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Paul Auslander, CFP and President of SeaBridge Private Wealth, joined "Forbes Newsroom" to discuss reports that President Trump floated the possibility of firing Federal Reserve chairman Jerome Powell, as well as what the Big Beautiful Bill means for your financial situation.
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00:00Hi, everybody. I'm Brittany Lewis, a breaking news reporter here at Forbes. Joining me now
00:07is Paul Auslander, president of Seabridge Private Wealth. Paul, thank you so much for joining me.
00:12Thanks for having me, Brittany.
00:14The big, beautiful bill was signed into law by President Trump on the 4th of July,
00:18and it is nearly 1,000 pages, and it contains his sweeping signature policies,
00:24including extending and expanding his 2017 tax cuts. I would love to get your perspective here
00:29on the package as a certified financial planner. What do you make of it? What's your reaction to
00:35what's inside the big, beautiful bill? Well, I think the primary thing is it extended and in some
00:42cases made permanent the tax cuts that he started with in 2017, which I think is really important
00:46because that would have resulted in a tax increase of significant proportions, which have had a
00:51negative impact on the markets. I think the thing that everybody's worried about is how does it
00:56impact the debt of the United States, right? We've collected somewhere in the neighborhood
01:01of $27 billion in tariffs last month. If those numbers continue, then Scott Besson and President
01:08Trump were right that they can offset a lot of these tax cuts and a lot of this spending with
01:13the increased tariff revenue. But we don't know that to be sure, right? That's projecting out into
01:17the future. We do know that we'll be due plenty of interest payments. So that's the concern that I have.
01:22But in general, overall, it's a positive for the markets right now. I think you'll see it almost
01:28like lighter fluid on an existing flame. The question is going to be 26 and 27. What happens
01:34then? And that is a big criticism of this bill, that estimates say it's going to add trillions
01:40to the national debt over the next 10 years. And I mean, trillions is such a big number, you can't
01:45even really wrap your head around it. And I work at Forbes. I deal with big numbers all of the time.
01:49And I think a question I get from just everyday people in my life, when they hear that number,
01:53when they hear it's going to add so much to the national debt. I mean, the question I get is,
01:58what does that mean for me? How does that affect me personally? What's your answer to that?
02:04Sure. Well, I mean, the worst outcome and probably the most likely is rising long-term
02:11interest rates, right? James Carville once had a famous quote. I used to think that if there
02:18was reincarnation, I would want it to come back as president or possibly a 400 baseball hitter.
02:23I'd rather come back as the bond market and intimidate everybody. And I think that's a big
02:27deal in terms of what we're talking about here. People worry about the stock market, but the bond
02:32market is really the thing you want to worry about in financial structures and in countries like
02:36America. And the bond market would react poorly to that increased debt. And I think that's the worry.
02:42And I think overall, from the 30,000-foot view, the Big Beautiful Bill is, like we said, nearly 1,000
02:50pages. And it contains a lot in there of the sweeping policies President Trump wants to enact
02:56in the next four years. And just from the everyday American, I mean, their question, again, is what
03:02specifically does this mean for me? What does this mean for my financial situation? What's your answer
03:07to that question? Well, in general, the answer is a resounding yes, right? It's a pro-business bill.
03:13It cuts taxes on the wealthiest Americans, but it gives people of not great means other things, too,
03:20automobile deduction loans, something that hadn't been in for a while, increase in salt from 10,000 to
03:2740,000. That cuts off at 500,000 of income. But prior to that, that helps a lot of people.
03:33Again, it's hard to argue with a lot of the feel-good measures in here. The question is,
03:40is that the prudent thing to do for our economy? President Trump thinks so. And listen, I'm an
03:46American. I'm rooting for him. I don't always understand the policies, but I hope he's right.
03:50The fact of the matter is, when you talk about large numbers, 25 billion or 30 billion a month,
03:56that's somewhere on the order of 300 billion a year times 10. That's a lot of money. So that goes
04:03towards offsetting that debt. You could think of the tariffs, if it works the way they anticipate,
04:07as a consumption tax rather than a tariff, right? Again, if it works the way they talk about. We
04:13know for sure we'll get increased interest payments. We don't know for sure if those tariffs
04:17will continue. And another criticism of this bill was that it makes the rich richer. It makes
04:23the poor poorer. I'm curious, what about the middle class here? What about the people in the middle?
04:28What exactly does this do for the everyday middle class American?
04:34Well, I think that's the area where I tried to focus in the last answer, which is car loans being
04:39deductible up to $10,000, SALT deductions being increased dramatically. Even if you're not doing
04:45well and you live in Nassau County, New York, right, Long Island, you're paying $30,000 a year in
04:51property taxes. And then you're paying New York state income taxes. So the idea that you can
04:57deduct those things again is a huge win for middle America and middle class America.
05:03And you work closely and have worked closely with high net worth individuals. What's their
05:09reaction to this bill and what exactly does it mean for them?
05:12They're overwhelmingly satisfied, A, for the permanent nature of the tax cuts that came in
05:19previously. But the very high end, like the fact that estate taxes have been increased to $15 million
05:26per person, $30 million a couple. The average, quote, wealthy person probably drops their taxes by
05:34two or 3%, which is a big number when you're dealing with some of the tax levels that they pay.
05:39So, yeah, in general, they're quite pleased.
05:42And so let's say I'm thinking about estate planning. What exactly would be your advice for that when it
05:49comes to what you're seeing in the big, beautiful bill? How would you approach that?
05:55I don't think. I think it'll be much the same of what they've been doing the last few years.
06:00Trusts are still going to be in order because besides trust helping to negate some of the taxes for
06:06anybody within a state over $30 million, it also provides asset protection, which is something that
06:12wealthy people worry about regularly being sued, whether for legitimate reasons or illegitimate reasons.
06:18But in general, the estate planning is very much the same that it's been, which is continue to
06:24make sure that to the extent possible, we leave as much as we can to our to our kids and our
06:30grandchildren. And kind of on the same the same stream there, what about investment decisions?
06:37How does this bill change the way someone should look at those?
06:41You know, it's interesting that you say that. When I first started in my career,
06:46the three things that you never talked about was politics, sex and religion. Right now,
06:50the first thing that comes up in almost every investment discussion is politically. And from
06:56a politics standpoint, I've never seen either MSNC and Fox are doing a great job of educating people
07:02or people just love to talk about it. But most of the conversations have to do with how should I
07:09invest based on President Trump's policies or or Republican Congress. I try to explain to clients
07:15that to keep that out of it to some degree makes as much sense as possible. Try to make decisions
07:20that are politically neutral. If you're a younger person, no matter who's in power, it's going to
07:25change four years from now or eight years from now. So don't base your investments on that equities
07:30are still the way to go. And if you're worried about stock market volatility, don't open your statement,
07:34just look at it once a year rather than once a quarter. If you're an older person, pre-retiree or
07:40somebody who has, in fact, retired, it still makes sense to reduce your equities exposure so that you
07:46don't have as much risk. Obviously, if you if you have a loss, you don't have the chronological time to
07:52make it up. So that makes sense. But there are certain common themes regardless of who's in political
07:56power. Right. You know, defense spending is going to be up because we have Putin and we have China.
08:01You know that infrastructure is going to be something that's going to increase and spending
08:06is going to be there. AI is a revolution that's taken hold on the likes of which I don't think I've
08:13ever seen and certainly others haven't seen. So there are certain common themes that are that are
08:18there that are investable regardless of who's in power. And I try to encourage them to think that way
08:23as opposed to the beliefs that you might have politically. That's a really interesting point,
08:28because I think, too, a lot of people in my generation grew up saying you don't talk about
08:33politics. You don't bring that up. That is not an issue in polite society that you talk about. Now
08:39it's a different story. Now everyone is talking about politics in social situations. And it's
08:44interesting that that has leaked over to investment decisions. Why and when did you see that switch?
08:50It's really been the last decade, amped up considerably during President Trump's first term
08:57and now his second term. But it was also very prevalent in the Biden administration. Right.
09:02Inflation spiked during that administration. You can argue with root causes of it. But the bottom
09:08line is, all of a sudden, people had somebody to blame for inflation. It was the Biden administration's
09:13policies. And so you see this now seeping into most of the conversations. And again, I think
09:18the financial planners role, if they're smart, is to try to separate that from the investments.
09:24And, you know, you can't ignore it completely. As an example, what's going on with the Federal
09:29Reserve right now might be a good example. You can't ignore what might happen completely.
09:35But by the same token, I wouldn't alter all of your investment decisions. Because of the way the
09:41world is starting to formulate and take positions in certain countries, defense spending was not
09:47something we talked about 10 years ago. You didn't really think that that Europe was going to decide
09:53to rearm at a massive scale that they are now. To ignore that, you do that at your own peril. Right.
09:59You it makes sense to buy Lockheed Martin because of that, because, you know, these countries are going
10:03to be buying more F-35s. But the fact of the matter is, in general, you try to keep those those tracks
10:09separate. Do you think then that that's a misconception people have that people either they like the
10:16president or they don't, they get they feel one certain way about their investments or not,
10:21and they infuse too much of politics into those investment decisions?
10:25It's no question. Absolutely. I couldn't have said it better. They they do do that. And,
10:30you know, one of the great myths that I always laugh about, and I have to go back and recheck it.
10:35Thank the Lord for chat GBT. Right. In most people that I talk to think that markets have done better
10:45during Republican administrations than Democrat. It's actually the reverse. It's not to say that
10:51that'll continue that way. But if you go back 25 or 50 years, Democratic administrations and it's
10:57interesting why. Right. Democratic administrations tend to spend more money than Republican administrations,
11:02at least in the old days. Five years ago, that changed dramatically. But because of that,
11:07companies did better because of those increased expenses and their stock prices went up.
11:12So you have to somewhat correct these myths with clients right off the bat. Nowadays, it doesn't
11:19matter. Republican or Democratic president, they're going to spend money like it's going out of style.
11:24So that now becomes a factor. Right. What does that do to the bond market? And then we're back into that
11:28discussion. And I cover politics mostly with a side of business, obviously, because I'm at Forbes.
11:35And so my conversations really for months have been about the big, beautiful bill. But I'm curious,
11:40have your conversations been about the big, beautiful bill when you have clients coming in?
11:44Are they referencing that by name? Are they referencing President Trump's policies by name?
11:49Or is that kind of shielded from the conversation a little bit?
11:52I've never seen so much of an emphasis on the word alliteration. They love that best,
11:58beautiful bill, all three of those Bs. And they bring it up. It comes up regularly.
12:03Not so much from the decisions, but how it's going to impact their taxes. They've heard that
12:08this is going to be good for my taxes. How does it impact that? And so you have to know that bill
12:13pretty well to understand that. And I'm a certified financial planner. I'm not doing tax returns.
12:19I can only imagine what my CPA friends and colleagues are going through.
12:24And I do now want to switch gears now. There is breaking news right before you and I sat down.
12:29So it could obviously change when, by the time this publishes. But as of now, the headline is
12:35President Trump is floating the idea of potentially firing Fed Chair Jerome Powell. As of now,
12:42he has not fired him yet, but he's floating the possibility. What do you think of that?
12:46Well, a couple of points, right? So I personally think it's a bad idea. Let me get that out
12:52immediately. And one of the reasons I think it's a bad idea is not agreeing or disagreeing
12:57with Chairman Powell. I have my own disagreements with some of the things that he's done over the
13:01past. But the fact of the matter is it roils the markets, right? That's something that particularly
13:06the bond market, but the stock market dropped when that news came out some 250 points within
13:12within 30 minutes. Markets don't like uncertainty. They particularly don't like the idea that this
13:18could be a protracted legal battle because the fact of the matter is the president does not have the
13:23right to fire the chairman of the Federal Reserve other than for cause. I don't know if having an
13:28expensive interior decorator is cause, but they may use that as the reason. But yeah, I think any
13:34uncertainty, whether it was tariffs announced in March or the possibility of firing the chair of the
13:40Federal Reserve, that doesn't help the markets. And I think in this particular case, he's a real
13:47estate developer. He loves low interest rates. And one could argue that lower interest rates would
13:52help all Americans, right? Mortgage rates, car loans, everything. But there's certain economic
13:56principles that the Federal Reserve is holding to. And I think if you had an administration that has to
14:01deal with him until the spring of 26, that's not a long time to deal with. And the price to pay is not
14:07roiling the markets. I think that would be the smarter decision. But I'm not in power and I can't
14:11make that call. And I think there are two separate questions here, really. One, is Fed Chair Jerome
14:18Powell doing a good job, in your opinion? And then the second separate question is, does it set a bad
14:24precedent if President Trump does ultimately fire him before that 2026 date? I mean, what do you make
14:30of those? Let's go with the first one. Do you think Chairman Powell is doing a good job?
14:34So I think Chairman Powell was late to the party raising interest rates because he's so cautious
14:40and careful. And I think he's late to the party dropping interest rates, but not by much. And I
14:46don't think it's something, again, the Federal Reserve is a tricky board to deal with. You've got
14:50a lot of experts sitting there, a lot of folks that have opinions. We don't hear the half of it when
14:56they come with their public comments. I do think he's been a steady hand on the tiller. And I think
15:02that's been comforting for markets. Markets have been up, particularly during a period of rising
15:06interest rates. If you think about how much the Fed raised interest rates over a couple of year
15:11period, and markets have still stayed solid, and unemployment has still stayed low, it's hard to
15:19argue that they haven't been successful. But yeah, you could pick around the edges. I think the second
15:24question is the easy one to answer. I think it's an absolutely terrible precedent for the President to
15:31do that. I think the for-cause comment is always, anybody that's ever been an employee understands
15:37there are many different definitions of for-cause. I'm not sure revamping when he had approval from
15:43various sources, revamping the Federal Reserve's building is for-cause, but I guess we'll find out.
15:48And like I said at the top of this part of the conversation is that, as of right now,
15:54Fed Chair Powell is not fired yet. President Trump just floated the possibility. But do you think he
15:59floated this possibility to get Powell to bend to his political will? Because it has not seemed
16:05like Jerome Powell has been swayed by President Trump's past comments before. Because President
16:11Trump has been very critical of Jerome Powell. Yeah, the last thing this will do will get Chair
16:18Powell to drop interest rates. If ever he would not do it, it would be from repeated pounding from
16:25Trump, which he's not going to do. I think the strategy here is to get Chairman Powell to resign on
16:30his own. That would solve both President Trump's problems and any market issues, right? And I don't
16:37think he'd do. He's already said he wouldn't do that. So again, to your point, we don't know for
16:41sure. He hasn't resigned. He hasn't been fired. I think that'll be a story that will play out for
16:46the rest of the day. But my sense is if Trump moves in this direction, Powell's a tough guy. He comes
16:52from Carlisle, great, great private equity firm. Those folks are brilliant and they're tough. And I don't
17:00see him backing down lightly. And I don't think it's because of his ego. I think it's because he sees
17:05himself as a steward of the markets and a steward of the Federal Reserve and he'd do what was right
17:10for the Federal Reserve. And in his mind, and I don't have any firsthand knowledge of this,
17:14but the way he acts suggests to me that in his mind, he has to stand his ground.
17:18Well, there's certainly a lot to look out for. And as that story develops, because as I said,
17:23as you and I are talking, we got the headline just a few moments before we jumped on this interview.
17:29I hope you can come back on and I hope you can break it down with me. Thank you so much for
17:33joining me, Paul. I hope you can come back anytime.
17:36Anytime. Thanks for having me, Brittany. I enjoyed it. Appreciate it.