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Josh Bolten: Tax cuts were 'not about making wealthy people wealthier'

Former budget director for President George W. Bush, Josh Bolten, says the Trump administration’s reduced corporate tax rates are creating strong economic tailwinds for U.S. companies, now that rates are in line with those assessed in Europe and the rest of of the world’s developed countries.

During Yahoo Finance’s All Markets Summit in Washington, DC on Monday, Bolten told reporter Rick Newman that the drop from 35% to 21% is making the U.S. a more competitive place to do business, yet continues to be a hard sell to the American public.

“The tax reform was not about making wealthy people wealthier,” Bolten said. “On the corporate side, it was about making it possible for companies to do business in the United States on a competitive basis, and it is having that effect.”

Bolten is now president and CEO of Business Roundtable, an organization that represents CEOs running fortune 500 companies, and previously served in various senior government roles during the administrations of presidents George W. Bush and George H.W. Bush.

When asked how to make the case that the cuts are good for Americans, Bolten said to look at the uptick in hiring, wages, investments, and the drop in unemployment.

“An increasingly uncompetitive tax code had been forcing companies to do their business overseas,” Bolten said, adding that dollars that had been trapped overseas have been repatriated to the U.S.

Bolten criticized the administration’s approach to tariffs, singling out tariffs on steel and aluminum and calling them a “mistake.”

“Other countries have retaliated against our exports,” he said.

‘China has not behaved responsibly’

On China, the companies represented by Bolten’s organization have mixed reactions.

“Companies are now very broadly in agreement that China has not behaved responsibly in the international trading environment,” he said. “The specific mistake was imposing very broad-based, large tariffs as the opening gambit.”

In September, Trump imposed $200 billion in tariffs on Chinese consumer goods imported to the U.S. The administration has threatened to bump tariffs from 10% to 25% in January if the Chinese do not concede changes to its trade practices.

“Don’t just keep on hammering the Chinese until they spontaneously combust and capitulate because that’s not the way a negotiation with the Chinese is going to work,” Bolton said, predicting that a jump from 10% to 25% will have meaningful repercussions.

“People will feel it. They’ll feel it at the Walmart — they’ll feel it on almost every consumer product you can buy in one way or another.”

Bolten said much needs to be done to curb the deficit. On Monday the administration announced the deficit ballooned to $100.5 billion in October, representing 60% increase from a year earlier.

Bolten said entitlement spending, which represents two-thirds of the budget, is driving the increase.

“That’s what’s growing so substantially. That’s why we face trillion dollar deficits as far as the eye can see,” he said.

“The solutions are all there,” the former budget director said. “The political will is not.”

Alexis Keenan is a New York-based reporter for Yahoo Finance. She previously produced live news for CNN and MSNBC and is a former litigation attorney.

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