Transcripts For CNBC Power Lunch 20170426 : vimarsana.com

it has dipped in and out of negative territory, the nasdaq hitting yet another record high. it is up again. the dow and s&p up for a third straight day. we are on pace for our best weekly gains of the year. wynn resorts is the best performing stock in the s&p 500. perrigo, edwards, united tech. let's party again, baby. >> you've got it, brian. i'm tyler mathisen. welcome, everybody. here is what else is happening at this very busy hour. shares of twitter soaring more than 10%. the strongest growth in monthly active users in more than a year. much better than expected earnings. after reports the white house is preparing an order to withdraw from nafta. more on this in a moment. and didi raising between $5 billion and $6 billion valuing the chinese taxi hailing service at about $50 billion making it the second largest vc-backed startup behind uber. we begin with president trump's big tax plan. we will get the details or at least the outlines of it. from what we can expect to how it will impact your money we have you covered. eamon javers, you first. >> reporter: tyler, a couple of important things to bring you up to speed on. i can tell you that there is nothing imminent here. there is that reporting but no announcement coming tomorrow on nafta. i can also tell you that i spoke to a senior administration official here on the white house complex last night who said the president would like to renegotiate the trade deal. he would need to do that but needs fast track authority and they're waiting for u.s. trade representative's office to come in to power. this official told me last night that they can't get the green light to renegotiate nafta. until that happens you have to comply with the law meaning there's a complicated bureaucrat process. in terms of this announcement that we're expecting at 1:30 on tax, an administration official here said that this will not blow up the deficit. a lot of speculation. would there be any pay fors in here. this official says they will have some pay fors in there and it will be a massive restructuring of the tax deduction system. almost all will go away here. related to charities, home mortgage interest but others would be eliminated so that's a way of reimagining the tax code. that's a pretty big process. this official telling me something fairly significant in terms of deductions in about half an hour, tyler. >> thank you, eamon. now about how high high earners may be impacted. >> if you're a hedge fund manager, a doctor, a real estate developer. the trump plan can cut your taxes possibly by half. for high-wage earners especially on the coast who work for companies this plan especially given what eamon said could be a huge tax hike. they're talking about pass through income not just the corporate coming in at 15%. they're talking about a higher standard deduction. they don't talk about rates yet. we don't know what the brackets are. we do know that just in keeping with trump's campaign plan they would cap deductions, all deductions except for charity and mortgage interest, at $100,000. that means business owners, partnerships especially those in states without high taxes. those on the east coast and west coast can no long er or will no longer under this plan deduct their taxes. if this happened there would be massive tax shifting as the pass through rate would be much lower. let's say a lot of people like me or you would make themselves into a company and use the pass through 15% even if the top rate goes to 33%. that's still a much lower rate. this could create a huge shift in how people work, how they structure their own taxes and who they pay and how it affects states like new york and california. >> thank you very much. robert frank from new york today. joining us on all this, who better than grover norquist, founder of americans for tax reform. he was at the hill event with secretary mnuchin discussing tax reform. grover, good to have you here. do you know anything we don't know? can you add to anything? >> mnuchin talked about some things that have leaked out and that is if the administration wants to take the corporate rate from its present 35% highest in the world down to 15%. not 20% which a lot of people, including me, thought was the consensus they were going to go. now they're going to 15%. is people who run their businesses inside their personal income tax brackets, that goes not down 43% to 20% but down to 25%. that goes to 15%. you're talking about cutting two-thirds the taxes in s-chapter corporations and cutting more than half for regular corporations. >> i assume you hike this and think it's pro growth. >> it is huge pro growth. they cut through and said we're going to take the rate so low you will not notice the deductions and credits people get all excited about. >> are you concerned about a growth in the deficit? that's the knock. you have to assume a lot of dwroet for the deficit not to grow as well. >> yes. and i think if we take the rate of growth from 2% a year, obama's record, to 4% a year, reagan's, and this is as pro grow growth, more perhaps than reagan's tax cut was, back 30-plus years ago -- >> don't move, grover. there's something we're going to want you to talk about because it's breaking news from kayla tausche right down the street from you in washington. >> reporter: michelle, we did get word from the house freedom caucus, the most conservative part of the republican party here in the house that they are going to support the amendments made that, of course, was supposed to be voted on last month. some of these issues are being worked out n. a statement last hour while the revised version does not repeal obamacare we are prepared to support it to keep our promise to the american people to lower health care costs. we look forward to improving the bill. our work will continue until we fully repeal obamacare. this effectively puts the ball in the court of the moderate tuesday group to make them come to the table. a source told me the changes would likely bring over up to 25 new yes votes from the freedom caucus. the challenge is making sure they don't lose any more moderate votes. once this goes to the senate it will likely be gutted. it will likely look 180 degrees different. the first step is the most important one. getting it agreed upon and then voted on the house floor and you will see what the senate does. the movement here. >> without leading us into the deep weeds, kayla, what changed? what is different? >> reporter: well, in the previous text or the one-page summary of the freedom caucus was able to get some assurances the cost of premiums for consumers were going to go down. they could opt out of the mandatory provisions the bill would have required. on the moderate side they were hoping to keep protections. that was in the previous text that has been agreed upon in principle for the last couple of weeks. today there are reports that the whole republican conference discussed whether congress itself will be forced to take part in these exchanges, basically eat what you cook. the affordable care act required that and that could be left out here. >> go back to that but keep an eye on the markets, too, as well because, remember, when obamacare repeal failed, the hospital stocks rallied. cardinal health, community health systems, they are tied to this so we are watching those as well. a marked impact, watch the insurers and the hospital stocks in particular. >> all right. thank you, kayla. let's get back to grover norquist. this is part of your world because there are so many taxes in the obamacare law that if they were able to repeal it it would have an impact on tax reform. >> yes. they total $1 trillion over a decade, getting rid of them is a big accept forward on getting all the way to fundamental tax reform. >> if they raise $1 trillion don't you have to make up for that somewhere else? >> in year 11 to year 50 deficit neutral. so when you repeal much of obamacare you repeal a trillion in taxes and $1.2 trillion in spending. you're cutting more spending than taxes. it improves the deficit -- reduces the deficit. and in the future that is a permanent trillion dollar tax cut. a trillion dollars ahead of where you are now. >> i want to come back, grover, to the main item on the docket today, the tax reform plan. we talked a lot about what it would do for businesses, s-corps, pass through corps and so forth. what does it do to individual taxpayers and what deductions to individuals might be on the chopping block? >> well, the rates that the president and house republicans had agreed to in the past, and they may refiddle this, but i assume they'll be fairly close, a top rate of 33%. a middle rate of 25%. a bottom rate of 12% that an individual would have $12,000 of income tax free, an exemption before any taxes were levied on them, and a family of four $24,000. >> we don't want -- >> grover, what about capital gains and what about estate tax? >> capital gains is half. death tax is gone, dead, over. >> let's say it works. let's say we get the corporate tax rate to 15% or 20%. in order to get growth they have to spend or invest, raise salaries, build new factories, whatever. do we need some assurance if we get this it done companies are simply not going to take the savings. it adds nothing to the macro economy and making those with stock healthier. >> the best investment we can make is to invest in ourselves. that's a pretty healthy company. other than itself. if you start putting rules on, then you don't have a free and open and competitive society anymore. some could buy potato chips, i suppose. that's why we have shareholders and boards of directors and that shareholders will insist they maximize value and the way to do that is to do more of what you've been doing successfully and if you've been doing stupid things, do that. >> grover, you seem happy. >> extremely. how we would reduce marginal tax rates. >> is it really going to get done? >> yes. by september, and mnuchin said we are doing territoriality. it's very important piece of reform. five-year notes up for auction. rick santelli tracking the action it at the cme. what about the animal spirits, rick? >> reporter: it ended with yesterday's two-year note. it was a bit of a different animal. we just auctioned off $34 billion five-year notes. the yield $1.875 billion and that was higher than the yield that we were trading at. higher yield, lower price. we mark off for that. 2.3 bid to cover. 57.3 on indirects, below average. directs were 5.3 above action. we gave it a straight "c." yesterday an a-minus for two years. the concession of the price drop and higher rates was viewed as opportunity. today rates are still sticking to the upside and a lot less opportunity. still ahead, treasury secretary steven mnuchin says the president's tax plan will be the biggest tax cut and largest tax reform in the history of the united states. in a few minutes the details when mr. mnuchin himself and gary cohn take that podium. we'll bring it to you live. stocks marching higher as a result of all of this. the white house tax plan and news the freedom kcaucus is supporting an amended health bill fueling markets right now. we'll have more on the markets straight ahead. i can't wait for her to have that college experience that i had. the classes, the friends, the independence. and since we planned for it, that student debt is the one experience, i'm glad she'll miss when you have the right financial advisor, life can be brilliant. ameriprise hey you've gotta see this. cno.n. alright, see you down there. mmm, fine. okay, what do we got? okay, watch this. do the thing we talked about. what do we say? it's going to be great. watch. remember what we were just saying? go irish! see that? yes! i'm gonna just go back to doing what i was doing. find your awesome with the xfinity x1 voice remote. welcome back it to "power lunch." we will get the details of president trump's tax plan live when it does happen. let's check on the markets and check in with bob pisani at the nyse. >> reporter: hello, melissa. two things moving the market, earnings and taxes. look at the s&p 500, 2396. if we closed here that would be a historic closing high. guidance, number one. this has been a trend. boeing, rockwell, northrop, ingersoll-rand, even timken. earnings have been strong, close to 12%. we've had the best quarter since 2011 and they're not lowering the number. geopolitical risks a little lower. guidance disappointment, risks out there lower. tax cuts are in play. that's a positive that's in play. weak ms. is out there. we'll see if it can get better over the poor first quarter data. everything is moving in favor of higher stocks. >> bob pisani, thank you very much. let's bring in kate warren with edward jones. and michael jones, chief investment officers and chairman with riverfront investment group. kate, i can't speak for my trusty co-hosts but when i go out and talk to people they will often ask me now, doggone it, i missed the rally. i was scared of the stock market. is it too late to get in? i tell them to watch the show to listen to people like you. is it too late? if you have no money in the stock market, is it too late? >> it is not too late but you should have realistic expectation it is that will see more versatility and not the double digits. it's not too late. you need to look at quality companies making sure you have a diversified portfolio and longer term horizon. >> are you seeing new money come in, kate, maybe clients that you haven't talked to in years start to come back in? >> yes. we've been seeing clients come in pretty much over this entire expansion. obviously many people were quite nervous back a long time ago but as things have progressed we've seen more money come in and the optimism reflected in surveys like consumer confidence and investor confidence the last year or so has brought more money into the market. >> we're seeing near records today because of the hope for changes when it comes to washington when it comes to health care reform. can we get more out of this double digit move we've seen? >> if you've noticed since the powerful rally we've enjoyed every pullback has been very short and modest and a lot of people were too conservatively positioned. they come pouring in every time the market pulls back even a little that suggests to us the market is in great shape technically and we're getting support for that technically strong position with the earnings position and today's announcements with the tax cut proposals and it was an expectation he might go on the sideline with proposals. that's clear ly not helping. >> the interday spike in shares of alcoa now up by more than 1% right now. this, speaking of announcements, wilbur ross will announce a plan to probe imported aluminum so we are seeing shares react sharply to that headline. we will bring you more as we have it but, again, to probe imported aluminum. kate, back to you in terms of a tax plan today, is it too late right now to take a look at the highly taxed companies like, for instance, a cvs and one example 39% ten-year tax rate, do you look at those stocks and say they will benefit with the reduced corporate tax rate and you buy stocks like that or small caps which have a huge percentage of domestic sales and would see an impact in the tax rate? >> yes, we certainly would be adding small cap stocks because they are likely to be beneficiaries not just of any tax proposal changes. i don't think it's too late to buy based on that. that's additional upside but you really want to focus on the fact that while first quarter growth is likely to be weak, you've been seeing stronger earnings and we expect better economic growth and that also is positive for domestically oriented companies. don't forget that international growth is picking up as well and that helps the multinationals as well as reinforcing some of the domestic companies that benefit from stronger demand in the rest of the world indirectly as opposed to directly. >> kate and michael, our thanks to you. still ahead president trump's much awaited tax reform blueprint. what's in it? does it have a chance of passing? how will it affect you and your money? we will find out in just a few minutes when mr. cohn and mr. mnuchin take the podium. i'm only in my 60's. i've got a nice long life ahead. big plans. so when i found out medicare doesn't pay all my medical expenses, i looked at my options. then i got a medicare supplement insurance plan. 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for pulmonary hypertension, as this may cause an unsafe drop in blood pressure. do not drink alcohol in excess. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have a sudden decrease or loss of hearing or vision, or an allergic reaction, stop taking cialis and get medical help right away. ask your doctor about cialis. your insurance on time. tap one little bumper, and up go your rates. what good is having insurance if you get punished for using it? news flash: nobody's perfect. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch and you could save $509 on auto insurance. call for a free quote today. liberty stands with you™ liberty mutual insurance. i'm courtney reagan. here is your cnbc business update. the u.s. military moving core parts of its t.h.a.d. system put in place to count earp the threat of potential missile launches by north korea. the system should be up and running by year's end. the director behind the oscar winning thriller "silence of the lambs" has died. he died this morning from complications from esophogial cancer. a woman is back on solid ground after getting stuck for hours on top of a crane. firefighters rescued the 23-year-old woman in toronto. police charginging her with criminal mismischief. no word on what motivated her to climb the crane. a sheriff's patrol car captured a meteor shooting across the sky. it was part of the meteor shower. very cool video. that's your cnbc news update. brian, back to you. >> courtney, thank you. you are looking at a live shot of the white house press briefing room where at any moment we will get, hopefully, details of the president's tax plan which his administration is touting as the biggest ever. the moment that happens, the moment those gentlemen, steve mnuchin or gary cohn, we will bring that to you live. in the meantime a check on the markets ahead of the announcement. today's moves aren't as big as the last couple of days but we are higher. the nasdaq hitting new record highs, so is the russell, the s&p 500 and dow hovering near record highs, too. as we heard from bob pisani earlier, consumer discretionary, telecom and financials are the leading sectors right now. michelle, the s.e.c. kicking off a meeting unveiling new rules for the internet. julia boorstin and its impact on the industry. julia? >> reporter: that's right. fcc chairman is about to take the stage right now at an event at the nuseum to outline his vision of internet regulations. he's expected to propose neutrality rules enacted in 2015. the central idea is internet providers should treat all traffic equally and should not block or slow down certain companies' content. while net neutrality has supporters including alphabet, youtube, facebook and netflix, opponents to the obama administration's approach including at&t and verizon say that the decision to classify internet service providers as common carriers as utilities has stifled their growth. now voluntary commitments from internet providers. last year he met with those of facebook, apple, cisco and their trade groups to discuss alternatives to the current rules. he could put his proposal to review the net neutrality rules up on may 18th which would set off a process of soliciting public comment and then after four to six months would propose a final rule. just yesterday in a speech pai said that at the s.e.c.'s next public meeting on may 18 the commission will vote on a proposal to start a comprehensive review of the fcc's media regulations as well. so, tyler, a lot of changes coming out of the fcc. >> julia, thank you very much. and that fcc chairman ajit pai will be on "closing bell" to talk about this and more. at any moment now the blueprint of president trump's tax reform plan. we'll bring it to you live when it begins. meantime let's bring in cnbc's editor at large john hared harwood. the most difficult to sell to the democrats and the fiscal conservatives within the republican party. >> reporter: well, for democrats the hardest thing to swallow is going to be a big cut in the corporate tax rate down to 15%. they'll attack that. the biggest difficulty for conservatives and republicans is the probability that this debt is going to create a big hole in the deficit. now the administration has said that it it will produce economic growth sufficient to pay for the cost, but there's a lot of skepticism that will be the case. the trump tax plan in the campaign last september when he revised it were that plan would add anywhere between $2.5 trillion to $7 trillion to the deficit and debt over ten years. that is going to be a tough sell for the administration. the house plan, of course, has got a 20% corporate rate. donald trump wants to go to 15% and give that rate to all those pass-through businesses that are not organized as corporations. that makes it all the more expensive. >> i would guess that one of the avenues for attack on the part of the democrats would be the president has not released his tax returns, and so there is no way of knowing how much this proposal would help him. >> reporter: exactly right, tyler. they'll say he has not released his tax returns. they'll say this pass-through rate could help donald trump businesses, could help the trump organization, and -- which is not a publicly traded company -- and it's going to be a huge challenge to do anywhere close to the timetable the administration initially laid out which was passing it by august. they've now conceded that's not realistic. they're looking at some time in 2017. even that for a tax reform process which is incredibly complicated, if you do both business and individual taxes, that is an ambitious time line even to do it by the end of the year. >> 60 votes in the senate to pass it? >> reporter: no. under the reconciliation provisions they have this expedited way that avoids a filibuster, they can pass it with just 50 republican votes and mike pence and the vice president breaking the tie. it will be hard to keep 50 republicans together if you have a plan that includes a big increase in budget deficit. >> we want to tell everybody if they look to the left-hand side of the screen, here comes sean spicer and treasury secretary steven mnuchin and gary cohn right behind him. let's listen. >> thank you all for being here. obviously today we're here to talk about the president's effort to provide tax relief to our corporations that will help grow jobs and to middle americans. two people here to explain it, the director of our national economic council gary cohn will walk through why we're doing what we're doing and the personal side of the tax. and then secretary of the treasury steven mnuchin will walk through the business side and the corporate side of what the president is doing to bring jobs back to this country, to make our businesses more competitive and help our economy grow. at the end we'll be glad to take questions on this. you are being provide add o one-pager right now that provides the top level aspects of the plan and then both the director and the secretary will go into further detail and take your questions. so without any further ado, director gary cohn. >> thank you, sean, and good afternoon to everyone. thank you for being here this is quite a historic day for us and one we've been looking forward to for a long time and one we're very excited about. we have a once in a generation opportunity to do something really big. president trump has made tax reform a priority and we have a republican congress that wants to get it done. and this is something that, quite honestly, i hope democrats would support, too, because it's good for the american people. the president is going to seize this opportunity by leading the most significant tax reform legislation since 1986 and one of the biggest tax cuts in the american history. we have been working on this for a long time. we've had great meetings. we had a great meeting last night with the leadership of the house and the senate. we have agreed on many of the important principles of tax reform. we look forward to working together with the house and the senate very closely in the weeks ahead. the president has focused on three things since his campaign -- job creation, economic growth, and helping the low and middle income families who have been left behind by this economy. he understands there are a lot of people in this country that feel like they work hard and they just cannot get ahead. they are sick of turning their paychecks over to washington and having no idea of how those dollars are spent. they are frustrated by a tax code that is so complicated they can't even do their own taxes. that's why tax reform is such a big priority to this president. he cares about making the economy work better for all american people. here's a little history. when president kennedy cut taxes in the early 1960s, the top rate on personal income was over 90% and there was rampant tax avoidance. and then, 20 years later, president reagan took rates down to 28% for individuals. since then rates have been creeping back up and more loopholes and special interest tax breaks have made their way back into the tax code disadvantaging average americans. and then on the business side when president reagan left office in 1988, the corporate tax rate was 34%, and it hasn't changed much since. for the last 25 years other countries have been aggressively cutting their tax rates and moving to a it territorial system in order to attract business. and the u.s. has done none of that. in 2017 we are still stuck with a 1988 corporate tax. that's why we are now one of the least xcompetitive countries in the developed world when it comes to corporate tax. so tax reform is long overdue. we are going to cut taxes for businesses to make them x competitive and we're going to cut taxes for the american people especially low and middle income families. today i'm going to outline the principles we have put in place for personal tax reform, and then i'm going to hand it over to secretary mnuchin to talk about the business side. first, here are a few sta tis it particulars on the individual side. in 1935 we had a one-page tax form consisting of 34 lines with two pages of instructions. today the basic 1040 form has 79 lines and 211 pages of instructions. instead of a single form, the irs now has 199 tax forms on the individual side of our tax code. taxpayers spend nearly $7 billion hours complying with these tax codes every year. and nearly 90% of taxpayers need some help in filing their taxes. we're going to cut taxes and simplify the tax code by taking the current seven tax brackets we have today and reducing them to only three brackets. a 10% bracket, a 25% bracket, and a 35% bracket. we're going to double the standard deduction so that a married couple won't pay any taxes on the first $24,000 of income they earn. so, in essence, we are creating a zero tax rate -- yes, a zero tax rate for the first $24,000 that a couple earns. the large her standard deduction also leads to simplification because far fewer taxpayers will need to itemize which means their tax form can go back, yes, to that one simple page that i talked about earlier. families in this country will also benefit from tax relief to help them with child and dependent care expenses. we are going to repeal the alternative minimum tax. the amt creates significant complications and burdens which require taxpayers to do their taxes twice to see which is high high higher. that makes no sense, and we should have one simple tax code. as we all know job creation and economic growth is the top priority of the administration. nothing drives economic growth like capital investment. therefore, we are going to return the top capital-gains tax rate and dividend rate to 20% repealing the harmful 3.8% obamacare tax on dividends and capital gains. that tax has been a direct hit on investment income and small business owners. we're going to repeal the death tax. the threat of being hit by the death tax leaves small business owners and farmers in this country to waste countless hours and resources on complicated estate planning to make sure their children aren't hit with a huge tax when they die. no one wants to see their children have to sell the family business to pay an unfair tax. we're going to eliminate most of the tax breaks that are mainly benefits to high-income individuals. home ownership, charitable giving, and retirement savings will be protected but other tax benefits will be eliminated. this isn't going to be easy. doing big things never is. we will be attacked from the left and we'll be attacked from the right, but one thing is certain -- i would never, ever bet against this president. he will get this done for the american people. with that i'm going to turn it over to secretary mnuchin to go through the business tax plan and then we'll both come back and take questions. >> thank you, gary. so as gary said we've been working on this plan for a very considerable period of time. our objective is to make u.s. businesses the most competitive in the world. right now we have a 35% corporate rate on worldwide income and defrl. it is perhaps the most complicated and unxcompetitive business rate in the world. not a surprise that companies leave trillions of dollars offshore. under the trump plan we will have a massive tax cut for businesses and massive tax reform and simplification. as the president said during the campaign we will lower the business rate to 15%. we will make it a territorial system. we will have a one-time tax on overseas profits which will bring back trillions of dollars that are offshore to be invested here in the united states to purchase capital and to create jobs. the president is determined to unleash economic growth for businesses. this is not just about large corporations. small and medium sized businesses will be eligible for the business rate as well. as gary said, we have had very productive meetings with the house and senate working weekly to get this done. we will continue to do that. we are determined to move this as fast as we can and get this done this year. i will just comment we will hold listening sessions. one thing this president has done very well is listen. we've had hundreds of business leaders here from all different types of areas -- manufacturers, retail, airlines, community banks, big banks, we are listening and we have been taking feed back. finally i would just add the president's objective is creating economic growth. we believe we can get back to 3% or higher gdp that is sustainable in this country. the overall economic plan consists of massive tax cuts and reform, regulatory relief and renegotiating trade deals. and with that we will unlock the economic growth held back for too long in this country. with that we'd both be happy to take a few questions. >> thank you, mr. secretary. when you talked about the individual tax rates, you're also talking about eliminating some of the tax breaks. are you talking about eliminating tax deductions, and which ones are you talking about eli eliminating and keeping? >> other than mortgage interest and charitable deductions. we think that will be sweeping reform. adam? >> thank you. when you talk about lowering the dividends and capital-gains taxes how does that mesh with what you said this morning about protecting the middle class from the very, very wealthy who might be able to take advantage of -- i don't know a better word than loophole but that would give them a lower tax rate. >> we've said the business rate is going to be available for small and medium sized businesses as well as corporations. we will make sure there are rules in place so that wealthy people can't create pass-throughs and use that as a mechanism to avoid paying the tax rate that they should be on the personal side. and i would just say on the dividend rates restoring the capital gains rate is critical to investment in this country. >> the initial plan that the president as a candidate outlined also included freelance or contract workers and that 15%. that's the same. what's your rate on repatriation of funds overseas and, gary cohn, what about the marriage penalty? the president promised to eliminate that. >> first comment on the rate of repatriation. we're working with the house and senate on that. i will say it will be a very competitive rate that will bring back trillions of dollars and as it relates to the definition of contractors and things along those lines, those will be the details we'll work with congress on as we turn this into a bill that will get signed by the president. >> so as secretary mew xhin said we are working diligently with the house and senate by coming up with the final details of the bills. you're going into micro details -- >> very important. >> we agree. very important. our simple premise is to lower rates and make simplify the tax system, lower rates and make it easy. we don't want to penalize people but make it very fair. we will get back to you with definitive answers on all of these details. >> so on the 10.5 and 35% rate, income brackets established to propose -- >> again, we are in constant dialogue with the house and senate. as secretary said, we're holding a bunch of listening groups right now. we have outlines. we have a broad brush view of where they're going to be. we're running enormous amount of data on the proposals right now. we will be back to you with very firm details. we're very confident to where they're going to be. we just wanted to get out and give you a broad brush overview where we are. the president very much believes in taking input, as the secretary said, over the next month we have a lot of different discussions going with a lot of different groups interested. >> does that mean state and local taxes eliminated. >> yes. >> how about health care? >> yes. >> mr. secretary, thank you, and mr. cohn, either one of you. when you talk about repealing the 3.8% obamacare tax hitting small investments and small business income, is this your first attempt with this, i guess to start pulling back on obamacare? and what do you say to your fellow republicans who say that this tax reform package is more about corporations versus cutting the deficit? >> look, this tax reform package is about growing the economy, creating jobs. it's about the economy. you know, as i started, you know, president trump comes in every day and talks to the two of us about economic growth, economic prosperity and jobs and what are we doing to stimulate economic growth? that's how we're looking at this plan. the 3.8% tax on capital gains, dividends and interest, the president looks at that very seriously as being a tax on capital being spent to stimulate economic growth. people putting investment capital to work and people taxed on their personal businesses. we're trying to get rid of that to be more stimulative, capital going back into the economy to create more jobs. >> more business than obamacare? >> more business than attacking obamacare? >> it's business. it's to stimulate business investment. we are trying to stimulate business investment. >> so on the -- first of all, does it pay for itself? is this plan, revenue neutral? and secondly what in here is non-negotiable? when this goes to congress, congress comes back with something added in, will the president refuse to sign that? >> let me first say, again, the core principles of this, we've been meeting with the house and senate. and they agree 100%. the core businesses make business rates competitive, bring back trillions of dollars to create jobs, simplify personal taxes create a middle income tax cut. those core principles are non-negotiable and something we all feel strongly about. as it relates to will it pay for itself, again, i think as we've said. we're working on lots of details, as to this. we have over 100 people in the treasurerly that have been working on tax and scoring lots of different scenarios. this will pay for itself with growth and with reduced -- reduction of different deductions, and closing loopholes. >> you said the -- >> mr. secretary -- >> if it turns out the congressional estimates when this is -- if it turns out this actually won't be growth, meet deficits, is the president comfortable with that? will he sign something? >> let me just say again. when we look at the deficit and the deficit has gone from $10 trillion to $20 trillion in the last administration, that is a problem and the president is concerned about that. this plan is going to lower the debt to gdp. the economic plan under trump will grow the economy and will create massive amounts of revenues, trillions of dollars in additional revenues. let's go in the back. >> if you don't replace some of the revenue with a border adjustment tax, how will you make up for the deficit caused by the reduction in the corporate tax rate? >> again, today we're putting out the core principles, which include rates, because we think that's a very important part of the plan. we will be working very closely, as i said, with the house and the senate to turn this into a bill that can be passed and the president can sign, and there's lots and lots of details that will be going into how that will pay for itself. >> mr. secretary -- >> is there -- >> yes? >> the territorial tax system. is that a border adjustment tax? is it tariffs? what is it? >> a territorial tax systems means that u.s. companies will pay income on income related to the u.s. it's territorial u.s. companies will not be subject to worldwide income, which has made them uncompetitive. >> is there a reason to be concerned that perhaps the republicans might not go along with this, just like they didn't fully go along with the obamacare replace innocement? >> again, i think there is a lot of desire by everybody to pass tax reform. gary said, we are at a historic moment and republicans and democrats want to create jobs and want to help the american people, and as i said, the core principles of this, we have agreement on and we will work forward on the details. let's go in the back. >> thank you, mr. secretary. quick question. you bring up repeal of the death tax. the estate tax. this is an issue that's been going on for decades, and it used to be they were always talking about phasing out the death tax over a period of years. groups such as jim martin 60-plus seniors association said they wouldn't accept it and wanted immediate killing of the death tax. is that what this is going to be? or is it going to be a phase-out measure again? >> right now our initial proposal is to immediately phase out when this proposal becomes effective, to phase out the death tax immediately. with the implementation of the new tax, the death tax would disappear. >> mr. secretary -- >> mr. secretary -- >> two questions. one, obviously this is a statement of core principles. it's just one page. obviously, tax reform will be much more complicated. when will we see the details? the actual plan? >> we are moving as quickly as we can. so we are working with the house and senate on all the details, and this is -- everybody has an agreement we are going to move this as fast as we can and when we have an agreement, we will release the details and go through it with all of you. >> second question is, will the president release his tax returns so that -- >> the president has no intention. the president released plenty of information, and i think has given more financial disclosure than anybody else. i think the american population has plenty of information on his -- right -- right there. excuse me. other people -- other people have the right to ask questions. >> -- will effect him personally? >> my question is to either you, mr. secretary, or mr. cohn. you mentioned middle class tax cuts. middle class families watching this tonight on the news, family of four, median income, $60,000. what does it mean for them? >> it's going to mean a tax cut. >> how much? >> going to mean a tax cut. >> why -- >> you're asking the same question we got asked over here. we will let you know the specific details at the appropriate moment. we are in very robust discussions with the senate, with the house leadership. they are progressing very quickly. and we will continue to give you more details as we have them. >> okay. we're going to take two more. right back here in the fourth row. yes? >> exactly a year ago, then candidate trump was asked if he believes in raising taxes on the wealthy. he said, i do, i do. including myself, i do. my question is, why isn't he doing that and will the president end up paying more or less taxes as a result of this plan? >> well, let me comment. i can't comment on the president's tax situation, since i don't have access to that. okay? but i would comment that our objective, okay, is the reduction in taxes, will be offset by significant reduction of deductions in other items, so that the effective tax rate, okay, is what we're focused on. one more question right here. yes? >> you may not have seen the president's tax returns but according to our estimations in 2005 returns that are out there getting rid of the alternative minimum tax would save him $5.3 -- only have paid $5.3 million in federal income taxes. so your response to those critics who say a lot of what you presented here today could save the president or benefit his own businesses? >> again, let me comment, what this is about is creating jobs and creating economic growth, and that's what massive tax cuts and massive tax reform in simplifying the system is what we're going to do. the amt is just another example of a third complicated set of rules. anyway, thank you, everybody. appreciate you guys being here. all right. that's treasury secretary stephen mnuchin and national economic council chair gary cohn presenting the outlines of what is described as the most massive tax reform since 1986, and perhaps the largest tax cut ever. though many details remain to be seen here. i believe we're going to bring in larry kudlow, correct? chat around the table here. one of the keys, michelle, you latched on to quickly, as did we all, the disappearance of all deductions on individual returns, say, for charitable deductions and the mortgage interest deductions. that means people in high-income or high-property tax states will no longer be able to deduct the tax they pay? >> usually, here we go. new york taxes, very high. but that means i pay less in federal tax. not anymore. that's going to be -- if you live in all of these high-taxed states, california, new york, new jersey. you're going to think about moving. >> i'm going to be a commentator. larry kudlow will join us. no way this is going to happen. all due respect to gary cohn and steve mnuchin, the most deduction taken. more than charitable contributions, the deduction of state and local taxes from your federal taxes. gop won't like it and democrats in high-taxed states certainly won't like it. >> delegations in new york, new jersey, california, aren't going to love that the gop might say, let's see. california, new york -- >> massachusetts. >> they're not -- >> masses. y massachusetts. states spend all kinds of are money and the rest of the country subsidizes you, because -- >> i know cnbc has a lot of v w viewers in new york, new jersey, massachusetts, california. look at the camera and say this. this is a smack in your face. it you're a high-income -- even if you're not. the taxes you pay on a local level is the single biggest deduction you take. >> just to underscore this, brian. even top rate goes down 36.9% down to whatever it is. >> 35%. >> 35%. you may end up paying more in taxes? >> so that's 4.5% you just talked about. new jersey, high-end tax rate is 11%. many other states up in the 9%, 10% 11% you won't take it all. scaled like the rest. 5.5, 6% effective. actually, you'll pay more. people wonder where will the money come from to pay for this stuff they're talking about? right there. eliminating that deduction, if they get it through, should raise a lot of money. >> the other thing that oh kou s occurs to me, sounds like an all-in wager on supply side economics it is. >> bring in larry, after i mention and all-in wager on supply side economics? that is just propitious. just spot-on. mr. kudlow? >> yes. >> a lot i would think you would like in what you have just heard. particularly the idea this is, and too feels to me like, an all-in bet on supply side economics and the ability of it to produce growth? >> that's correct. i think you're correct. i think this, from what i've gathered. i've been speaking with the republican senate meeting at lunch, but from what i'm hearing, this is a very bold plan. the kind of stuff, by the way, we looked at at the beginning of campaign. some of this stuff came out of kevin brady's house ways and means committee. you know. you're going to lower the rates, and broaden the base. lower rates, keep more of what you earn. have an incentive. work, invest, take risks. you don't need all of these deductions. the lower the rate, the less valuable these deductions are. now, sully, i have to differ with you, buddy. i won't predict the politics. none of us know this. i'll say this, why should taxpayers across the country finance the big spending habits of the largest states? >> right. >> new york, new jersey, connecticut, illinois. why should they, by subsidizing that spending? why? >> because those -- listen, i listen in new jersey, my friend. >> yeah. >> and i'm telling you. they've got the i.v. there taking out every dime they can from me. i assure you. >> also the biggest net contributors to the federal government. we always say the higher end pay most of the taxes. if the higher end are in those states -- they're going to extract more from us, buddy. we're both moving to miami. that's good news. >> no, no. this is going to put tremendous pressure -- i really mean this. an important point -- this is going to put tremendous pressure on voters and taxpayers to curb wasteful spending in these gigantic blue states. to curb public union spending, which tends to be private spending by a ratio of about 2-1. 50%. this is going to put pressure on it. of the days -- if this stuff stays, i mean, it's very bold and very brave. if this stuff stays in we're going to have a whole new debate. i mean, this is a drain the swamp debate. and it's long past due. now, i don't know everything that came out. like i say. i was talking to the senate lunch, but the corporate tax thing sounds exactly what we had in the campaign. we saw treasury, secretary mnuchin last night. he had a big smile on his face. we all had big smiles on our face. mr. trump, president trump is going bold. you're right. making a bet supply side, tax rate reduction coupled with base broadening will reincentivize the economy and produce phenom international increase in growth at a minimum, minimum, 3%, generating over ten some odd years $4 trillion in new revenues. it's the mother of all pay forwards. >> here's another question. here is the one pager. looks like a menu at a very fancy restaurant, but -- besides that, how much of this is what you and your team presented and proposed during the campaign, and there's one item here that i know you didn't like, which is not a part of it, and that is that border adjustment provision. how much of this resembles what you were proposing last summer? >> well, ex the border adjustment, sounds like a lot. i'd have to see it. it wasn't just me, steve moore, steve mnuchin, believe me. we weren't operating alone. >> i understand. >> i'd have to see it, ty. >> but i just can't answer that yet. >> border tax cut not here yet. not included. does that make you happy? >> it makes me very happy. very -- in addition to talking to you, it makes me very, very happy. >> you know who i bet isn't happy right now, larry? jared bernstein. we'll bring him in. former chief economist to vice president biden. jared, jared, jared, good to see you. >> where do we start? >> go to jared. >> you've seen the one-page proposal, and what do you think of it? >> well, you know, i actually think it looks a little better than trump's original plan. this looks a little closer to the house budget plan that i'm very familiar with, with paul ryan. top rate, 35% as i understand it. >> yes. >> trump was down around 33%. i do think that this still has the problem, and here larry and i have a, many decade disagreement. this is going to increase the deficit by around $3 trillion over ten years. that's my guess. i'm not sure about that number, and it's actually about half of what the original trump plan would have done. the proposal to eliminate itemized deductions outside of mortgages, charitable, obviously a revenue raiser but, of course, there's a lot of tax cuts in here. there's cutting 3.8% of investment tax cut that feeds, helps support the affordable care act. eliminating the estate tax, amt, both btax deductions for trump himself and creating a new loophole on pass through incomes. a lot i don't like. a testable hypothesis. larry and i have to come back here some number of months, years from now and i will almost surely disprove the notion this is going to take the growth rate from 2% to 3%. >> we'll go on, yes, with this debate. the biggest single missing ingredient in tax policy over the past ten years or even 15 years, is a competitive corporate tax code that produces business investment. net business investment. net capital stock. that's driving productivity. that drives real wages. you look at the numbers. we are growing our capital stock at a third of our historic rate. these corporate tax cuts go directly to those points to make better rewards and incentives and make it easier to build a business for ten years. the war against business is over, and part of that reason is because mr. trump has given the tax cuts. it's like he put it right in, where you needed it at the absolutely most. >> reframe the conversation a bit, larry. i was critical of the state and local donation probably because we live on this coast but i'll say this. there's something in here they proposed that, especially sort of upper middle class taxpayers should love kmp is the removal of the amt. here's why the gop hates it, you know. the amt alternative minimum tax, not indexed to inflation. i think 83,000 for a married household. as incomes go up with time because of inflation, and amt stays the same, that government sort of roach trap of amt is just going to take more people. now it can't. >> unfortunately -- >> i agree with you, sully. totally agreeni. >> first then jared. >> i agree. adds a lot of simplicity. working with then candidate trump, the complexity of the tax code that probably was his number one concern for all people. all right? well to do people can hand handlebetter than lower and middle income people but that was a driver. one of the reasons they went to take out the amt and i think he's absolutely right. >> the problem with the amt. look at trump's return that, the part of hits return he released for 2005. he actually paid a 25% effective tax rate which is probably a lot higher than most people expected. that's wholly because of the amt. take away the amt and he pays a 5% effective rate. i take your point about families getting caught there who may be ought not but you really need an amt because of the loopholes and so many ways. >> what if you take them away? what we heard there in the last few minutes, jared, let me finish my thought. >> sure, sorry. >> with respect to deductions taken by individual taxpayers. those would go away. but no real detail on the deductions and write-offs that businesses take. >> right. exactly right. >> to lower taxes? >> exactly right. if you really have a truly broad base, then you don't need -- >> you don't need and amt. >> i got to get back -- >> that's -- hold that thought, jared bernstein. >> we all agree -- >> hold that thought. >> hold on, larry. i want to tell you an empirical fact you're not going to like. i and many others. this is a canonical finding, have tried to find a relationship between changes in investment taxes and investment behavior by firms by corporations, even by individuals, and it's just not there in the data. just not there in the data. >> wait a second. it is in the data. i'll ask you this. i'm going to look at this study, but did that include corporate tax rates, did that include immediate expensing? did that include repatriation and territority? did it? tell me the truth. did it? >> yes. >> and include the capital gains tax. >> i was going to say and it included the capital gains tax. and, in fact, the only place you see something. i guess you like this part. when the capital gains tax rate goes up, people realize their gains before the change. there's a timing effect there. that's clearly in the data. but you -- >> jared -- >> the reason you can't link the kinds of tax cuts that you're getting all excited about here to growth is because the empirical linkages just aren't there. >> jared, you must like the doubles of the standard deduction? right? a family that -- first $24 nos tnos -- $24,000 not taxed. >> that will reverse some of the skews of this. if this really following the house plan after the thing was fully phased in, almost all benefits went to the top 1%. i'm not sure about that yet. >> i'll say this. jared is a friend of mine. already? jared is making a case. >> you said that before he zings me. >> jared is a friend of mine, even though you tweeted badly against us. i will say this -- jared is one of last representatives of the economic guild who believe that lower margin's tax rates or higher margin's tax rates have no behavioral impact on the economy. >> just a little. >> that is a dwindling number of economists, because what we're talking about here is basically virtually main street. main stream. we could argue about the size of the economic growth effect. that's fair. >> a good argument. >> argue about the rate straurs. structures. i'd luck to have that argument. across the board slashing of business tax rates and throw in individual tax rates and throw in the inheritance tax and throw in the capital gains tax. if you're going to tell me that that is not going to boost the economic growth, then i say the issue here -- >> i'm not going to tell you. i'm going to show you. >> the issue here is history. it's history, jared. >> i am -- when i get back to my office i'm going to post a number of plots that not just tell you but shows these facts. why i have really discounteded this, it's going to pay for itself or you'll get 2%, to 3%. >> got to go to john harwood. one quick question, larry. has anything like this proposal, specifically with business taxes, been tried in any state that you know of. >> oh, yes. >> reik kanslike kansas. >> la it worked or led to greater budget holes? >> everyone talks about kansas. kansas by the way had a delayed effect but it's working very well. look at all the red states p, a new study out. the tax foundation did a study. in spades, tyler. in spades. states with lower tax rates, states with lower corporate tax rates, states with lower sales tax rates and right to work states. in spades, with clarity, outperform their competitors by a wide margin. >> last word, jared, quickly. >> thank you. here you go. kansas, i happen to write this down. bond rating downgraded twice. general fund down 570 million. personal income tax down 700 million. >> so what? >> pass through costs, 472 million. >> so what? >> they predicted 190,000 would take the -- >> you guys got to take it outside! >> kansas can -- >> last word. >> kansas -- kansas -- sorry. kansas is exhibit a against supply side growth effects. exhibit a against supply side growth effects is the state of kansas. >> right. >> thanks, guys. >> sorry. leave it there. this conversation will continue. to john hardwood. >> tyler, we do not have enough detail obviously to analyze the effects of this on different income groups but it's important to remember, we step back and look at the trump campaign plan, which very much resembles what he is talking about, what steve mnuchin and gary cohn were talking about today. those plans either under dynamic scoring or static scoring, depending whether you're a liberal or conservative, provide much more benefits for the top 1% than for the bottom 20%. in the case of the dynamically scored analysis from the tax foundation, it was twice as much to the top 1%. in the case of the tax policy center, which uses a little bit of dynamic scoring, nothing like the tax foundation. it was ten times as much for the top 1% as for the bottom 20%. that is one political vulnerability for this plan. a second vulnerability is going to be the effect on the deficit. because, remember, the tax foundation estimated it would be at least $2 trillion added to the deficit. tax policy center said $7 trillion added to the deficit and also the idea of business rate cuts. if you poll that directly. the more people see that this is something benefiting businesses and the top income, and as adds to the deficit, the less popular it will be. a big challenge pushing this even with a friendly congress. >> thank you, john harwood in d.c. coming up on "power lunch," how will the tax plan play out for stocks if it gets through or if it doesn't? right now may be the best time to sell your home. bas news for buyers, frustrationing taking its toll. >> the incredible baseball play you have to see to believe. all that and more coming up on "power lunch." with help from our advisor, we made it through many market swings. sure we could travel, take it easy... but we've never been the type to just sit back... not when we've got so much more to give when you have the right financial advisor, life can be brilliant. ameriprise let's[ whimpers ] dog. find ping-pong. okay, let's go. find your awesome with the xfinity x1 voice remote. that's amazing! a used car, elon in see it with more details on the tax plan. >> we've been talking so much about the potential costs of president trump's tax plan. trillioning of dollars so far is the estimate, but eliminating personal deductions could be one way to offset that cost. an estimate from the tax foundation found that if you eliminate all personal deductions except for the charitable and mortgage interest deductions you could potentially raise as much as $2.4 trillion in revenue over the course of ten years. $2.3 trillion if you factor in the impact on economic growth. we've also talked about the distributional effects of the president's tax plan. how much might go to the wealthy, to the middle class, to the lower class. the tax foundation found eliminating personal deductions would be a primarily cost borne by the highest income households. the top 20% of households would see a tax increase of 2.7% if most of these deductions were eliminated and that compares to an increase of 0% to 1% for the bottom 80% of households. this is one area in which higher income households might be feeling the effects. one personal deduction that is stillaffected by the president's tax plan. 401(k) contributions. not included in the backgrounder the white house handed out during the press briefing, but gary cohn seemed to say that the administration is looking to protect that. so we're still looking for clarity there, but here is the statement from chairman ways and means committee chairman kevin brady's office put out yesterday on this issue. he said they are focused on rewarding savings with the lowest rates they can possibly create. looking at a number of solutions for increasing the amount of money that consumers put into their 401(k)s and said the 401(k) were a critical savings tool. looks like there could be some protections on capitol hill for that very popular deduction. melissa? >> thanks, elon moye. how the plan going to be received? steve liesman did polling on what people really want from washington. >> quick, i think they missed an opportunity. notice when cohn and mnuchin were asked how much will the individual middle income person save? saying, well if you're at the median, you will save x. didn't attach the prabracket. the idea of business deductions doesn't poll wool. polls towards the middle of priorities. look at our all-america poll from earlier ins month when we look at the answers of 800 americans. what's the top priority? you see cutting business taxes is just 6. notice number one. keeping jobs in the u.s. this sort of creates the imperative for president trump to sell this issue to say, you know what? having a competitive business tax structure is going to help satisfy your number one desire of keeping jobs in the u.s. we also asked people's views on the president's plan. you can see that it's about fourth or fifth on the list in terms of approval of the president's idea. 54%. 75% want infrastructure spending, you get a break when it comes to parties. democrats oppose and republicans in favor. it's about middling there. one other question asked. your choice, one of two things. cust the budget deficit or cut taxes. what would you do? 2-1 in favor of reducing the budget deficit. however, got a 28% said neither. the public could potentially be swayed here. this is why what we heard, i think, some on the individual side and some on the business side. for this to fly politically, the two have to be married together. a little on the individual and also on the business side. >> but i -- i love you, buddy, but i'll say that graphic, probably a easy radioen why c r cutting taxes wasn't that high. pull a mitt romney, don't pay effective taxes. half the country. after deductions. net return or pay zero. not paying anything. cutting taxes would not be a priority. >> could well be. >> state and federal and sales tax. >> because this is a survey of -- >> 800 americans around the country. by the way when we give that lichte, cutting business trackses is not number one for republicans. it's actually number five and six and seven for democrats and independents. they are much more in paver er repealing the a/k aca. a sales job is needed by the president. the question, whether or not he got off on the best foot today with a lack of specifics but also some of the broad principles that maybe americans may glom on to. >> steve, thank you. how will the tax plan if it becomes law, effect stokes? that's next on "power lunch." i joined the army in july of '98. our 18 year old was in an accident. when i call usaa it was that voice asking me, "is your daughter ok?" that's where i felt relief. we're the rivera family, and we will be with usaa for life. at crowne plaza we know business travel isn't just business. there's this. 'a bit of this. why not? your hotel should make it easy to do all the things you do. which is what we do. crowne plaza. we're all business, mostly. stocks holding on to gains after the trump administration unveil add blueprint to president trump's tax reform. what's the next move for your money? bring in senior port follow yore manager with russell investments. portfolio manager, guys good to see you. mentioned equity markets. a bid for safety on the heels of the release of outlines of the tax plan. a bid for bonds, for instance, with yields going to the lows of the session. the dollar came off gold, went higher. doug, what's your initial reaction to the plan and what it could mean for the stock market? >> yeah, michelle. i think it's the first blush. right? first take on this, but still a lot of issues to get clarity around. find out specifically what that repatriation right will be. not specified yet. 10% floated. still have to hear the brackets. see how it impacts a number of different constituencies and of course have to get that question answered whether or not this is going to be revenue neutral. clearly predicated on the fact of if it's dynamically scored with growth. wholesale, however, it takes one step towards what this whole rally we started, postelection in november, in terms of adding clarity. right? if you're a small business owner, a ceo, trying to make a decision with respect to whether you'll make that additional hire, buy that capital equipment, this starts, although we know there's a long way to go this summer and fall, through the legislative process and probably some give and take around what this ends up looking like, but this starts to form clarity around what benefits you get potentially from this. >> steve, worried this doesn't go through? granted details to be seen. already i'm sure fufkal hawks within the republican party rolling up their sleeves getting ready to fight and dems out there already ready to fight. what happens to stocks if the tax plan falls flat? >> look, if your investment thesis is based solely on lower corporate tax rates. >> may not be. valuations of the markets may have been achieved on part on the backs of tax reform? >> what i recommend looking for secular growth stories in companies that can grow no matter the corporate rate. if you're union pacific, just say, a large, solely u.s. company, paying 38% tax rate, this is going to be a good thing for companies and for hiring and manufacturing. if you combine lower corporate tax rates with low sustainable bountiful energy costs? great for job growth and manufactures growth. >> doug, where do you find value and think about overlaying paying the highest corporate tax rate, on top of what you're looking at? >> i think that certainly presents an environment where active management and stock pickers will be able to do well. this sets up an environment where active management could be rewarded for specific reasons steve mentioned. that said i think when we look globally and across the diversified multiasset port foug portfolio, we've got to get through the ecb confirming their path with respect to the bond purchase program, once we get that, from a fully hedged perspective, outside the u.s., looks a little more attractive. >> you like whirlpool, fedex. one that might benefit from a lower corporate tax rate or a lower tax on repatriated profits? >> sure. all pay higher than average tax rates. die com. 100% u.s. company pays a 37% tax rate. this is a company -- biggest customers are at&t and verizon. both of which pay very high tax rates. in fact, the verizon ceo was on cnbc recently two weeks ago laying out a tremendous infrastructure spend when it comes to a fiber buildout in the u.s. will this be accelerated if verizon has more cash flow as opposed to yes? i think the answer is yes. diecom, cheap stock, vees-of-vis-a-vis growth. >> thanks for joining us. appreciate it. >> taxes are not the only thing in focus at the white house. president trump inviting all 100 senators today for a special briefing on north korea. what can be done. even more sanctions, are they the answer? we'll explore that next on "power lunch." most etfs only track a benchmark. flexshares etfs are built around the way investors think. with objectives like building capital for the future, managing portfolio risk and liquidity and generating income. that's real etf innovation. flexshares. built by investors, for investors. before investing consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully. ♪ it's not just a car, it's your daily treat. ♪ go ahead, spoil yourself. the es and es hybrid. experience amazing. whyour boss?ork for? yourself? your family? our financial advisors are free to realize a plan to fit your family's unique needs. we'll listen. we'll talk. we'll plan. baird. let's get more on president trump's tax plan. ayman jabbers in the white house press briefing room. first question from secretary mnuchin. what was the takeaway in the room from the announcement? >> i think a lot of the reporters in the room center wanted to ask a lot more questions than they had the opportunity to. less than half an hour in terms a total briefs but we got details we've been waiting for in terms of the trump tax plan. here they are. 15% corporate tax rate. 35% top individual tax rate and repeals of state and local state deductions. almost all deductions with a few limited exceptions and estate tax. tax brackets reduced to three from seven. doubling of the standard deduction and repeal of the alternative minimum tax. here's how the treasury secretary stephen mnuchin described all of this just a few moments ago. >> under the trump plan, we will have a massive tax cut for businesses and massive tax reform and simplification. as the president said during the campaign, we will lower the business rate to 15%. we will make it a territorial system. we will have a one-time tax on overseas profits, which will bring back trillions of dollars that are offshore to be invested here in the united states to purchase capital and could create jobs. >> so one of the things that a lot of reporters and a lot of folks on wall street want is an answer to the question, just what will that tax rate be for that one-time repatriation overseas? we don't have an answer and to renegotiate nafta, trade agreement in the northern hemisphere nap is on going. that negotiation. awe talked to a senior administrator said the president would like to renegotiate with mexico but needs fast-track trade authority. to do that, needs his nominee for ustr in position. once they have that they can tick off a 90-day clock in order to begin the process of doing that. nothing imminent, guys, on nafta renegotiation here at the white house. certainly not tomorrow. they've got a long series of bureaucratic processes they have to tick off before they can get to it. >> still saw some of these currencies move on that stuff. thanks, eamon. appreciate it. so also happening in the building you see behind. president trump calling every senator to the white house today for a briefing on north korea. unclear what's going to be said or what the new administration strategy will be. joining us now, danny glassesze. a key architect of using financial sanctions against countries like iran and north korea good to have you here. >> thanks for having me. >> say you had stayed in treasury. what would you be advising president trump now? have financial sanctions worked against north korea? should we up them even more? >> well, certainly if you base it on the fact that north korea has a sizable nuclear arsenal now that seems to be growing, nothing any administration has done over the past 25 years seemed to have had much impact. i think it is important that north korea pay a cost for its violations of international law and persistence on pursuing a nuclear program. i would say, yes, continue the pressure and certainly develop a strategy, strategies, that punish north korea for its irresponsible behavior. >> why hasn't it worked? >> well, i think that north korea, the north korean regime is motivated by one thing, one thing only, regime survival. unless you're able to bring an existential amount of pressure on the north korean regime you won't have much success getting it to change its policies. to do that from a financial perspective, at this point in time, certainly it requires the cooperation of china. north korea gets almost all of its financial connectivity to the rest of the world through china. unless they enter into this with a partner with the united states, we're never going to be on our own able to get that existential level of pressure. >> should we do something against china when it comes to financial sanctions? >> well, you know, there's a number of ways you could try to gain chinese cooperation. one way is try to persuade that financial pressure is the way to go. we've been trying to do that with the chinese for quite a while. unfortunately china has a different perspective and set of priorities with respect to korea and have been willing to go a certain distance. willing to express their displeasure with north korea through financial pressure, but again never at that existential level. another way to do it would be to try to punish china or chinese banks. i think that would be very, very difficult to do. i think it would place a lot of priorities that any administration would have with the chinese at great risk and so this administration or any administration would have to weigh going after the chinese financial system with all of the other very important things we need to do in partnership with china. >> look for other answers. danny gralaser, thanks for joing us. >> thank you. a key question of the year, are markets tied to president trump and nothing else? we're explore that next in "trading nation." there has never been a better time to sell your home, folks, but that means it's not such a great time, maybe, to buy one. coming up on "the closing bell," fcc chairman on how new regulations will impact television and the internet. usaa gives me the peace of mind and the security just like the marines did. the process through usaa is so effortless, that you feel like you're a part of the family. i love that i can pass the membership to my children. we're the williams family, and we're usaa members for life. ♪ ♪ i'm dr. kelsey mcneely and some day you might be calling me an energy farmer. ♪ energy lives here. ...you realize the smartest investing idea, isn't just what you invest in, but who you invest with. ♪ othe newly advanced gle can i'm csee in your blind spot. onboard cameras and radar can detect danger all around you. driver assist systems can pull you back into your lane if drifting. bye chief. bye bobby. and will even help you brake, if necessary. it makes driving less of a production. lease the gle350 for $579 a month at your local mercedes-benz dealer. mercedes-benz. the best or nothing. take a lookality the retail sector leading the way finish line, fred and abercrombie. >> the housing mark, many saying right now is the strongest sellers market maybe ever. that, of course, is making it difficult for buyers to find a home at a price they like. that frustration is taking a toll on sales. diana olick has the story from washington. i thought sales were pretty good? >> the last couple months they were. seeing changes now. the market is great for sellers, awful for buyers and would-be shoppers choosing to sit the market out. deand in from home buyers fell 14% from january to february. measuring demand looking at the number of customers requesting home tours and writing offers. demand hit a record in january as consumers felt better about the economy and anticipated a strong spring market. compared with february, the number of buyers requesting tours fell 5.5% in march and the number of buyers writing offers dropped nearly 23%. so it's not that americans don't want to buy homes. just that there are too few homes for sale. across the 15 metros covered by the index, 12.5% few are homes than march 2016. inventory falling annually 22 straight months. the drop in demand showing up in mortgage applications to buy a home. perhaps the most current indicator of housing demand. the applications are less than 1% higher than they were a year ago and at the same time last year, mortgage purchase apps were up around's 17% annually. much bigger growth. some saying sales may peak in the fall when buyers come back hoping for less competition, and i'll tell you this one went under contract in a nanosecond. guys, back to you. >> that's like a millionth of a second. really quick. >> very quick. >> high frequency house trading. diana olick, thank you very much. all right. buying stocks, making a bet on trump's agenda? and only trump's agenda. ask "trading nation's" team. boris, kind of your thesis you pinged us. do you really believe the entire 15% gain since the election is because of the election? >> no. i think a huge part of it is because of the election, but at this point now we've made the gain, any forward progress is really going to be contingent on whether the administration is successful in its tax and infrastructure policy and everything the market expects out of it. no delivery by summertime you'll see a massive disappointment anden move back. underlying economy is nowhere near the level is at. chugging along at a sub-par pace. you need that whole push from the administration for things to go up. >> the tax announcement. cutting tax rates down to 3? right? a eliminating taxes under $25,000. shon that help the market? >> it will, if he gets it passed. if he doesn't get it done, a massive sell-off. >> unless you pay a lot in state and local taxes. how much of this -- being, what are you? suburban maryland guy? how much of this run is trump? >> a significant amount of it. we've gone from sort of the risk on/risk off trade to the trump on/trump off trade. look where we stand. s white house announced dramatic and talks reforms in 30 years. look at, like, the vicx. below 11. below 10.5 earlier today. say the gold market. it was going to blow out. the bond market vigilantes. not at all. gold is flat today. stocks are near another all-time high. things are remarkably calm, and pinning so much on trump's agenda, and not only what he does support, because there's a lot of blank spaces, but it will also pass. we just don't know that. so the long case is really investing a lot in the trump agenda right now. >> certainly are. and a lot more now to talk about, but we're out of time. appreciate it. for more "trading nation" go to our website. michelle? >> all right. espn announcing a string of layoffs today. that story, plus a preview of our big stock draft. looking at high-risk choices that could also return very high rewards. >> announcer: and now, the latest from trading nation and a word from our sponsor. you always pay your insurance on time. tap one little bumper, and up go your rates. what good is having insurance if you get punished for using it? news flash: nobody's perfect. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. and if you do have an accident, our claims centers are available to assist you 24/7. call for a free quote today. liberty stands with you™ liberty mutual insurance ♪ a beg meeting at the white house for all of the senators. this is the bus of senators going to the white house so they can meet -- bus aboutes, so they can meet with white house staff to get some kind of briefing on north korea as the white house administration works towards trying to figure out what they're going to to to try to get north korea to tub its nuclear program and nuclear weapon program. in there in those trees are a buchbl of buses filled with senators. >> all right. >> it is the rare tree bus. they're only seen in borneo. >> lay-offs, folks, at espn, a lot of them, and a lot of them are on-air personalities. if you watch the channel you may know them. the names trickling out throughout the day, julia boorstin is following this story from los angeles. many of these people whose names we've seen cover individual teams, college teams, pro teams and the like. >> reporter: that's right, tyler. now, espn will layoff about about 100 people according to a source close to the situation. that includes tv and radio reporters as well as writers. that's about 10% of its forward-facing talent. now, some of the names that have started to trickle out you may recognize including long-time reporters ed werder and jason stark, and nfl analyst trent dilfer and anchor greg crawford. saying, dynamic change demand an increased focus on versatility and value, and as a result we have been engaged in the challenging process of determining the talent -- anchors, analysts, reporters, writers, and those who handle play by play, necessary to meet those demand. we will implement changes in our talent line-up this week. now, he and his team pointed to sport center as an example of how espn's content is evolving, noting the debut of more digital-only content. now, a source telling me it is not just about cost cutting but about shifting strategy to work with the employees who are best suited to new multi-platform content. of course, this comes as espn and parent company disney have struggled over the past year, couple of years with declining subscriber numbers. melissa, over to you. >> thank you very much, julia boorstin. we are counting down to big stock draft tomorrow. eight teams picking two investments each from a list of 50. dominic chu is looking at the list and he has found a couple of names that could be risky but yield some high returns. hi, dom. >> guys, this draft in honor of the nfl draft and everything else, we will be looking for position players and stocks that fill needs at certain positions and gaps in line-ups here. look at these names because we combed through the list of possible draft candidates to take a look at which ones could have the most potential upside or down side, or the most risk or return. so look at some of these names. first of all, one that's been beaten up like crazy over the last couple of years, valeant pharmaceuticals, but according to analysts could have 8% upside potential. do the analysts have it right or do they need to bring down their expectations. a steady performer, pfizer on the pharma side. analysts think 12% upside. if you are looking for a steady player, maybe a linebacker, that sort of thing, that could be one of the stocks to watch. apple, some would call it the quarterback of any stock portfolio, still the 6% upside. one to watch here, tesla. this stock has been on fire, a huge tear, near record highs but it has exceeded analyst's expectations, so analysts with their target price think it could drop by 19% if the average target price holds. either analysts are to bump it up or keep it there. who knows? these are just four of the names on the board right now. we will see if any of those participants tomorrow decide to put some of these stocks in their team. back to you. >> always drft the best athlete available, that's what i say. it is not just the stock draft. we have an impressive line-up of guest from the active passive investor summit. tomorrow -- that sounds -- you know -- >> do they -- is the dance only the active? >> these people need medication. >> are you active? >> no, i'm passive. >> no, i'm active, sometimes. >> these are some big names here. >> meister, very good. on "power lunch," ed garden. that's tomorrow on cnbc. 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