A Minute with Peter Schiff
The Internet star, potential Dodd challenger and talking head who was right elaborates on his philosophy
Thursday, March 12, 2009
By vocation, Peter Schiff is the president of brokerage firm Euro Pacific Capital, and as we chatted in his Darien office, he had the occasional client meeting or other business to attend to — and he also had a radio show, a Forbes interview and a CNN show booked for the afternoon. We even paused our conversation for him to do a 10-minute radio interview over the phone.
Why all the media? Largely, it is because Schiff was one of the few to predict the economic crash — he even wrote a book in 2007 called Crash Proof: How to Profit from the Coming Economic Collapse. A video called "Peter Schiff Was Right," collecting many of his early prognostications with the mocking, incredulous responses from talking heads, has become an Internet meme. ...
...his economic views are widely known — no bailouts of any kind, let companies and banks fail, abolish or alter the Federal Reserve, return to a currency backed by gold, phase out FDIC insurance, etc. — his other political views were not as well known. Until today.
Maymin: What would you do as Senator? What needs to be done?
Schiff: The thing that the U.S. government needs to do is shrink — at least by two-thirds. What I would try to do to help the American people is to cut as much government spending as I possibly could. I would shrink the military dramatically. I would try to take our troops home from wherever they are around the world and just try to have a military that defends the borders of the United States.
So take them home from Korea, from Germany, from Iraq and Afghanistan?
Just have our military here. Protect the coasts. We don't need to police the world. There might be a couple of small strategic bases, but we don't need to have people in Western Europe. They're still in Germany. What are we doing in Germany? We don't need all these troops there. So I would take them home. We gotta abolish a lot of departments, like education, energy — all these departments just need to go.
Yeah, labor. We gotta abolish them. We gotta fire everybody that's working there. We've got to dramatically reform and phase out entitlements like Social Security and Medicaid. Try to find a way to pay something to people who that's their only source of income, but certainly guys with means, certainly a Warren Buffet or anybody with any decent wealth, has no right to a Social Security check. So try to find a way to phase those programs out, and just dramatically shrink government. Repeal a lot of unnecessary and burdensome regulations.
I mean, look, we've got the SEC. Get rid of it! ... Look at Bernie Madoff. People have gotten their life savings destroyed with Wall Street with the SEC protecting them, with FINRA protecting them. What the hell do we need these entities for? Get out of it. Let the free market function. Let the people do more due diligence. I'm sure that if there were no SEC, Bernie Madoff never could have existed. Because it was the SEC auditing him and saying that he was okay that made everybody think, "Oh, he must be good. The SEC is auditing him; he must be legit." There's no way he could have pulled off that Ponzi scheme without the SEC. Because people would have done their due diligence. ...
How would you feel about the Fair Tax, a national sales tax to replace all federal taxes?
We should abolish income taxes entirely. We should abolish payroll taxes. I think it is ridiculous that American citizens have to keep records, have to hire accountants, have to go through all this effort to pay their taxes. So we need to abolish it, and the government needs to collect revenue when we spend money, not when we earn money. And it's very simple. Just put a tax on every transaction. The rich will pay more than the poor because they spend more than the poor. There'll be no tax evasion. There'll be no underground economy. Everything will get taxed. But it encourages savings. So if you earn a million dollars and you don't spend any of it, if you put it all in the bank, and therefore it's available to be loaned out to entrepreneurs, you're not going to pay any taxes. You're not going to pay any taxes until you try to enjoy your money.
Which is fine, because if somebody is earning millions of dollars and living in a little shack and not spending anything, he's like a saint. He's basically a benefactor. He's just putting into the economic pot and he's not taking anything out for himself. Why should you tax that guy? That's better than charity. That's the best thing you can do for society ... And the reforms we need for health care. We just need to go back to get[ting] the government out of health care. The only insurance that people should have for health care is catastrophic major medical, which is inexpensive and everybody can afford it, and it should have nothing to do with your job, it shouldn't be provided by your employer — you should just buy it. That way people will take care of themselves and the hospitals — if people are really too poor, there'll be plenty that are charitable.
Why would you run as a Republican, not a Democrat?
It seems that philosophically I've got more in common with the Republicans than the Democrats.
Well, the Republicans talk about smaller government, less government. They don't govern that way but at least that's their rhetoric. Take out the religious elements — where I'm not necessarily on board — or the social conservative aspect, but the small government wing, the Ronald Reagan, Barry Goldwater types that are in the Republican party, they're not in the Democratic party. There's obviously Republicans that still believe in small government, in sound money. It's just none of the elected officials ever govern that way. That's one of the reasons you really need to put some people in office who really don't want to be in office. They're just there to do a job and get out. And the job is of dismantling the government and shrinking it and restoring it to its proper function.
Peter, you are ver estute in our need for economic survival. And your advise for the Health care system is right on. My thought to add to yours is to make HSA/IRA plans and for the poor, let the States do their duty by constitutional powers separation, which makes all the nany state socialism as to being a State's responsibility. If a National program is wanted or is better fiscally, le tthe Board of Governors provide it in a voluntary to each State choice.
As to the changing of the tax structure, please find the below the answer as to why we need the Fair Tax Plan yesterday. Get those powers defined by the constitution adjusted to consitutional good behavior and our Naitonal sales tax would drop from 23% to say 4%. Note that the first part of below speaks to the last vestage of industry we are about to lose in America, making us a third world naiton overnight. The last part speaks to how we got here and where we need to go fiscally:
Why car companies are struggling:
Remember a decade ago or more, when General Motors took the profits from North America and put them into Europe? Then about ten years later they declared the North American branch as failing, to not have enough cashflow? Why would they make such a move? Could it be the high corporate production tax in this Nation?
How does any company compete with a foreign market when saddled with a Federal Corporate Tax of 35%, State Taxes, in Michigan 22%, while the imports come duty free and no tax overhead? If Congress would simply stop playing possum with our lives and get some backbone, they could pass the Fair Tax Plan www.fairtax.org . That would remove from the cost of the product not only the corporate Federal and State taxes, but a host of expense tax, including the matching social security and payroll. The fair tax would put an fair equal tax distribution on all imports of 23%.
The Domestic car would be a wash in cost to the buyer in America and would be much cheaper to export. The cost of a car would drop about 22% and that would make the foreign market have to compete at the lower price. Sure the American will have to pay taxes as they are right now at about the 22% hidden tax in products bought from local production and from foreign production.
What would be the result of reducing domestic product price 22% and then tax all products foreign and domestic 23%?
We need the consumption tax yesterday, the day that they made policy of Free Trade. This is why our manufacturing left us to go overseas so that corporations could move there and create two markets, overseas and imports to America. Time is up. America is done bailing out the rest of the world in creating wealth. It is time we bring home our jobs and boost our still surviving ones.
Yes, a loan to the Auto Industry makes sense. The giving away of money by the Feds to money tycoons doesn't. What is wrong with our Nations Leaders. Maybe we should vote all incumbents out who don't support the Fair Tax. The car industry will retool and will help us rid ourselves of foreign energy which will in turn revive our economy also.
Where did we go wrong:
Before W.W.II this Nation was a closed market to imports. The framers of our current tax structure did so under the Americans consuming only domestic manufacturing, I imagine using the production tax system as a convenience since the bookwork was already in place and under management control. Then we opened our trade to Japan, making for free trade. This gave the American consumer a boost to their cashflow, making for more spending in other areas and those we lost a few jobs, the increased cashflow produced many more jobs.
President Reagan then introduced free trade to the world and opened our border to duty free import. NO thought was given to the production tax structure in place and the new surge of cheap goods made for even greater prosperity to the American consumer, while again eliminating some jobs, but at the same time we had new technology introducing new avenues of employment, thus the excise production tax on domestic production had minimal effect. During the period after, companies were being cannibalized for short term profit as their competition from imports was cutting into the profit margin and causing little advantage to stay in business. These companies were closed, jobs being eliminated, as the scavenger Companies bought them up and sold them for parts or took the parts overseas to open up manufacturing to import and feed the open accounts of buyers of the closed companies products, in a duty free, production tax free advantage and at a high markup profit.
The slow demise of manufacturing in America has grown and the need of social programs from the Federal Government to prop up the American dream continued to grow, expanding deficit spending and hidden inflation. This perpetuated the domestic excise production tax, furthering the handicap of American manufacturing. The need for additional income into Families also grew, demanding more then two spouses could produce to keep up with the standard of living and regulations and license fees, insurance costs, to a point where a majority of Americans are now in a fiscal struggle living paycheck to paycheck, if working. Jobs have become hard to find, many being entry level service jobs without any ability to advance or receive adequate wage. Jobs are at a premium, even with a low reported unemployment level, which does not report and hides many who have slipped from the employment rolls due to years of job seeking frustration, especially in the urban and rural areas.
Now we find ourselves being tempted into becoming what we fought for years with our own blood to push back, fascism, Communism and the Tyranny of Government, with the promise of fiscal security. The American Dream is on life support in need of a true free market, one of which fair trade exists. The cost advantage of foreign imports over domestic by continuing with a production tax is about 22%, the amount of hidden tax in domestic goods.
Time is of essence, that this very hour, this Nation is about to fall. The World Government proponents are about to make their final push for world dominance through one world currency. The Marxist of the world have moved into leadership positions in coalition with the One World Shadow known as RHINOs, the pawns of the One World Government advocates. The old media has joined or is owned by both powers and is a major instrument of this Coalition and is making for a unique threat to the U.S. Constitution.
The only way to prevent the above from fulfilling their mission to dominate this Nation and the World is to offer change to the American worker and Family a grand demand for their employment, jobs, jobs, jobs. Only then will the chain of despair be broken. The Conservative Movement must center all it's will on fixing the failing tax and trade structure of this Nation. We must lay down the plank of the Fair Tax Plan WWW.fairtax.org to the Democrat and Republican Grassroots and educate them across into a Party totally centered on the character and values of the Founding Fathers, presiding under the Constitution as written through the demand on the Judiciary to be of good behavior as instructed in the Constitution and defined by Alexander Hamilton in the Federalist #78 Document. http://www.constitution.org/fed/federa78.htm
The Fair Tax is the Salvation of the United States of America and it's Constitution of liberty and Freedom of We the People. Please make it so.