Add in the fact that many folks are worried about the fed and whether or not the fed is going to raise rates later this month, and you get a nest investing nervous investing public as we head into Labor Day Weekend anthony who better to have than a true giant in the business world, David Rubenstein, the cofounder and coceo of the private equity powerhouse, Carlyle Group. David, thank you for joining us today. My pleasure to be here. Anthony we typically get a recession every seven years in the u. S. Economy. It seems like we havent had one in longer than seven years, and were about to head into a next president ial term. How would you advise the next president , and where do you think the economy is right now, sirsome. Just to make it clear, on average weve had them every seven years since world war ii. The last recession ended in june of 2009. The next president of the United States will have to face a couple of issues. Number one, the economy is slowing down for quite some time. We have been averaging under president obama about 2 growth, but this year well probably be less than 2 . Second, we have a need for infrastructure spending. Infrastructure spending has been way down, and we dont really have as much money for that as we should get. Third, theres really a need for tax reform. We havent had tax reform since 1986, and were way overdue for that. And we have to deal with the trade issues. So i think the next president , whoever he or she might be, has to deal with trade, infrastructure, taxes and stimulating the economy. Those are four big economic issues. Trish two different approaches weve heard on the campaign trail. Hillary clinton has previously shown her support for the transpacific trade agreement. Donald trump, on the other hand, is saying we need to renegotiation everything that weve previously had on trade front front. When you say trade needs to be dealt with, in what way do you mean . Well, i think that the tpp has to be dealt with one way or the other. Right now the congress hasnt voted on it yet, but theres an opportunity, i think the president would like to to get it approved in the lame duck session. If it doesnt, its unlikely to get approved early in the next administration because president trump, if hes president , doesnt support it, and president clinton, if shes president , doesnt seem to support it either. Anthony general petraeus was back on the show a few months ago supporting the tpp. Where do you stand . I think in the end its a good thing for the United States and a good thing for the world. I think it makes it clear we would be a major player in ace ya. Part of the effort is to get us to be a more important factor in asia than we would be without it. Andotherwise i think china will dominate asian trade, so it is a good thing. It has some flaws, but i think in the end its probably a better thing than not to have it. Anthony for the last 75 years, david, theres a discussion on trade in the United States starting with the Marshall Plan to where we are today. Theres been a relative unevenness to the trade agreements. The United States, through the state department and the treasury, trying to help the developing nations grow their middle class. So there has been some unevenness in trade. As an example, the chinese can ship goods and services here, but they sometimes embargo our goods and services and the same with japan. When mr. Trump says he wants to even that out, whats your reaction . After world war ii, we were in a very strong economy, but since then weve become even stronger, and our economys gigantic. Were the economic engine of the world. If all these trade agreements were so bad, how did our economy get to be so vibrant . We are the envy of the world in terms of entrepreneurial activity, in terms of our productivity, in terms of the size of our economy, so i think these trade agreements while they have some flaws and nothing is perfect, i think they have been very good trish how do you justify the fact that weve basically seen a decade of really no growth . Granted, were not in recession, but we have no growth right now, and there are a lot of people very concerned that those trade agreements may have played a part in that and that the future is looking kind of bleak because theres nothing out there, david, on the horizon where you can say or point to to say things are really going to start well, growth is lower than anybody would like. But remember, when you have a 20 trillion economy, its hard to grow that at 6 a year. Nobodys to ever done that. Our economys are large. In addition, we have fewer people in the work force. Historically, 66 of adult males and females in the work force are 62. 5 . We have people retiring at a lower age and living longer, so you have fewer people adding to the gdp. Again, growing at 5 and 6 is very difficult. I think we can do more to tim late the economy, but the days of 6 growth for the United States may be behind us. Trish oh, wow. Anthony i want to talk about middle class and working class wages which dosome to be stagnating yes, youre correct. They havent been growing. What could we do there . Theres a lot we could do. Theres no one answer. One of the problems we have is that our Education System is very flawed. We have the envy of the world in our upper, higher education. Everybody wants to go to american colleges and universities. K12 is not the envy of the world, and its now producing a system where the city i live in, washington, 25 of the people who Enter High School are not graduating. And you see that around other large cities in the United States as well. You cant have a great economic engine if large parts of your population are not greating from high school. Theyre not adding to the productivity as much as you would like. So weve got to improve our Education System. But also weve got to do much more on infrastructure. The infrastructure is collapsing in this country, and i think the jobs that could come about from that would stimulate the economy. Trish lots of interesting stuff to talk to you about today, david, so do not go anywhere. David rubenstein staying with us. So much more to get to, to discuss with you. Wall street week is going to be right back. Forget the fed, could donald trump and Hillary Clinton have the biggest impact on wall street . Why David Rubenstein says its time for everyone to take this election a little more seriously. Next on wall street week. Everyone thought i was crazy to open a hotel here. Everyone said its so hard to be a musician, but i cant imagine doing anything else. 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What would help is simply being able to recognize a fair price. Thats never really been possible. But along comes a radically new way to buy a car, called truecar. Now it is. Truecar has pricing data on every make and model, so all you have to do is search for the car you want, there it is. Now youre an expert in less than a minute. This is how car buying was always meant to be. This is truecar. My opponent in this race has said very clearly that he thinks american exceptionalism is insulting to the rest of the world. She didnt go to louisiana, she didnt go to mexico. She was invited. She doesnt have the strength or the stamina to make America Great again. Believe me. [cheers and applause] trish all right. Donald trump or Hillary Clinton, barring something completely unforeseen, one of them is going to be president of the United States. Anthony well know on november the 8th. Were back with David Rubenstein. This is, obviously, a contentious election, but i really want to talk to you about the contention in the washington. There seems to be policies, as opposed to left and right, there seems to be policies that are right or wrong, and yet theres a fever in washington of contention. Is it worse than youve ever seen, and if it isnt, what do you think of it and how are we going to improve it to get people to work Better Together in washington . Its always tempting to say its worse than its been before because it gets peoples attention, but i tend to think it is worse than its been before because when i worked on capitol hill in the 70s, legislators wanted to Work Together, democrats and republicans. They socialized, and its very rare to see that now. I did start a program not long ago where i interview a great president ial historian about a matter of american history, so Doris Kerns Goodwin on lincoln, for example, and then i invite members of congress from both parties to come, and interestingly, when theres no press there, they get along. They have social interaction which they usually dont do. And i think if we had more social interaction between the members, it would be good. Right now they dont. Trish so many people keep saying this over and over again, but why is that . Let me explain. In the old days, members of Congress Actually lived there, but now many of them live in their districts, and they come tuesday to thursday, thats where the votes are. So more four days a week, theyre not there, and they dont do as many traveling abroad as they did before because its criticized, and they spend a lot of their time raising money because the name of the game is having a lot of money to get an opponent not to run against you. There isnt a lot of interchange between the two. Trish can clinton or trump change that . Hope springs eternal. And i hope that the next president , whoever he or she might be, would actually try to get members of congress to talk together, Work Together. It used to be if you were a good legislator, you were good at compromising. Now if you compromise, youre considered not very popular within your party. So many of them dont socialize, dont talk to each other. Its hard to believe this is going on, but right now its as bad as any time ive ever seen in washington. Anthony you mentioned Doris Kerns Goodwin, she wrote about taft and roosevelt era where there was a great income divide in the country at that time as well. What steps or measures do you think the american president can take to help close that income divide . Well, income inequality has been increasing and its as bad as any time since the 1920s. I dont think you can solve that problem overnight. Part of the problem is that the people on the lower part of the economic scale are going further and further down because theyre not educated, theyre not getting good jobs, the low minimum wage jobs are not ones that are going to make you have a productive income for your family, so i think its getting worse and worse. I think the Great Recession exacerbated the problem, and although weve come back, the people in the lower part have not come back, and they are doing worse than probably theyve ever done. Trish and you think about the feds role in all this, anthony, as well. I mean, david, they have left Interest Rates at record lows for the longest time on record. And perhaps inadvertently, helped create some of that income inequality in that the stock markets doing well. If youve got capital to invest, youre going to, youre going to see some returns from that. But anybody else is really challenged. Yes. Interest rates have been kept very low, and i think the fed would like to change that. Theyve telegraphed they would like to increase it, but they havent quite found the time to do it. I suspect the markets feel they will do it for sure this year, my own view is probably december rather than september, but who really knows. I think even in december, though, itll be a modst increase. I think its going to be a while before the fed feels comfortable going back to where with we were five or ten years ago, but it has probably fueled Wealth Creation for the people at the top but probably not the people at the bottom. Anthony sort of a question i ask most of our guests, do you think wall street or the Financial Markets that presidency or who gets elected president really matter to the markets . Well, i think the markets by indicating, they get people in washington give a lot of money to campaigns, so they must care about it. I think in the end, Business People will try to work with whatever circumstances are. Whoevers president , wall streets not just going to go home, theyre going to try and react and make money. Some candidates are thought to be better than others, but actually when you look back on it, business is more favorable to republicans, the stock market has done much better when you have an alldemocratic congress and democratic president historically. Higher gdp growth and higher stock markets, so its not clear that the republicans necessarily are better for the economy or wall street. Apt apt in the 1930s, Franklin Roosevelt said he accepted the bankers scorn and relished it, and it wasnt until the 50s that it improved. Were back there after crisis, bankers, Hedge Fund People like myself are social pariahs [laughter] when do you think that will end . Well, in the err are of political correctness, there are very few people you can criticize anymore and not be criticized yourself. Those you can are members of congress, Hedge Fund People, bankers and private equity people. Theres no doubt that people today feel that bankers alien unlawful enemy combatant the media two anthony the media too, david. [laughter] theres no doubt that bankers are unpopular, and private equity and Hedge Fund People are not going to win popularity contests, but theyre doing productive things for society, and they are helping create jobs. Were not just parasites on society as, unfortunately, some people think. Some people in washington have the view that bankers or people in private equity or hedge funds are not productive, and i think thats not fair. Trish part of thats because of the tax code. Back to some kind of tax reform that needs to happen as you stated earlier in the program. What does that mean for people like yourself . Well, im worried less about myself than what the economy would do. Right now i think that people in my situation are actually doing pretty well, so whether taxes go up for me or not, its not my main concern. My main concern as an american is to make sure the economy is doing well and the country is strong. I do think we should have tax reform, and everything should be on the table, and we should have a serious look at how to improve the tax code. Right now very few people understand it and fill out their own tax forms or tax code anthony were going to be back with more from David Rubenstein when wall street week returns. Stay with us. How did David Rubenstein become one of the most successful businessmen of all time . I got very fortunate and made more money than i probably deserve or ever expected. Its a conversation you wont hear anywhere else, next on wall street week. Eryone. The usaa Car Buying Service is helpful because it gives you that automatic savings, and i think it helps Service Members feel like their families are really cared for. And thats a really good feeling. announcer usaa Car Buying Service, powered by truecar. Tobut, alas, poor sarahs home myagain with tooth pain. Hamlet. Shes missing out on the rich classroom discussion and catching up on social media instead. Notcool. Remedialreading. Ohlooktheregoesyourgpa. Surprisingly, kids with Poor Oral Health are three times more likely to miss school. Crest. Dont let them miss out. Anthony were back with the Carlyle Group founder, coceo, David Rubenstein. David, private equity used to be the place for people employing a lot of capital. There seems like a lot of cash on the sidelines, so where do you think the reluctance is to spend and invest right now . Prices are at alltime highs, so the average cash flow multiple for a deal today is over ten times. Before the Great Recession, it was probably about 9. 5 times, so were paying higher multiples than before the Great Recession. Even though rates are lower, the cost is a little lower. Still its expensive. As a result of that, people are reluctant to put money to work. For the last five years, the private Equity Industry has returned more money to its investors than they have actually invested. Right now were returning more money than investing. I think if prices go down as the stock market kind of goes down a bit, i think that will probably happen at some point, itll be be cheaper, and well have more money invested. Right now theres about 1. 4 trillion on the sidelines which is dry powder the private Equity Industry has. I think youll see more money being invested. Trish and you think thats going to happen soon . Its hard to believe the stock market can keep going at record highs forever. At some point when the new administration comes in and people take a pause to to see whats going on, Capital Expenditures right now are down. The Business Community is not spending a lot of money. Theyre not sure who the next president s going to be, the policies of the next president , so i think theres a bit of a pause. Business spending is down, and i think you are going into lower growth mode, and that could probably produce stocks going down, and prices will be more attract there i to people like us. Anthony thats an interesting segway. Aetna has walked away from obamacare, and many other insurers have done that. Do you think theres some disruptive activity in the Health Care Insurance world that you guys could potentially take advantage of . We are a large investor in health care around world, not just in the United States. We do think that well, think about this. As people are aging and living longer than ever, the average age in the United States is increasing dramatically and around the world in developed countries, people need more health care as they get older. As a result, youre going to see more expenditures. In addition, remember, the baby boomers are aging. 65 years old, an age ofretiremes retiring every day. Not retiring, 10,000 are turning 65 every day. And as they age, theyre going to need more and more health care. Thats inevitable. And theyre the wealthiest part of our society. They have an enormous amount of money to spend on their health care, and they will spend it on their artificial hips, knees, transplants, whatever it takes. So its going to increase dramatically in this country and other parts of the world. Trish and what happens to obamacare as we now know it . I think whoevers president will make adjustment, and i think if president obama had a third term, he would make some adjustments as well. But i think youll probably see some adjustments. But the private sectors making the adjustments for the government to some extent, aetnas decision, others. I think its unrealistic to to think that it can be eliminated. Anthony i want to switch gears and talk about your philanthropy. Im a great admirerrer of our admirer of yours. Tell us your philosophical p bent. My parents were blue collar workers, and im the only child, and i rose up from very modest circumstances. I got very fortunate and made more money than i deserve or expected. I decided to give back to say thank you. A lot of what i do, what i call patriotic philanthropy, is buying historic docks units, give them to the documents, give them to the country, fix up the washington monument, things like that. I do hi its a way of saying thank you very much, United States, for making it possible for me to do what ive done. Trish staying with that theme, so many people worry that the American Dream as you have lived it is no longer available to young people today. Do you that grew up the way you did. Trish yeah. Do you think if you were growing up in todays society, this particular point in time, that you would have same opportunities . Well, i think it is harder today. But, remember, i grew up im white and caucasian, though jewish, so theres some discrimination against people who are jewish sometimes but certainly not now to the extent there was. But if i were black or hispanic or had some other way of identifying myself as not being part of majority of the United States, i think there would be some discrimination and some problems, yes. I dont think the American Dream is as vibrant for people as it used to be. We talked about income inequality, but social mobility is also a big problem because when social mobility means your ability to think you can rise to the top, and many people at the bottom say ive given up. Im just going to stay at the bottom and, therefore, they lose their ambition and, unfortunately, theyve become a drag on our economic well being. Anthony i mean, isnt that the barometric pressure reading of this political season, that people do feel despair . You can see it in the Bernie Sanders crowd, the donald trump crowd. What message would you give to those people . Theres no doubt that many people feel disconnected from society, and they dont feel theyre part of the success that the people in the upper part of society are experiencing. So theres no doubt that somebody is going to have to address this. Whoevers the next president is going to have to listen to those people and do some things that address their problems. Trish David Rubenstein, really fascinating conversation. Thank you so much for joining us. Thank you, my pleasure. Anthony next week, our guest is jost grano, former ubs joseph grano, former ubs chairman. Well see you then. [announcer] is it a force of nature . Or a sales event . The summer of audi sales event is here. Get up to a 5,000 bonus on select audi models. Always has to be who sat your desk . Phone now, with one talk from verizon. Hi, pete. Im glad you called. announcer vo all your phones can Work Together on one number. You can move calls between phones, so conversations can go where you go. Take your time. Im not going anywhere. announcer vo and when youre not available, one talk helps find the right person who is. Hi, john. announcer vo so wherever work takes you, you can put your customers first. Introducing one talk another way verizon connects your business better. Learn how at onetalk. Com. This show has never been solely about investments. Weve talked about anything that affected people and their money. From fox business headquarters in new york city, the new wall street week. Antiabout welcome to wall street week, im anthony scaramucci. Trish and im trish regan. Garys going to be back next week. We had stocks losing ground in august. September, you know, is historically the worst month of