Donald Trump on Economic Recovery (1991)

era's chief commentator of business and news reports they look forward to seeing you again thank you very much I'd like to call our next witness Donald Trump who certainly needs no introduction he your fame and reputation precedes you Donald we're very happy to have you here we know you to be very frank and outspoken and you've had extensive experience not only in real large real estate developments but also in sports and gaming and entertainment industries and I'm glad you're able to make it here this morning and appreciate your your waiting and being so patient as you have been so we welcome you especially to listen and learn from your experiences as we know you've been very much involved in regard to this credit crunch that we have before our nation today so you may proceed it any way that's comfortable with you and thank you very much mr. chairman dollie may proceed thank you very much well first of all I think I could say to mr. Seidman who I believe has done a really fantastic job while he was in government that had the 1986 catastrophe of the tax reform act not been passed I'm not sure that you'd know mr. Seidman in the capacity of RTC you know I'm in some perhaps more positive capacity but not in the resolution trust and I think in bringing that point up to mr. Seidman before he tended to agree with me I think good so this this Tax Act was just an absolute catastrophe for the country for the real estate industry and I really hope that something can be done as congressman Thomas recently said that something can be done to change at least parts of it because it has taken all incentive away from investing in real estate and real estate really means so many jobs I mean you have a city called New York City you have a city Boston you have other cities and and so many other cities but I can tell you from very personal knowledge New York City has virtually no construction right now and we're not only talking about office buildings of which there are many we're talking about housing moderate income housing low income housing even high income housing where you create jobs you create so many other things they buy carpet they buy furniture they buy refrigerators they buy other things that fuel the economy and incentive has to be put back in to the construction of things that are needed such as housing of all kinds I heard this morning that we've had the lowest number of houses built in terms of the housing since 1946 or 1947 and that's not much of a tribute to this group of folks that are representing the country unfortunately I feel you know I feel very badly about it everybody feels very badly about it the fact is that the one word that nobody up on the panel is as mentioned is the word depression and I truly feel that this country right now is in a depression it's not a recession people kidding themselves if they think it's a recession you look at what's happening in the automobile business and the in the retailing business the retailing business in any part of the country virtually is a total disaster but badly about it the fact is that the one word that nobody up on the panel is has mentioned is the word depression and I truly feel that this country right now is in a depression it's not a recession people are kidding themselves if they think it's a recession you look at what's happening in the automobile business and the in the retailing business at the retailing business in any part of the country virtually is a total disaster but the real estate business were in an absolute depression and one of the reasons we're there is what happened in 1986 in addition to what mr. Seidman said is what happened in 1986 with the with the changes so I really came on the basis that I wanted to I'll answer questions on it but I wanted to discuss the tax act of 1986 active-passive you're absolutely right 100 percent right and something has to be done it has to be brought back it has to be reformed it has to be taken care of I think for certain types of building such as housing I think depreciation schedule should be very severely limited cut so that people have incentive to build housing as opposed to commercial which really again the commercial is probably taken care of for a long while the reason it's taken care of for a long well however unfortunately is the fact that the economy is so bad that there's no reason for the commercial and I think that gets taken care of and gobbled up very quickly had the if the economy improved one of the big things that we don't have today that we used to have and that was a very good thing for real estate and that's the whole word of syndication and investment and if you're a dentist and you're making 200 or 300 thousand dollars a year and you can't invest now in real estate the reason the stock market is artificially high in my opinion is there's no other form of investment I mean you can't put it into real estate and you can't put it into bonds so people are putting it into a stock market all the companies in the stock market are doing lousy but their stock is high and I think what we have is when the stock market goes down by let's say a thousand points in two days which perhaps it might then we're in a full-scale depression that everybody admits it then the politicians admit it the president's going to admit it everybody's going to admit it and right now the only thing that sort of keeps the word depression off their list lip lip is the fact that we really have a 3,000 stock market and people are surprised to see it because the company certainly aren't doing very well within within the market itself but the syndication of real estate was a very positive thing and you can't syndicate you can't have people putting up equity that would take a lot of the strain off the banks if people could put up equity in the form of equity money for syndication where you used to be able to go out and syndicate a piece of real estate today you can't a lot of the strain that we're talking about liquidity crisis a lot of the strain comes off the banks and I think it could really open up a whole new market and the other thing is frankly by having cut the high income tax rates to 25 percent as an example people don't have the incentive anymore to invest invest they're saying why should I take a chance on investing in low or moderate income housing I might as well just pay the tax but the fact is that 25 percent for high-income people for high-income people it should be raised substantially with the understanding that if you invest you can get it down and down substantially below that number the incentive was taken away when the tax rates came down for high-income people and I say leave the middle leave the low lower but people with money have to have the incentive the dentist the doctors they have to have the incentive to invest and there is no incentive so New York City desperately needs housing there's no housing being built every city needs housing now there's no housing being built and I hope it ways and means they're going to be able to do something with respect to housing because if it if it's not done you're just not going to have any construction jobs in this country in New York City has the lowest number of construction workers I think since the depression I was with a very very capable firm the other day the biggest construction firm in New York City HRH and it's called HRH construction and we were discussing what they had planned they said they have not one building planned in New York City for the next two to three years now you think of it not one building plan so you say that means not one electrical worker I mean they're just finishing up some buildings and when those buildings are finished is going to be nobody employed in the biggest industry in the country because construction is the biggest industry in the country and there's going to be virtually nobody employed so I just come I was asked to come by the Chairman and I make this plea that if something isn't done to put the incentive back I mean we're no different right now than the Soviet Union they have no incentive and we have no incentive and if something isn't done too quickly put the incentive back this country is going to be in very deep problems it already is but it's going to get far worse now let me ask you if Congress does nothing doesn't take any course of action whatsoever how long do you think it would take our country to climb out of the economic crisis that is in today well I think if incentives aren't given through taxing and other means I believe that this country could be in this deep recession slash depression for years for years I see no no sign of any kind of an upturn at all there's no incentive to do anything there's no incentive to invest everyone's doing badly everyone the wealthiest people are doing badly the poor people are doing badly then everybody is doing badly I mean you walk around the cities today very very few are doing well and unless the incentive is given back to this country and it's been taken away with 1986 unless it's given back I really think you could be I mean there's an expression that we're using survive til 95 I think it's maybe longer than that it survived to 95 I think we're being generous it's really really bad and you folks are going to have to do something to fix it and to get people moving how did we get here as we are is it been the mountain of debt that's been created in the public and private sector I think has it been the generosity is mr. Seidman said of our tax laws and allowing interest rates to be deducted so that it encourages a debt driven economy well I think we got here by the fact that at the time certain things were done I can speak in terms of the real estate business certain deals were made predicated on a certain tax policy and then that tax policy was changed I mean I truly believe that you wouldn't have had the savings and loan crisis I mean you save minutia compared to the money that you've wasted on bailing out the savings and loans now your insurance companies are in deep trouble and I think they're going to get much worse because so much of their portfolio is in real estate and I think you better save the real estate now I mean I can tell you I buy things I bought things that were great deals in the middle 80s and the and even the later 80s but when that tax law kicked in you know really kicked in all of a sudden those deals which were good economic deals were no longer good economic deals because they change the game on me and they change the game on everybody else and it's pretty unfair you make a deal predicated on a certain tax law and then they change the they change the rules so a lot of the problems that you've experienced are because of the fact that some very foolish people in order to save a small amount of money because they heard the word tax shelter and they thought the word tax shelter was a bad thing as opposed to saying it's an investment in real estate I mean an investment in low-income housing they call a tax shelter and the word tax shelter is like the word junk bond it's a very bad sounding word even though it isn't necessarily a bad thing so they heard the word tax shelter and politically they didn't like that word and they said let's get rid of tax shelters but when they got rid of tax shelters they got rid of people investing in low and moderate income housing and lots of other good things and I think you're going to have to go back they could have corrected 1982 the law 1982 they could have corrected it gotten rid of the abuse and had a great situation today you wouldn't have had the savings and loan problems I don't think you would have had many of the banking problems you wouldn't have had what is going to befall you now I think they were just stronger to start off with but I think the insurance company is going to be in very deep trouble because of the values of their real estate have been eroded because of what Congress has done so you have some very deep problems that can be corrected fairly simply by putting the incentives back real estate has always been one of America's favorite industries the tax code has long favored real estate to a great extent because it employs so many people and it's so important for the welfare of our economy in 1981 we became very generous with real estate we cut depreciation schedules in half we gave tax credits would you say that's where we started to go wrong is that where we were I think was building shopping centers and commercial buildings that were not filled well I think I think that's where he started to go right but maybe to maybe there was an excess I think if it was channeled more toward the housing which has always been I mean there's never been enough housing you need it desperately and I'm talking to all forms of housing you need a desperate including low-income housing including well encompassing absolutely an including senior citizen housing and dormitory housing and other forms of housing there there has never been it's an insatiable thing and you could really get that going but what you're also getting going is jobs because I'll tell you what New York unemployment and other cities unemployment is astronomical I think it's much higher than the numbers are indicating I just don't think it's been reflected yet if you look at what's going to happen with a construction industry in the next few years forget it there's not going to be anybody working so I really think you need that for a lot of reasons but also to spur jobs passive loss is one thing that many people draw attention to Seidman you did members of this committee did when we passed it we had no hearings to my knowledge on it it happened almost overnight and it was a surprise so that it was never given the full thought and attention that should have before we made such a bold and important move there is a bill now that Mike Andrews has with several hundred I understand sponsors that hasn't moved through the committee yet Ways and Means Committee which says that developers should if they're in full-time occupation in real estate development should be excluded from the passive law rules law I assume you agree with this and I'm wondering whether or not you think it should even go beyond real estate developers well I think it has to go beyond developers because we're going to get a lot of the liquidity from people outside that are making money and can invest in real estate right now they can't invest in real estate as far as the passive laws I mean I did hear things about in 1986 passive laws but nobody ever thought it would be possible for something like this to get passed and all of a sudden it's passed and everybody including the United States government is left holding the bag and a lot of other governments by the way and now it's very difficult to get rid of because the revenue loss if we were the marginal rates of our income tax would have to go up so high they did that so that they could bring the marginal rates down well I don't think they would go up I think you'd end up bringing much more money into the system so that you may look at a specific list but I think the incentives and everything else would bring so much more money into the system but the numbers of anyone that says that would just be you know far far better than anybody really understands or knows hopefully we can cure these excesses just let me lastly turn to capital gains well it President Kennedy brought our capital gains down to 20 percent now of course it seems to be a bad word in certain corners of Capitol Hill would you say that we should go back to the traditional type of capital gains where all kinds of equities and real estate be given the normal deduction that we had pre 1986 or should we just target our capital gains to capital ventures the two resources that we need to have particular growth in I think it could be targeted but I think that capital gains is important and I think real estate in particular in this country really needs help because it's such a dominant force it just gets everything else going and if you can get real estate going if you can get construction going in the country I think that's the way you get out of the recession or depression and for savings super IRAs like Benson has absolutely no set aside your for that absolutely okay thank you very much Donnell I thank you Hal Rogers Thank You mr. chairman and thanks for being here mr. Trump thank him what would prevent if we restored the passive loss provision of the 86 Act what would prevent excesses under a reinstated passive loss provision that led to over commercial building previous to 86 well I think one thing that could be done is you could re-examine this over the years so that if in two or three or four years you saw a great deal of housing and I think that would be unlikely because it does seem to be insatiable but if you saw and I hope you'll have this problem frankly but if you saw so much housing being created by the reinstatement or the cessation I think that you could probably take another look at it and maybe terminated at that point for the future but I just feel that you really I mean that was a tremendously negative provision and it really hurt this country it truly hurt the country would you limit its reinstatement to residential properties well it just seems that that's what's really needed now I mean everyone agrees that you need housing and and you probably always will need vast amounts of housing so it seems that that's what's needed but you have to understand when the economy comes up you know these buildings many of the buildings built right now built in empty and see throughs and all when they were built it seemed like a good idea by a lot of people and a lot of honest people know the banks that loaned the money weren't all bad and what happened to a lot of people is the economy went bad and now everybody says how could they have built this much space but the fact is this space of the economy had stayed like it was in 86 and 85 that space would have been gobbled up and they'd be building more and everybody would be happy right now I mean the economy went very very bad and you look at various cities they're cutting back on space and I'm seeing things where they have less space this year than they had two years ago it's it's you know unheard of unheard of statistics so nobody could have predicted what was going to happen with the economy so it would be nice to have it across the board it would be nice to say that the banking system and various other controls will take care but you certainly at a minimum you should have it for the housing industry my opinion mr. Seidman seemed to say and he's behind you into and can correct me if I'm mistaking his testimony part of it he in essence said that a recovery in the overall economy is the only way to cure the real estate problem you're seeming you seem to say that the reinstatement of the passive loss provision of 1986 tephra would lead us out of the recession well no I'm not saying that alone I'm also I'm agreeing with mr. Seidman except I'll take the word only out I think that the government can do quite a bit also including the shortening of depreciation schedules the power to syndicate the right to syndicate which also has to do with the active passes if if we were able to syndicate development were able to syndicate even buildings that are built and successful and good that you can't get a mortgage I mean I have a friend he's got a building with an IBM triple net mortgage he with an IBM triple and at least he can't get a mortgage on the belt and it's a perfect beautiful nice little building with IBM as a tenant and he can't get a mortgage because it's realistic because the banks are allowed a certain amount of real estate and they want to cut down on the real estate so even a good loan like that they don't want to put it because they don't want to be associated this year with real estate this is a bad year for real estate there's been a bad two years for real estate hopefully in two years from now everyone's going to want real estate it runs in cycles but you really you really can do things other than just economy I mean I think you can I'd like to say that you can spur the economy through taxes so that the economy actually gets good now we're operating under the budget act the budget agreement summit which has a pay-go provision pay-as-you-go if you if you reduce taxes you got to make up the revenue somewhere else so we have a revenue-neutral action are you saying that if we reinstate the passive loss provision we're going to have some lost revenues because of that am i hearing you say that you would increase the income tax rates of the higher income people well I would do that once yes sir I would do that because I believe strongly that people don't have enough incentive to invest right now at 25 percent I just don't believe they have enough incentive to take the risk of investment with recapture and all of the other problems of investing in real estate and other things and I would absolutely do that with the understanding that if they do make the investments they can go down to the minimum level and I I feel very strongly about that as far as the five billion dollars that we're talking about that five billion dollars in loss of taxes may contribute a hundred billion dollars because of the incentives that it it gives see I don't look at that as a loss in taxes I think that so much work could be created by getting rid of that horror show that you may take in a hundred million now an accountant will tell you what we're going to lose five billion dollars but in actuality it could spur hundreds of billions of dollars worth of work I think if you're a testimony but very he'll thank you soon mr. Huckabee Thank You mr. Speer on mr. chop you mentioned the Soviet Union and no incentives there you know for the last 45 years we've been engaged in cold war with the Russians clearly I think a year ago it became apparent that we've won that war we spent tremendous dollars in the 1980s as did the Russians in the military buildup and it broke art their system in my opinion left us with a big debt but clearly we're surviving superpower today and here we find ourselves taking a micro look at this economy inflation very low running around 3% interest rates lower than they've been in 19 years no shortage of food no shortage of all the things that have put us in recessions in our lifetime and you seem to be saying and I believe I agree with you that you can trace this recession totally to the 1986 Tax Act and the devastating effect it had on real estate but yet prior to 1986 the tax laws were so generous that it seems to me that an awful lot of building was being driven by the tax code rather than a demand but your comment on this well I agree with that and I agree that there was abuse and there was a there were openings in that law which could have easily been stopped and that could have been corrected but what they did is they took an overall picture of the entire tax with the new Tax Reform Act of 86 and they totally destroyed the incentive that was proper in 1981 there were a lot of good things in 1981 and there was some bad ones and the bad things should have been corrected but they could have been corrected without having destroyed all of the incentive for instance we've had recessions before during my lifetime which is now getting a little bit older and older and older but in 1975 we had a recession but that was a picnic compared to this that was an absolute picnic that was a question of some liquidity some this some that this nobody knows when this is going to you know I sort of smile as they're saying when do you think it's going to end nobody has the faintest idea there's absolutely no hope in sight unless something is done by the government to spur the economy because the gut the economy is not going to spur itself I think all of the members here who don't seem to imply that they favor the changes in the passive losses you've mentioned of changing in depreciation schedules or I guess reverting back to his celebrated depreciation I think that was one of the areas looking back in the past that was perhaps the greatest abuses where one could recover their entire investment in perhaps three years as a result of tax write-offs which of these areas do you think would be more important well I think the I think the accelerated depreciation and the shortening of schedules is very import in terms of getting getting something going and again we really need something going now you can come back in two years or three years if it starts moving and you can terminate that but you have to get something going if it's not started soon we're just going to be in a freefall i I agree with you that there's probably an infinite demand for housing out there and that we certainly should change our tax laws to encourage investment there from from low-income housing all the way up the scale but you've suggested a new twist here that it's necessary to raise the top tax bracket from the 31 to 33 percent up to 40 or 50 percent and in order to encourage people to invest in these areas is that really correct if we had the passive losses and accelerated depreciation and one can anticipate future increases in the value do you think it's necessary to increase the tax rate I think would be a big help for the upper income tax payer to have incentive rather than paying taxes to invest I think that the accelerated depreciation depreciation schedule is being shortened would be a tremendous help for the obvious reason that you'd be able to get assuming the active passive and assuming the right to syndicate you'd be able to get investors to come into real estate transactions and I'm not talking about only new building I'm talking about existing because you have existing buildings with mortgages on where the mortgages are coming due and there's no bank in the world and I'm talking good buildings that are making money there's no bank in the world that will give you refinancing so if you could bring in equity money through syndication that would be a great thing that would be a really great thing because you'd open up the liquidity of the system so the banks can loan not only to real estate but to other things because right now there's just no liquidity if you brought in equity non-interest bearing equity that would be a tremendously positive boost for the economy how higher do you think you would have to take the talks but the top tax brackets in order to make this happen well I mean the higher it is the more incentive there would be I guess it was 50 and it was 60 at one point and was obviously even higher than that but the higher it is the more incentive and I don't mean middle income and I don't mean low income if anything that could be stay the same would be low but I'm talking about the people that are making a great deal of money should have an incentive to invest and I know it was 50 and I'm talking about a substantial increase with the ability to get it down to the minimum number thank you a lot of jobs mr. Thomas name is chairman um pleasure to meet you mr. Trump Thanks I've never really heard you in terms of your professional expertise I've only read about you in terms of other activities and I have to say that I admire you in terms of your professional expertise I have been fighting the 1986 tax bill ever since it was passed I think there were three really pernicious provisions along with all the other onerous ones we've been talking about one in particular changing of the rules and I'll spend some time about passive loss in a minute the second one that we haven't dwelt on was the change which almost invited literally invited the American homeowner to exchange equity for debt because we removed the tax deductibility of consumer debt and then changed the rules to allow them to squander the equity in their homes and then thirdly a point that mr. Seidman mentioned that most people don't realize was the retroactive aspect of that bill where many people had made decisions about pensions and their retirement tied to real estate in which the government changed the rules after the fact you could not believe the decision that the government made prospectively and I think psychologically that would significantly damaged us terms of passive Lassa know there a lot of people watching who don't really understand what we're talking about we're talking about the rules under which people make decisions to invest their money it's no question that there were tax strategies built into the code that allowed people to take advantage of so-called shelters we've talked about the excesses of the early 80s the cry for 1986 was don't let the tax code dictate economic behavior but I think you've quite rightly pointed out that one of the reasons the stock market is overly priced is that because of the tax code that's the only game in town that we are dictating economic behavior today the loss of equity in terms of the homeowner is a tax code structure we are continuing to dictate economic behavior and I think the thing you have to understand which I know you appreciate is that the tax code is going to dictate economic behavior there is no way for it not to if you have a tax code and what you've asked for is for the tax code to create incentives for behavior I agree with you the problem is I think people are overstating the correction necessary for passive loss he changes the bill that I originally sponsored and that I agreed to join in a co-sponsorship with Mike Andrews of Texas has been honed down to only cost about 2.8 billion dollars over five years the problem with the passive loss rules changes as you well know was not just to get rid of tax shelters that is people who were not materially participating in real estate like the dentists and the doctors that you have suggested would reinvest we're investing for purposes of tax shelters there's nothing wrong with allowing them to invest if they believe they can have an economic gain you don't have to tilt the tax code in their direction if there's an opportunity to make money in the real estate area the problem with the passive loss rules changes was that people who are literally actively involved in real estate aren't allowed to take losses against their activities and we're a long and hard a chairman is not here behind closed doors in the committee when this provision was put in the bill it was an attempt by people who did not understand the real world to take an academic definition and stick it into the tax code we have lived under this academic definition I think far too long and I really appreciate your your real-world plea that we make the kinds of adjustments that won't lead us to the over excesses of the early 80s but will allow those who want to participate and to create an active real estate market to be able to do so one last comment on depreciation you need to know that the requirement under the 86 tax bill was that it be revenue neutral that we make these multibillion-dollar adjustments within the tax code but that we come out even dollars the depreciation schedule was literally an accordion that was squeezed or stretched to produce the dollar numbers necessary to make the package revenue neutral it was not designed to create an honest return on investment in the real world it was a political gimmick to fill revenue gaps and I just I just want to thank you you have had to live with it I think the American people have had to live with it far too long we aren't talking about recreating 60 or 70 percent tax levels to fund a passive loss change I agree with you that if people are going to have their money eaten up by the tax code that they're going to look for ways to invest it in to make money incentives need to be built in don't need to be built that high we could use some of that money to adjust a depreciation schedule so that we don't create a massive tax loss direct your reaction I agree with you hundred percent I got to get you in front of the committee of ways and means as well as these kinds of committees we have literally hundreds we have over three hundred members who have co-sponsored our passive loss legislation it is not on the front burner in terms of any tax changes what what is being contemplated by the committee our political responses of adjustments within brackets create a quote-unquote tax break for the middle class and that if you would urge people who are in the private sector who have had to live for far too long to contact the chairman of the Ways and Means Committee Dan Rostenkowski contact mike Andrews contact myself about our passive loss legislation for three to five billion dollars I can think of no better immediate shot in the arm for our recovery it is an enormous advantage and I agree totally with you that when you try to construct a model that says it will lose three to five billion dollars in the tax code yes because we will change definitions in the code but what we also change is behavior and when that behavior exhibits itself in the real estate market I also agree with you there will be hundreds of billions of dollars of exchange of circular flow of economic activity of jobs and that there will be no loss of revenue to the government absolutely I really appreciate I wish I had a lot of questions for you but you already said everything for me that needed to be said I just wanted to put it in the context of where we are a relatively simple change to correct a serious error in the 86 tax bill could go a long way structurally but I think also psychologically to indicate that we are doing something we do understand the problem and we are responding Thank You congressman I thank you for your testimony it's a shame congressman that this very powerful and important industry doesn't have a better Lobby because I watch things being lobbied that that should never be passed and they get passed and I look at things like this and as you say it's on a back burner and you know how important it is and the real estate industry is a group of thousands of people some wealthy some not wealthy most not very wealthy right now and I will tell you they have absolutely the most pathetic Lobby in the history of the United States Congress it is so bad and I don't know how many of these people behind me are lobbyists but they're not doing a very good job I can tell you that I just tell the gentleman that if he would appear before the committee or several others like him they wouldn't need lobbyists thank you very much Joan thank you seems to be obviously the name of the game in Washington is to have an effective lobby and then you get the laws passed that you need to get passed for that particular industry mr. John Spratt the strong plank your testimony in a niche at a time I'll put one question to you obviously you've operated a vast or higher scale than I did when I was involved a little bit in real estate development but usually when we syndicated a project what drew the participants our limited partners to the syndication was not just a pass-through of losses but the fact that they can leverage their returns by writing off losses below the actual cash investment you think that's a good rule and should continue I think it's a rule that works in terms of getting people started and it certainly had an effect and it can be limited to an extent if need be but right now we don't need limits we need action because if there's not action you're not going to have an industry you're not gonna have a real estate industry and I'm really talking to a large extent because you know we talk about the overbuilding done during the 80s but I'm really talking about things that are existing not just for new construction but things that are existing because you cannot get financing for any building no matter how good it is no matter how good your tenant is you can it not get financing for it under any circumstances anybody if it has real estate associated with it you cannot get financing and that's a pretty pathetic situation maybe that changes but I think you people are going to be the ones that are going to have to make a change the point was of that when you describe the syndication you were talking about nearly on all equity syndication and I rarely saw on all equity syndication usually the attraction was that oh I'm sorry I didn't mean all equity no I meant that be a mortgage or that be a certain amount of debt and there may be 20 or 25 percent of equity infusion that's a positive thing because you'd have a lower mortgage you'd have therefore a lower interest rate on the mortgage and you'd have 25% of no interest free you know essentially interest for your equity so let's do guys on the bike that makes up the other 75% well the bank could make it up or you could have again it varies I mean you could have from 50 to almost a hundred percent and and but you could have a large amount of equity infusion and I think that's a real positive thing but right now under the existing laws you can't do that you can't even talk to people about it because it doesn't work I've got developer clients who still survived they think that this has been a shakeout and fit have survived and they look back on the period from 81 to 86 and they say there were a lot of characters in the business who shouldn't have been there they were distorting the market by doing deals that were totally tax deals they had no economic reality would you agree with that assessment I I would partially I think there was some a lot of good people in the market that got whacked and I think that there were a lot of bad people that maybe deserve to get whacked like you very much Jason thank you thank you very much John Helen Bentley please Thank You mr. chairman mr. Trent one thank you for being here today and for your stand on American manufacturing over the years I was one of those with mr. Thomas who early on in the as they were considering the 86 Tax Act was I described it as it stinks and I think that's the best description I can still get give to it today you've been talking about real estate here but that tax act also eliminated investment tax credits yes he'll emanated interest deductions on the purchase of items and we have a little Bank in my area which just this past week has reduced by 1% the interest on anybody wants to buy an American car okay the number of phone calls that that Bank has had since that ad was put in has been phenomenal and why can't what do you think would happen to getting manufacturing going which in turn helps with your real estate etc etc if we would give some inducements to investment tax credits on American you factored products I think it's a truly spectacular idea okay um no there we are are you gonna join me mr. Thomas I already have a bill inference okay so I agree with you okay very good I need to get some of my good Republicans to agree with me on that too but I think what we were one of our problems has been that we've been talking about free trade far too much instead of fair trade and as a result we're all getting feeling the effects of it and I think some of the people behind you are some of the people have been hurt as a result of some of the pressures on free trade of exporting jobs overseas again mr. Trump thank you for being here today and I someday like to pursue some of your thoughts on the manufacturing further thank you ma'am Thank You Helen Jim Hayes thank you mr. Trump I want to take this opportunity to perhaps outline things in a way that might seem sophomoric but realizing that this is an opportunity because of someone with your high profile to have people who do not deal with financial markets understand some of the dilemma we find ourselves in and some of the ways of getting out of it explained in very simple terms how a developer such as yourself with an idea for a project takes the cost of the project prior to 1986 and the impact of that act takes that project cost proposes a financing mechanism and goes about getting investors just briefly outline anything whether it's a commercial or residential real estate that's along it could be a pretty long answer but just briefly you conceive of a development in a site it usually starts with a piece of land you conceive of this you go and you get your zoning or you have your zoning you get your architects you get your engineers you get your planners you design something that you think is going to be nice and he can making all of the things that are supposed to be you then go out and get your financing ideally you used to go out and get your financing today you don't even think about it you then go out and get your financing you build your job you hopefully have a success and you've created a lot of jobs in between for lots of people that are buying lots of different things for the families including other homes etc etc and that's luleå process and that is the process but that process is now circumvented because it's impossible to get financing for any development in this country I would say right now and explain to them also that at the end of the trail when you had both an interim lender meaning somebody who gave you a construction loan and then a permanent lender who took that interim lender out and looked at this project over long term that projects you did prior to 1986 they were either in a stage of an interim lender or had been completed that even though those had been completed even though they had been conceived under tax laws that then depreciation that then allowed you to make that decision to go to the bank that the loan was economically viable by a loan officer who looked at it it made sense to them explain how even though it was done of the previous rules the subsequent rules were applied to you and the kind of economic impact they had for a completed transaction they weren't grandfathered correct you bring up a great point because I have never understood how this is possible I have never understood how somebody throughout this country didn't sue the United States government and have that overturned when you had people investors investing over a 10-year period for a set of under a set of conditions and this is as I was talking before playing the game we're all playing by a certain set of rules the rules were changed for the government but they weren't changed for us men it was an incredible it was an incredible circumstance that happened and people went bust by the hundreds of thousands and I hope you weren't one of them in terms of that but obviously you know a lot of people that were they change the rules on taxes and you have I mean you have some incredible situations where people guaranteed personally a stream of payments to be paid over a 10-year period based on a stream of tax benefits for perhaps a very good job like a low-income housing nothing wrong with that a very positive thing and after two years they got wiped out with the taxes and yet they still out all of this money and many of these people most of these people had to declare bankruptcy they couldn't pay it so they personally guaranteed a stream of payments how that wasn't grandfathered for those people I've never understood how it wasn't overturned by the courts and I'm sure many people must have brought lawsuits but I haven't heard of any successful lawsuit on it is just beyond me because it's probably the most unfair thing that I've seen in terms of business and government great point and another point that I'll be specific and I've been used an office building that I'm intimately familiar with unfortunately but to make the point with the change in configuration of interest deductions there was a building in my hometown that generated two hundred and forty two thousand dollars a year in rentals it had been done through a partnership not a leverage deal bully calendar I 100% occupied not outside investors only two partners but because of the change in 86 code the building was completed prior to the 86 code the two hundred and forty six thousand dollars was treated all his personal income to the taxpayer but the interest deduction to the insurance company that financed it was allowed only at ten thousand dollars whereas the actual economic activity was a slight gain of ten to twelve thousand dollars between rent and debt service but the tax impact of two hundred and forty thousand dollars when only a ten thousand dollar deduction gave an income tax bill suddenly of sixty and seventy thousand dollars on an investment that made twelve thousand dollars a year and that's what took them down not a dishonesty not a corruption not a bad planning out a building that fell down and not one that wasn't occupied or speculated on and I think wait they did a great job precisely in a beautiful German planning everything right and they got wiped out Henry that would explain your previous comment about good buildings that have tenants but now lenders don't want them I would suggest for two reason and ask if you agree one is because of uncertainty since people who did good planning and fair planning got killed retroactive Lee they're not trusting of a government that might not in search of revenues three-hundred billion dollar year budget do something in addition even on new buildings coming in because the rules apply retroactively retro actively absolutely correct and secondly because it doesn't have a collateral value under that circumstance since it's uncertain and then I'm going to make three points and please forgive me one is at no cost to taxpayers if we do some of the things you've outlined collateral value will be improved but it doesn't require an injection if a bank is carrying a building such as the one I just described whether its interim permanent if it currently is assessed at a value of 1 million dollars because of current tax law if tax law were changed that building alone might be 3 or 4 million dollars which on their collateral carried by the bank gives them less pressure from regulators because the asset bag has been increased but it didn't cost a taxpayer or revenue payer one cent you might even make a profit on RT C after all I mean you know the fact is if you if you really wanted to do this and you'd obviously have to do it across the board you could probably take RT C and end up starting to make some real sales instead of giving away for 5 cents in the dollar mean you're selling property for 5 cents in the dollar that's much better property than that and well if you made the proper changes in the tax law if you made some smart changes your RTC property could even you wouldn't have to contribute 10 cents to it in my opinion and secondly I represent people who are being foreclosed on who've never missed a payment that's something else I wish that people out there and at home would know they've made every monthly payment through other income and they were affording able to do so but because the collateral value was depressed even though they've never missed one of their bank payments those loans are being called because the regulatory scheme is saying we'll wait a minute this property is worth less therefore we're demanding 3 or 4 million dollars in additional collateral that they don't have and they're being placed into either bankruptcy or they're being placed into tremendous economic adversity having never missed one monthly or one quarterly payment it's a very unfair circumstance or a lot of I mean there are hundreds of thousands and I guess beyond that people exactly in that circumstance and the second point I would make is on property tax if we do nothing in the Congress if we keep current law then we're just not having enough years past where corporations and individuals are recognizing that if their properties are lowered because of the change in the tax code that they should go to their Assessors and get tremendous adjustments which once again lowers the property tax receipts of counties and parishes in my case States and make them suddenly have to come up with alternative tax packages for their own revenue measures and is that not in New York for example they're not probably people who are trying to get property tax adjusted dramatically because of the impact on real estate ventures there are do absolutely and my final question be on economic activity I come from Southwest Louisiana which people refer to as oil and gas community I used to hear people say constantly we were recession proof which I thought was an interesting phrase I heard it here in Northern Virginia there suddenly I think finding the equal recession-proof Nisour the two areas but secondly I used to hear constantly I'm not in the oil and gas business well when it collapse from $40 to 8 and bounced for a while everyone that sold shoes found out they were in the oil and gas business everybody that sold automobiles found out they were in it and I'm reminded of that today because I think the point you're making is that I'm not in the real estate business and I no longer am by the way don't own one square inch of anything you're lucky I said but the point is I'm not in the real estate business can't be said because it is such a large segment that fuels the economy that if you are the shop owner if you are in medical practice if you are an attorney you're in the real estate business because if your community has it collapsed as mine did it didn't just take down real estate developers it took down everyone three out of four of the kids who graduate this year but graduate degrees from my home university leave the state for employment they didn't have the oil and gas industry either they weren't Realtors but they can't stay and get a job and my last point would be this and then the Chairman won't shoot me for those who think it goes away cyclically my community has been in the grips of a deep depression for nine years it doesn't have a term limitation on depression and we had better having a affirmative action from a Congress or I guarantee you there is no guarantee that New York City won't have nine years or 19 years or that will ever turn it around and I would ask if you would agree with that and then I'll be quiet and hope this time I haven't been too striking my mother said I agree 100% thank you very much I appreciate your coming here also yes I thank the gentleman from Louisiana for the many suggestions he made perhaps should be a great candidate for the Ways and Means Committee on regard to non-performing loans value to loan should be changed and many people get trapped because of the banking regulations they're unfair and unjust mr. Thomas just briefly a question mr. Trump we've all been wringing our hands about the RTC and the property that has on hands and its inability to move it taking five cents on the dollar as an investor what would your opinion be of the Congress is making those kinds of changes in the tax code as we've indicated passive loss modify depreciation so on and then have the RTC rather than cherry-pick properties simply batch them on the basis of some criteria chronological listing or whatever some good with the bad and put them out there and see what would happen in terms of the market I think you'd move a lot of property that way I agree I think that you should make the changes you shouldn't sell another property you should make the changes and then sell the property and you're going to get money that you wouldn't believe but not cherry-pick in terms of putting the best properties out batch him and let a private sector sort it out I would I would agree with what you just said but I really think that you should stop selling property until such time as you straighten out the tax code because those properties are being sold artificially low because of a bad tax code appreciate the time thank you thank mr. Donnell the real estate industry is 20% of our GNP employs 8 million people and I understand according to a statement that you file there is 200 billion dollars in tax revenues that's realized nationally and you've spoken up for a very important sector of our economy and this sector that took the biggest hit in a tax reform of 1986 there are a number of Corrections that should be made for the sake of the growth of our economy otherwise it will be too late if we don't move soon so I want to thank you for your insights I thank you for being here I hope sometime soon we will have the advantage of your thoughts and your suggestions and your contributions before the Ways and Means Committee because I think some of the tax suggestions you may have a great deal of validity to them so much so I thank you for the hour or so that you've spent with us and I wish you well on your way back to New York thank you very much thank you well thanks thank you

Glenn Chapman


  1. It don’t matter if he was democrat or liberal at any given time. It’s just a platform. It’s what Trump does with it is what matter.
    Many people have micro view. They think small. So they see little, but make the biggest noise.

  2. He's son of the bitch. All World know verry well. Discusting snake. My Got destroy him.

  3. I'm Canadian and there are many admirers of President Trump up here, you have a leader that loves his country and has suffered daily attacks on his character, and on his family members, being fought by every carrier politician in DC on both sides of the aisle. Despite all that opposition America is prodoeribg economically, employment numbers and the ongoing peace talks with North Korea is unprecedented.

    One day in the future I won't be surprised if President Trump is the fifth face carved onto Mt Rushmore, sixth if America honours President Reagan first.

  4. Donald J. Trump was BORN to be president
    he has been the same person from when he became prominent in the 80s to when he came down the escalator to when he took the oath of office to RIGHT now, unlike crooked Hillary who changes views on racism, gay marriage, Iraq war, a woman being president etc. She will LITERALLY say anything to get elected…she is fake news

  5. Other clowns running for 2020 throw the towel now. he will run you over in 2020

  6. Extremely proud to have become a us citizen. I support my president for 2020

  7. Learn from Latin America lousy presidents. Trump for 2020 let him show Latin America how is done. I love my President Trump keep america great

  8. All the Mexican presidents that Mexico had they have destroyed the Mexican economy

  9. You dont need to build the wall. Just get a Mexican president with the balls and honesty like trump. Fix the economy and the Mexicans wont have to leave their country

  10. Make Mexico great. Elect trump for Mexican president and exile all the corrupted Mexican criminal politicians that ruined my former country

  11. Mr Trump is THE Greatest President Ever and is THE most admired Man in the world. He has the dedication to Americans and his country that no other magnate of his stature ever displayed. He has kept Campaign promises and continuously works to defend the country and fulfill his role as POTUS and CIC.

    The world of lying and pushing the intel agencies' propaganda is revealed. People know the MSM are shills and shams.

  12. So proud of our President 💪🇺🇸♥️🇺🇸

  13. They admire his expertise in this video, now he's a idiot who is colluding and they want him gone. This is why Trump is here now, they are all corrupt and AMerica saw through their BS.

  14. This was back when he was heavily in debt. It's surprising how decent these politicians were. No derogatory, snarky comments. No tricks. They seemed to be working together.

  15. Good lord, he did con a lot of people, didn't he? Need his tax returns to see what exactly happened to his business enterprises post 1994. Maybe it was all legit, but Trump holding on to the returns for dear life looks suspicious.

  16. 5:22 "the stock market is artificially high, in my opinion". Well, after he said that the market kept going up, and 3 years after that, from 1994 until the .com crisis, it kept going ridiculously up, and after that crisis (and the 2008 crisis) it kept going up and up until today, and probably after the next crisis it'll keep going up.

  17. White trash 🗑 bigot racist con punk biggest loser of all time , lost 1.6 billion dollars given by his daddy nothing earned

  18. Trump the art of the deal ? we just found out that he lost 1,000,000,000, from 1985-1993 and he did not pay any taxes for 8 years hahahahahahahahahahahahahahahahahah morons think this guy is smart , smart like a fox when he wants to fuck you and the government>LOL

  19. 中国?中国?中国?中国?

  20. I am SO glad to come across this video!! This man was destined to become President! A successful billionaire business man is just what this Country needed! Thank you for uploading this. 😀

  21. Luv you Mr.T 💪🏻🤙🏻😎🙏🏻👽🛸🗽🇺🇸 my champ. 💪🏻🙏🏻🛡️

  22. Free trade vs. Fair Trade! Brilliant! Sounds like a Trump plan. These people sound intelligent. This is much different than today’s Congress.

  23. I like the way the democrats went from calling him a genius, to calling him an idiot.
    I totally agree with him about 1986. That's when Washington decided to go back to trying things that Jimmy Carter tried. How many times in a row do you make the same mistakes before you realize that you shouldn't have done it.
    The government spends too much money at the federal level, period. There are no magical ways to tax the people more than a certain amount before you hurt the economy. Spend accordingly. Debt spending has caused more harm to the planet than global warming has, at least so far. The people who insist that we must spend this, and we must spend that, should be shown the door, and/or voted out of office.
    And vote out liberals, because liberals just cannot fathom that every entity has a credit limit.
    I don't want to call them stupid, but they just can't grasp it, so maybe they are stupid after all.

  24. Everyone loved Donald before he became President. Always outspoken. When California still had Republicans. Bad tax code from 86.

  25. He is so great,has he mentioned tariffs yet. Lets hear him talk about getting rid of regulations so companies can djmp the waste in clean waterways. Cut osha laws so they can put workers at risk. Cant sue you businees even if they are abusing you. Who is crazy enough to think that way.

  26. TRUMP kicked over the tables in DC and interrupted the boys club business as usual. The White House is the people's house and they work for us. The politicians make false promises, get elected, ignore the people and get rich. Trump has proven himself to love our country and is doing what is best for the country and the American people. Pray everyday for our President and his family. God elected Trump. Enjoy the ride

  27. President. Trump. K now's. What. The. Hell. He's. Talking. About. And. Knows. What. He's. Doing!!! Too. Bad. Congress. Is. Clueless

  28. Donald Trump is always been the smartest person in the room. He is a beast 100% all of the time. 2020 is going to be a good year and we will see Donald Trump re-elected. God bless Christian God loving American people.

  29. as a german living thousands of mls away i love youtube for give average people the chance to see people in many ways beside all the mainstream stuff !
    mr. Trump get bashed every day here in europe and especially here in germany …this alone makes me intersted in the reason why the hell he become President if he is such a bad, arrogant noob.
    After all these videos i´ve looked from him i have to say…..I think our politicians do in real envy him because he worked hard and successful in the industry he was involved. I think he is a far better President than always smiling Obama with a Nobel price for peace while he was inlvoved in many wars and conflicts.

  30. He is just as intelligent today as he was 27 years ago. WAKE UP AMERICA!!! TRUMP 2020 so America can remain GREAT!🤞🤞🤞

  31. Trump has always loved America and Americans with passion. He has always proffer solutions to politicians and gov't on how to better the lives of the American people. Most importantly, he has always been bold,courageous and smart. No political correctness just saying it as it is. Very honest, blunt and straight to the point not beating about the Bush. Americans are really really lucky to have Trump as their President. And he's doing exceptionally well and brilliant for the American people. What Americans must do it ensure that Republicans takes over the house in 2020 in order to ensure that all the populists policies and bills of President Trump should be passed in congress to benefit the American people. Trump will definitely go down as the best President America ever had. MAGA 2020.

  32. Basically the committee, our govt, is depending on Trump for advice and suggestions on the economy. Retweet and share this ASAP to show our present ignorant politicians of how idiotic they look to the voters. Why did elected officials seem so much smarter then? What has happened to the intelligence of politicians? Now we have idiots that hang on to any excuse to remove Trump because they dont have the intelligence to debate effectively. We have skum slum with no education in offices now…. Off the street thugs elected to official positions that can't bring themselves up to this high level of discussion so instead of having a civil debate, they rely on anti trump remarks and hollering impeachment. Trump makes the current demliberals and some repubs' brains look like mush that can't think their way out of a dog house. Usually when folks can't intelligently have a conversation, they yell and scream and walk off because they can't handle or understand educated conversations. The gold Balls of Trump, the honesty, straight up talk, and his intelligence is intimidating to low level minded ignorant people. Political thugs that steal from taxpayer and involved with lobbyist payouts is nothing but maffia crime— no difference from street level pickpockets and thieves. Sickening what our demsliberals and some repubs now represent– a thug in a suit and tie that can't relate to the taxpayer yet they CAN relate to the ignorant violent street thugs that follow them. So sad these folks represent our country- integrity exists no more with majority of elected positions at ALL levels. We need intelligence–Trump 2020.

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