Mick Mulvaney on Impeachment, a China Trade Deal and the Budget Deficit -- Journal Report

Date : 12/13/2019 @ 2:02AM
Source : Dow Jones News

Mick Mulvaney on Impeachment, a China Trade Deal and the Budget Deficit -- Journal Report

Acting White House chief of staff Mick Mulvaney, in an appearance at The Wall Street Journal's annual CEO Council meeting on Tuesday, was noncommittal when asked whether he and Secretary of State Mike Pompeo would testify in a Senate impeachment hearing.

"We'll do whatever the president wants us to do, is what it comes down to," said Mr. Mulvaney. President Trump so far has barred senior administration officials from testifying in the House impeachment hearings.

Mr. Mulvaney had more to say on trade talks with China and the U.S. economy, and he shared his thoughts, and those of President Trump, with Wall Street Journal Associate Editor John Bussey. Edited excerpts follow.

MR. BUSSEY: Gordon Sondland , the Trump-appointed ambassador to the European Union, says that you were in the loop on everything -- the president's effort to pressure Ukraine, to announce an investigation of the Bidens, and to investigate this debunked server issue, in return for Ukraine getting an audience with the president and military aid. He said, you, Pompeo, everybody, were in the loop on everything. What's your response?

MR. MULVANEY: I'm not going to testify here today, but I will remind everybody what Sondland said, which is that he very rarely talked to me and couldn't get me on the phone. The Democrats have certainly picked and chose what they want to say. ... I very much look forward to the opportunity, if the president instructs me to tell my side of the story. I'm looking forward to it.

MR. BUSSEY: Sounds like the White House is taking the fifth. Why not just say?

MR. MULVANEY: No, John. That's just not right. You take the fifth when you're in court. That's not what this is. This is a kangaroo process. And I don't mean to be too energetic about this, but this was never a level playing field. You're never given the opportunity to tell your side of the story. Again, would anybody in this room go into that setting without the White House counsel? That makes no sense at all. Would you go in not knowing who's going to be able to ask you questions and for how long? Keep in mind, a couple different times during this process, the rules changed in the middle of the hearing.

MR. BUSSEY: Let's talk about the next trade deal, China. Dec. 15 is the deadline that the administration has given [for additional tariffs on Chinese goods].

MR. MULVANEY: What happens on Dec. 15, I think, will have a lot to do with what happens between now and Dec. 15. What's the trajectory of the discussions at that time.

MR. BUSSEY: What is the trajectory?

MR. MULVANEY: I think that the trajectory toward a phase-one deal is pretty good. Now the phase-one deal is sort of the smaller-components parts that deal mostly with trade and not with some of the structural issues. A lot of the agriculture discussion you've heard would be bound up in phase one. But I think it makes perfect sense, given the complexities of the deal, to break it down into smaller pieces. To see if you can walk before you can run and crawl before you can walk.

MR. BUSSEY: Phase one has been described as, "You're buying more agricultural goods from us. We're lowering some selective tariffs."

MR. MULVANEY: I've seen that description. I think that's probably not unreasonable.

MR. BUSSEY: That seems to be at best a return to a status quo. And it's after tariffs have been imposed that have cost consumers, after taxpayers have had to pay additional funds to farmers who were hit by retaliatory tariffs in China. So it's really not even a return to the status quo, it's a half step back to the status quo, and at some cost to the U.S. Not a great report card for three years of negotiating.

MR. MULVANEY: I disagree. We wouldn't be having any of these conversations if Donald Trump wasn't president. This was always going to be hard. I think everybody recognizes the fact that at some point in time, we were going to have to have these discussions with the Chinese.

Now I think many of us wish those discussions had been 20 years ago, but they certainly couldn't wait another 20 years. Let's say better now than later.

I remember sitting down with some folks inside the White House early on when I was at OMB [Office of Management and Budget]. OMB is the clearinghouse for not only the budgetary stuff but also the regulatory affairs. And we were talking about how excited we were about the deregulatory successes that we had and a little bit less excited about the legislative process we had made, even when the Republicans were in charge of the House.

I remember telling folks, "Look, there are certain things that are easier than others in Washington, D.C. Dereg is easy, because it's just us. We don't have to work with Congress to do most of our deregulatory agenda, which is why it's been so successful. You move down to legislation, which is sort of the next level of complexity, and it gets a little bit harder, because then we have to convince Congress to do something." Even when they were run by our own party that was hard. Now it's even more difficult.

Trade deals are the hardest of those on that spectrum, because you have to get another country to change its practices.

At the root of all of this, what is the discussion with China about? It's about whether or not China wants to join sort of the first tier of nations. You do a deal with Germany, you're not required to give away half your business to Germany or to a German-controlled entity in order to do business in Germany. And the chances of them participating in an orchestrated attempt to steal your stuff is probably low on your list of concerns about doing business in Germany.

China needs to step up to that game. And that's going to be difficult to do. You look at the big picture, we are raising the issues that need to be raised. And I think in the long run, the country will be better off for it.

MR. BUSSEY: That assumes that China's concerned about its reputational standing and wants to join the first tier, when in fact, its economic model seems to be working quite well for it.

MR. MULVANEY: But is that sustainable?

MR. BUSSEY: It may not be.

MR. MULVANEY: It's only working to their advantage because we let it work to their advantage and the Europeans let it work to their advantage. And you finally stand up and say, "No, stop stealing my stuff." That's a fair conversation to have.

MR. BUSSEY: But those are the issues that the CEOs and that the rest of this country is waiting for. That's the big stuff. The smaller stuff is getting back into, "You buy some of our goods, we'll lower tariffs." The big stuff is subsidies of the state-owned enterprises, forced tech transfer, theft of intellectual property. And there we have not seen progress.

MR. MULVANEY: But that's just human nature. I don't care if you're Chinese or American or whatever. It's always easier to do a big deal after you've done a small deal. It's always easier for me to sit down with one of your reporters for maybe an hour-long, on the record, detailed interview after I have a relationship with them over the course of time on smaller things.

So I get what you're saying, but I think you're ignoring human nature, which is that, it's even more difficult to do the bigger deals first. Doing something on a phase-one basis to see if you can develop that relationship, develop the rapport a little bit, that just makes sense. And it's not surprising you're getting that from a businessman president.

MR. BUSSEY: President Trump has suggested that we might go past the election before a deal is struck. Is that language that's preparing the markets and the American people for the fact that --

MR. MULVANEY: No, I think that's just the president being honest. I've seen this before. I've seen people with deal fever before, who just work so hard on a deal, they have to have a deal, and at the end, they're willing to do anything to get that deal. That doesn't exist here. I think you're just seeing the president, taking his word on that, which is, "Look, I'll do a deal if I get a really good deal -- but I'm not in any hurry. I think I got a lot of the cards here."

I think he probably does. I think our economy's proved much more resilient than people expected. To your point earlier about the costs borne by the American taxpayer, look, I was on that side of the argument interior to the White House, you know, on who would pay the tariffs.

But when you put the tariffs on and inflation goes down, and the currency devalues, the yuan devalues, there's a real strong argument that the American consumers are not paying for much of the tariffs, or at least as much as we thought they were.

MR. BUSSEY: Let's move on to another sticky subject, the deficit. We can understand why in 2009, 2010 this happened. But over the last three years of some of the best jobs numbers and some of the strongest economy we've had in years, it's growing. You were once a deficit hawk, a Tea Party man. What happened?

MR. MULVANEY: The years that really bother me the most were, I guess it was the budget years '17 and '18. Because that's when Republicans held the House, the Senate and the White House, and the deficit numbers were way too big then. And people said, "Oh, Mulvaney, you're the budget director, you're a deficit hawk, how could you allow this to happen?"

Well, the truth of the matter is, what's the president's budget? The president's budget is essentially a messaging document. And the message is, "If the president were in charge, this is what the spending would look like." And that budget had dramatically smaller deficits than on there [a chart showing annual U.S. budget deficits]. What that exposes is that, even when the Republicans are in charge of the House, some Republicans like spending money as much as Democrats. It's hard to stop spending money.

MR. BUSSEY: Your stated expectations were that the tax cut would stimulate the economy to the extent that the economy would grow faster than the deficit would accrue. And that hasn't happened.

MR. MULVANEY: Portions of it have. If you drill down into the numbers, and again, it's been a year since I've looked at this, I think almost all of the deficit that's attributable to the tax deal is related to the child-care tax credit. The corporate tax cut actually did exactly what we said that it would do, generated a fair amount of revenue, so I'm very pleased with the results of that, and certainly we have no complaints about the amount of growth that we have.

MR. BUSSEY: It's the end of January 2021. The president has been re-elected to a second term. What are the top three agenda items for a second term, where he doesn't have to worry about the filter of re-election?

MR. MULVANEY: Prescription drugs is going to be a big one. Trade will continue to be a big part of it. I think the president would love to see further refinements to tax policy. He was always disappointed we couldn't get that corporate tax rate down just a little bit more, so we're going to continue to push those types of things. Also to make some of those cuts permanent, now that we've proven that they can work and that they do stimulate the economy, and that supply-side economics works.

People ask me sometimes, what's been the biggest success? And I think 20 years from now when they write the history of the first term of the Trump administration, it will be that we proved that supply-side economics works. And that you can have significant growth without significant inflation.


(END) Dow Jones Newswires

December 12, 2019 20:47 ET (01:47 GMT)

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