Mitt Romney policy director Lanhee Chen said in an interview on Bloomberg Television’s “Political Capital With Al Hunt,” airing this weekend, that the presumptive Republican presidential nominee’s calls for confronting China as a currency manipulator, intellectual property thief and trade cheat are what distinguishes his economic vision from Republican orthodoxy.
(This is not a legal transcript. Bloomberg LP cannot guarantee its accuracy.)
AL HUNT: We begin the show with Romney campaign policy director, Lanhee Chen, who joins us from Boston. Thank you so much for being with us. We obviously want to -
LANHEE CHEN: Thanks, Al.
HUNT: Start off talking about the jobs number. As Governor Romney said this morning, they were terrible, but he added it follows a whole series of bad economic reports. But today, consumer spending, personal income were up a little, manufacturing holding steady. Isn’t it a more mixed picture?
CHEN: Well, I think it’s a disappointing picture, Al, unfortunately. As you mentioned, it sort of came on the tail end of some really dismal economic news. Whether you look at slowing GDP growth or decreasing consumer confidence, jobless claims being up, this is really sort of unfortunately the capstone to what’s been a disappointing week.
HUNT: Well, let’s talk about how Governor Romney would fix it. What’s his big idea for the economy? He talks about his special background, but how is what he’s offering any different than garden-variety Republicanism of George W. Bush?
CHEN: Well, you know, really, it’s an innovative approach to our economy, which is what we need now. And it’s more than just traditional Republican policies. I think we talk about the importance of pro-growth tax policy and pro-growth regulatory policy.
But if you look at trade policy as an example, here’s a place where Governor Romney is really calling for a different approach, for example, confronting China on their currency manipulation, on their intellectual property stealing, on the barriers they put up really to competition from foreign firms. This is really a path forward that will be quite different from both President Obama and President Bush, frankly.
HUNT: Well, one of the -
CHEN: If you look at -
HUNT: Well, I was going to say, one of America’s foremost China experts is none other than Henry Kissinger, who has made it clear to a lot of people he disapproves of Governor Romney’s posture here. Have you or the governor talked to Dr. Kissinger about this recently?
CHEN: Well, the governor has been in touch with Dr. Kissinger, but, look, the bottom line is, Governor Romney is going to do what it takes to get our economy going, including confronting China, and there will be some in both parties that will disagree with him.
But the bottom line is, we have to take a more robust posture toward China, because they are a major trading partner and they are somebody who has the potential to stand in the way of economic growth, both for - for - for our country, but also for our trading partners. And so Governor Romney is going to take robust steps to make sure that China is a player on the international stage that plays by the rules.
HUNT: OK, let’s talk about banking. JPMorgan, supposedly the best-run Wall Street firm, leading the charge against Dodd- Frank, it lost at least $2 billion, maybe a lot more, trading risky derivatives from a federally insured bank. Now, does that give your campaign any pause about rushing to rescind Dodd-Frank and move back closer to more laissez-faire regulatory policies prior - that we had prior to 2007?
CHEN: Well, I think - yeah, I think that the mistake here is to say that somehow because we repealed Dodd-Frank and we get rid of the really burdensome set of regulations that Dodd-Frank put in place that somehow we’re going back to a, you know, dog- eat-dog kind of situation where there’s absolutely no regulation.
You know, Governor Romney has made clear that we do need some regulation of derivatives trading, that we do need to have some kind of consumer protections in place, that we do need to look seriously at things we can do to ensure that the financial services industry is regulated in a reasonable way.
But Dodd-Frank is really not the answer. And so, you know, I think we have to resist the temptation to caricature what a post-Dodd-Frank world looks like. And, unfortunately, that’s what President Obama and his supporters have been doing.
HUNT: Was the Volcker rule a good idea?
CHEN: You know, I think the Volcker rule has a lot of problems. I think you’ve seen a lot of our European trading partners express dismay at the Volcker rule. I think the fact that we’ve had to push off implementation of the Volcker rule several times now in the United States indicates that there are serious problems with it. And I think you have to look at the Volcker rule as being an example of one of the problematic elements of Dodd-Frank and one of the problematic elements that, quite frankly, Governor Romney would - would seek to replace.
HUNT: Let’s talk about taxes. Governor Romney’s tax cut proposal would give the top 1 percent by 2015 a tax cut of over $231,000, and that’s a time when many Americans are being asked to sacrifice. Shouldn’t the very rich and top corporate CEOs also make some sacrifices?
CHEN: Well, Governor Romney believes in a progressive tax system. And that’s what we have, and that’s what we will have in a post-tax reform world, if Governor Romney is elected president.
The bottom line is, we have a tax system that’s far too complex and - and, frankly, penalizes economic growth. We have to go to a system that’s simpler and that’s flatter and that reduces distortions in the tax code. And we do that by lowering rates across the board and by broadening the tax base.
HUNT: But, Lanhee, you haven’t told us yet how you’re going to broaden that base. Would you, for instance, do away or reduce the home mortgage deduction? Would you - would you - would you equalize treatment of capital gains to ordinary income?
CHEN: Well, you know, we see a number of different approaches one can take. Governor Romney has already said that we have to look at curbing the deductions, particularly on higher-income taxpayers. And there are a number of specific ways to get there.
Bowles-Simpson illustrated some approaches. The president’s bipartisan commission in 2005 illustrated approaches. So this is a process where Governor Romney is going to get in there as president and work with the Congress to figure out how we can achieve a broader base of taxation and lower rates across the board.
HUNT: Will he release specifics in this campaign? Will he give us specifics now?
CHEN: Well, I think you’ve already seen far more specifics from Governor Romney than you have from the president.
HUNT: No, but how about like - like the home mortgage deduction or charitables? Will he talk about specifics like that before November?
CHEN: Well, look, Al, what I come back to is this point, that there are a number of different ways to get there. Governor Romney has already indicated his commitment to achieve tax reform with a broader base of taxation and lower income tax rates.
HUNT: There are, as you know, 11.5 million American homeowners with underwater mortgages. Would Governor Romney do anything to help them immediately? Or is this just something the market has to work out?
CHEN: Well, I think that - that the housing crisis has been accentuated by - by the weak economic growth we’ve seen over the last several years. And Governor Romney has indicated that, you know, there are some steps we ought to take to ensure that we’re growing our economy.
But on the housing market specifically, I do think we have to resist the temptation for short-term approaches. And I think the president has fallen into that trap a little bit. He’s introduced all of these different programs, whether it’s HAMP or related programs, that really just haven’t helped the number of people that they expected. And I think that that is part of the downfall of a short-term approach when you’re thinking about the housing markets.
Look, we have to do everything we can to get this economy going, because ultimately that’s what’s going to get the housing market going again and going to get home values rising again and going to help people who, frankly, currently underwater in their mortgages.
HUNT: Lanhee, let me ask you this. You’ve studied American economic and political history, and a chief credential that Governor Romney claims is his business background. Now, over the last century, there have been three presidents who’ve had the most extensive business background: George W. Bush, Jimmy Carter, and Herbert Hoover. Are any of those models for a Romney presidency?
CHEN: Well, look, Governor Romney really brings a unique set of skills and experience to the presidency. And, you know, it’s a set of skills and experience that was built from a 25- year career in the private sector that is really unique.
I mean, I don’t know that it’s fair to compare him to those that have preceded him or would precede him if he were elected president. It really is a unique set of experiences, not just in the private sector, but also if you look at what he did rescuing the Olympics and governing Massachusetts, really turning around a difficult situation there.
He brings a unique set of experiences. He would be a unique commander-in-chief in the White House. And I just think it’s - you know, it’s probably not a fair comparison to look at other folks that may have had elements of their background that are similar to Governor Romney.
HUNT: Lanhee Chen, with that beautiful Boston landscape in the background, thank you so much for joining us.
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