Former Treasury Secretary Jack Lew on U.S. debt: It's not a good time to cut taxes
Jacob Lew, Columbia University professor and former Treasury Secretary under President Obama, joins 'Squawk Box' to discuss the state of the economy, impact of the tax bill on the national debt, how to reduce the deficit, and more.
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Los Angeles Times
32 minutes ago
- Los Angeles Times
Wall Street ticks closer to its record after Oracle rallies
NEW YORK — U.S. stock indexes ticked higher on Thursday following another encouraging update on inflation across the country. The Standard & Poor's 500 rose 0.4% to pull back with 1.6% of its record. The Dow Jones Industrial Average added 101 points, or 0.2%, and the Nasdaq composite gained 0.2%. Oracle pushed upward on the market after jumping 13.3%. The tech giant delivered stronger profit and revenue for the latest quarter than analysts expected, and CEO Safra Catz said it expects revenue growth 'will be dramatically higher' in its upcoming fiscal year. That helped offset a 4.8% loss for Boeing after Air India said a London-bound flight crashed shortly after taking off from Ahmedabad airport Thursday with 242 passengers and crew onboard. The Boeing 787 Dreamliner crashed into a residential area near the airport five minutes after taking off. The cause of the crash wasn't immediately known. Stocks broadly got some help from easing Treasury yields in the bond market following the latest update on inflation. Thursday's said inflation at the wholesale level wasn't as bad last month as economists expected, and it followed a report on Wednesday saying something similar about the inflation that U.S. consumers are feeling. Wall Street took it as a signal that the Federal Reserve will have more leeway to cut interest rates later this year in order to give the economy a boost. The Federal Reserve has been hesitant to lower interest rates, and it's been on hold this year after cutting at the end of last year, because it's waiting to see how much President Donald Trump's tariffs will hurt the economy and raise inflation. While lower rates can goose the economy by encouraging businesses and households to borrow, they can also accelerate inflation. The yield on the 10-year Treasury fell to 4.35% from 4.41% late Wednesday and from roughly 4.80% early this year. Besides the inflation data, a separate report on jobless claims also helped to weigh on Treasury yields. It said slightly more U.S. workers applied for unemployment benefits last week than economists expected, and the total number remained at the highest level in eight months. That could be an indication of a rise in layoffs across the country. 'We believe that were it not for the uncertainty caused by the tariffs, the combined information coming from the inflation and labor-market data would have compelled the Fed to have resumed cutting its policy rate by now,' according to Thierry Wizman, a strategist at Macquarie. The Fed's next meeting on interest rates is scheduled for next week, but the nearly unanimous expectation on Wall Street is that it will stand pat again. Traders are betting it's likely to begin cutting in September, according to data from CME Group. Trump's on-and-off tariffs have raised worries about higher inflation and a possible recession, which had sent the S&P 500 roughly 20% below its record a couple months ago. But stocks have since rallied nearly all the way back on hopes that Trump will lower his tariffs after reaching trade deals with other countries. Many of Trump's tariffs are on hold at the moment to give time for negotiations, but Trump added to the uncertainty late Wednesday when he suggested the United States could send letters to other countries at some point 'saying this is the deal. You can take it or you can leave it.' On Wall Street, Chime Financial jumped 37.4% in its first day of trading on the Nasdaq. The technology company is trying to be the main financial hub for customers, connecting them with its bank partners. GameStop dropped 22.5% after saying it plans to raise $1.75 billion by borrowing at zero interest rates, though the lenders could choose to be repaid in the video-game retailer's stock instead of cash. All told, the S&P 500 rose 23.02 points to 6,045.26. The Dow Jones Industrial Average added 101.85 to 42,967.62, and the Nasdaq composite gained 46.61 to 19,662.48. In stock markets abroad, indexes were mixed across Europe and Asia amid mostly modest movements. Hong Kong's Hang Seng was an outlier, and it tumbled 1.4% to give back some of its strong recent gains. Hong Kong's index is still up nearly 20% for the year so far, towering over the U.S. stock market's gain of less than 3%. Choe writes for the Associated Press.
Yahoo
an hour ago
- Yahoo
Stephanie Ruhle: Trump's China trade 'deal' returns the U.S. right back to where it started
After two days of negotiations, the United States and China appear hopeful about the progress they're making on a trade deal. But let's take a look at what actually went down this week. Both countries say they have a "framework" that basically gets trade talks back to the agreement they made in Geneva a month ago. That agreement paused Donald Trump's 145% tariff on China and China's 125% tariff on U.S. exports, reducing them to 30% and 10%, respectively. Commerce Secretary Howard Lutnick said Wednesday that, as part of the agreement, China will start granting rare earth export licenses for U.S. companies immediately. Those materials are vital for automakers, semiconductor manufacturers and other tech companies. But those licenses will only last six months, The Wall Street Journal reported, citing people familiar with the matter. Also, as part of the deal, there are reports that the U.S. will ease restrictions it placed on its own exports of technology and other products to China. And the administration will also reportedly pull back on cancelling visas for Chinese students. So if you call that a truce, it's a thin one. Why? We still need to wait and see if Trump and Chinese President Xi Jinping approve the concept. (Though that didn't stop the president from also declaring on social media, "Our deal with China is done.") And if they do, we also need to know when they actually plan to implement it. Lutnick also said that our tariffs on China are not going to change from their current levels. So I guess we're not going back up above 100%? That might sound like good news. Except, remember, the U.S. has already added 30% tariffs on Chinese imports since Trump took office — and China hit us back with 10% tariffs. And for those trying to follow the back and forth, the deal actually leaves tariffs on China at 55% after including the 25% tariffs already in place before Trump came into office. Meanwhile, that 90-day countdown clock is still ticking for all the other countries that have to negotiate new trade deals with us. However, on Wednesday, Treasury Secretary Scott Bessent told House lawmakers that it's "highly likely" Trump will push back that July 9 deadline for countries engaged in good-faith negotiations. All of which makes these hard-line trade deal deadlines seem more like a soft promise written with erasable ink. This article was originally published on
Bloomberg
2 hours ago
- Bloomberg
Bessent, Senator Warren in Heated Exchange Over Deficit
CC-Transcript 00:00Will this bill increase or decrease the deficit? Are varying scoring on that. So will the secretary of the Treasury. So I'm asking you, what is your view? Will this bill increase or decrease the deficit? It is my view that over the ten year window, it will decrease. You know, do you have anybody who agrees with you on this? Yes. Yes. Let me let me ask my question. Okay. Every credible independent expert agrees that Trump and the Republicans big, beautiful bill would add trillions of dollars to the national debt and would not even come close to paying for itself. The nonpartisan Congressional Budget Office, the Penn Wharton budget model, and the Yale Budget Lab all agree on this, and they're looking at ten year windows. Thank you. So do the Conservative Tax Foundation and Committee for a Responsible Federal Budget. Conservative groups, even Elon Musk and The Wall Street Journal are criticizing the bill for ballooning the national debt. The only people who are saying publicly that it's not going to add to the national debt, are you Donald Trump? The Republicans in Congress. Do you have an independent group that has put forward numbers that disagrees with all of these conservative groups and disagrees with The Wall Street Journal on this? Well, Senator, interesting to see you aligned with Elon Musk. But if I you're no more shocked than I am the. If we want to take the full congressional congressional budget scoring, they predict and I don't agree with their methodology, they predict a 2.4 trillion deficit, but they show the gap. No, no, no. But may I finish? They include that. But they've also scored 2.8 trillion in tariff income. So even even in Washington, D.C., math in Washington, D.C., math, that is a 400 billion surplus. Okay. So let me make sure I understand. This bill, you admit, will increase the deficit by $2.4 trillion, but you think there will be another bill and another set of agreements that somehow materialize haven't materialized so far, don't have any statutory authority, but that will make up the difference. So the answer to the original question will this bill increase or decrease the deficit? I think you just said it will increase this bill, increases the. I want to use all the all the CBO scoring and you can't take one without the other. I don't agree with the CBO. The law that we are scoring the bill that is in front of us. We don't have a tariff bill in front of us to score. Mr. Secretary, let me go on to the second question. You've said that government spending is, quote, out of control. You have also called government spending, quote, unsustainable. In fact, in the name of fiscal responsibility, you're working with the Republicans on this big, beautiful bill to pass the biggest cuts to Medicaid and the Affordable Care Act in American history. So, Mr. Secretary, help me understand here. Why is the national debt so very important that you're trying to kick 16 million people off their health insurance? But increasing the national debt doesn't seem to matter if you're cutting taxes for billionaires and billionaire corporations. Well, first of all, a huge portion of this goes to family owned businesses that are passed through entities that are below that level. Senator. And I am sure you share my goals of Main Street prosperity. You know, I'm glad to do tax cuts for people of modest means. The question I'm asking is why does the deficit not matter to you? We're talking about knocking 16 million people off their health care. But it matters not. It does matter to you if we're knocking people off their health care, but not. Well, first of all, that figure is overstated by 5.1 million. That is amount not attributable to provisions. And do you think it's okay? It is. It is simply health care. First of all, let's set that straight. Work requirements account for 8 million of CBO's claim number. Again, we're creating the economy. So for most Americans, Terry. So you don't want to answer that? No, No, Senator, I am answering. No, you're not. And what I want is for Medicaid to be used there for mothers and children as it was meant not for 1.4 million illegal aliens, not for able bodied people, and not it's not used for people who are not documented. Mr. Chairman, I just want to say here, the part that troubles me the most is that the secretary is deeply worried about the about the deficit and is willing to knock 60 million or, as he says, nearly 11 million people off their health care matter so much. But it doesn't matter so much if you're cutting taxes for billionaires, then it's okay to run up a big deficit. I think that's wrong. For YouLive TV
