, the numbers don't add up. Can I give you some numbers to


back that up? We have done an estimate, two years from now, going


by modest growth rates, real revenue will increase by $850 billion.


That's significant. That's just a couple of percent a year. Committed


already to interest on that alone is $1.3 trillion. So we have


commitments way beyond the revenue growth meanwhile everything else


under current law is going into a tailspin. Donald Trump has pledged


between three and 4% sustainable growth. How much can he control


that, he inherits an economy with near full employment, how many years


we have seen of the recovery, how much can he shared the economy? You


cannot control growth but you can put in place policies that will


encourage investment and work and that is what he plans to do with his


regulatory reform and tax reform. And when Congress passes the tax


reform, we will just have to see what happens. I am certain we will


not see growth rates of 3-4%. I could be wrong... You'd better be


careful, Jared! I don't care what you do, you won't get to 3-4%


sustained growth rates and this is the reason. All the stuff Diana


talked about sounds good, I don't really know what we mean by tax


reform and deregulation, that the kind of things Diana is talking


about is what I call after the decimal point. That is a few tenths


of a percent one way or the other. Doubling the growth rate calls for


one two things. Faster growth in the Labour force and foster productivity


growth. The Labour force has slowed considerably and of Donald Trump has


his way with immigrants it will slow even more, and productivity growth


which has been slow, we don't know what will happen, if it doubles the


troubles in the next few years. Are not going to commit to doubling the


growth rate that I will say that in the past eight years we have not had


a growth rate of more than 2%, to slow for the number of people who


want jobs and the growth we need. We are pretty much out of time. One


last question, or a prediction from each of you, which policies will


Donald Trump gets done? I believe there will be a tax reform, how big


is another question. Biggar there will be tax reform and regulatory


reform which will stimulator the economy. I'm afraid the Trump


administration will be able to repeal the affordable care act and


have no viable replacement. That is where we will leave it. All that is


left is for me to thank my guests, Jarrod Burneston, Diana


Furchtgott-Roth, and Eugene Stilley. Next week my colleague will be in


Bangalore to examine how a country with the fastest growing workforce


in the world is coping with the slowdown in jobs growth. For now,


though, from Washington, DC, goodbye.


A weekend of huge variety in the UK with one common denominator, I'll


show you what I mean with the help of some weather watcher


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