WHEN: Today, Wednesday, March 20, 2019
WHERE: CNBC's "The Exchange"
Following is the unofficial transcript of a CNBC interview with JPMorgan Chase CEO Jamie Dimon American University President & Former Obama Health and Budget Official Sylvia Mathews Burwell and CNBC's Kayla Tausche on CNBC's "The Exchange" (M-F 1PM – 2PM) today, Wednesday, March 20th. Following is a link to video of the interview on CNBC.com: https://www.cnbc.com/video/2019/03/20/jamie-dimon-ceos-optimistic-about-business-outlook.html.
All references must be sourced to CNBC.
KELLY EVANS: Welcome back to "The Exchange." The Business Roundtable has published its Quarterly CEO Economic Outlook Survey and executives are less bullish than a year ago. Kayla Tausche is in Washington and is joined by JPMorgan Chairman and CEO Jamie Dimon, along with American University President Sylvia Mathews Burwell for more. Hi, Kayla.
KAYLA TAUSCHE: Hi, Kelly. Thanks so much for having us and thanks to our esteemed guests today. In addition to that survey, they are also announcing a partnership, efforts under way between 15 companies, 13 universities to try to develop the 21st century curriculum for students and eventual workers for companies. So, our thanks to both of you for being here to discuss that and many other issues. Jamie, first the backdrop economically. We've heard from lots of CEOs, whether it's FedEx, UBS, about jitters. Potentially a global slowdown. And then the Business Roundtable Survey today showed a little bit of declining optimism. Is there a slowdown afoot?
JAMIE DIMON: What I would call a 'slowdown' – there are always jitters. I've never been in business where there weren't jitters. And it's a little bit of a slowdown. But, you know, the Business Roundtable is very optimistic about the future. America, in particular, had less of a slowdown than the rest of the world. But one of the things we try to focus on is: how do you make things better? So, this initiative today is a great example how business, government and this town can get together, create jobs for kids, you know, earning $50,000, $80,000 a year and so, the BRT is proud to be leading this effort. And these guys did an unbelievable thing in Washington building this.
KAYLA TAUSCHE: Sylvia, 93% of American graduates are in a job six months after graduation. So, what needs to change about the degree if it's working so well already?
SYLVIA MATHEWS BURWELL: So, at American University, we're very fortunate. As you said, 93% of our graduates are within six months in jobs or graduate school. For many, making sure we are staying connected to the needs of the business community. And that's what this partnership is about, is making sure we know what those needs are from our students, we're giving them the curriculum and tools they need. And the way the partnership works is once our students complete the curriculum and have the credential, then they receive preferential treatment, both in terms of internships and jobs. So, they have preference when they do these credentials. So, it's keeping that tie healthy and good so we know what's needed in the economy and we're working to provide it.
KAYLA TAUSCHE: The first step is getting into college, which now, I know, some applicants might worry with recent news that college admissions slots are for sale. How do you put those worries to rest?
SYLVIA MATHEWS BURWELL: You know, what I would just say, the incidents of the last weeks are very disturbing to any of us in higher education. What they've done to the image trust, I think we have to all realize that it is an important thing. But I think for the vast majority of universities and the vast majority of applicants, I think they know that that is not what is happening. All of us, I'm sure, are taking steps to make sure we look at our processes, make sure if there are any things we can do to prevent that thing. There are so many great students out there. We're in the middle of the process—as a matter of fact, our letters are going out today at American University and it is a great thing to see all these young people interested in coming.
KAYLA TAUSCHE: Jamie, as a parent, did it shock you? You raised three kids in hypercompetitive New York City. Was there ever pressure to tip the scales?
JAMIE DIMON: What I read about was shocking. I mean, obviously, people want to help their kids and people get benefits just from having tutors and things like that. But that kind of stuff was shocking. And I'll leave that – we have enough problems ourselves, I'll leave it to higher education to deal with.
KAYLA TAUSCHE: I know you gave $100,000 to Duke where two of your daughters went. $50,000 to Barnard. Is that a slippery slope though?
JAMIE DIMON: I don't know if that was before or after, or something like that. We tend to support everything we've ever been associated with. And so, I think they got in on their own rights.
KAYLA TAUSCHE: I want to ask you about the Fed, too. Of course, we are the pregame for Jay Powell's decision in just a little bit. Jamie, the Fed has said it will be patient. How long do you believe the Fed will be patient?
JAMIE DIMON: The Fed should -- I mean, I find it amazing people are shocked when the Fed says they're data dependent. Of course, they are data dependent. Can you imagine the Fed saying they're not data dependent? I mean, when they say they're being patience, they're saying looking at current events, it looks like it may be awhile before they have to make a major decision about changing interest rates. And I have faith they'll do the right thing based on the data they have at the time.
KAYLA TAUSCHE: Do you believe the Fed is between a rock and a hard place, though? You raise rates too quickly, growth contracts. You stand pat for now, the economy overheats.
JAMIE DIMON: I think that's always been true. I don't think they're between a rock and a hard place. I think they're trying to navigate what goes on today. You know, what's going on in the U.S. economy is pretty strong. This isn't like a bad thing. And I remind people rates go up because the economy is strong -- that's not necessarily a bad thing. A strong economy is far more important than a 25-basis point effect on the economy and jobs.
KAYLA TAUSCHE: You've said the trade war, if it escalates, could tip the U.S. Into a recession. The President just said a few minutes ago that even if we get a deal with China where he says talks are going well, that tariffs could stay in place for a substantial period of time. How much of an overhang is that?
JAMIE DIMON: Well, look, I didn't hear that. And I don't respond to minute-by-minute news like you guys do because I don't think it matters at all, to tell you the truth. So -- we've heard from the administration that they're working on very serious issues and made serious progress with China. We'd all like to see a deal done. And to the extent it's not done, and to the extent it's uncertainty, it's not good for the global economy. I'm not sure I'd say tip into a recession but it's certainly not good and you see that reflect in the market. Every time trade is going well, it goes up. Every time it's going badly, it goes down. And I have faith they're trying going to get an intelligent deal done, and it may take a little bit of time.
KAYLA TAUSCHE: Are you worried that the President is saber rattling with Europe now, too?
JAMIE DIMON: Again, what I have been told is that they're making progress in Europe. And, you know, the President has his methods and I wouldn't go about them but it's hard for me to say to say some of these methods didn't get people to the table. I think both are true. We like to see to the table to conclusion. And we think that's the best thing for the American economy, the global economy and the whole – you know, the rest of the world.
KAYLA TAUSCHE: Sylvia, we'd like to ask you to put on your hat as a former budget and health official here. The Fed Chair has also said that the U.S. cannot spend as if deficits do not matter, but the conversation in the democratic field right now is that college should potentially be free and that health care should potentially be free. Do you think those two things should happen?
SYLVIA MATHEWS BURWELL: So, I think when we talk about the issues of deficits, I'm still of the school that deficits do matter. And they matter for the markets, they matter for the economy, and they matter for policy investments that we make as a nation. And I think we have to consider— you were just discussing the issue of the question of a potential recession-- when we have the kind of debt to GDP ratios that are continuing to increase, is that a problem for our own resiliency as a nation if we go into those things? So I'm of that school. Do I think there are issues in health care? I think in health care, the most pressing issue that we can work on, or what everyone agrees on across party lines and that is access, affordability and quality.
KAYLA TAUSCHE: Do you support the six candidates who say that Medicare For All is the direction the country should go in?
SYLVIA MATHEWS BURWELL: You know, what I think we should do on all of these issues is focus on the substance of those three issues. And that's what I've said when I was Secretary and what I say now. Focus on access, affordability and quality and I believe there are steps we can take right now to make progress actually on all three of those. And whether that's in the pharmaceutical space or that's in the space of changing the way we pay for health care, not in terms of transactions, but pay for the outcomes. And those are the kinds of steps we as a nation can work on right now.
KAYLA TAUSCHE: Jamie, you said this week that America can afford anything. Can we afford $22 trillion in debt, a deficit that's nearing a trillion dollars this year, the proposals the democratic field is putting forward and potential a recession at some point?
JAMIE DIMON: Let me just say -- a couple of points. First of all, slogans are not policy and we all agree we need a lot to do on health care, on infrastructure, on skills and education. Thoughtful, proper policy that needs to be executed by thoughtful, bright politicians who have to lead the population we have. The debt to GDP for the world is 80% of GDP in America. So, it's like net debt is like $17 billion or $18 billion of the GDP. It's 250% in Japan. So, it's not what I call – I totally agree with her, it's important to have fiscal discipline. It's not an immediate issue. It's not going to put the economy into a recession tomorrow. But as that curve goes like this, which it does, you know, mostly because of burgeoning health care costs, we should fix the problem before it becomes a problem. It will fix itself at one point. I also think policymakers should separate we need proper business taxation, we need proper infrastructure, we need proper skills, and then how we afford to pay for it. We should not spend all our time to do this but not that, because you'll slow down growth. I mean, there should be -- both Democrats and Republicans need a growth agenda that we can afford to pay for if we're intelligent.
KAYLA TAUSCHE: Is it a growth agenda to regulate the big technology giants? Do you think that should happen?
JAMIE DIMON: Well, no, but again, that's a very -- people say that we made binary arguments. It's not binary. If someone has a reason where competition is unfair, then maybe you need regulation. And that's true for all of our businesses. And so, to me if people have legitimate complaints, people should look at where should there be fair competition? We all deal with. We all have to deal with antitrust and competition and things like that. So, you know, I'm not an expert in tech policy, but you know, to the extent they should do the same thing, they should look at it.
KAYLA TAUSCHE: But you are an expert in managing a company under fire and frankly, the approach to tech feels a lot like the approach to banks after the financial crisis – executives hauled before Congress, multibillion dollar fines and proposals to break up these massive companies. Do you sympathize with them?
JAMIE DIMON: They haven't had the benefit of the full monty yet. And if I was them, I might be getting prepared for it.
KAYLA TAUSCHE: What advice would you offer to Mark Zuckerberg?
JAMIE DIMON: Really get prepared for it. And which, look, it seems to me like they're doing a lot of work in privacy, and you know, robots, and democracy and who can advertise on their platforms, but it's a lot of work. And you know, my experience has always been when you get attacked by someone, you get one group, it could be every country, every AG, every regulator all at the same time. So, any company that's under attack like that or a threat, they should really gear up and look at it as a very broad-based, extensive type of thing they have to deal with, and listen carefully to the complaints on the other side. There are sometimes legitimate complaints you should be very, very reactive to.
KAYLA TAUSCHE: But you're in the business of underwriting and advising these companies. How long are you telling them to be prepared for the onslaught? And are you putting forth models that show what the sum of the parts would be if you break them up?
JAMIE DIMON: Well I think that's a whole different issue. I think, you know, we would offer help to any client of ours that asked for help. And you know, how they run their company and what they split up, that's a whole different issue.
KAYLA TAUSCHE: Sylvia, one company -- one big tech giant in this area that is getting a pat on the back, at least here in Washington, is Amazon for the investment it's making. When you talk to students, what's the appetite of students to go work for Amazon in Crystal City or in National Landing and do you think they will be able to deliver 25,000 good paying jobs?
SYLVIA MATHEWS BURWELL: Well, you know, I think the effort we're talking about today with the Greater Washington Partnership is about bringing together the needs of our community, our economy, in this Greater Washington area with what universities provide. And I think our students at American University are quite excited about that. Because at American University, 91% of our students are doing experiential learning. That means internships. And they're excited about that. The numbers you stated in our We Know Success website, where we tell people: After you finish your degree at American University, within six months, you're either in Graduate School or you have a job. Those numbers are 93%. Having a place like Amazon here is, I think, a great thing for our students and they're excited about it. I think they're also excited about having an innovation and technology sense to the community that they might be staying in, once they come here.
KAYLA TAUSCHE: Jamie—
JAMIE DIMON: Can I just add this? It's really important. One of the reasons companies that come here is because they have great universities that they can draw really attractive kids. But the 25,000 jobs, what people don't understand, it's going to be another 75,000 outside of that. Because when you have a company move here, they need people who prepare meals and clean floors to engineers to marketing people to lawyers to accountants to service that whole ecosystem. So, actually you can lift up the whole community and affordable housing, so you lift up – you don't over gentrify and stuff like that. So, these are huge benefits. And it's because the place is hospitable to business and wants to create jobs for kids and the health of the university system. University systems are often, the ecosystem around them is a huge success. You can look at Boston, you can look at Silicon Valley, can look at parts of New York, and you can look at look at Washington, D.C.
KAYLA TAUSCHE: Did New York make a mistake in pushing Amazon away and how much more are you investing here because of the expectation that they will grow more here?
JAMIE DIMON: Of course they made a mistake. There would have been 100,000 jobs in total there. Which, like I said, would have been jobs across the whole spectrum. And, people -- the mistake people make about New York, the tax benefits, New York has the highest real estate rates, the highest individual rates, the highest corporate rates. Those are effectively a reduction of the rates for a time period. So you know, I think it would have been hugely beneficial for New York. But if they for New York doesn't want them, so be it. They could go elsewhere.
KAYLA TAUSCHE: A lot of this sounding --
JAMIE DIMON: And it's not so bad for us because they would have competed for the same people I want.
KAYLA TAUSCHE: Jamie, your dexterous in your political speak. You had a dinner a Salon dinner off the record with some reporters last night. And --
JAMIE DIMON: Way off the record, huh?
KAYLA TAUSCHE: Well, the fact of the dinner was reported, but a funny blog on Dealbreaker on Monday said that your workforce announcement was one flag lapel pin short of a campaign event. Is this you testing the waters?
JAMIE DIMON: No, I am a patriot at heart. It's far more important than JPMorgan. And we are making a full effort to help anywhere we can help our country and work skills. We announced the 350 million program around the world. Trying to do exactly what they're doing here. And it's a local -- it's got to work locally. It does not work anywhere else. So we're going out with RFPs to local universities, community schools, mayors and see if we can create the same kind of ecosystem that's working here to lift up those communities.
KAYLA TAUSCHE: What do you hope President Trump tells the Business Roundtable when he meets with you guys tomorrow?
JAMIE DIMON: My experience with President Trump is that he says whatever he wants to say.
KAYLA TAUSCHE: Jamie Dimon, Sylvia Burwell, we appreciate both of your time today. Thank you so much.
SYLVIA MATHEWS BURWELL: Thank you.
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