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Wall Street Week Votes: Presidential Effect on the Economy

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Bloomberg Mar 31 23:22 · 12.4k Views

Joshua Bolten, Business Roundtable CEO, tells us what CEOs want from the next president.

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Transcript

  • 00:00 Before we get into what November white mean for business, let's talk about where we are right now.
  • 00:04 I know quarterly you do a survey of your CE OS.
  • 00:07 Who are your members?
  • 00:08 Where do your CE OS think we are as an economy right now?
  • 00:11 David, thanks for having me back.
  • 00:13 Our CE OS are in a pretty comfortable place.
  • 00:16 Every quarter we ask them about their expectations for sales over the coming six months
  • 00:22 and their plans for CapEx and hiring over that same.
  • 00:27 And we
  • 00:29 we combine the results into a
  • 00:31 headline index
  • 00:33 that is basically a pretty good barometer of CEO sentiment
  • 00:38 and the CE OS in the Business Roundtable.
  • 00:42 Their sentiment for the coming six months is pretty good.
  • 00:46 For the first time since the third quarter of 2022,
  • 00:52 the that headline index is above its historic average.
  • 00:57 So it's not, it's not exuberant, it's not
  • 01:01 going gangbusters as far as our CEOs are concerned.
  • 01:06 But they say they see things as in pretty good shape for the
  • 01:11 for the coming six months
  • 01:14 based on
  • 01:16 economic fundamentals.
  • 01:18 And
  • 01:18 it seems to me, David, that the one thing that might
  • 01:22 throw them off
  • 01:23 of that optimistic outlook is something that happens in
  • 01:27 something dramatic that happens in our politics or our geopolitics.
  • 01:32 So let's talk about that specific because
  • 01:34 as I say you had experience in the White House, you know wherever you speak, how much of a difference does it make who is in the in the White House, no matter who it is.
  • 01:42 Can the President really affect the economy substantially,
  • 01:45 both from the standpoint of our businesses enormously
  • 01:48 and in particular during periods when the tax code is open for
  • 01:55 renegotiation, when there are
  • 01:58 potential trade deals on the table that
  • 02:01 might or might not happen depending on who's in charge.
  • 02:05 The regulatory environment is dramatically influenced by
  • 02:10 by who's in the White House.
  • 02:12 So all of those things can really affect
  • 02:16 the
  • 02:17 the business outlook from from the standpoint of our country's biggest corporations.
  • 02:22 Let's take those three that you've mentioned, starting with taxes
  • 02:25 and the difference as we perceive it right now between the two frontrunners, Donald Trump and Joe Biden.
  • 02:29 Joe Biden has said he wants to increase taxes and specifically on corporations.
  • 02:33 Presumably, President Trump would want to renew the so-called TRAP tax cuts, the Trump tax cuts.
  • 02:38 So
  • 02:39 how does business perceive the alternative between these two individuals?
  • 02:43 Well,
  • 02:44 business very much welcomed the tax cuts that passed in 2017.
  • 02:49 They had a have a lot to do with the prosperity that we enjoyed before the pandemic and that we enjoy now is
  • 02:58 a a reasonable tax environment.
  • 03:00 You know,
  • 03:01 prior to 2017, the United States was
  • 03:04 among the highest tax jurisdictions in
  • 03:08 among developed countries.
  • 03:11 The 2017 act didn't didn't
  • 03:13 bring us to the head of the pack, but it put us in the middle of the pack where it's possible for U.S.
  • 03:18 companies to compete.
  • 03:20 In 2025 a lot of those provisions that brought us back into a competitive range are going to expire and
  • 03:29 there will be a big debate about what to do with
  • 03:33 a whole range of tax
  • 03:35 provisions
  • 03:36 on both the corporate and the individual side.
  • 03:40 And the
  • 03:42 the occupant of the White House is going to have a lot to say about whether
  • 03:47 taxes go up or remain roughly
  • 03:50 roughly where they are.
  • 03:53 The
  • 03:54 the composition of the Congress for that purpose is also going to be very important.
  • 03:59 And
  • 04:00 as close as it looks like
  • 04:02 polling suggests that our presidential elections will be,
  • 04:07 the
  • 04:08 the control of both houses of Congress is also very much in doubt.
  • 04:12 Josh.
  • 04:13 As you know so well,
  • 04:14 taxes in Washington amount to revenue.
  • 04:17 I
  • 04:17 mean if you cut taxes, you
  • 04:19 lower revenue as well.
  • 04:20 Typically,
  • 04:21 how concerned are business, CE OS,
  • 04:23 CE OS of the corporations
  • 04:25 about our debt and deficit situation?
  • 04:26 Because there's a lot of concern on Economist Point.
  • 04:29 Yeah.
  • 04:30 And
  • 04:30 as a former budget director, I'm I'm concerned as well
  • 04:35 the the CEOs of the Business Roundtable are very concerned about
  • 04:39 the fiscal situation of the United States.
  • 04:43 But from from
  • 04:45 their perspective,
  • 04:47 the United States doesn't really have a problem that we're under taxed.
  • 04:52 Certainly on the corporate side,
  • 04:54 we have a problem of overspending and if you look at historic data about.
  • 05:00 Taxation tax revenue as a percentage of GDP and government spending as a percentage of GDP.
  • 05:07 You see that the tax revenue over time is is
  • 05:11 relatively historically average place in how much of our GDP
  • 05:17 taxes are taking.
  • 05:19 What's gone way out of whack is the
  • 05:21 is the spending.
  • 05:23 And so
  • 05:24 our members would like to see the Congress
  • 05:28 and the President come together on sensible ways to
  • 05:32 to control what has been out of control spending
  • 05:36 and
  • 05:37 not try to solve the deficit problem
  • 05:41 on the backs of
  • 05:43 of our businesses.
  • 05:44 Because
  • 05:45 our economy will not flourish if
  • 05:49 if
  • 05:49 the
  • 05:50 the tax environment is not competitive and we are at risk of becoming an once again an uncompetitive competitive tax jurisdiction.
  • 05:58 The second thing you mentioned was trade and tariffs.
  • 06:01 Of course President Trump, when he was president, imposed a variety of tariffs.
  • 06:05 Those,
  • 06:05 for the most part, have not come off
  • 06:07 under President Biden.
  • 06:08 We're now talking about further tariffs from candidate Donald Trump.
  • 06:11 At the present time,
  • 06:12 how concerned is the business community with increased tariffs, particularly some of the ones we're talking about like 5060%, even 100% on Chinese products?
  • 06:21 Yeah, that would be
  • 06:22 it would be highly disruptive.
  • 06:25 the United States cannot operate in
  • 06:28 in the modern world as its own bubble
  • 06:32 of
  • 06:33 a protected economy.
  • 06:35 We are in a global economy
  • 06:37 and we damage our own prosperity and our own future competitiveness if try to protect ourselves
  • 06:47 by tariffs or any other measure from the global international trading environment.
  • 06:52 Nobody knows that better than the big companies that are members of the Business Roundtable because they operate in
  • 06:59 most of them operate in many countries around the world
  • 07:03 and
  • 07:04 they need to be able to compete.
  • 07:07 10% tariff across the board
  • 07:10 would be a huge tax on the American people.
  • 07:15 And
  • 07:16 to the extent that
  • 07:18 those are goods that consumers use, the consumer would pay the cost of that.
  • 07:23 And to the extent that a 10% tariff makes it more expensive
  • 07:28 for companies to produce here in the United States 'cause their inputs are more expensive,
  • 07:33 we'd be driving business overseas.
  • 07:35 So
  • 07:36 from the perspective of
  • 07:39 a business,
  • 07:41 a tariff like that would be a huge mistake
  • 07:45 and
  • 07:46 we certainly hope that doesn't come to pass as a
  • 07:49 as a policy matter.
  • 07:51 Overall, what the business community would like to see is a real affirmative trade agenda from the
  • 07:58 from the United States that is
  • 08:00 negotiating trade deals,
  • 08:02 especially with our friends and allies in Asia,
  • 08:07 which is the only way we're gonna succeed in competing with China.
  • 08:12 The third thing you mentioned was regulation.
  • 08:14 Obviously Donald Trump when he was president, had a very deregulatory agenda.
  • 08:18 President Biden has not embraced that.
  • 08:20 In fact, in some areas such as antitrust, enforcement has really doubled down in regulation.
  • 08:24 Gives us a sense how the business community perceives this alternative on regulation between these two candidates.
  • 08:31 The
  • 08:32 the business community has been very disappointed with the regulatory environment
  • 08:37 in the United States.
  • 08:39 Today
  • 08:40 in that same survey we just talked about, we asked our CE OS the question of do they think
  • 08:46 that
  • 08:48 that government policy is undermining
  • 08:52 free enterprise in the United States?
  • 08:55 And
  • 08:56 over 3/4 of them said yes, they do believe that government policy is undermining free enterprise.
  • 09:02 And
  • 09:03 among those who said yes, almost all of them cited regulation
  • 09:08 as a key concern.
  • 09:10 And about 2/3 of them said that
  • 09:12 antitrust policy is a key concern.
  • 09:15 So
  • 09:17 the
  • 09:17 the business community is, is not happy with the regulatory
  • 09:22 approach that the Biden administration has taken, particularly
  • 09:26 out of the Securities Exchange Commission.
  • 09:29 But a lot of other areas as well
  • 09:32 where
  • 09:33 we're hopeful to get improvements on that score.
  • 09:37 But on that score, a Trump administration would almost certainly be preferable.