You're listening to Taking Stock with Kathleen Hayes and Pimp Box on Bloomberg Radio. This is taking Stock the Republican presidential candidate Donald Trump. He put new details on his uh scale back tax plan today, one that is projected to cost the federal government less money but also to deliver perhaps fewer benefits to taxpayers than Donald Trump's original proposal. He was speaking today and UH the tax plan is of course one of intense interests to voters. Here to
tell us more is Wilbur Ross. He is the chairman of the chief executive of W. L. Ross and a Company. He is a noted investor collector, and he is an advisor to Donald Trump. Mr Ross, thank you very much for being here give us, give us your reaction and your your thoughts and perspective on Donald Trump's speech about the economy. Well, I thought both the substance and the delivery of it were exemplary. I thought he did a very good job in both, even though at the very
beginning the teleprompter didn't work. He was about five minutes into his speech before the turn of the teleprompter on didn't seem to phase him. I thought the most interesting line in the whole speech was he said, it used to be that automobiles were made in Flint, Michigan, and you couldn't drink the water in Mexico. Now you can drink the water, and you can't drink the water in Flint, Michigan, and the cars are being made in Mexico. Well, you know,
wilber I was over the weekend coincidentally, I was. You know, you start looking at tweets and all these different things, and you just land on all kinds of interesting information.
And someone had tweeted out a clip of Donald Trump at least twenty maybe thirty years ago, judging by the difference in here and everything else, right, And he was doing an interview with on a on a local broadcast in New York City, and he was talking quite adamantly about um us giving away too much, sending too much money overseas for military purposes, etcetera, and not keeping enough money here in the United States to to build up schools, build up housing, etcetera. UM So this is not something
that Donald Trump just thought about a year ago. No, that's true. And and when it comes to trade, it seems to me that there is an ever more vocal minority of economist not hewing the conventional line, which is, oh, trade deals are good and they increase our prosperity, but saying there are certain kind of trade deals that actually do the opposite. Well, first, so, all the conventional economists have generally been wrong on the economy. I don't know one of them who has been very accurate in the
last ten years. So I think we can overdeify the professional economists. But anybody economists or not who thinks that trade deficits helped the country just can't add and subtract. It's true that treaties like enough to make for more trade going back and forth, but that is in the point. The only thing that rubs off is the difference between
what you export and what you import. So I've never understood why so many of them are ideological as opposed to looking at the numbers and saying, how can we really say we like the idea of an eight hundred billion dollar trade deficit in goods between the US and the rest of the world. Every economist says she, look at the great job China has done. They've grown by exports. Well, if trade balance positive is a good thing for an economy. How can a negative trade balance also be a good
thing for an economy? It's silly. I have truly never understood why they don't get it. But I'll tell you what. The man in the street does get it. And the man in the street and woman in the street knows we're exporting jobs instead of products. We need to keep the jobs and export products. Tell us a little bit about his tax plans, because I understand that he says he would reduce taxes on all business income, including both traditional corporations as well as so called pass through entities,
to fifteen percent. And he also says that US based manufacturers would be allowed to fully right off the costs of new plants and equipment from their taxes, UH, in order to spur investment. Do you agree with that? Yeah, Well, let's talk first about the pass through one of the groups that he's excluded from the fifteen percent. Writer people like me because he has specifically told us that carried interests will now be taxed at the full thirty three
percent rate. So and that's all right. It's a pretty good business in any event. So I'm here as a personal victim saying I don't mind being victim uz because I think he'll spend the money wisely. Now, what does the tax plan really mean? A married couple with two children earning fifty thousand a year and paying eight thousand a year for childcare will have a thirty five percent reduction in their taxes. That's a big number. Go up
the bracket a little bit. A couple earning seventy thousand, again with two children and now paying twelve thousand for childcare, they will have a thirty percent reduction. Let's go to the extreme opposite end of the spectrum. Married couple, two children, five million dollars a year of income and the same thing, paying even more for childcare. Their taxes will go down three. So this is a very progressive tax system that he's got.
And the incorrect notion that some people have tried to put forward that this is just for rich people is really quite foolish and quite inaccurate. How are we going to pay for it? You gonna issue more bonds? And no, no, here's how he's going to pay for it. First of all, the the you'll see some of the independent scorers going to say that the dynamic cost of the tax plan is about two point six trillion. That's a pretty big number.
But the part of it that I worked on along with Peter Navarro, namely developing the regulatory and the trade part, will be able to take back into federal tax revenues about a trillion eight of the two six That leaves eight hundred and Donald's plan is to take one cent per year out of the discretionary spending, one cent more per year out of discretionary spending other than military. That's
a huge number over the ten year period. And then the rest will come from just running it more efficiently now. Donald Trump has also said that he's including a ten percent tax on repay creation of profits overseas by US corporations and also put together a sort of an incentive plan uh for US based manufacturings to expense the cost of their plants and equipment. Yes, the way the cost of expensing the plants will work is that corporations and
other businesses will make a choice. They can either fully depreciate the property or they can get an interest deduction.
They can't get full depreciation right off and full interest right off, and more or less, the purpose of that is to foster capital investment, not so much to Foster l b O s Well, there's certainly a lot of economists and federatory officials that would agree that investment spending has been extremely weak and most of its short term and business people seem unwilling to go, you know, buy back shares. We've seen a lot of that with cheap funding, right,
but we haven't seen a lot of investment. As as someone who has been a distressed investors saying, who has worked with banks and other kinds of companies, what do you think is holding back investment? Well, I think it's pretty clear gross domestic private investment other than residential, namely the basically the corporate investment used to be three quarters of a percent of g d P. Now it's around one quarter of a percent. There's a half a point
off g d P because of less investment. And it all started in two thousand and one and two when China was admitted to the w t O. F DI has gone up very, very rapidly. And what's really happened is instead of corporations fixing their domestic factories and putting capital in to make them more efficient, they're closing the factory and moving the whole thing to some less developed country. So the corporations are still getting productivity increase. And that's
why Corporate America doesn't oppose all these trade deals. But what about Mr and Mrs America. They're the ones who are left at home with either no job or flipping Hamburgers. Just the last point to Wilbert Ross. Some estimates, according to Bloomberg Politics, the new cost of the Trump tax plan could be around three trillion dollars over a decade. Do you buy that? Well, it is in the static model,
but it's not meant to be a static model. And just so that your listeners can understand, static model assumes that the cuts and taxes have no favorable impact on the economy. I don't think there's anybody who should logically believe that they'll have no impact. The dynamic model shows the two point six trillion minus the one point eight that will get from trade and regulatory and then minus
the other saving. So there you go. You gotta look at it dynamically if you want to understand Donald Trump's tax plan. Wilbert Ross thank you so very much for joining us chairman and CEO of W. L. Ross and Co. One