Below are the video and transcript to the panel discussion “Politics and the Economy,” which took place at the David Horowitz Freedom Center’s 20th Anniversary Restoration Weekend. The event was held Nov. 13th-16th at the Breakers Resort in Palm Beach, Florida.
Brian Calle: When I was coming into this weekend I wasn’t even fully ready because I was like, wow, what an election we just had. Wow. Then day three of Restoration Weekend and I’m like, wow, there is so much more to be done, and it’s so funny, this is the third year that I’ve been part of Restoration Weekend thanks to David and Michael Finch, and for years and years many of my friends who are here from Orange County, Marilyn, Cathy Grimmer, Paul and Sally Bender had said, “You’ve got to go to Restoration Weekend, no matter what the outcome of the election. We go there and we leave feeling revived and ready to fight more.“ After this particular weekend I was thinking to myself, a weekend might not be long enough. We should maybe start, David, Restoration Week. I don’t know. Michael’s going to kill me for saying that.
We have a really great panel today. We have two of the foremost minds of the conservative movement. Their brains are so big that I’m intimidated to be on stage with them. I’m going to introduce them both from left to right and they don’t need introductions, you all know them so I’ll make this quick. Michael Barone, obviously a senior political analyst for the Examiner, Fox News contributor and the author of the Almanac of American Politics.
Michael Barone: Co-author.
Brian Calle: Co-author, foremost author, right? Then second, Stephen Moore, long-time writer and editorial writer and columnist with The Wall Street Journal. Now he’s the Chief Economist of the Heritage Foundation and I think his most impressive credential, because I’m biased, is that he’s also a columnist for the _Orange County Register_ so, just saying. We’re going to start our panel off with opening remarks. We’ll start with Steve and then we’ll move to Michael with kind of their thoughts on what’s next on politics and the economy. Then we’ll ask a couple of questions and then open it up for you all to get your questions answered as well. Steven, let’s start with you.
Stephen Moore: Okay, so let me give you my quick – Michael is obviously the Dean of Politics. I’m going to give you just a quick seven or eight minute kind of sketch on what’s going on with the economy. Some of you have seen these slides before, and I’m sorry if I’m a little bit repetitive of what I said last year, but I think this is such an important message. Let me just start by saying this, I’m incredibly bullish on the U.S. economy. I think we’re going to see an incredible, especially after this election, I think we’re going to see a big burst out of growth. We’ve been stuck in this 2 percent rut on growth now for six years. This has been an incredibly weak recovery but because of a lot of factors I talk about, I just think we’re really prepped for a big recovery. As I said last year, but I’ll repeat this, the one industry that has really almost carried the rest of the economy on its back for the last six years has been this oil and gas boom. It’s not a surprise to anybody in this room by now. This is an incredible expansion we are living through. Politics is so rich with irony. The irony of Barack Obama’s Presidency is that he will have presided over the biggest oil and gas boom in American history and this is a president who hates the oil and gas industry. If you look at this chart you can see what’s going on here. The red line is all employment in every industry outside of oil and gas over the last six years, and you can see the big decline obviously in employment that happened during the great recession of 2008 and 2009 and you can see what a really flimsy recovery this has been, and it has taken us so long to get back to zero. By the way, this goes through the end of 2013. If it went through today, we’re right back about zero; so that is to say it took us six years but we finally recovery of every job that was lost during the recession. That’s a pretty, pretty long and slow recovery process.
Now look at the blue line. That’s the oil and gas industry, and it’s interesting, I was giving a talk this summer to the Oklahoma and Texas Oil and Gas Drillers Association. By the way, I think that may even be more conservative than this group here and so I started off my speech by saying, “Congratulations, you’re the people who reelected Barack Obama.” They weren’t real happy but without this boom, there is no way that Barack Obama would have ever been reelected because the economy would have still been in a recession in 2012. Now what’s interesting about this boom are a couple of things. It is not – as you know, Michael, my mentor was the Great Julian Simon and Julian Simon taught us that natural resources don’t come from the ground or from the earth. they come from the human mind. This boom in oil and gas is such a perfect example of what Julian talked about; that the ultimate resource is the human mind because this massive amount of energy we have in this country. It’s not as if all of a sudden overnight God endowed America with all this oil and gas. It has been there for hundreds of thousands of years. This is a testament. This breakthrough is a testament to incredible technological prowess. Wild cat or entrepreneurs, most of this energy was not found by Chevron and Exxon and so on, but smaller oil drillers just went out there and found this stuff, and it’s also a result of incredible technology. We’re just seeing technologies that have changed this industry in such a massive, massive way.
Now what’s interesting about this story are a couple of things. One is that if we get this right, and I said this last year – actually I misspoke last year. Last year I said if we get this right within five years, the United States of America is going to be energy independent. That is to say we are going to be selling more of this stuff than we buy and that’s true, I’m going to stick with that. It’s quite plausible that by the Year 2020 if not before, the United States will be a net exporter of oil and gas, and as you know, that is a complete game changer with respect to our economy, and it’s a game changer, by the way, with respect to our National Security. If we can actually sell this stuff rather than buy it; you know that you’ve been reading about this, ISIS gets about $5 million a day, $5 million a day from petro dollars. We are funding the people that are trying to kill us so if we don’t have to buy this stuff, it changes the whole geopolitical situation, but I’ve changed my tune on this. I would simply say this. I kind of underestimated how big this is. Before I said five years from now we’re going to be energy independent. Five years from now we’re going to be energy independent.
My new line on this is five years from now the United States of America; this great, great, great country of ours is going to be the energy dominant country in the world, the energy dominant country in the world. The thing that’s amazing about this, if you look at that incredible boom – just think about this ladies and gentlemen, think about how big this would be and could be if you actually had a president who liked this industry. This has happened at a time when Barack Obama is doing everything possible behind the scenes to completely decapitate this industry. For example, the pipeline issue is a big one and, by the way, we don’t just need the Keystone Pipeline, obviously we do; we need pipelines all over this country to get the oil and gas that we have to every area of the country and around the world where we need it. So that’s number one, Obama is not allowing virtually any new pipelines to be built.
Second of all as you know, if you look at this oil and gas boom on that chart, almost all of that, 98 percent of that boom is happening on private land. Almost none of it is happening on federal. In fact, I saw a statistic the other day that we’re actually drilling less today on public land than we were six or seven years ago. If we were to open up federal lands – and I’m not talking about drilling on Yosemite or Yellowstone or the precious national parks that are environmentally sensitive; I’m just talking about drilling on forest land and so on that’s basically vacant. If we were able to do that we could literally raise trillions of dollars of revenue of the next ten years to repay our national debt or to do other things to raise revenues. We could practically eliminate the corporate income tax and replace that with money that we could get from drilling on federal land.
So that’s the second one, and the third one that’s so important and that we should all be paying attention to is these new EPA Regulations that President Obama is talking about, and this insane deal that President Obama supposedly signed with the Chinese. Did you all follow this that the Chinese are now going to agree to reduce their carbon emissions by 25 percent by the year 2030? That is the biggest bald-faced lie I have ever heard. The Chinese are not going to reduce their carbon emissions. They are laughing at us today in Beijing. The Chinese are building a new coal burning fire plant every month in China so they are using fossil fuels. They’re going to burn this and they said to Obama, “Yeah, you go back to the United States and you cut your carbon emissions by 25 percent and we’ll do the same,” wink, wink, wink. That isn’t going to happen. This is just unilateral economic disarmament by the United States, and let me make another point about this because I think it is such an important issue. I think a lot of you probably know this but can anybody in this room tell me what country of all the industrialized nations in the world, which country has reduced its carbon emissions the most over the last six years. We have. How many of you know that? The United States. If you read the school books or read the newspapers you would know that. We have reduced our carbon emissions more than any other country. Wait a minute, how could that possibly have happened? How could that possibly be true? We didn’t do cap and trade. We didn’t do, I don’t think we ever signed the Kyoto Treaty. I don’t think we ratified it. We didn’t have a carbon tax, all these things that all these sanctimonious Europeans said that they did. We’ve cut our carbon emissions more than they have and I think you all know the reason why – because we’re converting electricity to natural gas. Natural gas has become the number one source of electricity in the United States; it just surpassed coal. Natural gas is a wonder fuel. It is like this amazing wonder fuel. Think about this; 1) It is abundant, we have hundreds of years’ worth of natural gas in this country; 2) It is made in the USA; 3) It’s incredibly cheap; and 4) It’s a clean burning fuel. Now why in the world would anybody be against natural gas?
But you know what’s amazing, the environmentalists have turned against natural gas; they’re against it even though it reduces greenhouse gasses. Stunning, isn’t it? I’ll make one last point about this. If you look at electricity production today in America, because you all know this – the master resource is energy. You can’t produce anything without energy and everything that we have, a major component of that is cheap and affordable energy. Well if you look at our electricity today, where do we get our electricity today? I just told you the number one source of electricity today is natural gas. The number two source of electricity is coal. So they don’t want natural gas, right, because they don’t want fracking. The second source of electricity in the United States is coal. They don’t want coal; they’re shutting down coal mines all over the country. The third source is nuclear power. They hate nuclear power. The fourth source is an incredibly good, very affordable source of renewable energy, which is what? What’s the number one source of renewable energy in American today? I heard somebody say it. Hydropower. Actually hydropower is a very good source of energy. They hate hydropower too. Why do they hate hydropower? Because then don’t want dams, it’s going to kill the fish. So any form of electricity production that actually works they’re against. This leads me to an important point that I want to make.
You know, David, at this conference we’ve been talking a lot about the sinister elements in America today, the communists and the Jihadist and the “so-called progressives.” I want to make a point to you that I think is really important. I would make the argument to you that the most dangerous movement in the world today is not all of these other groups, and I’m not saying they’re not dangerous. The most dangerous movement in the world today is the Radical Green Movement. These people are absolutely crazy.
So I’m going to just kind of move on and make a couple of other quick points. This is the crux of my argument about the economy, and this drives liberals crazy, so I want just two or three minutes to walk you through this. If you look at this chart, the way I put it is the last 50 years there have been two great economic crises in America. The first of course was the late-1970s and early-1980s when the United States went through what I call a mini depression. We all remember that period. You all remember 20 percent mortgage interest rates and 14 percent inflation and the fact that in the late-70s and early-80s America was truly deindustrializing, and if actually you read about what liberals and even a lot of conservatives were saying at that time, you remember this, Michael: America is an empire in decline, the Japanese are going to take over and actually the Soviet Model works better than ours does and so on. That was the kind of environment that Ronald Reagan took over in and of course, in 2008 Barack Obama took office during an incredible economic crisis. There’s no question about it. We had lost six million jobs, the real estate bubble had burst, and half of the banks in America had collapsed. So when Barack Obama walked into the White House, he walked into office in an incredible crisis, as he says ever speech that he gives.
Now here is what makes this experiment so interesting. These two presidents used diametrically opposite approaches to dealing with the crisis, right? So you all know the Reagan formula. It was to cut tax rates; it was to get government spending under control. He worked with Paul Volker to slay inflation by cutting the money supply, and in a sense what Ronald Reagan did was he empowered workers and entrepreneurs and businesses to rebuild the American economy, the supply side recovery. Barack Obama came in and did exactly the opposite, right? Barack Obama used every single page out of the Keynesian playbook and, by the way, I’m not going to blame this just on Obama. I would say the last year and a half or two years of the Bush Administration were a disaster too. So what did we do in response to the 2008 crisis? Well, we bailed out big banks, insurance companies and auto companies. We passed an $850 billion dollar so-called spending stimulus bill. We had ObamaCare. We had tax increases on the rich. We borrowed $7 trillion, in six years we have borrowed $7 trillion. This is a Keynesian’s dream, right? We threw everything in the Keynesian playbook at that recession. If you look at this chart, what I think is really interesting and I don’t think liberals have a good response to this. What this chart is showing you is that the U.S. economy has grown by 2 percent under Barack Obama under his Keynesian formulation. In fact, I think I wrote a piece on this for you guys are OCR. You can see, so the economy has grown by 11½ percent over that period.
Now that’s decent but then you look at what happened under President Reagan. Under Ronald Reagan the economy didn’t grow at 11½ percent over the recovery period; it grew at nearly 25 percent. Now that’s a big, big difference ladies and gentlemen, that’s a huge difference. That means, and what the number there you’re looking at, what that means, and if I updated that to today – because I don’t have the last two quarters on here. The underlying point of this chart is if the U.S. economy had grown as rapidly under Barack Obama’s recovery as it did under Ronald Reagan’s, the GDP national output and national income of this country would be $2 trillion larger today, $2 trillion. That’s a massive number. If we were to give that $2 trillion to every single family – by the way, that’s year after year after year we’d be $2 trillion larger. If we didn’t have that growth gap and we prorated that money to every family in America, the average family in America today would have $15,000.00 more income. $15,000.00 more income. Now here is the amazing part about this. The average family in America doesn’t have $15,000.00 more income in this recovery. I think most of you know this. The average median income family in the United States has $1,500.00 less income than when this recovery, so-called recovery, began.
Now why is that so important? I think that single statistic may more than anything else explain why the Democrats had their heads handed to them a week and a half ago. Barack Obama was saying just ten days before the election, “Every single statistic shows improvement while I’ve been President.” Well he left out the one that Americans care the most about. What Ronald Reagan used to call “real take home pay” and “real take home pay” has been reduced and not increased over Barack Obama’s presidency, and that explains in my opinion, Michael, why 51 percent of Americans today say that the United States of America is still in a recession – because for half of the Americans it still is a recession. When you’re losing income relative to inflation, you’re not feeling better about things; you’re feeling worse and that’s a point we have to hammer home over and over again. One quick final point.
Brian Calle: Okay, real quick though.
Stephen Moore: Okay, just the states.
Brian Calle: Michael wants to talk about something.
Stephen Moore: No, I know. I agreed not to be too long, but this is so important. No, I just got to do the Texas thing. So this is just the last point. If you really want to understand the superiority of our ideas versus their ideas, we’ve got such a great, great experiment here in the United States, and it turns out the four largest states in America, two red states, Texas and Florida are obviously red states. The two biggest blue states are California and New York. Correct me if I’m wrong about this Michael but I believe one out of three Americans lives in those four states.
Michael Barone: That’s right.
Stephen Moore: So those are the states that really matter and the basic bottom line here is that these red states, and this is what my book is about, the red states are incredibly outperforming the blue states. You know this, migration pattern – there is a huge migration out of the Midwest and out of the Northeast into the South and to states like Phoenix and Utah and so on, and this is what liberals cannot, they cannot explain this because they kept saying, “Look, they want higher minimum wages, higher tax rates on the rich, don’t allow drilling, more regulation” and so on. All of these things were supposed to create a worker’s paradise for the workers. What they can’t explain is if that’s the case why are people leaving those states and what this chart is showing you is that over the last 15 years, for every job that was created in California and New York, three to four jobs were created in Texas and Florida. Look, what’s the income tax rate today in Texas and Florida? Zero. How many in this room are Californians or New Yorkers? Do you know what your highest income tax rate in California and New York is today?
Brian Calle: Don’t remind us.
Stephen Moore: 13.5%. This stuff matters. I debated Paul Krugman on this about a month ago, about the economy. I showed him this chart and I said Paul, you’ve got the Nobel Prize in economics. Please explain to me if your ideas are so much superior to ours, what explains this, and you’ll love this, Michael. He said, “Well there’s a very simple explanation.” He said people are leaving because of the weather, because of the weather. Now, actually, as with everything –
Michael Barone: The last year that Dallas/Fort Worth Metroplex had something like 90 consecutive days of triple digit weather.
Stephen Moore: Exactly, you took my –
Michael Barone: I’d like to have Paul Krugman mow some lawns in that weather.
Stephen Moore: I said to Krugman, well, Paul, that’s an interesting theory, that you say you know people, and by the way, there is some truth to that. People want to live in warmer places, and I said if that’s the thing, if this is all driven by weather, Paul, you’ve got the Nobel Prize, please explain this to me, why are people leaving San Diego and going to Houston? He had no answer. I’m going to stop there. Thank you very much. It’s been a pleasure.
Brian Calle: Thank you Steve, and all right, Michael, ready to give us the political scoop?
Michael Barone: Well I’ll try to give you my view of a couple of important things, including some reflections on the dialogues that have been going on here at the Restoration Weekend. I can’t resist beginning with some census data because I can’t think of anything more interesting to do than to plow through historical census data, make tables and things like that. Steve’s economic tables are no match for this and the match is my home State of Michigan versus the State of Texas. When I was growing up in Michigan everybody said well Texas is going to progress, inevitably. They will get big labor unions and so forth. They’ll have business corporations that will cooperate with the unions. They’ll get big government. They’ll have an income tax, they’ll be like us in Michigan and so forth – census date. In 1970, Michigan had nine million people. In 2010, 40 years later, Michigan had ten million people. A little bit of growth over 40 years, not spectacular. In 1970 Texas had 11 million people. Just a little bit bigger than Michigan. In 2010 Texas had 25 million people. Explain that Professor Krugman. You got cold winters in Michigan, but you sure got hot summers in Texas and you actually have some cold winters there too. Anybody that’s moving to Texas for the weather is deluded. So let me just make three major points here that have been to some extent inspired or amplified by what I’ve been hearing, listening and talking to people with about at the Restoration Weekend.
The first is about the macro economy in which I do not consider myself to be an expert by any means. I do know that there was a congressman from New York that said if you tax something you get less of it; if you subsidize something you get more of it.
Stephen Moore: Would that be Jack Kemp?
Michael Barone: Yeah and Jack had the right idea. Obviously we want to get the macro economy growing again. Some conservatives are saying okay we’ll just reduce rates on the high end like Reagan did and that will be fine. I think we need something more than that. For one thing, tax rates are not as high as when Reagan entered office. There’s less to be cut, but I think we’ve got to do something else. We’ve got to lower some tax rates. We’ve got to get rid of some of the really hostile and anti-growth regulatory things and the crazed religion of the Radical Greens. I think we also have to try to do something about family formation. If we want to unleash human capital – and Steve has written about this recently. I don’t know if his former colleagues at the Wall Street Journal editorial board are a little miffed at you, but one of the things that I think is holding us back to some extent, although it’s difficult to quantify, is family formation or the lack thereof. All the sociological studies show that children raised in two-parent families do better by all sorts of metrics from crime to economic growth and productivity. No, I don’t want to say anything negative about single parents and so forth. But almost 50 years ago Pat Moynihan wrote his family report and he said that we’ve got a real crisis because 25 percent of black children are born out of wedlock. The figure today is 70 percent. The figure for all children is 40. That is higher form of magnitude than what Moynihan was looking at justifiably, presciently, with alarm back in 1965, so what can we do. The Tax Code doesn’t automatically shape behavior. I think there are ways society can send signals. When you look back in history people like us like to talk about declines of morals. There are also increases in moral behavior that occur in various ways. The United States in 1820 was a nation of drunks. Basically alcohol consumption was cut by about two-thirds over the next 40 or 50 years. That was an advance in human capital among other things.
We had senators like Mike Lee, Marco Rubio, others talking about child tax credit increase, other things to send money and signals to people to try to encourage family formation, to encourage two-parent families to give kids the advantage. I think that there are a lot of other ways that we can think about this in terms of economics; but that’s one way to send a signal, that’s one way to give what Cass Sunstein calls a “nudge,” which in this case I think is useful. So I think that we ought to be thinking about that and those of you who are active, and many of you are, in the voluntary sector, those of you who create organizations who work and organizations to try to foster better behavior, I think this is something many of you probably already are thinking about: how do we strengthen that kind of behavior because there’s a lot of human capital over the last generation that could have been created and wasn’t created. That’s a problem. We’d like to do better in the next generation, and how are we going to do this?
The second point I want to make is in another sense about the new generation and that’s taking a look at the election data, and this one was kind of fun to take a look at. I was always a little dismayed at reading the number on President Romney, is to take a lot at two groups that we’ve been told are going to be a larger part of the electorate in years hence, and they are, and that we were told were going to be part of an inevitable during natural and permanent Democratic Party majority in America – the Hispanics and the Millennials. If you made straight line extrapolations from the 2008 exit pole you might very well have thought that. Both those groups, Hispanics, a term invented by a census bureaucrat circa 1970; Millennials, people born after 1980 or the 18 to 29 year-old-age group among voters, voted approximately two to one for Barack Obama in 2008. They will be a larger part of the electorate. My move to amend the Constitution to raise the voting age to 35 is barred – and permanently barring from the vote anyone born after 1980, our chances for that solution has been missed.
Brian Calle: I wouldn’t be able to vote.
Michael Barone: There you go, okay, sorry about that.
Brian Calle: No it’s all right, it’s all right.
Michael Barone: I’ll listen to your recommendation and start voting. Those things having failed, those groups were going to go by, and you have writers like National Journal’s Ron Brownstein, who is a very talented guy, talking in addition about the non-white majority – divides electorate into whites and non-whites and says there will be a non-white majority. Well let’s see how that’s working out. Let’s start off with the Millennials. In 2008 they voted 66⁄32 to Barack Obama. Expressing that vote as a democratic margin as percentage of the total electorate. Take the democratic popular vote margin among Millennials as a percentage of the total electorate. It’s 7 percent of the total electorate. Barack Obama’s margin among the total electorate that year, 7 percent. Essentially all of this popular vote margin came from them. What has happened in years since. Well the Millennials down there in their parents’ basements have not been doing so well. They were told that there was hope and change – that Obama was a with-it sort of person and he was cool and the other people weren’t and so forth. In 2012 the Obama margin among Millennials goes down to 60 to 38. That’s actually the biggest decline arithmetically among any age group so there is some decline.
It brings to mind the fact of the baby boomer, the fate of the baby boom generation politically, which I guess I’m part. I’d like to say that the good news is that the baby boom generation is going to die out. The bad news is I’m going to die about the same time. The baby boom generation was 50⁄50 in the Nixon/McGovern race when the rest of the country was 63⁄36 for Nixon. In 2012, 40 years later the baby boom generation voted for Mitt Romney, so people are affected by the changes and the things they see in their life as well as by some of the conservatizing forces perhaps of growing older, perhaps wiser, but in any case, the initial vote is not destiny. Where were the Millennials in this election? Take a look at the Exit Poll, the national vote for House of Representatives, it was 54⁄43 Democratic. Express that as a percentage of the total electorate, Democratic margin as a percentage of the total electorate is 1.5 percent, 7 percent in 2008, 1.5 percent. Millennial turnout will be higher in the general election than it was in the off-year election, so 1.5 percent translates to about 2 percent general election terms. That’s a handicap for republicans. They’ve got to carry their age groups by a larger margin in order to win, they did so, winning 52⁄45 House popular vote overall in this year in 2014 as well as 2010.
What’s happened to the Millennials in large part it’s a lot of human capital that’s not being achieved, that’s not finding an outlet. I think one of the things I have felt is that there is a misfit between the Millennial generation and the way that they want to customize their own world. Set up their own Facebook page and all this stuff, iPod list, that’s pretty antique now. The tension between that and the centralized command and control policies of the Obama Administration. Those are policies that were initially crafted by people in an industrial age – 40,000 people worked at the Ford Rouge Plant. You had a huge union local, it had 60,000 members. You had a corporation that was one of the largest in the world. The building was built in 1916 to 1918 at a cost of $1 billion which was actually a lot of money then. I went around the Ford Rouge Plant in a car this summer – it’s 5.0 miles to drive around the perimeter of that place. That is an artifact of the Industrial Age. So individuals are small cogs in large machines, that’s what you do, big government, the centralized experts Jonathan Gruber will take care of you, you’re too stupid to take care of yourself, that’s the Industrial Age policies. That’s a bad fit with this generation. We’re not in an industrial age, we are in an information age. The Ford Rouge Plant is a symbol of the Industrial Era, this is a symbol of the Information age. It’s got more data in here than the Ford Rouge Plant ever processed and these policies aren’t working for them. I think they’re waking up to that. White Millennials are a significant Republican margin of this election. The black under 30 voters. Actually male blacks under 30 actually are moving towards Republicans more than their elders. So I think that there’s some hope there. They are looking for something.
The Republicans have an opportunity, they sure don’t have a mandate. But they’ve got an opportunity for getting in touch with these people for policies that will enable them to find work, to earn success in ways that maximize their own special talents – their own individual interests. The contribution that that individual uniquely can make to society. The other side’s programs don’t give you any access to society. The other side’s program don’t give you any access to that – you’re just a cog in a large machine. These programs – I think conservatives can come up with a couple of programs that allow human capital to flourish in ways that are particular to the individual. I think there’s an opportunity there.
Hispanics – Brownstein likes to lump together all “non-whites.” I think this is misleading. Hispanics and Asians, the people that fall into these categories, do not share the history experiences and heritages of Black Americans, which are, as many Black Americans will tell you, they are unique and they are absolutely correct in saying that. They’re not behaving that way. When Asians come to this country these days they don’t see separate drinking fountains marked off for them and they aren’t prevented from voting and in fact, what we’ve got is very different numbers. If you look at the Hispanics, they go 67⁄31 Obama, 2008, 71⁄27 Obama, 2012. They don’t like the self-deportation comment of Mitt Romney and so forth. This election they’re moving in the other direction. You look at the Exit Poll. It’s 62⁄36 for Democratic candidates for the House nationally. But this aggregated by state. One of the things you see, about 40 percent of Hispanics live in California, New York and New Jersey. They were voting over 70 percent on average for the Democratic Party. They are increasing Democratic margins that would exist if there were not a single Hispanic in any of those states. If you are looking at the rest of the country, you’re seeing a different pattern. In Rick Perry’s Texas, John Cornyn carried Hispanics 49⁄48, Greg Abbott got 44 percent here in Florida, Rick Scott got 38. In Kansas and in Georgia, states with growing Hispanic percentages that some Democrats think are going to carry those states for them, Hispanics voted for the Republican, Nathan Deal, David Purdue, Pat Roberts.
My observation is that Hispanics are voting more like their white neighbors than their black neighbors and depending on the state they’re in. I think that once again here are people that are looking for opportunity. Here are people that are disproportionately in their younger years. Here is human capital; potential human capital that is being under-utilized in this economy and these individuals are not being given an opening under this Administration’s policies so I think that once again there is significant opportunities and the idea that this is a totally non-white 90⁄10 democratic majority is simply factually wrong. I could add that the Asian numbers show a flip from 73⁄26 Obama 2012 to 50⁄49 Republican. I’m not sure that’s good data. Sorry folks we’d love to believe it but I think that you’ve got small and potentially unrepresentative samples, but I think it’s an interesting mix and some of you are in situations like that.
Let me move on to my third topic that I want to talk about and that is one that I know evokes controversy or strong feelings in this room and that is immigration. I think again there is a potential to unleash and enhance human capital in the United States, which we are in danger of missing, which people on the other side of the political fence are in danger of missing, and I think we have a set of immigration laws that have built on a system, that is built on a series of laws, 1924, passed 90 years ago, 1965, passed 49 years ago. We inadvertently got a system that prefers extended family reunification of mostly low-skill people to admission of high skill people. We’ve got a system now which we’ve got to lobby for declaring legalization of illegals, primarily low-skilled, and there’s an effective lobby for that. There’s an effective lobby for increasing the number of H1BVs, as they tend to tie high-skilled people to a particular firm. Microsoft wants you to work. Apple wants you to work.
I think we should take this opportunity, the fact that it’s obvious that we need to change our immigration laws, to take a new approach and not just do patch work. I’m not going to get into arguments here about what we do about seasonal farm workers, that’s a collateral issue. I think that one of the things we’ve seen now, unlike 2006 and 2007, which is when the sort of design of the bill that passed the Senate in 2013 was formulated. That’s a period when most of us thought we were going to have an unending surge of migration, especially low-skill migration from Latin America and some of us thought the best thing we can do is regularize it through some legalization. We thought also that our high tech system was going on fine, we didn’t have any problems there and we thought that we had plenty of demand for low skill workers because the economy was growing. Well, the surge in that migration from Mexico to the United States from 2007 to 2012 was zero, we don’t have that problem, and I think the argument is stronger today in my opinion than it was then, that says that legalization measures incentivize illegal immigration, which wouldn’t otherwise occur. I think prior to 2007 it was going to occur anyway. I think now we saw with the influx of Central Americans in the Rio Grande that there is an argument that undercuts the argument for legalization or at least suggests caution.
What I think is most important is to encourage high-skill immigration. Steve and I disagree, I don’t think we need a lot of low-skill people right now, new people. He thinks we always do. I think we always need high skilled people in this country and I think if you want to maximize human capital in the United States or in the world, we want high-skilled people in this country, as many as we can get. We’ve got a system where we admit a grudging amount of them, tied to particular firms. I think we might do better if we let in high-skilled people, people who can demonstrate that they have high skills and abilities and let them see what they can do in something that we have here despite the effects of the current Administration, which is called the free enterprise system, a free economy and work their way up there. I see as a model of the systems of our Anglosphere cousins Canada and Australia. Canada and Australia have high-skill immigration. They have point systems. I had a chance to talk here with Senator Sessions and I said to him, let’s look at how Canada and Australia do this. Can something like this be adapted to the United States?
Stephen Moore: Canadians and Australians don’t want us to do this.
Michael Barone: Well, a Canadian diplomat in Washington said to me please, please do not adopt our Canadian immigration system. We want these high-skilled people in Vancouver and Calgary and Toronto and Montreal. We don’t want them going to the United States. We want them in Canada and Australia wants them in Australia. I have a lot of affection for Canada or Australia but I say let’s give them a fight. I think that we should try to restructure this so that instead of extended family reunification of low-skill people we move towards high skilled people that have demonstrated their abilities and so forth in this country.
As I look back over the three things I’m talking about, let’s liberate the economy from high taxes, but also incentivize family behavior that we’re not sure we can fully influence but at least move people towards behavior that tends to maximize human capital. Present opportunities to growing groups of the electorate like Hispanics and Millennials so to maximize their human capital and to exchange our immigration system and not just tinker with band aids and stuff on the 90-year-old legislation and the 49-year-old legislation but actually reframe our immigration law. Take this opportunity to proclaim that we are a land of the free, home of the brave and we have open arms to people who come here with high skills and want to contribute to the United States and the world through becoming Americans.
Brian Calle: I think that, Michael, microphones are going to be going around in a second. I’m going to ask a quick question. Having just moved out from my parents’ basement, thanks Ally and Paul, and being Hispanic and a Millennial, I’d like to talk kind of specifically about some of those policies the Republicans just took to Congress, both houses. If you were in a room advising John Boehner and Mitch McConnell and the leadership in the Republican Party, what would you advise them they should do going out the gate in 2015 and what would you advise them not to do?
Stephen Moore: Well the first thing, how many of you have been following this issue, this esoteric issue of corporate inversions of companies that are leaving and I say this is actually a real crisis in this country, and I don’t think a lot of the politicians quite understand what’s going on here. If we don’t fix our corporate tax system – and most Americans have no idea about the corporate tax system and I don’t think Barack Obama understands this either. Our corporate tax, as most of you in this room know, we have the highest statutory corporate tax in the world. We’re at 40 percent and it’s interesting. If you look over the last 25 years it used to be, Michael, if you go back to 1990 the rest of the world was at about 45 percent. You know what’s happened over the last 25 years? The rest of the world is adopting Reaganonics – Ireland, England, Canada, they are cutting their rates very sharply and so it used to be we were 5 percentage points below the world average. Today we’re 15 to 20 percent above the world average. That doesn’t work anymore. I describe this as a Head Start program for every country that we compete with, right? It’s true and I would even make the case it is unpatriotic to support a 40 percent corporate tax. The people who are harmed by this tax are not big, rich Wall Street fat cats who own stock, although it does reduce returns to sharers, but there’s a lot of really good evidence by some of my friends at the American Enterprise Institute and some of my colleagues at Heritage, that the people that are hurt the most by this high corporate tax when companies leave is American workers. This affects their wages and affects their job opportunities, so I would make the case by that and if I could do one thing overnight I would say, let’s just get rid of the corporate income tax, right? Let’s just get rid of the corporate income tax and tax it to the shareholders when they earn it as capital gain.
But if we can’t do that there is a mandate in my opinion, there is a necessity we get that corporate tax rate down to 20 to 25 percent because if we do not do this and if we do not act quickly – you’ve seen what’s happened in the last nine months. Think about the companies. Burger King. Burger King is leaving the United States. Walgreen’s wants to leave. Pfizer wants to leave. I could name four or five other major Fortune 100 companies that are essentially renouncing their United States citizenship and leaving the United States and as you said, going to Canada, going to Ireland. In Ireland the highest corporate tax rate is 4½ percent. That means you can change your location from, say, New York to Dublin, and you can cut your corporate income tax by two-thirds. Companies have a charge to maximize their return to their shareholders so that would be the number one thing – get rid of the corporate income tax and then number two, let’s just blow up the whole income tax and start over with a flat tax.
Brian Calle: I agree with both of those things and I think you know that, but how to Republicans send that credibly to Obama when he spent his entire Presidency demonizing corporations and saying they’re the Devil.
Stephen Moore: Let me just make one quick comment about this. I believe one of the biggest, one of the turning points in this election – and correct me if I’m wrong you guys because you know politics better than I do. That imbecilic comment that Hillary Clinton made seven days before the next.
Michael Barone: When she was giving her Elizabeth Warren imitation?
Stephen Moore: Exactly.
Michael Barone: No there is going to be a very spirited competition if those two run against each other because we don’t know who’s going to carry Salem.
Stephen Moore: My only point in bringing that up is I do believe Brian that the big problem with the Democrats today, the Democrats today are anti-business, right? They are anti-business. My old boss Dick Army, you know Dick Army was the House Majority Leader, he used to say, and he said it so perfectly, liberals love jobs and they hate employers. Liberals love jobs and they have employers. You can’t have one without the other. This is where I think it gets to your point about Millennials saying, wait a minute, the Democrats said they were going to create all these jobs. When is the last time? Just a thought I want to put in your head. When is the last time this President in the last six years said anything good about business? When has he said, he is the same President who said two years ago, “you didn’t build that,” so that anti-business sentiment is the ruination of the Democratic Party in my opinion.
Michael Barone: Well, Steve starts off right with the populist to appeal and cut the corporate income tax. You’re absolutely right on the arguments intellectually and I think there is a political avenue to do this and an openness to do this. There is a lot of low-hanging fruit off there – the Keystone XL Pipeline, vote on a bunch of things where you’re going to get, by the way, a bunch of Democrats, 31 House Democrats voted for the Keystone Pipeline last week and so forth, that it’s a 70 percent issue. You’ve got a bunch of 70 percent issues, but I guess I would just reiterate my thinking on the immigration thing. I really think that we have an opportunity to change the trajectory of incoming immigration and so forth in the world in the years ahead. I wrote this book, Shaping Our Nation: How Surges in Migration Transformed American Politics and it’s about internal migrations and it’s about immigration migrations. We’ve had these unexpected surges of migration. Nobody in 1965 was predicting huge migration from Latin America. We actually imposed a limit of something like 60,000 Mexicans a year in the ‘65 Act, did you know that? It didn’t turn out to be very effective because of family reunification provisions and because of illegal immigration. Migration from Mexico was ten times that approximately between 1982 and 2007 and then it stops and that’s a historic pattern too. You get these surges that last one or two generations, they stop. I want the next surges to be high-skilled people from around the world.
One of the statistics that I saw recently and perhaps appropriate of last night’s meeting was that the percentage of people in the United States – like some of President Reagan’s statistics this may be wrong, so I want to be fact checked on this. The data was that of people born in Africa, that doesn’t include the President, people born in African in the United States today is something like 47 percent of them have college degrees and moving on to their accounting degree and getting that and we see that in Washington, DC. Michelle Obama, that Minnesota gets the Somalians, we’ve got the Ethiopians and it’s better for our metro area. But anyway, that’s an interesting data point. Let’s get the high-skilled people across the world because it’s better for our country and a more prosperous, more creative America is better for the world.
Stephen Moore: You know Michael I was in –
Michael Barone: It’s better for people all over the world because they in many ways have often been free riders on advances made in the United States and the people of the United States who make advances, who have economic success are also major supporters, not only through taxes and foreign aid but much more importantly through voluntary activities that have helped people around the world.
Stephen Moore: I was just going to say, I got in a taxi in Washington, DC about two weeks ago and the driver was an Ethiopian and he kept staring at me, and he kept looking back at me, he had this big smile on his face, “You’re on Fox News, aren’t you. I watch Fox News every day.“ I’m like these are our kind of people.
Brian Calle: All right let’s go to some questions from the audience. We have a microphone in the back.
Rep. Michele Bachmann: Thanks. You guys are so brilliant and I want to thank you and I just want to see me too to Steve.
Stephen Moore: Michele you are irreplaceable in the United States Congress. We love you. You are awesome! We need you to run against Mark Dayton for Governor of Minnesota.
**Rep. Michele Bachmann: **No I just want to say how much I love and underscore exactly what you said – in my former life I was a federal tax litigation attorney, before I came to the U.S. Congress and I think again this is a plus-up area where Republicans can go on offense in the next two years against Hillary Clinton or whoever the nominee is, because this is a job creations tax. That’s what the Corporate Tax Code is, it’s a tax on job creation and we need to frame it in such a way so that people know that what we want to do is get rid of these job killing taxes and have job creation taxes and I’ll give you one perfect example based upon inversions. Two weeks before the 2012 Election I sat down with all of the medical device industry in Minnesota from the baby startups all the way to the King Daddy which was Medtronic and all of them could be predictive. They saw that this could very well go the way of Barack Obama and the way of the medical device tax and so they’d been out looking in Europe and other countries to see where they could move their industries, and they were very frank. They said if we don’t take this election in 2012, we’re out of here because we’ve got better places to go for industry and so Medtronic is one of those companies that announced an inversion and then the Treasury Department came back and was basically going to cancel all those inversions but it’s human nature. People go where they can make the income so I think this is a target rich environment for us to go on offense and I think we’ll get Millennials. I think that we should compete for every bit of space for every voter because it’s about every voter, their job.
Stephen Moore: Let me make a broader point because I think that what you said is so important. Tell me if you think I’m wrong about this, Michele, but I think Republicans have an incredible opportunity right now with the old Reagan blue collar industrial union workers; because think about that. Put it like this, Michael. How can Tom Steyer coexist in a party with unionized blue collar workers? Tom Steyer is trying to deindustrialize America. He wants to destroy the jobs of pipe fitters, welders, electricians – he wants to destroy the jobs of Teamsters. Your and my party, Michele, you’re the person to do this. We ought to be going into these union halls, I’m serious, and we should be saying, we’re the ones who are trying to save your jobs. It’s these wacko Green Environmentalists who are trying to destroy your jobs, right? That should be our message.
Brian Calle: A question from Senator Sessions.
Sen. Jeff Sessions: Thank you, just briefly. I recall having met with a Canadian who runs their system of immigration. They are very happy with it. They are very pleased. At a hearing two years ago in the Judiciary Committee, the Microsoft representative and group pushing for high-tech visas praised the Canadian system. I said, well, Mr. Microsoft, I’ll adopt the Canadian system today. Do you agree to that? What do you think his answer was? He had this rueful smile, and the reason was they made a deal. They got their deal on the big bill. La Raza and the businesses who want lower-skill workers and the political groups that want family reunification. They made a partnership so that the package itself was unacceptable, in my opinion, so I guess I would say if we can break this bunch from their unholy comprehensive alliance and focus on the Canadian-type system, which gives points if you – millions of people speak English in the world. If you’ve got two people to apply to American, why not choose the one who already speaks English? Have we got two young people in Honduras and one has two years of college and one is a high school dropout, why not let the scholar get in?
We’ve got data to show that people with two years of education who come to America almost always succeed. Data shows that people who come to American without a high school degree, without language skills, almost always remain in poverty for generations. So I guess, Michael, I think you’re on the right track. I also am dubious about some of the things they say. Microsoft just laid off 18,000. Facebook, Mr. Zuckerberg, they only have 7,000 people. This is not a big job industry. If you travel the state like I do, and go in to business after business, it’s incredible the amount of robotics we’ve got. We’re going to have more widgets made with fewer people every year for the next 30 years. So we’ve got to think about how our people can be able to take the few jobs that exist out there, and we want to have their pay go up and not down. So anyway, I’ve gone too long.
Michael Barone: I think that this is a great example, Senator, that we are in an area where we need good policy instead of good lobbying. There’s a lobby for H1Bs because they stay with my company and you got indentured servitude or something like it. But high skill hasn’t got a lobby. It has got to find one.
Brian Calle: Why don’t we get a question over here and let’s walk to this side of the room too so there are a couple of questions over here.
Audience Member: Yeah, one thing you haven’t mentioned and please address it, is the toll on human beings of the Green Agenda. The world and our country came into fruition on oil, on energy. Nothing works, no one gets a better life without the energy to propel it. If you look at the Green Agenda, as a matter of fact I live in Austin. We have a little tabloid that’s called _The Austin Chronical._ Yeah you laugh, but it’s amazingly effective. They had some smartly groomed black kids calling green the new black, displayed on the cover of last’s week’s Chronical. This is a lie. It’s all a lie. If you take away the energy, Africa stops. They have no chance of ever getting out from under the chains of and if you look at China, what has propelled them forward at break neck speed? Energy, energy, energy and they take that all away and would you please address that because that’s one of the human tolls of the Green Agenda.
Stephen Moore: So I just got back my, it’s a great point. I just got back from Zimbabwe. My niece is a Peace Corps volunteer in this little village really out in the middle of nowhere. When you were talking I was thinking about this because this village, they are incredibly great people. I just fell in love with these people but you know, they’re living almost literally like it’s the 16th Century and you know what they don’t have in this town? Electricity, electricity. You can’t do anything if you don’t have electric power, and for our government, for Barack Obama to run around the world telling these countries they should use fossil fuels, use less fossil fuels, that’s immoral, right? He’s basically saying he wants to keep these countries poor and that’s a message we need to get through to people.
Just one other quick little story: we lost our electricity last summer when we had a big storm in Northern Virginia and I wrote a piece in the Wall Street Journal, and it got a huge response, and I just said what happened when the Morris electricity went out. I have three kids, two teenagers who I don’t like very much and then I have an 11 year old but my teenagers when the electricity went out, they thought the first few hours were really cool. We had a fire and we had candles and so on and I’ve got to tell you. After the first day, because we were without electricity for 72 hours, my kids were like screaming how do people live without electricity, my God they didn’t have any screen, they didn’t have cell phones. The point is if we let the Green Agenda go forward as these people want to do, we’re going to have rolling brownouts and blackouts in this country. If you want to see the American people get angry, it’s going to be when that happens. If you turn out the lights, people get pretty upset.
Audience Member: Good morning, two quick points. I find myself not surprised that once again I agree with Senator Sessions. Good morning Senator. Alan Greenspan testified before Chuck Shumer on April 30, 2009. It’s just two sentences, I want to read this because I think we have too many high-tech workers from foreign countries competing with American high-tech workers which disincentivizes kids from going into those fields. This is from Greenspan’s testimony. “Greatly expanding our quotas for the highly skilled with lower wage premiums of the skilled over the lesser skilled. Skill shortages in America exist because we are shielding our skilled labor force from world competition. Quotas have been substituted for the wage pricing mechanism and in the process” – this word amazes me – “we have created a privileged elite whose incomes are being supported at non-competitively high levels by immigration quotas on skilled professionals. Eliminating such restrictions would reduce at least some of our income and equality.” We need to get more American kids into those high tech industries, item number one. Item number two, if you go to the UN web site you will find that they predict the two fastest ways of increasing remittances flowing from the U.S. to the Third World, sustainability, green, and in that comprehensive reform. We need to understand that our laws were based on the concept of protecting American lives and American jobs, first and foremost.
Brian Calle: Michael, what are your thoughts.
Michael Barone: I’m not sure I’m so concerned about protecting high-skill people from competition. I think high skills are not are zero sum game. Andrew Carnegie did not suffer because John D. Rockefeller was successful in business. You got one immigrant and the other is the son of a confidence man. You can make an argument I think particularly at the stage of employment that we have now. Steve would not agree with it, but that low-skill employment is the zero sum game for the people and you let in more low-skills from other countries you drive down wages of low skill people in this country. I think there’s something at least marginally to that. High skill people are going to create and do things that you central planners didn’t think up. They’re going to actually figure out new things and Andrew Carnegie figured out new things, the poor boy from Scotland. So I’m for letting a lot of competition bloom with high-skilled people and I don’t think they ever crowd each other out.
Stephen Moore: Here’s why that’s completely wrong to say that our high-skilled workers or immigrants are taking jobs from American high-skilled workers. There’s a very simple reason why that’s completely wrong. It’s because 36 percent of the businesses in Silicon Valley that hire American high-tech workers were founded by immigrants. So if the immigrants didn’t come here a lot of those businesses wouldn’t exist in the first place.
Michael Barone: What we’ve seen with a lot of Hispanic voters – the one seriously contested Senate race was a state with above national average Hispanic percentage, was in Colorado and in Colorado the Democrats, partly through an effort of very rich people putting together a pretty smart political operation that’s won the major offices there, they imposed a gentry liberal, my friend Joe Cochran’s phrase, a gentry liberal program: gun control. Hispanic voters recalled one of the state senators that voted for it in Pueblo County, 42 percent Hispanic county. They were going to have an anti-fracking referendum. They decided to take that off the ballot because it was polling so badly they were going to get licked 80⁄20 or something like that. Abortion absolutism, Senator Mark Udall became known by the liberal media as Mark Uterus, ran half his ads, the NARAL pro-choice ad said that there would be no contraceptives available in Colorado if Cory Gardner was elected to the U.S. senate. We now have a chance to fact check that prediction since Gardner was elected and we’ll see if there are any condoms available in Colorado.
Brian Calle: Along with their marijuana.
Michael Barone: Well I’m not going to go there. They are rejecting that agenda. The question is do Republicans have an agenda that can go forward and that can help them maximize their human capital. Help them achieve their dreams. Help them earn success. I think we’ve been trying up in the platform, a lot of you in the audience are working at this sort of thing. Can’t give you a fast formula but I think there are Republicans working on it. I think that we’ve got to get going and the other low hanging fruit. What Michele mentioned, the medical devices tax. We have these wonderful industries that produce things like prosthetics that enable wounded veterans to live full lives in a way that wouldn’t have ever been possible before and what does this crowd do? They want to tax it. I think that there are a lot of opportunities here.
Stephen Moore: Well Michael let me just give you one, Hispanics are an obvious one but let me just put up one thought about black Americans. Anybody in this room from Illinois? A few. What a great race, Bruce Rauner won one of the most important races in the country this year, and what’s interesting about Bruce Rauner, this is a near billionaire hedge fund manager. They tried to run their own Mitt Romney campaign against him. Here’s what interesting about Bruce Rauner. I think every Republican in the country should take a page out of his book. You know what he did? Bruce Rauner spent a lot of his time going into black churches, black neighborhoods, black schools and he had a couple of messages. One of the things he said, which every Republican should do when we’re talking to black audiences. What have the Democrats done for you? Really, what have the Democrats done for black American? Nothing.
Michael Barone: No, I’m from Detroit and I’ve seen what happens.
Stephen Moore: Yeah, right, exactly. That was his point and what Bruce Rauner said is you elect me Governor of this State – I’m going to clean up your neighborhoods, I’m going to give you school choice, I’m going to clean up your schools, I’m going to give you jobs and you know what? Bruce Ronner got 20 percent of the black vote in Illinois, so we can win a bigger percentage of black Americans with a message of economic growth.
Michael Barone: Well, and here’s an Hispanic message. California and Texas, we’ve been looking at the number of jobs. Both of those states in the 2010 census were about 36 percent Hispanic. Texas Hispanics get better test scores than California Hispanics. Texas is non-union, non-ed run schools do a better job than California’s Teacher Union runs schools, okay? Texas Hispanics make more money than California Hispanics. Texas Hispanics have lower unemployment than California Hispanics. We have a test case on whose policies help Hispanic people in American and I think also there’s a spirit of, well there’s a spirit of enterprise. There’s also a cultural spirit. When you go to Texas the people in Texas look at somebody that’s got stereotypical Latino features, they say that’s a Texan. When rich Californians see somebody with that figure they hand them the keys to the car because they assume it’s a valet parking attendant.
Stephen Moore: So the message here, folks, is we have to make America look more like Texas and less like New York and California.
Brian Calle: Except for the weather, except for the weather. Thank you all very much for taking the time to listen to us and let’s give one more round of applause to our great panel.
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