In an interview on FOX Business Network’s (FBN) Mornings with Maria (weekdays, 6a-9a/ET), Secretary of the Treasury Jack Lew discussed the proposed changes to U.S. currency, tax reform, Steve Mnuchin, and President Obama’s transition of power.
Jack Lew On The Political Obstacles To Tax Reform
MANDATORY CREDIT: FOX BUSINESS NETWORK
Jack Lew on the proposed changes to the U.S. currency:
“I think that the idea of the Harriet Tubman being on our currency is pretty broadly accepted in this country. You hear people calling them Tubmans already. Since the President said it once, it’s become kind of a common phrase. It tells a story about how American history has many different lenses. The life of someone born a slave who fights her way to freedom, travels back and forth to bring other people to freedom, becomes a spy to help the Union Army find its way through the rivers into battle — And then in the end, being one of the early suffragists in this country that gave women the right to vote. It is a quintessential American story, but a uniquely important one, and a part of our history that belongs on our currency. That will be on the front of the 20. And what we’ve laid out as a vision is on the back, to use the reverse side to tell a story. So to animate the buildings that are there now. The Lincoln Memorial is sitting there just as a building on the back of the five. To surround it with images that bring it to life as a place where so many important things happened in our national history, from Martin Luther King’s “I Have A Dream” speech to Marian Anderson breaking the segregation line in Washington and singing for 70,000 people. The back of the 10, where we have Hamilton on the front, can show the image of women demonstrating for the right to vote, coming to the steps of the Treasury Department to make the case for the women’s right to vote, which happened in 1920. And in 2020, what better time to have a woman on the currency and the history of suffrage shown on our money?
And we’ve proposed that on the 20, that Alexander Hamilton be — pardon me, Andrew Jackson be retained on the reverse side in an image that would show the White House with sculpture that is facing the White House which is a sculpture of Andrew Jackson.”
On Steve Mnuchin:
“You know, I’ve spoken with him. I — I can’t say I know him. He obviously has a successful background in business. I know a number of people who’ve worked with him when he was in New York, and I think that he has approached this the way we all do, taking kind of immediate notice of the breadth of the responsibility that you have. And I will wait to get to know him better and watch how he proceeds. One thing I know is that he comes into a department is that is enormously strong. It’s a department that the career staff of the department can support you in any area you go into on any day, and that’s a good thing,, because any given day will have a dozen different components to it. And no one comes prepared without that resource behind them.”
On having a lot of business professionals in the new cabinet:
“I think that all who come into these jobs bring something that’s unique to ourselves and our background, and we all come into the jobs and then realize that there are many things that you couldn’t possibly have done before because there are different kinds of jobs. Whether it’s treasury secretary, secretary of state, any of the major agencies, I think that people have to come in and be willing to hear from a wide variety of voices and not just have one perspective. I think people need to draw on the resources of the institutions that they’re leading that have deep institutional knowledge. And you have to remain true to your principles and flexible to facts and analysis as you go through, because every day, you deal with things that are complicated and hard, and you can’t just come in thinking what the answer is. You have to find out the answer by going through the tough process issue by issue. The people can come from a business background and do well. They can come from a government background and do well.”
On whether Obama will still keep a peaceful transition of power:
“I think the President is determined for this to be an A plus transition. He has given a clear signal to everyone in the administration that that is not optional. That means providing the resources people need, the personal attention from every level, from the top on down. And he’s leading by example, doing it himself. Just Friday, I had lunch with former chiefs of staff and the incoming chief of staff, Reince Priebus, and we shared our candid advice. And I think one of the things he saw in that group is that it’s a group of people who talk very honestly and candidly with each other and nobody ever knows what we say to each other, and I have found in my experience, both as Chief of Staff, as the ONB Director, and now as Treasury Secretary, that there is an openness even after you’re out of office to sharing advice. I think that’s the spirit of this transition and it will continue.”
Please see below for full transcript:
Part 1:
Jack Lew: I think that the idea of the Harriet Tubman being on our currency is pretty broadly accepted in this country. You hear people calling them Tubmans already. Since the President said it once, it’s become kind of a common phrase. It tells a story about how American history has many different lenses. The life of someone born a slave who fights her way to freedom, travels back and forth to bring other people to freedom, becomes a spy to help the Union Army find its way through the rivers into battle —
BARTIROMO: What a story.
Jack Lew: And then in the end, being one of the early suffragists in this country that gave women the right to vote. It is a quintessential American story, but a uniquely important one, and a part of our history that belongs on our currency.
1:06: BARTIROMO: That will be on the back?
Jack Lew: That will be on the front of the 20. And what we’ve laid out as a vision is on the back, to use the reverse side to tell a story. So to animate the buildings that are there now. The Lincoln Memorial is sitting there just as a building on the back of the five. To surround it with images that bring it to life as a place where so many important things happened in our national history, from Martin Luther King’s “I Have A Dream” speech to Marian Anderson breaking the segregation line in Washington and singing for 70,000 people.
The back of the 10, where we have Hamilton on the front, can show the image of women demonstrating for the right to vote, coming to the steps of the Treasury Department to make the case for the women’s right to vote, which happened in 1920. And in 2020, what better time to have a woman on the currency and the history of suffrage shown on our money?
And we’ve proposed that on the 20, that Alexander Hamilton be — pardon me, Andrew Jackson be retained on the reverse side in an image that would show the White House with sculpture that is facing the White House which is a sculpture of Andrew Jackson.
Part 2:
Jack Lew: So let’s separate business tax reform from individual tax reform. I think we actually made a lot of progress on my watch on business tax reform. There’s a fairly broad consensus that the way we should reform our business tax system is to eliminate the loopholes and the deductions that make the system so lopsided. We have the highest statutory rate in the developed world, but our average rate is in — on par with most countries in Europe.
The difference is we need to get rid of the loopholes and the deductions and we need to lower the rates. But we can’t do is spend a lot of money having a tax cut that loses revenue because that’s just going to shift the burden somewhere else.
12:49: Why couldn’t we get it done? You know, the politics have been challenging in the last few years. I think that there was more of a consensus around ideas than there was about getting something done. You have to want to get something done, you have (AUDIO GAP) together. I think there were some in Congress who were just as happy not to have a big accomplishment on something like a business tax cut during this administration. But that didn’t stop us from pursuing it quite aggressively, and I had many, many conversations with now Speaker Paul Ryan, with senators like Rob Portman and Chuck Schumer. And I’ve believed for two years now that if there was a decision to get business tax reform done, it could be done in a way that closes the — the loopholes, that lowers the rates, and that shuts down the pressure that’s forcing companies to make these terrible decisions to invert and to leave the country, to pay taxes in another system. Even then, they’re still benefiting from all the investments we’ve made here in the United States.
I think that we — you know, we need to close that opportunity down, so we’ve done that through regulatory moves to make it harder. But the only way to really fix it is to reform our tax system.
12:50: I think we’ve gotten more than halfway there because of having ideas that there’s a broad consensus around, and I hope it can be done without kind of blowing a hole in the deficit, which will then just force either taxes to be raised on working people or cuts to be made in important services.
On the individual side, it’s more complicated because it’s tied to fiscal policy so fundamentally. There is no revenue-neutral way to cut individual taxes because — unless you so reduce deductions on things like, you know, charitable contributions and mortgage interest deductions that either it’s a policy problem or a political problem.
12:51: And I think the challenge has to be can you contain some of the deductions and lower rates and still raise additional revenue to close the fiscal gap that we have in the future? I suspect the environment in Washington won’t be focused on so much on the fiscal gap for the next few months, but it’s really important that we keep our eye on that, because if you open a big fiscal gap, the only way to close it is to cut spending or to raise taxes. And if you cut spending, you’re going to be looking at things like Social Security and Medicare and Medicaid and food assistance programs like SNAP. And that’s a real problem because that serves important needs in the lives of working families.
BARTIROMO: This is — do you think this experiment of rolling back regulations and lowering taxes, including taxes for those companies that are keeping all the money overseas, do you think they’re going to bring it here? Will this work?
Jack Lew: I think that there are ways to make it much more likely that that money will come home, but only if you make it mandatory that it be taxed. Not if it’s voluntary. If it’s voluntary, we’ve seen in the past that companies will only bring it back at the moment when they most benefit, not at the moment when it — when additional revenue to the overall system. We saw that in the 19 — in the early 2000s.
I think that the — the idea that you cut regulations and you unleash enormous growth in the economy, I — I don’t think it’s supported by the analysis that I’ve seen of most of the regulatory proposals. I think you also have to look at what you’re doing when you reverse regulations. If you create a greater risk of financial instability, that has a cost. If you create a greater risk in terms of the health of children because of the air they breathe or workers losing productive days because they had health problems, or their kids have health problems. We’ve seen that the cost-benefit of these things is net positive for doing the things we’ve done.
12:55: BARTIROMO: What do you know about Steven Mnuchin?
Jack Lew: You know, I’ve spoken with him. I — I can’t say I know him. He obviously has a successful background in business. I know a number of people who’ve worked with him when he was in New York, and I think that he has approached this the way we all do, taking kind of immediate notice of the breadth of the responsibility that you have. And I will wait to get to know him better and watch how he proceeds.
One thing I know is that he comes into a department is that is enormously strong. It’s a department that the career staff of the department can support you in any area you go into on any day, and that’s a good thing,, because any given day will have a dozen different components to it. And no one comes prepared without that resource behind them.
BARTIROMO: The incoming Commerce Secretary, Wilbur Ross, was on this program a couple of weeks ago. And he said that in the last two years, you tell me if this number is right, the Obama administration has instituted up to 7,000 new regulations, just in the last two years. And his quote was that do you think the U.S. was that wild and woolly two years ago that we needed 6,000 to 7,000 new regulations put in place.
12:56: Jack Lew: You know, I’ve seen the cost-benefit analysis of rules in this administration and prior administrations, and the benefits outweigh the costs much more in the actions taken in this administration. I can’t say I’ve counted — I don’t know how, you know, he’s coming up with the number — but I think that if you look at what we’ve done, it’s been guided by do we take action and produce the benefits that warrant the action taken? And I think we have an outstanding record on that.
BARTIROMO: Some people are saying, wow, in the last couple of weeks, Carrier decides to leave jobs here instead of sending them to Mexico. And, wow, Ford Motor is thinking about, you know, doing a plant here. And even Apple is considering making iPhones in the U.S. And they’re scratching their heads and saying how come President Obama didn’t make that call?
Jack Lew: I think that if you look at the U.S. economy, since we’ve emerged from the recession, there’s 15.5 million new jobs in the United States. You look at manufacturing: There’s been growth in manufacturing jobs in the United States. I think we’ve actually been doing a lot to have the system produce jobs because the United States is the best place to business.
I think that looking at kind of one-off interventions, compared to the entirety of the economic performance, is a different way of looking at things.
I’m very proud of the record we’ve had across the board to grow private sector jobs in this country. Just think, if we’ve been losing jobs at 800,000 a month instead of growing at 180,000 a month, how different the U.S. economy would feel to American workers. How many fewer manufacturing jobs there’d be.
BARTIROMO: What’s your assess (ph)? He’s got Rex Tillerson coming in as Secretary of State. You’ve got Andy Puzder coming in as labor secretary. A lot of business guys in government jobs. How does this play out?
1:02 Jack Lew: I think that all who come into these jobs bring something that’s unique to ourselves and our background, and we all come into the jobs and then realize that there are many things that you couldn’t possibly have done before because there are different kinds of jobs. Whether it’s treasury secretary, secretary of state, any of the major agencies, I think that people have to come in and be willing to hear from a wide variety of voices and not just have one perspective. I think people need to draw on the resources of the institutions that they’re leading that have deep institutional knowledge.
And you have to remain true to your principles and flexible to facts and analysis as you go through, because every day, you deal with things that are complicated and hard, and you can’t just come in thinking what the answer is. You have to find out the answer by going through the tough process issue by issue. The people can come from a business background and do well. They can come from a government background and do well.
BARTIROMO: Secretary, let me ask you this. Has the President given up on sort of like a very smooth transition of power?
Jack Lew: Not at all.
BARTIROMO: Because he allowed Michelle to basically say look, we’re now in a period of no hope. He has basically said, look, Donald Trump was whining about the election before the election. Is he still going to keep to that peaceful transition of power?
Jack Lew: I think the President is determined for this to be an A plus transition. He has given a clear signal to everyone in the administration that that is not optional. That means providing the resources people need, the personal attention from every level, from the top on down. And he’s leading by example, doing it himself.
Just Friday, I had lunch with former chiefs of staff and the incoming chief of staff, Reince Priebus, and we shared our candid advice. And I think one of the things he saw in that group is that it’s a group of people who talk very honestly and candidly with each other and nobody ever knows what we say to each other, and I have found in my experience, both as Chief of Staff, as the ONB (ph) Director, and now as Treasury Secretary, that there is an openness even after you’re out of office to sharing advice. I think that’s the spirit of this transition and it will continue.
