CNBC transcript: Business Roundtable President and CEO Josh Bolten speaks with Kayla Tausche live during CNBC’s Capital Exchange today
Q4 2020 hedge fund letters, conferences and more
Interview With Business Roundtable President and CEO Josh Bolten
KAYLA TAUSCHE: We are joined now by Josh Bolten, who is the President of the Business Roundtable, for the view from corporate America. In the course of the last year working from home I think we've done Zooms from my attic, my home office, my backyard, and I'd now like to welcome you into my living room, as well. I want to get your reaction to Jared’s comments on stimulus, first and foremost, where he talked about this desire to hold firm that whittling down is the enemy, and essentially go big or go home. How realistic do you think that is?
JOSH BOLTEN: Sure. Just first, thanks for having us all to your living room. On the issue that you were discussing with Jared on whittling down the Biden plan. That's not where the business community is. What our members are saying is that they are supporting what the Biden administration and what Jared was saying, the urgency of providing the rescue that's needed first, to get the pandemic under control, and second, to support the most vulnerable through the tough economic times that the pandemic has created. So, we're for whittling up on those elements of it. But to the extent that the administration has tried to move into their COVID package, things that don't address — that aren't designed to address the immediate crisis, and are making it difficult to get bipartisan support for this urgently needed package, we think they ought to be flexible about putting that stuff aside and taking it up later.
TAUSCHE: But Josh, put the urgency into perspective. Because the cares act when it passed in March was $2.2 trillion. The American rescue plan is $1.9 trillion. The previous package was passed at a time when the entire economy was at a standstill, and it passed with full bipartisan support. Now, of course, we were at a point where large swaths of the economy are open, yes, the pandemic is still requiring a lot of people to work from home, it has slowed growth, it has slowed a lot of contracts. But there is a package that was just passed at the end of last year that is trickling into this system right now. So I'm just curious on a scale of one to 10, how you would grade the urgency of this moment? Sure it is an urgent moment, but how does it compare to the times in the past year where lawmakers rose to the occasion and passed these packages?
JOSH BOLTEN: Well, it's not the very deep crisis situation we were facing at the front end of the pandemic, but the pandemic is still with us. So I put the urgency at the at the high end of the scale. But the urgency is with respect to getting the pandemic under control, and supporting the vulnerable while that process keeps underway over the course of the coming months. And so, that's what we're as representatives of the business community that's what we're putting our weight behind. Is get the money out there for the vaccines and for the testing, and for the public health workers that are going to help get the pandemic under control, and then take care of the people who have been just devastated by the pandemic. While we head toward what looks like it can be a robust recovery.
TAUSCHE: One of the elements in the package as we were just discussing with Jared is a proposal to raise the federal minimum wage to $15 an hour. Senator Bernie Sanders who will chair the budget committee, has suggested that there is a CBO report forthcoming that will show there will be a deficit impact from the minimum wage that will potentially allow Democrats to include that as part of their bill that would potentially pass on a party line. But I'm curious if you buy that argument that raising the minimum wage would make people less dependent on the social safety net and ultimately have a positive impact on the federal deficit?
JOSH BOLTEN: Well the Business Roundtable has been in favor of raising the minimum wage for some time. $7.25 is clearly too low. But we're skeptical about the argument that this is the moment to proceed to push through the Congress on what would have to be a partisan basis, and a large increase in the minimum wage. You know, the members of my organization, the Business Roundtable are the CEOs of America's largest companies. By and large, most of them already pay at least $15 an hour. The folks whom an increase in the minimum wage most directly effects are the small businesses around this country and they are the ones who have been most devastated by the pandemic, who are flat on their back – many hundreds of thousands out of business completely – but many just barely hanging on. And we want to get them back going again. I mean it's in the country's interest, it's in the interest of our businesses because for America's large corporations, those small businesses are our customers and suppliers. And so, pushing through a minimum wage increase that, especially in the short run, can be very damaging to small business unless it's crafted in a way that takes into account regional differences that has appropriate carve outs for small businesses, that will take a lot of time to negotiate and that's why we think this package is not the right place to do that. This package ought to be put through on a bipartisan basis, and focus on ending the pandemic and helping people make it through in the meantime.
TAUSCHE: As the political prognosticator that you are, what do you think the odds are that a bipartisan deal can be reached that would pass with 60 votes and not be pursued through a partisan process instead?
JOSH BOLTEN: It's looking tough, Kayla, but it's not impossible. Jared was right. The reconciliation process if that's the way the administration and the leadership decide they need to go – even the reconciliation process does not need to be partisan. I was part of the George W. Bush administration, which in 2001 went through a major tax cut bill with the support, overwhelming support, of the Republicans in Congress, and in the Senate, the support of 12 Democrats. So reconciliation doesn't mean that it's a partisan measure. But I think they've got a fair amount of work to do to get Republicans on board. And taking out of their proposal, put aside the issue of the top line, and I thought Jared made good points about. It shouldn't just be I propose X, you propose half X, let's end up at point six X. What they ought to focus on is the very necessary measures that can bring an end to the pandemic and support the vulnerable in the meantime.
TAUSCHE: I want to move on to talk about the priorities more broadly of some of the Business Roundtable member companies. I remember talking to you at the end of last year and you were talking about how important a federal mask mandate would be for companies who are otherwise charged with enforcing mask mandates on their own premises and oftentimes getting significant pushback from their customers in the process. In the days and I guess it's been – two weeks exactly actually since the mask mandate that the Biden administration signed has been into effect. Has there been a noticeable impact on your companies and the behavior of their customers and in terms of complying with this?
JOSH BOLTEN: I haven't gotten reports of that so far, but it's directionally absolutely right that the federal government and the President, personally, is showing very welcomed leadership on the safety measures that all of us need to adopt during the course of the pandemic. That means masking and distancing. They work. All of our members are doing their best to promote that within their workplaces, in their shops and so on. And so, to have the President step up and mandate the mask wearing on public transportation and in federal facilities, we're 100% behind that. That's the right thing to do. It's setting the right tone for the country. And our members appreciate it.
TAUSCHE: And on the agenda more broadly, it's been unmistakable that over the last 12 months the priorities of the Business Roundtable have shifted quite substantially. At the beginning of the Trump administration the priorities were tax reform, deregulation, and, of course, some free trade elements in there as well. In the last 12 months the agenda has been refashioned to include that federal mask mandate to include some immigration priorities, some climate priorities, and supporting an increase in the minimum wage, and some other elements that are unmistakably more reflective of the Biden administration's agenda as well. And so I'm wondering if you could just take me back to the drafting process and how you fashion your priorities. Is it truly that the priorities of these companies have changed in the last 12 months or is it that, you know, you're looking at the reality of engaging with an administration that has a completely different policy slate than the one that you engaged with for the last four years?
JOSH BOLTEN: Kayla, not quite either one of those. All of the things you just mentioned – immigration, trade, some other items that are high on our priority list, including worker training and infrastructure investment – all of those things were on our members priority lists during the Trump administration. But there, there was the priority and the opportunity during the Trump administration to reform our corporate tax code in a way that made it competitive for companies to operate in and out of the United States and on this side, I have a strong disagreement with Jared Bernstein. But where we will have agreement is on a number of these other agenda items that now come front and center that they've been priorities for a lot of our members for some time. And now with the new administration, there's an opportunity to pursue them. Jared mentioned infrastructure investment. That's a very big deal for the country and strongly supported by members of the Business Roundtable. We'd like to see a fundamental way that is paintable meaning that the people who are taking advantage of those infrastructure investments help defray the cost of that. So there are political hurdles to be met on all of them. Not least on controversial issues like immigration. But we're encouraged about the many items on our priority list, which also are on the new administration's priority list. First thing we got to do is get past the pandemic, but once we start to look beyond that there's a lot of reasons for optimism about alignment on priorities.
TAUSCHE: And on the engagement with the administration, obviously the Trump administration valued the feedback from corporate America and held a seat at the table for members of some of the country and the world's largest companies, but I'm wondering where corporate America is in the hierarchy of feedback for the Biden administration and how your engagement and dialogue with the Biden administration looks different from your engagement with President Trump?
JOSH BOLTEN: Well, you’d have to ask them where we stand in the priority. From our perspective, they've been terrific. There's been a very high level of engagement outreach, consultation. Candidly, in ways that are much more extensive and deeper than we experienced even at the outset of the Trump administration. So, very well launched from the standpoint of the Biden administration on giving the business community the signal that yes, they're interested in the business community's views. Now, we're not going to agree on everything. But at this point we feel very comfortable that we have the communication. The channels are open. There are people that are senior people in the Biden administration who are interested, want to hear from us and will take our views into account. We're encouraged by that.
TAUSCHE: And finally, I couldn't let this conversation end without asking you about the Reddit rebellion and the takeover of many stocks that we've seen in the last week by amateur day traders in this sort of uprising of the everyday investor against the so-called smart money. And I'm wondering how executives are watching this activity unfolding in the market, whether BRT plans to study it further, whether you think it's a longer term trend or if it's going to be more of a flash in the pan.
JOSH BOLTEN: My own personal view is more like a flash. From the standpoint of the Business Roundtable, recall the Business Roundtable CEOs run the largest companies in America. They're not typically the ones that are subject to these flash episodes of short selling and short squeezes. What the Business Roundtable members want to see is good, clear transparent, easily-functioning markets with good price discovery. So a lot of these blips are in a sense counter to that. We have confidence in the regulators and supervisors in our federal government to monitor the situation and to make sure that these, you know, episodes that largely affect a band of retail investors confronting some hedge funds that that doesn't bleed over into the very necessary function that our broader markets serve to the economy. I don't sense any great anxiety on the part of Business Roundtable members about it. But we'll see how it develops.
TAUSCHE: Well, we know the Treasury Secretary is going to be having a meeting on that topic with top officials from the Federal Reserve and other regulators, so we will see whether that yields any changes, any new regulation, and we'll see how long this episode lasts. But Josh, we really appreciate your time and your perspective on a range of issues today. Josh Bolten of the Business Roundtable, thank you again.
