Cohn the talked about texaco in the Top Administration agenda for 2018 which includes Infrastructure Spending and welfare reform. This is 40 minutes. [applause] gary, thank you for coming in. Appreciate it. We appreciate you and learn to sing offstage that when you were in the private sector you had a rule about meetings. I had lots of rules had a rule about memos. Rules about meetings. I was telling mike, he was asked me about the private sector i in the public sector. I sit in the private sector you can have a memo longer than three pages and a powerpoint longer than 10 pages exactly hard to Say Something concisely but theres always one message or two messages youre trying to deliver. An exit force you to get the point relatively quickly and force the conversation to where you want it to go. This was a positive morning after. We thought this would be in the presence desk, that bill. Little, little, tiny, tiny. 20 going to stop worrying . Im almost stopping worrying now. Last night was a huge night. If you put things in perspective to where we are this morning. We think about what we got done over the course of the year. You go back and read what everyone wrote, where we were one year ago today. A year ago today we were starting down this path. We were talking about this it has been 31 years since tax reform was done. We were talking about a corporate rate in with a 20 percent handling. People said there is no way that you can get below 25 percent. And there is no way that you can make it permanent. If you think about what weve done, we have a corporate rate down to 21 percent. We have made it permanent. Weve also brought down the small mediumsize business rate in line with the corporate rate to reflect on the pastoral rates. We got the top end of the pastor rate below 30 percent and all of the other rates down with that. This is an historic achievement herewith that we did something people do working for 40 years. We opened up anwar to drilling. Part of the president s initiative has become energy independent. And we appeal to the mandate. We think about will be accomplished last night and yesterday and will finish this off around 1230 today. It has been an unbelievable achievement to think what we have gotten done and how hard it has been to get it done. Given those that you just gave me. Why the bill so unpopular . No, i dont know to be honest with you, i dont know. I just think that we have done a very good job of creating middle income tax cuts. We will deliver to hardworking families, real tax relief you take the typical family of four earning 75,000 and cut their tax bill in half. We are taking them from 4000 2000. Look at the distribution tables and they are out now. Look at who is getting the tax savings, tax savings going in the fund distribution. The 20 50,000 learner that we went after is about 59,000 goodwill and after that group. Theyre rcgetting the largest percentage tax savings of any will and the whole distribution. We have clearly not communicated that. But what we will clearly communicate, and people citizen february. The Treasury Department says they will have to withhold for february paychecks. So when people get the february paychecks they will catch up for january and they will see more money in their pockets. Anything seeing is believing. When work is in the United States see their paychecks, the takehome money go up in february, i think there will be a huge change. When you were at your alma mater, American University with cnbc, john harwood, he said it is not our intention to give the wealthy a tax cut. What happened . We are happy to give everyone a tax cut. We really are. We want to stimulate the economy. We did not set out to give the wealthy a tax cut. If you go back to where we were and this is important to got here. D how we if you think of where we were one year ago today, one year ago today, we were in a a position where the house wanted to do adjustment tax, the senate had maybe two votes. The white house had their own plans. We had to over those many months, coalesce that group into a concise plan. We created the six of us that got to get up and we created an outline which had four major points. In one of the major points was middle income tax relief. We had to achieve middle income tax relief. There was a line for us in there. We never said that we were not willing to give tax relief to everyone people he said look, we cannot sponsor or support a bill that does not deliver middle income tax relief. We deliver that. What is the measure of success . Wage growth, they go together. When we look at the bill and we will look back on the bill for a lot of years, we are highly, highly convinced. And i think youre starting to see more and more time around. It is been fairly interesting to watch some of the economists. I will pick on my form industry, why not . It was interesting when the bill was going through the legislative process. Much of the wall street economists said i would have no economic impact. And amazingly as we started get to get closer and closer to final passage, and they had to start advising the clients and how to invest, for 2018 and 2019, amazingly, they started putting the forecasted started adding 2 10, 3 10, 4 10, 5 10 of growth in. We have swung the pendulum. People realized. When we get competitive with e the rest of the world, thats what this is about. It is about competing with the rest of the world. Having a business tax rate for all businesses that allows us to compete with the rest of the world. When we do that, we feel that number one, we will grow the economy. Businesses will relocate back to the United States. Businesses looking to invest, will help businesses invest, they will get after tax returns, they look at return after taxes. The United States now is going to score very well in the equation. When you do that, youll start investing in the United States can in fact i spoke with a ceo you say that was spent half 1 billion next year because he gets 100 percent expensing next year. He is buying americanmade products. That is happening because of the tax legislation. That will drive gdp. More importantly, when he spends the money, he is going to be driving jobs in the United States. We are very much in the place where we admitted, we are at a four percent unemployment rate. We have job creation going on. We have been waiting hundred 60, 170, 180,000 jobs per month. Weve not done for the last decade is we have not created wage growth. No one had a raise in the country. What we think we can do in the plan, i think this is really important. We feel that we can, for the first time in one decade, create wage growth. If Companies Need to expand, they need to hire laborers, they need to go to the labor market and compete for the incremental worker. We need to get workers back into the workforce. We will do that by driving wage growth. Economic growth and wage growth. What was failure be . Failure nois not an option. Failure would be that if you look at what happened 31 years ago. Succeed by lowering our tax rates low enough that businesses did migrate back to the United States. We became very competitive in the world and the rest of the world had no choice but i think we inhave now. They cut their rates to get competitive with us. So failure would be if we do not capitalize on our competitive opportunity and we allow the rest of the world to catch up to us. You started in a viral video of the wall street journal ceo council. They were asked to raise her hand if theyre going to increase the Capital Expenditure and then what happened . I dont want to be mean to the wall street journal but you should go through is on the audience. That is not the ceo that would be the capital commuters. They were not the right group in there. I look to raised their hand they were the right seals. You will end up talking to ceos and i spoke with a ceo of a Mentor Company yesterday. He told me, 5 million of investment starting january 1. We will get the investment. We will get money repatriated. We will get the investments. I think you have to judge us on what actually happened. You think more companies will hire then simply buy back shares will have i think companies will hire. The economy is doing really well. I will disagree with your prior guest. Why not . But when i look at what is going on, i do not think sa lo of the tax reform is in the stock market. What i rmthink is in the stock market right now is what is going on in the economy. The economy is doing well. We have had two consecutive quarters. I think you have one third consecutive quarter. 3 percent gdp growth. If you look at holiday sales as we have seen an early dinner people are shopping. People are buying. We look at some of the fedex data. People shipping packages. The economy is doing well. As we continue to grow on this solid economy, the companies will make more and more money. The stock market is reflecting the reality of whats going on in the Business Environment today. If you look at what the tax plan is going to do i dont think its factored in. You can take an interesting best of high tax and low tax stocks they are not doing what you think. You think the high tax stocks are outperforming the low tax stocks. And its not. I think theres more momentum. What does that tell you . It. It tells us that it is not rein the stock market. You think that there will be a taxcut bracket . I think there will be continuation to be a rallying market based on real underlying fundamentals of the economy, the us economy as well as european economy, global economies continue to strengthen as well as companies having more earnings power because of lower tax rate, being able to expand their business and creating more profits because of the incentives we have given them. And to grow their business and hire more people and become more profitable. Given understanding both the psychology and the plumbing of the stock market. Are you worried it is too hot . No, im not. I get worried about the stock market when market value what im saying is if you look at whats going on in Real Companies today, they are earnings are in line. We do not have huge pe multiples. It is not pe multiples are out of sight. It is not with volatility out of sight. Fact volatility indexes are just muddling along. No one is really worried about whats going on here. The economy is strong. Companies are doing well. The stock market is reflecting the companies are doing well. They reflecting that we have a positive Business Environment the deregulation that we put into effect is having an effect on psychology of the corporations. By the way, psychology in the boardroom is probably one of the most important aspects that affects bordentown that youve ever seen. And board mentality drives hiring, growth, i sat in more boardrooms and ever want to talk about. But at the end of the day, the psychology of how you feel about the economy and the environment really drives this. How high is too high . Is not a number. It is a decoupling of companies, the fundamentals. You are saying we are not close. We are not close. It is decoupling this morning when they had with that that was the last word on the bill. You were on the floor. What was it like . The senate floor, it is exactly what you would think. It doesnt exactly run at a brisk clip. It does not. He said there were some people missing, what was it like . I think its funny. There were two votes. There were two backtoback votes. In the first vote which came probably right around 12 oclock. Othere was nothing going on in the senate. The boat ended up taking 20 ndminutes or so and to get the last couple of boats and its sort of like where are people . I dont t want to take the last person to vote is but you can go back and watch. Where are they . What are they doing . You think at this time they have heard every minute of debate and they probably want to go home and 20 minutes later our waiting to get vote number 99 civic and went to the next vote. The actual vote on the final tax plan was interesting. They did not even call the roll call. People just swarmed the desk. The democrats just swarmed the desk, they voted no and left. Question from evan allen who is here with jennifer if you can make one change to this bill add or remove what is it . We would cut carried interest. We been trying to cut carried interest and we probably tried 25 times. Why not . We said there was opposition in the big White Building with the dome at the other nend of pennsylvania avenue every time we tried. Put a little more specificity. I think it is the reality of just the political syndrome. Take a second and explain why it is like the third why it cant be done . . The. Elongated from one year to three years. Carried interest is now a three Year Holding Period to get the preferential tax treatment but i dont t believe it carried interest. I believe carried interest, the president believes it is a loophole. Youre basically getting paid a preferred rate of return on someone elses capital. Not returning your capital. Explain the benefits and why . It is hedge funds, private equity, ledger capital, compensation that you get for running that money and is the earnings that you take up its with other peoples capital. Pebrought into getting preferential rates of return on your risk capital. Youre getting paid on someone elses risk capital does it make sense to us. The reality of this town is that constituency has a very large presence in the house and the senate. They have really strong relationships on both sides of the aisle. Having lived through this, it would be 31 years before someone does us again. I dont know. What i do know is this is hard. This is really hard. This is difficult. Having control of the white house, the house and the senate, you literally have to align the sun, the moon and the stars and make sure that everyone stays healthy to get this done. And so these are really difficult things to do. When i came here one year ago, you feel like i done the most intricate crazy deals that have ever gotten done and i have had had companies and leverage it to death and people say that is crazy. And you have done those things. Then you start down the tax any site this can be that difficult. I sat through swimming boardrooms and i have put two ceos in the room and said, one of you will not be here once we merge the companies and those are tough discussions but nothing compares to trying to get a tech still done request what was the president like behind the scenes uton this . How did he lay d in . What was the approach . The president was great. He was absolutely phenomenal on this. What did he needled you about . He never needles and bugs you. The president cared a lot about the business rate. Probably the single biggest topic the president cared about was the corporate rate. Why does it meet his redline . We more than met the redline. We are 20 percent deferred a year. For those of you that there is a neutral swap. It is 110 billion. What else did he insist on, asking about . He was intricately involved in lots of the details that he cared about. He cared about carried interest. Monday he wanted to know if we can do this. Literally. What did he ask . He says how does this keep surviving . He wanted to know. What did you tell him . He wanted to know i was doing my job. I explained to him that we have done our job. If the corporate rate, it was very important to him. He spent enormous amount of time on the passthrough rate and understanding the competitiveness and dynamics between pastors and corporate. And it is a complicated topic because the pastors compete with the corporate at one level. Corporate has a second level of taxation so the intricate playoff between double taxation, single taxation and the ultimate rate. We spent , a lot of time with h talking about that. We went through basically the swamp code and how many things we can deduct. Remember what we did here. This is totally missed as well. There are 5. 5 trillion dollars of reductions in the tax code. Therefore trillion dollars of base marks. You take out 5. 5 trillion and you do that in eliminating issues and issues and issues, it was state and local tax issues. Big issues. Look, i have a whole list of things that we took out of the code. You do 162 and all these lines of the text within no one is ever heard of. And look, everyone affects where everyone is affected by something you take out of the tax code. In those 5. 5 trillion we took out, 60 percent is the personal side. So we really try to simplify the personal side, but the vast majority of americans could their tax returns, what the president cared about was that they could do this on a postcard and simplify the system. The answer to that is no. I think the answer is yes. You think the majority of taxpayers can pay on a postcard . I think so. I think 90 percent. That we use the standard deduction. And for corporations tax cut, the tax court is now complicated, right . I do not know if it is more complicated or less complicated. It is one of the other. I said i do not know. But the Corporate Tax system has been bebeyond complicated. We cut enormous amount of loopholes out of the corporate system. We cut enormous amount of deductions up. Its another page. If you verse i dont know if youve ever seen a Corporate Tax return. But it goes from the floor to the ceiling. I will let you know in another year. Five days until christmas. Will the Government Shutdown . No. What gives you the confidence . We will get acr in the next two days. And congress will be on their way home by the weekend. So we will probably end up with a two week cr. Well get the spending into next year at current levels. We will deal with caps and we will deal with the spending issues. Military issues, and all of the other issues in the beginning of next year. After the senate crosses the final t this afternoon we can expect a celebration of the white house. Congressional leaders come down. Coming down this afternoon i think at 1 oclock. After the houseboats come i think at 1 oclock we will have senate and house leaders on the south lawn. What will the message be . The president will thank them for all of their hard work and hell congratulate them for their effort. He will remind them that we still have a lot of work to do. But it will be a celebratory act. This will not be ready for him to actually sign is after christmas. But the president signed this before or after new years day . We will see what happens. There are some technical issues that have to be dealt with. Explain with the likelihood is, what would st