Experience will continue to see that in the most exciting way possible. One of my biggest most exciting challenges. Thank you. [applause] we are going to get to tax reform because that is a big issue set in motion by the president yesterday but i want to talk about issues that are an important part of what you do in the country is trying to achieve. With north korea, and general David Petraeus said he and others are discouraged by the recent trade numbers indicating china still trading with north korea, these sanctions were apply last week, what is your level of confidence those sanctions will change materially chinese behavior . Can you clarify, there has been different reporting about this, what chinese banks are and are not doing Going Forward with north korea . For bringing that up. It is an important topic. I did have the opportunity to go with the president to the Un General Assembly last week, it was an incredible experience sitting in the General Assembly listening to his speech. He also signed last week in new york and executive order which gives the Treasury Department the most extensive powers, sanctions we have ever had. Specifically it allows us at the treasury to sanction any Financial Institution or other entity, any trade or facilitates any trade on a go forward basis with north korea. These are very important powers. We will be careful in using them but we think they will have a big impact. I want to emphasize that on a Going Forward basis. Of a been exercised yet . They havent. We did have sanctions this week, additional sanctions under the executive order but as it relates to Financial Institutions as i told my counterparts it will be on a go forward basis. We are concerned about historical activity, we are monitoring go forward activity and ongoing discussions. We think this will have a big impact. Central bank of china is or is not going to do financial business with north korea . I had very direct conversations with the governor. I dont want to comment on the specifics. You said the wont . Came out and made a representation as to what they do or wont do and we expect to follow through. Are you discouraged as general David Petraeus said he was by the trade numbers . Im not discouraged by any which i think this president has taken a very different position. For too long this has been an issue that has continued. We watched it. The president made very clear the activities with north korea are unacceptable. Hydrogen bombs being tested over the pacific are completely unacceptable and our objective is to denuclearize the peninsula. Before we get to tax from, something you said in the springtime about your role in relation to the us economy and you are asked about Artificial Intelligence and automation. You said it is not even on my radar screen. A company you use to work for put out a Research Paper describing Artificial Intelligence and automation as Apex Technology of 21stcentury American Economy meaning something here and now. Did you or have you reevaluated that sense of the importance of automation or Artificial Intelligence in terms of where the economy is going and how to deal with it . I hate to accuse the fake news of doing things but this is one of the times my quote was misrepresented to. They didnt say the entire context. What i said was technology is having a big impact in the workforce. I specifically think robotics, i commented at the time that robotics are an important part of the workforce and that is a positive thing taking over jobs that are not necessarily jobs humans need to do. What i was referring to is Artificial Intelligence. I specifically referenced r2d2 for star wars fans out there. It will be a long time before pure Artificial Intelligence takes over. That was not, that wasnt on my radar screen, that wasnt referencing whether it was robotics, cars, technology is here and having a big impact. What the president introduced yesterday as Congressional Republicans have embraced, relevant to technology and preparing for the 21st century challenges. What yesterday was about in tax reform, what is important is we make American Business competitive. Right now independent of technology, we have been a leader in technology for a long time with advances but independent of that, one of the highest is this tax rates in the world, we tax worldwide income which no one else does, if you leave the money it is not a surprise, trillions offshore, what the president talked about is he is focused on Economic Growth, you need to have Business Tax Reform for corporate and passthroughs, tax cut and simplification. It has been said the optimistic appraisals of the impact of your tax reform plan could bring growth, gdp to 6 . Are you that optimistic . That is optimistic. Is that built into your framework . What we have scored to and will score to is 2. 9 gdp over 10 years scaling up to 3 . We that is very doable. We can do higher than that but if we get to 3 , 2. 9 over ten years that is 2 trillion in additional revenue, 10 trillion of Economic Activity and not only will it pay for itself but pay down the debt and that pays for that projected Economic Growth, 1 trillion short when you look at the details released so far according to the committee for responsible i dont think those numbers are right. What we are trying to achieve is 1. 5 trillion static but i will describe as there are 500 billion between baseline and policy. We have a policy and rolling it over every year, i think it is the right thing to look at words policy, 1 trillion versus policy and if we get those 2 trillion we go to trillion dollars positive in paying down the debt. As you approach this audience and the country generally on this issue your position is dont worry about the deficit there will be no deficit implications if this tax reform plan is signed into law. You should worry about the deficit. We have gone from 10 trillion to 20 trillion of debt, that is concerning. We need to create Economic Growth and we projections are very reasonable. 2. 9 is a very reasonable number to project this. Statutory Corporate Tax rate is 35 but many studies, cbo say the effective average Corporate Tax rate, 24 so cutting it to 20 how much difference would that make and do work coming up that revenue for a 4 differential . That is the argument why we need tax reform and tax cuts because people spend so much time figuring out how to get around whether it is specialinterest or other tax things to get around paying a very high tax rate and they dont pay it anyway. This is about broadening the tax base and making it fairer. [applause] thank you. When you talk about rates, 25 , we still dont have income brackets assigned to those rates. Why not . We have done a lot of work on this. The point we are trying to make his we spent a lot of time on this. We cant have six people design the entire tax code. We have done a great job in the house and senate. We were far apart when we started this, everybody on the same page talking about brackets but as opposed to releasing them we will work with committees, the committees have the right to have input, they write the bills and we are working on that but let me comment on the 12 rate. When you raise the standard deduction effectively the 10 rate disappears and people who were paying 10 will pay 0. This is about creating middle income tax relief and simplification. Gary cohen was on cmb, top Economic Advisor in the white that president is open to a forced tax rate, 39 , just under 39. 5. Is that true . We didnt put in the release that we designed the rates. We said committees will contents fourth rate. To the extent we do that if we need additional money for middleclass reforms, people have different views with we should do that or shouldnt do that but the president said this is not about a tax cut for the rich and i can tell you in high tax states i had the pleasure of living in new york and california but i can tell you my taxes are going up in any event, not down. Getting rid of deductions is worth 5 Percentage Points on high tax states. Can you say to this audience in the country the when this proposal reaches the president asked us, one of the absolute must haves is distributional analysis which is the wealthy even if you win this argument, estate tax will be eliminated alternative minimum tax will be eliminated, distribution tables will reveal the top 1 will not get a tax credit . It has been the president s objective from the beginning, this has been dubbed the Steve Mnuchin rule, this is not about tax cut for the wealthy. I will comment we are talking about income taxes. If we change the estate tax, that is a different distribution but the president s objective was income taxes will not be a cut on the wealthy. Different states have different impact on this but that is our objective. You mentioned california and new york, one of several higher tax states. One of the academic they gets kicked around the state and local taxes, this proposal, proposes to eliminate federal Tax Deduction for what any income earner pays state and local taxes. There are 52 Congressional Republicans representing districts according to irs data those congressional districts pay higher than the average state and local tax, 3800 a year. Peter king is one of them. He said he cant vote for any taxable proposal that eliminates state and local taxes. If you lose those or a large percentage of those 52 House Republicans how do you pass this . First of all dont you love politicians, we have our own language with us . Salt. The average american if you Start Talking about salt, we are talking about dinner time. That is now referred to as state and local taxes. I think as i said this doesnt help me. This hurts me. I think longerterm getting the federal government out of subsidizing states is the right thing to do. It is not fair, the federal government should not be in the business of subsidizing states. The started in the house plan and we agreed with. Obviously for people in california and new york, new jersey, connecticut and other places we understand the impact. As we look at the rates even 35, they are not getting a tax break but this is something we will work with was on. Is a negotiable . I would say this is a pass fail exercise and we were not getting tax reform done. The president s number one issue that is not negotiable is 20 Corporate Taxes and again, we have a plan, this is a plan that has a lot of support from congress, we look forward to working with the committees. To get tax reform you need a reconciliation mechanism which means you need a budget resolution in the house and senate. Freedom caucus members would like to hundred Million Dollars in entitlement types as part of the budget resolution. Can you live with that . As you said we do need a budget. I believe if we get a tax plan people want to support in congress we will have a budget that goes along with that. When will this happen . One will lead to the other. They will go through together but they are connected. Can i get you to be more specific on your orientation to this idea, the Freedom Caucus vote on the budget resolution about entitlement plans . I have had a lot of conversations, a lot of respect for them, a lot of conversations with the senate, this is a congressional issue and we will work with them as budget are developed in the house and senate. As a conceptual idea are you in favor of getting rid of the debt ceiling as a matter of law and practice . The president was very open to the idea in his own words. There are certain things i came to a lot of experience with Different Things i didnt. The debt ceiling i have heard a lot about the debt ceiling but until you go through the debt ceiling it is different. I was operating like a piggy bank, i would be sitting every day with my team looking at our cash numbers and managing the cash and watching what came in or came out, we were operating with too little cash. First thing is i was very happy the debt ceiling got raised. First thing i did that day was raise 20 billion for sameday settlement to increase our cash, that is how concerned i was. My view is congress has every right, they appropriate the money and decide how we spend the money. When we agree to spend the money we need to agree to pay for it. Whether we get rid of it or approve the debt ceiling simultaneously with spending, we need to figure out over time to fix the system, at the end of the day the republicans and the democrats agree we are not going to not pay the government debt. Absolutely inconceivable. Share the internal conversations because this is a live issue, those in the administration i have talked to, make love amy said he wonders might the white house or future president give up the leverage that comes with the debt ceiling vote . Others said the best leverage you can find a lot of different ways and it creates unnecessary ripples of anxiety, the domestic economy and international appraisal. This is something we want to figure out on a longterm basis. The number one issue was making sure the debt ceiling got raised. I am happy and not only got raised december 8th but special powers got refilled. Treasury superpowers which takes us into next year. How far into next year . Im comfortable we can fund the government through january. I dont have visibility beyond that but i am comfortable that we are not going to be in a situation december 8th where we default on the government. Im hopeful that as part of the december rates negotiations, it is critical, the president could have done a longer deal but wanted to make sure we had military funding and that is an important part of the december rates negotiations. Im hopeful the debt ceiling will be distended. Thanks to your perusal of future projections on gdp growth, 2. 9 , if we are pretty much there now what is so exciting and dynamic about tax for if we feel that 2. 9, 3. 2, isnt the idea to get much higher than that . I never said we would end up at 2. 943 . I said im very comfortable we can get to higher than 3 sustain gdp growth. We are using very conservative numbers and as you said, theres a lot of expectations since the president has been elected. It is baked in and we will get tax reform, we have regulatory relief, we will get more in the economy, we had numbers that looked very good, quicker than we expected. People are reacting to the anticipation of economic changes. Retroactive to the first of this year, yes or no . On tax reform. We would like to but we will see. Subject to debate and fighting the vote, revenue neutral. I want to be clear on revenue neutral. On a static basis in wont be revenue neutral, on a dynamic basis under our projections not only revenue neutral but revenue positively help the audience understand the difference between static and dynamic. Static means there is no change in activity. People dont change their behavior. Lets just take the corporate rate or passthrough rate or what will come back to expenseing, companies spend too much time trying to figure out how to keep money offshore. We this will have a major impact bringing back trillions of dollars, that money will be invested here combined with what you said, create enormous capital investment. Will create enormous jobs and enormous revenue . By lowering the tax rate, we can get a lot more in revenue. People spend more time figuring out how to get around taxes when they are 35 then 20 . The dynamic parties assuming changes of behavior or Economic Growth, larger pie. Let me ask a couple other issues that have cropped up recently. There have been issues raised about your use of miller, secretary prices, the president said yesterday he was unhappy with the situation. Has he or chief of staff john kelly issued a directive to be more specific to cabinet secretaries about what is or is not permissible and what he wants cabinet secretaries to do when it comes to travel by air . I can only comment on the situation as it relates to me, i cant comment on other secretaries who are not involved in that but theres been no differing directive as it relates to me i look forward to, we will have an ig audit, inspector general, i am very comfortable we follow all the proper procedures. I never had the government pay for any of my personal travel. In the limited number of times we have used no air it has been National Security issues when i had to have secure communications, i am on the National Security council and sanctions, what im doing are an important part of the job or there have been times we couldnt get to places when we needed to be there. It is expensive and i understand why taxpayers are concerned about these issues. I look forward to the ig report reviewing our travel. What do you think is the future of paper currency, how much will that be part of way americans transact, my own personal transaction, just curious about that and what is the status, alexander hamilton, harriet tubman, andrew jackson. Alexander hamilton was the first treasury secretary, let me comment first on currency. I do think longterm trends are going to be less physical cash, we are happy the irs, number of electronic returns as relates to government payments, the number of payments we make to Social Security holders through electronically as opposed to physical checks so the trend towards moving from paper checks or card currency, theres a lot of efficiencies and the economy, surprises others are, big demand for physical cash. There are many more electronic t