Transcripts For CNBC Squawk Alley 20170929

Will propel the coiled spring of the u. S. Economy lets give you a snapshot of this group, which represents about 14,000 u. S. Manufacturers to show you why they are so optimistic first, they are mostly small businesses, who will get passed at the pass through rate their employees are compensated higher than the average u. S. Worker, but they pay nearly 20,000 per employee in order to comply with federal regulations. That is why the president s speech, according to Senior Administration officials, will talk first about deregulation, the various ways that he has and continues to plan to cut red tape for businesses. Then he will discuss lower rates as a springboard for manufacturing and for the u. S. Economy. And also this theme of onshoring, the incentives that they believe the plan provides to bring capital back from overseas to the u. S. By incentives such as repatriation treatment and also more favorable treatment of capital investment, which is so crucial to this group that invests in factories and materials and all of their various investments a Senior Administration official described the speech overall as unifying, saying this, quote, when we grow american manufacturing, we dont only grow jobs and wages, we also grow the american spirit of course, that comment is a distant cry from the president s inaugural address, where he talked about rusted out factories littering the american landscape, but manufacturers and companies here say the sole reason for that, they believe, is tax reform. Carl all right, so he will be speaking to an audience that sounds like will like what he has to hear, kayla thank you. As we await the president , lets talk more about this jared bernstein, former chief economist to Vice President biden and center on budget and policy priority senior fellow chris edwards, Cato Institute director of tax policy welcome to both of you do manufacturers get a disproportionate benefit out of this tax proposal weve seen certainly the high end ones do i think its very important to understand when youre talking about this change in the passthrough rate, taking it from about 40 down to 25 , 86 of passthrough businesses already pay 25 or less, so if youre actually a small business, this doesnt help you at all, because youre already paying a lower rate. For highend manufacturers, for the multinationals who benefit from not just the passthrough, but also the move to territorial, they are the ones who get helped mostly by this, and ive got to say, historically, thats not led to anything in terms of job growth or investment here chris, do you agree with that point . Manufacturing is a little less than 12 of our overall economy, but to kaylas point earlier, its an important source of high wage job creation. So if you do see a stimulative effect from tax reform, couldnt the white house argue thats going to flow down into workers pockets . Oh, absolutely. You know, its extremely important. Jared just said that most passthrough businesses take lower rates than the top 40 rate well, if thats true, then it should be no big deal dropping the rate for the other 15 of midsize businesses. Midsize and large flowthrough businesses hire hundreds of thousands each, so why not lower their rate, as well . There is no doubt that if you cut the Corporate Tax and the rate on passthrough businesses, more incentive to invest, because businesses invest through earned profits you cut the tax rate on profits, they invest more, they build more factories when you build more factories, you need to hire more workers, so the demand for workers goes up and wages goes up this is a winwin for workers and the economy. Although, jared, a lot of people have been going back looking at what happened when reagan cut Corporate Tax, average weekly wages, nonsupervisory went from 285 to 282 to 271 didnt happen for several years. Yeah, that was exactly the point i was going to make. If you look at the reagan tax cuts and the bush two tax cuts, the Manufacturing Sector did worsein the 2000s than any decade before that in fact, manufacturing employment fell by 5 million and that had a lot to do with international competition. And i think the punch line here is we tend to overestimate the importance of the tax code basically, and this may surprise you, im with chris in terms of the need to really clean out a bunch of mess in the code, especially as effects are multinational corporations, but the fact is that the corporate sector is doing great and the multinationals are doing best of all. They are sitting on literally trillions of cash that they could invest right now if they wanted to, simply giving them more goodies isnt going to change that equation look, wages are directly tied to worker productivity, and the more machines that workers work with, the higher their wages will be. So why so why arent they investing now, chris because the taxes on profits are too High Companies work ahead, they look at their spread sheets, and they say how much profit can we earn building this new factory and how much is the government going to take . Theyll build more factories and earn higher profits. Every other advanced country, from china, to britain, to canada, australia, has slashed their business tax rates because they know this is a competitive Global Economy its like youre denying the reality of globalization globalization is here and the United States has to respond to it, jared. Let me respond. I dont know if the democrats are the ones denying the reality of globalization, but i want to ask, jared, the white house and congressional leaders have drawn this 20 line in the sand for corporations as far as the taxation level, saying its nonnegotiable, so what do you expect the democrats to come back with . Theyve got to negotiate on some other point, so where are they going to try to get leverage well, i think they already have some leverage on getting on leaving the state and local Tax Exemption in place that is one of the big pay fors of this plan it covers about a trillion bucks over ten years is ending the ability for people to deduct their state and local tax payments its not just democrats, but a coalition of democrats and republicans, mostly from blue states where those taxes are higher have already gotten together and pushed back and looks like they are going to have to drop that pay for. By the way, that means a much larger deficit problem now, you know, the supposed deficit hawks, who at the end of the day are turning out to be more like chicken hawks, have already signalled that they dont really care that much about the deficit. I just got to say, what you heard from chris was the old litany of supply side trickle down and history shows it just doesnt work well, we get into that argument, we go down that path a lot. But specifically on the point, chris, about the manufacturers and this tax proposal, there is some talk about limiting the ability for corporations to pay their interest expense, so for those corporations that borrow and have a lot of debt to finance their businesses, that could be a problem and make it less of a winwin. Is manufacturing exposed look, you know, basic problem with the u. S. Tax code is it favors debt over equity. Thats been a problem for a long time and its why, for example, the Bush Administration slashed the tax rate on dividends and capital gains, so i think limiting the Interest Deduction is one way to equalize the treatment of debt and equity it is not good for the u. S. Economy if businesses are too heavily indebted equity is much safer, so i think that is a reasonable approach to limit the Interest Deductions. Hey, we agree on something. Im wondering, jared, how much theres going to be lobbying against what chris just laid out from big business first of all, we totally agree on that. You know, the effective tax rate on on investment thats financed by debt is a big negative number, so its a huge incentive to leverage up yeah, thats going to be a huge source of lobbying and not just for the Manufacturing Sector, but for p. E. Firms, for, you know, hedge funds, for lots of Financial Firms whose model very much includes debtbased finance. Now, its possible that the tax rise will say you get a carve out, you get a carve out that is often the way these things come down that just makes the code a lot more cluttered with carve outs jared, when kohn was asked yesterday about repatriation and whether or not that would result simply in more hikes than buy backs, he said, im paraphrasing, essentially okay because eventually that money would get reinvested in the economy. Hes said that before on our air. Is that fair thats really, again, thats historically inaccurate. So in 2004 we did one of these tax repatriation holidays and the vast majority of the money they brought back went exactly into a share buy backs and dividend payouts it was a huge loser for the treasury, and, in fact, the firms that took it back were net job losers and net investment losers so they just use it to pump up the share price. Im starting to quote gary Ice Cream Cone because of the give aways. That flows down into pensions because it helps boost the stock market, which he once argued on our air, as well final word the issue, i think looking at what corporations do with their cash is the wrong way to look at this when you look at the Corporate Taxes, the issue is businesses look ahead ten and 20 years. Are they going to build a new factory in the United States or britain or china or somewhere else, so they are looking forward. And they can get financing either from cash or from equity or wherever. The important thing is the tax on the marginal profits going forward. So cutting the corporate rate is what we have to do where they get the cash, its not that important, and the repatriation ten years ago, i agree with mr. Cohen you said, it doesnt matter with corporations they brought it back from abroad and it was going to go to work in the u. S. Economy. Thats the important thing i think well hear a lot more about that from the president today, that made in america theme. Guys, thank you, good discussion thanks, chris edwards. When we return, some strong words from twitter over russian meddling in the 2016 election. Plus, as sara said, the president set to speak at the National Association of manufacturers pitching tax reform well bring that live when he begins to speak. Dows down 15. Post nine is sponsored by Fidelity Investments innovative ideas for serious investors. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. And at 4. 95, you can trade with a clear advantage. Can we at least analyze can we push the offer online . Legacy technology can handcuff any company. But yes is here. The new app will go live monday . Yeah. With hewlettpackard enterprise, were transforming the way we work. With the right mix of hybrid it, everything computes. Have you any wool . Eep, no sir, no sir, some nincompoop stole all my wool sweaters, smart tv and gaming system. Luckily, the Geico Insurance agency recently helped baa baa with renters insurance. Everything stolen was replaced. And the hooligan who lives down the lane was caught selling the stolen goods online. Visit geico. Com and see how easy it is to switch and save on renters insurance. Big tech fending off criticism on capitol hill. Yesterday executives from twitter talked about russias ability to manipulate social media. The vice chair, senator mark warner, slammed the presentation as, quote, inadequate. The presentation that the twitter team made to the senate intel staff today was deeply disappointing. Their response was, frankly, inadequate on almost every level. Twitter says it suspended about 200 russianlinked accounts tech overall is the best performer for q3 joining us this morning, nyu stern professor sky galloway, author of the four, and internet analyst scott debit good to see you both scott, im wondering is it too early to figure out how this might be affecting your models, earnings models, in the year ahead . I think it would be naive to not begin to contemplate the possibilities that regulation becomes a bigger factor with large internet media platforms and otherwise, but youre right in terms of quantifying that, its way too early we are in the perception stage and i think over the next two, three, to five years youre going to see what, if any, financial impacts its going to have on a broad set of companies. Scott galloway, does it matter i mean, if you look across google, facebook, twitter, its not like political ads are even politically tilted ads are a huge part of the way they make their money. I stretch to think how regulation might actually choke off their ability to make money on targeted advertising. How much of a threat is this fundamentally . I think its a big threat, and your question is the correct one, because it probably doesnt affect their daytoday revenues much, but as regulators step in, more likely an eu regulator as europe recognizes the downside of tech but not the upside as the u. S. Economy, youre likely going to see the mother of all fines come out of the eu against one or more of big tech, and also, we are barrelling towards regulation if you notice a lot of senators and elected officials, their back bone is stiffening around these very serious issues that some of these platforms have been weaponized to undermine our democracy. So this wont be an incremental reduction in earnings, this could be a huge shift in the public and governments perception and treatment of these companies. But would you go so far, Scott Galloway, to say to investors that its a big risk and its a legitimate thesis for staying away from these stocks, which have dominated the market all year long . Were coming offof another quarter where technology was a big winner on earnings oh, its a very legitimate risk you could have Government Intervention that Takes Companies such as google that have a 90 share or facebook that enjoys some of the biggest margins and profitability in the history of media and absolutely flips their dynamic on their heads and sort of the gross idolatry or mother of all hall passes that big tech has received from government and from regulators is coming to an end. A perfect storm against big tech may be brewing this is absolutely a legitimate risk scott, how would you take that how would you translate it, again, into your model why would margins be affected . Would ad rates come down would user growth slow im trying to figure out how this would, logistically, impact margin well, its an unknown emerging Political Risk and i think the way thats reflected in terms of the way one values a business is the multiple that one puts on that asset or the discount rate thats applied in a discounted cash flow, so as you think about this period, as i said before, were kind of in this point where everyone has views and its the perception stage and well see what the reality is in coming years i think an investor would be wise to think about those factors when determining how to allocate assets within the internet sector and beyond longer term story, well keep our eye on it. Theres a couple different headlines on amazon today. The stock down nearly 10 since the beginning of the summer. Streaming its first nfl game ever last night, despite that 47minute weather delay. The reviews generally positive and whole foods ceo john mackey saying amazons acquisition of the grocery chain is helping to shed its whole paycheck reputation google reportedly did developing a device to compete with amazons echo show scott, you are a big fan of amazon you said before they have all the gasoline, whereas others are still running on some fumes. How do you think the last 48 hours changes that thesis, if at all . I dont think it does i think the only thing in the way ofamazon and a trillion dollar market cap is themselves, specifically the perception they are not a good citizen and government intervenes and breaks them up or starts getting angry at them. Theres some uncomfortable questions since 2008, walmart has paid 64 billion in Corporate Income tax and amazon has paid 1. 4. Even to hear a question talking about amazon getting a streaming video and acquisition of whole foods, weve never had a company that can literally stare at a nonadjacent category and take the value down of other companies. Do you realize kroger lost a third of its value in between the time amazon announced the acquisition of whole foods and closed on the acquisition of whole foods, it is oneeleventh the size of kroger we now have a company now that can conduct jedi mind tricks, and that is take the value down and hurt another company by looking at it and wishing ill on it and issuing press releases. But, scott, for those who dont believe in voodoo, is that a reason to doubt the valuation given to amazon . We dont really have numbers on the echoes that are being sold to know whether this is a huge trend. We dont know exactly how they plan to make profit off streaming, and we dont know if this whole foods thing is going to add substantially to the bottom line. So, is amazon perhaps being overhyped . I dont know. I think its i mean, this is a Company Whose valuation hit the antigravity bucket in its hard to justify if you compare to media or tech companies, but amazon no longer trades like a typical stock. They have replaced profits with vision and growth, and their vision and growth is more dramatic right now than any other Company Likely in modern history and business do you realize they are no longer the Fastest Growing online retailer, they are the Fastest Growing offline retailer with whole foods and Fastest Growing streaming company. They have the capital to go in and buy the world cup, to buy super bowl they are number two in terms of Capital Allocation of original content of 4. 5 billion, only vested by netflix, so this is a company, the question isnt what categories they are going to go into, the question is what categories wont they go into . Weve never seen a company fire on so many cylinders scott, your take . I think those points are very valid and i think as a fundamental analyst, you have to focus on fundamentals first, but when something emerges like has emerged here, which is now a known unknown, you have to consider it. I tend to believe that as it relates to government and intervention that for reasons that are probably too long in duration to go in this session, that amazon may for the time being fall down that list, but i dont disagree with scotts views longer term in terms of the true competitive advantage amazon has, and then more broadly the carnage that it does create outside of it scott devitt, wondering also how youre factoring in the nfl experiment last night. Long lightning delay and maybe a few parts, but whats the plan for amazon and streaming and content getting into live sports is that a potential game changer or just another experiment where investors give amazon a free pass amazon spending between well say 3 billion to 4 billion on content. As it relates to direct competition with the number one player in the category, which is netflix, they still meaningfully trail in terms of the amount of viewership on that content, and so the way i think of it is amazon is still trying to find its way in nvidia and sports is one avenue for that in terms of driving something that is unique that drives consumer adoption of video that allows amazon to more broadly incorporate it throughout the entire ecosystem, and this nfl, which is 50 million on 3 to 4 billion in content is a small bet in that direction. Scott devitt, as we get further into were past back to school, but more into the holidays, what we used to call black friday, does amazon typically perform better in the back half, given their impact on retail the stock yeah. The Stock Performance tends to be stronger in the fourth quarter, although thats become more apparent with time, thats been pulled forward into the Third Quarter. Its pretty clear with what amazon has done in terms of consumer awareness, adoption of prime now, roughly 80 million households globally, and the ability to deliver it very quickly, which is so important in the fourth quarter, that they are going to vacuum up market share in ways that are consistent with history, if not more, and the stocks should probably do well in that environment. Aside from these longer, Bigger Picture kind of threats that, you know, Scott Galloway has suggested exist with internet more broadly so hard to find an amazon bear reminds me of apple in 2012. Some of us remember what happened then, i dont know. Whats the bear case, Scott Galloway i know youre very bullish, but what could go wrong . The bear case is two words, washington, d. C. , or brussels. There is no other threat to amazon at this point well, thats a real threat. The president is targeting jeff bezos and amazon in tweets multiple times, and the more amazon shows up on the front of the wall street journal, which is a daily occurrence for some other big business its going to get into and disrupt, the more question that raises over jobs and the politics 100 . Theres a lot of ncomfortable things about amazon, but i think the war escalates in Continental Europe, and this is going to sound very political, but i think if you hit the administration, u. S. Administration against amazon, its the Mayweather Mcgregor fight and that is the redhead gets thecrap kicked out of him the collective iq of the administration right now versus amazon is woefully undermatched, whereas in europe you have someone willing to go after this company in the form of fines and potentially even calling for the breakup, so the prediction, the biggest threat to amazon is a woman named margery vesege out of the eu. This will escalate in Continental Europe been on the show before, soon will be again, guys. The scots, Scott Galloway, scott devitt, thanks so much for joining us, appreciate it. Thank you thank you and when we come back, the president about to make his case for the republican tax reform plan were going to bring you those comments live. Quk le iba ia moment can we at least analyze can we push the offer online . Legacy technology can handcuff any company. But yes is here. The new app will go live monday . Yeah. With hewlettpackard enterprise, were transforming the way we work. With the right mix of hybrid it, everything computes. I was playing golf love golf. I used to love golf. Wait, what, what happened . I was having a good round, and then my friend, sheila, right as i was stepping into the tee box mentioned a tip a pro gave her. No. Yep. Did it help . It completely ruined my game. Well, the truth is, that advice was never meant for you. I like you. You want to show me your swing . Its too soon. Get advice thats right for you. Investment Management Services from td ameritrade. Good morning, im sue herrera, heres your cnbc news update at this hour. A 12th death reported from a hollywood nursing home that lost all of its power during Hurricane Irma a 57yearold patient. Hollywood police say that it is treating all the deaths at that nursing home as part of its criminal investigation adults with diabetes may soon be able to keep tabs on their blood sugar without the pain of finger sticks. The fda has approved the first continuous glucose monitor, which uses a small sensor wire attached to the upper arm. It was developed by abbott Diabetes Care and should be available in pharmacies within the next few months. A volcano on bali exiting more signs of unrest today with a continued high chance of eruption more than 200 tremors were recorded today alone 144,000 people have been evacuated from that area and ten, count them ten, giant panda cubs making their debut in china a total of 11 pandas, including three sets of twins, were born at the Research Base between april and july of this year. Okay, everybody say awe, thats the news update this hour. Back downtown to squawk alley. Ill send it back to you, sara they were really cute we are awaiting president trump. Theres a live shot on your screen hes at the National Association of manufacturers to rally for his tax reform proposal. As soon as he begins speaking, we will take you there live. First, though, seema mody back at hq with the european close. Upbeat session for stocks as europe wraps up the Third Quarter with its best month of the year lets break down where weve seen the action. The german dax hosting its fifth positive quarter in a row of 4 . Markets in paris also up a similar amount the ftse, though, underperforming both as the pounds recovery resulted in a september loss lets take a look at currencies. The euro and the pound each rising against the dollar in the Third Quarter. We also saw big moves in global bond yields. The german tenyear yield up sharply this month the recent surge on expectations of tighter Monetary Policy worldwide. Higher yields giving a lift to european banks take a look at the european Banking Sector up more than 3 for the quarter. The overall stocks underperforming the s p 500, as you can see right here we finish with an ipo, rovios public debut in finland, the mobile game studio known for angry birds priced its ipo at 11. 5 euros per share were not seeing a lot of Price Movement right now back to you, sara. All right, seema mody, thank you. More out of europe, imf managing director Christine Lagarde weighing in on bitcoin, saying in london at a conference this morning, for now Virtual Currencies such as bitcoin pose little or no challenge to the existing order why, she says, because they are too volatile, too risky, too energy intensive, and because the underlying technologies are not yet scalable. She also went on to say many are opaque, some have been hacked, but interestingly the problems could be solved and could end up giving existing currencies and Monetary Policy a run for their money. In contrast, of course, jamie dimon called bitcoin a fraud all the heavy hitters weighing in on the viability of bitcoin some see it as a threat to Central Banks and governments who do not back this currency. Lagarde actually made an interesting point. She said in some remotes part of the world where theres not so much trust in institutions, for instance, it could be a safer way to Exchange Money than bank notes. Howard marks writes about it and sort of come around. Early on some of these old lions of the market say theres no Intrinsic Value, but really does a fiat currency have Intrinsic Value outside of cold and what is gold anyway look at you, questioning fiat currency rules, but seriously, its a technology question, and i think even more so than a currency question. If they can figure out the technology and get rid of some of the hacking and have a more viable, predictable market, then we can talk about actually using it sort of on a global basis but for now, countries in asia are cracking down. China and south korea is the latest i want to go back, i think your pun was underappreciated, a run for their money. Her pun right, right. Christine lagarde can do that gearing up for the big Imf World Bank meetings, which well be all over in the next few weeks sure you have your tickets already, right when we come back, the president will make his case for the republican tax reform plan right there at the National Association of manufacturers when he gibens to speak, well take you live. Take you live. Back in a minute with day one target date funds from prudential. Look forward to your 401k plan. No, im scheduling time to go to the bank to get a mortgage. Ugh, youre using a vacation day to go to the bank . I know, right . Just go to lendingtree dot com. Get up to five loan offers to compare side by side for free. Wow, thats great. Wait, how did you get in my kitchen . Oh, i followed a raccoon in through your doggie door. [gasps] get a Better Mortgage on your schedule. Not the banks. Lendingtree. When banks compete, you win. Just think of em as a big cat. With rabies. Breaking news, the president addressing the National Association of manufacturers talking tax reform he is set to begin speaking in a moment in the meantime, we have Team Coverage our Kayla Tausche is on the scene in washington, john harwood at the burrow, Steve Liesman back at hq what do we expect him to say we expect the president to strike a unifying tone in the speech to talk about deregulation, lower rates, specifically for small businesses, which most of these manufacturers are, and also talk about ways the administration is going to incentivize companies to bring cash and materials back from overseas. This morning we spoke to some manufacturers here and they have already started buying heavy machinery and materials, they say this is what the country needs and what their Companies Need and they are willing to bet the ranch in the meantime, that this is getting done because it is such a high priority for republicans and for this administration dont expect the president to talk about other ways that he has spoken in the past about things hes doing for the Manufacturing Industry hell skip tariffs and talk of taxes on companies that do move money offshore, expect this to be, as i mentioned before, a unifying tone from the president. Steve, i bet a lot of the manufacturing owners in that room would agree with the administration that this is going to be progrowth, they can get to the 3 , which will pay for the entire plan. Thats been what gary cohn told us on cnbc, what secretary mnuchin has been saying, the idea tax rates pay for themselves through growth. Whats your math tell you . Not so much my math, but most of the Research Says not just to be clear, the Research Shows that tax cuts can have a positive growth effect depending upon how they are structured are they deficit increasing or deficit neutral or decreasing, those are different effects out there, but one of the big papers written in 2005 by former Bush Administration economic adviser found the effect of maybe 18 to 30 in terms of the give back of a dollar of tax cuts so, thats their take. They are going to be doing what sounds to me like hyperdynamic scoring or warp speed dynamic scoring, whatever you want to call it, but it will be more aggressive than the conventional wisdom of economics would suggest. John harwood, are the democrats going to play ball here, basically take this plan with some attempted changes, or do you expect to see them try to argue against it writ large . They are going after the plan, because they have not been part of producing the plan republicans intend to produce this under the reconciliation process, which means no filibuster in the senate the House Republicans have not brought in democrats on the plan, so i think democrats are going to oppose it one other thing i think is notable about the president s venue today, the National Association of manufacturers would lose the current domestic manufacturing tax cut that is in law now and yet they are supporting this plan anyway. That is a win for the administration during the Previous Administration when they talked about lowering the Corporate Tax rate by taking away that credit theres the president entering jay timmons, of course, of the National Manufacturers association shaking his hand well have to hear if he gives us specifics about state and local, the degree the administration is willing to bend on some of those things, mortgage interest, repatriation, passthroughs. Well learn a lot hopefully in the next few minutes lets listen to the president. [ applause ] thank you very much thank you very much. Taking up a lot of television time, but thats okay. Thank you all very much. Its great to be here with the National Association of manufacturers, and i especially want to thank your president , jay timmons, and your chairman, david farr, along with all of the members of congress that are here today they are working hard, i will tell you that. Id like to begin by sending our thoughts and prayers to the people of puerto rico, who have been struck by storms of historic and catastrophic severity people have never seen anything like this. We have undertaken a massive federal mobilization to assist puerto rico, including the presence of over 10,000 federal personnel, including 5,000 u. S. Military and National Guard personnel. Led by a very, very strong and talented threestar general. All appropriate departments of our government, from homeland security, to defense, are engaged fully in the disaster and the response and recovery effort probably has never been seen for Something Like this. This is an island, surrounded by water, big water, ocean water. Were closely coordinated with the territorial and local governments, which are totally and, unfortunately, unable to handle this catastrophic crisis on their own just totally unable to the police and Truck Drivers are very substantially gone, they are taking care of their families and largely unable to get involved, largely unable to help therefore, were forced to bring in Truck Drivers, security, and many, many personnel by the thousands, and were bringing them on to the island as we speak. Weve never seen a situation like this. The electrical grid and other infrastructure were already in very, very poor shape. They were at their lifes end prior to the hurricanes, and now virtually everything has been wiped out and we will have to really start all over again. We are literally starting from scratch. Ultimately the government of puerto rico will have to work with us to determine how this massive rebuilding effort will end up being one of the biggest ever will be funded and organized. And what we will do with the tremendous amount of existing debt already on the island we will not rest, however, until the people of puerto rico are safe these are great people we want them to be safe and sound and secure and we will be there every day until that happens. Likewise, were working closely with the Virgin Islands on the disaster recovery, and that effort is going very, very well. Both governors, i have to tell you, of puerto rico and of the Virgin Islands, have been extremely good they are working so hard but theres nothing left its been wiped out. The houses are largely flattened. The roads are washed away. There is no electricity. The plants are gone. They are gone. Its not like lets send a crew in to fix them you have to build brand new electric Sewage Systems wiped out its never been anything like this so, there remains a lot of work to do, and we will work with the folks that were working with right now. They are trying very, very hard. I will tell you that, but nobodys ever seen anything like it were here today at the National Association of manufacturers to discuss our vision for americas economic revival and to celebrate the people whose vision and products stock our shelves, fill our homes, and enrich our lives i want to express my special gratitude to the incredible workers on stage congratulations. [ applause ] they are the ones and millions out there they are not as good as you, but they are very good but the millions out there whose dedication and drive makes this country run. Its a great honor to be here with the men and women whose creations power our communities and protect our nation we are all here today for the same reason, because we believe in that beautiful, beautiful phrase that hasnt been used so much over the last three decades, made in the usa [ applause ] its a phrase that fills our hearts with pride, and they embody the skill, grit, and drive of the American Worker the single best tribute to our workers can be found in the unmatched quality and craftsmanship of the Amazing Products they bring, from the blueprint, to the store front. Made in the usa is a global symbol of unrivalled excellence. My administration is working every day to lift the burdens on our companies and on our workers, so that you can thrive, compete, and grow. And at the very center of that plan is a giant, beautiful, massive, the biggest ever in our country, tax cut [ applause ] for decades the policy of washington, d. C. , on the subject of manufacturing was a policy best summarized in one word, surrender. They surrendered under my administration, the era of economic surrender is over, and the rebirth of american industry is beginning. America is winning again, and america is being respected again, and you see that happening all over you see the five plants that were announced just recently, auto plants. So many people are coming back into this country. They want to be back in. Other countries are bringing their companies and sending their companies in they all want to be back, and thats great for our worker. On every front, in every way, on every policy, we are guided by the same economic goal, to keep jobs in america, to bring jobs to america, to create real prosperity for america, the country that we love that is why we have lifted the restrictions on american energy, ending the war on goal, approving the keystone, xcel, and the Dakota Access pipelines, and ill tell you something, i did that immediately first couple of days, 48,000 jobs, and everybodys happy. And reversing the epa intrusion into your business and into your lives, instead, we are returning the epa to its core mission, clean air and Crystal Clean water. Thats what we want. We want clean air, we want clean water. Were fighting to create fair and resip ri call trade for American Companies and the word recipracal is important. Dragging down on countries that cheat, of which there are many and ensuring a level Playing Field for our great American Workers and our great American Companies. Because when our workers have a level Playing Field, no one, absolutely no one, can beat us [ applause ] right . Right . Weve also taken historic action to protect our manufacturing and Defense Industrial base. My administration ordered a first ever complete review of the Manufacturing Technology and supply chains we need to protect our country. We cannot have National Security without economic security. To further unleash american enterprise, we have taken unprecedented steps to remove jobkilling regulations that sap the energy, creativity, and dinism from our country. We are cutting regulations at a pace that has never even been thought of before. Not even thought of. This is a groundbreaking campaign that involves every suspect and agency across our government we are requiring every federal manager to systematically review, and then remove the regulations that destroy your jobs, hamstring your companies, and undermine your ability to compete. And we need some regulations but we dont need 35 regulations to take care of one item we dont need to go through nine different agencies to get something taken off, we want beautiful, fast, efficient regulation that works. [ applause ] thank you. Already ber seeing the results of an Economic Policy that puts america first. Unemployment is at a 16year low, wages are rising, the stock market is soaring to record levels the s p hit a record high just this morning as i was coming over gdp growth hit over 3 last quarter, was just adjusted yesterday, and is now at 3. 1 , a number that hasnt been seen in a very, very long time, and a number thats way ahead of schedule [ applause ] and i believe were doing better this month, but unfortunately having the hurricanes hitting texas florida, louisiana, and other locations and especially where we are right now with the kind of money were spending on puerto rico and Virgin Islands, its going to be a little bit of a hit, but were doing extremely well, even this quarter, despite the hurricanes Manufacturing Confidence is at an alltime high america is finally back on the right track. But our country and our economy cannot take off like they should, unless we transform americas outdated, complex, and extremely burdensome tax code. It is a burden on our country. [ applause ] we have a once in a Generation Opportunity to pass tax reform that is progrowth, projobs, proworker, profamily, and proamerica. Our current tax code Punishes Companies for doing business in the United States and encourages them to leave. And thats whats happened for so many years. And thats one of the reasons, probably the prime reason, that companies are leaving our country. And firing all those people, theyre not bringing the jobs with them, theyre giving other countries those jobs firing all of those great people, thats stopping. Its already started to stop, about nine months ago. But thats stopping. And its stopping right now. We need a tax system that Encouraging Companies to stay in america, grow in america, and hire in america. [ applause ] right . For several months my administration has been working closely with congress to develop a framework for tax reform that will deliver exactly that. More jobs, higher pay, and lower taxes for middle income families and for american businesses of all sizes, and these are businesses that create jobs. We unveiled an incredible framework on wednesday, in indiana, a great state, and id like to share with you four Core Principles of our plan first, we will cut taxes for every day, hardworking americans. And were going to cut them substantially. Under this framework, the first 12,000 for a single individual and the first 24,000 for a married couple will be absolutely taxfree. No tax we are nearly doubling the amount of income that is taxed at a rate of zero. Above that amount, income will be taxed at three rates, 12 , 25 , and 35 we will also substantially increase the Child Tax Credit to save working families even more money because we know the most important investment our country can make is in our children. Our framework also provides relief to those who care for an older loved one through a 500 tax credit something that everybody has been wanting so badly for so long but eliminating the tax breaks and special interests loopholes, that primarily benefit the wealthy, our framework ensures that the benefits of tax reform go to the middle class, not the highest earners. Thats why we also have Given Congress the flexibility to add an additional top rate on the very highest income earners to provide even more tax relief for every day working people second, our framework will make the tax code more simple, fair, and easy to understand American Families and businesses waste billions and billions of dollars and tens of billions of dollars on excruciating paperwork and compliance every single year, and it never ends, under our framework, the vast majority of families will be able to file their taxes on a single sheet of paper. Were also repealing the unfair and complicated alternative minimum tax or amt the amt requires many people to calculate their taxes two different ways and pay the higher of the two amounts. Were closing loopholes, reducing burdens, and replacing confusion with total clarity as part of this simplify kags, were also going to protect millions of Family Businesses by ending the crushing, horrible, and unfair estate tax also known as the death tax [ applause ] that means for those of you with small and familyowned businesses, your family wont have to sell the business in a fire sale just to pay a very, very high and unfair tax your families can continue to run your businesses with love and dedication and remembrance of you we will protect our manufacturers and our workers. And we will make taxes simple, easy, and fair for all americans. And its about time. [ applause ] we will cut taxes on american businesses to restore our Competitive Edge and create more jobs and higher wages for the American Worker. The last major tax reform was passed more than 30 years ago in 1986 with a large, bipartisan majority just sounds so nice. Wouldnt that be nice . Come on. Look at we have, we have so many right here. Lets go, raise your hands, fell fellas the 1986 tax bill was substantially reduced, our business tax rate to make america globally competitive went through the roof. The plan worked, the jobs and industry boomed, other countries saw our success and copied our playbook our foreign competitors adopted tax rates much lower and much more competitive than our own. In fact, when it