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tv   Politics and Public Policy Today  CSPAN  May 3, 2016 1:49pm-3:50pm EDT

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verification of what they actually needed to look for in the product they had purchased, oftentimes online. these collaborative efforts increased overall awareness of the safety risks that was really involved in arguably one of the hottest toys that sold last year. a major objective of phmsa's hazardous material safety program is to maintain a global system of hazardous materials regulations that enhances the safe and efficient movement of hazmat from oil to batteries that power everything that's we just talked about, including your phone. they literally cross every border, every jurisdiction, and all international boundaries. the u.s. is a leader in international harmonization. working to set global compliance standards and risk identification and development of safety controls and to insure regulatory consistency. it was these safety stands that
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alerted us to countries -- and countries all over the world to stop the faulty batteries, stop the use of these faulty batteries that had been used in the hoverboards and really to make sure that they were our challenge is a to lead in our environment and create a regulatory atmosphere where it can flourish and protect the people's safety. our regulated industries have experienced a series of accidents and incidents that have resulted in heightened attention scrutiny and skepticism about the safety of these modes of transportation. public opinion is clear, there should not be any trade of yfeds we move products.
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and everyone has a part in protecting the communities and the environment living along these transportation routes while effectively advancing safety of the products and services that we all rely on. the national gas well leak in california last fall was the largest methane leak in u.s. history. this failure at this facility, one of the most critical for energy supply in the area in southern california not only had a disruptive effect and a direct impact on the people living in and around that area, it also brought heightened attention to inconsistencies in the state standards that currently regulate underground natural gas storage and the very real consequences of not investing in our nation's aging infrastructure. i toured ali sow canyon earlier this year with secretary moniz and it was clear to both of us that there were many lessons to
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be learned. last month the department of energy and the u.s. department of transportation specifically phmsa announced the creation of an interagency task force on national gas storage safety. as part of the work of the task force, phmsa is moving forward with regulations for under ground natural gas storage will which provide minimum safety and operating standards for all states and improve oversight of interstate facilities. at phmsa we work on behalf of every american. no matter their zip code. their background, race or gender. accidents are not an acceptable part of doing business to the american people and nor should they be. that expectation is the foundation fur for our work and that's what drives us to execute our mission, the responsibility. >> when i started back in august
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2015 u having been nominated by the president and confirmed by the senate, coming in it was extremely clear to me that the mission of the agency is indeed expanding and our work is actually more critical than ever. in the last year alone, the agency has made some significant accomplishments. we finalized major regulations for the safety of crude oil transportation by rail. and to prevent excavation damage. one of the leading threats to pipeline safety. we've proposed new regulations for hazardous liquid and gas appliance and reauthorized the hazardous materials program for the first time in ten years. and now we're fully engaged in the reauthorization of the pipeline safety program, currently pending in congress. we are hard at work to engage and address the risks that our
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dynamic environment presents and as we look to the future we are investing in the agency's growth, both in the size and in capabilities. so make us the most innovative safety agency in the world. one that actually leverages our predictive capabilities to enhance safety. so better understand our current operations we undertook a purposeful and critical organizational assessment am phmsa. we looked at the entire agency to take stock of not only our existing capabilities but also assess the efficiency of our processes to better understand our culture. and to develop an investment strategy that really is forward-looking and looks to the future for what we have to do for our mission critical capabilities.
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the reality is phmsa is in a fundamentally different place. we are growing. because at the bottom line our mission is growing. and with advancements in technology, we are going to continue to grow. the administration, the congress and other key stakeholders are all recognized and support the importance of our work. in the last two years we've had significant investments alone from congress. both in terms of people and in dollars. we've grown our workforce by 25%. adding and filling 122 new positions in the last year alone. even with these increases however we anticipate the scope and complexity of our safety mission will continue to outpace our ability to add resources, requiring the agency to fundamentally rethink how we use data, information, information and technology to achieve our
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goals. while our hiring surge has helped us put more inspectors in the field, our long-term strategic framework known as phmsa 2021 drives and will drive our organizational and investment capabilities. this is based on the core principles of safety, trust and innovation. and reflects phmsa's goals of being more predictive and data driven. to that end we are making important organizational changes that will impact the way the american people and our regulated industries interact with us. we are also establishing a cross-functioning office of planning and analytics that will allow us to better leverage data and develop a more forward looking regulatory agenda, one that looks at results in a more timely, data informed and economically rigorous way so that we can better inform our rule making.
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our investments in research and development will enhance our ability to understand and learn from incidents. while also embracing innovation and fortifying the indelible link between new technology and new opportunities to increase safety. and because we know that public education and emergency preparedness is vital to reducing emergency tpgs incideinciden -- we are investing in education and outreach functions so phmsa's technical assistant programs can engage stakeholders locally in their communities and providing resources to our emergency response partners. like the training that we just i should -- the framework is a bit of a train the trainer concept.
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it looks at providing the best practices for incidents involving flammable liquids and gets directly to emergency responders in their communities allowing them to replicate the training directly. we also the guide book and they literally carry it on fire trucks and use to it understand exactly what kind of hazardous material they are dealing with at any time. and it's also in a mobile app that's in three languages. it really does help emergency responders by learning immediately how to manage hazardous transportation incidents within the first 30 minutes which is very critical in any accident. phmsa 2021, implemented as a whole will transform us as an agency. it will enable us to better leverage data and research to develop a more proactive
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regulatory agenda and ensure meaning f meaningfulness. it will also establish processes to develop rules in a more timely and efficient manner and empower us to discover the full scope of options and enhance our own capabilities as well as provide additional program consistency and continuity. so phmsa is looking to better structure ourselves to become the next generation safety agency. and these changes impact you. you should want a regulator that's informed. predictive. anticipatory. and we want to be that regulator. phmsa 2021 providers us with a faungs foundation to do exactly that. as we invest in ourselves to advance safety we support smart
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strategic investments in industry as well. advancing the culture within the pipeline and hazardous materials seconds is the next step. systems integrate modern systems creating standard operating procedures that are grounded in advancement of safety. as part of the company's operational structure sms takes soo into account the culture of an organization, alongside its systems, rules procedures and it really does account for that human behavior, that human factor, in decision making and really making to mitt get risk and advance safety.
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providing greater organizational insight. it requires leaders to champion safety and allows employees at all levels to raise safety concerns. for phmsa this means investing in our predictive analytic capabilities, improving integrate verification procedures and advancing performance based standards. for industry this means creating a culture that allows for non punitive reporting, as well as developing and adopting a platform to share and analyze data in a no fault environment. so that the industry as a whole can identify emerging trends and address risk before an incident or accident occurs. this can be done while still protecting proprietary interests and there is a compelling business case to be made. only when a major cultural and operational shift has taken place, beginning with us at phmsa, where we know if, you
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know, we have to actually walk the walk if we're going to talk the talk. only then will we actually truly see a marked improvement in safety. and yes. it really is an investment. it is an investment of industry's time, and money. and of ours as the regulators. we really need to focus and look at internal capabilities as well as external capabilities. but the payoff is really enormous. and it really is the next level of safety that needs to be invested in. look at the aviation industry. there were an unprecedented number of accidents in the 1990s in aviation. and recognizes there was a problem, the aviation community, to include the manufacturers, pilot, carrier, regulators, they created a partnership and began to share data. inspection and repair data. pilot log, and all different sorts of data. they chose the collaborative framework to partner.
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analyzing data and identifying emerging risk. ultimately changing the safety culture and resulting in management systems that truly did enhance overall safety. thankfully the aviation industry has not seen a large airline crash with major loss of life in almost 15 years. the industry is reaping the benefits of their investment, and so are passengers. because they know when they get on a plane they are not just trusting a pilot to get from point a to point b, they are trusting the entire supply chain who's absolute focus is on safety. and the pipeline industry is learning from other modes of transportation. in 2015 is mesh petroleum substitute released 1173 recommended practice. rp 1173 provides guidance to voluntary implementation for all pipeline operator, big and small. we are now urging industry to
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implement safety management systems purposefully, and really tackle it head on. all three versions of our pending pipeline reauthorization bills contain language that would establish a working group to consider developing a no-fault information sharing system to encourage sharing between the industry and lessons can be learned and we can work to address emerging risk. it is time for the industry to lean into this commitment and for operators to change their safety cultures and adopt new management systems. this is truly the next level of safety for the pipeline and hazardous materials industries. it is phmsa's mission to make
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the american public in the removing of the hazardous materials so they can use them and never worry about the process that got them there. in we're in a growth in mission, in opportunity, growth in size and there is no part of our opportunity we feel complacent. we're investing ing iing in al functions to prepare ourselves long term. phmsa as a whole must be prepared to respond to our changing environment. and we have the team to do it. one of the most profound results of our organizational assessment. and one that i'm actually extremely proud of quantifies the shear dedication of our workforce. our almost 600 employees are dedicated public servants who feel a personal responsibility for your safety each and every single day. they are an incredible group to
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lead and i'm inspired every single day by their drive and i share their incredible commitment. in the beginning of my career when i worked at the national transportation safety board, my very first accident launch was the value jet 592 crash in miami. the aircraft went down ruffle 10 minutes after takeoff. claiming theoughly 10 minutes after takeoff. claiming the lives of everyone on board. cause of the accident was not mechanical. expired oxygen containers were placed in cargo hold without proper packaging or labeling. the investigation revealed that these oxygen containers packed in regular boxes with only a layer of bubble wrap to protect them started a fire and produced a chemical reaction that allowed this fire to sustain, burn,
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explode and ultimately destroy the plane. this experience was foundational to my understanding of safety, as more than an idea but rather as a process that can be implemented, developed, learned and continuously improved. and there could not be a clearer introduction into how critical proper hazardous materials transportation is to our overall greater safety landscape. i witnessed firsthand the devastation that accidents and transportation can cause. both a loss of life and the lasti lasting impacts to families and communities. so when i was asked to serve as administrator of phmsa i was not only honored i recognized how critical it is that this industry be prepared to tackle today's challenges as well as our future challenges. i hope they have left with with
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you the same sense of urgency and optimism that i feel for phmsa. thank you all very very much for your attention. and i appreciate the opportunity to join you today. >> thank you very much. that was a wonderful overview of all of the different things that you all do at phmsa. and i appreciate appreciate you taking the time do that. i neglected to mention at the beginning. with we had a slight change of plans. we have to let the administrator go at 2:30. so i'll make my part of this conversation short so you can ask questions and we can get in a little discussion. i did want to say as someone married to a first responder and deeply connected to that community, very much appreciate the additional guidance that you have given that community to dealing with safety incidents. i also never thought i'd be involved in a conversation that included wd 40 and whipped cream
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at the same time. so that was interesting too. [ laughter ] you noted a couple of times you guys are in the midst of getting your reauthorization. so congratulations and i hope that goes well. you but also is have a very large agenda on your plate. and anybody involved in the energy sector knows you can't take a break from all of the things you are doing to enact large institutional change. so it is a very, very tricky and complicated thing that many people in our industry have to do. and both from a private sector standpoint and on sort of the regulator and public side of the equation. you laid out a lot of things. what are the key things that you need -- that you need to be able to get to to be that predictive, forward-looking industry that you are looking to create? >> thanks sarah. i think one of the things that's most critical here is we're looking to make some key organization organizational changes that really do impact the structure of phmsa.
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and in particular creating a office of planning and analytics. that office is really designed. and the thought behind it is to really focus on three main areas. one, strategic planning. two, data and analytics. and three economic analysis. because basically as you take data. and we collect an enormous amount of data at phmsa, across the board. what you want to be able to do is make sure that you are using that data to inform your rule-making. make sure that we've got the right regulatory regime in place. that it is also funl informing our economic annaalysis, so our rule making is informed and consistent as possible is because we're taking resources from across the anls, leveraging those capabilities and.
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>> that is really the construction of it. to look at the policy, strategic planning and regulatory picture. >> and will you be looking to make some of that analysis and data public and well-understood? because we repeatedly in the sessions that we hold here hear from people about how data is really the currency of trust for them. right? really enabling them to have good stakeholder average and also a big part of what you need to do. >> it is also a big transparency factor. we collect an enormous amount of data. a lot is posted on our website already. we try to be as transparent as possible that. said, there is opportunity for us to actually display that data, visualize it, analyze it. and assess it and inform not only our stakeholders but
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ourselves as to what we're finding. and how that might be better used for regulatory purposes. but also risk -- identifying risk. >> you mentioned you have a lot of things on your plate. so it is hard to pick and choose which ones. but you did mention the natural gas task force, setting minimum standards in terms of natural gas storage facilities. i know the canyon has been on the minds of a lot of people and as california heads into the summer time figuring how to meet the energy demand. can you tell us more about the broader activities of that task force and what you hope to gain from it? i think a lot of the work in looking at existing infrastructure here in the united states and understanding how different states and loikalities deal it with is something that there's a lot of interest but not a lot of understanding.
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>> i had the chance to be out in aliso canyon. it was really quite informative. it brought home this concern about aging infrastructure that we have. and there's been a lot of work done both in the industry and by the states to look at under ground natural gas storage for decades. but i really do feel like we have an opportunity now to set some minimum federal standards. so look at the regulation of under ground natural gas storage addressing potentially some of the concerns on aging infrastructure. recognizing that there are very vastly different geological forms out there across the country. but recognizing that the work that's been done accounts for a lot of that.
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and we have a way forward. i think there are going to be more lessons learned. the great thing about the department of energy being at the table is that they are leveraging all of the work from the national labs. so you have got multiple different labs, at least i think five different labs that are involved in this task force where they are collecting data. they are conducting workshops around the country to better understand not only the operational content of underground natural gas storage but some of the geological features and other things. so you are bringing in expertise and they are helping inform our rule-making as a result of this a and looking to see what are the potential next steps looking at down the read. >> do you have a time line established? >> it's fairly aggressive. i think six months. >> yeah that's what i thought. i didn't want to bring it up --
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>> ha ha ha. no pressure. >> [ inaudible ]. >> ha ha -- in everything. >> so other work you have out there pending is a natural gas transmission pipeline safety rule. and then you just announced something on lng safety workshops. can you tell a little about what you are looking for and public comment and participation in those items? >> so we published our notice of proposed rule-making, nprm, on gas. very proud that we're able to publish it as an nprm. we put out an initial 60 day review period and looking to make sure we host some forums around the actual content so that people have a chance to come and share some comments directly with phmsa. we've been trying to host --
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schedule some webinars so that we can actually collect stakeholder feedback moving forward. i realize it is a very dense rule. it is over 500 pages. very competenrehensive. but we really are looking for comprehensive comments to come back. those who are interested, i encourage you to submit your comments. share them with us. and then we'll look to actually hold an advisory committee meeting and resolve any outstanding issues through that process and look for final rule on gas transmission. same thing on the hazardous liquid rule. >> i promised to open it up to questions. please rate for the microphone. we are being web cast and aired. and then also name and affiliation please, if you could and then question in the form of
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a question. >> i'm mittsy worth with the naval potato graduate school. so thrilled i heard your story. because to be quite honest i didn't know it existed and my concern is the american public doesn't understand what you are doing. think how angry the public is because think don't have stories they can understand. i have a whole series of things i want to ask one about mainstrea maintenance. that was not a word i heard you use. i would suggest you set up some contests for people to write these stories for non experts. put them online. they have to be visual. for students to learn this. and they can then educate their parents. but everybody's overwhelmed with
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what it is we have to know about and learn. and nobody has time. so the question is how do you make it clear, concise, compelling and everyone caring? because by god what you are doing is important. but our whole infrastructure is a mess and they don't even discuss that, whether it's roads or brings. they are going to close memorial bridge for five years. and nobody thinks about what will be the traffic congestion in washington and what that will do to the number of hours trying to get there. this is all a piece part of a much bigger story. thank you very much. >> thank you. >> good question on communication and these challenges. >> great suggestions. thank you. >> i'm jenny mandel with energy wire. i was interested to hear you say you wanted to not dramatically step up your agency but dramatically change the way you work with data. can you tell us a little more
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about what it is you want to do using data and how it's different from other regulatory agencies? >> we do a lot of work already. obviously data is our bread and butter. the question is how can we better organize ourselves internally? we've conducted an assessment of just our data alone. and like i said. we collected an enormous amount of data. we've engaged labs to give us recommendations and how we might address any data gaps. moving forward we would be actually looking to see how we can better structure ourselves to make sure we are using the data that we have, effectively identifying it. informing it making sure it is as up to date as possible. and also matching that very well can our economic analysis. so that data is actually better
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informing our economic analysis. oftentimes we do that as the regulatory agency. but the question is how can we do it better? and what we're doing is bringing some additional expertise to the table to help organize, structure and streamline our process for doing that a little bit better. >> and maybe -- will you need any additional authorities or data collection capabilities? one of the things we were talk about ahead of time we do a lot of work energy information administration and they have found small tweaks in the way they have been collecting information or better information between how states collect information and what they ask for has helped them really keep up with what's changing in the industry. do you have similar types of collection and/or types of data issues that you are going to face? >> i think one of the other areas that we have opportunity
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and as, you know, phmsa conducts inspections for interstate transmission -- or interstate opportunities. the states actually do a lot of the work internally on the intrastate side. so bottom line is we have an enormous amount of inspection data that the states actually collect. and being able to have literally i.t. systems that talk to one another. one of the things that we're looking to do right now is further invest in platform actually, make all of that information sharing become a little more real between the states and us as the federal regulator so that we're sharing some of that operations, maintenance, inspection data a little more directly but also it's another platform to also shep the states. some of them are still looking to invest in their own procedures themselves. so if we're able to help them it
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also helps the federal regulator and bottom line we get a much better picture of the overall operation of any given pipeline, any given company if we're able to have that data inform our inspection process. >> it sounds as if you have got a lot on your plate already. and also that your main thrust as far as methane emissions are concerned is in natural gas storage. what are you finding in the states which have regulated this up till now? and do you expect to have a lot of conversation with them about this? >> thank you. absolutely. we've had over the course of time an enormous amount of conversation with the states. the states actually participated. i think there were upwards f ten
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states that participated. they participated in the recommended -- the standard setting committees that develop the recommended practices that api published last fall. so you had state coordination at that level. you also have literally every day we work with the states. we have an entire state program that is devoted to our work with the states and how we invest and provide grant -- making money so they can actually carry out their program on behalf of the entire system. but with -- in particular with regard to underground natural gas storage there's been probably two decades already worth of information, study and
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sharing. and now with the recommended practices that have been developed, the question now is how do we bet set some minimum safety standards that could be national in nature? and then recognizing that any state could of course go beyond those minimum safety standards and advance whatever additional safety measures they would want to undertake that are specific to their particular operating atmosphere. >> i just wanted to see, sow are you showing a notice of proposed rule making for these undergrou underground gas storage standards? >> hold on. i'm going to collect them. >> raise your hands if you had
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one. >> you talked about no-fault data reporting. could you talk more about what you mean about that? non pubertyi ipunitive reportin. >>. >> just last month a leak in the keystone pipeline went undetected. why should we have any confidence phmsa can ensure the safety of new appliance or new gas storage? >> okay. and last one up front here. >> sarah smith. reporter. i reauthorization bills
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would --. is it conceivable that you would wait to get those passed and act through that as opposed to the o normal rule making? or is the rule making process preferableable to emergency order authority? thanks. >> i'll start with underground natural gas storage. to be a little more clear. we are really focused on that rule making capability, what are the standards we can put in place? so we're working right now to define those. and the form of that rule-making would be literally a rule making. and we hope to be. we're advancing that and defining it right now. so we're not waiting for lems to move forward. and that's a good foundation i
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think. excuse me. as i mentioned before there is a good foundation already on the work that's been done around underground natural gas storage. so we've got some good data and looking to analyze the national data to further inform rule making going forward. as the good effort across the board. very collaborative and i think we have a good relationship to share. no-fault reporting? no fault reporting is really looking at how can we make sure that -- one of the things under -- if you look at the management system. a particular safety management system, i used to work at the faa and i was there during the 1990s and there were a number of accidents occurring at that point in time.
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one of the things that really advanced safety was this -- not only the adoption of a safety management system but the agreement. the partnership, the framework, that the industry the regulators, the operators -- everybody came together and kind of literally pulled together a partnership and understood the requirements. they had statutory authority do so. and it really propelled that next level of safety so they could share information with an independent third party. and that independent third party is really the data aggregator, the data collector and able to identify. okay. take away. strip away the operators name. but if i look at these ten operators and i start to slice and dice data what i'm really looking at is identifying emerging risk. so as you start to line up maintenance data etc. you are
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identifying where is that next risk factor coming from. and it is looking at trends and identifying areas that actually start to line up in a way that you can then address. both from an operations -- and the third party aggregator then share this is information with the operator, with the regulator, etc. and everybody understands this is not a punitive process. this is actually a safety process. so you are identifying emerging risk, addressing it so you are not in the position of waiting for an incident to start to look for trends. and that is the concept of how it might operate. other modes of transportation also have it. federal rail has the capability of doing this as well. and certainly it's been an initiative that secretary -- has taken on globally for the entire department. so as the good way forward.
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in terms of safety i think i was addressing your question as well with with regards to existing pipeline now. one of the things is making sure the inspection process is as rigorous as possible. as we learn from incidents regardless of where they are and how they are. and i was just up in pennsylvania on sunday, a pipeline, there was a gas explosion. really looked to understawhat h. do a root cause analysis. look to figure what that is going lead to in terms of improvements and safety that we have to make as a regulator. but again the overall effort is to be as rigorous as possible on the front end so that we're using data to inform our inspection process. to inform our rule-making, economic analysis -- everything.
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all of this is a much more rigorous way forward for the agency and it is a good investment i think. bottom line is we're never going to have enough people to actually cover the miles that we needs to. so actually need to leverage the information t data that we have and our capabilities in a much more exponential fashion to inform ourselves and identify that risk and address i it. >> we promised you to get out of here on time. i want to thank you very much on behalf of everybody here for sharing what your work is underway. we can all admit as the ambitious agenda and important at that. >> thank you very much. [ applause ]
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coming up in about a half hour, live at the institution. a look at tax policy. >> senator sanders is live in louisville, kentucky today. at 8 p.m.,
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"q&a." "washington journal," continues. host: our first guess is josh , talking about campaign 2016 and the focus in indiana. if you look at the front page of the indianapolis star, saying indiana decides today. how did indiana become so important in this process? guest: whoever wins indiana -- and a donald trump wins as the polls suggest he will cut it with him on a glide path to getting the nominations necessary. it's a winner take all state. there's a huge shift that takes can win theou majority of congressional district in the state which allocated delegates in the winner take all fashion as well. guest: if you look at the, toional polls when it comes
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trump, and 42% he is registering. what about the message is registering, and what is so appealing for the republicans? guest: it's a big manufacturing ine for republican voters indiana. donald trump has captured that message, he talked about the jobs that carrier has outsourced, is a major part of his message in indiana. that has resonated with his base. you also have to look at ted cruz's problems resonating beyond the hard-core social conservative part of the republican population. he hasn't been able to win over the mitch daniels republican voters, the more moderates. john kasich is getting 15% of the vote in the state. it's been harder and harder for ted cruz to get a majority when it's really only the most conservative republicans supporting him. cruz get the endorsement of mike pence and he can't see numbers rise because of that. about his endorsement was
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as halfhearted and endorsement as we have seen in some time. he did campaign with senator cruz yesterday on the campaign trail. when you issue an endorsement the friday before the primary and you are praising donald trump as much as you are praising ted cruz, it shows that there is limited ability to get momentum at this late stage. host: you saw the vice president will announcement that he made, i suppose to reach out to women voters. the no traction from that. guest: minimal traction. ted cruz is doing every play in the playbook to try and get some late momentum in this state. as we saw with the polling numbers over the weekend, donald trump only expanded his lead. in large part because of this deal with the whole race began last week when ted cruz and john kasich campaigns announced a deal where john kasich would ce de indiana. this backfired in a big way. host: we will talk about other aspects of campaign 2016 with our guest. if you want to call and ask
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questions, democrats, call (202) 748-8000, republicans, call (202) 748-8001, and independents, call (202) 748-8002. indiana voters, (202) 748-8003. on the democratic side, how many democrat delegates? guest: the big question for me is the working-class white voters throughout the holden credit primary process. -- the whole democratic primary process. hillary clinton did well, she can continue to build a broader coalition than she has had in a lot of earlier states, that will be a sign of momentum for her campaign. aboutpolling showing her 50% compared to bernie sanders at 43%. how much effort it hillary clinton put into the state? guest: not much. she just put in one appearance a few days ago.
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she was focused on criticizing donald trump, whereas bernie sanders has really barnstormed the state and tried to have getting a win in the state the demographically should be in his wheelhouse. host: this is about her confidence in her ability to win the state overall. she is lowering expectations. if she is the nominee and a donald trump is the republican nominee, indiana could become a big battleground state. she was test driving a general election message if she's going to expand the map in a race that matches her. in indianahose seeing this much attention for the first time in a long time as far as attention paid to their state at this point in the process? guest: for a presidential election, usually indiana is when nominations have been decided. clinton and obama squared off in whichn a pivotal primary played well in the 2008 nomination with republicans. we haven't seen a race like this in quite some time. host: we won't see results until
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tonight, assuming it goes as far as the results are concerned. then it's on to california. preview what to expect moving towards that? guest: california could be interconnected. it ted cruz one indiana -- if , theruz won indiana momentum is going to shift. if donald trump wins, he can essentially put the race away by simply not losing california by a big margin. even if he loses by five points, hypothetically, the masses there for donald trump to win, regardless. indiana is crucial because it sets of the momentum for future contests and it sets up donald trump with the math necessary to get to 1237. in california he has a double-digit lead, in indiana, he expanded his lead. the picture is looking good for donald trump to all but clinched his nomination tonight. host: again, the number is
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democrats, call (202) 748-8000, republicans, call (202) 748-8001 , independents, call (202) voters, (202)ana 748-8003. tim is on the independent line. go ahead. i'm an independent voter, i used to be a democrat. bernie sanders is my first choice, and donald trump is my second. i will explain. i feel like a lot of other people feel. donald trump is for america. , onthoughts on immigration isding our jobs overseas, the core of what this country needs to bring itself back. i know people have said that he is benefited just like the other big corporations have, and i agree with that. benefited,ne that is
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in he had to do it because he had to compete with other people. to be successful. but he has made a change, and now he is for the american people. and that's why they hate him so bad. and the republicans got exactly what they deserved, because they have been pushing these kinds of , mostes, the free trade every bad policy has been pushed by the republicans. they have been against obama, so trump is really what they need. if you look at republicans now in the way they are voting in the way they are going for trump, this is the reason. the domain is prejudiced at all. if you look at his background, he is not prejudiced at all. the man is for america. he wants to make america great again. i think he is very truthful. because he comes out and speaks. a lot of people say you can't do
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-- do for 12 million people, whatever. if you want to go to the moon and aim for the stars. if you fall short, he is going to make a big dent, but these other guys, they come up with half thought out plans. host: you put a lot out there for our guest. reflects thealler optimism and pro-trump circles, that he can reorient the map and win over likely voters. this is a bernie sanders supporters who said he could possibly vote for donald trump in a general election. immigration and trader issues that trump thinks he can play to his advantage in a general election better than hillary clinton. problem is, for the trunk campaign, his misogynistic comments and comments about women, and his imprint ability are big negatives that could also overwhelm those advantages. host: the comments that you talk about, the general discussion about his character, he talked a little bit about that. talk about what he thinks as far
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as looking at his character, and specific, taking a look at this contest. trump has a long trail of unpopular comments towards women, hispanics, others. he could be a turn on machine for democrats. the advantages he brings to the table when he talks about immigration a different way than most of public and candidates, traded a different way than a lot of republican and democratic candidates, that could play to his advantage. but there are so may negatives that are baked into the cake that it's hard to see how the pros outweigh the cons. ted cruz talked about the idea of character. [video clip] ted cruz: we don't want a president who is rationed hotheaded, who is liable to explode at the latest twitter storm. [applause] when you are talking about someone who is to be commander-in-chief, who is to have their finger on the nuclear
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of goodyou want someone and stable and steady judgment. [applause] and the third thing you want is, you want character. character is the most important aspect of any president or vice president. [applause] you want someone who has struggled, someone who has no loss. you want someone who is honest, tells the truth and doesn't lie all the time. you want someone who stands by their principles. you want someone who has principles. [applause] who doesn't have one position in the morning and one position at noon, and one position at night. host: what is your take away from that?
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that message from ted cruz about character, sobriety, it has been and ity republicans hasn't worked and has not made a dent in republicans mind. in a normal election environment, these would be sharp critiques against donald is a teflonrump candidate and this line of attack has not changed the mind of republican voters. host: steve from missouri. hello. caller: thank you. voting for are not nobody. they are voting against somebody. donald trump is for himself. it is about him. one thing is at least he will ruin it for the republicans care all i have got to say to the republican voters out there is make sure you have plenty of kleenex's and handkerchiefs because of election day, you will need them. host: what do you mean he will ruin it?
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he will ruin it for the republican party. they will lose the house and the senate and the supreme court and the presidency. like theeally democrats that much, but the problem is the republicans are the most corrupt and the most crooked of the bunch and they have been asking for this for a long time, 30 years, ronald reagan. donald trump is going to ruin the republican party. thank you, donald. i pay she at it. host: what about that idea? guest: a lot of republicans think that could be the case. could certainly cost republicans to the senate. that could easily be gone. the house where they have the largest house majority since 1928, it could be in jeopardy if trump is so toxic to a lot of getslican voters it
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democrat voters who might not normally show up. on what theate upside is and what the downside is. it is clear trump has a lower downside than other republican candidates out there. for the congressional committee, are they preparing for how that might affect the election? the senatorial committee, the congressional committee, have both in for a while compared -- preparing for the prospect of trump workers -- trump or ted cruz the human to a lot of blue state republicans, how to make sure the senate is up for reelection and have some a separate from donald trump. here is bill, independent line. caller: hey josh, i am over here in pennsylvania and there is not a chance the democrats will take the senate seat away because no
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one knows the lady who is running against them to begin with. i want to ask josh, what is the scenario? last friday was the first time we heard the fbi talking about any kind of criminal thing people.hillary and what is the scenario if the fbi comes act and in dates? , do theyy is indicted bring in biden or john kerry or one of the other establishment? there are a lot of birdie people who positively will not vote for hillary and i go back to an interview i saw a couple of weeks ago is jim that -- jim webb.
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he would not vote for hillary because he could never see her being commander-in-chief. it is not far-fetched so it's not far-fetched to say a lot off millennials are not goig to vote for that lady. just staying home. that's what's going to happen up here in erie. >> it's awfully, look, if hillary clinton is indicted in that unlikely possibility, yeah, it's awfully late in the process to change candidates, to change nominees. butt it would certainly add a wrinkle to an already unpredictable campaign. in you look at hillary clinton's numbers in pennsylvania, they're not good.d her favorability numbers are fairly weak. the problem for the republicans is that trump and cruz both have also have historically weak unfavorable ratings for a presidential candidate. it is going to be a race to the bottom. pennsylvania might be a very good example of that. >> a snapshot of that, as he mentioned, it's the race between
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thee republican candidate, pat toomey, the republican challenger and katie mcguinty, the challenger. >> thisoc is a race that the democratic party isn very heaviy invested in and they're going to spend whatever it takeset to ge her profile, her name identification up there. and they think that b in a blue state like pennsylvania, that will beho enough to win. >> kentucky, republican line, this is richard. go ahead, you're on. >> caller: good morning, listen i was listening to bill kristal earlier and he wad asked if the trump gets the nomination, would he vote for him and he said absolutely i'm not voting for trump. and they asked, would you vote forin hillary clinton? and he said no, i can't vote for hillary clinton. donald trump is the sole reason the establishment hated ted cruz so much that they let trump slip in there with a third of the popularan vote in the republica primaries and caucuses and now he's in control.
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and the establishments, the bill kristals, the mitch mcconnells, the paulwo ryans, they would ju as soon give it to hillary clinton, which means they will maintain their power, and hillary clinton will win. it'sd absolutely -- it's just like the rich kid who doesn't like the way the game is played so they're going to take their ball and go home. that's exactly what has happened to this party. thanks. >> and the results of this republicanth nominating process have backed up what the caller is saying. that you have trump, who has won a little under 40% of the republican vote.rt so you have at least half the party that doesn't like trump. that doesn't want him to be the nominee. but this is democracy. and the fact. that he's buildin momentum in the final stretch of the process,wa they want this t be over. think there's a lot of you know, settle it to just and not have a very heated and contested convention. >> here's a very heated piece.g?
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gop leaders surrender to trump. who are the leaders and what's the surrender and why is it happening? >> they are people who are lobbyists,e people who are strategists who see cruz as a weak nominee, as well as donald trump. they just want this thing to be over. they think thehent negatives of having a contested, heated divisive convention is worse than just settling, getting behind a nominee like donald trump as dealing with the chips as they may. >> so let's assume that he wins california. you talked about a pathway. by the timeil you get to convention time, are we going to see the magic number hit. is it going to be an issue as we talk about it today? >> if trump wins indiana, it's very unlikely that he can be stopped, short 1237. in fact it's quite likely that he'll have c the necessary delegates to clinch the nomination before we get to cleveland. that's why indiana is so crucial. it's a momentum-maker for the winner and if trump wins, it sets him up perfectly to exceed the 1237 delegates.
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>> warrenton, north carolina, democrats line this is tony for josh crossheuer. hello go, ahead. >> yes, how you doing? >> fine, you're on. >> caller: i have three quick points, could you telll me, wha does trump mean when he says make america great again? is that back to slavery? child labor? and anothergh point. why does poor whites, god-loving blacks vote republican? andd then with immigration, if you don't want immigration, or illegal immigration, why not punish corporations more and then they'll leave. i have have an issue with immigration. i'm throwing it all together. but punish the people that hire them to take advantage of that. thank you. >> yeah, i mean these are all resident issues in the campaign. the african-american vote is
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going to bebe interesting, if there's any way that trump wins a general a election against hillary clinton,wi it would be doingpr better than your averag republican does with african-american voters and certainly president obama ran up thee score with his constituenc in 2008 and 2012. if there's's any unlikely path, don't think it's very likely. itld would be that trump could pick off 20% of the african-american vote it would open up opportunities in some battleground states. >> let's talkk about bernie sanders for a bit. there's a line in today's write-up in the "washington times" that says this winning over super delegates is mr. sanders' only real shot at race. g the >> which is about as implausible as it sounds. super delegates have been hillary clinton's base from the beginning. these are elected officials, party leaders, party officials who don't view sanders favorably, and he's gotten a very small slice of the super delegate total. the fact that he's not winning races and primaries and is losing pred pretty badly in the number of pledgebl delegates as wellm suggests it's almost impossible formi him to convinc super delegates that he's the
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more plausible and deserves to be the nominee. >> we saw a speech on the year since the launch of the campaign talking about his intentions. he talked about the idea of going to the convention. all these thingser happening. even though the numbers tell another story. what's going on? >> look he wants his platform. hehi wants his ideology to be represented in philadelphia. he wants to hold on to his leverage as long as possible. to me is how on harshly does he attack hillary clinton now that the math looks exceedingly implausibleng for h to get the nomination. he's trying to keep enough chips on his side when it comes to a convention, when it comes to a platform discussion, he has some leverage to get the party to move a little more to the left. ast little more towards his wor view. >> so what does hillary clinton do with that? as far as her platform, does she adopt some mr. sanders or senator sanders' policies? does she incorporate them in her own? what does she take away with that? >> this is thehe fascinating question going forward. does hillary clinton move to the left, does she pander to some of
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the sanders supporters? or does she look at the republicans likely to nominate donald trump and say hey this is great opportunity not just to play to the base, but to move to the middle and perhaps run up the score in a general election, looking at states like indiana, looking at states like georgia, lookingg at states like arizona to really expand the map and get a mandate for her broader message in a general election? she's shown signs of doing both. throughout the last fewew weeksi think she's more likely to kind of go the latter path. throw a few rhetorical bones in bernie sanders' direction, but realize she has the opportunity of a generation to run against a weak republican nominee and to try to run up a score in a general election, and move to theiv middle. >> no chance of more progressives pulling her to the left. supporters, pro tension voters, still pushing her, even though she might adopt a more moderate path? >> with trump as the nominee, they don't have as much leverage. andli thehe vice presidential selection will be a key hillary clinton
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is thinking. if she goes to elizabeth warren or sharonn brown, a progressive senator from ohio, she feels like she needs to throw a bone to those liberals. i think it's more likely she'll go in a more moderate direction, like virginia senator tim cain, or someone more able to broaden the party. >> we're going to take you live now to the brookings institution. they're getting ready to get started with deputy assistant treasury secretary for international tax affairs, robert stack. talking about international tax policy. in addition, tax policy scholars and government officials will take part in this panel discussion. it's hosted by the tax policy center scheduled to start in just a couple of minutes.
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good afternoon. we're a few minutes past the hour. we thought we would get started. i'm bill gayle, i would like to welcome you to the brookings institution and this tax policy center event. we begin by asking the eternal question, how is this event different from all other events? in all other events, we talk about u.s. tax policy and what it means for the country. in this event we'll be talking about tax policy in other countries and of course what it means for the united states. also, this event is the first annual donald c.lubik symposium
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at the tax policy center. i wanted to say a few words about that we're honored to have don in attendance this afternoon here. my glasses are for reading so forgive me that. don is here with his wife susan, his daughters caroline and lisa, lisa's husband, david. don also has a son jonathan and many grandchildren, so among done's many attributes is he's helped solve the social security problem. we organized the symposium series in honor of don and his many contributions to public policy. don was tax legislative counsel in the treasury in the kennedy and johnson administrations. he was assistant secretary for tax policy in the carter administration. and then and again in the 1990s, in the clinton administration. he headed the tax advisory
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program for central and eastern europe and the former soviet union from 1994, to 1996, which could not have been an easy job. he served on the transition team on the obama administration in 2008. in recognition of all of these successes don received treasury's exceptional service award, in 1964. the alexander hamilton award, in 1980. and the treasury medal in 1999. you kind of get the sense that they started making up titles to give to him for his unselfish dedication to public service spanning four decades. these are big awards for those of you not tax cognizant. and they speak highly of don's abilities and savvy and determination. when he was not in the federal government, don was a managing partner in a buffalo-based law
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firm of hodgson russ andrews wood and good year. he was senior fellow at harvard law school's international tax program. he could co-authored a volume which i think has the greatest title in all of public finance "basic world tax code and commentary." a template for tax reformers around the world. he advised the city of buffalo and the state of new york among other others on tax policy matters. he has chaired the american bar association's committee on domestic relation tax issues. that sounds like fun. he's taught at the university of buffalo and american university, is a graduate of harvard university and law school. a phi bet kappa. don is one of the nicest people you'll ever meet. don, we congratulate you on your extraordinary record. speaking on behalf of len berman and the entire tax policy
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center, lets me say we're honored to establish the donald c. lubik symposium in your honor. thank you. today is the first such symposium. before i turn to the substance, i want to note these events don't just happen. they require the dedication and patience, savvy of many people to set them up. i want to thank two people in particular, blake -- kareen at the urban institute basically does everything for the tax policy center and rebecca sundin at the brookician institution who put together all the logistics for this afternoon. i can guarantee you without their tireless work and their patience, none of this would have happened. so thanks to both of you. all right in terms of the substance, changes in business taxes by other major economies
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are having important effects on the united states. everyone knows that our statutory tax rates are much higher than other countries. everyone knows that most other countries exempt most foreign source income of their multinationals. while the u.s. continues to tax repatriated earnings. in newer developments, many countries are offering new benefits for their multinationals, including patent boxes that allow special tax rates for income for research and innovation. at the time the oecd's bep's initiative. limit the ways that countries can shift their funds out of high tax countries into low-tax countries, but american multinationals, many american multinationals feel that beps is aimed at them. in the wake of beps some countries are now enacting new diverted profit taxes that target multinationals. we'll talk about all of these issues this afternoon. we're focusing on what happens
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in other countries, how that affects american workers, american consumers, american businesses. our keynote speak certificate bob stack. we're delighted to have him here. you have a bio in your packet. bob is the deputy assistant secretary for international tax affairs in the office of tax policy at the u.s. department of the treasury. and that capacity, he's responsible among other things for the conduct of legal and economic tax policy, including having the honor and the burden of representing the united states in bilateral and multilateral interactions with other countries. before joining the government, mr. stack served as head of international tax, at the law of firm of ivans, phillip and barker, graduated from georgetown law in 1984, where he was editor in chief of the georgetown law journal. he also clerked for at the supreme court.
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let me turn it over to bob, we're delighted to have you here and we look forward to your comments. >> thank you very much. i want to say before today i have not had the pleasure of meeting mr. lubick, but the outpouring of affection and support that we see at the beginning of the ceremony demonstrates i think the great affection you've been held in and the fact that you've been a giant in tax policy and i want to express my appreciation for that. i fully appreciate how instrumental don was in creating an office of tax policy at the treasury. with excellence and integrity as the hallmarks of that office. an effort that began with your participation 50 or so years ago. and it's something that as a current person at the treasury department, i wanted to begin my remarks today by expressing my
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deep appreciation for the contributions you've made and for the way that i have benefitted from them in ways seen and unseen, thank you very much. when i began to prepare today's speech, i noted that figuring it was on foreign tax law changes and their impact on tax law policy. i should speak on the topic assigned, that's something i've learned to do. and as bill just mentioned, i checked out the set-up on the brookings website and that bill just quoted from and i worry that my speech had been obsoleted as the answers are staring us plainly in the face, here's what the website says, changes in the taxation of business income jish nated by our major partners are creating shock waves in the united states. corporate tax rates in other countries have belg ben falling whi the u.s. federal rate has remained at 35% since 1993, the combined state, federal corporate tax rate in the u.s. is now the high end in the oecd.
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most other countries exempt income from their tax, while the u.s. continues to tax repatriated profits. and many other countries are providing new benefits for their multinationals, including patent boxes that allow special tax rates for income from research and innovation. well faced with these table setting observations, how could any self-respecting tax policy maker do otherwise than readily acknowledge that we must join the race to the bottom, dramatically lower our corporate rates and make one with those countries exempting foreign income from further domestic tax and for good measure, throw in a patent or innovation box to further lower the rate of further tax payers, what more was there to say? crestfallen as i've been allotted 25 minutes to speak, i was fumbling about for what i could possibly add to this debate. in which one side seemed to command the unimpeachable
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intellectual, an economic high ground. but as i recall, having been the parents of teenaged sons, it hit me -- i heard these arguments before. mom. dad, everyone else's parents are letting them do such-and-such, you should too. and failure to acquiesce to whatever it was we were being asked to go along with, always was purported to result in the direst consequences. i don't mean to make light on the need for business tax reform. the president has put forth a very robust revenue neutral business tax reform that the administration is proud of. but i do hope as the debate unfolds, it will address important questions, and be more than a cry to join the race to the bottom. but as important, i want to talk about the international context in which this debate is unfolding, and how the context
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should inform our discussions, on the specifics, the president has insisted on business tax reform, that is revenue neutral in the budget window and over the longer term, by lowering the rate and broadening the base. this seems reasonable in light of the fact that we face mid to long-term fiscal challenges and while we agree with the need to bring our statutory rate more in line with the rest of the world, the responsible thing to do will be to make business tax changes taking into account our overall fiscal constraints. too often it seems to me a major impediment to business tax reform arises because there are those who desire revenue-losing business tax reform. without making the case for how we are as a country to make the numbers add up, to produce fiscally responsible tax policy.
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this argument with revenue-losing business tax reform is often advanced in urgent tones by those who insist the survival of american business depends on our joining the race to the bottom and corporate tax rates and heaping on other tax breaks on top of that. while ignoring related issues, such as the current ratio of corporate tax-to-gdp, as compared with historic norms or for that matter the overall ratio of tax revenues to gdp compared to historic norms. the issue of whether such tax cuts favor capital or labor or even whether other revenue sources might be available to offset such losses. there are other weedy questions, too. in a territorial or quasi-territorial system won't be there a need for strong base prosecute protection measures. in such a sch system. should u.s. parented deductions
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enjoy current interest on deduction expense and a whole potential topic unto itself, what should our tax rules on inbound investment look like? how should we insure a level playing field between companies investing here, and those already here and competing with them? all of these questions arise in a politically challenging environment. marty sullivan pointed out in tax analyst recently, a gallup poll results in over the last decade, seven out of ten americans believed american corporations were not paying their fair share of taxes. similarly, according to marty, a 2015 pew research poll found that 64% of americans are bothered a lot by the belief that corporations are not paying their fair share of taxes. indeed, the business tax reform debate is also taking place in an environment in which riders on tax policy have wondered whether the political steam has been let out of the drive for
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business tax reform in light of issues that affect everyday americans. such as minimal average wage growth. i system in the panel that follows and in the weeks and months ahead, we'll continue to debate those issues. cy would only want to add today that i do not buy into the notion that the u.s. must willy nilly do what everyone else is doing. because we have our own unique circumstances and fiscal challenges that need to be taken into account as we do the responsible thing for our country. however. as the nation's top tax diplomat such as it is, i think my value today is really to step back and share a couple of observations about the global tax landscape that we face as woo consider international tax reform. and i have two observations i'd like to expand on. first, there is an urgent need to create an international tax system that permits greater
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certainty and stability for investment into the system so that businesses can get back to doing what they do best, running great businesses. second, i want to elaborate on what i've recently described as a greater need for business involvement in the global tax debate, beyond the halls of congress and the u.s. treasury. i'd like to begin with some very high-level observations based on over three years of representing the united states treasury department in all manner of engagement with foreign governments on the subject of taxation. covering the gamut. the g-20, all manner of engagement on the tax engagement issues, asserting u.s. interests in the ongoing state aid investigations by the european commission and dealing bilaterally with our important trading partners on a regular basis on all manner of tax issues. based on my experience, it is clear that the greatest contributors to the unstable tax environment we see in the world, have been one, the ability of
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u.s. multinationals to dramatically reduce their worldwide effective tax rates as reported to investors by permanently investing sums offshore. two, the so-called mobility of ip-incoming capital. and three, these are all related, the role of tax havens, however defined, as players in the international tax system. let me discuss each in turn i don't think it's open to debate that the ability of u.s. multinationals to defer income has been a dramatic contributor to global tax instability. i need to point no further than the eu state aid investigations where it's clear to me that fum f sums were deferred from u.s. tax had been taxed severe weather, including the u.s., these cases might never have been brought if one needs more proof, look to the points accentuated in the places like the permanent subcommittee on investigation hearings in the u.s. senate. the hodge hearings and public accounts committee in uk
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parliament, as well as those held before the eu parliament and the australian senate. these all focus on the very low rates of tax that are achievable whether abroad or individual countries by multinationals, and it is this effect that has caused a great deal of outrage in the international environment. these effective rates can be gleaned from financial statements and other sources, and can be achieved by multinationals through techniques widely available to them. countries around the world in times of austerity, pounced on these deferred earnings, which the rest of the world believes will never be taxed in the u.s. and have sought to right the rules in such a way as to take what they view as their fair share of this so-called stateless income. but deferral alone of course does not produce low effective rates. the mobility of intellectual property income and capital that is the relative ease with which
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multinationals can move these assets to favorable tax jurisdictions. aided by u.s. cost-sharing and check the box rules. has been a major contributor to the ability of m & es, to achieve low effective rates, which has promoted instability in the tax system, by feeding the notion that m & es, and in particular u.s. m & es are not paying their fair share. none of this instability would have been possible without the the presence of tax havens, however defined. for present purposes, it should suffice to say that large disparities in income tax rates whether based purely on the location of the income, or by qualifying for special regime, will inevitably drive behavior to take advantage of the arbitrage possibility. a goal of the beps project simply was to have countries that write the rules write them in such a way as to minimize income shifting into low and
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no-tax jurisdictions as opposed for example for doing such impossible things as seeking convergence on tax rates. any u.s. international tax reform that does not take a major step towards restoring stability will prove to be a puric victory. no matter the rates agreed, the degree of territorial or the presence or absence of patent boxes. while the u.s. has worked hard to put the issue of tax certainty on the g-20 agenda during china and germany's presidency, this agenda simply will not succeed if countries perceive that they are getting ripped off under whatever rules we end up with. one aspect of today's topic is the effect of foreign tax changes on the tax reform debate but let's look at some foreign tax changes that are flying under the radar and perhaps not adequately appreciated by all policy makers. i would submit that many, if not
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all of these rules i'm about to talk about, are motivated by a concern that the rules as they exist today, let companies achieve unacceptably low foreign effective rates. and the countries are fighting back. let's consider the uk-diverted profits tax and its australian equivalent. let's also consider jurisdictions that are limiting deductions on royalties and other payments if those payments are going to low tax jurisdictions. these sorts are rules are squarely the efforts of source countries to take aim at companies that shift income into lower jurisdictions, often by imposing taxes that would likely be creditable for u.s. tax purposes. in the absence of fixes to the international system, i think we are closer to the beginning of this trend than to the end. and these changes go beyond limitations on deductions for payments for low tax
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jurisdictions. consider the difficulties multinationals have in deducting management and service fees paid among affiliates all over the world. regardless of the destination of those fees, as well as the drive in some countries to find a permanent establishment and then go search the globe for the ip income that could be potentially sucked into that jurisdiction, once the p.e. is found. and finally for good measure, consider the recently proposed 6% equalization levy in india, with respect to outbound payments for digital advertising services. the levy is a supposed nonincome tax, with holding tax imposed on all payments made to those outside india for advertising services in india. what's remarkable here is india decided to leapfrog beyond income tax and its related permanent establishment treaty rules to impose tax on income often destined for a tax-advantaged location.
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there is no movement among the countries in the oecd to examine any of these various proposals, that may be or considered to be beyond beps. if u.s. international tax reform perpetuates this instability, shame on us, we will see more of it and more time and money spent by our multinationals combatting an increasing flow of inconsistent results around the world. as well as the resulting disputes. and if the u.s. multinational community continues to see it as in their best interests to perpetuate a system built on tax trarj and highly arbitrage and highly engineered tax planning, shame on them. you are signing up and bringing on more of the very instability you loathe and impedes your business. the president's global minimum tax proposal may well provide a strong antidote to such perceptions around the world.
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first, our business reform permits tax-free repatriation of amounts earned in countries taxed at rates above the global minimum rate. wherever it's ultimately set. thus permitting our multinationals to compete on a level playing field in virtually all of the major markets around the world and repatriate the profits without additional u.s. tax. but the global minimum tax plan also takes the benefit out of shifting income into low and no tax jurisdictions by requiring that the multinational pay to the u.s., the difference between the tax haven rate and the u.s. rate. the global minimum tax concept has an added benefit as well. that is protecting developing and low-income tax countries from foreign-to-foreign shifting so they can mobilize the necessary resources to grow their economies. while it is true that concepts such as minimum taxes and
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controlled foreign corporation rules are most effective, if most countries go along in imposing them, and so far the uk has been a staunch opponent of tightening these rules. i believe it is also true that the pressure will continue to build in the international community for the traditional resident's countries to take into account the spillover on to poorer countries of tax policies that encourage foreign-to-foreign stripping. stay tuned. indeed, at a recent imf symposium the minimum tax was identified as something that could be of great help to developing countries, by the mere expedient of disincentivizing foreign-to-foreign shifting by multinationals resident elsewhere. this last point, this discussion of what's happening in the debate with developing countries, and the need to help them protect their tax base shifts me nicely into my final observation. the need for greater involvement
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by the multinational community in the international tax debate. let me begin by making two rather obvious points. first, the beps project plainly took the business community by surprise. particularly in its effectiveness of changing the rules of the road and the environment in which these companies operate. second, whatever the eu does, with respect to requiring companies to report public country by country tax data and revenue data, we would all have to admit that transparency issues, spurred on in part by the panama papers have shot to the top of the global agenda and no amount of lobbying at treasury or on capitol hill will stop global pressure for more transparency. might the arms-length standard be served up next? it's broadly suspect. and lease shepherd, one of our reporters in tax analysts report
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had some choice things to say about that. if you watch how quickly country by country went as an idea among poor countries in developing spaces to being a headline story in europe potentially making it public, ask yourself, how quickly might the arms-length standard and country by country be put on the chopping block. back to transfer pricing. the effort we had in the beps process, to take a paper that seemed to us to write the arms length standard out of the oecd rules to bring it back to something that seemed more familiar to u.s. tax practitioners was a very heavy lift. the u.s. has been a staunch defender of the arms length standard and will continue to be for reasons i've elaborated on elsewhere. but we don't control the global agenda so what do i mean by greater m & e involvement? i don't advocate greater m & e involvement as a means of taking sides, as in i really need their help, although sometimes i do.
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it just occurs to me from my perch that when i meet with governments as i regularly do, and as i attend global tax events which themes, with themes often pushed by ngos are dominating, that if the mne community has a compelling perspective on global tax issues that should be appreciated by policy makers around the world, it is not being made effectively. but that leads me to my second point. the mne perspective needs to evolve way beyond we pay all the taxes we owe. to something more shall i say, fulsome. to combat the pervasive perception that multinationals do not pay their fair share. that transfer pricing is some sort of illicit practice, that blatant profit-shift something rampant and that therefore those nations need aggressive national action to rein those
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multinationals in. how the multinationals get engaged and participate fully in this debate, i leave to them. i don't think it's a tax that can be ignored. part of the discussion relates to creating conditions that are supportive of foreign direct investments in kunlts around the world. that relates back to the facts that the g-20 were going to look at the relationship between tax certainty and creating environments to increase foreign direct investments in countries around the world. that's a good thing. by investment we need to teach those countries that investment and growth mean more than attaining the investment needed merely to serve their large markets. part of this discussion relation to the need for more data to analyze taxes paid by multinationals, in the jurisdictions around the world and to focus the international tax debate more around a foot-driven search for --
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data-driven search for best policies and practices and much less on sensational and politically palatable anecdotes. mindy hertzfield made reference to the bubbles in the tax world where people surround themselves with like-minded thinkers and fail to see the perspectives of others outside it. to give you an appreciation of this fen none from where i sit. on one day i might be attending a conference in which we parse in excruciating details the transfer price equivalence of how many angels can dance on the head of a pin -- --
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he's sitting up and conscious and 911 is coming. so i presume we should just continue. now where was i? yikes. sorry. my heart goes out. i was talking about and i apologize, took some wind out of my sails, i will just deal, i was talking about the contrast between going to u.s. tax policy seminars, where people talk
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about in great detail how many angels can dance on the head of a transfer pricing pin. and them i'm involved in multinational settings, where the question is how we can stop the scourge of illicit transfer pricing and stop companies from using transfer pricing where the word is used in the same way as money laundering. those are the bubbles that as your representative i live in and what i was asking today was that we try in some ways for the sake of better policy, to bring those debates together. from my perspective, this is not about picking sides, but rather the discussion needs to be fully engage by all stakeholders so we can move forward and promote growth and create more favorable conditions for investment around the world. including in the developing
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world. ngos and representatives of the business community should be at the same conferences listening to and challenging each other's facts, arguments, policy proposals and visions for an international tax structure that works for everyone. i made these points at a recent speech and afterwards, someone in my the audience came up and said, he didn't think mauoral persuasion was going to be he have beenive many i was somewhat crestfallen because it made it drove home to me how ineffective i had been in trying to make my point. because i think i am making a point based on the bottom line and not moral persuasion, i think i'm making a point aimed at boardrooms and not technical tax people. after all, it's the boardrooms that are supposed to care about the long-term consequences of actions, and the reputational
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effect on the firm. aggressive tax planning and all the related elements that i've talked about has already imposed a great reputational cost on some firms, and the future trend is clear. i am suggesting that at the end of the day, companies and countries will both prosper in international, in an international tax system that minimizes distortions, built around tax benefits that can be achieved through a combination of the mobility of ip income and capital, and games played through tax havens with a boost from u.s. cost-sharing regulations and the check-the-box rules. policy makers should be exploring how to build those structures. and all stakeholders, including m & es and ngos should consider whether they share these perspectives. and if so, how to participate together effectively with government representatives, to build them.
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we are long past the days, if they ever existed, when congress and the executive branch were the only players of importance with respect to u.s. international tax policy. globalization and the emerging political structures that support it, have brought these issues to the world stage. and the actions of each country, has effects beyond its borders that must be taken into account, as we build an international tax policy for the years ahead. and the actions taken outside our borders, likewise can have a profound impact on our tax payers and the policies we set and we're living through that. this is all hard work in a challenging environment. and i will be the first to admit that other countries sometimes do little more than to seek their own national vaeng, instead of supporting principle rules. but we owe it to average americans, as well as our
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successful companies, that we stay at it. so we can give the world a little extra scoot in the right direction. during the time we are privileged to be engaged in helping to form u.s. international tax policy. thank you very much. [ applause ] >> i found your speech very interesting. it seems to raise a question about whether we should think more about the general values or ethical climate in which we all approach these issues. and i was wondering, what things the government could do to kind of encourage more of that, both on multinationals and with
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respect to other governments' policies? >> i'm afraid i'm not going to rise to that bait. because as a technical tax guy i've had trouble distinguishing my extra mortgage deduction when i buy a really big house, from the double dummy irish. we could have a debate later about it, but i can't do it i think it is about making policies and rules that we all agree to live by. but i don't think it's about naming and shaming. >> i guess we'll have a couple of minutes for questions from the audience. anyone have a question? way in the back. >> it seems with the new more inclusive framework that the oecd has announced for the beps
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implementation the transfer pricing follow-up work on profit split and related things like attribution of profits to a pe may, that may sort of be the acid test of the ability to sort of reach any kind of consensus with this larger group. can you comment on that? >> from my experience, i don't expect that expanding the group will actually expand the number of very engaged players in very technical transfer pricing issues, number one. it's just not been my experience that you know, we, we found it, we found it difficult to keep up with the flow of oecd paper and one of the biggest countries in the world so i'm not too worried about that. second in the follow-up work, like all in beps, we're a player, it's a consensus process, and you know, i think we'll have a strong influence in the work as it goes forward. i'm not terribly concerned about the effects of that. i do think to return to a theme. that i was trying to hit on is i
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think u.s. policy makers completely ignore at their peril what's happening in developing countries, low-income countries on the global political stage. a lot of that bubbles up into things you see every day. some people in the tax world think i do this as many like an avocation, it's a nice thing that he cares about those things. if you're not paying attention there, you're missing is a ship that can sail two years before you realized it sailed. so for u.s. policy, i think it's critical. >> national, you think there's a legitimate role for international tax competition? >> well, you whether i think there's a legitimate role for it or not, it's going exist, we're never going to drive out the arbitrage that comes from differential rates because that's kind of the the rules of the road. i think it would be fly eve to think we're going to build a system that gets away from arbitrage. when you get to highly
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structured transactions through what we would all recognize as tax havens, you're in a different place that you can do a better job of policing and u.s. companies should welcome it. >> john. >>. [ inaudible ] >> i think it wants to be. is it? >> i think it's conflicted. as a source country we're seeing it's going to be very protective of anyone using the uk market. they're going to limit deductions, watch tax havens, if you're in that, as mike williams has said to me, we'll have a 17% rate, but you're going to pay 17%. they've thooer going to be very aggressive in protecting their market. get the spillovers of the benefits of having such and such headquarters in london, they're going do want to do that, too, they're going to fight to have weak cfc rules so companies will find it an attractive place to
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be. i think they're kind of -- hybrid. yeah, the patent box, the patent box is i think a part of what will be driving it. but in my discussions, for example with some countries, they have viewed that as something that will be beneficial to their mid-sized companies, they're not convinced themselves that the world is going to rush their researchers over into the patent box. if you're getting 10% on your patent incox you getting a 10% deduction. the game here to get the high deduction and the low amount of income. it's not clear to me you do that by doing all your research offshore and moving all your researchers. >> last question. >> you talked about, uk headquarters companies. you also referred to u.s. companies. i mean isn't one of the issues that we're facing here, that companies don't have national nationalities? how as a policy maker do you address that, other than you know, fighting a rear-guard action with anti-inversion
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proposals? >> great question. when i first got my job i quickly realized, i consulted with some of the bright academics that there's all sorts of interesting ideas, that sales-based income blocks. so we, we have the system we have, you're absolutely right that mobility of headquarters, mobility of these items makes the current residence-based system fragile. no question. but as policy makers we get to play the hand we're dealt and that's the hand we have for now and we'll play it best we can. thank you very much. >> i guess the next panel should come up.


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