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Saturday, November 17 , 2018, 4:44 pm | Fair with Haze 64º


2010 Congressional Candidate Q&A with Tom Watson

NOOZHAWK: The so-called Bush tax cuts of 2001 and 2003 will expire at the end of this year. On Jan. 1, what will be the new rates of taxation on income, capital gains, dividends and estates, and the per child tax credit? Do you support the expiration of the existing rates or should they be extended? Why or why not?

Tom Watson
Tom Watson

TOM WATSON: We should not raise taxes on anyone; that is highly ill-advised. Taking more money out of the private-sector economy is not going to make it perform better, it will make it perform worse. That is not even arguable. One of the reasons growth is anemic is people know their taxes are going up and are planning accordingly. Without action by Congress, rates in all income levels will rise, with the top rate rising from 35 percent to 39.6 percent — but actually about 42 percent due to limitations on certain deductions. The inheritance tax will go from zero this year to 55 percent next year — picking your pocket after you die. Dividend taxes increase significantly, one of the worst examples of double taxation. Capital gains taxes rise to 20 percent from 15 percent.

Raising capital gains taxes by more than 30 percent is foolish. By definition, when you tax an activity you get less of that activity. Why would you increase taxes on capital formation when more capital formation is what we need to encourage business investment and expansion? This uncertainty is contributing significantly to our poor economy; we should make the current 2010 tax rates permanent and end the uncertainty. Raising taxes will harm our economy, so why on earth would we do that? I’ve written a white paper on economic policy and taxes that contains significant data on our economy, budget and taxes and outlines basic policies to resolve our budget issues and grow our economy.

NOOZHAWK: A leading national polling firm recently asked Americans to choose between these statements: A) President Barack Obama’s economic policies have averted an even worse economic crisis and are laying the foundation for recovery. B) President Barack Obama’s economic policies have run up a record federal deficit while failing to end the recession or slow job losses. Which statement reflects your opinion and why?

TW: Closer to B. According to government figures, the recession officially ended some time ago. Washington might believe the economy is growing but those of us in the real world understand how much we continue to struggle economically. If they looked at the unemployment figures, the number of closed businesses and the pain in families around the country, they would have known that the recession was, and is, far from over.

This administration’s policies are economically destructive and are contributing to the persistent high unemployment and anemic growth. Rational business people are not going to hire in this environment unless they absolutely have to. We have an environment of unknown escalating costs, which creates uncertainty and fear and prevents people from taking risk and growing. What is the new health-care law going to cost my business? What is the financial reform bill going to do to the cost of borrowing? Will it be harder to borrow? Is this Congress and President Obama going to ram cap-and-trade down our throats like they did the unpopular health-care reform law? What will that cost me? My taxes are going up in January; need to plan for that. And on and on and on.

The massive debt we are compiling is reckless and irresponsible, and all the debt we are issuing is crowding out other investments. In short, government policy is directly responsible for the state of our economy and is inhibiting growth. We should be growing at 5 percent to 8 percent right now if we followed a typical recovery profile. We are barely growing, and many fear we are sliding into another recession and it is caused by bad government policy. I have written a paper on the finance reform that was passed by Congress and signed into law earlier this year and how it will damage our economy and doesn’t address the core problems that caused the financial meltdown in the first place.

NOOZHAWK: According to the Congressional Budget Office, the U.S. debt-to-Gross Domestic Product (GDP) ratio will have risen to 62 percent at the end of 2010 from 36 percent in 2007. In a worst-case scenario, the CBO estimates an increase to 100 percent in 2020 and nearly 200 percent in 2035. What effect does such a debt load mean for middle-class Americans?

TW: Actually, it is worse than the CBO reports. The CBO numbers include as an asset on our balance sheet the basically nonexistent Social Security Trust Fund, which has no actual money in it, just IOUs for we taxpayers to repay. It has been spent already. If we take the bogus trust fund out of this calculation, we are at about 90 percent debt-to-GDP ratio. Historically, this has been a point of economic decline for most countries because the debt service (interest on the debt) takes a huge part of the budget and begins to cut economic growth by between 1 percent to 3 percent a year. This year we will spend about $400 billion on interest payments and the interest rates are very low. For comparison, the Defense Department baseline budget this year was a little over $500 billion.

When interest rates inevitably go up and we have to roll over our bonds, our cost of borrowing will increase and our interest payments will go up dramatically. Our debt service will become a massive part of our budget if we don’t get this under control. If we continue adding debt at this rate and interest rates rise, we could be spending 30 to 40 cents of every tax dollar just paying interest in the not-too-distant future. This is just like running up too much credit-card debt in your personal life.

This debt load will guarantee future generations a lower standard of living than they would have expected otherwise. It is immoral to burden future generations with a massive debt they had no hand in creating. My son will be in the first generation of Americans to receive a country from his parents that is in worse shape than the one they received. We cannot allow that to happen. We are borrowing 41 cents of every dollar we are spending now; that is not sustainable. We need to cut spending and grow this economy; that is the only realistic way out of this mess.

NOOZHAWK: How, specifically, are Americans benefiting from the health-care reform law? What are the disadvantages? How would you fix them?

TW: The bad parts of this health-care reform law greatly outweigh any good parts. At the end of the day, the best way to understand what your government has just done to your health care is pay more, get less. We had a cost problem, not a care problem, and our government just made the cost problem worse and will degrade our care with this poorly considered law.

My company just did open enrollment for health insurance and our quoted rates increased 30 percent! I thought that they told us this was going to save money? And we are just getting started with the nasty surprises in this bill. You will likely lose your current health insurance and be forced into a government plan. You will pay more and the level of care will degrade as more people are utilizing an already burdened system. Medical innovation will decline due to punitive taxes on medical devices and new drugs. This new law compounded our current problems and made them worse to solve a problem only about 5 percent of the population has: being uninsurable.

More government intervention into your health care is not going to fix a problem largely caused by too much government intervention into the health-care market now. More competition, fewer restrictions and allowing individuals to have the tax deductibility of health insurance will help introduce missing free-market forces that will help lower costs and improve care — the same free-market forces that give us all the other great products and services we enjoy in our economy.

Rep. Lois Capps keeps digging for morsels in this bill to convince the public that the dog food they were just served isn’t actually dog food, it has cheese on top. She focuses on benefits that few qualify for, or nice-sounding freebies that aren’t free at all. Don’t be fooled. This bill will destroy the best health-care system on earth. It is your body and you, not the federal government, that should make your health-care decisions. I’ve written a detailed paper on health-care reform that has a lot of information on the problem, the problems with the current bill and specific recommendations on how to really reform the system in a positive way that will control costs and keep the innovation engine alive.

NOOZHAWK: California’s fiscal health appears precarious. While the state Constitution prohibits a bankruptcy declaration, how much of a federal concern are California’s finances? What can Washington do to coax reform, or stabilization? Will the federal government step in if a bailout is necessary? Should it?

TW: California’s fiscal health doesn’t appear precarious, it is precarious. California’s problems mirror our federal problems in many ways. Fundamentally, they both have a big spending problem. Fortunately though, California can’t print money like our federal government. California also has a unique problem of chronic over-regulation that costs our state nearly $500 billion per year in lost economic activity and drives business out of our great state. That equates to more than 3 million jobs that are lost, move to other states or are never created, and about $15 billion in lost tax revenue. Additionally, California has an untenable public-pension liability that is unpayable.

These problems are all self-created problems for our state and they are the state’s responsibility to fix. As a congressman, I would fight to reduce costly unfunded federal mandates for the states and the burden created by Medicaid and other programs. Medicaid (Medi-Cal in California) is federally mandated and consumes nearly 30 percent of our state budget. We need to leave California’s money in California and not send so much of it to Washington to have it sent back at about 50-70 cents on the dollar with strings and conditions attached. It is our money, not Washington’s.

It is time to fundamentally revisit our relationship with our government. They work for us, not the other way around. Washington seems to think of we taxpayers as little more than ATMs to fund their spending ambitions. That is not the way our country is supposed to work.

NOOZHAWK: Energy security and sustainability are major challenges for the United States. What policies do you or would you support to meet the U.S. energy demand while ensuring an economically and environmentally sustainable future?

TW: Energy, growth and standard of living are inexorably linked. Our security as a country is also strongly linked to the availability of reliable supplies of cost-effective energy. Industry requires energy. Individuals require energy. Innovation requires energy. Services require energy. Energy is a fundamental input to nearly every human activity. Every new drug we invent, every crop we grow, every house we build, every bottle of wine we bottle, every new microprocessor we design, every new telecommunications satellite we launch, every new iPhone or similar device we invent, requires energy input at every level of invention and manufacture. It’s clear that cost-effective energy is critical to the long-term health of our country and we need to effectively and wisely exploit our own natural resources, make greater use of nuclear power, and we should continue to research and develop alternative sources of energy to help them become cost-effective.

At the same time, Americans have an obligation and responsibility to protect and preserve our environment and leave behind a healthy and sustainable planet. These can be and are mutually supportable goals if we wisely use our boundless ingenuity to meet these objectives. Technological advances allow us to use our natural resources in ways that have minimal impact on our environment; we need to use our natural technological edge to our advantage. And Washington needs public servants who understand how to use technology to reconcile the need for energy with environmental sensitivity.

NOOZHAWK: Surveying the global landscape, what is the most beneficial role the United States plays in world affairs? What should be America’s biggest concern?

TW: The United States has a key role in ensuring global prosperity and stability. Our Navy keeps the sea lanes open and makes global commerce possible. This is in our national interest. More than 90 percent of goods move on the seas at some point, and 80 percent of the world’s population lives near coastal areas. Our dollar provides a de facto global currency and we need to keep our dollar strong and stable.

We are the world’s leader and the world is better off when we are strong and engaged. We need to keep our economy and our military strong. History has shown that when the United States is weak, bad things happen. We are a force for good in the world; we need to keep it that way. There are always security and other concerns that plague human relations. We need to keep on eye on an increasingly aggressive and assertive China, an unpredictable Iran and North Korea, an annoying Venezuela, and the dangerous psychopaths that are al-Qaeda and other terrorist groups. Unforeseen threats are sure to arise. It’s a dangerous world.

NOOZHAWK: Is Iran a threat to the United States? What is the best way to handle its apparent nuclear intentions?

TW: Iran is a threat to the entire world. Absolutely nothing good can come from the Iranian regime acquiring nuclear weapons. Nothing. Even if they didn’t follow through on their threats to wipe Israel off the map, the fact that they had nuclear weapons would significantly destabilize the Middle East and set off a dangerous arms race as the Saudis, Turks, Egyptians and others would race to acquire their own nuclear weapons. That is not a good thing.

We need to be firm and unequivocal with the Iranian regime: Under no circumstances will the United States allow you to acquire nuclear weapons. Period. If we had been firmer on this in the past we would not be in this dangerous situation now. We need to be supportive of Israel; they are our strongest ally in the region and we share many common interests. Congresswoman Capps has been fairly unsupportive of Israel and has taken a few votes that are openly hostile to the state of Israel. We cannot allow the Iranians to threaten to wipe an ally off the map. Secondarily, beyond nuclear weapons, Iran is the chief state sponsor of terrorism and openly funds terrorist organizations like Hezbollah while overtly threatening to unleash their terrorist proxies with some regularity.

NOOZHAWK: Highway 101 is one of the West Coast’s most important arteries and the section within the 23rd Congressional District is critical to the movement of goods through the Port of Hueneme, the nation’s largest transit point for agricultural exports. Meanwhile, the roadway between Santa Barbara and Seacliff is essentially a parking lot. Does the district receive federal transportation dollars commensurate with its importance? Why or why not?

TW: No, our district does not. Highway 101 is one of only two main north-south routes for vehicle-borne commerce in our state. California is the largest state economy in our country and, in fact, the eighth or so largest in the world. The lost productivity spent in traffic jams and increased cost of transportation due to the sorry state of Highway 101 is significant and should have more national interest. It is a matter of priority on both the state and federal level; they collect enough in fuel taxes now to more effectively prioritize their current dollars. I’ve seen highways in Third World countries in my travels in the Navy that are in much better shape than Highway 101. The stretch between Mission Street and Highway 154 will destroy my car before this campaign is over.

NOOZHAWK: The 23rd Congressional District is a work of art, boundary-wise. Do you support redistricting efforts to make it more compact?

TW: Work of art? That’s an overly generous description. The gerrymandering in our district is an embarrassment. It is a national disgrace, and in fact is nationally known as “The Ribbon of Shame.” 175 miles long from Port Hueneme in the south to north of Hearst Castle, sometimes only yards wide and nearly disappearing at high tide. This isn’t democracy, this is a travesty. Check out the link on my site and zoom in and drag around to see the absurd lengths that incumbent politicians will go to protect their positions.

I frequently hear that we need to have term limits to deal with our broken and unresponsive government. I believe gerrymandering is the core problem because it makes districts uncompetitive. In a normal year, which this is not, incumbents are re-elected at a 97 percent rate. When you have a safe seat, you don’t have to listen to anyone and you grow out of touch with your constituents, much like our current congresswoman. Mrs. Capps doesn’t work for us anymore; she works for her party’s leadership as she votes nearly 100 percent of the time with House Speaker Nancy Pelosi, D-Calif., and Rep. Henry Waxman, D-Calif. Our congresswoman refers to them as “leadership votes.”

I do support removing the redistricting process from the Legislature and putting it into the nonpartisan group now responsible for the Assembly, state Senate and Board of Equalization. Congresswoman Capps, of course, loves the current system that has protected her for years and wants to keep it that way. In fact, Mrs. Capps has actually donated money to the Proposition 27 effort to overturn the voters’ will on redistricting, which won easily in 2008. Yes on Proposition 20 and no on Prop. 27.

NOOZHAWK: In your travels within the district, what do people say is their most important issue?

TW: Two things top the list: Spending and jobs. You don’t need to be an economist to understand that our economy is in bad shape and we can’t keep spending money we don’t have. We can’t print money, borrow, tax and spend our way to prosperity. That has never worked anywhere — ever — and its not going to work here or now.

NOOZHAWK: Which current or former House speaker do you admire most, and why?

TW: The late House Speaker Tip O’Neill, D-Mass. Even though his philosophy was different than mine, Tip had an amazing ability to work with people from the other side, including President Ronald Reagan to get things done. We need people in Congress today who will work to get things done for the people.

NOOZHAWK: Will you live-tweet the next State of the Union address for Noozhawk?

TW: I believe cell phone use on the floor of the House of Representatives is limited to your desk, and in 2011, with the help of the people, I intend to be on the floor of the House representing the 23rd Congressional District.

Additional Resources

» Click here for Tom Watson’s campaign Web site

» Click here for Lois Capps’ answers

» Click here for John Hager’s answers

» Click here for Darrell Stafford’s answers

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