Iowa Public Television


Newt Gingrich (R-GA) | A Republican Presidential Forum On Manufacturing

posted on November 1, 2011

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Former Rep. Newt Gingrich (R-GA) answers questions about education, jobs, taxes, regulation, trade agreements, energy policy and other issues facing the business and manufacturing industry.

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.


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 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 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?

Gingrich: No.

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.

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