tv Squawk Alley CNBC September 16, 2015 11:00am-12:01pm EDT
♪ welcome to "squawk alley." thank you for joining us today. john steinburg. john, good morning to you. cale azzel. shares of hp are doing pretty well after the company said it would cut another 30,000 jobs. this is a larger plan to cut 2.5 billion in annual costs. meg whitman explained those cuts to us earlier this morning on "squawk on the street." take a listen. >> we're excited about the
future. these cuts are never easy, but it's the right thing to do because we have to now get to the next phase of the hp journey, and if you think about the cuts over the last four years, they were mostly to help us keep, you know -- get a cost structure in line with the revenue trajectory. we're now saying that revenues will grow next year and constant currency. this now can be about margin expansion, and that's now got to be part of the story. >> as they move a lot of employees to low cost locations. going to give half of free cash flow back to shareholders. she has a good handle on this now. john, her words. what do you think? >> i'm cynical about this stuff, carl. remember when she came in, she blamed mark herd for cutting so much and cutting cut to the bone they couldn't ino vat. what has she done since she's been in there? cut, cut, cut, cut, cut. we were cutting because revenues weren't going. now we're cutting for profitability. even though we said things were going to grow this year. hp is a mess. you look at the enterprise business. they call themselves category leaders, but it's hard to see where they're going to be
leading when the server business, sure, that looked pretty good last quarter. service is under just pressure from the mega scale cloud providers. people don't have to buy searchers longer term as much as they used to. they've not disrupted cisco, and it's networking. palo alto networks, and checkpoint are stronger in security than hp is. software business for hp has gone no. s and then on the pc side they've got competition from chinese, taiwanese pc providers on the margins. it's going to be a tough road to hoe. >> is there a way to lace this story with some sugar? >> there's no sugar. i think the growth she talked about is in doubt.
necessity make products that are the products of the past. buzz feed had an article, an interview with tim cook, where he talked about how a whole lass of consumers that may never want a pc. he is okay with that. hp is to use his phrase such a backwards looking company. >> what pan did she have, john? what were her choices other than to downsize? >> it's not so much the downsizing that gets me. it's the gradual downsizing over time. i mean, it's one thing if all at once you say here's a activision for the company, we're going to hop this, we're going to chop that, and then we're going to grow, but the demoralizing affect of every quarter after quarter year after year and chopping people, saying you're almost done, then you're not almost done, saying you're going to grow, and then you don't grow, she's done a great job kind of engineering this company. you know, to the point where it is. even if you are an observer of technology, this is sad. >> even john's paz really says it all. if i was an operator in this situation, it's too much to even grasp. i think the split is good in the sense that at least it gives
different people looking at different problems. this hp enterprise services is the problem child. they're trying to get flat to down. >> a major change coming to facebook. ceo mark zuckerburg made the big announcement during a q and a session yesterday. take a listen to this. >> i think peopleville asked about the dislike button for many years, and probably hundreds of people have asked about this, and today is a special day because today is the day where i actually get to say that we're working on it and we're very los to shipping a testament. >> of course, get ready for this dislike button on facebook as well. they're working on it. no promise on a release date. there are times when someone says something that's not so great. >> he was always wary of doing a dislike button bays he didn't want a spiralling of hater where i. this will be an empathy button. it's not even clear it will be called a dislike button, but it's a way to express
acknowledgment understanding without saying that you like something bad that happened or you like a loss in the family or something huge. >> i think of it as i feel you button. that's -- either that or maybe a multiple choice here are the emotional responses that people are allowed to have to my statement. that's like an argument with the spouse button maybe. i don't know. maybe something like that. >> he said he wanted avoid the up-down vote dichotomy. >> it shows a big change in what's occurred on facebook. facebook started out as cat pictures and family pictures, and now it's the major source of news for month mo people. people want to discuss news and politics, you need a range of emotions. you need a range of simple reactions. it really is an acknowledgment. people want to be able acknowledge they saw a piece of content without doing all the effort of a comment. >> good point. meantime, it is under armor investor day, and we are getting news alerts from there. our sarah eisen is in maryland where she's going to talk to kevin this afternoon. we miss you, sarah. good morning. >> miss you too, carl.
good morning from baltimore. just want to bring you the news from this investor day. that is under armour has just updated their sales forecast. they say they are expecting $7.5 billion in revenues by 2018. this is an update because the last time under armour talked about its forecast, it was expecting $10 billion in revenue by 2020. accelerated growth plans for the company's top line. just to put it in perspective, under armour is a company that's less than 20 years old. last year had revenues just under $4 billion. this is a pretty ambitious growth target. the ceo kevin plank who is speaking in a room next door to me here at under armour headquarters is talking about how he is going to get there. namely international. huge source of growth for them. he just came back from a five-day trip to az wra with their star player. we're going to ask him about that. whether he saw any of the concerns that we talked about every single day in the chinese economy. international women's is a huge growth driver.
i'm sitting behind some of the new women's line. they expect that to be as big or potentially even bigger than their men's wear business in terms of apparel and footwear. footwear, huge for him. kevin plank just talking about how ten years ago they weren't even in the footwear business. now they have 40% of the marketed. that is in football cleats only. the point here to make is that, yes, under armour is growing incredibly fast. 21 plus quarters of 20% revenue growth. however, even that ambitious $7.5 billion target by 2018 is nowhere near the size of nike, which has a little less than $30 billion in revenue. one of the biggest questions is going to be, a, can you get there, and, b, how long is it going to take for you to catch up to the big guys? namely, nike and adidas with tens of billions of revenue. we will talk to ken plank after he addresses investors. that's coming up in the 1:00 hour of "power lunch" and then a little later a mystery sports guest. keep many mind, under armour has
sponsored a number of winners lately. not just steph curry. we'll talk about how he is planning to leverage some of the big players that have been on a pretty hot streak. >> that is a great tease, sarah. amazing. only one of two s&p companies with 21 consecutive quarters of 20% plus revenue growth. we can't wait for that later on this afternoon. >> see you in a bit. in the meantime, keep your eye on crude. up $2.50 as we got that unexpected drawdown in stockpiles not too long ago. it's leading equities a little bit ahead of the fed meeting. we're up 50 on the dow. we'll watch that. finally, according to reports amc networks in talks to buy cable network starz. our david faber asks point-blank is a deal in the works? this is what albrecht said. >> if i had a dollar for every time there was a rumor about starz, you and i could both retire. i think it's fair in an industry where people are as closely
aligned we all are in business together. the conversations are going on all the time. that being said, i'm not here to announce anything today. i do think all this chatter does highlight the fact that the premium brands, starz, being one of them, are more valuable than ever before. >> what do you think here? every name in the book has been bandied about. >> starz is an advertiser. they advertise power with us and the new patrick stewart show that came out, and advertising hey a remarkable category for me, and that is precisely to the point that he is making which is it's not about the end of television. it's about television delivered in a new way and effectively channels are going away as we've discussed. it's going to be content. i actually was at the conference, and he was at the goldman sachs conference. you had murdock, ryan roberts, other people there as well. ott, ott, ott. even at&t was talking about ott. it's very much a changed world. they are one of the free radicals to use john malone's term, below the big guys.
>> are we seeing the beginnings of a new bundle, though? is that what this is all about? we talk about leverage in the age of streaming, but isn't this just people compiling a bunch of content so they can force it down people's throats? >> murdock was on stage talking about rebundle and new types of bundles formed. people don't want to spend $9. they want to spend that $90 in a different way. we are seeing a new bundling i think that's going on. >> thanks for joining us. john steinburg, daily mail north america. dow down 65 points. shares of oracle in the green after getting upgraded over at suntrust. improved opportunities for the company's cloud business. they report after the bell tonight. cramer at the dream force conference. when we come back in about 20 minutes, the president will answer questions from some of the country's top ceos of the business roundtable. we will go live to d.c. plus, leave it to colbert it
the state that grows quite a bit of stuff. >> oh, this is ground zero for that. by the way, first of all, notice, swron, it's raining in california today. very good news. here's a quote for you. the marijuana industry is in every sector of our economy. that's according to the development director here in arcadia in hum bolt county, the heart of marijuana country. marijuana contributed $400 million to the county economy in 2011, but who really knows? most of it's illegal. with legalization on the horizon, arcadia wants to be a step ahead. the city council is considering turning this old abandoned mill into the nation's first marijuana innovation zone. if it's approved and constructed, people could reply for a license to grow and produce new and ino vaifsh products. there would be a kitchen and a lab. first just for medical marijuana, because that's all that's legal, but scaleable to include recreational pot if voters approve that here next we're. >> we believe that we already have a head start because we have essentially been in the illegal matter called marijuana
business and recreational marijuana business for a long time. >> the term i like to use is the carrot and the stick that we want to use the carrot to attract businesses to operate in a legal manner according to regulations and the stick that if people are operating in an illegal manner, that we will make it very difficult and uncomfortable for them to operate. >> well, not everyone is on board. for one thing, producing pot consumes a lot of water and power, and not everyone agrees. while some think it's good, maybe legalization and regulation will be bad for business. >> it's high time that things are moving in a positive direction. >> i couldn't see anybody who already has a successful career in it wanting to buy in to something like that if it would really take a toll on their income. >> if it happens, the mayor thinks it will be running next year, but, guys, if they zone it, will they come?
>> oh, and by the way, before i toss back to you, pot is on sale. are they high? there is a one-time, one day only tax holiday on marijuana due to a quirk in the state constitution. it's crazy. just today. >> how exciting. >> it seems like a prime area to get into this sort of thing. >> it's about having the expertise, and nobody has the expertise like humbolt county does. it's funny you should say appalachiana. hip necks. hippie red necks. those are the people growing here, and they know what they're doing. >> yeah. that's a good business. thank you very much. our jane wells out west. leave it to colbert to be the only one to finally ask apple ceo tim cook about his plans for an apple car. listen to this.
>> have i had a couple of tech giants on the show the last week. i had elan musk on. then i had travis, the ceo of uber. when he was here, he said, you know, apple is working on a driverless car. >> i've heard about it. >> he has already given it away. you guys aren't big on secrets. tell me about it. come on. cat is out of the bag. here, i'll videotape you while you talk about it. >> we look at a number of things along the way, and we decide to really put our energies -- >> they're doing it. >> there is an art to breaking down that wall of talking points. colbert might do it better than anybody on tvr right now zoosh he did a fantastic job at it, and, wow, an apple ceo on late night and talking not just about
products, not just talking around unnonsed products, and also talking about his personal journey, his desire to make apple that leaves the world better than founded. this is a company that's moved from being sort of a california thing changing the world a bit to a front and center kind of mega company putting personalities throughout and making change in areas beyond its products, which is something different than we would have said ten years ago. >> then yet again today, another note from the sell side. rbc talking about the upgrade program and how it's going to price that upgrade psych from 26 months to obviously something shorter than that, which is a reason you've been bullish on the stock. >> yeah. i think -- i wouldn't say i've been bullish on the stock. >> fair enough. >> who knows what the stock is going to do. i think this upgrade cycle has a lot of promise, and i think iphone upgrade program from apple could take a while to have an affect. i don't expect to see it have an affect in the first couple of weeks because it's not a preorder thing how it works. it's once people are in the stores that will get people to
pull the trigger faster. >> coming up, in a few minutes from now president obama is going to take questions from some of the top ceos in the country. live at the business roundtable. we're going to get you there as soon as he starts speaking. "squawk alley" back in a moment. awe believe active management can protect capital long term. active management can tap global insights. active management can take calculated risks. active management can seek to outperform. because active investment management isn't reactive. it's active. that's the power of active management.
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let's get to the cme group. rick santelli with the santelli exchange. rick. >> thanks, john. well, to me a lot of what's going on in the world and in the country specifically, especially at the first day of a two-day fed meeting, is about recalibration, and under that recalibration it's about credibility and volatility. many people ask me, and i ask them back, what do you think the fed is going to do tomorrow? granted, viewers, listeners, on radio, we're talking about this a lot because it merits a lot of talking about. there was a time when it was only talking about markets and the fed would have its time of nudging, and that was a topic. it's turned into much more than nudging and the topic now has
shifted because if you really want to understand markets, you have to understand whose thumbs are on the scale, how long they're going to be, this and how difficult it is to get that super glued thumb off any scale, whether it's at issue like import-export bank. kind of a subsidy. while interest rates sort of a subsidy. we've heard from some very large ceos of large financial institutions in the u.s. saying, ah, you know, i don't know if the data is good enough for an interest rate increase. pretty much the same ceos that have talked at great length over the last six and a half years about how better offer the u.s. economy is than the rest of the world. when it comes to crunch time, their customers are going to have to re-calibrate. that's where the volatility will come from. we've seen huge hedge fund managers pointing at each other, market volatility is your fault. the president is coming up, and i guarantee you import-export will be a huge contention in the followingure going to hear.
here is the president. >> more than 13 million new jobs over the past 66 months. the longest streak of job growth on record. the unemployment rate is lower than it's been in over seven years. there are more job openings right now than at any time in our history. housing has bounced back. it's higher than it was before the recession. we have made enormous strides in both traditional energy sources and clean energy sources while reducing our carbon emissions, and our education system is actually making significant progress with significant gains and reducing the drop-out rate, reading scores increasing, math scores increasing, and, by the way, more than 16 million people have health insurance that didn't have it before. this progress is a testament to american business and
innovation. it's a testament to the workers that you employ, but i'm going to take a little credit too. it's a testament to some good policy decisions. soon after we took office, we passed the recovery act, rescued our auto industry, worked to rebuild our economy on a stronger foundation for growth. other countries in some cases embraced austerity as an ideology without looking at the data and the facts. tried to cut their way out of recession. the results speak for themselves. america has come back from crisis faster than almost every other advanced nation on earth, and at a time of significant global volatility we remain the world's safest, smartest investment. of course, i will not be satisfied, and we as a country shouldn't be satisfied until more working families are feeling the recovery in their own lives, but the fact is that
what i have called middle class economics has been good for business. corporate profits have hit an all-time high. slowing health care prices and plummeting energy costs have helped your bottom lines. manufacturing is growing at the fastest clip in about two decades. our work force is more educated than ever before. the stock market has more than doubled since 2009 and 2015 is on pace to be the year with the highest consumer confidence since 2004. america's technoligical entrepreneurs had continued to make incredible products that are changing our lives rapidly. now, you wouldn't know any of this if you were listening to the folks who are seeking this office that i occupy.
in the echo chamber that is presidential politics, everything is dark, and everything is terrible. they don't seem to offer many solutions for the disasters that they perceive, but they're quick to tell you who to blame. i'm here to say that there's nothing particularly patriotic or american about talking down america. especially when we stand as one of the few sources of economic strength in the world. right now we've got the chance to build on progress that we have made and that is acknowledged worldwide. we have a hands to grow the economy even faster, create jobs even fastest, lift people's incomes and prospects even faster. we just have to make sensible choices, and i'm going to focus on one particular example. america's next fiscal year is almost upon us, which means the congress has about two weeks to pass a budget. if they don't, they will shut
down america's government for the second time in two years. democrats are ready to sit down and negotiate with republicans right now today as we speak, but it should be over legitimate questions of spend and revenue. not unrelated idealogical issues. you'll recall the republicans shut down the government because they didn't like obama care. that's not good sense. the notion we play chicken with a $18 trillion economy and global markets that are already skittish all because of an issue around a woman's health provider that receives less than 20 cents out of every $1,000 in the federal budget, that's not good policy making. the last time republicans shut
down the government it cost our economy billions of dollars. consumer confidence plummeted. i don't think anybody here thinks that's going to be good for your business. i've always believed what our first republican president, a guy from my home state named abraham lincoln believed. that through government we should do together those things that we can't do as well by ourselves. funding infrastructure projects. educating the best work force in the world. investing in cutting edge research and development so that businesses can take that research and take some risks to create new products and new services. setting basic rules for the marketplace that encourage innovation and fair competition that help a market based economy thrive. creating safety net that not only helps the most vulnerable
in the society, but also frees all of us to take risks and protect against life's uncertainties. and welcoming rather than disparaging thriving immigrants that are the source of continued renewal economic vibrancy and dynamism in our economy. my hope is that congress ames a little higher than just not shutting the government down. that's a good start. we like them to achieve that. i think we can do better. we can do things to help the economy grow. after the last shutdown both parties came together, and unwound some of the irrationale cuts to our economy and military readiness that's known as sec quester. that agreement expires in two weeks as well. for those of you who are not steeped in federal budget terminology, sequester basically
are automatic top line cuts that don't discriminate, don't think through what are good investments and what is waste and if we don't reverse the cut that is are currently in place, a lot of the drivers of growth that your companies depend on. research, job training, infrastructure, education for our work force. they are going to be reduced effectively at a time when other countries around the world are racing to get ahead of us. >> we've also reduced the
deficit by two-thirds. right now it's about 2.8% of gdp. we've reduced our deficit faster than some of those countries that pursued strict austerity policies and weren't thinking about how to grow the economy. the good news is we might be moving beyond some of the stale debates we've been having about spending and revenue over the past several years if what economists and people who are knowledgeable about the federal budget are listening to as opposed to this being driven by short-term politics. people in both parties including some of the leading republican candidates for president have been putting out proposals. some i agree with. some i don't. i'll give you one example,
though. have you two leading candidates on the republican side who have that issed we should eliminate the carried interest loophole. now, there's disagreement in this room around that. i will tell you that keeping this tax loophole which leads to folks who are doing very well paying lower rates than their secretaries is not in any demonstrable way improving our economy. if we close the tax loophole, we can double the number of workers in america's job training programs. we cou these are sensible choices that if you were running your business and you took a look at it, you would make that decision. well, america should too. this is an example of how we can maintain fiscal responsibility while at the same time making the investment that is we need to grow.
the bottom line is this. seven years ago if we had listened to some politicians who said we could only cut our way to prosperity, the fact is we would be worse off today. if we listen to them now, we'll be worse off tomorrow. i hope that you will talk to your friends in congress, democrats and republicans alike, as congress flirts with another shutdown. remind them of what is at stake. we will have some disagreements sometimes. i do not expect to get 100% of what i want in any conversation, including with my wife. i do expect us to stay focused on why we're here, which is to help the american people and businesses like yours and your workers do better. that's our job. we're not supposed to be impeding progress. we're supposed to be advancing progress. accelerating it.
if our leaders can put commonsense over ideology and the good of the country before the good of the party, then we'll do just fine. despite the perennial doom and gloom that i guess is inevitably part of a presidential campaign, america is winning right now. america is great right now. we can do even better. the reason that i'm so confident about our future is not because of our government or the size of our gdp or military, but because everybody in this country that i meet around regardless of their station in life, their race, their religion, the region they live in, they do believe in a common creed that if people work hard in this country, they should be able to get ahead.
i know that's what you believe. that's the values that you try to instill in your own companies as well. my hope is that decency, that hard work, that commonsense is going to be reflected here in washington. with that let me take some questions. i'm going to start with randall because since he volunteered for what i'm sure is a thankless job -- >> i'll get it going here. i know there are a lot of other questions for you, but leader mcconnell was just here a little earlier, and he gave us all a cause to exhale talking about the budget and seemed confident that we would get to a place where we would have a budget, and in the context of that, he spoke about how split government can actually provide opportunities for getting big things done that might be hard to get done otherwise, and he caused a head snapper with all of us when he gave you a very strong compliment over -- >> my head is snapping.
>> trade promotion authority. and how you work thad and you worked it very aggressively, and, by the way, all of us in here, mike froman, and jeff, are very complimentary of the work that was done there. now you have the authority to get a trade deal done. it's going have to come back to congress and so forth. talk to us about your view of the opportunity to get the transpacific deal done. >> i am confident that we can get it done, and i believe we can get it done this year. the trade ministers should be meeting again sometime in the next several weeks. they have the opportunity to close the deal. most chapters have been completed at this point, and i'm confident that it will, in fact, accomplish our central goal, which is to make sure that we've got a level playing field for american businesses and american workers in the fastest growing
region of the world. there are going to be unprecedented protections for labor standards and environmental standards, but also for ip protection. also for making sure that when any company here makes an investment, that they're not being disadvantaged, but are instead being treated like domestic companies for commercial purposes. the notion here is that we've got 11 nations who represent the fastest growing, most populous part of the world buying into a high standards trade deal that allows us and your companies on a consistent basis to compete. the good news is that with a lot of tough negotiate and a lot of
push and pulling, mainly by mr. froman, but occasionally i get called in to lob a call into one of my counterparts, i think that we're going to get this done. now, the key then once we close the negotiations and we have an agreement is to get tpp through congress. we got it through. i will return the compliment of mitch mcconnell worked very hard and very creatively to get it done. . we should not assume, though, that because the authority was done that we automatically are going to be able to get tpp done. i'll be honest with you. the reason is that the politics around trade are tough, and i said this even in the run-up to
getting tpa authority. a lot of americans when they think of trade think of plants in their hometown or nearby shutting down and moving to mexico or china and american manufacturing and good paying jobs being lost. the argument that i have made consistently to democrats has been that there may have been some mistakes made in past trade agreements and not, for example, having enforceable labor and environmental provision that is put american companies that are doing the right thing at a disadvantage. that there weren't enough safeguards for intellectual
property and the abuses of state-owned enterprises and subsidies that companies may have been involved with, but that's the status quo now, and if you want to correct those things, we got to raise the bar. i didn't fully persuade all my democratic colleagues because the politics are tough, and i was willing to take my case to the democratic caucus and to talk to my friends at organized labor and say that we can't look backwards. we got to look forward. we're going on have to compete in these areas. here's the concern politically is that i think within the republican party some of the same impulses that are anti-immigration reform, some of the same impulses that see the entire world as a threat and we've got to wall ourselves off, some of those same impulses also
start creeping into the trade debate. a party that was traditionally pro free trade now has a substantial element that they feel differently, and so the brt, i think, you know, you got to put engler to work over there. you know, to their credit, both mitch mcconnell and boehner i think are on the right program here. the closer we get to political season, the tighter some of these get. i will tell you this, though. that it will meet the compliment that i made that this will be the highest standard, most progressive trade deal in american history. it will be fwood for american
business a business. >> thank you for being with us. hi, mr. president. i wanted to ask you about cyber surt. you know, you put an executive order in place earlier this year because of the issues we have with information sharing and with liabilities and. >> i want to get your thoughts and with the upcoming visit of the president of china about cyber security and our relationship with china. >> this is an issue that is not going away. it is going to be more and more important and it is going to be very challenging. it's challenging, in part, because the internet itself, the architecture of it was not intended to carry trillions of
dollars of transactions and everybody's personal information. it was designed for a couple of professors to trade academic papers and so the kind of security that we are looking for was not embedded into the dna of the internet. this is something that from a national security perspective and from a business perspective wile have to continue to concentrate on. one of the big issues that you mentioned, maggie, that were focused on is this encryption issue.
there is a legitimate tension around this issue. on the one hand, the stronger the encryption, the better we can potentially protect our data. there's an argument that says we want to turbo charge our encryption is nobody can track it. on the other hand, if you have encryption that doesn't have any way to get in there, we are now empowering isil, child pornographers, others, to essentially be able to operate within a black box in ways that we have never experienced before.
still can't get in. we've created a process around which to encryption and the greaters needs of national security and law enforcement. and i won't say that we've cracked the code yet, but we've got some of the smartest folks not just in government but also in the private sector working together to try to resolve it. and what's interesting is even in the private sector, even in the tech community, people are on different sides of this thing. with respect to china, this will probably be one of the biggest topics that i discuss with the president.
we have repeatedly said to the chinese government that we understand traditional intelligence gathering functions that all states, including us, engage in, and we will do everything we can to stop you from getting state secrets or transcripts of a meeting that i have had, but we understand you're going to be trying to do that. that we consider an act of aggression that has to stop. we are preparing a number of
measures to indicate to the chinese that this is not just a matter of us being mildly upset, but is something that will put significant strains on a bilateral relationship if not result and we are prepared to take some countervailing actions in order to get their attention. my hope is that it gets resolved short of that, and ultimately, the goal should be to have some basic international framework that won't be perfect because there's still going to be a lot of non-state actors that -- and hacker who's are very good, and we're still going to have to have good defense and still have to be able to find the fingerprints of those and apprehend them and stop network that is are engaged in cyber crime, but among states there has to be a framework that is
analagous to what we've done with nuclear power because nobody stands to gain and, frankly, although the chinese and russians are close, we're still the best at this. if we wanted to go on offense, a whole bunch of countries would have significant problems, and we don't want to see the internet weaponized in that way. that requires i think some tough negotiations. that won't be a one-year process, but we would like to see -- if we and the chinese are able to coalesce around a process for negotiations, then i think we can bring a lot of other countries along. >> we will work with you on that too. >> okay. >> thank you. >>. >> i think thank you for that as
well, and when tpa is good, even the iran deal, really good health care standing up, all good. the place that we haven't made a lot of progress but that's really important for business and business progress is on tax and tax reform. it's almost like being backed in a corner. since you can't get a grand deal, we're starting to talk about subdeals, and the subdeals in and of themselves are destructive in a business roundtable to the grand deal. that's total tax reform. can you talk about how we should negotiate this duality that we're in right now and, you know, where do you think we're going to end up? >> we put forward a proposal early on that i'm confident i could sell to this group. not everybody would be thrilled,
but i think i could argue that over time would be good for business because essentially what we proposed was the traditional framework for tax reform, close loopholes, lower rates. we would address international taxation in ways that currently put american businesses at a disadvantage and would allow for repat yags, but would not simply empty out the treasury. and would generate enough revenue that we could actually also pay for infrastructure. howe our hope was we would get anybody nibbles on the other side. to his credit, paul ryan expressed real interest in discussions and negotiations, but your previous speaker, mitch mcconnell, has said that he is
not interested in getting tax reform -- comprehensive tax reforms of that sort done. there's still work being done. we're still in conversation with mr. ryan. i know that senator schumer and others have still been working on the possibilities of a fairly robust package. ultimately you have to try to get this done. you know, i understand why tax reform is losing because those of us who believe in a simpler, fairer, more competitive tax framework in the abstract sometimes look at our bottom lines and say, oh, no, that
deduction is helping us pretty good here, and even if this organization has been supportive, there are other business organizations in town that have some pretty strong influence over the republican party that haven't been as wild on it. partly because their view is that the only kind of tax reform that is acceptable is also one that would lower all rates my suggestion would be that the brt continue to encourage speaker boehner, paul ryan, mitch mcconnell to come up with an ambitious package.
i can assure you that the white house will take it seriously. we don't expect that everything in our original package would go forward. the one thing that we couldn't do and i get concerned sometimes that what is labelled as tax reform ends up just being cuts. you're not closing the loophole. it's a huge drain on the treasury. we are sudden lay accused of running up the deficit to help your tax rates, and we're not doing enough to help grow the economy and help ordinary workers.
>> our technology revolutions that are occurring in the production of energy or perhaps more importantly in the use of energy that gives americans i think a way to playoff and what has been a set of unprecedented challenges. what's your thoughts on that? >> tom, i think you described it well. i am much more optimistic about our ability to get a good example is just when you look at what's happened with solar. i mean, we're not quite as
moore's law yet, but the pace at which the unit costs for solar energy had gone down is stunning. we've seen not quite the same pace, but similar progress around wind. our natural gas production is unprecedented, and i have been very supportive of our natural gas production as being not only important to our economy, but also geopolitically. it's a huge recipe for energy independence. as long as we get the methane discharge issues right and i think there are ways of doing that with sound science. that's on the production side. on the utilization side, there's not a company here that is not
producing significantly more product with less energy than you were just ten years ago and certainly than you were 20 years ago. everybody here has seen the power of tracking utilization, identifying waste and timing issues around, you know, when is energy expensive, when is energy cheap? there's enormous progress on the commercial side and individual households now with things like the ekwifl ens. we're able to fine tune our energy usage in ways we just hadn't seen before. then you have the whole transportation sector in which we've continued to make significant progress in detroit as well as, you know, upstarts
like tesla. there's still some it distribution network issues around the transportation revolution, although companies like ups are doing a great job. that's all good news. i would say the big challenge now if we're going realize all the potential here is to work with utilities so that they have a business model in which they're making money while seeing this change in distribution patterns and grid. i think there's still some legitimate economic issues there that have to be sorted through, and it's tricky because it's a patchwork system. we don't have one national grid, obviously. the second thing is investment in basic research needs to
continue. battery technology is greatly improved, but we still haven't seen all the breakthrough that is i think that we can make with battery technology that would make a huge difference, and that's an exciting area for development. then i would urge the brt and some of you have done this. view the issue of climate change from the conference that will be coming up at the end of this year as an opportunity rather than as a problem. this is coming. if you talk to your kids or my kids, they are much more atune to this issue. consumers are going to be caring about it more and more.
the environmental affects that we're seeing. the lowest in the last 500 years. the flooding problems that we're already seeing in places like south florida. it's just during high tide. suddenly billions of dollars of property is under water. thinking about how our ingenuity and our science can solve these problems is going to give us a jump on everybody else, so there is a pledge that the some members of the brt have organized around supporting a strong paris agreement, i would encourage you to sign up on that and look