Iif, please welcome gary cohen, director of the National Economic council. In conversation with tim adams. [applause] thank you very much. Delighted to see you. Its great to be here tim, thanks. Gary was on my board for years, one of our best Board Members ever. I can see what had someone has to do to get on your board . I never thought of you as a government guy. Public sector, hows the transition gone . The missions are similar. The private sector is trying to serve its kind, trying to achieve itsobjectives and its goal. And the Public Sector is doing thesame. Is trying to achieve their mission, understand where the objective is and understandable. Its just a lot more difficult to get there. And the process is a lot slower and adapting to this slower process. I see you as someone who likes to execute quickly and well so lets just start with the hundred thousand foot level and that is your policy , your questions about water priorities and what you want to achieve. Youre close to 100 day mark. Lots of expectations but i think it gets a bad rap, its stuff to do things quickly as you said so tell me where we are at the 100 day mark and what your agenda and what you seethe next few months. Agenda hasnt changed. When we came in day one we talked about an agenda that revolved around jobs, job creation, employment, full employment, making the lives of citizens of this country better. Thats our number one objective. How you do that, thats what were working on so were going to do it in a bunch of different ways. Number one, trying to improve health care in this country and thats a staple of quality of life. Number two, trying to raise taxes and tax reform. We had a panel talk about infrastructure, the way we live our life when we get the way we get to and from work is really important and we have sub optimal infrastructure in this country. Those are three course that we are working on but we do that in terms of how you live your life and how we create jobs and on top of that, simultaneous to those were thinking about the Regulatory Environment. The Regulatory Environment cuts through all that. I was listening to one of the guests who said approval process. The approval process is regulated in the regulatory process of infrastructure is probably the most costly part of regulations. And slowing down the approvals, it just adds and adds to the cost of infrastructure. We have to understand the cost of regulation is slowing things down so we are simultaneously looking for all the different Regulatory Environments that we have, not just Financial Services. This crowd is concerned about finance and regulations but we got the Regulatory Burden in almost everything we do. Bending a lot of time would be the Regulatory Burdens as well. You heard on our first Panning Panel we had a lot of economists say me the regulation pieces may be overshadowed by the tax discussion or healthcare but thats not something you link toward, you can do that yourself as an executive order. You can get your cabinet secretaries in place to move quickly on the deregulatory piece. A lot of it is personnel. A lot of it is interpretive personnel, getting our personnel in the position will help us on the regulatory agenda. The example i like to give, we in the United States have a stress test for our banks. Europe has a stress test for their banks. The dialogue or description for a stress test is not that much different. The interpretation of the regulators that interpret the stress test is so different that a bank in europe with three percent capital passes their stress test with flying colors, basically in the United States with 10 percent tier 1 capital, it barely passes. So personnel is policy. Its changing the personnel will change the policy, change the expectation, we think thats important so you are right, changing the personnel will have a big effect on a lot of the regulations we have in the system, even when you look at infrastructure. You look at the epa, bureau of land management, patient wildlife, all these organizations. Running the processes, how they look at the approval process, how they schedule hearings, just getting those things done dealing incessantly, and all personnel. Though weve instructed our people that weve got to get these things through the system. Were going to try to force a very quick deadline system into place that we make sure we get things through the system as quickly as we can. So some of that you can do on your own in the executive branch but you rely on other branches of government on pennsylvania avenue. Congress is squarely in charge of taxes and appropriations so tax policy. How are you approaching it . You are developing your own set of proposals, and the house now with speaker ryan and chair grady, how do you assess steps and do you have principles you are guiding by and talk a little about that. I know secretary here, a speaker or two ago, he spent a lot of time talking about taxes. He and i are spending time working together on tax policy so we are going to come out and in a unified, united tax proposal program. The individual as well as corporate. It into include individual and corporate. Some of the corporate are exactly what the president better. People say we are difficult to be about what we are doing, we are ethical to operate. If you want to understand what the white house is doing, listen to what the president said on the campaign trail. He talked about low rates, yes what . We care about low rates. He talked about listening, guess what . We talked about using the tax code to make america more competitive, guess what . We want to figure out how you use tax code to make america more competitive. We talked about tax and reciprocity and making our tax code or aligned with the rest of america, making us more equal, we talked about using taxes to make sure we are globally competitive in bringing industry and jobs back to the United States. Those are the core principles, thats what were trying to do, trying to do in the Corporate Tax code as well as individual. One of the proposals in brian brady plan is to eliminate the deductions in short corporate. Leveling the Playing Field between debt and equity, how big an issue is that for markets and maybe how do you think about that. With the impact to marketsand the economy, is that a lot . I think it affects , Steve Mnuchin said weve got a lot of things on the table. Were working with all the different levels. And as you know, depending on where you end up in the rate spectrum, it depends on how valuable or how valuable that certain deduction is or isnt. We are continuously playing with the leverage that we have and were working on coming up with a policy. Im going to be director mulvaney here later today but let me ask about one thing as we quoted Ronald Reagan say efforts dont matter politically, were running 7000 deficit. When you think about tax bills, how important is it to have revenue neutrality and we heard a little bit about the importance of that , how big a role will that play . Mister mulvaney will be here later and hell have his very strong views on deficits. You take your big deficit question for him. That said, we have a legislative process to go through in tax reform. Part of that we figured out. We would like to have permanent taxes. When corporate, they are making longterm capital decisions, people are deciding to move this to the United States and a factory and make big capital investments, they need some permanence of the tax code. So the more permanent we can make the tax code, the more extensive. Roughly a big deficit in the tax code would potentially make it not permanent. That said if secretary mnuchin said, ill say it, using dynamic scoring they allow us to get to me place, we would like a permanent solution but again, we have to do what we need to do to drive job creation and drive the economy and were committed to driving the economy. You are talking about infrastructure backstage in the panel, discussing i know its an important issue, i was making a joke about every time i go to new york, on amtrak, its a harrowing experience. Tell me about your plans for infrastructure and how are you going to divide between tax credits versus your direct appropriations. As you know, we talked a lot about infrastructure. Our core basic plan when we started, we talked about healthcare, taxes, infrastructure in that order. Its part of our tax plan 80 use from the repatriated money, Gateway Infrastructure Fund or an infrastructure bill, so we know that we are going to fund some of the infrastructure director mulvaney will tell you that his budget, we got a substantial allocation in infrastructure and government will have to be involved in the infrastructure. That said, we think bringing private capital in alongside with the government, or even privatizing some of the infrastructure makes an amount of sense. Just building up the governance challenges for the sake of building up a government Balance Sheet doesnt make the most sense. If we got existing infrastructure that has direct revenues attached to it, we think there may be very interesting ideas in the forprofit or in the notforprofit world to take that infrastructure and put it into corporations and use more of a Capital Market to get back instead of putting it on the government Balance Sheet. We know that will create efficiency, it will create longterm better management, a Maintenance Program and will do the things that we need to do for an efficient longterm Infrastructure Management program so we do not want to hear if the federal government and just be a piggyback doling out money here, there is somewhere else. We want to be a partner with donors, with mayors, with municipalities to help them and totally invest along with them on projects that they want with capital. So theres a statement component to this as well. As you know, i think as most of you know, theres a huge component and the great irony in infrastructure is that the federal government owns very little infrastructure but we control almost all the infrastructure and we control almost all the permitting process. Ask how do you ensure that to use an example, im for rural kentucky, the Relations Committee on the house, its from southwest, southern kentucky, most highways in the world. How do you ensure that you are not building bridges and that you are putting these bridges where the population is . Thats what i was alluding to. We dont want to be in the business of just doling out money to dole out money. We want to be in the business of investing infrastructure or other people, meaning the state, the cities, the business quality authorities are going to put their money with us. Knowing that theyre going to need to get a return on their investment, theyre going to get a return on their capital. Hopefully it would make sense to bring in another part of that because we dont want to build a bridge to nowhere to say we built it in appropriations. We want to build a smart infrastructure where we are going to change peoples lives, were going to make getting to work easier, getting to school easier, flying across the country, those are the places we want to see impact. You talk about privatization, though that include, you have a list or is it something coming out then . We have a list. But its not a complete list. I have talked openly about the atc. I think the atc system is sort of a bellwether example. Of something that can be done and should be done, we are not trying, were not on the leading edge to do this, we are following what about a bunch of other countries have done. Canada, over 50 countries have done what im proposing we do. Theres a directattributable revenue stream already , dedicated to air traffic control. If you put the atc components into a private list, whether it be forprofit or notforprofit, stave it off, build the technology, modernize the system, the revenue is there, the technology is there, the opportunity is there and it will change everyones life. We will eat up time, you will sit on contacts is long, your flight time will go down. The defense patterns will go down and those of you that fly around know that you drop from 20,000 feet to 15,000 feet, 10,000 feet, you have direct descendent airports, certain airports in the United States have built that technology. You will go from waypoint waypoints, you will go directly from pointtopoint, you will save jet fuel in the process, saving jet fuel is costefficient and it will consume less energy and its environmentally very very friendly. Makes an enormous amount of sense, thats why many other countries have done it. The last time i flew laguardia, we were 37 in line to take off and sat there and i for three hours. You have my vote. I wont even guess what percentage of jet fuel from that trip you use on the ground. Because every time you start to get that hunk of steel moving again, its uses jet fuel. Whats the timing, is there something we can get done in the second half this year, its been 2018, 2019 . It is washington after all. You mention energy policy. What we are moving that one through the system, weve been working with secretary chow. The good news here is the house members, they have enormous desires to do this. Weve been working with many of the house members who this is an air transportation bill they had on the floor for a long time. We are working with a house who wants to work with us. Theres very little opposition to what we want to do, that said this is going to take years, not months to get done. Secretary, we have a connection on the senate side. Thats what i hear. You mentioned the energy policy, could you tell me how this was going forward, obviously the president is looking for West Virginia and waiting in that country, thats a space we havent seen it all, the west as well so is changing the mix and what are you doing about planet . We are supportive of jobs. We know that coal is a big job creator in the United States. But we have to allow cold to succeed area where also a big supporter in natural gas, a supporter of fracking, supporter of Energy Independence. Are supportive of the free market. Those things have to Work Together and different speeds have different economics to them and we are allowing the free market to be the free market. The Biggest Issue for us is this administration in Energy Independence and making sure we can control our own destiny. Thats in north america. For north america but for the us, look, were most concerned about the us but then we care about north america, imported oil, we are starting to export these things and building up more and more terminals in the United States and exporting more lng. We happen to have a feedstock or btu component that the rest of the world needs. More and more lng is needed and we have an excess supply of gas. Were going to permit more of these lng plants. Were going to watch these different factors in the United States here and were going to be supportive of them because part of creating jobs and part of manufacturing in the United States is what is your competitive advantage . We have a big competitive advantage. And we need to keep and promote our cheap energy and we got to use that as an example. Were still on oil for the Transportation System, how do you think about weaning the Transportation System , oil and i know theres been changes to the capital standard and annexation of the places in three different administrations. We know that oil is going to be major in everything we do, its going to be a major component to the transportation industry. Were not saying it should be, its going to be but when youre placing it into the Energy Sector and power sector, its a marginal role of oil thats in the oil stack every day so every marginal barrel that you dont consume is one more barrel of supply you have and youre affecting the price of the whole system which we think is good for the us consumer, very good for manufacturing in the United States. It makes us more competitive and we dovery much care about the environment. We want to do this in a very environmentally friendly way. We had marty fell on this this morning, another of his brother were luminaries and i assume thats not in the mix or its not something you consider conversation is willing to take on . Trade policy, you mentioned exports. Theres lots of questions about the administrations trade policy. There are colony of voices through the ministration, you could you tell me a little about how you, what is your philosophy and what you think of this presidency . Free, open, fair trade. Free, open and fair. What is their mean . It means we treat our trading partners the way they treat us. Present calls it restraint. We should be reciprocal in the way we treat each other. We would prefer that no one had carrots, that we have free and open trade borders but if you want to insist on having a tariff on wheat for our product which we insist you did not the president believes we should treat you reciprocally and we should tax your product coming into the United States and that is free. That is open and that is fair. That would be the definition of fair so the example he will use and its a good example is, its going on in the world today its, so if we manufacture a car in the United States and its ship to certain countries, they put a large terrace on that car. If they manufacture a car they can send it to the United States and create small terrace. Thats not fair. Where you think they should make the greatest gains, the foreign markets, ill talk about imports in a second but are there places that are low increase that you can make a change . On our exports . We can increase exports everywhere. We are becoming a better and better manufacturing and weve got cheap energy, weve got better technology. As we continue to improve our infrastructure, we will improve our availability of the market. And we will continue to leverage upon those assets to the best of our economy and we will be a better exporter but weve got to do it on a level Playing Field. The ministration about manufacturing jobs, we got lots of relatives. 10 percent of the economy is in the workforce, and a plus in services and a huge trade surplus in Financial Services. How do we hear more from the administration about Financial Services as compared to advantage for the us . Maybe we are not talking about it enough but were talking about it. When we were in florida, two weeks ago talking with the chinese. The chinese are opening up the market. We were talking a lot about them opening up more to our service industry. Giving our us companies broader access, allowing us companies to own 100 percent of their chinese joint ventures, many of those companies have been there 10 years which was the original rule that you have to be a joint venture partner for 10 years, many of our companies have been there formore than 10, we were talking about the ability for full ownership, to run bigger businesses which is more and more service. We are talking about it and were talking about quite a bit. Maybe we need to do a better job of making sure one of these is on the other side. The Reagan Administration is incredibly impressive for with respect imports. Their policies, putting terrace on steel, textiles motorcycles, autos and sugar. These bookings things said for the ministration look hollywood look benign so given that we often, the ministration we put on a pedestal, is that the right baseline . Are you getting a bad rap because we are trying to judge you against the world, the theoretical world of the trade . I dont know whats the right baseline. The right baseline to judge us is do we grow the economy. Do we create a better environment for us citizens . Do we put more people to work . Do we give them better jobs. Is there life get better . The more people end up getting a job that didnt want, the more people have a quality of life that they want, the more kids end up going to places they want to go, do people live where they want to live and its the end of our administration do people feel like their life and their quality of life, their standard of life and their future is better than it was the day we got there. If we did that, thats what we should be competitive. What do you think is the most important tool for doing that . Im going to take you back , to fisherprice and a toy factory, biggest toys in the city, shut down in mexico and china, the city never really recovered much. What can you do to help bring or keep those kind of jobs back in . We have to provide a, the tax rates that makecorporate competitive in this country. Thats the first place we are going to start. We have a 35 percent Corporate Tax rate. The oecd rate is 23. You know, if you look at 23 versus 35, were not competitive. Theres tax domiciles where you can get substantially lower but the president has been constantly talking about rate matters so weve got to start with taxes. Because companies, the first thing theyre going to make his build a business, im successful, what part do i keep and what part do i give my shareholders, what part do i give the government . Lets start with that. Weve got to have a labor force compatible to what we need to hire. You have heard a lot about retooling of the labor force, reeducating of the labor force. Were spending an enormous amount of time on apprenticeship programs and Vocational Education and tooling our labor force to the labor force were going to need in the 21st and 22nd century so were going to have to revive the labor force were going to need so theres hundreds of welding jobs out there in the world that we want the big building pipelines in this country. How you build pipelines . Youve got to weld them. Its a decent income level and grow from there. Weve got to create the environment where kids coming out of high school are willing to go into a program where they become welders. My father was a welder. My father was in electrics, this is how he started. I was so disappointed i went to college and it didnt become a welder. Weve got to get the narrative back to what it needs to be successful in this country and how were going to grow our economy and how were going to create an environment that for all and i think we can do it. Theres a lot of opportunity here. As i was talking aboutbefore, the l and g opportunity is enormous. If you look at what they made in japan and china and germany, to feed their environment, japan and germany have given up on nuclear power. They need to replace those, that power with ldg. The first thing is will permit an expert in the northwest. Just think of a transport time for the northwest to japan versus anywhere else. Then weve got to put facilities on the east coast to get from the east coast to germany. Thats a simple permitting process. The one place, its been turned down twice already. The second iif International Engagement youll be traveling with the president to the g7, the g20. Tell me about how you think about those engagements. What is your message when you sit down with the president sits there with his counterparts did in italy or germany later in summer . The message is simple. We care about the United States of america. We care about Economic Prosperity that we care about economic growth. We care about trade we care about being treated fairly and we want to be part of the global economy. More to be part of the global universe but we dont want to be taken advantage of. And we want to work with each and every country out there and we want to treat you fairly and we want you to treat as fairly. We want to be a great part with each and everyone of you. You are talking about chime in. Leading up to just a few weeks ago i was very concerned about uss u. S. China relations. China is an easy villain for us from economic rhetoric standpoint. The meeting with president she seemed to have gone very, very well. Using debit plan going forward. Talk about what that plan looks like and how to seek u. S. China relations developing . And meetings with great. I thought the meetings went great. We had 24 hours of pretty intense meetings, big group, two big group meetings. And then we split into two smaller groups which was probably the most productive time. I was part of the very small group talking on trade where we really got down to nuts and bolts issues on trade here that was a meeting when we talk about Service Trade industry and opening up china for our service business, not only the ownership of what they would have to do with intellectual Property Rights and software and data storage and all thei all the run having software stored on continent and data stored and localization versus international standards, and changing import export rules. Weve agreed to beef exports for a long time and they havent happened. Weve got to get these going in the next 150 pledged to work with us on beef and rice in the next 100 days. Weve talked to them about a bunch of other issues where we literally have laid out 100 day plan for each other where were going to try to open up more bilateral trade with each other, both on service as those on manufactured goods. We are continuing to have those dialects as we speak right now. I thought those dialogs went very well. The president got along very well with president xi. I think they forged a very good relationship. Since then its been reported quite likely that a followup phone conversation. President xi has extended a formal invitation to the president to come to china in the fall. I think the president would very much like to go to china in the fall. The big condition being that we need to continue to make progress on the tray to come in the trade negotiations. President does not like our trade deficit. He wants that trade deficit narrowed and hes happy to have it narrow by as exporting more to china. It doesnt have to be that they stop importing to us that we had to export more to them so that trade deficit narrows and narrows quite quickly. We have a huge conference in beijing in november. We would love to have you and the president come speak to a great opportunity. Im not sure that will be our forcing function but well see. Ten years ago hank paulson and i launched the process, a formal negotiation. Do you foresee similar kinds of negotiation vehicles or is this dto your 100 a blend then come back and rethink what the mechanism looks like . No, no. The 100 day plan is a kickstart plan for things that have been sort of in the hopper. Some of them are for four to six years that it just sort of installing around the edges, where we had to show each other that we can walk together, then we can start running. The 100 day plan is just a start. So its a confidence builder . Yeah, a confidence building. It scans of exports out of the United States indochina, showing that we can decrease the trade deficit by as exporting. But we actually set them and in response to was the one a day plan but we sent a longer term plan. Not being decades. Longerterm plan being a year and thplan had an awful lot on it. So were not saying its 110. Its 100, we started to waste are really working hard after we get done with the one or day plan, then start running after the big things that are really going to move the needle. My time is up. I miss you on our board. Its being its been good being vacuum state. We wish all the best. Thank you very much for coming today. Ladies and gentlemen, a round of applause. Thank you. [applause] the new administration has