The following is a transcript of an interview with Gary Cohn, IBM vice chairman and first Trump administration economic adviser, on “Face the Nation with Margaret Brennan” that aired on Dec. 15, 2024.
MARGARET BRENNAN: Gary, and we’re back now with the Vice Chairman of IBM Gary Cohn, who also served as the White House Economic Advisor in President Trump’s first term. Gary, welcome back. It’s expected the Fed is going to cut rates again this week, even though we did see in the economic data released 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.
GARY COHN: 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 of 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 were expecting. So we’re not down to that target 2% where the Fed would like to get to. That said, the Fed meting next week. The Fed is highly- 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.
MARGARET BRENNAN: So what does that mean in terms of the economy President Trump will be inheriting?
COHN: 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.
MARGARET BRENNAN: Do you think that will actually happen?
COHN: I do think it’s going to happen. So net, net, we are talking about a very positive business and cycle going forward into 2025.
MARGARET BRENNAN: Is the stock market really the best way to gauge it? You saw Mr. Trump at the stock exchange this past week.
COHN: Well, look, the stock market is one benchmark. It’s a- it’s an index, it’s a benchmark. And remember, the stock market is an index. There’s a- 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.
MARGARET BRENNAN: We’ve got to take a break and finish this conversation on the other side of it. Stay with us.
[COMMERCIAL BREAK]
MARGARET BRENNAN: 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 20- or part of it expiring in 2025. He said at the New York Stock Exchange this week that he wants it 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?
COHN: Look Margaret, we don’t know. You know, look, the whole tax discussion is going to happen over the course of 2025–
MARGARET BRENNAN: Why didn’t you do it in 2017?
COHN: 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- by the Budget Committee, They instructions are basically how much money you can spend or how much revenue you could 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 the end of 2025, to score that piece of legislation, which in 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 will 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 wants, on either side of the aisle, wants to go back to the prior tax code. You know, when we open up 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 out of- 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 makes sense in relationship to each other.
MARGARET BRENNAN: I think you’ve said in the past, though you don’t think the corporate rate should go down further.
COHN: Well, the business community as a whole, when we did tax reform in 2017, and 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–
MARGARET BRENNAN::: Other developed economies.
COHN: 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 U.S. domiciled companies.
MARGARET BRENNAN: 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?
COHN: Look, Scott is quite an 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–
MARGARET BRENNAN: They’re not going to like any of these promises–
COHN: I agree with that, but 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.
MARGARET BRENNAN: 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. 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?
COHN: Well, it sounds like, from what I’m hearing, and I don’t know, this could change anyway, 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. Budget related 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.
MARGARET BRENNAN: And then they’ll get to taxes?
COHN: And then use a second reconciliation bill, because there are two budgets out there, as there were in the Biden administration, use that to go after taxes and fixing taxes, especially the personal side of taxes that ends in 2025.
MARGARET BRENNAN: That’s a big fight to have in the year ahead. Gary, we will be talking to you again, then. We’ve got to take a break. Thank you.