Rep. Michele Bachmann (R-MN) answers questions about taxes, regulation, jobs, trade agreements, energy policy, health care 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: 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)