MTPR

Max Baucus Talks China, The ACA, And Tax Reform

Oct 25, 2017

Former Montana Senator Max Baucus' job as U.S. ambassador to China ended in January. He now divides his time between Missoula, Bozeman, and global public speaking engagements.

Baucus this week stopped by Montana Public Radio Studios to talk about China, The Affordable Care Act, and tax reform.

By the end of Baucus' nearly 36 year congressional career he had ascended to the coveted position of chairman of the Senate Finance Committee. As such, he was one of the architects of the Affordable Care Act, or Obamacare.

Baucus has kept an eye on the meteoric rise of Chinese President Xi Jinping who this week cemented his position as one of China's most power leaders in modern history.

Max Baucus: President Xi Jinping is a very ambitious, very intelligent, man who's worked his way up in the Communist Party. And he is molding the party to be all pervasive in China, so that the party can maintain power and also so that China can move in the directions which he thinks the country should move in.

Edward O'Brien: Meaning what?

MB: I tell you, it’s really something. The government has a view that it’s gonna, in thirty years from now, be the preeminent country in the world. The last 200 years of humiliation is virtually over. So they are doing things a step at a time. They built those islands in the South China Sea for example, they dumped sand on a bunch of reefs and called them islands. Totally against international law. They got away with it. They’re doing the same thing economically, they have their basic champion industries which they are protecting, the ones they think they will be the most important in the future. The past has been steel, coal, aluminum. Now it’s nanotechnology, semiconductors, it’s artificial intelligence. They’re moving very steadfastly and significantly forward and they’re closing out foreign competitors. They want to be the major economic force in the world in about 30 years. 

EO: It sounds like you think they can do that?

MB: I think there’s a decent chance. It presents a real challenge for us. Up until a couple years, we Americans, even in U.S. government, would think, "Gee, let’s just keep working with China at all levels. The more interactions we have with them the better, because after awhile, because we’re so good, they’ll be like us." Uh uh.

Chinese people like America, but they also are very proud to be Chinese because of their culture and their history, and President Xi Jinping is giving them, so far, what they want. The Faustian bargain will continue for awhile. That is, as long as the people find their incomes increasing and they get jobs and take care of their kids and the government is taking care of them, is cleaning up the air and water pollution, helping with better health care, then they the people won’t question the party legitimacy.  

EO: Meanwhile, President Xi and his colleagues, his comrades have a problem on its southeast border with North Korea, yes?

MB: Yeah, they constantly say, "Well, that’s your problem Americans." They don’t really mean it, but it’s a convenient excuse to put the problem off on America’s shoulders. So they basically think, "Well, gee, the status quo is the lesser of several evils." That is, let him, Kim, proceed, otherwise if we go in there and try to change him so he’s not building up nukes and missiles, then that could cause, potentially, a regime change, could cause consternation, instability on the Korean Peninsula. "We Chinese, we don’t want that, because we Chinese are fearful if that happens, if there's instability on the peninsula, that if we push Kim too hard, well, the result could be something we don't like. Namely, Americans and South Koreans, we're in control of the peninsula, we certainly don't want that. 

So the lesser of many evils right now is us just kind of keeping the status quo, put a little more pressure on Kim, abiding by the UN resolutions, and we're doing a little bit of what America wants, but not too much, because it'll upset the apple cart.

EO: What do you make of this business with President Trump? "Rocket Man," lots of fiery imagery, tough words, tough talk.

MB: I think it's absolutely stupid. It's counter-productive, it's destabilizing. First of all, in human nature, whenever you call anybody a name, that person's going to dig his heel in. 

Second, it just plays into Kim Jung Un's hands. Because his main point to the North Korean people, "Oh, those Americans, they're imperialists, they're monsters. They've got their military out there rto bomb us, they want to subjugate us. They bombed the bajeebees out of us in the Korean War, and they're going to do it again, those awful Americans.

EO: Switching topics, the legacy of the Affordable Care Act. What do you make of it right now?

MB: I'm very proud of the actions we undertook to pass that, I think it was 2009, I think. Because prior to that time, really, doctors were doing their things, hospitals doing theirs, we had Medicare, Medicaid, it was kind of a free for all. And a lot of people were not getting any health insurance.

So we did what we could, there's a lot more people as a consequence had health insurance. And we didn't do a very good job controlling costs. I see now the efforts President Trump is undertaking, is destabilizing, it's going to cause a lot more people not to have health insurance, and it really, it gets to the very basic question, "Is healthcare a right, or is healthcare a privilege?" And for the majority party, it's a privilege. 

I frankly think we should come to the point where it's a virtual right. We should have universal coverage, and we figure out a way to get rid of a lot of that waste, and it's an awful lot of waste in our system. 

EO: Tax reform is next on the agenda. It sounds like you have not very high expectations, but you hope some things can change, yes?

MB: Yeah. Last major reform was 1986. You know, the world's changed a lot since '86. One, is it's, a lot of high tech companies have come to the fore since '86. You know, Amazon, Microsoft, you know, Apple. And these are international tech companies, because of the nature of their business, and they have a lot of R & D, are able to park a lot of that off shore into other countries that are virtual tax havens with very low rates. So these companies didn't exist back then.

So a tax reform should include, lowering the top corporate rate, but also should be done in a way so that income distribution is fair, it's proportional, all across the board. It should not be done in a way that gives the wealthy more breaks than the less wealthy. That's just wrong.

And the corporations have a lot of money. Right now, cash, they have a lot of cash. American corporations are doing pretty well. What do they do with that money? It goes to stock buy-backs. It goes to bonuses. It goes to dividend payments. It does not go near as much to job creation, especially because there's more robotics, and manufacturing has become much more technologically advanced. It does not go to jobs.

So, I think whenever we look at what happens in Washington on tax reform, we should look very closely at, okay, what is the real effect of this? Is it really going to grow the economy or not? Or is this just putting more money in the pockets of people who really don't need it?

EO: Elimination of the Estate or "death tax: as it's called sometimes, is it a good idea or not?

MB: No, it's not a good idea to eliminate.

EO: Why?

MB: Because it tends to create dynasties. If a family's got a lot of money, and they keep it, it creates a dynasty. The goal here is for Americans, I think, to have an equal start. It adds to the income gap between the most wealthy and the least wealthy.

EO: When you look at the Republican party, what do you see? When you look at the Democratic party, what do you see?

MB: Well, I see disorganization in both. I see both parties struggling to try and figure out how to deal with the extremes in each one. The Republican party, it's the Steve Bannon extreme. The bomb throwers. Destroy the Republican party in the Senate, basically. 

The same thing on the Democratic side. Not to be critical, but Elizabeth Warren, Bernie Sanders, they're the far left wing of the party. And they're drawing people way off to the left. And so when you're running these primary elections, both parties, Republican or Senate, it tends to go waaaayyyy off to the extreme right or the extreme left. And then that adds to the partisanship in America rather than coming together and working together.

EO: Ambassador Max Baucus, privilege having you here, thank you for your time.

MB: Thanks Ed.