Bloomberg Wall Street Week: Ross, Brouillette, Langone

sec Chairman J Clayton. Bloomberg Wall Street Week with David Weston from Bloomberg Radio. The issue is joined. Republicans lay out a very different view of where we're headed, but equity markets will They just seemed to keep on climbing no matter what they hear. This is a special election edition of Wall Street Week. I'm David Weston. President Trump began rolling back Obama era regulations early in his administration when he took the United States out of the Paris

Climate Accord. In order to fulfill my solemn duty to protect America and its citizens, the United States will withdraw from the Paris Climate a Court. The Trump administration also lowered US vehicle emission standards, saying it would save automakers one billion dollars in compliance costs. But just last week, California finalized its own fuel efficiency agreements with five automakers that are more closely in line with the Obama era standards.

The Trump administration has placed big emphasis on increasing use and production of fossil fuels. Republicans and Democrats are far apart on their climate policies, but Dan Briette, Secretary of Energy, says it is possible to have a bipartisan energy plan. Sure you can. I mean, natural gas is a very clean source, and we're developing technologies here at the at the U. S. Department of Energy to make it even cleaner. We're also developing technologies to make you know, carbon intense

fuels like coal, even cleaner. And of course we always you know, have had nuclear power for the last seventy years, which is entirely emissions free. So I mean, you can do both. You can have a renewal generation base and you can have an emissions free baseload generation available to you.

Said to choose to do it, and I think that's what the fundamental problem is in places like California, they've relied too heavily or focused too heavily on renewable power like wind and solar, at the exclusion of some of this baseload power which you absolutely need in today's world to ensure that you have the energy you need when

you need it. Prisoner Trump's administration has done a fair amount and trying to really, as I say, reinforce energy independence of United States, relying in part and significant partner fossil fuels. What's left to be done if he's elected for a second term, what's on your agenda, Well, we

need to continue to build out infrastructure. So you know, as you and I have discussed in the past, we have done a great job in America of increasing our production, making ourselves energy independent, relying on new technologies, are new work technologies like horizontal frack, horizontal drilling and fracking to allow us to increase production of of these resources here in the States. Our challenge today is actually getting the

product to market. It's building out pipeline infrastructure to get it to the oceans, to get it to the coastlines. It's building export facilities so that we can make this oil and gas available to the rest of the world, because they're going to continue to use these types of fuels for the foreseeable future, perhaps as many as forty to fifty years out. And I think it's important that as we do this, we maintain our posture in the world as the number one producer of oil and gas.

And the reason we'd like to do that is because it gives us four policy options. The whole notion that we are able to, you know, for instance, of Secretary of State traveling to Sudan to perhaps normalize relations between Sudan and Israel, to work on deals like the U a E And Israel. Those things couldn't have happened forty years ago because we would have been afraid of the reaction in the Middle East, and perhaps we would have endangered our national security by putting our oil supply at risk.

We were entirely dependent upon them. The fact that we are independent today allows us to pursue these types of foreign policy options. Energy is important in our society for all sorts of reasons, but it also is the source of a lot of employment. There are a lot of jobs in the energy industry. And one place where the repolis of the Democrats seem to be two ships passing the night is how we're going to create more jobs.

We heard uh for Vice President Biden say he's going to create millions and more jobs by going to green energy. We heard Republicans criticize his positis for saying, you're gonna lose a lot of jobs, Which is it, aren't we adding more jobs and renewables right now that we're adding in traditional energy? Yeah? Well, I can't really comment on Mr Biden's comments. As part of the campaign, I'm prohibited

from doing that, so I'll stay away from that. But what I will comment on is that, you know, when we look at the technologies that have put us at the top of the world in terms of energy production, hydraulic fraction we just mentioned, you know, the US Chamber of Commerce tells me that if we were to do away with that technology, we would lose approximately nineteen million jobs over the next few years. And you know, it's not a question of retraining those people and putting them

into renewable technologies. Certainly you can do that, and people may be forced to do that if you if you if you do away with this technology. But the challenge with that, David, is that the salaries, according to the unions that we have talked to, the salaries in the oil and gas business are about twice what we're seeing

in the renewable energy space. So it's one thing to suggest that you might retrain people and put them into a new role, which are also giving them a fifty percent pay cut according to these Unionsas just briefly here at the end, give us something of the investment you're making a new technology of the Department Energy, Well, it's enormous. I mean, we're across the board. We spend about sixteen billion dollars a year just in basic science, basic research

that leads to these technologies that we just discussed. I'm very excited about what's just over the horizon with regard to advanced nuclear reactors. I think we're right on the cusp of not only smaller reactors, higher density energy sources for America that will be connected to micro grids in some cases. We're also excited about moving perhaps even beyond fision energy nuclear energy as we know it today, to fusion energy. So it's a very exciting world that we're

about to face. Is there a real process with the fusion energy people and talking about that forever? That's true, Yeah, they have been, but we've made real progress. We've turned around some of the management issues around a large facility in France known as the Eater Facility. But we also have private sector companies here in the United States who have made tremendous advances, General Atomic, several others out in California. They're doing a great job. That was Secretary of Energy

Dan Briett. Coming up. President Trump is running on his record of talking tough on trade. We talked with Secretary of Commerce Wilburg Ross on what the President has accomplished so far. That's next on walstret Week on Bloomberg. This is Bloomberg Wall Street Week with David Weston from Bloomberg Radio. As a candidate in two thousand sixteen, President Trump promised to make trade deals that would be fair to American

workers and businesses. Over the past three years, he raised harrifs on imports, renegotiated a trade deal with Canada, Mexico, and broke in a Phase one deal with China. In spite of some of the progress on the trade deal, US exports to China fell by nearly eight percent from and China continues to fall short of its promises to buy US goods. The US trade deficit narrowed slightly in June as global lockdown restrictions from COVID nineteen East, but

the recovery is expected to be uneven. We asked Secretary of Commerce Wilburt Ross what President Trump has accomplished on his trade agenda so far. Well, in terms of China, a lot has been accomplished. On the enforcement side, we really have been enforcing quite vigorously. You're familiar with the actions we've taken on wild Way, You're familiar with the actions that we've taken on ZTE, two major telecom companies.

Most recently, we've been working very hard are on the semiconductive part of things, because while China does have technology, we still have the best software design and the best fabrication equipment for semiconductors, so we're trying to avoid them taking unfair advantage of our technology. Technology is really important because while protecting things like steel and aluminum help take care of today's world, technology is tomorrow's world, So that's

a big deal. Very recently, we put on the entity list of five hundred companies since two thousand and seventeen. Awful lot of those are Chinese companies, and that's because they are the ones that seem to be doing the most to violate sanctions, to violate human rights, and most recently also to create problems in Hong Kong. So that's been a big, big series. And then of course you have the tariffs, the Section three Old one tariffs that

USTR imposed on China. So the cumulative effect of ball this is enormously greater than the long term camulative effect of everything that had been done pre Trump, Mr Secretary, As you think about a second for your term for President Trump, there's a lot of concern that we may be entering into what some people call a tech cold war with China. Do you believe at the end of four years with President Trump still in office, we would

be more disengaged with China when it comes to technology. Well, first of all, in the Cold War and technology started long before President Trump. It wasn't only under President Trump that the Chinese was stealing intellectual property. Wasn't only under President it in Trump that the Chinese were requiring joint ventures and lo and behold, the joint venture partners required

technology transfers. So this abuse of technology, which you've called the technology cold War, really had its origins many years before the differences. President Trump is mounting the ramparts and starting to defend US against the technology war. Then he's doing it with the whole variety of measures that I've described before. But he's doing it also in another way in terms of the big initiative that was just announced about a billion dollars for further artificial intelligence research and

quantum computing research. Those are two of the most significant technological advances yet to come, and so putting money here helping our companies go further is a very good thing. So there are two edges to what we're doing. The one is clamping down on their abuses, and the other is fostering US technology we've been helping to propagate in the Congress Senator Cornyn's legislation relating to semiconductor funding so that we can bring more fabs back to the US.

I hope the Congress will go along with that when they go back into session, and if they do, that will be a very very good thing for America. Secretary was one of the things that we have heard a good deal out of out of the Trump administration is the fact that the coronavirus originated in China. There is a lot of concern that they were not forthcoming and disclosing what happened, a lot of blame and finger point.

Let's be frank, is there any serious contemplation of possible sanctions against China coming out of the coronavirus and how they handle it seen sanctions for the Trunk Administration in other situations. We believe that they did not handle the coronavirus very well. Nobody knows right now whether the original outburst was something deliberate, was it leakage from a laboratory

that was inadvertent, or how it exactly started. But what we do know is that at the same time as they blocked air travel from Wuhan to Beijing, Shanghai and other big Chinese cities, they didn't block travel to the US, to Europe and to Africa. That was a deliberate decision, and obviously that contributed mightily to the spread of coronavirus to the United States. Second, they've not been very forthcoming to our health authorities about what was actually going on

over there, and in fact, designed to stand it. They've now prohibited their virologists from doing joint papers with American virologists trying to sort through coronavirus, So those are not very helpful things. There's those some severe question as to how forthcoming they were in their relations with the w t O. So there's a lot to worry about in their handling of coronavirus. But be that as it may, it's pretty clear on a national basis, and incidents of

new cases is coming down quite a bit. Had been up around seventy six thousand on a seven day average. Now it's down into forty thousand, so it's still too many, but direction of change is a very good one. Plus every day we're having announcements about a potential cure, every day we're having announcements about a potential vaccine. We're going to get there and want to get there pretty quickly.

We will get this ugly monster under control. And the decisive action taken by the President both cutting off travel to China early on despite the objections of Nancy Pelosi and Joe Biden, was a very wise thing. That was U s Commerce Secretary Wilburt Ross coming up. The US healthcare system is facing its biggest test from COVID nineteen. We talked with Ken Langon, chairman of the n y U Langon Medical Center about what the pandemic says about

our health care system. That's next on Wall Street Week on Bloomberg. This is Bloomberg Wall Street Week with David Weston from Bloomberg Radio. COVID nineteen is shining a light on the state of healthcare in the United States. President Trump has made no secret of what he thinks of the Affordable Care Act. We have to repeal and replace Obamacare. We can repeal it, but the best is repeal and

replace and let's get going. President Trump's Jobs and Tax Cuts Active seventeen scrapped the c A individual mandate, but his request for the Supreme Court to strike down the entire law is still pending. Healthcare spending grew four point six two eighteen, reaching three point six trillion dollars. Healthcare expenditures as a share of the nation's GDP has been growing steadily as tax revenue as a share of GDP

comes down. We asked Ken Langne, chair of the board of Trustees of n y U Land Gone and co founder of home Depot, what COVID nineteen taught us about US healthcare. The virus to me is rapidly receding an impact and importance. For example, the results in New York City hospitals are dramatically lower than they were back in April. We whether it's heard immunity, whether it's compliance or not, if you wear a mask, everybody wore a mask, the problem would go away, because that's the easiest way to

convey inflections. So I am very optimistic about how we're learning to deal with it. For example, one of the things we learned about an m y U was we had patients who have IT lying prone, lying on their bellies, and believe it or not, it had a significant effect on their dependence on a ventilator, which if you don't have to put somebody in the ventilator, God, please don't.

I think we've addressed the issue of supply of PPE successfully, and I think the pharmaceutical industry, by the way, deserves a lot of credit the effort they've all made collectively, not with a profit motive. Uh. I believe, based upon hearing people smarter than me, that will have at least one successful vaccine by Christmas, and maybe more, maybe more, maybe multiples are one. Uh. I think there's there's there's the anybody therapy, which looks very promising and that could

be now. That doesn't prevent you from getting it, but God forbid, if you get it, it's going to be very helpful in treating you. And and if you haven't had it, it might give you an immunity for a couple of months of the vaccine obviously is meant to have a longer duration as with any issue. I think the President made some good decisions. I think he made some unwise decisions. The good decision was jumping on it

right away regarding flights in from China. I wish she had a different stand on mask because I said earlier, but mass to me a very critical part of the defense. Again, it's a pandemic, so I wish that he had embraced masks sooner and more enthusiastically. I would feel better if he had a little higher regard for the pharmaceutical industry.

Not let me say this to you, David, and I want to warn you when I in a spirit offul disclosure, I am a very major investment in healthcare industry, in a number of companies, my biggest position in the industry being Eli Lily. I give the industry straight aged for pulling together in the last four months and doing what they could to help the country out of this more

ask uh. I think the effort they're all making now on a vaccine, it's very good, and I think the motive, thank god, it is not their bottom line, but alleviate the tragedy that it's had on humanity around the world. And that's that's the name one of the redeeming features of the pharmaceuticals. So I would He's done a lot of great things, and I wish he had done his his passion for this hydrochloric quam for me. Uh, I'm not.

I don't think it was merrited. I don't think it's I don't even like the drug that they thought it would be. It has purposes, it's been around a long time, and it's effective for different conditions that it might help a few people through the through the infection of COVID. But so what I'm saying is I liked some of the things he did. I like the fact that because they were they were arguing with each other in the last couple of weeks, that he issued an executive order

to help out. I'm I'm thrilled with his compassion and a sensitivity to the health care delivery system we have in America. Because n y U we lost in one month million dollars. There were hospitals in New York that lost even more than we did. And thank god they got that first bill through and nominally it's alone. Uh, if it is a loan, we have to play it back. That means we lost five of a million because don't forget in that period of time we stopped doing everything

except dealing with COVID patients. We will overwhelmed the number of people that came in, so we had nothing. We could do nothing but focus on dealing for the epidemic of the pandemic. So that's the best dancer I can give it. That was Ken Lane Gone Home Depot, co founder and chairman of the n y U Land Gone Medical Center. Coming up, we wrap up the week with our special contributor Larry Summers. This is Wall Street Week

on Bloomberg. This is Bloomberg Wall Street Week with David Weston from Bloomberg Radio to take us through the economy under President Trump. We convene now our virtual round table contributors Larry Summers, who served under President Clinton as treasure Secretary and then as the Director of the National Economic Council under President Obama and Glenn Hubbard, who served as Chairman of the Council of Economic Advisors under President George W. Bush.

So let me start since we're telling a candidate for President Trump on the Republican side, Glen, let me start with you. When you hear the plans that were being told for the second four years, will they get us that full employment? The President Trump that really promised. Well. I think conventions are obviously great theater. The President was pointing back to the pre COVID world, and he could point to some good successes. He did have success with

the economy. Unemployment was very low, market valuations were very high. GDP growth was solid. I think he could well point to the Tax Cut and Jobs Act, and he could point to his regulatory agenda, having said that there's uncertainty about trade policy, and what missing was missing to me was a sense more of the future. He talks about make America great again, to see make America flourish again, what would it take to get every American to participate

and prosper. I think their ideas there on the Republican side, but I wish more of them had been at the geop convention. So Larry, let me bring you in on the other side of this, as it were, is what you heard from foreign Vice President Biden going against the full employment either when he's talking about something a three point eight trillion dollars in new taxes. Is that what this economy needs right now? This economy needs a serious program of public investment. And some part of that public

investment program will pay for itself. And some part of that public investment program is rational to finance with debt, but some part of that public investment program probably should be paid for with tax increases, especially when those taxes increases would make the economy fairer and would also make the economy more efficient. We don't serve any useful purpose by failing to elect billion dollars a year, most of it from the highest income people, because we don't do

a competent job of enforcing the tax law. We could move towards fixing that and raise a trillion dollars over the next decade from high income people and close tax shelters. At the same time, we've got a variety of loopholes and special breaks that divert resources into inefficient uses and cost the government a ton of revenue. The famous carried

interest provision is one example. UH. In that regard, those are candidates for rational tax reform that at the same time would finance government doing what it UH needs to do. I'm for that. I think there are people who have the idea that, caused by envy, we should have tax increases in order to tear down the rich. I think that would be a mistake. There are people who have the idea that we should have tax increases for the sake of having tax increases, or just as a device

for reducing the deficit. I think that's a mistake. But should we pay for some portion over time of the huge public investment we need? Yes, I think uh we should. And I think that's the spirit in which Vice President Biden has talked about tax increases. And so Glenn, what about it year from Larry that it's a matter of public investment, which really is what we need right now. On the Republican side, for President Trump, we said let's cut the cattital gains tax. Well, private investment is that

the most efficient way really of getting investment? Where is Larry right? Well? I think public investment is very important. We need a strong infrastructure program, not just physical but also technological. We're seeing that play out before our very eyes. It's hard to disagree with Larry on issues like avoiding tax avoidance. Of course we should do that. Having said that, is Vice President Biden serious about a large tax increase on business and business owners in a recession or an

incipient recovery. We've got very large proposed increases in the corporation tax and individual tax rates, and the most radical expansion of the payroll tax. Not to be used for seal security, but do you be used for other purposes? So the Biden plan may have been developed at a time and a place, but we're not at that time in that place. So while I don't disagree with Larry, it's not really the Biden plan. Okay, so fairly quickly,

Larry sort of more or less yes or no? Do you think Vice President Biden is serious about that three point a trillion dollar tax increase? I think Vice President Biden is serious about a major increase in public investment and paying for an important part of it, though not necessarily all of it, and I think that's the right thing to do. I do not think that it's anybody's intention to impose a may your new set of austerity on the current economy. Glenn and I may have a disagreement.

Uh the business community before the Trump tax cuts thought it would be fantastic if the corporate tax rate were cut to. In fact it was cut to. There were a set of tax cuts proposed for non corporate businesses that nobody was even asking for. I think we should repeal and replace some of that and use the revenues to push the economy forward for everyone. And I think that is the right thing to do, and that's the

spirit of the of the Biden plan. As I understand, Larry, I think you get old victory lap this week, because over five years ago you wrote in the Financial Times and I'll quote it, the FED could inject much needed confidence in the economy today and minimize future risks by announcing and following a strategy of not raising rates until it sees the whites of inflations eyes now as best I understand. That's sore. Know what j Pal said this week, isn't it? I think it's more or less exactly what

he said. I think he said two important things. He made clear that the two percent figure was a two sided target, and after a decade of being below two percent, it would be okay with him if we were above two percent for a while and we weren't being religious about two percent as the ceiling. That's what I and

many others have been advocating for a long time. And he also said that he was gonna reject what has been a FED staff preoccupation for a long time, the Phillips curve idea that we should stop the party before it gets started by raising rates when it looks like the economy is going to be really strong and unemployment is going to be low, and wages are gonna rise fast, and the last last people to be hired are gonna be hired, and employers are going to be reaching for

less guild workers and those with some blot on their backgrounds. UH, that we're not gonna cut off economies growth when those kinds of things happen until we actually see inflation materialized. And I think those are too welcome, welcome and frankly overdue changes in UH perspective from the fat there are things that I've been calling for for half a dozen years, UH in recognition of the fact that our economy's basic

problem isn't an inflationary gap. It's a deflationary gap where savings succeeds investment, and that pushes interest rates too far down, causes UH money to flow into liquid assets that then get inflated and caused bubbles, and UH risks too much sluggishness in the economy. So I think the FED has

moved to substantial distance in the right direction. I think they've still got some way to go UH in terms of recognizing the limits of what they're able to do and putting the right kind of pressure on other policies to push demand forward. Well, let's talk about those limits exactly, Gland. Let's assume you agree with Larry essentially more or less better late than never. But at the same time, is

this the cure for what ails us right now? Because this doesn't get rid of the coronavirus, it doesn't get increased productivity, it doesn't get growth going necessarily, does it. I think it's a it's a good step. I too have called for average inflation targeting for some time, but it's not a free launch. I mean, it does give the FED room to let the economy run hot. It's a good thing. It gives room for interest rates and you curve to steepen that too, would be a good

thing in the present environment. However, it may cause misallocation in capital markets relative to say, a fiscal policy response, and it isn't going to cure the coronavirus for supply side. So yes, we can say good job to the FED for the Jackson Whole announcement, but I don't think it's time for the FED at least to be taking a victory lap. I think Washington needs to focus on fiscal policy. Share Powell's doing his part, but it's only a part.

Is there another danger, Larry actually which we met called mission creep bar from the military, and I think in Vietnam is there mission creep here? Because as you read what j. Pow had to say, he was talking about all sorts of things like really fixing inequalities and income and a wayes addressing problems with municipalities. Is that something really the FED is competent to do. I think Glenn and I are again in violent agreement. Uh, what the Fed did is necessary, it is a long way from

sufficient to address America's economic challenges. Because the FED, frankly, has been more successful and more competent in the last few years. The other parts of the government, there's a tendency to turn to the FED to solve every problem. I don't think the FED can fix the environment and make America green. I don't think the FED is the right instrument for dealing with struggling municipalities. I don't think the FED is the right instrument for addressing racial inequality.

So I think the feds new emphasis on a strong economy, it's move away from a single minded UH focus on preempting inflation, is overdue and appropriate. But I don't think we should turn ourselves into an economy run by the FED. Are many thanks right now? So Larry Summers of Harvard and Glenn Hubbard of Colombia, and both of them are contributors to Wall Street Week for this virtual round table. And that does it for this edition of Wall Street Week.

I'm David Weston. This is Bloomberg. See next week. M HM.