WHEN: Today, Thursday, September 28, 2017
WHERE: CNBC's "Squawk Box"
Following is the unofficial transcript of a FIRST ON CNBC interview with National Economic Director Gary Cohn on CNBC's "Squawk Box" (M-F, 6am-9am ET) today, Thursday, September 28, 2017. Following is a link to the interview on CNBC.com: https://www.cnbc.com/video/2017/09/28/watch-cnbcs-full-interview-with-necs-gary-cohn-on-tax-reform-framework.html.
ANDREW ROSS SORKIN: JOINING US NOW, FIRST ON CNBC, GARY COHN, NATIONAL ECONOMIC COUNCIL DIRECTOR. GOOD MORNING TO YOU, GARY.
GARY COHN: GOOD MORNING, ANDREW, HOW ARE YOU?
SORKIN: I'M GREAT, THANKS FOR JOINING US THIS MORNING. I DON'T KNOW IF YOU GOT A CHANCE TO HEAR WHAT YLAN JUST SAID, BUT WE WERE TALKING ABOUT THE COST OF THIS AND WHAT IT MEANS. $2.2 TRILLION, DO YOU THINK THAT'S RIGHT?
COHN: WE DON'T THINK THAT'S RIGHT. WE DONT THINK THAT'S RIGHT AT ALL. YOU KNOW, WHEN PEOPLE COME OUT WITH THE NUMBERS THEY TAKE A STATIC VIEW OF WHAT THE TAX REFORM MEANS. THEY DO NOT INCORPORATE GROWTH. WE THINK OUR TAX PLAN WILL HAVE AN ENORMOUS AMOUNT OF GROWTH IN IT. WE THINK YOU WILL UNDERSTAND THAT AND GUESTS IN YOUR SHOW WILL UNDERSTAND WHEN WE DRIVE ECONOMIC GROWTH BY BRINGING BUSINESSES BACK TO AMERICA BY MAKING OUR BUSINESS TAX SYSTEM VERY COMPETITIVE WITH THE REST OF THE WORLD, WE THINK WE CAN DRIVE A LOT OF BUSINESS BACK TO AMERICA, WE CAN DRIVE JOBS BACK TO AMERICA AND WE CAN MAKE OURSELVES VERY COMPETITIVE. THAT GROWTH IS NOT FACTORED INTO THOSE NUMBERS.
SORKIN: GARY, INTERNALLY, WHATS YOUR ESTIMATE? WHAT'S THE NUMBER IN TERMS OF PRODUCTIVITY GROWTH THIS WILL CREATE?
COHN: WE THINK WE CAN PAY FOR THE ENTIRE TAX CUT THROUGH GROWTH OVER THE CYCLE.
SORKIN: I – I UNDERSTAND THAT, BUT IN TERMS OF THE GROWTH RATE THAT YOU THINK THIS WILL CREATE IN TERMS OF PAYING FOR IT.
COHN: SO, LOOK, ANDREW, AS YOU KNOW LAST QUARTER WE WERE ABOUT A 3% GDP GROWTH. THIS QUARTER WE'RE GOING TO HAVE SOME STRANGE DATA BECAUSE OF THE HURRICANS AND THE WAY THE HURRICANES EFFECT. WITHOUT THE HURRICANES WE WERE TRACKING OVER 3% GDP GROWTH PER QUARTER. WHEN WE CAME INTO THE WHITE HOUSE EIGHT MONTHS AGO PEOPLE WERE RIDICULING US TO HAVE A 3% GDP GROWTH IN OUR FORWARD FORECAST. NOW WE'RE TALKING ABOUT 3% AS GROWTH TARGETS WE'RE HAVING RIGHT NOW. OUR PLAN WAS BASED ON A 3% GDP GROWTH WE THINK WE CAN BE SUBSTANTIALLY ABOVE 3% GDP GROWTH WITH WHAT WE'RE GOING TO ACCOMPLISH ON DEREGULATION AND WHAT WE'RE GOING TO ACCOMPLISH WITH TAX REFORM.
MELISSA LEE: SO TO GET TO THOSE TARGETS, GARY, AND TO HAVE THE WHOLE THING PAY FOR ITSELF OVER THE COURSE OF THE CYCLE, WHAT ARE THE LINCHPINS TO THAT PLAN? WHAT NEEDS TO HAPPEN IN ORDER TO GET TO THOSE END GOALS?
COHN: LOOK, AS I SAID, DEREGULATION IS IMPORTANT AND WE'RE RUNNING DOWN THAT PATH. WE'RE MAKING IT EASIER FOR BUSINESSES TO OPERATE AND EXPAND IN THE UNITED STATES. MORE IMPORTANTLY, OUR TAX PLAN WILL DRIVE GROWTH. IF YOU'RE LOOKING TO INVEST CAPITAL IN THE WORLD OR LOOKING TO START A BUSINESS AND YOU LOOK AT OUR 35% CORPORATE TAX RATE VIS-A-VIS THE REST OF THE WORLD, YOU WOULD NOT CHOOSE TO INVEST IN THE UNITED STATES TODAY. IF WE LOWER THAT TO 20%, YOU START WITH A 15% TAX ADVANTAGE WHERE WE ARE TODAY. THAT BECOMES MUCH MORE ENTICING FOR YOU TO WANT TO OPERATE OUT OF THE UNITED STATES. WHEN YOU OPERATE OUT OF THE UNITED STATES, YOU HAVE TO HIRE COMPETE FOR LABOR. WHEN YOU GO OUT AND COMPETE FOR LABOR YOU HAVE TO HIRE PEOPLE. YOU HIRE PEOPLE AND ATTRACT PEOPLE BY OFFERING THEM HIGHER WAGES THAN THEY HAVE NOW, SO YOU SEE HIGHER WAGE GROWTH. WHEN YOU SEE HIGHER WAGE GROWTH YOU SEE HIGHER CONSUMPTION. YOU SEE HIGHER ECONOMIC GROWTH. ALL OF THESE THINGS LEAD TO HIGHER GDP. WE THINK THIS IS VERY, VERY ATTAINABLE.
JOE KERNEN: GARY, IN NEGOTIATING NORMALLY FOR A HOUSE OR SOMETHING, THERE'S A NUMBER YOU WANT TO END UP BUT YOU ALWAYS START -- IT'S JUST THE WAY IT'S DONE, I DON'T KNOW IF IT HELPS. DOES 20 MEAN 22? IF YOU REALLY WANTED 20 WOULDN'T YOU HAVE DONE 15 TO END AT 20 OR IS 20 THE LAST NUMBER THAT YOU'RE GONNA TALK ABOUT? I THINK THE PRESIDENT REALLY DID WANT 15, I THINK YOU WANTED 15 SO 20 IS ALREADY GIVING UP SORT OF YOUR SIDE OF THE NEGOTIATIONS IS THAT THE FINAL NUMBER? YOU'RE NOT GOING ABOVE THAT?
COHN: SO, JOE, GREAT QUESTION AND THANK YOU CAN FOR THAT. WE WOULD HAVE LOVED TO HAVE GONE LOWER, WE REALLY WOULD HAVE BECAUSE THE LOWER WE GO WE THINK THE MORE ATTRACTIVE THE UNITED STATES BECOMES. THIS DOES BECOME A REALITY OF MAKING THE BUDGET BALANCE AND MAKING THE ECONOMIC REALITIES OF THE UNITED STATES WORK. WE WOULD HAVE LIKED TO HAVE STARTED LOWER AND GIVEN OURSELVES NEGOTIATING ROOM. WE ARE AT 20. 20 IS A BRIGHT LINE TEST FOR US. THE PRESIDENT SAID IT, HE SAID IT YESTERDAY AND HE'S BEEN VERY CLEAR ABOUT IT. WE ARE NOT GOING OVER 20. 20 IS THE TOP OF WHAT WE'RE WILLING TO GO ON THE CORPORATE TAX RATE. WE HAVE MADE THAT CLEAR TO THE LEADERSHIP IN THE SENATE AND HOUSE. THEY UNDERSTAND THAT. WE TOLD THEM IF WE START AT 20 WE'RE ENDING AT 20 AND THERE'S NO ROOM TO NEGOTIATE THAT.
SORKIN: GARY, I ALSO WANT TO TALK ABOUT THE INDIVIDUAL TAX RATES. I KNOW YOU MADE A COMMENT YESTERDAY ALLUDING TO THE IDEA THAT THERE COULD BE A SURCHARGE ABOVE AND BEYOND THE HIGHEST – WHAT WOULD BE THE NEWER LOWER RATE BUT A HIGHER RATE THAN 35%. WHAT CAN YOU TELL US THERE?
COHN: LOOK, WE'VE GIVEN THE TAX WRITERS BOTH IN THE SENATE AND THE HOUSE THE ABILITY TO PUT IN A FOURTH RATE IF THEY NEED IT TO MAKE THE PROCESS WORK. AT THE END OF THE DAY, THIS IS ABOUT MAKING THE PROCESS WORK AND GROWING THE ECONOMY. WE ARE SO CONCERNED ABOUT GROWING THE ECONOMY, BRINGING BUSINESS BACK TO AMERICA AND GIVING HARDWORKING EVERYDAY AMERICANS A TAX BREAK, ALLOWING THEM TO KEEP MORE OF WHAT THEY EARN, ALLOWING THEM TO SPEND MONEY, ALLOWING THEM TO BUY WHAT THEY NEED TO BUY. GO OUT AND BUY A NEW CAR, REMODEL THEIR HOUSE, GO ON VACATION, THAT'S WHAT WE NEED TO DO. IF CONGRESS NEEDS A FOURTH TAX RATE FOR A SMALL PERCENTAGE OF THE POPULATION, WE'VE GIVEN THEM THAT LATITUDE, THE HOUSE AND SENATE HAVEN'T DECIDED IF THEY'RE GOING TO USE IT BUT WE'RE TRYING TO WORK – WE'RE NOT TRYING, WE ARE WORKING VERY COLLEGIATELY WITH THEM AND WE WANT TO GIVE THEM THE TOOLS THEY NEED TO DELIVER A BILL THAT WILL GET THROUGH THE HOUSE AND THE SENATE.
SORKIN: JUST TO PUT A FINE POINT ON IT, IN TERMS OF THE LATITUDE, WHAT INCOME STRATA ARE YOU TALKING ABOUT?
COHN: LOOK, ANDREW, WE HAVEN'T AGREED UPON THAT, BUT THIS IS GOING TO BE A VERY HIGH INCOME EARNER BRACKET. IT'S GOING TO BE ONE THAT AFFECTS VERY FEW INCOME EARNERS.
SORKIN: BUT ARE WE TALKING ABOUT OVER $500,000 OR OVER $5 MILLION?
COHN: I THINK IT'S A NUMBER BETWEEN THOSE TWO, HOW'S THAT?
KERNEN: HE NEEDS TO KNOW AN EXACT NUMBER, GARY. I THINK –
LEE: HE JUST ASKED YOU A SPECIFIC QUESTION, ANDREW.
KERNEN: TALKING ABOUT HIM – WE NEED A LITTLE BIT MORE CLARITY ON THIS.
COHN: AND ANDREW, I'LL HELP YOU OUT I KNOW THERES A LOT OF 500,000 AND 5 MILLION.
LEE: JUST SAY YOU'RE ASKING FOR A FRIEND ANDREW AND ASK THE EXACT QUESTION. NO, WE'RE JUST JOKING.
SORKIN: LET ME ASK YOU A DIFFERENT QUESTION. WE WERE TALKING TO LARRY KUDLOW EARLIER THIS MORNING WHO I THINK SOME OF HIS BLUEPRINT HAS BEEN WORKED INTO WHAT YOU GUYS HAVE PUT OUT YESTERDAY. WHAT WAS THE THINKING IN TERMS OF RAISING THE LOWEST RATE FROM 10 TO 12?
COHN: SO I THINK YOU'RE LOOKING AT IT WRONG WHEN YOU TALK ABOUT THAT. WHAT YOU HAVE TO DO IS LOOK AT THE PACKAGE IN ITS ENTIRETY. WHAT WE DID IS WE DOUBLED THE AMOUNT OF MONEY THAT PEOPLE PAY ZERO TAXES ON. SO WE'VE TAKEN THE STANDARD DEDUCTION AND DOUBLED IT. SO FOR A MARRIED COUPLE, THEY NOW GET $24,000 OF INCOME AT A ZERO TAX RATE. THEN WE TOOK THE 15% TAX RATE AND LOWERED IT TO 12. SO WE HAVE REALLY HELPED OUT LOWER INCOME EARNERS BY DOING THAT IN THAT PACKAGE IN ITS ENTIRETY AND THEN YOU LAYER ON TOP OF THAT THE CHILD CREDITS THAT WE'RE INCORPORATING, THE INCREASED CHILD CREDITS. WE ARE DOING AN AWFUL LOT TO HELP HARDWORKING AMERICANS. I THINK WHEN PEOPLE SEE THE FINAL, FINAL DETAILS THEY'LL BE PRETTY IMPRESSED WITH WHAT WE'RE DOING FOR WORKING AMERICANS.
KERNEN: GARY, DURING THE REPEAL AND REPLACE OF OBAMACARE, OBVIOUSLY YOU SEE A LOT OF RHETORIC FROM THOSE OPPOSING LEGISLATION LIKE THAT. IN THE MEDIA YOU HEAR A LOT OF NEGATIVE THINGS. IT'S STARTING ALREADY WITH THIS TAX BILL. BUT REPUBLICANS THOUGHT, HEY
THEY'VE GOT THE SENATE AND HOUSE. IT DOESN'T MATTER WHETHER YOU HEAR THIS RHETORIC AND YOU CONTROL BOTH CHAMBERS. THIS SHOULD GET DONE. BUT NOW WE KNOW, SOME OF THESE REPUBLICANS, MAYBE THEY'RE NOT COMPLETELY COMMITTED TO - OR MAYBE THEY'RE IN A STATE THAT'S BLUE OR FOR WHATEVER REASON, YOU CAN'T COUNT ON THEM. DO YOU THINK IT'S DIFFERENT FOR THIS ONE? I MEAN, I'M SEEING THE RHETORIC ALREADY. IT'S UNBELIEVABLE, ABOUT HOW THERE'S NO MIDDLE-CLASS TAX CUTS HERE, IT'S ALL A GIVEAWAY TO THE RICH. ARE SOME OF THE WAIVERING REPUBLICANS IN THE SENATE GOING TO NOT HAVE THE BACKBONE TO PASS THIS HOW MANY CAN YOU LOSE, ONE OR TWO?
COHN: JOE, NOTHING IS EASY IN WASHINGTON. WE UNDERSTAND THAT BUT WE ARE CONVINCED BY HAVING WORKING WITH THE HOUSE AND SENATE LEADERSHIP ON DELIVERING A FRAMEWORK THAT WE ARE IN A GOOD PLACE. WE'VE GIVEN THE TAX WRITERS IN THE SENATE AND HOUSE LATITUDE TO BRING THEIR MEMBERS ALONG. WE UNDERSTAND THAT WE HAVE TO DO THIS IN REGULAR ORDER TO GET THE VOTES WE NEED TO GET THIS PASSED. I THINK MOST OF THE MEMBERS IN THE HOUSE AND THE SENATE UNDERSTAND HOW IMPORTANT THIS IS TO GET OUR ECONOMY GROWING AND KEEP SUSTAINED ECONOMIC GROWTH. AND SUSTAINED ECONOMIC GROWTH IMPORTANT FOR EVERYONE IN THE COUNTRY.
SORKIN: GARY, ONE LAST QUESTION. I'D IMAGINE – WE'VE TALKED ABOUT THIS ISSUE FOR YEARS OURSELVES, ENDING THE CARRIED INTEREST TAX BREAK, SOMETHING THE PRESIDENT TALKED A LOT ABOUT ON THE CAMPAIGN TRAIL. THIS PLAN SEEMS TO BE SILENT ON THAT THUS FAR. IS THERE SOMETHING COMING?
COHN: SO, THE PRESIDENT REMAINS COMMITTED TO ENDING THE CARRIED INTEREST DEDUCTION.
SORKIN: IN WHAT FORM? ARE WE GONNA SEE THAT IN SOME WAY WE HAVEN'T YET?
COHN: AS WE CONTINUE TO EVOLVE ON THE FRAMEWORK THE PRESIDENT MADE IT CLEAR TO THE TAX WRITERS IN THE CONGRESS THAT THAT IS HIS POSITION, THAT WAS HIS POSITION DURING THE CAMPAIGN AND HE CONTINUES TO SUPPORT THE POSITION THAT CARRIED INTEREST IS ONE OF THE LOOPHOLES WE TALK ABOUT WHEN WE TALK ABOUT GETTING RID OF LOOPHOLES THAT AFFECT WEALTHY AMERICANS. THAT IS ONE OF THE LOOPHOLES THAT WE'RE REFERRING TO.
LEE: ONE LAST QUESTION, I KNOW WE'VE GOT TO GO, WHEN IT COMES TO THE FRAMEWORK, ARE THERE OTHER ITEMS THAT ARE IN YOUR VIEW NON-NEGOTIABLE?
COHN: WE HAVE TO GIVE EVERYDAY HARD-WORKING AMERICANS A TAX CUT. THIS HAS TO BE GOOD FOR AMERICAN WORKERS. IT HAS TO BE GOOD FOR EVERYDAY AMERICAN CITIZENS. IF WE DON'T DO THAT WE HAVENT ACCOMPLISHED ANYTHING.
SORKIN: GARY COHN, REALLY APPRECIATE YOU SPENDING TIME WITH US THIS MORNING ON "SQUAWK BOX."
COHN: MY PLEASURE, THANKS FOR HAVING ME.
SORKIN: SEE YOU SOON. YOU BET.
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