On CNBC's Squawk Box, Portman Talks Jobs & Tax Reform

Interview

During an interview this morning on CNBC's Squawk Box, Senator Portman discussed the need to put in place pro-growth policies that encourage investment in jobs here in America. Portman sounded an optimistic tone about the opportunity Congress now has to confront our slow economic growth head-on and detailed his ideas for giving the economy a shot in the arm. By focusing on working together to reform our broken tax code, Portman said, Congress can make America more competitive, create more jobs, and raise wages to help ease the middle-class squeeze.

Transcript of the interview can be found below and you can watch the interview here.

Andrew Sorkin: "Comprehensive tax reform was a key Trump campaign promise, and House Speaker Paul Ryan says reform will come in spring. Joining us now is Senator Rob Portman of Ohio, who serves on the Finance, Budget, and Foreign Relations Committees. Good morning to you."

Senator Rob Portman: "Good morning, Andrew. How are you?"

Sorkin: "Great to see you, Senator. Thank you for joining us. We've been trying to understand all morning and frankly for the past couple weeks, but at this point in terms of the timing on tax reform, which the market has priced in as if it's happening relatively soon, but increasingly there have been reports and murmurs and other things that have suggested maybe this is going to take longer than we thought. What do you think?"

Portman: "Well, we need to do it. It's urgent. It's one way we know we can give the economy a shot in the arm. You and I have talked about this before on this program. The reality is that the code is inefficient. It's antiquated. It's a great opportunity. Timing will depend on a couple things. One, I think having a budget done, which usually happens in the April/May time frame. You have a process -- you talked about before on the show -- called reconciliation, where with fewer than 60 votes you can get it done with a majority vote. I think that'll probably be necessary, honestly, to get the kind of tax reform done that we're looking at: pro-growth, pro-jobs tax reform. It probably is summertime--early summer. The point is that we're moving forward. It seems as though there's a consensus among Democrats and Republicans that the current code is broken and there seems to be a lot more work being done with the new administration coming in and with the Ways and Means Committee and our Committee on the Senate side, the Finance Committee. So I think it is moving forward, Andrew."

Sorkin: "Just to put a fine point on it in terms of timing, you think this summer? That is 2017. This is not a 2018 project."

Portman: "No, I think it should be done this year and can be. We've done a lot of research on this already. We've had, as you know, dozens of hearings. I was involved with Chuck Schumer actually, the new Minority Leader, in co-chairing a working group on this international tax reform issue a year and a half ago. We came out with our report that said basically the code is punishing U.S. companies and leading to jobs and investment going overseas. There's some pretty simple things that can be done to stop that. So I think there's an opportunity here."

Sorkin: "Senator, we just had a conversation with Steve Forbes in the last hour about the border adjustment tax. Also though, importantly, the issue of whether the tax reform package is ultimately going to be revenue-neutral. Does it have to be revenue neutral for you?"

Portman: "I think it can be revenue neutral because it will generate a lot of revenue if it's properly analyzed. This is by using a so-called dynamic score rather than the static score that doesn't assume the changes in behavior that we know are going to occur. I'll give you an example: we have the highest rate in the world now on our businesses at 35 percent, really 39 percent when you average in the state taxes. At one point, we were at the low end of that. Now we're at the high end. That's resulting in a lot of jobs going overseas, but also it's resulting in companies not bringing their earnings back from overseas. If there's $2.5 trillion locked up overseas, Andrew, there's a great opportunity by lowering the rate, having repatriation bringing that back, which will generate more revenue. I think it should be revenue-neutral because that way it can be so-called permanent tax reform, not subject to the limitations of the budget, which is what otherwise would happen. But we should use the kind of scoring that actually shows the dynamic nature of good tax reform."

…

Sorkin: "Senator, before we let you go, I want to ask you about a comment that Seth Klarman, a famed investor, put out in a letter that he sent to his investors recently. It's gotten a lot of attention. I wrote about it in "The New York Times' yesterday. He said something and I wanted to hear your view on this. He said "President Trump may be able to temporarily hold off the sweep of automation and globalization by cajoling companies to keep jobs at home, but bolstering inefficient and uncompetitive enterprises is likely to only temporarily stave up a market forces. While they might be popular, the reason the U.S. long ago abandoned protectionist trade policies is because they not only don't work, they actually leave society worse off.' What do you think about that?"

Portman: "Well, I think Seth is restating basic economic theory. So there's a lot to that. I would not say that that's what President Trump is doing. Certainly not exclusively. What he's talking about is increasing the amount of manufacturing here in America. My home state of Ohio is an example of that. When Ford Motor Company brings jobs back, as they have to build the F-350 trucks, they were supplementing what they were doing. That does add jobs. That does make the United States, you know, a stronger country economically. Significantly, it also increases wages and demand for workers. I do think you can bring back jobs. Yes, there will be more automation. Yes, there will be more efficiency. That's certainly happening. If you increase the volume, the amount of manufacturing done here--which we can do, particularly with our energy opportunities we have now in this country and the fact that the differential between wages is not as great as it once was--we have a great opportunity here to bring back manufacturing jobs. I think that's where the sweet spot is."

Earlier this year, Senator Portman was on Squawk Box to discuss jobs, tax reform and the economy. You can see that interview here.

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