Conference Presentation, Fireside Chat, Panel
A Conversation with Steven Mnuchin, U.S. Department of the Treasury | Global Capital Markets
Milken InstituteSteven Mnuchin, Maria Bartiromo, Mohamed El-Erian, Thomas Finke, Scott Minerd, Arunma Oteh, David M. Solomon
- Attendees are expected to experience extensive developments over the next three days.
- The administration aims to simplify the tax system so that most Americans use a postcard format and claim the standard deduction.
- A 15% business rate is expected for both large and small businesses in exchange for eliminating special interests.
- Officials plan to resolve the remaining 20% of tax reform details currently unagreed with the House.
- Tax reform legislation is targeted for passage and presidential signing as soon as possible.
- Legislative action on taxes is anticipated to proceed with a pace similar to health care, potentially requiring reconciliation with 51 votes if bipartisan support is absent.
- Economic growth and the elimination of deductions are expected to fund the tax reform plan.
- A difference between 2% and 3% GDP growth is projected to generate nearly $2 trillion in revenues over a 10-year period.
- Reaching a sustained 3% growth rate is estimated to take approximately two years.
- A report on regulatory reform is scheduled for release in June following four executive orders.
- An infrastructure package valued up to $1 trillion is expected to be funded through public and private partnerships rather than the deficit.
- Housing reform for Fannie Mae and Freddie Mac is targeted for the second half of the year, specifically by the end of this year or the beginning of next year.
- Legal immigration is expected to continue driving growth while existing laws are enforced.
- Markets may react positively to policy direction, though conviction could waver as the legislative process becomes complicated.
- Implementation of policies is expected, but market sentiment may shift if immediate results are not observed.
- Increased infrastructure stock is projected to spur economic growth by up to 2%, depending on the country's development stage.
- The infrastructure package is expected to be sequenced upfront alongside tax reform to validate market pricing.
- Failure to deliver tax reform by the end of the year or stalled health care progress could lead to market doubt regarding the administration's delivery ability.
- Economic optimism is driven by an improving global picture, though massive technological disruption and deflationary pressures present a complex economic environment.
- Lower tax rates are expected to spur investment and improve the competitiveness of the U.S. tax infrastructure.
- High economic growth is anticipated to allow the Federal Reserve to normalize policies without negative consequences.
- Rate normalization is expected to include two more hikes this year for a total of three, with balance sheet wind-downs planned by September.
- A significantly stronger dollar is deemed unaffordable unless Europe also promotes economic growth.
- A border adjustment tax-induced stronger dollar carries risks of unintended consequences and adverse global positioning effects.
- Supply chains established on previous assumptions cannot be rebuilt instantly and would require years or decades to reconstruct if border taxes are implemented.
- Institutional investors are seeking yield and are expected to move capital into infrastructure, infrastructure debt, and asset-backed securities.
- Emerging markets and Europe are lagging behind the U.S., presenting tactical allocation opportunities despite past volatility.
- Technology is expected to continue disrupting all businesses regarding delivery, supply chains, and margins.
- Robotics and artificial intelligence are predicted to revolutionize society over the next 10 to 20 years, impacting low-wage jobs and living standards based on the policy mix.
- Financial services and manufacturing are identified as industries likely to benefit most from the President's policies.
- High market optimism and rising stock prices contrast with hard data such as GDP, retail sales, and inflation indicating a soft patch.