CNBC's full interview with Treasury Secretary Steven Mnuchin at Davos

[00:00:00] Speaker 1: tax levels and the rates that corporations are paying are perennial hot topics right here in Davos. Yesterday Joe spoke with President Trump about what could be next in terms of taxes under [00:00:09] Speaker 2: his administration. We're going to actually probably lower taxes if you want to know the truth. You know if you take a look at what we've done we've cut taxes in half and we've taken in more revenue substantially than we did when the taxes were high. Nobody can even believe it but we take in more revenue with the big tax cut. I mean you were paying really 41 percent that we've run it down to 21 and it's sort of lower than that. That will be a priority. Oh absolutely. One of the reasons I'd like to see the interest rates lowered frankly is because I'd like to refinance the debt and pay [00:00:39] Speaker 1: off the debt. Joining us now to talk more about taxes trade and the economy is U.S. Treasury Secretary Steven Mnuchin and sir it's great to have you here today. Thank you. Great to be with you as well. [00:00:50] Steven Mnuchin: I didn't bring any snowballs to throw at you. There's plenty of snow right over here. You can make [00:00:54] Speaker 1: some on your way out if you get him. Not me. Let's talk a little bit about what the president told Joe. Just this idea of additional tax cuts coming. I was thinking this was something that you were gearing up and potentially thinking of if there if there's another four years that that would be something happening now. But the president has since said that this is going to be something that's probably coming to Congress in 90 days. Can you explain a little bit about what this plan is and how quickly [00:01:17] Steven Mnuchin: you think you can move forward on it. Sure. Well let me first just put this in perspective because there's no question that the president's economic agenda is working. The combination of tax cuts regulatory relief and now trade getting the two big trade deals done last week and the president has asked us to start working on what we call tax 2.0 and that will be additional tax cuts that fuel the economy. What will they look like. Well there'll be tax cuts for the middle class and we'll be also looking at other other incentives to stimulate economic growth. Can you give us any hint as to what that is. I won't preview them here today but again they'll be focused on items that will increase economic growth. Why looking at the middle class as tax cuts for there right now. All right. Again I think the president feels that we need to continue to incentivize the middle class that their taxes have been too high. [00:02:08] Speaker 1: Historically we had big tax cuts already. And that's an area we'll continue to look at. This is all happening as the deficit looks like it's crossing some new high levels. How do you kind of look at that. When do you expect that that deficit will be tackled and how are we going to do that. [00:02:24] Steven Mnuchin: Well that's a good question. And let me just step back for a second and comment on the first tax cuts because I stand behind my comments that the tax cuts will pay for themselves despite the New York Times disagreeing with me today. We've tracked the numbers. We're right on track for the first two years. Again what we've said is kind of with the appropriate growth and we're running above those numbers that we'll have an excess of the trillion and a half dollars that was the static cut. Now let me just say aside from tax cuts we also did have increased government spending. And the reason for that was the president felt it was important to rebuild the military. It had been under invested. And to get that done we had to agree with the Democrats to increase non-military spending. So if you look at the increase in the deficit a significant component of that is additional government spending. We did a bipartisan deal this year. But there's no question we need to slow down the rate of growth of government spending because we can't sustain these deficits growing at these levels. [00:03:28] Speaker 4: Can I just put a fine point on that. So given the additional spending you still believe that on a 10 year run rate that we will be flat or better in total as a result of those tax cuts in terms of revenue in to match what also was the additional spending. [00:03:45] Steven Mnuchin: No. So without the additional spending. I think that's where a little bit of the debate is. Put the spending aside. And when people focus on the deficit this year. Okay. What we've said is the tax cuts which were a trillion and a half dollars over 10 years. Again front loaded with things like capital expensing. So we've never said that kind of in year year one the president's absolutely correct revenues are higher. So we're talking about higher revenues. But if as we look over 10 years we're two years in. We can monitor this every year. We're following our projections. And we think it will pay for itself. Now that's different than you can't spend the money on tax cuts and spend the money on increased government spending. So over time we need to slow down. Right. The rate of growth of government spending. [00:04:30] Speaker 5: The you're trending nationally. And some of your comments about the environmental 17 year old environmental activist Greta Thunberg. I just would like to get I know you were just joking about some comments but I think it's a serious issue. And what I think is somewhat serious is that she has been elevated to a position whether it's from time magazine or being a finalist in the Nobel piece. Whatever you want to call it. She's here to great fans. [00:05:00] Steven Mnuchin: And I think it's a very fair. Is that a commentary on anything. Do you think about Davos or about where we are in the world in general and in terms of of climate alarmism etc. Well let me just comment because obviously the climate issue is something that is being talked about this week. And I think quite frankly our environmental policies are misunderstood. The president absolutely believes in clean air and clean water. He supports a clean environment. He announced this week. The support of the trillion tree. Initiative which will have an important impact on emissions. And what the president said is he got out of the Paris agreement not because he doesn't like the environment but because it was a bad deal. It was unfair for the US. And if you look at the real environmental issues right now. They are in China. They are in India. If you look at what the U.S. has been doing on its own without government intervention. Industry has gotten a lot more efficient on carbon emissions. And I just want to put this in perspective. Again climate change is going to have an impact on emissions. And what the president said is he got out of the Paris agreement not because he doesn't like the environment but because it was a bad deal. It was unfair for the US. And if you look at the real environmental issues right now. They are in China. They are in India. If you look at what the U.S. has been doing on its own without government intervention. Industry has gotten a lot more efficient on carbon emissions. And I just want to put this in perspective. Again climate change is something that should be discussed. But there are a lot of other important issues. And I just put this in context. [00:06:08] Speaker 5: But I think the president actually said the prophets of doom that have been proven wrong again and again in the past referring to some of the alarmists that and we do see we've had I mean long ago the ice caps were supposed to have melted by the year 2005. There was you know our children weren't going to see any snow. The Malthusian bets have never paid off. So that is the current we've got a two year or five year window to prevent the total demise of civilization. [00:06:36] Steven Mnuchin: It is. I mean is it. Do you believe that we're that close. No no I don't believe we're that close. And what I would just comment is there are a lot of other important issues. Obviously this health issue and what's going on. The potential of of health issues spreading. Nuclear proliferation. Clean air. Particulate pollution. If you look at water. At least the president has made very clear Iran can never have a nuclear weapon. Nothing against the climate issue. That's a much better risk. It's much bigger risk today. And I think that the youth needs to understand climate is one issue that needs to be put in context with lots of other. Let me ask you a question. [00:07:13] Speaker 4: We had Jamie Dimon sitting in the seat that you're in right now. Just yesterday. He said that he was an advocate for a carbon tax with a dividend. For example Satya Nadella last week announced a program that will cost that company material real money to to produce a carbon negative corporation. Do you think that they are mistaken if not worse given the commentary that the president others have made. Look I have a I respect both of them and running of their businesses. I would say that they are mistaken. [00:07:35] Steven Mnuchin: They have different policy views than we view. We don't believe there should be carbon taxes. We want to cut taxes. We think that industry can deal with this issue on its own is dealing with this and this is a worldwide issue. [00:07:56] Speaker 4: That's a much bigger problem outside of the US than inside the US. The president said though that he does not believe that carbon dioxide is ultimately the problem. And the thing that I was trying to understand is then he obviously signed on to this trillion tree program. Why would he do that. [00:08:12] Steven Mnuchin: Well again I think there it's both correct. He doesn't believe that's the problem. On the other hand obviously planting a trillion trees is a good thing for the planet. So there's no question you you you. It is not a problem then you wouldn't need to do to be planting the trees. Well first of all trees are being cut down at at at paces all around. I mean having forests creating trees. I think these are all good things. But I go back to what you said. This is not the doom and gloom issue. OK that is going to impact everybody in the next 10 years. It is an issue that should be considered along with a lot of important issues. The national security issues of what's going on in the Middle East and the president's addressing this. Again we're much more focused on Iran not having nuclear weapons. [00:09:00] Speaker 5: Were you surprised at the tone in Davos. Did you come expecting a lot of ESG stakeholder discussions and instead it became more about the the story of of resurgent growth in the United States versus the rest of the world. That's it's been more about that. It really has. And you know first I would just say you know we were very happy to have the president back here. It was a great opportunity for him to talk about the economic program we've had in the U.S. [00:09:26] Steven Mnuchin: And he also had the opportunity to see lots of CEOs both Americans and Europeans who are investing in the U.S. And there's no question the U.S. continues to be the bright spot of economic growth around the world. Europe although it may have bottomed out still looks slow. China still looks slow. [00:09:44] Speaker 5: And the president's economic program is clearly working. Does the president talk to you about his plans for for Europe and whether that's going to be the next front in where we take a really hard line and in certain unfair trade practices that we view are still in place against us in Europe. Are we going to push back hard. [00:10:04] Steven Mnuchin: Well of course of course he talks to me. We could be. So tell us because he said that and that got a lot of the entire the entire trade. He says you don't want to scare anyone that we're definitely going to do anything. But it sounded like they've been put on notice. Well the president's been very clear. OK. Now that we've got U.S. M.C.A. done. And now that we've got China. The president is focused on Europe. We had a good bilat this week with the EU. He also had an important meeting with the head of the WTO where we talked about WTO reform. So the president is very focused on trade and he's very focused on on Europe. Now the good news is we have seen a lot of investments in the U.S. from the European car companies. But the president wants to make sure that we have free and fair and reciprocal trade and in Europe. And by the way we're very focused on a U.K. free trade agreement which we hope to get done this year as well. [00:10:55] Speaker 4: I want to ask you briefly about our country's relationship with Saudi Arabia and specifically in the past 48 hours these reports that MBS the leader of that country may have been personally responsible to some degree for hacking Jeff Bezos' telephone. What do you make of those reports. [00:11:14] Steven Mnuchin: I only know what I've read in the paper and I can't really. If true how concerned would you be. Again I don't really I don't want to comment or speculate on which paper I've read in the paper. [00:11:24] Speaker 4: Well which paper. I mean but first let's get that out of the way. I think there's a real question by the way about how about this. If you're an American CEO today. Should you be inclined to do business with Saudi Arabia. Absolutely. So I you know we do a lot of business with Saudi Arabia. [00:11:43] Steven Mnuchin: They're obviously a big component of energy. We have an important defense relationship with Saudi and that's not going to change based upon one article in the paper again. But if that proved to be true. I'm not going to speculate on what ifs and everything else. This is like asking about the dollar. [00:12:02] Speaker 1: I think this is going. I think this is going. You support a strong dollar. Secretary. I support a stable dollar. Mr. Secretary. Let me ask you very quickly. You recently announced I think just last week that we're going to be seeing 20 year bonds. I think a lot of people had been anticipating maybe we see a 50 year bond. We had talked to you about the very long term things at one point. Does this mean we will not see a longer term bond anytime soon. [00:12:23] Steven Mnuchin: No not necessarily. I mean again this is something we've studied carefully. There's no question. We want to look at expanding our borrowing capabilities. We've studied 50 and 100 year bonds very carefully. We actually got what I'd say reverse inquiry on the 20 year. And when we looked at this at least in the short term one from a technology standpoint we can do the 20 year very quickly. It would take us a little bit longer to do the 50 and 100 year in terms of and also in terms of a direct duration and proceeds we can raise a lot more money in 20 years in 50 and 100. So we can actually extend the duration more efficiently. I know you got to run. Paul Tudor Jones the fiscal and monetary combination of where we are right now craziest thing in history. Do you think it's explainable but in ways that doesn't indicate we're in some type of bubble. I do. I mean at one I would say on a monetary basis although U.S. interest rates look low by historical basis relative to the rest of the world they're high and the deficits are reasonably low. relative to GDP but we have to grow so that we shrink them over time.