Transcripts For CSPAN2 Key Capitol Hill Hearings 20140623 :

CSPAN2 Key Capitol Hill Hearings June 23, 2014

Next, a constitution about the Global Economic outlook from the wall street journals annual cfo network conference. Panelists include the chair of the White House Council of economic advisers and the world banks chief economist. This is about 30 minutes. [applause] good morning, everyone. Thanks to you both for being here. During the session were going to ask for your participation on a couple of questions so, please, get ready for some morning calisthenics. Beyond the painful, long recovery theres increasing concern that the longterm growth rate is slower than we thought. It averaged about 3 , now the imf is out with a report that says it will be 3 , and thats down from the 2. 8 that they predicted just in april. Whats going on, and is our future a bit darker than we thought . Uhhuh. If you look at Economic Growth, we could look right where we are right at this moment, and we dont want to look in the Rearview Mirror at the First Quarter, we want to look at where things are now, and job growth has actually picked up. Were adding about 220 jobs a month. If we add jobs for the month of june, well have 52 consecutive months of private sector job growth, that would be the longest consecutive streak of private sector job growth weve seen in this country. But then you look forward. Theres two come components of growth. One is how much youre adding to your productivity, and the second is how much youre adding to the work force. The first started rising in the mid t 90s with the new economy, and its continuing strongly, and iathink theres n lot of technology and growth in our future. A half year before that was quite strong. All the indications are the Second Quarter is quite strong and that it was an aberration but an aberration that large will still take down your average growth rate looked at over the course of the whole year. Id like to ask you about emerging economies. I was talking to some cfos last night and emerging economy seems to be answer for growth. Now thats reverse almost completely. The world bank has a study out this is for the third year in row they will deliver to support the growth under 5 . What can be done to bring them on track and what do you predict . Disappointing. Disappointed by their own past performance. Below 5 , for. 8 is our figure. Thats in the global scenario, simply isnt enough. Among the big countries, china is still at over 7 . Again compared to what china used to do with great these are earlier, five, 6 is handsome growth. India is down below 5 compared with india was doing three or four years ago. But for. 8 is not bad. The one which gone down quite a bit but my own expectation is that the are sufficient deep underlying issues mainly to do with the labor market. It doesnt happen everyday so it never makes the headlines. But because of those reasons, a lot of the growth leadership, absolute levels of no comparison, a lot of the growth leadership within one or two years go back to the emerging economies, developing economies. In managing reform and be relatively better end up with organization. Before i go on i want to switch to our first question for the cfos. Wed like to know which country you think will deliver the biggest economic surprise over the next 12 months. One of the x. Factors in economy just over the past week now is the aspirin violence in iraq. What sort of impact do you think that could have on the u. S. Economy . Oil prices, as does the success of the shield them insulate us in ways that it would not have previously . If you look eight years ago we were importing 12 Million Barrels per day of oil. Weve got that down to 6 Million Barrels per day. Half of that reduction was extra production. We have discovered an increase our production of oil by as much in this country as iraq produces. And about half of that reduction, that import is due to reduced use in fuel efficiency. We are the most fuel inefficient people are so we are more insulated from Global Oil Prices than we were, but no one is fully insulated. Even if we didnt import any oil our price would still be determined on a Global Market and the Global Market could very much be a function of events around the world. We are in better shape than we wouldve been a decade ago to withstand an oil shock. Were a lot better shape than we were 30 or 40 years ago in terms of Oil Intensity of our overall economy. Theres no doubt the risk factor is when were taking very seriously. Are you doing any modeling in terms of how long it would take . We certainly monitor the situation in oil markets, and as the president said last week, we would look at a range of responses that we could potentially take if there was a disruption in oil prices. Does this change the export to bed at all in terms of natural gas . The expert our talk about building terminals two, three years from now. I dont think this changes that at all. We are still waiting for some answers. Mr. Basu users the Economic Advisor to indias government until 2012. The election there is incredible optimism now about india. Are people getting added themselves . What should companies be think of when theyre thinking of india . The optimism i think is right. You should not get ahead of yourself but optimism is nevertheless right. If you look at the last couple of years of the previous government, and i was actually in there, the reforms have slowed down. You seen from 20052008, india was growing at 9. 5 for anna. Through the downturn, the Global Financial crisis it kept up pretty well than the last two years has dropped and. There were also a slow down in reforms. There was an imminent election. There were corruption scandals breaking which was affecting the temperament endured in the country. There was a lot of just ordinary Civil Society very upset about this. So this election and there comes a burst of expectation, and if you look at the details, we do expect there will be some reforms that will come in. Now they dont have to think of the next election for another five years. So i actually expect given that couple of the fundamentals of the income, like the savings rate and investment rate, india now saves and invests the way countries used to do in the 70s and 80s when they were growing very fast. So those economies are very strong but if reforms get indirection, i think within a year, a year and have the growth in india should become very clearly spent and you think in the past few years have been a real disappointment. You were just unable to break disappointment but there are two things you look at. Indias growth is growing between 4. 86 . Which by any global standard since the whole world have slowed down massively, was not quite as better i kept saying in india, one of the best signs was on one Television Interview in india someone said mr. Basu, whats happening to the country . Its going to the dogs with india growing at 6 . I said this changes in yardstick. Heres the great hope for india, 6 is not treated as really disastrous for the economy. The Global Factors did better on the economy but no doubt the reforms was slow down and therein lies the main hope that her expectations are up once again. I like to ask you both away into the austerity to be. It was striking to see earlier this month, in the case of the uk the Christine Lagarde actually apologized for George Osborne for criticizing the uk austerity cuts saying the imf had gone too far. What lessons should we take from this . Is the uk going to emerge as a model for austerity cuts . Id love your thoughts on europe as well. I actually on balance, the austerity management, given that the world has changed over the last seven, eight years if you look at fiscal numbers, europe, the rich countries look much worse than emerging economies. Data being so, fiscal austerity is something they would have to go for. European countries in particular. The country is the design of austerity and i think most has to be on the design britain did right. It took harsh moves which did have a slow down effect but this year were expecting uk to grow at Something Like 3 which for a rich country is pretty good figure. And i think that the costs that were taken in austerity are beginning to pay dividends over the. On europe as a whole the euro eurozone had negative growth last you last year the world bank, only two regions of negative growth, eurozone and middle eastern and north africa. This year were expecting the eurozone to climb back into positive growth territory. There are some countries which havent done well. The netherlands, the First Quarter did not do well because it was too hot. But eurozone on the whole were expecting its going to cost 1 this year which given the performance of the eurozone in recent years is actually a very clear good sign that things are beginning to pick up. Mr. Furman, does the uk hold any lessons for the u. S. . I think you want to look back a little bit further and ask what countries are today compared to where they were prior to the crisis. The United States we attain its per capita gdp that it had reached in 2007, the end of 2007, within four and half years after the crisis ended. That was actually remarkably fast period after financial crisis the usually takes about eight years to get back to where you were before it begins and i think that was a combination of extraordinary fiscal and monetary financial housing across the board auto response. Europe isnt back yet. The uk isnt back yet. France isnt back yet. Most of europe is not back yet. Germany has, and i think that tells you to some degree about the difference in those policies. And the european economies are starting to strengthen. They are starting to in greece to increase their aggregate demand. Theres a lot of structural challenges Going Forward in terms of how theyre doing supervision but they still need that aggregate demand. They need that engine for growth. You are seeing some of that from the ecb, but there probably could be a role for fiscal policy as well. Lets see what you all thought of the Biggest Surprise in the coming months. 33 for india, very, very addressing. 16 for russia. I must say a question for either view, was speaking to the cfo last night who was worried because he had planned that was half built in russia and what to do. How does russia play into your thought about the Global Economy, and how significant of a shift do you think this is . Russia has great uncertainty goes along with all the difficulties of making a, forecast, theres the political uncertainty. Russia itself has cut its growth forecast for this year to 0. 5 . I in fact forget what Bank Forecast for russia was but it is boldly just a less than that. With a big margin around that because also ordinary investment investigatory. So russia really i think we cant rely on that as a growth driver until the political situation calms down. Mr. Furman, and issued a little closer to home. Theres been a number of practice of tax and version, medtronic was just the latest. How concerned is the administration about the use of basically Tax Advantages and incidents that companies have to locate operations abroad . Do you think this is something that gives an impetus to some Corporate Tax or from . This is something that were concerned about, that we are looking hard at. We vetted proposal in our budget that would tighten up the rules on conversions but it would increase the share of ownership that would allow you to qualify for inversion. Some of the deals youve seen would qualify under that standard. Youd still be required to pay tax in the United States. But this is also part of a broader problem with the Corporate Tax code that is deeply broken, with the United States having the highest Corporate Tax rate in the oecd, with the United States having an International Tax system thats broken that both allow substantial base erosion and also greatly in defense of the completeness of our country. So ultimately the solution here is to reform our tax code. I certainly think thats the lesson that youve are from senator wyden. Youve heard it from senator hatch, from both sides of the aisle. I think thats a lesson i would love washington and congress to hear loud and clear, that this is an argument for reform our tax code. When we reform our tax code heart of that is about making america more competitive but we need to also come as part of that need to take measures to address this inversion issue. Do you think the increasing practice of it will drive the pressure up enough to trump something . Theres consensus that something is to be done sometime. I wouldve thought the fact that the United States became the world recordholder in Corporate Tax rate a little over two years ago would have just put a ticking clock on our efforts and increase the pressure. And i think this just adds to it. And i think the good news is theres an increased conversion of use. If you look at what chairman camp in the ways and Means Committee has put forward, there are issues with it but things we debate but has a lot in common in terms of a tax rate in mid to upper 20s that has president obama changing the rate. And so i think there is an increased agreement something that needs to be done. Theres an increased agreement about what is there needs to be done, and we now just need to go ahead and do it. Something the president would love to do. Weve gone an exceptionally long time in her discussion about the Global Economy without talking about china. Mr. Basu, you dont me earlier that you come up with some new data on the purchasing power parity index and when exactly china will overtake the u. S. Could you explain . The purchasing power parity, not mine, there were huge organizations the massive organizations that computes the. Its hosted by the world bank. So china, corrected gdp. Its known now its expected to overtake the us sometime this year. So my own competition was putting in the growth numbers, projecting forward and looking for the date. So i could i have a date which is just a fun figure, 29 september is the day on which the u. S. Economy will be overtaken by china. I should immediately tell you that as this number is mine so i havent talked about it as yet, but the overtaking is the biggest nowhere nearly as momentous as some Media Outlets have made it out to be. China is for time the population is expected to shrink per capita income. Also purchasing power, it means in chinese and by its goods more cheaply than you can buy American Goods within the u. S. But if you look at and the International Domain where youre in a third country having to go in there, they are the purchasing power parity is unimportant because you have to pay the countrys price. So its not as momentous but having said that its going to overtake on the 29th of september. Might earlier expectation was, i did a competition a few months ago, the second of november but after that we got the numbers in the use of growth in the past quarter have been going down. Lower growth across the area. Mr. Furman, whats the significance of this and how concerned is the administration about the sense that china is increasing protecting its own companies to . First of all, we should start monitoring gdp on a daily basis. I feel a little behind with our quarterly numbers. But as kaushik said, what matters in the International Arena is not that restaurant and haircuts are cheaper in china than there are in the United States. Its how much money can buy in terms of financial power, in terms of foreign aid, in terms of military power. And every one of those depends on the Market Exchange rate and measured on the Market Exchange rate, the United States is enormously much larger than china is. Plays a much larger role in the Global Economy. But china is playing a global role, and with that, that brings opportunity. It helps support u. S. Economic growth and growth in china stronger. That helps us your. It helps our exports. But it also great challenges and frictions, and thats something we are trying to engage with china and work our way through. Between the spine issues and a sense that theres favoritism to as louise, do you sense a shift in china of these. To the west . You know, you take Something Like the Exchange Rate and there has been increased number of concerns after the been some progress made in that area that some of that is slipping. Secretary lew went to china about a month ago to engage with the chinese on that issue. With a whole bunch of other issues that come with in the economic arena that were engaging with china on. A lot of them are in the interest of chinas economy. They need to rebalance, move away from a very heavily real estate, construction, credit, directed credit driven economic expansion to one thats more sustainable and more external imbalance. That would be in the interest of the United States as well. The World Economy more broadly. Second comment on china. The growth forecast is 6 . But there is a workaround that point forecast and for the recent that i think jeffrey which is alluding to

© 2025 Vimarsana