The Next Stimulus? Bringing Corporate Tax Dollars Home to Work in America

Held Wednesday, June 15, 2011

Third Way

Subject: Subject: The Next Stimulus?
Bringing Corporate Tax Dollars Home to Work in America

Introduction:
Ryan McConaghy,
Director of the Economic Program,
Third Way

Featured Speakers:
Senator Kay Hagan (D-NC)

Representative Loretta Sanchez (D-CA)

Representative Jared Polis (D-CO)

Panelists:
Andy Stern,
Former President,
Service Workers International Union

George Schink,
Managing Director and Principal,
Navigant Economics

MODERATOR:
Dan Maffei,
Distinguished Senior Fellow,
Third Way

Wednesday, June 15, 2011,
Washington, D.C.

Transcript by
Federal News Service
Washington, D.C.

RYAN MCCONAGHY: Good morning, everybody. Thanks for coming. If you could start to take your seats, we’ll begin the program in a moment. And as you find your way to your seats, if we could just ask, as a reminder, if you could take out your cellphones and make sure that they are in the silent, vibrate or off position, just so we make sure we don’t have any disruptions, we’d appreciate it.

All right. Well, thank you, everybody, for being here this morning. We’re excited. This is the first event in Third Way’s corporate tax reform project. And as we gather here this morning, numbers are dominating the discussion. We’ve got seven GOP candidates debating in New Hampshire, we’ve got three meetings of the Biden debt ceiling group and we still have zero championship rings for LeBron James. (Laughter.)

But one number looms over all those, which is 9.1 percent unemployment. And that’s the question we’re all asking in this town: How do we bring that number down? So today we’re going to see if another number – 1 trillion (dollars) in overseas earnings – can help us answer that question.

We’re really lucky to have three very prominent members of Congress here to help us dig into that question today. We’re joined by Senator Kay Hagan, who was elected by the people of North Carolina in 2008. And in addition to being very near and dear to our hearts as a Third Way co-chair, she’s also a leader of the Senate Mod Dems group. She brings her experience as a vice president of the North Carolina National Bank to her work on the Senate Banking Committee. And in her short time in Washington, she’s developed a real reputation as an advocate for small business and a fighter for pro-growth policies.

We’re also lucky to be joined by Congresswoman Loretta Sanchez, who has represented the California 47th district for eight terms. In addition to Armed Services and Homeland Security, she’s a leading member on the Joint Economic Committee. And she serves on the new Democratic Task Force for Innovation, Competitiveness, also Tax Reform and Education and the Blue Dog Task Force on Oversight and Reg Review.

And last but not least, we’re definitely thankful to have with us Congressman Jared Polis of Colorado’s 2nd District. Before coming to Washington, Congressman Polis founded several Internet companies and he was named Ernst & Young’s entrepreneur of the year in 2000. He also served as the chair of the Colorado State Board of Education and founded two innovative charter schools. Since coming to Washington in 2008, he has joined the Rules Committee, serves on the Democratic Steering Committee and also – very important to us – is an honorary Third Way co-chair.

We’re really fortunate to have all these members with us today. We thank you for your time. They’ve all shown themselves to care deeply about job creation and about generating economic growth.

So we’ll go ahead and get started. And, without further ado, Senator Hagan.

SENATOR KAY HAGAN (D-NC): Thanks so much. Good morning. And you mentioned 9.1 unemployment – well, it’s 9.7 to 9.8 in North Carolina. So what we’re doing here is really near and dear to my heart. And I really want to thank Third Way for hosting this important forum. Nothing wakes me up in the morning more than the food here: bagels and then tax policy to go on top of it. (Laughter.) So I really appreciate the opportunity to be with you today.

And while we know that our economy is gradually improving, we are certainly far from out of the woods. And over the past two years, aggressive monetary policy and fiscal policy has contributed to the recovery that we’re seeing today. And despite Federal Reserve steps to ease the flow of credit to businesses, stabilizing housing and forestall a financial crisis and despite aggressive fiscal policy, we continue to see anemic growth and persistent unemployment.

As Ryan said, the national unemployment rate sits stubbornly at 9.1 percent. And in North Carolina, it is hovering right at 9.7. And that equates – nationally, 13.9 million Americans out of work and in my state, more than 430,000 who are looking for work and almost half of which have been out of work for more than six months. And among our military men and women returning from serving our country, unemployment is even higher. Our military men and women have an unemployment rate hovering around 12.1 percent.

And I think, looking forward, the picture is just as startling. McKinsey Global Institute recently estimated that the United States must create 21 million jobs over the next decade. North Carolina’s citizens – we have about 9.5 million people. So if we need to create 21 million jobs, we need to create enough jobs for two states the size of North Carolina. Those are the numbers that we’re talking about here.

And in the long run, we’ve got a lot of work to do to train our students and to retrain our workforce on the jobs of the future. But in the short run, we have to do something immediately to encourage businesses to make substantial capital investments in the United States and to create more jobs. Unfortunately, the list of policy options left at our disposal is short. And the list that has any potential of achieving bipartisan support is even shorter.

As you heard, I was a banker in North Carolina before I was elected to the state – to the North Carolina state senate. And then today, I serve on the U.S. Senate Banking Committee. And I look for ways to give corporations the ability to finance hiring and capital investments as efficiently as possible. And right now, we may have an opportunity to do that through a repatriation holiday.

U.S. multinational companies hold up to $1 trillion in past earnings at subsidiaries abroad. And that number grows every day. But because of our current tax policy, these corporations are likely to keep those earnings overseas indefinitely. And this means companies are unlikely to bring these funds back to the United States, where they would be taxed to help plug our deficit hole and be spent on domestic initiatives.

With a simple and temporary change to our tax code, also known as the repatriation holiday, we could entice many multinational companies to bring this money back to the United States for capital, for investment and, most importantly, for hiring. A repatriation holiday can encourage economic activity at a fraction of the cost of recent fiscal policy. Analysis of the 2004 holiday shows that a temporary rate of 5.25 percent resulted in $312 billion that flowed from abroad. Nearly 200 billion (dollars) of that was used by the corporations to finance capital, spending and hiring and to retire debt, and it also generated billions of dollars in tax revenue.

Because a larger sum of earnings has accumulated abroad today, a holiday could bring substantially more capital to the United States. And without a repatriation holiday, these funds are unlikely to ever be brought back to our shores and ultimately taxed. But a holiday, I think, would bring these investment dollars home at a fraction of the cost of past stimulus efforts. And as a banker, that seems like pretty good policy – good global policy to me.

We all want to take action to create jobs. But few proposals to jumpstart our economy can generate support from Democrats and Republicans. Done right, I think a repatriation holiday could garner support on both sides of the aisle. And we cannot ignore that opportunity. So I am very interested in working with each and every one of you here, with my colleagues in the House, my colleagues in the Senate on both sides of the aisles to talk about this, look into this and hopefully get this repatriation holiday done.

So I really appreciate the opportunity to speak to you today. I do chair the Emerging Threats Committee for the Senate Armed Services and we are having a markup on that bill today, so I’ve got to scoot back and chair that meeting. So I’m sorry I’m not able to stay. And, Representative Sanchez, I believe you’re next. Thank you so much. (Applause.)

REPRESENTATIVE LORETTA SANCHEZ (D-CA): Perfect. Well, I think the senator set the stage for what we want to discuss today. And I’m actually very interested in not only what my colleagues have to say, but what our panel will say today also. I want to begin by thanking Third Way for having these forums, our ability to discuss issues because they’re very important.

Personally, I’m probably going to have a different spin on the repatriation tax. And the reason is, I don’t think that the repatriation tax – a one-time holiday tax – is actually about policy. That’s not a policy decision. That’s just about how – what do we tax something at? It’s a completely different issue than, how do we put people to work and how do we make sure that we make America stronger?

So I want to begin by saying, I’m probably the kind of person that people want to be talking to because, you know, for me, this tax issue is just, how much do we tax it at to bring it back in? I don’t care how you use it. I think you should be able to use your money the way you want to use your money.

I mean, you know, people think that the last time, in 2004, when we did this, that people – that corporations used it and they bought back their stock. So what? If I was a stockholder in that company, I did well. They paid out dividends. Hey! If I got dividends as a stockholder, that’s good. And by the way, when a company, as you know, sends out dividends, it’s a double taxation! So from a federal perspective, what’s so wrong with having you decide how you spend your money?

I don’t want to tell you, bring back that money and you have to spend it here or you have to create jobs here; you have to do that. I think, as a corporation, you’re going to do what you’re going to do. You should bring it back because you believe that the United States is the place that you should be investing. That’s policy. Policy is about, how do we make the United States the place where corporations want to invest?

So if I want to give incentives, if I want to change regulations one way or the other, then for me, that is policy because that encourages you to invest in the way I want you to invest. I want to incentive you. But I don’t want to tell you how to spend your money because I think a corporation can make their best decision as to what they’re in business for and where they should put that money.

Lot of people say in 2004 that there wasn’t enough spending. Well, I think about two-thirds of the money that came back was about reinvesting in your own business, was about training your people, et cetera. I think if we do the right thing and we make tax policy easier to understand – easier to understand, without everybody trying to figure out how to play the games and loophole it and everything, we’re all much better off. I’d rather be discussing that than, rather, whether we give a holiday or not.

I will tell you, I’m for a holiday. I just don’t know at what percent. I would bring that back – I would say, in my opinion, probably 5 percent is too low and 35 percent is too high. So come and talk to me about where you want to be. But all the rest of it – all these attachments, everything about, you know, how you should spend it and only if you create 100 jobs here or 500 jobs there or invest in green or do whatever or promise not to pay down dividends or out dividends or buy down your stock – for me, that’s not the relevant piece of this.

I want multinational corporations – corporations that are headquartered here – to bring back that money. I do. But I want you to bring it back for the right reason because I want you to believe that this is the place where your dollar will work best for what you’re in the business of doing. So that’s the kind of discussion that I want to have.

I want to have a discussion about where our real comprehensive tax policy goes and I want to have a discussion about how we incentivize you to do what you need to do. If we’re not training our people or educating our people well, then why aren’t we helping you, who understand what training your people need in order to be more productive? Why aren’t we helping you to go that way? Those are the kind of policy issues I want to have with you.

Convince me what percentage we should bring that money back for and I’m a pretty easy vote on this. So that’s what I have to say about this issue and I’m – that’s why I’m really looking forward to hear the discussion about what and how and when we bring it back. And I think that we can find the votes in the Congress to have this issue completed.

But there’s a much broader issue and – as a Democrat, there’s a much broader issue for me. How do we ensure that we make our economy the place where companies want to be? That’s the broader issue, that’s the policy issue and those are really the issues I want to be working on. So thank you for being here this morning.

I want to, of course, bring up my next – my colleague, who has a lot of experience in business, creating many businesses before he came to the Congress, and really is a good voice with respect to where we should be, especially in the new area – the technology area, the ups – the new start area. As an investment banker, I used to do private placements and look at small- and medium-sized businesses and bring them to fruition. So I’m really excited to hear what Jared Polis from Colorado has to say this morning. Thank you. (Applause.)

REPRESENTATIVE JARED POLIS (D-CO): Well, I want to thank Third Way and today’s speakers and my good friend Dan Maffei as well. And it’s always very exciting to hear Congresswoman Sanchez, and I agree a lot more with her position than the senator’s in the sense that her position is economically sound. It’s true that it shouldn’t matter how the repatriated money is deployed. And if it’s better to be used as a dividend or as a share buy-back, that, of course, is pumping money into our economy as well. Largest shareholders are pensions, putting money into the pockets of American consumers who go out and create demand. And, of course, some of it will also be used for capital and infrastructure.

With regards to what the rate needs to be, we also need to look at the comparison that many companies do when they borrow against their existing earnings and overseas subsidiaries. If they’re able to borrow against cash in the bank at a very low rate, we need to make sure it actually makes sense for them to repatriate because many – that’s what they’ll do now, effectively paying a penalty for having to reinvest in this country of a few percent a year. But we have to have a rate that compares favorably to the very low borrowing rate that they would spend over time. Maybe that’s five, maybe that’s 7 percent. Obviously, the higher it is, the less it’ll – will be repatriated on the margins.

I do believe that there is the opportunity to have this be even more successful than the last time around. Senator Hagan referred to 312 billion (dollars) being repatriated in 2005 and there is far more in overseas earnings that exist today. So there is reason for cautious optimism that this would provide a great short- and medium-term stimulus for our country. And when we look at a short- and medium-term stimulus, yes, we mean jobs. That’s certainly part of it. We also mean the stock market. We also mean money in the pockets of consumers across our country. Some of it will be used for all these ends.

Now, under the various proposals, all of which I support, including Adam Smith’s proposal and Kevin Brady’s proposal – Adam Smith proposes that firms that have to increase their U.S. employment by 5 percent, keep the job for two years, and then they would have a 5.25 percent rate. And companies that didn’t meet that would pay an 8.55 percent rate. So it’s a bifurcated rate. Congressman Brady, whose bill I’m also a cosponsor of, includes provisions that would penalize firms that fail to reinvest the repatriated funds in American job creation.

Now, again, I agree completely with Congresswoman Sanchez that it doesn’t make sense to tell corporations how to spend this money and invest this money. It should be used for the highest leverage purpose possible. But I do believe that some of these provisions are important politically. Not all members of our caucus and, probably, the Republican caucus as well would agree with Congresswoman Sanchez and I on this point. Many people, for this to be a palatable vote, want to point to a direct ironclad nexus to job creation.

So from my perspective, that’s fine, as long as it doesn’t harm the policy too much. I think that both Adam Smith and Kevin Brady have fine policies in that regard. I think the less, the better; the simpler, the better. But if it takes having a direct nexus or penalty for lack of job creation as part of the bill, I think that that can be an important piece of gaining the support, particularly in the Democratic caucus. And we just have to be thoughtful about how we do that so we don’t forgo the purpose of it, leading to less repatriation by severely limiting the usage, which is what we risk on that end.

Obviously, in the long term, corporate tax reform is what we need. At 35 percent, we’re well above the global average. And we have a very complex tax structure. Companies that invest heavily in accounting tricks and folks to try to seek special tax breaks for them on Capitol Hill tend to benefit. Companies that focus on their core business models and actually generating profits tend to pay a higher rate. We do need to change that.

And, of course, there’s a great push from many of us on the Hill as well as within the administration for overall corporate tax reform. But that is, you know, politically unlikely to occur. It doesn’t mean I’ll continue to stop pushing for it; it doesn’t mean Congresswoman Sanchez won’t push for it. We certainly hope it occurs sooner rather than later.

But if there’s the opportunity to do a discrete piece, particularly the most stimulative discrete piece that will actually create hundreds of thousands of jobs in our country, put money in the pockets of American consumers, boost pensions and decrease the deficit in the short run, this is something that we should all be excited about as Americans. And I’m certainly excited about it and hope to work to pass this into law in whatever form seems feasible. Thank you. (Applause.)

MR. MCCONAGHY: Well, I’d like to thank the senator, who had to go off to her markup, and also Congresswoman Sanchez and Congressman Polis for their remarks. Got us off to a strong start in the discussions. Saw a little bit of some difference of opinion there and I think we’ll see, hopefully, a little bit more in our panel discussion, where we’ll get some more open discussion going. So I want to thank you both for being here; appreciate it.

And we’ll move on to our panel, which is being moderated by Congressman Dan Maffei, formerly of New York’s 25th District. He represented that district, which includes Syracuse, in the 111th Congress and he served on the Financial Services and Judiciary Committees. He has joined Third Way as a senior distinguished fellow and he’s using his experience as a senior vice president for corporate development at Pinnacle Capital Management and his experience as a senior aide on the House Ways and Means Committee to help drive Third Way’s corporate tax reform project.

So I will turn it over to Congressman Maffei.

DAN MAFFEI: Great, thank you very much, Ryan. Welcome, everybody. I want to thank my former colleagues in the Congress for their earlier remarks that I think well-framed this discussion. We’re very lucky to be joined by a distinguished panel of experts and stakeholders to sort of unpack this issue over the next half-hour.

Jim Rogers is president and CEO of Duke Energy. He has spent – he’s in the middle here with the orange tie, which I think is for Syracuse; he claims its for – (inaudible). We all know it’s not for Third Way – (inaudible, laughter) – orange. He is the president and CEO of Duke Energy. He has spent 22 years as a CEO in the electric utility industry. He’s also had experience in public service, having served in multiple capacities at the Federal Energy Regulatory Commission, as deputy attorney general for the Commonwealth of Kentucky and as a newspaper journalist.

Andy Stern, who is on the my far right – most of your left – (laughter) – but Andy Stern most recently served as a member of the president’s bipartisan fiscal commission. He is best known as a champion for the 22 million members of the Service Employees International Union, which he led as president from 1996 to 2010. And he is also a well-known progressive advocate on all sorts of economic issues.

And then to my immediate right is Dr. George Schink, who is a noted economist and managing director and principal of Navigant Economics. He has expertise in a wide variety of issues, including energy markets and regulatory economics. He also consults on the economic effects of public policy and has published an economic analysis of the effect of a repatriation holiday, which will – (inaudible, background noise) – very, very shortly.

And I guess we’re going to be fairly informal. First names okay? Is everybody okay with first names? All right, good. Well, it’s our hope that we will answer a few major questions, or at least address them in this panel, and those are, essentially, would this work as an economic stimulus and the kinds of the things that the senator talked about – are those really possible with this kind of policy?

What improvements could be made, if any, on the 2004 policy and what responsibilities should corporations have if this temporary tax cut is granted? Kind of the things that Representative Sanchez was talking about. And what Representative Polis ended his remarks as – does this really have a chance of happening in Congress and what would need to be done to get the coalition together to actually get it done this Congress?

I’m going to start with Andy. You have a long history in the labor movement. We don’t often see union officials echoing business concerns on tax and economic issues. Why are you finding some areas of agreement on this particular issue?

ANDREW STERN: Because I don’t think this is echoing business concerns; I think this is echoing American concerns. And I think we’re at a place, now, that everybody knows the numbers of 9.1 (percent) or 16 percent of people who are seeking work/under-employed, 25 percent of youth African-American unemployment.

So we have an American problem. We have very few solutions, given the nature of politics here. And I think when Democrats realize this is stimulus, and probably the only stimulus that has a chance of passing, and Republicans realize this is a corporate tax break, you know, we have a perfect situation for a solution.

MR. MAFFEI: Economic stimulus and a corporate tax break – everybody has something. Dr. Schink, you and Dr. Laura Tyson authored that paper that we mentioned earlier on – at the beginning of the Obama administration – about this earlier proposal, actually, to temporarily lower the rate on overseas earnings being brought to the U.S. – what we’re all calling repatriation of those funds.

For those of us who are not economists – or can’t pronounce the word – (laughter) – try and boil it down to a layperson. What is the economic argument that this – how would this improve our economy?

GEORGE SCHINK: Well, I mean – and I think it’s been articulated by the previous speakers – the problem is, right now with our current tax structure, the earnings overseas are not being repatriated. They’re being held over there. And it will take a lower tax rate that could be accomplished, ultimately, through comprehensive tax reform but that’s not on the near-term horizon.

I think in the immediate term, a repatriation tax holiday would, in fact, bring this money back for domestic uses – investment and job training, all the other things that have been enumerated. Absent this repatriation holiday, I think these funds will remain overseas for use overseas. And I think, given our sluggish economy and our high unemployment rate, we need the funds here, being spent here, rather than being kept overseas. I think it’s very, very simple.

MR. MAFFEI: When I was in elected office and, you know, in all the campaigns, the number one thing is always jobs, jobs, jobs. I’m going to go to you, Jim: What jobs did this create at Duke Energy in ’04 and how do you know it will do the same thing again?

I mean, it may be good for our economy, in one sense, that we’ve seen – and there’s people – like Steve Pearlstein wrote over the weekend – something that’s good for business now, which may even be good for the economic growth, isn’t necessarily going to translate into jobs. Do you have evidence to the contrary?

JIM ROGERS: I do, and let me just put my answer into context. First of all, we are a power company that provides electricity to over 4 million people – (coughs) – excuse me – touching the lives of 11 million people. The important point here to us is that we’re the most capital-intensive industry in the United States. Secondly, we’re a vital-infrastructure business. Today, we have $1.3 billion that is overseas that we could bring back. What will we do with the money?

We really have several missions in this century. One is to modernize our generation fleet, to retire and replace. So the money can be used there, and for every billion dollars that we invest, that creates 15,000 to 20,000 jobs, either directly or indirectly.

Our second mission is to modernize our grid, and everybody’s heard about smart grid and what the implications are there to really accelerate energy efficiency in this country. Our third mission is to really help our communities be more energy efficient. So in a sense, some of these dollars could be used to invest in the homes and businesses of our consumers.

So the way I look at this, this is about jobs, absolutely, no question; but it is also, particularly for an infrastructure business like ours – it allows us to modernize that and, at the end of the day, really reduce the emissions. So there’s an environmental benefit for our company and our industry that comes out of this on top of an economic benefit associated with the repatriation of these dollars.

MR. MAFFEI: Okay, follow-up question, Jim: One are the arguments that the critics make of this proposal is not that, you know, those things in theory couldn’t happen but they say most of these companies already have a good deal of cash reserves here. They already have strong balance sheets. Why aren’t they spending the money they already have here? How would bringing in more money end up bringing new stimulus to the economy when they’re already sort of sitting on money that they do have already in the States?

MR. ROGERS: Well, first of all, I’ll speak for our company specifically and then generalize. We spend $5 billion a year in capital reinvested in our system. We spent $1.7 billion in the last three years building over 1,000 megawatts of wind generation, as well as solar generation. We need more capital.

And in fact, in the last two years, we borrowed over $10 billion in the markets to reinvest in our business to achieve the objective I mentioned earlier. So this isn’t about us hoarding capital because we’re not. We’re deploying capital because we’re in a period where reinvestment in our infrastructure is really critical.

MR. MAFFEI: So is that just the other industries that are hoarding it?

MR. ROGERS: No. (Laughter.) I’m not going to speak for the other industries, but I know companies like Cisco, last time, when they brought the money back, they created more than 1,000 jobs that are engineering jobs, and since then, subsequently, more. And Cisco is a partner of ours in a number of projects that are focused on energy efficiency.

So the important point I’m making here is I think every company, every industry is different. Ours has the benefit of not only creating jobs, getting the economy going, but also has the benefit of making our economy more energy efficient and making any new generation in this country more environmentally benign.

MR. MAFFEI: Andy, I’m essentially asking if you agree, but obviously, a lot of the critics of this proposal are your friends and allies, and some of them even label it as just, you know, big, corporate welfare and imply that it will do nothing for your average worker. What do you see as potential positive impacts on the average worker?

MR. STERN: I mean, we have a trillion dollars sitting overseas. We’re having a lovely intellectual debate about what we should do with it and the money just keeps growing. So I cannot believe under any circumstances having a trillion dollars overseas is an advantage over having a trillion dollars at home, so let’s start with the most simple issue. (Laughter.) I just don’t get that.

So then the question is, so what are people going to use it for? I’ll go out on a limb – I’m not an economist – someone’s going to create a job with a trillion (dollars). I don’t know how many more than one. Those that don’t create jobs are going to spend it on dividends. They’re going to spend it on share buybacks. They’re going to spend it on other things.

That money will flow into the economy, whether it’s returns for pension plans, whether it’s money for state governments that are desperately in need of tax revenues, or the federal government. That money will not all, you know, be sitting somewhere, undeployed, as it is now. So to me, it is only on the upside. You know, I happen to believe that 5.25 (percent) is way too low. The real discussion should be twofold. What is the rate? And the second question, which we haven’t gotten to yet, is what do we do with the money?

Q: I’ve got a question. Why not just take –

MR. MAFFEI: I’m sorry, this is – sir, you are clearly just – sir –

Q: Why not pass the Stop Tax Haven Abuse Act and outlaw tax dodging? Why are we letting these corporations – why are we rewarding corporations that are dodging their taxes? And you, sir, should be ashamed of yourself.

MR. MAFFEI: Obviously, he’s late for a train.

Q: (Inaudible, off mic) – stop tax haven abuse! Outlaw tax dodging!

MR. : That’s the most exciting thing that’s happened yet. (Laughter.)

MR. : That’s my life, usually. (Laughter.)

MR. MAFFEI: We wanted to sort of illustrate the stimulus – (inaudible, laughter) – part of it. We’ll go from Andy right to you, George. What –

(Cross talk, laughter.)

MR. MAFFEI: – possible restrictions on this or, you know, what kind of rate it should be – let’s get to that. Do you think there should be conditions on this? I mean, I think you did have something in, at least, your previous paper about 5 percent going to some sort of a purpose. How should that work? You know, how should the restrictions work?

MR. SCHINK: Well, I personally believe that, as I think the two congressmen said earlier, that, you know, the restrictions really are not very – you know, aren’t necessary. From an economic stimulus – (inaudible, background noise) – there will be stimulus without them. I think they may be necessary from a political acceptability point of view.

And think corporations, by and large, are willing – were willing, then – to support restrictions and appear to be willing now. I think the point is, you don’t want to make it so restrictive that it makes it unattractive. I think the restrictions then involved devoting a certain amount of – (inaudible, background noise) – percentage to certain types of investment, and I think that, that could be productive and I think, to a certain extent, wouldn’t greatly limit the amount of money being brought back. So I think there are –

MR. MAFFEI: So a few things would be okay – doesn’t necessarily make it a stronger stimulus to you but for political purposes – (inaudible, background noise)?

MR. SCHINK: Yes, I think so. I think however the money is distributed back into the economy, it provides a stimulus. I mean, I think Congressman Polis said that and I think he’s correct.

MR. MAFFEI: But is there some stimulus that’s better than others?

MR. SCHINK: Well, just from an analysis of these sorts of things, the biggest stimulus comes, I think, from business investment spending but that doesn’t mean there isn’t also a significant positive stimulus for the other things they might do with it.

MR. MAFFEI: Jim, if you really want to get this done, are there strings, if you will, that you think the businesses would consider worth it, or –

MR. ROGERS: I think I can speak – it would be easy for me to – (inaudible [13:42]) – strings. I mean, I have a long line a projects in terms of wind turbine and solar projects that I can commit to, and I would put the money in those kinds of things. But if I look across all of industrial America, I think there ought to be flexibility in terms of what they do with the money because, at the end of the day – they talk about how much money is on the balance sheet of U.S. companies; it’s primarily international companies who have operations overseas.

And so to put that money to work, we need to bring it back to this country because our number one problem is unemployment and my greatest fear is we have structural unemployment at 7 to 8 percent for another decade. And if we don’t start jumpstarting this economy and getting jobs going, this is bad news. And by the way, we don’t have to add to the national debt to bring this trillion dollars back. We don’t have to increase the deficit to bring these dollars back. So this is money that needs to be redeployed here.

MR. MAFFEI: Unlike the stimulus bill that I voted on and, you know, passed, this doesn’t take anything from the Treasury. Look, I agree and, you know, putting my political hat on, of course, people want more jobs. But yesterday, in the Washington Post, or the Express, it talked about a survey of Associated Press economists saying that we should – you know, need to wait for the recovery and not necessarily have more stimulus. Do we even need more stimulus? I’ll start with you, Andy.

MR. STERN: Yeah, I mean, listen, there are 9.1 percent, at best, unemployed. You know, waiting for the situation to change for them seems ridiculous. McKinsey just issued a report. It’s high-end, 22 million jobs claim, I think, takes a series of experiences to happen that are never going to happen; the lower-end, 7.5 million jobs are more likely.

But I think, more importantly, you know, the question is – which we, again, haven’t gotten to – is, I happen to think the money that comes back should be used in a longer-term way to create jobs. And that’s why I –

MR. MAFFEI: How do you think that –

MR. STERN: I’m just a big supporter of taking the government’s share of the money – I’m not really worried about what the companies do with their share of the money. They played games in 2005. We will have games again because money is fungible. And we can chase people around for the rest of our lives; we should just appreciate that it’s not going to be a very easy thing to hold people accountable – did I lose a job? Did I create a job?

So we know how much they can bring back. That’s the tax rate. That’s what I’m for. And then I’m for putting the money in an infrastructure bank which the Chamber of Commerce, which the CEO of Pepsi, which lots of other people all say – and the president himself says – this is way to create jobs in the long run.

So you take the government’s share of the money, not the companies’ share of the money, and you invest it in something other than deficit reduction. So I’m not a big fan of deficit reduction with this money. I see this as another source of a second investment pool of capital for the long run.

MR. MAFFEI: So stimulus bringing it back and then more stimulus with what you do with any revenue –

MR. STERN: That’s right.

MR. MAFFEI: George, does that make sense? Are you worried about inflation, like some of those economists are?

MR. SCHINK: Well, in the current weak economy and the high unemployment rate, I’m not very worried about inflation. I’m more worried about getting the economy going and getting jobs created.

MR. MAFFEI: And Jim, do you see this, in your company, doing just that? I mean, do you have plans right now on the books that –

MR. ROGERS: I have projects today that I don’t have capital for. I have wind farms. I have solar. I have smart grid deployment that I don’t have enough capital for today. If I could bring this money back, I’d put people to work and I’d be cleaning up the economy.

MR. MAFFEI: One of the big debates about this, obviously, is the fact that this money is overseas and, of course, could be brought back – and just, they would have to pay the 35 percent tax. You know, in Washington, we’re used to three-letter agencies: CIA, FBI, NSA. Well, the big power in our world in the tax world is JCT – (laughter) – and that, of course, is the U.S. Congress’s Joint Committee on Taxation, which is the official estimators of revenue and tax effects of this proposal.

And they say that, far from raising revenue – it will raise some revenue in the short run and, actually, as one of the members of Congress mentioned, almost twice as much in the short run, even according to JCT – but in the long run, they say that more and more companies are going to just shift their profits overseas.

In other words, companies like Duke Energy and Cisco might bring back the money for now but then, when it comes to next time, they’ll just keep more money overseas waiting for the next holiday, and their total 10-year cost is $30 billion. George, I’ll start with you: Do you think that, that reflects the realities of this?

MR. SCHINK: No, I don’t. Corporations aren’t managing their funds to game the tax system. Their managing their funds to maximize their profits. And they’re not – the idea that the funds have grown over there just as a ploy to get a tax repatriation holiday is ridiculous. I mean, they aren’t bringing it back because the current tax structure discourages bringing it back and investing it here. It provides an incentive to keep it there and invest it there. And I don’t think that’s in the U.S. interest.

MR. MAFFEI: Similar question – tax economist Mark Sullivan has written, “Another repatriation” – Jim, this is for you – “Another repatriation holiday would remove the only significant restraint on the U.S. multinationals to move profits abroad. The dam would be broken.” Yeah, you’re going to bring this money home now but, after that, are you just going to move every penny you can overseas, waiting for the next holiday?

MR. ROGERS: No, we don’t think that way. I mean, we look at projects and we look at the return on investment. We look at risk-adjusted returns. So when we invest in South America, whether it’s Peru or Argentina or Brazil, each has a special risk-adjusted component to it. We would, as we generate money from our operations there – and that’s way – the money is being generated in South America from our hydro facilities.

The question is, can we deploy it in the United States to be able to produce clean energy? And today, we can’t. And again, there are opportunities in South America and there will continue to be because their growth in demand for electricity – take Brazil, for example – is 5 to 7 percent, while in the United States, it’s less than 1 (percent). But our challenge is different in the U.S. because we’re going to have to remake our entire fleet by 2050. So we need the money back here to actually create investments and to remake our structure.

MR. MAFFEI: So then, actually, doesn’t that sort of fit into the critics’ argument? Eventually, you’ll have to bring it back, even at a 35 percent rate?

MR. ROGERS: Well, if we can get a higher return – I mean, take Brazil. We pay a 30 percent tax in Brazil and then we come here and we pay 35 percent. There are a lot of projects that will look much better to you economically, in terms of returns, just to keep them in Brazil. And by the way, the economy is growing fast. They want your money. The people want electricity. They see that there is a link between electricity access and prosperity. So there’s a strong pull from Brazil to spend the money there.

MR. MAFFEI: Right, and actually, Brazil – there are a lot of other countries that now have even more of a tax-rate differentiation. Andy, you mentioned earlier that getting this money in is better than keeping it overseas. Many of your progressive allies, though, say, look, eventually, we’re going to get the 35 percent of this, or at least, that’s the assumption. Why do you disagree with them?

MR. STERN: Well, I would love companies to bring it back at 35 percent. I want to make that perfectly clear. I’d love Joe Biden and everybody to have a long-term fiscal plan. I’d love China to reinvest in the United States. (Laughter.) I’d love for there to be peace in the Middle East. So there’s a lot of things I would love to see happen.

The truth is, people are voting by their deposits and their deposits are now overseas, and we can have a debate that’s an appropriate debate of, are there people going to bring it back at 35 percent? They aren’t and they won’t. So to me, the question is, we need corporate tax reform. This is not the answer to that.

This is a small, one-time, probably bad tax policy in an intellectual, academic sense. It’s just with 9.1 percent unemployment, I’m interested in getting money back into this country to do something for people, short run, and hopefully, with an infrastructure bank, in the long run. So I’m willing to make the understanding this is bad tax policy but it’s better for people than having the money sit overseas.

MR. ROGERS: Can I put in one other point here that I think is really critical? And you asked the question earlier, would it be better to have another stimulus for a trillion dollars or to bring this money back?

And the answer, hands down, is bring this money back. Our country cannot afford another stimulus, particularly the way the money as deployed. We can’t afford it, and the reality is, we need to face up to that and move on to something that we can afford and will actually help generate jobs in this country.

MR. MAFFEI: Well, wouldn’t the comprehensive – wouldn’t overall tax reform be better? Why not just wait for that?

MR. ROGERS: You know, the tooth fairy – I’m kind of – you know what I’m saying? I mean, I have the same kind of feelings you do – peace in the Middle East – (laughter) – I mean, you have all these things I’m hoping for, but the reality is, given unemployment at the level that it is today –

MR. MAFFEI: Kentucky winning a (championship?). (Laughter.)

MR. ROGERS: We’ve got to go to work today.

MR. MAFFEI: George?

MR. SCHINK: The other thing is, there’s nothing about implementing this now that’s an impediment to comprehensive tax reform. The impediments to comprehensive tax reform are a lack of agreement about what it means and how we’re going to get there. And we’ve been – I think it’s something you have to get done but it’s not going to get done quickly, and I think we need the stimulus now.

MR. MAFFEI: Okay, all right. Fine, but I’m going to play the devil’s advocate a little bit because, speaking of lack of agreement, you had, in today’s Politico, Obama administration officials criticizing this, saying, bottom line: The 2004 holiday didn’t create the promised jobs and investment and everyone knows the sequel is never as good as the original.

You know, there have been other people in the Treasury Department, including the assistant treasury secretary also saying that we don’t want to keep the ball off of comprehensive reform and it’s been echoed by the chairman of the Ways and Means Committee, Mr. Camp, the ranking member of the Senate Finance Committee. Isn’t that simply a no, at the end of the day? Why is that not a no, Jim?

MR. ROGERS: Two different facts: Then, we had about 4.5 to 5 percent unemployment; we didn’t have 9 percent unemployment. That is a really critical factor. Then, we didn’t have as much money offshore as we have offshore today. A lot of people talk about corporations having $1.6 trillion on their balance sheet their not putting to work. I would daresay if you broke down their balance sheet, a trillion (dollars) of it is overseas.

So we’re in a country where we have multinational corporations that do business around the world and they invest their money where the opportunity is and where the tax rates are good. And if we make it tougher to bring the money back, they’re not going to bring the money back. They’re going to invest in China. They’re going to invest in India and Brazil.

MR. MAFFEI: Right, I mean, with all the good reason – Andy, do you see, though –

MR. STERN: I mean, then we should make a new movie. You know, the last movie was not the greatest movie. People promised things they didn’t’ deliver about jobs. So that was a bad movie, so let’s create a new movie.

The movie looks like this: We have a trillion dollars; we bring it back; we charge people probably a little bit more than the 5.25 percent; we don’t tell them what to do; we take the money; we invest it in long-term job creation. I like that movie. I don’t necessarily want to have the sequel to the last one.

MR. ROGERS: Well, it doesn’t necessarily have to be.

MR. SCHINK: I mean, I’ve looked – we looked at some length at the studies that purported to show that the 2005 experience wasn’t favorable, and I think they all have serious problems. I think most of them start with the assumption that it wasn’t a good idea and then set out to try to prove it.

I think there’s no – all these studies that purport to show this are just not reliable studies, and I think the presumption that the 2005 experience was a failure is just wrong. I think, you know –

MR. MAFFEI: It’s hard to know. Our economy was in better shape then.

MR. SCHINK: Our economy was in better shape and I think, as people have pointed out today, the fact that a lot of it was spent on tax repurchases and dividend payments and other things doesn’t mean that it didn’t provide a stimulus.

The money got out in the economy and it got spent. And there was also a lot of experience – I think the Cisco experience you mentioned – and other companies did do a lot of major investment projects and hire people. So I think the rhetoric that says this didn’t work is just that – rhetoric. The facts don’t really support it.

MR. MAFFEI: Right. All right, last question and then we’ll get to a couple of audience questions. This is all great arguments for doing it but one of the people with this rhetoric is the president of the United States, and it seems to me that, in order to get this done, you’re going to at least have to get it by him.

What sentence or two, if you had a sentence or two with him – and Jim, actually, you were with him yesterday, I believe – we’ll start with Andy, but going around, alternating people – what sentence or two would you tell the president to try to say, you know, look, you’ve got to reconsider this?

MR. STERN: It’s the only stimulus opportunity you have today to help improve your election chances in November of ’12, and it sets the stage for your infrastructure bank that you’ve been – it funds your infrastructure bank that he’s talking about for a long time.

MR. MAFFEI: George, and then we’ll finish with Jim.

MR. SCHINK: I’d like to say ditto because I think I agree fully. (Laughter.)

MR. MAFFEI: That works.

MR. ROGERS: I’d say ditto but I’d underline another point: This is really critical to getting the economy going. This is happening on your watch. This is a tool you have at hand. You need to use this tool.

MR. MAFFEI: Great. All right, do we have a couple of audience questions? By the way, I appreciate you waiting for the appropriate moment. (Laughter.) What did the Washington Post say? You know, wait for it, you know? So thanks very much.

Q: Hi, I’m Steve Wamhoff with the Citizens for Tax Justice. I guess I just want to clarify your views on some of the other research that has been done.

If I understand, I think what you’re saying is that the bipartisan – the nonpartisan Congressional Research Service was wrong in issuing a study that said that the last time this was tried it did not create jobs, and that the nonpartisan Joint Committee on Taxation was wrong recently when it had its analysis saying that if we repeat this repatriation holiday, it will cost $79 billion over 10 years, partially because some of those profits would have been brought back anyway; partially because, ultimately, corporations will shift even more profits offshore, meaning even if your only goal is to get more of these profits into the U.S., even in that limited goal, you fail on that.

So do I understand correctly that you think that the nonpartisan Congressional Research Service and the nonpartisan Joint Committee on Taxation are incorrect and Congress should ignore these analyses?

MR. MAFFEI: George, you’re taking on some pretty big people there.

MR. SCHINK: I haven’t specifically reviewed those. I reviewed some other ones, earlier. I don’t – I mean, the problem is that, from what you’ve just said, there’s a lot of assumptions underlying that study that I think can’t be documented.

I think if I can – you know, I think the gist of the studies I’ve seen is you can’t prove it worked, it didn’t, or if you can’t show me that this specific job got created, it didn’t. But these studies tend to ignore the examples where it did work and sweep them under the rug. So I am very skeptical of these studies. I mean, and that’s where I (come from?).

MR. STERN: Can I just answer one part because I have this dilemma all the time? Yes, it probably could – I don’t think it will – but it could lose money in the back years. But isn’t that stimulus? Isn’t that was progressives are for? We’re trying to get money into the economy now to stimulate the economy to create jobs that hopefully solves that problem on the back end.

And I agree, if we do nothing and the same economic situation has, we may or may not lose money. But stimulus, almost by definition, is spending money you don’t have to stimulate something you want to have done. So I don’t think we can be on both sides of the argument, of let’s have a balanced budget on one hand, when it comes to this, but let’s be for deficit spending and Keynesian economics otherwise.

Q: (Inaudible, off mic) – so if it raises – you know, I think, according to the analysis, it raises maybe $20-something billion in the first couple years and then ultimately loses $79 billion –

MR. STERN: I think it could raise a lot more in the first couple of years with a different tax rate, and I think the investment in the infrastructure bank raises a lot more money in the long run than almost anything else that is deficit spending will do.

(Cross talk.)

MR. STERN: And we won’t do deficit spending.

MR. ROGERS: I think there’s another way to think about this, and that is, if the policy of this country is to have multinational companies that are headquartered in this country to invest in the great countries and other countries around the world, this is a perfect policy for that. This is not repatriating – allowing the repatriation of dollars in a fair way.

And so as a consequence of it, what this government is encouraging is companies to move money out of the country, reinvest in other parts of the world, create jobs in other parts of the world and not in the United States. And that’s what voting for the status quo is about.

MR. SCHINK: And the out-year losses assume it will come back, and I don’t think it will. I think it will be invested abroad.

MR. MAFFEI: In other words, it assumes the companies will have to, at some point, bring it back at a 35 percent rate.

MR. SCHINK: And the reality is they’ll probably invest it abroad.

MR. MAFFEI: The next question?

Q: Hello, my name is Richard Phillips. I work at the Institute on Taxation and Economic Policy. And actually, I’d like to ask a question sort of based on this point we were just talking about. Wouldn’t a better alternative to a tax repatriation holiday be to end deferral and sort of go to a system where all companies have to pay taxation on their offshore profits?

MR. MAFFEI: So you would keep – just to make sure I understand your question – you would keep the so-called worldwide system. You would still tax these companies, but you would just simply not allow them – you would just assume – you would deem them as earned in the United States?

Q: Yes, you would end deferral.

MR. MAFFEI: Jim, what would happen to your company if we got rid of deferral? Would that work? Do you think that would – you know, you’d bring it back in then? You wouldn’t be able to avoid the tax.

MR. ROGERS: No, I mean, let me tell you what that kind of circumstance would create. It wouldn’t create, for our company – because we’re an infrastructure business in the United States but also invest internationally in infrastructure businesses – but it will raise a question for major companies, like Applied Materials, who I’m on the board of, or companies like Cisco or Pfizer.

Do they really want to be headquartered in the United States with that kind of tax policy? There are a lot of countries with much lower tax rates, much lower effective tax rates, and countries that don’t penalize you for doing business in other countries. And this, in a sense, is – that suggestion raises the specter that people will rethink where their headquarters are.

MR. SCHINK: And I think what you really need is a comprehensive tax reform that puts our tax system in line with the tax systems abroad.

MR. STERN: It’s a better system. It’s just not going to happen but it is a better system.

MR. MAFFEI: Okay, so Andy, you would be –

MR. STERN: I mean, I’m for – you know, listen, I’m for – you know, one of my concerns on the fiscal commission was that, you know, where we had shared sacrifice everywhere but for corporations because every time we talk about changing the corporate tax system, we talk about being revenue-neutral. I don’t get that.

You know, nothing should be revenue-neutral right now that we’re changing. People’s lives aren’t revenue-neutral; they’re revenue-negative. So you know, I do think there’s a question of fairness of corporate taxation and what role they play. I don’t think deferral – having sat on the commission and talked to many Democrats – deferral is not happening. You know, and a lot of this –

MR. MAFFEI: You mean getting rid of deferrals?

MR. STERN: Yeah, getting rid of – I mean, if we want to have – there are lots of academic, appropriate debates about better and worse tax systems, and we should have that debate. There’s still the trillion dollars overseas and, while we’re having that debate, I just happened to believe we should get this done.

Q: Hi, I’m McKenzie Shawn (ph) with the Tax Justice Network. And I think, Mr. Rogers, you said we didn’t have as much offshore as we do today, in your comments, so doesn’t that sort of speak to the issue that this actually incentivizes companies to keep their money offshore if they think they can just have a holiday every five, six years?

MR. ROGERS: No, I don’t think the expectation is you’re going to have a holiday every five or six years. We didn’t have as much offshore at that time in history. We have much more offshore today. But that also reflects the growth in the investment opportunities around the world. They have really escalated during this period of time and the U.S. economy has not been growing as fast and the opportunities haven’t been as great.

So multinational companies – they are indifferent as to where they invest. The only thing they really care about is the return on their investment. And if they get a better return in the BRIC countries than they can get in the U.S., that’s where they’re going to go. But what you would like to do is encourage them to bring the money back and reinvest it. My situation is so different because I’m an infrastructure business and have to totally remake my system over the next 40 years. And this capital would really help me accelerate that remaking.

MR. STERN: I mean, I just think we need to appreciate, which is hard – you know, I wrote a book that was about the third economic revolution, not the Third Way, which basically says, we’ve had three in history. Agricultural had a 3,000-year transition; industrial had a 300; this is the third. It has a 30-year transition. We’re witnessing the most creative destruction that any economy has ever seen in the shortest period of time.

People have more money overseas because they do more business overseas. In the majority of U.S. Fortune 100 companies, you know, the amount of revenues that are being created overseas is far greater than 2005 and it will grow because they are not American companies. They are American-headquartered companies and they do exactly, you know, what Jim said.

They’re looking to make money and wherever the margin is the best for their shareholders, they’re going to do it. The question for us is, given that change in reality, what do we do about it? One is about comprehensive tax reform and the other is, in the interim, what are we going to do with the money that’s sitting overseas? I just say bring it back and do something with it.

MR. MAFFEI: And a lot of believe that the Third Way is the third economic revolution. (Laughter.) Jim, one follow-up question that does concern Duke: I was on the Ways and Means Committee staff back in 2004. I don’t remember Duke actually being a big lobbying force then for this. I mean, I remember you being opposed but it was mostly the techs. First of all, is that right? And has it changed? Why are you so – what is different now and why are you so at the forefront of this one?

MR. ROGERS: Well, I think part of the reason I’m at the forefront is we have a billion free overseas. We have a backlog of potential investment in wind projects and solar projects, and we need to accelerate our smart grid. I’d like to bring that money back, and I think the investment in the United States, on a risk-adjusted basis, is better. So I’m in a fundamentally different place than we were then, in terms of what the challenges are today.

MR. SCHINK: I think increasingly, to the world economy, we are living in a global economy. And I think there is – you know, all – many more companies have worldwide operations and this is a bigger issue than it was back then.

MR. MAFFEI: We’re a little over but I think we can do two more questions and hopefully, everybody can stay. Go ahead.

Q: Good morning, my name is Scott Klinger. I’m with Business for Shared Prosperity. And I think one of you noted that some companies are devoting a lot of effort to accounting ways of moving profits offshore through things like aggressive transfer pricing.

Some of our small business members think that’s a pretty big loophole that needs closing that’s caused this swelling of offshore assets. Would you be in favor of looking at closing the tax haven – some of the tax haven loopholes and tightening transfer pricing restrictions as a part of this repatriation holiday?

MR. MAFFEI: So just to understand your question, the tradeoff would be, don’t wait for overall comprehensive tax reform to do the repatriation, but also don’t wait to do some of the transfer pricing reforms, also?

Q: Correct.

MR. STERN: Yes, I’m for that.

MR. MAFFEI: Yeah. (Chuckles.) Jim, a little tougher question for you.

MR. ROGERS: Yeah, I don’t know what the – I don’t know the details of that so I’m really not going to comment on it.

MR. MAFFEI: All right. And George?

MR. SCHINK: I also don’t know the details at this point so I don’t –

MR. MAFFEI: I think it would depend what the deal was.

MR. SCHINK: I think the biggest concern is we don’t turn this into a two-year debate and get nothing done.

MR. ROGERS: But you know, let me make one more point, that if you all walk out of here with any single thought, it is that we have over 9 percent unemployment and I look at projections – because the electric use is kind of tied to how the GDP is doing – and based on our projections, we’re going to see about 2.5 percent growth and that means we’re going to have about 8 to 9 percent unemployment to 2014 or ’15.

So you need to walk out of here saying, what can this country do to get the economy going and get jobs? And I think this is just one tool that we have. There are many other tools but we want to use this tool.

MR. MAFFEI: I think we have time for one more question.

Q: Hi, Lee Slater with Congressman John Larson’s office. I just wanted to follow up on the politics point that, Dan, you had mentioned earlier. We hear from Secretary Geithner that he’s opposed to this, aside from comprehensive reform – the same from Chairman Camp, Ranking Member Levin.

I think to add to that, what makes me wonder if this isn’t just going to turn into every other tax battle is a number of the Fortune 50 companies across the nation are also opposed to it, aside from comprehensive reform. So how do we change the tenor on this conversation where it’s not some of the larger industries who benefited last time, like the high-tech companies who benefited – how do we make this something where all companies get behind it?

And a follow-up: Wasn’t this something that was discussed last time, when we did the stimulus? It was part of the recovery act in the Senate. I think there was an amendment that was not passed. And how would that – why do you see there being a different environment in the Senate now from just a few years ago?

MR. MAFFEI: All right, let’s take the first question first, and it’s a good one. I talk to companies, off the record, that – don’t want to use their names – they would gain with this, if it happened, but they want to – they don’t – in fact, they’re quietly kind of lobbying against it because they say, we want the full chance of having real corporate tax reform. Jim, why are you not in that camp?

MR. ROGERS: I’m not in that camp because I am very, very worried about our economy and I don’t see what is actually going to get it going, as I look around at all the different ways that we can stimulate the growth of the economy.

And I see this as just one tool. And the important point here is, we have to get our economy growing because if we don’t, we’re going to find ourselves in a place where it’s going to get even tougher to get it going if we continue to linger at 9 percent unemployment for another two, three, four years.

MR. MAFFEI: And George, you originally wrote the paper because you were trying to get it in the original stimulus package, if I remember correctly.

MR. SCHINK: That’s correct.

MR. MAFFEI: You know, it didn’t happen. Why come back now when, in some ways, there’s less of a chance of getting – (inaudible, background noise).

MR. SCHINK: Well, I think at that point, there were a lot of stimulus options and a lot of things were done. I think it turned out not to be enough. I think the economy would be a lot worse off had they not done them, but I think it is an option that’s available now and probably the only one, and I think it’s important to do it now.

MR. ROGERS: Let me kind of answer your question in another way that might be more insightful for those here. A lot of major Fortune 50 and Fortune 100 companies might hold back for full tax reform but they might also say they don’t want to bring it back and they don’t want to be put in a position of having to bring it back because they’re making more money, on a risk-adjusted basis, investing in other parts of the world.

So for them, they would rather grow the business in Brazil or India or China or name the country than bring it back to the United States because the opportunities aren’t so great here. And if, all of a sudden, the door was open, then they would be forced to make decisions to invest in the country where they’re headquartered. And I think that is as much the reason why they are solid – they might say, yeah, I want more of a greater corporate reform but the real reason is they’re making more money overseas and they don’t want the door open because they don’t want to bring it back.

MR. MAFFEI: Andy –

MR. STERN: I would just say – it’s probably illegal to say this – but I’m making book right up here for anybody who wants to be that we’re going to have corporate tax reform this year. (Laughter.)

(Cross talk.)

MR. STERN: We can’t even raise the debt ceiling, you know, which seems a rather obvious thing we need to deal with, and now we’re going to imagine corporate tax reform? And Dave Camp, appropriately, says I don’t want to do corporate tax reform unless we’re going to do small business and personal tax reform.

Now we’re back into – I lived this in the fiscal commission. They’re all legitimate issues. It’s all a legitimate discussion and if this was College Bowl and there was a right answer, I’d be very happy about having some of these discussions, but this is not happening.

MR. MAFFEI: I’m not out for six months and I’m still waiting for some sort of legitimate debate that I would have missed. (Laughter.)

MR. STERN: Well, I mean, we talk about No Child Left Behind – here’s something everybody agrees to and we’re saying it’s probably not going to get done.

MR. MAFFEI: All right, we’re out of time but so, would you take the bet about a repatriation holiday? That’s the question. I mean, I think everybody is going to agree with you on overall corporate –

MR. STERN: I mean, I would say when people finally realize we have a trillion dollars overseas, is it better to have it here, yes or no? The answer, I think, is obviously yes. Then the question is, under what conditions – what’s the rate and how it’s used for. I think there is a way to construct this that, in the end, just like the president said, I’ll never agree to extending the Bush tax cuts – you know, it’s better than other alternatives and there aren’t many more other alternatives.

MR. MAFFEI: Former president of SEIU, Andrew Stern; current president and CEO of Duke Energy, Jim Rogers; managing director and principal of Navigant Economics, Dr. George Schink, thank you very, very much. (Applause.)

MR. : Thank you, again, for coming. Thanks for all your questions and we hope you enjoyed the event and found it useful. Thank you.

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