EDINBURG, Texas (Reuters) - Democratic presidential frontrunner Barack Obama supports multi-lateral trade deals, does not view himself as “protectionist” and does not believe the overall corporate tax rate should rise, one of his top economic advisers said.
However, Austan Goolsbee, a key economic official in the Illinois senator’s inner circle, told Reuters that he believed Obama does want oil and gas companies and private equity firms to pay higher taxes.
“As an overall matter do corporate rates need to go up? No,” Goolsbee said in an interview on Thursday.
“There are many corporations for whom he does think they need to go up,” Goolsbee added. “When he says we need to close all the loopholes for the oil and gas industry, he is saying their corporate taxes need to go up. They’re not paying their fair share.”
As Obama takes a commanding lead over New York Sen. Hillary Clinton in the race for the Democratic nomination, investors are hungry for a clearer picture of how the first-term senator would alter U.S. financial policies if he wins the White House.
Goolsbee, an economics professor at the University of Chicago Graduate School of Business, sketched out Obama’s positions and sought to assuage concerns on Wall Street that he would be less open to global trade than President George W. Bush.
“I don’t think he views himself as a protectionist,” Goolsbee said. He said Obama favored expanding access to global markets through trade deals such as the World Trade Organization’s Doha round so long as labor and environmental standards were in place.
Obama has won labor support for his criticisms of the North American Free Trade Agreement, NAFTA, which he says he wants to amend.
Goolsbee criticized the Bush administration for not enforcing existing trade agreements and bringing too few cases before for the WTO. Such cases would likely rise significantly in an Obama administration, he indicated. China, he said, was one example where a host of violations had been overlooked.
The senator is also “very concerned” about the country’s current account deficit with China and other nations.
“We have major imbalances with many parts of the world,” he said. “This is naturally what happens when you’re running huge deficits and the country doesn’t have a lot of savings. You have to borrow the money from abroad. He’s very concerned about that.”
Obama’s plan to address the situation is based largely on getting people to save. He has proposed an automatic saving mechanism so that workers put money into a retirement account on a regular basis, unless they opt out.
Both Obama and Clinton have emphasized their economic proposal as voters worry about a potential recession.
But Goolsbee declined to comment on the performance of one of the economy’s key stewards, the U.S. Federal Reserve, and its chairman, Ben Bernanke.
“The Fed’s independent for good reason and it’s not the place of presidential candidates or the president to...evaluate how they think the head of the Fed is doing,” Goolsbee said.
He expressed sympathy for the central bank’s job — and personal praise for its leader. “It’s a tough position for it to be in the middle of all this credit turmoil,” he said. “Bernanke himself is a good guy. I know him as an academic. He’s a very nice guy.”
On taxes, Goolsbee said Obama did not want corporate tax rates to rise but would seek to make tax policy more fair.
On an issue that is key for the private equity industry, Goolsbee said Obama believes carried interest should be treated as ordinary income rather than as a capital gain, which is taxed at a lower rate.
“His basic philosophy is stuff that’s a fee ought to be treated as a fee,” he said. “It’s clear that there are at least a fair number of places where they’ve pushed the envelope too far, and the carried interest ought to be counted as ordinary income.”
Dividends should be taxed at the same rate as capital gains, Goolsbee said.
(Editing by Sandra Maler)
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