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Legal View with Ashleigh Banfield

Obama to Announce Crackdown on Companies That Shelter Money From IRS; Obama's Money Agenda. Aired 12-12:30p ET

Aired May 06, 2016 - 12:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

KATE BOLDUAN, CNN ANCHOR: Thank you so much for joining us "AT THIS HOUR".

JOHN BERMAN, CNN CO-ANCHOR: LEGAL VIEW with Ashleigh Banfield starts now.

ASHLEIGH BANFIELD, CNN ANCHOR: Hello, everyone. I'm Ashleigh Banfield and welcome to "Legal View". We've got breaking news coming out of the White House this hour. President Obama just moments away from an announcement on a crackdown, a crackdown on companies that shelter money from the IRS or launder it for criminals, for terrorists, for sheer evaders.

From this day on, U.S. banks will now have to know exactly who it is that owns the companies they do business with. You might have thought that already happened. Surprise, surprise.

There's a lot that still needs to be done, and our Michelle Kosinski standing by live in that press briefing room where the President is due to speak moments from now.

Our Business Correspondent Alison Kosik is at the New York Stock Exchange, where she's been juggling a lot of those jobs numbers that have come out today.

Our Chief Political Correspondent Dana Bash is in Washington, and I'm joined here at the Time Warner Center by Rana Foroohar. She is CNN's global economic analyst and assistant managing editor for TIME magazine.

First to you, Michelle Kosinski, the timing of this announcement and the topics which seemed to catch some of us off guard, put it in perspective for us.

MICHELLE KOSINSKI, CNN WHITE HOUSE CORRESPONDENT: Right, it is. I mean, the release of the Panama Papers really shed light on this. It was pretty shocking. All of these documents leaked from a Panamanian law firm showing people with money in these offshore accounts.

So, the White House said that it's been working on this issue for a long time and they listed rules that they've been enacted in the past.

So, they've mentioned the Panama Papers in the White House blog. But how much of an impetus that was for the release of this today. That's what we'll find out.

But clearly they're aligned, the White House mentioned it at length in this blog, but they want to have this new rule that goes into effect now forcing financial institutions to know basically who they're doing business with, who owns the companies that are putting money there.

But the White House is also proposing legislation. There are four different points that they want Congress to do to close loopholes, to try prevent tax evasion, to allow for more transparency. Of course, that's always a question mark. Is Congress going to do that? But the White House is clearly on this message, you know, the timing is perfect with the Panama Papers. They want to get that across. But the White House also wants to talk about the jobs report. Even though it's not as strong as it was in months prior, they still want to highlight those gains and the consecutive months of job growth that they've seen.

Ashleigh.

BANFIELD: So, interesting, because that's what I thought our whole conversation was going to be about today and it is not, it's what you're about to hear, Michelle Kosinski.

So if I can go to Alison Kosik at the New York Stock Exchange, I am changing our topic. It's not just going to be about those 160 jobs. It's going to be about the bigger picture, the graphic that shows the pattern. Not just in the last three or four months, the entire year. And why the President may not have been too thrilled to make the focus today on this picture on our screen, but instead, a different picture.

Take it from there, Alison.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: You know, you look at the picture, though. You look over the past five years, Ashleigh, the average number of jobs that's been created, about 207,000 jobs. That's not too shabby.

But here's where the problem starts. The problem is that Americans aren't feeling it. Because a lot of people, despite the fact that the unemployment rate is sitting at 5 percent, many look at the underemployment rate as the real indicator of what's really being felt in the U.S. And that underemployment rate is at 9.7 percent. It is down a bit from 9.8 percent but it is still high. So, we want to see that number come down.

So, what is underemployment? It's the broader measure. It includes people who are out of work, people who are looking for work, and people who are working part-time, but want to work full-time. But people aren't feeling this recovery is going gang busters because -- I want you to listen to this number, Ashleigh, 8 million people are out of work and are looking for work.

5.9 million people are working part-time, but they want to work full- time. And keep in mind, those people working part-time, they don't get benefits. They don't get health benefits, which means that they got to shell out that extra money for health benefits, that hurts their bottom line. And finally, wages. You look at wages, they have been moving higher ever so slightly. Look over the past 12 months, wages went up 2.5 percent. Yeah, it's better than expected. Clearly not great, but we are seeing them move in the right direction.

So you're seeing a lot of people who are working part-time. They're not getting the wages they want. They're not getting the benefits they want. That's why so many people aren't feeling the recovery.

Here is the rub in all of this. You know where all of the openings are? The openings are in these high-paying jobs. Yes, there are 5 million of them. Companies tell us, they've got 5 million jobs open. But they don't have enough skilled applicants. I'm talking about positions in technology, in computer science. But the trouble is, is that they don't have enough skilled workers to fill those high-paying full-time positions because even those higher paying jobs that we saw created in April, they're only temporary.

[12:05:12] So that really doesn't take into account the longer term picture of our jobs issue here in this country.

BANFIELD: Yeah, and you can, you know, shout it from the rooftop if you want that there are jobs in those high-tech industries. But if you're in the Rust Belt, you're still mad as hell and you're going to a Donald Trump rally about it because it's frustrating ...

KOSIK: Exactly.

BANFIELD: ... or a Bernie Kosinski rally for that part.

Speaking of the politics of all of this, Dana Bash, I want to jump in here with you if I can as the president, you're just joining us, is about ready to take to the lectern in the briefing room at the White House.

There are some numbers I want to go over with you, because that might give us the bigger picture about why, why we're about to get this briefing from the President. And that is the job approval numbers. This has just come in, CNN/ORC poll. How is President Obama handling his job? 51 percent of those asked approve of how he's handling his job. 46 percent disapprove.

And before our viewers look into those numbers too deeply, it's important to put them into context. So here is the context of presidential approval ratings over the decades. 51 percent for Obama now, but if you go back to President Bush, back in April of '08, Dana, it was 28 percent. If you go back ...

DANA BASH, CNN CHIEF POLITICAL CORRESPONDENT: I'm surprised it was that high.

BANFIELD: Well, because you've been working your job for a while. Clinton in 2000, that's Bill, was 59 percent. Reagan in May of '88 was one point less than Obama is now.

So just with that context, with the approval ratings and then the idea that only 48 percent of Americans think the economic conditions today are good, that's sort of our last big question for Americans who are -- who were surveyed. Put into context what you think we're about to hear the President say to us about these numbers.

BASH: That we're doing much better, can always do even better than that. But that the economy is still on an upswing. And, if you use that approval rating that you just put up, 51 percent, so the majority of Americans do approve of him, that is a message that has been resonating.

However, as you aptly pointed out, Ashleigh, there is a reason why Donald Trump is now the effective Republican nominee with a, not just the fact that he's an outsider, but with a very, very clear economic message saying, "You know, we've got to bring jobs home." I get that many of you out there aren't feeling this economic upswing, so on and so forth. Same with Bernie Sanders on the Democratic side. It's because there is a lot of pain there.

But there's also a reason Hillary Clinton has hitched her wagon so tightly to Barack Obama because she sees particularly with the Democratic base and even the broader electorate that it's not so bad to be the president right now. And to run as a, you know, a third term of Barack Obama. If you're a conservative Republican, it's the worst thing they ever heard. But if you're somebody who's, you know, kind of in the middle and feeling not terrible, that's why she's doing it.

BANFIELD: And she, as she hooks her wagon, as you so aptly described it to Obama's start, that might just be what President Obama is doing today.

BASH: Yeah.

BANFIELD: And I want to list out exactly what the White House says this is going to be about. It's not just going to be about those jobs numbers that came out this morning. It's going to be about, and I will list what they said, the statement on the economy, new steps to strengthen financial transparency, combat money laundering corruption, and tax evasion, boy, does that ever sound like stuff I want to hear. It's that populist message, Rana Foroohar ...

UNIDENTIFIED FEMALE: It is.

BANFIELD: ... that maybe right now is what is driving Donald Trump and maybe not driving Hillary Clinton.

RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: I think that's absolutely right. I mean, if you look at what Trump's been out there saying, he's trying to position himself ironically to the left of Hillary on economic issues. He's saying, "Look, I'm the guy who's not in hack to Wall Street. I'm going bring back jobs and renegotiate trade deals."

Now, much of those not true, but it does hit something that really resonates with people who felt experience in this country, which is that a lot of people haven't felt the recovery.

I mean, we are still in the longest slowest recovery of the post-war era, you know, and jobs and wages have been stagnant since the 1990s. And Hillary Clinton's message has been not only that the Obama administration has done a good job, we're in a good place, but also that the '90s when her husband Bill Clinton was in office were great and we just need to sort of get back there.

Well, a lot of people don't feel that. They really are feeling a lot of pain and I think that's why Trump is doing so well right now.

BANFIELD: So, if you're just joining us again, we're expecting the President to come out and give us a briefing about the state of affairs for the economy and maybe more pointedly, he's going to swing that message towards what he wants Congress to do to tighten up loopholes and money laundering corruption and tax evasion.

[12:10:02] By the way, if you were wondering just how bad tax evasion is in this country, you might have heard of people maybe underreporting, or maybe not saying exactly what their tips were, or that sort of thing. You'd be shocked to find out that it's $458 billion that goes unpaid and is owed to Uncle Sam every year. It's a big, big part of the operating budget that we don't have in this country.

The significance of that and what the President wants to do about it next.

(COMMERCIAL BREAK)

BANFIELD: So with you who're just joining us, we are watching with bated breath, the microphones at the front of the White House briefing room because that's where the President of the United States, at any moment, is going to take to the microphone.

Presumably to paint a pretty rosy economic picture, but he's got a couple of other things on the agenda. On this Friday, it's not just sort of post-super, super, super Tuesday Friday. It's also jobs Friday. And the jobs numbers for April came out and though they were projected to be somewhere around 200,000 new jobs created last month, they weren't. They were actually willfully short of that.

It was only 160,000 jobs created in April, which means three months in a row that are on the downside. That's not a rosy picture. It's very hard to spin it.

So, what might be about to happen is that the President is going to talk about some other things he wants Congress to do to protect you and your money and all those bad guys out there who take it or who don't pay their fair share.

So joining me now, Paul Callan, who's going to explain to us a little more about what's on this sort of money agenda of the President. And when I say the money agenda, there's some interesting things. Rana Foroohar, I'm going to get you to weigh in on them as well.

But there's this whole list of topics whereby economic transparency is on his radar, and there's a list that I would love our control room to pop up if they can of what he wants to do to tighten up, you know, the loopholes out there in corruption and money laundering and tax evasion and to strengthen, you know, financial transparency.

So, Paul Callan. It's great to read that he wants to pass legislation to require beneficial ownership transparency, but what on earth does that mean?

PAUL CALLAN, CNN LEGAL ANALYST: Well, it goes back to money laundering which we probably should start with the definition of money laundering, which essentially is when you have proceeds of a crime and it should be taxed. What you try to do is you try to shift it into a legitimate business to hide some sort of criminal activity and terrorism is -- that's the danger with terrorists as well.

Now, that's not necessarily what this beneficial owner business means. What this means is that a lot of companies register anonymously in offshore banks to engage in massive financial transactions and the U.S. government has no way of knowing whether these transactions should be taxed.

So what this rule is going to do is it's going to say the bank, if it contracts with anybody, they have to know the name of the entity and be prepared to reveal it under certain regulations ...

[12:15:07] BANFIELD: I've had the ...

CALLAN: Yeah.

BANFIELD: I've had the warning the President is going to come out in probably about a minute.

CALLAN: OK.

BANFIELD: And that's the only reason I'm cutting you off because I did have a long list. I'm going to skip the list if you'll just indulge me for a moment. Rana ...

FOROOHAR: Yeah.

BANFIELD: ... if you can do for me this.

FOROOHAR: Yes.

BANFIELD: When I read that $458 billion in taxes go unpaid every year ...

FOROOHAR: Yeah.

BANFIELD: ... I thought of all those big companies that hide them and in fact, that's not it. It's underreporting, underpayment, and failure to file in that order. That seems to me like the IRS has got that figured out, but no?

FOROOHAR: No. I mean, think about the amount of people in this country and the resources that the IRS has is, you know, it's not in line. But I do think that there's a bigger point here. And I think to what you were just saying, there's a divide in this country right now between the fortunes of the biggest companies who can legally do a lot of offshore tax optimization.

BANFIELD: Legally, absolutely.

FOROOHAR: Right?

BANFIELD: Very clever.

FOROOHAR: OK. It's -- exactly, they're not breaking the law, but they're able to move the profits if they have the biggest share of right now, wherever they wanted and not pay the fair share of taxes.

Labor can't do that, consumers can't do that. That divide is causing a lot of political pressure, it's one of the reasons you have the kind of populism you've seen in this 2016 election cycle. And I think that that is what President Obama speech is going to be about.

BANFIELD: And Donald Trump is actually referred to these kinds of things. The President is coming out. Let's go ahead and listen to him.

(BEGIN VIDEO CLIP)

BARACK OBAMA, U.S. PRESIDENT: How you doing, everybody?

Seven years ago, in April of 2009, our economy lost nearly 700,000 jobs and the unemployment rate hit 9 percent on its way to 10 percent.

Seven years later in April 2016, our economy added 160,000 new jobs. That makes April the 74th consecutive month of private sector job

growth in America.

Over that record streak of job growth, our businesses have created 14.6 million new jobs in all. Wages have been rising at an annual rate of more than 3 percent this year. So, the unemployment rate has been growing. Unemployment has been falling. And wages have been rising.

But, the global economy, as many people here are aware, is not growing as fast as it should be. We were still seeing a lagging growth in places like Europe, Japan, and now China.

Here in the United States, there are folks out there who are still hurting. And so, we've got to do everything we can to strengthen the good trends and to guard against some dangerous trends in the global economy.

And if the Republican Congress joined us to take some steps that are pretty common sense, then we could put some additional wind at the backs of working Americans.

To create new jobs, they should invest in our infrastructure, our roads, our bridges, our schools, our water mains. Some of you joined me when I went to Flint this week. It was a great example of the kind of work that is out there to be done. And we could be putting people all across this country back to work with huge multiplier effects across the economy if we started investing in the infrastructure that will make us more productive.

To reward some of the hardest working people in America, Congress should raise the minimum wage. This is something that would not only help those individuals who are getting a bigger paycheck, but it also means they're spending more and that would be a boost to business.

To level the playing field for American workers and crackdown on unfair foreign competition, they should pass smart new trade agreements. And, Congress should reform our tax code to promote growth and job creation which includes closing wasteful loopholes and simplifying the tax code for everybody.

I've been talking about this for a while, only Congress can fully close the loopholes that wealthy individuals and powerful corporations, all too often take advantage of, often at the expense of middle-class families. If they're getting out of paying their fair share of taxes, that means that the rest of us have to shoulder that burden.

And I put forth plans repeatedly to do exactly that. Close loopholes, make sure that everybody is paying their fair share, which would not only give people greater confidence in the system, but would be good for our economy.

It would make sure that families and small businesses, who don't have fancy lawyers and fancy accountants, are being treated the same as big corporations who do.

I think it's fair to say the Congress will not act on a big tax reform plan before the election. That would shut down some of these loopholes. But what my administration has been doing is to look for steps that we can take on our own to make the tax system fair.

In recent months, we've seen just how big a problem, corruption and tax evasion have become around the globe.

[12:20:03] We saw what happened with the release of the Panama Papers and we have seen the degree to which both legal practices of tax avoidance that are still unfair and bad for the economy as well as illegal practices that, in some cases, involve nefarious activities continue to exist and to spread.

So, combating this kind of tax evasion and strengthening the global financial system have been priorities of mine since I took office, and they're part of our broader ongoing efforts to make sure that rules aren't rigged and our economy works for everybody.

Let me give you an example, here at home, we've made our tax code fair and asked the wealthiest Americans to start paying their fair share. And last month, the Treasury Department took action to prevent more corporations from taking advantage of the tax loophole that let them shift their address abroad just to avoid paying taxes in America. Taxes that they rightfully owe.

We've taken several steps to make sure that our law -- tax laws are enforced, including leading efforts to crack down on offshore evasion. And as a result, thousands of individuals have come forward to disclose offshore accounts and pay the taxes that they owe, along with interests in penalties.

Today, we're building on those efforts. And I'm -- I believe that you've heard from Treasury, but I want to amplify what they told you in detail.

Number one, we are requiring banks and other financial institutions to know, verify and report who the real people are behind shell corporations that set up accounts at those institutions.

One of the main ways that companies avoid taxes, or wealthy individuals avoid taxes is by setting up a bunch of shell corporations and making it harder to trace where moneys are flowing and what taxes are owed.

We're saying to those financial institutions, you got to step up and get that information.

Second, we're plugging a gap in our tax rules that foreigners can exploit to hide their assets to evade taxes. The Treasury Department and the IRS are issuing a proposed rule to make sure foreigners cannot hide behind anonymous shell companies formed inside the United States.

Now, these actions are going to make a difference. They will allow us to continue to do a better job of tracking financial flows and making sure that people are paying the taxes that they owe, rather than using shell corporations and offshore accounts to avoid doing the things that ordinary Americans, hard-working Americans are doing everyday, and that's making sure that they're paying their fair share.

Having said that, we're not going to be able to complete this job unless Congress acts as well.

So, I'm calling on Congress to pass new legislation that requires all companies formed inside the United States to report information about their real owners to the Treasury Department's Financial Crimes Enforcement Network, that's going to help law enforcement better investigate and prevent financial crimes.

I'm calling on Congress to provide the Justice Department with additional tools to investigate corruption and money launderers. And I'm calling on the Senate, in particular, Senator Rand Paul, who's, you know, been a little quirky on this issue, to stop blocking the implementation of tax treaties that have been pending for years. And these treaties actually improve law enforcement's ability to investigate and crack down on offshore tax evasion. And I'm assuming that's not something that he's in favor of.

So, we're going to need to cooperate internationally because tax evasion, tax avoidance, you know, money laundering, these things are all taking place in a global financial system. And if we can't cooperate with other countries, it makes it harder for us to crack down.

In the -- if we can combine the actions that we're taking administratively with the new tools that I'm asking Congress to provide the Justice Department and Treasury, these actions will prevent tax invasion, they'll prevent money laundering, they'll prevent terrorist financing, and they'll most importantly uphold a fundamental principle of our economy.

In America, no matter how wealthy or powerful, you should play by the same set of rules as everybody else.

All right. Thanks. I'm going to take a couple of questions with that.

Let's see. Go ahead, yeah. Since you're now the incoming president of the White House Correspondents' dinner.

UNIDENTIFIED MALE: Thank you, sir.

Mr. President, what's your reaction to Donald Trump becoming the presumptive nominee of the Republican Party this week?

And, given the delegate math, do you think it's time for Bernie Sanders to step aside on the Democratic side?

OBAMA: Well, with respect to the Republican process and Mr. Trump, there's going to be plenty of time to talk about his positions on various issues.

[12:25:09] He has a long record that needs to be examined. And I think it's important for us to take seriously the statements he's made in the past. But, most importantly, and I speak to all of you in this room as reporters, as well as the American public, I think I just want to emphasize the degree to which we are in serious times and this is a really serious job.

This is not entertainment. This is not a reality show. This is a contest for the presidency of the United States. And, what that means is that every candidate, every nominee needs to be subject to exacting standards and genuine scrutiny. It means that you got to make sure that their budgets add up.

It means that if they say they've got an answer to a problem, that it is actually plausible and that they have details for how it would work. And, if it's completely implausible and would not work, that needs to be reported on and the American people need to know that.

You know, if they take a position on international issues, that could threaten war, or has the potential of upending our critical relationships with other countries, or would potentially break the financial system, that needs to be reported on.

And, you know, the one thing that I'm going to really be looking for over the next six months is that the American people are effectively informed about where candidates stand on the issues, what they believe, making sure that their numbers add up, making sure that their policies have been vetted, and that candidates are held to what they've said in the past. And if that happens, then I'm confident our democracy will work, and

that's true whether we're talking about Mr. Trump or Ms. Clinton, or Bernie Sanders or anybody else.

But what I'm concerned about is the degree to which reporting and information starts emphasizing the spectacle and the circus. Because that's not something we can afford. And the American people, they've got good judgment, they've got good instincts, as long as they get good information.

All right.

(OFF-MIC)

OBAMA: I think on the Democratic side, let's let the process play itself out. You know, you mentioned the delegate math. I think everybody knows what that math is. I think Senator Sanders has done an extraordinary job raising a whole range of issues that are important to Democratic voters as well as the American people generally.

And, I know that at some point, there's going to be a conversation between Secretary Clinton and Bernie Sanders about how we move towards the convention.

The good news is, that despite the fact that they're in the course of primaries, everybody starts getting a little chippy, I've been through this, it's natural. Sometimes even more with the staffs and supporters than with the candidates themselves, the good news is, is that there's a pretty strong consensus within the Democratic Party on the vast majority issues.

There's some disagreement about tactics. There's some disagreement about political strategy or policy nuance.

But, both Secretary Clinton and Bernie Sanders believe that every American should have health care. So do I. Both candidates believe that we should be raising the minimum wage. Both candidates believe that we should invest in our infrastructure and put more people back to work.

Both candidates believe that we should pass a comprehensive immigration reform policy that makes sure we're enforcing laws and improving our legal immigration system. And making sure our borders are secure, but also that we continue to enjoy the incredible boost that we get from attracting talent from all around the world.