WASHINGTON – The turnover of more than half Minnesota’s eight U.S. House seats leaves new eyes looking at fixing stubborn issues. For Minnesota’s business community, those issues range from workforce development and trade policy to economic growth, tax reform and health care costs.
Retiring Democratic Rep. Rick Nolan, 74, was replaced by Republican Pete Stauber in Minnesota’s Eighth District. Nolan welcomed a youth movement to the House. He called dozens of newly arrived House members, including Minnesota Democrats Angie Craig, Ilhan Omar and Dean Phillips, “young, smart, aggressive and diverse.”
Craig, Omar, Phillips, Stauber and Republican First District Congressman-elect Jim Hagedorn answered Star Tribune questions about how to help Minnesota companies keep the state economy running hot. Their responses ran a gamut.
Craig, who will represent Minnesota’s Second District, thinks President Donald Trump’s protective tariffs on imported steel and aluminum, as well as punitive levies on $250 billion of Chinese imports and China’s response to them, “have largely hurt farmers and component manufacturers” in her district.
“We need fair trade,” she said. “But tariffs and a trade war are not the way to go about it.”
Phillips calls the president’s approach “dangerous isolationist trade policies” and backs a more diplomatic approach that ensures Minnesota businesses can access overseas markets.
Stauber’s sprawling Eighth District has profited from the metal tariffs, allowing once-shuttered mines to reopen. Stauber called for an end to “years of improper and unfair trade policies that disproportionately harm American workers and industries.”
Hagedorn, who flipped the state’s First District congressional seat from Democratic to Republican, favors “properly negotiated” international trade agreements and does not favor tariffs. Still, Hagedorn believes “the president’s tough negotiations have been successful” in rewriting trade agreements with Canada and Mexico. Despite sagging agricultural prices attributable in part to Chinese retaliation to Trump’s tariffs, Hagedorn said his constituents, many of them farmers, understand that the U.S. must address the Chinese trade imbalance and theft of American intellectual property.
Omar, the Democrat representing Minnesota’s Fifth District, is skeptical of multinational free-trade agreements saying they have shifted jobs from the U.S. to other countries. She calls tariffs a “valuable tool for spurring domestic production and boosting industries ... hit by unfair trade practices.” But she cautions that current tariffs “have been particularly damaging Midwestern farms that export to Chinese markets,” leading her to support the extension of aid to those farmers in 2019.
Health care costs
To control health costs, Omar favors single-payer medical coverage for the nation.
Craig and Phillips want people under 65 to be able to buy into Medicare, the government-run health insurance plan now open only to seniors. Craig wants Medicare to be able to negotiate drug prices collectively for all Medicare recipients.
Hagedorn believes the country should move away from “government-run medicine” and inject “patient-centered principles,” such as tax exemptions for health expenses, greater use of health savings accounts, high-risk insurance pools to provide insurance to people with pre-existing conditions and health insurance sold across state lines.
Federal regulation of business
Republicans favor less regulation. Hagedorn supports legislation that lets Congress “reclaim regulatory authority from federal bureaucrats” with measures such as sunset rules that end regulations after a specified period. Stauber believes the “federal government should encourage, not inhibit, job creation.”
Omar said “balanced and effective federal regulations” guard economic security and public health. “No Minnesotan should ever experience preventable health risks from breathing polluted air or from drinking unsafe water,” she said.
Craig, who spent a career as a medical device company executive dealing with regulators at the U.S. Food and Drug Administration, sees a “need to strike a balance between allowing businesses to innovate and protecting consumers.”
Phillips said that “except where necessary,” he prefers “government incentives to government mandates.”
Early reports indicate that tax windfalls from a large cut in the U.S. corporate tax rate and reduced taxes on American companies’ foreign profits returned to the U.S. are going mostly to stock buybacks, not to job creation, capital expansion or employee raises.
Hagedorn said private businesses in the U.S. free-market economy should retain the right to invest profits as they see fit.
Phillips, who helped run his family’s distilling business before moving to run an ice cream company and then a small coffee business, supported the corporate tax rate cut. But having watched companies use added profits “to enhance executive compensation and for massive stock buybacks,” Phillips believes “it is bad policy when the vast majority of the benefits ultimately flow to top earners.”
Omar hopes the new Congress “can work toward creating a more progressive tax system” and believes tax policy should include “regulatory standards” that make sure legislated windfalls benefit all Americans.
Craig thinks “too much of the corporate tax savings are going into stock buybacks.” So she favors a new restriction that allows corporations to bring home foreign profits at a reduced tax rate only if they reinvest the profits in “capital infrastructure or in additional research and development.”
Training Minnesotans for employment has become a critical issue for Minnesota businesses. The state’s unemployment rate is 2.8 percent. Yet many high-paying jobs go begging for want of qualified applicants.
The newcomers each advocate some kind of educational reform to match instruction to skills needed by employers. Suggestions range from federal funding of career and technical education to an emphasis on STEM (science, technology, engineering and math) in school curricula, as well as federal programs that make post-high school training affordable.
Phillips suggests federal pilot funding for “apprenticeships, three-year degrees that combine high school and college, competency-based education and ‘last mile’ training so that states and localities can explore options that are best for their communities.”
Craig said Minnesota faces a 143,000-worker shortage and needs federal immigration reform to keep the state economically competitive.
Omar, an immigrant from Somalia, wants federal policies that let Minnesota increase immigrants’ inclusion in job training and workforce development.
Consensus exists around promoting the state’s massive medical technology sector, a source of thousands of high-paying jobs.
“If we want to use federal policy and our tax code to continue to grow high-tech industries of the future,” Craig said, “we must do more to incentivize research and development.”
Repealing a 2.3 percent sales tax on medical devices that helped pay for the Affordable Care Act attracted general support. The House voted in July to end the tax. If the Senate does not vote on repeal by the end of December, the issue likely will be resurrected in the House in 2019.
Hagedorn backs permanent repeal of the tax, whose collection has been suspended since January 2016. Omar and Phillips support repeal but only after another source of revenue has been identified to replace it.
Craig calls device tax repeal “an issue with broad bipartisan support.” “Ending the tax on revenue,” she said, “would help promote innovation and strengthen our economy.”