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will leave middle and lower income household's untouched. we talked about your concerns on the deficit and debt. where you stand on biden's approach and what he's been focused on? >> to come back to your initial question, why did i come out from behind my desk now? i view 2024 as the last chance

to grow our way out of this problem. four more years of laying -- layering on this amount of debt and then we end up in a permanent european place, and then maybe you have to go to a higher taxation place, a la fran opportunity to grow our way out of this, but i think i'm deeply cynical about this. spend, spend spend, many of the assets maybe are productive. clearly they have gotten rid of scoring, so you are replacing things that work with things that maybe even work less well. these could be stranded assets. now they are going to say we have done all this spending we've got to pay the piper.

as part of a series they ask how do we restart american productivity, and number one, you do it through tax policy, and you keep high return, high after-tax returns and capital. raising the corporate taxes is just the wrong thing. it is a piece of sleight-of-hand when biden says he's not going to raise taxes on anyone making less than $400,000. but if you're going to move capital gains up to the same level as ordinary income, that's going to hit everybody. this is just worse and worse -- >> then there's the incident of corporate taxes as well

because that presumably has an impact on wages and affects coomer -- consumers indirectly. >> the other thing is, the 2017 tax cut, a lot of the deficits were frontloaded because investment expenses were in those years. but these biden deficits are actually worse because the expense was 100% on day one. i just think it's a kind of dynamism killer. some of these other ideas, like taxing unrealized capital gains if you want to tax unrealized capital gains, if you want to drive the venture capital industry offshore, i could not of come up with a better way to do that. i'm on a foundation board, and every three years, to make us feel not very smart, they take us out to silicon valley.

we said we want to meet the fund managers this time, what was fascinating, six out of the eight entrepreneurs were not nativeborn americans. that is high-end end, high-class immigration. butcould all be in singapore, they could all be in israel, they could all be in abu dhabi, drive that whole class offshore. >> you noted earlier on0tc that you saw the trump presidency as a shrewd adaptation of the reagan era playbook for that when he first century. i wonder if you could elaborate on that. when you think about the ways in which a selective departure, the way in which he did reaffirm the reagan playbook, talk to us about the parallels. >>were in 1980. reagan came in with high inflation and the great

malaise. and the soviet union. trump came in, it wasn't malaise, but, the recovery had not been strong. they both immediately went for tax cuts. they both focused on the biggest external threat. reagan spent the soviet union into oblivion. i think trump had a different idea for how to deal with china and makeup for a lot of bad trade, historical trade agreements. and kind of pushed things forward. i think that once trump was in office, and even make america great again, it was a

set. it's an optimistic vision of america, instead of managed decline, which i would a biden 2.0 would be. but i will say i think whoever wins has a mandate. if joe biden wins, he has a mandate for central planning things on the periphery, novel economic ideas, and donald trump will have a mandate for deregulation, cling the border , and energy independence and projecting strings. so both candidates will have a mandate. >> going back to tax policy, donald trump is calling for making the -- she's calling for

a bigger across-the-board increase in tariffs, policy critics see as self-defeating. is there a role for tariffs in a conservative economic policy agenda? >> let's go back to alexander hamilton. he believed in terrorist for two reasons. when he was setting up the treasury, there was no real so tariffs, up until world war i, were the main source of revenue. he believes tariffs will generate revenue and to protect nascent u.s. industry. i would add a third reason for tariffs, and it is negotiating. so i think that, given donald trump's credibility and what he has done in the past on tariffs that we may not have to get to tariffs, but the threat of tariffs will change the quality and the fairness of a lot of

historically more trade deals. president trump was very focused on the trade deficit and they talk about a function of bad trade agreements, and i think tariffs are one way to remedy that. but i think anyone with an economics background will also tell you that the trade deficit comes from our budget deficit and from the level of the currency. there is thiseraction and the calculus between the three and i don't think -- i believe in a conservative agenda tariffs do have a place, but i think that it is part of a calculus of all the tools in the toolkit. >> you might be among the

world's leading experts on currency fluctuations, so if you go back to the reagan era, you had the plaza accords -- >> it was up-and-down. >> talk to us about you see some kind of large-scale currency intervention as an important tool for the next presidential administration. >> i don't think there needs to be a large sale -- large-scale currency intervention. i think you have to go back to the 80's and even the 90's where there is a large-scale coordination between currency, between fiscal, between monetary , and with the chinese, with a lot of these systems, these excess reserves that are being accumulated, the level of the excess reserves just tells you that probably there is the

initial trade agreement that is not right, the level of the currency is being suppressed, if there's hidden subsidies, there is something wrong the level of the excess reserves tells you probably there's initial tre agreement is not right, the level of the currency is being suppressed, that there's hidden subsidies. there's something wrong with these excess reserves. is there something else that could be done? you' reserves, you're moving out of treasuries, maybe we don't think it's a good idea. >> so essentially the strength of the dollar right now is a product of interventions that other states are undertaking including some adversaries are taking, and we need tbe more proactive?

>> i think we are not thinking about it the way we used to. and i think it's back in this calculus. the other thing, too, when you're running these massive deficits that generate the high inflationary level the biggest currency in the world is now a carry currency. on forward points, a real pickup on yield over the japanese yen of 3% to 3.5%. that's not sustainable orse optimal over the long term. but i think we have to keep coming back to china because how do we think about the chinese currency, our research at my firm shows that we think the chinese currency on any academic model is now undervalued.

they've done a big internal devaluation. they've cut labor. they've written down real estate. they're very similar to what happened to the europeans 2011, 2012. but the currency is in three different equilibrium, you're statistically cheap. you have 99% of your citizens, if they could take the money out, they would. then you also have the 20% chance of foreign investors who probably believe if i'm holding an r.m.b., is there a 23% chance in three years i'm not getting my money back? i think the r.m.b. is really something we have to investigate the relationship between that and the dollar. there's a whole charles kendall burger one of the great rs of the 20th century. i think canes gets a lot of

credit for bread and woods, i think kendallburger was a big part of that. at the time it was between the u.s. and sterling, he called it the important pair. so i think we've got to ring the important pair for the u.s. and c.n.m. when you go to reserve currency status, in the history of the world there have been six reserve currencies. tell me what all the former reserve currencies have in common? portugal spain u.k. they were also security zones. how did they lose reserve currency status, especially spain, they got highly leveraged and could no longer their military. so when you tell me people in

the biden administration say we want reserve currency stratus but their 10-year budget projection calls for 20% cut in defense in a if anything, defense spending needs to rise, then you can't keep your reserve currency status if you lose the defense. >> you're a admir for shinzu. and he believed in fiscal stimulus and structural reform. if you were advising, let's say donald trump were he elected's in 2025, what would you suggest as the three arrows for a successful >> i might advise him to campaign on the three arrows, 3% real economic growth and how do you get that, through

deregulation more u.s. energy production, slaying inflation guidance on confidence and people to makeate sector can take over from the bloated government spending. two, i would urge him to make public his desire to get the deficit down to 3% by the e of his term. he didn't get thousand these 3% to 7% deficits, i think they averaged 4% under him. get that down to 3%. and three million more oil barrel a day from u.s. energy production. that would be my 3-3-3. that would substantially increase the oil price, the

number one drivers of inflation expectations. then back to the fed they could go into a proper easing cycle. >> let's talk about debt. you started your remarks by describing haw it's been a big motivator for you in getting into the fray and the public policy debate nationally. this year the federal deficit will land somewhere between 6% and 7% of g.d.p. and the primary deficit will be close to 4%. that's just staggeringly high relative to europe and canada, as you mentioned early on. it really is quite an outlier when you're looking at other advanced market democracies. you're talking about getting the deficit down to 3% overall, not just getting the primary deficit down there. talk to us about a path that you consider politically realistic and credible. donald trump is someone very much a pragmatist and he's not going to want to tank the economy but he won't be close to

some idea some kind of fiscal consolidation would be appropriate. when you're thinking about the path there, what does it look like, some kind of fiscal consolidation that is not something that will cause an enormous amount of economic pain. >> it goes back to my earlier point, i think we're at the last chance bar and grill burger out of this and has to include we reinstate the tozen17, the tax cuts and job act with pay force. so i think we can tame the green new deal. we'd probably save a trillion over 10 years on that. i think there's probably something to dterms of empowering states, no cuts. i think on discretionary

spending, we probably need to do some kind of a freeze except for defense. and, you know, i think the market will respond to that. and then i have been very outspoken and i noticed with great pleasure in the past 48 hours that senator kennedy from louisiana and senator haggerty from tennessee took secretary yellen to task for shortening the u.s. debt which has also eased financial conditions. when people talk about politicizing the fed, i think treasury has taken over the fed, as former fed chair, she knew how to do it. you can ge cycle on debt costs. it's been prudent to finance on the front end. every emerging market blowup i've ever seen always starts the same way, you end up with an

asset bubble. sound familiar? that's driven by high deficits high deficits get financed on the short end and call it the three body problem. you're not supposed to see it in the u.s. but younezuela or argentina. interest will be $1.10 trillion. more than the defense budget. i have an article coming out the next few i was writing it with congressman mike gallagher but he's gone to the private sector and privatized himself. these high deficits are a defense problem. they're going to create a

national defense problem. cicero said -- had some quote unlimited finance is the sinew that holds war. the u.s. ability to leverage up during a conflict is the treasury was able to expand the deficit, steven was talking about it earlier, whether it's covid crisis or war. but u.s. treasury was able to save the country during the civil war by expanding the deficit. we're able to save the economic well-being of the country during the great depression by spending. and we're able to save the world during world war ii. we have to get this down or there's no room for maneuver.

it goes down trillion mechanically if there are no deficit increases this year. i think president trump with the right policy could create a reflexive self reinforcing cycle on the downside. and when there is talk -- these entitlements are massive. i think that the next four years isn't the time to deal with we've got to deal with the discretionary portion of the budget and get that under control. but i think the signal -- i always say crawl, walk, run. we've got to crawl, maybe walk our way to get the current deficits under control and then the next steps is for the future administration to have the confidence to deal with the enentitlements. >> you talked early on about the historical role of tariffs and protecting american industries

and also the notice of tariffs being used for negotiating leverage. there's another way tariffs have been used in american history and that's a source of revenue. i wonder when the former president talks about across the board tariffs, particularly large tariffs on china and of course president biden announced his own tariffs on chinese electric vehicles among other goods, do you see a role for see some folks saying this essentially amounts to a kind of consumption tax on american households but if there's a geopolitical benefit to it, do you see that as a credible strategy to help achieve fiscal consolidation? >> yes. let's say that there 10% tariff. having long time, some portion of that will result in currency appreciation. normally it's 2/3 of that. now you're collecting 10%, the

lift on the currency does 6% or 7% of it for you. >> and hurts exporters. >> and hurts exporters. but you're also using it as a geopolitical tool. i was at and foreign relations committee and jerod bernstein was talking about biden policy, and to him, anything that they don't like is a market failure. everything's a failure but in the european think tank said to him you've said the word friend shoring seven times. you never tell us what it means to be a friend. so i think in terms of tariffs, i think in terms of currencies i think in terms of bilateral trade agreements, i think in terms of security agreements. i think in terms of values but i

think we should make it very clear, there's a green red, and yellow bucket and we let everyonef you want to be counted. >> here's what we ask of you and you can choose which bucket you want to be in and here's what you get for being in the bucket. >> i believe we have time for a few questions from the audience. reporter: there's definitely a view in the first trump presidency, the tax cuts and spending weren't good for our country's financial health so what makes you think that he's called himself the king of debt, why do you think things will go better in the second presidency on that front? >> that view would be incorrect.

it was fantastic for the country. working wages went up. the capital investment went up. the tax collection level never went down. so then we hit covid and i think that we don't know -- things were going very, very well. so i'm not sure -- i reject the view that it didn't work country. and the debt to g.d.p. would have been going down from 2022 onward. so i think the tax cuts and jobs act were a home run across every segment. it was fueled by private sector expansion. it wasn't fueled by this

government spending. and -- and, wait for it, noninflationary. because the demand shock from the private sector was met with the deregulation as opposed to now the demand shock is being met with supply constriction through regulation. >> any other questions? i'm sorry. there's someone on this side of the room and then you'll be next. reporter: charlie screen from "the daily mail." in the background, you've been to several fundraisers. what is the mood on wall street about a possible trump victory and are they optimistic or pessimistic and could you also give me an idea of who they want to see as vice president?

>> i have no particular expertise -- i'll work backwards. i have no particular expertise on the veep, but i can tell you that i think they'd be happy with the list that leaked out yesterday. i think the wall street group would be very happy with that. i think the wall street group was always going to come back. what i find more interesting is the new venture capital cohort who is supporting president trump, as they say in las vegas the new shooter. this is a completely new group and it's being socialized now in silicon valley, it's ok to be a republican it's ok to support donald trump. i found steve schwartzman comments on why he's coming in in favor of donald trump.

a lot of it was anti-biden sentiment. whether it's the pervasive anti-semitism with a lot of these policies. they're two candidates now and there's a clear choice. ive. reporter: scott, you mentioned you think policies can get real g.d.p. to about potential g.d.p. according to most estimates was not much more than 2% in the previous administration. and nobody think also it's changed all that much, maybe a shade here or there. where do you think the sort of big -- go from 1.8% to 3% is a pretty big jump. where do you see the big difference is coming from? >> look, i think

the global economy is actually picking up. between trump and biden, the economic data for biden the big jump is in structures, which is the manufacturing. mining which is the energy industry is practically none. i think we can do that p. i think we can get consumer sentiment back. i think it can be export. i think it can be very broad-based and i think a lot of it can be driven -- i think just in the energy industry if they can get some regulatory certainty, that that would happen.

some of my clients are some of the biggest private families who are manufacturers in the u.s., and i always ask them for trump 1.0, what was more important for you, the tax cuts or theregulation? the tax cuts were nice but the regulatory certainty is what enabled us to do the massive capx. we'd show up at the obama e.p.a. and ask seeking some window guidance on our chemical facility can we do this, what do you think of that? and they would be on site at the facility on monday. so i think it can be across the board. and look, i think once we can get inflation down, interest rates down, then i think we can have a proper housing boom. >> i hope you'll indulge me, a bit of a more personal question. so you lived for many years in

london, you lived in the northeastern united states, now you're back in your home state of south carolina. one reaction i've heard from a number of folks on the political right is that in the wake of donald experience in his criminal trial but also in his civil trial, there are a lot of people who have come to believe if you're someone who holds conservative political convictions, it is no longer very wise for you, if you're someone of means in particular, who might be a target to reside in a deep blue municipality or state, and someone who is a lifelong brooklyn resident and right in my broad disorientation, it's a thought. and wonder how you think and when you speak to other like-minded folks investors entrepreneurs, people who want to enter into public life, are you getting that sense as well someone who has to migrate to political safety given the changing climate?

>> i think the recent verdict is the most -- is when the idea of being an enemy of the state the "state" as in state government, has maybe come to the forefront. i think in people's minds previously, it was tax rates regulation ease of doing business. again, regulatory certainty within state govnment. this migration from the blue states to the red states is one of the largest migrations, the post civil war migration by american blacks in the south. this migration back to red states it started before there was a nostate. but i think there is a risk premium that's been does a risk premium get created

on tax uncertainty? i'll tell you, i have one investment in massachusetts, and massachusetts put in a excess tax above a southern level. massachusetts was my biggest tax bill last year and i have one investment there. so i think this idea of economic freedom, i really think it's economic freedom. i don't think we've degenerated yet to this idea that enemy of the state. i hope we won't. that i'm part of the republican party. i've studied game th i'm part of the republican party that is saying the best revenge is just a win on november 5. let's not set off a tit for traditionally conservatives are the adults in the room.

let's stay that way. you know, it's the -- but it is alarming. it's alarming on both sides to seehe breakdown in the federal systemet was during trump with sanctuary cities. we're not going to enforce the law. and the state of texas feeling as thoto enforce their own border. i think we've got to get back to this idea that the federal system does work. >> everyone, please thank scott bessert. [applause] [captions copyright national cable satellite corp. 2024]

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