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Interview with Presidential Candidate Jon Huntsman

Interview with Presidential Candidate Jon Huntsman

By Fareed Zakaria GPS - December 11, 2011

ZAKARIA: My first guest today wants to be the next president of the United States.

Jon Huntsman is a Republican, but he served as ambassador to China under President Obama. He was previously governor of the state of Utah, and back when George H.W. Bush was president, Huntsman served as deputy assistant secretary of Commerce and also had a stint in Singapore as ambassador. A storied career already, but now he wants the top job.

Jon Huntsman joins me. Pleasure to have you on.

JON HUNTSMAN (R), PRESIDENTIAL CANDIDATE: Thanks, Fareed. I'm honored to be here.

ZAKARIA: Why is it that most people think of you as the Republican whom independents and moderates are going to love, but Republicans can't really get - get warm and fuzzy about?

HUNTSMAN: Well, Republicans, as a matter of fact, are coming around and taking another look. They might have missed something at the very beginning, and that was a conservative track record as governor.

I delivered the largest tax cut in the history of our state tax reform. We took that state to the number one job creator in America. We reformed education by expanding choice. We created health care reform without a mandate.

But I'm also the kind of leader who believes in bringing people together. I say we have too many levels of divide in this country. We forget that we're Americans first and foremost.

And in order for us to get to the point of problem solving, the underlying issues - and I believe there are two major issues that we must tackle immediately. One is the economic deficit, which is very real, and it's a cancer metastasizing in our country that's going to shipwreck the next generation if we do nothing about it.

And the other is a deficit of trust, Fareed, and that is, the American people no longer trust their institutions of power. They don't trust Congress. They don't trust the executive branch, a president who hasn't led. They don't trust Wall Street.

And, I say, as a candidate and then as president, I'm going to talk about a banking system that is too big to fail, which we have.

ZAKARIA: And you want to break the banks, huh?

HUNTSMAN: I do, because I believe that capitalism without failure isn't capitalism. So if you've got banks that combined have assets that are roughly equal to two thirds of our GDP, $9.4 trillion.

If they are too big to fail, then those who believe in a system that ought to be functioning based on free market principles, you can do taxes, you can do regulatory reform, everything else. But if you're left with banks that are too big to fail, you're setting yourself up for disaster.

ZAKARIA: Let's talk about the temperament, though, because it is - at least it seems to me one of your problems, which is that the Republican primary wants people to say incendiary things. I mean, if you watched the rise of Herman Cain, you watched the rise of Rick Perry, you watched the rise of Newt Gingrich, there is a market for people to say slightly outrageous things as a way of proving that you're, I don't know, politically incorrect or willing to - to, you know, kind of not cotton to the mainstream media. So, you just refuse to say those kinds of incendiary things.

HUNTSMAN: Well, it may give you your Warholian 15 minutes of fame, Fareed, but in every case that you've cited, they've all come down. They go up and then they come down because there's no staying power. There's no sustainability there.

And all I'm saying is I've got a track record. I'm a consistent conservative, when you look at my record, and my track record would speak to accomplishments as governor. I've lived overseas four times, three times as a United States ambassador. I've been in business.

So, when we get our Warholian 15 minutes of fame, and I think it's coming this month as we gradually build up. With a sustainable rise in New Hampshire, we'll have the staying power -

ZAKARIA: But you're -

(CROSSTALK)

ZAKARIA: You're predicting something about Newt Gingrich, who is still up. You think that that candidacy will fade?

HUNTSMAN: It's hard to know. We'll have to see where the marketplace goes.

But I can tell - I can - all I can tell you is this, Fareed - I'm not going to pander, I'm not going bluster, I'm not going to contort myself into somebody I am not. And I'm not going to sign those silly pledges like everybody else has done. And I'm not going to make that sojourn (ph) into Donald Trump's office.

There are just some things I will not do.

ZAKARIA: Tell me about the - the way you will get this budget deficit under control. As you know, we're spending about 23 percent of GDP. We're taxing at around 14 or 15 percent of GDP. That leaves a very large gap.

Republicans are saying that they will not accept a - a dollar of tax increases for $10 of - of spending cuts. How can you make up that entire difference? We're talking about a seven or eight percent of GDP entirely by spending cuts, and what would the effect on the economy be if you liberally cut - cut what would be roughly $1 trillion out of the economy?

HUNTSMAN: You've got to combine aggressive spending cuts.

I like the Ryan plan. I like what it calls for, $6.2 trillion out of debt and spending. I think it is necessary, such that it will take a standard 19 percent of - of our GDP that's allocated to spending that which is more sustainable.

But we have to be smart enough, Fareed, to couple the - the cutting and the management of the debt part with firing our engines of growth. And I learned as governor that when you can fire your engines of growth in an economy, you can expand your base and revenue will increase, and you can pay the bills.

We've got to start paying the bills as - as an economy. We're not doing that today. And, as you pay the bills and your - your debt to GDP is going to change, then you're going to get back on your feet again.

But I believe we have an opening to re-create a manufacturing miracle in this country, a manufacturing renaissance. You know, when I was born in 1960, the manufacturing as a percentage of our GDP was 25 percent. We exported $3 for every $2 we imported. We owned 36 percent of the world's GDP.

And I look at where we are today, an anemic nine percent is derived from manufacturing.

ZAKARIA: You - you slightly dodged my question on taxes, so I'm going to ask it again. If you got spending cuts of the kind that - that you want to get - let's just take Simpson-Bowles as one example, where the spending cuts are roughly speaking $3 of spending cuts for $1 of tax increases. The increases achieved precisely the way you want to do it, broadening the base and eliminating loopholes.

Would you - would you accept that?

HUNTSMAN: Well, I - I would tell you that we do not need tax increases in today's environment.

Here's what I would do with the revenue. I would phase out the loopholes and the deductions in the tax code, which I know some people don't necessarily agree with but I think it's exactly what this country needs, both on the individual side and on the business side. Out with corporate welfare, out with subsidies.

I would reinvest that revenue back into the tax code, which would allow you to lower the rate, which would be good for everybody.

ZAKARIA: OK, this always sounds good in theory, so let me ask you about -

HUNTSMAN: It's what I did as governor.

ZAKARIA: No, no, no -

HUNTSMAN: It's what I did as governor, so I'm not speaking from an economic theory.

ZAKARIA: I know, but what I mean is -

(CROSSTALK)

HUNTSMAN: -- as a practitioner.

ZAKARIA: -- people don't like tax loopholes in theory, but then when you tell them that the deduction on interest for mortgages is effectively a loophole, they - they recoil, and of course that's the one that costs the most money. HUNTSMAN: Of course.

ZAKARIA: $100 billion. Would you be willing to phase out that deduction?

HUNTSMAN: Of course. It's what I fought for when I was governor. I did the same thing as governor. So, again, I'm not speaking as a - as a theorist here, I was speaking as a practitioner.

And I've talked to people in the mortgage industry, and I've said, tell me you wouldn't be willing to trade off a deduction that first and foremost focuses more on debt than it does equity, which is not a good place for us to be prioritizing tax cuts or - or loopholes, if you had in exchange a lowering of the rate? And the answer was, so long as you treat everybody fairly and - and don't just pick on our industry, that would probably be fine.

So all I want to do is pick on everyone equally. I just want to phase out all of the loopholes in total, because I believe that we have a tax code that is like a 1955 Chevy trying to travel on the superhighway of the 21st century. It's just - we're wondering why we can't stay competitive, and it's that way on the - at the individual income side, and on the business side.

ZAKARIA: When we come back, we will talk with the former ambassador, Jon Huntsman, about China and the rest of the world. Stay with us.

(END VIDEOTAPE)

(BEGIN VIDEO CLIP)

ZAKARIA: It seems to me, given the - your poll numbers, it is - it is possible for someone to look at your candidacy and say this man is running for Secretary of State.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

ZAKARIA: And we are back with Jon Huntsman, candidate for the presidency of the United States by the Republican nomination.

Let me start now with China, about which obviously you have a particular and deep expertise. But Iran, because you have said essentially that you would use American military force to take out Iran's nuclear program. Is that a fair characterization of your position?

HUNTSMAN: It - it's fair in the sense that I would have all options on the table, because you have to ask yourself the fundamental question, can you live with a nuclear Iran, understanding the proliferation implications in the region, Saudi Arabia, Turkey, probably Egypt following up with their own weapons programs. And I think in that case, you have - you have the elements of disaster longer term.

So, if you can't live with a nuclear Iran, then you must keep all options on the table, and that's where I am.

ZAKARIA: We live with a nuclear North Korea. We live with a nuclear Pakistan. Iran right now is fairly effectively contained, as far as we can tell. There has been Saudi Arabia. The Egyptians are publicly opposed to them. The Israelis, of course, are both opposed to them and have a very large nuclear arsenal of their own that - that acts in some deterrent form.

The regime is having economic difficulties. It's having political difficulties. Doesn't it feel as though they are cordoned and contained in a way that - that should be enough? Or do you really feel you need that - that fairly large leap of military action?

HUNTSMAN: Well, you - you have to keep an eye on them. I don't know that the containment theory is necessarily as it was a generation ago with a much different Iraq, for example.

But I think the regime in Tehran, I think they've already decided for themselves that they want nuclear status. I think they've looked at North Korea - you mentioned North Korea - and they have said, North Korea, nobody's touching North Korea. They have, you know, a few crude devices. And compare and contrast it with Libya, and say Libya had a program. They gave it up for friendship internationally.

And I think they've decided they want whatever credibility comes with - with nuclear status. And I do believe that that runs the risk then of proliferation problems that would then be unmanageable in the region.

So, I say, as long as the centrifuges are spinning and as long as they're moving toward what could very well be enough to sound (ph) material for a weapon, I say we have a problem. And that means we've got to keep an eye on them. It means we've got to get inspectors in there. It means we've got to have openness and transparency, which never has been part of the regime. And I'm not at all optimistic about where this is taking us over the next one year to three-year time horizon.

ZAKARIA: Let's talk about China. You think China is going through a transition, and a transition not just economically but politically. You see an economy that has grown at 9.5 percent for 30 years, but that can't continue to grow at that pace and is going to start deescalating.

You see a political system that is going to go through a transition of its own to a new generation of leaders, presumably, as you know, not hand picked by Deng Xiaoping, the father of modern China. And you said that you think this will cause enough uncertainty that it will actually result in a drop in foreign investment in China.

HUNTSMAN: I - I do believe that will be the case. And so, economically, they're making a transition from being the largest export machine ever created in the history of humankind to a consumption model. And, as they do, they're going to have to bring their currency more into market valuation.

They want more consumers. Their - their entrepreneurs in China are demanding that they expand their consumer market. And, indeed, if they want to bring their population up the economic ladder, they have no choice. They have to begin moving more toward a consumption-based model. So that, all by itself, is going to result in some diminution of growth.

The rest of the international markets, on which they've grown to rely, are throttling back and their export performance will lessen, which of course will bring - will cause unemployment to - to move upward.

The political dynamic is a very interesting one, and that is, the 18th Party Congress is around the corner. We forgot sometimes, we have elections here next year. They have leadership changes.

You'll hear politics play out because of those elections. You'll hear politics play out in China because of those leadership changes. They are sweeping, and they are significant.

If you stop to ponder that 70 percent of the top 200 leaders are turning over in China, including seven of the nine members of the Standing Committee of the Politburo, I can't remember a time since 1949 when this significant, this comprehensive a change has occurred in - in senior leadership in China.

The Fifth Generation is coming to the forefront. I know many members of the Fifth Generation, as I did the Fourth and some in the Third. They have a different view of the world. It's based more on a nationalistic set of impulses.

They don't necessarily remember the Great Leap Forward, '60 to '64. They barely remember the Cultural Revolution, '66 to '76. They do remember 30 years of blue sky, eight, nine, 10 percent economic growth. That has informed their view of the world. They think their time has arrived.

ZAKARIA: Mitt Romney says the Chinese artificially keep their currency low. That makes their goods cheap on world markets. He says that when negotiating with them, they try to unfairly get the best deal.

They don't protect the intellectual property - property rights of Western companies, and that they have all kinds of advantages for national champions, that they basically don't play fair. They cheat. Isn't that true?

HUNTSMAN: In - in every category, you can cite major challenges in the relationship. So we're celebrating 40 years since Richard Nixon visited next February. It's gone from zero trade to $400 billion in trade, soon to be the largest trading relationship this world has ever seen. And there will be nothing like it for as far as you can see into the 21st century. So of course we have problems and challenges. Are we dealing with them in ways that would allow at least some advancement of the marketplace? Of course. It is slow going, it is painful, and it's the nature of the relationship. It's large and it's terribly complicated.

ZAKARIA: But it sounds like you're not willing to - to be tough on them, and Romney would argue that you're - I would - I would imagine, that you've kind of gone native. You spent time there as ambassador -

HUNTSMAN: Oh, no.

(CROSSTALK)

ZAKARIA: -- things too much from the Chinese point of view.

HUNTSMAN: And - and you can talk to them about how native I went. You know, I was locked out of travel to many parts of the country because of the way I - I dealt with dissidents and promoting human rights -

ZAKARIA: But why wouldn't you publicly criticize them for all these things which are - first of all, they're wrong -

(CROSSTALK)

HUNTSMAN: I used to publicly (ph) criticize them all the time.

ZAKARIA: -- of violations of WTO -

HUNTSMAN: Listen, as a trade negotiator, I used - I was on the front line of those issues. I've criticized them for a long time.

I disagree with the idea as - as promoted by Romney that you would slap a tariff on them the first day that he's in office for currency manipulation, because I know what lies ahead. They're going to slap a tariff on us, saying that we've manipulated our currency because of QE1 and QE2. And I say, all right, that - that sounds great in front of certain audiences, but in practice, you start a trade war.

ZAKARIA: Was President Obama a good executive to report to as ambassador of China?

HUNTSMAN: I didn't report a whole lot to him. It was more of State Department working with a lot of the other elements of government, whether that was on the intelligence side or the defense side, or with members of Congress.

I would argue that we didn't pull our levers of power in terms of promoting our values like - like we could have. We ought to be speaking out on human rights, like I did as ambassador. I had to pay a price for that, but that's important.

Speaking out on the issues regarding political dissidents, speaking out on the issues of the day regarding political reform. We're the only nation left in the world, Fareed, that does that effectively, and that can move people and move history when we stand up and speak.

ZAKARIA: But you're willing to - you say we should speak out more on political reform in China, but not call them to task on their currency manipulation or -

HUNTSMAN: Oh, I'm not saying don't call them to task. You - you have to do that, while recognizing you've got 15 other issues that - that are equally distressing in the relationship. And, at some point, you've got to sit down and negotiate a - a way forward. That's the way that it works.

ZAKARIA: It seems to me, given your poll numbers, it is - it is possible for someone to look at your candidacy and say, this man is running for Secretary of State. So, I'll ask you, if a Republican candidate becomes president and now offers you the job, will you be Secretary of State of the United States?

HUNTSMAN: Nice try, Fareed, but we're - we're in this to win the race. We're moving in the right direction in - in New Hampshire. And that's always the marketplace that upends conventional wisdom. Make no mistake about that.

And we're doing just fine in - in New Hampshire. We're going to win New Hampshire. We're going to exceed market expectations there.

So I don't think about anything other than keeping our eye focused on the ball, and that is dealing with the two deficits that we have in this country - one an economic deficit, the other a deficit of trust.

ZAKARIA: Jon Huntsman, pleasure.

HUNTSMAN: Thanks, Fareed.

ZAKARIA: Thank you so much. 

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