- Transcript (RTF)
Candidates for the Republican nomination for president gathered at Vermeer Corporation headquarters in Pella, Iowa for a forum sponsored by the National Association of Manufacturers and broadcast by Iowa Public Television.
Candidates participating in the forum included Rep. Michele Bachmann (R-MN), former Rep. Newt Gingrich (R-GA), Rep. Ron Paul (R-TX), Texas Gov. Rick Perry (R-TX) and former Sen. Rick Santorum (R-PA). The forum was moderated by Iowa Gov. Terry Branstad and Nightly Business Report Co-Anchor and Managing Editor Tom Hudson.
From coast to coast, from the assembly line to the board room, American businesses affect the impact of a global economic slowdown. Thus far the manufacturing sector has been a bright spot in the American economy but challenges remain for thousands of businesses still developing products, still growing, still building right here in the United States. With only weeks remaining until the first votes are cast in the 2012 election process, republican presidential candidates discuss their plans for business and manufacturing. From Pella, Iowa, this is the Republican Presidential Forum on Manufacturing.
Hudson: Welcome to central Iowa on this beautiful autumn day. We're here inside the gorgeous Vermeer Global Pavilion where hundreds of manufacturing employees and business leaders from across the country have joined us for a discussion on the future of an industry vital to America's economy. Hello, I'm Tom Hudson, co-host of Nightly Business Report on PBS. Welcome to our viewers on PBS stations across the country and those watching this forum online. We'll introduce our candidates shortly but first a few words from our hosts today.
Vermeer-Andringa: Thank you. Welcome to the Republican Presidential Forum on Manufacturing. I'm Mary Vermeer-Andringa, President and CEO of Vermeer Corporation and the current chair of the National Association of Manufacturers Board of Directors. I'm pleased to have Jay Timmons, the CEO of the Manufacturers with me today on stage and we are very pleased to host this forum on manufacturing. The NAM consists of 12,000 companies across the country who are involved in manufacturing and with a voice of 12 million people who are involved in great manufacturing jobs. So, we're very eager today to hear what the candidates have to say about manufacturing and issues that are important to us.
Vermeer-Andringa: Just a few facts ... we are the largest manufacturing economy in the world in the United States. 60% of everything we export is manufactured goods. The majority of R&D takes place in our manufacturing firms. And for every dollar that we produce as a manufacturer it produces another $1.40 in other goods and services. So, manufacturing means jobs and it is important to our economy. I'm very pleased now to introduce one of the moderators for today's forum. The Governor of the state of Iowa is a great friend of manufacturing and we're very pleased to have Governor Terry Branstad with us this morning.
Branstad: Thank you very much. Thank you. (applause)
Branstad: Mary Andringa, thank you. We're very proud that you are the first woman to be the chair of the National Association of Manufacturers. As Governor of Iowa I am very proud to invite all the manufacturers and your guests here to Iowa. We are looking forward to the first-in-the-nation precinct caucuses that are going to be held here on January 3rd of 2012. The most important issue facing America today is jobs and the best jobs are manufacturing jobs and so we're looking forward to hearing the candidates say what they are going to do to eliminate some of the federal impediments, some of the regulatory and tax impediments that are preventing our manufacturing industry, our private sector from being able to revitalize our economy and creating the jobs we need to get America growing again. So, thank you all for being here and we're proud to host this in Pella, Iowa. (applause)
Branstad: And now the candidates ... Representative Michele Bachmann ... Speaker Newt Gingrich ... Representative Ron Paul ... Governor Rick Perry ... Senator Rick Santorum. Welcome. (applause)
Hudson: Before we begin our conversation with each of the candidates here today let's pause for a moment to hear some of the thoughts and concerns about the future of American business directly from the men and women who work within the manufacturing sector.
There's not a whole lot of jobs out there right now.
It's a big problem.
I think we need to build more factories.
It's no secret that we're competing with other countries for jobs and for manufacturing.
If we look at manufacturing within the United States and then look at manufacturing within other countries we have learned from the past.
I really hope that our government is looking at ways to improve trade across the countries to make sure that we have the same opportunities to export our products as we do to import products from other countries.
I'm a welder.
My whole family is in manufacturing.
It's our bread and butter. Manufacturing is all that I know.
To my family manufacturing means that there's going to be a constant money in our home, educations for my kids.
I have three kids and they're all teenagers and above and it has supported them, got them through school and kept them fed and with a home.
We're not rich by any means but we do have a comfortable lifestyle.
The money is good and the people are great and I love my customers.
The people in Washington need to remember that there are Americans that are building cars here, Americans taking pride in what they are doing here.
Manufacturing to me means making a quality product that meets the customer's end needs.
As I grew up that if it was made in America it was the very best and I think that's still the case.
There are plenty more Americans out there that if given the opportunity I believe will take the same amount of pride in performing the work that we do.
That's what we do, we make things, we build things, we improve things and that is what Americans are about.
Hudson: Some of the hundreds of thousands of employees throughout the American manufacturing sector. The format for today's forum is unique and simple. Each candidate will have fifteen minutes to answer questions from Governor Branstad and myself today. There will also be questions from our audience members here in Pella, Iowa all focused on the future of business, American manufacturing and American jobs. We're joined now by our first candidate, Texas Governor Rick Perry. Governor Perry, welcome back to Iowa.
Perry: Thank you, it's good to be back in Iowa again. It looks like the corn crop is just about out.
Hudson: And it's been a very good year certainly. But not a great year for American jobs. The average American worker who loses his or her job today can expect to not find a job for 40 weeks. The election is 52 weeks from this week. Whirlpool just announced it was closing a plant in Arkansas losing 5,000 jobs. If your tax plan was implemented with the flat tax, optional flat tax, what would that mean for those workers losing jobs today before election day?
Perry: Well, there are a number of parts of my, not only my jobs plan but my tax plan. I want to talk about the jobs plan first, about getting Americans back to work on the energy side of things without having to go to Congress, without asking anything, signing my name to executive orders and to executive actions you could open up these western lands for our energy side of things and putting some people back to work almost immediately. When you look and see what has happened in North Dakota, Terry, when you see what has happened in the Marcellus Shale up in Pennsylvania and places in Texas where they have opened up these new shale plays, get our coal industry back. This President of the United States, he's at war against the coal industry so getting Americans to work almost immediately is my goal and I've got a pretty good record of that. Terry and I compete against each other from the standpoint of state against state and we have created over a million net new jobs while I have been the Governor of Texas and this President has overseen 2.5 million jobs being killed and it has been more off of the regulatory side. When you think about Obamacare, when you think about the EPA I don't know what Vermeer has to add to the cost of one of these pieces of equipment right here just because of EPA but I guarantee you it is a substantial amount of money and I'd pull back every one of those regulations since 2008 and check then for cost versus benefit and nearly all of them are going to get pitched out because the benefit is going to be miniscule relative to the cost.
Hudson: Governor Perry, Whirlpool announced those 5,000 job cuts, they didn't cite regulations though, the company cited consumer demand. That was why they are cutting jobs here in the United States.
Perry: But you understand why there's consumer demand being lost out there. I mean, the people have lost confidence that they can go and risk their capital. I mean, that is what is going on in America. For three years we have had a President of the United States that has sent a clear message that they do not believe in the free market enterprise of which I grew up with. They believe that if we would stimulate the economy with more federal money, if we pitch more dollars out into the economy that it would create jobs. We know that doesn't work. In Texas or in Iowa or whatever state it is we know that the way that you create jobs is by not overtaxing, over regulating or over litigating and then the small businessmen and women or for that matter somebody like Whirlpool, a big business, they know that they have the confidence they can risk their capital, have a chance to have a return on investment and they hire people and at that particular point in time that is how you take an economy off. It has worked in the state of Texas for a decade. I think we're like the 15th largest economy in the world. If it will work in Texas it will work in this country.
Branstad: Governor, your state leads the country in terms of wind generation and we are a state that also generates a lot of electricity from wind, we're up to 20%.
Perry: You're quick on our tail.
Branstad: What we would like to know -- the wind energy tax credit is going to expire, it has expired three times previously. Senator Grassley has been a real champion of this. We would like to see it extended for four years. Would you support extending that? And also would you support retaining the renewable energy standard which has helped us reduce our dependency on foreign oil?
Perry: I happen to believe the federal government needs to be completely out of the energy business picking winners and losers and let me share with you why. In exchange to get rid of all of those regulations that are out there and whether you're in the oil and gas business and the tax credits that they get, whether you're in the ethanol business and the renewable fuel standard or whether you're in the wind side, from Washington, D.C. I do not think it is the federal government's business to be picking winners and losers and frankly on any of our energy sources. I mean, these two solar debacles that we've seen are pretty good examples of that. But if a state wants to, which is what we did, Terry, we put into place in the state of Texas an incentive for renewables and the wind energy came in and took great advantage of that, that's the reason we became the number one wind energy producing state in the country. I think if states want to compete against each other by putting those types of standards, those types of incentives in place that is a correct and a proper way for the state. But at the federal level I do not believe that the bureaucrats in Washington, D.C. ought to be picking winners and losers in the energy industry or for that matter in any other industry. They ought to get back to what they ought to have been doing which is standing a good military and securing our border and then let the states work out the rest of most of these things.
Hudson: Governor, I know we have a question from the audience on energy. Before we get to that, what role should the federal government play in supporting research and development within the energy industry?
Perry: R&D is the one place that I would allow the federal government to continue to be engaged and to give those credits because that is where the private sector is going to come up with the new ways to burn coal cleaner, we're going to come up with the new ways to use the DDGs in a new and exciting way for the feeding industry, they're going to be the ones that come up with the technology on the solar side or on the wind side or energy sources that we haven't even thought of yet. R&D absolutely correct but the idea of us giving $535 million to some solar company just because they've got a good lobbyist that could get them into the White House, that's nuts and we need to get away from that and allow the private sector, the private sector and the marketplace to decide who the winners and the losers are when it comes to energy.
Hudson: Governor, let's take that question in energy from Wayne Millage here in the audience ... Rex Millage, excuse me.
Millage: Good morning. My name is Rex Millage. I work at the parts distribution center here at Vermeer. I've heard a lot of talk about energy taxes and I have two concerns, the first being manufacturing uses a lot of energy and I'm concerned how that could affect my company and my job. Secondly, I commute 70 miles round trip a day to work and I'm wondering whether that will affect if energy taxes will translate into higher gas prices and home heating costs.
Perry: Let me just talk about the energy industry as a whole and you've already heard me kind of broadly talk about I'm an all of the above energy guy. I think this country ought to be allowing the use of -- we're sitting on 300 years worth of energy in this country. We're on a treasure trove. We're the Saudi Arabia of coal and we've got an administration that has basically said we're not going to allow you to use it and we know that we can burn these sources of carbon in a way that is safe for the environment. We have cleaned up our air in Texas over the last decade, 27% reduction of ozone levels, 58% reductions of nitrogen oxide, Terry. We know how to do this. It is our kids' air, it is their air they're breathing. I suggest to you, Terry and his environmental officers in Iowa would do a whole lot better job of making sure that your environment is clean in this state than some bureaucrat in Washington, D.C.. Allow these companies to explore and to develop all of these different energy sources. I will suggest to you that if you allow the R&D credits and you get the government out of the business of picking winners and losers not only will energy become substantially more prevalent and have a lot more different choices but the prices will go down as well.
Hudson: Governor, let's talk about trade policy because the United States obviously imports a lot of that energy that Rex is talking about here. How would your trade policy encourage domestic energy production and perhaps open up new markets for U.S. coal and U.S. natural gas?
Perry: Well, let me go back to talking about this huge amount of energy that we have in this country and our lack of commitment from the current administration and frankly previous administrations but in particular this administration to using domestic sources of energy. When you look at what we have in the western states, in the federal lands and waters, we have more energy locked up but recoverable, proven resources, proven reserves than Russia, than Saudi Arabia, than Venezuela, than Iraq all combined yet an administration that is not going to allow this country to use that energy. I happen to think that is irresponsible. We have the energy resources and when you take Alaska into account, when you look at the Canadian pipeline and that Keystone pipeline, that oil is going somewhere. It's either going to go west to China or it's going to go south to the United States. There is no doubt in my mind where that energy resource needs to go. So, making America domestically secure from the oil and gas and the other energy resources makes abundantly good sense to me. We send over $300 billion a year to countries that do not have our best interests, frankly in some cases hostile to who America is. What a great day it would be to just say, no thank you, Mr. Chavez, we don't need your oil.
Hudson: Governor, how do you develop those international markets for U.S. coal and natural gas, however, of which there is abundance here in America?
Perry: Say it again, the question of how you ...
Hudson: Develop international customers for U.S. domestic energy.
Perry: Oh, international customers. Listen, the issue, we're selling coal to some of those right now. I'm less interested in selling that outside of the United States than I am using it here first. That is my interest. If there is a ready supply of natural gas, which we obviously have, I think we have at least three terminals on the Texas coast that were for bringing LNG in and now they are being transformed into places where we can export, haven't got a problem in the world, love to be selling some of that North Dakota gas to anybody that wants to buy it. But we need to get America secure first before we start developing an export market. I mean, you can do both at the same time but I'm more focused on the job creation that comes in the energy industry when we allow for that type of production of our resources, domestic sources of energy, we can do it safely, we can do it cleanly and we can do it in a way that will put a lot of Americans to work quickly.
Hudson: And to that point, the energy industry tells us they are seeing a skills deficit when it comes to advanced engineering and advanced technology jobs. They are finding unfulfilled jobs when we have a national unemployment rate at 9%. How would the Perry economic and jobs plan address that job skill deficit?
Perry: Well, obviously one of the things we need to be doing is making sure that our universities, and you've got some great ones up here in Iowa, are really focused on how do we deliver these types of skills sets as cheaply and as quickly as we can. I've got some great concerns and I'm not going to speak about Iowa, I'm going to speak about Texas. I think it is costing way too much money for a young person to go through four years of college. We have allowed way too much cost to creep into the cost of tuition. I laid out an idea this last year that we ought to be able to deliver a degree that costs $10,000 total. Now, there are a whole lot of people whose jaws hit the ground and most of them are working on college campuses. But the fact is we ought to be really bringing it home that we're charging way too much money for the education that we're giving our kids and get focused in on these technology sides of the type of education they need but also using technology. The idea that we're having to force these kids to come to brick and mortar to be educated, that is the old way of thinking. W need to be looking at online ways to be able to educate these kids, to get the types of skills that we need and allow for the particularly in the technology side. That's where Texas growth has really occurred in the last decade. As a matter of fact, 2.3% I think of the workforce is in the oil and gas industry in the state of Texas. Our huge growth was in technology and particularly in biomedical with Houston, Texas, Texas Medical Center, with UT Southwestern. So, we have really transitioned our state from oil and gas/agriculture state to a highly diversified technology driven economy and it is one of the reasons that we have created so many jobs.
Branstad: One of the biggest impediments for jobs is the federal tax burden, the federal corporate income tax second highest in the world and we have a penalty for bringing profits back from overseas. There's a trillion dollars that could be invested in this country. Would you support reducing the federal corporate income tax and eliminating the penalty for bringing profits back from overseas?
Perry: That is what you ought to be paying your personal income tax on, 20% flat, about four different deductions, do the quick math, send it in, that is the personal side. He asked about corporate. Corporate ought to be 20% too, corporate flat 20% weight, get rid of all of the loopholes and all of the, you know, Washington corporate lobbyists are going to hate me as the President of the United States. I'm going to take a wrecking ball to that corporate tax code and frankly the personal tax code as well. We've got $1.7, $1.6 trillion offshore. I would put a five and a quarter percent rate on that money for one year to allow it to be brought back in, to be able to create jobs. The American Chamber of Commerce estimates $360 billion worth of economic activity. Let's quit penalizing Americans for making money, quit fighting this fight that we're fighting on divisions of between those that have money and those that don't. I want everybody to have more money and my tax plans do that and that is what the American president needs to be doing. Quit having these divisions of class warfare.
Hudson: Governor, we have to leave it there. We appreciate your comments. Thank you so much for your time today. Governor Rick Perry of Texas.
Perry: Thank you. (applause)
Hudson: Next up, Senator Rick Santorum.
Hudson: Senator, you call yourself the defender of the taxpayers. Taxpayers benefit from innovation, robust innovation certainly with a growing economy. Laptop computers, flat panel displays, new generation batteries were all invented here in the United States but now largely are made overseas. So, what role should the federal government play in developing, promoting and retaining American know-how?
Santorum: Well, that is actually what my whole tax plan is all about. We actually understand that we're still innovating here in America except we're not producing what is being innovated here and it's one of the reasons that you see these Wall Street protesters and a concern that sort of the middle of America is being hollowed out, that the wealth that is being created by the innovators is not trickling down, if you will, to those who would make those products. And so I have actually focused my tax plan on manufacturing and I have been traveling across the country talking about just what Mary Andringa was talking about which is we have an industry that has a great multiplier effect in the economy and it is manufacturing. If there is one thing I hear when I go out across the country it's that we need made in America again, we need to make more things in America again and it's not just that pride of making things but it is the opportunity for those at the bottom end of the income scale to be able to get the jobs and I think the average manufacturing job earns about $20,000 more than non-manufacturing jobs. That means folks at the bottom end and the middle can move up that income scale and if we create a competitive environment -- I've heard some candidates talk about we need a trade role with China. No we don't, we need to just beat them. We need to have to have an environment here that can attract those jobs back from China and the new innovative products to be made here.
Santorum: So, I have put together a plan that I know some people, Rick Perry just talked about a 20% corporate tax. When it comes to manufacturers and processors we would zero out the corporate tax. We would say there would be no corporate tax for people who make things here in America. That would be job number one. Governor, you just asked about repatriation of profits. If you repatriate profits, and there's estimated of $1.5 trillion potentially sitting in overseas accounts in profits over there, you bring those back and you invest them in plant and equipment in America you pay zero, you pay nothing.
Hudson: So you put the requirement that that repatriated money would have to be invested?
Santorum: I have two levels. Number one, if you bring it back for any reason I agree with the five and a quarter percent tax which is what we used back in I think 2004 and I was one of the authors of that bill to move that forward. But if you invest it in plant and equipment, you can show that money or you show that investment going into creating jobs here in America instead of dividends, which is not a bad thing, I'm not complaining about it, but if you're going to put that to work to create American jobs you're not going to pay any taxes on it because the benefit to the economy and the tax revenues that will flow from that deployment will be, as Mary mentioned, have a multiplied effect. Three, there's one thing the President could do right away and that is you can't go in and say I'm going to change the tax code or I'm going to change this law or change that law. But you can, as the Governor knows, you can repeal regulations, you can change regulations. That is all within the purview of the President of the United States. So, what I've said is that every regulation that the Obama administration has put in place that costs businesses more than $100 million I would repeal. We'll repeal every one of them. Some we will have to replace and as the Governor knows it takes a little longer when you repeal and replace but there are a lot of those regulations there right now that are punitive that the administration has put in place that we can get rid of completely. If you make capital available, you make it profitable because you eliminate the tax burden and you create a regulatory environment where businesses can, where manufacturers can compete we'll offset that 20% disadvantage that manufacturers have excluding labor costs, the 20% disadvantage that our manufacturers have here in this country vis-à-vis our big trade competitors and then they'll create job here.
Hudson: In the last week a number of manufacturers like Honeywell and United Technologies have said they are increasing their restructuring budgets for this quarter and into the next year, not because of the regulatory environment, because of uncertain economic conditions. So, again, the question is, which we posed to Governor Perry is, how does that address end consumer demand, which most economists point to that is why the job market has been weak?
Santorum: Well, first off, if you create more efficiencies and more profitability for companies and they can hire more people then you're going to have more economic activity, more people are going to go to work and that is going to create more consumer demand. The rest of our tax plan actually lowers all the rates, simplifies the code and puts more money into people's pockets too. So, the other thing is, look, I think Newt in joking said this the other night in Des Moines, you know, the minute a republican president or a republican congress are elected the attitude in this country is going to change in the business community. You're going to see the attitude of consumers change. You're going to see an upward arch of markets and this economy because the crushing burden of a government knows best, Washington run system that Barack Obama and the democrats have put in place is going to be over. You know, the President going around the country beating up on businesses, beating up on people who are successful investing has an impact. If you look at Franklin Roosevelt during the Great Depression he did the same thing and it had a real dampening effect on the economy of this country. That attitude will change under a Santorum administration.
Branstad: Senator, Iowa is very much an agricultural state and then we have great manufacturing like Vermeer where we are today which is also related to agriculture and many things like that. One of the things that we're concerned about, we're still heavily dependent on foreign oil and we have made some progress over the recent years with the renewable energy standard that is gradually reducing our dependency on foreign oil and using renewable that we produce in agriculture and also, of course, we've had this wind energy tax credit which has expired three times, Senator Grassley is a real champion of that, we'd like to see that extended for four more years. How do you feel about the wind energy tax credit and the whole renewable energy standard which is helping us reduce our dependency on foreign oil?
Santorum: I'll meet you halfway, Governor. I believe we have to get rid of all tax incentives for all energy. I think we have to have a level playing field and we need to phase out those programs. I don't think we should create a heart attack for any industry but we should phase them out over a period of time. I have suggested five years for ethanol and some of these other credits. Let's phase them out, let's get to a -- and I'm talking about not just ethanol but I'm talking about gas, oil, there aren't any tax credits for coal, they just beat the heck out of coal. So, we need to create that level playing field, number one. With respect to the renewable energy standard this is a Clean Air Act issue. I support maintaining that. I'm not going to die on that hill. I'll leave the renewable standard in place in part because you're right, I mean, we do create energy in this country. The ethanol industry has come a long, long way. Look, I'm someone who voted against all the tax credits for ethanol, I voted against all the tax credits for ethanol and I don't know why that's beeping. Did I say something wrong? I voted against the tax credit for ethanol.
Hudson: It's a green light.
Santorum: I'm here in Iowa, I forgot about that. I won't repeat that, I promise, I won't say it again. But I did support the renewable standards because I understand the clean air impact on that. So, that's where I'll meet you halfway. But we have to have an energy program that, Governor Perry mentioned Marcellus Shale in Pennsylvania is the second largest natural gas field in the world. When I was in the United States Senate six years ago natural gas prices were $12. They are $3.60. So, when the President says, well, we can't drill our way to lower prices, yes we can, we just did and we can do so in oil with respect to ANWAR and offshore. We need to create more jobs in this country through energy and we have lower energy prices. We have more coal and we have more electrification manufacturing, that's one of the other planks of my manufacturing plan, stable energy prices, stable natural gas prices which are obviously disproportionally used by manufacturers.
Hudson: Now, one part of energy, of course, is a tax that goes purportedly to support infrastructure and infrastructure building which is used significantly by manufacturers to get products like these to market, not only domestic markets but international markets. What role does the federal government play in collecting those revenues and dispersing them to improve infrastructure?
Santorum: I'm someone who believes that there is a federal role in infrastructure. I know a lot of folks thing that should be left purely to the states. The problem with that is I come from the state of Pennsylvania. I think it's something like 80% of the truck traffic in Pennsylvania never stops in Pennsylvania. And so, if you just said well, Pennsylvania's job is to keep their infrastructure, well we benefit a lot of states that just come rolling through our state and for us to have that burden is really not fair. And so there is a role for interstate commerce and keeping the free flow of commerce going to help states that share a disproportionate burden of truck traffic and of course we all know it is the truck traffic that beats up your roads, it's not the car traffic. So, I do believe there still is a federal role in the area of interstate transportation where we've gotten a little off track. There's a lot of federal projects are not interstate in nature, are not supporting that type of dynamic and we need to focus those resources in that interstate transportation and I think the federal role should continue.
Hudson: Should the gas tax be indexed?
Santorum: At this point I would say no but I do believe, again, we should keep the federal role involved.
Branstad: Dodd Frank is the federal response to what happened, of course, with the banks and we have a lot of small community banks out here that were not part of the problem, they didn't make risky loans yet they are being hampered and overregulated and additional tax burdens have been placed on them because of Dodd Frank. We think that is one thing that is really holding back a lot of small business because they can't get the financing. What would you do about that?
Santorum: Well, I would repeal Dodd Frank. I was against it when it was being proposed. I'm against too big to fail. I think the idea of bailing out Wall Street a second time, creating that moral hazard -- I always remind people that the top three, "top three" candidates for president on the republican side all supported the Wall Street bailout. I don't think that's necessarily a good thing for us as a party to be going out in this election cycle with someone who supported a huge government intervention into the marketplace and Dodd Frank is simply a redo of that which is an opportunity for the government to, again, pick winners and losers, decide who is too big to fail, who is too crucial. That is a bad approach and, of course, what happened with Dodd Frank was they put new regulations in place for the bigger banks and they left it discretionary to the regulators as to whether they apply it to smaller banks. Anybody see this one coming, that oh I'm going to apply one standard to one bank and another standard to another, it's just not what's going to happen and it didn't happen and you're right, it's crushing small banks and as a result small businesses.
Hudson: One of the unique opportunities we have in Pella is to hear from our audience and we have a question on jobs from Mr. Tony Raimondo.
Raimondo: I'm Tony Raimondo of Behlen Manufacturing. I think I speak for everyone in this room. We all know job creation is really critical to stronger economic growth. What specific actions would you take in your first 100 days to promote job creation in the U.S.?
Santorum: Well, I mentioned before the tax plan that I would put in place and the regulatory reform that I would put in place and the things we would do to create energy jobs so I just want to reiterate those things. I think one of the biggest things we can do is to repeal Obamacare. I think that is a job crusher that is creating all sorts of uncertainty whether, as Governor Branstad knows I've been to 90 counties in Iowa so far and I'll be at all 99 by tomorrow night and as I travel around Iowa I hear this from business people, small towns, big towns, uncertainty of what the federal government is doing, all of these plans that are put in place, what cost it's going to be, what the regulatory burden is going to be and we can repeal Obamacare and it's not by a waiver, a waiver is a bad idea. I know Governor Romney suggested that but it's a bad idea. Why? Because if you allow some states to waive, and Governor Branstad I suspect would try to get out of Obamacare, California and New York won't but the people of Iowa will pay for California and New York. That's a bad idea. What we need to do is repeal the whole thing and you can repeal the important parts of it through something called reconciliation. Having a little experience in Washington and knowing how to get things done that actually can pay off for the benefit of the people of this country we can repeal all the taxes, all the spending, gut the entire program and get it done in four months. That would be in my mind job number one in starting to turn this economy around. There's a whole host of other things we can do from, as I mentioned, from the regulatory perspective. My tax bill lowers rates and simplifies the code. I don't know if we can do a postcard, probably do it one page, leaves five basic exemptions in place for children, for charities, housing, pensions and healthcare but everything else is scrubbed out of the code, we simplify it, that will create, again, an energy and a vibrancy in the marketplace that will help turn the economy around and it can pass.
Hudson: Just a couple of minutes left here. You mentioned your hope to repeal healthcare reform. Prior to the passage of healthcare many small businesses would cite one of the barriers of hiring was increased year-over-year, double digit cost increases for providing healthcare. You repeal the reform that is on the books now, what do you replace it with?
Santorum: Yeah, this is one I've had, again, a lot of experience in. Way back in 1992 I joined a guy by the name of John Kasich who happens to be the Governor of Ohio right now and we introduced the first bill called Medical Savings Accounts. It is now called Health Savings Accounts. But the whole concept back then and I have been an advocate of this for 20 years is consumer driven healthcare. The bottom line is that we have a healthcare system right now where the consumer is disconnected from the price of the good and when you do that you're going to have waste, you're going to have inefficiency, you're going to have fraud, you're going to have all sorts of problems and that is why we spend more on healthcare than any other nation in the country. Unless we get the consumer back involved, unless we have high deductible plans where consumers are out there participating actively in the marketplace with respect to pricing and quality and all of those things then we're going to have the opposite occur which is government top down.
Santorum: That is what Romneycare, Obamacare is all about is government top down regulating the marketplace. And if consumers don't, someone else is going to have to and ultimately it will be the government. And so that is the choice we'll have to make. I'm excited about going out and as I have across Iowa and talking about the consumer driven healthcare model and is really founded in the American experience. I mean, it is founded in believing in free people, believing in free markets, understanding that government controlling people's lives does not lead to a better quality of life, doesn't lead to even equality. What improves the overall quality of people’s lives is trusting markets and consumers.
Hudson: Senator, we appreciate your time. Thank you for joining us. Senator Rick Santorum. (applause)
Hudson: Representative Michele Bachmann. Good morning, Representative.
Bachmann: Good morning.
Hudson: Nice to see you, welcome to Iowa.
Bachmann: Thank you, thank you for the invitation. Good to see you, Governor.
Hudson: Congresswoman, of the 20 industries that are forecast to lose jobs at the fastest pace over the next decade 19 of them are in the manufacturing industry, the 20th is the federal government believe it or not. How do you address this trend?
Bachmann: Well, what we need to do to address this trend is to get our economy and to get the manufacturing business sector in one that would actually work and I think that this is something that the National Association of Manufacturers has already identified. They have said this is the lifeline that we need. In other words, we need the federal government to get off our back when it comes to taxes, you're taxing us to death, you're making us uncompetitive because United States manufacturing is 20% more difficult, less competitive you might say than their nine leading competitors around the world. Next, the regulatory burden is out of control. Steve Jobs recently said this to President Obama, he said you're killing us with regulations. It's true. Tort reform is a must do. It costs our GDP two percent of GDP just to deal with tort reform and lawsuit abuse. I'm a former federal tax lawyer, I see the lawsuit abuse all around me and, again, something else that has really hurt manufacturing is the lack of affordable, accessible energy. So, we need to have an all of the above energy strategy so we can have tremendous resources here in our own backyard.
Hudson: All the economists would point to aggregate demand, that economic term, in other words consumer demand for products, that has been the stagnant part of this economy and that has hurt the job growth, it has hurt manufacturing, it has hurt many industries. How do those policies wind up addressing consumer demand?
Bachmann: Well, we have consumer demand because just like the manufacturers are having to hold back on their products it is because it begins with the consumer. The consumer looks around and sees that the economy is in trouble and so they are unwilling to buy products. Now, the good news is in the third quarter of this year we saw 2.5% growth. The first quarter was 0.4%, the second quarter was about 1.3% but still 2.5% is fairly anemic. With the kind of recession that had we should have been seeing 5% growth. So, this is something we can see and the United States has about 5% of the consumers for manufacturing, 95% of the consumers are outside of the United States. So, we want to make sure that American manufacturers have access to their markets.
Hudson: What would you like to do in your first 100 days in the Oval Office when it comes to international trade?
Bachmann: Oh, easy. What I want to do is change and reform the tax code. Again, I'm a private businesswoman, my husband and I started our own profitable company, we think profit is a good thing and also as a tax lawyer. Number one, we have to reform the tax code. I want to have a flatter, fair, more simple tax code and we have a proven model with Ronald Reagan in the 1980s and so mine borrows from those principles. But then also I will repeal Obamacare. I am committed to that. I introduced the bill in Congress and I have been fighting for this and also Dodd Frank, I wrote that bill as well to repeal Dodd Frank. We've got to have a moratorium on any further regulatory burden.
Hudson: How do those domestic policies, though, increase international opportunities for manufacturers like Vermeer?
Bachmann: Well, excellent question. The reason -- the way that it does is that it creates certainty for manufacturers. Right now manufacturers look at the Dodd Frank bill, the jobs and housing destruction act, and they look at Obamacare and both of those bills together say hey, that's a lot of cost for me, those are a lot of unwritten rules and these are two bills that will never finish being written so it is the mother of all nightmare on regulatory burden. That is cost, that is all it is. Government is a cost of doing business. Dodd Frank is a terribly high cost as is Obamacare.
Hudson: But at the same time the bright spot in the economy in the third quarter has been exports despite Dodd Frank, despite Obamacare, as you say we have seen exports continue to increase.
Bachmann: Well, we have and that is what we want to continue. Part of that is because we finally passed the three free trade agreements. I traveled to Columbia, I met with President Santos and he said essentially to me, what is wrong with people in Congress? Don't they see how this will benefit manufacturing? Don't they see how this will benefit ag? Well, of course, we need market share because 95% of the consumers are outside of the United States. We have to grow our share, not inhibit it and so that is why I was pleased to vote for those three free trade agreements. But we have a dozen others that are out currently being negotiated, both free trade and fair trade, we have to remember both aspects. But the United States is only involved in one so we can step up our game too.
Branstad: Talking about competing in the world marketplace, when I was Governor before we were able to attract six automotive component parts companies from Canada to Iowa, we got Ipsco Steel to locate here, Skyjack and many other commuting companies. About two months ago I was in Illinois where they are raising taxes encouraging companies to move to Iowa and one of these companies said, you know, we like what you have to say and what you're doing about reducing the tax and regulatory burden in Iowa but we're concerned about the federal tax burden. When I was Governor before the Canadian dollar was worth 65, 70 cents, now it is par with the American dollar, their financial institutions are stronger and they have reduced their taxes, their federal corporate taxes are lower than ours and they're going to go from 18% to 15%. What do you think we need to do to compete with Canada and other countries so that we don't have American companies moving their operations north of the border?
Bachmann: You just explained why you got re-elected, Governor. That's exactly what you did and we need to do the same things. I met with a muffler manufacturer down in Des Moines and he has a plant in Des Moines and he has one in Canada and he said, look, I had a decision to make. I saw the out of control spending, the debt accumulation, I don't see the corporate tax rate going down, we're the second highest corporate tax rate in the world. He said, Canada had an 18% corporate tax rate in 2010, I purchased a million dollar piece of equipment, I could either put it up in my Canada plant or in my Iowa plant. He said, I sent it to Canada. When I sent that piece of equipment I sent jobs with it too, I hated to do it but it's because of corporate tax rates. That is why I want to make the United States one of the most competitive corporate tax rates in the world and essentially my plan is to make the United States the best place to do business for manufacturing. Our family, I was born and raised in Iowa, and my dad's job was in manufacturing. He worked for the Chamberlain Corporation in Waterloo, Iowa and they are there no more and unfortunately too many manufacturers have left Iowa and the United States for better climates to do business. That has to change.
Hudson: Do you support cutting or eliminating a tax on repatriated profits that American companies bring back?
Bachmann: Oh, I support zeroing out the repatriation. If we would zero that out because profits are stimulus. That is the true stimulus are profits so we want to bring that $1.2 trillion from overseas here to the United States.
Hudson: And would companies be able to use that money for any purpose they see fit?
Bachmann: Without a doubt, it's their money, they should.
Hudson: Including stock buy backs and dividends?
Bachmann: Anything they want to use it for.
Branstad: You know, you grew up in Iowa and you have represented Minnesota in the Congress, both of these states are states that have really done a lot in renewable energy. I want to ask you also, do you support maintaining the renewable energy standard which is present federal law and also extending the wind tax credit, which is your state and my state as well as Texas have been leaders in wind generation?
Bachmann: Well, we have been because the United States is replete with the greatest energy assets that we have in the world. We're in a wind tunnel, if you will, right here going all the way down to Texas and through Oklahoma. What I believe in is an all of the above energy approach. I want to expand and explode all of American energy production. There is a congressional research service report that came out this year that said America is the number one energy resource rich nation in the world. What I would like to do is a reexamination of those credits because quite frankly I'd like to pull them back and let these industries be more self-supporting and stand on their own. But what I want to do is pull back the regulatory burden. There is an astounding $1.8 trillion regulatory burden every year that businesses comply with. When you consider that we send into the federal government $2.2 trillion in tax receipts this year and on top of that we also pay a $1.8 trillion regulation burden that is what we need to change. I want to pull the regulatory burden back and then I don't think that we'll need the level of subsidies that we have in the past.
Hudson: That include ethanol?
Bachmann: That includes all energy because I really want to see a federal playing field. We've seen what a disaster it is when the federal government picks winners and losers like Solyndra, for example, that is in the news right now and I would prefer that the United States not make those choices. I fully believe all of these industries have it within their capacity to stand on their own.
Hudson: You were talking about tax policy and tax ideas earlier. We have a question from the audience from Kendig Kneen on taxes as well.
Kneen: Hi, Kendig Kneen from Al-jon Manufacturing in Ottumwa, Iowa. Manufacturing has benefited over the years from several items in the current tax code that promotes domestic manufactured goods for export. As president I'd like to know specifically what your administration would do in tax reform that would continue to make this promotion and our exports possible.
Bachmann: Well, we're looking at the expiration on December 31st of the R&D credit. This has served business very well and I would call on President Obama to continue the R&D credit. Again, what I want to do is simplify the code in every possible way but there's a few things that do help manufacturers. One would be the section 179 that if we have 100% expensing on section 179 and what that is, is essentially when a manufacturer purchases a capital product for their business they should be able to write it off 100% in the year of purchase rather than having to drag that out over 15, sometimes over 30 years. That is very helpful, the R&D credit is very helpful but over time I'm looking at a serious flattening of the corporate tax rate, 34% is completely unacceptable and you can close a certain amount of "loopholes" that benefit just one industry over another if you flatten that rate. But in the meantime, I think we do need to extend R&D and I support 100% expensing of purchase capital products.
Hudson: Congresswoman, this brings up the point, what role do you think a federal policy maker like a president should play in regards to supporting research and development in American innovation?
Bachmann: Well, again, I think the best thing that President Obama could do right now would be to make a speech or issue a statement and say he will make that permanent going forward. That is the biggest problem, I'm a businesswoman, that is the biggest problem business has right now. They have no idea what is going to come out of Washington, D.C. when they wake up in the morning and that is why we need to have an immediate moratorium on regulations, it's killing us and we also need the President to make some statements that he is going to bring some certainty back into the regulatory world and for taxes, that there won't be new taxes.
Branstad: You've indicated you support repeal of Obamacare and also tort reform, both good things I think for the health industry. What would you do on a positive side to try to get people to take more ownership of their own health and to reduce healthcare costs because increasing healthcare costs is a tremendous drag on manufacturing and actually hurts all consumers of this country?
Bachmann: There's no question. I was at Carver Pump earlier this week and that is what they told me. They have actually increased their efficiency dramatically without hiring new employees but they have also expanded their product line. They have been able to do that through efficiency but their biggest burden is healthcare. And so what I would do today, each state has a monopoly of insurance companies in their own state. I would get rid of that and let every American purchase any health insurance policy they want anywhere in the United States with no minimum federal mandates. Then I would allow people to pay for their own health insurance with their own tax free money. They could pay for their insurance premium, their copay, their deductible, their pharmaceutical, their medical devices, whatever it is to whatever level they need because people have different medical needs and then I would have total tort reform. That is what we need to have, true tort reform because that addresses the biggest problem in healthcare today which is cost. The other thing that we don't hear much about is the fact that this country is scaring venture capitalists in healthcare out of the country. So, whether it is drug manufacturers or medical device manufacturers we're losing cures right now and so we want to have more innovation, more productivity, that is manufacturing. We've got a lot of healthcare manufacturing but we're scaring it out of the country with our unreasonable debt burden, regulatory burden and also our tax code.
Hudson: Let me ask you about healthcare though. You're calling for an individual market then to develop, a robust individual market. But we have seen this health market that has developed today that manufacturers and companies in all industries are dealing with that size matters, if they can buy in bulk they get better discounts for the company, a portion of the insurance as well is for the employee portion. How do you ensure that the cost structure of an individual market doesn't run out of control?
Bachmann: Well, associated health plans. They work very well and that is something that people can easily join. Again, the federal government hasn't been helping to reduce costs on business. They have only gone the opposite way. They have heaped burdens on business and so my approach as President of the United States would be to work with business and make their life easier. I want manufacturing to succeed wildly, that is my goal. I don't want to see manufacturing be the servant to government. I think government needs to serve the people and manufacturing is a backbone of our economy.
Hudson: Finally, I want to ask you about productivity. You mentioned Carver Pump in Muscatine, Iowa that you visited earlier. The manufacturing industry employs two million fewer people today than it did just four years ago but yet the U.S. economy is actually larger today than pre-great recession. Is the market and is the manufacturing industry going to have to deal with a more productive workforce which will mean fewer jobs in the future?
Bachmann: Well, they are already but, again, I believe that we can have manufacturing return to the United States and grow in the United States. I talked to a manufacturer last week who said to me he is about the last tool and dye maker in his area. My father was a tool and dye maker, that is how he started out and then he became an engineer. We need, this is something else we need, are more engineers in the United States. Steve Jobs just said recently prior to his death to President Obama that there are 700,000 that they are employing outside of the country for Apple and part of that is because they can't find 30,000 engineers in the United States. That is a real problem. Our education system, which is why I got involved in politics, we raised 23 foster children in our home, we have to encourage more science and math in the United States. We need more engineers and innovators. Young people want to be, they want to be entrepreneurs and so we need to encourage that.
Hudson: Congresswoman Bachmann, thank you for your time and comments, appreciate it.
Bachmann: Thank you. Thank you. (applause)
Hudson: Up next Congressman Ron Paul of Texas. Welcome Congressman, welcome to Iowa.
Paul: Thank you. Good to be here.
Hudson: Congressman, America sold almost $300 million worth of corn to China last year which was a five fold increase from the year before. Last year American manufacturers like Vermeer sold $6 billion of farm equipment worldwide. Vermeer just signed its biggest customer deal ever yesterday and it is all export. How would you open up more international markets for American manufacturers?
Paul: It sounds like we're doing pretty good with China. Well, what you have to do is be more competitive and we're less competitive to be the world producer because we have too much taxes, too much regulation. But it is also involved with the monetary system. When the country becomes the issuer of the reserve currency of the world unfortunately the biggest export is money. So, there's a temptation to buy from overseas, increase your current account deficit and then we go to consumption. That is our disease. We have been doing that ever since we have been issuing this paper currency since 1970 and it is gradually getting much worse. So, if you don't look at the regulation, the taxation, trade policy and monetary policy this is going to continue to get much worse.
Hudson: To the point of monetary policy, Congressman Bachmann mentioned a 2.5% economic growth in the third quarter largely driven by the consumer but also exports were strong. Exporters like Vermeer have been taking advantage of the weaker U.S. dollar. In fact, Vermeer says that part of the reason they were able to sign the big contract this week was because of the lower dollar. The international buyer was able to take advantage of this.
Paul: Yeah, when you get a lower dollar it works for a little while but it's not a solution, it's just temporary and then you have everybody putting their money at different rates, everybody has competing valuations. But it only lasts because we already see price inflation coming back here so you lower the dollar, prices go up and it cancels out the temporary benefits. So, we really have to start talking about if you want a more bounce trade and a fairer trade system you have to have a commodity standard of currency otherwise you will always have these competing devaluations and then everybody is going to be unhappy and then they're going to ask for trade wars. We've already started, look, our tariffs, Brazil has put a 30% tariff on Chinese goods so the trade wars have been devastating so the only way you can solve that is solve the problem with the currencies and the devaluations.
Hudson: Do you support the trade deals that were just signed?
Hudson: Panama, Columbia and South Korea?
Paul: I support the lowest tariffs of anybody in the Congress. I want the freest trade possible. I never vote for sanctions. I want to trade with Cuba but I do not like international arrangements because of the sacrifice on their sovereignty. The WTO is on occasion they give us lower tariffs but most of the time, more times than not you go there to retaliate and I'm not for that, I'm not for another level of government. And another Constitution trade policy needs to be designed by the Congress. It is not to be designed by a body that is created by Congress and give the authority to the executive branch. So, no, I don't like the international trade agreements, I just like low tariffs, as low as possible, as quickly as possible and get out -- a lot of the people who preach free trade are the ones who are the first ones to put on sanctions so they are hypocritical about some of these free trade agreements.
Branstad: You like low tariffs, you also like lower taxes at the federal government. The federal corporate income tax is a real burden. We are being told that that has put us in a non-competitive situation especially with the penalty then for bringing profits back from overseas. What would you do about that?
Paul: Zero tax on the people who want to repatriate their money and as a modest start I would put the corporate tax at 15% and we would become more competitive.
Branstad: That is equal to what Canada is going to be next year.
Paul: Yeah, I want them very low because in many ways I think that the corporate tax, if you lower corporate tax only the executive is going to benefit but the consumer benefits too. Corporate taxes are a form of a sales tax. They do have -- if you're competitive they have to pass this on. So, I am low taxes but you can't get low taxes unless you deal with the big problem and that is big spending and that is where I think so many come up short, they're not willing to talk about significant cuts in spending.
Branstad: You have been really bold in that. Do you want to kind of share with us in a little more detail because I think you have got the boldest plan to reduce the federal deficit and I think most Americans are scared to death, they have seen this country become a huge debtor nation, we see the federal debt go up $1.3, $1.4 trillion year after year, we know this is not affordable, not sustainable and you have a plan to deal with that.
Paul: We have two debts, we have the foreign debt which is the biggest in the history of the world and that is one subject. But the national debt is now $15 trillion and it is unsustainable. And we get into a mess because of this and everybody in Washington thinks the solution is spending more money. But the best example to realize why you have to cut spending is what happened after World War II. They cut spending 60%, they cut taxes 30%, they brought 10 million people back home and the economy boomed. It was taken out of the government, put into the economy. Now, I have a propo9sal to cut $1 trillion, cut five departments and significantly cut and put all that money back into the business community and the private community. Government expenditures just doesn't work. But the real reason is taxes, spending is a tax. You either tax the people, you borrow the money or you print the money. It is always a tax so spending has to come under control and this idea that the economy would collapse is absolutely false. The economy would blossom if you cut taxes and spending.
Branstad: One of the problems with borrowed money is you've got to pay it back with interest and you can only build half as much stuff if you're doing it with borrowed money.
Paul: That's right and it's a good case for individuals can't do it, business can't do it, why should government do it. If a business gets into trouble do we go to the businessman and say, well you're in trouble, now you're approaching bankruptcy, what you need to do is borrow more money. But at the government level they say to solve the problem we have to borrow more money to stimulate the economy and take people that don't have jobs -- if the consumer drives the economy you should be spending more money, get another credit card and you'll save the economy. It makes no sense.
Branstad: Haven't they already tried that with this administration and the previous administration with these so-called stimulus plans? It hasn't worked, right?
Paul: It hasn't worked since the Depression and it didn't work in Japan. You need to cleanse the system, you need to get rid of the mal-investment and you need to get rid of the debt otherwise you can't have economic growth and that is what they refuse to accept.
Hudson: And just to that point we have a question from the audience from Pat Meyer on housing which gets to just the point about some of the things that may be holding back the economy.
Meyer: Pat Meyer, Pella Corporation. Manufacturers have a considerable stake in housing and the construction industry and obviously with the recent recession it has impacted our business. As president what are you going to do to address the significant and rapid decline of the housing industry?
Paul: What the government needs to do is a lot less a lot sooner. The market should have been able to adjust in one year and we'd be back on our feet again. We need to get out of the mal-investment and the incentive to make mistakes. That is when you're subsidizing housing interest rates like Fannie Mae and Freddie Mac and you create too much credit you'll always get a bubble. So, you have to get rid of the bubble. You have to get those prices down where people will go back in and buy these houses, people can maybe buy a house again that have saved but to stimulate housing or keep the government involved in giving artificially low interest rates absolutely wrong. It will perpetuate the problem, you need to get that system where housing prices go down and then we'll go back to building houses again.
Hudson: You talk about artificially low interest rates in housing because of government involvement in Fannie Mae and Freddie Mac guaranteeing home loans. The treasury market, the Treasury Department can borrow at less than four percent, borrow that money for a decade, that's not being withheld, that is not being artificially held down, that is what the market is saying it can bear. You're a free market guy. The market is saying that interest rates ought to be low.
Paul: Yeah, but it's all artificial because the feds, they are pumping QE1, QE2, there's nothing market oriented with our interest rates and that is how you created the bubble. I mean, most everybody in Washington now can see this but Bernanke kept interest rates too low too long. So, what was the solution? Lowering to minus. We have an inflation not at 3%, it's much higher and interest rates, banks can borrow money for less than one percent. So, we're getting a negative rate. So, it's all artificial. We have -- most business people know that you don't put on wage and price control, very damaging to the economy. But generally speaking everybody accepts this notion that the price of money is not to be left to the marketplace and it is always regulated, it has been since we've had this Federal Reserve, much more so in the last 40 years. But if you regulate the price of money, believe me, you're going to have mal-investment, too much debt and you're going to have bubbles and you're going to have a recession. And if you don't understand the business cycle you can't solve the problem of a recession. That is my contention.
Hudson: Congressman, what does the short-term cycle look like under a Paul presidency if you're able to put in place the type of monetary policies that you are, leave alone the monetary policies usually in the garage of the Federal Reserve?
Paul: You have to deal with monetary policy -- so if I could have my way, it took about a year after World War II, '46 the unemployment rate was quite low, economic growth was booming, I would say a year, year and a half. But it will be prolonged. '08 up until now nothing has been solved.
Hudson: But the time of World War II you had a growing, youthful population. You didn't have the burden necessarily of Social Security and Medicare and you had American as the top economy, developed economy in the world. It's much different this generation.
Paul: But why? It's because we've wrecked the economy. We have young people graduating from college with a trillion dollars worth of debt and there are no jobs. So, there's a young population sitting there begging and pleading for jobs and that is what we have to do is create that. Now, I wouldn't say that the conditions are different. Markets work whether you have people, no matter what the age is or what the conditions are, on the market principle if you cut spending and taxes and regulations and do the right things the jobs will become available and jobs, there will be people there to work. Right now I still get people looking for workers coming in because our people aren't trained. So, yes, we have to have workers programs, a booming economy would have a requirement for more labor. But under these conditions it's not going to be solved, of that I'm certain.
Branstad: Congressman Paul, some of the young people in the Occupy Wall Street group and whatever are demanding that their loans be forgiven or dramatically reduced. How do you feel about that? What would that do? Would that make things better or worse?
Paul: Well, it would just be more interference. It was created by the government by Sally Mae and they shouldn't be forgiven, we should give them jobs so that they can start paying that debt down. But that is where our real problem is. But it's a mixed bag on Wall Street. Some are complaining they want their, they want more stuff handed out from the government and get out of their debt. Others they are demonstrating against the Federal Reserve. I sort of like the second half.
Hudson: You have talked about your desire to have a more transparent monetary policy coming from the Federal Reserve. The way that the terms are situated for the Federal Reserve Board governors, of course, are designed to cross over administrations and governments here in the United States. The chairman, Ben Bernanke, is due to hold a news conference tomorrow after an interest rate meeting. What would you like to hear from the chairman tomorrow?
Paul: He was resigning. (applause) That he's going to throw in the towel and say I am very sorry. Keynesian economics and place controls on money absolutely doesn't work and everything we've done the last four years really hasn't solved our problems.
Hudson: And then after the stock market explosion we've seen in October what happens to capital prices?
Paul: What happens to capital ...
Hudson: Capital prices.
Paul: With, you mean after what?
Hudson: After your resignation.
Paul: Well, it's going to be steady, healthy growth but it would be based on value, it will not be based on speculation. You won’t see up 300 points one day and down 400 the next day because that is not value, that's pure speculation but you have to have a sound currency. The currency is the measurement of value and if the currency isn't sound this is what you have. Price fluctuate because it is the currency that is unsound and internationally that is the case. We're witnessing the destruction and the elimination, the end stages of the dollar fiat standard of the past 40 years. It is a big -- it's worldwide, the dollar is the reserve standard of the world, everybody holds dollar is not a United States problem, it's a Greek problem, Spain problem, Japanese problem but it's a monetary policy, that is what has created the monster that we're dealing with today.
Branstad: A lot of what we're seeing, you know, the analysts are saying the stock market's fluctuation has a lot to do with what is going on in Europe and their huge debt problem. Is it your analysis that we're headed in that direction when you look at the debt situation in Greece and Italy and Spain and all of those European countries? Is that the direction we're headed if we don't change directions?
Paul: We are and it's going to be much bigger and much worse but right now the dollar is still respected compared to a euro and a yen and people will still take it. But the dollar is very vulnerable. The dollar bails out everybody and it bails us out domestically. We will be involved overseas with the European thing, they say no but we're in the IMF, we bail out, there's a limit to how much weight you can put on the dollar. When the crisis hit in 2008 the fed was very much involved. We did get some information, they dealt with $15 trillion worth of credit. Congress only messed around with the simply little trillion dollars that they gave away to their friends. $15 trillion, $5 trillion of it went to foreign central banks and foreign governments and they didn't want to tell us a thing. That is why you have to have transparency and the American people are with me on that because the percentage of people that want transparency of the fed about 68%. So, I think that's very healthy.
Hudson: Congressman Paul, thank you for your comments, appreciate it.
Paul: Thank you very much. (applause)
Hudson: Up next, former House Speaker Newt Gingrich. Speaker Gingrich, welcome to Iowa.
Gingrich: Good to be here. Thank you.
Hudson: Speaker, you spent some time in the classroom as a professor. The U.S. economy has six million fewer jobs today than it did four years go. Two million of those, a third, have disappeared from manufacturing, from this one sector yet many manufacturers report not being able to fill advanced manufacturing positions. How do you begin to address that skills deficit?
Gingrich: You attach a mandatory training requirement to all unemployment compensation and say if you need unemployment compensation, fine, you have to sign up for a business offered job training program. If you have 99 weeks of unemployment that's an associate degree. In 99 weeks you could train virtually anybody. You establish the principle we do not give people money for doing nothing.
Hudson: Where does the funding come from for the training?
Gingrich: The businesses, you said every business in this country we're going to provide you free personnel, you can offer distance learning, work at the University of Phoenix, Kaplan, look at what the National Association of Manufacturers has done with distance learning. But you say to people if you took the amount of time we have paid people to do nothing for the last six years you would have the highest human capital in the world in the American workforce. Now, you combine that as I do at newt.org with 100% expensing for all new equipment so you could write it off in one year and you'll now have the most modern manufacturing equipment in the world with the best trained workforce in the world and at that point you tell the Chinese that you know they have a crisis and we'll try to counsel them.
Hudson: What is the direction of American wages at that time and what does that do to the competitiveness of manufacturers?
Gingrich: Well, if you have the best trained workforce in the world with the most modern equipment in the world wages go up because your productivity goes up. There's a study that just came out of the Boston Consulting Group I think it was in August that says by 2015 South Carolina and Alabama will be less expensive than coastal manufacturing in China if you take total cost. It's not just what you pay the person but it is what is the cost of the equipment, what is the cost of logistics, what is the cost of all the other factors. There's no reason we can't rebuild America at a remarkable speed. We've done it before but we have to have a totally new attitude in Washington and frankly, as the Governor knows, in states, in local communities we're not going to remain the post World War II America coasting because we're so dominant. We're going to have to go through a period of very fundamental change in our policies and in our institutions.
Hudson: To that point let me ask you about long-term unemployment, apologizes Governor, I need to follow up here, long-term unemployment almost 40% to 50% of people who are unemployed today have been unemployed for six months or longer. Is that a structural economic issue? In other words, is there something structurally wrong with the U.S. economy that people are not able to find jobs?
Gingrich: There's something very structurally wrong with the U.S. economy, it's called the U.S. government. When you have a Food and Drug Administration which cripples the ability to bring new products to market, you have an Environmental Protection Agency that runs around Iowa trying to convince farmers there shouldn't be dust on dirt roads, you have -- and driving up the price of electricity everywhere in America, you have an anti-petroleum and anti-coal administration in the richest country in the world for energy, you have a tax code which is anti-manufacturing, you have a Labor Department which is anti-manufacturing, you have a National Labor Relations Board that wants to put Boeing out of business in South Carolina, you go down the list. This country has been maniacally anti-jobs. Obama is a left wing radical who believes in class warfare and then he's surprised that everybody who he's attacking doesn't create jobs. What did he think was going to happen? You can't go around the country and blame everybody who creates jobs and then say well gee, why don't you go out and take the risk with your capital and spend the next five years of your life creating jobs so I can attack you even more.
Branstad: As Governor, there's a whole lot of new republican governors that came in across the upper Midwest, we have been working to reduce the tax and regulatory burden, bring jobs to our states but we have been hearing concerns that, well, the tax burden at the federal level and the regulatory burden, you have already talked about the regulatory burden, but that federal corporate income tax and the penalty for bringing profits back from overseas is causing a lot of American companies to say maybe we ought to just move our whole operation to Canada or some other foreign country instead of investing and creating jobs here. What would you do about that?
Gingrich: First of all, your analysis is exactly right. By the way, here you had a great year with the budget, you did a great job of getting Iowa back on track again. If Washington were doing as well as you're doing we'd all be at four percent unemployment and happy as we could be. One, you should repeal Dodd Frank immediately. It is killing small banks, it is killing small business and it is killing housing. Two, you should repeal Sarbanes Oxley. I just had a major multinational say to me they'd love to be headquartered in the U.S. but we cost them two percent of gross sales for compliance. It's something that actually produces no useful information, produced none in 2008. Three, I think you've got to look at a fundamentally new tax code. At newt.org and our proposed 21st century contract with America I'm for zero capital gains tax which would bring hundreds of billions of dollars back in the U.S. and it means zero capital gains tax also at the corporate level. I am for eliminating double taxation of dividends. I am for 12.5% corporate tax rate which is the Irish tax rate which would liberate I think about $700 billion of the $1.2 trillion that is currently locked up overseas. As I said earlier, I'm for 100% expensing of new equipment, abolishing the death tax and an optional 15% flat tax -- the Hong Kong model where they have for years now allowed you to keep the current deductions or go to a flat tax and they found it to be a very successful model to let people make the choice.
Hudson: Mr. Speaker, on the repatriation of U.S. company money overseas would you put any limitations on how those corporations use that money?
Hudson: Buy backs, dividends, salaries, bonuses?
Gingrich: What do you care? If they bring $700 billion back to the U.S. and they do it as buy backs, okay, that means they gave all that money to Americans to do something with. Why would you want some Washington politician or Washington bureaucrat setting moral judgments about how independent private firms spend money they have earned?
Hudson: That money, of course, was made by those American companies due to trade. We have a question about trade from our audience today, in fact, from our host, Mary Andringa. Mary.
Andringa: Speaker Gingrich, many of us, in fact, most of us in manufacturing have been waiting four years to see the three free trade agreements passed. We are grateful they finally passed and the President signed them about a week and a half ago. But meanwhile, our competitors globally in the EU and China are working on a lot of agreements and I think we now are working on one other one. What would you do as president to move the process along and to open up more markets for U.S. companies?
Gingrich: Well, Mary, first of all, your company is a perfect example of why you have to have dynamic scoring. In 1948 this company was one person, now it is thousands. If you look at how free enterprise works over time it does dramatically better within a snapshot. It's one of the great problems in Washington is having people who score as if the world were a series of Polaroid snapshots when in fact the world is dynamic and constantly changing. I think we should very aggressively try to have the most open markets in the world. Iowa is a perfect example not only in agriculture where if we didn't export you'd have a depression on prices but also in terms of manufacturing. You're a dramatically bigger manufacturing state than people realize. But in addition what I'm outlining is if you have a revitalized America where you have real training for workers, you have real tax advantages for manufacturing, you have a real effort to modernize the entire basic structure, you have a commitment to American energy and then you take part of the royalties from American energy and use that as a commitment to infrastructure the combination of those steps mean we would be once again the most dynamic country in the world and therefore every trade agreement would be to our net advantage because we would be a much more aggressive competitor. I think that also means you look at the current taxes on Americans working overseas because the truth is every American who represents us overseas represents additional jobs in the U.S. and we ought to make it advantageous to be selling American around the world, not a liability to be selling American around the world and that is why I thought when President Obama went to Brazil and told the Brazilians he was glad they were drilling offshore and he wanted America to be their best customer I thought he had it exactly backwards. We don't hire presidents to go out and be foreign purchasing agents, we hire presidents to go out and be salesmen for the United States. (applause)
Hudson: To that end, Mr. Speaker, do you support the three free trade agreements that were recently signed?
Gingrich: Yes, I strongly support all three free trade agreements.
Hudson: Where else would you like to sign free trade agreements under a Gingrich administration?
Gingrich: I would like to get the most wide open markets which also means, frankly, we engage in the European Union. The European Union as they just did with an aircraft tax, for example, the European Union has layers of bureaucracy in Brussels which is where I wrote my dissertation. They have layers of bureaucracy that scheme every morning for ways to rig the game against the United States. The Europeans have reached a conclusion they can not compete with us head to head and therefore they will try to avoid it by a wide range of regulatory antitrust and other devices and we should be dramatically more aggressive. I'd like to look around the country, I'm not normally pro-trial lawyer, but I would like to look around the country and find the toughest, most energetic trial lawyer in America, make them a U.S. trade representative and tell them their job is to go out and kick in doors for the United States every day and the more doors they kick in the happier we're going to be.
Branstad: What would your policy be -- we're still heavily dependent on foreign oil -- what would your energy policy be for the United States? How do we become energy independent and reduce the stranglehold that the Middle East and so many of these other countries have on us and how quickly do you think we could become energy independent?
Gingrich: I think we would be energy independent much more rapidly if we abolish the Department of Energy which has failed totally for over 30 years, fundamentally reform the Bureau of Land Management, fundamentally reform the Department of the Interior, adapt a policy that is pretty straight forward. This country has more total energy than any other country in the world, more than Russia, more than Saudi Arabia, more than Canada, more than China, massively more. Here in Iowa 20% of the electricity comes from wind. I voted for gasohol in 1984. I voted when Ronald Reagan signed it and we did it deliberately. We decided that it was better for money to go to Iowa than to Iran, better for money to go to South Dakota than Saudi Arabia. I still believe that and I'd like to see some kind of encouragement for every vehicle to have flex fuel capabilities and every gas station to be a fuel station, not just a gas station. Now, having said that I'm for drilling offshore, I am for the development of natural gas, I am for the use of coal and I would encourage the development of green coal, carbon sequestration using that for tertiary recovery in the oil fields. Look at Alaska, you don't have to get tied down in the fight over ANWAR. We own 69% of Alaska. That is one and a half Texas’s. I said this the other day to Governor Perry, I said, I don't want to offend you but Alaska is more than twice the size of Texas. If you set aside half of Texas, you said to the environmentalists you get to take half of Texas and Alaska, tell us the half you love most, that leaves you a state area the size of the state of Texas to develop. The largest coal reserve in the United States is Alaska. The Chukchi Sea, not ANWAR, the Chukchi Sea off of Alaska has as much oil and gas as the Gulf of Mexico and it has taken a maniacally anti-American energy bureaucracy, a truly stupid litigation system and a President who routinely attacks American industry to keep us from being energy independent. There is zero reason we couldn't create millions of new jobs, hundreds of billions of dollars of net income for the United States and do so in a way which, by the way, really builds up manufacturing because if you're going to develop oil, gas, etc. you have an entire manufacturing base providing the equipment to do it.
Hudson: Mr. Speaker, with those kinds of ideas and with renewable tax credits for renewable energy, ethanol subsidies, what role does the federal government play in your mind about supporting research and development when it comes to energy policy and quite frankly picking winners and losers?
Gingrich: Let me make a distinction. I think there is a big role for the National Science Foundation, the National Institutes of Health, when I was Speaker while we were balancing the budget we doubled the size of NIH. We should have, in retrospect, tripled the size of the National Science Foundation. If you're talking about basic research the U.S. government is enormously important. If you're talking about encouraging the development of certain activities it is legitimate, this goes all the way back to Adam Smith and the Wealth of Nations, it is legitimate to have biases in the system and favor what you want whether it is building the transcontinental railroad by giving away land or it is by developing airlines by paying for postal air services. There are a lot of things you can do that don't pick winners and losers, they create an environment and they say to everybody go out and compete, this is where we want you to go, now go compete and do this. But we want to have an attitude I think that says the federal government does basic research. If you're going to have a tax credit frankly it ought to be at least for ten years because you want a long enough time and the people make capital investments. When Congress passes one year and two year tax credits it is a tremendously inefficient way to subsidize something because you never get any capital investment and any momentum because you have no planning horizon. And this is why we need ...
Branstad: That's the problem right now with the wind energy tax credit. Senator Grassley and others would like to see it extended four years, would you support that?
Gingrich: I would like to see a minimum ten year tax credits with a rolling annual renewal like football coaches. I mean, that is a pretty good model to keep people focused. But having said that my candidacy more than anything else is about the scale of fundamental change it takes to rebuild America and you can take this as one example -- I tell everybody I don't ask anyone to be for me, I ask them to be with me and the difference in part is we're going to have to spend eight years reminding Congress every day that petty, parochial committee behavior is destructive of the United States, passing an annual tax credit is really good for the leverage of that committee and really stupid for America. And I think as a former Speaker of the House I have a unique standing to explain the legislative process to the legislators and as president I would seek to fundamentally change the current congressional behaviors which I think are destructing the United States on a bipartisan basis because they maximize the selfish power of the legislators and minimize the general interest of the country. (applause)
Hudson: Mr. Speaker, we'll leave it there, sir. Our time has run out. Thank you very much. We'll have you stay right there for the time being. Speaker Newt Gingrich.
Hudson: A great program and thank you everybody here in lovely Pella, Iowa and thanks to all of our candidates for the time and attention and the insights and thanks, of course, to the Iowa Governor Terry Branstad as well as the entire team here at Vermeer Corporation in Pella, Iowa. We couldn't have asked for better hosts, thank you so much. (applause) To watch the streaming video of the entire Republican Forum on Manufacturing you can visit our Web site at iptv.org. For our entire Iowa Public Television crew and the National Association of Manufacturing I'm Tom Hudson. Thanks for joining our conversation today.