tv After Words Stephen Moore Trumponomics CSPAN January 6, 2019 10:59am-12:01pm EST
>> next on "after words",," economist stephen moore discusses the economic policies of the trump administration turkeys interviewed by veronique de rugy, senior research fellow at george mason universities mercatus center. "after words" is a weekly interview program with relevant guest host interviewing top nonfiction authors about their latest work. >> host: it's my pleasure to be here today with steve moore to talk about his new book, "trumponomics" and it's a book that he co-authored arthur laffer. and steve, i don't think you need an introduction, anyone who's worked in washington, d.c. but since the audience that if one is from here, you are a distinguished fellow at the heritage foundation but you can pretty much everywhere. even at the cato institute, you
started the club growth, in which year? >> guest: around 1999 1999. >> host: . you on the editorial board and you are a contributor at cnn, a regular, you're on fox before. you have been everywhere. >> guest: and you. >> host: your co-author come you in the world of taxes for a boy knew of, he was a reagan economist and use the president of arthur laffer associate. it's my pleasure to be here to talk with you today. ..
you're optimistic, you are a true believer and i've known you for a very long time and this is one of your distinguished features >> one of the things i loved, i think we as free-market conservatives are naturally optimistic. we think things are going to get better. julian simon was my mentor and his philosophy was life on earth it's better when you allow people, the free market and that's true and the left is all doom and gloom. i don't know if you noticed that, whether the world coming to an end because of climate change or we can't grow faster than two percent and i think trump is an economic optimist too, like
reagan. he thinks if you replace the right policies, people will flourish, people will get richer, the rising tide lifts all boats and those are things that are attractive to trump . >> i'm sorry you couldn't be there but i'm going to share a smallstory . until the book party i had met him in person once and it was in the 90s, early 90s in france and we were having breakfast at the intercontinental and i was a student in economics and it was like meeting a rock star and i remember he said something that stuck with me for my whole life and to this day i think about it even outside thecontext , he said to me talking about the reagan tax cuts that one of the problems and mistakes that were made was to make the tax cuts implemented at growth and it was like, i can't even remember what he was coming to but i may have implied that it was a good thing and he said it's close
enough, you tell people things are going to be less expensive tomorrow, they're going to defer investment and it just stayed with me. >> by the way, that's relevant. a big part of the book, a third of it is how we got the tax bill passed and one of the stories we tell in that book is there was a stage near the end of the tax debate and that tax law has been a phenomenal success, it's been unbelievably positive for the economy but there was an issue about whether we should delay the business tax cuts for a year in exchange for a slightly lower rate in the longer term and i was agnostic, i thought there are arguments on both sides. congress said you're making a big mistake if you do this, you're going to hurt the economy in 2018 because
people will delay their decisions and that will lead to less economic activity in the short term and he says that's one of the mistakes reagan made and why recovery on the reagan didn't start until the full thrust of the tax-cut. >> it makes a lot of sense, let's talk about the book. what is the book about? what do you think of the book is about? >> it starts from when larry kudlow and i met trump and originally it was going to be the three of us, everyone watching the show probably knows donald trump stole larry kudlow away from us and now he's the most important economist in the world but larry and i met trump almost exactly 3 years ago in late 2015 and the first chapter is meeting trump, that first meeting through the tax
fight. what we tried to do is people have, watching the show have their own opinions one way or the other about donald trump. half of the people love trump and half of them hate him, he's a polarizing figure and what we tried to do is give an honest defense. what we liked about trump, how he operates. what i thought was the good, bad and ugly about donald trump and i admire the man but there's a lot of great things about trump. he's got a lot of character defects as well and we tried to lay that out in the first-hand account but i've come to admire him. what i really liked about him, he was focused on growth and he understood you have to get the economy growing to solve all these other problems . larry kudlow and myself, that really i think is the focus of what trumponomics is
about. it's about growing and economy, putting people back to work and the second big feature of trumponomics is that trump is pro-business. he's pro-american business and i love that about him because you can have jobs, you can have growth or higher wages if businesses are doing well and that's a big change from eight years ago, 10 years ago we a community organizer as president who didn't know a lot about business to a guy who's focused on how all these public policy decisions will benefit american businesses. >> i want to talk about the man, one of the things, it was a good reminder in your book. you reminded us how unlikely it was. what a tour de force that president donald trump is president donald trump at the time. did you always see it coming? >> first of all, trump took a big risk through his reputation to do this.
i admire him for taking the chance. everybody said he couldn't win, i was rolling on the ground laughing, i thought it was a publicity stunt and i just didn't buy into it. two things changed my mind about the viability of trump, one was meeting him in person . a guy's a winner. i remember walking out of the bathroom saying this guy's got a good chance of winning. he's very personable. i always say the most politicians are wonderful people in public and jerks in private. trump is the opposite. he can be a jerk and public but he's a wonderful person when you meet him personally and that can-do spirit resonated with me. the other thing that turned me on to trump was attending his rallies area i started to go to two or three of them to see, because something was going on and i didn't know what it was you had all these other candidates, there are 15 republicans running for president, jeb bush. >> a lot of them who you
like. >> i like them all but trump was the only one i had never met but i went to one or two of these events and i was really struck by the people who were there. the first thing i said to donald trump when i met him in that meeting was donald, we called him donald back then, i don't know if i loved you but i sure love your voters and these were people who were not republican. they're not republican, not democrats. they were people who tended not to be politically active and they were people just left out of the political system and they were angry. they felt like there were people from michigan and pennsylvania, wisconsin who felt like the middle class and then left behind and both parties were not attended to what they were saying whether it was an immigration or trade or their personal economic conditions. and trump really tapped into that rage and he saw it before anybody else and i loved these people, you go to
these rallies and you see bus drivers and school teachers and construction workers and a lot of veterans. you'd be surprised how many blacks and hispanics would show up and i remember one of my favorite stories about those events was typically 30 502,000 motorcycles out to the side of the arena because trump dominated the biker vote and these were people who were upset about washington, they bought that washington had become greedy and self-indulgent and completely out of touch with america and you know, they were right. >> it was interesting because i was thinking when i was reading your book, i'm trying to think about this trump phenomenon and dale carnegie was about the greatest coach in american history and he used to say the most important thing you can do is to make the person you're talking to feel important and i wonder whether this is what president trump has done, is doing at these rallies. that the others weren't doing
. >> he was, he was attentive to what they were saying. and i think you know, a turning point in that election i think waswhen hillary clinton called these people deplorable's . look, a lot of republicans were into with these people but the left held these people in contempt. these were working-class reagan democrats who work 40 hours a week and felt like nobody was paying any attention. their financial stress, their worry about their jobs, the factories leaving, the small towns they lived in and when not nancy but hillary said these are irredeemable deplorable people, this was this kind of elitist view of liberals that somehow they know better than people themselves about how to run their lives and that's the
key to trump's victory. i didn't know that he was going to win but i knew he had a good shot at it remember, people were saying there's no way. zero chance of trump . >> the night of the election hillary clinton, the chances were 95 percent. >> one lesson i learned from the trump campaign and this is an important lesson whether you like donald trump or don't like him. this is whether in science or finance for business orsports or whatever it might be , often times in life and more often than you would think, the experts are wrong and they could not have been more wrong. every political pollster, every consultant, they all had the election wrong and that's why when people say we know with certainty something is goingto happen , people should be skeptical because sometimesthe experts are wrong . >> my former colleague ross roberts is calling on two
economists, in particular to be more humble because there's a lot of things that economists can tell you and there's even more things that economists can tell you so when we predict that a particular tax cut or spending increase is going to grow, the economy buys one point whatever percent, and you have three numbers. and you're like, no. there's the exact number of jobs, we can't. >> i'll give you an example, this has a lot of relationship with climate change. all the scientists believe, it's not true that all scientists think it's happening and there are many times when the scientific consensus has been wrong throughout history. overpopulation, running out of all these things but you read the reports about what the economy is going to look like in 2100 and it's like wait a minute, they can't tell us what yearwhat the economy is going to look like .
>> going back to the trump phenomenon, one of the things you talk about in the book is something that i have read other places. you read it when you read the book by bob woodward, the gatekeeper. every book that i've read that touches on president trump says this and all of my friends who are working for him have worked for him and what in one capacity or other they say the same thing which isyou've touched on . he has his public persona and then he has his private one and one of the things i find the most remarkable which is anchored in your book and i've heard friends tell me, he's a great listener. he's a great listener, he will focus on what you're saying and listen attentively. and if you want to elaborate a bit because i suspect our audience maybe really read that. >> he is incredibly, and he
likes to debate. he doesn't surround himself with yes-men. he likes the fact that when we told him that we were for free trade and he's not a free trader by any means, he likes to debate it out and do get out and we had a lot of fights about that and they were friendly fights they were disagreeable but we disagreed and i respect that about him. a good ceo should not be surrounded by yes-men . and ultimately, donald trump is the president and he's going to make the decision people always say he's got this this agreement among his cabinet. what's wrong withthat, you should have disagreement, there should be all sides presented . >> that being said, i agree with the fact that it's important to have people telling you different sides of the story.i agree, but he seems to have some sort of a taste for, the fighting
spirit within his administration. it's not a peaceful environment . >> there's a lot of chaos and sometimes the chaos is accepted and to his detriment but there is a lot of chaos and in his first two years, i was thinking how many of his cabinet is left at thispoint. there's been a lot of turnover. he does not suffer fools gladly. if you fail, you're fired. what was his famous saying, you're fired. he demands performance . one of the things that's been unfair about him , the criticism that he didn't pay some of the vendors and stuff that were working on building his buildings, one of the things i found interesting about trump, he's a perfectionist. he told me the story, he would go through the buildings after they were built and go through in a hotel to the bathrooms, he'd run the faucets and if something wasn't working he say this isn't working. and that's a pretty good management style.
you've got to get this right and i'm not paying and then he didn't pay me the bill, that's because you didn't deliver what you promised. >> i like him to start doing this with our budget because there are a lot of things that are not working as advertised but we can get back to this. obviously being a republican is a big test, there are questions i think about him being follow-on republicans but maybe this is what the republican party is now is president trump. i don't know, i'm not a political scientist but what are the major differences you see betweenpresident reagan, president bush, president obama . >> i get asked that a lot. there are a lot of similarities between reagan and the trump. reagan believed it belongs on not rushmore, he was one of our greatest president .
he rebuilt our economy and trump, just similarities between the two that are important, number one, both trump and reagan loved people and trump loves most people. he loves to be around people. i've seen him in every venue, he goes up to people and loves to talk. this is maybe the most important thing and liberals should pay attention because they want to be him. reagan and trump were always, always underestimated by their political opponents. you may be too young to have lived through the reagan campaign but when reagan ran for president, people laughed . ronald reagan actor ran for president? then he went on to a surprising victory. the way they are different, this is a point we tried to get across in the book. ronald reagan was ideological and i mean that, barack obama
is ideological. barack obamawas ideologically liberal. and that means reagan understood the free market. he understood the constitution . he was steeped in conservatism. he grew up with bill buckley. trump is not ideological. you and i are ideological in the way we look at our world. trump looks at the world as a businessman. he doesn't look at it this lens. because most of the things we believe are the right solution and liberals have the wrong solution, he comes around in most cases to the kind of solutions that we believe are the best way to grow the economy. now, there's two issues and we can get into this that he is really i think taken on conservative dogma and the first is on trade where he's not conventional free trader and the second is immigration where he's been in terms of restrictive in what he wants
to do. those are areas where he has conflicted with the party. >> i can think of a fewothers . i'm concerned that because there's no ideology, that he can be swayed by an argument. i know a ton of businessmen who are really bright, obviously they are phenomenally bright and incredibly better than me at making money. and yet, the level of actually fundamental understanding of economics is really just very thin. and that could be a problem now. i recognize that he can be the head of the country and not know absolutely everything but it does raise real concerns. >> i'll give you an example.
one of the things i don't like about donald trump is for example with the gm layoffs that we had recently. donald trump said were not going to give you any more money. you've got to keep this plan open and so on. i hate it when plants close, i don't want people to lose their jobs . it's a terrible thing but do we want the government to tell businesses where they can put their factories, when they can open? that's the problem. >> one thing that i wanted to ask you is should the government really be run like a business? there's no profit in law, there's no price system to tell you when you're correct or when you're not. and i can see the appeal of the message. i just am actually not quite sure that it works per se. for instance, the united states is not a company. and a lot of these analogies of the business world don't hold weight or when they do,
they lead to the wrong message. i think trade is a very good one and we'll cover trade and immigration later but so this whole businessthing , i think as a message it's great. it might be energy for sure but it does, there's some limits. and certainly one of the things i am also very wary, i worked on issues of cronyism which is the unhealthy marriage between the government and businesses and president trump for all his business acumen, one of the problems that i see sometimes is temptation. it's to go full on cronyism. it's not like friends think about fox gone, all these encouragements and incentives , particularly companies to prevent them to go settle somewhere else and we've seen that here in india with the
big fight with amazon. trump had nothing to do with this but it is really risk of being pro-business to me we get rid of these barriers to do business. and that's regulation and taxes and there's just a whole lot ofthings . president trump is going to talk about this, i think on the regulation, he's like this is an area where he's incredibly, he really knows what he's talking about. he's also doing a lot of good things but always a risk. when you say people arecruel , is it that their pro cronyism at the same time? >> a couple ideas. the government is a $4 trillion enterprise so it's the biggest enterprise in the world . bringing business principles to how we operate makes sense
to me. you don't waste money, you have a bottom line. you make sure that you only have so much revenue and you don't spend way over your revenue amount. trump has brought some of those principles to washington which i think is well long overdue. one of the things about barack obama is look, barack obama didn't know anything about business. howcould he possibly know what economic policies are going to work ? >> i think the biggest difference between president obama and president trump , one really, i don't know if it was true but listening to him, it felt like a very antibusiness sentiment . and president trump i think companies are relieved. >> we've got charts in the book that show when people say this is the obamarecovery works , what are people
talking about? under obama, the last year when he was in office the economy grew 1 and a half percent, sliding down into a recession and look what happened to business confidence, consumer confidence, literally two days after the election just went through the roofbecause people realized this guy does know something about business . when i talked to businessmen and women people asked me was the most single important thing trump has done to unleash this incredible economy and it wasn't any one thing. that businesses knew that if they were successful, the government wasn't going to come after them with a baseball bat and hit them over the head . just adding the government as much out of the way, we all want clean air, you want safe water. we want financial protections but in ways that are going to inhibit our businesses. i'm pro-business.
i'm not a cronyism that you can't have jobs about business and the problem is the democraticparty i think has become antibusiness in their outlook . >> let's talk about the tax cuts. big thing. you and i, i mean we're talking about reform and tax and it's done.i would always say the idea of in 25 years i will still be calling for the reduction of the corporate tax rate, that depresses me. i don't have to say this anymore. tell us about the tax cuts, became to be, and. >> in our first meeting with trump, we asked us to be economic advisers so the first thing he said is can you put some, he knew in general the direction you wanted to go read you wanted to lower rates and help businesses. and bring, make america more competitive so that the factories leaving would come back to the united states and we were fully on board so we
put some meat on the bones and basically came up with this idea of why don't you do 20 percent business tax rate because you know this, you've done a lot of research area and we were up here and the rest of the world was down here and there was a 20 percentage point gap. as we said to trump, this is a 20 percent tariff were putting on her own businesses . >> and the us had the highest income tax of all in the world. >> and for almost twice as high as the average. >> when your higher than the french. >> big trouble. >> we had a tax discussion so there's two things together. those were really detrimental to companies and the left is always talking about how well, the corporate income tax at home by keeping their money abroad, but it's not a solution and every investment
decision especially of that size is dictated by a bad tax and it's not conducive to first two great business decisions or two great economic outcomes. >> he was not a tough sell on that. one of my favorite stories as we said we recommending to you that you run on a present business tax rate and i'll never forget, he said i'm not goingto do that. don't you understand what we're saying and he said i want 15 percent. it was so interesting . what's so interesting is that from that day until, it was almost exactly a year ago that that bill wassigned into law and we got the boats we needed . and i remembered mitch mcconnell coming into the room to see the president and he said i'm sorry mister president, i couldn't get 15 percent, would you take me? absolutely i'll take 20. trump is a master negotiator. he understood something larry and i didn't. he started at 15 and
negotiated up because if he had started at 20, there's no 26 percent. the other thing trump did i want to mention because it's important on that tax bill. every time we bring this up he said what about the 26 and a half million small businesses? he said i want to make sure every business man and woman in this country gets a tax cut so this has been mislabeled . there's this big giant tax cut for the large corporations, every small business that had a tax liability has gotten a tax cut and that's where a lot of the juice to the economy has come and we did the repatriation we allow businesses that have money overseas to bring it back at a low rate and that's coming back, half $1 million of money that come back to build factories and the investment here . >> there's a minimum tax, one of the changes that were made is to have a minimal global tax. >> i believe there is. >> we got rid of, there's
only elements. we got rid of the corporate alternative minimum tax. but you know, for businesses it's been a very positive thing. we're seeing money come back to the united states, a lot of business investments and the most important point and this is something thatlarry always , larry kudlow said to trump all the time and trump now says it all the time because it's true. when you cut taxes for businesses, it's a middle-class tax cut. how can that be? when you get businesses investing in this country, they're going to hire more workers, data more, their productivity is related to business investment and if you got a truck company that has 18 trucks and all of a sudden they had 20, they have to hire to our truck drivers so it was oriented towards getting businesses healthy so they can hire more workers and incidentally, today in america we have 7 million more jobs than we had people
to fill them, that gives workers a lot of opportunities to bring their wages up . >> it's a point that's worth repeating that the corporate income tax rate is not just a giveaway to businesses. the economic research shows very clearly that it leads to more capital investment which leads to more productivity and leads to higher wages. and the economic growth means as you said more jobs but also the jobs that exist are going to be higher-paying. is this something that is counterintuitive i think for people and i was just really sought during the fight. >> liberals say this is atax cut for rich people . that's wrong. we did a study at heritage finding the average american has gained $2000, the average middle-class worker seen a
$2000 after-tax increase in their income and when you include the increase in the salaries they're getting, we estimated $3000. if you're making a family that making 50 $80,000 a year and you get an extra $2500 a year your paycheck, that's a big deal. i don't care if nancy pelosi says that's a problem, it is a problem and it's one-story. i was in dallas a couple months ago walking down the street and this latino woman walks by me and she grabbed me bythe arm and says are you the one that talks about economics ? and i said i smiled and i said that was me, i wasn't sure if she was going to slightly and she said i did not vote for donald trump and i said i don't even like donald trump but she said i got a $2000 bonus from my employer. she said for the first time in five years, i able to take a vacation. that's the kind of thing that means a lot to a middle-class family. >> i'm sure and i in fact, after the tax plan was announced that it was a done deal, there were all these
ways of bonuses across the country. increasing paid leave, that's all of these stuff and it wasn't in my opinion, it wasn't at all the tax cuts already working per se. but it's the optimism. people felt good about the future. let's talk about the individual flight of the tax plan. >> on the individual side, you and i have known each other a long time, we love to see a flat tax . get the rate down as low as possible, we tried to do as much of that as we could. and if there was an area where we fail, it was that. down the special interest groups and trying to get rid of all the loopholes is a difficult thing to do. we weren't able to get rid of the mortgage reduction, the charitable reduction. a lot of the special interest loopholes that have been
grafted the tax system, we got rid of some of them and i'm glad that no longer can people in very high tax states deduct their high taxes because if you choose to limit high tax state, i would say ifpeople in new york are surprisingly, i can invest my high tax anymore . you want to live there and why should somebody living in texas have to pay higher taxes so you can have higher taxes in new york -mark limited that to $10,000 for household and that's a very positive thing and we got the highest tax rate down. we cut the rates by about 10 to 15 percent including the highest rate which we got down from 40 percent to 37 percent and small businesses tended not 20 percent of their business income off their taxes so their rate is effectively closer to 30 percent. >> with the state and local tax deduction, we saw this weird political moment when the democrats in high tax states were complaining that their richest taxpayers
weren't going to be deducting their taxes and that their tax bill was going to go up. it was bizarre. >> this is a great point and i want to explain this to the viewers of the show because if you're liberal, you have to understand this. one of the things we did in our tax plan, we don't what's called the standard deduction. check off the box and you get a better deduction, i think around $10,000 or you can go through and itemize your deductions but what we found is almost 90 percent of americans now are better off checking the box and you don't have to keep all your receipts, you just check the box so the only people with a few exceptions itemizing their deductions are people in the top 10 percent of income and most of those itemized deductions go to the top one percent so when liberals say they want to bring back the state and local tax reduction, what they're saying is they want to bring back a tax deduction for the richest, vast majority goes to george soros
and bill gates and really richpeople. so i thought liberals said they didn't want to get a tax cut . >> so you brought up this standard deduction and i'll tell you, i wasn't a fan at all of the individual side. there werethings that i like . and it's important for people to know that a vast majority of the income tax because we are talking here about the income taxes paid by the top 10 percent of americans. 70 percent roughly. 17 percent of the income taxes are paid by the top 10 percent. income earners. and what i didn't like and really what i think was a big mistake, again. politics is not my thing. i can understand why you would do it and you talk about it in the book. why you would do it for
political reasons but it was a missed opportunity, talking about the middle-class tax cuts. was just nonsensical but the middle-class when it comes to the income tax, 50 percent of the whole thing and that was the standard deduction, essentially what it means is you take even more people out of the tax rolls . >> i get it but economically it's a bad idea and then on top of that, the price you pay in terms of trade-offs, economic trade-offs is you are not getting the biggest bang for the buck in terms of economic growth. now again, the politics, there's the politics, i get it but the rhetoric also bothered me. it was not just bad economics but also the rhetoric was problematic. >> just to defend doubling the standard deduction.
i think that was a positive thing to do because what we're trying to do, conventionally i want to move toward a flat tax. no deductions, everybody pays 18 percent and the only deduction you get is for your kids and yourself and you have a great system where it's very simple. rich are going to pay their fair share because they're not going to shelter all their money and what we tried to do by doubling the standard deduction that 90 percent of people don't have to itemize is to take away the political constituency for these big loopholes and now if we do another round of tax reform in the direction you and i would like to see, it's going to be easier to get rid of those remaining loopholes because only rich people get them. we have to alert the middle-class, get rid of all those deductions because it's only the people like jeff based those who are getting them but of course there are political decisions made all the time. we had to fight to get the 50 votes in the senate and it
was dicey, we didn't know until the lastday , it was almost 3 days before christmas whether we have the votes to get it. you thought on obamacare we came one vote short in the senate. we were terrified. we needed to get this done because the benefit to the economy would be so enormous and notwithstanding your points, i'm proud of it. i think it's one of the most pro-business pieces of legislation we got in 25 years and so far the results have been unbelievable. we got massive job creation, lowest unemployment rate for women, blacks, hispanics, the construction boom and people feel it every day and this wasn't the obama recovery. we've increased the growth rate from 1 and a half percent to 3 and a half percent in two years and that was a heavy lift but was the tax cut was a big part of it as i said, i think the corporate side, i saw the individual side as a way to sell. >> the way i put it is when reagan reformed our taxes system in the 80s, when the
highest income tax rate was 70 percent, he brought it down to 28 percent and the economy boomed. the problem then it was more on the individual side. the biggest problem we had when trump became president was a business tax system . you wrote a lot about this. we had the worst business tax system in the world. now we fix that, you're right, we didn't do a lot to fix the individual side but hopefully there will be another crack at it. >> we're going to talk a little bit about taxes later in the context of government spending but talk about deregulation. i will say, i had been a vocal critic of president trump whether it's on the tax cuts for trade and immigration but i will say this, on deregulation, we've been an incredible champion
to be in the american economy and the thing that's important to note is that fundamentally the president when it comes to regulation, he doesn't have a ton of power and yet he's been using every single tool in his toolbox to actually do what he could do. starting from day one, calling on congress to repeal the biggest regulation that came out. can you talk more about this? >> i'll tell you the story, when the three of us started working for trump, laughter and i and larry kudlow during the campaign, one of the first things he did was he had i think he called it his business roundtable and those were about 30 ceos of major companies, men and women who run great companies and these are construction companies, energy companies and so on and it had a big impact on me and a big impact on him,
trump went around, he asked every business man and woman what is your biggest problem? i would've thought they would have said the tax system. they didn't. they said the red tape and regulation is strangling us. under obama got worse every year and that's why the growth rate was so low because businesses stopped investing . if somebody going to whack you over the head if you invest, they'renot going to do it. from i think having impact on his thinking and the fact that he's a builder . he's dealt with the super regulations i remember watching him on tv one. i'll say this honestly, it's the first time where he was talking about economic issues and i was like, he gets it. on a very profound level. he had a banner made withall the licensing stages . to build the building, remember that? it was quite striking and he was explaining things like their licensing requirements
that make you get to in a row and then to get the third one, you have a mandatory time of nine months to wait before you can even apply for it. and all these incredible requirements. >> remember what he said in his state of the union speech. using examples is a great thing and he said to get a permit to build a road and take 5 to 10 years. that's ridiculous. you need a road and where you have congestion, you can't build it for 5 to 10 years? another example was obama past this climate change legislation that essentially just was in its intention was to destroy the coal industry
in america. we have 100,000 people employed by the coal industry. we get one third of our electric power generation from coal, you're going to strangle this industry with these regulations that are almost impossible to comply with? in that case, they knew the coal industry couldn't comply, they knew it would bankrupt the industry. you don't want the government bankrupt and industry to fulfill political objective and you can tell those stories hundreds of times the last chapter in the book is called a light switch is flipped from off to on and it's kind of after trumps year anda half in office , i got that from a guy who was, who runs an auto repair shop outside of cleveland ohio and he has about 20 employees and i said jimmy, how's the economy doing? how's your business doing . and they said this was about
six months after the election and i'll never forget this. he said steve, it's almost like the day after the election, a light switch was flipped from off to on and ever since then he says i've had more business than i can handle and that's unleashing a fact of businesses knowing it's going to be okay. they're not going to get whacked by obamacare and i can't tell you many times businessmen and women have told me similar stories and that's why we got a strong economy now . >> we can sense the optimism in a lot of places but i want to go to the three issues that you barely touched on them. they're the big missing part of i think, trade and immigration and next month there's going to be $22 trillion, $22 trillion, when president obama was in office was almost 11 trillion so it means in 11 years, uncle sam has accumulated more debt than its entire history and it's only uphill from there. and you make a mention of this that there's not enough spending cuts and in fact
there's really not and in this sense, we're back to the reagan years, to the bush years where everything, every spending cuts, every fiscal responsibility is taking a backseat in the name of defense spending and it's still surprising coming from donald trump who he actually reasonable, you have things where you talk about how he's frugal and really, it comes through. >> several points, you exaggerate but that's way too large but just so your audience knows, from 2018, the first year of this biggest asset since ronald reagan, federal revenues into the us government were higher than they been inamerican history . i know you know this but it's not a revenue problem. the tax cuts, we had grown the economy and we're getting the revenue in.
>> it also goes to saying that while not all at least as i suggested, not all the tax cuts are going to pay for itself. it's not a problem, it's a drop in the debt. >> i'll get on the spending, the congressional budget office has already revised the economy so much over the next 10 years that we've recouped about two thirds of the cost of the tax cut but the spending is out of control, no doubt about that. trump made a terrible decision where he said i want to spend more money on the military and i'm not going to debate that because i'm not a military expert but the only way to get democrats to go along was to spend more money on social programs. we got $3 billion more on both of these programs and that led to the upward spiral and then debt. where trying to get him right now to do a war on waste and go through every nook and cranny in the government and get rid of the inefficiencies
. >> but waste is where the money is . >> but particularly medicare, his administration is seeing a lot of reform on medicaid in a way that serves a population . but medicare and social security, they are two areas he said he doesn't want to spend and to be fair to him, the republicans don't seem to have any interest in reforming social security. >> the democrats don't either. >> the democrats are not even -- they want to extend everything but there like the driver of our debt and it's going to be less growth and higher taxes for everyone.
>> if you go to the economy, you can pay for social security and medicare . we just need more growth and one thing is for sure. we showed him this curve. here's the debt, you percent growth that the cbo has and if you look at the debt with 3 and a half percent, it goes down so who else is going to be a component of that? i don'tthink trump wins the election if he said he's going to cut social security and medicare . there's no question democrats will run the ads of the wheelchair over the cliff and then you would have nancy pelosi. >> it's a catch-22 because no one wants to do it. and then when they're in office, there's no way. >> and it's not good. >> nobody want to put their big boy pants on and say we've got a big problem. >> people don't really recognize and i think republicans don't recognize this is that if you value your tax cuts, you'd better
start cutting spending. look at france, look at what's happening now. when you have. >> their writing in the streets. >>. >> the thing people don't understand is that big government have very regressive taxes so the french have much more regressive income taxes. they have much higher, exactly. have a value added tax that's about 20 percent. they have to social taxes, seven point higher than we do and these are regressivetax cuts . and the thing is, we're not keeping those tax cuts if we're not even, if you're not cuttingspending . >> trump has to do it, i wanted him to start legalizing the spending bills. pelosi will be speaker in less than 30 days and we should see some fights on spending, he should do that. the amount of money were
spending for a country that's $20 trillion in debt is completely outrageous. >>. >> you much government spending is going to kill growth and growth is important . >> the true cost of government is how much it spends. >> now trade negotiations, you said your students of julian simon. he who believes fundamentally, he wrote about this. >> people like you coming to this. but it's not people like me, people who come to immigration, you've been such a vocal advocate for immigration. as the ultimate resource. so i'm very surprised.
has he changed? >> it has changed a little bit. we need more immigrants in this country, we need more legal immigrants. we don't haveenough workers to fill the jobs and we call need what larry calls the brainiacs . anybody who wants to work and wants to come to this country, i'm all for it. especially the trump voters made it clear and i talked to them, they don't want to do anything about the legal immigration system and increasing the visas until the border gets secure.i'm with them, let's get the wall built, let's get the border secure. this idea that you have sanctuary cities and catch and release and you can get rid of the border patrol, that idiotic. if you're going to come into this country, you have to come legally. if you can get the border security done and it can get done in 2016 and i think drop trump was open-minded to have built and legalized a lot of these kids that have been in the country but also allows us to expand legal immigration.
>> but most people who are illegal come here legally so i don't know that the wall is going to help that much but we also see our job as free market economists, there's so few of us who are in immigration for the greatness that it does to a country and i think it is -- but then you have to reform the system to allow all these. >> we should be selective in who we bring in. for example, i'm opposed to immigrants bringing in their elderly parents. not going to be a benefitto the country . >> in your mind it's not a high scale low scale. >> it should switch toward more high scale immigration. >> there are things like low scale immigration -- >> high skilled immigrant is going to bring more to the country than low skill. >> they bring in the benefit by allowing americans who are
here in the middle-class go those of the latter. >> the merit-based system that trump wants to move through where you get more points if you have skills, if you know english, if you got the balance that we need. every other country like australia, canada, they have that system and it works well for them, why shouldn't we move in that direction? >> if we get the taxes in line, everyone is what going to want to continue coming here.so it's better. >> i get people that say trump hates hispanics, you've got all these hispanics at the border trying to get in, how bad can our country be if everybody wants to come in here? >> and finally, trade. we know that fundamentally, the benefit of trade is unilateral. we would love it if there
were no trade barriers around the world but ultimately, >> your in favor of unilateral free trade. i'm not. i used to be but i'm not anymore. >> the economics is clear, look at hong kong. hong kong is all euros and it's for duties. and it's not. >> wouldn't it be better if, when the optimal outcome be that both countries have zero tariffs. that's what trump is in it for. he's using tariff's as a negotiating tactic. it's just a truism and it's in the book. these tourists are lower than every other country. >> canada has lower tariff's and there are other countries that have lower. >> they're slightly higher than we are. >> also the current state of
the world right now, because of this tactic is that we have higher tariff's on a lot of things. >> i'm optimistic that trump is going to win. i'm against the steel tariff's and auto tariff's, i agree on that. the big deal that americans should be concerned about is china andmy opinion is china is a new soviet union, their out-of-control . their human rights, the fact they steal, they teach, they live, all these things we can't live without anymore and it takes tariff's to get them to start to behave themselves and stealing and cheating, we ought to do that . >> a fundamentally arepaid by americans . >> there also paid by chinese companies. >> it's hurting us and it's interesting when you look. >> you think they were just not letting china continue to
do it? >> i think there's no silver bullet ever. what's important is there are different ways. >> like what? >> i think this was a good way using all the data. >> we benefited from this because that was the highest level of complaint against the united states and the data shows the united states complies with china. >> are you kidding me? >>i'm not kidding you. >> china has massive violations . they haven't been upfront about anything? >> there's a study at cato looking at the wto. >> i've looked at the data . american men and women can't do business in china.
>> there hurting their own people. >> but they're also hurting our companies. >> basically, we're imposing high taxes on americans. they start treating their people write. and the jury is out. >> i'm optimistic. trump is using leverage here and i think it's about time. every country lose access to america's market to grow, especially china. if china says you're not going to have access to that market until you behave yourself and creating a level playing field, opening up your markets to america, do you think they should be able to steal $300 billion from our economy? >> the way to go is not to attack, have the exception of the commerce department for all these tariff's, their heartbreaking stories. you're like, we always talk about the consumption tax and you know what? workers and the manufacturers in america they're treated
well and it is so hurtful. >> here's where i disagree, i think trump is going to win. i think china is going to for, we're going to get freer trade system with china as a result ofwhat trump is doing they'll reduce their tariff's . >> they're going to do the minimum they have to do and the problem is the mental taxes are still going to be there. >> i agree with you, those are hurting america because there making america -- >> i don't think it's going to be a good strategy but i'm just an economist. >> there's a lot of truthto what you say and i'm a free-trade guy but i think china is a different case . china is so problematic. >> that's what people use to say about russia. >> we didn'thave free trade with the soviet union . >> it's a recurring year and
i think punishing ourselves, i don't think it's the way to go. that being said, i am so glad we had that conversation. it's a really interesting perspective. >> i know this from larry kudlow, he was the silent partner in this book . he's fighting for zero tariff's. he's basically saying any country that wants to come to the united states, we will cut tariff to zero. wouldn't it be ironic if donald trump who said protectionist policies led to more free-trade, not less. i'm hoping that but i can't guarantee it. >> thanks so much for this conversation, i rarely get to have you to an entire hour for myself . >>.