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tv   Institute of International Finance Policy Summit Secretary Mnuchin  CSPAN  April 21, 2017 10:02am-10:38am EDT

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there are a dozen books about joe mccarthy, yet there is no biography of the senators who had the back on to stand up to him first -- margaret chase smith. remember how you went about preparing for that speech? ever: the hardest i have worked on anything i have ever delivered on a podium. >> historian david mccullough on spirit," "the american a collection of his speeches going back to 1989, sunday night at 8:00 p.m. eastern on "q&a." u.s. treasury secretary steve mnuchin spoke at a banking conference about the trump administration's upcoming plan for major tax policy changes. he said a proposal will be reached very soon and will be funded by economic growth. it includes middle income tax cuts and the lowering of corporate tax rates. this is about half an hour. >> i turn to our speaker. let me again thank our good friends and colleagues who have been a cosponsor of this event today.
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the chairman and ceo mark weinberger is a dear friend who will be asking secretary the questions. we are fortunate to have the secretary here today. i have worked directly for four treasury secretaries. others dearr friends. i know what makes a good treasury secretary. i have traveled millions of miles within that haven't spent time with this secretary, his vision in the president's vision, let me say i'm incredibly confident that this gentleman has the right ideas in the right team in place to advance a very progrowth agenda. and so with that, i would like to introduce and thank our treasury secretary, the 77th secretary of the treasury, steve mnuchin. and mark wineburger. [applause] >> well, put a lot of pressure
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on you there, mr. secretary. >> very kind introduction. >> absolutely. well, thank you. let me add my thanks for being here. thank all of you for being here. start a little bit on the personal side, mr. secretary. obviously you had an incredibly distinguished private career. you have done a lot of different things. but i'm not sure that prepared you necessarily for going into government, and my first question is, what is the biggest surprise, the biggest change you feel going into being the treasury of the united states of america? >> the biggest surprise is that the skill sets for private business carry over very well into government. i thought it would be much more different. but in a way, many of the aspects are similar, in the sense of no different in business. you have customers. here we have the american taxpayers and american workers. you have different constituents, whether it be shareholders,
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boards, regulators, here we have working with congress and other constituents, and there's a real teamwork aspect to this. so, i would say in the overall skill sets i think they came over in many similarities. as it relates to the job itself, there's a lot to do in this job. there's huge operational aspects of the job, but there's three fundamental parts. one is domestic finance, which i had a lot of experience in, international finance, which i like to say i had a reasonable amount of experience, and the third part was terrorist financing and intelligence, which i like to say i had no experience in. so i spent the first 90 days getting a ph.d in sanctions, -- sanctions programs and the intelligence functions and what we do at treasury and some of the most important work we have
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done and has been instrumental to what we're doing in north korea, in syria, in iran, and in many other parts of the world. mark: well, thank you. we only have 30 minutes, so i will get to the substance in a we had lunch today with a number second. of board members of the organization, and they were asking a lot about how -- you mentioned you came into your role, some things you didn't have any experience in. you have skill sets that carried over. a lot of people in this administration are coming in brand-new to government. how do you see it operating when you work with the president, how are you deciding who does what and how you negotiate with him in making decisions? how does the organization come together? how does it work? sec. mnuchin: again, what i think is great is president trump brings to the job a lot of the things that were very similar to when he was at trump tower. so, you know, this is a president that is willing to meet with lots of people. he has literally met with
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hundreds of hundreds of business people, big business, small business. he listens and takes in a lot of information, whether it's from people in the administration or outside. he listens to a lot of people and then he makes a decision, and i think it's a great process. mark: all right, so let's go -- another thing you probably were never involved in before was the g20. sec. mnuchin: that's true. mark: so you came back from overseas and getting a scan of what is going on around the world. one of the first questions the folks have is, what -- to you, what are some of the most important things globally you're focused on, the things that might worry you the most, the most important to accomplish. sec. mnuchin: well, i mean, first, let me just say that our priority is really about creating economic growth here. and i think that's very doable. i think the difference between 1.8% gdp and 3% gdp here is an
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enormous difference, and critical for us. and i think growth here is good for the world economies. so, a lot of our focus, as it relates to international issues, are around fair and balanced trade, around fair and balanced investments. i think, as you know, we have one of-if not probably the largest trading market and the freest trading markets and that's been a big focus of discussions with our counterparts. but i think what is good for the u.s. economy is good for the global economy. mark: so, great. let's come here -- that's where you'll major focus is going to be, at least short-term. the economic policy that the president has put forward, that you're focused on, describe what you think is most important to get done short-term? what's going to create jobs the quickest, and what are you going to say day one, the rest of this year, we have to get done,
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highest priority? sec. mnuchin: so, i mean, our two main points to create economic growth are tax reform and regulatory relief. and those are the things that we have been working on every single day since i've been confirmed. as it relates to tax, as you well know, we have over 100 people in the tax department, even though we haven't gotten everybody confirmed yet. we have an incredible treasury staff working hard day and night and we're close to being able to bring forward what is major tax reform. and on the regulatory side, my focus is primarily on the financial markets, although across the administration, we're focused on regulatory relief. and again, we believe in proper regulation. this is not about having no
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regulation. but as it relates to regulatory reform, making sure that our banks can lend and that this doesn't put our taxpayers at risk. mark: let's take the two issues. your biggest issues. let's start with tax reform. we had good panel this morning getting a little bit into the weeds of process, and all that. let's step back. you had a campaign. the president had a campaign, came up with a plan. it morphed a little bit as it went through toward the end. the house put out a plan. now you have to work with the senate and have to have something that becomes legislation. that is going to be very important. the plan doesn't do anything. so what are the principles in the plan that you want the most? what has to be in there from the administration standpoint to get signed by the president? sec. mnuchin: well, the good thing and let me just say, i've been meeting weekly with chairman brady and members of the senate finance committee, so we have been doing a lot of work. and i think the good news is that the three groups have the same objective.
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and the objectives are simplified personal taxes, create middle income tax cuts to spur the economy, and make our business taxes competitive. right now, we have some of the highest business tax rates in the world. we tax on worldwide income. we have this crazy system of deferral. so it is not a surprise those three things lead to u.s. companies leaving trillions of dollars offshore. so on the business side it's about making business taxes competitive and bringing back what we believe will be trillions of dollars to invest. mark: so what i'm reading into that is obviously lower corporate rates, like you put on the table, and dealing with the repatriation issues, getting the money back. when you do that, of course, it does cost money because if you're going reduce taxes, even if you're going to get more growth over time, there is a question about whether it has to
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be revenue neutral or not, or whether or not you have to be fiscally responsible. what is the administration's current thinking on that? sec. mnuchin: the good news is, you know a lot about this stuff. you are an educated consumer. the deal will pay for itself. now, having said that, we fundamentally believe in dynamic scoring. so as you know, static scoring, you change the tax code, plug it in, see what the cost is. so you're correct that fundamentally you're lowering taxes under a static score, it's going to cost money. now having said that, some of the lowering in rates is going to be offset by less deductions and simpler taxes but the -- taxes, so some of it will be made up on that. but the majority will be made up on what we believe is fundamentally growth and dynamic scoring. and, you know, these are huge numbers. you could have as high as $2 trillion difference in revenues over a 10-year period, depending on what you think is going to be the growth function.
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so, the plan will pay for itself with growth. mark: so you're looking for something that at least will be fiscally responsible, have rate cuts, international changes, probably look at the deductions, credits and exemptions in the code to see what does not need to be there. sec. mnuchin: absolutely. mark: to offset some costs and what on the individual side? sec. mnuchin: similar. on the individual side, fewer number of brackets. you know, the house plan had three brackets. we're looking at whether we think it should be three or four, but fundally fewer brackets, less deductions, simpler tax code. this will be the most significant change to the tax code since reagan. sec. mnuchin: it would be well received, if we can achieve all of that. the house also has a plan, obviously, the blueprint they have out there. they'll have a hearing next week
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. it has those things in it. has the border tax, which we know and anyway know has become a hot flash point for discussion. it has complete expensing. it has deniability of all interest deductions. are you going to be considering those as this moves forward? is that part of the administration's view? sec. mnuchin: we have had discussions with them, and the border adjusted tax. you're in the marketing business. as i noticed, you went to ey. that was good marketing. the border adjusted tax which is a package of three things -- the border adjustment tax itself, the limit on interest deductionibility expensing, we're looking at all three of those items. there are certain things we like about it and certain things we don't like about it. in particular, we are concerned about the impact on the currency. if the currency does correct, you'll have a much stronger currency, and that hurts our exports. if the currency doesn't correct, you would have price appreciation and inflation in
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consumer goods, and that is concerning. we're working with the house and having discussions about the specifics of it. mark: ok. working with the house. very important what we learned both from the healthcare issue and also just from all legislation in the passing the senate. in the panel we had this morning, they talked about the senate beginning to think about going to go forward. are they part of the discussion? sec. mnuchin: absolutely. we have been meeting every single week since i was confirmed, which is a little over two months, so the president had a few more days advantage than i do. he is obviously approaching 100 days. and we're going to have our tax plan announced. and that's going to be something that we think can get past work with the house and the senate. mark: ok, so you have been meeting for a long time. you have the right players the table. want to get it done by the end of the year, onlily you happened for the august, summer, but that was optimistic. so when are we going to see the plan? sec. mnuchin: soon. very soon.
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very soon. just to be clear, we hope this won't take until the end of the year. we're very focused on it. big priority for the president. we will get tax reform done. it will be sweeping. it will be significant. and it will create a lot of economic growth. mark: ok, i know this is a top one to answer, because i have been not in your shoes, but at levels below it in the treasury building. is there hope to get democrats on board? does it have to go through a budget reconciliation process? sec. mnuchin: i hope it's bipartisan but if not we'll go through the reconciliation process. there should be democratic support for, particularly making businesses competitive and simplifying personal taxes. so there's been an issue with trying to get the parties to work together, but we'll see. mark: ok. not going to take that one directly on, i see. ok. let's switch and move off of taxes. we have some other questions people put out here. 120 day regulatory review.
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a lot of notoriety. a lot of work is being done on that. can you give us any update and what you're focused on. sec. mnuchin: first of all, we couldn't be more excited how that is going, and the president came out with core principles. the core principles include many aspects of dodd-frank, but go substantially further than dodd-frank. so, again, our approach has first been to reach out. so, as opposed to just conducting an experiment within the treasury, we're reaching out. we have had 16 focus groups with as many as 50 or 100 people in each one of these. getting real live comments on regulatory issues. understanding from small banks , understanding from nonbanks, understanding from big banks, what are the issues with current regulations? what are the issues with the regulators are not working together, where there's
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conflicting regulation? we're taking all that information in, we'll be analyzing it, and then we'll be going step-by-step, making recommendations to the president. some of it will be things we can do through the regulators. some of it will be things the president can do by executive order. and some will be things that need legislation. but we will be releasing the report to him the beginning of june, and we're going to be recommending some significant changes, and we are going to make sure that banks have liquidity, that they can lend, they're safe, they don't put taxpayers at risk. been a long time since the financial crisis. we're going to make sure the rules make sense. june,so beginning of that's when you will go to the president with it? sec. mnuchin: correct. mark: all at once, or more to come later? sec. mnuchin: the major issues will be addressed in the june report. mark: anything -- in your
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confirmation process, along the lines of financial regulation, particularly dodd-frank, you were asked a bunch of questions and give a long -- gave a lot of answers. one was on the orderly liquidation authorized. any further thoughts? -- youuchin: it is one will see more to come on ola. it's something we're looking at very carefully. again, there are certain big concerns we have with ola, and we don't want that be used to support "too big to fail." on the other hand there are aspects of the bankruptcy code right now that do not work for a financial institution that is in a crisis. we are going to need to fix that. so, we're going to be coming out with recommendations on ola. mark: you will. recommendations. don't want to share what they are right now? sec. mnuchin: a little bit premature. mark: i'm trying. sec. mnuchin: you are trying. you are doing a good job. mark: what about the volcker rule? sec. mnuchin: when i came in right now, i saw something that
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came across on the voelker rule coming up on the imf today. i don't think the volcker rule had anything to do with the financial crisis. so i don't really think -- i think it was more of a political issue than necessarily a problem that created the financial crisis. having said that, you know, i don't think regulated within the bank -- in a regulated institution, i don't think that's the place to have proprietary trading. within the regulated entity. having said that, the major problem with the boko rule today -- and we're working on fixing this now. this is one of the things i'm working with the regulators on. one of the roles i have is chairing at sock -- chairing fsoc, where the regulators work with me. and we'll make sure we work on the definition. the biggest problem with the boko rule right now -- we all know if we're sitting in a room with two bloombergs and telephones and that's all we do, that's proprietary trading but
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-- this should be relatively simple. if you're sitting in a customer business and doing customer trades and you're facilitating the business, as you know, many of these markets are not agency markets. they're principal markets in the over the counter. and i think the right thing to conclude is, if you are acting within the context of a customer business, there's clarity that banks can commit capital and we are going to work with the regulators to make sure there's property liquidity in the system. mark: great, and as you are working through all these rules, mr. secretary, you were not confirmed yet so you couldn't be at the first meeting the president had with the advisory forum, the 17 ceo's. whatever the rules are, all the different agencies are conflicting and have oversight and a lot of duplicative information. it is hard to get answers. and one of the commitments was to try to streamline that process.
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if one agency does that, it won't be fixed. are you working with other agencies? sec. mnuchin: absolutely. the issue is we need to make sure that all he regulators are interpreting the rules consistently. if they have differences, they work them out and put out consistent guidance. and then not just the guidance but we need to make sure that the people who are actually regulating in the field are consistently following that guidance. mark: great. let's go to the g-20, which you just came back from, again, if i could. in the communique you endorsed the idea that all of you would work together in a regular -- on the regulatory issues and cooperation. obviously, there was some disagreement about whether fair trade language and so forth. what is your view about working together with other governments in the regulatory process? the infrastructure that was built after the last world war and the u.s.'s responsibility in it? sec. mnuchin: well, you know,
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what i would say is in general, i think these meetings, whether the g7 or the g20, particularly on the finance tracks with finance ministers and governors, makes a lot of sense because there are lot of issues that cross over our various economies. having said that, i don't think in many expects there's a one -- many aspects there's a one size fits all regulatory response for every single country that is exactly the same. so, we have had very productive discussions. i've actually been hearing a series of bilateral meetings. think i did six or seven of them already today. after this, i go back into what i call speed dating with financing board governors. mark: sounds really fun, yeah. sec. mnuchin: we have had very productive discussions, and particularly, we just finished having a summit with the chinese at mar-a-lago and had very productive economic discussions and we look forward to the
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outcome to that. mark: and i know that there's later panelists who will talk trade and other issues. i assume it is hard to differentiate, really, some of the trade issues. sec. mnuchin: i think they're all distinct areas, and many cases, we're kind of attacking them one by one. mark: and one issue, then, here, it comes up a lot in the g20, important to u.s. businesses, is the state eight issue, -- aid issue, where foreign countries are saying that u.s. businesses owe more tax there because they got a deal that was unfavorable? and then you have the base erosion and profit shifting. are you engaged in those discussions? sec. mnuchin: not as involved at you are, i can assure you. yes, we're discussing those at
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high levels, and they are very important issues. again, we have to make sure the tax code is simple enough that we can administer it throughout the world. mark: obviously a very important issue because that's part of the whole base erosion issue. that would help tax reform, if we could get some of those things fixed. shifting over to the international side, what about international capital reforms? the basel committee any insight? , what are your views on that? sec. mnuchin: janet yellen sits on that committee. that is not me, although we do talk regularly about a bunch of different issues. this is one of the things we do have conversations on. and my sense is that the committee is close on these issues. so, you know, again, i think it is moving in the right direction. mark: the capital requirements, you think they are on par with where they should be in the u.s. or not? sec. mnuchin: i don't believe there is a one size fits all, but on the other hand you have to have a level playing field
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across international markets with large banks. so it is something the committee is working closely on. ok, keeping in the g20, one of the issues that was brought up, which is something you are very focused on in the u.s. -- the end of the day, we will have director mulvaney talking about regulatory reform and other issues. maybe there could be a cost-benefit analysis in the g -- to regulations and the g 20, that japan and europe were behind this. how do you feel about this? is that something that could really happen, that there should be a focus on the cost? -- costs coming out of global regulators? sec. mnuchin: again, my own view on this is that you have to look at, when you put in place regulations, what is the cost and what is the benefit? you know, it is just beginning to have discussions on those types of things at the g 20, but i think it is appropriate. and again, you can have good regulations that of have to be
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-- that do not have to be costly and hinder business and lending. as you are working -- you are not fully staffed yet, your team. you are trying to get many through the confirmation process. as you are working with your counterparts across the world, are you -- i mean is there , anything the business community can do to be helpful to you? to give you the information we are seeing -- what we can do to prepare you for these meetings or share our views? or have any input? sec. mnuchin: first of all, let me just give a little bit of a plug for the career staff at treasury. you probably know this from having been there. i had this view of showing up to work at having nothing to do because none of my people were there. i mean, the -- we have about 98,000 people in treasury including the irs. but even within the departments, where we have a couple of thousand people alone, the career staff is incredible. so, i mean, i have never been
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anywhere where i asked the question and the next day i get a briefing book on this. you have people who have thought of these issues for long periods of time. this isn't about republican issues or democratic issues. the staff is very impressive. i would like to get the senior team confirmed, going back to your comment -- this administration is willing to reach out and get ideas from outside. my view is, we are not proprietary on ideas. wherever the best ideas come from, we want to hear them, we will think through different approaches, and we will make a decision. and it is a practical way of looking at things. mark: makes sense. one issue we have not touched n willthink gary cohe mention some of this. as we consider infrastructure, how does that figure into your agenda? sec. mnuchin: i know you are
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going to speak to him later. he is really going to talk about infrastructure. what -- but it is a big priority for the president. he has talked about wanting to dedicate $1 trillion. we obviously cannot finance all of that on budget. gary is very focused on this. it is a big priority of the president. mark: makes sense. i hate to end on a sore note, so to speak, but let's talk about health care. the president has talked about putting it back on the agenda. that really does affect, in some ways, the tax process throughout the year. you are using budget reconciliation bills. we had a discussion earlier in the day on that. with the health care bill how do , you foresee it moving forward? any insight on that? sec. mnuchin: what i comment is, whether health care gets done or doesn't get done, we will get tax reform done. and kind of -- i am not as close to the health care discussions. i know the president and team continue to look at that. we will see where that goes.
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the current health system is a disaster and needs to be fixed. -- i guess youu are saying you don't know yet. there are billions and trillions of tax increases in the affordable care act. you're saying you don't know yet, but there's a trillion dollars of tax increases in the healthcare bill, the affordable act. is it your thought would be dealt with in tax reform if we back to healthcare? sec. mnuchin: we'll take everything under consideration. mark: a last question, i guess, that we have time for, would be a tough one. sec. mnuchin: tough one? the easy onesving so far? mark: i'm trying, but you're bouncing them off like a basketball. it's incredible. sec. mnuchin: i'm learning the political skills of washington. mark: i'm sure in your deal you're a lot more specific on these things. last question. this is early for you.
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maybe we'll have another chance to talk to you next year, the year after, even more thought out. you've got an incredibly important role. obviously you're representing all of the united states, the economy, because of the role you play in it. i'm sure the magnitude of the job hit you quickly, but the days are long, the years will be short. when you think however long, four, eight years, you'll be in the role, whatever it might be, what do you want your legacy to be? sec. mnuchin: economic growth. the one thing about this job, and there's -- you know, as i said, there's a huge operational component to this. i can see how you go through four years, and you do it a lot, what we'reused on going to get done. to me the number one issue is economic growth. be through tax reform, regulatory reform. i'm also very focused on we need housing reform. we have to fix -- we have two entities, fannie mae and freddie
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mac, sitting under government control. out how tofigure reform housing finance, so we don't put taxpayers at risk, and liquidity. i'm also very focused on cyber security. our standpoint -- and again, this is a big issue across the government, but from in treasury, one, you know, we maintain probably largest database in terms of records, and we need to make sure that's protected. we need to make sure that uspayers can interact with safely and securely. and then from the standpoint of the financial system, i'm working very closely with banks financialre that our infrastructure is protected. along the way, the debt ceiling increased, a few minor things, but those are my priorities. mark: you don't have ambitious
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goals. when i'm hearing. sec. mnuchin: it's a big agenda. mark: it is. to debt ceiling is going be -- sec. mnuchin: see. i gave you a freebie there. mark: i know you did. be reached.o you've got extraordinary measures you can do. sec. mnuchin: i'm using superpowers. we had a big day on april 18th, in tens of billions of dollars on tax debt.
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i'm confident we'll get the debt ceiling right. we'll have bipartisan support. mark: hear, hear. thesecretary, we wish you best of luck, not only your responsibilities, but your legacy. sec. mnuchin: thank you. have great confidence in everything you're doing. sec. mnuchin: thank you very much. [applause] >> current federal government spending authority runs out a today, as craig kaplan points out. congress has to pass a bill to before theing midnight deadline next week to avert a partial government shutdown. two-weekreturns from a break next week. caplan, our capitol
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producer. mexico's secretary of finance and public credit is toe in washington, d.c. discuss the future of u.s./mexico economic relations, and how the trump administration is impacting mexico's economy. from the center for strategic and international studies beginning at 2:00 p.m. eastern on c-span. march for science rallies will the nation's capitol, marking earth day. u.s. scienceout and technology policy live from the american association for the advancement of science today here on c-span live starting at 5:30 eastern. 8:00coming up tonight at eastern, nbc journalist and women's alzheimer's women maria shriver at 8:00
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eastern on c-span. this weekend, book tv is live 22nd annual "los angeles times" festival of books. our two-day coverage starts saturday at 1:30 p.m. eastern with a conversation about .iographies at 3:00, a look at the party, with hugh hewitt, corey fields, and peggy grand. 5:30 p.m., the author of "the questions."l our live coverage continues 1:30 p.m. eastern. it's a discussion on the environment. at 4:00 p.m., gary young talks about his book "another day in the death of america: ray short lives."0 at 7:00 p.m., david horowitz on on "big agenda:
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's plan to save america." the the first 100 days of trump administration approaching, c-span takes a look cabinet,esident's which includes the senior most appointed officials in the branch.e part two begins with education betsy devos, narrowly confirmed in february with vice pence casting the tiebreaking vote. the daughter of a wealthy michigan family, the wife to the amway fortune, ms. devos has been a longtime republican party activist and one time as state party chair. her education advocacy over a onber of years has focused the issue of school choice, including


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