March 26, 2025 • 63 mins
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The extension of Trump-era tax cuts presents critical planning decisions as exemption amounts could drop from $14 million to $7 million per person without congressional action.
• Estate tax exemption likely to receive a four-year extension rather than permanent status
• Trump administration characterized by chaos and short-term thinking rather than coherent strategy
• Stephen Miller identified as Trump's most influential advisor and policy gatekeeper
• Elon Musk serves as a "heat sink" absorbing criticism while implementing controversial policies
• Government agency staff reductions create long-term damage to institutional knowledge
• International allies may pursue independent security measures if US support seems unreliable
• American civic education crisis leaves citizens unable to understand how government functions
• Energy sector potentially most resilient to upcoming political and economic turbulence
• Immigration restrictions risk undermining America's technological leadership
• Political divisiveness threatens productive dialogue on critical national issues
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Clem Miller (00:00):
Got to do it.
Steve Davenport (00:02):
Hello everyone and welcome to Skeptic's Guide
to Investing.
Today, Clem Miller and I, SteveDavenport, have a special guest
, Mr Fraser the author of WealthActually and we're looking
forward to talking about what'shappening in Washington
regarding the tax bill and theextension of the tax cuts from
(00:25):
Trump and trying to determine ifthe chaos of tariffs will
become the chaos of taxes.
I believe that we're not seeinga government that really has a
very coherent plan that jumpsfrom 25 to 50 percent tariffs
overnight, depending upon whichside of the bed you wake up on,
(00:46):
and it feels to me as if we'rethinking that this is going to
be the way that they attack andapproach tax extensions.
Clem Miller (00:56):
This is going to be quite a year and I'd like to
start with Fraser and ask andI'd like to start with Fraser-
and ask, fraser, do you see thechaos continuing or do you see
the chaos getting a lot moreserious when it comes to
people's dollars and taxes?
I think the chaos is going tocontinue.
(01:17):
I think Trump equals chaos andhis way of doing things Just
that's just the lingua franca ofour existence these days.
My day job really is to sort ofthink about it from a
multi-generational and estatetax perspective.
So, to the extent I have anyknowledge of that for your
(01:40):
listeners who are vaguely awareof that part of the law,
essentially at the federal level, the estate tax exemption is
currently at about $14 millionper person, which is
generationally really high and avery generous set of
circumstances that we're in theway the previous law was set up
was that in the TCJA back in2016,.
(02:02):
It had a runoff of eight yearsand that was done through the
reconciliation process.
So we're coming up on eightyears and, in order to make the
numbers work, that 14 million issupposed to get down to about 7
million per person at the endof this year.
So the sort of wagging tonguesaround all of this are sort of
saying, okay, you know Trump'sin place.
(02:25):
He wants to theoreticallyeither extend this generosity or
even just get rid of estatetaxes in general.
What do we do to plan for this?
Because if nothing happens,then we get this, this exemption
, cut in half and you know welose some of the generosity in
terms of the planning that we doon this front.
So, uh, so people like me tryto go around and understand not
(02:47):
only what clients want but alsowhat the tea leaves say in terms
of what these taxes are goingto do.
So that's sort of thebackground as the sort of oh,
we're going to, we're reallyinterested in removing estate
taxes entirely.
We're thinking about extendingthings.
Where does that sit these days?
In talking to a lot of differentpeople, both Washington and
(03:10):
otherwise, the conventionalwisdom is that the extension of
the estate tax portion anyway itlooks like around four years,
and so the idea would be thatthe cutting in half wouldn't
take place at the end of thisyear but it would be four years
from now.
That gives us a little bit ofcertainty.
(03:31):
It gives us some tools andthings like that.
Now, if I try to sort oftranspose that to other parts of
the tax code ie, you know,income taxes and capital gains
taxes and carried interest andthings like that we get all
sorts of mixed signals and thatultimately leads to the chaos.
You have so many differentproposals on things and in order
(03:52):
for these tax situations tohappen, the reconciliation
process requires essentiallythat any tax cuts are paid for
or else the tax law has tosunset.
And that's where we are rightnow.
And, given the way thingsoperate vis-a-vis Trump and his
(04:13):
administration, the narrow edgesin the Senate and House and a
somewhat weakened response fromthe Democratic side of things, I
don't see certainty comingaround the corner anytime soon.
So I advise clients, generallyspeaking, that when you've got
(04:33):
things in front of you that youcan take advantage of,
especially on the estate taxside of things, wouldn't be the
worst thing in the world to getthat in.
Get some moss growingunderneath the transaction such
that if anyone were to reversethings or to try to claw that in
, get some moss growingunderneath the transaction such
that if anyone were to reversethings or to try to claw it back
, it just would be extremelyunlikely going forward.
Steve Davenport (04:53):
What do you think, Clem?
Does the idea of more chaosseem palatable to you, or do you
think it's?
Uh?
I think it could be worse thanthe current chaos, because
foreign taxes on imports reallydon't affect people a heck of a
lot.
Frazer Rice (05:11):
If aluminum goes up , I'm not sure I'm I'm a big
buyer of aluminum, but when youtalk about my, uh, when you talk
about my income tax rates, myears kind of perk up so, in
order order to deal withanything having to do with taxes
you know, putting the tariffsaside for a moment, but anything
(05:34):
having to do with a stateincome tax and other taxes there
has to be a laser-like focus inCongress on how to deal with
that, and I don't think we'regoing to see a laser-like focus
in Congress on how to deal withthat, and I don't think we're
going to see a laser-like focus.
I think there's going to be alot of attention paid to things
(05:56):
that really aren't thatimportant, such as trying to
ratify a lot of these doge cuts.
You know, the doge cuts thatare being, you know, blocked by,
and not just doge cuts, butalso some of the stuff related
to immigration that's beingblocked by courts.
I think that, you know,inevitably, you know, Trump is
(06:21):
going to have to go to Congressand get that stuff sort of
reverse engineered, so to speak,put in behind him, make sure
that it sticks, and that's goingto take up a lot of energy in
Congress that could otherwise beused for, I think, more
(06:41):
productive purposes like lookingat taxes, for example.
Steve Davenport (06:48):
Yeah, I mean I look at things in terms of the
narrowness in the Senate and theHouse.
It feels to me like a lot ofpeople are just kind of waiting
and I like to think that thishas all been thought out by the
strategists on the Democraticside and Republican side.
But when I see the days when wehave a 25 percent tariff in the
(07:11):
morning and a 50 percent tariffin the afternoon, it feels to
me like this is definitely a youknow kind of figure it out as
we go along.
And I agree with you, you needa laser-like focus in order to
do things.
To the tax code.
And when I look at the tax code, I think here's an area where
(07:34):
it gets more and more difficultas we go along, because so many
of the rules and so many of theexperiences in the past are
really like third rail moments.
When you think about I thinkabout Ryan pushing the
wheelchair over the cliff andhow his career basically ended
(07:55):
on that one item, and I thinkthere's a lot of questions about
what becomes of this bill andwhat becomes of this
administration, in my mind it'sa two and done and they're going
to lose the House when we go tothe midterms and at that point
we have a lame duck.
(08:17):
So I'm looking at this as if Iwere the strategist on the one
side, the Democrats I'd saylet's just play and delay.
We delayed until that midtermaction, any real action.
I think they can say we didn'tcause the taxes to go up.
Trump put in a temporary taxraise cut and it's now expired
(08:41):
because he wasn't thoughtfulenough and he didn't have enough
influence to really put in apermanent.
I mean the fact that he pickedbusiness to get the permanency
and left the individuals tosunset, I think is appreciated
by all the business leaders whowere supposedly being helped by
the Trump administration.
So it feels to me like we're ina short-term game here and I
(09:06):
put the American people as theones who end up losing.
What do you think, frazier?
Clem Miller (09:14):
I don't have much there to disagree with, aside
from the mixed signals that getsent out.
I think the you know sort ofthis real estate dealmaking
ethos where you sort of getthings done and then renegotiate
later and sort of hopeeverything happens.
(09:35):
It's not a great way to runthings in terms of long-term
planning, so I'm not happy aboutthat and somewhat scared on
that front from that perspective.
But I completely agree with youthat you know, for those folks
who are terrified of sort of aRepublican regime, my comment
and it goes back to even beforethe election was that even if
Trump wins, you know you reallymight only have a year and a
(09:59):
half to deal with sort of thisquote unquote Republican ethos
in terms of governing and taxplanning and so on, and that in
the midterm election if one ofthe houses or one of the
branches of government SenatorHouse flips, then you get into a
real lame duck scenario andthen you set yourself up for an
(10:20):
interesting scenario afterwardswhere you know you figure out
what the president looks like,whether that's a Republican or a
Democrat, and Trump isconstitutionally bound not to
run.
And you know at that point wereally are back again in sort of
in the mix of sort of a generallevel of chaos and lack of
(10:43):
certainty in terms of taxplanning.
Steve Davenport (10:45):
Mix of sort of a general level of chaos and
lack of certainty in terms oftax planning, and do you have
any opinions about what mighthappen if Trump were a lame duck
, and how does it relate to thefuture of the party?
It seems like, when I look atthis, it feels like the vice
president.
Well, he gets a lot of praisefrom Trump.
(11:08):
Now, as we go along, just as wego along with the Musk
relationship, I have aprobability of both of those
relationships blowing up, youknow, in a year, somewhere
around 70 or 80 percent.
Do you think thoserelationships last?
Clem Miller (11:26):
No, I don't.
I think that you know there isa you go back to.
You know how many Scaramucci'sdo you last in terms of your
tenure under a Trumpadministration and you know
that's I don't know two or threeweeks be.
There will undoubtedly beturnover within the cabinet.
(11:46):
It depends on who runs afoul ofwhom.
You know the Musk part.
He provides a very usefulfunction for Trump at this point
, which is he's the the bad copin terms of blowing up the
government and using dogetactics and things like that
when Trump doesn't feel like heneeds him anymore.
That's it.
I think Vance is the same way.
(12:08):
One of my pet things, as far asyou know I take on a bet with
other people on this is that Ithink Trump is I don't know if I
think or you know I think it'ssort of an interesting thought
project, but I think that Trumpcould resign after his last
State of the Union.
And I think this accomplishesthree things.
(12:29):
If I'm being really magnanimous.
It sets up Vance or whomever onthe Republican side, to have
some incumbency before goinginto an election.
Number two it takes awayArticle 25 and sort of
comparison to Biden issues asfar as capacity.
It takes away Article 25 andsort of comparison to Biden
issues as far as capacity.
But I think from an egostandpoint, I think Trump would,
(12:50):
I think is interested in, froman ego perspective, tidying up
his legacy and by sort ofwillfully abdicating power, he
can say he did something thatBiden didn't willingly do.
He, I think, washes away theJanuary 6th stain that he
currently quote unquote enjoysand ultimately, I think he tries
(13:11):
to position himself as GeorgeWashington for the new
generation and that he deservesa spot on Mount Rushmore with
the other four.
All of which is, you know, I'msure it's extremely unlikely,
but I don't put it past him totry to make some sort of grand
theatrical gesture like that,and then you have real chaos,
because then that's notsomething that this country is
(13:32):
used to seeing in a meaningfulway, and I certainly in recent
and even non-recent memory.
Steve Davenport (13:42):
I think you may have something there, Frederick
.
Clem Miller (13:46):
I'll take the other side of that bet if anybody
wants to do it.
Steve Davenport (13:48):
Yeah, I mean, I don't want to.
I don't want to contest you onthat bet, but, um, I'm still
saving my uh quotas forretirement.
But it's uh, I, I think the uh.
The question that is in mostpeople's mind is how do all the
legal issues and how do these,you know, I mean they've?
It seems as though the uh, the,the need for uh pardons has
(14:10):
probably gone down, but I'm notsure by the end of this um, in
three years, where we'll be interms of the apartment nature of
the government and is what doyou think, clem?
Frazer Rice (14:24):
well, uh, you, I've got this.
I'm trying to think throughthis whole idea of the early
departure of Trump that Fraserjust raised.
I think there's something tothat, but I think that it would
have to be under a conditionwhere Trump is not feeling
pressure.
In other words, if he's under areal attack, like an
(14:45):
impeachment process or somethinglike that, I don't see him
resigning in the middle of that.
He's going to fight in themiddle of that.
So there would have to be anabsence of, there would have to
be an absence of pressures forhim to to go along with that.
But I think if there were anabsence of such pressures, yeah,
I mean, I think it makes somesense that he decides to do that
(15:09):
.
Of course, it's really hard togive up power.
I mean, look at Trump 1.
Look at Biden.
Obviously it's very difficultto give up power.
So would that be the same casewith Trump too?
I don't know, it depends on howmuch he's achieved and how much
(15:30):
pressure there is so possible,but I think the conditions would
have to be right for that tohappen.
Steve Davenport (15:39):
In my opinion it does seem to be very
magnanimous to the RepublicanParty to try to establish a
smoother transition and a higherprobability that the
Republicans remain in power,which I think that Trump's only
been interested in Trump beingin power, not Republicans.
Clem Miller (15:57):
Make no mistake that that's way down the list on
reasons he'd do it.
It, the main reason, would bepurely ego driven and some sort
of if he saw a pathway towardpolitical immortality.
In some ways, I think back toyou, clem.
I think it's an interestingpoint in terms of the absence of
pressures.
(16:17):
On one hand, I think having ademocratic house would, in
theory, be very frustratingfrustrating and he would have
trouble doing anything.
On the other hand, they wouldalso have the ability to have
hearings, and that would makelife miserable for him, and so
on and so forth.
Uh, I, uh, to be determined.
(16:37):
It's.
It's one of the, it's one ofthose half developed thoughts
that I wanted to get out there,just in case no one else.
You know, I can put my stake inthe ground, just in case.
Frazer Rice (16:46):
So there's another um, another thought that I've
had recently, uh, as I'velearned more and more about um,
Vance, uh, and Teal and Musk andCurtis Yarvin.
And Curtis Yarvin and I don'tknow if you've read about all
(17:10):
that stuff you know Musk goinginto meetings with his dark MAGA
hat, and you know there's thissort of you know, regardless of
whether Trump is involved inthis or not or adheres to this
theory, there is this sort ofstrain of authoritarian thinking
, that sort oftechno-authoritarian thinking
(17:33):
that is espoused by this CurtisYarvin and kind of adopted by
Musk and Peter Thiel and to someextent influencing Vance, may
have led to Vance makingcomments about ignoring the
courts, which they're not doingright now and it doesn't sound
(17:54):
like they will.
It sounds like they're veryfrustrated with courts but at
the end of the day, they'rethey're, you know, adhering to
the court rulings at the moment,right, uh, but you know Vance
has made comments that wouldsuggest that down the road,
maybe, uh, they would not, um,adhere to the courts.
But anyway, I think you knowVance probably has more of an
(18:17):
authoritarian streak in him thanTrump does, and so I think
that's something to be watchingout for.
Clem Miller (18:23):
I agree with that and, by the same token, I think
we have to remember that Trumpin many ways is a generational
talent in terms of understandingratings and how the media works
and that sort of framework,much more so than in terms of
getting votes and much more soin many ways than his business
(18:44):
acumen.
He is a once in a once in amulti lifetime.
I put him up there with PTBarnum in terms of understanding
how to get attention andratings.
Uh, I don't think Vance isanywhere near that.
Uh, I think he, like Obama, inmany ways caught fire with a
book, uh and uh, has been ableto sort of stitch together his
(19:05):
background into something that'svery interesting.
But at the same time, I thinkto think that he's going to take
up Trump's mantle and be ableto have the same sort of resolve
slash, understanding of how themedia works and so on, I don't
see that at all.
Steve Davenport (19:20):
Yeah, there's been a strategy that's come out
lately that Trump is creatingthis chaos purposely with the
tariffs so that the economicconditions in America will get
bad enough that he would be ableto make the case that we are
heading to a recession and theFed needs to cut rates and that
(19:41):
he really wants a few things inthis administration lower oil,
lower interest rates and lowertaxes.
And I look at this as a chessgame and I'm not sure if he's
better at checkers, but could itpossibly be that his bumbling
(20:02):
and his incoherence aroundtariffs is just a way to create
this kind of chaos and thatchaos leads to the Fed needing
to do something?
It would seem like a pretty slyway to do it, but I'm not sure
if it's sly or if it's justaccidental that we're seeing the
(20:25):
Fed now in a position that theyhave to talk about two cuts.
And once they start talkingabout two cuts, it's just a
question of how do we get theresooner in terms of Trump?
And maybe when all of thisstuff is over and some of these
countries give up on trying tofight the tariffs, they
(20:47):
negotiate and he he says look, Ishook this, these countries
down and I did what I could do.
And now America is a betterplace because we have less
tariffs with our tradingpartners.
I mean, is it possible thatthere is some, you know, evil
genius there behind any of theseideas?
Clem Miller (21:07):
Clem, I'll let you start with that one, because I
have to think about that one fora minute.
Frazer Rice (21:12):
So, while you're thinking about it, steve, I
think there's an attempt to,there is a strategy, and there
is some talk out there aboutsomething that's referred to as
(21:42):
the Mar-a-Lago Accord.
There is a call to create sortof a new world.
I don't mean this in the darksense, right, but sort of a new
world or sort of along the linesof a new plaza accord.
I don't know if you mightremember back in the 1970s Some
(22:02):
of us were little kids back then, or not born yet, right but
there was this thing called thePlaza Accord, named after the
hotel where the major powers gottogether and decided on how to
arrange or manipulate, I shouldsay, exchange rates so that the
(22:27):
US would not be disadvantaged asthe world's reserve currency.
And I think Trump feels that thedollar is overvalued and that's
causing some of our tradeimbalances, and so he would love
to get the dollar undervalued,which of course means that other
countries have to have theircurrencies rise in value, and by
(22:51):
creating chaos around the world, perhaps he can get everybody
into the ballroom at Mar-a-Lagoand work out a new deal that
would be sort of akin to the oldPlaza Accord, which is ironic
because he used to own the Plaza, but I don't know if he owned
it at the same time as the plazaaccord, but um or own some
(23:13):
highly leveraged portion of it.
Oh, yeah, exactly, but yeah, Imean the whole idea would be
create a uh, you know trump,creating a new, uh, global order
of exchange rates where thedollar would be undervalued to
the extent that we would all ofa sudden see surpluses and
(23:37):
something of a manufacturingboom, or at least incentives for
a manufacturing boom in the US.
Clem Miller (23:46):
I think too, just just from a political lesson
perspective, I think everymodern politician sort of looks
back at Bush one and sees thathigh popularity early in a
one-term situation ended upreally poorly for him, as he
ended up with his you know, readmy lips no new taxes.
And so I think there's acalculus going on saying look,
(24:10):
if I'm going to create pain inorder to get to an outcome later
on in the term, I'm willing toaccept it now, because memories
are so short and the politicalnarrative and sort of recasting
of this is all going to beforgotten in six months.
And so if you're willing tocreate short-term economic pain
for the American public orcompanies or anything like that,
(24:30):
and you think you've got somesort of pathway into something
that's better, you've got to doit now and in the conjunction
with you know sort of the flood,the zone, types of executive
actions that have happenedacross all sorts of different
areas, so that everyone, youknow, depending on their
personal issue, uh, du jour, youknow they've got something to
(24:51):
sort of think about and befrustrated with or be happy
about, and you know sort ofusing all of these different
modes of chaos on the economicside of things.
If you think you've got somesort of angle to uh, you know,
create a different equilibrium,that where the U?
S comes out slightly ahead uh,slightly ahead, you've got to
get the pain points done in thefirst year while you have the
(25:11):
ability to do it, and then youhave some time for that
narrative to build back in.
If unemployment rises early orif interest rates pop for a
second or whatever happens onthat front, if you've got pain
to take, or if the stock marketdrops or it's volatile like
we've been seeing, if you've gotpain to take, you want to take
(25:32):
it early so that people onlyremember the most recent thing
that's happened.
Steve Davenport (25:36):
Yeah, yeah, I looked at what he tried to do in
the first administration withObamacare blowing up Obamacare
and that was his only item.
He could have doneinfrastructure.
He could have done things thathad enough agreement to cross
the aisle, but he just refusedto do it because he said this is
my first and most importantgoal and he wanted to show
(25:57):
people he was serious.
And in my mind he just burnedup his goodwill and then that
really kind of made it much moredifficult to do things later.
Clem Miller (26:07):
That really kind of made it much more difficult to
do things later.
That happened to Clinton too,and, and so you know that that's
one of those gigantic problemsthat you know spills over to
other things.
And so you, you know if you'vegot, if you know how much
political capital you have inthe bank and you're trying to
allocate resources towardsdifferent things, you know that
that's where you know, I thinkTrump has sort of looked at it
(26:28):
and said, okay, you know, I'vegot, I, I, I truly believe he,
he sort of looked at and saidokay, I've got a year, and, and
if I'm going to make a dent,I've got to do it all right now
and use the executive branch todo it.
Uh, because it's, you know, the, the, the Leviathan of uh sort
of checks and balances willdiscover, uh, how to slow me
(26:50):
down and and if I don't get thisstuff done, it's not going to
happen.
All of which is to that's whatsort of feeds my point that by
the end of three years, uh, hemay, he may have finally said
okay, I've, I've had it and, um,you know, not now it's time to
tidy things up for the future,for, you know, capital T Trump.
Steve Davenport (27:10):
Do you think there's anybody who's who's got
that kind of strategicperspective in his
administration, that like if youwere to say, well, the real
ideas, the real, the real visionis coming from this member of
his, you know.
Is it his chief of staff?
Is it like I?
I don't think I can figure outwhat Trump is thinking, cause
(27:33):
I'm not sure I have the similarstate of mind.
Glenn may have a similar stateof mind, but I don't.
And and so I'm just a logicalkind of engineer and I'm looking
for where is, where is thelogic in his administration?
Is it dissent?
Is it, you know, the Secretaryof State?
I mean, where do you think thestrength?
(27:54):
If there is a strength and I'mnot saying there has to be, but
if you look at the people, Ilike to try to figure out what
are the people saying to him,and then what is he saying?
And then, is there anyinfluence?
And how do?
Because once you know where hisinfluence comes, then you have
a good idea of where his trailis going to lead.
Clem Miller (28:14):
Right do you see any?
Frazer Rice (28:16):
influence on him yeah, climb, you go first.
Steven miller is his biggestinfluence.
Okay, I, I agree with that.
Yeah, I, I he's been with himthe longest, I believe, of all
these advisors he is.
You know, he's right there nearthe Oval Office.
(28:37):
Apparently he has a veryforceful ideology which goes way
, it's like trumpism times fiveor six, right, um, he's not like
, uh, you know, yeah, he, hepretends to well, not pretends
(29:01):
he's a.
He's very, um, uh, loyal, ultraloyal to trump, but not in the,
in the kind of um, almost um,toadying way that you know these
cabinet secretaries are, um, Idon't think trump listens to his
cabinet secretaries.
I think the cabinet secretarieslisten to him.
(29:22):
Uh, I totally agree, yeah, butstephen, stephen Miller, I think
, is a very powerful influencein the, you know, in his staff,
and so that's where you know ifthere's any.
I mean, I'd say Stephen Milleris more important than Vance and
(29:44):
I think I think he's moreimportant than Musk.
I think he's more importantthan Musk, I think he's, you
know, musk is going to be there,for Musk is important.
I think Trump is relying onMusk because he doesn't have the
energy at his age to do thisall by himself.
So that's why Trump is energyor competence.
(30:08):
Not that Musk is terriblycompetent, but Trump feels that
he's not.
I think Trump rightly believeshe's not competent enough to do
what Musk is doing.
But Musk is not ideological oras ideological as Stephen Miller
is.
Clem Miller (30:27):
Yeah, I was going to say, I think, totally agree,
that Musk serves a couple ofpurposes.
Number one is he ends up beingsort of a driving factor in all
of these doge cuts, but he alsoacts as a lightning rod so that
Trump does not have to receiveall of the criticism directly on
that front and he almost actslike a like a heat sink in many
(30:48):
ways.
I think, too, one thing tothink about is that you know
around Trump I think there are.
You have this very complicatedVenn diagram of different
interests that need you knowsort of a voice in front of the
president.
You have sort of the tealtechnocrats.
You've got sort of let's callit Wall Street.
You've got the Christian right,you've got it.
(31:10):
All goes down the list.
There's all sorts of differentsubsets that all link up and I
agree I think Stephen Miller isin many ways one of the
gatekeepers of all that to tryto keep things organized and
cohesive, and so to the extentthere's a logic, it's really
more of a funnel to then go intothe Trump computer, into how he
thinks of things and how hethen uses what he has to bear as
(31:31):
far as messaging and gettingfrom here to there on certain
packs Additionally, things likeStephen Witkoff as far as sort
of Mideast policy and trying toengineer that You've got kind of
that function over here andtrying to engineer that You've
got kind of that function overhere.
All of that is to say that youknow to call it evil genius or
(31:53):
genius or whatever.
I think sort of over, sort ofoverplays the idea that there's
some sort of grand scheme goingon here.
I think Trump does have asystem in place to process the
various inputs that he's gettingand the various demands on the
power that he has in place, andhe has a real set of ideas and
(32:15):
concepts as to how to reward orpunish.
But I don't think henecessarily knows what he's up
to from week to week and thatultimately falls to someone like
a Stephen Miller or maybesomeone else that we haven't
mentioned.
That helps to keep thatorganized and take it from pure
short-term thinking to somethingthat's a little more
medium-term thinking.
Steve Davenport (32:37):
I would love to think that there's something
beyond short-term thinking.
So, whether it's Miller orothers, I think then we can
start to try to understand whythings might be going the way
they're going, and I don't, youknow, whether it's to talk about
fentanyl coming in from Canadaor some of these other ideas.
I find that whoever is drivingthis discussion hasn't really
(33:01):
thought it through quite to theend in terms of you know, if
fentanyl is a problem, then youknow the amount coming through
Canada isn't, you know, changinganyone's world.
So it was kind of a.
Do you think that, when we'rein this situation, that there
will be damage to America as aresult of some of these actions,
(33:25):
or are they more likely, justlike the executive actions of
Biden, going to be turned overby the next person who comes in?
Clem Miller (33:35):
You start first.
You've got good foreignexpertise on this.
Well, I think domestic as well.
Frazer Rice (33:41):
Steve, when you're talking about damage to America,
you're talking about domestic,foreign or overall?
Steve Davenport (33:48):
I'm talking overall because I think that you
know when we cut back on theIRS.
Frazer Rice (33:52):
You know, I know, having worked in government for
a long time, albeit in a smallagency, the export import bank.
(34:15):
Uh, that government uh issomething that doesn't move.
That is it like an immovableobject.
Right, it's very difficult tomake changes and to the extent
changes are made, it's very hardto undo them.
So you know, if you lay off awhole bunch of people, it's
(34:36):
going to take decades to replacethat level of experience.
And indeed, in government, youknow people may not recognize
this, but in government thereare a lot of people with a lot
of particular expertise incertain areas.
And I remember I'm going totalk about a previous episode,
(35:00):
minor episode of cutting, but Ithink it's illustrative I
remember when there wassomething called the Bureau of
Mines and you know theyeliminated that, I don't know,
20 years ago, 15 years ago,something like that and in the
Bureau of Mines there used to bean expert, like a real super
(35:21):
engineering engineering trainedexpert on each particular
mineral engineering trainedexpert on each particular
mineral and industry, privateindustry relied on the expertise
of that, of that person, uh, inorder to make decisions about
you know where to mine uh, howto mine uh, you know that expert
(35:42):
would have.
Uh, I remember myself there wassome reason I had to go over to
their offices and there weremaps all over the place of where
the deposits were.
I mean, that was a huge loss ofexpertise for private industry
in this country that they gotrid of the Bureau of Mines and
right now there's a lot ofexpertise that's being lost
(36:03):
across a whole series ofagencies and, yeah, some of it
will be picked up by the privatesector.
Some of it will just be lost aspeople retire early Because,
remember, government has a goodretirement and a lot of people
will take advantage of thatretirement.
If they're laid off or ifthey're, even if they're just
(36:26):
unhappy with what's going on,they'll take advantage of it and
and and take off.
So you know, domestically Ithink you know a lot this could,
this current episode couldcause a lot of damage.
That's irreversible.
So, yeah, they could remove theexecutive, direct executive
(36:47):
orders in the future, but thedamage is done.
So I think that's that'sterrible.
Now, in terms of internationalum, I think that you know we
haven't seen yet all the damagethat could happen and you know
we've seen threats about Canada,we've seen threats about Panama
(37:08):
and Greenland and you knowwe've already seen some progress
, I'd say, with Panama, in thesense that there was a sale of
some of the port facilities to aUS, to BlackRock, actually from
CK Hutchinson.
But if you look around, there'sa lot of, there are a lot of
threats, you know NATO, ukraine,korea.
(37:33):
You know these are things thatif they get carried out, are
going to be extremely damagingto US foreign policy and but
they haven't been really carriedout that much yet.
But they haven't been reallycarried out that much yet and
it's all sort of in the realm ofpotential threats and you can
(38:01):
kind of chalk that up to.
You know, you put out aposition, you can kind of chalk
it up to negotiations to acertain degree right now to try
to advantage US positions.
But you know, if any of thesethings really get carried out to
any great extent, I think that,uh, it could cause a tremendous
amount of damage.
Any one of these things.
The U?
S were to invade Greenland, uh,that would bring NATO down on
(38:21):
us, right?
I mean, even something assimple as Greenland would bring
NATO down on us.
So that would be terrible.
Ending all support to Ukrainefrom the US and not being
willing to back up Europeans ifthe Europeans go in there with
support, I think would beterrible for us.
(38:44):
So there are a lot of thingsthat could go wrong on the
international front and we justhaven't seen it yet, but it
could very well happen.
Clem Miller (38:57):
On the domestic front.
I'm going to take acounterpoint to Glenn there.
I definitely understand theidea that if you've got good
expertise that goes away, it'sgoing to take a long time to
recover.
I worked for a state agency wayback in time and I seem to
recall I came out of thatexperience before I went to law
school and said if you fired 400of those people you wouldn't
(39:19):
notice.
And then if you fired another200 people six months later you
still wouldn't notice.
And so on the one hand, I agreethat there are pockets of the
government that you absolutelyneed and you need expertise, you
need data collection.
Cutting the IRS is just mindlessto me, because that is a
(39:39):
revenue collector and, yeah, itmay not be the most efficient
one, but it's.
You know, I did a podcast witha former IRS commissioner.
They get a big job and you knowit's not easy and it's
underfunded and you know you setthem up for failure anyway with
the way you sort of cast thempublicly.
But to blow that up makes justit's just shooting yourself in
(40:01):
the foot in many ways.
But that said, I think that thegovernment, the administrative
state, is very crafty and veryresilient, and so I think a lot
of these efforts, you know, dogeor otherwise will either get
reversed maybe with a lot ofpain in reversing it or I think
(40:25):
the benefit from something likethis is that it is going to
force Congress to do its job incrafting appropriations in a
much more strategic and specificway, which I think they got
into a really bad habit over thelast 40 to 50 years, saying
here's a check, go do it.
And then the administrativestate was in charge of sort of
dealing with that.
And you know, I think the good,unintended consequence of
(40:49):
what's going on here is that itis putting some responsibility
back into Congress, who I reallythink is at fault principally
for a lot of the chaos, in manyways because they've passed the
buck on everything and I think,hopefully, assuming we get to a
postmodern world in terms ofcongressional legislation and so
(41:11):
on, between that and LoperBright, which is sort of taking
away administrative reliance onthe administrative
interpretation of law, it'sgoing to force Congress to do
work in terms of craftinglegislation going forward.
Now that might be wishfulthinking.
On the international side, clem,I pretty much agree with you on
(41:32):
that front.
I worry that, as the US hasgone from being sort of the
polite statesman and the adultin the group.
We now have taken on sort ofthis adolescent posture in terms
of increasing our negotiatingstakes, etc.
And popularity is important inmany ways.
That is a soft power, and ifyou spend that in sort of
(41:58):
dubious ways, that sets yourselfup to collapse in other ways.
And what's going to end uphappening too, I think, is that
the US is going to get caught atcross purposes with some
different types of gestures.
So, for instance, launching anattack on the Houthis is, you
(42:18):
know, a different approach thanit is to sort of potentially
leaving the Ukrainians in thelurch as far as support's
concerned.
And so what that tells peoplelike Taiwan, for instance, as
far as what support they canrely on or not rely on from the
US, that's unclear.
And you know, I think, thatsort of the schizophrenic nature
(42:39):
of what we're looking at froman international perspective.
It doesn't augur well.
And you know, I hope, you hopein many ways that there's some
thought or some vision as towhat sort of a realignment of
priorities is going forward.
But to sort of spendfriendships like we seem to be
(42:59):
doing at this point, I thinkcould be expensive later on so,
fraser, if I might, uh carry alittle bit further on your
points there.
Frazer Rice (43:06):
so you brought up taiwan, uh and uh, I think if
you think about taiwan, youthink about, about germany, uh,
you think about, potentially,you think about, potentially,
south Korea, you think abouteven Ukraine, and you have to
wonder, you know, if thesecountries feel threatened by the
(43:31):
absence of US support, or evenby US antagonism, will these
countries move along with theirnuclear weapons programs?
I don't think that's.
Some people might say, well,that's not something that's
likely to happen.
But there have been periodsthere have been at least two
(43:53):
periods in the history of modernTaiwan where they had been
working on nuclear weaponsprograms.
I doubt very much that all ofthat stuff, all the paperwork,
has been burned.
Clem Miller (44:06):
I agree.
Frazer Rice (44:08):
That paperwork is somewhere.
And if I were them, you know,with the Chinese doing exercises
to surround them, I would beworking on a, on a nuclear
weapon right now, or severalnuclear weapons.
Uh, germany could develop onevery quickly.
They've got the industrial base.
Uh, they could develop one umvery quickly.
(44:31):
And besides, you know, francehas talked about extending its
nuclear umbrella uh over um,talked about extending its
nuclear umbrella over, you know,over the rest of the EU.
So there's that possibility too.
And then I wouldn't even put.
I mean, I know, you knowUkraine doesn't sound like the
kind of country that would beable to develop a nuclear weapon
.
But you know they had nuclearweapons there, albeit under
(44:52):
Soviet army control.
But a lot of the folks in thesoviet um, in the soviet
military, were actuallyukrainian, some of the smarter
ones even, and uh.
And so there's expertise aroundwithin ukraine to do and not to
mention that, but also nuclearpower facilities in the ukraine.
So they could um, you know,potentially uh be looking uh at
(45:17):
nuclear as a long-term militarydeterrent if they can't rely on
the US or Western Europe forthat.
Steve Davenport (45:27):
Yeah, I just came back from a meeting with
the local CFA society and I satnext to a Chinese national.
Next to it a Chinese nationaland her comment when I mentioned
Taiwan was China is having somany problems they can't handle.
Taiwan now added to the listthat there's so many worries and
(45:47):
so many concerns about theeconomy and the real estate and
all of the other things going onwith China economy-wise that
they're just so focused ontrying to up or trying to right
this ship and get it moving andthe economy moving again in a
way that they think will be, youknow, in line with Xi's goals.
(46:08):
So her comment was they can'thandle Taiwan, they can barely
handle the mainland.
So I've been one to think that,you know, chaos is the time to
operate.
Sometimes is when things aredifficult and things are
confused in a domestic sense,that having an international
(46:29):
goal or an internationalopposition, you know, is a way
for you to focus your peopleback away from their current
troubles and to something on theoutside, and I think that in my
mind it's still a possibilitythat Xi would want to, you know,
take advantage of the US.
I look at what happened with,you know, netanyahu and his
(46:51):
recent actions again in Gaza,and I said you know, trump
wanted this problem to go away,he wanted it to be solved.
He wanted it to be.
You know, trump wanted thisproblem to go away, he wanted it
to be solved.
He wanted it to be, you know,so we could focus on the Ukraine
, and it's not going away.
And so, in my mind, the moreenergy and effort we keep
putting towards, you know,europe and the Ukraine and the
(47:14):
Middle East, I think is allgoing to make it very hard for
us to respond or consider what'sthe right way to approach
Taiwan, and to me it's just toobig.
After seeing what happened withHong Kong and reincorporating
Hong Kong, I feel that Xi hasthat on his radar and if things
(47:38):
get more volatile in China, Ithink it makes for a more
volatile situation in Taiwan.
But my biggest concern about thefuture is really what happens
to the US in terms of how wecontinue to operate as a society
.
It feels to me like we're twodifferent countries and two
(48:01):
different people are justgleeful if you're on the Trump
side and people are depressed onthe Democratic side and the
people in the middle who areindependent, they don't know
what to think of where we'regoing, because I don't think
there's been a clear directionfrom the Democrats and I think
there's.
So, when I look at Trump, Ithink of somebody who is able to
(48:25):
through media, really, you knowsend messages and get things,
get the discussion turned aroundto what he wants to talk about,
and in doing that, I think alot of other voices aren't being
heard in the country right now,and in that way, I think his
legacy will be one of division,and I think it'll, you know, it
(48:46):
could lead to, as we've talkedabout, or I've talked about, the
idea of a third or fourth party, because it feels to me as if I
keep seeing the Netanyahu andthe far right party that he's
got his government with, and Idon't think anybody has 50%, and
so, therefore, I think thateventually, people are going to
(49:08):
get tired of having a group leadthat has 35% of people backing
them.
The Democrats and theRepublicans really don't ever
look like they're going to getclose to a majority, so I think
we're going to see the partysystem break down, which, just
like this, doge activity in thegovernment.
(49:29):
It has some pluses, it has someminuses, but I think it's one
of those things in the futurethat nobody's talking about, and
therefore it's likely to bemuch more disruptive than it
could be.
Clem Miller (49:43):
I think this country is paying a huge civics
bill right now, where I just hada podcast with an author who
has a book called how to Raise aCitizen, which I think is
really good, and the amount ofmoney spent on teaching civics
to kids is, you know, if there'sa dollar spent on STEM
(50:07):
education, which is good, anickel is spent on teaching
civics.
And I think now we have apopulace that just doesn't
understand how this countryworks.
And so when you have people whoare extremely good at
manipulating the media,controlling narratives and so on
, there is really no good NorthStar at the moment for people to
(50:28):
understand what the content ofthat information is in the
context of how things actuallyoperate.
And so you end up people whobecome virus experts and then
move over to becoming Ukraineexperts and then become
constitutional lawyers allwithin the span of a week, and
have no idea what any of thesethings mean or do.
(50:49):
And then, in the context of thepolitical framework, you have
people yelling oh,constitutional crisis, blah,
blah, blah, blah, blah.
Wait a minute, let's ease backhere.
Let's see why, let's see howthese different parts of the
different branches of governmentoperate.
Let's see how the differentbranches of government operate
within themselves and how thisall works.
(51:12):
Lot of the country, especiallyeven amongst let's call it
successful, intelligent people,they don't really know either.
They see president, they don'tknow who their congressperson is
, they don't go to jury duty,they probably didn't vote.
They don't understand theconcepts of federalism, et
cetera, et cetera, or the ideathat states don't print money I
can go down the list ofdifferent things that sort of
(51:33):
evaporate in people'sconsciousness that I think are
important.
And then add on to thatinnumeracy and not understanding
the power of compounding andyou end up with a very
uneducated populace.
And that's where we are today,where you've got, even on both
sides of the aisle you've gotpeople who just don't understand
how things work, and we'repaying for it.
Steve Davenport (51:55):
Yeah, I mean I.
I've been working the last 10years in financial literacy and
it's you know.
Now we've gotten 27 States tohave a one semester class
required for financial literacy.
So that means that 22 do nothave any requirement.
And if you think about thatover the course of your life,
you know your 12 years ofeducation.
(52:16):
Two semesters the course ofyour life.
You know your 12 years ofeducation.
Two semesters, 24 times fiveclasses, 120.
If one out of your 120educational opportunities is in
financial literacy, is it reallygoing to change?
Or you know impact howindividuals understand finance.
Frazer Rice (52:35):
And then, hey, steve, yep, is there a pattern
among the states as to whichstates have financial literacy
and which don't, or is it across?
Steve Davenport (52:44):
It's just a it's a random walk really, and
it has to do with the stategovernment and how willing they
are to take it up.
And some people have very goodprograms for children on the
lower end of the spectrum, butnot necessarily.
The concern about money isviewed as something that is in
(53:04):
the home and not like religion.
They believe that money shouldbe discussed at home versus in
the classroom.
One of those sensitive issuesthat as a society, like civics,
we don't, we don't teach, wedon't talk about, because it
usually ends in an argumentright, and I think that, as a
(53:25):
society, as we keep getting moreand more volatile and more and
more with shut shutdown ofconversations, which I went home
and this weekend and talked topeople and sure, sure enough,
you know, there was a breakdownin terms of how you talk about
this.
I think that's the legacy ofTrump is the divisiveness where
(53:49):
you look at your opponent and,instead of thinking about
someone who you think could seea few of your points, what we're
seeing is it's not worth eventalking about now, and so I
think we've got this wholeunderground information kind of.
I was talking to somebody andthis is what they said, and I
think that's not really theAmerican dream where we thought
(54:13):
we would all come together in acommon place and figure out how
to operate the government andthe industry together.
So it feels like the idyllicview in the American
exceptionalism in my mind is notabout AI, but it's about how we
relate to other people.
Clem Miller (54:46):
I always mark intelligence by someone who's
able to have at least two, andsometimes even more, thoughts in
their head around a topic atthe same time and not to be able
to, you know, being able tounderstand and respect other
people's views, uh, and.
And to be able to be stridentin one's own, uh, but accepting
of other viewpoints, uh.
Without that, I don't knowwhere we go.
Steve Davenport (55:08):
Okay, I got to wrap it up here.
What I'd like to end this withone um question and and try to
be you know give me yourthoughts in terms of if you were
to pick an idea today that youthink will survive through this
next few years, of whatever isgoing to happen with government
and our country, what industryor area do you think is most
(55:34):
equipped to get through thistariff slash, tax cut, slash, AI
world over the next two tothree years?
If you were to pick oneindustry to buy or to be
invested in, what would it be?
Clem Miller (55:52):
I'll go first because I am uniquely
unqualified to talk about thisstuff.
So I'll put out the posit that,no, this is not investment
advice, don't listen to me.
Blah, blah, blah.
But I think the most resilientthing is energy.
I think, as a general matter,whether you're AI or you're
(56:12):
bringing manufacturing jobs homeor you're exporting or doing
anything like that bringingmanufacturing jobs home or
you're exporting or doinganything like that the ability
to power these things is onlygoing to go up and to make
things more efficient anddiversified.
You know, whether you go oil ornuclear or natural gas or
electricity, anything in thatspace having to do with sort of,
(56:33):
you know, to sort of bringthings back to an American
viewpoint, I think is going tobe insulated, certainly over the
next few years, because it'sjust a necessary quality and I
think over the long haul, if Ireally wanted to build sort of
the concept of Americanexceptionalism, I'd want to
(56:53):
think of America as being theworld's battery and to be able
to be an energy exporter thatother people are reliant on as a
subcategory.
I mean, we talked a little bitabout Germany and you know what
it decides it wants to do goingforward.
I think one reason why it's sohamstrung at this point is
because it's so dependent onRussia for its energy.
I think the US, if it tries tobe isolationist and more
(57:18):
independent as far as that'sconcerned, the development and
continued focus on its energycapability and transmission and
means to keep things moreefficient and powered within its
own control.
I think that's an interestingtheme.
Steve Davenport (57:38):
I agree with you, professor.
I think that the East Coastcould supply Western Europe with
LNG, and the West Coast couldfocus on supplying, you know,
via Cushing and otherwise Japan.
They both need natural gas,they both want to get it from a
reliable source.
They both want to get theirenergy from a place that they
(58:00):
feel is more stable.
So I think we should be lookingat the energy outlet as a good
way for us to build for thefuture.
It doesn't necessarily have tobe a carbon-based energy.
As you mentioned, the batteriesand the solar are both areas
that we could become exceptionalat.
What about you, clem?
Frazer Rice (58:22):
I still think that technology, information
technology, is the place to beover the long run, and I think
there are a lot of differentcompanies involved in that space
and some are doing very well,others are doing less well.
(58:43):
So it's a question of being ableto pick and choose among those
companies that are doing well orless well.
I think that I think that someof them, uh, some of the tech
companies, uh are, you know, alittle bit too exposed to you
know, economic uh variation, uh,but they have less beta to the
(59:07):
economy than uh than does youknow some of the energy
companies.
Now, admittedly, the you have amovement in energy towards sort
of more stable companies, right, but a lot of the energy
industry, especially around oiland gas, is still cyclical in
terms of prices, and I tend tolook more for stable growth in
(59:30):
my portfolio than cyclicalgrowth.
I recognize the energy theme.
I think it's an important themethan cyclical growth.
I recognize the energy theme.
I think it's an important theme, uh, and actually there's an
overlap between energy andtechnology, in the sense that
some of the, some of the energyis there to support the
(59:50):
technology.
Clem Miller (59:50):
You know the cloud computing and so on.
Uh, but I uh.
Frazer Rice (59:51):
I do have energy in my portfolio, uh, but I think
over the longer term, I thinktechnology is the right place to
be.
And just to be clear toeverybody, that's not me
advocating MagSven, right, Imean there are MagSven stocks
that I don't hold and there area lot of stocks that aren't
(01:00:14):
MagSven in the tech area that Ido hold.
Steve Davenport (01:00:18):
Yeah, one of the things that I'm concerned
about with technology is theimmigration and the holding on
to intellectual capital.
The American institutionseducate a lot of foreign
students and we don't have a wayfor those students to stay in
this country and continue tohelp it grow.
So when you say technology, Isee immigration and the US
(01:00:40):
reputation being hurt in thenext two or three years, and so
people might not come here to beeducated anymore, and I think
that will because we don't offerthe continuation or some type
of a job or some kind of a visaqualification for masters of PhD
.
I think we're in some wayshurting that industry and I
(01:01:04):
don't know if we'll be enoughhurt to change it.
We'll still be a technologyleader, but I think it's doing
something to take the shine offcoming to America for your
future, and I think that that issomething that we are a country
built on immigrants, and so ifthat building or that source
starts to be compromised, Ithink some of the future in
(01:01:25):
technology is compromised, and Imay be extreme in that view,
but I've really felt like thebiggest lack we've had in the
last few years has been acoherent policy, and if we had a
more coherent policy towardsthese skilled workers.
I think we would be puttingdown insurance that we are going
(01:01:45):
to still always be on thecutting edge of technology.
So I see Trump kind of breakingthat contract a little bit, but
it could be that, you know,they will smarten up on how they
handle immigration so that it'snot going to affect any of
those students or graduatestudents who are here.
(01:02:05):
So anyway, I think it's been agreat call.
Thank you for all your insights, fraser.
It's a pleasure to be with youagain.
It's a pleasure to be on.
It's a lot of fun and Tom and Ireally enjoy the conversations
and we hope you get to tax dayand we all survive and make it
to the 16th and can continue totalk and work in these areas.
(01:02:28):
So thanks everyone and Iappreciate you listening.
Please like and share with yourfriends.
Got to do it.
Steve Davenport (00:02):
Hello everyone and welcome to Skeptic's Guide
to Investing.
Today, Clem Miller and I, SteveDavenport, have a special guest
, Mr Fraser the author of WealthActually and we're looking
forward to talking about what'shappening in Washington
regarding the tax bill and theextension of the tax cuts from
(00:25):
Trump and trying to determine ifthe chaos of tariffs will
become the chaos of taxes.
I believe that we're not seeinga government that really has a
very coherent plan that jumpsfrom 25 to 50 percent tariffs
overnight, depending upon whichside of the bed you wake up on,
(00:46):
and it feels to me as if we'rethinking that this is going to
be the way that they attack andapproach tax extensions.
Clem Miller (00:56):
This is going to be quite a year and I'd like to
start with Fraser and ask andI'd like to start with Fraser-
and ask, fraser, do you see thechaos continuing or do you see
the chaos getting a lot moreserious when it comes to
people's dollars and taxes?
I think the chaos is going tocontinue.
(01:17):
I think Trump equals chaos andhis way of doing things Just
that's just the lingua franca ofour existence these days.
My day job really is to sort ofthink about it from a
multi-generational and estatetax perspective.
So, to the extent I have anyknowledge of that for your
(01:40):
listeners who are vaguely awareof that part of the law,
essentially at the federal level, the estate tax exemption is
currently at about $14 millionper person, which is
generationally really high and avery generous set of
circumstances that we're in theway the previous law was set up
was that in the TCJA back in2016,.
(02:02):
It had a runoff of eight yearsand that was done through the
reconciliation process.
So we're coming up on eightyears and, in order to make the
numbers work, that 14 million issupposed to get down to about 7
million per person at the endof this year.
So the sort of wagging tonguesaround all of this are sort of
saying, okay, you know Trump'sin place.
(02:25):
He wants to theoreticallyeither extend this generosity or
even just get rid of estatetaxes in general.
What do we do to plan for this?
Because if nothing happens,then we get this, this exemption
, cut in half and you know welose some of the generosity in
terms of the planning that we doon this front.
So, uh, so people like me tryto go around and understand not
(02:47):
only what clients want but alsowhat the tea leaves say in terms
of what these taxes are goingto do.
So that's sort of thebackground as the sort of oh,
we're going to, we're reallyinterested in removing estate
taxes entirely.
We're thinking about extendingthings.
Where does that sit these days?
In talking to a lot of differentpeople, both Washington and
(03:10):
otherwise, the conventionalwisdom is that the extension of
the estate tax portion anyway itlooks like around four years,
and so the idea would be thatthe cutting in half wouldn't
take place at the end of thisyear but it would be four years
from now.
That gives us a little bit ofcertainty.
(03:31):
It gives us some tools andthings like that.
Now, if I try to sort oftranspose that to other parts of
the tax code ie, you know,income taxes and capital gains
taxes and carried interest andthings like that we get all
sorts of mixed signals and thatultimately leads to the chaos.
You have so many differentproposals on things and in order
(03:52):
for these tax situations tohappen, the reconciliation
process requires essentiallythat any tax cuts are paid for
or else the tax law has tosunset.
And that's where we are rightnow.
And, given the way thingsoperate vis-a-vis Trump and his
(04:13):
administration, the narrow edgesin the Senate and House and a
somewhat weakened response fromthe Democratic side of things, I
don't see certainty comingaround the corner anytime soon.
So I advise clients, generallyspeaking, that when you've got
(04:33):
things in front of you that youcan take advantage of,
especially on the estate taxside of things, wouldn't be the
worst thing in the world to getthat in.
Get some moss growingunderneath the transaction such
that if anyone were to reversethings or to try to claw that in
, get some moss growingunderneath the transaction such
that if anyone were to reversethings or to try to claw it back
, it just would be extremelyunlikely going forward.
Steve Davenport (04:53):
What do you think, Clem?
Does the idea of more chaosseem palatable to you, or do you
think it's?
Uh?
I think it could be worse thanthe current chaos, because
foreign taxes on imports reallydon't affect people a heck of a
lot.
Frazer Rice (05:11):
If aluminum goes up , I'm not sure I'm I'm a big
buyer of aluminum, but when youtalk about my, uh, when you talk
about my income tax rates, myears kind of perk up so, in
order order to deal withanything having to do with taxes
you know, putting the tariffsaside for a moment, but anything
(05:34):
having to do with a stateincome tax and other taxes there
has to be a laser-like focus inCongress on how to deal with
that, and I don't think we'regoing to see a laser-like focus
in Congress on how to deal withthat, and I don't think we're
going to see a laser-like focus.
I think there's going to be alot of attention paid to things
(05:56):
that really aren't thatimportant, such as trying to
ratify a lot of these doge cuts.
You know, the doge cuts thatare being, you know, blocked by,
and not just doge cuts, butalso some of the stuff related
to immigration that's beingblocked by courts.
I think that, you know,inevitably, you know, Trump is
(06:21):
going to have to go to Congressand get that stuff sort of
reverse engineered, so to speak,put in behind him, make sure
that it sticks, and that's goingto take up a lot of energy in
Congress that could otherwise beused for, I think, more
(06:41):
productive purposes like lookingat taxes, for example.
Steve Davenport (06:48):
Yeah, I mean I look at things in terms of the
narrowness in the Senate and theHouse.
It feels to me like a lot ofpeople are just kind of waiting
and I like to think that thishas all been thought out by the
strategists on the Democraticside and Republican side.
But when I see the days when wehave a 25 percent tariff in the
(07:11):
morning and a 50 percent tariffin the afternoon, it feels to
me like this is definitely a youknow kind of figure it out as
we go along.
And I agree with you, you needa laser-like focus in order to
do things.
To the tax code.
And when I look at the tax code, I think here's an area where
(07:34):
it gets more and more difficultas we go along, because so many
of the rules and so many of theexperiences in the past are
really like third rail moments.
When you think about I thinkabout Ryan pushing the
wheelchair over the cliff andhow his career basically ended
(07:55):
on that one item, and I thinkthere's a lot of questions about
what becomes of this bill andwhat becomes of this
administration, in my mind it'sa two and done and they're going
to lose the House when we go tothe midterms and at that point
we have a lame duck.
(08:17):
So I'm looking at this as if Iwere the strategist on the one
side, the Democrats I'd saylet's just play and delay.
We delayed until that midtermaction, any real action.
I think they can say we didn'tcause the taxes to go up.
Trump put in a temporary taxraise cut and it's now expired
(08:41):
because he wasn't thoughtfulenough and he didn't have enough
influence to really put in apermanent.
I mean the fact that he pickedbusiness to get the permanency
and left the individuals tosunset, I think is appreciated
by all the business leaders whowere supposedly being helped by
the Trump administration.
So it feels to me like we're ina short-term game here and I
(09:06):
put the American people as theones who end up losing.
What do you think, frazier?
Clem Miller (09:14):
I don't have much there to disagree with, aside
from the mixed signals that getsent out.
I think the you know sort ofthis real estate dealmaking
ethos where you sort of getthings done and then renegotiate
later and sort of hopeeverything happens.
(09:35):
It's not a great way to runthings in terms of long-term
planning, so I'm not happy aboutthat and somewhat scared on
that front from that perspective.
But I completely agree with youthat you know, for those folks
who are terrified of sort of aRepublican regime, my comment
and it goes back to even beforethe election was that even if
Trump wins, you know you reallymight only have a year and a
(09:59):
half to deal with sort of thisquote unquote Republican ethos
in terms of governing and taxplanning and so on, and that in
the midterm election if one ofthe houses or one of the
branches of government SenatorHouse flips, then you get into a
real lame duck scenario andthen you set yourself up for an
(10:20):
interesting scenario afterwardswhere you know you figure out
what the president looks like,whether that's a Republican or a
Democrat, and Trump isconstitutionally bound not to
run.
And you know at that point wereally are back again in sort of
in the mix of sort of a generallevel of chaos and lack of
(10:43):
certainty in terms of taxplanning.
Steve Davenport (10:45):
Mix of sort of a general level of chaos and
lack of certainty in terms oftax planning, and do you have
any opinions about what mighthappen if Trump were a lame duck
, and how does it relate to thefuture of the party?
It seems like, when I look atthis, it feels like the vice
president.
Well, he gets a lot of praisefrom Trump.
(11:08):
Now, as we go along, just as wego along with the Musk
relationship, I have aprobability of both of those
relationships blowing up, youknow, in a year, somewhere
around 70 or 80 percent.
Do you think thoserelationships last?
Clem Miller (11:26):
No, I don't.
I think that you know there isa you go back to.
You know how many Scaramucci'sdo you last in terms of your
tenure under a Trumpadministration and you know
that's I don't know two or threeweeks be.
There will undoubtedly beturnover within the cabinet.
(11:46):
It depends on who runs afoul ofwhom.
You know the Musk part.
He provides a very usefulfunction for Trump at this point
, which is he's the the bad copin terms of blowing up the
government and using dogetactics and things like that
when Trump doesn't feel like heneeds him anymore.
That's it.
I think Vance is the same way.
(12:08):
One of my pet things, as far asyou know I take on a bet with
other people on this is that Ithink Trump is I don't know if I
think or you know I think it'ssort of an interesting thought
project, but I think that Trumpcould resign after his last
State of the Union.
And I think this accomplishesthree things.
(12:29):
If I'm being really magnanimous.
It sets up Vance or whomever onthe Republican side, to have
some incumbency before goinginto an election.
Number two it takes awayArticle 25 and sort of
comparison to Biden issues asfar as capacity.
It takes away Article 25 andsort of comparison to Biden
issues as far as capacity.
But I think from an egostandpoint, I think Trump would,
(12:50):
I think is interested in, froman ego perspective, tidying up
his legacy and by sort ofwillfully abdicating power, he
can say he did something thatBiden didn't willingly do.
He, I think, washes away theJanuary 6th stain that he
currently quote unquote enjoysand ultimately, I think he tries
(13:11):
to position himself as GeorgeWashington for the new
generation and that he deservesa spot on Mount Rushmore with
the other four.
All of which is, you know, I'msure it's extremely unlikely,
but I don't put it past him totry to make some sort of grand
theatrical gesture like that,and then you have real chaos,
because then that's notsomething that this country is
(13:32):
used to seeing in a meaningfulway, and I certainly in recent
and even non-recent memory.
Steve Davenport (13:42):
I think you may have something there, Frederick
.
Clem Miller (13:46):
I'll take the other side of that bet if anybody
wants to do it.
Steve Davenport (13:48):
Yeah, I mean, I don't want to.
I don't want to contest you onthat bet, but, um, I'm still
saving my uh quotas forretirement.
But it's uh, I, I think the uh.
The question that is in mostpeople's mind is how do all the
legal issues and how do these,you know, I mean they've?
It seems as though the uh, the,the need for uh pardons has
(14:10):
probably gone down, but I'm notsure by the end of this um, in
three years, where we'll be interms of the apartment nature of
the government and is what doyou think, clem?
Frazer Rice (14:24):
well, uh, you, I've got this.
I'm trying to think throughthis whole idea of the early
departure of Trump that Fraserjust raised.
I think there's something tothat, but I think that it would
have to be under a conditionwhere Trump is not feeling
pressure.
In other words, if he's under areal attack, like an
(14:45):
impeachment process or somethinglike that, I don't see him
resigning in the middle of that.
He's going to fight in themiddle of that.
So there would have to be anabsence of, there would have to
be an absence of pressures forhim to to go along with that.
But I think if there were anabsence of such pressures, yeah,
I mean, I think it makes somesense that he decides to do that
(15:09):
.
Of course, it's really hard togive up power.
I mean, look at Trump 1.
Look at Biden.
Obviously it's very difficultto give up power.
So would that be the same casewith Trump too?
I don't know, it depends on howmuch he's achieved and how much
(15:30):
pressure there is so possible,but I think the conditions would
have to be right for that tohappen.
Steve Davenport (15:39):
In my opinion it does seem to be very
magnanimous to the RepublicanParty to try to establish a
smoother transition and a higherprobability that the
Republicans remain in power,which I think that Trump's only
been interested in Trump beingin power, not Republicans.
Clem Miller (15:57):
Make no mistake that that's way down the list on
reasons he'd do it.
It, the main reason, would bepurely ego driven and some sort
of if he saw a pathway towardpolitical immortality.
In some ways, I think back toyou, clem.
I think it's an interestingpoint in terms of the absence of
pressures.
(16:17):
On one hand, I think having ademocratic house would, in
theory, be very frustratingfrustrating and he would have
trouble doing anything.
On the other hand, they wouldalso have the ability to have
hearings, and that would makelife miserable for him, and so
on and so forth.
Uh, I, uh, to be determined.
(16:37):
It's.
It's one of the, it's one ofthose half developed thoughts
that I wanted to get out there,just in case no one else.
You know, I can put my stake inthe ground, just in case.
Frazer Rice (16:46):
So there's another um, another thought that I've
had recently, uh, as I'velearned more and more about um,
Vance, uh, and Teal and Musk andCurtis Yarvin.
And Curtis Yarvin and I don'tknow if you've read about all
(17:10):
that stuff you know Musk goinginto meetings with his dark MAGA
hat, and you know there's thissort of you know, regardless of
whether Trump is involved inthis or not or adheres to this
theory, there is this sort ofstrain of authoritarian thinking
, that sort oftechno-authoritarian thinking
(17:33):
that is espoused by this CurtisYarvin and kind of adopted by
Musk and Peter Thiel and to someextent influencing Vance, may
have led to Vance makingcomments about ignoring the
courts, which they're not doingright now and it doesn't sound
(17:54):
like they will.
It sounds like they're veryfrustrated with courts but at
the end of the day, they'rethey're, you know, adhering to
the court rulings at the moment,right, uh, but you know Vance
has made comments that wouldsuggest that down the road,
maybe, uh, they would not, um,adhere to the courts.
But anyway, I think you knowVance probably has more of an
(18:17):
authoritarian streak in him thanTrump does, and so I think
that's something to be watchingout for.
Clem Miller (18:23):
I agree with that and, by the same token, I think
we have to remember that Trumpin many ways is a generational
talent in terms of understandingratings and how the media works
and that sort of framework,much more so than in terms of
getting votes and much more soin many ways than his business
(18:44):
acumen.
He is a once in a once in amulti lifetime.
I put him up there with PTBarnum in terms of understanding
how to get attention andratings.
Uh, I don't think Vance isanywhere near that.
Uh, I think he, like Obama, inmany ways caught fire with a
book, uh and uh, has been ableto sort of stitch together his
(19:05):
background into something that'svery interesting.
But at the same time, I thinkto think that he's going to take
up Trump's mantle and be ableto have the same sort of resolve
slash, understanding of how themedia works and so on, I don't
see that at all.
Steve Davenport (19:20):
Yeah, there's been a strategy that's come out
lately that Trump is creatingthis chaos purposely with the
tariffs so that the economicconditions in America will get
bad enough that he would be ableto make the case that we are
heading to a recession and theFed needs to cut rates and that
(19:41):
he really wants a few things inthis administration lower oil,
lower interest rates and lowertaxes.
And I look at this as a chessgame and I'm not sure if he's
better at checkers, but could itpossibly be that his bumbling
(20:02):
and his incoherence aroundtariffs is just a way to create
this kind of chaos and thatchaos leads to the Fed needing
to do something?
It would seem like a pretty slyway to do it, but I'm not sure
if it's sly or if it's justaccidental that we're seeing the
(20:25):
Fed now in a position that theyhave to talk about two cuts.
And once they start talkingabout two cuts, it's just a
question of how do we get theresooner in terms of Trump?
And maybe when all of thisstuff is over and some of these
countries give up on trying tofight the tariffs, they
(20:47):
negotiate and he he says look, Ishook this, these countries
down and I did what I could do.
And now America is a betterplace because we have less
tariffs with our tradingpartners.
I mean, is it possible thatthere is some, you know, evil
genius there behind any of theseideas?
Clem Miller (21:07):
Clem, I'll let you start with that one, because I
have to think about that one fora minute.
Frazer Rice (21:12):
So, while you're thinking about it, steve, I
think there's an attempt to,there is a strategy, and there
is some talk out there aboutsomething that's referred to as
(21:42):
the Mar-a-Lago Accord.
There is a call to create sortof a new world.
I don't mean this in the darksense, right, but sort of a new
world or sort of along the linesof a new plaza accord.
I don't know if you mightremember back in the 1970s Some
(22:02):
of us were little kids back then, or not born yet, right but
there was this thing called thePlaza Accord, named after the
hotel where the major powers gottogether and decided on how to
arrange or manipulate, I shouldsay, exchange rates so that the
(22:27):
US would not be disadvantaged asthe world's reserve currency.
And I think Trump feels that thedollar is overvalued and that's
causing some of our tradeimbalances, and so he would love
to get the dollar undervalued,which of course means that other
countries have to have theircurrencies rise in value, and by
(22:51):
creating chaos around the world, perhaps he can get everybody
into the ballroom at Mar-a-Lagoand work out a new deal that
would be sort of akin to the oldPlaza Accord, which is ironic
because he used to own the Plaza, but I don't know if he owned
it at the same time as the plazaaccord, but um or own some
(23:13):
highly leveraged portion of it.
Oh, yeah, exactly, but yeah, Imean the whole idea would be
create a uh, you know trump,creating a new, uh, global order
of exchange rates where thedollar would be undervalued to
the extent that we would all ofa sudden see surpluses and
(23:37):
something of a manufacturingboom, or at least incentives for
a manufacturing boom in the US.
Clem Miller (23:46):
I think too, just just from a political lesson
perspective, I think everymodern politician sort of looks
back at Bush one and sees thathigh popularity early in a
one-term situation ended upreally poorly for him, as he
ended up with his you know, readmy lips no new taxes.
And so I think there's acalculus going on saying look,
(24:10):
if I'm going to create pain inorder to get to an outcome later
on in the term, I'm willing toaccept it now, because memories
are so short and the politicalnarrative and sort of recasting
of this is all going to beforgotten in six months.
And so if you're willing tocreate short-term economic pain
for the American public orcompanies or anything like that,
(24:30):
and you think you've got somesort of pathway into something
that's better, you've got to doit now and in the conjunction
with you know sort of the flood,the zone, types of executive
actions that have happenedacross all sorts of different
areas, so that everyone, youknow, depending on their
personal issue, uh, du jour, youknow they've got something to
(24:51):
sort of think about and befrustrated with or be happy
about, and you know sort ofusing all of these different
modes of chaos on the economicside of things.
If you think you've got somesort of angle to uh, you know,
create a different equilibrium,that where the U?
S comes out slightly ahead uh,slightly ahead, you've got to
get the pain points done in thefirst year while you have the
(25:11):
ability to do it, and then youhave some time for that
narrative to build back in.
If unemployment rises early orif interest rates pop for a
second or whatever happens onthat front, if you've got pain
to take, or if the stock marketdrops or it's volatile like
we've been seeing, if you've gotpain to take, you want to take
(25:32):
it early so that people onlyremember the most recent thing
that's happened.
Steve Davenport (25:36):
Yeah, yeah, I looked at what he tried to do in
the first administration withObamacare blowing up Obamacare
and that was his only item.
He could have doneinfrastructure.
He could have done things thathad enough agreement to cross
the aisle, but he just refusedto do it because he said this is
my first and most importantgoal and he wanted to show
(25:57):
people he was serious.
And in my mind he just burnedup his goodwill and then that
really kind of made it much moredifficult to do things later.
Clem Miller (26:07):
That really kind of made it much more difficult to
do things later.
That happened to Clinton too,and, and so you know that that's
one of those gigantic problemsthat you know spills over to
other things.
And so you, you know if you'vegot, if you know how much
political capital you have inthe bank and you're trying to
allocate resources towardsdifferent things, you know that
that's where you know, I thinkTrump has sort of looked at it
(26:28):
and said, okay, you know, I'vegot, I, I, I truly believe he,
he sort of looked at and saidokay, I've got a year, and, and
if I'm going to make a dent,I've got to do it all right now
and use the executive branch todo it.
Uh, because it's, you know, the, the, the Leviathan of uh sort
of checks and balances willdiscover, uh, how to slow me
(26:50):
down and and if I don't get thisstuff done, it's not going to
happen.
All of which is to that's whatsort of feeds my point that by
the end of three years, uh, hemay, he may have finally said
okay, I've, I've had it and, um,you know, not now it's time to
tidy things up for the future,for, you know, capital T Trump.
Steve Davenport (27:10):
Do you think there's anybody who's who's got
that kind of strategicperspective in his
administration, that like if youwere to say, well, the real
ideas, the real, the real visionis coming from this member of
his, you know.
Is it his chief of staff?
Is it like I?
I don't think I can figure outwhat Trump is thinking, cause
(27:33):
I'm not sure I have the similarstate of mind.
Glenn may have a similar stateof mind, but I don't.
And and so I'm just a logicalkind of engineer and I'm looking
for where is, where is thelogic in his administration?
Is it dissent?
Is it, you know, the Secretaryof State?
I mean, where do you think thestrength?
(27:54):
If there is a strength and I'mnot saying there has to be, but
if you look at the people, Ilike to try to figure out what
are the people saying to him,and then what is he saying?
And then, is there anyinfluence?
And how do?
Because once you know where hisinfluence comes, then you have
a good idea of where his trailis going to lead.
Clem Miller (28:14):
Right do you see any?
Frazer Rice (28:16):
influence on him yeah, climb, you go first.
Steven miller is his biggestinfluence.
Okay, I, I agree with that.
Yeah, I, I he's been with himthe longest, I believe, of all
these advisors he is.
You know, he's right there nearthe Oval Office.
(28:37):
Apparently he has a veryforceful ideology which goes way
, it's like trumpism times fiveor six, right, um, he's not like
, uh, you know, yeah, he, hepretends to well, not pretends
(29:01):
he's a.
He's very, um, uh, loyal, ultraloyal to trump, but not in the,
in the kind of um, almost um,toadying way that you know these
cabinet secretaries are, um, Idon't think trump listens to his
cabinet secretaries.
I think the cabinet secretarieslisten to him.
(29:22):
Uh, I totally agree, yeah, butstephen, stephen Miller, I think
, is a very powerful influencein the, you know, in his staff,
and so that's where you know ifthere's any.
I mean, I'd say Stephen Milleris more important than Vance and
(29:44):
I think I think he's moreimportant than Musk.
I think he's more importantthan Musk, I think he's, you
know, musk is going to be there,for Musk is important.
I think Trump is relying onMusk because he doesn't have the
energy at his age to do thisall by himself.
So that's why Trump is energyor competence.
(30:08):
Not that Musk is terriblycompetent, but Trump feels that
he's not.
I think Trump rightly believeshe's not competent enough to do
what Musk is doing.
But Musk is not ideological oras ideological as Stephen Miller
is.
Clem Miller (30:27):
Yeah, I was going to say, I think, totally agree,
that Musk serves a couple ofpurposes.
Number one is he ends up beingsort of a driving factor in all
of these doge cuts, but he alsoacts as a lightning rod so that
Trump does not have to receiveall of the criticism directly on
that front and he almost actslike a like a heat sink in many
(30:48):
ways.
I think, too, one thing tothink about is that you know
around Trump I think there are.
You have this very complicatedVenn diagram of different
interests that need you knowsort of a voice in front of the
president.
You have sort of the tealtechnocrats.
You've got sort of let's callit Wall Street.
You've got the Christian right,you've got it.
(31:10):
All goes down the list.
There's all sorts of differentsubsets that all link up and I
agree I think Stephen Miller isin many ways one of the
gatekeepers of all that to tryto keep things organized and
cohesive, and so to the extentthere's a logic, it's really
more of a funnel to then go intothe Trump computer, into how he
thinks of things and how hethen uses what he has to bear as
(31:31):
far as messaging and gettingfrom here to there on certain
packs Additionally, things likeStephen Witkoff as far as sort
of Mideast policy and trying toengineer that You've got kind of
that function over here andtrying to engineer that You've
got kind of that function overhere.
All of that is to say that youknow to call it evil genius or
(31:53):
genius or whatever.
I think sort of over, sort ofoverplays the idea that there's
some sort of grand scheme goingon here.
I think Trump does have asystem in place to process the
various inputs that he's gettingand the various demands on the
power that he has in place, andhe has a real set of ideas and
(32:15):
concepts as to how to reward orpunish.
But I don't think henecessarily knows what he's up
to from week to week and thatultimately falls to someone like
a Stephen Miller or maybesomeone else that we haven't
mentioned.
That helps to keep thatorganized and take it from pure
short-term thinking to somethingthat's a little more
medium-term thinking.
Steve Davenport (32:37):
I would love to think that there's something
beyond short-term thinking.
So, whether it's Miller orothers, I think then we can
start to try to understand whythings might be going the way
they're going, and I don't, youknow, whether it's to talk about
fentanyl coming in from Canadaor some of these other ideas.
I find that whoever is drivingthis discussion hasn't really
(33:01):
thought it through quite to theend in terms of you know, if
fentanyl is a problem, then youknow the amount coming through
Canada isn't, you know, changinganyone's world.
So it was kind of a.
Do you think that, when we'rein this situation, that there
will be damage to America as aresult of some of these actions,
(33:25):
or are they more likely, justlike the executive actions of
Biden, going to be turned overby the next person who comes in?
Clem Miller (33:35):
You start first.
You've got good foreignexpertise on this.
Well, I think domestic as well.
Frazer Rice (33:41):
Steve, when you're talking about damage to America,
you're talking about domestic,foreign or overall?
Steve Davenport (33:48):
I'm talking overall because I think that you
know when we cut back on theIRS.
Frazer Rice (33:52):
You know, I know, having worked in government for
a long time, albeit in a smallagency, the export import bank.
(34:15):
Uh, that government uh issomething that doesn't move.
That is it like an immovableobject.
Right, it's very difficult tomake changes and to the extent
changes are made, it's very hardto undo them.
So you know, if you lay off awhole bunch of people, it's
(34:36):
going to take decades to replacethat level of experience.
And indeed, in government, youknow people may not recognize
this, but in government thereare a lot of people with a lot
of particular expertise incertain areas.
And I remember I'm going totalk about a previous episode,
(35:00):
minor episode of cutting, but Ithink it's illustrative I
remember when there wassomething called the Bureau of
Mines and you know theyeliminated that, I don't know,
20 years ago, 15 years ago,something like that and in the
Bureau of Mines there used to bean expert, like a real super
(35:21):
engineering engineering trainedexpert on each particular
mineral engineering trainedexpert on each particular
mineral and industry, privateindustry relied on the expertise
of that, of that person, uh, inorder to make decisions about
you know where to mine uh, howto mine uh, you know that expert
(35:42):
would have.
Uh, I remember myself there wassome reason I had to go over to
their offices and there weremaps all over the place of where
the deposits were.
I mean, that was a huge loss ofexpertise for private industry
in this country that they gotrid of the Bureau of Mines and
right now there's a lot ofexpertise that's being lost
(36:03):
across a whole series ofagencies and, yeah, some of it
will be picked up by the privatesector.
Some of it will just be lost aspeople retire early Because,
remember, government has a goodretirement and a lot of people
will take advantage of thatretirement.
If they're laid off or ifthey're, even if they're just
(36:26):
unhappy with what's going on,they'll take advantage of it and
and and take off.
So you know, domestically Ithink you know a lot this could,
this current episode couldcause a lot of damage.
That's irreversible.
So, yeah, they could remove theexecutive, direct executive
(36:47):
orders in the future, but thedamage is done.
So I think that's that'sterrible.
Now, in terms of internationalum, I think that you know we
haven't seen yet all the damagethat could happen and you know
we've seen threats about Canada,we've seen threats about Panama
(37:08):
and Greenland and you knowwe've already seen some progress
, I'd say, with Panama, in thesense that there was a sale of
some of the port facilities to aUS, to BlackRock, actually from
CK Hutchinson.
But if you look around, there'sa lot of, there are a lot of
threats, you know NATO, ukraine,korea.
(37:33):
You know these are things thatif they get carried out, are
going to be extremely damagingto US foreign policy and but
they haven't been really carriedout that much yet.
But they haven't been reallycarried out that much yet and
it's all sort of in the realm ofpotential threats and you can
(38:01):
kind of chalk that up to.
You know, you put out aposition, you can kind of chalk
it up to negotiations to acertain degree right now to try
to advantage US positions.
But you know, if any of thesethings really get carried out to
any great extent, I think that,uh, it could cause a tremendous
amount of damage.
Any one of these things.
The U?
S were to invade Greenland, uh,that would bring NATO down on
(38:21):
us, right?
I mean, even something assimple as Greenland would bring
NATO down on us.
So that would be terrible.
Ending all support to Ukrainefrom the US and not being
willing to back up Europeans ifthe Europeans go in there with
support, I think would beterrible for us.
(38:44):
So there are a lot of thingsthat could go wrong on the
international front and we justhaven't seen it yet, but it
could very well happen.
Clem Miller (38:57):
On the domestic front.
I'm going to take acounterpoint to Glenn there.
I definitely understand theidea that if you've got good
expertise that goes away, it'sgoing to take a long time to
recover.
I worked for a state agency wayback in time and I seem to
recall I came out of thatexperience before I went to law
school and said if you fired 400of those people you wouldn't
(39:19):
notice.
And then if you fired another200 people six months later you
still wouldn't notice.
And so on the one hand, I agreethat there are pockets of the
government that you absolutelyneed and you need expertise, you
need data collection.
Cutting the IRS is just mindlessto me, because that is a
(39:39):
revenue collector and, yeah, itmay not be the most efficient
one, but it's.
You know, I did a podcast witha former IRS commissioner.
They get a big job and you knowit's not easy and it's
underfunded and you know you setthem up for failure anyway with
the way you sort of cast thempublicly.
But to blow that up makes justit's just shooting yourself in
(40:01):
the foot in many ways.
But that said, I think that thegovernment, the administrative
state, is very crafty and veryresilient, and so I think a lot
of these efforts, you know, dogeor otherwise will either get
reversed maybe with a lot ofpain in reversing it or I think
(40:25):
the benefit from something likethis is that it is going to
force Congress to do its job incrafting appropriations in a
much more strategic and specificway, which I think they got
into a really bad habit over thelast 40 to 50 years, saying
here's a check, go do it.
And then the administrativestate was in charge of sort of
dealing with that.
And you know, I think the good,unintended consequence of
(40:49):
what's going on here is that itis putting some responsibility
back into Congress, who I reallythink is at fault principally
for a lot of the chaos, in manyways because they've passed the
buck on everything and I think,hopefully, assuming we get to a
postmodern world in terms ofcongressional legislation and so
(41:11):
on, between that and LoperBright, which is sort of taking
away administrative reliance onthe administrative
interpretation of law, it'sgoing to force Congress to do
work in terms of craftinglegislation going forward.
Now that might be wishfulthinking.
On the international side, clem,I pretty much agree with you on
(41:32):
that front.
I worry that, as the US hasgone from being sort of the
polite statesman and the adultin the group.
We now have taken on sort ofthis adolescent posture in terms
of increasing our negotiatingstakes, etc.
And popularity is important inmany ways.
That is a soft power, and ifyou spend that in sort of
(41:58):
dubious ways, that sets yourselfup to collapse in other ways.
And what's going to end uphappening too, I think, is that
the US is going to get caught atcross purposes with some
different types of gestures.
So, for instance, launching anattack on the Houthis is, you
(42:18):
know, a different approach thanit is to sort of potentially
leaving the Ukrainians in thelurch as far as support's
concerned.
And so what that tells peoplelike Taiwan, for instance, as
far as what support they canrely on or not rely on from the
US, that's unclear.
And you know, I think, thatsort of the schizophrenic nature
(42:39):
of what we're looking at froman international perspective.
It doesn't augur well.
And you know, I hope, you hopein many ways that there's some
thought or some vision as towhat sort of a realignment of
priorities is going forward.
But to sort of spendfriendships like we seem to be
(42:59):
doing at this point, I thinkcould be expensive later on so,
fraser, if I might, uh carry alittle bit further on your
points there.
Frazer Rice (43:06):
so you brought up taiwan, uh and uh, I think if
you think about taiwan, youthink about, about germany, uh,
you think about, potentially,you think about, potentially,
south Korea, you think abouteven Ukraine, and you have to
wonder, you know, if thesecountries feel threatened by the
(43:31):
absence of US support, or evenby US antagonism, will these
countries move along with theirnuclear weapons programs?
I don't think that's.
Some people might say, well,that's not something that's
likely to happen.
But there have been periodsthere have been at least two
(43:53):
periods in the history of modernTaiwan where they had been
working on nuclear weaponsprograms.
I doubt very much that all ofthat stuff, all the paperwork,
has been burned.
Clem Miller (44:06):
I agree.
Frazer Rice (44:08):
That paperwork is somewhere.
And if I were them, you know,with the Chinese doing exercises
to surround them, I would beworking on a, on a nuclear
weapon right now, or severalnuclear weapons.
Uh, germany could develop onevery quickly.
They've got the industrial base.
Uh, they could develop one umvery quickly.
(44:31):
And besides, you know, francehas talked about extending its
nuclear umbrella uh over um,talked about extending its
nuclear umbrella over, you know,over the rest of the EU.
So there's that possibility too.
And then I wouldn't even put.
I mean, I know, you knowUkraine doesn't sound like the
kind of country that would beable to develop a nuclear weapon
.
But you know they had nuclearweapons there, albeit under
(44:52):
Soviet army control.
But a lot of the folks in thesoviet um, in the soviet
military, were actuallyukrainian, some of the smarter
ones even, and uh.
And so there's expertise aroundwithin ukraine to do and not to
mention that, but also nuclearpower facilities in the ukraine.
So they could um, you know,potentially uh be looking uh at
(45:17):
nuclear as a long-term militarydeterrent if they can't rely on
the US or Western Europe forthat.
Steve Davenport (45:27):
Yeah, I just came back from a meeting with
the local CFA society and I satnext to a Chinese national.
Next to it a Chinese nationaland her comment when I mentioned
Taiwan was China is having somany problems they can't handle.
Taiwan now added to the listthat there's so many worries and
(45:47):
so many concerns about theeconomy and the real estate and
all of the other things going onwith China economy-wise that
they're just so focused ontrying to up or trying to right
this ship and get it moving andthe economy moving again in a
way that they think will be, youknow, in line with Xi's goals.
(46:08):
So her comment was they can'thandle Taiwan, they can barely
handle the mainland.
So I've been one to think that,you know, chaos is the time to
operate.
Sometimes is when things aredifficult and things are
confused in a domestic sense,that having an international
(46:29):
goal or an internationalopposition, you know, is a way
for you to focus your peopleback away from their current
troubles and to something on theoutside, and I think that in my
mind it's still a possibilitythat Xi would want to, you know,
take advantage of the US.
I look at what happened with,you know, netanyahu and his
(46:51):
recent actions again in Gaza,and I said you know, trump
wanted this problem to go away,he wanted it to be solved.
He wanted it to be.
You know, trump wanted thisproblem to go away, he wanted it
to be solved.
He wanted it to be, you know,so we could focus on the Ukraine
, and it's not going away.
And so, in my mind, the moreenergy and effort we keep
putting towards, you know,europe and the Ukraine and the
(47:14):
Middle East, I think is allgoing to make it very hard for
us to respond or consider what'sthe right way to approach
Taiwan, and to me it's just toobig.
After seeing what happened withHong Kong and reincorporating
Hong Kong, I feel that Xi hasthat on his radar and if things
(47:38):
get more volatile in China, Ithink it makes for a more
volatile situation in Taiwan.
But my biggest concern about thefuture is really what happens
to the US in terms of how wecontinue to operate as a society
.
It feels to me like we're twodifferent countries and two
(48:01):
different people are justgleeful if you're on the Trump
side and people are depressed onthe Democratic side and the
people in the middle who areindependent, they don't know
what to think of where we'regoing, because I don't think
there's been a clear directionfrom the Democrats and I think
there's.
So, when I look at Trump, Ithink of somebody who is able to
(48:25):
through media, really, you knowsend messages and get things,
get the discussion turned aroundto what he wants to talk about,
and in doing that, I think alot of other voices aren't being
heard in the country right now,and in that way, I think his
legacy will be one of division,and I think it'll, you know, it
(48:46):
could lead to, as we've talkedabout, or I've talked about, the
idea of a third or fourth party, because it feels to me as if I
keep seeing the Netanyahu andthe far right party that he's
got his government with, and Idon't think anybody has 50%, and
so, therefore, I think thateventually, people are going to
(49:08):
get tired of having a group leadthat has 35% of people backing
them.
The Democrats and theRepublicans really don't ever
look like they're going to getclose to a majority, so I think
we're going to see the partysystem break down, which, just
like this, doge activity in thegovernment.
(49:29):
It has some pluses, it has someminuses, but I think it's one
of those things in the futurethat nobody's talking about, and
therefore it's likely to bemuch more disruptive than it
could be.
Clem Miller (49:43):
I think this country is paying a huge civics
bill right now, where I just hada podcast with an author who
has a book called how to Raise aCitizen, which I think is
really good, and the amount ofmoney spent on teaching civics
to kids is, you know, if there'sa dollar spent on STEM
(50:07):
education, which is good, anickel is spent on teaching
civics.
And I think now we have apopulace that just doesn't
understand how this countryworks.
And so when you have people whoare extremely good at
manipulating the media,controlling narratives and so on
, there is really no good NorthStar at the moment for people to
(50:28):
understand what the content ofthat information is in the
context of how things actuallyoperate.
And so you end up people whobecome virus experts and then
move over to becoming Ukraineexperts and then become
constitutional lawyers allwithin the span of a week, and
have no idea what any of thesethings mean or do.
(50:49):
And then, in the context of thepolitical framework, you have
people yelling oh,constitutional crisis, blah,
blah, blah, blah, blah.
Wait a minute, let's ease backhere.
Let's see why, let's see howthese different parts of the
different branches of governmentoperate.
Let's see how the differentbranches of government operate
within themselves and how thisall works.
(51:12):
Lot of the country, especiallyeven amongst let's call it
successful, intelligent people,they don't really know either.
They see president, they don'tknow who their congressperson is
, they don't go to jury duty,they probably didn't vote.
They don't understand theconcepts of federalism, et
cetera, et cetera, or the ideathat states don't print money I
can go down the list ofdifferent things that sort of
(51:33):
evaporate in people'sconsciousness that I think are
important.
And then add on to thatinnumeracy and not understanding
the power of compounding andyou end up with a very
uneducated populace.
And that's where we are today,where you've got, even on both
sides of the aisle you've gotpeople who just don't understand
how things work, and we'repaying for it.
Steve Davenport (51:55):
Yeah, I mean I.
I've been working the last 10years in financial literacy and
it's you know.
Now we've gotten 27 States tohave a one semester class
required for financial literacy.
So that means that 22 do nothave any requirement.
And if you think about thatover the course of your life,
you know your 12 years ofeducation.
(52:16):
Two semesters the course ofyour life.
You know your 12 years ofeducation.
Two semesters, 24 times fiveclasses, 120.
If one out of your 120educational opportunities is in
financial literacy, is it reallygoing to change?
Or you know impact howindividuals understand finance.
Frazer Rice (52:35):
And then, hey, steve, yep, is there a pattern
among the states as to whichstates have financial literacy
and which don't, or is it across?
Steve Davenport (52:44):
It's just a it's a random walk really, and
it has to do with the stategovernment and how willing they
are to take it up.
And some people have very goodprograms for children on the
lower end of the spectrum, butnot necessarily.
The concern about money isviewed as something that is in
(53:04):
the home and not like religion.
They believe that money shouldbe discussed at home versus in
the classroom.
One of those sensitive issuesthat as a society, like civics,
we don't, we don't teach, wedon't talk about, because it
usually ends in an argumentright, and I think that, as a
(53:25):
society, as we keep getting moreand more volatile and more and
more with shut shutdown ofconversations, which I went home
and this weekend and talked topeople and sure, sure enough,
you know, there was a breakdownin terms of how you talk about
this.
I think that's the legacy ofTrump is the divisiveness where
(53:49):
you look at your opponent and,instead of thinking about
someone who you think could seea few of your points, what we're
seeing is it's not worth eventalking about now, and so I
think we've got this wholeunderground information kind of.
I was talking to somebody andthis is what they said, and I
think that's not really theAmerican dream where we thought
(54:13):
we would all come together in acommon place and figure out how
to operate the government andthe industry together.
So it feels like the idyllicview in the American
exceptionalism in my mind is notabout AI, but it's about how we
relate to other people.
Clem Miller (54:46):
I always mark intelligence by someone who's
able to have at least two, andsometimes even more, thoughts in
their head around a topic atthe same time and not to be able
to, you know, being able tounderstand and respect other
people's views, uh, and.
And to be able to be stridentin one's own, uh, but accepting
of other viewpoints, uh.
Without that, I don't knowwhere we go.
Steve Davenport (55:08):
Okay, I got to wrap it up here.
What I'd like to end this withone um question and and try to
be you know give me yourthoughts in terms of if you were
to pick an idea today that youthink will survive through this
next few years, of whatever isgoing to happen with government
and our country, what industryor area do you think is most
(55:34):
equipped to get through thistariff slash, tax cut, slash, AI
world over the next two tothree years?
If you were to pick oneindustry to buy or to be
invested in, what would it be?
Clem Miller (55:52):
I'll go first because I am uniquely
unqualified to talk about thisstuff.
So I'll put out the posit that,no, this is not investment
advice, don't listen to me.
Blah, blah, blah.
But I think the most resilientthing is energy.
I think, as a general matter,whether you're AI or you're
(56:12):
bringing manufacturing jobs homeor you're exporting or doing
anything like that bringingmanufacturing jobs home or
you're exporting or doinganything like that the ability
to power these things is onlygoing to go up and to make
things more efficient anddiversified.
You know, whether you go oil ornuclear or natural gas or
electricity, anything in thatspace having to do with sort of,
(56:33):
you know, to sort of bringthings back to an American
viewpoint, I think is going tobe insulated, certainly over the
next few years, because it'sjust a necessary quality and I
think over the long haul, if Ireally wanted to build sort of
the concept of Americanexceptionalism, I'd want to
(56:53):
think of America as being theworld's battery and to be able
to be an energy exporter thatother people are reliant on as a
subcategory.
I mean, we talked a little bitabout Germany and you know what
it decides it wants to do goingforward.
I think one reason why it's sohamstrung at this point is
because it's so dependent onRussia for its energy.
I think the US, if it tries tobe isolationist and more
(57:18):
independent as far as that'sconcerned, the development and
continued focus on its energycapability and transmission and
means to keep things moreefficient and powered within its
own control.
I think that's an interestingtheme.
Steve Davenport (57:38):
I agree with you, professor.
I think that the East Coastcould supply Western Europe with
LNG, and the West Coast couldfocus on supplying, you know,
via Cushing and otherwise Japan.
They both need natural gas,they both want to get it from a
reliable source.
They both want to get theirenergy from a place that they
(58:00):
feel is more stable.
So I think we should be lookingat the energy outlet as a good
way for us to build for thefuture.
It doesn't necessarily have tobe a carbon-based energy.
As you mentioned, the batteriesand the solar are both areas
that we could become exceptionalat.
What about you, clem?
Frazer Rice (58:22):
I still think that technology, information
technology, is the place to beover the long run, and I think
there are a lot of differentcompanies involved in that space
and some are doing very well,others are doing less well.
(58:43):
So it's a question of being ableto pick and choose among those
companies that are doing well orless well.
I think that I think that someof them, uh, some of the tech
companies, uh are, you know, alittle bit too exposed to you
know, economic uh variation, uh,but they have less beta to the
(59:07):
economy than uh than does youknow some of the energy
companies.
Now, admittedly, the you have amovement in energy towards sort
of more stable companies, right, but a lot of the energy
industry, especially around oiland gas, is still cyclical in
terms of prices, and I tend tolook more for stable growth in
(59:30):
my portfolio than cyclicalgrowth.
I recognize the energy theme.
I think it's an important themethan cyclical growth.
I recognize the energy theme.
I think it's an important theme, uh, and actually there's an
overlap between energy andtechnology, in the sense that
some of the, some of the energyis there to support the
(59:50):
technology.
Clem Miller (59:50):
You know the cloud computing and so on.
Uh, but I uh.
Frazer Rice (59:51):
I do have energy in my portfolio, uh, but I think
over the longer term, I thinktechnology is the right place to
be.
And just to be clear toeverybody, that's not me
advocating MagSven, right, Imean there are MagSven stocks
that I don't hold and there area lot of stocks that aren't
(01:00:14):
MagSven in the tech area that Ido hold.
Steve Davenport (01:00:18):
Yeah, one of the things that I'm concerned
about with technology is theimmigration and the holding on
to intellectual capital.
The American institutionseducate a lot of foreign
students and we don't have a wayfor those students to stay in
this country and continue tohelp it grow.
So when you say technology, Isee immigration and the US
(01:00:40):
reputation being hurt in thenext two or three years, and so
people might not come here to beeducated anymore, and I think
that will because we don't offerthe continuation or some type
of a job or some kind of a visaqualification for masters of PhD
.
I think we're in some wayshurting that industry and I
(01:01:04):
don't know if we'll be enoughhurt to change it.
We'll still be a technologyleader, but I think it's doing
something to take the shine offcoming to America for your
future, and I think that that issomething that we are a country
built on immigrants, and so ifthat building or that source
starts to be compromised, Ithink some of the future in
(01:01:25):
technology is compromised, and Imay be extreme in that view,
but I've really felt like thebiggest lack we've had in the
last few years has been acoherent policy, and if we had a
more coherent policy towardsthese skilled workers.
I think we would be puttingdown insurance that we are going
(01:01:45):
to still always be on thecutting edge of technology.
So I see Trump kind of breakingthat contract a little bit, but
it could be that, you know,they will smarten up on how they
handle immigration so that it'snot going to affect any of
those students or graduatestudents who are here.
(01:02:05):
So anyway, I think it's been agreat call.
Thank you for all your insights, fraser.
It's a pleasure to be with youagain.
It's a pleasure to be on.
It's a lot of fun and Tom and Ireally enjoy the conversations
and we hope you get to tax dayand we all survive and make it
to the 16th and can continue totalk and work in these areas.
(01:02:28):
So thanks everyone and Iappreciate you listening.
Please like and share with yourfriends.
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