Tax reform bill earlier today. He spoke for about one hour. I will make my scintillating announcements about everything in the main course will be served. Gary, let me first introduce you. Y is assistant to the went to American University. Subsequently worked briefly at u. S. Steel. Then it Goldman Sachs in 1990. Became a partner in 1994 and rose up to be the head of the commodities position. And cohead of the Global Securities division. And then ultimately in 2006 became the president and chief operating officer and director. And he is on a tight schedule, so im going to start right now. Thank you for doing this. Im just wondering how much of my bio you memorized. Well, i memorized it a little bit. Pretty good. So, are the egos bigger in washington or wall street . What egos . No egos. None . Neither place. Okay. And have you found since youve become one of the two point men on the tax bill that youve become very popular . All of a sudden people call you and tell you how important their issue is for National Security or National Defense or whatever other reason . No less or no more people called me today than have called me for a long time. Okay. Maybe its just a personality flaw. It seems like no more, no less than before. So people arent calling you more than they did a year ago . Not really. You dont have High School Friend call you, oh, this a few of that. Not really. Its been interesting. You know, people let me do my job. Im sure once they start seeing what we do and how it impacts them, that may change. I think people reserve the right to call me, but so far they havent exercised that option. Okay. So yesterday or today the house leadership unveiled their bill. And you are going to have a meeting at the white house with the president and leadership at i guess 1 30. So in talking about it, is the bill that was released or supposedly today is that something the president can support . If that bill went through today the president would sign it . David, as you know, the group of six of us came out with a framework. And we got that framework after starting in really diverse different places, the six of us. We got ourselves to a unified framework, which really had two driving principles in it. Driving principle number one is we had to deliver a middle income tax cut. Number two is we had to lower the business tax rate to make us competitive with the rest of the world. The bill that the house delivered today accomplishes both of those objectives. In fact, they stuck very much to the framework that we had delivered. So, yes, the bill that the house has delivered, the ways and Means Committee delivered today , is a bill that the president can support. And do you have any reason to think the Senate Finance committee will agree to the same bill . I think the senate like the house is going down their paths in regular order. One of the other components that we agreed to as a group of six is that we were going to do tax reform in what we would call regular order. We would go through normal committee processes, the Tax Writing Committee in the house, the Tax Writing Committee in the senate, they would write their own bills, they would go through their committee process, they would go to floor. And if we needed to, we would go to conference at the end. Thats exactly whats going on here. And thats how were going to get the buyin in the process. The senate is doing that. They are cooperating with the house. And the house did cooperate with the senate. So we are going to get bills that have a lot in common. Im not sure theyre going to be 100 in common, but i think were going to be in good enough position to deliver a tax bill to the president s desk this year. This year . This year. So youre very confident that the house and senate will pass and the conference will pass it this year . We are working towards this year. Okay. So did the house leadership tell you that they have the votes in the house to pass it now . The bill just got dropped this morning, we know that the house has been spending enormous amount of time with their members, with their Committee Members as well as the rest of their members working on the details. I am confident and speaker was in the oval office two days ago talking about the bill with the president. We were there together. Im confident the speaker is going to be able to deliver a bill out of the house. When you do these bills, you know, you have a tenyear cost of something, a production cost or costs a certain amount of money. That number is prepared by the joint commitee. Do people accept it as gospel because you have no choice . You just answer the question. We have to accept the score to get the legislation through. History will tell us the results will not be what the score says it will be. Bille will legislate to a that gets the score that we need to get to get it through the legislative process. And we happen to very strongly believe that we are going to way, way surpass what theyre going to score on the revenue side of the equation. Okay. Does the treasury have its own revenue estimates or are they are just not relevant in terms of these things . No, treasury is extremely relevant. They have a large group of people in the treasury that spend enormous amount of time on tax and scoring tax and working on that. And they have their own revenue estimates. We have our own revenue estimates. Everyone else is going to have their own revenue estimates on what the Economic Impact of tax reform, what it will do to the economy. But in the end when theyre marking the bill up, its only the joint Tax Committee numbers that really matter. So in terms of the bill itself, its a bill that is designed to have 1. 5 trillion of incremental debt at the end of ten years. Wed like to say less revenue. Okay. Thats how the instructions are. The instructions are less revenue. Okay. Now, originally it was supposed to be a revenue neutral bill. Why did the administration and the house go for a 1. 5 trillion deficit increase in debt . So the reconciliation instructions give us room to produce a piece of legislation that has 1. 5 trillion of less revenue on the scoring system that youre talking about. Right. We do not believe that is going to be the actual reality. We believe that by lowering the business tax in the United States and becoming much more competitive with the rest of the world and dropping our rates down, we will encourage businesses to come back to the United States and redomicile back to the United States. We are going to grow our economy at a faster rate than the model is going to suggest. We also believe that by lowering the tax rate on middle american hard working families, they are going to spend more money, velocity is going to increase in the system and the economy is going to grow. So we do believe that theres going to be more growth in gdp, more revenue to be taxed, and therefore, the revenue that theyre saying wont show up, we believe it will show up and we will be able to tax it even though we tax it at a lower rate. Okay. Lets talk about the Corporate Tax cut. Its going to take the Corporate Tax rate from 35 to 20 . Now, theres some people who say , why not phase it in over five years . It would cost less money. The administration wanted to do it immediately. Do you think theres a big advantage of doing it immediately versus fazing in . We do think theres a big advantage to bringing it in. Look, youve sat in a lot of corporate boardrooms, ive sat in a lot of corporate boardrooms. Boards like to know whats going to happen and they like certainty. Yes, itd be nice to say that its certain, but theres nothing more certain than by having it happen. We know that by having it happen next year and on top of that giving people a fiveyear expensing window where they can do 100 expensing, we are sending a very clear message that we want you to invest in this country. We want you to move jobs back. We want you to hire people. And were not making it ambiguous. Were making it clear what we want you to do and how were going to grow the economy. The phase in we dont want people to think about investing in this economy. We want you to do it now. So repatriation provision would be under excise, so theres no incentive to keep tax cash offshore because youre going to pay it back one way or another. So that money will all come back presumably. Is there any incentive that the people who bring it back, companies who bring it back have to create jobs . Or what are they likely to do with the cash . Does anybody have any idea . So, david, youre right. The repatriation fee the deemed fee, so its not like you get the choice to bring it back or not bring it back, were going to collect a tax on you over the tax window whether you bring the money back or not. Were going to create an environment where we hope that you invest it back in your business. But ultimately either youre going to invest it back in your business or you can distribute out of your business to someone else whos going to reinvest it back into another business. Okay. Lets talk about some of the controversial provisions. Of course controversy is in the eye of the beholder, but lets talk about state and local income tax. Deduction. You must be very familiar with that. Ive heard about it. Right. So in states like new york, massachusetts, other high taxing states, high state and local income tax, they will no longer residents of those states will no longer be able to deduct that income tax, is that correct . Under this proposal . It is sort of correct. There are a couple little provisions in there that we did add back some real estate taxes property tax if you do choose to be an itemizer. As a whole, we have eliminated the vast majority of those deductions. Wont you believe that will be very difficult for high state tax representatives or centers senators to agree to that provision . David, at the end of the day this comes down to are we delivering a middle income working family tax cut or not . We believe that the house plan is delivering that. And when you score it out and when you see the distributions and the distribution tables will be out relatively shortly, the distribution tables will determine whether were delivering that tax cut or not. We believe that this plan that the house laid out is able to adequately deliver that distribution to those working families, where we told you we were going to deliver that, that tax cut. The average family of four in the materials that came out today is medium family of four income is 59,000 and they will get a tax cut of about 1140 or Something Like that, roughly . I wont argue for 40. So the median family of four will get it. What about the people who are in the upper income . Will they be getting a tax increase or a tax cut or just neutral . Look, it depends on each and everyones individual circumstances. As you know, the hard part about taxes is everyone has their own unique set of circumstances. We set out with the objective as i said we had two objectives, middle income tax relief and Corporate Tax relief. We have not targeted the upper income brackets, but we do believe there is quite a bit in for the upper income families. Were dealing with a state tax. And were dealing with other things that affect upper income taxpayers. So we do believe when you look at the package in its entirety, were able to touch every taxpayer in some positive way. Tax, we phasetate that out. Why not just get rid of it immediately . 24. Think the house plan is they will double the exemption and in 24 they will give you a tax. Exception on the death there will be gift tax restrictions. So if you want to give money to your children, you should die and you can give it to them taxfree. Lets talk about universities. Peoplerovision that many did not anticipate that is not there, if you are a private university, you get a tax on that endowment income. The house is making their decisions on how they want to bill revenue and down the balance the bill. Ws in the some la system about taxing private versus public entities. Youre getting into a layer of legality that is above my understanding of the tax code. You worked on very complex corporate transactions, at it worked on anything as complex as the tax code . Probably not. It has more moving parts than any transaction i have seen. This bill is designed to pass the congress but it is designed past without any democratic votes. We have spent an enormous amount of time trying to make a bipartisan. The president has traveled with the democratic members of the senate to talk about the bill. The president had dinner with Democratic Senate members and we had bipartisan meetings in the white house and the house. We had met with the blue. Democrats trying to get bipartisan support for what we are doing. Would like to have a bipartisan bill. Only, it is republican the president will still silent. It delivers middleclass tax relief and it shows up on his desk, i guarantee he is going to sign it. Is the president going to lobby members for votes or is he going to say it is a house problem . The president cares a lot about tax reform. Its all about making the system fair and returning low income families their income back. Issue oftalk about the trade. Nafta, you expect there will be a renegotiation that will be agreed to argue think we will were trying to negotiate nafta to be fair and good for american jobs. Want to make sure americanbased companies are treated fairly in the freetrade system. Were trying. Negotiators are continuously meeting. And were continuously trying to get to a point where we think that american based companies an american base manufacturers are treated fairly in the agreement. In terms of trade the president will be going to china shortly. He has from time to time been upset with the trade deficit we have with china. Is he going to mention anything to xi jinping when he is there . I would probably assume it gets mentioned. Ok. And what about south korea . Hes not going there but hes been upset about the treaty we have with south korea. He is going there. Oh, im sorry, hes going to vietnam, south korea, japan and china, is that right . Hes going to tokyo and then, yeah, and the philippines. So he goes to south korea he will mention the trade imbalance . Uhhuh. Ok. Let me ask you, hes also got many other issues on his agenda. Obviously north koreas a big issue. Hes going to spend a lot of time talking about north korea. With the president has gone overseas before, you have gone with him but now your responsibility is to get the tax bill so youre not going to go on this trip . Yes. I had a long discussion with the president where i thought it was a better use of my time. Not that the trip isnt unbelievably important, but tax reform is so important that i thought being here and working with congress along with secretary mnuchin, working to make sure tax reform stays on his agenda. We should stay here and that is what were going to do. You expect to be involved in all the back and forth. Director cohn we are in constant dialogue on where they are heading and what their concepts are and making sure were working together yo to get a bill to the president s desk. G ont now we are plannin looking at health care during the new year. There was a rumor that maybe the president or somebody wanted to have elimination of the mandate in the tax bill, the health care mandate, 8 the president tweeted that yesterday. So its not off the table. Its something that could be looked at. And we are spending a little bit of time looking at that. And if it works and we have votes, the president would be inclined to have us look at that aggressively. The president , when he does a tweet, does he call you and say im going to do a tweet in a certain area . Does he consult with you sometimes or not. Director cohn sometimes yes, sometimes no, depends on the time. Ok. In terms of your background, you have been very public about the fact that you were not a great student because you were dyslexic. Uhhuh. How did you realize you were dyslexic . And how did your family get you treatment for that . Director cohn well, i try and explain this to people. This audience might be the right age to understand this. In the when i was growing up as 1960s, a dyslexic dyslexia not know if was a commonplace name or disease. But i was growing up, it was not diagnosed or if it was diagnosed that was not what it was called. In fact, i was not diagnosed until high school or even later. Before that he did not realize you are at a disadvantage or you did not think you are a great student . I knew what was going on. I thought it was everyone else had a problem. I knew where i was, everyone else had a problem. So the typical issue was that everyone thought i was lazy, did not apply myself, did not care. That i was a bad student. I was labeled with all of those issues because i can never keep work or keep the homework done. There were not enough hours to be prepared for class. The negative feedback loop became so negative that you fallen to a rut. It was at ones it was no ones fault. You graduated from high school. Barely. Barely. Did you ever think it would be easier the word for the problem was yourself, starts with a d, thats all i know. So you went to American University. So did you struggle there or you did ok . Director cohn so i know theres, i just saw, i know theres an American University crowd in here somewhere. The president of the university is right here. Oh, right in front of me. So thank you to American University for accepting me because i was probably a long shot for them. But when i got to college it was completely different. College and you get to reinvent yourself. No one is your the gun kid or you are the no no one as you are the dumb kid. You get to refine yourself. Class 16 hoursto a week. College is a time management exercise. You tell me i need to being class 16 hours week, i can give get prepared. Can was not easy, but doing good in college was all about time management. Throughle to get myself because i was able to manage my summer. Were you an athlete as well . I was not. I was not a good enough athlete to be an athlete in college. I know the feeling. So after you graduate you went back to your native area of cleveland and you worked for u. S. Steel. I did. What were you doing . You werent a steel worker. No, no, it was a jump in my career there. I worked for the Home Building Products Division of United States steel. Sold aluminum siding, gutter lighting and replacement. Were you good at that . Director cohn wasnt there long enough to find out. So theres a story, sometimes may be true that you met somebody who asked you about options, you took a taxi ride with him and you got a job. Director cohn so ill give you the minute version of the story because its about, so after my freshman year in college, i did the typical summer internship at the cleveland broker dealer. A week in equities, a week in the back office, a week and commodities and spend the rest of the summer anywhere you want. I fell in love with the commodity got. The commodity guys. 1980 as in the summer of. Hunt brotherng the and what they were doing in the gold and silver. Mother my grandmother to invest in a trading account. Father io convince my didnt need to go back to college. I somehow lost that argument but i realize what i wanted to do in life. I did my next three years of college in two years because i had to get back to the financial markets. U. S. Steel seemed a bit of a ved to new yorkmo and my dad forced me to get a job. I took friday off and came to the floor of the commodity exchange. Know there was 17 layers of security around the commodity exchange. In desperation, i finally got myself onto the floor. Running offguy the floor. Phones. Before cell the elevator and said you are going to laguardia and effectively share a taxi. In this taxi ride, he happened to be a senior got at one of the big brokerage senior guy at one of the big brokerage f irms on the floor. He said do you know options. He said i have the options trader, if you stand behind me and trade, i will hire you. That night i went to the barnes noble, i thought the right book and i bought options of strategic investment and i said lets pick two chapters and memorize them on two different strategies. I convinced them i did everything about options and got hired, started in new york the next week. Great, so i guess two questions arise immediately, one, did you give any of the profits of the gold arbitrage to your grandmother . So i gave her the money back like a week later. With her profits . No. Forgot about that. Shes still alive today. Wow. 105 next week. Wow. Congratulations. I hope shes watching. The man who hired you what became of him . Hilary bergman. Hes still around and in the business. If he called you up and lobbied something on the tax bill, would you listen . He doesnt have my cell phone number and dont give it to him. Ok. Hed probably find you. But that worked out and then from there you ultimately got a job in 1990, he joined goldman. Turned january pretty good trader. Yeah, its been a good run. Ok. So lets go back to the tax bill for a moment. Director cohn are you sure you want to talk about trading . What your great skill in trading in trading you can lose , money, you just have to get over that and go on to the next thing. You cant get depressed. Director cohn exactly right. So did you have some trades sometimes just didnt work . And how long did you stay with them . Ms. Sanders director cohn most of your trades dont work. Oh, really . Director cohn yes. No, i mean, thats the difference between good trade and bad trade. I always said like 8 of your trades arent going to work. You have to realize the 20 that are good and stick with them. So you were a registered democrat, is that right . Director cohn i still am. All right. Still are. So did you actually know President Trump before you got this position . Director cohn no, never met him. Thats not true. We met each other once at a yankees game. Ok. Director cohn we were in George Steinbrenner box together many, many years ago. He was a man who died when there was no estate tax. That is what he is famous for. Ok. The someone called you and said it jared or somebody said would you want to meet my fatherinlaw. Director cohn it was portrayed as come in and talk to the president elect at the time about your views of the u. S. Economy and what you thinks going on. And so after the first time you met with him, did you think you were going to get a job offer or you werent sure or you werent really sure you wanted one. Director cohn i had all of those emotions. I knew i was going to talk about the economy. In typical president elect trump style the interview went literally 360 degrees, when the gambit of all different topics. End it turned into do in my would you administration . I wasnt sure when i walked out what would hundred percent of my my thinkings was . And your family were they supportive of your going to washington and working for a nondemocrat . Or they didnt care. Director cohn my family is supportive of me whatever i want to do. More importantly theyre supportive of helping the country in any way we can help the country. Ok. So at one point the president said if i met you earlier i would have made you secretary treasury, do you remember that comment . Director cohn i might. I might not have. In any event, so you got the job, when you got to washington, did you realize that the white house job while its close to the president , you have a small office. You had a great view before coming cap nephew. Director cohn you had a view. View before, now no great view. N so when youre working in the white house its very easy to get people to come and see you. If you want to see somebody, you director cohn from a pressure standpoint its dramatically more pressure. I think, you know, when you realize that youre working for 300 plus million american and trying to deliver to them the best idea in the best results in the most proficient way possible i had shareholders and i had partners but it is different from partners and shareholders. When i had shareholders, i can call them and say we will do better tomorrow. You developed a close relationship with the president. How many times a day in the early part of the administration were you going to see him . Could you walk in any time . Director cohn the president likes people coming in to communicate with him. He likes knowing whats going on. He loves the input. He loves opinions. He loves use. He loves views. Transition, we were spending enormous amount of time together. The reality is, we have a pretty welldesigned game plan. We are in execution mode. Im getting the tax bill done. President , ied the can walk and see him wherever he is. He is not bashful about telling me his views. Oh, hes not bashful . Director cohn no. Hes not. So youve developed a very close relationship with him and after charlottesville it was said by maybe some in the press it wasnt as strong, what is that like now . Director cohn i think its as strong as its ever been. Ok. So you can talk to him any time and hes happy with you and so forth . Director cohn i probably saw him times already today. Wow. Director cohn at least. Im leaving here to go be with him. Ok. The new chairman of the fed is to be announced this afternoon, i believe, so youre one of the candidates. Do you really want that job or director cohn the president will make his decision. I think the president s made a spectacular choice and im really supportive in what the president is doing in this position. Ok. And no regrets about if youre not the person getting the job, no regrets. Director cohn im really supportive. And its a great decision. Ok. So many people who work in the white house, i did it myself, they burn out after a while. So how long do you think you would like to stay in the white house . After the tax bill, would you like to go for two or three years . The opportunity to execute the president s economic agenda and deliver for the American People is an extraordinary opportunity. Im going to do this as long as i can possibly do it. Whenever you cant possibly do it anymore, what would you like to do next . Private equity or something important like that . Director cohn well, you know, being your replacement you filled that job last week so thats off the agenda. Well, if you were available, we could have talked to you. Director cohn well, could have, should have and would have. There you go. Back to the tax bill for a moment. Whats your interest in this bill . Director cohn could a, should a and would a. On the tax bill would you say that the average person will get a benefit, average individual at a certain level will see some tax cut. That was our objective. Director cohn that was our objective. Weve spent enormous amount of time working with the house and working with the Senate Making sure were delivering on the president s objective. The house is done a good job. Done a good has job. Now, youre changing the now, youre changing the mortgage interest deduction, i think right now you can up to million. Youve lowered it, though it is perspective. Director cohn we hope that everyone supports this bill. The reality of Home Ownership is that people buy homes when they feel good about the economy, feel good about their job, they feel like theyre going to be employed for a long while and they feel like theyre going to have wage growth. They do not buy homes because they can deduct their interest. Mortgage isws the leading people to buy bigger houses that they should buy. Growing the economy is what is important to homeownership. Ok. Charitable deduction youre leaving that, theres never discussion about getting rid of that. Director cohn correct. Correct. What about the deduction for, lets see, for child credit, child care . Youre increasing family tax credit . Director cohn were increasing child care credit as well as other family related credits. So were definitely taking the child care credit up. The house is proposing 1600. Rom 1000 two and a tax credit for yourself, your spouse and your dependent children. Ok. What about when the process is going through the house, is there going to be tradeoffs where somebody will say why dont you get rid of this deduction and ill give you my support for that. Director cohn thats the house process. Thats exactly where we are. The house ways and Means Committee will be working on a bill for the next couple weeks. They will deliver their belt. They will deliver that bill. Then the bill will go to the floor and they will vote on it. If it is not pass, it will be not such a disappointment. If you get early next year you can live with that. Director cohn we can live with that because we have to do this for our economy, but we prefer to get it done. I think its important that american workers, when they get their first paycheck in 2018, they have more disposable income. Thats good for the economy and good for our workers. Now, under your budget that you proposed to congress, youre likely to have under your budget 100 billion increase in the angle deficit. Are you worried about increasing the deficit and how are you going to deal with that problem. Director cohn david, were worried about creating Economic Growth. You know this as well as any of us. The times we see budget deficit go down, times when weve had lower taxes. This year you project growth for this year you project growth for this year, this fiscal year to be roughly. or roughly two and a half percent. Or higher. Director cohn weve already had two consecutive quarters over , one included a hurricane, which we know knocked down growth pretty significantly. So, you know, tracking at a run rate of every 3 . Were excited about we see going on in the real economy. You know market very well but did you write goldman for a long time. Do you think the stock market is ahead of the economy a bit, or youre not worried about the relatively high market rates . Director cohn i think if we continue to execute on our plan, we continue to deregulate, we deliver real tax reform, were going to continue to see real Economic Growth and see the markets pricing it in. David in terms of deregulation and other things, glass steagall, no change in that. Youre not going to support a change in what was glass steagall, youre not going to reimpose glasssteagall. Director cohn we got a bunch of changes that were going to do Financial Services industry along with the house and senate that they support to really get regulation back where it should be. Everyone else agrees we have swung the pendulum way too far capwe have candy mediumsized we have handicapped small banks. We need to roll back some of that regulation. David you would do this through regulation, not in a change in the legislation . Director cohn theres going to be led to that regulatory theres going to be regulatory changes and changes to dodd frank. The Biggest Surprise when you came to washington what, its harder than you thought, easier than you thought, people are nicer than you thought, what was the biggest change, surprise . Director cohn its hard. This is really hard. No one should underestimate how hard this is. I think what people from the outside dont understand is how hard people are working. Im working out like i worked when i was 20 years old. David youre making the same salary. Director cohn i was making more. Working 18 and 20 hour days trying to get things done. Peoples intentions are in the right place. It is hard. The natural momentum to do nothing david you have seen Business People come into the oval office, do they tell you in advance of their going to tell the president a, b and c and then you dont see that. Director cohn ive seen every playbook there possibly is in the oval office. Tell me a, b, c, and alphabet, ive had them tell me nothing, ive seen every playbook run. David so im going to influence you about the tax bill as it goes through. There will be some modifications, whats the best way to influence you, you know, about a change they might want. Director cohn i think they should give you a phone call. David not getting very far. Director cohn dir. Cohn the ability to serve. When you think about my life history and the ability to get back give back to my country is unbelievable. David the downside is that hours . Dir. Cohn no, nobody ever died from working hard. David but why take the chance . [laughter] if, after the tax bill is done and you want to stay part of the administration, is there any other job he would want in the administration or are you happy with the current job . Dir. Cohn i have such a unique job and platform, i am pretty pleased with where i am. I did not quite understand the breadth and magnitude of the top i was taking feared a bunch of people ive relied on in a was talking about coming to washington told me, that is a great job, you should take it. I was not sure it was the right job. Now im in the job and see how i ameaching it really is, pretty pleased with where i am. I have more things to do than i have time to do. David no regrets. Dir. Cohn no regrets. David i know you have to go back to the white house for an announcement. Thank you for your time. Dir. Cohn thank you. [applause] david ok, now everybody can eat. [laughter] tomorrow, house ways and Means Committee chair kevin brady will sit down with jake sherman and anna palmer about that for a discussion about the tax reform process proposal. That is live on cspan two, streaming line on cspan. Org, or you can listen on the cspan radio app. Next week, the ways and Means Committee will market the legislation with live coverage starting at noon eastern time on cspan networks. After legislative business finished in the house today, members of the progressive caucus came to the floor to talk about the republican tax proposal. Ms. Jayapal thank you, mr. Speaker. I ask unanimous consent that all members have five legislative days to revise and extend their remarks and include extraneous mater
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