tv Washington Journal Peter Morici CSPAN April 6, 2021 3:21pm-3:55pm EDT
appointments. the house returns tuesday, april 13 for legislative business. speaker pelosi announced that later this month, she expects the house to work on equal pay for women legislation as well as a suspension of the 2% across-the-board cut to all medicare payments until the end of the year. president biden's infrastructure and jobs package is not expected on the house floor until later in the spring or early summer. watch live coverage of the house on c-span, the senate on c-span2 and follow our congressional coverage anytime at c-span.org or listen on the free c-span radio app. >> peter is the professor of economics at the university of maryland. good morning to you. guest: good morning.
host: he wrote a recent piece taking a look at this idea of infrastructure and saying this could be a case for bipartisan support. could you make the case? guest: i think there is a lot of good and decent things in the infrastructure program. there are a lot of things that are good and decent and have nothing to do with infrastructure. the difference is the problem of getting bipartisan support. let me alert you to two major elements. there is about $600 billion advertised as straightforward infrastructure. there is at least another $500 billion in their of what we would call industrial policy. something americans don't like to talk about, but it means things like promoting the semiconductor industry. increasing support for r&d.
i think those things have really strong bipartisan support. some on the basis of increasing the gas tax. it is way out of date and probably, we should do it. there is a lot of other stuff in there that can be accurately characterized as show safety net, social programs. we can get into a discussion of whether those are good or bad, but reality is if they are not infrastructure, they are not industrial policy. those are the items with which you have strong support. the democrats can't get the whole bill that way. they will go through a kabuki dance basically saying hello, senator mcconnell, are you interested in supporting us. they come up with a narrow proposal. let's do reconciliation, as you covered in the last segment,
they seem to have an infinite supply of reconciliation. it is like a hydra. my feeling is that there really is the potential to bring the country together and it is a lost opportunity because what the country needs now, and i'm not speaking as an economist, is a common project, something like the space program. all roads, bridges, ports, airports and all the rest should be used for every building and industrial policy. i have to recognize that if we don't do it, we are going to lose out. think of it like the war production during world war ii. we need to meet the chinese challenge. that is the way to do it. there is broad support in congress for those kinds of politics. if we don't call them industrial policy. let's go on and do it. host: if you want to ask
questions of our debt -- guest, democrats on one line, republicans and independents. you probably heard yesterday the treasury secretary proposing at least raising of multinational taxes, a higher rate. i want to play you a little bit of what she had to say on that front and then get your response. [video clip] >> competitiveness is more about how u.s. headquartered companies fair against other companies in global merger and acquisition bids. it is about making sure the government's have a stable tax systems to raise sufficient revenue to invest in public goods in response to crises in the all citizens fairly share the burden of financing government. president biden's proposals announced last week have bold
domestic action including to raise the u.s. minimum tax rate and renewed international engagement. recognizing it is important to work with other countries to wind the pressures of tax competition and corporate tax space erosion. we are working with g20 nations to agree to a global minimum corporate tax rate that can stop the race to the bottom. together, we can use a global minimum tax to make sure the global economy thrives based on a more level playing field and the taxation of multinational corporations and spurs innovation, growth and prosperity. host: what do you think about that as a means of financing echo -- financing? guest: i think it is a very nice
statement. it is one that does not take into account history that she has lived through and participated. in order to have a common corporate tax, you have to have a common base. this is what we are going to tax. but in every country, people like to exclude things. you can have a common rate, say 21%, but if you broadly define r&d and give an r&d tax credit like we do, you are really going to have a smaller tax than everyone else. not everybody is going to want to impose the same credits. that is the first thing. the second thing is that we have been engaged in negotiations for many years about how internet companies should be taxed because you have a basic division between where goods are made and where they are sold. in the good old days when we shipped automobiles around, we made cars in detroit and japan sent cars here. there was plenty to tax once they got here.
when they made the cars, you tax them on the distribution cost. everybody shared. now, if you are in cupertino or somewhere else on the west coast and you come up with a neat software solution that provides the basis for running cell phones, you can charge royalties on the worldwide. there is really not much physical presence abroad to tax. the europeans generally are very upset because they don't have big internet companies. they have really come up short in competing in the area and they want to tax on the basis of sales, but there is not much presence there to tax. we get involved in a conflict over that because after all, if a tax them, we can't and you cannot have everybody taxing at 24%. before you know it, there are no profits left that all. we have not been able to reach a reasonable conclusion or compromise on that and she knows that.
this was some sort of bout of multilateralism. i call this the garden of eden solution. in the garden of eden, everything was perfect, but there was the apple, oh so tempting as it was. if we just take a bite of the apple, we know more than everybody else. 120 countries around the world, 180 countries around the world, the number of jurisdictions should not matter, should agree. with today's intellectual driven property companies, you can easily move the company. you may have to pay some fees to get out of the united states, but you can move to the cayman islands or bermuda or someplace else that decided to have a 5% corporate tax rate. there is really not much you can do about it. if you attack them, put attacks on with the export and so forth,
you violate international law. you violate the wto agreements. i just don't see this as a starter. it is the sort of thing i would get in a case study for a first-year mba student and would say, go through this drill and rewrite the paper. i don't mean to be bipartisan. some of the proposals that were authored by the trump administration. part of the high-tech companies, they were equally ludicrous. i am starting to wonder what they do over at the treasury department. host: as far as the political side, what do you think that move does as far as democrats who don't want to be at that high?
guest: night you're getting close to not wanting to do that. i'm not a broadsheet like the new york times or newsmax. let's pretend i am. then you can say, they say this will make us competitive by going to 20%. i thought i'm going to get these international negotiations going so anybody raises their taxes. well, senator joe can go along with the tax. everything passes by 50 bucks these days. -- by 50 votes these days. they will get their tax, they will get their worldwide minimum that relieves us of the competitive burden of having such a high tax rate. sometime in 2055, 2555 or the next millennium, it is not going to happen in any timeframe soon. i really wish i can speak personally with the treasury
secretary, but, because i would be amused by your answers. it reminded me of the time where i said we needed electronic currency. and they told me he wasn't interested in that. guess what happened yesterday? the chinese gave electronic currency. one of the things you can count on, in the world of economic policy, is economist tend to have their fleet -- have their feet planted in the past. it is hard to get them looking forward. that's why they don't like industrial policy, for example. nothing you can count on, is the treasury department, no matter who was in power, is playing yesterday's baseball game. without even the benefit of yesterday's paper to show them the results. host: mary, you are on with our guest. hello. caller: i just want to say, i am
very upset about the fact that joe biden's agenda is starting to, when it comes to taxing the corporations, it is sounding like business as usual. what is 20% going to give us? when it was 35% for knockdown. amazon pays no taxes. here's what i'm going to do. i will boycott any company that doesn't agree with raising the taxes. we need to have money for the infrastructure he wants to create. he is not going to get it, they are not going to tolerate it. you can say what you want to say. everybody seems to be owned by the corporations which are not people. the people needs to know the truth right now. maybe you should tell them the truth. people have the power, they are going to use it. right now, the corporations on us. they have owned us for the last am 50 years. i am tired of it. most people that i know are
tired of it. so, that is all i have for you right now, but i will boycott. and joe mansion needs to get out of office. he is not a real democrat. guest: you trust on an important problem here, you can raise the tax all you want. do tax rate is going to be zero. 20% would make is one of the highest in the world. must be clear about that. but, what really matters is with actually pay. now, if you're going to boycott every company that opposes the tax increase, i would suggest you must be good at baking at home, so in your own close and other skills. because, i thought there were going to be many companies that would support this thing. unless they have all the deductions and exclusions and so forth. so, maybe jeff bezos can come
out and support it because he is all that stuff going for him. i would have to look at the corporate returns. but, this problem goes way back. back when i was a kid studying economics on the 60's. it had a monopoly, every kitchen in america. it didn't pay any taxes on its profits. this is a problem. i think, also, this rhetoric that says we are owned by this or that, that is like shouting. i ask you, if you're going to your church and you are involved in meeting, he gets any reasoning process, any processes getting to the root of the problem. right now, we are shouting at each other on these issues. and, so, we will not get very far very quickly. i think senator mcconnell sent something that was very poignant. yesterday, senator schumer said
this will put an end to republican obstruction. every chance he gets, he says something like that. how would you like it if we get a 51 vote majority? and start a national right to work act? we are getting dangerously close with the retaining -- authoritarian solutions. where if you get a grasp on power, you can ram through an agenda that is controversial. all of this shouting and screaming is not useful. host: let's hear from michigan, harrison michigan, democrats line, hello. caller: everybody keeps talking about everybody else, but i have yet to hear from the very beginning of this pandemic, i have yet to hear anybody talk about the disabled people in this country. one of reagan said why punish
the successful? what about the people who didn't make it after paying for years. social security insurance policy, just like every social security recipient in this country. i did it, now i am on disability. this so-called wage that biden keeps talking about, that is just unlivable. you have hundreds of thousands of people in this country that are living a less than wage now that have paid for three years into a very strange insurance policy, that every retiree has paid into their whole lives. just like i have. a few years out of 25 years, maybe three, without being able to work.
but, working for 25 years and winding up having to live like this, on the very edge, i just had my tax credit taken away. his little income as i have, now you guys are paying for a whole stuff. host: take what you which -- which you wish and go with that. guest: a couple of things. first of all, we need an enhanced national pension system. we need one that doesn't discourage people to work when they can work. we need to recognize people living longer. they are not marginally engaged, even when they are. even when it quite used to be.
inside forklift trucks that run on propane gas, expensive and we only use them for limited applications. with a couple that were used up that needed to be done. we can work longer. if we do that, we can provide people for generous pensions. when i began my working life, i'm 72. we were told that your old age retirement, social security, right attention in your home. you have to pay off your home. paying mortgage and retirement. this product pensions can't be relied on. too many people find themselves
in a situation. just a social security check is not enough. we assumed other money would be there, we need to come up with a system, and this is been talked about for a long time, that encourages people to create something and have them bill young. out of the say it is alarming, we talk about this when i do the business network. it is really hard to get millennials to sign up for payroll deduction, even when they can afford to. we talk about our own kids being difficult. a lot of young people setting themselves up for a bad end. they seem to think it would go forever. i can understand the feeling of immortality. the notion that we will be a will to work forever, we have
people that can't work anymore, an example of why need to get going on this. but, we need a better national pension system. we need one that is not premise. it will stay there your whole career, not very normal these days. suppose you had a way of carrying that benefit from employer to employer, a lot of those employers are not going to be around. they will go out of business, technological change. for example, i would not be surprised if the pension would not be worth much. i want to take a particular company. the people that made carriages, did not make automobiles people who make internal combustion cars, they may not make electric
vehicles. the people who rely on pensions from the traditional or legacy automakers may find themselves disappointed. if you think i'm nuts talking that way about these large companies, there are couple of things i know, they will have another downsizing. eventually, there will be a little bit of water on the beach that a lot that -- that evaporates. host: let's go to stephen in pennsylvania. caller: i am concerned about the tax increases across the board, nobody is telling the public the truth that it will affect every american. no matter what your economic base or wage earning. sorry about the dog. but, when i found since 1980, we
had the 401k come up. that was lost twice in my lifetime. and, nobody is talking about the sticky hands in the politics. that have taken the money away since the 60's. when my dad was alive. every time we go to get money to get something, they read the public trust. i don't think our politicians should be doing that. we would have enough money with social security. and other investments over the past years if there was stuff taken the money away. the tax increase that mr. biden is proposing is going to hobble the americans business. this going to hobble american business because it is a global economic tax increase. guest: i didn't think i was
writing lines in the washington times. when i give you my story on it, whether it makes some sense you, and appropriate way to accept the challenge. i, terribly -- i am terribly concerned about these tax increases. i know taxes were much higher, there are so many loopholes you can drive through, it is what you actually paid matters. today, there are not that many ways out of it. you have to pay it. also, the state exclusion, about 11 million, you have to pay it. if you have enough money, it is 40%. if you look at who does the investing in america, the water goes down and goes away.
the investing the goes on in america is in small startups. they're the ones that go into apples, facebook, microsoft, so on and so forth. there are a lot of venture capitalists, they tend to be older people that have made a fortune. now, they spread it around. one out of 10 of those will succeed. their whole payoff is in terms of capital gains. because, the governor doesn't really subsidize those activities the way it doesn't china or korea. orton taiwan. we used capital gains tax break to subsidize it. now, that might not be clean or transparent but that is what we do. they're going to tax at an early race. an awful lot of them live in new
york, that is the reality. investing in startups is not one of the things. it happens in california and new york. if you look at the consequences, an older person investing, he already has his big house. his plane. and, you look at the consequences of investing in startups. he has maybe a one in 10 chance at it succeeding. then, when it succeeds, about 75% of the prophets, 80% of the profits and taxes because of the tax increases that are now being planned. what is that mean to you? what do i care? well, the reality is what has been driving the american
economy has been this innovation. they have been creating the jobs and the wealth. we complain about how big amazon is, well if it wasn't big, people wouldn't be working. it is not just people to push on boxes and warehouses. marketing people, i got a name of my millhouse -- in my mailbox, and get the message. the thing is, we can't afford to smother them. or the little guy is not going to have a job. and, i am afraid that is what is going to happen because, in the woke religion of inequality and unfairness and so forth, it seems as though being successful is something that is grounds for exclusion, banishment and so forth. the successful people are not needed to create jobs. i know i sound like the gop, i
don't mean to be. i have often felt that when i went to the white house, obviously during the trump years, not because of a trump supportable because prime minister -- i am a conservative economist, i would talk about electric vehicles. i think that is wildly important to the country. they would say we want a level playing field but we don't have a level playing field. not promoting it properly. i think that is very much to the detriment of the future of the u.s. worker because, we are not making those vehicles. host: you saw the numbers come out for jobs last week with the unemployment rate going to 6%. 916,000 jobs. those are the broad numbers. what you think about what is going on? guest: about 90% of the economy is rising very rapidly.
they can expect wages to go up. but, a lot of people lost their jobs. in this pandemic that will never get them back. one of the things we have learned how to do is to use technology for example to have fewer insurance adjusters. we will have fewer airline pilots. also if you were sandwich makers. and for them, the pandemic on the recession will continue for a long time. if i was disappointed in the economic industrial policy side of things, it was that there wasn't the meaningful, quick, do it right now training initiative for these people. many of these people live in the wrong places. if you make sandwiches and new york, there will not be a job for you there at a sandwich shop perhaps. there probably will not be a job for you at amazon's office and manhattan because you don't have the background. we need to retrain them. most of these people don't have
the money to relocate. there was nothing in there for them on that either. if that is what we desperately need. unfortunately, the president carries with him biases, just like trump did, just like obama, the carriage -- they carry baggage from their childhood. with joe biden, it is his irish heritage. he is disinclined to do anything positive for the u.k.. and the fact that his wife is a community college teacher. somebody who is making sandwiches, 40 years old, barely has a high school education is not going to get much out of queensberry community college in new york city. he needs a 14 week program writing code. and, with proper relocation assistance, we can use the department of labor apprenticeship program, which doesn't cost you to go to school, you get paid to go to school. and, it generally leads to jobs,
on average, that they $70,000 a year. that is where the initiative should be. i write this all the time, but the phone never rings because of the kind of gestalt that permeates the council of economic advisers, and, it doesn't fit into joe biden's view of the world. which was very progressive in 1962. host: one more call from john, california, independent line. caller: hello. i have one simple question. actually two, another statement. the world won't be fixed with barbed wire and landmines. my question are corporations, wanted a pay tax when the money is through to the dividend holders? it makes no sense to me. guest: i think it is less than
amusing to talk about landmines and barbed wire for terribly desperate people. i am not for doing them any harm. i think this administration's policy is terribly misguided. and i think the last of administration policy was terribly misguided. we don't have time to go into why we have this migration problem at this moment. with regard to taxes on dividends, my feeling is on corporation to then pay dividends, double taxation is a real and profound problem that we have been unwilling to talk about. when janet yellen talks about people paying their fair share, even if company keeps the money and has no corporate tax, the shareholders are going to pay money to distribute in the form of higher stock values, so they pay their capital gain tax, or dividends with state taxes. the steepest taxes are in dividends.
my feeling is, corporate and personal income taxes are so broken, not just in the united states and europe so beyond political a repair because politics is politics, goes back to the senate, the greeks spending endless hours debating things. we would probably still be in the garden of eden if we have politicians because we never would've been the apple. the all thing out of the thrown out, we have to go to evaluated tax of about 20%. that would be enough for bidens agenda. i have to finance a benefit for children. which even republicans like mitt romney think and i think that is going to happen. and so forth. it would be enough to finance better for older people in addition to social security for the time being. and then we would have these
debates about what is fair, what is upside down, what's upside out. i think the trump administration and the tax-writing people during the republican era really let us down. because, the tax reforms that were proposed under corporate tax looked a lot like a failed value added tax. i'll rather than do it in a veiled fashion, i would rather do transparency, for the light of day for everyone to see. but, you have to do we have to do in washington. i'm interested not in what is perfect but what is possible. and i think they let us down on that. and it is really unfortunate. host: the professor emeritus of economics at the university of maryland, writes a regular column, you can find the work online. thank you for your time today. guest: it has been a pleasure to visit with you again. >> president biden