Wary CEOs, take note: John Kerry wants you to know that business has nothing to fear from his Administration. On July 16, the Democratic standard-bearer sat down with BusinessWeek Editor-in-Chief Stephen B. Shepard, Washington Bureau Chief Lee Walczak, and Washington Outlook Editor Richard S. Dunham for a detailed discussion of his economic philosophy.
Who would be better for business -- John Kerry or George Bush?
I am going to be better for business. In Congress, I carved out an economic portfolio that has been both thoughtful and visionary -- on technology and trade, on capital formation, on entrepreneurship. I decided to go to the Banking and the Commerce Committees, and now to the Finance Committee, in order to carve out a different kind of portfolio.
And what's in that portfolio?
In 1993, I did a targeted capital-gains reduction. I supported critical technologies, worked on reducing paperwork and improving [small business'] access to credit. In 1985, I was one of the first Democrats to push for the [Gramm-Rudman-Hollings] deficit-reduction effort. It was considered heresy in Massachusetts.... I am going to bring Corporate America to the table -- not to lecture but to say: How do we make you more competitive? How do we get out of your way? Research-and- development tax credits? I'd make them permanent and larger. Manufacturing tax credits? That's a smart way to help.
Do you think you get credit for these things?
Because American politics has been reduced to simplistic sloganeering.
But haven't you antagonized business with attacks on "Benedict Arnold CEOs"?
Unfortunately, in primaries and the heat of politics, things get misinterpreted. I am 100% in favor of companies going abroad to do business -- I'd be an idiot not to understand that. In fact, my proposal on deferral of taxes on foreign investment has been geared to recognize the distinction between legitimate business [and tax avoidance].
But a sham transaction [to relocate a corporate headquarters overseas] is a sham transaction. We have these shifts purely for the purpose of tax avoidance, and to me that's avoiding your responsibility.
Still, on the trade front, you suggested that you will reopen the World Trade Organization and NAFTA pacts to strengthen labor and environmental protections.
What I said was that I will appoint a commission. I would want my Treasury Secretary on it -- and my model is somebody like Bob Rubin. I am going to do a 120-day review to look at what's working and what isn't. Is there currency manipulation? Are markets closed to us that were supposed to be open? To what degree has dumping taken place?
To amend the WTO and NAFTA, don't you have to reopen the treaties?
To do that you have to create an international process. You can't do it unilaterally. I'm not going to just kill [treaties]. I have suggested a dialogue.
President Bush is often described as favoring a CEO management style. Describe your system.
Well, you saw the way I managed my Vice-Presidential pick. [And] I put together a multimillion-dollar campaign. I changed the manager in midstream, put the pieces back together, and won the nomination. I'm decisive. I'm a strong leader. I push. I know how to set goals. I had four years in the military as an officer, and it's a form of management.... People who know me know that I'm decisive, I'm strong, and I am very demanding.
So why hasn't this registered with voters?
Because America hasn't had a chance to get to know me. And because nearly $90 million has been spent [by the GOP] to define me otherwise.
How can you be an unknown with a 20-year Senate record?
Tell me whose record in the Senate does register. I have not spent my life trying to self-promote. I'm not chairman of any major committees. And if you are not, your name isn't on a bill. Still, I think I have broken ground with innovative programs. I led the fight to put an additional 100,000 cops on the streets. I broke with my party on education reform in 1995 and talked about the need for accountability -- we couldn't just throw resources at the system. So I think I'm willing to think outside the box, and that will come through.
You paint a pretty bleak picture of a middle-class squeeze. Are things really all that bad out there?
I'm not painting a bleak picture at all. I'm very optimistic. The pessimism is at 1600 Pennsylvania Ave., where they tell you the best we can do is lose 1.9 million jobs over four years. You guys think that's great? Come on, folks. I think we can do better. I'm not the one saying how tough it is out there -- it's Americans who are telling me, in places like Iowa and Wisconsin and Ohio.
The deal you are offering voters seems straightforward -- more affordable health care and more money for schools, financed by higher taxes on the rich.
It's going to be financed by rolling back [cuts for families earning more than $200,000]. I'm not going to tax the wealthy. There are pejoratives in the phrasing.
Are you sure repeal will get you all the money you need?
Yes, I am absolutely positive it is really there.
And what about deficit reduction?
I am absolutely committed to it.... Why is Warren Buffett supporting me? Why is Barry Diller supporting me? Why [are] Steve Jobs and Lee Iacocca supporting me? It's because they know I can restore fiscal responsibility.
Both you and President Bush propose to cut the deficit in half over four years -- what's the difference?
But he doesn't! He has $6 trillion in proposals and initiatives that are not paid for. I don't. I've showed you the loopholes I would close. Show me any loophole George Bush has talked about closing. I mean, the Bush talk on this is fantasyland, folks.... He told you we weren't going to have a deficit, we could afford the tax cuts. That was the biggest B.S. I've ever heard in my life. We went straight into deficit.
So you believe that just by rolling back tax cuts for top-end taxpayers, you can fund a health plan and deficit reduction?
Yes -- absolutely. Let me be very clear: I like low marginal rates. I fought to get low marginal rates. I voted for going down to the 28% and 14% brackets [in 1986]. I am not going to raise marginal rates -- ever -- above the rates we had under Bill Clinton.
Under your plan, upper-income individuals also lose their tax cuts for capital gains and dividends. Won't that hurt investment?
With all due respect, look at what happened to investment in the 1990s.
We had a tech boom.
I believe we can have a tech boom again.... [But] Bob Rubin and a lot of smart people tell me the capital-gains differential [doesn't matter much]. When you're at [a capital-gains rate of] 20%, it doesn't deter you from making millions with a new idea. So you're not going to change investment patterns.
How can you expand health-care eligibility and control costs?
Let me tell you how: You're paying for very inefficient delivery of care [today].... I put together a set of principles. I want to have the marketplace work. I want people to have choice. I don't want Washington mandates. I don't want a new bureaucracy.... What we've done is create a huge incentive for business to say: "That makes so much sense that I'm buying in." In exchange for [companies] having an early health-and-wellness program [and] for [agreeing to] pass the savings along to their employees...we're going to pick up 75% of the cost of catastrophic care. That reduces their costs and makes them more competitive.
If Congress balks at the tax changes you seek and you're short of cash for your programs, then what?
We would not be able to do as much on health care, and that is the choice in this race. George Bush wants to defend tax cuts for folks earning more than $200,000 a year. I say we can have [better] health care if we roll those back. That's your choice. And I believe if I get elected, America will have made that choice.