:00:05. > :00:15.offer from there were -- their employers.
:00:15. > :00:17.
:00:17. > :00:20.Time for HARDtalk. Mitt Romney and his Republican
:00:20. > :00:25.advisers claim momentum is on their side as the US presidential
:00:25. > :00:30.election enters its final stretch. Their unrelenting focus is on the
:00:30. > :00:36.ailing US economy and their claim that a Romney administration would
:00:36. > :00:41.rebuild America as a low-tax, small government haven of economic
:00:41. > :00:47.enterprise. My guest is the founder of the advocacy group, Americans
:00:47. > :00:52.for tax reform. He is one of the most influential figures in
:00:52. > :01:02.Republican politics. How credible is Mitt Romney's rescue plan for
:01:02. > :01:23.
:01:23. > :01:27.America? Welcome to HARDtalk.
:01:27. > :01:31.Good to be with you. It is clear that Americans have
:01:31. > :01:34.been somewhat distracted from the battle between Barack Obama and
:01:34. > :01:39.Mitt Romney by Hurricane Sandy but putting aside the efforts of the
:01:39. > :01:43.country to clear up from that and focusing on the politics, is it not
:01:43. > :01:49.a problem for you on the conservative side of the fence that
:01:49. > :01:52.your argument with Barack Obama, that he has failed to manage the US
:01:52. > :02:00.economy, is looking increasingly threadbare as the economic
:02:00. > :02:07.statistics show that the economy now is clearly in recovery mode?
:02:07. > :02:13.The economy has technically been in recovery since July, 2009. We have
:02:13. > :02:18.been in recovery for almost all of President Obama's presidency. But
:02:18. > :02:23.if you compare this recovery from when it started to that of Ronald
:02:23. > :02:27.Reagan's economy, if we were matching, going out for two months
:02:27. > :02:32.in each economy -- heat recovery, there would be 10 million more
:02:32. > :02:37.Americans at work today if Obama had followed Ronald Reagan's tax --
:02:37. > :02:40.path of cutting moderate tax rates, reducing regulation instead of
:02:40. > :02:45.expanding it and trying to reform entitlements instead of putting new
:02:45. > :02:49.ones on top of all the ones that have not been reformed. This has
:02:49. > :02:57.been a disaster of a recovery compared to what Ronald Reagan did,
:02:57. > :03:02.compared to every single recovering since the 1930s. With respect,
:03:02. > :03:07.Ronald Reagan inherited a difficult economic situation in 1981, but
:03:07. > :03:11.nothing like Obama's inheritance from George W Bush after the global
:03:11. > :03:15.financial crash the US economy was in meltdown. You had a massive
:03:15. > :03:19.deficit and debt problem to deal with, which Obama is still
:03:19. > :03:23.wrestling with, but he has, if you look at the figures, the
:03:23. > :03:28.unemployment figures, the growth figures, housing starts and
:03:28. > :03:35.everything else, he has over four years finally injected confidence
:03:35. > :03:38.back into the US economy. OK, you must be a very young man
:03:38. > :03:44.because you do not remember that when Reagan was elected, interest
:03:44. > :03:49.rates in this country were over 20%. Prime interest rates. Inflation was
:03:50. > :03:59.over 10% two years in a row. We had a declining standard of living. And
:04:00. > :04:02.
:04:02. > :04:06.we had a decade of decline, not a financial crash. And as you
:04:06. > :04:10.remember, keeping those UN reform was Obama and the Democratic Party
:04:10. > :04:15.refusing to break them up and to force them to reform, Freddie Mac
:04:15. > :04:20.and Fannie Mae. Yes, we had a crash because of Freddie Mac and Fannie
:04:20. > :04:25.Mae going belly-up and having hundreds of billions of dollars
:04:25. > :04:29.thrown at them. That was something that Republicans were complaining
:04:29. > :04:34.about and are arguing to reform for almost a decade. I think we would
:04:34. > :04:37.have been better off if push it focused more on fighting the
:04:37. > :04:43.Democrats and Freddie Mac and Fannie Mae rather than some of the
:04:43. > :04:49.international staff. Let's not get too hung up on the causes of the
:04:49. > :04:55.meltdown in 2007 and 2008. The fact is that there was a meltdown and
:04:55. > :05:00.Obama had to react to it. But that is important! Philosophically, I
:05:00. > :05:04.want to address one issue with you. It seems that you and those on the
:05:04. > :05:08.Republican to get out selling the idea to the electorate that,
:05:08. > :05:14.frankly, far from being a force for good in terms of managing the
:05:14. > :05:19.economy and economic recovery, government is a malign influence. I
:05:19. > :05:23.wanted a one specific and asked you about it. That is, the bail out.
:05:23. > :05:30.The government bail out of the water industry in Detroit and the
:05:30. > :05:37.big three water industry produces. Is it your position as it was with
:05:37. > :05:43.Mitt Romney, that Obama should have let Detroit to go bankrupt? He did
:05:43. > :05:47.let it right go bankrupt. But first, he handed out a lot of taxpayer
:05:47. > :05:51.money to organised labour. They went in and shows some auto
:05:51. > :05:56.dealerships to be shut down, others not, not through bankruptcy, not
:05:56. > :06:01.through law, but through political process as. The deal is thought
:06:01. > :06:05.that a lot more Republican dealerships were shut down than
:06:05. > :06:10.democrat or independent ones. Then, they went in and if you were
:06:10. > :06:15.unionised, you got pension subsidies and if you weren't, you
:06:15. > :06:24.didn't. They went in and took away the legal right that people who
:06:24. > :06:28.owned debt had to be paid first. They went, no, Union's first. This
:06:28. > :06:33.was a politicisation of a bankruptcy. Chrysler was sold to a
:06:33. > :06:38.foreign company and General Motors is exporting jobs. This is not
:06:38. > :06:42.exactly the brilliant moment for the Obama administration... It was
:06:42. > :06:48.completely politicised what could have been a natural bankruptcy,
:06:48. > :06:53.which companies come back from all the time. Yeah, I find what you say
:06:53. > :06:57.interesting given that you and other senior members of the
:06:57. > :07:01.Republican team how to deliver a message to the voters of Ohio, for
:07:01. > :07:08.example, where the water industry provides a substantial number of
:07:08. > :07:14.jobs, that, you know what, we wouldn't have failed to out. And,
:07:14. > :07:19.frankly, you probably wouldn't have jobs now. And given that Ohio, sees
:07:19. > :07:26.2009, has seen a jobs recovery, that might be something that many
:07:26. > :07:30.voters there might not want to hear. Well... OK... You do know that the
:07:30. > :07:37.bail out went to two companies - General Motors, Chrysler. Ford it
:07:37. > :07:43.did not get bailed out. Ford is still functioning. Ford is still
:07:43. > :07:48.employing people. Ford is in Ohio. Toyota. Many international car
:07:48. > :07:52.companies operate in Ohio. And it you know much better than I do that
:07:52. > :07:56.the auto makers generally, including experts were analyse the
:07:56. > :08:03.for situation, said that if General Motors and Chrysler had not been
:08:03. > :08:06.saved, Ford and Toyota would have gone bust as well. That would have
:08:06. > :08:12.been fascinating. That if their competitors were not there, Ford
:08:12. > :08:16.would have done worse? Or that Ford would have had their competitors
:08:16. > :08:21.financed against them? And you believe Ford and Toyota would have
:08:21. > :08:26.survived the General Motors and Chrysler went bust, do you? OK, the
:08:26. > :08:31.argument when you to a rule of law bankruptcy... The companies don't
:08:31. > :08:35.go away. All the American Airlines had gone bankrupt and come back.
:08:35. > :08:39.What you do is you renegotiate and figure out your costs and so on.
:08:39. > :08:44.All the equipment is still there, all the workers are still there,
:08:44. > :08:47.all the expertise is still there. If you do end up liquidating a
:08:47. > :08:52.great deal of debt. What was done was a politicised version of
:08:52. > :08:56.bankruptcy reform, rather than a legal version. It is not an
:08:56. > :09:03.improvement. It does get your fingerprints on who you give money
:09:03. > :09:08.to, who you get favours from, and the automotive industry's unions
:09:08. > :09:14.are major contributors... What happens is they take taxpayer money
:09:14. > :09:20.and a report people who give them money. Sorry for the interruption,
:09:20. > :09:26.there is a time delay, but you paint this as an utterly partisan
:09:26. > :09:29.moment. The very conservative Detroit News newspaper, which is
:09:29. > :09:34.actually pushing for Romney in the election, at the very same time has
:09:34. > :09:37.made it clear in their view, and I am quoting directly from an
:09:37. > :09:41.editorial: Mitt Romney was wrong in suggesting that alternators could
:09:41. > :09:45.have found operating capital in the private markets. What General
:09:45. > :09:50.Motors and Chrysler needed was bridging loans to get them through.
:09:50. > :09:55.Obama put a rescue team to work and they were true to that task. That
:09:55. > :10:03.is endorsement from a Conservative newspaper. Sometimes newspapers can
:10:03. > :10:08.be wrong. I mean... Yes. I just find it, when the argument right
:10:08. > :10:12.now is about the economy, the role that government should play in this
:10:12. > :10:16.economy, and when the jobless figures have been so bad for so
:10:16. > :10:22.long and are now improving, I find it interesting bet your message is
:10:23. > :10:28.that ultimately the only good thing government can do is get out of the
:10:28. > :10:34.way. Well, I gave you the two examples of significant economic
:10:34. > :10:39.disruption just before Reagan. Double-digit inflation. He squeeze
:10:39. > :10:45.inflation out while dealing with a recession on top of each other. 20%
:10:45. > :10:49.interest rates, a disastrous economy. The Soviet Union on the
:10:49. > :10:53.march all around the world. Serious defence challenges, not from
:10:53. > :11:00.terrorists with our Bee Gees but guys with thousands of nuclear
:11:00. > :11:05.missiles -- terrorists with rocket propelled grenades. They each chose
:11:05. > :11:12.a different part. Reading's path created 10 million more jobs and
:11:12. > :11:18.Obama's Park did. I have written a book on this. It compares chart by
:11:18. > :11:23.charter President Obama's recovery, which is worse than in France,
:11:23. > :11:28.compared to Ronald Reagan's recovery. And each period of
:11:28. > :11:33.economic growth that has followed. This recovery, technically a
:11:33. > :11:37.recovery, GDP growth has been positive. Terribly weak and lousy
:11:37. > :11:42.compared to history, millions of Americans are out of work. This
:11:42. > :11:45.recovery is only one measure of unemployment. If you cowed people
:11:45. > :11:49.who are not looking for work because they what one but do not
:11:49. > :11:55.think there are any positions there, or who have part-time jobs because
:11:55. > :12:01.they want full-time jobs, nothing has got any better. One month ago,
:12:01. > :12:05.we dropped 200,000 full-time jobs in the US but increased 800,000
:12:05. > :12:11.part-time jobs because their work part-time jobs but few were full-
:12:11. > :12:15.time jobs. This is no body's idea of a sound economic policy. On top
:12:15. > :12:22.of this, to get his lousy period of economic growth, five trillion
:12:22. > :12:26.dollars of debt for nothing. Let us focus on one specific aspect of the
:12:26. > :12:33.future plan coming from Mitt Romney and Paul Ryan. That is, eradicating
:12:33. > :12:38.the deficit over eight-ten years. The deficit, of course, still over
:12:38. > :12:42.one trillion dollars per year. Piling on a national debt that sits
:12:43. > :12:47.on something like 16 trillion dollars. Given that context, does
:12:47. > :12:54.it really makes sense for Mitt Romney and Paul Ryan to be talking
:12:54. > :12:58.about tax cuts totalling some five trillion dollars? OK, the only way
:12:58. > :13:03.you get economic growth is to reduce marginal -- reduce marginal
:13:03. > :13:11.tax rates. Obama was to take them up. We have the highest corporate
:13:11. > :13:15.tax rates in the world. In Europe, it is 25%. Obama wants to take it
:13:15. > :13:25.to 45%. Most businesses pay personal tax rates, which he was to
:13:25. > :13:28.
:13:28. > :13:33.take up from 35% up to 43%. Most American businesses up to 44%.
:13:33. > :13:39.you know, he does have a plan to cut corporate tax rates as well. It
:13:39. > :13:43.is not so much about the corporate tax rates. I am fascinated to hear
:13:43. > :13:48.how you explain that cut in income tax rates, particularly, let's face
:13:48. > :13:54.it, for the richer, more wealthy Americans, to the tune of well over
:13:54. > :14:00.three trillion dollars, how that is the wise thing to do in the face of
:14:00. > :14:05.massive deficit and spiralling national debt. OK. The problem we
:14:05. > :14:10.have... You keep talking about it. I understand that in the US, that
:14:10. > :14:14.is what Democrats keep talking about. The problem we have is that
:14:14. > :14:18.the government spends too much money. The Democrats, the Liberals,
:14:18. > :14:23.the big spenders, the advocates and lobbyists will be spending in the
:14:23. > :14:29.US, they say that we have a spending programme, we just don't
:14:29. > :14:35.look to the passes enough to give money to our friends. -- steel from
:14:35. > :14:40.the pass is enough. The problem America has, and the good news for
:14:40. > :14:46.Obama, is that the American people understand that we have a spending
:14:46. > :14:52.problem, not a tax problem. We spend too much. And the only way to
:14:52. > :14:57.fix a spend too much problem is to spend next. We know what Obama's
:14:57. > :15:01.plans are. He walked into office and through $800 billion on the
:15:01. > :15:04.spending table. Then he added trillions of dollars. Then he put
:15:04. > :15:10.in a government healthcare programme, which will cost
:15:10. > :15:14.trillions of dollars per decade as it is finally phased in. They face
:15:14. > :15:24.it is slowly because each part of it is so in pop -- unpopular, they
:15:24. > :15:26.
:15:26. > :15:33.The poll is that independent tax economists who have studied the
:15:33. > :15:41.plans to do the maths has not add up. They say it will not work. They
:15:42. > :15:46.say the plan cannot work, it is not mathematically possible. But to
:15:46. > :15:56.give you some numbers for your viewers to keep in mind. If over
:15:56. > :15:57.
:15:57. > :16:01.the next ten years the United States crones not that 2%, but 4%,
:16:01. > :16:11.added to that of 41 decade, he increased revenue's that is an
:16:11. > :16:12.
:16:12. > :16:18.increase. That is a big if. Regan and did it. The point is, if you
:16:18. > :16:28.want revenue, you have growth. We have Obama's plan, what does he
:16:28. > :16:32.want to do? The Warren Luff that are planned. A 30% tax on any one
:16:32. > :16:42.who makes more than $1 million a year. Regardless of how you learn
:16:42. > :16:46.
:16:46. > :16:55.the money, 30% is tax. There would raise - the deficit is seven
:16:55. > :17:03.trillion dollars. - it would raise 49 billion. Less than 1% for the
:17:03. > :17:10.debt better Obama will accumulate. The idea that he bought and raise
:17:10. > :17:14.taxes on the debt, even his own numbers laugh at that. He gave me a
:17:14. > :17:23.lecture about Reagan before and I doubt your knowledge of the man,
:17:23. > :17:27.but as I understand it, after having cut taxes, he raised them
:17:27. > :17:37.three times. Bill Clinton raised taxes and he delivered an economic
:17:37. > :17:43.boom as well. You can raise taxes and deliver growth. We will clarify
:17:43. > :17:51.the difference between tax rates and total tax burdens. Reading took
:17:51. > :17:56.the top rate from 70% to 50%. He never allowed the rates to go up.
:17:56. > :18:03.There were times when the Democrats insisted on certain smaller tax
:18:03. > :18:13.increases. The only significant one was in 1982. It was the biggest
:18:13. > :18:14.
:18:14. > :18:21.mistake of his presidency. Spending not go down, it went up. We saw
:18:21. > :18:25.what happens when you make an increase without cuts. You
:18:25. > :18:34.mentioned Bill Clinton. What did the growth for the first two years
:18:34. > :18:38.of his presidency. What was the turning-point? When the Republicans
:18:38. > :18:46.took control of the Senate and all of his spending plans died. There
:18:46. > :18:51.is why we ended up with a surplus. He was predicting massive deficits
:18:51. > :18:56.every year because he would spend every penny he brought them. When
:18:56. > :19:04.they cut the capital-gains tax without growth. Does it worry you
:19:04. > :19:14.that some respected Republicans have described Mitt Romney and Paul
:19:14. > :19:15.
:19:15. > :19:20.Ryan plan as a fairy-tale. They have said the plan does not work
:19:20. > :19:24.and that you deliver a message that can be summed up as no tax under
:19:24. > :19:30.any circumstances, even if the country goes to hell. These are
:19:30. > :19:39.respected Republicans who disagree with your take on the balance
:19:39. > :19:45.between tax and spending and your approach to the fiscal deficit.
:19:45. > :19:51.Simpson is a former Republican senator from a wedding. He is an
:19:51. > :19:59.advocate of higher taxes. He does endorse the Democrat running for so
:19:59. > :20:06.that in Nebraska. The idea that he is a significant Republican... The
:20:06. > :20:13.reason he has a job is because Obama appointed him. I am willing
:20:13. > :20:20.to debate his position, but the idea that he has stature in the
:20:20. > :20:30.party is a fiction. What you're talking about is Up there are some
:20:30. > :20:31.
:20:31. > :20:37.people who have not read Simpson. The spending cuts are fantasy land.
:20:37. > :20:45.Obama has rejected every one of them. The tax increases the
:20:45. > :20:49.Democrats like, spending cuts they have rejected. There is actually a
:20:49. > :20:58.real budget that has been voted on in the House of Representatives and
:20:58. > :21:08.pass. This is the Paul Ryan plan. It would bring spending down to 16%
:21:08. > :21:11.
:21:11. > :21:14.of GDP. It does not raise taxes. It is revenue neutral. It is rude to
:21:14. > :21:21.interrupt but I want to stop you. He talked about reforming
:21:21. > :21:29.entitlements. What the plan envisages is in the medium to long-
:21:29. > :21:39.term, massive cuts to food stamp programmes, to the medical care aid
:21:39. > :21:41.
:21:41. > :21:49.programme, massive reform and cuts to Medicare as well. They rather
:21:49. > :21:56.things like college aid, that would go. This is what your entitlement
:21:56. > :22:01.reform might consists of, isn't it? It is not. It is a good opportunity
:22:01. > :22:06.to clarify. There are three parts to the reform. We first talked
:22:07. > :22:16.about cutting food stands and Medicare. What the plan does is
:22:17. > :22:17.
:22:17. > :22:23.take the exact same reform that Bill Clinton signed. It gets
:22:23. > :22:33.extended to other welfare programmes. There are 185 means
:22:33. > :22:43.tested welfare programmes. 77 large ones. You take those and say to the
:22:43. > :22:45.
:22:45. > :22:50.state, the one success in Clinton's presidency was reformed welfare.
:22:50. > :22:55.Clinton has attacked his own programme when Republicans to it.
:22:55. > :23:01.He has put himself in an awkward position. We're talking about
:23:01. > :23:11.taking the success of Bill Clinton's welfare reform. It was
:23:11. > :23:14.
:23:14. > :23:20.Roger Regan's idea. -- Ronald Reagan. We remove the devastating
:23:20. > :23:23.strings and regulations that the federal government sends down to
:23:23. > :23:29.the state. That saves a great deal of money while giving more
:23:29. > :23:36.flexibility. We are almost out of time. A final thought. If Mitt
:23:36. > :23:43.Romney wins, do you believe that he will exacerbate or diminish the
:23:43. > :23:47.growing economic and social inequality we see in the US today?
:23:47. > :23:52.I think that he would give strong economic growth which means
:23:52. > :24:02.millions more Americans working. Les is the most important thing you
:24:02. > :24:07.can do. Whenever the stock market goes up that would give more
:24:08. > :24:16.inequality. The recession and the lousy economy has created more the
:24:16. > :24:20.quality. Resurgence du... The most important thing we should do is
:24:20. > :24:25.have a free society with as many opportunities as possible.