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Rick Santorum (R-PA) | A Republican Presidential Forum On Manufacturing

posted on November 1, 2011

Former Sen. Rick Santorum (R-PA) answers questions about taxes, regulation, jobs, 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.

Transcript

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)


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