york real estate but gambling real estate, boxing, wrestling, beauty contests, television, construction, never been the target of a criminal investigation. that's astonishing in new york city. >> a conversation with longtime journalist and publisher peter osnos sunday night at 8:00 eastern. the head of the white house council of economic advisors and treasury secretary talked about economic and trade issues this week. they were part "the wall street journal's" annual conference. >> we're going to dive into the economy over the next hour tracking the u.s. economy. it's on a roll setting a pace for global growth, how long can that continue? can the u.s. be the only economic engine that's pulling the world's economy at this point? what about that u.s. budget deficit?

kevin hasset is the chairman of the white house council of economic advisors. please welcome them. >> thank you. [ applause ] >> oh, kelly, tharnks. we're down to 19 minutes, so let's just get right into it. >> why don't we start out talking about financial markets. the dow is down around 700 points as we walked out here. why is the market down? what is it telling you? >> i think that, you know, day-to-day stuff is hard to call. i think one of the main driving forces in equity markets is revisions for the outlook. if you look at how the outlook has revised since last spring, i think the big change is the asian economies are slowing, european economies are slowing. yesterday i met with the chair of the council of economic advisors for germany and they're lowering their forecast for next year. for u.s. multinationals, they

have business all around the world. the u.s. outlook is still very possible, but the outlook in europe and asia has dropped a lot. i don't know about today. i think basically the news since last spring is that the global economy seemed to be in a coordinated boom. it's in a less coordinated boom and it's the u.s. leading the way. >> how long can the united states remain insulated from slowdowns we're seeing in japan, germany, both contracted in the third quarter, china slowing down? how long can we keep up this divergence? >> it would be a much bigger concern if we were a net exporter to those places. right now the u.s. is in this virtuous cycle of recovering from being the highest corporate tax place on earth. capital spending is up 7.5% so far this year. manufacturing jobs are up 450,000 since the president took office after dropping a couple hundred thousands from the previous president. those manufacturing workers and that 7.5% capital spending we're

seeing they're going to produce output. it there's a heck of a lot of momentum going into next year. given the normal relationship between capital spending and output we should see another 3% year last year, the u.s. >> you talk about forecasts for visions in germany and outside of the u.s. you're wrapping up the white house forecasts for next year that will go into the economic report of the president, budget, what's the forecast for next year? what do you see on growth, unemployment, inflation? >> so as cea chair one of your jobs is to be the chair of the troika. we had the troika meeting a few weeks ago to finalize the forecast for next year. it's going to become public next year. the thing i can say is last year when right about this time i was on the stage we thought the3.1%.

a lot of people said that possibly happen. i think gary cohen said to raise your hand and a lot of people didn't put their hand up. we're up 3.3% this year. gdp right now has the fourth quarter coming in at a point that would make it 3.1%. there's not a lot of cause to change the forecast going forward. >> you're stick ing with 3.1%? >> i don't want to release the forecast, but that happens next year, but, you know, if you've got the first year right in a ten year forecast you wouldn't expect to see a lot of revision. >> now, the yield curve is pretty flat right now. ten year yields are under 3%, they're closing in on two year yields. in the past that's been an indicator of recession. what's the risk of a recession? >> i think the recession risk right now is very, very low. but the recession risk is

certainly non-zero, you know, pretty far from zero in europe and some pockets of europe. i think if you look at europe right now it's being driven by a number of factors. one the slow asian economy is a problem for them because they export a lot to asia. two, there's the uncertainty over brexit. the third is in italy there's a debt problem that i think people are really worried about how it's all going to end. i think in europe uncertainty is doing what it normally does to capital spending which is putting it on hold. purchases of big ticket items go on hold. in the u.s., capital spending gives to gdp twice. and then it gives you gdp when it starts producing output. we've had all this new investment and all this manufacturing hiring that's going to increase goods production next year. i think the odds of recession, absent some really striking

financial collapse somewhere no one could predict -- >> so you mentioned business investment. i want to read you numbers i jotted down here. it strikes me as kind of a mixed picture. net residential fixed investment grew. non-residential fixed investment, that's a proxy for business investment. as a percentage of gdp, 13.6%, nominal in the third quarter. it was 13.7% in 2014. and 14.7% when we had a tech boom in the 2000s. here's a number i know you love from your days at the fed. shipments of non-defense capital goods 3.4% year or year compared to 10% year over year from last year. it looks like the business investment picture right now is good, but not great. that we're having growth, but not a boom. do you agree with that?

>> i disagree. first, you know, the last number was pretty bad. those are affected by weird seasonal and so on. smoothing through the ups and downs, the cost to capital model we used to forecast investment this year said that it would be up about 9%. and through the first three quarters they were up 7.5%. the model is about working and that's the same model that gave us 3% next year. i think it's correct for you to point out that the very last monthly data item was negative. but it's after a really, really big increase. the fourth quarter don't forget spiked because you got to expense at a higher corporate tax rate last year. so if you go back a year you're looking at about a 10% capital spending boom. >> so we're a year into tax cuts. you feel -- >> can i say one last thing?

if our model said we should go up 10% and we're up 2% i would say our model is being refuted by the data. the patterns in the underlying data are consistent with the tox affect we bobbled. >> you're comfortable a year after the fact saying we're having a boom? >> yes. >> we have a question i wanted to ask the audience to respond to about how ceos are responding to trump administration economic policies. looking at this question, you should think about tax cuts. deregulation also the tariff picture. have the trump's administration's economic policies increases or decreased your interest in investing in the united states? of course, you have the option of saying no change as well. >> so while we're waiting for this question to be answered -- i'm not seeing any movement here. why don't i ask you, kevin, what

you expect to see? >> i expect -- well, so i would expect that the majority of people would say increased. that's like the simple economic effect is. there might be some people, that because of transfer pricing and the nuanced rules of guilty and the kind of things the internet audience doesn't want us to talk about, that maybe for them it would go the other way. on net i think it should increase it. there's a vast economic literature that says that people's location decisions are very, very responsive to statutory corporate tax rates. i wouldn't expect that firms would be much different. >> and it looks like you're right. there's not a man or woman in the room who said these policies are decreases their interest in investing, despite the fact we've written quite a lot in the last year about tariffs and the impact tariffs are having on the economy. what's your assessment of the tariffs that have been put in

place already? how have they affected the economic picture? >> well, i think actually, you know, president trump has said from the beginning he's a trade reformer. i started a year ago june and my first meeting in the roosevelt room, the chair was making a presentation at a trade meeting. it was clear the long run objective of the team, which larry cudlow has talked a lot bo about, previous presidents have wanted to make progress. president trump was really, really serious about putting tariffs on people if they didn't make their trade policies more reciprocal. if you look at the dinner we had with china, the free trade talks that are underway with europe, the korean deal that's already closed, you can see that it's not just talk. president trump is trying to move us towards a better place. the way you evaluate as an

economist something like, say, the steel tariff is if the steel tariff creates this positive movement in trade policy, the short run costs of disrupting industries that consume steel it would be worth it. there's a lot more movement than there have been previously. >> how are u.s. tariffs affecting the chinese economy? have you presented that to the president? >> i can't talk about what i present to the president, but i can say that the problem of choosing what to put a tariff on is a simple one for an economist. suppose there's a chinese firm that 100% of their sales are in the u.s., but they have 1% of the u.s. market. then if you put a tariff on that firm it's bad for that firm but we can buy it from somebody else. so if you're trying to decide what your trade policy should be, then, you know, if you're using it as a tactic what you

want to do is maximize the harm to them if they don't come to the table and minimize the harm to us. without going into details about how they ended up sorting through all that, if you look at the big response from china, look at the decline in markets, the manufacturing sector, the ism type datas, it's looking negative there, and the very muted response here you would have to say that approach has been pretty successful. >> now, there was the possibility until a couple days ago we were moving towards 25% tariffs on another $200 billion worth of goods from china. what impact would that have had on the u.s. economy? >> you can sort of sort the things you could put tariffs on from the easiest thing where there are lots of close substitutes from, we can make it ourselves or buy it from somebody else to the other side where they only have it on earth. you slide down to the scale as you get closer to the end, it

hurts us too. there's a heck of a lot of stuff that china does that we're hoping to change in this negotiation. a report was put out last year of intellectual property theft where we said that there are estimates that china is stealing as much as $500 billion a year from u.s. firms and citizens. so if we start out down $500 billion, then maybe even going down to the bottom, if that's what it takes to get them to stop is something that has a positive net gain to the u.s. economy. it's true that if you were to go all the way to the bottom you would be moving into the kind of thing that doesn't match that example i gave you about close substitutes. >> the tariffs from here hurt the united states more and more. the further we go into this? >> the point is the simple economics of what i said is not the only concern that the usdr had as they were crafting the list. you can talk to secretary mnuchin about it when he comes out on stage. the basic principle is as you get closer to the end you would be hitting things that would

have more of an effect on the u.s. >> should the u.s. try to kick china out of the wto? >> i thought a sign of the really major impact that president trump has had on the international trade debate was the g 20 statement mentioned wto reform needs to be a part of the international agenda. the reason why the president believes that, and i concur, is chinese intellectual property theft has been a serious problem year in, year out. president obama got them to promise to stop but then they kept going. every time we bring a case to the wto we win but it takes five years and doesn't seem to have much of an effect. if we're going to have these international rules and they're going to create a circumstance where one country can regularly steal hundreds of billions of dollars of intellectual property from other countries and then lose the case in the long run, then we have to think about wto reform. i think the fact that wto reform made it into the g 20 statement is an important sign that other

countries agree. i said on the bbc when i was in london during the brexit discussions, you know, last week, that i would consider advocating in the white house that china be kicked out of the wto if they continue to misbehave and it continues not to function and not to reform. that's a much less likely path now given that the g 20 agrees that the wto needs to be reformed. >> one of the concerns in the market today is whether this truce or pause we're seeing is for real and there's going to be progress. do you think there's going to be -- >> yeah, again, secretary mnuchin is right in the middle of it. he's coming up and i think he's a better source for that kind of thing. i can say that i can see a lot of positive signs. there's been a lot of positive movement. there's 90 days to get stuff worked out. but the stuff that has to be worked out isn't rocket science. it could be worked out quickly if everybody wants to. i think the real big news for me that came out of the meeting when i talked to my friends that were there is the two presidents

agreed we need to work together to make progress on this. >> i want to talk about auto tariffs and then quickly move to the fed before we open this up to the audience. what is -- the administration is going through a process of evaluating whether auto imports are a national security threat. what's the argument for auto imports being a national security threat? when are we going to see that report? >> well, that's a question for wilbur ross, his team is putting together that report. they put together a report on steel, you know, and i look forward to seeing that report. >> what's the argument? >> you have to wait and see what argument they decide is the one they want to lean on on the report. i wouldn't want to foreshadow it. >> i want to talk to you about the fed -- actually let's open it up to the audience and then i can come back to the fed. questions?

any questions from the audience? >> so inflation of late has been running a little bit below the fed's 2% target. it's preferred around 1.7%, 1.8% right now. should the fed be raising interest rates at the time when it's missing its inflation ta h target. >> i respect the independence of the fed. the president does, too. i know he has opinions but he picked independent minded people. when we simulated this year last year and then talked about our simulations here on the stage, one of the things we saw in our economic models of what happens to the economy after a tax cut is that you get this big supply side stimulus and investment boom and that shifts the curve out and puts pressure on prices. you can get accelerating growth with decelerating inflation because you had a supply shock, not a demand shock.

that's pretty much what the data looked like to me. >> the fed is raising interest rates at the time when the ecb is about to end its qe program. what's the impact on financial markets and on the economy from all this monetary stimulus ending? >> i don't want to give the central banks advice. they know what they're doing. i can say if you go from a period where interest rates are not -- like throughout the yield curve to a world where they once again are, which is possible because we're not in the new normal. we've got low growth and need to hold down interest rates to try to keep ourselves from going into deflation to normal normal. if you've got normal gdp growth then you should expect other things to be normal, too. i would expect that we have gone back to the old normal and that we should expect to see that in financial variables. >> this return to normalcy, should that include a return to normalcy in interest rates sne. >> i would expect if you look at

long run relationships between rates outside of policy rates and the economy that i would expect those to be part of the return to normal. >> we just -- i want to move back to tax policy, one of your favorite subjects. we just had a lunch with jeb bush, celebrating his father. i want to talk to you about george bush's economic legacy. he agreed to raise taxes in november 1990. it was a political disaster for him. he lost reelection. economically, we went on to have the longest economic expansion in american history, at least post world war ii history. we went towards a period of budget surpluses. knowing what came out of that period, can we say that his economic policies, in particular that tax increase, was a success? >> i think that at the margin, he increased the marginal tax

rate that that alone in isolation is a negative. but what president bush did at that time was he made the calculation that austerity was a worthy objective and that it would set the stage for a continued expansion. he was managing in a divided government. i think that i can sort of see how -- when you're legislating with people that have different views with you that you sometimes have to make concessions. i do think that the the balance budget that we saw that was part of the legacy did set the stage for a really massive expansion. i think most of that expansion came because of the technic logical innovation that happened at the time. >> do we have some questions? >> one more quick question. >> okay. so dick cheney went on to say that deficits don't matter. the white house is forecasting a trillion dollars budget deficit next year. does that matter?

>> yes. deficits matter. you know, i'm not all the way in the bob ruben camp. i think in the long run, you know, deficits are in some sense an opportunity. if we have a fiscal consolidation in the u.s. that should be a net positive for growth. there are a lot of countries around the world that have figured out how to do that. before i entered the white house, matt jensen and i wrote a big study on fiscal consolidation and the positive growth effects. i think that's absolutely a powerful force going forward that at some point policymakers are going to have to confront. in the near term, i have to say that -- i have to emphasize the president was correct that in the beginning getting the corporate rate to be competitive and getting the military to have planes that fly and so on and that he inherited serious problems that were higher priorities, genuinely, than deficit reduction.

i think we've made an enormous amount of progress with that. if you look at the ten year forecast, i guess we're going to expect about $6 trillion more gdp than we thought when president trump took office. that gives you lots of faodder for fixing problems. >> thank you guys. >> thank you very much. [ applause ] >> let's continue this conversation, the economy's growing very strongly. you're seeing wage growth at a level you haven't seen in many years. you also have a rising deficit. how does the nation's chief bookkeeper keep track of this? steve mnuchin is the u.s. secretary of the treasury. he'll be interviewed by the editorial page editor of the "wall street journal.journal."

please welcome them. [ applause ] >> mr. secretary. >> thank you, pleasure to be here with you. >> welcome and thank you for being here. let's jump right in. we listened this morning -- i did, we all did to john bolton and larry cudlow talk about the china dinner and the deal. i have to say outside of qualcomm fentanyl and some general promise to buy some goods, i didn't hear anything specifically the chinese committed to. what did they commit to? >> so let me just put this into perspective. i think it's important to understand the perspective. we've been having discussions with our counterparts for the last year and a half. we've had multiple trips over a long period of time. when the president -- when president trump and president xi spoke and it was clear they were going to meet at g 20 we started doing work for this meeting. this was the first time that

china responded to us on the structural side with very specific items. so they took what was our original 30 page document and they put it in 142 specific items. they came back in advance of the meeting with specific responses to the 142 items with certain things committed they could deal with immediately. certain things they could deal with in a short period of time and certain things that were more problematic. going into this meeting, i think there was substantially more work done on both the structural and the non-structural items. prior to the meeting we had two meetings with our counterparts, the vice premier and others. and we reported, we had several meetings with the president. the president specifically said i want to hear this directly from president xi what they're committed to do and i'll make a decision at the dinner.

i think to say that all we heard about was qualcomm and buying things, i don't think that's the case at all. there was a -- there were very specific commitments, president xi spent the first 45 minutes walking president trump through a very specific plan. >> can you give us an illustrati illustration? >> well, i think you know the issues we've talked about. the structural issues -- >> i mean i'm talking about the commitments that they made to change behavior, change laws or something like that. here's why i ask. i think there's a lot of market chatter today that we got the nice bump in the markets on monday because they thought, okay, there's a good truce and progress was made. today a lot of people are saying you know what? maybe there's less there than meets the eye. maybe there's nothing much there except more talk. that's one of the causes for the market taking the dive it did today. >> look, i think it's clear the market opened up yesterday 450

points. the president was very specific on the readout from the meeting which he drafted. the president went back and spoke to the press on air force one. okay. and, look, i think the market is now in a wait and see. the market is trying to figure out is there going to be a real deal at the end of 90 days or not. i will toell you there are specific issues the president agreed on, okay, but now have to be dealt with on specific wording. for the first time china agreed that -- to a concept of specific time frames, specific deliverables and penalties if they don't respond. now, whether we can get that to a real agreement or at least make a lot of progress over the 90 day period or not, time will tell. but, you know, this was not just high level stuff. there were very specific commitments made from everything

from intellectual property rights to forced technology transfer to joint ventures to cyber issues. without going through all of them, there were 142 specific items on the structural side that we're dealing with. >> how firm is the 90 day deadline? could that be pushed further ahead? >> the answer is the president is going to see where we are at the end of 90 days. it's our expectation we have some form of an agreement and real progress being made or the president will move forward with tariffs. i would say we're going to work our best at the direction of both presidents. this is very different. this is the first time that the presidents sat down and discussed specific issues. and, look, you know, plenty of people are skeptical and can say china has made these commitments in the past. if there's a deal, there's got to be a basis of a real deal. >> okay. let's turn to another trade issue, nafta, the new nafta,

which the president -- >> it's not the new nafta just for the record. it's the usmca. >> for us journalists who need a short -- >> usmca, it's very short. it's shorter than new nafta in terms of letters. >> before the usmca -- >> thank you. >> -- was signed, wilbur ross, the commerce secretary said if they did a deal steel and aluminum tariffs would be lifted. the president said the same. the steel and aluminum tariffs are still in place. you know the prime minister of canada almost didn't come because he was concerned about th that. when are you going to lift the tariffs? >> there are specific discussions going on. we want to resolve these issues.

i think what happened was we have to resolve them with mexico and canada simultaneously. we're not going to try to resolve you know, canada without mexico. >> if you assured them they would be lifted, why not just lift them? what's complicated about that? >> i don't want to go into all the details. there are conditions of lifting them. whether we agree to quotas, there are specifics that have to be negotiated. i don't want to go into the details now, it would be inappropriate. i've heard the details. i think ambassador lighthizer

and secretary ross are working with them. i hope it's resolved quickly. >> some kind of quota system for imports or exports? >> exactly. we want to make sure that, you know, kind of we don't destroy the entire program. we want to make sure that there's not transshipments and other issues. i'm optimistic we'll resolve the issue. >> on the usmca politics, i'm still waiting to see a single significant democrat like speaker pelosi, speaker to be pelosi or minority leader schumer say they endorse the deal as is. in fact, what i hear is most of them saying i don't support it as is. does that give you any concern whether you can pass this in the next congress? >> well, of course it has to have -- give a little bit of a concern. on the other hand, i would just say when you go through the issues on this deal, i really do think this is a much better deal. this isn't just things like u.s.

content and autos, which are very important to the president. this goes on to financial services, currency, it's the first time we have currency provisions. it goes into intellectual properties. it really brings the agreement into the modern day. the democrats were consulted extensively through this process. i hope this doesn't become just a typical political process where democrats just don't want to do anything that the president wants to do. i'm optimistic that when it comes down to, you know, this in the new congress this is a good deal. bob spoke to a lot of democrats along the way who gave private assurances. >> well, that's why i'm surprised. i know he was negotiating with a lot of them. where is sharrod brown? >> you've been around washington plae plenty of times so you shouldn't be surprised in anything i guess in politics.

>> well, one other thing about this agreement, that is about the president said on the plane back from argentina that he means to terminate the current nafta deal, even before the usmca is ratified by congress. isn't that giving more leverage to the democrats in the house? because if they don't vote for it, then what happens is that would go back to the pre-94 tariff rules which you know are much higher. that could do significant harm to the economy. >> well, i think the president was pretty clear. he's going to put the pressure on the democrats to be clear. this is a better deal. they were consulted. he means business. >> yeah, but if they say, well, sure, fine, it's a bad deal. you gave us a deal, we don't like it. if the economy suffers,

presidents take the blame. >> i'm not overly concerned about this. i think it's going to pass. there is an enormous support on both sides, absolutely. >> what about the labor unions? i haven't seen the auto workers support it so far. i haven't seen any environmental groups support it. where are you going to get the support on the left? >> the labor was involved all along. let's see how this plays out. i think this is a big step in the right direction. it shows we can bring trade deals into the modern world and this will be great for economic growth on all three countries. >> okay. one of the things, and you mentioned it that's been negotiated in the new deal with mexico and canada is the content rules for automobiles and the rage rates in mexico. specifically designed to help american carmakers. >> absolutely.

>> yet general motors just announced it's closing four or five plants in canada and the u.s. layoffs of 15,000. what does that say about the confidence that this is really going to make a big difference for american automakers? >> i think it will make a big difference. as you know when you talk about the auto industry, the auto industry consists of small cars, medium sized cars, big cars, suvs, small trucks, big trucks. and the way these plants work, there is a very big expense of retooling plants. it takes time. you know, look, i'm not as expert on the auto industry as other things. i think the problem that gm has is they have less demand for certain things in certain plants. one of the big focus for us is going to be how do we make sure we can put the people in those plants back to work? the good news is, it's a great

economy. people need workers. so, you know, whether gm or other auto companies can retool those plants or those plants can be used for other things, there's a lot of demand. there's a lot of demand for workers in that part of the country. with the tax bill and the economic growth, those people are going to be put back to work. >> philosophical question. is it appropriate for a free market administration to criticize a ceo about where she deploys her capital? >> look, i think the issue is the president in this administration has really gone out of its way to support business. we constantly listen to ceos, we take in a lot of input as we formulate these policies. i think there was a better way for general motors to handle this and come up with a plan before they announced they were

abandoning these factories. >> what would have been better? >> i think it would have been better to really look at what the alternatives were before they just announced this. but i leave that to gm and for they and their board to figure out. >> okay. i think that was the question. it's better to leave it to the board than the ceo. the electric car subsidies the president mentioned. are you going to move and eliminate those as the president suggested for all car companies? >> i think if we did it, we do it for all. i think that's something that the president wants to seriously consider. you know, i for one think we don't need to be -- i don't think we need to necessarily subsidize electric cars at this point in the cycle. so people want to buy electric cars, you know, kind of -- it's an economic decision. i think electric cars will continue to develop. there's obviously been some

great development of electric cars. the government subsidized this industry. it should stand on its own. free market people like you guys at the editorial board should understand that concept. >> we're for that. we'll support that. if you put in the budget $7,500, get rid of that in your proposal, is that going to be in? >> i think we're looking at that. i hope it's in the budget. >> good. might have made a little news there. now one campaign theme the president ran on, infrastructure spending. didn't get it done in the first two years, but it is a priority also of the democrats. so the democrats though are saying you have to pay for it. they're saying what we would like -- some are saying we would like a tax increase. the president's big success was tax reform, cutting rates. he said at a press conference after the election that maybe he'd think about some adjustment in rates to get a deal with

democrats. do you think -- is raising the corporate tax rate from the current 21%, which you cut it to, is that on the table as part of an infrastructure deal? >> in none of my discussions with the president have iu hear that being contemplated. he reserves the right to do whatever he wants but that's not something i've heard in any of my discussions contemplated. what i would say is that last year it was a big priority of the president to increase military spending. and to get that done, we agreed with the democrats to increase non-military spending. there was plenty of money to go around in non-military spending to allocate some chunk of that to infrastructure. i know gary cohen who i just saw, you know, worked on that last year trying to get that done. the issue last year was not that there wasn't enough money.

there was plenty of money. it was the democrats' priorities where they wanted to put it. i can tell you because this is something -- i constantly people to the president about it. he very much wants to do infrastructure spending. so i'm hopeful in the new congress we'll figure out a way to do that with the democrats and we'll figure out a way to pay for it. my pencreference would be to pa for it through government savings as opposed to increasing taxes on anybody. >> how about the individual top rate, which came down to 37% from 39.6%? it's a high priority for the democrats. every democrat leader i talk to says we want to raise that top grade, is that something -- >> that's not the democrats i speak to. because a big component of the reason why we did that is because we got rid of s.a.l.t. for people in new york, connecticut, california, new jersey, illinois, i mean, i can tell you i still pay california

taxes, my taxes went up significantly. >> join the cl hub. >> we were sensitive to the impact -- that's a big part of the economy. those are democrat states but it's a big and a major reason to lower the top rate was to offset some of the impact of eliminating salt. but i can tell you, again, for people in those states, kind of that is something that was very important for economic issues. i don't think you are going to hear democrats in those states wanting to do that. >> okay. so can i, can we reassure markets here who are a little concerned about the economy right now, that next two years, tax increases are off the table? >> i have not heard anybody in the administration suggest otherwise. >> on that, let's get some questions. >> yes. >> questions for the treasury-secretary. >> anybody here, come on, we got

to get you guys engaged here. yes, sir, right here. >> just on the negotiation with china, i think i know what you're going to say, but you talked about yesterday, market up 450 points, today down 800 points, how much does the market, how the market reacts over the next 90 days going to have any impacts on the negotiation and the stance of the administration? >> i don't think it will have a big impact. i mean from my perspective, first of all, i would just comment, you know, i do think we have a lot more market volatility in general, because of the amount of electronic trading and trading programs there are, and because of kind of the dodd frank issues, dealers can no longer really principle. so one of the issues, we're studying this at fsoc, we're

studying this with the regulators, we get a lot more volatility in both directions, so any time there is any amount of news, okay, we move quickly in both directions. we're very focused on economic growth. the things i think people should be looking at, is where is gdp, where is inflation. the good news is, the inflation numbers really look good particularly with oil coming down now. so i see the economic environment very attractive. now, if we can get a deal that works, the single biggest opportunity for u.s. business, and u.s. workers, this is the first time that china has ever sat down this level and having a commitment of really negotiating a real deal. if we can get this to work, it's enormous. they've put on the table a number, not that, you know, this is about selling out, because it is not, i want to be clear, but they put on the table a number of 1.2 trillion dollars of additional goods.

>> how many years? >> that's over multiple years. scaling up, okay? . but if we can get the structural changes, u.s. companies are going to sell a lot more goods with a growing china middle class. so if we can get this right, this is one of the biggest economic opportunities for u.s. businesses, u.s. worker, and the u.s. economy. >> other questions? right here. >> secretary mnuchin, one area that you haven't touched on is iran and sanctions on iran, and impact on energy pricing. you want to comment on what, how you see things playing out in the next six to 12 months? >> i think this is something that you've seen a whole of government work really, really well on, and this has been an integrated strategy. i've been to the middle east three times in the last year, big part of what i focus on is obviously the sanctions

programs. i've worked very close with mike pompeo, and others, on this. we were very, you know, we wanted to be sensitive to the oil markets. i think the oil markets ran up in advance of this. i think people were relieved. the sanctions are working. the europeans weren't happy about it. but the sanctions are working. and you know, iran just had a missile test this week. i can tell you from my conversations with the europeans at the g-20, we may have a difference in strategy in how to get there, but everybody is 100% aligned that we don't want iran to have nuclear weapons. we don't want iran to be shotting and testing ballistic missiles and exporting terrorism. so i think this is a strategy that's worked. the president gave the original deal time. couldn't change it effectively. he terminated it. and i think you're beginning to see the economic impact on us,

on them, and we've done it in a way that had a moderated impact on the u.s. economy. >> the question over here, yes, and tell again who you are. >> rich lesser, pcg. friday after thanksgiving, there was quite concerning report put out by the administration about climate and its impacts economically and societily in a moderate time frame, not very, very long time frame, following on the u.n. report. obviously the president has shared his views on that subsequently. does climate, sustainable economy have any factor into the priorities for the administration as you look on, as you look at the years ahead, and what we do to move to a more sustainable economy? >> sure, well, let me just comment, you know, as treasury secretary, i have kind of vast responsibilities that span across the government. this is not one of my areas of expertise. i did read the report. i found parts of the report

interesting. you know, i will tell you, the issue i probably spent more time on is the paris agreement, and again, if you look at what the u.s. has done in terms of cutting carbon emissions, and efficiency, in the private sector, we've done an enormous amount. and again, if you talk about the china/u.s. issue, you know, pollution is a big problem in china. they know it. quite frankly, you know, if they were going to, if they were going to have goals similar to our goals, it would have been one thing, but this was a one-sided issue. but i'm not an expert. i can't comment on the report. i can comment on the president is interested in clean air, and clean water, and we can do that in an energy p-efficient way. but i'm not an expert kind of, i read through the report, it was quite long. >> one last question right here. >> ralph, with the seg. he mentioned withholding the tax

credits for lesser vehicle, would you opposed to removing tax credits for renewable energy, that also creates distortions in wholesale power markets? >> i think that is a policy we should look at, although i don't think we've made any decisions on that. >> secretary mnuchin, one last question. >> of course. >> there are a number of people involved in the trade negotiations. sometimes hard to determine exactly who in charge. the president is the owner of the team. who is the coach? >> sure, this is like inside baseball, people are, you know, kind of make a lot into these different issues, so let me explain this very carefully, because i think there's been a bunch of confusion, and people want to make this out more than it is. first of all, we have an integrated economic team. we meet constantly. the integrated economic team includes kevin, who is here today, includes wilbur ross, myself, larry kudlow, peter

navarro, chris la dell and others. all of these discussions on china that have occurred to date have been myself and bob and larry kudlow, before it was larry kudlow, it was gary, who was here, sat in the meetings with me. we have different views at times, we present the different views to the president, and the president gives us direction. bob being the ustr is the right person who clearly should be the one who is negotiating the agreement. it is his job to turn this into an agreement. i am very involved with the vice premiere who is my counterpart, i've been involved in all of the detailed discussions, but clearly, the job of documenting this clearly belongs with the ustr, and there is nothing more to this. i know the paper wants to make this out as kind of a, you know,

one team versus the other team. as a matter of fact, i will tell you, president trump said in the meeting with president xi, even joked about the fact that we had different people with different views, and president xi kind of looked there and smiled and he had said, yeah, i have the same thing across my talble. so obviously, people have different views but we do have an integrated approach. everybody wants to get to the same place. >> secretary mnuchin, paul, thank you very much. >> thank you. >> thank you. former president george h.w. bush was buried yesterday in college station, texas. at the bush library museum. this week, we will bring you this week's events commemorating the 41st president. saturday, starting at 9:15 p.m. eastern, the casket arrival at the ceremony at the u.s. capitol. and public tributes from the rotunda. sunday, at 10:35 a.m. eastern, the state funeral at washington

national cathedral. and that will be followed by the texas funeral at saint martin's episcopal church in houston. that's this weekend. on c-span. saturday at 8:00 p.m. eastern, conversations with two retiring members of congress. republican representative lamar smith of texas. retiring after 32 years in the house. and democratic representative michael capuano of massachusetts who was defeated in the democratic primary. >> you faced a contentious primary this year. did that surprise you? >> no, not at all. i've been telling people for a while that my constituents are angry. they're very angry. they're angry at the democratic party for not standing up for certain things. they certainly are angry that donald trump got elected. and the way he has governed. and it is not the partisan, everyone wants to look at it as the partisanship but it is the easy short-handed way to say it i guess but they forget that we

have a republican governor in one of the most democratic states in the country and the most popular, and he just won an overwhelming victory. so the partisanship is not it. it is part of it. it is how you do it. and so my constituents are angry, upset, want change, and i knew it was going to be a tough primary. >> but you are a mr. smith goes to washington, aren't you? >> oh, not everybody is going to remember the jimmy stewart movie with that title. but i have to say, i shamelessly played on that theme when i first ran for congress, and we had bumper stickers that said send mr. smith to washington. and more than that, we decided that it might be an interesting idea to try to auction off a poster from the movie, jimmy, a poster of the movie, send mr. smith to washington, and i called jimmy stewart, who was a republican and he autographed the poster for me, which we auctioned off at my first or

second fundraiser in san antonio, and i had a friend pay $1,000 for that poster, that was the biggest contribution we had had so far. and he has the autographed jimmy stewart poster, at his house today. and so that brings back happy memories, too. >> representatives lamar smith, and michael capuano, saturday at 8:00 p.m. eastern, on c-span and c-span.org. and listen on the free c-span radio app. up next, doctors and health insurance ceos talk about the structure of the u.s. health care system, and ways to improve service and treatment. the american enterprise institute organized the event. >> good morning. good morning. good morning, everyone. good morning. let's go ahead and get started. welcome to the american