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tv   Mexicos Finance Minister Speaks at the Inter- American Dialogue  CSPAN  April 17, 2019 9:15am-10:05am EDT

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predator", "influenza", "an elegant defense", "the break through", it starts on c-span2. >> thursday morning the justice department will release a redacted version of the mueller report. it will be released to congress and the public at the same time. once the report is released, c-span will open the phone lines for your reaction. and when available you'll be able to find the report on >> next, a discussion on mexico's economic and political outlook and political and financial future with mexico's finance and public credit secretary. he spoke at an event hosted by the inter-american dialog in washington. this is 45 minutes. >> good morning, everybody,
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we're going to get started, if people could take their seats. good morning. thank you for joining us for a special event with mexico's secretary of finance, carlos urzua. we're honored to have you here for dialog. we're delighted to partner in this event with the woodrow wilson center and i want to thank my colleague. secretary urzua has had a distinguished and academic career, a professor tech lodgeco monterrey before. called on him and invited him to join the government and assume this critical post in managing economic policy. secretary urzua had previously
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worked with them when he was mayor, and under them he earned a reputation for fiscal discipline. secretary urzua has been a consultant to the world bank, to the united nations and also to the private sector. he has a ph.d. in economics from university of wisconsin. secretary urzua has kindly agreed to talk about the economic agenda and priorities of the obrador administration. that's a bold agenda aimed at reducing policy and equality and boost being economic growth and investment. it's not an easy challenge, but it's critical to the success of this government. it's trying to pursue a different approach from previous, mexican administrationings. we look forward to the
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secretary's remarks followed by an exchange with all of you. so, thank you again for coming and with that, let me turn it over to secretary urzua. >> i always start when i speak about mexico with the following. now i believe that there are three mexicos. i used to think there were two mexicos, but now i think there are three mexicos. the northern side of mexico, that has been always modern and has always had, you know, reasonable growth rates. the southern part in which the growth rates seems many years ago have been very low, but i
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would call the north center side region for people that are from mexico. and in the states around it, that has enjoyed very, very high growth rates in the last few years. the community growth rate in the case of the south for the last 15 years has been of the order of 23% cumulative in 15 years. in the case of the northern part, it has been twice as much, 46%. and in the case of the north center region, thrice as much, 68, 67%. there are some states, my home
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state, and other states in that region, have enjoyed even growth rates of more than 10%. so what we have is a very hete heterogenous country. and we as a government have to take care of that and have, of course, for economic, but also for moral reasons we have to produce a lot on the south of mexico. and what you will see when you review most of the social programs and even the infrastructure programs that this government has, you will see that there is a particular emphasis on the southern side. and so that is the very first thing that i would like to tell you or remind you. the second one is that mexico as a whole has grown, not too much compared to latin american
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countries in the last several years. there are several reasons for that, many reasons for that, but from my point of view, at least partially from the point of view to the present, the reason is the lack of investment in mexico, enough investment in mexico. now, at this point mexico has investment both private and public on the order of 23% or so, gdp. if you want to grow, you have to have at least an investment at least in between 25 and 27% of gdp. and the problem is not the private sector, actually. for our fortune, the private sector, both democrat and the private sector have been-- the investment has been okay. it's a little bit more than 20% of gdp, but the problem is -- the reason is simply because
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you know whenever you're in trouble. the very first thing you-- investment and not current advantages and that's been done in the last 30 years in mexico with a very bad out consequences for doing that. another problem that we have is that that meager public investment has had very low quality. what i am trying to say is the following. there's a study by the imf. i can't remember when it was published, perhaps three or four years ago, in which they estimate the multiplier on the economy of public investment for many countries, and one of t the-- the ones that are at the bottom are some countries that you can imagine which ones and also mexico. the multiplier affecting the case on mexico was very low. and the reason for that is not
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the magnitude, because they have too little or too much investment. the problem is the efficiency, the quality. i will give you an example how low quality, public investment to the quality of public investment can be in mexico. if there are some people-- there are many people i suppose from mexico, but let me remind you, there was supposed to be a train going from mexico, a little bit farther of taluca, the capital of estadio mexico. and it was supposed to go if i remember well, 29 billion
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pesos. they ended up spending not 29 billion pesos, twice as much almost 60 billion and it hasn't been finished and we have to spend another 25 billion pesos, if we want the train system to be finished up. that is what i -- low quality. so low in the case of the train, i don't know who designed the way in which the train was going to go from taluca to mexico city, but it doesn't pass near through-- it doesn't pass near to taluca. i think that's very stupid. and now we are going to have to spend more money to have, you know, a branch of the train. it is just -- and so, what we would like to do is to increase public investment, but we don't
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have the money so we have to be very careful with that. but especially at this point what we would have to have is a very well-targeted public investment. you know, so we did a lot of efficiency. a lot of quality and so-- that's something that we are doing as well. and in particular, however, we are very keen on having private investment in mexico. we believe that we can still enjoy more private investment in terms of-- and when i'm talking about the private investment, not talking mexican private investment, for us it's very important. much of the cases we have in big investment, we are hoping that would have a lot of
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foreign investment contents. let me have two examples. one example is the-- what we call now, i will use spanish, the term is-- [speaking spanish] >> i don't know how you say that, but which means to connect two ports, vera cruz and selena cruz and going through the isthmus which is the narrowest part of mexico. and there is a train, more than -- years ago we had to modernize a little bit and we are smoothing some of the curves. we are taking care of, you know, the ups and downs that are too abrupt for trains, cargo trains that need to go faster as it is now the case.
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there is a road, a nice road, actually, that goes parallel to the train, railroads, there are also pipelines, we have everything over there. we have to modernize especially santa cruz because we say in spanish-- i don't know what, you know, it didn't have enough debt for -- depth for ships to be over there, but we're doing that as well. but in any case, what we would like to have, because we have already the infrastructure more or less. what we would like to have is a partner, a partner, a logistics partner, a firm, good firm,
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there are several good firms, in the case of trains and ports that can do that job, logistic partners that manages overflows, you know? the ports so the train -- and we wouldn't mind at all to have a foreign firm doing that and we are going to have a bidding process and whoever wins it wins it. of course, since it is isthmus, there could be some security reasons to take care of that, the national security, so we would be perhaps, we would be restrict our bidding process to companies from particular countries. basically we can do that in the case of countries with whom we c can-- we have a free trade agreement by law. anyway, the second port the one
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closer to the heart of the president is what we call the -- the more than 15,000 kilometers long and goes through all the peninsula, the peninsula, the yucatan peninsula that goes through 6 six different states and in that case which is r since it is more ambitious project because we don't have a lot of infrastructure over there. we have some, but we are planning to divide in seven parts and to have public-private associations in each part. and again, we will in mind to have all the winners coming from the -- from outside of mexico. we have some of them from mexico, and so on and so forth. so we would be very interested
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on attracting more and more private investment for mexico. i know that you are going to is an i -- to tell me and well, you know, why not the old sector? well, the old sector for people from mexico, the sector for mexicans almost talk about the -- so i don't want to talk about that, but i have, by the way, i have a presentation and i will leave it to mike to -- and you can share it with anyone that wants to take a look at it. doing a very good job in the last three or four months. and which you can ask me a lot of questions. but anyway, that is another matter. i can stop here and then i can take questions. >> okay. thank you, secretary. thank you very much for those remarks.
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we have about 25 minutes. maybe if i just ask the first question and then i see that everybody is thinking about their questions. but there's a lot of uncertainty about the trades, u. is-- usmca, so-called, what is going to happen with that, a little more pessimistic. i wonder if you could comment about a little how the uncertainty about the ratification of that negotiated treaty affects the economic outlook? >> we are very worried and just i talk with many people about that issue. it would be, obviously, it would be disastrous for us not to have a free trade agreement with the u.s. nafta or the new version. agreement. and my worst nightmare is that
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president trump decides to send to congress, you know, the draft of this new agreement and on the other hand, he signs a letter saying, well, regardless of what's happening over there, in six months, the u.s. is going to leave nafta, in that case he can do it. there are some legal issues and some people say, well, that would be most-- he could try to push the new free trade agreement by simply saying, well, if we don't have this, we don't have any. that would be, obviously, very dangerous for us in the very short-term. one minute later we would be in trouble. and, but i think that it's just a nightmare. nobody in the u.s. and canada thinks so. we don't think so, but that is-- the other one, it goes smoothly
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and it is there for us and i think that sooner the better for canada and i think the sooner the better for the u.s. we have a lot of hopes and we are taking care of the most sensitive issue, especially for the u.s., not for canada, which is labor standards, particularly the -- this lack of democracy is still, i would say, in unions in mexico. and that it is obviously very important for the american workers, the u.s. workers, and we are trying to pass the laws this month the labor-- how you say labor. >> labor reform. >> labor reform. we are hoping to have it passed through in the congress this month. th
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that-- the unions and provides a justice system than we have now. we have also-- by the way, this is interesting, we increase the minimum wage from x amount of money to 16% more, trying to reach the minimum welfare labor according to -- for people from mexico. and 16%, it's 3.9%. in the border where we have a particular economic program that lowers down the corporate income tax from 30% to 20%, and the minimum wage rate to us increased 100%. as far as we do and also the central bank, none of them has had any inflationary impact.
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and also in the case of the border, we have, because of the new economic benefits, employment has been increased. and also, as recently, we have already received news about the new contract. we could not-- not all the workers are earning minimum wages. of course, most earn more than that and apparently, that increasing minimum wages have had a positive impact in terms of increasing real wages for the new year for the workers, and more of that. the minimum wage. so, we are -- with that-- which it was, not made because of the free trade agreement, but because we believed that it was from all points of view, from economic to moral point of
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view that the wages were so low, even compared to most countries in latin america, do that, and it has happened that that is something that the u.s. workers especially the-- you know, so we are optimistic. we're optimistic and hopefully the agreement is going to be signed very soon. >> thank you, mr. secretary. why don't we open it up. please identify yourselves and try to be brief. norah, wait for the microphone. >> how are you? nice to see you. we were-- many years ago. my question is about economic growth because a lot of the success of the entire program is cement issed on the fact that it will have higher economic growth than the past.
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but the first announcement is that almost half of what we expected for this upcoming year and what do you expect to happen, to have a turn around in growth and you know, what is your perspective in terms of the growth scenario moving forward? was it falling? and what's going to make it turn around? >> you know, the economic growth is slowing down, opportunity for us, and for everybody, especially the europeans now. and we are still thinking that our economic growth is going to be 2% more or less. we change the interval from 1.1 to 2.1% because we wanted to be in line with the central bank forecast. we are very respectful of the central bank.
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we don't want to miss up with the central bank. and that interval is the one that's more or less is taken from the new -- that the bank does regularly. but we still think it's going to be 2%. why? well, to start with, we believe that this focus on the south of mexico is going to help, it's going to help because we are stimulating demand and investment in mexico and we believe that that can be important. particularly, you know, a kind of a keynesian argument that would be, we are providing much more money transfers than before and of course, the marginal propensity of saving in the case of people is less
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than indicated so far. so we believe that we can do it. to tell the truth, we have to speed up, especially the announcement of public projects like the ones that i just talked about and many others. and also, there have been some, already some successes in some projects that, you know, if you hear from-- when you hear about them, you would think, well, you know, it won't work, but they are working very well. there is one that is supposed to connect 300 rural communities in states, and the idea is to-- the government, especially in that case where there are communities that are ruled-- i don't know how you say that in spanish -- in english, but not by the common, by common-law to put it that way,
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and what the federal government is doing is to transfer min and technical advice to those communities and they are communities with roads and they are filling up roads with concrete, not any road, you know, really nice roads, the community, they are doing very well and they are doing it very fast and labor intensive way. so we believe that this different spending composition will help so little bit, but, yes, we are concerned about the slowing down of the global economy, yes. >> thank you. yes, sir, yeah, in the back here. >> good morning. i'm from exxon bank. you mentioned the oil sector, and my question, actually one
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of the largest creditors with emex. and re recently announced 7, 8 billion, a relief from emex. my question is what other plans for the future. is this something that could be-- it's a heavily indebted company, question number one, number two, in terms of a new refinery, how is that-- how will that be financed given that pemex has six existing refineries operating under 35% capacity. thank you. let me say before answering that question, let me remind you that i have copies of this new investor presentation that pemex had and you will be amazed by some of the results,
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latest results. now the production, the oil production has been-- oil production was like this for the last five years or so, four years or so. now we have stopped that trend, and actually it's going up a little bit. this is the first graph. in the second graph, you will see that in 2016, 2017, and 2018 there were new -- there were no new developments of fu fuel. in 2019 pemex expects to have new fields, here are the names. there are some-- quite interesting. one of them is in the land, not sea, it's land in vera cruz and
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it has a lot of reserves, but also the quality of the oil is quite good, actually. very light. almost gasoline. you know, we won't need refineries, anymore. and oil as well. so i think that the future, the new future for pemex is actually quite bright. let me give you another thing. you will have over here, but the one i like most is this. that perhaps you will -- you m may-- can you see it? you know, do you see bars, there are very huge and then small bars, well, that is-- daily, and that's the-- one in november, there were-- they were stealing 81,000 barrels a day.
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remember the barrel is something like, would be like 0157, 58 liters, so multiply it, a day. and now it's like [inaudible] >> this fight against what you ca call-- help to reduce crime and helps pemex because it has a new flow in the order of an extra flow in the neighborhood of 30 billion pesos, more or less. there are interesting things happening and i'm saying this because everybody say, well, the hacienda is helping pemex in a mindless way and that won't work. we believe that that will work, but the problem that pemex-- the problem that pemex has always had is very simple, actually, it has been overtaxed
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by the federal government for many years, overtaxed, a lot and we have milked cow and almost dies, the cow. and so one thing that you could do is to try to reduce that overtaxation and we are doing that, but that's going to take time because we cannot tell them, i'm going to reduce your duties and taxes by half because we will be in trouble, not them. but we are trying to reduce the tax and duty charges. but also, we have to take care of the following fact. up to this point, and you can see it, also, over there. even in the last few years, at this point three months from, you know, the first three months, van, february, march, for the last 18 -- for the last, actually for many years,
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pemex already had issued that. at this point they have not. let me see if i can find that. they had issued 2013 to 2019 and for-- they've issued the first three months. at this point pemex has been able with using -- and by fighting theft, not having to go to the market. but they will have to go to the market and they will have to refinance about, you know, i would say about 6.4 billion dollars this year. if we let them alone to go to the market, it's going to be
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very costly. they will be able to, but it's going to be very expensive. we have on the other hand an establishments who want to reform, have a counter cyclical nature in which the way that you decide. we will leave that in line of most establishment funds-- that have counter cyclical companies. and countercyclical, from the front when you're in trouble and you are growing well, you put the money into the fund. and what we are doing is to redesign that, but to take from that about 300 billion pesos, to take about 100 billion pesos or so to help it. basically what we want to do is
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to allow pemex not to go to the market if they don't want to go to the market and simply, you know, take a part of each step. basically, that's what we are doing once and for all. only this year. and later on, there probably, there are some people that believe that we should assume a federal government-- make it -- we don't like that, that would contaminate our own. but we are aware that in the short-term they may need some help and we will provide that help. >> thank you. yes, sir. in the back. >> i wanted to ask you in your recently published budget for 2020, you have forecast a production of pemex of 1.9 million barrels a day, but,
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could you explain how we're going to get to that amount, especially if in the same budget you are-- that you published, programmable expenditures are going to be down by 0.7% of gdp. so it would seem to me in order to get to 1.9 you would actually invest a lot more and i feel that maybe the room you have for the current expenditure is not that big anymore since there's a lot of work this year. >> as i said, at this point now, oil production is the order of 1.73, 1.74 now. and if i said we are blessed with some oil fields easy to exploit and have very good oil, and also, they don't say that here and i wish they have done
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that. also there are going to be a lot of-- a lot of private concessions, for private companies. so there's a difference between a concession to exploit and to explore and exploit oil fields. i say, with the contract of services, service contract. that's different from a farm out in which that company and pemex enjoyed the benefits. it's very different. at this point the government is not trying to do that, the last scheme, farming out. but they are going to open up a little bidding for these services in many, many, what i'm talking about really doses, do dozens of oil wells.
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and pemex is very aware it doesn't have enough money to have capital, enough capital expenditure and of course, at this point they will try to use the private sector. >> thank you. wait for the microphone. >> i want to ask you about-- >> closer in the microphone. >> something related to your department, but not quite directly. it has to do with immigration. president lopez obrador has insisted correctly, might you, that the cost-- that the way to stem the immigration from central america is investing in the development of those countries. he has used figures, 20 billion dollars, and i wonder, where is
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that money going to come? do you realistically expect the trump administration when they cut off the central american aid. and do you have the money to invest in central america out of mexico? >> to start with, i-- the last column, and i believe that she's one of the best journalists that we have in mexico. i didn't know, i didn't know you before. well, you know, that question is very difficult to answer in my case because i don't know much, but i can tell you something. yes, the president believes, i believe, i think most mexicans believe that, and perhaps most americans believe that the only way we can deal with this migration problem is to have more growth in the region.
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and it is the case unfortunately that in some countries in central america the growth that they have had in the last decades is very meager compared to their population size. he believes that there has to be a kind of a -- should i say like a little plan like the u.s. helped europe to reconstruct their economies. but the issue of course, and that is the only way. that is the only way pt, but the issues, of course, were how can we in mexico have the money to help the government. i understand, but that, i cannot assure -- i cannot assure you about that. i understand that president trump has talked about some
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particular figures on that respect. we haven't had yet, received anything, and mexico eventually would, of course, would try to have some money as well. but also, i can tell you that in this budget, it is not contemplated something like that, but eventually i'm sure that the-- both the u.s. and mexico worked together. we could commit ourselves, mexicans, could help in building of the fund. but i don't know more about that. i don't know much about it. . >> thank you very much. final question here, yes, please. >> good morning, secretary. right now, at georgetown.
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i want to know why many of the projections in mexico rely on foreign investment. and however, there's a lot of concern about coming to mexico. can you project how to change these perceptions. >> by the way, i used to be a president at-- and i like very much. many years ago. i don't want to talk how many years ago. yes, you know, the decision of the consortium-- it's very difficult decision to solve. there were many views, even the president had different views about that, but at the end, the most important reason was the fact that it would be extremely
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expensive. they were already delayed, i according to the production process, and they would be extremely costly to maintain the airport because it's delayed. and i know you can keep maintenance to anything, now days it's very costly to do that. and we-- at some point, we expected the airport project to -- if there was to be finished, it would be like in 2024 or so. because it was so delayed. and of course, that made the investors a little bit afraid. first, because we had already issued once that were backed by the airport tariffs and people were a little bit concerned about how we would treat those. and the answer was simple.
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we would honor them. in fact, what we have done already is to lower the amount from six billion dollars to 4.8 billion dollars, and we have changed already the contract agreement so that's okay now, and it's very easy, actually, to service that debt. and we have also-- there was financing-- well, i don't want to talk about that, it's a little bit technical, but anyway, that part can be solved. the other party is, of course, that investors, most of the investors in the case of the mexican airport were the mexican investors. could be angry or concerned about the-- that measure. and some people believe that have made some at this point to
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take in new stance and a kind of a wait and see stance by not investing much at this point. and there is a new figure that was released and i think that last week, about a gross capital formation, and it has very good news, actually decrease in january the largest in real times since, i don't know, 15 years or so ago so you may want to look at that data. we're not very concerned about that. as you know, we are more concerned about how we're going to-- are we going to deal with the fact that, yes, we need more airports in mexico and perhaps you know the idea is to have, aside from the mexico city airport and teluca airport, a
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new one in santa lucia, now estado mexico. on and the project is going on. a company that's subsidy of airbus is designing the new space, you know, it is very important that the flight and the way in which the planes go, you know, go from one airport to the sky, you know, don't conflict with the other airports. apparently, that is okay now. apparently it has been done now and it is now being even, being built, part of the airport because it is a military airport that the military
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people are going to have a lot of -- they are going to build up the airport and so it's going on. ... and for sharing this participant very informative. please join me in thanking the secretary. [applause] [inaudible conversations] >> a look at our live coverage
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today on c-span2. coming up at noon eastern, lessons from the 2010 california wildfires on public health needs during wildfire season. the johns hopkins bloomberg school of public health will host that discussion with the center for injury research and policy. at 2 p.m. eastern president trump takes part in a conference to pointed of benefits of opportunity zones created in the 2017 tax cut legislation it's a tax break aimed at investment of low-income neighborhoods. the meeting with state and local tribal and community leaders on the impact of those opportunity zones, live coverage starting at 2 p.m. eastern today. at 4:00 eastern we will go live to the american enterprise institute as it hosts a discussion of modernizing the foreign agents registration act which requires people representing foreign powers to disclose the relationship with the government they represent. live coverage at 4 p.m. eastern
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on c-span2. you can also watch live online at melissa with the free c-span radio app. >> the justice department released a redacted version of the mueller report tomorrow. it will be given to congress and release publicly at the same time. once the report is released c-span will open our phone lines to get your reaction. also when available you can find the report online at our website >> i think the legacy of rochester is really ongoing. the more rochester embraces its role as the city of compassion, healing, wellness, hospitality, i think our mission is to make people feel welcome that this is a home away from home. >> c-span's cities tour is on the road exploring the american story. this week and we take you to rochester, minnesota, with the help of our spectrum cable
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i think most people have a misconception about what bob dylan is. >> watch c-span's cities tour of rochester, minnesota, this saturday at noon eastern on c-span2 booktv and sunday at 2 n c-span3. working with our cable affiliates as we explore the american story. >> award-winning hollywood writer and producer rob long address the liberty forum of silicon valley about conservative messaging in hollywood and politics. he was executive producer of the tv show chairs and founded the conservative political website hello. thank you for coming. i'm so glad you are here. also have come for savard like a headcount of walking around with rob a few minutes ago, lots of people said thank you for mentioning a son -- how


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