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Bloomberg Audio Studios, Podcasts, radio news.

Steven Mind the chaff of the White House Council of Economic Advisors joined just now for more. Steven, welcome back to the program, my friend. Let's talk about the President's message for House Republicans a little bit late to this morning. What's top of mind?

Steven Mind the chaff of the White House Council of Economic Advisors joined just now for more. Steven, welcome back to the program, my friend. Let's talk about the President's message for House Republicans a little bit late to this morning. What's top of mind?

Good morning, Thanks for having us. Well, what's top of mind is the Council of Economic Advisors just published a paper it's available on our website talking about all the good stuff this tax bill is going to do. It's going to boost GDP relatives not passing the bill by about four point two to five point two percent. It's going to create seven million jobs, and it's going to boost take on pay for a typical family of four by eight to thirteen thousand dollars. So these are really big effects relatives not passing the bill. It's imperative that we get this bill over the line.

Good morning, Thanks for having us. Well, what's top of mind is the Council of Economic Advisors just published a paper it's available on our website talking about all the good stuff this tax bill is going to do. It's going to boost GDP relatives not passing the bill by about four point two to five point two percent. It's going to create seven million jobs, and it's going to boost take on pay for a typical family of four by eight to thirteen thousand dollars. So these are really big effects relatives not passing the bill. It's imperative that we get this bill over the line.

Steve, though, when I'm talking to individuals in Congress and then reading your white paper, you have a fifteen percent corporate tax rate in your white paper right now that's not being discussed in Congress. Do you think the President is going to bring that issue forward today?

Steve, though, when I'm talking to individuals in Congress and then reading your white paper, you have a fifteen percent corporate tax rate in your white paper right now that's not being discussed in Congress. Do you think the President is going to bring that issue forward today?

You know, I can't I can't prejudge the apple of exactly what these talks will do, but that fifteen percent corporate rate on domestic manufacturing will help at the margin, But it's not the it's not the core of the proposal that you know, were those numbers that I gave you will be pretty similar. If that doesn't make it into the final version, maybe it'll be a hair lower. But you have to keep in mind there's a lot of stuff going into this bill, and any single one of these, any single one of these measures isn't enough to sort of, you know, change those numbers a lot. Because all these measures to combine together to improve the investment opportunities in America, to encourage firms to invest, encourage firms to bind to invest, new equipment, new factories, all the stuff.

You know, I can't I can't prejudge the apple of exactly what these talks will do, but that fifteen percent corporate rate on domestic manufacturing will help at the margin, But it's not the it's not the core of the proposal that you know, were those numbers that I gave you will be pretty similar. If that doesn't make it into the final version, maybe it'll be a hair lower. But you have to keep in mind there's a lot of stuff going into this bill, and any single one of these, any single one of these measures isn't enough to sort of, you know, change those numbers a lot. Because all these measures to combine together to improve the investment opportunities in America, to encourage firms to invest, encourage firms to bind to invest, new equipment, new factories, all the stuff.

There's a ton that's going into this bill, and that is why it's even so challenging for Speaker Johnson to get all these different factions on board. Something else you don't have in your paper, though, is what's going on in salt. Do you expect the salt cap to raise, say, thirty K forty K?

There's a ton that's going into this bill, and that is why it's even so challenging for Speaker Johnson to get all these different factions on board. Something else you don't have in your paper, though, is what's going on in salt. Do you expect the salt cap to raise, say, thirty K forty K?

Yeah, so I do expect there to be salt relief. The President has expressed support for this, and I think the President will deliver salt relief to American House. I don't know exactly what the number will shake out, And as you know, this is how negotiations happen. One side says what it wants, the other side says what it wants. And the President is one of the best negotiators in history, and he's shown over a career spanning decades that he can forge hundreds of deals, and I think he'll forge another one right in front of us. Now.

Yeah, so I do expect there to be salt relief. The President has expressed support for this, and I think the President will deliver salt relief to American House. I don't know exactly what the number will shake out, And as you know, this is how negotiations happen. One side says what it wants, the other side says what it wants. And the President is one of the best negotiators in history, and he's shown over a career spanning decades that he can forge hundreds of deals, and I think he'll forge another one right in front of us. Now.

There is a good element in this that you're focusing on growth, and I do think that that is important. You can't cut too much.

There is a good element in this that you're focusing on growth, and I do think that that is important. You can't cut too much.

You have to offer some sweeteners to.

You have to offer some sweeteners to.

Keep growth going, to keep the revenue side of things going. I do wonder, though, how much of a constraint to debt side really is, given the fact that looks like things are getting a little yippie again in the bond market.

Keep growth going, to keep the revenue side of things going. I do wonder, though, how much of a constraint to debt side really is, given the fact that looks like things are getting a little yippie again in the bond market.

Thanks so, I'm so glad you mentioned that, because the truth is that we do have a plan for deficit reduction and we will deliver lower deficits. It just happens that some of those things fall outside of the scoring process. How CBO scores the bill because of the rules that Congress gave it. And so, for example, we're going to get better growth as a result of this bill, as a result of deregulation, as a result of the trade deals we're negotiating. We get growth to three percent. That generates four trillion dollars additional revenues over the ten year win budget window above the CBO baseline. That doesn't go into the scoring process because CBO doesn't account for improvements and economic growth. We're going to bring in hundreds of billions of dollars of revenue through tariffs, right, that's another point off the deficit. We're going to bring interest rates down through expanding the supply side of the economy, through a more effective tax rates, through deregulation, through pushing the supply side out to meet the demand side. We get interest rates back to where they were pre COVID. That's another point off the deficit. And then there's cuts to waste, fraud, and abuse, some of which are in the bill, some of which are being accomplished by those that's another fifty two hundred basis points off the deficit. Worth of GDP. So I just gave you three to four percent of GDP off the deficit. None of it falls into the scoring system that the CBO is doing part of, Yet the conversation is for some reason dominated by CBO.

Thanks so, I'm so glad you mentioned that, because the truth is that we do have a plan for deficit reduction and we will deliver lower deficits. It just happens that some of those things fall outside of the scoring process. How CBO scores the bill because of the rules that Congress gave it. And so, for example, we're going to get better growth as a result of this bill, as a result of deregulation, as a result of the trade deals we're negotiating. We get growth to three percent. That generates four trillion dollars additional revenues over the ten year win budget window above the CBO baseline. That doesn't go into the scoring process because CBO doesn't account for improvements and economic growth. We're going to bring in hundreds of billions of dollars of revenue through tariffs, right, that's another point off the deficit. We're going to bring interest rates down through expanding the supply side of the economy, through a more effective tax rates, through deregulation, through pushing the supply side out to meet the demand side. We get interest rates back to where they were pre COVID. That's another point off the deficit. And then there's cuts to waste, fraud, and abuse, some of which are in the bill, some of which are being accomplished by those that's another fifty two hundred basis points off the deficit. Worth of GDP. So I just gave you three to four percent of GDP off the deficit. None of it falls into the scoring system that the CBO is doing part of, Yet the conversation is for some reason dominated by CBO.

Well, part of the reason why it's not being scored is because there are a lot of contingencies before you get to all of these realities. And I'll just pick out once, since we were talking about the bond market, the idea that yields go down as you increase the supply side of the economy, there's a pretty bumpy path to get there. Do you have enough faith in that that you ignore USGG three thirty year index GP, that you ignore the thirty year yield, you ignore the ten year yield in the mere term, and just have faith that longer term it will work out.

Well, part of the reason why it's not being scored is because there are a lot of contingencies before you get to all of these realities. And I'll just pick out once, since we were talking about the bond market, the idea that yields go down as you increase the supply side of the economy, there's a pretty bumpy path to get there. Do you have enough faith in that that you ignore USGG three thirty year index GP, that you ignore the thirty year yield, you ignore the ten year yield in the mere term, and just have faith that longer term it will work out.

Yeah. So, look, you know, we're still dealing with the lingering pressure, the lingering inflation pressures due to President Biden's reckless fiscal policies. But we are bringing those inflation pressures down through pushing out the suffice side of the economy. We've had now three inflation reports in a row below expectations. Core inflation on an annual basis is running the lowest level since March of twenty twenty one, and as we continue to control inflation, it will provide scope for interest rates to come down. I have no doubt about that.

Yeah. So, look, you know, we're still dealing with the lingering pressure, the lingering inflation pressures due to President Biden's reckless fiscal policies. But we are bringing those inflation pressures down through pushing out the suffice side of the economy. We've had now three inflation reports in a row below expectations. Core inflation on an annual basis is running the lowest level since March of twenty twenty one, and as we continue to control inflation, it will provide scope for interest rates to come down. I have no doubt about that.

Well, Steve, you know, the American people are concerned about prices going up, the latest being Subaru. They're going to be increasing their vehicle prices citing quote market conditions aka concerns about what's going on with trade and tariffs. How can you say you're delivering on inflation when actually companies are warning that prices are going higher.

Well, Steve, you know, the American people are concerned about prices going up, the latest being Subaru. They're going to be increasing their vehicle prices citing quote market conditions aka concerns about what's going on with trade and tariffs. How can you say you're delivering on inflation when actually companies are warning that prices are going higher.

Yeah. So look, you know, imports only fourteen percent of the economy. The ability of the ability of those types of things to really move the needle on inflation are limited. And what we saw in the tariffs in twenty eighteen twenty nineteen was zero macroeconomic evidence of inflation. What we've seen so far since the tariffs have been and don't forget, we've been introducing tariffs since day one of this administration, and what we've seen as tariffs have started to come up has been no real meaningful macroeconomic effect and inflation. And so while there can be volatility in the short run, I do believe that US importers have flexibility, but where they get stuff from, they can make stuff at home, they can import from other countries that treat us better, that right trade deals with us as opposed to countries that treat us worse, and that flexibility gives them leverage. That leverage allows them to force the burden of the tariffs on the other party on other countries. Now, in the fullness of time, that will happen. But in the short run, can there be volatility in prices in economic activity just as there were in financial markets, Yeah, it can happen. But over time we have the leverage and that will allow us to force the burden of the tariffs onto other countries.

Yeah. So look, you know, imports only fourteen percent of the economy. The ability of the ability of those types of things to really move the needle on inflation are limited. And what we saw in the tariffs in twenty eighteen twenty nineteen was zero macroeconomic evidence of inflation. What we've seen so far since the tariffs have been and don't forget, we've been introducing tariffs since day one of this administration, and what we've seen as tariffs have started to come up has been no real meaningful macroeconomic effect and inflation. And so while there can be volatility in the short run, I do believe that US importers have flexibility, but where they get stuff from, they can make stuff at home, they can import from other countries that treat us better, that right trade deals with us as opposed to countries that treat us worse, and that flexibility gives them leverage. That leverage allows them to force the burden of the tariffs on the other party on other countries. Now, in the fullness of time, that will happen. But in the short run, can there be volatility in prices in economic activity just as there were in financial markets, Yeah, it can happen. But over time we have the leverage and that will allow us to force the burden of the tariffs onto other countries.

When you think about tariffs, do you think they're going to be revenue raising or do you think that we're going to get deals so the revenue raising won't be as high? And do you have a number within the White House that you're discussing which how much you want to get in terms of revenue raises to offset this tax bill?

When you think about tariffs, do you think they're going to be revenue raising or do you think that we're going to get deals so the revenue raising won't be as high? And do you have a number within the White House that you're discussing which how much you want to get in terms of revenue raises to offset this tax bill?

Sure? So, First of all, what we've seen with some of the deals we've made so far is that there's still a ten percent tariff in place, and in the case of China, the other there's other tariffs too, the fentanyl tariffs, the tariffs from the first term as well, And so even if we strike deals, odds are will still be collecting some tariff revenue. But even if we end up bringing those tariff rates below or down to zero, you know, that means more economic activity. If we're writing deals because we're succeeding in opening foreign markets to our exports, allowing American firms to sell into foreign markets the way we allow foreign firms to sell into our market, that means more economic activity here because of more exports. And if there's more economic activity, more exports coming out of America going to foreign markets, that's more income that gets taxed at the personal level, at the corporate level, and that's lots more revenue too. So either way you slice it, we get revenue from tariffs or wet revenue from higher GDP because we're selling more to other countries.

Sure? So, First of all, what we've seen with some of the deals we've made so far is that there's still a ten percent tariff in place, and in the case of China, the other there's other tariffs too, the fentanyl tariffs, the tariffs from the first term as well, And so even if we strike deals, odds are will still be collecting some tariff revenue. But even if we end up bringing those tariff rates below or down to zero, you know, that means more economic activity. If we're writing deals because we're succeeding in opening foreign markets to our exports, allowing American firms to sell into foreign markets the way we allow foreign firms to sell into our market, that means more economic activity here because of more exports. And if there's more economic activity, more exports coming out of America going to foreign markets, that's more income that gets taxed at the personal level, at the corporate level, and that's lots more revenue too. So either way you slice it, we get revenue from tariffs or wet revenue from higher GDP because we're selling more to other countries.

Sounds like win win, Stephen. Let's hyper ends up that way. Stephen Marin there the White House Council of Economic Advisors Chair

Sounds like win win, Stephen. Let's hyper ends up that way. Stephen Marin there the White House Council of Economic Advisors Chair