I talked to MARC ROWAN, the CEO of Apollo Global Management, about the provocative plans that fundamentally reconstructed our economy and eventually correct the federal budget. Whether or not there is a possibility of implementation is an unresolved matter, but the relationship with Rowan with President Trump means that the plan is created.
A few weeks after President Trump won the election, he is a huge private equity and a joint -established co -founder and highest executive of the Apollo Group, Mark Lowin, to become a Finance Secretary. I was invited to Ma Lago. At the time, Rowan in Asia to meet investors canceled all plans and flew around the world to meet Trump. Definitely one of the most powerful investors in the world, Rowan, talked to Trump, but eventually did not get a job. (I did Scott Bessent.)
However, since then, he has become more and more influential even for Trump's orbit economic policy and some Democrats. -And he proposes a very specific plan.
Apollo's CEO Rowan is a champion of the federal government's budget model that supports the provision of funds at the University of Pennsylvania. Chair of the School Advisor Committee. Not only does the tax reduction, called the Penwarton Budget Model, but also reduces almost all tax exemption. Increase the tax rate of capital gain. Creating carbon tax and rewriting the rules for immigrants and health care. According to the model, by 2054, the proposal, which could reduce federal debt by 38 %, to increase 21 % of GDP, and increase wages by 7 %, brought booing and applause from Republican and Democrats. There is a possibility.
An important budget lecture approaches this summer, so you'll probably hear more about this idea. Federal debt has expanded to a record level that concerns the Republican Party and advanced economists, and there is no sudden decline in interest rates. The President will extend the tax cut to increase the deficit to $ 3.7 trillion in the next 10 years. Congress Budget Bureau and Policy Demakers are looking for an unconventional solution.
I recently sitting with Rowan and discussing the plan and how it happened. The interview was edited and condensed.
What made you start looking at these problems like this?
In 2008, I saw the Obama administration rewriting the US economy as a whole -rebuilt airline, car, finance and insurance. And they were hostile to the industry. I got a phone call and I called the chairman of Amy Gatman University at the University of Pennsylvania. I told her that if you support it, I would build an entity focusing on your research and focusing on economic budget. And that was the origin of Pen Warton's budget model.
Why are you interested in creating a model?
There is no national budget model. It's like 28 Excel spreadsheets. And if you bring coffee and donut in the morning, you will get a better score than that. If you are the chairman of the committee or a Senator and want to negotiate a bill, you will not be able to get an invoice until then. Imagine you are shopping, but you can't do the numbers until you agree to buy it! This is how our government operates.
Given the current financial situation, the United States is expected to record a $ 1.9 trillion deficit this year.
There is no configuration of the current package, salt expenditure and changes in tax reduction and reduction. But that doesn't mean it's impossible.
So what do you do accurately?
By the way, what did Trump promise? He promises a low tax rate. I can get a low tax rate, 28 %. He promised a decline in the corporate rate. I can get 15 % of the corporate rate. He promises to balance budget and financial caution without doing a lot of things to reach qualifications. I can do that too. This budget gives him an alternative. There is no single cut on this budget. If they do the cuts and Dougles and do many other things, they are all benefits.
It's surprising if it's true. Let me explain the details. He talks about reducing the highest tax rate and removing deductions when many people believe that the most wealthy people are too few.
If the limit rate is low, you can remove many distortions. The top limit tax rate is 27 % (decrease from 37 %), and salt deduction is not much worth it. The difference in capital gain is not much worth it. The tax plan, trust and gimmicks for real estate planning is not much worth it. And you started to start all of this gameplay, and even began to underestimate the overall concepts of S-CORPS and companies. And the simplification of focusing on deductions is overwhelmingly positive. The people I generally do this pay the capital gain and do this by those who do this. “Okay, sign up.”
He also talks about reducing corporate rates to 15 %.
There is a 21 % corporate rate. However, the effective rate is 13.6. Therefore, we will collect taxes based on those close to 15, but encourage companies to make decisions from 21. Suddenly, everyone decides the limit at 15:00 and does not collect any more money. We are changing their actions.
From 21 to 13.6 is a series of distortions. Decorative Christmas Tree: Pharmaceuticals, R & D Credits, all distortions that get a rate from 21 to 13.6. When you go to 15, why do you go to Ireland or Bermuda? At that time, all incentives that move around the world through this shell game will disappear.
Do you claim that the 15 % tax rate is actually higher than today's average?
yes. You can reward the margin growth. For the next dollar, it will reward more people to more people. This is what you want. It's incentive. In addition, since a small tax rate is taxed at 15 instead of 21, we will reward companies to record more income in the United States.
Advanced aspects will say that taxes should be even more advanced than them. People like you, like you, are at the end of the high end of them. Therefore, they should say that, given the recent branch of income, they should consider how to tax on the cohort in another way.
You know, this is tested everywhere in the world. It doesn't work. Everyone who tried it basically gave up it. New York is shouting a tax base. California depresses the tax base. Basically, the most wealthy person in the world is the most flexible in preparing them to move, so it doesn't work. As you know, the tax law is the most advanced western country. The proportion of tax paid by the rich for me and the people like me is my tax on the first day.
Will you pay more based on this?
If not, I will pay a lot based on this.
Remove the “Death Step Up Base”. This is a provision that deletes the capital gain of the deceased's portfolio and values everything on a dead day that most Republicans do not want.
We like to allow generations entrepreneurs to build wealth, maintain their wealth, and maintain more. But when they die, they cannot pass it with tax -exempt. It's an incredible American for me.
If you raise your wealth and you are still working, you will pay more money in the future, even though you are paying more money today, you will do it more until you die I think you like this plan because you hold it.
But isn't everyone making it?
On the other hand, if you are an idolic, you don't like this plan because you pay more than today with capital gain. I don't think it's a bad result.
This model includes this idea that illegal immigrants require health insurance payments. How does it work and what is the effect?
We will be most of the population revealed by health insurance for costs. With this plan, we will have almost universal health insurance.
Why?
Premium has dropped considerably to add this large -scale requirements for young immigrants to participate in the Health Appool.
So, are you not all illegal immigrants overseas?
What I'm talking about is a wise expulsion. Since they are social risks, remove those who need to remove them. Recognize that there are many people here for economic reasons, and that they have achieved effective functions but should not be on the economy freely.
But isn't the cost of insurance just given to the employer, so it's given to consumers?
For industries that have benefited from illegal immigrants, the cost is imposed on these industries, as the incremental cost is divided to some extent between immigrants and business.
What kind of reaction did you get all of these?
I didn't expect this. The interest I have gained is out of the chart, not from Republican or Democrats. Because, depending on the glasses you use, this may really be a Republican bill. Or it may be a really democratic bill. Health insurance requirements. This allows people to see what it is in their own opinion.
To be honest, do you think this is all realistic?
Washington is entrusted to its own device, and never does anything other than at present. They make a shack, jive and budget device and do nothing. And the deficit continues to rise. Only if they get a certain market pushback, or if they pass the current budget to consider alternatives, it will be politically impossible to execute.
Thank you for reading! See you on Monday.
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