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Get Four
|  | FEBRUARY 26, 2004
John Kerry's To-Do List Create jobs, get tough with China, and redefine NAFTA are all high on the Democratic hopeful's agenda, as he explains here Heading into a key Mar. 2 battle for the Democratic Presidential nomination, Massachusetts Senator John Kerry seems increasingly confident of his ability to weather the challenge from North Carolina's John Edwards. Now, Kerry is shifting his sights toward a showdown with President George W. Bush -- a battle many Democrats think will hinge on a debate over globalism's toll and the economy's achingly slow job growth. On Feb. 24, en route by plane to Ohio's battered Rust Belt, Kerry sat down with BusinessWeek Washington Bureau Chief Lee Walczak to discuss his economic philosophy. Here are edited excerpts of the interview -- a shorter version will appear in the Mar. 8 edition of BusinessWeek. Q: Every candidate seems to have a 10-point plan to create jobs (see BW Online, 2/26/04, "Jobs: Desperately Seeking Answers "). Why is yours the best? A: It's the most comprehensive. [Now,] we actually reward people for taking jobs overseas. With the business deduction, you get a benefit for offshore status, which allows you to avoid taxes. Tyco (TYC ) is a classic example: They move to Bermuda, shift the corporate address, and reduce their tax burden by $400 million. I'm going to end that advantage. [But] I'm not going to penalize companies for competing globally. Q: Don't you also want to reduce the tax rate on companies that keep manufacturing jobs in the U.S.? A: That would encourage manufacturing job-creation in the U.S. That [break] is just targeted to manufacturing. I also have a zero capital-gains tax proposal with a holding period of five years for patient capital purposes. And I would [aid] the so-called critical technologies. Q: Wouldn't cheap wages send many other companies overseas, tax credit or no? A: The differential in labor makes a great deal of difference for some industries, and you can't redress that. But the [profit] margin, with respect to some of these tech areas, is such that if you begin to reduce health-care costs, reduce energy costs in America, and neutralize the tax benefits [for offshoring], then that begins to create a different playing field. Q: What's wrong with the Republican approach to job growth -- cut marginal tax rates, stand back, and let 'er rip? A: I like low rates, and I have voted for them. I don't want to raise them beyond where they were in the Clinton years. I simply believe we can't afford the tax cut that George Bush has given us. Q: But when you repeal a chunk of that tax cut, you are taking stimulus out of the economy, right? A: I am taking a little bit of stimulus out, but there's an awful lot of stimulus that has been put into the system. In the past couple of years, there has been a lot of [federal] spending. Q: Fed Chairman Alan Greenspan is worried by some of the protectionist rhetoric being voiced this election year. Isn't this sort of talk inflammatory? A: The consensus [for free trade] has been fraying. The backlash is not only coming from American workers but from companies, too. Look at Boeing (BA ). It has been fleeced by Airbus' subsidy structure, and we didn't do anything about it. Or look at intellectual-property laws. We have companies getting clobbered by China's [piracy]. You need to keep the consensus for trade alive. But you keep it alive by making sure everybody is being helped by it, and that's not what's happening. Q: How would you fix NAFTA? A: I want to put [changes] into the body of the treaty. I know the Republicans don't like that approach. But I believe it's important for sustaining the consensus on trade. And I'm not talking about draconian, counterproductive standards. I'm talking about doing reasonable things.... I'm for the trade laws we passed being implemented. In NAFTA, we have labor [and environmental] protections in the side agreements. But they have not been enforced. Q: Still, labor codes are notoriously weak in many countries. Are we dealing with symbolism here in all this fix-NAFTA talk? A: I don't think we're dealing with symbolism. If you don't have enforcement, you will have revisions with respect to the agreement itself. Q: You're a critic of Beijing's economic practices, so why vote to admit China into the World Trade Organization? A: Because we can enforce the agreement. Because it was important to get the foundation in place -- and it had antisurge and antidumping provisions. Q: But you intend to apply more pressure on Beijing on the trade, intellectual-property, and currency fronts, right? A: Absolutely. I think you have to.
BW MALL
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