Bloomberg News

Paul Pitches Flat Tax, Immigration as Remedies for Detroit (1)

December 06, 2013

U.S. Senator Rand Paul

U.S. Senator Rand Paul, Republican from Kentucky, speaks at the Detroit Economic Club on Dec. 6, 2013. Photographer: Bill Pugliano/Getty Images

U.S. Senator Rand Paul, a potential presidential candidate who has said a bailout of Detroit would occur “over my dead body,” told a business crowd there that cutting taxes and luring immigrants would turn the city’s fortunes.

The 50-year-old Kentucky Republican wants federal legislation to create “economic freedom zones” in distressed cities like Detroit, which has filed the largest U.S. municipal bankruptcy. He said he would cut income taxes to a flat 5 percent in areas of the U.S. with unemployment more than 1.5 times higher than the national average. He would cut payroll taxes and eliminate capital-gains taxes.

“Detroit’s future will not come from Washington,” Paul said. “The magic of Motown is here in the city. It’s not in some central planner’s notebook. What Detroit needs to thrive is not Washington’s domineering hand, but freedom from big government’s mastery.”

Paul said the Republican Party stands to lose more national elections unless it attracts a broader, more diverse voter base -- especially blacks -- and promotes individual liberty more than it does tax cuts.

Party Untied

“We need people in our party without ties on, we need people with tattoos, we need people without tattoos,” he told a mostly white crowd of about 400.

Detroit is the latest venue Paul has picked this year to show himself as a different kind of Republican. He spoke at historically black Howard University in Washington in April and to the U.S. Hispanic Chamber of Commerce, seeking out audiences some in his party rarely engage.

Paul drew groans at Howard and was later criticized after he asked one woman whether she was aware that Republicans helped found the National Association for the Advancement of Colored People, the nation’s oldest civil-rights organization. She was.

Detroit, the country’s 18th-largest city, faces $18 billion in long-term liabilities and has said it doesn’t have the money to pay bondholders, retirees and employees everything it owes them while still providing its 700,000 residents basic services, such as ambulances and streetlights.

Standing Aside

Speaking today to the Detroit Economic Club at the Motor City Casino, the libertarian-leaning Paul touted the opening of a new Republican Party office in the city, which he attended earlier. Detroit is 83 percent black and President Barack Obama won 97.5 percent of the city’s vote in 2012, according to its elections office.

Paul drew applause when he said the government bailout of General Motors Co. (GM:US) and Chrysler Corp. in 2009 was a bad idea, a view he said is not popular in the city.

“It’s better to look at an industry that’s suffering and say, ‘What are the obstacles government has placed in its way?’ and try to get those obstacles out of the way, rather than having specific, direct government input,” Paul said.

A CNN/ORC International poll conducted Nov. 18-20 showed that New Jersey Governor Chris Christie is the top choice among Republicans and independents who lean Republican as a potential 2016 candidate among the names now being mentioned most frequently.

The survey, with a margin of error of 5 percentage points, had Christie at 24 percent, followed by Paul at 13 percent, U.S. Representative Paul Ryan of Wisconsin at 11 percent, U.S. Senator Ted Cruz of Texas at 10 percent and U.S. Senator Marco Rubio of Florida at 9 percent.

To contact the reporters on this story: Chris Christoff in Detroit at cchristoff@bloomberg.net; John McCormick in Chicago at jmccormick16@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net


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