Matt Kibbe (6:41)

So a couple questions on that. The substance of the tax bill. The tax provisions in the big beautiful bill, there's some new bells and whistles, but fundamentally it's an extension of the 2017 taxes because they expire under the reconciliation rules that they were playing with. As important as it is to not raise taxes by not extending the existing tax rates, my sense is that that doesn't give us a growth bump.

Steve Forbes (7:15)

No, because that's a, that's existing policy with the tariffs. And tariff is another word for tax, excise tax, sales tax, whatever name you want to give to it, it is a tax. As Warren Buffett said, the toothpairy does not pay that tax.

Unnamed Participant (7:29)

Yeah.

Steve Forbes (7:29)

And so you need, you need, especially if the president wants this 10% base tariff, you need a big, not beautiful tax cut, but a super beautiful tax bill tax cut. And this is what I worry about. Got to renew 2017. We don't need a 3 to $5,000 tax increase on families, but also we got to have more juice in there. The economy is going to retain its mojo. That's why, again, I want reductions in personal tax rates, reductions in the corporate tax. I'd like to eliminate it, but because, as you know, businesses are tax collectors. Again, it doesn't come from the clouds. So, yes, they've got. I'm a little annoyed that our friends in Congress don't get that they have to do something. They have to supersize. You know, we go to the fast food, but they got a supersize exercise. This tax cut.

Unnamed Participant (8:24)

Yeah.

Matt Kibbe (8:25)

Ren's Paul has been quite lonely being a voice of opposition to the Trump tariff paradigm. And they want it both ways. They're like, this is not a tax increase. It's not a tax on consumers. But they claim that there'll be all this magic revenue that comes in to offset.

Steve Forbes (8:43)

Well, there's one of the, one of the dangers of having a general tariff, it's in effect, a new tax. And so that's a tax burden on the American people. And when politicians say, oh, we'll put in this tax, but we'll reduce other taxes, clutch onto your wallet because it's soon going to be empty. Yeah, the tax burden is going up. I live in New Jersey, decades ago they imposed an income tax under the guise of reducing our super high property taxes. Well, today we have the highest property taxes for 40 years later in the country and a dreadful state income tax which maxes out at almost 11%. So that's a new tax and that should be debated. And I do think though that this is where Trump sometimes it's good to be lucky even if you don't realize it because I think the Supreme Court will throw out the 10% tariff. That is a permanent tax. It's not an emergency. And so therefore Congress can pass tax increases, not presidents, by signing an executive order. Back in the 1930s we had this thing called the National Recovery Administration which was the most status fascistic piece of legislation we've ever had in our history where every industry was controlled in prices and wages and working how you set up your company and everything. Eventually the Supreme Court threw it out unanimously and Roosevelt was furious, tried to pack the court, but it saved his presidency because the economy was going to do even worse under him than Hoover. And the Supreme Court saved him. Well, what I'm hoping happens here is the Supreme Court saved us from these tariffs and we get back to the pro growth stuff. Yeah, if you want a tariff, get it through Congress. Good luck with that.

Matt Kibbe (10:28)

Yeah, so this sort of echoes of the sales tax versus flat tax debate that we used to have because the President has Trump eliminating the income tax and the IRS in exchange for a tariff based system. Those numbers don't actually add up.

Steve Forbes (10:46)

Well, that gets to a rather painful for them truth and that is yes, in the 1800s we had tariffs, but we didn't have the income tax. We, we didn't have the payroll taxes, we didn't have the corporate tax and a lot of the other stuff they've put on since. Even in 1929, Matt, when we had the most sophisticated economy in the world, the Federal government was 3% of GDP. State government's about 10 today. Pick a number. 35, 36 when you add it up. And so it's a totally different environment now. If we were starting all over, maybe you could make a case. But again, if something has been around like the regime we have today to try to change it overnight and not think there's going to be massive disruptions. No, that's not the way the real world works. And they should have learned from COVID When you have the lockdowns, it's not like turning the light switch on or off. You've disrupted very sophisticated things around the world. And so people go on and do other things things. Companies may pull up stakes. Some country may be still in the COVID mode, another one, Sweden may be in the non Covid. So all the synchronization you had in the past gets thrown out and it takes time to put it back together again.

Matt Kibbe (12:01)

So I've come up with a compromise and I got Senator Rand Paul to agree to this compromise. If we could return to government as a percentage of GDP, that was true under President McKinnon McKinley, I think you would come on board and say, well, okay, we can, we can accept some tariffs.

Steve Forbes (12:21)

Well, but try getting back to that might be hard. McKinley era. Especially when they say, oh, that means Social Security goes out the window, your Medicare goes out the window and I'll be entitled to. One of the things is that Republicans haven't learned how to navigate this. You can't come across as trying to take something away. That's when, when I ran, I always said for younger people, you bring in a new system, don't scare people who are on it, you give them a choice. But for younger people, they have a new system where instead of tax on society, you're creating capital. When you put money aside for your future retirement and you get to choose the age at which you wish to retire.

Matt Kibbe (13:06)

Instead of Washington politicians, we've lost that sort of obvious solution of freeing young people from just debt and an unsecure retirement future. Nobody really talks about that within the GOP anymore.

Steve Forbes (13:22)

Well, I think they have to relearn how you fight these things. You go on offense. Just take this whole broujah about Medicaid. Why should somebody who's healthy, in his 20s and 30s not work a terrible 20 hours a week to qualify for benefits, food stamps and things like that. People say, yeah you should, you're getting a freebie. And as you know, Medicaid was originally designed to help people with disabilities, help poor mothers and the like. And they expanded it under Obamacare with the notion of having a government run system. So let's get back to basics. But by the way, on Medicaid, it's the most expensive health insurance program in the world with the most dreadful outcomes in the world doctors don't like. So how can you spend all that money and have something that is so dysfunctional?

Matt Kibbe (14:18)

You know, it was just a couple years ago when every Republican said they wanted to fight fully repeal Obamacare. The core of which there were other elements obviously, but the core of which was this dramatic expansion in Medicaid that undermined the care for the most vulnerable population that you're talking about. And now you can count on maybe two hands the number of Republicans that are willing to say we need to fully repeal the expansion under Obamacare. They just don't want to do it.

Steve Forbes (14:49)

Well, that gets to another thing. All of this green stuff, they got to get that expunged now because we've seen when something is around for a while, good luck in getting rid of it.

Unnamed Participant (15:02)

Yeah, you can change it.

Matt Kibbe (15:02)

Ethanol.

Steve Forbes (15:04)

Good luck in getting rid of that. As Ronald Reagan said, the closest thing to immortality is a government program. And so the sooner and I hope in the big beautiful bill when they finally pass it, they do really tear out all of these green new tax credits and spending and things like that. And they end up destroying jobs because they're wasting resources. We get nothing out of it. Be one thing, oh, they're spending too much to give us something. We're spending too much and getting negative return.

Matt Kibbe (15:39)

Thank you for joining me today on.

Unnamed Participant (15:40)

Kibbe on Liberty and for being part of our fiercely independent audience. Every week my organization Free the People partners with BlazeTV to bring you this show. My guests bring smart perspectives on everything from current events to timeless philosophical debates. If you like what you hear, go to freethepeople.org kol and support Kibbe on Liberty so we can continue to produce these honest conversations with interesting people. Now let's get back to it.

Matt Kibbe (16:10)

The let's talk about the spending in the big beautiful bill and more importantly, the lack of spending restraint in the big beautiful bill. I think it's Milton Friedman who argues that the ultimate rate of taxation is the rate of spending.

Steve Forbes (16:24)

Well, he made and you're right, that shows how far Euro goes his observation. But he said he'd rather have a 1 trillion dollar federal budget that was grossly out of balance. So 800 billion of red ink and a $2 trillion budget that is balanced. Yes, because the 2 trillion is 2 trillion resources from free people. 1 trillion one taking resources from the people. So how you finance it is one thing, but it's taking resources reduce taking resources away from free people.

Unnamed Participant (17:01)

Yeah.

Matt Kibbe (17:03)

So Rand Paul and Thomas Massie and just a handful of others have been pushing back on the spending provisions in the big beautiful bill because we just didn't do the things we were promising. The good news is the House finally did some nominal doge department of government efficiency cuts. I think it was about 9 billion which of course is a drop in the bucket of a But at least.

Steve Forbes (17:35)

It'S a start and sets a precedent. And the key thing that's coming up is this 9.2 billion bill to rescind that spending. And even though the nominal dollars are low, it does affect real spending, not baseline spending. All the games they play with, those are real dollars. We'll see if the GOP can pass that. And if they pass the small one, then you can go for bigger things. Especially if you have a more prosperous economy. Then the fear factor, oh, I'm going to lose something or if something happens, I'm not going to have any safety nets dissipates. When you have a prosperous economy, then you can make, if you have the backbone to do it, make the big start making big moves. And for instance, in health care, we should be doing in health care what we're doing in education. In education you have education savings accounts, which is beautiful in the sense that the parents control the money. Not a bureaucracy, you control it. Mom and dad in health care we need the more the equivalent where you control the spending. And with companies now having high deductible plans where you're paying more out of pocket than you ever did before, you want to know what it's going to cost. And so that's the beginnings of a consumer market. That's the only way you save health care. It's insane. Today we have the agency overseeing Medicare and Medicaid issuing 11,000 pages of rules regs each year, which a free market would do and do flexibly, sensibly, adjusting to circumstance that you can never do with 11,000 pages of, you know, I don't even get into it.

Matt Kibbe (19:22)

One of the upsides of the lockdowns, and particularly what they did to children in schools is that parents for the first time not only noticed how, how much the system didn't care care about their kids, it was about the teachers, not the kids. And then they got a chance to look at their curriculum through zoom school. And they have ignited a revolution, a parent based revolution, as my friend Corey DeAngelis would say. And universal school choice is passing in state after state. Apparently there's an element in the big beautiful bill on this. But this is not primarily a federal thing, it's a state thing. So that that is happening and it's a, it's a model that could be applied to health care and all sorts of things.

Steve Forbes (20:08)

Absolutely. And one of the things they should do with Medicaid is block grant the money to the states. So you have what happened in the 90s, a state like Wisconsin, which led the way in welfare reform. Liberal state like Wisconsin set the template for federal welfare reform. Work requirements among them and it works. And so you want to have states seeing what works and what doesn't work. And again, with the patients having more say about where the money goes. Then you get a system where the provider and the customer, the patient are directly connected instead of today where it's all third party and a hospital knows its revenue is dependent not on satisfying you, but on how well they negotiate with Medicare, Medicaid, private insurers and the like. And the proof of it is the lousiest mat. Lousiest motel in America wouldn't dare put you in a room with another guest, a sick guest with a curtain in between.

Unnamed Participant (21:15)

Yes, yes.

Matt Kibbe (21:17)

If you want to understand the health care system, spend a couple days in that room and it's a wake up call. So back to deregulation, I think, and you could say this of the first Trump administration, one of the things they did well, they were able to do is to tear out red tape. Now, of course, the Biden administration came back and doubled down on that.

Steve Forbes (21:40)

But that's an important point you make. Deregulation, which has no glamour to it whatsoever. No one would have associated with Donald Trump. They actually did serious deregulation. They actually did try to remove rules from the rule book.

Unnamed Participant (21:56)

Yes.

Steve Forbes (21:57)

And so suddenly we had precedence. This can be done. This should be done.

Unnamed Participant (22:01)

Yeah.

Matt Kibbe (22:02)

And by all accounts, they're doing it again. And I think one of the really optimistic aspects is what they're doing on energy policy. Like if you actually want America to be less dependent on foreign energy, you want us to have affordable energy, you might make it more legal to produce energy in this country.

Steve Forbes (22:25)

Well, that's one of the most bizarre things, was when Biden or whoever was manipulating him banned the export of liquify natural gas, which set us back several years. And those worried about national security, China is an energy importer. And whether it's directly or indirectly they will be importing our natural gas for supplying it. The Europeans are desperate to have an alternative to Putin for their energy. And but then we got to get away from. They have a requirement in the bill, I think that by 2030 1% of LNG must be in American made ships. We can't make those ships today thanks to the Jones Act. And so take that out and you start loosening things up here. Get rid of the Jones act, we'll start having yards again that can turn out ships. Right now, if you're comparing one ship model with another, cost four to five times to do it in an American yard, then in a Korean or Japanese yard.

Unnamed Participant (23:27)

Yeah.

Matt Kibbe (23:28)

There's, there's so many things like the Jones act that I wish the Trump administration would go after first. Because the, the, the logic of tariffs in their mind is that we're, you know, we're getting screwed by our competitors. And if we just impose tariffs, we can rebuild America's manufacturing base. That's not going to work. But what could work is freeing them up.

Steve Forbes (23:53)

Why you rebuild the manufacturing base is lower taxation, which they've made some steps on. They got to do more and deregulation so they actually can spend time not just turning out stuff, but putting in practice the learning curve. So that's why I forget what organization said, wait two years, you can buy a dishwasher again, that can do it in an hour. And instead when you have all these regs, manufacturers have to try to comport to the regs, which hurts productivity. And so instead of getting ever and ever better and cheaper household products equipment, we end up going backwards, more expensive. And the washing machine today should be able to do it in 30 minutes. Probably cost $500. Look at flat spot screen TVs. The prices they were 20 years ago, probably 20,000. And what you can get in the store today for a few hundred dollars.

Unnamed Participant (24:51)

Yeah, yeah.

Matt Kibbe (24:53)

The power. So I know you got a bunch of other stuff you have to do. My last question is, you have 10 minutes with President Trump and it's just you, it's not the handlers. And he wants to know where he should be doing on the economy. What am I doing right? What am I doing wrong? What do you tell the president.

Steve Forbes (25:17)

Recognizing you'll never get invited to play golf with him again. You should go forward, get this tariff thing resolved. Trade negotiations are tough. They take time. But pursue them like you're doing with deregulation. Not glamorous. It takes time. But do it so we don't have these extra cost disruptions there. That would be a huge benefit. Strengthen your tax cut bill big time. How about a flat tax? But we'll let's intermediate step. Let's go for big cuts in the income tax rates. That's the key thing, tax rates. And on the Federal Reserve recognize they have a broken model which believes that prosperity cause inflation and they're going to be an enemy of yours. Not by design, but by the way they operate. And maybe you don't say it in public, but just look at the gold price, see what they're actually doing, whether they know what they're doing or not. So those would be three key things. And then say, continue on deregulation which is almost, almost more important than spending cuts in terms of allowing the production of resources.

Matt Kibbe (26:37)

So do you think, final question when it comes to tariffs and by the.

Steve Forbes (26:44)

Way, plan for the long term for private accounts for your young people.

Unnamed Participant (26:51)

Yes.

Steve Forbes (26:52)

In Social Security.

Matt Kibbe (26:54)

So when it comes to tariffs, there seems to be different wings in the Trump camp. Some who actually believe that we can tariff our way back to prosperity. So the ideological wing, well, we tried that in 1929.

Steve Forbes (27:07)

It didn't work out so well.

Matt Kibbe (27:08)

Yeah, it didn't work out at all as I recall.

Steve Forbes (27:10)

Yeah, 25% unemployment is not a sign of success.

Matt Kibbe (27:14)

But then there's other people that believe that, that the tariff thing is the art of the deal and that he's using potential tariffs as a cudgel to bring potential trading partners back to the table and to reduce tariffs. Do you, do you sit in one camp or the other in terms of where the Trump administration is actually coming from?

Steve Forbes (27:36)

Well, it'll get them to the table but then you have to know what they ask is, and again, it's not just tariffs, it's all the non tariff barriers. And stop then talking about a 10% permanent tariff. That to me is a contradiction to zero tariffs. Vietnam, for example, critical country for us for a whole host of reasons gets hit with a 46% tariff in advance for the moment, but hanging over. And the Vietnamese have indicated we'll go for zero. You get rid of all your tariffs on us, we get rid of all your 00, which Trump as president of pass has indicated he's in favor of. Take him up on it and say tomorrow zip across the board. And that would be set a great example for others so we can have a true free trade area. But they, I don't know the state of negotiations, but I don't think they're there yet with the Vietnamese. I haven't heard any rumors of a Vietnamese trade deal yet. They're desperate for it.

Matt Kibbe (28:48)

Yeah, thank, thank you, Steve. I know you gotta get going.

Steve Forbes (28:52)

Thank you, Matt. Keep up the good fight.

Unnamed Participant (28:55)

Thanks for watching. If you liked the conversation, make make sure to like the video, subscribe and also ring the bell for notifications. And if you want to know more about Free the people, go to freethepeople.org.