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Gary Cohn
  WSJ CEO Council Gary Cohn Democratic Senators  CSPAN  November 15, 2017 10:08pm-11:12pm EST

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the bay that the film looks, it didn't look like what the commission concluded. >> american history tv. all weekend every weekend. only on c-span 3. next we'll take you to the wall street journal annual gathering of corporate executives. they heard from democratic senators. education secretary betty devosz. chair of the white house counsel of economic advisors. senate majority leader mitch mcconnell and vice president mike pence. we start with the director with gary gary cone. >> taxes is our always at the top of the councils agenda. you are very keen on understanding what's happening
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with policy making in washington. today we have the personal from the white house who is going to be the chief guide of the white house tax plan. through the congress. that's gary cohn. director of the national council. intervowed by jerry baker our editor in chief. please welcome them. >> morning. thank you very much again for being here. thank you, gary for joining us. bright and early. the topic is taxes, taxes, taxes. we'll start off with alabama. >> original. >> we had a lot of discussion about taxes with your colleague last night chl we'll go over that ground and more detail. and ask more some of the more longer term questions. let me start off with something i did ask secretary last night. see how you answer it. why is now a good time to be
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cutting taxes to be increasing the deficit significantly. know estimates vary. this is a $1.5 this will immediate tax cut. 78% of gdp. total revenue is about 17%. quite low. the economy is close to full employment. this is seems an unusual time to add such a huge amount to the deficit. why now? >> so let me take that question into piece ts. you ask a loft different pieces in there. let's start with the core issue here. when you look at what's happened to the u.s. work force since the recession, yes we have created jobs. we're at 4.1% unemployment right now. 16 year low in unemployment. even if you look at last month unemployment report, which was a good report. we had 0 wage growth in the
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united states. we have had many years right now of zero wage real wage growth. wages have been growing in line with low inflation. one of the big drivers of our tax reform policy is to get real wage growth back into the united states. and we think that's really important. something that american workers deserve. they deserve real wage growth in the country. and so when we talk about lowering taxes on businesses, small businesses. big business, every business in between. one of the results of that we believe is that businesses are going to be able to pay their workers more. there's going to be competition for labor. and when you compete for labor as you expand your business, we'll drive real wage income in united states. and we believe that is very important. and the effects of driving real wages are pretty dramatic on the
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economy. we know that individuals know how to spend money. much more efficiently than government. the multiplier effect of individual spending is substantially higher than the multiplier effect of government spending. >> isn't surely the way that wages are going to rise through a competitive labor market u you have seen unemployment is down at 4.1%. there's issues about labor participation rates. but clearly the pool of the available workers is drying up. now that hasn't had the effect of dramatically increasing wages. but the general expectation is actually the wages will start rising. as the economy operates at full employment. the wages will rise as competition for labor increases. why does it need a tax cut addressed to business to do na? >> we haven't seen that. we keep talking about what should happen. and what could happen and what might happen.
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but we haven't seen any of that happen. what we have seen is we have seen companies acting as good fa touc and small companies thinking about how to drive earnings. and we have seen them use international models and out sourcing models. we have seen them move employees over seas. we have seen them move ref knew over seas. that's rational human behavior. so we need to combat that. and we need to make the united states competitive. where we can drive wages in want country. one of the biggest reasons the bigger companies are able to provide wage increases is because they have good earnings. and during the cycle. but all of those earnings are trapped offshore. and the penalty to bring that money back on shore is too high. so kpaep companies just leave that money and it builds up offshore. in spite of good earnings it
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hasn't made its way down to the worker. >> why not just again if this is about raidsing wages, why not just have the middle class tax cut. why not the bulk of the tax cuts be directed at the personal level instead of what you have is both the house and senate plan have the tax cut is essentially a corporate tax cut and the personal side balances because of eliminating deductions. why not direct the tax stimulus at the wokkers? >> this is where there's a misunderstanding. people really aren't getting the details. so if you take the tax cuts the tax simplification apart. this is not sophisticate td data. this is ready available. and you look at what's in there, sh there are close to $6 trillion of tax cuts in the plan. it's 6 trillion. there are close to $4.5 trillion
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of base broadeners in there. that nets to the trillion everybody wants to talk about. when you look at close to $6 trillion of tax cuts, many, many of those are in the middle class. so the way it works is when you're moving all of the different pieces of tax around, a lot of that is going even just the increase in the child tax credit. you have it slightly different plans in the house and senate that's, it's 7 or 800 billion tlars by itself. just the increase from a $1,000 of refundable to 1650 in the extra $650 non-refundable. that's $800 billion by itself. right there we talk about there's no money going to the middle class. right there is $800 billion going to hard working families. >> there is no question the median someone on the median income. it varies a bit.
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you have this effect in the house where that tax cut that someone gets immediately does fade away. as some of the other effects take place. there's a reasonable size tax cut for someone on median income. >> remember, in the house plan, just so i don't want to let that point drop. the house plan in there to get in there budget constraint window, they have a 5 year window in a longer window. they have two things that disappear at the end of five years. the immediate expensing and the $300 credit for taxpayers for the spouse and independence. they do disappear at five years. it's the assumption of the house members that if our plan creates the commission stimulus we believe it will create that those plans will get elongated and the $300 will be permanent. when people show you the cliff in 2023 dh everyone loves to
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show. we believe that cliff will disappear. if and when we get the economic growth we think we'll get. >> you again, u.s. growth has been about 2% for the last ten years. disappointing by historical standards. and the president of the certainly the believes your economist believe you can get it to three. let's understand what's been going on. a large part of the reason why growth is dropped the trend growth seems to have dropped from 3% 20 years ago to 2% today. seems to do with demographic. ageing work force, fewer people coming into the work force. the birthrate 20 years ago was lower. and by the way that's a global not just the u.s. how does a tax cut change -- the other phenomena is productivity. has been weak. >> you just answered lt the
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question for me. >> that's global. weak every. how does the u.s. -- what's going to go on here with the tax cut aimed at business that will raise productivity? >> it's about productivity. if you look at the last time our economy really took off, it was a productivity boom in the country. we need to get productivity back growing again in the country. we believe we can do that. one of the big components of the tax bill is a five year, day one immediate. no matter which plan we go with. is day one immediate expensing. for capitol expepdture. we do believe there's a enormous amount of capitol expenditures that can be spent in the system. that will really enhance productivity in the system. we need to get workers producing more per unit of labor. we need to be more productive and more efficient in the
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system. your question before on artificial intelligence is really interesting. we continue the develop artificial intelligence. more companies to invest in automation. we will create more and more productivity. so that five year window of immediate expensing that's aimed at jobs number one. really productivity equally as jobs and trying to create productivity gains to get the economy growing. >> we have seen this extraordinary expansion of the technology sector this enormous investment there's been in technology many 25 years and the revolution in peoples lives and the way bids work. there's no increase in productivity. it's declined. it's one of the mysteries of modern economics. so that investment you have seen is not actually improving productivity. that's global. we have seen this weakness in productivity everywhere. how will that change? >> i would argue it's a multiple
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factor model. the regulatory environment is had a huge impact on productivity. and the fact that we have over burden companies with regulation and that companies are spending so much money on what we would consider not productive regulation. in the cost and associated with that non-productive regulation. is chewing up amount of the earnings they can't reinvest that into what's really productivity and product of assets. that matters. i know you talk about this last night. and we continue to talk about rolling back some of the regulation. that makes us less effective. we need to continue to roll back that regulation. we need to make businesses more competitive. i'm not looking to deregulate businesses. we're looking to make businesses efficient. looking to have properly regulated. we're also looking to allow them to compete. and be more productive than
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businesses around the world. that could be a competitive edge. the government shouldn't be stifling growth. it should be encouraging. with proper guardrails. >> what data are you seeing that suggest business in the united states is not come pet ti. and not productive. you see profit shares very close to all time high. way up on 20 years ago. you see stock prices up 30% in the last year. shareholders have done extremely well. companies are making profit. investment is down. how is it again -- i'm not sure what it is that business needs right now that is actually answered for by a big tax cut. >> we want companies to invest back into the economy. not give money back or sit on money because they don't think there's anything to do with it. there should be enormous amount of opportunity in the economy right now to invest capitol.
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into our economy. that's what we want companies to do. the reason they're not doing it is because it's really hard. if you want to create a new mine and there's company in the united states trying to create a copper mine for 15 years, and it's literally tens of thousands of jobs in arizona. they can't get permits. >> that's a regulatory issue. how is cutting the corporate tax rate to 20% -- >> we have to fix the entire system. i was talking about productivity. i was talking about deregulation. i'm there, the ability to expense all of your capex on that in the first five years, if that mine made since 15 years ago, it makes more sense today than it did 15 years ago. the economics to do that to make that investment today when you're looking at after tax
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returns, or or whatever you want to look at after the ability expense up front. and the ability to look at that with a lower task rate. even when you pay your employees more money. which you're going to in a tight labor market. will make more sense. which will drive economic growth. >> let take a poll question. which we have here. you know the drill. open up your app and here we are. the question is will congress pass a major tax reform by the end of 2017. we're seven weeks away. yes, no, depends on what happens in alabama. so far. there we go. that's -- little bit of pessimism in the room. surprises me a bit. you're very confident. we were talking about this backstage. again, there's a lot to be worked out. house bill and senate bill.
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amendments to both. reconciliation and conference. you're confident this is going to get done. >> so, let's take a real look at where we are today. last week regot the house bill through the committee with 24 votes. 24-16. this week we're in the senate finance committee. i think there were 350 amendments filed. they had to be filed by sunday at 5. washington trick. sunday at five. 350 amendments filed by sunday at five. the the senate finance committee will work all week to get through the bill out of the senate finance committee. i assume, i assume. that before they go home for the thanksgiving recess kp by the way they're scheduled to leave thursday night. >> only in washington wrou get a week for thanksgiving. >> i assume they get the bill
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through the senate finance committee. that will be thursday or friday of this week. the house is scheduled to vote on the full bill again on thursday. i am confident that the house is going to vote on the full bill before they go home for the recess. again they're scheduled to leave thursday. by the end of the week, the before we get to the recess which starts this week, we will have the whole the bill through the house, we will have the senate finance committee done. the only thing left to do is to get the full senate to vote on the bill. then at that point we may we may need to go to conference committee. create a bill that both can agree on and send it back to both chambers to be voted on. so i think there's a loft people that you ask the question four weeks ago by thanksgiving would we have both bills out of committee? you probably would have got similar results. >> is it important to have it done by december 31st?
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people in the house want it done to have a bill in place for the new tax year. or you'll settle for it if it drifts into the new year. >> it's important to get it done. we have to get taxes done year. the legislative calendar is going it get very crowded. come the first, second week of december. there are a bumpbl nch of issuet got punted. december will get very crowded in the legislation. >> few potential wrinkles still here. i asked treasury secretary and i see the president tweeted about one of them. i want to ask about that. this plan by senator tom cotton. supported by people to reintroduce the removal of the individual mandate. obamacare individual healthcare mandate requiring people to sign up for health insurance. that would save significant amount give you additional revenue to play way.
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$340 billion. cotton saying he'll do it. trump supports it. there are concerns once you start pulling on that string which is called obamacare as we have seen for ten months, all kinds of difficult things arise. do you think it's that would you welcome that? >> we're highly supportive of it. it comes down to whether the house and the senate have the votes. and i think it's more of a question as the senate have the vote. we have already voted on obamacare. we have shown you we delivered the votes. can the senate deliver the votes. tax reform is really important to us in the administration. it's important to the house and senate. we have to get that done. if we can get the individual mandate repealed as well and incorporate that, that to us is a real win fall. and we'd love to see that happen. we're plotting ahead of tax reform. whether it happens or not. >> a few specifics.
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i want to open it up for questions, too. the state sdp local tax deduction elimination. republicans in high-tech states are upset about that. the house has at least some allowance for a deduction on property taxes. senate has none at all. you prefer the house or senate measure? hit very hard who pay a lot state and low and taxes. >> it's not a proper characterization. the question should be is do the bills deliver middle class middle income tax relief? the answer to both is yes. how they get there is different. remember, the house went with four tax brackets. the senate went with seven. remember the seven has a 10% bracket. house a 12% tax bracket. they're finding different ways to company sate for the different issues. the only way to grade whether
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it's tuck seszful or not is to look at the table, look at the distribution. say does this do what we want it to do and does this deliver tax relief to hard working american families? and the answer to both bills is yes, it does. yes they attacked it different ways. they fwet get to the same answer. >> your message to the republican congressmen in new york sdp california and illinois. and new jersey. who are worried about this is sorry too bad. you'll get middle class tax cuts and those people will get hit in your district. you'll have to take your lump. is that the message? >> we're delivering middle tax class relief to people in your district. and running tax returns for people in your district. we have run literally i don't know how many wech run. a lot of returns for a lot of people. in what you call the salt districts. >> let me ask you housing. the bill to get the house bill again and the senate bill slightly different again. would cuts the be allowable the
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mortgage interest deduction to half a million dollar loan rather than a million dollar loan. the doubling of the standard deduction will eliminate. for a lot of people mean there's tho point in anymore deducting their mortgage interest because they have something below the standard deduction. there's a lot of concern in the housing sector. lots of lobbying going on. this could really cause a lot of damage. i knee people think half a million and had a million dollar loan maybe that effects the wealthy. there's a lot of people with loans in that range. in some way outside the upperest side of manhattan and silicon valley and beverly hills there's concern this could do significant damage to the housing sector. did you worry about that? do you think the bill is going to be fine. and we can live with it. >> i worry about everything. of course i worry about it. i worry about everything. when you look at the data and
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look at reality, people really don't buy houses because of the deductibility of interest. people buy houses because they're bullish on the economy. they're gainfully employed. they think they'll be employed for a long time. they think the business is solid. they think their pay is going up not down. potentially the spouse is getting a job and in the same fundamental characteristic. that's when people tend to buy houses. >> they make a calculation of what they can afford, and take out a loan. >> data will show you what interest deductibility does is allows people to buy a bigger house. it doesn't allow them to make the decision should they buy a house. >> the first thing when you think about a mortgage. how much can i afford out of my income. part of the calculation is the tax deduction. >> you maybe shocked. there's plenty of countries with robust housing markets that
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allow you to deduct. >> i did live in one. i remember when the 1988 abolish mortgage interest completely. it led to the biggest collapse in the housing mark. almost immediately when it went in effect. >> you should have been bought every house in the country. >> eventually the prices did turn around. it was over the a four year period. which is an awkward cycle in american. questions from the audience. >> you have wup to the left. >> i'm interested in the excise tax. and particularly its impact on foreign direct investment in the case where the foreign direct investor plans to export from the united states to another country. >> give me more context of what you're worried about so i don't go off to left field.
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>> the concern is that if you're a foreign company and you have an option to supply a market and say mexico from your foreign headquarters or from your u.s. operation, the excise tax going to create an incentive to supply that market from your foreign headquarters? >> so, what was attempted to be done here and this is an area where the house and senate are not exactly in line with each other. i think there will be some type of compromise worked out here in the end. what the house and the senate are trying to do is they're trying to dole with the whole base erosion issue. and really want they're trying to deal with is pricing within companies. we have a unique history here with multi-nationals being able to put property and licensing into the lowest tax jurisdiction
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in the world. we won't pick on the irish or the singapore. or hong kong. they use jurisdictions loik that. and they charge their u.s. companies very high licensing fees. so the u.s. company makes very little money by licensing the ip or licensing the chemistry. and then the subsidiary in the low tax jurisdiction makes all the money and end up paying single digit tacts rates. the house and senate said we want to level that playing field in some respect. we don't want to continue to encourage base erosion. and we want to make sure the companies are paying the u.s. their fair share. understanding we live in a fwloebl supply chain and multi-national companies have operations around the worl. they took in attempt at doing that. i think they came out in a relatively fair place. this is very difficult.
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almost over country does something like this. that has a tax rate in the 20% rate. if you don't have a tax rate in the low teens or single digits your always worried about this. the house and senate both spent a lot of time worried about the international side. >> other questions? >> can i ask you all a quick question. if the tax reform bill goes through, do you plan to increase investment of your companies investment capital. show of hands? >> why aren't the other hands up? >> i have a question. for the gar ri quickly. one way without any question i think economists agree you can improve productivity and improve the economic performance. you can probably raise wages too. given the jobs involved. is a big investment in infrastructure. i don't think any single nern the room or country doesn't think the country needs a
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significant upgrade in the infrastructure. anybody who flies out of major airports in the new york area. for example. will be familiar with the scene of misery and disaster. and that's just before you can get out of the taxi. the and familiar with the state of the roads. >> i was there yesterday. >> everybody knows the president made a huge deal of this during the campaign. we'll spend a lot private funds and public funds. yet he came in and went after obamacare repeal. we spent nine months doung that process. now woer onto taxes and a lot of skepticism. he could have come in, worked with colleagues of yours. democrats by the way you have been a democrat. democrats would have supported it. republicans would have supported it. would have raised productivity. why didn't he do it? when will we get around to it? >> it's the very next thing in
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the agenda. if we get the republican to vote taxes out of the house this week. we'll be into them. i would like to say next week or the next week. first week back in december. we'll start talking infrastructure. realistically probably january 1. we have a bunch of funding issues. and debt to deal with. in december. but literally the next thing on the agenda is infrastructure. and remember in some respects our hand fts played for us. before inauguration. speaker ryan went down the repeal and replace path. that happened in early january. that was in motion before the trump administration came to town. that started playing out in the house. the president made a firm commitment that tax ts would be done year one. and so we're doing the regular
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reform. we spent a will the hof time on healthcare. we spent a lot of time on taxes. i have a team that's spend time on infrastructure. this year. and we have a lot of really good ideas on what to do with infrastructure. we have had a bunch of by partisan meetings. and i think there's going to be a lot of great ideas that come out. that is an area where there will be pretty broad by partisan support. we can have dramatic impact. >> i'm sure you don't want to preview. if you do we'd love to hear it. preview the plan. and broad out line. for example will it be deficit neutral? we have the issue of the deficit. with tax reform. tax cuts. will it be deficit neutral? >> the current budget that we continue. there's a $200 billion allocation in there. we have a $200 billion allocation to the infrastructure plan. we're working within the realm
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of that $200 billion. we're going to spend some time with the president i think it's the week after next. and lay out to him the broader plan on what to do with infrastructure. the good nouz with infrastructure is there are a lot of different alternatives. on how you go about infrastructure and how you pay for it and what are the pay fors and there's revenue attached to a lot of it. you have a lot more optionalty. dealing with infrastructure. >> final question. this is not on tax. more personal question. back in the summer when the president when we had the protest in charlottesville and counter protest. which resulted in the death of a young woman. president came out and made remarks which were widely regarded as controversial to say the least. some people were very disappointed. including yourself that you were
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concerned that he hadn't condemned as forcefully as he should have for the people responsible. it was widely reported again that you were unhappy and it wasn't clear whether you are going to stay in the administration. how can i ask you did you reconcile yourself to it. and as the president reassures you and the country, you think that he does have the approach to the issues which is unifying rather than devicive? >> i have had numerous conversations with the president on this topic. he and i are working very well together. we're completely unified on what we're doing on the economic front. and i'm really excited to serve on his team. and driving the economy. and think of what we're getting done on the regulatory front. we didn't talk about -- i know you talk about secretary last night.
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what we'll do for community bank and small banks. to get that done in the first year. and think about the regulatory front. two straight quarters of 3% gdp growth. with hurricanes involved. looking at unemployment where it is. the stock market is a barometer. it's an interesting barometer of how people feel about the economy. looking whaths going on with tax reform and i don't agree with your poll. i think we'll get something done. i strongly think we will. we have great momentum. to have the opportunity to serve on his economic team and drive a lot of policy with the president, is really a unique once in a lifetime respondent. he and i have talked about the issues. and we're working really well together. >> so you're happy through his tone the tweeting. it's not too divisive. >> he's the president of the united states. >> does he have a responsibility
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to be a unifier? >> of course. >> does he execute that? >> i think he -- the president won the election. relatively convinceingly. and the president is doing a lot of the same things today that he did to get himself elected. in the country surely liked it on november 8. >> ladies and gentlemen. please join me in thanking very much gary cohn. >> republicans control all three the house the senate and the white house. what is the democratic agenda given the control that the republicans have over policy making now in washington dc. and what exactly is the democrats message to americans how will they different themselves in 2018 and 2020?
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joining us to discuss that is amy. of the senator from minnesota. democrat. and mark warner democratic senator from virginia. they'll be interviewed by paul. the washington bureau chief. join me in welcoming them. >> thank you. >> good morning, everyone. i thank you for being with us. we'll get straight to it. social media has been under scrutiny because of its use by the russians and meddling of the election last year. senator, you are the sponsor with warner. and senator mccain of a bill that require the same disclosure for political advertising on social media as other mediums
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like tv. what's behind that and does it have any chance of passing? >> everything can pass in washington. ad as you know after a while. i think it does. and i think that you really have to step back first of all there's the obvious national security issues with finding out that russia used to buy adds on facebook. it is bigger than that from a perspective. or democracy and the country. $1.4 billi $1.4 billion were spent on the ads. by political campaigns by issue groups. just in the last election. and the predictions are that will go up and up. so if a candidate or group runs an ad on radio or tv or print, they have to put a disclaimer prepared and paid for by whatever it is. and they have to disclose it. which is really key. because that means journalists, opponents and everyone can see what's going out there. that isn't true right now on the
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internet. these ads can flash up, maybe against companies, maybe against opponents. they are political ads of what we call national legislative importance. which means they have to be disclosed. if you are in print radio or broadcast. and so to me this isn't about regulating the internet. this is about acknowledging the fact these are media companies. that have huge ad selling departments. and the same rules should apply and that way at least you'll be able to have another set of eyes looking alt these ads to help fair it out where they came from. and of course we'd like the companies to rise to the occasion here. their the most brilliant companies with brilliant people. if the radio station in minnesota can figure out what an ad is of national legislative importance and keep it on file. i think these guys can. >> senator you have had the social media companies before the senate intelligence committee part of the russia
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probe. do you think they get it. how to you describe the attitude? >> first of all. teaming up on this with john mccain. it is a national security issue. i would argue more than a campaign finance issue. i start with the premise and many of you in the room i know i can claim i was in business longer than politics. i was a cofounder of an ex tell. my business was in technology. i'm very protech and proinnovation. these are great iconic american companies. they have changed the way we communicate. i think while they have created this eco-system that is changing our lives, there's a dark under belly. and i do believe that the companies were slow to recognize, and acknowledge the challenge. what somebody has a background i
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didn't fully appreciate. if we accept just what facebook discover td at this point, the fact that for 150,000 tlars and the ads are the small component. and then the ability of roughly 50 to 60 trained hackers and russia creating at this point they say 470 fake accounts which is curious. since facebook discovered 30,000 plus fake accounts in the french election. so a little bit of money. a relatively small number of hackers. combined with a few hundred thousand bottoms. were able to touch 126 million americans. in the election campaign. and that's before there was revelation about even more fake ads and fake accounts on instagram. so yes, the companies it took them a while to understand to
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appreciate. i'll grant them perhaps this was early season in the american election. and by the time the french elections and dutch elections came along they were understanding it. >> are you going to invoot them back? >> i think -- it was great to have the general council. and we got great legal answers. what we'd like to hear, though, is a the policy answers. what we'd like to hear is a willingness to corporate. if we try to legislate this alone without them, chances are we'll mess it up. we need the active collaboration. of these entities. >> you want the ceos to come? >> i'd love to have the ceo. and this is a -- the notion that we have seen in more than tripling of digital advertising in the political from 2012 to 2016, that will i would wager go up 10 x between 2016 and 2020.
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this is the future of political advertising. i can target you to an individual basis. the notion you can target the individual and have the communication if it's a paid ad particularly disappear. just doesn't seem right. we're not what we're trying to do is the lightest touch possible. we're not everyone getting into the question of fake accounts. that is something we have to work with the companies. this issen area i would argue beyond political advertising. for you who rely on digital advertising for your own brands. the same manipulation used in the effort are used in a lot of digital advertising space. >> we'll get to the poll question. but so i can take from that yoi intend to call the ceos? >> there's many more questions that need to be answered. >> great. thank you. our poll question for all of you to answer is the government should force greater disclosure about political advertising on social media.
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a quick referendum on what you have heard. >> not on us. i hope. >> that was -- is that the first. >> we'll take the early it a m we're letting everybody answer that. so do you feel that there's been, senator klobuchar, do you feel there's been a change in washington's view of the technology industry? i think for a long time it was hands-off, let them grow. they're going to be world dominating companies. do you think issues over data collection, privacy, net neutrality, antitrust, has there been a shift? >> think so, but i think part of it is because they have shifted. their business models have shifted. they now have huge ad silling departments. that's fine. when you start going into that realm and things start happening where people are manipulating you to try to get what they want and there's no rules of the road in place, of course, there's
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going to be a response to that. so i think there has been a change, and i think when i look back in time, if anyone remembers that pippa sopa fight on the judiciary committee and we were simply trying to do something about people stealing content and putting it out on websites and the government should be able to take those down. well, we were thwarted completely by those companies, and the bill wasn't perfect. things had to be changed. but then after that, everyone did nothing. i remember admiral mullen coming up to me and saying i'm afraid after that happened, no one is even going to do anything about cybersecurity on the military side, on the business side. we have been stymied as we have seen company after company hacked. the victims here are not just politicians. we're talking about business hacking, we're talking about the government. election software, so i think we need to be putting a much bigger focus on this and making sure that whatever we do isn't stagnant in time but allows us
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to do more to protect our cybersecurity. this is becoming a form of warfare in the modern age. >> let's get our results. a whopping 4 persh don't like what you're doing. and 96% do. >> could you all come to the senate and vote? >> that should be a result that gives you reassurance as you go on about this. let's talk about the economy more broadly. we had both secretary mnuchin and director cohn here. they sounded optimistic about the prospect of getting tax cuts through. that would give republicans momentum going the to 2018 and an economic achievement they can tout. >> let me start. i'll be the first to acknowledge that we need substantial tax reform. that having the highest nominal corporate rate does not keep us competitive. i would argue a couple points, though. number one, many in this room, i
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had an opportunity to work with when we worked together on the simpson/bowles plan. remember the framework of the plan. it was tax reform. it had lower rates. remarkab remarkably, it included two things. one, those lower rates were paid for. and two, there was a recognition in that effort at least that actually america net-net against our competitors needed additional revenue. i would simply point out, and you folks would understand this better than most of my colleagues. 35 oecd nations. america is ranked 31st out of 35 in terms of total taxation, state, local, and federal. so we relative to all of our competitors are relatively low taxed nation. now, how do they deal with that? most of them have a consumption tax that allows them to bring their corporate rates down. this plan, i think, has a couple faults. first, it starts with a bogey of
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$1.5 trillion of additional debt when we're already $20 trillion in debt. that is not a good scenario. you know, not going to quote some wild-eyed guy here. alan greenspan last week said that when you do tax cuts, when you're at relative full employment, which we are, with borrowed money, you may get a quick sugar high, but the growth projections that are coming forward that gary, and gary is a good front of mine, i think are grossly overoptimistic. and i think there's a way to do this, but it should be done in an open fashion, bipartisan, let's take some time. argue it through. not something that is going to create a whole series new of new tax advantages that we don't fully understand because this bill is not seeing the light of day. last point is, and again, i believe that we need a more competitive tax rate, but i do believe as well that in a world where the whole nature of work is changing, when no one social
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contract that started in the 20th century has disappeared. no one is going to work for most of your firms for 30 years. the real disadvantage for low and moderate income people not having the training they need to continue upgrading their skills. if we're going to do repatriation and give folks ana not why say you need a meaningful worker training program so there is some assurance that the benefits that are going to go writ large to corporate america will at least flow through some of the workforce. why not think about a affordable system so people can move from job to job. we have the most 20th century social benefits system where you only get social benefits if you work long-term as an employee. those jobs are disappearing. think about a tax code that is going to be forward leaning, and
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unfo unfortunately, i don't think that's what's taking place now. >> i'm going to ask you something i think is of interest to people here. do you yes or no approve of a 20% corporate tax rate? >> i don't approve of the bill that's there right now with that rate in it for a lot of the reasons mark just outlined, but i do want to bring down the corporate tax rate. i have always supported bringing the money back from overseas. i have 18 fortune 500 companies, which i always like to tell him, in my state. >> i think she's got more than virginia. >> not going to go there, so it's been very important to our state. we have like a 3% unemployment rate between 3% and 4%. i would like to bring that rate down. i want to simplify the taxes. my issue with this reform bill is the debt piece, the $1.5 trillion. but also the fact that if we want to get this done, and i want to get something done. i wish we had led with this. i wish when the president had gotten elected that he had worked with senator schumer, who wanted to do something about the
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overseas money, and tied it in with infrastructure, which had always been our plan, and combine that with things that could truly help the middle class, which would be, include minimum wage increase that we haven't seen for years. doing something about the student loan refinancing. there's a number of things we could have done. but right now, this waited until after all of this divisiveness, and we are where we are, we still have an opportunity, but not with the bill as>2ñ it is, m my perspective. perhaps we're going to cobble it together, but there's some real issues here. i think gene sperling, if you want to know why it's not popular, put something out a few days ago explaining the senate bill, that 65 million people making under $100,000 would either get a tax increase, this is the senate version, or a tax decrease of $100 or less. so that's why you're not seeing all these people saying, oh, this is so great for me. they see it as a shift. but i'm talking as someone that
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knows we have to bring that corporate tax rate down. there's got to be a way that we do it that's more of a compromise that what the bill is. >> so i take that as a long no. >> first of all, i mean, i'm going to give a preface and try to give you a shorter answer. one, at 23 and in debt, 100 basis points add about $150 billion to $160 billion in interest payments. that's more than we pay at the department of education. $1.5 trillion. people believe there's going to be all this growth, put a trigger in there that would snap back some of the rates if we end up driving up the debt that much. that alone adds $250 billion of additional debt service over the next decade. to me, whether the rate is 20 or 25, 23, is more a question of what is the effective rate? a nominal rate and effective rate. is there going to be some
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guarantee that we don't end up with a system, which frankly right now, if you're domestic and if you're retail, you get hosed in this tax code. but i don't want to create -- there's nothing in this tax code that will discourage international companies from continuing to use tax havens in a way that i think will even see further abuse than we've got right now. whether the rate is 20% or 25%, if you have large multinationals paying effective rates of 2% or 3%, that's not fair to our domestic corps who will be playing a much higher rate. and there's really nothing being done to block that abuse and kind of minimal tax, the minmous tax issue they've got in there, it actually could work to its reverse based on where you place your intellectual property. let's look at real rates, not just nominninal rates. >> democratics had elections in
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virginia and new jersey and washington state. one lesson from you on what we should take away from that. >> if the republican party continues down this civil war and an agenda that is anti-immigrant, divisive in an america that is increasingly diverse, they're going to get wiped out and not just traditional areas but in the suburbs and increasingly, we even saw in parts of rural virginia, a shift around. so i think those of us who are pro business, who are pro competitive, ought to take maybe there could be some strange new alliances. >> your one takeaway. >> people want a positive message. they didn't like how gillespie ran the campaign. it wasn't just virginia. it was also new jersey. i would agree on the immigration front. i'm a big believer in comprehensive immigration reform. i see it as an economic driver,
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and all of this negativity is going to boomerang back at the people who run campaigns like this. >> we'll go to the audience in a second. "saturday night live" poked fun at the age of the democratic leadership on saturday night. is it time for new leadership going to into a crucial election? >> versus the age of the republican leadership? you know, i work in the only place in america where at 62, i'm one of the young guys. and you know, i think that's a problem in both parties. >> just again, you look at some of those young people that won in virginia and people want to see new energy. and i do think that when people vote in minnesota, or they vote in virginia, they're not seeing the layer of the leadership in washington on the ticket. to me, they're seeing whoever is in front of them. to me, a lot of it is incumbent on us to be putting up people who have this new energy and
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some new ideas as opposed to who's running things behind the curtain. >> terrific. let's get some audience questions. >> yes, right back here. >> hey, mark. >> hey, richard. >> where's the soul of the democratic party going? is the party in three years going to have elizabeth warren or you? >> here's -- and you're my friend? here's what i think. both political parties right now are caught up in 20th century debates. and some on my side of the aisle are talking about command and control economy, and all top down government regulation. some on the other side have strong mannism or unfettered markets alone. i don't think either party, people -- what scares me the most, and as we see people move to the extremes, the people are losing faith in free enterprise. again, longer in business than i
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have in politics, but i believe that modern american capitalism is not working for enough people. i think there is enormous pressure on many of you that focuses on short-termism versus long term value creation. i'm not sure the great american companies in the 20th century could be created in today's corporate environment. both iconic technology companies have been created because the founders have kept responsibility and ownership with different kind of share structures. so why not talk about how we create a new social contract that works? why don't we look at affordable benefit model? why don't we look at recognizing that we ought to treat investment in human capital, particularly low and moderate skilled human capital, to same way we treat intellectual capit capital, and treat those meaningful programs as a tax credit rather than a tax deduction. i think the democratic party does better when it's forward leaning.
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left, right, is not where the party should be. democrats are best when they're forward leaning. i think particularly when we've got mr. trump, which is such a vivid contrast, that he harkens back to some mythical age when only a certain segment of(vjx americans did well, i think the democrats can articulate a different kind of vision, they'll do well. >> can i just answer that for a second? >> yeah. >> you're now running your businesses in a time of opportunity and not crisis. that's how we should be governing. governing from opportunity. and that's should be the message of our party, which means everything from the workforce training he was talking about to changing our immigration laws to bring in talent and acknowledging that 70 of our fortune 500 companies are headed up by immigrants. 25% are u.s. nobel laureates were born in other countries and bringing people together on an economic interest. >> question. >> tell us who you are.
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>> i'm from snapon tools. i'm a u.s. manufacturer. one of the things we have beheld for maybe 20 years is manufacturing in the u.s. has an asymmetric burden associated with the tax rates. you have said it yourself. and yet you have different pieces of your interest that say, oh, we don't want to move on that right now, except if we could do these kinds of things. i suggest that if we had republicans here and the democrats were in charge, we could get the same kind of thing. so my question is, what moves the congress forward on a -- sort of uniformly accepted problem, which is the asymmetric tax rate, and gets all of you to move forwad forward and eshoo e the special things you would like to fix in this bill. >> let me try to address that briefly. if there's one thing we should learn from the last decade is when either political party tries to do something really big with only their team, you get no
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guarantee of permanence. and you can look at that in terms of obamacare or dodd/frank or the republican efforts to repeal your health care. you really want to do tax reform. i'm all in. but let's do a real process where it's not cooked up with a half dozen folks behind closed doors, and let's argue these things out and then let's have a long enough time to review that bill so we don't create more problems in the rush to get a low rate than we actually had in the forefront. there are times, it didn't get a lot of attention in the sweep of everything else, but there have been a group of us on the banking committee that have worked for a couple years now, and we announced yesterday, i think 9-9, democrats and republicans, on some dodd/frank reform that is particularly targeted towards community banks. is it the whole thing that either side wanted? no, but it's the kind of reasonable compromise we ought to do a lot more. that was driven by people
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sitting together at a table and working through issues. that's not what happened on this tax bill. >> yes, right here. >> john from the mayo clinic. >> i have heard of you. >> hello, senator. question for you. could you give us an update on the progress to bipartisanship on health care? >> sure. there was quite a breakthrough this year, and that was the lamar alexander and patty murray worked together to make some changes to the affordable care act focused on the exchanges, as you know. this is to allow cost sharing and some of the reinsurance and things we have seen helping in states like alaska and like in our home state of minnesota, where the doctor and i live. and right now, that bill got a number of us, i'mztñ a co-spons 12 democrats, 12 republicans. i think there's strong support. if it came up for a vote, it would pass. >> 75. >> a far cry from where we have been for so long. so now, the hope is that it gets part of one of the big bills at
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the end of the year and we can get it done that way. and that we move on from there. and of course, that's the beginning. there's other things we need to do on pharmaceutical prices, which we have done nothing about for years and years and years. you have seen this major escalation there. but for so long, it's just been either repeal it or keep it in place. we really haven't been working on long-term care or some of the other issue s we should be. i'm hopeful this is the first breakthrough in years to make changes. >> this is not a news flash, but congress never gets big things right 100% the first time. frankly y doubt if many of the original business plans are 100% right. what we have lost in the last several years, whether it's taxes or health or banking regulation is the notion of you take a big step and then you come back and recalibrate. that has not happened, particularly in health care. >> other questions. i see another hand. >> can i ask one more to senator klobuchar because you have been a driving force behind an
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anti-sexual harassment bill that received bipartisan support in the congress last week. there's a hearing in the house today on that issue. how big of an issue is this for capitol hill in light of everything else we're seeing in industry and in hollywood? >> i think everyone in this room knows that suddenly in every company in america and just as there is on the hill, newfound interest in this. there was a "saturday night live" skit that i suggest everyone watch with claire the hr person at nbc, who is hyperventilating over all the calls she had. i think that's a good thing that that's happening right now in america. it's not easy and it's not all going to be positive thing, but it's something that has to happen, and it has to happen on the hill. the reason that senator mcconnell who worked with me on this bill, and it was chuck grassley, who was the lead republican on it with me, we wanted to have this mandatory training. many of your companies have mandatory training. we didn't have that in the u.s. congress. so that's the first step, and then we have to look at our reporting process and what
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happens. this is not to me about bringing down, toppling people in power. to me, it's about allowing people to grow in the workplace who have felt pushed down, who have felt afraid in a toxic environment. and that's good for business when you allow people to do better and to succeed. and that's just not been happening for a number of women, and it's part of the reason we don't have as many women in high ranking positions, including in the senate, like we should. >> can i wrap up just with one more question about the message of the democratic party? you're in an elevator with a millennial, you have 15 seconds to pitch the democratic party. what is the message that you want to impart to that new voter who is going to be voting for many years to come? what's the message of the current democratic party. >> what i would argue it should be we get the fact that work is changing and there needs to be a social contract to help you
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through the changes, and at the same time, we have to create a capitalism 2.0 where every american has the opportunity to aurn good living. >> to say we look like you, we are you. we believe you should have an opportunity to succeed no matter where you come from or who you are. and we believe in america. and america is working together on one team and moving ahead. >> senator klobuchar, senator warner, thank you very much. paul beckett. [ applause ] over the last ten ceo councils right at the top of your priority list, first has been tax reform and right after that, education. what you have meant by that is developing the skills and skills training to make sure that you have the workforce you need for the next decade. finding people who bring into your companies that can execute the type of work that you need done in a new technological world. so how does the white house plan to address yo