Moneybeat: Campaign promises

MYRNA BROWN, HOST: Coming up next on The World and Everything in It: The Monday Moneybeat.

NICK EICHER, HOST: Time now to talk business, markets and the economy with financial analyst and advisor David Bahnsen. David's head of the wealth management firm the Bahnsen Group. He is here now. And David, good morning.

DAVID BAHNSEN: Good morning, Nick. Good to be with you.

EICHER: Alright, David, some tax policy to talk about. The New York Times reports three plans put forth by former President Trump, one of them for hotel and restaurant workers. He was speaking in Nevada about axing the tax on gratuities, no tax on tips. Two, he met with some CEOs in Washington and floated a plan to cut the corporate tax rate. And then third, he is talking about not taxing Social Security benefits. How do you appraise those as tax policy, David?

BAHNSEN: You know, I'm not really a big fan of any of them. None of them are really supply side, but I don't know that any of them are particularly serious. either. I think that they are all in that camp of kind of vote pandering. And, you know, for a right wing movement conservative like me, we forget that sometimes both sides of the aisle are very capable of it.

Now, at the end of the day, if I had to pick between vote pandering by trying to cancel away student debt or vote pandering by saying I'm going to get rid of a certain targeted tax on a certain targeted voting block, I would prefer the latter.

But, you know, all of these discussions from the left and the right on tax policy require Congress, and I'm not sure that any of this is very serious politically. Now as a matter of policy, which you're asking me about, I favor lower taxes, lower tax rates, and I favor lowering, decreasing the size of government.

Do I think that by targeting a particular sector to say part of your income shouldn't be taxed, or even on the social security side, saying we're not going to tax your benefits, that that's the way to go about doing it? Or do I prefer as a means of getting to lower taxes, broad based tax cuts? I prefer the latter. I think it creates more incentives in the economy, and it's what we've done in the past that generated the most success.

When you have broad based reduction of tax base, it creates the most equalized opportunity and increase in productivity. So that would be my preference as to how we go about doing it. And of those three, by the way, I guess I shouldn't have said all three, because a reduction of the corporate tax rate is broad based, but I think he already reduced it from 35% to 21% and got rid of a lot of the kind of silly deductions that were more targeted and susceptible to favoritism and cronyism.

But the rate at 21%, my understanding is that President Trump is saying he wants to reduce that to 20%. But some of the people advising President Trump, including people that I'm very involved with, are pushing him to consider a 15% rate. 21 down to 15 would be very supply side.

EICHER: Okay, well, another big story involving the Trump campaign at his Mar-a-Lago press conference last week, a reporter asked him about the Federal Reserve. Have a listen to this.

TRUMP: The Federal Reserve is a very interesting thing. And it’s sort of gotten it wrong a lot. And he’s tending to be a little bit late on things. He gets a little bit too early and a little bit too late. And, you know, that’s very largely a — it’s a gut feeling.

I believe it’s really a gut feeling. And I used to have it out with him. I had it out with him a couple of times very strongly. I fought him very hard. And, you know, we get along fine. We get along fine. But I feel that — I feel the President should have at least say in there, yeah, I feel that strongly. I think that, in my case, I’ve made a lot of money. I was very successful. And I think I have a better instinct than, in many cases, people that would be on the Federal Reserve or the Chairman.

“I feel the president should have at least a say.” And the context there was interest rates. What do you think David?

BAHNSEN: Well, I first want to be a little bit defensive at President Trump, in the sense that I don't believe he's being serious. And I think that this is an example of sometimes him saying things that are taken more seriously than they ought to be. There is no remote sense in which one could defend the president administering monetary policy.

That independence of a central bank is vital. And I am totally open to the arguments, and I have made the arguments that the independence of the central bank is somewhat mythological, that it doesn't ever exist purely; and we saw through Covid, and we saw through the Financial Crisis, and we've seen in other countries that there is what I call an accord between the Treasury Department and the central bank at some level that I'm never comfortable with. But making it explicit and flat out saying that those who spend the money will directly be responsible for the decisions around the cost of money is not even a slippery slope to... Is wildly abusive of public trust, of public funds.

So my own belief is that President Trump knows that it's a way to jawbone the Fed, to talk about the Fed, and he's speaking to his own base and audience that is not really thinking about rules-based monetary policy, or some of these deeper, principled issues, but more kind of thinking, okay, he's setting the stage for, I want the Fed to do certain things. He's kind of working the refs, if you will.

I'm totally against it, but I don't believe for a second he's serious. And one of the reasons I know that, is I don't believe any of the people advising him who, some of which I know very, very well, agree with any part of this. So the central bank and the politicians ought to be independent of one another, and there has been coordination in the past, but the notion of the president setting interest rates is something that would be impossible for any conservative to get behind.

EICHER: Alright, David, before we go, it was one week ago today, on Wall Street, the Dow shed a thousand points on Monday, the Standard & Poor’s 500 Index lost 3 percent, but by Friday …

AUDIO: Bahnsen rings the bell …

Well, how about that? All was well. David Bahnsen ringing the bell, the opening bell on the New York Stock Exchange. What an exciting day that must have been for you, David. What is the story behind that? Tell us.

BAHNSEN: Well, it was. Thank you for bringing it up. We had a lot of fun with it. On Friday of last week, the New York Stock Exchange had invited us to ring the bell. Anytime you issue a new security with the New York Stock Exchange, they are likely to invite you. It could take a little time. We have our own fund strategy that the ticker is TBG, like The Bahnsen Group, but it's obviously not our company, The Bahnsen Group. It's a dividend portfolio that we began trading with the New York Stock Exchange in November of last year, and so they invited us.

I brought my investment committee with me, and what you couldn't see on the floor of the exchange was a lot of our employees from our New York office were there, too. Up on the podium with me were my other traders and analysts and portfolio people. So, yeah, it was a really memorable experience. It's a beautiful building.

I just want to quickly say, by the way, they did a little private reception for us beforehand, and they played this little two minute video, and they won't release it to the public. I asked for a copy of the link, and they said they can't do that. This video that was, again, kind of a commercial for the New York Stock Exchange in providing the history and everything, was such a beautiful defense of free markets, talking about how capital markets are necessary for human freedom, for what people can do when they're free, to build and create and grow. And it had the history, and as I was watching it, recognizing, you know, that their specific agenda was tailored to Wall Street and capital markets, but it was just this, like a faith based, you know, Christian defending free enterprise would have made the video. And so I was really encouraged by that not everybody is surrendering to the forces of wokeism and DEI and progressivism, and apparently the New York Stock Exchange is still doing the right thing here.

So it was nice.

EICHER: Even if only behind the scenes.

BAHNSEN: Yes, yes, well, and so I think, you know, it's one area where it's necessary to maintain a meritocratic and freedom-oriented perspective is in markets.

EICHER: All right. David Bahnsen, founder, managing partner and Chief Investment Officer at TBG, the Bahnsen Group. Check out David's latest book. It's titled Full Time: Work and the Meaning of Life. The website is fulltimebook.com David, have a great week.

BAHNSEN: Thanks so much, Nick.

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