Magazine

A Bolder John Edwards


With Maria Bartiromo Many pundits place John Edwards third in the race for the Democratic Presidential nomination, after Senators Hillary Clinton and Barack Obama (though not necessarily in that order). And so, the chatter goes, because he can afford to be more daring, Edwards is setting the agenda for the other Democratic candidates. Whether those observations are true or not, one thing is certain: The Edwards who wants to be his party's standard bearer in 2008 is bolder and more confident than the Edwards who ran for Vice-President on the John Kerry ticket in 2004. The last Democratic Presidential nominee to talk about raising taxes was Walter Mondale in 1984, but his flaming defeat doesn't seem to deter Edwards. And he isn't shy about taking on Rupert Murdoch or the credit-card industry, either.

Senator Edwards, simple question: Why should you be President?

Because America needs change, serious change, and the President who's most likely to bring about that change is one who has a long history of taking on the entrenched interests in Washington that stand between America and change.

You're calling on candidates to stop accepting money from lobbyists. And you criticized a candidate for taking money from Rupert Murdoch. Now, the story in the New York Post and elsewhere is that you accepted a book advance from HarperCollins, which is owned by Murdoch's News Corp. (NWS) Are you going to give that money back? And can you clarify what you're asking of the candidates with regard to lobbyists?

Sure. The government and the system in Washington are rigged by lobbyists, most of whom work for very powerful interests there. And what I said is, we need to end this game if we are going to bring about the change America needs. I have not accepted money from Washington lobbyists. I don't accept it in this Presidential campaign, and I haven't in any of my campaigns. And to his credit, Senator Obama—at least in his Presidential campaign—also does not accept money from Washington lobbyists. What I've done is call on the Presidential candidates to lead and for the Democratic Party to say: "We don't take these people's money. Their job is to peddle influence, and we no longer accept their money." Lobbyists have First Amendment rights, and they can continue to speak out and make their case. But they should not be making contributions to the candidates.

So accepting campaign money from Murdoch is different from your book advance?

As for the book advance, the people who reported that know full well the money did not go to me. Every dime of it went to charity. Habitat for Humanity, the International Rescue Committee—a program for low-income kids to be able to go to college—they have the money. [The whole story] is nothing but an attempt to distract from the basic issue that I've been raising, which is consolidation of the media. My point all along was that having Rupert Murdoch [run] every newspaper in the country or having a small group of people control America's media outlets is not healthy. It's not good for democracy, and it's not good for divergent and dissenting voices to be heard. I absolutely believe that consolidation of the media is not healthy for America, and I think....the next President of the United States has a responsibility to try to maintain a divergent group of voices in the media.

You have carved out a left-of-center position in the race for the Democratic nomination by talking about the growing disparity in this country between the haves and the have-nots—the Two Americas. With your millions in the bank and celebrated $400 haircut, aren't you very much one of the haves? So how sincerely can voters take your position?

Oh, there's no question that my family is a "have," absolutely no question about that. But I began in a family that had nothing. And because of hard work and luck, I've had a lot of success in my life, like lots of Americans have. So my view is that I have a responsibility, both as a citizen and as a Presidential candidate, to try to make the same opportunities available to others. That's at the heart and soul of why I'm running for President. I understand what the American dream is. I think it is important to embrace that aspirational component, to applaud those who have done well and give opportunity to everyone to do well.

As President, what would you do to help middle-class Americans reduce credit- card debt and help lower-income people avoid getting trapped by predatory credit-card lenders?

What we're going to do is restore balance in the credit-card market. I am proposing a Borrower's Security Act that would do the following: first, require credit-card companies to disclose the true cost of making only minimum payments, as many consumers do. Second, I would restore a 10-day grace period before imposing late fees and penalty rates. Third, apply interest-rate increases to future balances only. And fourth, end the practice of universal default, where a creditor can change a borrower's terms based on their debt payments to other creditors. We also need a new consumer protection commission, which I would call the Family Savings & Credit Commission, whose job it'll be to review all the financial services products that are being marketed to families and ensure that the terms are reasonable and fairly disclosed. [The commission would] oversee all types of financial institutions whether chartered under federal or state law.

You were a trial lawyer representing injured people and making millions on Big Business. Some say this country is way too litigious, and that's one of the reasons it's not as competitive as it once was. Is America too litigious?

The first thing I would point out is that I was a small-business owner and ran a small business. Helped run a small business in the beginning, and then ran my own small business for two decades. So I actually know a lot of the issues that businesses are faced with as a result of my own personal experience. What I believe is that the jury system represents democracy in action. Are there things that can be done to create improvement? Yes, there are. For example, I've proposed that in the case of medical malpractice, we put more responsibility on the attorneys who are considering filing cases, requiring them to have independent experts determine whether the case is meritorious or not, and then require the lawyers to certify that the case is meritorious before filing it. And I would hold the lawyers, not the individuals, responsible financially, so that we don't get cases into the legal system that don't belong there and clog up the system.

With 48 million Americans uninsured, how are you planning to fix the health care system in this country?

I've proposed a very specific universal health care plan that requires coverage for every man, woman, and child. It gives Americans choices in health markets between either a private plan or a government plan. The government plan is essentially Medicare Plus. Subsidize health insurance premiums up to about $100,000 of income for a family. And we'd fill in all the cracks in the health care system, which means that [denying coverage for] preexisting conditions is outlawed; preventative care, chronic care, long-term care are all covered; mental health is treated the same as physical health; and it's mobile. If you move, if you change jobs, your health care can go with you. And there are a whole group of things we would do to bring down health care costs—roughly $130 billion of cost savings a year. They include mandated use of electronic record-keeping. And my plan costs—you didn't ask me this, but I think people deserve to know—my plan costs $90 billion to $120 billion a year. It's paid for by rolling back President Bush's tax cuts for those who earn more than $200,000 a year, back to the tax rates that existed under President Clinton.

Are there any of the Bush tax cuts that you would extend or make permanent?

Yes, all the tax cuts that apply to the middle class, which is already carrying too much of the tax burden. So I would leave the tax cuts in place for people earning roughly $200,000 a year or less.

You've talked about almost doubling the current capital gains tax of 15%.

If I can be a little more precise, what I have said is if you earn under $250,000 a year, your capital gains rate will stay where it is now, which is either 15% or lower. I would raise the capital gains rate from 15% to 28% for those who earn more than 250,000 a year.

Based on your experience as an adviser to private equity firm Fortress Investment (FIG), what is your take on the private equity boom?

I can tell you what I saw firsthand at Fortress (FIG). Basically, what they did was look for business deals that made sense. They created opportunities. They were looking for good investments where the opportunity for return and growth was high, which I think is largely true of most businesses in this country. And they worked very hard at what they did....and accomplished some good things in terms of the efficiency with which capital was being used and capital getting to the places where it could be most productive. I also think that there are some changes in our tax system that, if applied to hedge funds and hedge fund managers, will create fairness that doesn't exist today.

You have said that hedge fund managers and private equity players pay taxes at a lower rate than their secretaries. How would you change that?

The profit that hedge fund managers earn....is effectively the product of their work, and I think it should be taxed at ordinary income rates. And I think we should close the loophole that allows hedge fund managers to defer large amounts of compensation offshore.It's certainly not something that most Americans can take advantage of.

Should the oil industry be subject to a windfall profits tax?

I know others like Senator Clinton have proposed that. Instead, I have proposed that we eliminate the subsidies in the federal budget for oil and gas companies, which I think are unnecessary given their profitability.

When would you bring the troops in Iraq home?

If I were President today, I'd draw 40,000 to 50,000 troops out immediately. I would continue a steady redeployment of combat troops out of Iraq for the next 9 to 12 months. I would engage the Sunni and Shia leadership to help reach a political compromise. And I would engage other countries in the region, particularly the Iranians and the Syrians, to participate in helping stabilize Iraq, because they both have an interest in a stable Iraq, especially if America is not an occupying force.

Are the Saudis friend or foe, and how likely is it that the royal family will collapse?

Oh, I think that's unpredictable. I do know that this $20 billion arms deal with the Saudis is a bad idea. It was done with no conditions. The Saudis, we know, have fallen well short in their efforts to stop terrorism and be supportive in Iraq. The Bush Administration says that this $20 billion deal was done as a hedge against Iran, but Iran spends only $4 billion to $5 billion a year on conventional weapons, so I'm concerned that it will incentivize Iran to accelerate its nuclear program. The deal represents the Bush Administration's foreign policy of convenience as opposed to a long-term vision for how we stabilize the world.

Maria Bartiromo is the anchor of CNBC's Closing Bell.


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