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Gary Cohn, the IBM (IBM) vice chairman and former US National Economic Council director from 2017 to 2018 during former president Donald Trump’s administration, sits down with Seana Smith and Madison Mills to discuss the economic impact of the upcoming election. “I’m always concerned about deficit spending because I think at the end of the day, we have to be cognizant of our deficit spending… You think about the amount of money we’re just spending on interest to service our debt today. It is a stifling number, and it will get bigger over time as the debt builds. We have to think about that. That’s one of the reasons why I’m so convinced the yield curve is going to get steeper and steeper is because the amount of debt.” He adds, “I think both candidates need to understand, and I think some of them do, is that we need to grow the economy. The only way to really deal with the debt problem is to grow the economy. Our debt as a percentage of GDP can go down if our GDP goes up. We have that. To me, that is the essential ingredient is do economic growth. I don’t believe we should be in an economy where it’s based on a plan of redistribution. I think we should be in an economy where we’re based on a plan of economic growth. And we want to provide a system of rules and regulations and regulatory environment where we’re encouraging growth, not discouraging growth.” On which candidate would be better for the economic growth, Cohn explains, “There’s an 82-page economic plan from the Harris-Walz campaign. There’s a lot of rhetoric from the Trump-Vance campaign. I think what we know for sure, and this is how I evaluate, we know what the economy looked like for the four years of the Trump presidency. We know what’s gone, what’s happened in the Harris-Biden presidency. We know what those two economic pictures look like. I think you’ve got a lot of data to make a decision what economy you like.” “I’ll be honest, I happen to like the pro-growth, the reasonable, but sensible regulatory economy that we had during the Trump administration. I think this overly protective, overly restrictive, highly regulatory economy that the Biden administration, Biden-Harris administration has is not beneficial to growing GDP, especially when you keep losing cases in court where you’re trying to restrict the economy and your restrictions don’t even hold up in court.” Vice President Kamala Harris’s economic plan includes increasing the corporate tax rate to 28%. Cohn says this is “bad” for IBM and other large corporations. “There’s many companies prior to the US tax rate going down to 21%, that had the option to redomicile into another country to avoid paying US taxes. They were inverting their businesses out. It was a horrible thing for the United States to see companies that wanted to be based in the United States leaving the United States for one reason and one reason only to lower their corporate tax rate.” He says, “We do not want to discourage companies from being based in the United States and paying taxes in the United States… We encourage them by deeming a tax on their offshore earnings. By deeming that tax, an enormous amount of money came back in the United States, Hundreds of billions of dollars came back in the United States. And that money is being reinvested in the United States. And that’s one of the basic reasons I think our economy is so strong. I think a lot of people have missed that point.” For more expert insight and the latest market action, click here to watch this full episode of Catalysts. This post was written by Naomi Buchanan.
