tv After Words Stephen Moore Trumponomics CSPAN December 29, 2018 10:00pm-11:03pm EST
daily. in 1979, c-span was created as a public service by america's cable television companies. and today we continue to bring you unfiltered coverage of congress, the white house, the supreme court, and public policy events in washington, d.c. and around the country. c-span is brought to you by your cable or satellite provider. >> next on after words, economist stephen moore discussing the economic policies of the trump administration. he's interviewed by veronique derugy senior research fellow at university murdata center. interviewing top non-fiction authors about their latest work. >> veronique: it's my pleasure to be here today with steve moore, to talk about his new
book called "trumponomics," it's a book he co-authored with arthur laffer. steve, i don't think you need introduction to anyone who's worked in washington, d.c. since not everyone is from here you are a distinguished fellow at the heritage foundation but you have been pretty much everywhere. you've been at the cato institute, you've started a club for growth, and in which year was that? >> stephen: it was around 1999. >> veronique: until 2004. you are a contributor at cnn, a regular -- on fox before. you've been everywhere, and. >> stephen: i'm everywhere too. >> veronique: your co-author arthur laffer if you are in the world of taxes everyone knew of the laugher curve, he was a reagan economist, and the president of laffer associates.
so it's my pleasure to be here to talk with you today. you and the head of the counsel of economic advisers kevin hasett you are in my opinion the happiest warrior in the free market. i agree. i believe they belong to that club too but you are this really happy warriors, optimistic, true believers, and i've known you for a long time and this is one of your distinguished features. is it okay one of the things i've always loved. >> stephen: we think things are going to get better. julian simon was my mentor and his whole philosophy that earth gets better when you love freely and love free markets.
and that's true. the left is so doom and gloom. it's oh, god the world is coming to an end, or we can't grow faster than 2% growth. and incidentally i think trump is a economic optimist too. i think he think physical you put in place the right policies people will flourish, everyone benefits, people will get richer, and that's one of the things that attracted larry and i to trump. >> veronique: so talking about -- i'm sorry you couldn't be there, but i'm going to share a small story. i met until the book party, i met art in person once. it was in the early '90s in france and we were having breakfast at the intercontinental. i was a student in economics, and it was this meeting like a rockstar for me. i'm he said something that stuck with me for my whole life, and to this day i think about it
even out of the context of taxes. he said to me that talking about the reagan tax cuts, and one of the problems and mistakes that we made was to actually make the tax cuts implemented it -- and i was like i can't remember what he responded to what i said but i may have implied it was a good thing, and he's like absolutely not. you tell people that things are going to be less expensive tomorrow they're going to defer -- and investment, and i just stayed with me. >> stephen: by the way that's relevant to the tactics debate. a third of it is how we got the tax bill passed, and one of the stories we tell in there, in that book about the tax debate is that there was a stage by the end of the tax debate, and that tax law was -- has been a phenomenal success. it's been unbelievably positive for the economy.
there was an issue about whether we should delay the business tax-cut in exchange for a slightly lower rate in the longer term. i was agnostic on it. there were arguments on both sides. arthur was steadfast, you're making a big mistake, you're going to hurt the economy in 2018 because as you said people will delay their decisions, and that will lead to less economic activity in the short term, and he says that's one of the mistakes that reagan made and that's why the recovery under reagan didn't start until the full thrust of the tax-cut was put in place. >> veronique: let's talk about the book, that's makes a lot of sense. so what is the book about? >> stephen: it's a firsthand account. it starts from when larry kudlow and i met trump, and originally it was to be the three of us, and everyone watching the show
probably knows donald trump stole larry kudlow away from us and he's the most important economist in the world, and larry and i met trump exactly three years ago in late 2015 when the presidential race was starting, and we go through -- from the first chapter is called meeting trump about the first meeting with him through the whole campaign, and the tax fight, and what we try to do is people watching the show have strong opinions about donald trump. probably half the people love him, and half hate him. he's a pollerizing figure. and yet what we try to do is give an honest assessment. what we liked about trump, how he operates, what i call the good, bad and ugly about trump. i greatly admire the man, and you know this too, there is a lot of great things about trump, he has a lot of character defects and we try to lay that out in the firsthand account. but i've come to admire him.
he's focused -- what i really liked about him is he was focused on growth. he understood you have to get the economy growing to solve the problems. that was music to the ears of larry kudl oh, and myself. and that was the focus of what "trumponomics" is about. it's about growing the economy and putting people back to work. the second feature of "trumponomics" is that trump is pro-business. he's pro-american business, and i love that about him because you can't have jobs or growth or higher wages if businesses aren't doing well. that's a big change from when wn we elected a community organizer who didn't know a lot about business to a guy who is focused on how public policy decisions will benefit american businesses. >> veronique: we're going to talk about this but first we're going to talk about the man. one of the things -- it was a good reminder in your book.
you reminded us how unlikely it was. what a force that president donald trump is president donald trump at the time. did you see it coming? >> stephen: trump took a big risk to his reputation, i admire him for taking the chance. everybody said he couldn't win. i was rolling on the ground laughing when he announced it, i thought it was a publicity stunt frankly. i didn't buy into it. two things changed my mind about the viability of trump. one was meeting him in person. he's a winner. i remember walking out think he has a good chance of winning, he's personable, i always say most politicians are wonderful people in public and generation in private. trump is the opposite. he can be a jerk in public but he's is a wonderful person when you meet him personally.
that "can do" spirit resonated with me. the other thing that turned me on to trump was attending his rallies. i started to go to two or three of them because something was going on and i didn't know what it was. you had all these other -- there were 15 republicans running for president. >> veronique: many of them who you liked -- >> stephen: i loved them all but trump was the one i hadn't met. i went to two or so of these events and i was struck by the people who were there. the first thing i said to trump when i met him was -- i don't know if i love you but i sure love your voters. these were people who were not republican -- not democrat, they're not -- they were people who tended not to be very politically active, and people left out of the political system. they were angry.
they felt like -- there were people from michigan, ohio, pennsylvania, wisconsin, who felt like the middle class had been left behind, and both parties were not attentive to what they were saying, whether it was on immigration, trade, or their personal economic conditions. and trump really tapped into that rage. he saw it before anybody else did. i love these people. you go to the rallies and see school teachers, and construction workers, and bus drivers, and many blacks and hispanics, and i remember one of my favorite stories about the events was you typical 500-1000 motor vehicles because trump dominated the biker vote. these were people upset about washington, and they thought washington had become greedy and self-indulgent and completely out of touch with america, and you know what? they were right. >> veronique: it's interesting i was thinking when i was reading
your book. i'm always trying to think about the trump phenomenon. and dale carnegie was the greatest coach in american history and he used to say the most important thing you can do is to make the person you're talking to feel important. i wonder whether this is what president trump has done, is doing at these rallies. that the others weren't doing. >> stephen: he was. he was attentive to what they were saying, he was listen to what they were saying. a turning point in that election i think was when hillary clinton called these people deplorable. she meant that. a lot of republicans too were intentive to these people but the left held these people with contempt. these were working class reagan democrats, work 40 hours a week and worked hard and felt no one was paying attention to them. their financial stress and worry about their jobs, and factories leaving the small towns they
lived in. and when hillary said these are irredeemable deplorable people this was a elitist view of liberals that somehow they know better than people themselves about how to run their lives. and that's what -- that was the key to trump's victory. i didn't know he was going to win but i knew he had a good shot. people were saying no way he can win. >> veronique: the night of the election i think hillary clinto? >> stephen: one lesson i learned from the trump campaign, i think this is a important lesson whether you like him or don't like him. whether in science or finance, or business, or sports or whatever it may be that oftentimes in life, and more often than you would think the experts are wrong. and they could not have been more wrong.
every political pollster, punneddant, consultant they had all it wrong. that's why when people say they know with certainty that something is going to happen people should be skeptical of that because a lot of times experts are wrong. >> veronique: economists should be more humble because there's a lot of things economists can tell you and more things economists can't tell you. when we predict that a particular tax-cut or spending increase is going to grow, the economy by 1 point -- whatever percent, and then you have three numbers following that and you're like no -- the exact number of jobs -- no we can't do that. >> stephen: i'll give you an example of that, this shows relationship with the climate change. all the scientists believe that. it's not true that all scientists believe it's
happening, and b there is time when the scientific consensus has been wrong over history, overpopulation, running out of oil, you read the report but what the economy is going to look like in 2100 -- it's like we can't predict where the budget is going to be. >> veronique: going back to the trump fuacknowledge phenomenon,e things you talk about in the book is something i've read other places. you read it by bob woodward, the gatekeeper, every book i've read and that -- on president trump says this, and all of my friends who are working for him, have worked for him in one capacity or the outer say the same thing. it has his private personnel, and his private one.
one of the things i find remarkable which is echoed in your book is that he's a great listener. he's a great listener, he will focus on what you are saying. and listen attentively. and if you elaborate a little bit because i suspect our audience may be surprised about that. >> stephen: and he likes to debate, he doesn't surround himself with yes-men. he likes the fact that when we told him we were for free trade. he's not a free trader by any means. he likes to debate it out, and duke it out. we'd have fights about that and they were friendly fights they weren't disagreeable, but we disagreed. i think a good ceo should not be surrounded by yes-men, and i'll admit he's going to make the ultimately decision but people say gee he has disagreement,
what's wrong with that? there should be all sides presented. >> veronique: do you think -- i agree it's important to have people telling you different side of the story but he seems to have some sort of a taste for the fighting spirit within his administration. it's not a peaceful environment. >> stephen: there's a lot of chaos, and sometimes the chaos is excessive. no question about it and to his detriment, but there is a lot of chaos. in his first two years i was thinking how much of his original cabinet is left at this point. there's been a lot of turnover. if you fail you're fired. he demands performance. one of the things that has been unfair about him the criticism that oh, like he didn't pay the
vendors that we're working on rebuilding his buildings. one of the things i found interesting about trump he's kind of a perfectest, he told me the story he would go through the buildings after they were built. he's go into the bathrooms, and run the faucets and if something wasn't working he'd say this isn't working, and he'd say you need to get it right until it's working. the vendors say he didn't pay the bill that's because they didn't deliver what they promise said. >> veronique: i would like to do this with our budget because there are things that aren't working as advertised or not working at all. obviously being a republican is a big -- there are questions i think ability labeling him full on republicans but maybe this is what the republican party is now, i'm not a political scientist but what are the main
differences you see between president reagan, president bush, president obama? not president obama. >> stephen: there are a lot of similarities between reagan and trump. reagan unbelievably, i think he was one of the five greatest president. he won the cold war, rebuilt the any after the disaster of the 1970s, trump -- just similarities between the two that i think are important for people to realize. number one, both trump and reagan loved people. loved people. trump loves people. he loves to be around people. i have seen him in every venue, and goes up and talks to people. second of all, and this is maybe most important. liberals should pay attention to this. both reagan and trump will always, always underestimated by their political opponents. you're maybe a bit too young to
remember the reagan campaign, but when reagan ran for president people laughed. ronald reagan an actor running for president? and then he won a surprising victory. so that was areas they are alike. the area where they're different ronald reagan was idial ageical, reagan wasidia logically econservative, and obama too. reagan understood the free market, and he grew up with bill buckley, trump is not ideological, we are the way we look at the world. trump looks at it as a businessman. now, fortunately because most of the things we believe in are the things we believe in he comes
around in most cases to the solutions we believe are the best way to grow the economy. there are two issues that he is really taken on conservative dogma. and the first is on trade. where he's not a conventional free traders, and the second is immigration where he's been vere of what he wants to do. so those are areas where he has conflict with the party. one last thing -- >> veronique: i can think of a few others. paid leave -- i am concerned that because there is no ideology there that he can desuede be swayed by arguments that are unofficial. i know a ton of business men who are bright, and phenomenally bright and incredibly better than me at making money and yet
the level of actually fundamental understanding of economics is really, really just very, very thin. and that could be a problem. now, i recognize that you can be the head of the country and not know absolutely everything, but it does raise some real concerns. >> stephen: it does. i'll give you an example. one of the things i don't like about donald trump, for example with the gm lay offs. well donald says we're not going to give you anymore money, i hate it when plants close, it's a terrible thing when companies lose their jobs. that's a problem when companies have to be told by the government when they can close. >> veronique: should the government be ran like a business? there's no profit in loss. there's no prices system to actually direct you to tell you
when you are correct or when you are not. and the i can see the appeal of the message. i am actually not sure it works for say for instance the united states is not a company. and a lot of these analogiies of the business world don't translate or when they do they lead to the wrong message. i think trade is a very good one. we'll cover trade and immigration later, but -- and so this whole business thing i think as a message it's great. it might be energy for sure. but there's some limits to this. and certainly, one of the things i am also very wary i've worked a lot of issues of cronyism, which is the unhealthy marriage between government and businesses, and president trump for all his business acumen, one
of the problems i see sometimes is his temptation to go full-on cronyism. it's not like for instance, think about fox con. they say all the encouragement and incentives to particular company to prevent them to go settle somewhere else, and we've seen cynics here with the big fight with amazon president trump had nothing to do with thus. there is a risk of being think pro-business should mean you get rid of the barriers to do business. that's regulation, and taxes, and a whole lot of things. and president trump we're going to talk about this. i think on deregulation he's like this is an area where he's incredibly he really knows what he's talking about, he's impressive, and he's doing a lot of good things. there is always a risk, right? when we say people are
pro-business, that they are actually pro-cronyism at the same time. >> stephen: so a couple of ideas. first of all, the government is a $4 trillion enterprise. it's the biggest enterprise in the world. bringing business principles to how we operate that makes sense to me. you don't waste money. you have a bottom line. you make sure that if you only have so much revenue you don't spend over your revenue amount. trump has brought some of the principles to washington which i think is well -- long overdue. one of the things about barack obama is -- barack didn't know anything about business. how could he possibly know what economic policies are going to work to make -- businesses to grow. >> veronique: there's like maybe the biggest dwins between trump and obama was really one
really -- i don't know if it was true, but listening to him it felt like a anti-business sentiment. under president obama. and under president trump i think companies are relieved. >> stephen: look at what happened -- we have charts in the book that say little -- when people say this is the obama recovery -- what are people talking about? under obama the economy grew 1.5%, it was sliding down into a recession. look what happened to consumer confidence, investor confidence, business confidence, it went through the roof after the election because donald trump knew something about business. when i talk to business men and women, people say what's the important thing trump has done to unleash the incredible economy right now, and in my opinion it wasn't any one thing. it's that businesses knew if they were successful the government wasn't going to come after them with a baseball bat
and hit them over the head with it. that's getting government as much out of the way. we want clean air, we all want safe water, and financial protections, but in ways that aren't going to inhibit our businesses. i'm pro-business. i'm not a croniest, but you can't have jobs without businesses. and the democrat party has become very anti-business in their outlook. >> veronique: let's talk about the tax cuts. big thing. you and i -- i've been talking about the tax -- and it's done. i would say the idea of in 25 years i will still be calling for the reduction of the corporateeral income tax which depresses me. i don't have to say this anymore. tell us about the tax-cut how how it came to be, and yeah. >> stephen: so in our first
meeting with trump, he asked us to be economic advisers and so the first thing he said to do, he knew in general the direction he wanted to go in, he wanted to lower rates and help businesses succeed, and bring -- make america more competitive place so that this is a factory's leaving they would come back to the united states and we were fully on board that. we put meet on the bones and came up with the idea that why don't you do 20% business tax rate because you know this. you've done research on this. we were up here and the rest of the world was up here. there was a 20 percentage point gap. as we said to trump this is a 20% tariff we're putting on our own goods and services we're putting all our businesses right out of the gate as a 20% disadvantage. and almost twice as high as the average. >> veronique: when you're higher than the french -- and the other
thing is we had a world war tax system. so those two things together were detrimental to companies. and the left is always talking about how well the corporate income tax at home by keeping their money abroad, but it's not a solution. every investment decision especially of that size that is dictated by a bad tax system is not conducive to first to grade business decision or grade economic outcomes. >> stephen: and he got that. he was not a tough sell on that. we said we're recommending to you that you run on a 20% business tax rate, and i'll never forget and he said no i'm not going to do that, and he said i want 15%. and what's so interesting is that from that day until we -- it was almost exactly a year ago that that bill was signed into law and we got the votes we
needed, the 50 votes in the senate, and mitch mcconnell coming into the room to see the president, and he said i'm so sorry have i couldn't get you 15%, would you take 20 percent? he understood if you start at 15%, and negotiate it up -- if he had started at 20%, it would have been 25%. the other thing trump did that's important on the tax bill. every time he'd bring it up, he's say what about the small businesses in this country. i want to make sure every businessman and woman in this country gets a tax-cut who has started a business. this is a giant tax-cut for the large corporations. every small business that had a tax liability has gotten a tax-cut. that's where the juice of the economy is coming too. and we did the repatriation to
allow businesses overseas to bring it back at a low rate. we estimate half a trillion dollars to build factories and reinvest it here. >> veronique: there's a minimum -- one of the changes that were made is you have a minimal global tax? >> stephen: i believe there is on the business side. we got rid of the -- of the corporate alternative minimum tax. but -- you know for businesses it's been a very positive thing. we're seeing a lot of money come back to the united states. we're seeing a lot of business investment, and the most important point. this is something that larry always -- larry kudlow said all the time, and trump says all the time because it's true. when you cut taxes for businesses it's a middle-class tax-cut. people say how could that be? when you get businesses investigate more in the country they're going to hire more workers, pay them more,
predictive is related to the business investment. if you have a truck company that has 18 trucks, and now they have 20, they have to hire two more truck drivers. it was oriented to get businesses healthy, so they could hire more workers. and you know this we have 7 million more jobs than we have people to fill them today in america. that gives workers a lot of opportunities to had bring their wages up. >> veronique: i think it's a point worth repeating. that the corporate income tax rate is not just a give away to businesses. o. >> stephen: it helps workers. >> veronique: the economic research shows very clearly it lese to more capital investments which leads to more productivity, and that leads to higher wages. and the economic growth means as you said more jobs. but also the job that exists are also going to be higher-paying. it's something that is counter
intuitive i think for people, and i was really glad during the fight for the -- >> stephen: when liberals say this was a tax-cut for rich people or corporations they're wrong. we did a study for heritage saying the average american gained $2,000, average workers have seen a $2,000 after tax increase in their income and when you include the increase in salaries we estimate $3,000. if you're a family making 50-80,000 dallas a year, and you get an extra $2,000 a year in your paycheck, it isn't crumbs, one story i was in dallas, i was walking down the street and this latino woman walked by me, and grabbed me by the arm, and asked if i was the one who talked about economics and worked with donald trump, i smiled and said
yeah, that was me. she said i did not vote for donald trump, and i don't like him. but i got a $2,000 bonus from my employer. for the first time in five years i'm going to be able to take a vacation. that's the kind of thing that means a lot to a middle-class family. >> veronique: i'm sure. and in fact after the tax plan was announced that it was a done deal, it was signed, there were all these waves of bonuses across the country, increasing wages, increasing paid leave, that's a lot of this stuff, and it wasn't in my opinion it wasn't at all the tax-cut already working per se the mechanism of the tax-cut but it's the optimism. people feel good about the future. let's talk about the individual side of the tax plan. >> stephen: so on the individual side you and i have known each other for a long time. i think we would like to see a
flat tax, get rid of the loopholes. we try to do as much of that as we could. if there's an area we failed it was that. taking on the special interest greuches and getting rid of the loopholes is a difficult thing to do. we weren't able to get the mortgage deduction, charitable deduction, the special interest loopholes. we got rid of some of them. i'm proud of the fact that no longer people deduct their high taxes because if you choose to limit a high-tax state to live in a high-tax state. people in new york say i can't deduct my high-tax number one, you decided to live there, and when i should people in texas pay higher taxes so you can live there. we limited that to $10,000 per household, and we cut which rates by 10-15% including the highest rate which we got down
from 40% to 37%, and small businesses can deduct 20% of their business income off their taxes so their rate is closer to 30%. >> veronique: with the state and local tax deduction we saw this very weird political moment where the democrats in high-tax state were complaining that their richest taxpayers weren't going to be deducting their taxes and their tax bill was going to go up. it was bizarre. >> stephen: this is a great point i want to explain this to the viewers. if you're a liberal you have to understand it. one of the things we did in the tax plan is doubled the standard deduction. you check off a box and you get a standard deduction, around $10,000, or you can go through -- itemize your deductions, but what we found is that almost 90% of americans now are better off just checking the box, and you don't have to keep
receipts, and check the box. the only people with exceptions that are left itemizing their deductions are people in the top 10% of income, and most of those go to the top 1%. so when liberals say they want to bring back the state and local tax deduction they're saying they want to bring back the tax deduction for the richest -- the vast majority goes to george soros, and bill gates. >> veronique: it was an interesting moment. you brought up the center deduction. i will tell you i wasn't a fan of the individual side. there are things i liked like -- and it's important for people to know that a vast majority of the income tax because we're talking here about the income taxes payed by the top 10% of americans.
like 17% roughly -- 70% of the income taxes paid by the top 10% income earner, and what i didn't like and it really what i think was a big mistake. again, politics is not my thing. i can understand why you would do it and you talk about it. you talk about it in the book why you would to it for political reason. it was a missed opportunity talking about the middle class tax-cut was just nonsensical. the middle class when it comes to the income tax pays 3% of the whole thing. and doubling the standard deduction effectively what it means is you kick over more people out of the tax roll. and so politically i get it but economically it's a bad idea. and then on top of that, the price you pay in terms of trade-off, economic trade off is you are not getting the biggest
bang for the buck in terms of economic growth. now, again, the politics there's the politics, i get it. but the rhetoric also bothered me. it was not just bad economics it was the rhetoric was problematic in my opinion. >> stephen: just to defend the doubling the standard deduction, i think that was a positive thing to do. what we were trying to do. eventually i wanted to move towards a flat tax, no deductions. every one pays 18%, and the only deductions you get is for your kids and yourself, and you have a great simple system, rich are going to pay their fair share because they won't be able to shelter their money. but what we tried to do is by doubling the standard deduction so that 90% of people don't have to itemize, is we've taken away the political constituency for the political loopholes. if we do another round of tax reform it will be easier to get rid of the remaining loopholes
because only rich people get them. let's get rid of all the deductions now, because it's only the people like jeff bezos who are getting them. of course there were political decisions made all the time. we had to fight like hell to get the 50 votes in the senate. it was dicey. we didn't know until the last day. it was three days before christmas if we had the votes to get it. on obamacare we became one vote short in the senate. we needed to get this done because the benefits to the economy would be so enormous, and i'm pleased -- not with standing your points, i think it's one of the best pieces of legislation we've passed in 25 years. the results have been unbelievable. we have massive job creation, the losest unemployment rates in 50 years for women, blacks, hispanics the construction a boom, and manufacturing boom, people feel it every day.
this wasn't the obama recovery. we've increased the growth rate from 1.5% to 3.5% in three years. the tax-cut was a big part of it. >> veronique: the corporate side is -- i saw the individual side as the way to sell -- >> stephen: the way i'd put it veronique is the way reagan reformed our tax rate in the '80s he brought it down to 28% and the economy boomed. problem was on the individual side. the biggest problem we had when trump became president was a business tax system which so -- you wrote a lot about this. we had the worst business tax system in the world. how can you be competitive with that? we didn't do a lot to fix the individual side but hopefully there will be another crack at it. >> veronique: let's talk about -- let's talk about taxes later in the context of government spending but let's
talk about deregulation. i will say i have been vocal critic of president trump whether it's on some aspect of the tax-cut or trade and immigration but i will say this. on the deregulation side, he's been a incredible champion to the american economy. and the thing that's important to know is that fundamentally the president come the comes to regulation he doesn't have a ton of power. yet he's been using every single tool in his toolbox to actually do what he could do. starting from day one, calling on congress to repeal the latest regulation that came out, and so can you talk more about this? you have a whole chapter about it. >> stephen: i'll tell you the story when the three of us started working for trump, during the campaign, one of the first things he did was he had a
business -- i think he called it his business round-table, and these about 30 ceos, men and women who run great companies, construction companies energy k.s, manufacturing companies. it had a big impact on him and me. donald trump didn't talk at the meeting. he went around the table and asked what is your biggest problem. i would have thought they said the tax system. they didn't. they said it's the red tape and regulation it's strangling us, under obama it got worse every year and that's why the growth rate was so low. businesses stopped investigate. if somebody's going to whack you over the head if you invest you're not going do it. trump that had a big impact on his thinking, and the fact he's a real estate man, a builder, he's confronted these stupid regulations. >> veronique: i remember watching him on tv once, he was doing a prevention.
it was the first time he was talking about economic issues and i was like -- he gets this. he gets it at a very profound level. he had a banner made with all the licensing stages. to build a building. and it was really quite striking. he was explaining things like they're like licensing requirements that make you get two in a row, and then to get the third one, you have a mandatory time of 9 months to wait before you can apply for it, or 6 months, but -- all these incredible requirements. >> stephen: remember when he said in the state of the union speech. using real examples is a great thing to do. and he was saying to build a permit to build a road can take 5-10 years. that's ridiculous. you can't build it for 15-10 years because of environmental laws and so on.
obama passed this climate change legislation that essentially just was in its intention was to destroy the coal industry in america. wait a minute we have 100,000 people are employed by the coal industry. we get one-third of our electrical power generation from coal. you're going to strangle the industry with these regulations that are almost possible to comply with. and in that case they knew the coal industry couldn't comply, and it would bankrupt the industry. you don't want to government to bankrupt an industry to fulfill a political objective. you can tell the stories hundreds of times but the last chapter in the book is called a light switch is flicked from off to on. after trump's first year and a half in office what has happened to the economy. i got that from a guy who runs a auto repair shop outside of cleveland, ohio, and he has about 20 employees. i said jimmy, how is your
business doing now? and as i said this was about six months after the election. i'll never forget this, he said steve, it's almost like the day after the election a light switch was flicked from off to on, and since then i've had more business i can possibly handle. that's leashing effect that businesses know they'll be okay. and i can't tell you how many times businessmen and women have told me similar stories and that's why we have a strong economy now. >> veronique: we can sense the optimism in a lot of places. now i want to go to three issues that are -- that actually you barely touch on them and they're the big missing parts of i think spending, trade, and immigration. and spending next month the debt is going to be $22 trillion.
$22 trillion. when president obama got into office it was roughly almost $11 trillion. so in eleven years, we've -- the uncle sam has accumulated more debt than it's entire history before. and it's only uphill from there. and you make a mention of this that there's not enough spending cuts. in fact there's really not. and we are like in this sense we are back to the reagan years, to the bush years where everything, every spending cut, everything financial fiscal responsibility taking a backseat in the name of defense spending. and it's very surprising coming from donald trump who seemed like actually a reasonable, and you have things in there where you talk about how he's frugal, and it is like -- it's not that it hasn't come through. >> stephen: a couple points. first of all the deficits are
too large. just so your audience knows. in 2018, the first year of the biggest tax-cut since ronald reagan, federal revenues were higher than they've been in american history. i know you know this. so it's not a revenue problem. the tax cuts have actually grown the economy and we're getting the revenue in. >> veronique: and it's worth saying that while not all -- at least not projected, the tax-cut is going to pay for itself, it's not the problem. it's the job and the dead bucket. >> stephen: just to finish the point. the congressional office has revised the economy so much over the next ten years we be recouped two-thirds of the static cost of the budget. i think trump made a terrible decision spending more money on a military. the problem was the only way he
could get the democrats to go for that was to spend more money on the social problems. we got millions more on both programs, and this led to the upward spiral and debt. we're are trying to get him to do a war on waste, and go through every nook and cranny of the government and get rid of the waste. a trillion dollars of waste -- >> veronique: i know his administration is actually doing a lot of work reforming medicaid well in a way that it's served it population. but medicare and social security two areas that he has said he doesn't want to -- and to be fair to him the republicans don't seem to have any interest in reforming social security -- the republicans. >> stephen: ethe democrats don't
either. >> veronique: the democrats -- it's not even they want to expand everything. it's just the no adults in the room, and it's like the driver of our debt, and it's going to mean less growth and higher taxes and by the way higher taxes for everyone because you can't get that kind of money just -- you're going to. >> stephen: if we grow the economy fast enough we can pay for the social security and medicare programs. we need more growth. one thing's for sure if you don't get the faster growth we're out on this curb. here's the debt with the 2% growth that cbo is calculating, if you look at the debt of -- with 3.5% growth it goes down. growth is going to be a key componeabout to that. one other quick thing i don't think trump would win the election if he said he was going to cut medicare and social security. the democrats would have run the ads of running the wheelchair over the cliff, and then you
would have nancy pelosi. >> veronique: it's a catch-22, no one wants to do it -- when they're in office there's no wa- >> stephen: nobody wants to put their big boy pants on and say there's a problem with these programs. >> veronique: the problem that people don't recognize, and republicans don't recognize this enough. if you value your tax cuts you better start cutting your spending. look at france. this is what's happening now. when you have the thing that people don't quite understand that big government, they have very regressive taxes. so the french, have much more regressive income taxes, they have much higher -- a value added tax above 20%. they have the social class -- social taxes which we call the peril tax 7 points higher than we do. and these are regressive taxes.
>> stephen: they're killing the middle class. >> veronique: we're not keeping the tax cuts if you're not cutting spending. we're not. >> stephen: trump has to do it. he has to start vetoing the spending bills. pelosi is going to be speaker in less than 30 days. and we should see fights on spending. he should do that. the amount of money we're spending for a country that's $20 trillion in debt is completely outrageous. >> veronique: one final thing is too much government spending is going to kill growth. growth is important -- >> stephen: laffer likes to say the true cost of government is what it spends. >> veronique: now negotiations -- you said you're a student of julian sometimen who believed fundamentally -- >> stephen: people like me coming to our country.
>> veronique: low-scale immigrants you've been a vocal advocates for low-skill -- for immigration, and the ultimately resource. so i'm very surprised that you -- has anything changed? >> stephen: it has changed. i've come to the conclusion we need more illegal immigrants. we need workers to fill the jobs, and we need to brainiacs, the secret service -- anybody who wants to work who comes to this country i'm all for it. the american people the trump voters made it clear -- and i've talked to them personally. they don't want to do anything about the illegal immigration system increasing the stressas until the border gets secured. i'm with them on that. let's get the wall built, and the border secure. this idea that you have sanctuary cities and catch and release, and you can get rid of the border patrol that's
idiotic. if you're going to come to the country you have to come legally. now my view is if we can get the border security done, and i hopefully can get done in 2019, then you can pass -- and i think trump was open-minded to a bill that legalized a lot of these kids that have been in the country that allows us to expand our legal immigration system and that would be a great outcome. >> veronique: most people that are legal come here illegally. so i don't know if the wall will have that much. but our job as economists, as free-market economists there are so few of us who can actually praise immigration for what -- the greatness it does to a country. >> stephen: they have to come legally. >> veronique: then you have to reform the system to allow these and not -- >> stephen: we should be selective in who we bring in. i'm opposed to immigrants bringing in their elderly parents. they're not going to be a
benefit to the country if they're i 70 years old. >> veronique: in your mind it's not a high-scale low-scale -- >> stephen: i think we should switch more towards high-scale immigration. the high-skilled immigrant is going to bring more benefits than a low-skill immigrant. >> veronique: they bring in the benefit by looking americans who are here who are low-skill, and middle class who go up the ladder. >> stephen: i like the merit-based system trump wants to move towards. if you have skills, education, know english, have the balance we need. other countries like australia, and canada, have the system it works well for them why shouldn't we move in that direction as well. >> veronique: if we get the spending in line, and the taxes in a line i think everyone is going to want to continue coming here. >> stephen: that's a great problem to have. >> veronique: for a better -- >> stephen: i always say people hates hispanics it's like wait a
minute you have all these hispanics at the border trying to get into the country how bad can our country, how racist can our country be if everybody wants to come in here. >> veronique: you and i we know that fundamentally the benefit the economic benefit of trade is unilateral. yes, we would love if there were no trade barriers around the world. but ultimately -- >> stephen: you're for unilateral free trade. i'm not anymore. >> veronique: hong kong is lines of zeros and for each -- it's yours, yours, yours -- >> stephen: wouldn't the optimal outcome be that both countries have zero tariffs? >> veronique: that would be great. >> stephen: using tariffs as a
negotiating tactic to get other countries to reduce their tariffs. it's a truism, and in the book and comes from constitution. a lot of tariffs are lower than any other country,. >> veronique: canada has lower tariffs than us and other countries have lower tariffs. >> stephen: not according to the report. >> veronique: we went to war with them over -- and also the current state of the world right now because of this tactic is that we have higher tariffs on a lot of things. it's not good. >> stephen: i am optimistic that trump will win -- i'm against the steel tariffs and auto tariffs, those are bad. completely negative i agree with you on that. the big deal on this right now that people should be concerned about is china. my opinion is china is the new soviet union, they're out of control, the human rights they steal, cheat, lie, intellectual property stolen we can't live with that anymore. if it takes tariffs to help them
behave themselves and stop them from stealing and cheating then we need to do that. >> veronique: they're fundamentally paid by americans. >> stephen: both countries. >> veronique: it is hurting us, and it's interesting when you look at -- >> stephen: so you'd be in favor of not letting china continue to do -- >> veronique: i think there are ways -- there's no silver bullet, but what is important to there are different ways. >> stephen: like what? >> veronique: like going through i think -- was a great way, it was a good way using the wto,. >> stephen: wto? really? >> veronique: we benefited from this because the highest level of country is against the united states, and the united states -- the data shows the united states complies much less than china. at the wto. >> stephen: are you kicked kidd?
they violate every provision of the wto. >> veronique: go check the data, looking at the wto. >> stephen: you're wrong about that i've looked at the data, tariffs three times higher than we do. they can't do business in china. >> veronique: they're hurting their own people. >> stephen: they're also hurting our companies. our companies can't do business over there. >> veronique: so we're imposing high taxes on americans until they start treating their people right. we'll see. the jury's out. >> stephen: i'm optimistic, trump is using leverage here and i think it's about time. every country needs access to america's market to grow especially china. if trump is saying you're not going to have access to that market until you start behaving yourself, and start creating a level playing field. opening your markets to america. you think they'd be able to
steal $350 billion -- >> veronique: certainly not. go read the exemption, the request for exemption for the tariffs. there are heartbreaking stories. these are -- we talk about a consumption tax but you know what? workers are manufacturers in america who are consuming -- integrated world and it is so hurtful and we'll see -- >> stephen: here's where i disagree. i think trump will win, china will fold, we will get a freer trade system from china as a result of what trump is doing. they will reduce their a tariffs -- >> veronique: i think they're going to do the minimum they have to do. >> stephen: probably. >> veronique: the problems like the metal taxes will be there for the long haul. >> stephen: steel and aluminum. those are hurting america because they're making american
manufacturessers more expensive. >> veronique: i'm not the head of the country just an economist. >> stephen: i think there's truth to what you say i'm a free-trade guy but china is a different case, china is so problematic. >> veronique: people used to say this about russia. >> stephen: we didn't have free-trade with the soviet union. >> veronique: it's a recurring fear, and i don't think punishing ourselves is the way to go. that being said i am so glad we had that conversation because it's a really interesting perspective. >> stephen: larry carvel, the silent partner in this book with laffer and he's fighting for zero tariffs. every country he's basically saying -- you know any country that wants to cut their tariffs to 0 in the united states will cut our tariffs to 0. wouldn't that be a good outcome? we end with the note, wouldn't it be ironic if donald trump actually led to more free trade