Discussing tax policy. The debt ceiling and other issues. This is 45 minutes. I want to thank you very much for coming. Absolutely. Glad to be here. Mnuchin is the 77th secretary of the treasury. Yield in 1985rom where he was the publisher of lee yield daily news ya daily news and also a member of skull and bones. You cannot acknowledge it. If i were, i could not acknowledge it. He joined Goldman Sachs in 1985. Inman sachs 1985. Became a partner in 1994 and rose up to be a member of the management committee. He was the chief Information Officer of Goldman Sachs. He left in 2002 after 17 years and formed doing capital dune capital. He also was involved in the business. Ent he financed a number of movies including avatar, mad max, and movies like that. Meer that occurred, he told that a dinner once that he would become the Campaign Finance chairman for donald trump. I said you will never be heard from again because [laughter] that is correct. But my predictions are usually wrong. It worked out well for you. You became and for the president. Became secretary of the treasury and were confirmed february 2017. Have you talk to your accountant about your own taxes . Are they going up or down . [laughter] well i am definitely making a lot less money in this job. But my rate is going up. Given california and new york, my rate is going up. Mr. Rubenstein are your friends still your friends because their rates are going up . I think people understand the Economic Impact that this is having. I think even for people in new york and california, there is a slight increase. It is not a big increase. Obviously, we saw yesterday walmarts announcement. It is very impressive. Over a Million People at walmart getting additional bonuses. Were now up to 130 companies who have gotten special bonuses. Mr. Rubenstein the process of getting a tax bill through congress. Were you convinced you could get it done in the first year . Sec. Mnuchin i was. Byhought we did get it done august. Obviously, the health care delayed things. This was a well thought out plan. Mr. Rubenstein it didnt go , meaningegular Order Committee hearings and so forth. Do you think regular order is more or less a good thing to of lloyd in tax legislation, or are you happy with the way things went . Technically it did go through the Committee Process and regular order. Mr. Rubenstein if there anything in the bill that you wish was not in their or you are not happy with . Overall, in i think couldnt be more pleased with it. If you look at the process and i think what worked well is the House Committee worked on taxes and thinking about this for a long time. Way before the president and i showed up, they had been working. During the campaign, and developing the economic program, we spent a lot of time with the president thinking about taxes. Taxes were a major part of his platform. I think we couldnt be more pleased. That is not to say every single item,nd every single line but we could not be more pleased with the bill. Mr. Rubenstein sometimes, there is a technical corrections bill. To get that passed you need 60 votes. Are you going to try to get a technical corrections bill or you dont need one . Sec. Mnuchin i think that is something we will see. It is something weve talked about. Opposed to everyone else who has moved on to other legislative things, our number one issue is implementing the tax plan. It is a massive amount of work at treasury and the irs. Yesterday we Just Announced the new withholding tables. We have not identified any thing so far that is particularly problematic. There are 80 sections of the bill left to the secretary to put out regulations. We have a lot of work at the treasury and irs. Mr. Rubenstein very often the rs has more work. Be a neednt seem to to hire more irs agents. Mr. Rubenstein sec. Mnuchin this touches every aspect. Technology, processes, forms. We are talking to congress about additional fundings. We would expect to hire a significant number of person of people. Mr. Rubenstein but not the audit people. [laughter] all mnuchin in seriousness, one of my projects in the irs is to see how we can use technology more for audits. We want to make sure that we automate. Gap, thethe tax theoretical difference between what we collect and what we should. We will look at technology to narrow that. Mr. Rubenstein one of the most important changes if the elimination of the deduction for state and local taxes. And dos controversial you think you could have avoided doing that if you had phased in the Corporate Tax cut . What if you had phased in over five years. David, as you and, there were tradeoffs that is one we could have made. Salt that wasn of part of the house blueprint from day one. We thought through. For people in this room, that may not seem like a lot. For a big chunk of the country it was meaningful. We have the right balance. The high tax states be subsidized . Because then normally the follow on question is because they are donor states who give more money and my response is because there are more wealthy people that live in those states. Mr. Rubenstein some people say it was an effort by the red states to tax the sec. Mnuchin i dont think thats the case at all. No one said this is a political issue. It was an economic issue. Mr. Rubenstein what is think about governors who say you can make your payments and make it a charitable deduction . That ischin i think one of the funniest things i have possibly heard. [laughter] i will say we will wait to see the language. Most people understand the concept of a charitable deduction. That is voluntary, that goes to help people. It is different from the high cost of real estate taxes in my favorite two locations. Mr. Rubenstein so there would be no auditing of governors who proposed that . You wouldnt audit their taxes . Sec. Mnuchin we wouldnt audit theres, but we will audit real estate taxes. Mr. Rubenstein the people who worked on this tax bill, the gang of six, what were those meetings like . How did you avoid the press knowing when you are meeting . Sec. Mnuchin one of the things that worked really well is this was a team effort. There were a lot of people in the beginning who said, the white house and treasury should put out their own plan. They should break the bill. They should write the bill. It was clear from the beginning that the treasury, white house, house, and senate were on the same page. When we started the process, they were far apart. We worked every week on narrowing those differences. Enter answer your second question about how we avoided to answer your question, the secret service can take you through kitchens, garages, and things like that conveniently. ,r. Rubenstein so the tax bill it is said by some that it will increase the debt by 1. 1 to 1. 5 trillion. Do you agree with that . Sec. Mnuchin i dont. Mr. Rubenstein do you think it will be revenue neutral . Sec. Mnuchin lets start with joint tax. 1. 5 trillion. At that is what we had to reconcile two on a static basis with no change. What we had to reconcile to on a static basis. Or 500s another 450 billion between the policy and the baseline. They were measuring it to the baseline, tax extenders rolled over every year. Our view is you should measure it to what the actual policy is. We think there will be over 1 trillion of growth. I do think it will pay for itself. Mr. Rubenstein you are projecting growth at 3 for the next 10 years or so. Sec. Mnuchin it is actually but we door two think we can get to 3 or higher. Mr. Rubenstein but if you fail, you have a 2. 2 or 2. 3 which would be higher. Sec. Mnuchin by definition. It will never be higher again. Worstcase scenario it is 1. 5 trillion less half a billion. Mr. Rubenstein there were no democratic votes for the tax bill. Did you try to get their votes . Sec. Mnuchin we did. Andad a series of meetings the president hosted several i partisan meetings. We have several democrats live with us on air force one to their home states. From the beginning, the democrats sent a letter to the president and copied me and made very clear on what their conditions were. There was a big philosophical difference. We were focused on creating growth and good for the economy, they drew a line in the sand. If the democrats were to gain control of the government at some point, do you worry the tax bill would be undone because there are no democratic votes . Sec. Mnuchin not at all. First of all, i think it is an unlikely hypothetical, but even if it were, at that. I think it will be clear that you have the economic growth. So there is a tax on money offshore. You will bring money back or put an excise tax on it. There is no requirement that they invested in job creating kinds of things. Why was there no requirement that use it in a certain way . Sec. Mnuchin thats a good question. That is something we talked about a lot. Various people came up with ideas. Should we put conditions, attach it to this . Our view was if we create the will incentives, Companies Bring it back because we charge them a tax either way, so there is a big incentive. As you know, Certain Industries people should make capital investments. Certain industries, people should return money to workers as we have seen with walmart. Philosophically our view was what the companies allocate that capital. We believe 70 of it will fall will flow back to the workers. Mr. Rubenstein the president was involved. Did you call him every day . Sec. Mnuchin if i go back to the campaign, his two Major Economic speeches, one was detroit and one was new york. Up until he went on stage, he was fine tuning the tax rates, what we were doing. We debated them. For the last year he called gary or i or both of us every day. We reported to him what we were doing. Mr. Rubenstein when you get a call from the president does that make you nervous or are you happy to get those calls . Sec. Mnuchin no. It does not make me nervous. I have known him for a long time. I traveled with him for a year on the campaign. I would not be here if i didnt feel like we could have a good twoway conversation. At the end of the day i understand he is the president. So on the tax bill today, as you see it youre happy with it and dont see any need to make modification. There may be a need for certain technical corrections. Again, there is nothing we have identified right now that is a problem heard we will see if we need to finetune anything. Mr. Rubenstein the debt of the United States is 20 trillion. You are responsible for making sure we pay the debt. As an owner of treasury bills i want to make sure you do pay that. Are you worried about the limit . You will run out of capacity. You are over the limit now. See have a couple months before you cant pay my treasury bills . Of theuchin this is one things that multiple treasury secretaries advised me on before i got into the job. I have been through one certain people were critical of me in the extension here and at the end of the day, this is all about we have to raise the debt ceiling every time we get close to the debt ceiling. One of the things the president i think about is how should this process be changed. We as a debt ceiling, budget, and appropriations. In any business, you plan what you will spend and then you plan how you finance it. It is somewhat of a ridiculous process the way we do this. Mr. Rubenstein do you think we should have a debt limit at all . Sec. Mnuchin i wont go so far as to say we wont have a debt imit, but when money is authorized to be spent, the debt limit has to be raised. , im using these treasury superpowers because we have hit the debt limit. The problem with that is, the more time you extended, this town doesnt work until you hit a deadline. Mr. Rubenstein speaking of another deadline, the government will run out of money relatively soon. January 19 . That, that is authorization to spend. We will not run out of money. We will have the cash, just not the authorization. Mr. Rubenstein the operation of the government, the funding of government, do think it will get resolved in time . Sec. Mnuchin i dont think there will be a shutdown. I think it will be resolved or there will be another cr to extend this. So lets goin through a couple other things before we get back to the tax bill. Went to up in new york, yale, went to Goldman Sachs, why did you want to be an investment banker . Is that what you studied to be . Sec. Mnuchin i did study economics. When i was at yale, i was publisher of the yale daily news. I was interested in publishing here it i remember thinking i wanted to go into publishing. I applied for a job at conde nast for the summer and one of the best things they ever did was reject me. They said thank you very much but we are not hiring summer interns. I ended up working at Salomon Brothers were three summers. I grew up around wall street. I liked the mortgage trading business. Mr. Rubenstein so you left Goldman Sachs and started your own Financial Services company. You bought indymac. Why was it controversial when you are confirmed . So, i was sitting in my office in new york during the summer of 2008 watching tv. This was in the middle of the crisis. Indymac, there were people lined up around the block trying to get their money out. This was a real thank run. We had not had a bank run in this country in a long. Of time. Of the onlyone deals the fdic had to take it over and operate the bank. Mostly they would take it over friday night, sell it on friday night, open up for business on monday. Indymac was a highly problematic bank. In no doccialized loans. Their mortgage portfolio had 30 doing with these. Even the financial crisis, it was hard to originate loans that were that bad. The only reason i was able to buy it and put together an Investment Group was no real bank wanted to buy it. It had every problematic loan. Construction loans, home builder loans, a big portfolio of reverse mortgages. Up, but thecleaned reason it was controversial was because it had so many illiquid loans that we had so many delinquentoans loans. Mr. Rubenstein let me ask you about your movie career. What is a producer actually do . [laughter] when your producer do you pick the actors or actresses, what do you do . I was the leastc. Mnuchin likely person to get in the film as miss. When i first looked at these investments and someone came to us and said we should look at this film investment. I said that was the craziest idea. Everyone will take their money back from this from us. We developed a theory that turned out very well. Long termin it is a bet on content. Investments, ise had a few that the content was going to be worth a lot more money. At the time there was no netflix. At the time, there were no ipads but i did understand technology and understood that as bandwidth became faster, there would be more demand. I did not actually pick any of those films. I did two deals with fox. 75 films with warner bros. I was the money guy. Mr. Rubenstein i saw you at a conference in los angeles. One time you said you were going to become the finance chair for Donald Trumps campaign. I asked you if you are sure . Your response was, you knew what you are doing. I have known him for about 15 years. I would describe it was more social than business. We looked at a lot of investments together. We got to know each other quite well. I had been speaking with him back when he was thinking of running. I remember having dinner with him right before he announced. After he decided to run, i would visit him every couple of months. Right after he won new york, i was actually in new york and economy the next day. Do you want to come on board . I agreed to meet with him and talk about it. I went to this event, i do not know if anyone ever went to a up. P rally, but i showed mr. Rubenstein this does not look like a big trump riley group. Rally group. Sec. Mnuchin the only way i can describe this is like showing up to a Rolling Stone concert with mick jagger. The moment i saw that, i knew he was going to win. The more i traveled with him, the more convinced i was. Mr. Rubenstein have you been a democrat or republican . Sec. Mnuchin i had been a democrat. Toad given a lot of money democrats. Gave a lot of money to people like you. I did write some checks. Mr. Rubenstein most of your friends in the hollywood area were probably liberal democrats. When they heard you were doing this did they ask you what you are doing . Sec. Mnuchin yes. Mr. Rubenstein have they tried to get favors from you since . Sec. Mnuchin not favors but i would say even a lot of people who were skeptical have come around seeing the economic plan and seeing what this has done to the economy and the markets. Mr. Rubenstein he was elected president. Did you think he was going to win at the end . Sec. Mnuchin i was 100 convinced. Even in the end when we were seeing the florida poll numbers, i was telling people that the numbers were not right. Mr. Rubenstein he called you and said, how would you like to be secretary . Sec. Mnuchin i was part of the transition. Even though i knew him well he put me through an interview process like other people. Being the good former investment banker, i showed up with my yellow pad and showed up with a presentation. Mr. Rubenstein when he offered you the job, did you realize that the irs audits every year. Was that ok with you . Sec. Mnuchin as a matter of ict, i will tell you that knew i would have to sell everything. That did not bother me. I did not realize how difficult the process was of going through a confirmation. I think i delivered a thousand pages. 8,000 pages. Sold everything and they still wanted to look at every investment. Mr. Rubenstein how much the cost . Sec. Mnuchin it was very expensive. Mr. Rubenstein what is the best part of being secretary of treasury . Definitely not interviews. Here butys happy to be it is by far the most interesting thing i have ever done. The thing that is great about the strong is that it touches on so many different aspects of government. A big focus of what i do is domestic and international finance. A big component of what we do is manage all the sanction programs. Whether it is iran, whether it is north korea, whether it is i am a member of the National Security council and this is a big part of the strategy that we employed for foreign policy. The job touches on a big part of this. The other thing that is great is that we have the best location. We have the best building in the best of patient. Location. The best thing is it is six minutes from my office to his office. Mr. Rubenstein his button is bigger than everyone elses all right . Sec. Mnuchin that is true. Is there a secret tunnel mr. Rubenstein is there a secret tunnel . Sec. Mnuchin i will tell you there was at one point. I do not use the tunnel. I walked down the steps, they open a day for me. I walked through the east wing and through the rose garden. Tripubenstein you made a that got a lot of attention to fort knox. Is our goal really there . Gold realneed our ly there . Why do we still need gold . Sec. Mnuchin at one point we were on the storm gold stand ard. You know, it has been a good asset. We have got gold there and we also have gold at the new york fed. I had the opportunity to see both of them. They are well protected. Mr. Rubenstein what about bitcoin . Are you comfortable with that currency . What do you think the u. S. Government should do about it . Sec. Mnuchin do you own any . Mr. Rubenstein no, i do not know what it is really. I know i miss the boat. Is that something you are worried about . Could it replace the dollar as a currency . First, let me say we are very focused on cyber currencies, crypto currencies. Up ae last meeting, we set working group. We are working with regulators. Have two issues with them that we are focused on. One is we want to make sure that bad people cannot use these currencies to do bad things. States, under our wallet toou have a own bitcoins, that company has the same obligation as a bank to the customer. In the u. S. , we have rules for all different type of things to track those activities. The rest of the world does not have that. One of the things we will be doing is making sure that this does not become the swiss numbered bank accounts. Is thatr concern i had there is a lot of speculation. I want to make sure that consumers who are trading this understand the risks. I am concerned that consumers to get her. Could get hurt. Mr. Rubenstein do you think russia is thinking of coming up with her own crypto currency as a way to get around sections . Sec. Mnuchin i do not think that is a concern. Again, this is actually something that i have spoken to the fed about. Crypto currency is like a bit going. Effectively, instead of euros or dollars. , you have a different currency there are Central Banks that are physicalof replacing cash with issuing digital currency. Fed hash contemplated it but i do not think they will do that. Mr. Rubenstein talking about physical currency, there is a picture of you getting one dollar bills from the treasury. Do you have to practice . Sec. Mnuchin i did. Signaturel you, my has been perfected by signing lots of documents but was completely illegible. Now my signature is really neat. If you actually sign a check with your real signature and then you sign the dollar bill this way, people can compare this. Mr. Rubenstein i have now institutionalized my signatures. I sent new documents to the banks. Your predecessor said we would change parts of the 20 bill. Have you any plans to change what he proposed for the dollar 20 bill . Sec. Mnuchin the Davis Administration looked at changing the currency. The Previous Administration looked at changing the currency. Let me first explain why we change the currency. It is all about counterfeiting. There has been changes over time. There are actually certain features that are in the bills that you cannot see. Only machines can see whether they are counterfeit or not. I have met with the secret service and the fed. Our focus is working on the next sort of security features in the bill. This is years away. Mr. Rubenstein on the question of whether you would still have Harriet Tubman or not . Sec. Mnuchin we have not made we will look and at whether we change it or not. Mr. Rubenstein it was reported in the press that you recommended that how become the chairman of the fed. Was that your recommendation . Sec. Mnuchin i was very involved in a recommendation to the president but i will not comment on who recommended her or who did not. I think janet yellen has done a great job. I look forward to working with her. Mr. Rubenstein how frequently do meet with the chairman of the fed . Sec. Mnuchin every week. We alternate between offices. Mr. Rubenstein have you ever said, maybe Interest Rates should stay low . Respect the no, i independence of the Interest Rate decisions. We talk about what the impact of the economy is. We talk about regulatory issues. We talk about international issues. It is interesting because when i started these meetings, i wonder what we would talk about. I would tell you, there has not been a week where janet yellen and i have not spent less than an hour talking about things. Mr. Rubenstein it was reported in the press that you are recommending somebody other than her. Is that awkward . Sec. Mnuchin no. Mr. Rubenstein the economy. The are you projecting for economy this year in terms of growth and inflation rate . Sec. Mnuchin higher growth. Moderate inflation. Lower unemployment. Mr. Rubenstein what is your biggest worry about the Economy Today . We have had eight years of uninterrupted growth at some point something will probably slow down. Are you worried about it . Sec. Mnuchin that is a good question. What i would say is that people in my jobs, people in your job, are not very good at predicting what the next problem is. A lot of times, the reason why it becomes such a big problem is because people have not anticipated. It i would say that if there is something i am concerned about from the financial system, i would say that cyber is something that im very focused on. I do think that it is one of these areas that we have to continue to invest a lot of money into privately. Make sure that the government is working with the private industry. That would be the one area. Mr. Rubenstein a number of secretaries and you and the president will be going to meet with the global elite. Was he going . Why is he going . Sec. Mnuchin i got this question yesterday when i gave a brief conference of the white house. First of all, i did not realize that it was the global elite. I realize that globalists like you do attend. I have looked at the list and there are on awful lot of World Leaders and business people. To me, this is no more the or theelite than the g20 milken conference. Important economic agenda. Mr. Rubenstein when you meet with finance ministers, do you wonder how they became . How do you go along with them . Sec. Mnuchin the person who i have been most impressed with is wafting. Wolfgang. I think he is the longestserving finance chair. I have had several private dinners with him. To me, spending time with people like him, it really is an education. He has perspectives going back to the fall of the berlin wall and the changes to the economy there. Some people are very interesting and some people are not. Mr. Rubenstein which ones are not . You one ofn i gave the really interesting ones. Sec. Mnuchin you have met with a number of your predecessors, what is the best advice you have received . I think there has been a lot of good advice. Probably, the most important part in the most important advice has been around the various different aspects of the job. Different people have had different advice on policies but one of the things that the treasury is known for is the career staff. We have a very long and very professional career staff. And other agencies, the politics gets much more impacted through the staff. For theirry is known great career staff. Mr. Rubenstein is infrastructure a goal for the president this year . Do you see that as bipartisan . Sec. Mnuchin that would definitely have to be bipartisan. Of movese been a lot on that front already. Doneubenstein are you trying to make any legislative changes on the Health Care Bill . Sec. Mnuchin that is something that the president is considering and talking to congress about. What we were able to accomplish in the tax bill was getting ready it rid of the individual mandate. The idea that they are being charged for not buying insurance is not something we agree with. The other thing we are now looking at is with the department of labor and others on regulations that will allow different businesses to get pool across state lines there insurance line. Companies ane opportunity to lower their cost. A lot of companies will be able rates. G down their people whove several we are waiting to get confirmed. Mr. Rubenstein is it harder to get them through the white house process or the senate process . Sec. Mnuchin not even close. Getting them through the white house process has been very easy for us. Getting it through the senate is very challenging. I think the statistic is that at this rate, we will not fail the government fill the g overnment. Mr. Rubenstein is the president happy with the job . Sec. Mnuchin i think he loves being president. Mr. Rubenstein before he became president , he actually came here. Do you think he should come back . Recommend it to him . Do you still enjoy the job . Do you have plans to stay for one year, two years, three years . Sec. Mnuchin i will be here for as long as the president is president. Mr. Rubenstein some of your predecessors have gone on to be secretary of state. Do aspire to do that . Sec. Mnuchin no. I am thrilled with my job. Mr. Rubenstein where are the egos against biggest . Hollywood, washington, or wall street . Sec. Mnuchin that is tough. Mr. Rubenstein where are people the nicest . Sec. Mnuchin washington. People are definitely the nicest. That is my story and im sticking with it. Mr. Rubenstein mr. Secretary i want to thank you very much for coming. That is a much. [applause] thank you so much. [applause] [inaudible] sunday night, Georgetown University law professor Peter Edelman looks at the way the penalized excessive fines and fees in his book, not a crime to be poor. He is interviewed by hank johnson. Was poverty in issue in terms of the war on drugs or the victims of the war on drugs . That . D poverty play into that . What happens to families. What happens to thewhat happense been locked up and the collateral consequences that they can not get jobs. They are not allowed to live in public housing. 45,000 laws across the country, collateral consequences of one kind of another, have destroyed somebodys life. If they were not poor when they went into prison, they are definitely povertystricken for the rest of their liv