Competing to Win
Of the many wounds to America’s economy over the past few years, the majority have been self-inflicted. But that unfortunate reality notwithstanding, you can’t seriously examine our long-term national economic and jobs outlook, particularly regarding manufacturing, without addressing the China question.
I was tempted to say “the China threat,” and certainly that would be accurate on many levels. But in the vast intersection of the world’s two largest economies, there are many opportunities as well.
As president, I would start the task of spurring economic growth – and the job creation that comes with it – by dramatically cutting America’s uncompetitive corporate tax rate in half for all companies (to 17.5%), and zeroing it out for Section 199 manufacturing activity. Home-grown manufacturing in many ways is the foundation upon which the rest of our economy is built. It is also the playing field that China has most successfully managed to tilt in its favor.
Their wages will probably always be lower than ours, and their environmental and social protections as well. But that doesn’t mean we can’t work to pry open their markets and press them to play by the rules of international commerce and currency exchange. And when they do, I believe we can compete head to head with them or anybody else. The Chinese people work hard, there’s no doubt about that. But so do we.
Of course, there’s more to this bilateral relationship than trade. It certainly doesn’t help our position that we continue to create huge debt for the rest of the world to buy. But I think our current straits are also a result of a refusal on our part to confront honestly the true nature of what remains a brutal, authoritarian and nationalistic regime. What does China stand for? Largely, it stands only for itself.
Our response must be more than just a corresponding selfishness. It must be rooted in our values. That’s a term that gets bandied about pretty loosely, so what exactly are America’s values in this context?
1) Free enterprise. That means globally competitive, pro-growth corporate and manufacturing tax policies. It means eliminating stifling, job-killing regulatory behemoths like Obamacare as well as all of the other new rules the administration has dropped on the business community. It is 20 percent more costly to do business in the U.S. than our top nine trading partners, and that’sexcluding labor costs.
I support a fairer, flatter tax code because the current system punishes individuals, small businesses, and corporations competing globally. I will fight to simplify the tax code by moving from six to two rates and lowering personal income tax rates to 10 percent and 28 percent respectively and eliminating deductions other than those for charitable giving, home mortgage interest, health care, retirement savings, and children. I will also eliminate the oppressive and unfair Alternative Minimum Tax (AMT) and death taxes, and cut capital gains taxes by 20% to spur further economic growth and investment.
The American people are the greatest innovators in the world – this alone makes us capable of competing economically with all countries. To the extent that government plays a role in the economy, it should be to protect the freedom to allow this innovation to blossom naturally, instead of trying to “spread the wealth around.” We’ve seen how well that has worked over the past three years: One in six Americans is now in poverty, one in four kids on food stamps – the president’s vision of fairness reminds me of Churchill’s definition of socialism: “An equal distribution of misery.”
2) Education reform. Another critical element for our manufacturing and economic success is relevant and quality educational options. The federal government now administers 47 different employment and job training programs at a cost to taxpayers of $18 billion. I will fully block grant federal job training programs and most federal education programs to the states, giving states flexibility and resources, and strongly encouraging them – and their communities – to create quality vocational education options for students that are directly tied to what manufacturers and other businesses most need to compete.
We must dramatically reform our entire education system, returning decision-making to consumers and provide them with meaningful options that meet the needs of individual students and employers rather than governments or unions. Barely half of the young people in our 50 largest cities graduate from high school on time. While the solutions do not lie with the federal government, this should be unacceptable for all Americans who embrace expanded opportunity and are serious about expanding opportunity and addressing poverty. It should also be unacceptable to those who want us to compete and win globally.
By 2018 it is estimated that only 37 percent of jobs will be open to workers with only a high school diploma, and they are not going to pay well. Better education, better skills, and a better connection to job options for all of our students will help get us back on track. Local business and education providers should be at the forefront of this strategy.
3) Peace through strength. This is the opposite of President Obama’s “leading from behind,” which is such a pitiful expression of policy that it has made the French look bold by comparison on the global stage.
National defense is the number one constitutional priority of the federal government. We don’t need to be cutting a trillion dollars from our defense and troops when the Chinese are moving in the opposite direction, adding large numbers of warships, submarines, fighter jets, and offensive missile capabilities that can knock out stealth aircraft and threaten our largest warships.
At the same time, it also means living within our means. President Obama has created record budget deficits by spending 40% more money than we actually have. We need to cut $5 trillion in federal spending over five years, balance the budget and pass a Balanced Budget Amendment capping federal spending at 18% of GDP to reduce government and so we don’t ever get in this mess again.
We must also unleash our domestic energy resources instead of trying to strangle their development. My plan will create energy security that strengthens our national security and decreases reliance on unreliable and adversarial nations. We need to expand domestic innovations and energy resources. This includes oil, natural gas, clean coal, and nuclear energy. As President, I will remove bans on drilling—both onshore and offshore—and will end federal energy subsidies, like those for Solyndra. This will immediately increase expectations of future supply, thereby lowering prices. It will create jobs and bring revenues to federal and state governments.
America is one of only a few nations in the world to put known large domestic supplies of oil and gas off-limits to exploration. The result? The Chinese, who generate less than one percent of their electricity from renewables, have purchased drilling leases from Cuba and will soon be drilling 45 miles off the coast of Florida while American workers sit on the bench and watch Chinese workers perform their jobs.
4) Standing up for liberty. When the Chinese government attempts to manipulate Internet service providers – even forcing them to provide information on domestic dissidents – it’s not just an economic issue. It goes to the heart of the battle between freedom and tyranny. We can’t leave these companies to simply fend for themselves in the face of this kind of oppression. Likewise, we must stand with peaceful nations in southeast Asia, many of whom China has been attempting to intimidate by asserting ownership and control over the South China Sea.
In a nutshell, we must continue to stand for freedom and human rights, which are hardly uniquely American values. But they are at the core of our vision of a just society. Certainly we help no one by relegating them to a distant second priority behind economic considerations. Reticence on these issues does not convey the kind of strength and self-confidence that command respect in Southeast Asian cultures. A robust human rights policy that is integral to our engagement with China will project confidence in our values that will reverberate through Burma, North Korea, Sudan, Iran and elsewhere.
We are on the right side of history, not just economically but on the value and dignity of all human life. Ronald Reagan was able to walk and chew gum at the same time. He stood with Soviet dissidents in prison even while he engaged and stared down to the Soviet Union. We must likewise engage China economically while making clear that forced abortions through their one-child policy, religious repression and the torture and imprisonment of dissidents are simply not acceptable.
That might seem obvious or even pedantic, but it seems beyond the grasp of the current administration. Just last summer, Vice President Biden went to China and announced that he would not “second guess” their one-child policy. Not long before, President Obama held an elaborate official state dinner for Chinese President Hu Jintao – a tragic irony in which the winner of the 2009 Nobel Peace Prize hosted the man who was at that very moment imprisoning the winner of the 2010 Nobel Prize.
His name is Liu Xiaobo, and he is still in jail for no reason other than exercising his God-given right to speak freely. As Americans, we believe not only in freedom of commerce but in foundational freedoms like religion and speech as well. That is the subtext upon which we must engage China economically. We are freedom people.
Rick Santorum, a former representative and senator from Pennsylvania, is a candidate for the Republican nomination for president.