A Conversation with President Clinton

Clinton Global Initiative Meeting on Boosting U.S. Economy

By Trish Regan

I was in Chicago for the third annual Clinton Global Initiative meeting where the focus was on restoring growth to our economy. Bloomberg TV was the exclusive broadcaster from the event and, while there, I had the opportunity to speak with the creator of the event himself, Former President of the United States Bill Clinton.  Bloomberg viewers heard his views on everything from repatriating offshore profits (he’d like to bring money back for use in an infrastructure bank) to the NSA, to Syria and energy independence in the US.  When I asked him if we’d see a Clinton in the White House in 2016, he delivered a line that drew both laughter and applause from the audience. “Chelsea’s still too young,” he joked.  He then went on to stress the importance of looking beyond politics and beyond elections. You can read an excerpt from my interview with the President here.

Regan: Warfare has changed, in large part because of technology. Edward Snowden said that he could pretty much wiretap anyone, even the President of the United States, if he were to have the e-mail. How comfortable are you with that?

Clinton: Well, it is what it is. One of the big challenges of our 21st century world will be to try to provide some right to privacy without being naive about the need to use our ability to track electronic communications to try to prevent terrible things from happening in the United States and around the world. A lot of the things he said don’t register with this PRISM program, which is designed to track communications overseas.

They have prevented a very large number of harmful actions. Now, if – when – there is the slightest evidence that anybody has penetrated the meat of the conversations for political, financial, or personal advantage, then I think there ought to be action to protect that.

But you can’t really claim the benefits of all this technological stuff and put everything in e-mails and expect, given the nature of the technology, to have the same measure of privacy we had when we didn’t have that ability.

Regan: One of the big things here at CGI is public-private partnerships. How do you get the private sector more involved working with government to encourage economic growth?

Clinton: I think that one of the things that should be done is to pass legislation creating a national infrastructure bank. That used to have a lot of bipartisan support, and I think perhaps we could get that again as part of the overall effort to reform corporate taxes.

We lag behind most of our competitors in Europe and Asia in attracting private capital to public infrastructure. It’s slowing down our productivity growth. It’s slowing down our economic transformation. It’s costing us an enormous number of jobs in the short run. And so I still think that the greatest opportunity we have for public-private cooperation is in infrastructure, including in the energy transformation.

Regan: We’ve got more than a trillion dollars sitting offshore; companies keeping their money overseas. Could they repatriate it, bring it back and put it in one of these infrastructure banks at a lower tax rate?

Clinton: President Bush tried to do it when he was in office. It had big bipartisan support. They said you bring this money back, pay like 5.5 percent on it. It was generally viewed as a bust economically, including, I think, by him, because they were very disappointed that almost all the money went to increase the incomes of the corporations that repatriated the money and to grant dividends and buy back stock.

But, assuming the money has already been taxed in the jurisdiction where it was earned, they could let them bring it back tax free if they put some percentage of it in an infrastructure bank which would have a guaranteed rate of return. That could be tax free. So for example, if you got a 6 percent guaranteed rate of return that was tax free, if you repatriated let’s say $100 million and you agreed to put $10 million or $8 million into the infrastructure bank with a rate of return of 6 percent, that might work to seed this thing.

Let’s assume it would take you eight, nine, ten months to agree to how we should change the corporate tax rate more or less according to what Simpson-Bowles recommended. Lower the maximum rate but cut a lot of the deductions and credits and stop trying to tax overseas income that was really earned overseas.

Every other country has adopted a territorial corporate tax system – every other wealthy country. If you operate in Ireland and you actually have a business there, the corporate tax rate is 12.5 percent. Today the rule is if you repatriate $300 million you paid in Ireland, you owe on that another 22.5 percent. And nobody else is doing it. So if you ran a corporation, you wouldn’t bring that money home.

The danger is a lot of money is held overseas under the flimsiest of claims that it was earned in the Cayman Islands or some other tax structure, and we know better than that, but it’s easy to fix the tax dodge problem. It’s easy to prove that there was not an ongoing real business operation in place X, Y or Z, and they basically parked the transaction there just to pay no taxes.
But in all these other countries that have lower tax rates than we do, for us to tax people on the difference is nothing but an incentive for them to keep the money overseas.

Every time I ask somebody about this who doesn’t favor this position, they say that if you let people repatriate the money, you will just encourage them to take business that really occurred in the United States and say it happened somewhere else. That’s the tax dodge argument. Okay, fix that. But if they made the money somewhere in Europe, somewhere in Asia, somewhere else and they had a real tax system over there and they paid the taxes over there, I say let them bring the money home and invest it however they want.

Regan: Do you think there’s a chance it’ll go through? Everybody’s talking about corporate tax reform.

Clinton: I do. It’s a question of whose ox gets gored. For example, ironically, many of the corporations that pay the highest taxes are those that are in sectors where we have the greatest potential to grow. For example, in manufacturing. For example, Dow Chemical probably pays right at or just over 33 percent tax rate. They’re probably pretty close to the 35 percent maximum because they have manufacturing operations in America. They can track it. You can audit it. Everybody knows what the deal is. We could get more manufacturing jobs if they paid in the range of the international average, which is somewhere between 24 and 26 percent.

Regan: President Clinton, any chance that we might see another Clinton in the White House in 2016?

Clinton: Chelsea’s still too young (laughs). Look, I spent most of the last six months trying to reorganize our foundation and make sure we had a good space for Hillary to come in and do her projects, and Chelsea spends half her time on the foundation now because she knows more about all this – how it should be managed and organized than I ever will. So this has been fun for me. I don’t know what Hillary’s going to do, but whatever it is, I expect to support it.

But I think – let me make a serious comment. I think it really matters who the president is. I think these elections are important, but I think that only fixating on politics all the time gives us a form of national attention deficit disorder and it keeps us – I’m being serious here – I think it keeps us from giving attention to the kinds of questions you’ve asked me today. We have staggering challenges in America. Flat wages. A lot of long-term unemployment, young people having trouble finding jobs. The student debt issue is a big problem. All these things.

And we have these brilliant opportunities because of the explosion of energy potential and all the other infrastructure richness we have, including, as I agree with what Valerie Jarrett said on the panel, that we still have the best system of undergraduate higher education in the world. And I think immigration reform is a huge opportunity for us.

And so I’m only halfway kidding about what I said. I think we shouldn’t just fixate on the next presidential election all the time. We need to take a little time off to work and think about what our country needs and think about what we can do together and think about what the parties can do together and think about how we can reach across these lines that divide us and make something good happen for America.
Regan: Well, that’s why CGI’s a good opportunity. We’re doing exactly that here.

Clinton: When I started this, I thought we were creating a network where businesses and philanthropists and government could work with nongovernmental organizations all over the world, and that we were creating a network that would be creative. Because of the political divisions we see in our country today, I also think it is a counter-model for how people ought to make all kinds of decisions.

If you look at the challenges we’re facing today – look at this Supreme Court decision yesterday, which I thought was terrific. I like bragging on the Supreme Court. I don’t get many chances. What they said – that you can’t patent a gene or a genomic sequence, and we’ve got to keep it open, that’s a huge deal. America led the world in sequencing the human genome. There are now 700 computer companies in San Diego alone because it’s the center of genomic research. The economic and quality of life opportunities there are staggering, but there are a lot of moving parts.

So solving those kinds of challenges doesn’t fall very well within this kind of harsh rhetoric we keep being fed from the nation’s capital. I grew up in the ‘60s, so this – I don’t really think we’re having too much trouble here compared to then. Soon it’ll be the 50th anniversary of Martin Luther King, Jr.’s speech, and soon it’ll be the 50th anniversary of John Kennedy’s assassination, then followed by five years of total chaos in the streets and capped off by the assassinations of Martin Luther King, Jr. and Robert Kennedy. That makes this look pretty tame.

The difference is today (from then), [is that] while all that was going on, we passed the Civil Rights Act, the Voting Ratings Act, an Open Housing Act, anti-poverty legislation and, even though I disagreed with it, we had bipartisan support for five long years for America’s involvement in Vietnam. In other words, the political system and the leaders were far less divided then, than the people were.

Today, I am convinced that the people are as divided as they are because political interests feed them things designed to maintain that division, and that in fact the people with the money and the power and the political positions in the country are more divided than the public is. So what I try to do with these CGI meetings is to give people the chance to be free of all that and just focus on what might work. •

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