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Governor Mitt Romney checks in while barnstorming Michigan

Friday, January 11, 2008

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HH: Pleased to welcome back now Governor Mitt Romney. Governor, welcome back to the Hugh Hewitt Show, always a pleasure.

MR: Thank you, Hugh, good to be with you.

HH: I know you’re driving across Michigan, and you referred to it in last night’s debate, and congratulations on your performance in that. What’s the rest of the country not know about the Michigan economy, Governor?

MR: Well, Michigan has been going through a one-state recession. Their unemployment rate is 7.2%. The state forecasted that next year, it’s going to go to 8.2%, and the year after, 8.7%. What’s happened is that Washington has imposed mandates on automobile companies here that have caused the domestics to get in real tough shape, and the foreign cars to do well. And Washington watches, but doesn’t have a lot of interest about doing anything, and it’s just one more example of Washington not being able to get the job done. I think Washington is just fundamentally broken.

HH: And now Governor, I talk with a Detroit News columnist a little bit later in the hour. He wrote a piece today saying that part of the problems are the CAFÉ standards, and the indifference that Washington has to the automobile industry. Do you agree with that assessment?

MR: Yeah, I think Washington is very anxious, as we understand, to be in good with those that are concerned about global warming. But calculating what the consequences are for real lives in one real state is not something they’ve spent a lot of time doing. And when they impose standards that have not been carefully crafted along with the industry, and with people who understand what the impact will be of those changes, then I think they’re doing a disservice. Surely, we have to raise the fuel economy standards in this country. But we have to do it in a way that does not put at a disadvantage the people who make cars in America.

HH: Does fuel cell technology have a connection with Detroit, Governor, because a lot of people are putting a lot of emphasis on fuel cells for the future.

MR: Yeah, it sure does. And in my view, we as a nation should be investing very substantially in energy technologies. Whether that’s for power generation like nuclear power with reprocessed nuclear fuel, or with clean burning coal, or liquefied coal, where we sequester the CO2, or whether it’s energy efficiencies in automobiles and in appliances in homes. We say gee, we hope the private market gets that done. But in the interim, we’re spending $400 billion dollars a year to buy energy from other people, hurting our economy, our foreign policy, and our environment. So in my view, we ought to make a far more substantial investment as a nation in new technologies to get ourselves energy independent.

HH: Governor, your dad, when he was at American Motors, and subsequently as Governor of Michigan, used to box with Walter Reuther of the UAW. Is the UAW part of the problem or the solution now in Michigan?

MR: Well, probably both. They have made some important moves in the most recent contract talks to reduce the burden of some of the legacy costs that were pledged upon U.S. manufacturers. I think in the past, the UAW asked for some very excessive rewards, which have meant that the U.S. manufacturers just can’t be competitive, even with foreign companies that come here and build new factories. And that’s simply going to have to change, and I think you’re going to have to see a grand solution reached out between the federal government, the state government in Michigan, as well as the unions and manufacturers to come together to say you know what? We can’t afford to say goodbye to a major manufacturing sector that has not only implications for employment for hundreds of thousands of people, but also strategic implications for our military preparedness.

HH: Governor, I’ve been reading a book called China Inc. It came out three, four years ago, and it’s rather staggering the competitive advantage that China has on almost every level. How does an aging infrastructure in Michigan, and the automobile industry, with all those legacy costs, compete against basically a labor market where it’s a buck a day for many people?

MR: Well, actually, I also read China Inc. a couple of years ago, and the short answer first is that if we can’t compete in Michigan, if Michigan isn’t going to be able to compete, then America can’t compete, because we’re going to find America competing with China not just in automobiles, but in airplanes and MRI machines and drugs and software. And what we basically have to do is to do what, well, what great economists said had to be done if Great Britain were to stay ahead of us a hundred years ago, and that is invest in technology, invest at the highest end of education, pursue the sciences to develop new products, and simply outthink and outsmart and out-innovate others around the world. And instead of doing that, of course, we’ve been disinvesting in technology. American corporations spent less money last year on R & D than they spent fighting tort lawsuits. And of course, government layers on regulations, high taxes and mandates on businesses to make it even more difficult for them to compete. So we’re basically setting ourselves up to be the Great Britian or the France of the 21st Century, becoming a second-tier economy, and that’s obviously not necessary. But that’s the course that we’ve been taking.

HH: So what’s the line you as president would take with China, vis-à-vis their very predatory pricing and their very…it’s not predatory to employ their billion people who are peasants, but how do you deal with that?

MR: Well, you know, we can compete with China, and there is a natural advantage they have with low labor costs. But we cannot compete if they’re going to have an artificially low currency exchange so that our products are priced high in their markets, and theirs are priced low in our markets. We will not be able to compete if they routinely steal our designs, our patents, our entertainment software, and all of the software that we make, and basically steal that, duplicate it, give it to themselves for virtually free, and then sell it back here as counterfeit. I mean, they’re going to have to play by the rules, or they shouldn’t be able to have free and unfettered access to our markets. We love free trade. That’s good for us. But free trade that hollows out certain sectors of our economy will ultimately be bad for us.

HH: Have you traveled in China, Governor? I know you’ve been around the world a lot, but have you been there?

MR: Yes, I have. I actually negotiated to acquire a company in China. We did not ultimately buy it, but it was a manufacturer of small appliances, and did that during my venture capitalist days. And then since I’ve been governor, I also went over to China and visited with the governmental leaders in Beijing.

HH: And obviously, they’re going to host the Olympics, and you know a little bit about running an Olympics. Do you sense among Chinese elites a shift that is genuinely towards market-based economy? Or is it still that state down approach that inevitably we have to be suspicious of?

MR: Well, I think we certainly have to be suspicious of their intent with regards to human rights and democracy. I don’t think they’ve made the kind of progress there we might have hoped. But I think they’ve recognized that free market economies have very powerful and very favorable economics, and that they are winning a number of wars. They are, in some respects, they’re almost Adam Smith on steroids. They go around the world, they buy up oil from some very bad nations, they’ve had a joint venture with General Motors making Buicks, and now the company that’s been making Buicks is, from what I understand, now going to be making automobiles on their own without the participation of GM. They’ve learned what they needed to learn. I mean, they’re very efficient, sharp, tough businesspeople, and not a lot of moss is growing under their feet. We’ve got to recognize we’re facing an economic powerhouse down the road, and we have to compete with them. We cannot simply say let’s put barrier up around us, because ultimately, as the Soviet Union learned, that barriers come down. And if you can’t compete, you become a second-tier nation in a big hurry.

HH: Now Governor, I’ve been watching this very closely. My audience knows I’m a supporter of yours. But I hope whoever is the Republican nominee, if it’s not you, does understand the economy. As you’ve listened to your colleagues on that stage, putting Ron Paul off to one side, do you get the sense they really have an understanding of how the economy grows?

MR: You know, I don’t think it’s possible for somebody who has spent their entire life in government, or as a lawyer, to understand what it is that makes our economy work. I know that my experience has been very unusual, but I consulted to a large number of companies, and then I began a business of acquiring or starting companies. I’ve done that for 25 years. But I think you have to have that experience to understand how our economy works, and how we grow jobs, how we remain competitive globally. And frankly, unless we are an economic powerhouse, an economic superpower, we cannot remain a military superpower forever. And all the military strategy in the world will not make up for economic apathy and atrophy. And so I think it’s critically important now that we strengthen our economy with some of the investments I’ve described.

HH: Now Governor, last night you also spoke about change, and I know that resonated not enough, but a lot, in New Hampshire. And I don’t know how it’s working in Michigan. But I know that some people love it, and other people are skeptical that anyone really can change the iron triangle in D.C. What makes you think you can succeed where a lot of people didn’t?

MR: Well, I think the key is that America recognizes that we’re facing a critical moment in time. It’s like my wife, Ann, says, she says that watching Washington is like watching a couple of guys in a canoe on a fast-moving river approaching a waterfall. And instead of paddling, they’re arguing. And as the waterfall gets close enough, and as there are, if you will, Sputnik moments, wake-up moments that occur, finally, Washington will act. And I think you’re going to see Washington finally act on immigration, for instance, because America is just angry about this one. I think you’re going to see us finally act in being able to stand up to China and other nations that are taking away jobs from our country, because the consequences are becoming more and more apparent. I think you’re going to finally see us act on health care. We’re going to recognize having almost 50 million people without health insurance is not good economics for anybody, because they’re getting free care that the rest of us are paying for. So we’re going to have to see a change, and I believe I can help lead that change.

HH: Now after the debate was over, both Senator McCain and you went on Hannity & Colmes, and I quite distinctly heard Senator McCain say the path to citizenship is still part of his immigration plan. In fact, I don’t think he’s changed his plan at all, just the sequencing of it. I don’t know if you heard the same thing. Did you?

MR: Oh, yes, he’s exactly where he was before. And by saying that now he’s learned from the American people, and that he’s going to secure the border first, that’s all fine and well. But he still intends to provide amnesty to illegal aliens. You know, he says well, those have committed crimes will be ushered out of the country. Fine. I don’t know what that number is. He uses a number of two million. But that means that ten million or perhaps fifteen million or twenty million would be allowed, under his plan, to remain in this country. And that is a form of amnesty, and it’s something which I strongly disagree with. I welcome legal immigration, but I do not think we should say to people who come here illegally that they have a right to stay here for the rest of their lives.

HH: Now Governor, does that issue matter in Michigan in the way that it matters, say, in Southern California, Arizona, New Mexico?

MR: You know, I think in Michigan, the biggest issue overwhelmingly is the economy, and how to rebuild a struggling economy. And while immigration matters, it pales compared to the economy. Likewise taxation. That pales, compared to the economy. And so it’s a different mix as you come to Michigan.

HH: Now I’m told that Governor Huckabee’s speech was very poorly received at the clug in Detroit this morning, because it’s that populist stuff. Is Michigan sophisticated about what has to happen? After all, they turned down Mark DeVos, who really brought the free market message two years ago, Governor.

MR: Well, you know, I did not hear about Governor Huckabee’s speech, but I must admit this populist attack on wage payers is not something which I think is going to sell in a Republican primary, and hopefully won’t sell in the nation. I guess he may be channeling John Edwards. We have to realize that if you want to have good jobs, you’ve got to have strong employers. And probably the best news anybody can hear in this country is that corporate profits are rising. That means that companies will be expanding, it means they’ll be hiring more people, it means homes will be selling for higher prices, because people will be moving to take good jobs. You want to see our economic sector thriving, and I’m not just talking about big companies, I’m talking about little companies, pizza shops and taxi companies, hair salons. Everybody does well together, and this attack on employers is something which I think has no place in the Republican Party, let alone America.

HH: Now Governor, the credit crunch got worse again today, and Chairman Bernanke says okay, we’ll get together in a little bit. If you were president, would you be ordering, or at least cajoling, the Fed to get moving quicker?

MR: Yeah, I think you have to say that the peril of a further credit crunch in this country is sufficiently great that the Fed should be making bold efforts to allay the credit crunch. But I also think that out of the White House and the Treasury, we’re going to have to work with some of the servicing organizations and mortgage holders, to get them together, and perhaps even in collaboratives and cooperatives to do a better job in working out arrangements where people can remain in their home and make the payments that were originally scheduled, rather than having them reset at new higher rates. We just can’t afford to have people knocked out of homes, have those homes dumped into the market, kill the housing market in this country. Housing has been, of course, one of the sectors of the economy which has kept us going in what otherwise would have been a tough time.

HH: Governor, I want to finish with a couple of questions about Iran, and then the campaign. First of all, last night, you were trying to make the point, and I think that the minute and a half thing was not as good as the two minute thing, and I’d prefer a five minute thing, that the speedboat attempt by Iran to challenge the destroyers was part of a larger plan. Can you expand on that?

MR: Yes, you know, there are some who say oh, this is just the Revolutionary Guard, you know, out racing around. But that’s simply not the case. Ahmadinejad does not run that kind of a loose ship. He is testing America. He tested Great Britain. There are a number of ways we tested America. One, he wanted to see what the defenses are around our ships. Two, he wants to divert activity from other places where he is active. Three, he wants to rattle a saber/sword so that the rest of the Arab world could see that he might be able to close off the Straits of Hormuz. And fourth, even if we had taken action to sink one of those ships, he would then tout that around the Arab world, and get the Arabs in the street to support him, at a time when our president is there trying to develop Arab support for cracking down on Iran. So the guy is no dummy, and we’re going to have to be far more effective in bringing together the world, and recognizing the threat that’s associated with Iran. I think the National Intelligence Estimate was confusing to many who read it. The top line that said they’re not developing nuclear weapon technology was a narrow slice of nuclear weapon technology they were referring to, because obviously, they’re continuing to develop the nuclear fuel that would be required for a nuclear bomb. And that, after all, is the gating feature, the difficult feature in being able to create a nuclear weapon. So we’re going to have to get the rest of the world to come back together again, despite the time out that the NIE seemed to provide to the world.

HH: Now Governor, you talked tough about the war against jihadists, and that means often the war against some Arab extremists. Detroit’s got a large Arab-American community ringing it, and Dearborn, of course. How do they react to that message? Are they rejecting people who talk bluntly about the war against jihadism?

MR: You know, Muslims who live in this country, and frankly, moderate Muslims around the world, warm very much to my view that we should be supporting the voices of moderate Muslims, strengthening those voices so they have the capacity to reject the violent and the extreme. If there’s any population in America that knows what kind of peril might exist here and around the world if groups like al Qaeda were to have more free rein, it is the Muslim people. And so I have nothing but support from those that I hear, because I’m not in any way critical of moderate Muslims. I am very concerned about those who would bring down our nation, or bring down moderate nations of people around the world.

HH: Now political questions, Governor. When I was going to law school in Michigan, Detroit was almost a no-go zone, except for the Tigers games. Is there any way a Republican can get votes out of Detroit?

MR: Well, I think Detroit is largely a Democratic city, as you know. But Michigan is a lot bigger state than just Detroit, and of course, the Detroit suburbs are very much Republican territory as well. I do believe that we can pick up votes in Detroit on a couple of issues. One is education. Republicans are on the right side of education. We put the kids ahead of the unions, and I’m talking about the teachers’ unions. And the teachers’ unions have failed to turn around the schools in the inner cities. African-Americans know that. And I think we’re going to see more support coming from African-Americans. Number two, my health care plan, getting everybody insured, is going to be attractive to people in the cities. And number three, I think people in this state, more than perhaps almost any other, recognize the commitment my family has had to people of color, in a desire to see the end of discrimination.

HH: Now Governor, as you barnstorm Michigan, are you waking up the memories of George Romney? He was extraordinarily popular for his three terms. Are the old guard still there? Do they remember the old man?

MR: Well, they sure do. You know, there are not a lot that are still people who met my dad, but of course, everywhere I go, people come up to me and tell me stories about having met him. And I believe I’ll get a bit of a bump from people who remember his reputation, his record of integrity, and his unquestioned devotion to the people of this state.

HH: Now last question, Governor. You had a big fundraising day on the day after New Hampshire. But a lot of the talking class, the chattering class, want to force you out of this race if you come in other than first place. What’s your response to them?

MR: You know, I know there are a lot of people that would like to force other people out of the race. But simply, that’s a decision I get to make. No one’s going to make that for me. And I’m planning on winning in Michigan. But you know, I’m going to see how things develop down the road here. There’s no hurry for me to get out. I have the funds necessary to go the entire distance. I’ve got supporters who certainly want me to go the entire distance. And you know, this is a very fluid race. There was a while there we thought that Rudy was sort of like the only competitor out there, and in a two-man race, we all thought that. And I had to win the early ones to be able to go up against Rudy in the late ones. But now, gosh, we could have several people with delegates going into Super Duper Tuesday, and have a lot of us come out on the other side of Super Tuesday with a lot of delegates. So you know, it’s a different race than people are used to, and you’re not going to cram the old rules into the new game.

HH: Last question, Governor. Knowing how Bain & Co. works, have you already got someone studying those convention rules against the possibility that brokered might show up in our vocabulary soon?

MR: (laughing) That’s a good idea. I’ll be working on it, Hugh.

HH: Governor Mitt Romney, always a pleasure. We’ll talk to you next week after the Michigan vote.

MR: Hey, thanks so much, good to be with you.

HH: Thank you.

End of interview.

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