live from new york where business never sleeps this is "squawk box. good morning, well cocome t "squawk box. a look at u.s. equity futures at this hour. i want to call it unch, we're marginally in the red. we open off about a point with the s&p, the dow off about a point. and the nasdaq off about two the hang seng and shanghai both in the read. let's tell you what's going on in europe. looking at green arrows across the board. marginal, marginal finally talking about crude and really where that's been landing. we're over $52

52.74. creeping up to $53 >> here are the big stories we're watching roku will make its public debut on the nasdaq. roku priced shares at $14 each that's the top end of the expected range it has a market cap of $1.3 billion. rok lush roku wi tra under roku. roku founder and ceo anthony wood will be on "squawk box" this morning and rovio, the maker of angry birds video games will price later today. the senate intelligence committee calling on facebook, twitter and alphabet to testify

at a hearing on russia's role in the 2016 election. the hearing is november 1st. alphabet and facebook have not said if they will attend mark zuckerberg hitting back at president trump who claimed yesterday that the social media company was always anti-trump. zuckerberg posting on facebook, trump says facebook is against him. well, liberals say we helped trump. both sides are upset about the ideas and content they don't like that's what running a flat form for all ideas looks like zuckerberg said he regrets comments he made after the election suggesting that fake news on facebook shaped the outcome of the election. >> russia's alleged attempt to meddle in the politics in the u.s. may have reached beyond the election the new yo"new york times" -- i true >> it is true. >> the "new york times" reports that a network of accounts connected to russia were used over the weekend to stoke the national anthem nfl controversy.

the accounts pushed both sides of the debate was there a preponderance of one or the other i don't know one was #takeaknee the other wa was #standforouranthem jam the larger issue, the idea they're trying to stoke an identity politics and campaign of division, if you will, in the country unto itself should be problematic. you seem to be non -- >> you don't think we do -- we're -- we have no idea the stuff we do. sometimes we drop leaflets >> we may do all sorts of things >> we protect our interests. >> who knows

if they did both sides, they're stoking -- >> they want the division in the country. so we're at a standstill, distracted by this issue >> we're constantly undermining their efforts. >> sure. >> and we're the good guys, we should be able to undermine their efforts. >> because we do it, doesn't mean we want them do it, too >> why defending their ability do it? >> i'm not defending -- what happened today did that set you off, your stain on your collar >> i have a bit of a stain on my collar that's true. >> did that set you off? don't take it out on me. >> fallout from the college basketball bribery scandal, rick pitino has been placed on unpaid leave. the athletic director was also placed on leave. at issue the federal criminal investigation on tuesday alleging that two louisville coaches worked with an adidas

executive to pay high school recruits six figures to go to louisville the school was already on probation by the ncaa for another scandal in which a coach hired escorts to entertain players and recruits louisville faces the death penalty in the world of the ncaa meaning theycould be banned from basketball for at least a year two of the high profile recruits announced yesterday they would go elsewhere. i don't know i think the death penalty is not the right phrase, maybe if you were banned from basketball forever that would be closer the ncaa has implicatedmore than just the six schools already named. >> i would reference the previous problems pitino had, but i'm not sure i would get -- i don't think any light bulbs would go off on this set do you remember? i'll go to you first you have a better chance at this >> was there a betting something -- >> no, in like a -- like some

type of sports bar it closed there was a waitress involved. pitino was married >> oh, right >> plays into this next. >> it does >> it's sports related hugh hefner has died at the age of 91. according to a statement released by playboy enterprises, he passed away peace fly fully n wednesday. he is credited with ushering in the sexual revolution in the '60 wz his men's magazine. he was also known for lavish parties thrown at the mansion. often filled with celebrity friends, playboy models, but a throwback to -- i think the '70s with you playboy after dark. that was the name of the tv show they would take you in to some of the parties you would see the hollywood stars that were front and center back then. james kahn or don rickles.

he would always have his -- i dress like that at times >> with the ascot and a smoking jacket. >> velvet robe >> you do, don't you >> still do. very comfortable no he always dressed like that. i visited the mansion one time it was in the middle of the day. a friend of mine bought one share of playboy stock a fellow broker. one share. and he wanted to get it signed i think he talk ed ed to someboy nobody was there we did see the zoo even when we went, it was very dated. >> did you go to the grotto? >> was one room that -- >> i don't know what grotto is except what i watched on television >> there was no one there, before you there was a theater room very tacky everything was -- the stereo equipment out in the pool section was old samsung stuff. there was one room where i didn't want to touch anything.

it was mattress floor. the entire floor -- >> you're kidding. >> no i'm not. >> did you jump on it? roll around? >> as i said, i was -- yeah. so i have -- that's the experience beautiful place on the border of l.a. country club. beautiful golf course. beautiful property the white house and republican lawmakers are releasing their tax plan proposal which would provide large tax cuts to corporations and individuals. eamon javers joins us now with more i looked at the different papers, everybody has a different take, as you would expect, depending on where you sit on these issues. >> not surprising. >> it is interesting that the blue states for whatever reason hit it hard. it's because of the way it is, with the high state taxes. >> it's the state and local tax deductions i was talking to a senior administration official who said in new york state that state and

local tax deduction is worth about 5% on your taxes some of the wealthy new yorkers may not see a tax benefit at all because of that state and local tax deduction going away the president was out on the campaign trail for tax reform yesterday. he was in indianapolis making remarks about his proposal we don't have all of the details. but they rolled out more look at what the plan is for the corporate rate the president saying he wants a 20% corporate rate he settled on 20%, and a 25% rate for pass-throughs, those are partnerships that's a big chunk of the economy. on the individual side, they're going to collapse the number of tax brackets you see the current tax brackets ranging from 10 to 39.6. under the proposal they'll go from 12 force % to 35%, but thel be a higher fourth rate. i was talking to gary cohn who said that fourth rate is for

what people think of as the 1% it could be as high as 37%, 38%. on the campaign trail yesterday, the president went after the estate tax with particular invective. here's what he said. >> we are finally ending the crushing, the horrible, the unfair estate tax or as it is often referred to, the death tax. we are not going to allow the death tax to steal away the american dream from these great, great families many of which are in this room today. >> the president said he hopes to have democratic votes for this tax package when it's all said and done. he brought joe donnelly, the democratic senator from indiana with him on the trip he rode in air force once. he got a ride in the beast, the presidential limousine the president from the stage teasing joe donnelly a little bit about what might happen if he doesn't vote for the package.

>> if senator donnelly doesn't approve it, because he's on the other side, we will come here and campaign against him like you wouldn't believe. >> maybe little carrot and stick there to see if they can get some democrats on board. republicans are hoping they can get this done by the end of the year the president said that healthcare will have to wait for january and february when he said he will revisit that as well we'll see where this goes. very tight legislative calendar between now and the end of the year >> thank you for that. we want to break down the tax plan with our guest, douglas holtz aiken from the center for american progress, and senior fellow seth hanlow you're sitting next to me. we talked about what the rate could or could not be. let's talk on the corporate side is 20 a realistic number or the latest anchoring device on our way towards something higher

>> 20 is doable. but 20 is hard work. they'll have to get into the committee and do base broadening a lot will resolve around what they do with the international tax rules. it's doable. it would be an enormous improvement in the u.s. business climate. we are so far out of line with developed competitors, that the status quo is dangerous. >> to make the math add, they need to do what? >> they need to keep the rate at 20 they need to go to the one-time deemed repatriation, set those rates. those have not been -- what would you set that at? >> something in the range of 8%, 10% on the liquid stuff. lower on the nonliquid stuff get some money out of that you have to be completely disciplined on holding on to the r&d tax credits and not much else there's going to be a big fight over interest deductibility. >> where are you on interest deductible >> if you're going to have

expensing, you don't need the interest dedeductible? >> seth, where are you >> 20% rate is not achievable at all. it will cost 1.8 trillion or 1.9 trillion over the next ten years. the offsets they're talking about don't come close to paying for that that leaves open the question how will they pay for this without putting the tab on the national debt or on the back of middle class families. there's a lot of unanswered questions. i think 20% is completely unr l unrealistic unless they shift the burden to families or on the national credit card >> i want to agree with seth we don't know yet. we saw yesterday the aspirational good news >> but eve seen you be quite critical when he was talking at 15%, even at 20% >> i don't think 15% is doable >> you talked how it might be in the mid 20s before >> could end up there. it's doable. it's hard work and we'll see if they're going

to -- >> but hard work doesn't make up for math >> it's hard political work to resist the constituencies who will say watt their doer this dn >> in terms of the math you can get there? >> you can make this revenue neutral with dynamic scoring >> on a sensible dynamic scoring. >> what kind of growth rate do you have to assume >> 2.52., 2.6. >> if you can get there, it works. >> yes >> the pass-through issue. 25% makes sense. is that number the right number? >> the fundamental problem is more than half the business income is not coming through the pass-throughs. if you improve the tax climate for the business in the u.s., you have to do something this approach has the good news, you get a rate down to something

sensible, but then you have the compliance issue how will you stop the recharacterization >> seth, where do you land on the pass-through >> that's one of the biggest and most unnecessary giveaways they're cutting the top rate on pass-throughs down to 25%. the vastya j majority and most l small businesses are already in the 25% bracket. we're talking about large businesses or wealthy people that own pass-through businesses like donald trump himself. and pass-through businesses already pay lower effective tax rates than corporations because they don't have the second layer of tax there's no reason to cut the pass-will y pass-through rate. having a huge split between the two will create more complexity, litigation with the irs, people trying to squeeze in through the loopholes, hedge fund managers trying to get themselves into the loophole

this is the opposite of tax reform we're trying to get rid of special loopholes, not create big new ones >> seth, here's my question. what would you do? the status quo is untenable. we're losing the headquarter companies in the c corps, we have no productivity growth, stagnant wages, how can you defend the tax code. >> we need to simplify the tax code, but number one, we need to make investments in the country to improve productivity. so raising the debt by 2.2 trillion -- >> have you seen the return to federal investments and infrastructure there's nothing there. it sounds good but the reality is the investments we need are the ones u.s. corporations are making overseas now. we have to make it the case that firms want to invest in america, innovate in america, hire people in america it would be great if siemens wanted to come and hire people in america we are so out of line with international competitiveness.

we have to do something, but all i hear is it's a giveaway. >> businesses are saying we need better infrastructure, and we need to invest in things like early childhood education to improve productivity growth. the other thing about the plan, president trump calls it a made in america plan. it cuts the tax rate on overseas profits to zero by moving to a territorial system >> which every other developed country does what could we learn from that? >> but every other country doesn't do it. they have strong rules to protect against that >> that's what they'll do. >> where is the plan it's almost october now. all we see is hand wave being how we'll prevent this. >> we talked about this a couple guys getting makeup. but -- >> that's what we do >> there's an additional rate on high earners to make sure things

are maintained this is about class warriors on the left and right but it won't work because you still get attacked from the left that it's a cut for the rich even though there will be a surcharge on high earners, we're at 44% now 28% back in reagan 44% now. it's nom cot coming down from h, never will it's probably going up, but that won't satisfy people who say it's a giveaway to the rich. >> everything is a giveaway to the rich the fundamental thing to remember this is not 1986. '86 they raised taxes to marginalize rates. this is about having a business climate in the u.s. where they want to invest, hire people, give them a raise. that's an essential part of the future we will continue this conversation doug and seth, thank you quick programming note, we have two members of the big six, the authors of the gop tax plan, that's at 8:00 a.m

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hurricane maria crippled the island of puerto rico, shutting

down the power grid and causing heavy damage to the island's infrastructure for the latest, let's bring in ricardo rossello, governor of puerto rico. in the last 48 hours, has there been improvement it got to the point there where we were all focused on whether relief was getting there quickly enough is it better >> yes yes, it is better. one of the reasons that it is better is because of the logistics component to it. different from florida and texas, puerto rico is an island. so a lot of the assets have to be flown in. the air traffic was clogged or they have to come through on boats. if you compare it to the rest of the contiguous states, you could get somebody from a nearby state and drive it things are moving. we visited all municipalities.

we deployed water and food to all of them. we need to continue on those routes our main object shive is to make sure people are safe and deliver critical components such as diesel to maintain hospitals running. and then we can give access to food and water >> the most urgent need, water and shelter, at this point those have mostly been met nobody is in dire straits at this point >> well, you know, we have a lack of communication. severe lack of communication because our power grid was essentially destroyed. our telecoms have gone down. we have been making an effort with the telecom efforts to put provisional antennas around the island so we can communicate but that has taken time. so in order to go over that limitation of communications, we

have done two things we either send runners every day to the municipalities so they can go forwards, backwards, we can exchange information, or i have started deploying even personally satcom phones, so mayors can talk to us. still, as you can imagine, communication has been pretty slow and limiting. >> so as far as fema and the response, and we know that they were already dealing with houston and irma already, but they have been responsive in your view? >> yes, yes. they have. they have. we've been working as one team we have a united eoc i've solicited help from the dod, from the state government we're aggregating all of those assets however here in puerto rico some of them have taken more time because of the air traffic control, that's been a

limitation but fema has been working just between the last 48 hours. they've deployed about 40 missions of food and water, rescue on the island and that parallels our efforts so that we can make sure that we have a grasp on what's going on across puerto rico people have food, water and shelter, and that the hospitals remain energized so that patients can be in a better state. >> do you expect the jones act to be waived where is that right now? the democrats have introduced something or >> i don't know the long-term. i know that's a long-term discussion in terms of the immediate term, i do -- i've spoken to the white house late last night, and i think as was the case with irma, we had a temporary waiver. i think the same will apply over here the white house has responded

very quickly to all of our petitions. so i would expect to have a an answer sometime early in the morning regarding that >> at this point it has not been a lack of funds, it's just logistics and the fact it's an island there's been enough money at this point that hasn't been the issue >> well, let me caution that it is going to be a monetary issue real quick we're still in the emergency mode we have gotten resources we have gotten food and water. we have them in our ports. we're starting to distribute them the limiting step right now is the logistical assets. we're trying to recruit truck drivers, they should be coming between today and the next couple of days, so we can be better with logistics. but puerto rico is already in a fiscal crunch.

we had little liquidity. our economy was dwindling, since we started our administration, we implemented far-reaching economic reforms i personally slashed 1$1.4 billion off our budget notwithstanding that, even though we were making those fiscal and economic development decisions, the truth of the matter is hurricane maria changed the game it is now -- >> governor, you have north of $70 billion in debt right now. the creditors were already talking about some sort of restructuring. what do you see for creditors or bond holders now is it true you've been offered new loans in order to pay for future repairs >> no, we have not been offered loans. i have requested congress that in their aid pack dhaj thage thy include several things number one, the amount and magnitude of the damage, similar

to what happened in texas and florida, we are u.s. citizens, proud u.s. citizens. we helped others as little as two weeks ago we rescued and gave shelter, food and water to about 4,000 u.s. citizens stranded in the islands. we expect equal treatment, number two we expect flexibility in the early going of the rebuilding process. as i said, we're in dire fiscal situation. we have little money in the box. and we are not going to have revenues in the next couple of months that puts us in a bind in order for a government to operate and for us to meet our emergency needs, we are going to need some money. we are also requesting 100% waiver from the fema cost sharing component. the president authorized that on an administrative level up to six months, but this will take a bit longer

lastly, we're asking for the fed and treasury to offer puerto rico lines of credit at reasonable rates so we can start mitigating aside from that, we don't have, right now, access to those loans. >> governor, thank you preef appreciate your time we wish you well >> thank you thank you for your thoughts and prayers. coming up, today's market drivers. we'll tell you what to expect as far as jobs and the gop data that's due out this morning. insight into the federal reserve. former philly fed president charles plosser joins us at 7:30 eastern time as we head to break, here's yesterday's winners and losers my dell small business advisor

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what's not surprising? how much money sam and yohanna saved by switching to geico. fifteen minutes could save you fifteen percent or more. ♪ welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning welcome back to "squawk box" on cnbc a look at itseu.s. equity futur. it's turned around marginally. still unmuch across the board. >> stocks to watch today include toshiba signing an $18 billion

deal to sell its chip unit to a consortium led by bain capital the group including apple and deltel technologies western digital opposes the deal and still has litigation against it. the drama is not over yet. shares of abbott labs rising this morning the fda approving the glucose monitoring device for adults it will allow millions to track blood sugar levels without having to prick their fingers. doing that on a daily basis is not good it would be nice to get around that hain celestial making an agreement to engage capital to make changes on its board. hain will nominate six new director, three board members will not seek re-election. the changes could lead to a potential sale of the company. on today's wall street agenda, weekly jobless claim

and the final estimate on second quarter gdp at 8:30 a.m. eastern. gdp is expected to remain unchanged from the previous estimate of 3% esther george and fed vice chair stanley fischer are speaking today. for more on the market let's bring in scott brown and raymond stolfus. great to have you both here. s&p fresh all-time high in the intraday session that was partly spurred about the talk of tax reform what kind of impact would that have on fiscal '18 eps >> it could add an additional 2%, 3% we're looking for next year eps growth right now from where we stand, we'll have to see as we get closer, probably 8% growth next year. >> you're at 2650 on the s&p 500 does that incorporate the notion of fiscal stimulus >> does not at this time >> would have to raise that 2650

if we get something? >> would remember, that's to th of this year that's not the 2018 targets. >> all right i will go out to you, scott. in terms of -- it almost seems like be careful of what you wish for. we could have a boost to eps and potentially a boost to the markets. repatriation could cause the dollar to go higher. all of this could end up causing the pace of rate hikes to be faster how do you suss out the push/pull of the dynamic of the markets? >> rather than argue the merits of the tax proposal that we had, it's important to look at the mechanics of how they can get this done. we saw the difficult time they had trying to do the healthcare reform they need a budget first before they can start on the tax reform that means we'll have to see some budget agreement by december 8th so they can get busy on that one issue is we want tax reform.

you're talking lowering rates, but it also means giving up deductions that we have. nobody wants to give up deductions that will be a tough sell. real hard road ahead for congress to get this done. that said we're still in the sweet spot for the stock market. the economy is still improving it's not so rapid that the fed is rushing to take the punch bowl away. you will continue to seepg earnings drive stock prices. >> would you agree with that >> very much would when we look at it, we think that tax -- a tax cut is likely. tax reform probably not. probably nothing is contentious except for healthcare reform as tax reform there's so many vested interests from all sides of the political realm. so we think we'll get some kind of the tax cut, the market will like it. our president will likely call it tax reform.

but it will be most likely a tax cut with an expiry date on it. it will be good for corporates and the consumer which sectors of the market specifically aside from small caps, which pay most of the taxes here in the u.s. so we would see a great benefit n terms of sectors >> very positive on the cyclicals, including materials, industrials, consumer discretionary, technology. the defense that we continue to like would be healthcare in related to financials, we need that net interest margin spread a bit further >> scott you seem very on the fence when it comes to whether or not this will get done. in your view, is there a possibility that what gets passed could damage the my what is the downside risk in your view? >> i don't think there's a whole lot of downside risk other than the disappointment with the markets. if the stock market levels that

we're seeing are based on the whole trump agenda, there may be some -- >> are they? when you hear wall street forecasts say -- forecasters say nothing is baked in for fiscal stimulus, we're not built on the expectation of fiscal then if you take that away, does that impact -- >> you talk to the traders, the sales people, the people that are on the front lines in the market, they're still optimistic that we will get there at some point. but we're eight months in. we don't have truinfrastructure spending plan. it's better than the one paige thing one-page thing we got a while back, but details have to be worked out the my can do well here. whether or not we get the tax cuts over the next year or two >> going leave it there. scott and john, great to see you both >> coming up, a huge lineup

including the ceo of row cku set make its public debut. and then we have two of the big six. we have gary cohn joining us live from the lawn of the white house, that's followed by an extended interview with house speaker paul ryan. lots to talk to them about with this tax plan and what it means. you're watching qux sq"squawk b cnbc

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. welcome back to "squawk box. time for the executive edge. the state of california is moving its presidential primary from june to march to gain more influence on choosing candidates from both political parties. the state held its primaimary le this will leave the iowa and new hampshire caucuses in place as the first and second nominating contests >> interesting it will be a race among states to try to get to the front of the line >> right

>> california, we don't even need to know how they vote in the presidential election. >>we have a good idea. >> right if you're trying to figure out who will be the nominee and -- >> right >> that is true. >> that could be significant >> mexico has opened the possibility that talks revamping nafta could run into 2019. the previous deadline of the end of december was put in place to avoid the mexican campaign which begins in march. the next round of negotiations will begin in washington on october 11th a judge dismissed the s.e.c.'s fraud case against investor lynn tilton this is a big deal tilton had been fighting a 2-year-old s.e.c. and traitive case th administrative case that accused her of loan pools and collecting $2 million in extra management fees the publicity on this was terrible a judge determined that the violations alleged by the s.e.c. were unproven.

tilton's lawyer said her reputation has been restored and justice done hopefully we can get lynn tilton on the program to talk about this it was an extraordinary story. it was quite terrible what -- when you think about what those allegations meant to her business to her reputation, and then to see her every fektiffecy fight the law and win is extraordinary. >> and rare. coming up, nfl controversy was the biggest story in sports until a bribery and fraud scandal brought down college baseball basketball's highest paid coach. as we head to break, here's a quick check of what's happening in european markets. mixed. not a lot happening. germany up

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welcome back fallout from the college basketball bribery scandal on the sport's highest paid coach rick pitino has been placed on administrative unpaid leave. the school athletic director was also placed on leave

a federal investigation on tuesday alleged that two louisville coaches paid $100,000 for a student to come to schooly named. meanwhile, amazon has a big nfl kickoff taking place tonight the tech giant will begin screaming the first of ten thursday-night football games. this evening as part of its one year deal with the nfl, joining us now is patrick risch, sports business program director at washington university in st. louis. i'm shocked, shocked, there's bribery going on here. is this a casablanca quote there's a lot of money going on in college sports. football is worth $1.5 billion we know these are real numbers, money sloshing around like that is like -- i don't know, you sort of know in the background what's going on but it's the tough to catch and sometimes people look the other way, i think, but this has been going

on. >> joe, it has been going on it goes to show you it took the fbi to get things done because the ncaa's legislative arm just isn't long enough. it hasn't been strong enough they have limited people at the ncaa that can address this, they don't subpoena power so it's certainly not surprising and quite frankly, joe, i think this is a great thing for college sports it's a great thing because there are a lot of programs that do try to play it clean and you have a lot of programs that go behind the scenes and skirt the system with the shoe companies involved so let's hope this brings a little bit more cleanliness to our college sports. >> winning is important. when a team hires a rick pitino, and we were talking about the other crazy stuff in his cv, he wins, though, doesn't he do you think there's anything to the notion that maybe they don't want to look too closely at how he's so success or do they think

that, look, we were totally blindsided by this >> joe, it's true there are programs and executives, athletic directors, that didn't want to look too close at their most successful gentlema that's had issues but now they won't have any choice. this investigation should scare every coach and executive in college athletics so i expect this is going to clean up the sport. but amateurism is partly to blame as well. if there was a system where you could find a way to allow athletes to receive money up front and it wouldn't be athletes across all sports, it would mostly be in the revenue sports of football and men's college basketball then things would be more above board instead of this seedy underbelly we've seen for years. >> what percentage do you think of the successful programs bend the rules at least a little bit

and not outright break them? do you think 50% >> joe, i would say at least a third. at least a third of the power five conferences in college basketball and in football i would say at least a third get very close to that gray line, maybe dip their toe over the line. >> is pitino gone? administrative leave his lawyers says he's fired. is that a -- some kind of strategy that pitino's team is employing or is he going what's administrative leave mean >> essentially my understanding from reading the contract or what's been reported is he has to be given at least ten day's notice so i think this administrative leave is to cover that ten-day period and he will be gone because of this incident joe, one more thing about this how about the nba's role in this right now the nba has an age eligibility requirement which they didn't always have which essentially is quote/unquote forcing these high school kids to at least go one year to college. it's a farce you've seen a lot of guys that

are one and done if you allow these kids to go to the pros out of high school, again, you may not see this payment. of course, the nba has a reason, a cost reason why they do this, joe, and that's because they don't want high school kids to come to their ranks, pay them all this money and find out they can't cut it at that level so that's part of the culprit as well. >> sundays are football days and i understand how people might say, you know, i'm not, i'm out. what are they going to do, patrick? i've seen the videos, guys tick steelers' signs in half. how long does it last and how deep does it get in terms of affecting ratings. >> it's a great question i think you're still going to see some demonstrations going forward this season. i don't believe the dip in ratings is attributable

predominantly to this factor i think what's happening with ratings, joe, is there are so many more people streaming the content and their nielsen ratings don't capture streamers. so that's a major reason why you've seen a dip in ratings joe, i think the telltale -- a couple things, direct tv is allowing customers if they wish to get a refund on their nfl sunday ticket if they are having issues with the player protest so let's see how many people refund their nfl sunday ticket but i think the biggest telltale about how the public is reacting to the way athletes react to what's going on is when the nba season starts in three weeks because obviously the highest percentage of african-american athletes are in the nba, to start it off as a social injustice protest, now it's a protest against freedom of speech what are the nba teams going do? it's going to be fascinating when they open up in a few weeks. >> football, you know -- i love

it when the planes fly over, i like the big flags they have wrapped themselves in american flag and i don't know it's incongruous i don't know, i think i'd be concerned if i were goodell or the networks or whomever i don't know we'll see. >> the directv numbers will be a very tangible metric we can look at in a few weeks. >> with me it's the bengals, what am i losing >> a lot there. >> i'm losing nothing. if i don't want watch, watch, it's always the same for 30 years. >> i feel bad for you, joe. >> it's an easy choice for me. thanks, patrick. thanks, joe coming up, two membersf the big six, the authors of the gop tax plan at 8:00 a.m. national economic council director gary cohn will join us live from the white house. then house speaker paul ryan will be our ecspial guest for an extended interview "squawk box" will be right back. this is the new new york. we are building new airports all across the state.

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markets, we'll see how they feel about the gop tax blueprint. we'll tell you how reforms could mean for companies and investors straight ahead how to tell how they feel, they're unchanged but it depends on the prospects for whether this happens or not, right unwinding the fed's balance sheet. former philadelphia fed president charles plosser joins us and roku begins trading. we'll talk to the ceo as the second hour of "squawk box" begins right now >> announcer: live from the beating heart of business, new york city, this is "squawk bo.".

>> good morning, i'm andrew ross sorkin along with joe kerr anyone and melissa lee, becky is off today. look at the futures. we were basically marginally down, now we're moving more realistically down but only a little bit dow off about five points, the s&p 500 off a point and a half here's what's making headlines roku going public today. its ipo priced at $14 per share. we will talk to anthony wood and we'll do that at the nads dsdaq lyft one step closer to going public itself. it's about to hire an ipo advisory firm. sources saying an ipo could come as early as next year. interesting that they might go

before uber on the public path equifax promising to give consumers more access to their credit records following the removal of richard smith as ceo. equifax says it will introduce a free service january 31 that will accomplish those goals president trump and the big six rolling out -- better than the gang of something, i think, isn't it they have these weird monsters >> sounds like a sports conversation, the big six. >> it does sound like the big six. hopefully they're not playing against each other the tax plan is out. reduces the corporate tax rate to 20% joining us now, cnbc senior citizen -- no, senior contributor -- >> ooh, charlie, joseph! >> big trouble big trouble. >> it has nothing to do with age, it has to do with staff

dmur th - sta stature in this case. >> you're back peddling in the right direction. >> i'm not there yet. >> you don't take the discount >> i'm never taking it keep your stupid discount. [ laughter ] actually, i might. >> you should take the discount. >> there may come a day when i do so there's some benefit to this larry kudlow, then brookings institution director david we wessell who all that gray is from wisdom as well. are you 29 now, david? what's the biggest surprise -- this was as expected, was it not, david what's the biggest surprise you saw when we saw the -- and i know it's not complete yet but with what you know, what's the biggest surprise >> well, actually i was surprised that for cosmetic reasons they decided to raise the top marginal -- the bottom marginal rate from 10% to 12%

for people at the bottom that seemed to me a strange thing to do. it gives the left a talking point and i gather from sum reports president trump saw that and was displeased but basically you're right it's as expected, it's a big tax cut for business, it would probably blow a big hole in the deficit. it would produce some economic growth but not enough to offset the lost revenue and there are just a huge number of unanswered questions, vague statements like "the committees will work on doing this and doing that. >> larry, the -- i mean is there a surcharge on high earners? that will -- so 44% -- it was 28% -- >> there's no way it's going 44%. >> it's already 44 effectively. >> federal income tax. >> but there's going to be a surcharge on high earners. >> i don't know that i don't know that andi don't think the republican congress will put it through. >> what about the state -- what about getting rid of the state deduction? >> yeah, that's gone. >> that's a big -- >> on paper it's gone. >> that's a big deal, isn't it

>> don't you think it's possible th ces back and then they put the surcharge on the high earners as an offset >> i doubt it very much. the point of this exercise -- by the way, this final plan is remarkably close to what steve moore and i did during the campaign and i'm gratified for that there's some issues that haven't been resolved as david said. >> when it blows up and goes nowhere i'm going to talk to you about that, larry. >> always ready to talk but i want to say the guts of this thing from day one going way back was the investment side, the supply-side of the economy because we have not had capital formation, we have not had business investment, we have not had productivity these are all the weakest parts of this recovery and by my reckoning and others, it took at least a percentage point out of a normal economic recovery to use fred smith of fedex's line, we need to stop penalizing

investment and this bill will do that it's going right into productivity and worker wages. that's why i argue and i see the president is making this case, wage earners, middle-income wage earners will be the biggest beneficiary of these reductions in the corporate tax the 100% expensing and the repatriation they're going to benefit because more investment and jobs and real wages this is not a rich man's tax cut. so funny, you're arguing here over nothing 39.6 to 35, maybe it will be 37. in the reagan years we went from 70 to 28 so this is a business tax cut that will help wage earners more than anybody else in this thing. that's the work of kevin hasset and other economists >> people at home, i looked at the papers today, people at home are going to hear larry say that

and they're going to read the papers where it says it does absolutely nothing for the middle-class and everything is about pass throughs and wealthy people and estate taxes and it's going to -- they're going to say who's telling the truth here they have one side saying it's about wage growth for the middle and the other side saying it's tax cuts for the rich. it gets old, doesn't it? what's true? >> well i do agree with larry on one thing, this does look very much like the tax plan that larry kudlow and steve moore floated during the campaign. it's kind of remarkable after nine months of sitting around the table they end up with something that -- it's eight pages, they made it nine pages by counting the cover sheet and it's basically -- >> i wanted them to put it out in january, david, by the way. that was my great hope i still wish they had but thank you for the kudo. >> that's about the only thing i'm going to agree with you on,

larry. >> i understand. >> look, it's a very good argument that if you cut taxes on investment there will be more investment and that will trickle down to the workers and to some extent that's true but it's a question of degree if you eliminate the estate tax, if you cut the top marginal tax rate, if you cut the rate on business pass throughs, if you do all those things, most of the stock in america is held by wealthy people mo of thsavings in america is held wealthy people. they will get a direct benefit and i don't believe that larry is right that the gains in investment and employment will be large enough to offset this i don't think this is a tax cut for the middle-class, i think it's a huge tax cut, i don't think we're going to see this whole thing because they just gave us all the good parts, they're keeping the bad parts quiet, that's a great strategy, political strategy, but i don't think larry's right. i just disagree with him. >> i know, i expected it

you and i disagree, i hope respectfully look, i think again the power of the new investment incentives, i go back to fred smith of fedex, we are now going to quit penalizing investment, that's through the lower corporate tax rate, that's through the lower pass through small business tax rate, that's through the 100% expensing for new capital. we've had virtually no business investment in this cycle virtually. i'm not going to say have none but minuscule and capital formation in this cycle is running a third of its historical norm and when you put those together -- and i'll throw in overseas repatriation, i don't know whether it's $1 trillion xx trillion, i can get you the extra point from two to three. and the numbers will be based on that the treasury department is running its own model and i believe they'll come out with 3% economic growth which will get you a couple trillion dollars on

the budget deficit i personally think this whole thing will pay for itself, the business side, within three years, i believe it will pay for itself -- >> when you say the business side, it will pay for the corporate tax cuts. >> everything. yes. it will pay for the corporate tax cuts i thinthat the changes in marginal tax rates are good. i like tt incentive. particularly the middle and lower, i agree with the president on that 100%, but they're not huge. >> do you agree with the president on the lowest rate being 12% or 10% >> well, you know, i don't think i know enough about that because that came at the back end, that was not in our plan. what was in our plan was doubling the standard deduction. now that's not necessarily a supply-side marginal tax rate shift, however it gives a lot of hardworking folks in the middle and lower middle area a big break and it also cuts back on the importance of itemizing and, you know, i don't know if it was

on air or not, joe's right, state and local i think is going to go, a lot of the net interest deductions for corporations are going to go and there's going to be a whole bunch of those. >> can we address the pass through issue? >> i'll try. >> and david, too. at 25%, does that work in your mind >> yes oh sure. >> i think david will say no. >> lower is a small business tax rate. >> you don't think all of us will incorporate as larry kudlow, inic? >> the answer is no much as i would like the answer to be yes. the abc is no. they have for years been working on making important distinctions between legitimate business income and personal income it's the reason i don't like carried interest, for example, you don't need any of that stuff, if you're going to have a

20% corporate rate, the same with the pass throughs, is that an easy task no, but it's doable. we need small business help. we really do that's another lagging aspect of this business hike i would just say -- look, dave, i understand we're going to disagree about revenues and impact you're aware of the academic literature just as well as i am. it's split but lately it's moved toward lower corporate taxes do help wage earners. i would just say to you give us a chance give us a chance we tried other ways, we had big spending in the last administration, huge spending, we're going back to jfk and reagan, subjects of my book "jfk and the reagan revolution. the president yesterday mentioned jfks and reagan, but david, give us a chance. the models don't always work the way we think they're going to

work. >> david just gave you $10 trillion over eight years, give us $8 trillion to try with see what happens you tried redistribution, you got nowhere, let's try this. >> i think the problem -- there are two problems here. one is we have a pretty big debt now, 75% of gdp and if we pass this bill in its current form -- which i doubt we will -- we're going to run up the debt to levels that are unprecedented and i'm not willing to take the risk that we won't get 3% growth and we'll end up with a much bigger debt and secondly i do think we have to worry about how much the tax code restrains the inequality that has been created over the last decade that's a personal value. i think this takes us in the wrong direction and i think we're going to have volumes of rules on the pass throughs to distinguish when is it business income and when is it wage income they can't work that out yet it will be a mess. >> no tax cut in recent times

has aimed so selectively and personally and directly at corporate taxes and capital expenditure taxes and repatriation it's undeniable that taxing those key areas for capital has held this economy back it's undeniable. whether democrat or republican whether you like the cutting of the top rate or not, that's a different argument you may disagree with me about the magnitudes i don't think you can disagree that it's going to have positive impact on productivity and real wages. >> i only disagree on the mag any feud i only disagree on the magnitude. >> appreciate it appreciate that. to be continued i hope. >> thank you. >> thanks, david, very spry for -- >> for what? >> well, for the senior economist, senior adviser. what is your title again senior commentator. >> senior contributor. >> senior contributor.

>> but young at heart. >> but young at heart. >> and playing great tennis, having a great tennis summer you should challenge billie jean king. >> melissa, helps me he sits next to you coming up, national economic council director gary cohn will be our special guest at 8:30 house speaker paul ryan. wow, cohn and ryan will join us live from washington that's pretty good we want to turn to the recovery and relief effort in puerto rico. contessa brewer is in san juan this orning. good morning, contessa. >> andrew, i'm at the port in san juan and you can see the royal caribbean cruise ship that will be evacuating people off of the island to ft. lauderdale later today. out at sea, the port has just opened on saturday, immediately crowley, one of the biggest shippers here, started bringing in vessels full of relief supplies but there are 1500 cargo containers sitting on the

water waiting to be unloaded here's a ship, three levels of cargo containers here filled with essential supplies. we're talking about water and food and building supplies and construction equipment and medicine that are sitting on these containers not getting to the people we know are desperate for it take a look at this now. a massive sea of cargo containers we're talking 9500 in the whole port of san juan, 3,000 just in this yard filled with things people are desperate for life saving supplies i talked to the vice president of crowley here in puerto rico and i said, look, does seeing this make you mad? >> it makes me sad and frustrated just to see that we have here all these goods and that people out there are just begging, anxious, in the need of such important supplies and they

are all sitting here in this yard. >> so puerto rico is an island of three and a half million people nearly all still without electricity. those who have power are using generators but they are desperate to get their hands on fuel 91% of the island has no cell service. in fact, we heard from the governor that many of these private trucking companies can't get hold of their drivers to get them to work truck drivers can't get to work because of the fuel issue. diesel has become the number one obstacle in the supply chain when the drivers get to work often there's no fuel for these delivery trucks so we're talking about roads blocked by debris or power lines. this is a supply chain that has absolutely broken down. >> contessa, the president yesterday mentioned he was considering lifting the jones act. would that help? >> the companies here say woi that would help? there's a bottleneck in the harbor of american trucks bringing american supplies from

american ports to get here how would it help to add more foreign carriers into that we did just see a foreign carrier bringing in cargo, of course that means it came from a port other than american port so the domestic shippers say no, that's not going to help, there's going to be a hearing on capitol hill about that and crowley's ceo is going to testify. you're likely to hear him say please don't add more ships, the problem is not lack of american ships, the problem is how do we get these moved out of this yard to the people who are so desperate for it we need somebody to take control of the lodgistics so we get truc drivers to move the cargo containers. >> a heartbreakingly frustrating situation. contessa, thank you. coming up, the dow snapping a four-day losing streak we'll talk investing and the impact of the gop tax plan with two market pros after the break then former fed official charge plosser joins us to discuss the fed's plan to unwind its balance sheet. the ceo of roku talks trends

and the company's listing on the nasdaq stay tuned, you're watching "squawk box" on cnbc (baby crying) (slow jazz music) ♪ fly me to the moon ♪ and let me play (bell ring)

let's get you caught up on the markets now in the wake of the president's big tax reveal the futures are slightly negative but the s&p 500 in yesterday's session hit a fresh record high. joining us now for more discussion about the markets, the president and ceo of an

asseting management company. it will director of investment strategy at glen mead. jason, in terms of tax, let's say we get a corporate tax cut of 20% and nothing else on the business side, what could that do for the markets >> i think that if something manages to mass here, this is going to end up being a surprise for the market it doesn't matter magnitude in whether it ends up being a surprise at this point the market has nothing baked in we went from a lot of hype around something coming through in january february time frame to nothing so if we get something that has an effect on corporations we could actually see some sort of impact in the economy. >> at what point do you tell investors to increase your exposure to stocks because of the belief something will happen and it could be that one thing that pushes -- >> this is the part where it gets hard because it's hard to put a good probability on

something passing through congress here. it depends on the ability to negotiate along the way, what can be negotiated, whether they can find a reasonable middle ground there's some opportunities here but there's a lot of skepticism and justified skepticism for getting something meaningful through. >> so fortunately we're in a market situation where we have earnings growth to back up the valuation we're seeing if you had to overlay where there is value in the market on its own and what can benefit from tax reform or tax cuts, what would live in that cross section? >> the small cap sector has been directing. we had to sell off for anyone who believe this is can go through, then you have to have an allocation of small and mid- the big mega companies, they can get some benefit with the repatriot united nations of the money but small and mid-s, whether you want to make that bet now or see where it goes is up to you. start to think about where

there's value. there's value in small cap stocks, even small cap value. >> what sectors? >> i think there's a chance if this goes through you'll see a boon because the biggest impact, think about a small company that can write off their entire tax bill that can be a catalyst for that sector of the market. >> i think phil is on to something here. >> the biggest benefits come from the companies carrying the highest tax burden on their income statements and that tends to exist more at the small and midcap level than the larger capitalization companies so there is more opportunity there. we talk about overvaluation in the u.s. equity market at the same time we're overvalued but not at the extremes of overvalued territory. we've set these evaluations for a five year period or longer. >> i agree and one thing i think we forget to talk about. we look at pes of 17 of this historical number, that's the number we benchmark. i don't agree. when interest rates are 50%, 60%

lower than we've been accustomed to over the last 20 years, you have to ratchet up your expectations to a higher multiple because you're paying less for your debt so the market isn't cheap but i don't think it's expensive >> in a rising rate environment, though, the markets could look more expensive >> then you pivot so if you made money in technology and health care, pivot to energy and financials especially the energy sector looks like you're getting support there and you get financials that will make money on cash balances, there's your opportunity to pivot. >> phil, jason, thanks. >> thank you. coming up, former philadelphia fed president charles plosser joins us then we'll talk taxes with national economic council director gary cohn "squawk box" will be right back. are you ok? what happened? dad kinda walked into my swing.

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good morning and welcome back to "squawk box" on cnbc we're live at the nasdaq market sent in times square shares of blackberry are on the rise in pre-market trading the company once known for smartphones but now a seller of software and services posting an unnexted profit for its latest quarter. saw revenues beat forecast blackberry's market cap is a fraction of what it once was, standing at $5 billion the latest weekly reading on initial jobless claims due out in about an hour, counters expect 275,000 new claims, that's up from 257,000 the prior week, the weekly jobless claims numbers have been skewed by the hurricanes we'll get the third reading on second-quarter gdp at 8:30 eastern time consensus forecast calling for an annual economic growth rate of 3%, identical to the reading registered a month ago. >> third reading on second

quarter? third reading on second quarter. >> yes. >> coming up, a former philadelphia fed president -- >> first on the second on the -- >> charles plosser and then the ceo of roku talks streaming technology cutting the cord and much more looking at u.s. futures see how we're setting up, down across the board. stay tuned it's not just a pay check, you actually like what you do. even love it. and today, you can do things you never could before. ♪ ♪ you're developing ai applications on the cloud. finding insights hidden in decades of medical documents. and securing millions of iot sensors. so get back to it. and do the best work of your life. ♪ ♪

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it's a new kind of network designed to save you money. call, visit, or go to xfinitymobile.com. welcome back a man needs no introduction, steve leaseman is here -- was i talking about you or charles plosser. >> either one. i'm here with charles plosser, the former philadelphia fed president, gentleman i've known for many years and discussed monetary policy and economics, an expert in both those records. charlie, i think there's a lot of issues on the table let's get to them one by one the december rate hike run aing at about 63% probability and i'm guessing you think the fed ought to do this why?

>> i think there i ear still a long way from where they need to be on interest rates even if you believe the so called r star is low -- >> r star is the mutual rate of interesting the one that doesn't accelerate or decelerate the economy. go ahead. >> so i think they've got a ways they can go. if you look at their longer-term projection and the summer of economic projections they just published they think the long-term funds rate ought to be about 2.8% let's say well, they're only a little over 1%, you have inflation running pretty close to target a little low but not too much. and you have what most people consider to be close to full employment we ought to be closer to that 2.8% than you are. >> we didn't bring you on for a victory lap but we'll give you half a victory lap if more years you argued the federal reserve had the inflation dynamic wrong. that low unemployment would lead to higher wages would lead to inflation was the wrong way to think about inflation, fed chair

janet yellen has come as close to acknowledging that they ought to be rethinking that process than i've ever heard her what is the inflation? what is the right way to think about how inflation will be created and why the federal reserve keeps coming in under its 2% target? >> well, the whole story of the phillip's curve, the relationship between unemployment and inflation we learned in the 1970s that didn't work very well. we had high unemployment and high inflation the phillip's curve was a useful predictor for inflation. at the beginning of the great recession and the crisis when the unemployment rate went up to 10%, the inflation rate didn't fall as much as the curve said so that's the bad model for thinking about monetary policy. >> but charlie it's also fair to point out your model wasn't all that goode they are. in fact you predicted these zero percent rates and qe would lead to inflation it did neither. >> that is correct, i admit

that. >> so nobody has a good idea. >> well, it still could. >> we have no idea what's causing or not causing inflation. >> i think we still do but i think the jury is still out. here is my story we have something like $2.5 trillion of excess reserves sitting in the banking system. all the result of qe and the purchase of assets it's still sitting in the banking system it hasn't gone out into the economy to circulate as money. if and when that happens we will get inflation so i would say the second half of my story hasn't proven true yet but the jury is still out until we get control -- >> and it could be too much regulation on the banks limiting loans? it could be a global investment story? >> there are any number of reasons why that might be the case and i don't think we fully understand it, i don't fully understand it, i admit. >> let's get to the most important story here i saved it for the last because i think it's the most important one.

this growth story. are we stuck at 2% growth? is that the up with we should settle in and not be really upset that that's all we get or there a way in your opinion with the right set of policies you could with increase productivity and get to a better number get to 3%? >> yes, i think so i think the puzzle in this economy is not that we're stuck at 2%. it's because productivity is so bad and has been for the last decade or more, productivity is so low that we can't grow much fast every i think our policies ought to focus on policies that will increase the economy's productivity, the work force's productivity and there may be lots of things we could do about that. >> are tax cuts one of them? >> tax cuts may be one of them, efforts to improve productivity through reducing red tape, regulation there are a whole slew of things that might be pursued if we want to help enhance productivity

that's the focus monetary policy will not solve the productivity problem. >> you can't cut rates and increase efficiency in the economy. >> as the last ten years. >> let's do the last topic here which is there's likely to be a -- well, not likely there is a question coming to the president who should we appoint as fed chair? should janet yellen be r reappointed? >> well, obama appointed ben bernanke who was appointed by george bush so it would not be out of the ordinary for him to do that but there would be other candidates, some of them would be quite good, others maybe not. >> does he or she need to be an economist? >> well, i'm an economist, steve, so i have a bias here i would like to see an economist as the fed chair. >> what would be the down side of appointing a non-economist? >> monetary policy is not as simple as running a a business

in the sense that it requires understanding how the dynamics of the economy work, maybe only a limited amount in some cases but our last experiment with a non-as the fed chair you may remember g. william miller that didn't turn out so well. >> didn't end well. >> so i'm all for having non-economists on the board or as bank presidents, some of that is important and necessary -- >> are you available for the job, charlie >> next question, steve. >> i think we're done. charlie, thanks for joining us. >> thanks, steve. coming up, roku setting its ipo price at $14 a share, valuing the company at over a billion dollars. we'll speak to founder and ceo anthony wood about the device maker's future after the break at the top of the hour, gary cohn, head of the national economic council joins us to talk taxes and at 8:30, house speaker paul ryan is our special guest so be re tsuo stay tuned for these new making interviews. we'll be right back. i count on my dell small business advisor

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looking at video in times square of roku television streaming pioneer roku set to begin its first day of trading on the nasdaq after the company priced its ipo of 15.7 million shares at $14 a share. joining us is the founder and ceo of roku, anthony wood. we're thrilled to have him here to congratulate him on what i thought was a momentous day. you said it's only old day, you have stuff to do. >> well, it's a huge milestone for roku becoming a public company but our goal is to power every tv in the world and we have 15 million active customers so there's more to go. >> for those who don't understand the roku model, there's the device itself but also the advertising and service piece of it. i don't think everyone understands the breakdown of how that works. >> we've done an awesome job of letting people know about the roku experience and when people think of roku they think of the home screen, the devices, the roku tvs but for an investor's

point of view, that's not our business those are how we acquire active accounts our business is selling advertising, being a next generation ad platform, being next generation scaled distribution -- content distribution platform. >> but your revenue breakdown doesn't reflect that 74% of your revenues according to 2016 is from the device and then the rest is from the services -- the platform revenue and two-thirds of the platform revenue are from ads so you're talking about the services component but that's a smaller part of the business. >> 80% of our gross profit in the first half of this year came from our platform business which is advertising and content distribution advertising is our bread and butter, that's -- as the world moves to streaming that means all tv advertising is moving to streaming. there's a huge opportunity to become the next generation of tv ad -- >> the big question mark right now is where does roku fit

within the ecosystem of much better funded companies like apple, like google and like amazon and what's the potential that some of those folks and others decide they don't want to put their stuff on your service? >> roku's position in the ecosystem is being the platform that ties together the customers, the tiesers, the users. we've been competing with big companies for a long time very successfully we have 15 million active accounts it grew 42% year over year we do that by not sending alot of money on marketing. we do it by winning customer reviews. we have built a purpose-built operating system for tv. it's the best way to stream. that's how we get customers. >> just this week google pulled youtube from the amazon echo you are switzerland right now for most of these guys they don't necessarily consider you to be in the same -- competitor set is there a chance that one of

these guys decides you know what we won't allow you to run some of our content >> i don't know why they would do that. we're the largest platform for distributing content in the united states. if you want to reach the audience at scale you need to be on roku. that's why we're partners with amazon and google and all content providers. >> are they locked into a contract with you or can they pull at any time how does that work given that all of them are jumping into the space? >> they've been in the space for a lo time. they're strong partners of ours. we have contracts but what they really want is to distribute their content to our customers which are the most engaged active customers in the streaming world. >> as a roku user, what do i get for putting up with ads? that's why people don't want ads. that's why i use amazon as my platform to get apps. >> people like free content. free is one of the most top searched terms on our web side

when people are trying to decide what to buy, people leave the traditional pay ecosystem for a reason it's less expensive. customers don't want to pile on $10 over $10 subscription. they want a few high quality subscriptions for content. we're seeing that happening, free content, add-supported content is the fastest growing on roku today. 40% of viewing on roku has ads. >> when you wake up and think about your competitors, are you more worried about apple, google and amazon or samsung with smart tvs that try to incorporate this functionality themselves >> when i wake up in the morning i don't think about my competitors. i'm focussed on how can we allow our partners to make more money? how can we get scale on our platform and smart tvs are the best way for us to build scale one in five smart tvs sold in the first half of this year ran

the roku operating system oro cue tvs and that will keep growing. just like smartphones have an os, they have android, a phone company doesn't make their software. >> so that's part of your revenue stream you license. >> we do but licensing to tv manufacturers is a way for us to bring more customers into our ecosystem then we monetize them with you are ad platform. >> congratulations it's a milestone and there are more to come we appreciate it. >> thank you. >> thanks. when we return, we'll taken a inside look at the largest most expensive home listed in the united states. robert frank takes us inside this mansion in bel-air right after the break. witness katy perry.

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ever aowed inside the house which is under construction. we'll see graphic images of it it will be finished next year. take a look. the one has steadily been taking shape since 2013 and it's possibly the most desirable site for a home on the planet and our cameras are the only ones that have been allowed in is this the best view in all of los angeles? >> for sure, yes in one eye line you have from downtown l.a. to the ocean to the getty. this is the best. >> but the breathtaking views are just about the only thing that come naturally here the rest is being built from the ground up -- with top-of-the-line materials including a virtual mountain's worth of marble. when it's complete in 2018 this mammoth structure will include a glass-encased library, four-lane bowling alley, 40-seat movie theater, indoor/outdoor nightclub and, of course, a room

full of jellyfish illuminated by black light because why not? speaking of one-of-a-kind water features, the grounds will include four infinity pools with built in conversation pods plus the largest indoor pool in california and a moat that circles the entire four acre property we are standing in the moat. >> it will feel like the house is floating on water. >> and there are now crazy price $500 million, there are 13 listings in l.a. of more than $100 million i can't find a single one in new york so l.a. has far surpassed manhattan in terms of hyper prices >> what do you think the chances are that this pric-- that anything comes close to it >> it's going to be in the hundreds of millions maybe 100, maybe 150, not 500 but there have been three sales in l.a. this year of more than $80 million so far this year we haven't had a single one in new york city. >> what do you think that's a

function of? >> l.a.'s become a magnet for tech entrepreneurs, the overseas wealthy, particularly from asia and for people that maybe it's the second residence, they don't have to pay california taxes but love the life-style. a lot of entrepreneurs are moving from new york and the east coast to l.a. >> 13 listings at $100 million or more which would be a record list -- record sale for los angeles. >> hugh hefner passed away, his house sold for $100 million last year. >> whoowns it now? >> what's that >> who owns it. >> the metropolis family, they own twinkies. >> the playboy mansion >> yes. >> it's the land, i think, right? >> it's the land, it's a tear down. >> are they tearing the house down >> yes he bought the land next door. >> it's run down. >> as part of buying it, they had to have hugh hefner live there so hugh hefner lived in his house until he passed away so now they can finally take

it's just the land for $100 million. >> before we leave you, tease it you have a great interview on "power lunch" where melissa will be hanging out with you. >> today at 1:40, we'll have lynn tilton who just yesterday the s.e.c. basically dismissed the case againster will. they spent five years investigating her, two years fiting this, it was dismissed yesterday for lack of evidence so we'll talk what about this has meant to her, where she goes from ere. >> it's a remarkable story. >> thank you, guys so one person is going to live there? it's not a multifamily >> at the one? >> yeah, the $500 million -- >> a lot of people will live there. a lot of people with a lot of staff. >> it looks -- under construction it looks like an office building. >> you walk up there, it's like a mall that's being built. it's so -- you have no idea the scale of what that's like and

it's all built -- a lot of it is underneath it that you don't even see >> heliport? i can't believe they wouldn't put one? >> you would but you can't land a helicopter in bel-air no matter how rich you are. >> that doesn't make up for the traffic. >> that's the thing about the house, you never have to leave it's got everything coming up, national economic council director gary cohn joins us after the break an interview you cannot afford to miss. we'll be right back. for your heart...

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president trump pimps his plan to america. >> our country and our economy nnot take off unless we dramatically reform america's outdated complex and extremely burdensome tax code. >> we'll go live to the white house. top economic adviser gary cohn joins us first on cnbc and the news makers don't stop there an extended interview with house

speaker paul ryan coming up. a special hour of "squawk box" begins right now. >> announcer: live from the most powerful city in the world, new york, this is "squawk box. ♪ start me up i'll never stop good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site, i'm joe kernan along with andrew ross sorkin and melissa lee. a big hour ahead first we'll talk to president trump's economic adviser gary cohn, then house speaker paul ryan will join us. let's get a check on the markets as they're trying to -- you know, the thing about the markets what do they have to decide they have to decide is it the tax penalty? what are the chances it happens? at this point we are negative. down the 22 on the dow 17 on the nasdaq our top story, republicans

out with their plans to overhaul the u.s. tax code. president trump just tweeting moments ago "democrats don't want massive tax cuts, how does that win elections great reviews for a tax cut and reform bill. we want to get to ylan mui in washington good morning. >> the big problem with massive tax cuts is the potential for massive deficits and the next step in tax reform is to get a budget the senate is expected to mark up their version next week the house has passed theirs out of committee and it will determine how big those tax cuts can be but early estimas from the tax framework released yesterday are eye popping. $2.2 trillion. that's from an analysis by the center for a responsible federal budget now, there are still critical details missing from this tax plan so a lot of assumptions are baked into their analysis. but that number is way bigger than the $1.5 trillion tax cut

that republicans have agreed to. this price tag could complicate trump's efforts to get democrats on board because they're the ones who have been sounding the alarm of the impact of tax reform on the deficit. we saw trump yesterday trying to do indiana's senator joe donnelly during his speech but donnelly doesn't seem sold, at least not yet. he put out a statement saying he works for hoosiers, not a single political party or for president trump. so donnelly said he wants to make sure this tax plan really is a break for the middle-class. guys, he said he won't support it until he sees more details. i think we'd all like to see more details back to you. >> is there any democrat in terms of where we see the fault lines that you think might fall in line with the plan? >> right now on the house side we've seen republican tim -- sorry, democrat tim ryan of ohio saying he does support cutting

the corporate tax rate some of those red state democrats like heidi heitkamp and joe donnelly said they would look at the corporate side tax cuts but right now it's dependent on what the dynamics are like on capitol hill and what those numbers look like for the middle-class in particular. >> ylan mui in washington, we appreciate it. we'll talk more about tax reform with house speaker paul ryan in the next hour. right now we want to get to our first news maker of the morning. joining us first on bc, ga cohn, national economic council director good morning to you, gary. >> good morning, andrew, how are you? >> great, thanks for joining us this morning i don't know if you got a chance to hear what ylan just said. we were talking about the cost of this and what it means. $2.2 trillion, do you think that's right >> we don't think that's right at all when people come out with the numbers they take a static view of what the tax reform means

they don't incorporate growth. we think our tax plan will have an enormous amount of growth in that and you will understand and guests in your show will understand when we drive economic growth by bringing businesses back to america by making our business tax system very competitive with therest of the world we think we can drive a lot of business back to america, we can drive jobs back to america and we can make ourselves very competitive that growth is not factored into those numbers. >> gary, internally, what's your estimate what's the number in terms of productivity growth this will create. >> we think we can pay for the entire tax cut through growth over the cycle >> i -- i understand that, but in terms of the growth rate that you think this will create in terms of paying for it >> so, look, andrew, as you know last quarter we were about a 3% gdp growth this quarter we're going to have some strange data because of the way the hurricanes effect. without the hurricanes we were over 3% gdp growth per quarter

when we came into the white house eight months ago people were ridiculing usto have a 3% gdp growth in our forward forecast, now we're talking about 3% as growth targets we're having right now our plan was based on a 3% gdp growth we think we can be substantially above 3% gdp growth with what we're going to accomplish on deregulation and what we're going to accomplish with tax reform. >> so to get to those targets, gary, and to have the whole thing pay for itself over the course of the cycle, what are the linchpins to that plan what needs to happen in order to get to those end goals >> as i said, deregulation is important and we're running down that path. we're making it easier for businesses to operate and expand in the united states more importantly, our tax plan will drive growth. if you're looking to invest capital in the world or looking to start a business and you look at our 35% corporate tax rate vis-a-vis the rest of the world, you would not choose to invest in the united states today if we lower that to 20%, you

start with a 15% tax advantage where we are today that becomes much more enticing for you to want to operate out of the united states when you operate out of the united states, you have to hire people, you have to go out and compete for labor. when you compete for labor you have to hire people. you hire people and attract people by offering them higher wages than they have now so you see higher wage growth when you see higher wage growth you see higher consumption, you see higher economic growth all of these things lead to higher gdp we think this is very, very attainable. >> gary, in negotiate iing liker a house or something, there's a number you want to end up but you always start -- it's the way it's done, i don't know if it helps. does 20 mean 22? if you really wanted 20 wouldn't you have done 15 to end at 20 or is 20 the last number you'll talk about i think the president really did want 15, i think you wanted 15

so 20 is already giving up sort of your side of the negotiations is that the final number you're not going above that? >> so, joe, great question and that you can for that. we would have loved to have gone lower, we really would have because the lower we go we think the more attractive the united states becomes making the budget balance and making which t economic realities of the united states work we would have liked to have started lower and given ourselves negotiating room we are at 20 20 is a bright line test for us. the president said it, he said it yesterday and he's been very clear about it we are not going over 20 20 is the top of what we're willing to go on the corporate tax rate we have made that clear to the leadership in the senate and house. they understand that we told them if we start at 20 we're ending at 20 and there's no room to negotiate that. >> i want to talk about the individual tax rates i know you made a comment

yesterday alluding to the idea that there could be a surcharge above -- what would be the newer lower rate but a higher rate than 35% what can you tell us there >> we've given the tax writers both in the senate and the house the ability to put in a fourth rate if they need it to make the process work at the end of the day, this is about making the process work and growing the economy. we are so concerned about growing the economy, bringing business back to america and giving hardworking everyday americans a tax break, allowing them to spend money, allowing them to buy what they need to buy. go out and buy a new car, remodetheir hoe, go on vacation if congress needs a fourth tax rate for a small percentage of the population, we've given them that latitude, the house and senate haven't decided if they're going to use it but

we're trying to work -- we are trying to work very cleej lcleeh them we want to give them a bill that will get through the house and the senate. >> in terms of the latitude, what income strata are you talking about? >> andrew, we haven't agreed upon that but this is going to be a very high income earner bracket. it's going to be one that affects very few income earners. >> are we talking about over $500,000 or over $5 million? >> i think it's a number between those two, how's that? >> he needs to know an exact number, gary. >> he just asked you a specific question. >> we need a little bit more clarity on this. >> andrew, i'll help you out i know there's a lot of 500,000 and 5 million. >> just say you're asking for a friend andrew. >> let me ask you a different question we were talking to larry kudlow

earlier this morning who i think some of his blueprint has been worked into what you guys have put out yesterday. what was the thinking in terms of raising the lowest rate from 10 to 12 >> so i think you're looking at it wrong when you talk about that you have to look at the package in its entirety what we did is we doubled the amount of money that people pay zero taxes on. so we've taken the standard deduction and doubled it so for a married couple, they now get $24,000 of income at a zero tax rate then we took the 15% tax rate and lowered it to 12. so we have really helped out lower income earners by doing that in that package in its entirety and then you layer on top of that the child credits that we're incorporating, the increased child credits. we're doing an awful lot to help

hardworking americans. i think when people see the final details they'll be impressed with what we're doing for working americans. >> gary, during the repeal and replace of obamacare obviously you see a lot of rhetoric from those oppong legislation like that. in the media you hear negative things it's starting already with this tax bill but republicans thought, hey they've got the senate and house. it doesn't matter whether you hear this rhetoric and you control both chambers. this should get done but some of these republicans, may they're not completely committed to -- or maybe they're in a 125 it that's blue or for whatever reason you can't count on them do you think it's different for this one i'm seeing the rhetoric already. it's unbelievable about how there's no middle-class tax cuts here, it's all a giveaway to the rich are some of the waivering republicans in the senate going to not have the backbone to pass

this how many can you lose, one or two? >> joe, nothing is easy in washington we understand that but we are convinced by having working with the house and senate leadership that we are in a good place. we've given the tax writers in the senate and house latitude to bring their members along. we have to do this in regular order to get the votes we need to get this passed i think most of the members in the house and senate understand how portant this is to keep sustained economic growth. that's important for everyone in the country. >> gary, one last question we've talked about this issue for years ourselves, ending the carried interest tax break, something the president talked a lot about on the campaign trail. this plan seems to be silent on that is there something coming?

>> the president remains committed to ending the carried interest deduction. >> in what form? will we see that in some way we haven't yet? >> as we continue to evolve on the framework the president made it clear to the tax writers in the congress that that is his position, that was his position during the chasm pain and he continues to support the position that carried interest is one of the loopholes we talk about when we talk about getting rid of loopholes that affect wealthy americans. that's one of the loopholes we're referring to. >> one last question when it comes to the pram work are there other items that are are in your view non-negotiable? >> we have to give everyday hard-working americans a tax cut. this has to be good for american workers. it has to be good for everyday american citizens, if we don't do that we haven't accomplished anything. >> gary cohn, really appreciate

you spending time with us this morning on "squawk box." >> thanks for having me. >> you bet. we have a news alert president trump is authorizing a waiver of the jones act for puerto rico. this will let non-u.s. ships bring goods into the island's ports. of course we did see contessa's report it's not the issue of bringing the goods on to the island, it's getting the goods to where they need to go on the island. >> probably might as well do it anyway, though. >> exactly. still ahead, another news maker on deck, our special interview with house speaker paul ryan is minutes away. he'll join us at 8:30 eastern time stay tuned, you're watching "squawk box" on cnbc this is the new new york. we are building new airports all across the state. new roads and bridges. new mass transit. new business friendly environment. new lower taxes. and new university partnerships to grow the businesses of tomorrow today. learn more at esd.ny.gov

welcome back to "squawk box. david tepper donating to hurricane relief efforts in texas, florida and puerto rico the hedge fund manager and good friend of "squawk box" pledging $3 million to nonprofit organization feeding america the funds will be used to help rebuild food distribution networks, the story by hurricanes maria, irma and harvey shares of blackberry soaring in the pre-market session. the company formally known best for its iconic smartphone posted an unexpected profit of five cents a share. revenue exceeding forecast and improving sales of software and services that stock is up almost 7% shares of abbot labs on the

rice the fda approving the monitoring device for adults with diabetes. millions of patients will have to track blood sugar levels without pricking their fingers and dex come is in the same business and makes glucose monitoring service where you don't have to prick your finger either those shares are down 28%. >> there's a new startup in the valley where you put this thing on and it has bluetooth in it and you just leave it on. >> for glucose monitoring? >> yeah, it sticks in and it's on your phone all day all the time. >> that's what i was saying. if your apple watch could notify you when your insulin levels are too low or too high. >> but it has to be inside your blood at all times. >> so there is a -- >> oh, it goes inside. >> it goes inside. it's a thing -- >> but if you could marry these technologies prickless with the watch device, that's powerful for the millions of people with diabetes out there coming up, two key economic reports will bring you numbers and later tax reform in america

and we'll speak to paul ryan at 8:30 eastern time, that's an interview you will not want to miss

welcome back do "squawk box. a check on the futures right now, the day after the dow broke a four-day winning streak the s&p 500 hit intraday record

highs. looks like the s&p will lose 4.5 points at the open the dow looking down by about 27, nasdaq by about 21 points softbank has overcome a major obstacle to its planned multibillion dollar investment in uber. the japanese firm agreed to block attempts to elevate former ceo travis kalanick back to the company's top ranks. the venture capital firm bench mark which led kalanick's ouster in june fighting that it would reject the reappointment of kalanick so that's done lyft could be one step closer to going public according to reuters, the ride share project is close to hiring an ipo adviser lyft finished interviews and now expect to make a decision shortly. it comes adds the larger competitor uber tries to recover from a range of scandals a judge has dismissed the s.e.c.'s fraud case against lynn

tilton she had been fighting a two-year-old s.e.c. case they said she misled investors and collected $200 million in extra management fees. a judge determined the violations allege bid the s.e.c. were unproven. tilton's lawyer says her reputation has been restored and justice has been done and you won't want to miss a special interview with lynn tilton on "power lunch" at 1:40 p.m. eastern time. >> you'll be there. >> yes, i will. coming up, breaking economic news we'll get a weekly jobless claim and a final read on second quarter gdp which was the third or the second. plus we'll get to our news maker. one of them, house speaker paul ryan we have a lot to talk to him about, including tax reform and the gop agenda he'll join us right after the break. is the monolithic view of emerging markets obsolete? at pgim, we see alpa in the trends, driving specific sectors

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♪ don't be afraid to catch fish run up and chase throw ♪ welcome back to "squawk box" on cnbc live

the house and senate intelligence committees have invited tech giants google, facebook and twitter to appear for public hearings on russia's interference in the 2016 election the house appearance will happen in october while the senate committee appearance is expected on november 1. it's not clear yet whether the invition h been accepted the committees are looking at the spread of false news stories and propaganda when we return, we have breaking economic news for you two kererts ouy poabt to hit the tape stay tuned for that. plus, paul ryan in just a moment we're back in a minute you know who likes to be in control? this guy. check it out! self-appendectomy! oh, that's really attached. that's why i rent from national. where i get the control to choose any car

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welcome back to "squawk box. exciting we have some breaking news we'll be seeing our last look at second quarter gdp of course as we get very close to ending the third quarter, interest rates move back into that 2:30 to 260 range here we go, our last look at second-quarter gdp gained one-tenth from 3% to 3.1 that's key on personal consumption, 3.3, that's what we expected, that was what was in the rear-view mirror on the price index, 1%, same scenario. that what it was backwards and forwards personal consumption expenditu quarter over quarter is up nine-tenths also as expected equal to our last look and we see a 12,000 jump in initial claims from a 1,000 revised 260 which was stated last week at

259 now stands at 272,000. there may be some issues giving a little added upside to that number continuing claims 1.934 million, that is down a bit and wholesale pride of course which is -- excuse me, trade balance which is a deficit, wow, $62.9 billion. that's a little less than the 65 we're looking for and sequentially lower than 63.9 you think we're done, we're not. wholesale inventories for august up 1%, more than double expectation. maybe that's a good thing if they were purchased and, of course, our retail inventories were up seven tenths, that's a big jump following down one-tenth. let's go back a little bit take a breath. on the gdp data, let's dig down a bit. corporate profits, last look they were up 1.8 this a little bit on the negative side, put them in reverse now stands it up one-tenth. after all of that, 230 before

data, 230 after. no big surprises on the data we are holding the selling that's moved it from into intraday low yield, two basis points away from 2% three weeks ago to where we sit now. we still, of course, need ongoing issues regarding legislation, how it may affect the markets. equities look to be lower. joe and the gang, you've had great guests, great guests coming up in the form of ryan. can't wait to hear what he says, back to you. >> rick santelli at the cme. as rick mentioned, we ve another news making interview this time with house speaker paul ryan right after this break. let's look at futures one more time after we got the 3.1% final. dow looking to lose 31 at the open, s&p looking to be lower by about four you're watching "squawk box.

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in the month of october, tech

take a check on the markets after we got the second revision for second quarter gdp 3.1% was that print. dow jones looking to lose 30 at the open, s&p looking to be down about four, nasdaq looking to be lower by 16 points looking at the reaction in the treasury market, not too much in

the yield side still holding on the a 2.33% yield here the gop out with the tax reform blueprint joining us now, house speaker paul ryan. we just went over some boards, markets are off a little and there's an old adage, buy the rumor, sell the news, i don't think it necessarily means anything about the plan itself although i think we're all wondering about the likelihood of how easy it's going to be to garner those votes again i wish i was talking about bipartisan votes, but i'm talking about republican votes because we know how hard that is after what we've seen. is this going to be different, do you think i'm basically talking about the senate again or the same three or four individuals, can they hold this bill hostage as well to pass it >> that's a legitimate question this day and age but i feel very, very good and confident on this particular project because

our dna is pretty much wired the same on tax reform and taxes we had disagreements within our own party and caucus on health care the house passed its health care bill last may as you know but what we did differently in this go pround round is we sent the four months working together, the senate finance committee, the house ways and means committee and the white house making sure we're on the same page so we're there for the takeoff and landing. meaning unlike health care where the house passed a bill and the senate went a different direction and ultimately didn't get anything passed, we're making sure we did the hard lift, the tough work ahead of schedule so that we came up with the same framework that's why i feel like we're wired for success and it was done by the commit knees charge of writing this legislation, senate finance committee, house ways and means committee along with steve mnuchin the treasury secretary and gary cohn, the nec director with myself and house leadership involved. so i feel good about that. i'm excited about this, joe, i have to tell you i've been workg on this pretty

much my adult life i was jack kemp's staff economist working on this stuff back in the '90s and i was chair of the ways and means committee before i had this job and there is not another thing we can do in congress, in law that will do more to grow this economy, lift wages, help people get a raise and bring confidence into our economy and hit the 3% growth average we used to have than doing tax reform this is it this is the game changer for our economy and we are so uncompetitive globally it's crazy we are haurting hursts with our kax code whether it's businesses overseas with trapped cash, whether it's the fact that we're taxing our businesses at much higher tax rates than our competitors or people living paycheck to paycheck, the middle-class getting a squeeze. there's so much economic anxiety. tax reform does so much to fix those problems and that is why we are all in on this, we are unified and exided about this.

>> don't look at conservative web sites because they're saying you're raising taxes on rich people and then you look at the liberal -- i'm looking at "usa today" don't look at u"usa today trump will reap millions, proposals to benefit the wealthy. certain places are saying it doesn't benefit the middle-class at all so i would ignore this stuff because you have a job to do obviously but then again sometimes public opinion and the way it's characterized when things get rolling, the repeal plans never got above 20% and i think that mattered and there can be pressure on you i would urge you not to look at this stuff i wonder if whether your less committed members in the senate will fold to the public pressure because it's hard to do this stuff.

>> this is why it hasn't been done since 1986. i've been on the ways and means committee since 2001 trying to do this. clearly, joe, this has been a hard lift because of the things you just said not the mention special interests looking to keep their loopholes let me clear up a couple things. surcharge. we're just saying the high income earners won't receive the kind of tax rate reduction and tax cut the middle-class will receive because this is about people living paycheck to paycheck with rpect to t, it's a crazy ridiculousax and it's very complicated we don't need it even the arbiters on this debate, even the irs add cat says this is crazy, you should get rid of this but our rates on businesses are so high 35% for corporations, 44.6% top effective rate for pass throughs which is 80% american businesses that's what we're taxing businesses at and the average in the world is 22.5 so this is killing us and if you make money

overseas you can't bring it home because you get taxed if you do that so we know we need to fix this and we know we can get much faster economic growth, more bigger paychecks and more jobs in this economy with tax reform so i would sail we'll get -- the demagoguery is going to come this is politics that happens. we know what works and we know americans need a break we know people need a break on their paychecks and we know we need faster economic growth so we can get more wages. we haven't hit 3% growth and that's why you have economic anxious sighty that is why you have stagnant wages. this gets us a 3% economy plus and we know that, that's why we're so dedicated to doing this. >> the president yesterday and gary cohn reiterating what they called a bright line on this 2% rate meaning it won't go higher, are you committed to that? >> yes, i talked to the president late last night i'm excited he said a red line, bright line, whatever line you

want to call it. i agree. when we pulled the border adjustment from our bill in the middle of the summer that created a big revenue haul and we spent the next few months reworking the numbers and making sure we could get to 20% which we can and we're excited about that, so we have to stick the landing on that and we're just as committed as the white house is holding through on that. >> are there other items in the nine-page framework that fall into that same category that are non-negotiable or is everything on the table except for the 20% corporate tax rate. >> here's the point i'm trying to say the reason we put this framework out, get who put it out? the house senate and white house together so now we work within this framework. this goes e-z from the framework we all agree on that we'll work within this framework and we move it to the tax writing committees because the constitution says the house must go first on tax policy the ways and means committee will fill in those details

inside the framework and then we send it over to the senate who works within this framework so don't think of this thing going outside the framework, think of here's the framework and now we put the details within because we've agreed between the house and senate and the white house on this framework. >> it was kind of a -- i demolted you earlier. >> where's backy, by the way >> becky i think is doing her civic duty and i think she actually is on a trial. >> oh, she's on jury duty. >> i hope she throws the book at this -- >> whatever case it is. >> we don't know maybe he's innocent. or she's innocent. we don't know. sorry i brought it up. >> lynn tilton fought the law and won. >> but with trump it's guilty until proven innocent with you now you want to give the -- >> anyway. >> i'm sorry i brought that up just please say hi to her for

me. >> we are, too. >> speaker i'm looking at this alabama situation and what they're pointing to -- i'm going to call you paul, i've known you for so long. >> we've known each other a long time, that's what i go by. >> they're saying it was caused -- they're telling senator collins, murkowski and mccain to take a bow for electing this -- for getting this twice defrocked supreme court justice luther strange but they're also pointing at mitch mcconnell as well that this is the kind of thing that happens to voters when they get totally disgruntled about the way things are going. is this going to make it harder? >> getting tax reform done >> the whole obamacare debacle, i wonder whether it makes it harder or easier. >> as you know, we passed our obamacare bill last may and we used the reconciliation rules that are not rules to write the

bill which we didn't like doing but we did because we wanted to get law. we're frustrated we've passed 373 bills here in the house. 270 some are still in the senate so in the house -- we've passed more bills in the house in the trump presidency than they did in the obama presidency, the clinton presidency and both bush presidencies so in the house we're rocking and rolling, getting our work done. we passed our appropriation bills ahead of schedule, the first time a republican majority has done that since 2004 we passed a repeal and replace of dodd/frank, we passed borde security bills, we passed veterans bills, education refor, we've passed these things we said we would pass when we said we would pass them, so we're frustrated the senate has rules that perplex us and frustrate us but it's the way our system works and they have a razor thin majority and then they have to approve these judges and ambassadors and cabinet secretaries which takes

a lot of their time as well so their system is different than ours and we've been passing these bills and we're frustrated but we have to get this stuff done there's no excuse for not getting things done. one of the reasons why i'm so bullish on tax reform is because we will use reconciliation for tax reform which means two things, that i can't shrink the debate forever, it has time limits on debate and they cannot filibuster and that's why we're bullish on tax reform because we know this is the biggest thing we can do to help economic growth, to make american businesses more competitive, to keep companies in america and not inverting and moving overseas and manufacturing, look, a 20% corporate tax rate with full expensing for five years in a territorial system, we'll knock it out of the park with that. bringing the pass through rates down to 25, we'll knock it out of the park and giving middle-class taxpayers a break moving paycheck to paycheck, this igoing to be good for our country, yes we have to get thrt

bonanza, we have to get through the pressers and demagoguery and the misinformation and focus on doing our jobs we have the votes and tools to do it because we're using reconciliation and that's why i'm bullish getting this done. >> i know the senate is talking about getting democrats. do you think the house you'll get a few? >> i do. we have a lot of friends on the other side of the aisle and we have conversations with them and there are still moderates left and i would say they like what we're doing. they've talked to us about what their issues and concerns are so i do believe -- look, if you're from indiana or north dakota or missouri or montana, almost all of your businesses are pass throughs, a bunch of your businesses are moving overseas, your constituents a struggling and they know tax reform gets us growth so at the end of the day i believe we will get some democrat support because rather than voting ideology or party line i think they'll vote for their constituents, they know this is good so i do believe at

the end of the day in my heart of hearts we'll get those votes. >> you're not in the senate and i hear your frustration looking over at that -- those ledges to over there do you think you'll need democrats? >> i don't think so. >> so you think mccain will vote for this >> i think john will. >> and rand paul and susan collins? >> yeah because again health care is an issue where we have differences of opinions as republicans, number one. number two john had process issues, we are going through regular order. we negotiated a framework between the house and senate and white house now we're going through the committee system and going to the floor doing it the way the process was meant to be done so because we're -- we've had hearings all the time this year in e house and senate ways and means and finance committee so we've had hearings, we're doing regular order, we're using the rules as they were

intended to be used so yeah, i do believe and by the way taxpayers in arizona and maine are struggling just as much as they are in wisconsin and we know this relief is much neepded and we believe and know that we can get 3% economic growth but our tax code is holding us back and we know that. >> so first you have to do the budget, right? >> yeah, we're bringing it to the floor in the house and i think the budget committee is marking it up in their committee next week. >> so that's going to work >> yeah, i think you know the process, you get the budget through, you get the budget reconciliation and instructions we call it and then you bring that tax bill out of the ways and means committee send it to the budget ommittee, bring it to the floor and send it to the senate. >> the blue states seem like if this -- are you confident that the state tax deduction, does that make it to the -- does that see the light of day when it's

said and done? >> i think it has to because numbers are so great and that gets you a middle-class tax cut, even for people in every state so that gets you the ability to give middle-income taxpayers, people working paycheck to people worki paycheck to paycheck >> california and new york it to you i want you to stick it i do new jersey, can there be a new jersey exclusion >> we're getting a lot better in wisconsin but we're considered a hi-tech state as well. but you got to remember, this is about lowering taxes for middle income taxpayers and that gets us the ability to do that. look at the fact that nine out of ten taxpayers can fill their taxes out on a postcard. when you double that standard deduction and keep charity and mortgages you dramatically

simplify the tax code. >> first at the bottom of this, which talked to gary cohn about it walk through the idea of going from 10% on the bottom to 12 >> yeah. no, no you got it wrong you're going from 10% on the bottom to zero by doubling the standard deduction people who are capturing that 10% rate they go to 03% rate. 15% bracket comes down to 12 that's the point you'reooking at this optically oh, a 10 goes to 12. no we're exempting those people from the 10% rate from many more dollars of their income. we're getting a lower income tax cut for those people as well >> speak to the estate tax issue and to the degree you would remove it what would that do to

economic growth in this country? >> look, you guys -- i don't know where you live, andrew. where i live businesses are family businesses. businesses are multi-generational farms, manufacturers this tax is destroying the inner generational transfer of business to business father to daughter and on to the next generation. just quite frankly we don't think that should be a taxable event. it's not fair. you pay taxing all your life sometimes two or three times on the same dollar. when you die you do it again what ends up happening when we do that to people is we destroy family businesses. why on earth would we want to be doing that >> i make the argument to you that actually the estate tax -- i can make the exact arguments you're making. it's a philosophical argument less than an economic growth argument >> philosophical but big economic growth for those who lose their businesses or cut their businesses in half when

the owner dies that's bad growth for those family businesses for ranchers and farmers. people in this country have businesses asset wealthy, cash poor >> 100%. then the other question is gary cohn talked about this fourth tier that they've effectively said there needs to be a fourth tier we're game for it or at least open to it in your mine what kind of tier are we talk about? what kind of incomwod a family need to have before you began that discussion. >> the purpose of that fourth tier, and i've spoken with the president about this many times, i've spoken to gary. i don't want high income earners don't get a giant tax break because we want the tax breaks to go to the middle class. we're not talking about raising rates. the top rate is 36%. nobody is talking about going

above that so that you can put that fiscal space, that money into middle class tax cuts no one is talking about bringing rates up from where they are do they drop as far as they would otherwise. no, they likely won't. >> i'm asking about that fourth rate what kind of income million dollars, $2 million. >> that's something the ways and means and finance committee have to talk about. that could go up that's going to be decided by the ways and means finance committee. >> this will pass this year by the end of the year? >> look. you're not going to get 3% growth in 2018 unless you get this done in 2017. we have the time and space to do it one of the deals the president was able to do on the debt limit was give us this time and space to get this moving instead of having some possible government shutdown on the floor we have the budget on the floor next week.

we've done a good job of clearing the decks, get focused on this. we had a half day retreat with our members walking through all of this. we believe -- and look, the house is more nimble, faster because we use reconciliation and tight timelines on that. we can get this done this year get it done in 2017 so we wake up in 2018 with a new tax system and an economy that's taking off so we can get above 3% growth. >> okay. thank you for all the time today. i know you have to run thank you. as we head to break here's a quick programming note tomorrow our guest is quicken's owner and cavs owner we'll be right back. usaa to me means

peace of mind. we had a power outage for five days total. we lost a lot of food. we actually filed a claim with usaa to replace that spoiled food. and we really appreciated that. we're the webber family and we are usaa members for life.

simplify. equifax is promising to give consumers more access to their records as well as more control over them. in an op-ed in the "wall street journal" the interim equifax ceo says the company will introduce a new service by january 31st gos. will accomplish those after wes of teasing, former

white house communications director anthony scaramucci taking to twitter to announce a new news site, scaramucci post he didn't give many details. "the scaramucci post" would be a world class experience he wants to it be apolitical not about left or right. it's about right and wrong >> awesome "scaramucci post." okay when is that any idea >> i don't know when the launch date is. >> world class experience. >> can we be guest columnists. >> maybe >> do a point, counter point thing. >> you and me? >> not make it political >> just not right and wrong. >> that's going to be -- we'll listen for details state of california is moving its presidential primary from june to march to gain more influence in choosing candidates the state traditionally held its primary so late that democratic

and republican voters effectively had already chose end. everyone wants to do this. that leaves iowa and new hampshire the only ones first and second in the nominating contest. we have eight seconds to go. what do you think. up or down on the tax plan will it blast? >> 2018 project. something does happen. >> thank you becky might be back tomorrow >> she will be back. >> make sure you join us tomorrow "squawk on the street" is next ♪ you already for this ♪ good morning welcome to "squawk on the street". i'm carl quintanilla with jim kramer and david faber the dow is lower but the sales pitch for tax reform is on full blast. cohn and ryan on our air moments ago. mild gains in