As stock markets tumbled Thursday amid fears the country could slip into a second recession, U.S. Sen. Ben Cardin said American companies have the tools to turn the economy around – if the government could provide certainty.
“You give them predictability, they’ll take off,” said Cardin, D-Md. “There’s a lot of money on the sidelines.”
Among his other ideas to reform the tax code, Cardin proposed a temporary, sizable tax break to encourage multinational corporations to bring cash held abroad back into the United States.
Budget analysts, Cardin said, predict that if this money were taxed at a 9.5 percent rate, there would be a $20 billion to $30 billion influx of tax revenue from multinationals. Cardin proposed funneling this money to an infrastructure bank to build schools and roads. America’s official corporate tax rate is 35 percent.
“We’ve been told (by industry leaders and lobbyists) that if it’s under 10 percent, they’ll bring the money back,” Cardin said. The tax break would be for only a short time and would apply only to cash moved back to the United States, not all corporate profits.
A May analysis by investment firm J.P. Morgan found that 519 American multinationals hold $1.375 trillion in cash on foreign shores, in part to avoid high tax rates in the United States.
In a wide-ranging interview with The Capital’s editorial board Thursday, Cardin laid out plans to inject money into the economy without increasing taxes, discussed the impact federal budget cutting will have on Maryland and offered a few issues federal lawmakers might actually be able to resolve in spite of the poisonous atmosphere hanging over Washington.
The budget deal reached earlier this summer to stave of federal default included sizable cuts in defense spending over the next decade. Cardin said jobs at and near Fort George G. Meade, wherea recent realignment transferred thousands of workers, would remain funded. But defense contractors are likely to see future deals evaporate.
“It’s here,” Cardin said of the cuts. “What it means is the defense contractors are going to be the ones that are hardest hit. We have been very growth-oriented in bringing in private defense contracting opportunities in this region. The future doesn’t look nearly as bright as it did a couple of years ago.”
The budget debate and the 11th-hour deal struck by federal leaders spotlighted the unwillingness of some House Republicans to compromise, even if the country’s well-being is at stake, Cardin said.
“The political environment in Washington is so brutal right now,” Cardin said, calling Capitol Hill “broken” and describing the dysfunction as the worst he has seen in his 24-year tenure in the House of Representatives and the Senate.
“You’re not going to get me to defend Congress,” he said.
Still, he said, at least two issues could have traction in Washington before the midterm elections: energy policy and immigration. He said there’s enough consensus on those issues – and only on those issues – to pass meaningful legislation.
Given the political environment, Cardin expects his re-election effort to be a competitive campaign that will “receive a lot of attention.”
His campaign staff raised $2 million this year and contracted with a polling company to begin taking voters’ political temperatures this fall.
Cardin also repeated his opinion that the military needs to act in order to launch redevelopment of the former David Taylor research facility at the mouth of the Severn River.
More than a decade ago, the federal government turned the property over to the county, which gave it to private developers to turn into a business park and hotel.
But plans for the former naval research center remain at a standstill because a small, high-security research facility called the Joint Spectrum Center still operates on the property. Developers and defense officials are wrangling over who should pay to move Joint Spectrum to another secure facility.
Cardin said Joint Spectrum belongs at Fort Meade.
“I raise (the issue) every time the military is in my office.”