Trump Economic Advisor, Stephen Miran, on Tariffs and Tax Cuts

The Trump administration seems to have a lot of big ideas about reshaping America, including its economy. We've seen the unveiling (and delaying) of sweeping tariffs aimed at boosting US manufacturing. The 'Big, Beautiful Bill' is currently working its way through Congress and features a lot of supply-side economic ideas, including an extension of tax cuts. So do all of these things work together to boost growth? What happens if that growth doesn't materialize? What is the administration's ultimate vision for the US economy? And what are they seeing right now in terms of things like inflation and employment? We speak with Stephen Miran, Chair of the Council of Economic Advisers at the White House. See omnystudio.com/listener for privacy information.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  Finance is increasingly being built on digital rails. But as the adoption of virtual assets, tokenization and stable coins grows, can regulation not only keep pace but help accelerate it? Find out more later in the podcast.

• 0:16Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting and hiring practices.

• 0:59Speaker 01

  But according to recruiters, advisors and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company. And Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates quote "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at chatgpt.com.

• 1:39Speaker 02

  The world of business is constantly evolving and Comcast business keeps you totally in step with secure AI-backed networking in more than 100 countries. They're powering over 90% of the Fortune 500 and millions of small businesses. That's a lot of muscle. And behind it all, thousands of experts answering your call at 2 AM like it's 2 PM. One partner powering how business gets done for companies around the globe. When you add it all up, no one does business like Comcast business.

• 2:26Joe Weisenthal?

  Hello and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

• 2:31Tracy Alloway?

  And I'm Tracy Alloway.

• 2:33Joe Weisenthal?

  Such a cliche to say that there is a lot going on right now, but there's a lot going on. It is CPI day today.

• 2:39Tracy Alloway?

  Yes, it was, and it came in softer than expected. Actually, it was a really unexpected figure. I think all the economists surveyed by Bloomberg had the number higher than what it came in as. And so kind of a surprise.

• 2:53Joe Weisenthal?

  Kind of a surprise, of course, when the tariffs were announced in early April, some people, you know, a lot of people reasonably thought they were going to go up so far, four straight months of going to the downside. Well, obviously, that means we have, A, a lot of just sort of straight up macro uncertainty and, B, a lot of policy uncertainty still between both the ongoing trade discussions and, of course, you know, the one big beautiful bill and what's going to happen on taxes and spending.

• 3:17Tracy Alloway?

  In short, there is a lot to talk about.

• 3:19Joe Weisenthal?

  We really do have the perfect guest, I think, to talk about all of this. We're going to be speaking with Stephen Miran. He is the Chair of the Council of Economic Advisers at the White House. So we can ask him all these questions about the state of the economy and policy. Stephen, thank you so much for coming on Odd Lots.

• 3:35Speaker 05

  Look, thanks for having me. I've been a big fan for a long time, and it's a real honor and a privilege to be here.

• 3:39Joe Weisenthal?

  Amazing. We're going to clip that and send that around. All right. If CPI had come in hot today, I would have started with a question on that, but I'm not going to start by giving you a softball of CPI. I'm curious about the other side. Right now, how do you perceive the momentum on labor in this economy or just the growth momentum on this economy? How robust is it?

• 4:01Speaker 05

  Look, I think that the economic data have been coming in pretty good. And you mentioned CPI, you mentioned inflation. I do think it's worth noting that in all four months since the president was inaugurated, inflation CPI is surprised to the downside. And I think that was very much in contrast to lots of people's expectations. And we also, you know, experienced the same on the upside, right? We had three beats in a row on jobs day for jobs numbers. I think that, you know, the underlying economy is, has been pretty healthy. There has been whipping around of the sentiment data. But I think that the correlation between the sentiment data and the real economic activity has really declined in recent years. The sentiment data are driven by stocks, right? And volatility in financial markets.

• 4:43Speaker 05

  They're driven by political sentiment and people's reactions to to policy if they like it or if they don't like it. But there's been minimal connection between the two of them. And if you look at the the real economic data, it's been pretty good. And yeah, OK, so the first quarter GDP print was, you know, a hair negative. But if you looked at underlying private, you know, final domestic demand, which strips out the really volatile components like inventories and imports, you know, that was high twos, almost 3%, right? You know, so like underlying growth in the first quarter was pretty good. Then, you know, the GDP trackers for the second quarter seem like they're 3% plus, almost 4%. You know, I think it's really hard, you know, I think you really got to squint to find, uh, you know, sort of bad news in the economic data.

• 5:26Joe Weisenthal?

  OK, Tracy, so the Fed doesn't need to cut is what I'm... No, just kidding. Anyway, Tracy, go on.

• 5:30Tracy Alloway?

  Uh, just on the labor market, how are you thinking about the interaction between the administration's immigration policies and overall employment? Because on the one hand, it seems like deportations might be helping to keep the unemployment rate kind of low right now. But on the other hand, you know, if you deport enough people, you start to get worker shortages. Maybe you get higher wages. Maybe you get business disruption and things like that.

• 5:57Speaker 05

  Let me make a couple of observations. One, you know, there were lots of predictions, again, from, you know, the the typical doomsayers and Chicken Littles out there, that when the president shut down the border to protect Americans, that job creation would fall out of bed. And again, that has not been the case. There's no evidence of that in the data. Two, if you do look for slack in the labor market, if you do look for pockets of weakness, you are going to find it in exactly, exactly the cohorts of labor market that are in direct competition with illegal immigrants who come who come invading over the border, right? You will find the unemployment rate for people in the 20 to 24 year old age cohort is about twice the natural, the national average, like 8.2 or something. You will find the unemployment rate for people in the 16 to 19 year old cohort is

• 6:42Speaker 05

  about three times or more than the national average, like 13 and a half or something like that. These are the folks who are in direct competition with illegal migrants. These are folks who are high school students, college students, just finished one or the other, got their GED, dropped out, whatever it is. These are people who are at the start of their careers, who are the most in competition with illegal migrants, and that's exactly where the slack is in the labor market. And these are the people that we have to protect because there is so much evidence in the labor economics literature that the initial conditions when you graduate, the conditions of the labor market, when you get your first job, affect your career for decades to come. And if you graduate school into a bad labor market, you can have worse wage profile decades into the future relative to someone who graduated into a stronger labor market.

• 7:26Speaker 05

  And there are reasons why, because you know, skill accumulation matters. You know, what your last job was matters for what your next one is. And it's so important that we get these young people on the job ladder, on the skills ladder to start, even if it's something like a summer job in high school at a construction site, where you know, like you're learning something important, like when the boss says you show up to work at 8:30, you show up to work at 8:30, like that's the rule and you do it, as opposed to sort of starting your first job, you know, four, five, six years later, and you show up at 10 or 11 because that's when you feel like showing up, right? And so it's so important that we get people on the jobs ladder to start their career, to start learning skills of all sorts, they can climb that career ladder and make good lives for themselves. And I really do believe that if you get this process started, not only does it help them

• 8:11Speaker 05

  now, but it also helps them throughout their careers and will start to address problems like declined labor force participation among prime age males, for example, right? If a lot of those people had gotten on the jobs ladder right out of school, I think that you'd have higher participation rates there. So this is all super important, but you also brought up another issue, which is prices, which is inflation, right? Mm-hmm. And I think, you know, if you remember a year ago, there was a lot of conversation about how immigration had helped to, so, you know, quote, "rebalance the labor market", and folks of all sorts were praising it for helping to calm inflation. I think that's really wrong because, well, A, I just discussed the slack in labor market being exactly where the competition with the migrants is, but two, If you take a large number of people, right?

• 8:56Speaker 05

  A large number of new entrants into the country and you throw them into what is a only sluggishly adjusting capital stock, things like housing, things like hospital and medical care, things like infrastructure and schools, the price or the quality, the price of those things will go up or the quality will go down, which means the quality adjusted price goes up. Put another way, if you throw 10 million new residents into a fixed supply of housing or only sluggishly adjusting supply of housing, that's going to put upward pressure on rents. And the connection, the empirical relationship between rents and measured inflation is much, much, much, much stronger than the empirical relationship between wages and measured inflation.

• 9:40Speaker 05

  And so the inflationary effect of throwing millions of new residents into a relatively fixed supply of housing dramatically outweighs the, the, the, any disinflationary effects through the labor market, which again, have come at the expense of these young Americans who are trying to start their careers. So I think that the, you know, that the overall interpretation of these policies in, you know, the economist commentary, it has been really backwards and really wrong. I think that large scale immigration was pretty inflationary. If you throw a positive population shock into an economy, you know, traditionally it will be inflationary. And there are studies of this in, you know, German reunification. There's been a number of studies about what happened when German, you know, when East Germany and West Germany reunified, and then you had tons of immigrants going from East

• 10:24Speaker 05

  Germany to West Germany, and that was very inflationary for West Germany. You know, that type of inflation caused the Bundesbank to start raising rates, which led to the breaking of the Bank of England pound of sterling to the Deutschmark. You know, this is, this is not a new concept. This is a concept that's out there and I think that a lot of folks have got it backwards.

• 10:40Joe Weisenthal?

  There was also a large fiscal expansion in Germany at that time because they sort of recognized that that was needed to integrate the East German economy. But I want to talk about tariffs. Here's a question that I've had for a long time. I hear different goals of tariffs. Sometimes it's about, okay, it's going to bring in this much revenue. Sometimes it's about, it's a matter of national security because we can't be so reliant on foreign manufacturing for various reasons. Sometimes it's about jobs, et cetera. What, you know, setting aside what the ultimate trade deals look like, like what are the benchmarks that we should use to see, did these tariffs achieve the goal? What does that look like?

• 11:23Speaker 05

  Yeah, so this is this is another great question. And so I want to point out that there's not just one set of tariffs. There's a lot of sets. There's a lot of sets of tariffs. There's the 301s and the 232s and Naipa tariffs. And they each have their own particular statutory, you know, statutory justification. Some of them are, you know, national security. Some of them are, you know, unfairness. Some of them are the emergency of trade deficits. So they're all sort of distinct. But if you were looking to sort of thematically look across them and say, you know, what are what are we doing here? I think you'd sort of start to see two, two broad lessons. One is imbalances, trade deficits, right? A sustained accumulated series of trade deficits, international imbalances, will lead to economic vulnerabilities.

• 12:05Speaker 05

  It will lead to financial invulnerabilities. It is unsustainable. If it keeps on going, it leads to places that aren't great. On top of that, it's unfair to American workers and firms. It puts them at unfairly uncompetitive ground. It disadvantages them relative to our trading partners. And there's a there's a real element of fairness. There's a real element of sustainability economically and financially. And the idea that we should start addressing those imbalances, you know, sort of is a is a is a strong driver of what's going on with is a very primary driver of what's going on with the tariffs. And by the way, you know, if we address those imbalances, if we bring those imbalances down, it creates more balanced trade, which is more sustainable, right? It will create more resilient, more robust trade. And more trade, by the way, if other countries open

• 12:48Speaker 05

  their open their markets to our products, it will be a world of more trade, not less trade, but more balanced trade. And that will be more resilient, more sustainable, and actually increase the longevity of the global trading system, which I think is something we should, you know, which I think would be a good thing. The other thing that's really going on is, as you said, national security. It's really important that the United States be able to defend itself, its alliance partners, preserve open shipping lanes, without having to rely on strategic adversaries or hostile countries for key parts to do that. If we have to rely on a country like China or somebody else for key parts to make bullets, or tanks, or satellites, or other things that we need to keep our people safe, it's not a good situation. We don't want to have to ask permission to keep ourselves

• 13:33Speaker 05

  safe, right? We want to be able to keep ourselves safe on our, you know, out of our own power to do so. And so one thing that a lot of people say to me is, well, why don't you just balance the, you know, balance international deficits with, with services? And I think that you really have to think about national security here, too. You know, like, I think that services are great, and I love that the United States is, you know, the world's biggest exporter of services, and I want to sell as many services as we can, right? Like, that's, that's fabulous. We should do, we should do more of that. But selling services doesn't address the national security dilemma, because you need manufacturing, too. And if you think about it, the United States just took steps to open the Red Sea to shipping, right? We don't really ship through the Red Sea. It's our trading partners that, largely speaking, ship through the Red Sea. But we took, you know, we, we exerted

• 14:14Speaker 05

  kinetic force, kinetic force to open it. We needed a robust manufacturing sector to do that. We will continue to need a robust manufacturing sector to do that. No amount of selling financial services, or of selling internet advertisements, or of selling legal services, will be able to open the Red Sea. You need kinetic force. And so it's not a case of one or the other. It's a case of diversification and both, and saying, yes, services are good, services are important, but we also need to be thinking about manufacturing for the sake of being able to defend ourselves and our, our alliance partners and, and keeping shipping routes open.

• 15:02Speaker 00

  What's next for virtual assets? I'm Jacob Grease, host of Economy Scale, a series exploring growth in key global sectors. And in this episode, we're diving into the digital forces shaping finance. Sean McHugh from Dubai-based Virtual Assets Regulatory Authority has this to say.

• 15:18Speaker 06

  We're seeing a lot of institutional players come in, digital asset dedicated hedge funds, high-frequency traders, and that sort of thing, and folks who service institutional clients.

• 15:27Speaker 00

  As more capital enters the market, adaptive regulation is likely to become increasingly key. Rhys Merrick of Ripple says.

• 15:35Speaker 07

  A lot of regulators globally would like to keep the industry at arm's length. That's the opposite here. I think also what you'll find is that regulation and frameworks can come out, but some of them are maybe a slight iteration on some 80-year-old policy and not actually in line with what the technology can do and offer. And again, that's very different in Dubai.

• 15:54Speaker 00

  Listen to the full episode wherever you get your podcasts. This series is brought to you by Bloomberg Media Studios and the Dubai Department of Economy and Tourism.

• 16:04Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw, innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting and hiring practices.

• 16:48Speaker 01

  But according to recruiters, advisors and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company. And Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at chatgpt.com.

• 17:27Tracy Alloway?

  It seems to me that the administration is very focused on perceived inequalities or injustices with other countries, with foreign trading partners, or just foreign allies in terms of trade, in terms of military spending, et cetera. And I guess my question is, do you see, or do you have any policies to address perceived economic inequality within the US? Like, why is all the focus international versus domestic policy?

• 17:58Speaker 05

  You know, the best way to approach that subject in the United States is to create opportunity for everyone, so that everyone can work better themselves and share in American prosperity. And that's exactly what the president did in his first term, right? The same policy mix from the president's first term, trade renegotiation, tax reform, deregulation, energy abundance, same exact mix in the first term that led to 3.5% unemployment, negligible inflation, and historic gains in income for, in real median household incomes, historic reductions in poverty rates, you know, new lows in unemployment rates for various disadvantaged groups in America. You know, this was a very successful recipe. And the best thing that you can do for folks who are less well off is to create a situation

• 18:43Speaker 05

  in which firms want to hire them, in which firms want their labor, want them as employees. And the best way to make firms want to hire more employees is to create a pro-business environment in which firms are doing well, because the better they do, the more employees they want, right? And so that's why we're focused on creating an environment of economic growth, of economic dynamism, where firms are prospering and therefore hiring workers and paying them well, and workers are experiencing real wage growth. You know, that's what we're trying to do.

• 19:10Joe Weisenthal?

  I want to go back to manufacturing, and I find this to be a very compelling point, that as many services and digital ads that you sell, it doesn't, that will never be, from a security standpoint, even if it is from a dollar standpoint, it'll never be from a security standpoint, the same as being able to build something and that kind of sovereignty. With the last administration, the Biden administration, like, I sort of understood, you know, I think they had actually similar, they clearly have very similar concerns. And you saw it through chips, you saw it through the loan programs office with things like energy and so forth. I had this very sort of, I understood their like theory about like, okay, de-risking and subsidies. And there were a lot of like new ostensibly advanced manufacturing

• 19:50Joe Weisenthal?

  facilities that went up. How does this administration actually think about like pushing the US to the frontier of advanced manufacturing when it comes to some of the energy stuff, some of that's being curtailed? I don't hear much about chips. I don't like, how, how do you think about like the incentive structure such that we get sort of, you know, risky capex heavy investment here so that we can still sort of build the things, whether it's chips or larger things that are important for national security?

• 20:22Speaker 05

  One thing about industrial policy that's important to keep in mind is that you have to think about sustainability. And I mean economic sustainability here. And if an industry is reliant upon government subsidies to exist and the government subsidies go away, you know, it's very likely that the industry goes away too. And you just set yourself up for another wave of deindustrialization. And that was the fatal flaw at the heart of the Biden administration's industrial policy and all the climate stuff that they were engaged in was it was industries that that were designed to be permanently, you know, sort of permanently reliant. And so if you want to create a sustainable manufacturing boom, what you need to do is to create a pro-business environment to make America more competitive and to make it a place where people want to do business. And that's

• 21:06Speaker 05

  what we're, that's what we're aiming to do. The deregulatory agenda is incredibly important for that, incredibly important for that. Economists are so underappreciative of the importance of regulation because it's difficult to study. It's not quantitative. You can study interest rates quantitatively. Joe has a 3% interest rate, Tracy has a 7% interest rate. Let's compare

• 21:25Joe Weisenthal?

  That's right.

• 21:25Speaker 05

  That's unfair.

• 21:26Joe Weisenthal?

  True, by the way.

• 21:28Speaker 05

  You can study taxes quantitatively.

• 21:29Joe Weisenthal?

  Sorry, just to be clear on this, I just want to, national security is like a public good, right? And I, does the market price public good? Well, I mean, like when we're, even if we're just talking about normal defense, there's always this public investment that is sustained and the big defense contractors always need public money coming in, et cetera. And so when you talk about this, like national security element to spending, I get your point about sustainability. But when we're talking about this, isn't there always going to be sort of a level of public backing that's necessary when it comes to something like securing the national security?

• 22:01Speaker 05

  Oh, there absolutely will be, and that's that, you know, national security is forever, right? And so there always will be, you know, the primary element of the government backing this stuff, and that's going to continue. Also, industrial policy, I think, tends to be more successful with national security because we have a better idea of what works and what doesn't work than, you know, someone in a government trying to predict consumer preferences 10 years from now. You know, that's really hard. It's hard to predict what consumers are going to want 10 years from now, this type of car, that type of car. But it's, you know, much easier to listen to the military and say, we need this weapon, or our soldiers are going to, you know, have trouble. Right? And so it's easier to pick winners and losers as well. And there will always be government backing for national security. You know, you can sort of do things to ensure more of that supply chain becomes

• 22:44Speaker 05

  domestic. And I would expect that you, I would expect that you see that type of thing over time. I think we have to tie this back together to the overall policy program, making America a more competitive place to do business, a better environment to do business in. And some of the tax incentives that are in the big, beautiful bill for investment, like full equipment expensing, full R and D expensing, full expense to give new factories, these are very substantial incentives to invest in manufacturing capacity in America. If you look at the academic research, the paper by, you know, Gudere, Reich, and Zwick et al from a couple of years ago, they found that the full expensing was the best bang for the buck in terms of incentivizing investment, right? So the combination of cutting the red tapes that firms can do what they want without begging permission from Washington,

• 23:27Speaker 05

  creating very strong tax incentives for investment, creating energy abundance to make it cheap to do stuff, opening foreign markets to American products, that American products are more competitive, this is a very powerful overall combination for saying that America is a good place to do manufacturing, and America is a good place to do business.

• 23:43Tracy Alloway?

  Well, let's talk about the big, beautiful bill for a second. And one of the things that has really caught the market's eye is this Section 899 idea, which would basically tax foreign holders of US bonds. So I've seen this described as a retaliation tax that's targeting countries with which the US again sees sees them as having unfair tax policies. And so I'm curious, like, what exactly is the strategic goal? Of this provision, is it mostly to try to incentivize foreign governments to maybe change their tax policies so as to make them better or more beneficial to the US?

• 24:23Tracy Alloway?

  Or is it a revenue generator at a time when clearly the deficit is getting bigger and people are worried about that? Or is it maybe a first step, a tiny step to revamping the role of the US dollar in the global financial system? What is it exactly?

• 24:40Speaker 05

  This provision is about the OECD global minimum tax and us trying to prevent American tax sovereignty from being exported overseas. We shouldn't be in a situation in which the taxes that American companies pay can be automatically determined by what's going on in other countries with their domestic tax rates. That shouldn't be the situation. And also, the OECD minimum tax process really disadvantages American firms by its structure and advantages Chinese firms because it's all about how you calculate corporate profits. And many Chinese firms aren't run for corporate profits. They're run for very specific state-directed activities and goals as opposed to profit maximization. And so this is something that would even further exacerbate competitiveness issues that we suffer. But it's about that.

• 25:25Speaker 05

  It's also about the digital services taxes. Countries, particularly in Europe, levy these taxes on digital services that just happen to, by design, have cutoffs that only affect American companies. They treat American companies like piggy banks and like free revenue. And it's not fair. And we're singled out and we're targeted, and this is to discourage that activity. If you talk to the Europeans, they'll tell you something like, these companies, these activities, they are not taxed anywhere. And if you're not going to tax it, then we're going to tax it. But that's simply not true because these products are taxed in Europe by the value-added tax, in the same way anything else that's sold is taxed the value-added tax. If you sell a widget, or a car, or a digital advertisement in Europe, it falls into that scheme. And so it is taxed.

• 26:10Speaker 05

  And this is something that singles us out. 899 is primarily a disincentive to those activities. We shouldn't have our trading partners single out our companies for unfair additional taxation. Shouldn't have other countries try and absorb American tax sovereignty in into their own policy into their own policymaking. This stuff should be undone and 899 services an incentive to undo that stuff services an incentive to remove those those unfair policies, the discriminatory policies. And hopefully, you know, I would be happy if it never got triggered because the digital services taxes got dropped and because some, you know, other countries deemed that US policy already satisfied the OECD criteria. That would be a great outcome.

• 27:05Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Businessweek's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting and hiring practices, but according to recruiters,

• 27:50Speaker 01

  advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates quote must be willing to work extended hours and weekends as needed. One major perk for all that hard work? Employees access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at chatgpt.com.

• 28:28Speaker 02

  The world of business is constantly evolving. Every day, new challenges, new opportunities, new ways of working. Comcast Business keeps you totally in step with secure AI-backed networking built to power the way modern business gets things done today in more than 100 countries around the world. That's some serious muscle. And get this, Comcast Business powers over 90% of the Fortune 500 and millions of small businesses. Behind it all, network engineers, cybersecurity specialists, support teams, thousands of experts answering your call at 2:00 a.m. like it's 2:00 p.m. Always on, always ready. That's a lot of coffee.

• 29:10Speaker 02

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• 29:21Tracy Alloway?

  So I take the point that this is part of a tax strategy, but at the same time, you know, big foreign investors, when they're thinking about what to invest in, they have a lot of choices. They could buy a U.S. Treasury, they could buy a 10-year JGB, I don't know, whatever. And I'm curious, you know, with an added tax, that would seem to change the calculation a little bit. Obviously, you've had people talking about just the volatility and uncertainty introduced by the administration's economic policies. So how do you actually keep American debt competitive to global investors?

• 29:57Speaker 05

  Well, so that's a misinterpretation of 899. 899 doesn't apply to most portfolio flows. And so the assets that you listed would be exempt from it. It's mostly targeted at, you know, corporate profits because that's what the minimum OECD minimum tax is about, and that's what digital services taxes are about. And so it's a like-for-like. It doesn't touch things like the portfolio flows you described. And all of that is just has nothing to do with 899.

• 30:22Joe Weisenthal?

  Let's talk about the debt more broadly and maybe then a little micro. From time to time, you often hear people say the national debt is this really big crisis. It often has to do with politics, as we all know, and suddenly people go in and out of concern about the size of the debt, depending on who's in the White House. It's fine, I get that. But why is it so important that all of the 2017 tax cuts are extended? If the debt is really something that is, you know, sort of existentially concerning, I get you're gonna, you know, you say, okay, well, there are spending cuts. This is, there's going to be some growth. Therefore, the trajectory is not going to be as bad as it was. But if debt is at an existential level, why is it so important that all the tax cuts

• 31:06Joe Weisenthal?

  be extended and in some case expanded, like such in the case of, say, like, you know, the SALT deduction?

• 31:12Speaker 05

  So it's so important that we don't, that we don't allow tax rates to move higher because higher tax rates are really bad for the economy and they're really bad for economic growth and they're really bad for competitiveness. You know, we want an environment in which firms want to do business, in which people want to work and in which firms want to hire the people who want to work. And low taxes are conducive to all that. High taxes disincentivize work, they disincentivize investment, they disincentivize business activity, they disincentivize profit making because the government takes a bigger and bigger share of all of those activities. And so we want an economy that is dynamic, that's efficient, and that's, and one with abundant resources that produces abundant goods and services. And that's a low tax environment and that's always been the story of supply side economics,

• 31:57Speaker 05

  always. Now, I think that the conversation about the deficit gets distorted by the CBO score. And let me, let me explain that a little bit, which is that this, in order to pass legislation through the reconciliation process, which allows you to pass legislation with a simple majority instead of a 60, you know, instead of a 60 vote, super majority for overcoming a cloture vote or a filibuster. There are very specific rules that you have to follow to get through the reconciliation process. Now, I'm not an expert on it. I understand like 10% of it and like I'm involved in the government. There are people who are like really, really masters of these rules. I'm not one of them, but I'm going to tell you a little bit about it, which is that in order to go through reconciliation, every item in the bill has to be judged to be primarily about the budget.

• 32:41Speaker 05

  The only way to prove that you're primarily about the budget. Is to have the CBO score it and say that this score means that you're primarily primarily about the budget. Now, the CBO score is involved in that process of passing a reconciliation bill through very Byzantine rules with very specific legislative purpose in mind, but it is not designed to be a comprehensive view of the totality of budget items that would affect the that would affect the fiscal outlook over coming years. And so, for example, tariff revenue, right? They only just scored this late last week. And by the way, at the request of Senator Schumer, you know, you know, that was not included in the score for the one big budget, the one big beautiful bill. But you'd have to be crazy to think that about $3 trillion of revenue from tariffs

• 33:25Speaker 05

  didn't matter when discussing the outlook for the deficit. I mean, like, that just strikes me as nuts, right? Like, better economic growth, right? Through the combination of taxes, of tax policy, deregulation, energy abundance, trade negotiation, we're going to get growth to 3%. 3% growth brings an additional $4 trillion of revenue over the 10-year budget window. Through pushing out the supply side of the economy, supply-side policies push out the supply side. Positive supply-side policy brings down price pressures because you're increasing the supply of goods and services, as opposed to stimulating demand while regulating the supply side into brittleness. That creates inflation. What we're doing will bring down inflation by pushing out supply. We get inflation down, interest expenses will follow. Inflation durably down, interest expenses will follow. If those return to where they were before COVID, that's another $3 trillion plus

• 34:10Speaker 05

  over the budget window, right? And none of that stuff is really credibly included in the score of the bill because of the very specific rules that CBO follows that Congress assigned to it for the purpose of obeying a very Byzantine reconciliation process that's not designed to be a big picture of the totality of things that go into the deficit. And now, what I just listed for you is like 3 to 4 percentage points of GDP of deficit reduction.

• 34:35Joe Weisenthal?

  By the way, Tracy, I just want to make it clear to anyone listening, I was not complaining about expansion of the SALT deduction. I do, you know, I live here in Manhattan, so I don't want anyone to think that that was a complaint.

• 34:47Tracy Alloway?

  All right, noted. Okay, but on the subject of the bill and, you know, forecasts for the deficit and things like that, it does seem like a lot of this is a big bet on economic growth, right? And growth will make up for lost revenue from tax cuts and increased spending on things like the military or whatever. What happens if the growth doesn't materialize? Do you have like contingency plans for that scenario?

• 35:13Speaker 05

  Well, I just told you that tariffs would bring in about $3 trillion over a decade. And I also told you that if interest rates come back down to where they were before COVID, that's another $3 trillion plus.

• 35:24Tracy Alloway?

  But we still don't know, we still don't know what the trade deals are going to look like, though.

• 35:28Speaker 05

  We don't, we don't, but you know, if you, what the president said when he was on the campaign trail was that he wanted 10 to 20% tariffs on the entire world and 50 to 60% tariffs on China. And what we've got now is sort of in the ballpark of that, right? So, you know, we don't know what the, what the ultimate trade deals will look like, you know, but I'm optimistic that we'll start to see a lot of deals come out as we get close to the July 9th deadline because of the way these are structured, that each country is going through certain steps. And those steps will hopefully conclude as we get close to that deadline. The tax bill will hopefully be, be passed roughly a month from now, less than a month from now as well. And so, you know, I do see a lot of this uncertainty starting to resolve in, in, in coming weeks.

• 36:07Joe Weisenthal?

  One of the ways in which the one big beautiful bill might have some fiscal contraction is through Medicaid and Medicaid work requirement. What is the goal there? The, the academics say that there are, there are very few people who are on Medicaid right now who are just not working, that this is a lot of extra paperwork, et cetera, that there is not some big block out there of people who could be working but aren't and collecting Medicaid. And they say, okay, well, this will just end up through paperwork and other hassles. People will lose their insurance due to the difficulty of, increased difficulty of accessing it. What is the goal? Is it about getting more people in the workforce or is it about shrinking the overall spending of this program?

• 36:52Speaker 05

  Well, they're related, you know, they're, they're related and there's, there's always moral hazard effects from, from these types of programs. And what we want to do is slightly improve the trade off. And, uh, you know, I'm, I'm, I'm optimistic that it'll result in, that it'll result in budget savings. And I'm also pessimistic that if the one big beautiful bill doesn't pass and we have a $4 trillion tax hike and, you know, a 4% decline and a 4% point decline in GDP, that, you know, like many more millions of people will lose their health insurance as a result. You know, like eight, nine million people, I think, might, you know, according to calculations from my team. So it's really important that we, that we've not let that happen.

• 37:27Tracy Alloway?

  So we've talked a lot about the idea of tariffs and uncertainty and the impact on businesses. And you say you're optimistic that, you know, things will get better as deals are announced. And I'm very curious what your day to day actually is like as Chair of the Council of Economic Advisers and how much you're talking to, you know, business owners, investors and people like that. Are you mostly holed up in an office? Or are you out and about, you know, meeting local businesses? How does it work exactly?

• 37:58Speaker 05

  So a little bit of everything. So, you know, you started this off by talking about trade and tariffs. And this is, this is a good time to disclaim that I'm not a trade negotiator, you know, that I run the Council of Economic Advisers and not the Council of Economic Deciders, which is fun, you know, because that means that I don't have the actual responsibility for making, for closing it. There are other people that close it, not me. And of course, the President is ultimately the guy who closes the deal and that comes in and makes it even better at the end. What I will say is that, you know, I do a lot of, I do a lot of what you said, which is, you know, trying to get the administration's economic message, explain, explain economic policy, explain why we're doing what we're doing, as we've been doing right now. And, you know, today, I've got, you know, sort of a total, this is, I guess, my fourth of six total speaking engagements today, including for, including for TV.

• 38:43Tracy Alloway?

  At least we're not last. That's good.

• 38:45Speaker 05

  Yes, no, you're, you're, you're not. And that's, and that's a big part of my job is, is communicating, communicating why we're doing what we're doing and what we expect to happen to folks. And then there's a lot of analysis that happens internally, too, you know. On a day to day basis, you know, the Council of Economic Advisers is really the internal think tank, economics think tank for the White House. And we provide economic analysis and economic advice and economic policy analysis to the President and also to, you know, all of the other principals in the administration. And so, on a day to day basis, we could have incoming from, you know, someone saying, what would the effect of this sanction on that country be to this, you know, commodity? Or what would the effect

• 39:25Speaker 05

  of, you know, of this change in a tax rate be on labor supply? Or what would the effect of a change in this regulation be on gasoline prices? And that could come in from, from any quarter at all. And then, of course, the folks who are asking want to want to talk about it and sort of understand why or or what we think could be done to improve or mitigate or whatever it is that we want to do. And so what we do is we just provide a lot of economic analysis and advice to a lot of different parts of the administration. And it's always, you know, it's always a new a new policy question, you know, multiple times a day.

• 39:58Joe Weisenthal?

  There seems to be this one sticking point, at least one of the cards that China seems to hold is rare earths. And according to the president in a Truth Social post this morning, they're going to sell the start selling them again. The Wall Street Journal having reported not long after that that, OK, it's going to be six months and they may revisit it. From your perspective, is this the type of thing that the public sector in the US should figure out a way to incentivize or spend directly on creating new sources of supply? Like, is this the type of thing that, like, from your perspective, would make sense for something like, you know, we're going to need these commodities? It does not seem great to be entirely dependent on one country. Like, should the government spend to figure out

• 40:42Joe Weisenthal?

  new new sources here?

• 40:44Speaker 05

  So my opinion and my advice would be absolutely yes. And, you know, this is in response to decades of China basically subsidizing all parts of the supply chain to drive everyone else out of business. And every time in any country, there's a new project, China comes in with even more heavily subsidized product in that market to drive them out of business. And so as a result, they've basically monopolized the supply chain. But I think what you're describing is the best possible argument that that anyone they made the argument for the president's policies even better than I ever could. Right? And the drama that's played out over over rare earths has made the argument for the president's policies better than I thought possible, because this is exactly the type of thing that we should

• 41:25Speaker 05

  not be reliant on. And, you know, it underlines the critical importance of this stuff. Right? Like, we have this part that, you know, these critical inputs that, you know, like, we should not have the vulnerabilities that we have. And so, you know, it really has, it really has has shown a spotlight on why we're doing what we're doing. And I really think, as I said, you know, proves why what we're doing is important better than I thought possible.

• 41:52Tracy Alloway?

  OK, here's my last question. Who loves tariffs more, Trump or you?

• 41:59Speaker 05

  I think, look, you know, everybody in this administration loves tariffs. And I think there's a reason why tariffs are an incredible tool. They have persuaded our, our trading partners to enter negotiations about dropping trade barriers. They never, ever would have entertained without them. You know, the United States has been writing, you know, letters to our, to our defense alliance partners for many years, asking them to spend more on defense. And for many decades, it went nowhere, right? You have to, you have to be willing to show that you're serious and that you're willing to do what it takes to shake things up, to get the, the change that you need. And I think it's been, it's been spectacularly effective. It's been spectacularly effective at doing that. Retaliation has been minimal. The only country that's meaningfully retaliated has been China, which is a, a substantial success story.

• 42:44Speaker 05

  Revenue is pouring in, uh, you know, as a nice side effect of what we're doing. And I think that we're all on the same page about that. Like, I think that this is, this has been a fabulous, successful, successful tool and experiment.

• 42:54Joe Weisenthal?

  For my, for our entire career, the big question has been, when will Germany start spending more money? And they actually are. Stephen Miran, thank you so much for, uh, coming on Odd Lots. Uh, really appreciate you taking the time and, uh, hope to have you, uh, back, maybe when, uh, some of these deals are in.

• 43:10Speaker 05

  Thanks for having me. It's been a real pleasure.

• 43:25Joe Weisenthal?

  Tracy, I really enjoyed that conversation. One thing that I think is interesting to me is to just sort of, you know, some of the stuff about the philosophy of like, okay, there's all these like goals that are kind of bipartisan at some point in, in some level or in very much so, particularly around manufacturing, particularly about Chinese dependence. So interesting to hear the sort of philosophy of like what you do about these issues.

• 43:48Tracy Alloway?

  Yeah, a couple of things stuck out for me. So one is the importance of tariff revenue in deficit calculations, which again, like, if we're thinking about the trade deals, I, I wonder if that influences the decision. If forecasts for the deficit are based on a presumption that we are going to be charging tariffs. For all these goods, then, you know, I don't know what happens if we suddenly strike like an amazing tariff deal for the US. And then the other thing that really stood out to me is, again, like, the importance of economic growth in a lot of these calculations. And it really all seems to boil down to that big bet that all of this is going to help the US economy grow even

• 44:31Tracy Alloway?

  more. And that's going to be the thing that offsets everything else.

• 44:34Joe Weisenthal?

  Yes. And I think like, the economic growth through like, in theory, like, the optimal tax structure, in theory, regulatory improvement on the supply side, growth through, you know, greater energy supply. Like, these are things that, like, at this point, by the way, we are recording this June 11. They seem like they're hard to disprove, right? So you have a lot of these sort of third-party organizations coming out and saying, no, they're not going to, this won't raise growth that much. And then the White House says yes. I think at this point, you know, obviously, like, none of the forecasters expect a major boon to growth from the one big beautiful bill. But as Stephen argued, like, according to him, economists aren't good at forecasting

• 45:19Joe Weisenthal?

  the benefits of deregulation. So it's like, well, maybe we need to revisit it.

• 45:23Tracy Alloway?

  Yeah. Well, I'm also curious about the timeframe, right? Like, so no one's expecting a big, immediate boom in economic growth. But like, when does it actually start to kick in? And how do you trace it back to deregulation and supply-side policies and all those things? I don't know. We should have asked him that.

• 45:40Joe Weisenthal?

  Yeah, well, you know, next time. Hopefully, he said, it was on the recording, he said he's a big fan, right? Like, that was actually in the episode, right?

• 45:48Tracy Alloway?

  He's locked in now. Okay. Okay. Shall we leave it there?

• 45:51Joe Weisenthal?

  Let's leave it there.

• 45:51Tracy Alloway?

  This has been another episode of the Odd Lots Podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.

• 45:57Joe Weisenthal?

  And I'm Jill Weisenthal. You can follow me at TheStalwart. Follow our guest, Stephen Myron. He's at Steve Myron. Follow our producers, Carmen Rodriguez, at Carmen Armand, Dashal Bennett, at Dashbot, and Cale Brooks, at CaleBrooks. For more Odd Lots content, go to Bloomberg.com/oddlots. We have a daily newsletter and all of our episodes. And you can chat about these topics 24/7 in our Discord, discord.gg/oddlots.

• 46:21Tracy Alloway?

  And if you enjoy Odd Lots, if you like it when we dig into some of the Trump administration's economic policies, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad-free. All you need to do is find the Bloomberg channel on Apple Podcasts and follow the instructions there. Thanks for listening.

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