James Pethokoukis

Politics and policy from inside Washington

My chat with Jon Huntsman about his economic plan

Sep 1, 2011 01:45 UTC

I spoke with Republican presidential candidate Jon Huntsman on Tuesday evening, just as he was putting the finishing touches on his economic plan, which he announced Wednesday. (Here are all the details.) Some excerpts from our conversation:

On what’s wrong with the U.S. economy …

We have a jobs crisis on our hands in this country, and first and foremost we need to rebuild our core. And the core that I’m talking about is our economy. This world always needs an engine of growth to pull the global economy along, and China has been an engine of growth. And the next two or three years could prove problematic in terms of China maintaining its status as an engine of growth.

So all the more we’ve got to get back on our feet and get our act together. What we’re doing is based on common sense; it’s based on experience; it’s based on real-world solutions. There is no lack of solutions, just a lack of serious leadership. I draw my inspiration from basically three things. One of them is the Ryan plan. The second  is the Simpson-Bowles deficit commission report. And the third is energy independence from the Pickens Plan.

On Rep. Paul Ryan’s debt reduction plan …

I embrace the Ryan plan. The content there is basically going to drive me forward in terms of debt and spending and how we get this country to 19 percent of GDP in spending as opposed to 23 percent. That is the model I would work from. It might not be the final position, but it is the going-in position for me. I like what it advocates for Medicaid. I like what it talks about in terms of Medicare.

On tax reform …

In order to infuse predictability and certainty into the marketplace – which it doesn’t have today and therefore it has no confidence and therefore you don’t have business employing and you don’t have business releasing capital expenditures into the marketplace — you have to get certainty in terms of tax reform. We’re going to lower rates [23 percent, 14 percent, 8 percent and a zero capital gains rate] with three brackets and an income tax return that would resemble a post card. This is reminiscent of what I did as governor where I actually created something close to a flat tax where we worked to eliminate all the deductions and loopholes.

So I am premising both individual and corporate tax reform [with a top rate lowered to 24 percent] on clearing the cobwebs out. You pay for it by eliminating corporate welfare, by phasing out subsidies and loopholes and deductions. My goal would be to phase out everything on the corporate side and the individual side. I know that is controversial. I know there is a political risk there. But that is the only way you can raise the revenue to buy down the rates. There ‘s no other way to pay for it. When I was governor it took us two years, we brought both parties together and we got it done. So I am coming at this exercise as probably the only person in the race who’s actually been through this effort before.

On regulatory reform  …

We are going to call for rolling back existing regulations, specifically Obamacare and Dodd-Frank. We are going to call for dramatically reigning in the EPA. We are going to curb the excesses of independent agencies like the [National Labor Relations Board], which is standing in the way of legitimate job creation in South Carolina with the Boeing plant.

On housing:

If you want an example of a housing market that is on the move, why is it that Vancouver the hottest housing market in the world today? Because they have a clear and defined and user-friendly legal immigration policy. They’ve got people coming in and investing in their marketplace, bringing up values. We need to fix our H-1B visa program, as well.

On China and free trade:

We’ve got to use the tools that we’ve got under the [World Trade Organization] and use them aggressively. But more importantly, we’ve got to get our house in order here. We have less leverage at the negotiating table today with China and less clout because our own economy is broken. If you want to get the attention of the Chinese – and I can tell you having done this for 30 years both in business and in government – you’ve got to have some leverage and some economic strength behind you. We have to restore our economic core and that would do more for our leverage than any WTO case.

We’ve also got, and I did this as ambassador, to engage the emerging private sector in China to begin to push issues like intellectual property protection because it is in their interest as innovators and entrepreneurs and creators to make sure China steps up and and does more. I lived in Taiwan in the 1980s.  Taiwan was an egregious violator on the enforcement side of intellectual property rights, as bad as China has been in recent years. But the minute their entrepreneurial class started to develop their own intellectual property, they turned on a dime and lobbied their own government. That same creative class is emerging very, very quickly in China.

On dealing with climate change …

China and India are not willing to play on the same playing field. And we should not be unilaterally disarming, in a sense, especially at at a time when we need to get this economy back on its feet. The last thing we should be doing is anything that would hinder job growth and economic expansion. I am not going to have any discussion about it until such time as we get China and India tuned into the issue. They’re not now, and I don’t thing they will be for some time.

COMMENT

Coyottte,

The country is hardly operating from laissez-faire economics. Federal interfence in the housing market, creatijng Fannie, Freddie, and the Community reinvestment Act, along with exceessively loose monetary policy and decades of defitict spending, brought us to our currnet sorry state. The last thing in the world this country needs right now is more regulation.

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Huntsman tax plan goes big and bold

Aug 31, 2011 15:18 UTC

Current polls say Jon Huntsman, former Utah governor and ambassador to China, isn’t a top tier candidate for the 2012 Republican presidential nomination. But he certainly has a top-tier economic plan. Huntsman will offer a broad proposal later today – covering taxes, regulation, trade and energy. But I already had a peek at the tax part. And I think it is excellent. Huntsman says he would do the following:

1) Eliminate all deductions and credits in favor of three drastically lower rates of 8%, 14% and 23%.

2) Eliminate the Alternative Minimum Tax.

3) Eliminate taxes on capital gains and dividends in order to eliminate the double taxation on investment.

4) Reduce the corporate rate from 35% To 25%. Huntsman would also shift to a territorial tax system and implement a tax holiday for the repatriation of foreign earnings.

Basically, this is the “zero option” Bowles-Simpson tax plan that lowers marginal tax rates and broadens the tax base. But there is at least one big difference. B-S would use part of the money from axing some $1 trillion in annual tax breaks to lower marginal rates and part for deficit reduction – a net tax hike. Huntsman would divert that extra tax revenue into “paying for” the elimination of investment taxes.

At first glance, this looks like perhaps the most pro-growth, pro-market (and anti-crony capitalist) tax plan put forward by a major U.S. president candidate since Ronald Reagan in 1980. But it is not without political risk. In addition to killing tax breaks for businesses, Huntsman would eliminate the mortgage interest deduction, healthcare exclusion, and the child tax credit among other “tax expenditures. ” We’re talking about a whole herd of sacred cows. Both his fellow presidential candidates and Washington lobbyists will likely attack him for some of those ideas.

I would like to see an analysis of the plan’s distributional impact on various household income tax levels. In addition, a CBO-style revenue and spending breakdown would be helpful.  Keep on the look out for a chat I had with Huntsman about his economic plan. I will post it sometime after his speech later today on the proposal.

COMMENT

Where would the elderly fit in to this tax plan of 8%, 14% and 23%? Thank you.

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Jon Huntsman’s pitch perfect presidential speech

Jun 21, 2011 17:36 UTC

When was the last time someone announced for U.S. president with a barn-burner of a speech? I can’t think of one recently, not even Barack Obama in 2007.  And Jon Huntsman’s speech was certainly no worse than Mitt Romney’s or Tim Pawlenty’s. But style aside, what did he say? He seems to want to deal with entitlements sooner rather than later:

We must make hard decisions that are necessary to avert disaster. If we don’t, in less than a decade, every dollar of federal revenue will go to covering the costs of Medicare, Social Security and interest payments on our debt. Meanwhile, we’ll sink deeper into debt for everything else – from national security to disaster relief.

And there is nothing wrong with this chunk:

We must make broad and bold changes to our tax code and regulatory policies; seize the lost opportunity of energy independence and reestablish what it means to be a teacher in society. We must reignite the powerful job creating engine of our economy – the industry, innovation, reliability, and trailblazing genius of Americans and their enterprises — and restore confidence in our people.

Now, we did many of these things in the great state of Utah when I was governor. We cut taxes. We flattened rates. We balanced our budget. We worked very hard to maintain our AAA bond rating status, something few states can claim. And when the economic crisis hit, we were prepared. And by many accounts we became the best state in America for business. We also were named the best managed state in America. You see, we proved that government doesn’t have to choose between fiscal responsibility and economic growth.

Perhaps the most important part:

It’s not that we wish to disengage from the world, don’t get me wrong, but rather that we believe the best long- term national security strategy is rebuilding our core here at home.

And this is the core, I think, of the Huntsman campaign: Rebuilding and retooling America’s economic strength from which our global power flows. Hey, I am dying to hear the technocratic details on this, and hopefully Huntsman will go far beyond keeping the Bush tax cuts and repealing Obamacare. I think he has to. Timidity is not an option for a dark horse candidate. The bolder the better.  But he shouldn’t forget to also make the moral case as to why entrepreneurial capitalism is best for America vs. Obama’s state-managed variety, of which he should be quite familiar from his time in China.

 

Huntsman rides hard into the 2012 race

Jun 17, 2011 16:04 UTC

When Jon Huntsman, America’s man in Beijing until recently, joins the U.S. presidential race next week, he won’t be coming alone. His entry will add a China spin to the economic issues under debate by the current Republican field. That alone should make his candidacy one worth watching.

No doubt some of Huntsman’s soon-to-be rivals will attempt to make hay that his previous employer was the fellow whose Oval Office they’re hoping to occupy. But the former Utah governor would be wise to use his recent ambassadorial posting to turn the conversation to the Middle Kingdom. America’s primary economic and military rival merited only a single passing mention during the New Hampshire GOP presidential debate earlier this week. That shouldn’t happen again.

Huntsman’s overseas gigs — he was briefly ambassador to Singapore in the early 1990s — give him a unique perspective on the economic challenges and opportunities that Asia’s rise presents to America. Despite current angst about China’s growing economic might, Huntsman knows firsthand the simplicity of that view. China is a desperately poor nation — its per capita GDP is lower than Jamaica’s — that still needs to show it can innovate as well as imitate. It is not a nation of Asian supermen ready to dominate the 21st century.

Moreover, in China’s need to rebalance its economy toward more consumption, Huntsman has seen the flip side of America’s need to reorient toward more saving and less debt. (And how entrenched political interests make such rebalancing efforts difficult.) He’s already hinted at supporting cuts to defense spending and eliminating economically inefficient tax breaks — while also lowering tax rates. And Huntsman’s call for America to increase its energy efficiency echoes China’s efforts to do the same.

Huntsman is also, of course,  sure to talk about his impressive record as the Beehive state’s governor. He was overwhelmingly reelected in 2008, with the nonpartisan Pew Center calling Utah one of the three best-managed in the nation. True, for now, most Americans know as much about Huntsman as they do China — not much. They would be wise to study up on both.

 

COMMENT

Gary Johnson created far more jobs than Huntsman did(11.5% vs 5% job growth). He also left Governorship as a more popular man. Still, he never got this kind of gratuitous write up. Are you owned by CNN? How do you feel about Ron Paul?

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