And we're back now with the vice chairman of IBM, Gary Cohn, who also served as the White House economic adviser in President Trump's first term. Gary, welcome back. It's expected the Fed's going to cut rates again this week even though we did see in the economic data release that inflation is still high. President Trump said can't lower prices once they're high, seems to be admitting that it's not within the president's remit to control what you spend at the grocery store.
Margaret, thanks for having me. You're right. So we had two bits of economic data this week: we had consumer prices and we've had producer prices. Both came in on the high side where economists were hoping. If you look at the consumer prices, we're looking at about 2.7% on consumer prices. Remember the Fed's target for inflation is about 2%, so we're running almost a percent high. Producer prices came in even higher than we're expecting, so we're not down to that target 2% where the Fed would like to get to. That said, the Fed is meeting next week. It's highly viewed that the Fed will cut interest rates by 25 basis points next week. That means over the course of this year they will have cut interest rates by 100 basis points. Now as you look forward into next year, people had projected they would cut a lot more. I think we are seeing the rate of cuts slow down, and slow down quite dramatically, as people are starting to evaluate the economic data that we have. So what does that mean in terms of the economy President Trump will inherit? So the president's inheriting a very good economy, a very stable economy. We have real solid economic growth, we have real job growth, we have real wage growth. And I think some of the wage growth that we're seeing, we've seen a lot of these union contracts be renegotiated in the second half of this year. Those wages feed through the economy, they feed through as inflation. So the economy the president's inheriting is quite strong. I think it will continue to stay quite strong. And in fact, the American consumer today, as well as Corporate America, is quite excited about what the Trump administration is talking about. And the business environment is very positive. Corporate America is talking about a lot of expansion, a lot of capital expenditure for next year, about repatriating more jobs back to the United States, about building more factories in the United States, hiring more workers.
You think that'll actually happen?
I do think it's going to happen. So net net, we are talking about a very positive business cycle going forward into 2025.
Is the stock market really the best way to gauge it? You saw Mr. Trump at the stock exchange this past week.
Well, look, the stock market is one benchmark. It's an index, it's a benchmark. And remember, the stock market is an index. There's a huge diversity of what's going on in the stock market. There's some of the tech stocks at the high end that are performing very, very well, and there's some of the more traditional stocks in the middle of the market that are not performing as well.
We got to take a break and finish this conversation on the other side. Stay with us, Gary, we'll be right back.
Welcome back to Face the Nation. We're continuing our conversation now with Gary Cohn. Gary, before the break you were telling us the business world has high expectations for the Trump administration. One of the things that Donald Trump promised to do in his second term was lower the corporate tax rate. So you helped put together the tax plan that's expiring in 2025, or part of it's expiring in 2025. He said at the New York Stock Exchange this week that he wants to go down further from 21%. He really wanted to get it back down to 15. And we will be able to do that. Will he be able to do that?
Look, Mark, we don't know. You know, look, the whole tax discussion is going to happen over the course of 2025. In 2017, we did not have the financial wherewithal to do it. When you go through reconciliation, which is how they will do taxes this time in 2025, you are given instructions by the budget committee. The instructions are basically how much money you can spend or how much revenue you can take in. This time it will be how much money you can spend. We did not have additional money to spend, so the lowest we could get the corporate tax rate at that time was the 21%. That's also the reason that the corporate tax part of the tax legislation in 2017 expires at the end of 2025. To score that piece of legislation, given the financial requirements we were given by the Senate and the House Finance committees, we had to end the personal side at the end of 2025. So we do know that taxes will be taken up by this Congress in this session. We know that they're going to have to deal with the personal side of the equation because if not, the personal side we revert back to the pre-2017 tax code. That was a very arduous, ugly tax code with much higher rates, with a lot more loopholes, a lot more deductions. I don't think anyone on either side of the aisle wants to go back to the prior tax code. You know, when we open up the tax code, even if we're just talking about the personal side, the corporate side will come into play. And there's always this interesting relationship between the personal side and the corporate side because the vast majority of companies in the United States are small businesses that file on a tax return that allows them to pay the personal rate. But there's a difference between the personal rate and the corporate rate, and you want to make sure that those relationships don't get too far out of line with each other so people aren't incentivized to change their corporate structure to become a subchapter S corporation versus a corporation so they can take advantage of the tax code. So there's always a lot of time spent there to make sure the personal rate and the corporate rate make sense in relationship to each other.
I think you said in the past though you don't think the corporate rate should go down further.
The business community as a whole, when we did tax reform in 2017, whether you look at the Chamber of Commerce or you look at the Business Roundtable, you look at any of the business organizations, they were very supportive of a 21% tax rate. They, in fact, I think would have been happy with anything at 23% or below, which put us in line with other OECD countries around the world. It made us competitive with other developed economies. Obviously companies will be happier if the tax rate goes lower, but realistically we just need in this country to be competitive with the rest of the world. We do not want corporate taxes to be a disadvantage for US-domiciled companies.
The pick for Treasury secretary is hedge fund manager Scott Bessent. You may know him. He says he's going to deliver on the Trump tax cut pledges, but that's eliminating taxes on tips, Social Security, overtime pay. Can he actually deliver on any of that?
Look, Scott is a quite accomplished individual. So look, I know he will put a lot of effort into this. He will have a lot of help with other people. Kevin Hassett, who's going into my old job at the NEC, will have an important seat at the table. Kevin understands a lot of these policies. There will be a lot of opinions at the table. When we get to tax writing, you know, the House and the Senate will have their opinions. Remember, there are members of the House that ran on one item and one item only. They ran on the idea that we should bring back the state and local tax deduction, the SALT deduction. There were also members that ran on being deficit hawks. There were Republicans that ran on thinking that we have built up too much deficit and we need to get our budget under control. We're going to have to find a way to balance all of these needs and get to a tax plan that makes sense, but allows us to continue to drive our economy, continue to drive the economic growth, and continue to drive wages and jobs.
Well, you heard the House Speaker say some of this may be done through reconciliation, which implies that the Senate isn't going to seek a majority vote here. They're just going to try to put this through with 51 votes and do it in kind of an arcane way. When is this going to happen, and should it happen before they fix the border?
Well, it sounds like from what I'm hearing, and like I don't know, this could change any way, there's other people smarter than I deciding on the strategy on this. It sounds like there may be two reconciliation bills. It sounds like the first reconciliation bill, which you're right is a bill that allows the Senate to do something in a simple majority, budget related only, you can only reconcile a budget with a simple majority. It sounds like there may be a first reconciliation bill which is border related, where they may take back much of the unspent Inflation Reduction Act money and some of the other money that was appropriated under the Biden administration and use that to close the border. And then they'll use a second reconciliation bill, because there are two budgets out there as there were in the Biden administration, to go after taxes and fixing taxes, especially the personal side of taxes that ends in 2025. That's a big fight to have in the year ahead.
Gary, we'll be talking to you again then. We got to take a break. Thank you.
And we're joined now by the Ukrainian ambassador to the United States, Oksana Markarova. Good to have you back with us.
Thank you for having me and bless Sunday to all.
Western powers as you know is sending troops to Ukraine to help Ukrainian forces, but Russia's got North Korean troops now who are fighting on their side. Yesterday President Zelensky said Russia has been using a significant number of North Koreans. How are they fighting?
Yes, so we are not asking for other troops. Ukrainians are still capable of defending our own country. We're asking for the military support. Yesterday we have seen those tens of thousands of troops that we warned the world about. We have seen hundreds of them on the battlefield already, and we are successfully fighting with them as we are fighting with the Russians. I mean, look, we see them now in Kursk Oblast only, and our brave defenders were not only able to kill a lot of them but also keep the positions. So it's difficult of course to see the reinforcement from this axis of evil, but it will not change anything for us. We will continue defending the very long line, whether it's in southern, eastern Ukraine, or whether it's our defensive operation in Kursk.
And in the meantime, the North Korean troops are getting trained in modern warfare and they're learning in Ukraine.
Absolutely. And we also have to worry about what is it that Russia is promising or even delivering to North Korea in exchange for this, and North Korean missiles. But I also raised the manpower issue because it's a problem for Ukraine as well. Military recruitment is tough right now in Ukraine. There has been pressure on your government by the United States to lower the draft age so that you can boost the number of fighters. This is arguably a bigger issue than the weaponry itself. Is it affecting the ability of Ukraine to keep up this fight?
I wouldn't agree that it's a bigger issue than the equipment itself. We still have, first of all, we have a number of young people fighting for Ukraine, and they are volunteering, and women are volunteering. Ukraine is one of the countries that lifted all restrictions for women, for example, and we have 60,000 women in the armed forces. With the recruitment, the last changes to the law on mobilization already allowed us to create new brigades which we are training now. And the problem is to have enough equipment to train them on so that we can actually not send to the battlefield like Russians do, unprepared, whether it's North Koreans or unprepared Russians, but to send soldiers who can do and deliver on a mission. And it's very important for us because every person matters for Ukrainians. Of course there are challenges, and we have the plan and we know how to do it because again, this is our home we are defending. So when it's necessary, all of us are going to be defending our country. But weapons and having more weapons, especially long range, especially to counter this 3,000 glide bombs every month that Russians are sending against us, missiles both Russian and North Korean missiles, it's still a question of artillery and weapons and air defense most importantly. And the more we can have, the faster we can, the more efficiently we can defend.
Well, the Biden administration has been releasing more weapons just in the last week alone. But Donald Trump gave an interview to Time Magazine and he said the United States is escalating by allowing for weapons, missiles to be shot into Russian territory. He's specifically focused in on that. He does not like that Ukraine is doing it. What is that mean for you on day one of the Trump administration?
Well, let me start by saying thank you to all American people really for standing with us all this time. Let me thank President Biden and his administration for all the support. Let me thank President Trump. He's the one who made a historic decision to provide us with Javelins, actually to provide us with lethal aid in the first place back in 2017. Yes. So right now we have to do everything in order to stop Russia. And we know it could be stopped. It was recently stopped in Syria. We liberated more than 50% that they have taken. We actually kicked them out from the Black Sea just with our own naval drone capabilities. They could, we can stop them. The more equipment we have, especially including the longer range equipment in order to be able to degrade the attack capabilities faster, the faster they will either come to the table because again, Ukraine wants peace. Nobody wants peace more than us. Ukraine was never a problem. We never initiated this conflict. And we negotiated at the first sites. Remember in 2022 when Russians started negotiations, they of course did not negotiate peace, they negotiated a pause. As we just heard Congressman Waltz, who absolutely rightfully said it has to be peace, not a pause.
He was careful, he didn't give a lot of specifics as to what the Trump policy will be. But we do know that Viktor Orban was at Mar-a-Lago this past week and he talks to Vladimir Putin and he's talking about a Christmas pause. Do you see a chance for a Christmas ceasefire and prisoner exchange?
