tv The David Rubenstein Show Peer to Peer Conversations Bloomberg July 10, 2021 9:00am-9:31am EDT
david: this is my kitchen table and also my filing system. over much of the past three decades, i have been an investor. the highest calling of mankind, i've often thought, was private equity. [laughter] and then i started interviewing. i watched your interviews, so i know how to do some interviewing. [laughter] i learned from doing interviews how leaders make it to the top. >> i asked him how much he wanted. he said 250. i said, fine. i did not negotiate with him. i did no due diligence. david: i have something i would like to sell. [laughter] and how they stay there. you don't feel inadequate being only the second wealthiest man in the world, is that right?
[laughter] i am in the hall of flags in the commerce department in downtown washington. i just had a conversation with the secretary of commerce, gina raimondo. she is clearly one of the most talented people of her generation. harvard graduate, rhodes scholar, yale law school graduate, venture capitalists, -- venture capitalist, treasurer of rhode island, two-term governor of rhode island, and president biden asked her to serve as secretary of commerce, and she is one of the point people helping to get through his infrastructure legislation. many presidents have proposed infrastructure proposals and bills, but very few have gotten them through. so why do you think president biden's bills will likely get through, if you do? sec. raimondo: i think we will. i think we will. i have had numerous conversations with people on capitol hill, and there is bipartisan support for the bill. maybe not all of the bill and all aspects of it, but i think there is a growing recognition that we have kicked the can long enough, and there is a backlog of infrastructure in every state
in america. and i think this will be the moment. and the president is determined. so, you know, that helps. david: the president has two types of infrastructure. traditionally, infrastructure is bridges, airports, toll roads, and so forth, and he has that in the first part of his infrastructure bill. he has a second part, the caring part, which deals with elderly care, child care, kindergarten, pre-kindergarten, and so forth. why did he do it that way, and are people confused when he calls things related to people infrastructure? sec. raimondo: yes. people are confused. i think he did the right thing. i think investments in the care economy and in those systems, which, by the way, are fraying all over america -- i know it from rhode island, my own state. we need to rebuild systems of training, i.t., so that these workers can have i.t., wages. it is vital. by the way, you cannot go to work and be productive if you can't have good access to child
care or elder care. so are people confused? yes. are there some republicans that are balking at the inclusion of the care economy? yes. but i like our chances of getting it through. the president is committed. david: explain this to the american people. we have a $1.9 trillion stimulus package the president got through at the beginning of the administration. there were no tax increases to pay for it. we borrowed all that money. why not do the same thing with the infrastructure bill? why not just pass it and borrow the money? why do we need tax increases? sec. raimondo: call it old-fashioned, but the president thinks we ought to pay for our investments, just as any family would. you have to pay the bill. you can't put everything on the credit card and not pay it. the rescue package was an emergency. there were lives on the line, we have to get the vaccine out, had to meet the needs of the pandemic. that was a crisis, an emergency response, and so he felt it was appropriate to push for that.
these investments, he feels very strongly, ought to be paid for. his proposal is to go ahead and raise taxes on companies. he has been very clear. his red line is no one making less than $400,000 a year will see a penny of their taxes increase. and, by the way, i think it's responsible. we can afford it. businesses -- you know better than i do. there were dozens and dozens of very profitable, multibillion dollar companies last year that paid nothing in taxes. closing those loopholes and using that money to invest in infrastructure is a good investment. david: there are two different types of tax increases he has proposed. on the first part, the traditional part of the infrastructure bill, he has proposed raising the corporate tax. some people say that the president might be prepared to compromise at a lower rate. what is your view on how high the rate needs to be in order to pay for some of the things in that bill? sec. raimondo: well, you know, he has come out where he has
come out at 28%. we are willing to compromise, to answer your question. we think this is a reasonable proposal. it isn't as high as it was. 21% was unreasonably low. and, by the way, most business people will admit that. you know, they were expecting it to go back up to something reasonable. so, anyway, we put forth one proposal. you know, investments, over an eight-year period, paid for over a 14-year period, but there's compromise. and if the republicans were to come back with a slightly lower rate, maybe we pay for it over a longer period of time, i'm sure we could find that common ground. david: ok, so your job as secretary of commerce, among other things, is to be a liaison with the business community. and so, as you liaison with the business community, what do they say to you? do they say, i don't want a
higher tax increase, or i can live with something, but don't quote me? what do they tell you? sec. raimondo: [laughter] exactly. some have been for it. microsoft, salesforce, a number of companies, siemens, the auto companies, they've come out for it, in favor of the jobs package. others have said, yes, there ought to be an increase in the corporate tax rate. everyone seems to agree that it is wrong that we have so many companies who paid no taxes last year. and we have to close loopholes that enabled that. you know, a lot of people, maybe they feel 28% is a bit too high, and maybe 26%-27% might be a better number. but i have made dozens and dozens of phone calls to ceos across industries. they agree we need big investments in infrastructure. they applaud the president for calling for not just traditional
infrastructure. they like the investments in research and development, broadband, technology, semiconductors. and they know that higher corporate taxes are a way to pay for it. david: now, people in washington often measure one's power by how long it takes to get your call returned. so when you are governor of rhode island, you are calling the ceo of microsoft -- i don't know if you get your call returned right away, probably you do. what about if you're secretary of commerce? how long does it take to get your call returned? sec. raimondo: it's pretty quick, so far. [laughter] it depends on who you're calling, obviously. and i, because of my career in business and my career in public service, i already have strong relationships with many people in corporate america, so they know me. they return my call. but look, here's what i would say. there is a general desire to help this administration be successful. because people realize we have
to be successful. you know? the business leaders i'm talking to, they know we need to make these investments. they know we need to compete. they know we have to compete with china. they want to help us be successful. so when i call on behalf of this administration, so far, calls are returned speedily and they're engaged. david: so let's talk about the individual tax increases that are part of the care part of the infrastructure bill, because that probably will be more controversial is my guess. the president has said no tax increases for anybody, as you say, making $400,000 or below, and the people above that, they will see a tax increase that could go as high as 39.6%. sec. raimondo: yes. david: so, do you expect that will be compromise, as well, or do you think the president is determined to get everything he is proposing? sec. raimondo: he is proposing it today, so i wouldn't want to lead with our chin and say we're going to compromise on day one. but i will say this, the president wants bipartisan
action. and if compromising is a part of that, it's what he wants to do. he's been crystal-clear with us. the only thing that is unacceptable is getting nothing done. like, we have to get things done. so the capital gains, treating capital gains like ordinary income absolutely will be controversial. is there room for compromise? maybe. but, you know, he feels that we have to raise those taxes, and we will compromise as we go. ♪
david: let's talk about your background for a moment. some people may not know your background. so you grew up in rhode island. sec. raimondo: i did. david: and were you the child of privileged parents, very wealthy parents, or not? sec. raimondo: no, i was not. my dad worked his whole life at a watch factory, you boliva watch factory. rhode island was once the jewelry manufacturing capital of america. my mom stayed at home with three kids. i grew up in a pretty small house. there were six of us. my grandfather lived with us. he was an italian immigrant. i joked that when i went to college, when i went to harvard, i was so excited because i got my own bed. because i shared a bed with my sister until then, so we were a
working class family. we weren't poor. my dad lost his job in his late 50's, so things got tougher after that. but we were just kind of working class rhode islanders. david: rhode island is a small state, as i mentioned before. everybody must know everybody because senator reid from rhode island says that he was your babysitter at one point. is that true? sec. raimondo: it's a fact. it is a fact. it is a fact. [laughter] he was my next-door neighbor and we went to the same high school. by the way, as did tom donlon, former national security advisor, and mike donlon, we all went to the same high school. we all knew each other. the donlons and my family, we all made a living as kids working at the same summer club on the same beach. david: they are all talented people, but only one of them became a rhodes scholar and that was you. sec. raimondo: right, that would be me, yeah. david: you won a rhodes scholarship. only 32 are picked every year and then you went to yale law school. very few people get into yale law school. with a harvard degree, oxford
degree, yale law school degree, you could have gone anywhere. why did you go back to rhode island? not that it is not a great place. many people go to new york, washington, los angeles. what propelled you to go back to rhode island? sec. raimondo: because i loved it. i loved the place. i felt i owed something to the community. and there is something special about building businesses in the community where you are from and seeing them flourish in a community you care about. david: so you ran initially for the secretary of treasurer position for rhode island. why did you want to be treasurer of rhode island? people wouldn't say harvard, oxford, yale law school, people wouldn't think you'd be a treasurer of rhode island. sec. raimondo: it's funny. when i ran, that was the reaction i received. i called my parents to say i was doing this, and they said, but gina, you have such a good job. my mother started to cry. "politics is such a dirty business." i just -- i believe in service. i believe in public service. and i was qualified for the job. i actually had a finance
investing background, which is what the treasurer does. i was chair of the investment committee, and i just believe in service. david: but when you got the job, you started cutting pensions, and that was very controversial. why did you do that, and how did you take that opposition to that and enable you to become governor? sec. raimondo: so, i didn't cut pensions, i would say. everyone kept what they earned. the system was broken. you know, for better or for worse, i was able to do the math and understand, very quickly, that the system would run out of money before too long, and we would have to go to people and say, “i'm sorry. we are going to cut your pension in half.” it was dishonest. i couldn't live with the dishonesty of telling teachers and firefighters that their pension would be there when i knew it wouldn't. so i just -- we fixed it, by the way. the pension system today is stronger than it's been in decades. and everyone also said i
wouldn't be reelected, but i was elected handily. because i think people want the truth. and i think people want people like me to solve problems. david: all right. so you were reelected, and then you were elected governor of rhode island. many people said you wouldn't be elected governor as well, reelected as well. so you are governor of rhode island, and many people thought you could be running for president this time. you chose not to do so. why did you decide to give that position up to become secretary of commerce, because, in rhode island, you were the big everything. you were the 800 pound gorilla. because you are the governor. you had a lot of power, and you were very powerful in the governors' associations and so forth. sec. raimondo: mm-hmm. david: and secretary of commerce is a great job, but you're not the president. why did you decide when the president asked you to do this to do this? sec. raimondo: because i wanted to be on the team that helps america build back. in many ways, we are really
struggling right now, as a nation, as an economy, and i want to be on the team that gets us back on our feet. and that was very appealing to me. david: you mentioned briefly your business background. you were governor, you were treasurer. but you were actually in the venture world, i think. sec. raimondo: yes. david: what was it that you did? you started your own venture fund? sec. raimondo: yes. so, for about 11 years, i was in the venture capital business, first at a firm in new york and then with the cofounder of pointe judas capital. we were an early-stage venture firm. i focused on health care, so i invested in medical device and i.t. companies, which i loved, actually. and that experience enabled me to be a better commerce secretary. i know entrepreneurs, what it takes to have innovation. another thing that we run here is the patent office. that's in commerce. you know? i saw that strong patents matter in order to protect innovation. david: now the secretary of commerce is an unusual position.
you have so many different parts of the commerce department. it has been called by some as noah's ark because you have so many different things put together. n.o.a.a. is here, the weather bureau is here, so many things. sec. raimondo: space commerce. david: the census too. so when you took the job, did you realize how many different disparate things that you have to deal with? and did other secretaries of commerce who had this position before say this is what you have to worry about? and did you get any good advice from people? sec. raimondo: yeah, so i talked to many, and i got terrific advice. i think that's what makes the job fun. and hard. it's hard. it is hard to learn about the details of fisheries, fisheries management, trade, census, space commerce, tarriffs, semiconductors. but for me, that is part of -- it is intellectually fascinating. and i would like to think, if you put your back into it, you can have a big impact across a whole range of topics. david: so, when you decided to
david: let's talk about your job as secretary of commerce. historically, the secretaries that i have known have said, well, i have two jobs, one is to represent the president's views to the business community and the other job is to represent the business community's views to the president. sec. raimondo: yeah. david: and both are not easy. do you have those two perspectives as well? is that what you see yourself as, as liaison to the business community and liaison from the business community to the president?
sec. raimondo: that is a big part of the job. and i think it's important for the business community to know we want to hear from them. you know, that is very important. you know, i am very available to the business community, and we want engagement. and i bring that information to the president, who, by the way, is genuinely very interested to know what do we have to do so american businesses can compete? david: right now, there is a shortage of semiconductors, it appears, in the united states. is that because of supply chain problems, covid? and what are you doing and the president doing about this? sec. raimondo: it is because of supply chain problems. we have to shore up our supply chains. we have become overly dependent on a few suppliers in a few countries. and we need to make investments. so what we're doing is working with congress to pass a $50 billion semiconductor supply chain fund so we can incentivize
semiconductor companies to build, to manufacture chips in america. david: so when you were looking at the campaign, we looked at the campaign, president biden did not support a lot of things that president trump did. but some people are surprised he has kept the tariffs in place. you oversee the tariffs. the steel tariffs he put in place are still there, the tariffs on aluminum are still there, and the tariffs related to auto products, related to china, are still there. is there any insight you can give us about why they're still there? sec. raimondo: although we don't agree with the way the trump administration handled many things, one of the things is they brought to light the fact that our competition with china is serious. it's a strategic competition that will define our time. and president biden agrees with that. so we're going to continue to play tough with china.
we're going to continue to use all of the tools at our disposal to protect american workers and businesses from unfair practices by chinese governments. and so the reason that we haven't made those changes is really that, we need to continue to be aggressive with china. david: european countries aren't happy with the tariffs on steel and aluminum. the president's going to the g7 summit soon. do you expect we'll see any news relating to that when that summit occurs, relating to those tariffs? sec. raimondo: i expect robust discussion between now and then. the europeans are not happy. i have had many discussions with my counterparts in the e.u. they are our allies. europe, of course, is not a threat to american national security. china's oversupply and flooding their market and our market with cheap steel. that is a national threat, and we need to work with europe to
prevent china from doing that. david: so some of your predecessors have done trade missions, taken business people around the world. right now, you can't do that, of course, because of covid. but the administration seems to say, we don't want to have greater access to foreign markets so much so that people can build factories overseas. we want them to build them here. is that part of your ethos, as well? not necessarily to have people build overseas but build more here? sec. raimondo: we need to do both. we need to do both. i plan to be active in export promotion. we need to help american businesses to export. we do need to continue to have free markets, even with respect to china. we need to do business there. we need to export there. but, right now, we need a domestic focus. and so, at least for the first 18 months, a lot of my focus will be domestically. david: you've been running the department to some extent, remotely, i guess, because,
while we are in the department now, a lot of people are not here. sec. raimondo: yes. david: do you expect some point that people will come back and you will be going back to the way the department was run before, everybody shows up for office work five days a week? or what do you think will happen? sec. raimondo: maybe not five days a week every week, but certainly, predominately, yes, back in the office. it will be like business. i think work-from-home is here to stay for a certain part of the week. but look around. this is a ghost town. i mean, i hope a few months from now, you will see some vibrancy here. david: if the american people watching, if they don't know much about the commerce department or what the secretary does, what would you like people to know about the commerce department and what your principal goal is as a secretary of commerce? sec. raimondo: to help more people get back to work in decent-paying jobs. it's really very simple. everything that goes with it. trade policies that level the playing field so american workers can compete, ip policy that allows innovation to continue, helping startup
companies so they can evolve. but all of that, fundamentally, at the end of the day, i learned this as governor, david. americans don't want a handout. they just want a chance to have a decent job. and so i'm obsessed with that. i was obsessed as governor. i'm obsessed with that now. and that's what everything i will do will be through that lens, creating decent jobs. david: so when you decided to take this position, you called your mother and said, guess what? i'm giving up being governor. i am going to be secretary of commerce. what did your mother say? sec. raimondo: she was excited. she's 90 now. and she said, "i hope you can help biden. biden has to be successful. i hope you can help him." ♪
>> i'm erik schatzker. welcome to bloomberg's front row. today i am talking to orlando brought about. -- orlando bravo. his firm, thoma bravo has grown at a breakneck pace. unlike his peers across the buyout landscape, orlando deals in only one industry -- software. he calls it the best business in the world. you have recurrinv