tv Bloomberg Markets European Close Bloomberg May 18, 2017 11:00am-12:01pm EDT
working on this. for the small businesses and so forth because i would not want to support a big reduction just for the biggest of the biggest and do nothing for our basic base and job creation, small to medium-sized businesses. are you working in that area? secretary mnuchin: yes, we shape concerns and i have referred to this as a business way instead of a corporate rate. we have a i just want to emphasize that we are committed to make sure that rich people don't use passed throughs as a loophole to avoid the rates. singlery up antant and lawyer sets
pass-through to get through the system. on how weking hard create growth in that part of the economy. out and getesh this into the weeds on this, i hope you will be briefing us. i know the finance committee has to restriction over this. we have more than a passing interest in all of it. sec. mnuchin: i will be more than happy to come back and read your staff on this. heitkamp: the demands of the american public and responsibility of washington, d.c. is to encourage economic growth. that can solve a lot of our problems as we go forward. i want to talk about the xm
banks fear. the bank supported 164,000 jobs across the country. that's compared to 52,000 jobs in 2015 because we didn't have a quorum. in 2015 alone, three chinese export credit agencies financed a total of $500 billion. the potential there is that those could have been markets that were accessing but were not getting access to today. is au believe the xm bank critical tool for enabling american manufacturing competitiveness? sec. mnuchin: i do. i've spent a lot of time looking at this and i'm concerned that without more members on it, they can only make loans up to $10 million. the board should look at credit
risk and everything else. the xm bank is an important tool. the president has proposed adding new members. >> one of the great fears we have is that the suggestion of the leadership of the xm bank going to former representatives scott garrett who isn't just a critic of the bank and a reformer, i think he's someone uldare very concerned wo not advance the interest of the bank and doesn't believe in the mission of the bank. do i have your commitment to work on a bipartisan basis to leadership in the bank that would make for the bank is fully functioning and that these credits are actually coming before the board for up or down approval? sec. mnuchin: i want to make sure i understand your question -- garrett'sact scott
name is advanced to lead the bank as chairman, we are deeply concerned that many of these credits, $30 billion worth of , will noting today even see the light of day because the head of the bank has the ability to set the agenda for the board. i don'ty important -- care if mr. garrett is on the board. i do care if he is setting the agenda for the xm bank. are you willing to work on a we can moveasis so these nominees as expeditiously as possible without getting into the weeds on someone that many of us suspect might be a seven tour of the bank -- a saboteur of the bank? sec. mnuchin: i cannot comment on his specific situation. he was proposed by the president. assure you, the president is interested in making sure that the xm bank can land.
we've had lots of business people come in and talk about this. the directorthat and i are deeply involved in . >> i raised this issue as early as december with the president and was grateful to hear that he was supporting the bank. , we areve forward already in make him looking to june, we don't have nominees yet. -- we are already in may, looking to jun. june, we don't have nominees yet. these are the kind of americans the president talks about every to who work very hard maneuver she did for pension and health care and yet, they are being told that their pensions will be reduced 70%. we were able to reject a plan
that was cemented. where are you at with reviewing central states? sec. mnuchin: this is something that you mentioned at my meeting and confirmation. i'm a lot more familiar today on this issue than i was beforehand . at treasury, we perform an important function when people make applications on these. it's not a subjective function. we go through and run tests. i share your concerns. we look forward to working with you and others. it is a complicated issue. >> i look forward to your response to the march letter. thank you.
sen. brown: thank you, mr. chairman. i would like to talk about a couple of items -- i want to go back to an insurance related issue. hat has to do with the u.s. e.u. agreement. are differenthere types of insurance carriers that do business in the united states. some want to do business within the european market but also within the united states market. some only do business here. they are concerned there is a discrepancy between the have full who want to access and capability to do business in all of the eu markets and because of that to mother was a covert agreement
that was created, one in which we have a temporary seat in this decision-making body. carriers havelty concerns about what the impacts are of being included in this covered agreement which leaves a number of different areas unanswered. some of my friends on the other side of the aisle suggested in our last meeting with treasury officials that when i indicated it was like passing along a plan to find out what's in it, i was going back to obamacare and i didn't need to do that at this time. this covered agreement leaves unanswered questions for a number of our property casualty carriers doing business with an united states -- within the united states but may be subject to the agreement in the future. would you commit to work with us and get back with us on taking is second look at the
covered agreement -- a second look at the covered agreement? sec. mnuchin: i will. this is another area i'm actually a lot more familiar with than when i first came during my hearings. we've had several internal meetings where i've been briefed on this. we have reached out to industry and we are aware of their are people who support it and people who don't support it. the agreement specifically, this is something we do in conjunction with the u.s. trade representative. now that the trade representative has been confirmed, we will be close to making a decision. we would be more than happy to reach out to you and hear your views before we make that final decision. ,> the questions they've asked we should be able to get an answer to them one way or another. sec. mnuchin: i can assure you that we will did this is something i'm familiar with.
>> following up a bit on senator shelby's discussion in terms of the tax rates and support and the fact that a lot of our job c-corps, theyt are s-corps. bill, a 74,000 page tax some of those pages give it and some take it away. hurt andeople who get people who have an advantage or receive an advantage. this, there will be individuals who lobby hard against not allowing the deductions to be removed. while we want to see a simplification and a lot of people out there would love to see that happen, there's concern that as the president would
suggest that it is truly time to prime the pump similar to the kennedy administration and the reagan administration when we regaled the economy. that's refueled the economy. dollars to remain with individuals so they can reinvest into businesses as well. are we stuck with only a program which is revenue neutral? we are basically going to take away as much as we get back. or, could we actually consider some sort of a down payment on a tax plan in which we allow for reduction in actual taxes collected so they can be reinvested back into the economy? our basicwould take 10 rate for individuals at down to eight and from 25 to 23 and 30 to 28.
not a huge expense and yet, it may very well impact those at the very bottom a little more than those at the very top. there are additional resources they can invest back in the business and into the economy. sec. mnuchin: the president and i fundamentally believe that tax reform is critical to growing the economy in getting back to sustain economic growth. we look forward to working with you. different people will have different views as to under what scenarios it should be revenue neutral. some people believe in dynamic, some people believe in static. the president does believe that we need to create economic growth and we are willing to have lower tax revenues in the short term it that will create economic growth. the difference between 2% and 3% gdp is roughly $2 trillion over
a 10-year period of time. economic growth will help us deal with a lot of other complicated economic issues we have. >> thank you. senator van hollen: thank you for your service. recently, i sent you a letter together with many of my colleagues on this committee objecting to your decision to put keith in charge at the occ by using a maneuver that evaded senate confirmation. the occ serves as the chief banking regulator overseeing 2000 banks. he's spent most of his career working very closely to protect the interests of those banks. i appreciate the letter i got back yesterday. i will be sending you another
letter to ask you to respond to the following questions. why were you willing to install him as head of the occ before his ethics preventing has been -- pre-vetting has been certified? your letter indicated that his special temporary 130 day status allows them to avoid president trump's ethics pledge. i want to know whether that would allow him to immediately and work occ and lobby on behalf of big banks and i'm interested in whether all this means that you will be presenting the nominee in the next 130 days. i will ask for your follow up on that. i want to ask you about tax policy. i agree with my colleagues who said if we are going to do tax reform and i think tax reform can work and can be an important
step that we should focus on middle income tax relief and not another round of tax breaks for the very wealthy and special interests. last november, you agreed with that statement. i quote what you said in november -- "any reduction in upper income taxes will be offset by less deductions so there will be no absolute tax cut for the upper class." that's what you said. senators reid and tester have asked you questions about the tax reform plan you are submitting. i have a question related to a in cut plan that is already progress that you and president trump have strongly endorsed. that is the house health care plan. which according to the congressional budget office has $900 billion in tax cuts, including $270 billion in tax
cuts that go to higher income families. and the analysis of that tax cut is that millionaires will get on average $50,000 year in tax cuts. that's because what we did in the affordable care act as we apply capital gains and that income taxes, medicare taxes on very high income individuals. they can help shoulder their share of the medicare trust fund. the totally violates standard you set forward in november, doesn't it? it's a really yes or no question. sec. mnuchin: the first question you asked my wanted to respond to come on the controller of the currency at the occ. it is our intention -- we have someone the president has approved that is going through the fbi vetting process. this is a time-consuming
process. we do hope that there will be somebody who has cleared and somebody who will go through a senate confirmation process. this is in no way an attempt to put someone in who wouldn't be going through. this is someone in on an acting basis. , i havesecond comment only been partially involved in the health care -- that is not in my area of response ability. my comments are more focused on tax reform. the president's intent is there is and middle income tax-cut. >> it is a fact that the health care bill that passed the house has $900 billion in tax cuts. with $900 billion in cuts to medicaid and some in medicare. it huge pillar of this is tax cuts. isn't it the case that the
provision that gets rid of the medicare tax slightly -- flatly plan -- thereur will be no tax cut for the upper class? isn't it an absolute tax cut for millionaires? sec. mnuchin: my comments were focused on tax reform -- >> this is tax policy. what's been interesting about this health care debate is that you have this major tax change masquerading under the cover of health care. why is there a big tax cut in the health care bill? you deal with tax policy. sec. mnuchin: i think the idea was that that tax was hurting investment and jobs in this country. carewas part of the health
repeal. , that tax will help people who are investing money back into the economy and will create jobs. it flatly contradicts your statement of no absolute tax cuts for the upper class. >> thank you for being here. appreciate you being willing to step up and do this and it's nice to have a private sector guy trying to figure this out. i want to go to the debt and the portfolio. we've got $20 trillion of debt. a third of all sovereign debt in the world. $200 trillion of total debt in the world one out of every three government debt dollars out s.ere are our we have the largest fed balance sheet in history. of lowthis period
interest rates, little over 50% are three years or less in maturity. while the u.k. has 48% 20 years or longer. is this something you guys are taking a look at and do you plan to go longer? sec. mnuchin: it is something i've talked about. we are studying ultralong bonds commit 50 year bonds or even longer. we've been working with the treasury borrowing committee to advise us on what the market for that is. it is something that we will consider as we look at debt management. no decision has been made. we are seeking guidance as to the demand. >> thank you. it looks to me like we are unilaterally way ahead of our other signatory partners in basel three.
as a business guy, for small banks and community banks and regional banks, they are hampered by the costs of compliance and by this reserve requirement. is there any attempt in your future priorities to look at what we are doing regarding our future commitments to basel three and what we can do to get the other partners to line up and catch up with us in terms of the commitment of safety for banks? sec. mnuchin: there is. i've had conversations that most recently when i was at the g7 with other board of governors and other finance ministers about basel three. it's something we will be looking at as part of the president's executive order. no decisions have been taken. , the fed isellen the one who technically participates.
it is something we are looking at. >> we've got somewhere around $6 trillion of liquidity that is not at work in the economy today between the russell 1000 balance sheets with the strongest liquidity position might be trillion dollars in the bank balance sheets because of this capital reserve requirement and this unrated patriot it -- on repatriated u.s. profits. this is part of our future in terms of getting the economy moving again. the cbo always had 1% of gdp grows $3 trillion over a decade. yet, we tend to talk in the senate about spending cuts or tax increases as a bilateral conversation. yet, growth is really talked about because it is any such
eric term in the senate. tarik --an you said esoteric term in the senate. how the president and how the administration sees fiscal policy now marrying up with the monetary policy of our future. sec. mnuchin: you did talk about repatriation. that is something we are looking at as part of tax reform. there are literally trillions of dollars sitting offshore. with the highest corporate tax and thisdwide taxation concept of deferral, why would u.s. companies bring money back? we hope there are trillions of dollars that come back. the othertes to economic issues, we look forward to continuing to talk to you about them. competes atuts u.s.
risk for foreign companies that have a lot of liquidity that can come in and make an acquisition of a u.s. company and use tax arbitrage to pay for that acquisition. sec. mnuchin: they can indeed. i hear that almost every day as i hear from business leaders that u.s. companies who feel like they are at risk of getting taken over and at risk of having the jobs moved outside of united states. we have an uncompetitive system we need to fix. there are several economic reports that over 70% of the corporate tax burden is borne by the workers. for far too long, workers in this country have not had wage increases. that is something we saw when we met with hundreds of business leaders across the country. >> thank you, mr. chairman. sen. warner: good to see you again.
i don't want to belabor the point that senator van hollen was making. beyond the fact that the health care legislation, which i strongly oppose, offered a massive tax cut for folks like is really, it also just a transfer of obligation from the federal government which used to share in the medicaid responsibility to the states. ofs an $830 billion transfer response ability back to the states. the states can cut their medicaid or and up resulting in dramatic tax increases to pay for that medicaid. reform, but's tax the health care debate will influence how many of us approach the tax reform debate. whether it comes to repatriation
or these other issues, i want to work with you. we have to do it in a way that is at least deficit neutral and doesn't follow upon something that frankly doesn't do the best for health care or benefits folks like you and me and is a transfer of responsibility to the states. as you are aware come i'm up to my eyeballs in the issue around the rush investigation. -- russia investigation. it may be the most important thing i ever do in public life. senator burr and i have asked the treasury department for cooperation on getting appropriate documents that will be part of our investigation. we have received some of those documents and we are reviewing them.
my understanding of how we query that big data will require some collaboration. i want to ask you at this hearing that we will have your personal commitment that you will continue to work with this bipartisan committee and bipartisan investigation so we can get to the bottom of it and get the facts out to the mac in public. -- american public. sec. mnuchin: i did meet with my general counsel and review and make sure we were being responsive to you on that. is an area of enormous interest in this particular area in terms of following the money, it is something that is terribly important. somebody else raised this issue -- i want to take you to a hypothetical in terms of the liquidation authority in title ii of dodd-frank. was something we spend
a lot of time on, the one part of dodd-frank that got 80 votes. if we have a large trillion dollar plus 50 institution headquartered in the united states and operating across the world with multiple subsidiaries, if it runs into a credit crunch and the rest of the financial industry stopped fails, inness and it order to have been orderly failure and wind down, would you agree that shareholders need to be wiped out? sec. mnuchin: it is hard to respond to a hypothetical situation. >> we don't want to have taxpayer bailout. we want -- sec. mnuchin: again, let me just comment that it is hard to comment on a hypothetical -- >> i would think that you would wiped outhareholders
-- the creditors to take some losses. management fired. sec. mnuchin: i suspect shareholders would be wiped out. it is a saying that hypothetical situation. where,ould be situations for various regulatory reasons with title i and title ii may not be appropriate. if you wipe out the shareholders and wipe out the up having the end creditors take a loss and you still have a liquidity issue, you need some backstop their. -- there. the process we set up in title ii makes the most sense. back when we had your confirmation, we talked about this. vonnie:
this continues to be a hearing that secretary steve mnuchin is giving. we are awaiting paul ryan. his weekly news conference is coming up and we will bring you any highlights from that as well. the testimony of secretary-treasurer steve mnuchin. ark: stocks are down for third consecutive day. stoxx 600 was 1.2% lower yesterday. yesterday at the end of the day was 1.2%. still, the biggest dip since january. saga that is engulfing the
white house is deftly spilling over into global markets. look at the currency boards. sterling pushing through 130 against the dollar. the euro was 2016 high yesterday. the dollar down a third of 1%. the u.k. 10-year unchanged. tenure see the spanish up. spillover in europe today. down -- the vix down.
the spread 95 basis points. awaitingn, we are house speaker paul ryan's weekly news conference, the first back .o secretary-treasurer mnuchin financialtill have institutions in america that are too big to fail? believe any are too big to fail. some may be too big to succeed. >> delete have any institutions if they failed it would have a substantial impact on the american economy? >> it could. >> decent dodd-frank has limited that risk -- do you think dodd-frank has eliminated that
risk? -- if those financial institutions had more capital would help them -- would help them? -- would it help them? >> more is always better than less but if morris stopping them from lending that is concerning. >> my question is not meant to suggest my thinking about this. what do you think about glass-steagall question mark >> -- glass-steagall? >> we do not support. -- a very significant problem on the financial markets and think there are things we could look at around regulation, but we do not
support a separation of banks and investment takes. >> why is productivity growth so low in our economy in your opinion? complicatedhat is a question. >> just give me the cliff's notes version. >> it a commendation of regulatory issues. a combination of job-training , tax issues. i think it is a love of issues leading to productivity. >> if we could increase from 1% to 2%, wages would go up, right question mark >> that's right and we would create huge growth in gdp. >> once again this is the
question, not a suggestion. do you think it's possible to do businesses to have do more profit-sharing so that it is a win-win? the idea it would increase profits for the entity and workers were carter to be more productive and make their wages go up -- were carter to be more productive and make their wages -- work were carter and to become more productive and make their wages go up? today, the house continues to act to make sure our law do whatent agencies they need to do to make us safe.
yesterday, the house acted on a new round of sanctions against the syrian regime in order to cut off resources for a silence assad policy -- assad's war machine. as we speak, the ways and means committee is holding a major hearing today on examining progrowth tax reform. progress means grows of wages, -- growth ofnity wages, jobs, opportunity. bipartisan legislation for education.
a realr i go, we have skills gap between the skills people need to get good jobs in the good jobs out there being offered. i'm very pleased that the education workforce committee is moving forward on this legislation. later today, mac thornberry will -- this is an essential part of our efforts to rebuild our military for the 21st century. -- this memorial day, is a problem we have been working on for years and the v.a. is already taking strides to get veterans better care, shorter lines and more peace of mind. over in the senate, our
colleagues continued to discuss the path forward to repeal and replace obamacare and lastly, 14thresident signed the congressional view action -- review action. we have much more to do to and washington's culture of overreach as we work to protect jobs and the economy. we are working to advance our agenda and address the problems that americans face in their everyday lives. questions? >> earlier this week, senator mcconnell said we could do with a little less drama at the white
house. do you believe with that assessment? >speaker ryan: yes. it is also nice -- always nice to have a less drama. people need to know we are busy at work trying to solve their problems. i realize there is a lot in the media today. that does not stop us from doing our jobs. one of the reasons i ready the ,ist on closing the skill gap makes the pentagon more efficient, get tax reform moving. these are things that affect people in their daily lives. i think it is important people know we can walk and chew gum at the same time and drama is not helpful at getting things done, but we are still getting things done. >> a number of congressional leaders met with deputy attorney general rod rosenstein. were you at the meeting and what
is your sending -- understanding as to why doj took this step? as i said before, i believe the professionals need to do their jobs independently, objectively, and thoroughly in a believe the special counsel helps them do that. we're going to keep the investigations going. i think the intelligence committee has the right to do that. involving another country interfering with elections. investigationsn are going to continue. the [indiscernible]
does that present a conflict? i have not spoken with the chairman about that. >> do you think he should step aside? outker ryan: i will find what he is or isn't doing. i will not comment on something in the media. i would rather hear from him myself. with response to intelligence, that is where i think the intelligence committee should do their job. >> you have been close over the years with vice president pence and he is working on these thees here, but considering past two days, there have been
some members who say we might be better with vice president pence? toaker ryan: i'm not going comment on that. >> [indiscernible] speaker ryan: the appointment of the special counsel helps assure people in the justice department they will do their jobs independently and thoroughly which is what we called for all along so i think it was appropriate to do that. in the meantime, we will keep , keepour jobs investigations going and the education workforce committee closing the skills gap.
let's get working on tax reforms and fix people's problems and all committees are still doing that. i know people get consumed with the news, but we are working on people's problems everyday and we have these different committees that do different jobs and our job is to make sure we make progress for the american people and we are doing that. regarding tax reform, -- speaker ryan: i think we are making good progress. senate majority leader mitch plansell says he thinks
are rather bleak. one of the alternatives -- what and youalternatives have a transition that would make it more allocable -- palatable? speaker ryan: you can say yes to what you all you said -- you can say yes to what all you said. you should have some kind of adjustment and phase-in. . i think border adjustment is the .mart way to go if you are not going to do border adjustment, then you have to look at the alternatives. there's upsides and downsides.
that is the process we are going through. we're going through what is the best way to reform the tax code and lower tax rates for businesses and make -- make the american tax systems internationally competitive? we are losing companies. we had an incentive that basically tells companies outsource your manufacturing. we are working on this, fixing people's problems and that is why tax reform is so critical and i believe there are legitimate concerns to any version of tax reform and we have to accommodate those concerns. about director comey and potential objection of
justice? do you think there is any possibility that whatever comes out of congress will affect next year or two years on the road? toaker ryan: i will refer .ee hss -- chs that issue is still unresolved. >> on the question of potential of justice -- objection of justice. speaker right: that is what investigations are for. you have a special counsel that will take over that for polio. the whole point is to have an independent investigation and follow the facts. it is premature to prejudge anything at this point. only that we have a process in place here in congress and the justice department. oversight?part of
speaker ryan: i will leave it up to the committee to decide. vonnie: you've been listening to speaker paul ryan revving up his weekly news conference. , he did notning mention anything about investigations. all of the questions have to do with other things. mitch mcconnell talking about less drama. he said he would like to see less drama. it is always nice to have less drama and people need to know we are busy at work trying to solve problems. about jasoned june and nowing in
we can go to kevin cirilli who is bloomberg's chief washington correspondent. i want to ask you about what the speaker had to say about trauma. it was your interview he was referencing. clearly house speaker paul ryan trying to make the case that republicans in the house are trying to continue their legislative agenda. the republican members i'm have expressed a lot of frustration. again, you have an optimistic speaker ryan suggesting tax reform will still be dealt with talkss calendar year, but from folks around town in both parties suggesting all of this
is making it much harder for republicans to accomplish their agenda. havee: all morning we secretary-treasurer steve mnuchin giving testimony and we have had tax reform come up. paul ryan talking about the border adjustment tax. saying they will have a way to the grout middle-class tax cuts and have something pay for it. what has been the conversation this week about tax reform? >> i think there are several among congress at various caucuses. when i interviewed mitch mcconnell earlier this week, he said it would have to be neutral. when you talk about the border adjustment tax, something
speaker ryan has advocated for in order to pay for any tax cuts , that is a significant form of revenue. there are differences. how are they able to walk and chew gum at the same time question mark we heard from seek a ryan who said they can do it. vonnie: u.s. markets have started to rebound from the date hit yesterday. some big news in the treasury market. major you can see averages are rising high. of a bounce.
backf the groups bouncing is technology. we saw a lot of the big names ureters yesterday recently pulling back. here is the today chart. here are some of the tech movers. here.is the big drag mark: coming up, the u.s. isn't the only country dealing with drama. we will look at prime minister theresa may's latest campaign pledge. that is next. this is bloomberg.
-- that is one of the big things in this manifesto. that is the kind of language that is going to -- the corporations who require global talent uncomfortable. thank you for the update on the conservative party manifesto. steve mnuchin is continuing his testimony on capitol hill. do watch it on the bloomberg and tv . this is bloomberg.
here are the top stories on the bloomberg that we are following. u.s. stocks rebounding from the worst selloff of the year. technology in bank shares rally. trumpthe concern that the agenda may be in jeopardy. -- calling it a witch hunt on twitter. fbi comes a day after director mueller was appointed special --