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Slashing the Corporate Tax; Canadian Lumber Targeted with Tariff; Rare Images of ISIS Stronghold; Blog Post of Mar-a-Lago. Aired 9:30-10a ET
Aired April 25, 2017 - 09:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:34:22] JOHN BERMAN, CNN ANCHOR: So the White House claims that the president will unveil his tax plan tomorrow. It's unclear exactly how much detail we get. But as we've been discussing, one detail has leaked out, that they're cutting corporate taxes all the way down to 15 percent.
POPPY HARLOW, CNN ANCHOR: But that's going to cost a lot and the president's own party may balk at the price tag.
Our chief business correspondent Christine Romans back with us.
All right, you cut corporate taxes from 35 percent to 15 percent. The Tax Policy Center says that's going to cost you $2.4 trillion.
CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Right.
BERMAN: With a "t."
HARLOW: With a "t," in a decade.
ROMANS: And the Treasury secretary says you can pay for that through growth, through the growth that will come through it. That's called dynamic scoring and that's something that a lot of economists say is like -- it's like saying you're on a diet and you're going to lose weight without cutting any calories right now because you're going to excursive later on.
[09:35:07] HARLOW: That's my kind of diet.
ROMANS: You know, it kind of doesn't -- it doesn't -- right, exactly.
So let's look at what we're talking about here. The highest corporate tax rates in the world, the U.S., on paper has the highest corporate tax rate of 35 percent. You can see how it stacks up there. The average for developed nations is 20 -- about 23 percent.
There is no question that our high tax rate could be holding back companying.
HARLOW: Yes. ROMANS: And it's also unnecessarily complicated with all kinds of loopholes. But when you look at what big companies actually pay, they take advantage of all of those loopholes written by Congress, I should point out, all of those loopholes and back doors and there's an effective tax rate of 14 percent. This is for large companies that make money in the U.S. from 2012 to 2016, I think. And one in five of those big companies paid no federal taxes. So they have found legal ways to get around that high rate.
So if you're going to cut taxes, you have to reform taxes so that you get rid of those loopholes, you get rid of those back doors and it's much more fair and an even playing field. Just reducing it to 15 percent and getting rid of the Alternative Minimum Tax, AMT, that's $2.4 trillion that you're talking about it would cost in red ink over the next 10 years.
BERMAN: And we had no idea full stop if they're going to include any reforms in this announcement tomorrow.
ROMANS: No. No.
BERMAN: All right, Christine Romans, another big development overnight. If you had an office pool over what the first country that the U.S. would engage in a trade war under during the Trump administration might have been China or Mexico.
BERMAN: But, Canada.
ROMANS: I would have said China. I really would have. But instead it's our friend, our ally, our big trading partner Canada. There's been a dispute over Canadian soft lumber since the 1980s. For as long as I've been covering business, we've been fighting with Canada -- the United States has been fighting with Canada in the World Trade Organization and elsewhere about what the U.S. says are unfair subsidies of lumber. Lumber that comes to the U.S.
ROMANS: The Canadians say that is lumber that goes into American's houses that helps homeowners.
BERMAN: It does. Yes.
ROMANS: Right. I mean it's what we build houses with. And so, you know, Wilbur Ross, the Commerce secretary, says a very bad week for U.S./China trade relations --
ROMANS: U.S./Canada. Sorry. See, it's, I'm telling you --
BERMAN: Yes, it's hard to say.
ROMANS: I'm telling you, it's hard to say, a bad week for U.S./Canada trade. But that is the first tariff they slapped on Canadian lumber.
HARLOW: A 24 percent tariff.
ROMANS: That's right.
HARLOW: Where does it go from here? What's next? They're mad about this 290 plus percent tariff that Canada puts on American dairy products, but where does this go from here? Is this the beginning of a trade war?
ROMANS: We'll have to see. I mean I think it's -- no one wants a trade war. Anyone who wants a trade war is crazy. You know, no one wants a trade war. I think this is the commerce secretary showing that he is serious about some of these complaints --
ROMANS: That American producers and farmers have had and he is going to -- you know, he's going to act.
BERMAN: By the way, Democrats -- some Democrats in the northwest, you know, lumber states, support this.
HARLOW: Good point.
BERMAN: This isn't just a Republican or Democrat thing. It's bipartisan.
HARLOW: Good point.
All right, Christine Romans, thank you so much.
Joining us now is Alex Brill. He is a research fellow at the American Enterprise Institute, which is conservative, right leaning. He's also the former chief economist for the House Ways and Means Committee.
It is nice to have you here.
Let's just get you on the record on this tariff idea. Is that a good call by the Trump administration with Canada?
ALEX BRILL, RESEARCH FELLOW, AMERICAN ENTERPRISE INSTITUTE: Well, we have on the books rules that allow us on a case-by-case basis to look after things like soft wood lumber. This is not a new issue for the United States. I don't have the insights to know exactly what the appropriate price for lumber is coming in from Canada, but this is not a new Trump thing, this is a policy that's been disputed for a long time.
HARLOW: Oh, it's a tariff -- the tariff is new.
BRILL: A matter of (INAUDIBLE). Exactly.
BERMAN: All right, let's talk about corporate tax cuts. You have been supportive, very supportive, of cutting the corporate tax rate before, but you personally have proposed cutting it to 25 percent. HARLOW: Yes.
BERMAN: The president is going to propose cutting it all the way down to 15 percent. And as far as we know, not suggesting any offsets, any way to make up that revenue. Is that too far in your mind?
BRILL: Well, the corporate tax is probably the most distortionary and harmful tax in the whole system. It raises about 10 percent of the revenues that are collected come from the corporate tax. As we just heard, it's the highest in the -- one of the highest in the world. It not only hurts businesses and their profits, but it hurts workers, the people who work at those companies.
Is 15 too low? As a policy matter, if you're looking at a tax that's the most harmful, then the best thing to do is to get it as low as possible. The question is, is the one that you flagged at the beginning is, what do we do about the budgetary consequence of that change.
HARLOW: Yes. I mean you wrote this big paper -- we spent the morning reading it -- in 2012 and even you said cut it down to 25 percent. You didn't go to 15 percent because you know what that's going to cost. It's going to cost somewhere between $2.4 trillion and maybe $4 trillion if you include some of these other corporations in this corporate tax cut in a decade. Do debt not deficit just not matter anymore?
BRILL: So, first, that paper from five years ago was written in a little bit different context when the president of the United States was a Democrat, President Barack Obama, not interested in tax reform at all and that paper was intended to try to show what a compromise might look like. So I don't think that 25 is necessarily a better number than 15.
[09:40:01] Your question about deficits, they absolutely do matter. I think they matter both in a real economic sense and they matter in a political sense. Lawmakers are concerned about the budgetary consequences of tax reform. They're going to be interested in offsetting the costs of lowering rates by broadening the base. That's the definition of tax reform is not only lowering the rates, but making other reforms as well. That's the core of the House Republican plan. That's a roughly revenue neutral proposal that not only lowers the rate, but broadens the base as well.
BERMAN: So in the spirit of fiscal responsibility, which I can tell just by looking at you goes down to the cellular level for you, is it irresponsible to propose a tax cut the size of which the president does seem like he's going to propose without explaining how you're going to make up that money?
BRILL: I think it's premature to comment on the president's proposal because I think he's only revealed part of it. And basically what we know so far is he's sticking to a campaign promise to advocate for the corporate rate to go to 15.
HARLOW: All right. Let me ask you one other -- BRILL: We don't know the rest of his plan yet.
HARLOW: Well, let me ask it one other way where you have to say yes or no. Would you sign, if you were the president, would you sign legislation that cuts the corporate tax rate to 15 percent with no offsets?
BRILL: I would not sign that proposal. I think that the reforms need to be long-range fiscally sustainable and that -- and I also think that proposal would not come to the president's desk. So it's a bit of a hypothetical.
BERMAN: We have the first official promise of the future Brill administration. Thank you so much for being it was. Alex Brill, great discussion. We really do appreciate it.
BRILL: Thanks for having me on.
BERMAN: All right, we have a CNN exclusive inside the final ISIS stronghold in Syria. How the terror group operates in really one of the most dangerous cities in the world.
[09:45:57] BERMAN: All right, a CNN exclusive. A rare look inside war- ravaged Raqqa. This is the last ISIS stronghold inside Syria.
HARLOW: Our senior international correspondent Nick Paton Walsh joins us right now from Irbil, Iraq, with this story.
NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: Very hard to really see inside that city, the de facto capital that ISIS declared of their caliphate. It's been so heavily repressed. Only really through ISIS' lens, its own propaganda, have we seen life inside there. But these satellite images we've obtained have given us some stark details of what's really going on inside that next target city in the campaign against ISIS.
WALSH (voice-over): The final target in the war on ISIS, their capital, Raqqa. So wretchedly isolated, held hostage in terror, the closest we get to it is from space in these exclusive satellite pictures taken for CNN. Here, two checkpoints in the street and nearly an ISIS flag. Precision strikes cutting its people further off from the world.
UNIDENTIFIED FEMALE (through translator): Life is not life. Life is death. We are besieged. We can't leave or walk around. Anyone who breathes is slaughtered.
WALSH: She escaped a day earlier and describes from safety to the north the claustrophobic, paranoid world of living with ISIS in streets covered by massive (INAUDIBLE), put up across this central market to hide ISIS fighters from coalition drone cameras overhead. Another escapee describes how ISIS fighters (INAUDIBLE).
UNIDENTIFIED FEMALE (through translator): The foreigners treat residents very well. But the Syrian ISIS members, they are very aggressive with people.
WALSH: ISIS used their own drone to film the damage from coalition strikes, part of a slow net slipping over the city. Images of life inside Raqqa are rare. By one occasion, filming the panic of residents trying to flee. Only seconds of horror filmed here as ISIS have just told them the dam at Kapca (ph) to the west might break open, flooding Raqqa. It never happened, like so much of their propaganda. The dam was fine.
But to the west, fierce fighting backed by U.S. special forces has drawn the noose yet tighter. These coalition backed fighters to the west, north and east are about to move in from the south. Then the noose will be complete and the countdown begins to when these distant streets are open for the world to see again.
WALSH: Now, as you saw there, the noose is slowly tightens around Raqqa and it is most likely the next focus of the Trump White House. They said they've seen nobody tougher on the terror group. Well, this is potentially the first military campaign that this new administration could effectively own. The plans have been in place for months. The question is when does it actually get underway? The lives of many civilians (INAUDIBLE) in the balance.
BERMAN: That will be a key moment when it does happen.
Nick Paton Walsh for us. Thanks so much, Nick.
I want you to take a look at something right now. This is a post about Mar-a-Lago, that is Donald Trump's home, the president's home in Palm Beach. This does -- it looks like an advertisement. It wasn't posted by a travel company. It was on a State Department blog. It's down now, but the question is, did it break the law? That's next.
[09:53:54] HARLOW: So, the president does not like to spend the weekend in Washington, D.C. He has gone to Mar-a-Lago seven times since his inauguration. He spent 25 days there. And now we're learning the State Department posted this on its website. It's an article about President Trump's private club, which he's nicknamed the "winter White House."
BERMAN: Yes, the post has since been removed, but this was made available to all embassies through a government website called Share America. Seems almost promotional. Is that a problem? CNN Money's Cristina Alesci has more on this and joins us now.
CRISTINA ALESCI, CNN MONEY: The blowback to this blog post, which is actually down now -- the State Department took the blog post down -- but the blowback was almost immediate. You had Democratic lawmakers essentially saying this is an example of a plutocracy (ph). You had ethics experts who said this was a clear violation of a law that prohibits public officials from using their positions for private gain. In fact, a complaint has already been filed, so we're going to see some legal arguments, potentially, over this move.
But the reason that it is so controversial is because Donald Trump continues to make money off of his private business. For example, with Mar-a-Lago, the membership fees on that club have increased since the election from $100,000 to $200,000, and the American public does not want to see its president essentially profiting off of his position. So, there are two main problems here -- Donald Trump still profits from his private business, and there's no transparency as to how much more money, potentially, he's making after the election here.
[09:55:34] So, lots of problems. This isn't going away. And it's a clear example of how he really can't separate himself unless he actually sells his businesses, which he's not going to do. More importantly, he keeps promoting his businesses by actually going to them, taking meetings there. I'm here in Washington, D.C., where the hotel is host to his entire administration. You can see the Treasury secretary there on a regular basis, the Commerce secretary there on a regular basis. So these have become hubs of power, and it is going to be an issue going forward.
HARLOW: All right, Cristina Alesci with the reporting. We appreciate it.
You know, the fees to join Mar-a-Lago went -- it doubled, $100,000 to $200,000 after he became president.
Still to come for us this morning, news that the president is looking for a big cut to the corporate tax rate, but the CEO of one of the biggest banks in the country says, here's a warning, make sure it's not just tax cuts, make sure it's actual reform. That exclusive interview next.
BERMAN: Plus, we've got breaking news on Ivanka Trump. Her first foreign trip not going as planned. Stick around to find out why.