Jeb Bush: Trade with Cuba When Cuba is Free

Oct 15, 2015

R: Governor Bush, welcome.
B: Good to be here.
R: You know, a variety of folks are saying and talking about this being your first trip to Iowa, but I think it's not...
B: No.
R: And you came here often when your father ran for president and when your brother did. Why don't you talk a little bit, first, about those experience?
B: Sure. Gosh, I must have been like 26 years old when my dad ran, the campaign was basically 1979, because the caucus was in January, and I probably went to at least 50 of the counties if not more. I spent a quarter to half my time here. I remember eating really well, eating really, really well, which I enjoyed, and meeting a lot of nice people. I always comment on this, Chuck Grassley must have cloned himself in 1979 and '80 because he seemed to be, my brother Marvin and I spent a lot of time here and it seems like we both saw Chuck Grassley on the same day at the same time. I mean, I learned a lot by campaigning for my dad and for my brother. I learned a lot about Iowa as well.
R: Thank you for coming. Why don't we get started?
B: Yeah.

R: One of the important issues for agriculture is trade, and as you know, Governor Branstad has a close relationship with the leader of China.
B: Yeah.
R: Who uniquely came here when he was a young man and the governor has always told me which term that was and I can't remember exactly which term that was, but it was one of the first terms and early terms of Governor Branstad's and he learned about Iowa and he learned about food production. That friendship today is an important aspect of Iowa to export more products to China. How do you see the relationship with China going forward?
B: It's one that we need to manage with great care because of the complexity of the relationship. They are a competitor in some ways and certainly from a strategic national security point of view we need to be vigilant as it relates to their efforts to use cyber warfare against us. There's real challenges. On the other hand there's huge opportunities as it relates to expanding trade. China's projected, lowered their growth rate. This year their projected growth rate to 7%. Imagine if we were at 7% right now, I don't think we'd have the deep pessimism that exists in our country today. Higher growth creates massive opportunities as you see the emergence of a Chinese middle class growing and growing and growing, which is a sweet spot for Iowa agriculture, to be honest with you. So I think having a completely engaged relationship so that we don't have misunderstandings and that we take advantage of the trade opportunities that are going to be probably the greatest trade opportunities that American agriculture has, of any country in the world it is likely to be China for the next generation of time.

R: Recent discussion has focused around Cuba…
B: Yeah.
R: ...and whether we should trade with Cuba. Should we trade with Cuba?
B: We should ultimately trade with Cuba when Cuba is free. The difference between China and Cuba is China has huge economic opportunities for us. Cuba is a country of 11 million people, impoverished, and it's a dictatorship. Any efforts taken by the Obama administration right now has not gotten anything in return. So he's opened up possibilities of additional trade, although Congress ultimately will have to lift the embargo and he's moving towards diplomatic relations, but Cuban dissidents are still in prison. The economy is controlled by a handful of, what we would call, they're basically part of the Apparat-chik of the Cuban regime. There's no small business development. All the mythology built up about Cuba, the simple fact is it looks more like North Korea than a country that's emerging towards a freer place. The better approach would have been to say to Cuba, to the regime, "You make these changes and, of course, we will open up a diplomatic relations and, of course, we'll open up trade." Ultimately that will create a growing economy for Cuba that will create opportunities, but right now, this is not something that we should be doing unless there's big time changes in Cuba. 

R: New subject, immigration. You have been the biggest proponent of immigration in the country. You've written a book. What does an immigration policy under President Bush look like?
B: It starts with recognizing that the rule of law is a sacred value in our country,  that we need to enforce our border, we need to deal with the fact that 40% of our illegal immigrants come with a legal visa and they stay, overstay their bounds. Great countries ought to know where those folks are. It has an E-verify system that is truly verifiable. It is something that businesses can take to the bank and that we get that done first so that there's confidence moving forward that legal immigration will be easier than illegal immigration because today I think a lot of people have big doubts about that. Then, I think we need to move from a family petitioning legal model which this country has, since the 1960s has had the broadest definition of family, spouse, minor children, adult siblings, and adult parents, and so we have what's called chain migration where more and more of our legal immigrants are coming through this expanded definition of family.

We should narrow that to what every other country has, spouse and minor children, and then dramatically expand based on economic need, economic immigrants. A guest worker program to deal with the shortages in agriculture and other sectors based on demand. Creating, expanding H1B visa holders. Allowing investors to come to our country. Modeling our immigration system based on the Canadian model. Okay? Canada has more economic immigrants than we do and we're ten times their size. If we want to be young and dynamic and growing again, where the debate isn't about who is taking from whom, rather than have an expanding pie where opportunities exist for all of us, I think we need to fix this broken immigration system. The final thing I'd say is that immigrants that are here need to have a path to legalized status. No one I know has a plan to deal with illegal immigrants, to say that they’re going to be rounded up and taken away. There isn't a specific plan. What we need to do is to make sure people pay fines, that they learn English. That they work, that they don't receive government assistance. That they earn legalized status over the long haul. That they come out from the shadows so that they can be productive with a provisional work permit. This is the only serious, thoughtful way, I think, to deal with this and we'd better start doing it because this is a competitive world, Bruce. I mean, we're not operating on all of our cylinders right now and to be successful as a nation we should take advantage of all of our strengths and deal with the problems that we face and fix those. That's how a successful strategy works in family life and business and, certainly, it should work that way in government.

R: Okay. Next subject -- The RFS and ethanol production, and in particular, the renewable fuel standard. Where do you come out on that?
B: I come out on it, first of all, where the EPA should create a much more certain playing field to start with. This is just another example, each week I learn of another example of not just EPA, but across the alphabet soup of government, where the uncertainty makes it harder for people to make investment decisions. In this case, creating a certain playing field has to be part of the answer. I would suggest to you that ultimately, whether it's ethanol or any other alternative fuel, renewable or otherwise, the market is ultimately going to have to decide this. The law that was passed in 2007 has worked for sure. Look at the increase in production. It has been a benefit to us as we've reduced our dependency on foreign sources of oil, but as we move forward, over the long haul, there should be certainty for people to invest and we ought to continue to innovate to create the lowest cost energy sources in the world so that we can grow economically, and so, at some point, we'll see a reduction of the RFS need because ethanol will be such a valuable part of the energy feedstock for our country. Whether that is 2022 or sometime in the future, I don't know.
R: So, one of the challenges for the industry, is that uncertainty...
B: Yeah.
R: And, efforts in Congress to repeal it and I think those, a number of people in the audience would agree with your statement on market access and consumers choice, but what about between now and then on stability on the RFS that exists today?
B: That's what I'm saying. The EPA needs to create guidelines. This idea that you're now, what, a year and a half, almost two years behind, makes it impossible to make long range investment decisions. So create clarity going forward of a baseline amount of ethanol. My guess is, given how successful there's been a reduction in price of cost, that ethanol will be able to compete beyond that baseline mandated amount, that their volumes will be able to grow. It's really hard to make an investment decision that may take two or three years when you're already two or three years behind of what the baseline amount is.

R: What do you think about wind?
B: Wind, well, I love it for Iowa; It's not so good for Florida. Wind is, we have sun, so, you know, our alternative energy sources in our state might be different than Iowa, but one of the companies that's the largest producer, it is the largest producer of wind in the United States, is a Florida based company called NextEra and they believe that given, again, American innovation, American technology, the cost, the price of production of wind is now on its way, very close, to being competitive with any other feedstock, and so my guess is, "Job well done." This is how America works. We create an incentive, in this case it's the production tax credit. It's created an industry that has allowed to, that has created innovation and creativity, the American ingenuity at work. It's now competitive and I think it ought to be phased out over a period of time.
R: How would you do that with the expiration of the wind tax credit that no longer is there on future wind being able to be built and where does that fit into?
B: Do it over a three to five year period. Be certain about it. Just say, "Here's, this is as long as we need to be able to be competitive to create a diverse feedstock for power generation." This is a place where the industry wants that. They are not opposed to that at all. Look, I mean, at some point, these incentives, if you believe in markets working, and I do, put me in on that side of the camp. I believe in entrepreneurial capitalism and markets prevailing. Look at the fracking revolution that happened. No one thought natural gas prices would be as low as they are. It happened not because it was a government driven deal. It was because of American innovation creating that opportunity. We ultimately need to get to that point for all of our energy sources because it will be the lowest cost energy for the greatest number of people. In this case there was a good incentive. It was put in place, for 15 to 20 years it worked. Now, we're at a point where, in places where there's a prevalence of wind, it can be an important part of the energy needs of the Midwest, Texas, and California. I wish it was in Florida, but it isn't.

R: Let's talk about a new topic, food. What role does GMOs play in feeding the world?
B: We rewind the tape as it relates to American innovation and American technology. This is, think about it this way, an American farmer in 1950, produced one unit of agricultural products and today they produce 15 times more. I mean, this is one of the greatest high technology innovative sectors of our economy and the GMO effort to increase yields, to deal with droughts, to deal with disease, is an element of that. It creates economic opportunity and prosperity. We should not be trying to make it harder for that kind of innovation to exist. We should celebrate it, so as it relates to the labeling efforts, state by state, all these things, I think that's a solution for a problem that doesn't exist. We shouldn't be adding burdens to this innovation that makes it possible for us to be the greatest producer of food to the largest number of people in the world.

R: What about country of origin labeling?
B: I actually, I like that. As a consumer, when I go to Publix in Coral Gables, which I'll do tomorrow morning after church, to go prepare for Sunday Fun-day in my house. We'll be cooking Iowa beef and I'll probably make a really good guacamole and I want to know where that avocado is from and I want to know where the onions from and the cilantro and all the secret stuff I put in it, so I like the country of origin labeling. It's prevalent in supermarkets in this country.

R: As we talk about government spending and the USDA programs, a variety of those programs, over time, have gone from cash subsidies, direct subsidies and lowering those, with the federal crop insurance as a safety net in place of disaster payments that happened before. Your perspective of some of those programs, is that the right direction to be heading?
B: I think the crop insurance system is a far better approach and it is integral to the farm economy. Look, I was governor of Florida for eight years and we actually have farm income that's quite comparable to Iowa. I mean, it's a big darn deal. Three hundred different crops that are produced there. It's a huge, it's the second largest industry behind tourism in our state and the crop insurance program is, creates a stability that makes it possible for, and very volatile kind of situations for farmers to be able to be successful. I mean, in my experience in this we had citrus canker that almost knocked our industry to our knees. Now we have greening. We had hurricanes. I don't know if you know that Florida still occasionally has a hurricane. We had fires, we had all sorts of natural disasters and other disasters that made it essential to have the stability of the crop insurance program for sure.

R: As you dealt with Florida agriculture and the nitrogen run-off issue.
B: Yeah.
R: It's a big issue in Iowa. Around the country farmers are trying to do things to manage that through new technology, other ways. How did you deal with that as governor of Florida?
B: We had a big issue as it relates to restoration of the Everglades and the sugar industry, hundreds of thousands of acres of sugar being produced, the most productive sugar production in the United States. And, the only way to make this work effectively is not to come and mandate and yell and scream and have press conferences and great photo ops. It's to work in a collaborative way to make sure that the viability of agriculture is front and center as you try to achieve a larger public good. Most of the time my experience is that those efforts are better done voluntarily. That there is an expectation and that people figure out the best possible way using best practices to sustain their business and also achieve the desired effect of runoff. Today, Bruce, the big challenge in Florida, I assume it's the same here, is the EPA ruling as it relates to waters of the United States. Now, it's just outrageous the definition of water. Imagine Florida, which until people started migrating down there, basically, we were effectively one big wetland. Imagine the Army Corp, this is like, I mean the EPA, this is like to use an Iowa expression, they're like a pig in slop. I mean, this for them is perfect because they can now put their tentacles into every aspect of every activity in the state of Florida and I'm sure here in Iowa it's the same thing. We have to begin to reign in this top-down driven regulatory system and figure out more collaborative ways to achieve the public good.
R: How, actually, do you do that because along with the navigable waters the EPA has wanted to regulate dust out of combines.
B: Yeah, are kids working in their family farms or, you know, it's just... The first thing you do is you change presidents. I mean, you put people in the alphabet soup of government that have practical experience in the fields that they are regulating. I know that sounds like a crazy idea, that somehow there's a... I mean, immediately you say, "Well, that's a conflict." No, it actually, practical common sense might be useful in every level of the EPA and every level of the FDA and all the other agencies that make it harder for people to rise up right now. Then, you have a president who has a chance to undo the executive orders that were done by executive order. I mean this president has used his authority and authority he doesn't have to go way beyond what any president's done in the past. You can reorder and restructure that by undoing those executive orders. Thirdly, being a governor of a state, and I'm sure the other governors said this as well, there is no reason why Washington should be the end all and be all in the regulatory world. We should respect the tenth amendment and shift as much power back to state and local governments to provide more common sense regulation. The final thing I'd say, and just so you know, in most of these federal laws there's delegated authority that's granted the executive to give that power to the states and over time that power has been taken back, particularly with the EPA. The final thing I'd say is that we need to revamp this whole notion of what economic, the cost benefit analysis of every rule is. There is a process to measure what the economic costs are for the implementation of rules in most cases. The Clean Air Act I guess is disallowed, but in most cases. But it's not based on real economic impacts. I think bringing an independent view of that so that even if it's a good intended idea for a regulation, if it costs three X more than the benefit, then maybe we shouldn't do it.

R: One of the things that I think you'll continue to see in Iowa and around the country, have noticed, is the urban rural divide...
B: Yeah.
R: ... that is happening today in income levels, education, health care, how would you reverse that trend and what specifically have you done in Florida as governor to make a difference with that?
B: We have an income divide inside of urban areas, and there is the large urban areas are, you are correct, I think, are probably more prosperous around the country than the rural areas. What we tried to do was focus on the fundamentals. The first thing that I think is essential is to assure that children can read and write and calculate math and understand, have a sense of history that we are constantly challenging an education system that only yields about a third of our kids, after we spend more per student than any country in the world other than Luxembourg and two other countries, that a third of our kids are college or career ready. No community can be sustainable if you have those kind of results. That's a systemic problem across the urban and rural areas, but if you're going to create an environment where people are going to invest to create jobs, you have to have an educated workforce. Everything is now being immersed in technology and innovation. You can't just use your hands to be successful. You have to use your hands and your mind and that's not happening enough. We're just basically just casting aside large numbers of people.

The second thing is this, I don't believe that this is a Washington solution. This has to be…  Governors are the best place for this to happen. Washington could be a partner. There's all sorts of smaller grant programs that exist. If they're to be successful they ought to be driven by strategies determined at the local and state level. I don't think presidents ought to be focused on a five point plan to deal with rural Florida or rural Iowa. That is best done in partnership with the leadership at the state level. Bringing broadband into communities is part of this. In the case of Iowa and certainly Florida, invigorating and constantly updating the competitive nature of agriculture and making it more global every chance we have. I mean, I think free trade is going to be one of the great Godsends for the next generation of time for agriculture. We have two trade agreements that the president ought to be given Trade promotion authority on. The congress has the right to turn those treaties down if they are not negotiated correctly, but it's a fantastic opportunity for us to expand markets in places like Japan and Korea and Southeast Asia and certainly in Europe, which is very protectionist as it relates to its agriculture. Tearing down those barriers will do more for rural Iowa than any particular plan that I'm aware of.

R: We're about out of time.
B: Oh, darn it.
R: Thoughts, perspective in particular on health care in rural areas?
B: Health care, in general, you know, we've created a monstrosity of consolidating power in Washington D. C. Suppressing wages, making it uncertain for investment, in fact, the greatest job suppressor in the so called recovery that we've gone through is Obamacare. I think replacing Obamacare with a market oriented approach that is where local and state input starts to drive the policies away from this top down driven system where there's employer mandates, employee mandates, all sorts of mandated benefits that are creating huge costs and all these cross subsidies make it harder for small business, particularly, to make ends meet. We need to move back to a system that is consumer directed where patients have a direct relationship with their health care provider and where there's rewards for health and it's low cost and the effort by the state, by the government, ought to be to try to create catastrophic coverage where there is relief in families in this country that if you have a hardship that goes way beyond your means of paying for it that you have a... The government is there, or an entity is there to help you deal with that. The rest of it ought to be shifted back where individuals are empowered to make more decisions themselves.

R: Okay, well, thank you Governor. Thank you for coming.
B: Thank you, take care. Thanks guys.