Ex-Reagan economist SOUNDS ALARM as Republicans struggle to match Democrats' energy

[00:00:00] Speaker 1: Well, joining me now is truly an all-star panel, Art Laffer, former Reagan economist, Dan Brouillette, former energy secretary, and Steve Forbes, Forbes media chairman and editor-in-chief. I can say about three paragraphs right off the top of my head about every one of you guys, but we don't have time. So let's just get right into it. I mean, obviously, the economy is always the top issue in any campaign, unless there's a really serious thing like 9-11 going on. So far, thank God, what's happening in Iran hasn't blown into that. But, Art, just because you dipped your toe into politics, you ran for the Senate, as I remember once, in California. You know a little bit about politics yourself. How do you think Republicans have been doing in terms of trying to refine their message around the economy in these last couple of weeks before the election? [00:00:52] Speaker 2: First place, Steve Forbes ran for president of the United States. I was going to, I see, I couldn't, I'm always going to leave something out with you guys, [00:00:59] Speaker 1: because you all have a huge resume. [00:01:02] Speaker 2: Thank you. I was his first donor, by the way, both times, so I just am a big fan there. I don't think they're doing a very good job of anything there. I don't think they have the spirit, the dream, the flesh that's going on. I mean, and I don't know what the outcomes are going to be, but I watched some of the debates and some of the things, and these people on the other side are showing much better. The issues, obviously, are with Trump. We've got the greatest economy ever, all that. We're doing Iran, which we should have done. We've got Kevin Warsh in there, which is great. All the substance is with us, but the style, the form, the energy is with them, and I'm worried about the election outcome. [00:01:40] Speaker 1: But the energy, Steve, with them is socialist energy. It's Marxist energy. I mean, it's energy that's focused on something that clearly could be pointed out by Republicans, has been tried thousands of times in the history of man, and has failed every time. Why don't they just specify that point? [00:02:00] Dan Brouillette: It's a good question, because they have this defensive mindset, and it's hurting. They should make the case that free enterprise, freedom, is moral, and you pointed out these things have always failed in the past. But also, getting to Art's point, the Republicans, and they should have done it at that Dallas convention, put forth new proposals for tax cuts so that people say, yeah, he did something for us last year. By golly, if we win, better things are coming along, and they haven't done that. So you've got to put something positive on the table. [00:02:30] Speaker 1: By the way, I don't want to point fingers right away, but isn't that the Senate's fault? Shouldn't John Thune have put all these things up for a vote? [00:02:35] Dan Brouillette: They should have, but also the White House. The president should have been leading for it, because if he led with it, they would have had to follow, because they know whether bread is buttered or whether a big constituency out there. So it's a failure, not just of communication, but a lack of positive substance. And they have it there. Why not go out there and do it, and talk about the—and ask these Democrats, do you want to raise taxes or not? Right. Do you want to do away with gasoline automobiles and things like that? [00:03:04] Speaker 1: Things that they have said in the past. [00:03:06] Dan Brouillette: Things they've said in the past and put it right to them. Have confidence. Convey confidence that, one, you believe in what you say, and these people are trying to hide what they're not. Yeah. And put it out there. [00:03:17] Speaker 1: Well, and the affordability. I know Democrats think they own the word affordability, Dan Brouillette, but they don't. I mean, the fact is, is that a lot of what happened during the Biden administration was directly related to the unaffordability, turning America into a place where you could, with a lot of savings granted, but you could still think of having a house, not just in your lifetime when you're an old person, but when you're a young person with a family. The housing situation is something I want to talk to you guys about. But the other issue, of course, hot on everybody's mind, is what happens when you go to the gas station, fill up the tank. Oil and gas are a problem. And that is a big part of the affordability issue. What can be done? Is the president doing enough now with this diesel deal? Could he be doing other things as well to get oil and gas down? What do you think is going to be happening, first with oil, then with gasoline, and finally with diesel? [00:04:15] Speaker 4: Sounds good, David. Well, as the only person who's never run for public office and never will run for public office, I'll try and answer that question. Look, I think the president is focused on the right thing. And what he's trying to do is increase supply into the marketplace, given the demand that we have, which should adjust prices over the long term. He's been focused up to date, though, on things like crude oil production here in the United States, which is going to exceed another record. We'll probably touch 14 million barrels a day here in the U.S. of crude production. But as we're learning in this crisis, this is not really the problem. This is not really what's driving that price that you just mentioned at the pump upward. It's our refining capacity. It's our pipeline capacity, the lack thereof. That's what we should be focused on. And I think where the president needs to turn his attention. You know, with regard to the Russian deal, look, I'm a bit of a skeptic. I don't think that that's going to do much to affect the market. We use roughly 30 million barrels of diesel a day globally. We use about 4 million barrels a day here in the United States. This entire deal is going to release maybe 35 million barrels into the marketplace. It won't make a dime's bit of difference. But where we should focus going forward is our infrastructure development here in the United States. Let's increase our refining capacity. Let's make permitting easier. Let's make financing of those projects easier so that they can be built. That's where we need to focus. All right. [00:05:36] Speaker 1: Affordability regarding housing is a critical issue, Art, particularly for younger people. I mean, I grew up in a very difficult time in the late 70s, early 80s, when you had interest rates, 30-year cost. I guess you'd pay 14, 15 percent at the height for a loan. And so there were times, we've been through that before, where young people entered the market and the home buying was ages or at least years away from where they were. But we can put up a chart here. There's a very interesting chart about the gap between the median income in the United States and the qualified income to buy a house. You can see they're about equal there from 2008 until about 2022, when the inflation really began to take off and then the Fed jacked up rates to try to stem inflation. It used to be you had enough, the median income, to buy a home. Now the median income is about $89,000 a year. And the qualified income to buy a house is $130,000 a year. That's a huge gap. How do you get that gap back to normal? [00:06:44] Speaker 2: I think what you want to talk about is getting houses being affordable. And houses being affordable has to do with all the regulations that Dan was talking about for energy apply to houses perfectly. But the one that's really, really huge, and it's what Nixon won on in 1972. He won a landslide victory on capping property tax rates. If you cap property tax rates, you're going to make housing much, much, much more affordable. It's needed desperately in the U.S. Prop 13 did it great in California. But we need to cap property tax rates nationwide and make it so that people do not have to ever pay any more than, let's say, 2% per year on their home property tax bill as long as they live in that house. And that would do it. And that's what Nixon did. And he won big time. Why the Republicans don't get behind this is beyond me. But it's the biggest winning issue ever. And they're losing ground on it. [00:07:40] Speaker 1: Yeah. Well, Art, I have to ask, though, that was the one that Mr. Jarvis put together, correct? Back in the... Yes. [00:07:45] Speaker 2: Jarvis, we were all there. Jerry Brown was a great fan of it as well. And it preceded Reagan's... You know, I was very involved in it. [00:07:51] Speaker 1: Yeah. It preceded Reagan's election by a couple of years. But it was a low... It was a state issue. I mean, how do you transport that into a federal issue that the president got involved in? [00:08:01] Speaker 2: You just make it a federal issue just the way Nixon did. You just make it a federal issue. It was not a state issue in California until we made it a state issue. It was a cities, counties, and local district issue. There were hundreds and hundreds and hundreds of separate property tax jurisdictions, separate categories of property, all of this nonsense. We made one California property tax rate. That's it. And no, you can't increase by more than 2% per annum and never be more than 1% of a fair value price. And we can do that nationwide, make it bang, done, and we would have a spectacular boom that you've never seen before. [00:08:35] Speaker 1: Steve, there is less than three weeks before the election, but there is still time to refine some of these speeches and some of these appearances the president is going to make. Is affordability of housing one of them? Could he do what Steve just mentioned, what Art just mentioned? [00:08:50] Dan Brouillette: The answer is yes. And he could say, why not do what California did years ago, which they've been trying to undermine ever since, and also highlight the local regulations that make it impossible. Compare what it takes to do a deal in Tennessee or Texas, housing development, compare it with California. One, you can do it in a matter of months. California, it's a lifetime undertaking. And so hammer that as well. And how about making capital gains, put it to, index it to inflation and things like that. You put it out there and say, if we win, this is what we're going to push. And yes, there's time. As a British prime minister once said, a week in politics is a lifetime. And so hammer it. They've got the money to do the messaging. And so take something positive. Because people, even though they're now leaning Democrat, they know the party is not good. They know there's something wrong. Like a good question to ask an opposing candidate is, are you in favor of building pipelines so we can get more gasoline at the pump? Things like that. Put it to them. [00:09:52] Speaker 1: Well, and Dan, that gets us back to energy. And I know there's no time to change gas prices. And the refining activity that you were mentioning, the deregulation that would lead to more refining, that's going to take months, if not years. So there's no time before the election. But here's what the president, I think we can get this soundbite from the president talking about oil dropping. And he said it before, maybe too much. Maybe people say, there he goes again. But let's play that soundbite. And I want to get you to react to it. Roll it. [00:10:22] Speaker 5: Oil is always the big one. It's the big player. And oil is going to be dropping like a rock. They have no Navy. They have no Air Force. They have no anti-aircraft. They have the worst inflation of any country anywhere in the world. They have no money. [00:10:38] Speaker 1: And Dan, we did see that happen already back in April when a couple of months after the war started. We saw that moment. It looked like we had a truce with Iran. Oil prices fell about $20 a barrel in a cup. A couple of days down into the 70s. Have too many other things happened since then to make it likely that that would happen again if the war ended tomorrow? [00:11:02] Speaker 4: Look, I think if the war ends tomorrow, oil prices are going to come down pretty dramatically and pretty quickly. I think the president is right about that. But the challenge for consumers is that the retail, the refined product pricing is not going to come down nearly as fast. And that's because the transportation risk is still going to exist. It is still dangerous to get your oil through the Strait of Hormuz. And right now, refiners are paying roughly $20 to $30, sometimes $40 a barrel more than the price you see on the screen just to get that product delivered. So that's really the challenge. But look, I think Steve is exactly right. You know, we need to index capital gains to inflation. That needs to be done. It needs to be done very quickly because it will allow the additional investment that I just mentioned in the infrastructure here in the United States to be undertaken. That's really what we need to focus on. [00:11:47] Speaker 1: All right. Well, I want to focus in the last minute that we have with somebody that Steve and I talked about on Varney yesterday. But Art Laffer, you should be very proud that one of our own, one of the original supply siders, the guy who's very much known with Al Rabushka as one of the godfathers of the flat tax, which, of course, is part of they took your Laffer curve and turned it into a flat tax. And it was a brilliant party. He just got the Robert Hall. It was Hall and Rabushka. Robert Hall just got the Nobel Prize for economics. Now, it wasn't specifically for the flat tax. We should mention it was for something else. But this has got to be good news, no? [00:12:27] Speaker 2: It's good news. It's great news. And, Steve, congratulations on all you did on that. Then we did it on the Democratic Party with Jerry Brown with his flat tax. It worked wonders in both places. But, you know, the thing that shocked me about the Nobel Prize is the 30-page discussion. of Bob Hall's positions never, ever, ever mentioned that paper. I know. I mean, and that's the paper that soared him into the top ranks of economists. That paper was super great. Hall and Rabushka, just phenomenal paper. And they didn't even mention it. [00:12:58] Speaker 1: It was disgraceful. But it does bring this guy to light. It does. We're going to mention the fact that he was part of one of the founders of that whole flat tax theory. Steve Forbes, I've got to end with you. Is it conceivable that sometime, perhaps it's going to be the next presidential election, somebody can glom on to this issue as the issue that propels him into the White House? [00:13:20] Dan Brouillette: It's ripe for the taking. Hall is not known as a raging conservative at all. And so you've got a Nobel Prize-winning economist. You've got a genius like Arthur Laffer behind it. And I hope one of the candidates exercised what we love, entrepreneurship. Go out and put it out there. Make it a centerpiece. And Democrats love it. Independents love it. Republicans love it. Everyone hates the complexity of the tax code. [00:13:42] Speaker 1: As Art knows, because he had to deal with the left wing in California to sell this idea. I mean, they like the fact of getting rid of all those special deals for the rich people, right? Yeah, they sure do. They sure do. [00:13:55] Speaker 2: We were second in the race in California. I mean, in the president race. [00:13:59] Speaker 1: Final last word, Dan. Go ahead, quickly. [00:14:02] Speaker 4: No, look, I think they're exactly right. We have to reduce the cost of doing business here in the United States. Let's encourage this entrepreneurship and build out this infrastructure. [00:14:09] Speaker 1: It's not rocket science. You make it easier and cheaper to do business, and you'll have more business. It's as simple as that. Art Laffer, Steve Forbes, Dan Buriette, thank you so much, gentlemen. Great to see you all. YouTube, and you can catch full shows streaming now on Fox One.