♪.
LARRY: TO TALK ABOUT THIS FISCAL
INSANITY SOME MORE, THE LAST 48
HOURS, INCREDIBLE, EARLIER
TODAY, I VISITED WITH SENATOR
ROB PORTMAN.
PLEASE TAKE A LISTEN.
JOINING ME NOW OHIO SENATOR ROB
PORTMAN, AMONG HIS MANY, MANY
CREDITS DOWN THROUGH THE YEAR,
HAPPENS TO BE PRESENTLY RANKING
MEMBER OF THE HOMELAND SECURITY
COMMITTEE.
SENATOR PORTMAN.
GREAT PLEASURE TO HAVE YOU BACK
AS ALWAYS.
LET ME BEGIN, THE NEWS IS SO HOT
RIGHT NOW.
WE GOT THE NEWS TODAY.
WE’RE IN A RECESSION.
ONLY PEOPLE SPLITTING HAIRS ON
SEMANTICS DISAGREE AND ALL OF
THEM ARE IN THE BIDEN
ADMINISTRATION.
AND, THE PROPER CURE, THE BEST
CURE IS 735 BILLION-DOLLAR TAX
HIKE.
NOW I THINK THAT IS KIND OF BEGS
COMMON SENSE, MAYBE YOU CAN HELP
ME ON THIS, BUT IF WE’RE GOING
INTO RECESSION AND I MIGHT ADD
THE SECOND QUARTER NUMBERS WERE
EVEN WORSE, SO WE’RE GOING TO
PROBABLY HAVE A THIRD QUARTER
AND FOURTH QUARTER RECESSION,
WHY ARE WE RAISING TAXES, SIR?
>> EXACTLY THE WRONG THING TO DO
RIGHT NOW, AND VERY
SPECIFICALLY, WHAT WE’LL DO IS,
IT WILL HURT WORKERS WAGES.
IT WILL HURT CONSUMERS BY
RAISING PRICES.
BOTH OF WHICH ARE EXACTLY WHAT
WE SHOULDN’T BE DOING AT A TIME
OF HIGH INFLATION AND LOW
ECONOMIC GROWTH.
WHY?
WAGES ARE NOT TEAMING UP WITH
INFLATION ALREADY.
THAT IS THE BIG ISSUE OUT THERE.
SECOND WITH REGARD TO PRODUCTS,
WE DON’T WANT THINGS TO COST
MORE AT A TIME INFLATION IS
DRIVING THEIR COSTS UP WAY TOO
HIGH.
IT MAKES NO ECONOMIC SENSE.
ON TOP OF THAT, THE WAY IN WHICH
THE DEMOCRATS WANT TO RAISE
THESE TAXES IS USING AN
ALTERNATIVE TAX CALCULATION
SYSTEM USING ESSENTIALLY WHAT
THEY CALL BOOK INCOME, MEANING
GAAP INCOME.
YOU UNDERSTAND THIS BETTER THAN
ANYBODY, LARRY BUT THAT IS
TERRIBLE FOR THE ECONOMY, IT
WILL HAVE BUSINESSES MANAGING
TOWARD THAT TO AVOID TAXATION
WHICH IS BAD FOR THE ECONOMY,
BAD FOR ECONOMIC GROWTH AND
PRECISELY WHAT WE SHOULD NOT BE
DOING RIGHT NOW AT A TIME OF
STAGFLATION.
LOW ECONOMIC GROWTH, BELOW ZERO
AND HIGH INFLATION.
LARRY: LET’S SPEND A MOMENT ON
THAT BECAUSE THE 15% MINIMUM
CORPORATE TAX DOES NOT PROVIDE
ANY CARVEOUT FOR THE IMMEDIATE
100% EXPENSING OF PLANT.
>> THAT’S CORRECT.
LARRY: AND EQUIPMENT WHICH SOME
PEOPLE BELIEVE WAS THE MOST
POWERFUL PART OF THE CORPORATE
TAX CUT.
ALL RIGHT, 21% RATE ALSO VERY
IMPORTANT.
>> CORRECT.
LARRY: BUT THE POINT IS, THIS IS
GOING TO STOP BUSINESS
INVESTMENT WHICH IN TURN IS WHAT
GENERATES PRODUCTIVITY AND
HIGHER REAL WAGES FOR WORKING
FOLKS.
NOW I CAN’T IMAGINE ANYTHING
WORSE THAN THIS, SENATOR
PORTMAN.
>> IT COULDN’T BE WORSE IN PART,
NUMBERS CAME OUT TODAY,
INDICATED INVESTMENT IS DOWN,
THAT INCLUDES INVENTORY
INVESTMENT.
INCLUDE INVESTMENT IN THE KINDS
OF THINGS YOU’RE TALKING ABOUT
WHICH IS NEW PLANT EQUIPMENT,
EXPANDING FACILITIES, ALL THE
THINGS THAT WE WANT TO SEE.
THAT INVESTMENT ACTUALLY WAS
RELATIVELY LOW IN THIS LAST
QUARTER, EVEN AS COMPARED TO THE
ECONOMIC GROWTH NUMBERS.
THAT IS WHAT DROVE OUR LOW NICK
GROWTH IN PART.
SO IT IS EXACTLY THE WRONG TIME
TO DO THAT.
ON THIS SHOW YOU WILL BE ABLE TO
EXPLAIN TO PEOPLE, I KNOW,
BECAUSE YOU UNDERSTAND THIS SO
WELL, HOW THIS IS NEGATIVE FOR
WORKERS, IT IS NEGATIVE FOR
CONSUMERS, BUT IT IS ALSO BAD
FOR THE OVERALL ECONOMY AND OUR
INTERESTS TRYING TO CLIMB OUT OF
THIS RECESSION.
LARRY: YOU KNOW, BY THE WAY TO
EMPHASIZE YOUR POINT, BUSINESS
STRUCTURES, SO-CALLED
NON-RESIDENTIAL STRUCTURES WHICH
ARE ESSENTIALLY FACTORIES,
PLANTS, THAT KIND OF THING, DOWN
12% AT AN ANNUAL RATE IN THE
SECOND QUARTER.
SO THAT IS ONLY GOING TO GET
WORSE AS A RESULT OF THIS CRAZY
TAX SYSTEM.
THE OTHER SIDE OF THE COIN IS,
SENATOR MANCHIN SAYS THIS IS
ANTI-INFLATION BILL.
THAT IS HOT DEMOCRATS ARE
SELLING THIS.
I DON’T UNDERSTAND IT.
NOT ONLY WILL RAISE TAXES WHICH
WILL CUT BACK ON SUPPLY OF GOODS
AND SERVICES BUT ALSO THEY’RE
GOING TO INCREASE SPENDING BY
WHAT ANOTHER $433 BILLION?
>> YEAH.
LARRY: REALLY?
>> BY THE WAY WITH REGARD TO THE
TAX ISSUE, WE’LL GET ANALYSIS OF
JOINT COMMITTEE ON TAXATION,
NON-PARTISAN GROUP, SIMILAR WHAT
THEY GAVE US LAST YEAR, WHICH
SAYS THE TAX INCREASES THAT
SUPPOSEDLY FALL ON CORPORATIONS
BECAUSE UNDER THEIR BOOK INCOME
THEY DON’T SHOW INCOME, THOSE
WILL BE PAID BY WHO?
NOT THE CORPORATION IT GETS
PASSED ALONG, DISTRIBUTED TO THE
SHAREHOLDERS, TO THE EMPLOYEES
WITH LOWER WAGES, LOWER
BENEFITS.
OF COURSE TO THE CONSUMER.
SO THAT IS THE NON-PARTISAN
ANALYSIS WE’LL SEE BOTH WITHIN
THE CONGRESS AND FROM OUTSIDE
EXPERTS.
THIS IS NOT JUST A REPUBLICAN
THING.
BECAUSE I DON’T LIKE DEMOCRAT
TAX INCREASES.
THIS IS THE ANALYSIS WE’LL GET
FROM THE NON-PARTISAN GROUP.
-- HEAR THAT.
LARRY: SENATOR, AS MUCH, AS MUCH
AS 70% OF THE BURDEN OF THE
CORPORATE TAX FALLS ON THE WAGE
EARNERS, THE BLUE-COLLAR,
WORKING FOLKS.
AS MUCH AS 7%.
THIS WAS KEVIN HASSETT GREAT,
WHY IN THE 2017 TRUMP BILL, WE
MADE SURE TO LOWER THE RATE,
GIVE 100% FULL EXPENSING.
AT A TIME OF HIGH INFLATION.
AT A TIME OF HIGH INFLATION,
STRAIGHT LINE DEPRECIATION IS A
KILLER, ABSOLUTELY TAKES AWAY
BENEFIT OF 100% EXPENSING.
I DON’T UNDERSTAND THIS.
WE ALSO HAVE, BECAUSE CHUCK
SCHUMER BASICALLY DID NOT TELL
MITCH McCONNELL THE TRUTH YOU
HAVE GOT 284 BILLION-DOLLAR
SPEND ON THE CHIPS PLUS BILL.
I UNDERSTAND THERE IS NATIONAL
SECURITY IN THERE, YOU KNOW THAT
IS ANOTHER SPENDING ITEM WHICH
WIPES OUT ANY DEFICIT REDUCTION
WHICH IS WHAT THE BIDENS ARE
TALKING ABOUT LOWER INFLATION
GOES.
>> TO ME THE PROCESS ARGUMENT WE
SHOULDN’T DONE CHIPS BECAUSE OF
RECONCILIATION IS LESS
COMPELLING THAT IS WHAT IS IN
RECONCILIATION.
I ALWAYS KNEW THE DEMOCRATS
WOULD DO A RECONCILIATION BILL.
OF COURSE THEY HAVE BEEN SAYING
THAT, THEY CAN DO THAT WITHOUT A
SINGLE REPUBLICAN VOIGHT.
I THINK IT IS WRONG THEY’RE
DOING IT BUT MOSTLY I’M
CONCERNED ABOUT WHAT THEY’RE
DOING BECAUSE IT’S TERRIBLE
POLICY FOR THE PEOPLE I
REPRESENT.
IN TERMS OF WHETHER WE’RE IN A
RECESSION OR NOT TRADITIONALLY
AS YOU KNOW BETTER THAN ANYBODY,
WHAT THE DEFINITION IS, IS TWO
QUARTERS OF NEGATIVE ECONOMIC
GROWTH.
WE HAVE THAT NOW.
FORGET THAT.
TALK TO PEOPLE SUFFERING THROUGH
THIS INFLATIONARY TIME, THIS LOW
ECONOMIC GROWTH TIME, IT FEELS
LIKE A RECESSION TO THEM.
THEY’RE GETTING SQUEEZED.
THIS POLICY IS WRONG-HEADED, I
HOPE WE TURN THIS AROUND,
LETTING AMERICAN PEOPLE KNOW
THIS WILL MAKE THINGS WORSE, NOT
BETTER.
LARRY: I KNOW SENATOR MANCHIN IS
A FRIEND OF YOURS, A FRIEND OF
MINE, I DON’T UNDERSTAND WHY HE
CAVED INTO THIS.
SENATOR PORTMAN, AMONG OTHER
THINGS, COAL TAXES ARE BEING
DOUBLED IN THIS BILL.
I DON’T UNDERSTAND JOE MANCHIN’S
POSITION HERE.
DO YOU HAVE A THOUGHT ON THAT?
>> WELL THE KIND OF COMPANIES
HURT THE WORSE, LARRY, THE ONES
DO TAKE THAT DEPRECIATION AND I
IMMEDIATE EXPENSING EXTRACTIVE
INDUSTRY, IT WOULD INCLUDE COAL,
MINING FINANCIAL SERVICES.
THEY WOULD TAKE A LOT OF CREDITS
NOT AVAILABLE UNDER THIS.
BOTTOM LINE TO SIMPLIFY THIS,
THE TAX CODE IS WRITTEN TO
PROVIDE TAX PREFERENCES FOR
CERTAIN KIND OF BEHAVIOR.
YOU CAN ARGUE IF THAT IS FOOD OR
NOT.
GO INTO THE TAX CODE, MAYBE
REPUBLICANS WOULD GET RID OF
GREEN ENERGY TAX CREDITS.
MAYBE DEMOCRATS WOULD GET RID OF
DEPRECIATION BUT DON’T DO IT
SETTING UP A WHOLE ANOTHER TAX
SYSTEM AVOIDING ISSUE.
A COMPANY TAKE AS LEGITIMATE TAX
PREFERENCE, DEDUCTION THEY
SHOULD KEEP IT.
THE ALTERNATIVE IT WILL HURT
SOME INDUSTRIES A LOT WORSE THAN
OTHERS.
BY THE WAY EXTRACTIVE INDUSTRIES
LIKE COAL IS ONE OF THEM BECAUSE
THEY’RE CAPITAL INTENSTIVE.
LARRY: SENATOR, ANOTHER
IMPORTANT STORY, YOU HAVE THE
LEAD ON IT, YOU BROKE IT ON
MONDAY.
CHINESE COMMUNIST PARTY IS
SPYING ESPIONAGE ON THE FEDERAL
RESERVE BANK, GOING AFTER
FEDERAL RESERVE RESEARCHERS AND
STAFF PEOPLE IN BEIJING AS WELL
AS HERE.
I THINK MONEY PAYMENTS WERE
MADE.
THIS IS A VERY NASTY STORY.
I DON’T KNOW WHY JAY POWELL IS
DENYING IT BECAUSE IT GOES BACK
TO 2015 BUT CAN YOU SHED SOME
LIGHT ON THIS STORY?
THIS STUFF IS OUT OF A JOB
LECLAIR NOVEL THIS IS LIKE
"TINKER TAILOR SOLDIER SPY."
SOUNDS LIKE A NOVEL, BUT
UNFORTUNATELY REALITY.
BY THE WAY EVERY SECTOR OF
ECONOMY AND EVERY SECTOR OF THE
RESEARCH ENTERPRISE HAS BEEN
SUBJECT TO THIS FORA NUMBER OF
DECADES.
WE DID AN IN DEPTH
INVESTIGATION, WE DID A REPORT.
WE HAVE LEGISLATION TO TRY TO
ADDRESS IT BUT THE FED IS THE
LATEST OF INSTITUTIONS TARGETED
BY THE CHINESE.
IT IS NOT THE CHINESE PEOPLE.
IT AS YOU SAID THE CHINESE
COMMUNIST PARTY.
IT’S A DELIBERATIVE EFFORT TO
FIND INFORMATION THAT THEY WANT
THAT IS VALUABLE.
THE FED HAS VALUABLE
INFORMATION.
A LOT OF IT IS TAXPAYER PAID, IF
TAXPAYERS PUT MONEY INTO
RESEARCH AS WE DID WITH REGARD
TO THE CHIPS LEGISLATION, WITH
CHINA THROUGH PROGRAMS LIKE THE
TALENTS PROGRAM, COMES IN, GETS
RESEARCH, GETS RESEARCHER,
BRINGS THAT RESEARCH OR
INTELLECTUAL PROPERTY BACK TO
CHINA AND LEAPFROGS THE UNITED
STATES OF AMERICA.
HELPED WITH THE RISE OF THEIR
MILITARY AND THEIR ECONOMY AND
IT HURT OURS.
IT IS ACROSS THE BOARD.
IT IS HEALTH CARE.
IT IS FINANCIAL SERVICES.
IT IS THE MANUFACTURING ECONOMY.
IT IS CERTAINLY OUR MILITARY.
SO THIS IS WHERE THE FED NEEDS
TO BE GIVEN A WAKE-UP CALL.
THEY CAN DO A WAKEUP CALL.
THEY HAVE MADE CHANGES THEY CAN
MAKE CHANGES AN TIGHTEN UP MORE.
LARRY: DO YOU THINK THERE ARE
STILL FED PEOPLE TAKING MONEY
FROM THE CHINA CCP OR SHARING
INFORMATION, SHARING MODELS?
A LOT OF PEOPLE WANT TO KNOW
FROM YOUR WORK HAS THIS PROBLEM
BEEN SOLVED AND ERADICATED FROM
THE FED?
>> WELL, TAKE A LOOK AT THE
REPORT.
THE REPORT IS BASED ON ACTUALLY
A FED STUDY ITSELF AND THE FBI.
WITH THAT REPORT SHOWS IS THAT
THERE HAVE BEEN A NUMBER OF
INSTANCES.
WE TALK ABOUT SOME OF THEM, NOT
ALL OF THEM, DO IT ON ANONYMOUS
BASIS.
WE THINK IT IS IMPORTANT TO GET
THE WORD OUT THERE.
I DO BELIEVE THIS IS GOING TO
RESULT IN THE FED TIGHTENING UP
PROCEDURES WHICH IS APPROPRIATE.
THAT IS THE WORLD WHICH WE LIVE,
LARRY.
THIS IS THE 21st CENTURY
WHERE WE’RE CONSTANTLY BEING
BOMBARDED BY PROBES FROM VARIOUS
GOVERNMENTS BUT PARTICULARLY
FROM THE CHINESE COMMUNIST PARTY
AS YOU SAID TO GET INFORMATION.
WE’VE SEEN HACKING.
WE’VE SEEN WHAT HAPPENS IN
CORPORATE AMERICA.
SAME THING HAPPENS ON THE
GOVERNMENTAL SIDE.
THE FED IS NOT IMMUNE FROM THIS.
LARRY: DO YOU WANT TO PLAY A
LEAD ROLE IN THE LECLAIR MOVIE?
DO YOU WANT THE GEORGE SMILEY
ROLE?
IT WAS GARY OLDMAN BUT MAYBE YOU
WANT TO PLAY IN THE NEXT MOVIE?
>> YEAH.
I DON’T KNOW I’M MORE LIKE A
SECOND, THE GUY IN THE
BACKGROUND KIND OF SHUFFLING
ALONG TRYING TO DO THE
INVESTIGATION.
LARRY: ALL RIGHT.
>> THANKS FOR RAISING THE ISSUE,
LARRY, AND LOOK, WE NEED TO FACE
IT.
THIS IS A WAKEUP CALL FOR ALL OF
US.
THIS IS REAL PROBLEM.
WE’VE GOT TO TIGHTEN UP OUR
SECURITY PROCEDURES TO BE ABLE
TO PROTECT INFORMATION.