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tv   Wall Street Journal CEO Council Discussion with Larry Kudlow  CSPAN  December 4, 2018 9:20pm-9:52pm EST

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process they talk about investing in people as a part of the five-point effort and that was pretty remarkable that you can't be authentically safe thas your employee isn't safe to. thank you. [applause]
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we had some kind of an agreement cannot be deal with an understanding we had many of these before where china says it will do something and then china doesn't. how is this time different? i am hopeful and a couple of reasons i come in the discussions between the two sides leading up to this were
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broad and more specific than we had before i will give you an example to approach. on the friday and saturday before the dinner, steve mnuchin and i had talks and he said something that struck me he said he can move immediately and we divided the world of trade issues for three different categories. both sides agreed on match and the least two of the categories there was more inclination to agree, not the third put the
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first two. so i asked him, i said immediately what does that mean. immediately is a good word. i don't know the answers to that, and it might b be a pulpit of a litmus test that he meant we are pretty far advanced in our discussions we can do these so that is the first time i heard that.
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along with the broad scopes of the topics on the table that suggested to me this was a bigger deal than the conversation. >> basic things about the 90 days that the u.s. has put on this. we haven't even acknowledged the time zone that the u.s. is expecting. >> we will see. i wouldn't read a lot into that. one of the things that was
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interesting to me president trump had been saying for quite some time he had a good relationship with the president i'd nevethat i'd never seen hime personally. i saw a chemistry between the two and i will add to the. president xi agreed quickly for president trump asked for a designation killing hundreds of thousands of people. almost without hesitation he says yes and second, later in
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the conversation he asks president xi what he'd reconsider the deal if it came up again and almost without pausing, president xi said yes i will. for many months i have said. people ask me recently what should china do and i would say tongue-in-cheek they ought to say yes to something because
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they never have. they are not saying i'm going to say yes. that's why i'm raising this anecdote. >> we know the leaders can be charming and gracious but you are asking them to do in 90 days but has not been accomplished over the last two decades of asking. they continue to subsidize the state on enterprise and hack companies for information they used to build other industries
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to create unfair standards so you're asking them to move in 90 days it's kind of hard to imagine that despite the relationship they are necessarily going to move this time. >> i have no assurances. but in my judgment and others may disagree me come further and the table of content is larger than anything we've seen before and that doesn't ensure what they are willing to talk about van anything we've done before. i'm glad we have bob lycos --
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white house or who's going to monitor these agreements and to use an old phrase he's the best in the business and we will be extremely tough on that. it looks like the ball is being moved in the right direction much more than the past eight or nine months but i can't sit here and say we are going to get this and this. >> what should they use as a measuring stick of success to determine whether or not we are beginning to progress toward those goals to say we are going to continue progressing or there's not been enough progress made in the end of the 90 days or you prepared to raise tariffs
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>> the president certainly is. >> president trump believes they will. they raised it in the retribution not only for that reason that they can ring it down to 25% we would be back down to where we were. i will use that as ... test myself. it's so easy. so that's one area. i would have a lock when they are lowering the rate on the agriculture and industrial commodities i would keep track of that and i wor wouldn't mease
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against specifics. these are not government to government transactions into the issues of macroeconomics and they've said a lot about that in the meetings. regarding the other points you'vyoumade, the most importane long-run health of the united states is the technology related issue and the list you gave is correct. we cannot let that happen. this is what gives applications, entrepreneurial. they cannot steal it and issues of ownership and they insist
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they owned the majority and they can order the companies to put their blueprint on the table and that is a formula for stealing the technology right there. >> some high point. these are big problems that the businesses had and at the same time we are asking them not just to change the relationship international business but to change their economy this is the communist party using state on enterprise for patronage to control the economy, to control their own power.
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>> given this uncertainty, should ceos look at this and say we are not sure what's going to happen maybe the administration will understand this, maybe she was being genuine or maybe not should we be diversifying away from china pulling things out of sending them to other places in the world? >> i think american ceos should be realistic and in the past 20 years where migrating in history suggests china stopped, i don't
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think much has happened and there is some evidence they are moving in the wrong way. i'm just saying you have to be realistic. i don't thin think that a lot of people have been sufficiently realistic. you just have to keep your eyes open and i think these talks will be significant. i don't think these talks are designed to completely change the system. i think they are centered on a variety of specific issues and
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as much as i may want to have them adopt the supply-side free-market model, i prefer lower tax rates i'm not sure we can get there in 90 days with china. the president is clear on this we will go back to 25% on the existing good services and may add to that. i understand having been a journalist for a long time you could be too cynical.
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it is entirely possible. they've been masters of policy talking about 20, 25 economic and business sectors. where is our 20, 25 plan, not industrial policies so much >> basic science investment. sometimes it works and sometimes it doesn't.
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he's capitalist, so am i. and so are the people around him and that is what the trade talks are all about. he is a trade reformer and he means it when he says he would like to have zero subsidies. it's a tough road but he means it. i've learned from him sitting around talking about overthrowing soviet communism when most people were trying to figure out how to do business with it.
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some of the lessons are applicable. i want 2019 and i hope to get there. if you allow me would allow me,e economic policies have done very well into the economy is growing faster than the critics suggested. i'm amazed that this recession and pessimism that has swept the media but the evidence is quite different than the speculations. let's go to questions. you don't see a recession on the horizon for the couple of years.
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can we get a graphic of the deficit is this a bad thing happening? it a is a percentage of gdp. >> the projection that included some spending cuts in 2018 it's gone up and the budget office is much more negative to the white house on the size of the deficit going out. the level of the deficit was about 100 some billion lower and
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i believe it was lower than our own. we argue that they are way too low and it's going to cal fall r the next several years. i would argue that the tax cuts already have paid for at least two thirds maybe more. the estimates before and after the tax cut than nominal gdp was raised by $6 trillion that's where i get this number that's their own model we are trying to
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be as realistic as we can for the upcoming book as the charge shows it comes down quite a bit and i've always been associated with the scenario. we are on target for growth and that is the building block.
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it's once an and across-the-boad 5% reduction in domestic spending and we will attempt that. the budgets are dead on arrival that we are going to fight that battle. he is a dear friend and said we are all budget hawks but i do want a limited government and i won't growth of the questions from the audience.
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>> the same question i asked both of you. there's a list of 172 to the present it and if they agree on behaving perfectly and to stop side effect and if they agree to the protection overall bu what'n the list is really important as priority for the side? >> whatever happens or doesn't happen the enforcement will be very strong trust but verify and
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we have a history. the various aspects of this technology problems are so important we are talking about commodities and i asked. working on the derrières that's
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important so a quick plug on that if they open their markets to us in the energy area all of which has come up, i believe we will have an astronomical increase on the sales to china for the reason our economy is the most competitive in the world right now. it's the most commodity and if you give a chance we will sell and sell which will benefit the economy and farmers and manufacturers but also benefit chinese people and get the best there is. so that is important but i will come back to the technology related issues let's get one more question on the back before we come to break.
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what about the fact that chinese basically have a circle around an island that gets stronger to east asia and we can't really play into that i haven't heard much about what we can do with google or facebook to get to the market or maybe that is unrealistic. as you know, the limits on investment which go to the technology issues which i call the family jewels so we put into the firmament and we are not it was an important piece of legislation to protect us. now i think we do telecom stuff
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better than they do which i don't want to make a federal case out of this but that's kind of where the theft comes from, does it not if they can do it on their own i would presume they would if they can't, they are not above stealing it and i don't know that we are going to end o up back, but that whole process which includes cyber security issues as you know it may be kind of comes down i've livelooked at this for eight ore
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months but the more i think about this it strikes me that the ownership issue is really important. they need to change their joint venture system it's the root of all evil and i don't know why we have these been jurors. the chinese authority to get a pretty good at the technology in whatever field it happens to be. to continue to emphasize that, bob talks about the time.
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and i'm glad to see a lot of american businessmen and women are talking about this now that conversation is now moving in our direction people are picking up on it and i saw my friend gave a speech on the subject of. i will sell as much energy and whatever i want, but the ownership issues, technology issues, cyber, that has to be addressed for the future of the united states and to the relationship and any potential trade deal. you hear other people from the administration i'm just going to tell you this camper really
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wants palpable measurable reforms in that area. this other stuff has to stop. we put up with it too long and i think now the center of the discussion is finally moving. i'm going to give kudos to president trump. i'm not here to give political advice i'm just going to say president trump inherited this including the wto. the plenary sessions virtually every country agrees the wto has to be completely reformed so
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that's one issue and every country agrees with us they are experiencing it whether it is germany, france, whomever they are a threat and this has to change and we do have a trade coalition and we signed up for a trilateral document which explicitly discussed bond market problems with china etc.. we have got to make change just. i don't want to be overly pessimistic or cynical, sorry i
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didn't mean to say that but i just wanted to say that degrees of importance that have to be changed. >> we will leave it on that optimistic note. >> coffee and refreshments outside. we will be back. "the wall street journal" conference the ceos of insurance company aetna and dick's sporting goods talk about politics. "the wall street journal" moderates our discussion. [applause] >> welcome. >> welcome. we will jump right into it. this morning we spent a lot of time talking to the business and external affairs and this is one

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