Inauguration Special Talking Business

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