Corker said the president could set the nation on the path to world war iii. The nfl president Roger Goodell has issued a statement suggesting out players should conduct themselves during the national anthem. He said he believes everyone should stand. He also said the controversy has been a barrier against making Real Progress on the issue. For the crisis will be reviewed at the owners meeting in new york next week. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. I am mark crumpton. This is bloomberg. Julia live from bloomberg World Headquarters in new york, im julia chatterley. Scarlet on scarlet fu. Joe im joe wiesenthal. Julia u. S. Stocks are climbing to record highs. Joe the question is, whatd you miss . Catalonia, takes a step back from going on its own. Here at home, President Trump is plan,ing to tweak his tax as a public feud with senator bob corker raises prospect back raises questions about the prospects for that legislation. Prizewinning economist paul krugman joins us exclusively on bloomberg for the next hour. Whatd you miss . President trump looks for unity on tax reform. Making he will be changes to the framework that was unveiled last month, as key senators raise concerns about specifics of the plan, which includes eliminating state and local tax deductions. Economistewinning krugman joinspaul us. Professor krugman, thanks for joining us. Julia the prospects for tax reform during this administration . Paul it seems completely coherent and it seems like they have lost the thread on what they are trying to do. They have no way to accomplish anything that looks remotely neutrality, without raising taxes on a lot of middleclass people. It is a myth but i wouldnt be the first time that something that is a myth would make it through congress. Joe when you say it is completely incoherent, what do you mean by that . When you look at the policies, what stands out is not making any sense . Paul they keep on saying americans are the highest tax country in the world. That is a lie. We are just about the lowest taxed nation. But they keep on implying they are going to do a tax cut for middle income people. They keep on saying, we are responsible fiscally, and yet there is no way you can have what they really, really want, which is a huge tax cut for businesses and a pastor thing which would be a huge tax cut for people with high incomes, without somehow or other raising taxes on a lot of people to pay for it. At they havent figured out way to make the thing hang together. Julia and dont forget the middle last middleclass taxcut. Paul there is no middle class tax cut in there. They have a couple of ways they thought they were going to be able to pay for it, one of which involved repealing the Affordable Care act. Scarlet that didnt go so well. Was thee other one border tax adjustment. Since both of those have died, they have absolutely no way to make the arithmetic work. Julia you have pushed back on the idea that taxes are the lowest that taxes are the highest in the u. S. . Paul they are among the lowest. We have a relatively high Corporate Tax rate, but you have lots of deductions and our Corporate Tax rate is normal, and our individual tax rates are low. So it is amazing trump repeats this again, and again, and it is as false as anything there is in the world. Side,n the Corporate Tax are there ways that you think taxes could be reformed, and a productive way, to make things more efficient or logical . Paul it is funny. The reform the paul ryan initially floated, a destinationbased cash flow tax, was not a stupid idea. In fact, it was one of the few things i have seen from paul ryan. Joe this is a big moment, were paul krugman is praising paul ryan. Paul you could get bipartisan support among tax experts, saying this is a good idea. And of course, it being the one thing i have seen from paul ryan that was really not a terrible idea, it died instantly in the political arena. And without that, without the border tax adjustment that is a piece of that, there is no way to make a significant cut in the corporate marginal tax rates that doesnt explode the deficit. About arts talk laffer, and the laffer curve, and the implications for kansas, and what happened there. Has been blown out of the water by every single example we have seen. There is not a single case that anything like to laugh curve has proven to be true. Ffer curve has proven to be true. Capital labor can easily flow so the chance is much higher at the level of one state, than the United States as a whole. Even so, all it did in kansas was created fiscal crisis. The clinton tax hike was supposed to destroy the economy. We had the best boom of the postwar era. He is substantially increased taxes and 13 and nothing terrible happened. So there is nothing supporting this point of view, except the fact that some very rich people would like it to be true. That, do we on all understand the tax cuts and aggregate . Paul there is very little reason to think tax cuts matter much, one where or the other, for underlying growth. Cut taxesns when you is, you cut tax collection. That is basically what happens. That if you are grieving a lot of financing is going to be coming from higher growth due to the tax cuts. Ball there is no reason to believe this. Scarlet i need to ask you about health care because the president says he plans to sign executive action to create more Health Care Options for people, outside obamacare. That is his sell. But what happens in the interim . Because this wouldnt take effect right away. Paul insurers have to make decisions about whether to participate in the market. They have to submit requests for premiums. So all this uncertainty is wreaking huge damage, already. Foriums are going way up 2018. That, most of that is from the Trump Administration and the uncertainty he has created. Scarlet can it survive until 2019 . Yes, because even in the individual market most people are receiving subsidies. And medicaid is unaffected by this. So it gets worse but it doesnt paulpse read scarlet krugman is sticking with us for the next hour. Coming up, the president search for the next fed chair and whether the Central Banks independence is perhaps at risk. This is bloomberg. Scarlet whatd you miss . Concernedconcerned that the sear the next fed chair might take a political term. Nobel prizewinning economist paul krugman wrote, other federal agencies, are about to , that one ofd american policy positives last remaining havens of competence and expertise will soon share in the general degradation. Have a perfectly fine fed chair who could be reappointed. Janet yellen has, by every indicator, done a stellar job. Why not . Just keep her. On the other hand, the Prediction Markets were thinking that the most likely pick was horsh, who does have a track record over the past decade read and it is consistent. He has been wrong about everything. He was worried about inflation, that the world was sliding into depression, that fiscal policy was get a turn us into greece, it is just amazing. It is almost awesome, you could taking whatever he says would happen and go the other way. A political point of view, he has family connections with trump. And he might be appointed although his stock has declined, a little bit. Doesnt sound like you think kevin would be a good pick, versus a pick who would be being at trumps back and call. With trump calling him out for a rate hike, for instance. Which would be a bigger concern . Paul both. You have somebody that is respected by the fed, and respects the institution of the fed, that person is not going to essurable by the white house. If trump just decides they like him or her, that is the type of person you would be concerned about, being criticized. Is a do you think there chance that his criticism of janet yellen was made perhaps, before he had spoken to people who have known more about Monetary Policy. And having learned subsequently, perhaps he is realizing that continuity would be a good thing and reappoint janet yellen . Paul well i would hope so. Be you turns tend to followed by further you turns. Every time you think he has reached a reasonable agreement on something, he finds a way to go back on it or it. Speaking of janet yellen, one of the most notable things going on is the persistent failure of the fed, or the economy overall, to get to 2 inflation. To hit the inflation right. In light of a weve seen over the last several years, have you involved in your thinking of what the fed can do if you hit inflation . What have you learned about the fed and inflation by watching this persistent shortfall . Paul there are two things. One is, Monetary Policy doesnt have much traction when Interest Rates are low. Even though the fed is normalized a little bit, we are still in that regime, where all the attention is on the fed and yet the fed has much less power than it does in what we would take on as normal times. The other thing is, if there is going on in the inflation process, whether it is the natural rate of unemployment is laid down, or the phillips curve or,gotten flatter, the underlying models we were using to try to predict inflation were never very good, and i now looking completely. Favorite theory of what that something is . I think it is a mix. I think there are still pentup wage cuts that dont want to happen, and there is still an overhang from the past. And come i think there is nervousness. I think people, having been through the Great Recession in the long, slow recovery, are just very reluctant to grant or demand wage increases that might be locked in during the next slump. Scarlet is that mean the fed should rethink its approach to targeting 2 inflation . Paul no, on the contrary. Everything we have seen is that 2 inflation is too low, given that we have seen how hard it is to get inflation up, whence it is too low. Given that it really looks like that we really need to have the opportunity of having ly negative, real Interest Rates, that the feds target rate should be about 2 . I am old enough to remember 4 . I remember reagans second term when we had 4 inflation. It wasnt that bad and i give you more room for Monetary Policy. So, i would go there. It is a long way from being politically acceptable, but by no means to say that we are having trouble to get to the 2 target, which actually looks too low, that we should give up on even trying to get there. Joe should the fed not be hiking right now . If you are the fed chair . Hiking would not be right now. I think the fed is trying to normalize and that version of normality when out the window, 10 years ago. Julia talking about changing political dynamics in the age of trump. From new york, this is bloomberg. Scarlet whatd you miss . Isublican senator bob corker in open opposition to the president , calling the white house and Adult Day Care Center and worrying the president could lead us to world war iii. Paule back with krugman, nobel prizewinning economist. Joe corker said there are a lot of people in his caucus, who feel the same what he does. But none have called out trump, to the same degree. Paul it is about their political careers. Attention toaying this stuff for a long time, and i read a lot. Todays republican legislators, people in the senate, and more so in the house, they grew up in an era of a monolithic, very tightly organized republican party. The ours not people these are not people who courageously staked out a position that might be unpopular. These are people that joined a machine that would guarantee them a good leaving even if they lost an election. So, these are apparatchiks, these are not people who are going to step up and take a stand on principle. It is not the kind of people they are. If corker turns out to be more interesting guy than we thought, but he is also decided that his political career is over. There are very few that are going to be willing to do that, even under the most extreme circumstances. You have senator john mccain and senator bob corker. So you have two. The koren people who are on edge of retirement, or possibly dont have long to live, are willing to speak out. Julia losing two big senators like that is actually critical for the gop. Paul that is right. And everybody saw the Obamacare Repeal crash and burn. Tax reform, or whatever it is they are trying to do on taxes, is in big trouble. So it is quite possible they will have a completely sterile legislative agenda, which from my point of view is a good thing. But in any case, yes, they dont have the kind of margin that they need to push stuff through. The party has rallied around principles that seem to be in opposition to themselves. For instance, they want tax cuts on Investment Income to boost the economy. They want tax cuts for the middle class, all the while avoiding widening the budget deficit. You cannot have one without the other and something has got to give and no one is willing to concede any of that. Phrase that we talk about, the impossible trinity. There are three things that everybody wants and you can only have two of them. They definitely have got themselves in the impossible trinity. Problem also have the that trump sold himself to his base, as as a populist. Swamp,ng to drain the and everything. And everything theyre doing is standard republican. Joe how is that tension going to resolve, ultimately. As it does seem like the mcconnell wing and the trump wing are distinct, especially as how they see the economy, populism, taxes perhaps. You think the mcconnell wing will be swept out . Paul if you look at concrete legislative measures, and what trump has proposed or at least signed on to, first on health care and now on taxes, it totally the mcconnellryan wing. There is no hint of that economic populism in anything he actually does. He talks a populist game but his populism never translates into economics. He is populist on Race Relations and cultural wars, but on economics it appears to be entirely just rhetoric. If he actually tries to ion done, he apparently called Chuck Schumer and friday to get something done on health care. And tax cuts, tax reform, just a sort of bipartisan outreach has become the endgame if he wants to get things done. Because he is a dealmaker, he wants action, results. All the thing about a dealmaker though is, he tends to renege on all his deals. He had a thing of the dreamers and now he is gone against that. Deal onam willing to health care, but now he is imposing conditions. Who is going to make a deal with him, really . Scarlet what can democrats do when they are possibly working with the president on a deal when they are not clear whether it would come due fruition. And they are in danger of splintering . Paul i think that is very exaggerated. On policy substance there is not much division. In fact, the whole party is pretty much unified on anything that involves policy. Scarlet right now there unified against donald trump. Paul they are unified on obamacare, singlepayer, and if you look at the standard singlepayer plant most of it is a transition to a public option. I think there is much Less Division there. I think with the republicans do is, sound flexible, talk to trump, make it clear we are willing to talk to trump, but they dont offer him anything much, because, why . They know they will get shafted if they do, and they know that the base will be angry, if they do. And the debt debate, they didnt actually give up anything and trump did. Paul, thank you. From new york, this is bloomberg. Julia whatd you miss . Starts climbed to a record high as the dollar weakened. Im juliette justly. Scarlet im scarlet fu. Joe im joe weisenthal. If you are tuning in live on twitter, we went to welcome you to our closing oh coverage every weekday from 4 00 to 5 00 p. M. Eastern. Scarlet lets begin with our market minute. Highs fory of record the dow and s p 500 and the nasdaq. Gains of anywhere from 1 10 of 3 10 of 1 . Joe new highs once again. Pretty remarkable. Scarlet lets look at some individual names here. Procter gamble declaring victory in its bid to keep , even asf of its board the Hedge Fund Says the vote is still too close to call. 5 . Art gaining almost that is a big move for walmart after announcing a 20 million stock buyback. Also, it says it expects ecommerce sales to surge 40 in the next fiscal year. A quick mention of ual an american air. United continental surging after financial gains. You can see American Airlines getting a little bit of a lift from that as well. Joe finally, lets go to the Government Bond market. Very quiet today. Hardly anything going on. Your yells unchanged twoyear yields unchanged. Really nothing going on here. Julia that is what we are seeing in the fx market as well. The dollar index, not a pretty chart, but the dollar is lower for a third day versus most of the g10. We talked about concerns about tax reform. I think we can take it as a pause in the recent rally looking like it is running out of steam. Showing you what is going on in the eurodollar, we have the catalonian president ial speech today to parliament stepping back from the prospect of a unilateral declaration of independence. He wants to engage. We have the euro above 1. 18. Want to show you what is going on in the eurodollar. Sorry, in sterling as well. The rally we have seen this week to around 1 . A mixed picture for the u. S. Economy, but still more chatter about the bank of england raising rates in november with a one and done move. Scarlet a quick update on stocks. The dow finished a record, but the s p and nasdaq fell just short. Joe finally on commodities, lets look at oil and gold. Oil gaining nearly 3 , rising optimism that more countries are going to join with opec to cut production. Supply. Inished back above 50 a barrel. Gold futures gaining again up to 1290 an ounce. Those are todays market minutes. Scarlet whatd you miss . The postelection market rally that was not predicted. We are still here with paul. You made the call that market would tank. Soon and i retracted it afterwards. I did what you should never do, which is let your political biases interfere with your judgment. I thought this is a terrible thing, which it was, but it is not necessarily going to be terrible for e