THE OBAMA STIMULUS.
THERE ARE NAYSAYERS ON BOTHç
SIDES.
BLAKE BURMAN, THANK YOU VERY
MUCH
>> THANK YOU VERY MUCH, DAVID.
I THINK THIS ONE WILL BE TURN
OUT TO BE GREAT.
DAVID: FIRST ONE WAS GOOD.
>> LET ME BE VERY STRAIGHT WITH
YOU DAVID.
PAST THAN I AM THE FUTURE.
I FEEL CONFIDENT AND COMFORTABLE
ABOUT WHAT IS GOING ON HERE.
I BELIEVE WE'LL HAVE A VERY GOOD
ECONOMY FOR A NUMBER OF YEARS.
THIS IS JUST THE BEGINNING.
IT IS LIKE THE '81 TAX BILL,
WHICH IS KEMP ROT
THENhShP &C% WE GOT TO THE '86 A
YEARS.
DAVID: EVEN THE '81 DEAL HAD
SOME PROBLEMS WITH IT.
FIRST IT WAS DELAYED TOO LONG.
RECESSION IN EIGHT SY ONE HAD IT
GOT KICKED IN IMMEDIATELY WHICH
IT WASN'T.
>> CORRECT.
>> THE TOP RATE WAS ONLY BROUGHT
DOWN TO 50%.
IT WASN'T UNTIL '86 IT WENT DOWN
TO 30.
IS IT CONCEIVABLE, WE COULD HAVE
SOME SAME KIND OF PROBLEMS WITH
THIS DEAL?
>> NO, I DON'T THINK SO.
I DON'T THINK THAT IS THE THING.
THE EARNED INCOME DID NOT
CHANGE.
HIGHEST MARGINAL EARNED INCOME
TAX RATE DID NOT CHANGE WHICH IS
THE LION'S SHARE OF THE MARGINAL
TAX RATE.
IT WAS NOT DROPPED AND THEY
SHIFTED BRACKETS OUT AND THEY
LAID IT F YOU DELAY INCOME TAX
BREAKS WHAT WILL YOU DO THIS
YEAR.
DELAY ALL THE INCOME.
THAT IS WHY THE BOOM STARTED.
THIS BILL DOES NOT HAVE THE
DELAY FEATURE.
IT ALMOST DID.
PREVENT THE DELAY FROM TAKING
PLACE?
>> I HAVE IN IDEA.
I TALKED TO ALL AT LENGTH ABOUT
IT.
YES, I BELIEVE I HAD SOME.
DAVID: GOOD FOR YOU.
>> THAT IS ONE THING THAT WOULD
KILL YOU.
OTHER PEOPLE, THE ARGUING OTHER
WAY, THEY WERE SAYING DAVID, CAN
YOU BELIEVE THIS EXPENSE
SOMETHING MUCH BETTER AT 35% TAX
>> THEREFORE WE SHOULD DELAY THE
RAISE THE RATE TO 95%, THEN
EXPENSING IS EVEN BETTER, DELAY
THE TAX CUT FOR 40 YEARS.
WE'LL HAVE THE BOOM OF THE
CENTURY.
HOW STUPID ARE THEIR ARGUMENTS?
DAVID: THANK GOD THEIR ARGUMENT
DIDN'T WIN.
WE HAVE HISTORY IS INDICATOR
WHAT WOULD HAPPEN.
WHEN YOU DELAY TAX CUTS,
BUSINESSES DELAY THE BUSINESS
DECISIONS AND ECONOMY DELAYS
GROWTH.
>> THEY SURE DO.
DAVID: ONE THING THAT CHANGED
DRAMATICALLY FROM THE 1980s,
TECHNOLOGY.
THE FACT SO MANY BUSINESSES
PARTLY BECAUSE OF TAX
DISTORTIONS HAVE HUNDREDS OF
$300 BILLION.
THIS TAX CODEç IS MEANT TO
ADDRESS THAT.
HOW IS THAT GOING TO CHANGE OUR
ECONOMY?
>> WHAT THAT IS GOING TO DO
CORPORATIONS WILL BE
HEADQUARTERED IN THE U.S. RATHER
THAN OTHER COUNTRIES WHICH HAVE
MUCH LOWER TAX RATES THAN WE DO,
BUT THEY WON'T ON
JANUARY 1st.
THAT WILL CHANGE THE
CALCULATIONS FOR COMPANIES TO
KEEP THEIR HEADQUARTERS HERE AND
REVENUES, EVEN THOUGH IT MAY NOT
INCREASE OUTPUT EMPLOYMENT
PRODUCTION.
IT WILL GIVE US FAR MORE TAX
REVENUES BECAUSE THEY WON'T USE
SHELTER OF INCOME BY HAVING THE
CORPORATE HEADQUARTERS ABROAD.
SO THAT MEANS THE REVENUE LOSSES
CONGRESSIONAL BUDGET OFFICE
SUGGESTED.
DAVID: THERE ARE WORRY WARTS
WORRY ABOUT GROWING TOO FAST.
THEY CLAIM THAT WILL CAUSE
OVERHEATED ECONOMY.
HASN'T WORKED WELL.
RATHER HAVE OVERHEATED ECONOMY
IF I HAVE TO CHOOSE.
THE PROBLEM WITH ALL THE CASH
WHAT DO YOU SAY?
>> THAT IS JUST NOT TRUE.
NOW A LOT OF THAT MONEY IS
ALREADY HERE.
BUT WHAT IT IS HERE IN IS
SUBSIDIARIES, FOREIGN
INCORPORATED SUBSIDIARIES OF
FUNDS IN T-BILLS OR WHATEVER
ELSE THEY MIGHT BE.
ALL WE'RE GOING TO DO IS CHANGE
THE OWNERSHIP OF THOSE DEPOSITS
FROM THE FOREIGN INCORPORATED
SUBSIDIARIRIES TO THE MOTHER
COMPANY BECAUSE THAT TAX RATE
NOW SOME OF IT WILL GO INTO
PRODUCTION, OUT PUT EMPLOYMENT
PRODUCTION.
IT WILL CHANGE THE NAME WHO OWNS
THE ACCOUNT.
THAT IS WHAT WILL HAPPEN BUT
SOME WILL GO INTO NEW PLANT AND
DAVID: TALK ABOUT WHAT WAS
RONALD REAGAN'S FAVORITE PART OF
IF THAT IS REALLY WHAT HE WANTED
TO FOCUS ON WITH HIS TAX PLANS,
CREATING OPPORTUNITIES FOR SMALL
BUSINESSES, FIRST INDIVIDUAL,
DEVELOPMENT OF COMPANIES LIKE
APPLE AND MICROSOFT, YOU SEE
WHAT WAS REALLY POSSIBLE, DO YOU
THINK THIS BILL DOES ENOUGH TO
HELP SMALL BUSINESS?
>> YES.
A LOT OF SMALL BUSINESSES ARE
CLIENTS OF LARGEç BUSINESSES,
C-CORPORATIONS HAVE BEEN
DECLINING DISA MATALLY BECAUSE
OF OUR TAX RATE.
NOW WHAT WILL HAPPEN
C-CORPORATIONS WILL COME BACK.
DON'T THINK, DADE, ALL
C-CORPORATIONS ARE LARGE
CORPORATIONS, THEY AREN'T.
A LOT OF SMALL COMPANIES ARE
C-CORPS AND THEY WILL DO WELL
THE CORPORATE TAX RATE DEDUCTION
AND YOU WILL FIND A LOT OF
PEOPLE BENEFIT FEED ON EFFECTS
OF OTHER COMPANIES GROWING AND
RETURN ON INVESTMENTS.
THAT IS WIN/WIN FOR EVERYBODY.
TAX REVENUES WILL NOT DECLINE AS
A RESULT OF THIS BILL.
THEY WILL NOT.
DAVID: I'M WORRIED ABOUT THE
NAYSAYERS.
YOU SAY IT IS GOOD FOR
EVERYBODY.
THERE ARE CERTAIN INDIVIDUALS
WHO SAY IT WILL NOT HELP THEM.
THERE ARE PEOPLE LIKE
"THE WALL STREET JOURNAL"
EDITORIAL BOARD, YOU AND I
TALKED THERE WAS NOT ENOUGH DONE
TO BRING DOWN THE TOP RATE.
WILL THERE BE A TRUMP TAX CUT
PART TWO, THE WAY THERE WAS
REAGAN TAX CUT PART TWO IN 1986?
YOU SAY I CAN NEVER DO ENOUGH
FOR THIS?
THAT IS TRUE.
UNLESS WE GET THE JERRY BROWN
FLAT TAX 13% ACROSS THE BOARD
TAX RATES MORE.
I PERSONALLY TOTALLY AGREE WITH
THAT BUT I DON'T THINK YOU WANT
TO BLAME THIS BILL AND CURSE IT
BECAUSE IT DIDN'T CUT PERSONAL
INCOME TAX RATES ENOUGH.
DAVID: YEAH.
>> THIS BILL IS GREAT.
MAYBE THEY COULD HAVE BEEN
BETTER.
MAYBE THEY COULD CUT PERSONAL
RATES MORE.
I COULD BO ALONG WITH THAT THERE
YOU START FEEDING FRENZY OF
ECONOMIC GROWTH.
IF MY PROJECTIONS ARE CORRECT
YOU SEE ECONOMY DOING WELL,
DEMOCRATS JOIN WITH US.
AND SEE ECONOMY GOING ANOTHER 20
YEARS OF PROSPERITY.
DAVID: HOLY COW.
ART LAFFER, YOU CAN'T BLAME THE
GUY FOR BEING EXCITED.
HE IS THE ARCHITECT OF TWO TAX
OVERHAULS 35 YEARS APART.
YOU MUST HAVE BEEN 12 YEARS OLD
FORETHE FIRST ONE, RIGHT?
DAVID: YOU DON'T SHOW IT, MY
HIMSELF.
THERE IS ART AND RONALD REAGAN.