Charlie Kirk Breaks Down America's Capital Expenditure Boom with Treasury Counselor Joe Lavorgna

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[00:45] >> There's record amount of money being

[00:47] invested in the country right now. You

[00:50] didn't hear that in the mainstream

[00:51] media. You didn't hear that on your

[00:53] local newspaper. But do you know that

[00:55] capital expenditures or capex

[00:58] it's a very important data point on how

[01:00] much companies are investing in America.

[01:04] Joining us now is J Joe Lavorgna uh

[01:07] counselor to the US Treasury Secretary

[01:09] Scott Bessant. Joe great to see you.

[01:11] Thank you so much for your time. Tell us

[01:13] about the successes that we are seeing

[01:16] with capital expenditures in this

[01:17] country right now. Yeah, you you led uh

[01:20] with a nice lead in and that is if you

[01:22] look at the capital expenditures

[01:24] essentially what businesses are spending

[01:27] uh to run their businesses more

[01:29] efficiently to run it better. Those

[01:31] capital expenditures in the official

[01:33] government data rose at a 24%

[01:36] annualized rate in the first quarter.

[01:38] That's obviously a huge number. And then

[01:40] we have figures from the Federal Reserve

[01:42] that suggest that in the second quarter

[01:45] uh those same government numbers when

[01:46] they become official next week should

[01:48] show another 11% increase. That would

[01:53] bring first half capital expenditures,

[01:55] capital outlays, capex as it's known to

[01:58] a 17% annualized rate. That would be the

[02:02] fastest two quarter gain excluding the

[02:05] pandemic since late uh since late 1997

[02:10] which you think about it's almost 30

[02:12] years ago. Uh we had gains of this

[02:14] magnitude and that of course Charlie was

[02:17] before the one big beautiful bill was

[02:18] signed. So it's really remarkable story

[02:21] that people aren't aware of.

[02:24] They are not. Let's play cut 332 here. I

[02:27] had our team get this. It's uh it's the

[02:29] Palunteer CEO Sankar praising President

[02:31] Trump's leadership in AI innovation

[02:34] which which is directly tied to capital

[02:36] expenditures. So if we want to win the

[02:39] AI race, we actually want people to

[02:42] invest capital in this country, not

[02:43] otherwise. Play cut 332, please.

[02:46] >> Well, I you could say our our adversary

[02:48] China, they're they're kind of the best

[02:49] at long range planning. They have

[02:51] systematically worked over 40 years to

[02:53] invest against our weaknesses. But you

[02:55] know the one thing they could not see

[02:56] coming is the AI revolution because even

[02:58] we could not see it coming. The AI

[03:00] revolution is an American phenomenon. It

[03:02] it is something we are leading in as the

[03:04] president said. We can't take that for

[03:06] granted. We have to keep up the pace as

[03:08] the president's doing and as our

[03:09] industry is doing. But the the real

[03:12] opportunity is that AI allows us to give

[03:14] the American workers superpowers. It

[03:16] allows us to compete in a completely

[03:18] asymmetric way. We shouldn't forget at

[03:20] the dawn of World War II, we had the

[03:23] 17th largest army. We were the underdog

[03:25] by a long shot. And I think American

[03:28] greatness always starts when we're the

[03:29] underdog. When we were the rebels

[03:31] against the red coats, when we were when

[03:33] we were starting to build factories in

[03:34] World War II, we're back there again. I

[03:36] would agree with the president that we

[03:37] are the leader in AI. We're not catching

[03:39] up. We're leading.

[03:43] >> So this AI renaissance is very

[03:45] important. I know you guys are

[03:45] monitoring this at the Treasury

[03:47] Department. What does that also mean for

[03:50] bluecollar jobs investment? And can you

[03:53] talk about how capital expenditures

[03:55] actually is a direct investment in the

[03:58] working class? Because when companies

[04:00] invest, workers then have higher wages

[04:03] and more work. Please.

[04:05] >> Right. So Charlie, if you look so far at

[04:07] the first six months of President

[04:08] Trump's term, bluecollar workers, these

[04:12] are people who are not the professional

[04:14] managerial class. They're oftentimes

[04:16] unfortunately living paycheck to

[04:18] paycheck. Their real wages, their

[04:20] inflation adjusted pay is up 1.2%.

[04:24] Uh the only time it's been faster to

[04:26] start a new administration was Trump 1.0

[04:29] to 1.3%. They're virtually the same.

[04:32] Unfortunately, through the bulk of time

[04:34] and data go back to the 1960s, people

[04:36] saw real wage declines, not even

[04:38] increases, but declines. So already the

[04:41] blueco collar boom has occurred to the

[04:43] extent we get more capital investment.

[04:45] In other words, companies being able to

[04:47] invest in tools, machinery to allow them

[04:50] to produce more that means higher

[04:53] productivity, higher profits. By

[04:55] definition, it means higher wages. And

[04:57] we know from technology and AI certainly

[04:59] now is at the forefront of techn

[05:02] technological innovation that when we

[05:04] have these technological booms, they're

[05:07] disinflationary. So that will also tend

[05:09] to lift real wages, but also the middle

[05:12] class tends to benefit quite

[05:14] significantly. We had a little bit of

[05:16] that under Trump 1.0 in his first term

[05:18] when you saw significant increases in

[05:20] median household income and the middle

[05:22] to lower income wage earners did the

[05:25] best. So essentially what the

[05:27] president's doing is he's taking the

[05:29] policies that worked well in his first

[05:30] administration and he is accelerating

[05:33] and improving upon them in the second

[05:36] term because there's other parts of the

[05:37] bill not just the full expense of capex

[05:40] but also uh Charlie the full expensing

[05:42] of structure. So now you could deduct

[05:45] the building of a plant or a factory.

[05:48] That is incredibly novel. It's

[05:49] innovative. It will help on the AI race.

[05:52] will help on building digital assets

[05:54] because you need data centers. So all

[05:56] these things are working together and

[05:58] you need people to build it. Those

[05:59] that's going to directly benefit the US

[06:02] worker.

[06:05] Let's play cut 380. This again this is

[06:07] major bluecollar

[06:09] bottomup investment. Play cut 380

[06:12] please.

[06:13] >> The capex comeback in full swing.

[06:16] Business investment is surging at the

[06:18] fastest pace since 1997. equipment

[06:20] production jumping 17% year-over-year,

[06:23] powered by retroactive incentives in the

[06:25] president's newly signed big beautiful

[06:28] bill. Uh the administration hoping to

[06:30] boost productivity, lift bluecollar

[06:32] wages, and lay the groundwork for

[06:33] longerterm economic growth.

[06:39] >> So what other components on the capital

[06:42] X side makes America

[06:45] a have a competitive advantage? So, can

[06:48] you just walk our audience through how

[06:50] some of these companies, they need to

[06:52] pick what country they're going to have

[06:54] capital expenditures in and why is it

[06:57] now that America is winning that

[06:59] contest, please?

[07:00] >> So, number one, Charlie, we we start

[07:02] with the Tax Cuts and Jobs Act of 2017.

[07:05] You've got a significant cut in the

[07:07] corporate tax rate. Corporate tax rates

[07:09] is one of the lowest in the world. We'd

[07:11] love to see it lower, but it's one of

[07:12] the lowest in the world. So, you've got

[07:13] that that now is permanent. You've got

[07:16] pro business regulation, the president

[07:18] trying to shorten the time with which it

[07:20] takes to build something because the

[07:22] permitting process has gotten out of

[07:23] control. You want to do AI, you want to

[07:25] have to be the crypto uh country of the

[07:28] world, the dominant driver. Well, you

[07:30] need data centers. How do you have data

[07:32] centers? Well, you need data centers.

[07:33] You got to power them. You got to power

[07:34] that with energy. You need cheap and

[07:36] abundant energy. The US has that. So,

[07:38] you've got a very friendly business

[07:40] environment. You've got low corporate

[07:42] tax rates. You've got cheap and abundant

[07:45] energy. You're getting tax credits to to

[07:48] uh to to be here if you're building a

[07:51] plant or you're investing in capex. I

[07:54] mean, it's it's across the board where

[07:56] you you want to bring your money here

[07:58] and and the tariff in addition is an

[08:00] added incentive to do it. So, this is

[08:02] why you're seeing the president announce

[08:04] uh all the these countries wanting to

[08:06] invest directly in the US, why Secretary

[08:08] Bess has been working so hard to get

[08:10] these trade deals through. We're now

[08:12] reaping the early stage of these

[08:14] benefits which should be

[08:16] multigenerational as they take hold.

[08:20] And so let me just kind of have one

[08:23] final question here, Joe, which is the

[08:27] how much of this is current and is also

[08:29] a lagging indicator. When do you think

[08:31] we'll start to really see the

[08:34] culmination of cap X? because some of

[08:37] this, in my opinion, takes 6 9 12 18

[08:41] months to materialize into macroeconomic

[08:44] data. When do you think we're going to

[08:46] really start to see all of this

[08:50] take hold where people start to feel the

[08:53] benefits of this capital expenditure um

[08:56] bonanza that's happening in a good way?

[08:59] So the big gain in Q1 that looks like it

[09:02] continued in Q Charlie was due to the

[09:04] fact that we have retroactivity to the

[09:06] tax cut. So it's already starting.

[09:08] That's number one. Number two, because

[09:10] President Trump has been able to get the

[09:13] inflation rate down, we're seeing the

[09:14] the real wages increase. So it's here.

[09:17] It's in the very very early innings. Uh

[09:20] and because AI now is so abundant and we

[09:24] we you know we know how to use the

[09:25] technology. So that shortened the time

[09:27] period from which you actually could get

[09:28] the benefit. So we're not talking like

[09:30] 12 18 months. We're going to continue to

[09:33] see the benefits as you get more

[09:34] capbacks. We'll see very strong second

[09:36] half numbers. The economy should be

[09:38] growing at 3% 3% plus. And then sometime

[09:41] in the new year, we could talk about how

[09:44] 2025 started this incipient boom. And

[09:47] with these policies in place, there's a

[09:49] very long runway. And that runway is

[09:52] going to be higher living standards,

[09:53] higher wages, and Americans are going to

[09:55] feel much richer uh and healthier

[09:58] because of