Ross Perot Answers Your Questions

INSERT DESCRIPTIONRoss Perot

We recently solicited your questions for Ross Perot.

You asked him about third-party candidates, the national debt, what kind of car he drives, and “why do guys from Texas with the initials R.P. have so much integrity?” (We’re pretty sure that last one was a reference to our earlier Q&A with Ron Paul.)

Perot doesn’t have an answer for the R.P. question, but he fielded quite a few of the rest. Thanks to him for his answers and to all of you for the good questions.

Question

How will you respond if Obama puts through the tax increase he has promised, particularly with respect to the capital gains tax increase he has promised?

Answer

President-elect Obama appears to be leaning toward a delay in his tax increases for the wealthiest 5 percent to pay for his promised tax cuts for the remaining 95 percent. History has shown that raising taxes in a recession tends to worsen the situation. We would encourage him to delay his proposed increases and implement his proposed tax cuts. We ascribe to the theory that tax cuts boost the economy — and therefore increase total tax receipts — no matter which portion of the tax-paying public receives the tax cuts.

Question

I remember when you were running for president, and they showed you driving around in your old Volvo. What are you driving now? And what would you do about the U.S. automakers’ woes?

Answer

Actually, I was driving a 1986 Oldsmobile. I have always driven American-made automobiles, and I currently drive a Ford product.

Clearly, General Motors meets the definition of too big to fail, as do Ford and Chrysler. General Motors happens to be closer to running out of cash at this moment. The question is whether domestic automaker sales are slumping as a result of the short-term liquidity credit crunch or more basic reasons such as their business models. I suspect both are to blame, but the proportions are difficult to determine. An analytical approach would favor a prepackaged bankruptcy, but the situation is well beyond that stage. It’s now in the hands of the politicians who are almost certain to craft some type of bailout or bridge-financing feature to keep G.M. out of liquidation.

Question

Have the politics of multinational corporations destroyed our sovereignty?

Answer

While the question is intriguing and thought-provoking, I do not believe that multinational corporations are threatening the sovereignty of the United States. I do believe, however, that we could be our own worst threat to our sovereignty if the United States is forced to keep borrowing huge amounts from foreign countries. The old rationale for the federal debt — “We owe it to ourselves” — is long gone. Nearly half of our public debt is now held by foreign individuals, foreign corporations, and foreign central banks. Such entanglements could complicate matters to the point that our balance of payments could control our foreign policy, which could put us in a dangerous negotiating position.

Question

You were close to the auto industry for a while. What should we do about it?

Answer

Each company should be considered separately, because they each have unique circumstances. Let’s take the G.M. situation because it appears to be the most urgent. The possible repercussions of a G.M. meltdown are too frightening to contemplate.

Assuming that G.M.’s numbers are correct and that they desperately need $4 billion within the next 30 days, I believe the government should provide a loan or guarantee a loan for this amount. After President-elect Obama takes office, it will probably be necessary to increase the size of the loan. At that point, I believe the government should provide enough financing to guarantee that G.M. is solvent for another 12 months. This will give G.M. the time it needs to sell or shut down the Pontiac and Saturn lines and to consolidate other operations. G.M. has already announced its plans to take these steps.

At the end of one year, if G.M. cannot continue without further help from the U.S. government, it should undertake a prepackaged bankruptcy to radically alter its business model. G.M. would, in effect, have a one-year moratorium to get its house in order and hope that the economy recovers sufficiently to stimulate sales.

One provision that should be put into any advances or guarantees is that all government-backed loans are senior to every other form of financing on G.M.’s books — now or in the future. So if G.M. does go through bankruptcy in the future, the taxpayers’ contribution to this bailout will stand first in line after a restructuring.

Question

How do you believe Social Security can be reformed (or abolished, if you believe this) to benefit my generation (I’m 17 years old) as well as the current generation?

Answer

Plans such as Rep. Paul Ryan‘s (R.-Wis.) “Roadmap for America’s Future” contain several ideas for reforming Social Security that deserve serious consideration. The challenge is to preserve the benefits for retired citizens and those nearing retirement age, say 55 and older, while strengthening the retirement benefits for the remaining workers. This would include ensuring the solvency of the Social Security system with changes to the retirement age.

Contrary to conventional wisdom, the current financial crisis offers the perfect time to face this problem. The record deficit spending that has already been approved is sure to place enormous burdens on our children and grandchildren for years to come. Taking steps now to solve the Social Security dilemma (as well as the more pressing problems posed by Medicare and Medicaid) will help to bring clarity to the long-term outlook for our nation’s financial future.

Congress has already proven that it is reluctant to adopt even modest reform proposals when the economy is good, having defeated a bill in the 1990’s to add just one month per year to the retirement age for Social Security. We can’t afford to wait until the economy recovers to adopt reforms.

Question

Given how things have changed over the past 16 years, do you think that it would now be possible for a wealthy individual or a group of individuals to bankroll and organize a serious third party to challenge the Democrats and Republicans?

Answer

It is difficult to devise a scenario in which an individual or group of individuals could develop a viable third party capable of challenging the Democrats and Republicans; they have a vested interest in retaining a two-party system. A serious threat to the status quo would undoubtedly be met with subtle, or perhaps overt, roadblocks to formation. Look no further than the Federal Election Commission, which is totally controlled by Republicans and Democrats.

Question

You have been a strong advocate of a balanced budget for our nation. In our current times, with necessary bailouts happening everywhere, where would you start in order to eliminate the national debt America now has?

Answer

The reality of the situation is that eliminating the national debt requires that the federal government run a budget surplus each year. A surplus occurs during a year when the government collects more in taxes and other forms of revenue than it pays out in expenses and other expenditures. The difference between the amount the government collects and the amount it pays out is called a surplus, and that amount is used to pay down the national debt. Frankly, given the current financial crisis, there is no chance that the government will produce a surplus for the fiscal year that ends September 30, 2009. And it is highly unlikely that a surplus will occur during the following year.

One measure that could reduce the size of the deficit during the current year (and therefore reduce the amount of debt that will be added to the total debt) is to require that the budget for every department in the government will remain the same as the preceding year.

Question

Do you consider all deficit spending misguided? Surely there are some times when it is called for.

Answer

Classical economic theory calls for deficit spending by government when faced with prospects of recession and depression. The challenge, of course, is to spend money in a manner that will create the most benefit for the economy. This will prove to be an incredibly complex assignment and the subject of much debate.

Of course, wartime often requires deficit spending. World War II required huge amounts of deficit spending, for example. The difference between then and now, however, is that we ran budget surpluses after the war and paid off the debt.


mike

Am I spoiled for being disappointed that only eight questions were answered?

Monte

Who is "we" from the first paragraph? Is Mr. Perot speaking for a group or did he receive a crown?

Sam

Just want to point out one slightly misleading implication in Mr. Perot's answer to the question about the 2 party system:

It is primarily America's electoral system, NOT the entrenched influence of the Democrats and Republicans that creates the 2 party system in American politics.

Certainly, the 2 dominant parties will work hard, and even collaborate, to prevent the rise of a strong 3rd party. However, if a 3rd party did manage to rise this would almost certainly lead to the death of one or both of the current leading parties within a few election cycles. Our winner-take-all electoral system virtually ensures that over time we will always return to a stable equilibrium of 2 main parties. The parties may change names and coalitions may shift, but it is virtually inconceivable that America will ever have more than 2 dominant political parties for a sustained period of time.

JIMTOM

Be it resolved.......we get rid of the electoral college!!!

D

The social security question doesn't seem to have an answer, even from Ross Perot. It looks like us younger folks will have to keep paying into a system that in a best case scenario won't be available to us until we are REALLY elderly or that maybe won't be there at all.

Stats Geek

D - It looks like you younger folks need to read up more on the financial position of social security before posting comments. Under a "best case" scenario SS will be completely solvent for the next 75 years or more. Even under the less than best case scenario (most likely scenario according to the trustees) , SS will be able to pay 70% or more of the projected benefits for the next 75 years (and possibly more) without rasing the retriement age or increasing the taxes that fund it. That 70% of projected benefits that can be paid from the current system actually means that the SS benefit will be larger when you retire than it is now (even after adjusting for inflation).

CTC

paying 70% on 100% of your total liabilty is the definition of insolvent. SS will not go away, it will just eat up the budget as we age.

steve

I did a double take after reading this one:

"We ascribe to the theory that tax cuts boost the economy — and therefore increase total tax receipts — no matter which portion of the tax-paying public receives the tax cuts."

Huh? I agree with him on the don't raise taxes in a recession part of it, but this claim is way too strong to be defensible. And what a strange and unlikely comment from the mouth of H. Ross Perot!

Jim Reid

Couple things:
1. Elections. The number of parties isn't as important as the primaries and electrial college. We should have all primaries on the same day and the top 5 running for president should be on the ballot, regardless of party.
2. Social Security. SS can be resolved if the Feds would keep their hands off of the money. If it is believed that they can pay 70% minimum if the Feds left it alone maybe it would grow....like it was suppose to do to cover inflation.

Nicole

"We *ascribe* to his theory"? [my starred emphasis added]--according to the Oxford English Dictionary, "ascribe" means something akin to "give or attribute credit to" (one of the less frequent definitions of the word is "to appoint to a vacancy," a meaning especially pertinent today). Is this Texese? If so, can we trust his tax policy if he can't even speak correctly? Otherwise, copy editor, where art thou?

Jim DeBlasio

Mr. Perot hasn't changed much over the last 17 years, certainly I would have expected his thoroughly discredited supply-side arguments in favor of tax cutting to have been modified at long last. Also, there is no reason to fix Social Security because it's not broken. The Republicans and conservatives have always hated Social Security and all other programs that help the average American and loved free giveaways to big business and the super wealthy billionaires.
I'm grateful to Ross Perot for one thing, he helped to defeat the first president Bush by taking more votes from the Republicans than from the Democrats in 1992. Whenever an issue becomes popular enough to sustain a third party, either the Republicans or the Democrats, or most often both parties, will adopt that issue for themselves.

shizzyfinn

I agree with comment #8, on the oddness of Perot's support for Arthur Laffer economics. I thought Perot would have a more sophisticated view than the tax dodger's timeless con: "when ya lower the tax rate, by golly, ya end up getting more tax receipts."

I was also thrown by Perot's idea that it would be unfair to lower Social Security benefits for people at or near retirement. If benefits have to go down, shouldn't everyone feel the pain? It ain't right to put all the sacrifice on younger folks.

Adrien

My favorite quote is:
"The challenge, of course, is to spend money in a manner that will create the most benefit for the economy. "

To what benefit does our deficit go today? Where has it been going for the past eight years? What value are we creating with this debt?

Skip

Don't blame me I voted for Ross, and would again." You hear that giant sucking sound?"

Peb

He did not say anything about the giant sucking sound of jobs leaving the United States. Perhaps because Perot Systems is one of the biggest outsourcers of US jobs.

Matthew

His comment regarding total tax reciepts increasing is stating that the goverment should:

1: lower personal tax rates
2. encourage the use of that "saved" money to be put to work to create new industries and jobs.
3. collect more taxes in a now growing economy than would otherwise be less in a recessionary environment; this is done 2 ways, first by taxing the industries' profits, second by taxing now those employed individuals

In theory, there would also be less money needed to be spent on unemployment benefits.

Lastly, when you make fun of grammar mistakes, you look like an uneducated elementary school child.

David Howard

The first time Ross Perot became prominent nationally I thought his out-of-touch quality was just a generational quirk -- that he was speaking a language my grandfather might have understood but that had become obsolete.

Now, however, I see that he has a weird personality disorder that has nothing to do with his generation. I think he's a bit autistic. Nothing he ever says suggests the existence of real human beings. He treats life as a math problem.

That doesn't necessarily make him wrong about the economy; it just makes him robotic.

jason

Perot's quote here is totally stupid:

"We ascribe to the theory that tax cuts boost the economy — and therefore increase total tax receipts — no matter which portion of the tax-paying public receives the tax cuts."

That is such a technical question and he blows off the important details. By this standard, we should immediately cut taxes to zero percent and watch the treasury overflow infinitely.

Yes, increasing taxation does at some point cause lower federal revenues by retarding economic actvity. But where we are the curve is such a technical question and Republicans and Perot just always take it on faith that we are ALWAYS up on the trough of that curve. Always. When times are tough, cut taxes. When times are good, cut taxes.

It is no surprise rich people always want their taxes cut--they are rich and their self interest is to stay that way--but it is amazing the gullibility of Red America and their willingness to believe this absurd shibboleth.

Read more...

Matthew

Ok, so if the tax payers give the automakers a bailout, what will they give us if they get back on their feet? They are not promising anything in return...it's like a 21 year old girl who needs daddy to pay her credit card bills but doesn't understand the idea of reciprocating...

patrick

So Ross Perot is a serious guy? OK, let's lower the tax rate to 1% for everybody. The government will be Rolling in tax receipts, right? JEEZ... maybe he mentored Sarah Palin.