“I Am Very Optimistic”

inFOCUS: Thank you for meeting this morning. Republicans are the party of free markets, but also want to protect American jobs from outsourcing. How do you see job revitalization in a place like Ohio? Do we need protectionist legislation; do we need something else? How are we going to get the jobs back?

Senator Portman: I actually am very optimistic about insourcing more jobs, but we have to change the way we approach pretty much every major economic institution in our country – meaning our tax system, our regulatory system, our worker skills, worker training system, our health care system. We have huge opportunities out there, but we have not taken the time to carefully construct pro-growth, modern systems to adapt to an increasingly competitive global environment. Tax reform may be the easiest, which pardon me for talking about it for that reason, but also because the code is so out of date.

If you’re talking about not outsourcing but rather insourcing jobs, you have to start with the fact that we have a tax code that actually encourages investment in jobs that go overseas. There’s no question about it – you mentioned Ohio – two big companies have inverted overseas, classic Cleveland companies. They would have stayed here but for the tax code. When they leave it’s not just that they change their headquarters. They take jobs and investment with them.

One of the things that I’m very excited about in this congress with a new Republican president is to actually get tax reform done. Everybody’s got their own ideas, I have mine, and I’m trying to encourage my colleagues to listen to everybody else and come up with something that we can all agree on. I think it would be lowering the rate, we have the highest rate of any industrialized country, which is a terrible place to be, but then also our international system encourages people to keep their money overseas. Which is crazy.

iF: So you want the code to favor repatriation?

Senator Portman: Yes. There’s two and a half, maybe three trillion dollars locked up overseas, so I really believe this is an opportunity. I know there’s always skepticism over whether anything can get done here in this town, but I think tax reform is very realistic. Get it right and you’ll make a big difference in terms of insourcing and giving the economy a boost. I’ve been seeing with skills training, you can do it.

We spend a lot of money, federal government money, ineffectively now, in my view. Between $15 and $18 billion a year on 47 job training programs spread over seven or eight departments or agencies. The right hand doesn’t know what the left hand is doing and very few programs have any performance measures. I think we should focus much more on CTE [Career & Technical Education], at the middle-school level and high school level.

If kids have these skills, they can get a job in Ohio, and therefore the jobs will stay in Ohio. It’s not just about trying to ensure you have the right tax, health care, regulatory environment. It’s also to be sure there are the right skills in the community. Otherwise, companies will leave. They’ll go to another state or another country. I’m very high on the CTE programs and how they can work better and how we should support them more, and on the worker re-training for the incumbent workers who need to be retrained in an evolving, high-tech economy.

These are all things that we can do. It is within our power to make an environment that’s much more pro-growth. We know about health care – the cost spikes have just been deadly for job growth. If you’re in small business and you’re hiring somebody, you’re bringing on a 25 percent increase in health care cost year to year. That’s a real negative to hiring. As a small business owner in Ohio, with costs and mandates, you’ve had an 82 percent increase in the last four years for health care. It’s very hard. Health care, regulations, and taxes create a real compliance burden.

We just finished marking up a bill last week on regulations to come up with smarter regulations going forward and having to go through a cost and benefit analysis for all regulations. You would have to have more input from the public. You would have to use the most cost-effective way to get from here to there, whatever the objective is. That’s not done yet.  In my view, this is exciting because there’s an opportunity across the board. As a Republican and as a fiscal conservative and free market person, I think there is enormous opportunity for improvement.

iF: Have we entered the age where the federal government is going to be supplying health care to us? Except for the safety net, people who are poor and really cannot do it, it’s not clear to me why the federal government or the states are providing insurance to people. Have we entered an age where we’re not ever going to get rid of that?

Senator Portman: I don’t know. By far the biggest provider of health care is still the employer. Probably 65 percent of people in Ohio get their health care from the employer; we forget about that sometimes. Then you take into account Medicare and Medicaid, and you end up with about 6 percent of the people who are in the exchanges – 212,000 in Ohio. Not that that’s not a really important group, but there are ways through the market to provide them with refundable tax credits where they can buy their own health care in the private market. I think if we do the right things on replacing the Affordable Care Act, we will move to more market approaches and market approaches can reduce cost. If you have real transparency and real information and then you have competition, there’s no question in my mind that we can stop the big increases in cost.

Now there are some underlying problems in health care we also have to address. The cost of technology, the cost of pharmaceuticals, the cost of things are going up, and that’s tough because it’s health care, and it’s very personal and very emotional. But we have to do it all. We can’t just do the insurance reform, and some of this will have to come later because it can’t fit into budget reconciliation. Coming up with a way to have pharmaceutical companies compete more here rather than having high costs here and lower costs overseas. There are some things that can be done to put more market orientation in place.

Veterans’ Health Care

iF Can some of that apply to veterans’ health care as well?

Senator Portman: Yes. I will say, our veterans like to have their own system. That’s my impression from Ohio: we have had veteran town halls all over the state and there’s a portal on our website for veterans. There are complaints and concerns that we will try to address with individual VA providers, but as a rule, I do think having facilities that are focused on veterans and their unique problems is also important. At the same time, they should have more choice. If they don’t have what they need in terms of a specialty near their homes, they should be able to get a card, go out and get it on their own.

I’m not one of those Republicans who thinks we get rid of the health care system for VA and just have them all in the regular health care system, particularly now. There is a lot of PTSD, a lot of traumatic brain injury, a lot of very acute problems with returning veterans from Iraq and Afghanistan, Syria and wherever we’re going to be. Can we make it better? Yes, we definitely can. We should give more choice to veterans, but I do think there’s a role for a veterans’ system.

With regard to opioids, I’ve been working to try to stop the overprescribing. We’re putting things in place with the VA that can be cutting-edge. Having the doctors and the nurses come up with alternative ways to deal with pain. That can be leading-edge practice, developed in the VA, rather than having them as the more antiquated approach to health care.

The Opioid Epidemic

iF: I know you’re very concerned about opioids. How did we get to this point? It’s as if we woke up one morning and we discovered there’s an opioid epidemic. How did we get here?

Senator Portman: It’s so, so sad. If you could point your finger to one thing, it would be overprescribing, and I mean that both in terms of purposeful overprescribing and accidental overprescribing in the sense that doctors really didn’t understand the addictive power of this medication. There were literally people, who wrote to medical journals, one in particular, saying if you use opioids for pain it won’t be addictive or it’s unlikely to be addictive, but it is. For many people, it is extremely addictive.

Then there were “pill mills” where it wasn’t a legitimate prescription, it was, “We know what we’re doing and we’re going to give you whatever you want.” In Ohio, people were lined up around the corner to get medications. At one point there were as many prescriptions as there were individuals in parts of Southern Ohio – as many prescriptions per year as there were individuals. Think about that. We’re still probably prescribing as many pills in Ohio as there are individuals. It got out of hand and people got physically addicted. Some of it was because there was an accident or an injury and the doctor said, “Take 60 pills.” And they would say, “Oh, the doctor said it, so it must be the right thing to do.” Others abused it knowing it would give them the high they were looking for. It’s hard to differentiate because we don’t have good data on that, but a lot of it came out of that. And then heroin was less expensive. Heroin traffickers in Ohio would show up at these pill mills and follow people home and say, “When you finish this, here’s something else that’s cheaper and we’ll give you the first hit for free.”

iF: You need a buy-in from legitimate doctors. You need law enforcement for pill mills and people that shouldn’t be doing it, and law enforcement for heroin dealers. So there’s not a single track here. You’re really talking about five or six different strands of things to get control of the issue.

Senator Portman: Exactly. It has to be more comprehensive, and you’re absolutely right. I will say the pill mills are mostly shut down now, so we’ve done a good job of that, but meanwhile we have an estimated 200,000 people addicted in Ohio, and four out of five of the heroin addicts started on prescription drugs they say. So the pill mills may mostly shut down, but the people are addicted.

iF: Then from a governmental point of view, you still have those people and they need services.

Senator Portman: Oh yes. Now it’s their kids, and their kids’ kids getting into heroin, and the latest one is the synthetic heroin, which is Fentanyl, Carfentanil, U4 – it goes by other names. Basically it is a chemical compound that is an opioid, but it’s synthetic, meaning it can be made even less expensively. And it’s deadly; Fentanyl is 30 to 50 times as powerful as heroin. Carfentanil is even more powerful. This is the stuff you use to put elephants to sleep for operations.

iF: Is this a federal issue or is it state? Where does the primary emphasis go?

Senator Portman: All of the above. I’ve been a leader here in Washington, but I think you’ll be hard pressed to find a speech I give where I don’t say, “This is not going to be solved in Washington.” But Washington has a role to play. One thing we did with our bill, the Comprehensive Addiction Recovery Act, was to bring experts from all over the country to five conferences here in Washington over three years, looking for best practices. What’s going on in Connecticut that works? What’s going on in Oregon that works? We tried to come up with evidence-based approaches and stimulate more state and local activity as well, to leverage the federal dollar more. I think that’s the answer but it’s a national epidemic and obviously it goes across state lines. In terms of enforcement, having the FBI involved, and DEA, and the Customs and Border Patrol is really important because a state or a local official certainly can’t control it the way it needs to be done. 

Right now we’re trying to get legislation passed at the federal level with regard to drugs coming in from overseas – mostly from China where most of the Fentanyl is produced. They literally stick it in the mail, and you can go online and get it at your PO box. It is a federal responsibility to try and protect our communities from this poison coming in. Protecting our borders, essentially.

Career and Technical Education (CTE)

iF: You talked about CTE and students. How do you break through the idea that all kids should go to four-year colleges? How do we develop a conversation about what high school students should do?

Senator Portman: It should be customized to the child and I think it starts in middle school. Skills training helps to keep kids in high school, based on the data, because they’re using their hands, it’s more interesting. In Ohio, you can get college credit for CTE and we’re trying to spread that idea around the country. I think the answer is getting to the administrators, but also getting to the parents, because many parents grew up in an era where vocational education was considered a place for people who couldn’t succeed on the four-year track. That’s no longer true. Now if you get into a CTE program in an exciting school district, you get a great education and you get a job when you get out – because that apprenticeship program leads to a $50,000 a year job in a manufacturing facility or a biotech facility or an IT facility. It’s such a great opportunity, and you can go back to school if you want, and often your employer will send you back to school.

The alternative is pushing everybody into four-year colleges and universities, which is what we’ve done for too long, in my view. The average college debt in Ohio is $27,000 and 50 percent of the kids graduating from Ohio four-year colleges and universities are not finding a job that matches their degrees. So they may end up in retail or something else – not that retail is a bad thing, but it’s not what you went to school for and you can’t buy the car, and you can’t get your own home because you’ve got $27,000 debt. So, I think CTE is really exciting because it’s great for the kids and it’s great for the economy.

Tax Cuts and the Economy

iF: Could you talk about tax cuts? We have a huge deficit problem, and how do you square the fact that we have a deficit that’s probably bigger than it ought to be and a national debt that is bigger than it ought to be, with everybody’s desire to pay less in taxes? Mine included, yours included, and everybody’s included, right?

Senator Portman: If you did properly structured tax reform, I believe we would get a lot of economic growth, which rolls into more revenue. Not every tax cut results in more economic growth and more revenue, but some do. I was in Congress in the 1990s when the balanced budget was done. We assumed there would be a balance after five years. There was balance in about a year and a half because capital gains taxes were cut and the revenue came in.  You also need to have an analysis that’s fair – that figures what the macro-economic impact is going to be. Not a static CBO score, or a Joint Tax Committee score, but dynamic scoring. You look at the actual impact on behavior. The result of that will be more jobs, more investment, and everybody wins.

I don’t know if you’ve seen some of those articles where they said, “Portman’s kind of in the middle.” I’m not for blowing a hole in the deficit but I’m not worrying about it. I think it should be revenue-neutral, but I don’t think it should be based on a static score; it should be based on a dynamic score that shows the changes. That produces a significant difference because we think there’s about a trillion dollars more revenue that comes in under a pro-growth tax reform proposal, which leaves a lot of room for tax cuts relative to a static score.

iF: Can we afford the defense spending that we need to have?

Senator Portman: We have to do it. I’m a budget hawk. I want to keep the spending under control, and there’s no question the Pentagon can be run more efficiently, and we should try to find savings in procurement, and in the bureaucracy. We are over cost on pretty much every major weapon system. But we find ourselves in a position right now where we have to spend more just to be able to get the readiness that we need. We have ships that are docked because we don’t have the resources to keep them up. We have planes that are grounded. We have pilots who can’t fly because it costs too much. We have, I think some serious issues with regard to some of our weapons programs, including everything from small arms to the Joint Strike Fighter where we need to get moving on this stuff to keep our qualitative edge.

It’s very important to Israel that the United States has that qualitative edge. Not just that Israel has it, but the United States has it, and so I think we need a further investment right now. I would agree with the president on that and agree with my own leadership, but at the same time, let’s be sure it’s spent wisely. Let’s redouble our efforts in oversight, because the Pentagon is a big place and some of these procurements have been way over cost.

The Joint Strike Fighter cost $150 billion and they didn’t use a second engine for competition. I believe in competition and the Pentagon needs to be better at spending money wisely.

Energy Policy

iF: When the President was in Saudi Arabia, he talked about Middle East countries not funding terrorism. One way to limit funds available for terrorism would be greater American energy independence and the ability to export energy. Nuclear power, fracking, natural gas. Where are you on things like nuclear energy?

Senator Portman: I totally agree and again, I’m excited about the opportunities there. If we use nuclear power and use the resources from the ground and use them wisely, we have the potential to be the energy power in the world. We have it all now. With the shale finds we have oil and natural gas; we have lots of sunlight; we have lots of wind; and we have nuclear power capability that enables us to produce emissions-free energy. I’m also a big fan of using coal and burning it more cleanly. I have legislation to give the power plants a tax benefit called a Private Activity Bond if they capture CO2 and sequester it. We have perhaps 300 years worth of coal in the ground. I think the United States can be an energy powerhouse and that is so important for our economic security, but also for our national security. We don’t need to rely on Saudi Arabia or anybody else. We can be an exporter and I think that is exciting.

In Ohio ten years ago, no one would have thought we would be an energy exporting state. We were totally dependent on other states or foreign countries to provide our energy. Now we have two big shale finds and once we build up the infrastructure a little more, we’ll be able to be a net exporter. That lowers the cost for our industry. Ohio will be able to use natural gas to bring back the chemical industry, the steel industry, and all these energy intensive industries. So it really is exciting.

iF: That circles right back to where we started, which is how you get jobs in Ohio. Senator Portman, on behalf of the Jewish Policy Center and the readers of inFOCUS, thank you.