IndustryWeek Summit (Trade)

Nov. 20, 1998, Washington, D.C.

ROGSTAD: And there -- I think that that debate is moving forward to the point where -- we can deal with some transition questions. There is a lot of stuff. The base -- it is possible now to take the major reform proposals -- sales flat USA tax, et cetera. A lot of work being done to show the equivalence of those. And I think the debate can get down to the real point. Are people interested in doing that or not. The debate has been real clouded with a lot of technicalities. And I think we can get beyond that. I think -- so we'll keep leaning on it because we think it is important. Why the hell do you want to have a fundamental excise tax on the nations seed corn to deal -- as we move forward in economic growth. I mean, that is the premise and the answers -- it is a rhetorical question, but, boy, it is tough to make progress on it. I think secondly, probably the most important issue that is facing our members at the moment, tactical, maybe strategic, is the trade issue. I mean, we've got members that are positioned around the world. I have got members that say they wake up at two in the morning thinking about Japan. And they do. And -- so you look at fast track. I mean, one of the things that I find out about fast track is, I mean, it is in -- we have positioned the darn issue in a way that you can't talk to the American people about it. It is inside the Beltway baseball. It is a process question. I mean a member of Congress will say, gee, you guys have got to go and talk to your employees about fast track. Well, think about the nature of that discussion. That the CEO is going to talk to his employees about fast track. We have got to be talking about actual trade actions, trade barriers. FARIS: Is that the Daytona? The Daytona , is that the fast track? ROGSTAD: Yeah, sure. I mean it is just bizarre stuff. And I think that I'm convinced that, in fact, you are going to make progress on the trade front, you do have to deal with the reality of job displacement. I mean trade accounts for one-fifth, one-sixth of the mobility in the economy. I mean, God help us, we always continue to have business failures and business growth. It is the source of productivity improvements and what we are. But any job shifts are now automatically ascribed to trade. So that if you want to deal with trade, you better go right in and start talking about what is in that employment decision nexus. You have got to deal with it straight off. So I think there is -- you can't separate trade and the whole work force issue. I think, thirdly, Tom touched on it. I think we have got -- you want to see interesting viewing, what are we going to do on the budget in this country? In government expenditures in the next two years? You have got a rather fascinating process here. We have got the fourth and fifth years of a budget agreement which nobody around this table will seriously think is going to get implemented to the end. But the fourth year of this, which is where we now face, has Draconian reductions in it with respect to domestic discretionary spending. Huge. I mean, the people think they wrestle with the Endowment For The Arts and the Commerce Department, et cetera, the first -- the last three years, wait until they really look at what is here. Now if you are a Republican saying I got two things I want to do. I want to curtail -- allegedly curtail the growth in government. And I'm very interested in a tax cut, recognizing the caps on all of this business on the budget agreement makes tax cuts a little bit difficult, how do you argue the budget process this year. How does (former House Speaker-elect Bob Livingston -- R, La.) Mr. Livingston argue it in terms of returning back to committees being an appropriator. We just had the greatest increase in government spending in the last year that we have seen in a long time. I don't see anything that is going to change that around in the ensuing year. And I find that and the rhetoric we're all talking about moving indistinctly opposite of that. So I will continue to be interested. We will be interested in that budget process. And perhaps some way to get some sand in the gears. Because I think if that budget agreement goes unilaterally, which I think it is going to, I think we may rue the day. JASINOWSKI: Can I come back to the question of what might pass next year and make a couple of comments based on what has been said? I don't think we are going to get fast track because I think that the labor unions had too much to do with the Democratic party success and that, therefore, that you won't get a bi-partisan agreement on that trade issue. And that the best you can do on trade next year, as Barry suggested, is to focus on educating our members and members of Congress about the benefits of trade. And dealing with the longer-term Asian issue through interest rate reductions and improved international monetary reform. Secondly, I want to say that I am considerably more optimistic that there will be very major tax reform and tax cuts next year. Far beyond what most people think. Because the economy is going to be slowing very substantially at a time when fifty percent of the world is in recession. Because the merits of the case, as Jack outlines, are very large. And because the Republicans did a poor job of making the case that they are going to make this next time around. So I see, again I want to say it, again. The number one issue in the House of Representatives will be taxes and taxes and taxes. And people just haven't caught up with that yet. I think third, you are going to have a lot more attention on education and training because of skills shortages. And that ties to technology in a way in which you are going to get tax incentives and other means of improving the skills and availability of our work force. And I think that is a sleeper issue, too. I am looking at major tax incentives for on-the-job training for our workers as part of the tax package going through the House. Finally, I think that we are going to get -- we could very well get some very adverse health care legislation. And that we must be prepared to offer some sensible reforms in order to prevent the undermining of ERISA and the -- and the trial lawyers coming after us, Jack, as you have so often articulated as the real problem with the legislation that has been up there. DONOHUE: Just a couple of comments on that. First of all, I agree very much with Jerry on the health care issue. Both Livingston and some of his new leadership who are sponsors of that. That we won it last time by five votes. We don't have those five votes any more. J.C. Watts was a sponsor. So where do we go and I have already been hearing noise from up there that, well, maybe we just make the bill so you could sue the HMOs and other health groups, but not the companies. Well, if in fact they pass a bill, and if, in fact, it keeps the ERISA provisions as we know them, I mean, we would all be responsible to go out and say that any -- first of all any CEO of a public company that continued to offer company-paid, company-based health care ought to be replaced. And that we need a new system where the companies pay for it for 140 million people, but you buy it on a pool and you don't buy it with us anymore. And I don't know where you guys will be, but that is where I'm going. And I think that they really feel that a health care deal is important. Second, I -- Jerry raises a point that I wish I had the answer to. Tax cuts are really -- I mean the Republicans are talking them up and I think we are in a position where we are severely taxed and the payroll taxes over the next twenty years, I mean, if we don't find another way to do social security, make the changes you are talking about, we are talking about open them every couple of weeks. But I'll believe all that when I see it because of the Republican Senate and because of the sentiments that we are seeing in a lot of the polls. I have two other points to make. On the fast track, while I'm very sympathetic to Jerry's view that ,boy, this is going to be a tough time to get it, I think we have to do what we are doing with China MFN. First of all, we have to change the name. Second of all, we have to find something to put in it. But third of all, and very, very simple, we need the farmers. If you want to put it in English, the farmers are getting screwed. All through Latin and South America. All around Europe and Asia. And if we can negotiate some more attractive rates for those guys without eleven percent duties, we can stop paying the man extra five or six billion a year and I think you might be able to get some votes that you couldn't get right before the election for that. My final point that I would make is that as this agenda begins to put itself together, it is either going to gain steam or lose steam in a big hurry. Take these issues, plus the others that the administration and the Congress are talking about, social security, which by the way, needs to be done. And how we do it is going to be very interesting. If they can hit one or two quick wins and keep up the polls and everybody get excited and start to see things going north instead of south, you might see a lot more legislation. If they start bumping into each other and bumping into a lot of the press and political realities in a nasty way, I think we will see a lot of dancing and not a lot of doing. But I'll tell you what. Whatever happens, the hours are going to be longer and the questions are going to be harder. And the approach is going to be more complicated. And we are just trying to get enough assets together to do something about it. I agree with all the issues that you raised. The question is, can they get up ahead of steam. And if they do, how do we either join it and hook our wagon to it or how do we stop it. And if I can, in one sentence on the side, and maybe you would be kind enough not to put this in the article, but I cheer you on, Jack. On this IRS thing. I cheer you on. Every day you do that and you are out beating on that deal, and lots of my members are saying, "Are they insane? How do you get rid of the IRS?" You are setting the ground work for a much more logical and compelling look at the tax code in this country. In a way that none of the others of us can actually do. But you have my support. FARIS: Well, thank you. And on the record, I would like to say thank you very much. DONOHUE: Then put it on the record.

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