Lower taxes, simpler code can spark economic growth
By John Larrabee
Lower taxes, simpler code can spark economic growth
PBN PHOTO/BRIAN MCDONALD
BRINGING DOWN THE HOUSE: Michael Riley, the Republican challenger for the seat held by U.S. Rep. James R. Langevin, says that Congress could benefit from members with no previous political experience, such as himself.
PBN: Your campaign literature highlights your background as a Wall Street broker and investment expert. How will that background help you be a good congressman?
RILEY: I did work on Wall Street, as a trader. I’ve never been a broker. If you say to a trader, you’re a broker; he takes that as an insult, because a broker gets money no matter what. If he tells his client to buy something and it goes down, the broker still gets money. If it goes up, he still gets money. A trader only makes money if he buys it low and sells it high.
Trading involves instincts and overall understanding of what’s going on, and it requires paying a lot of attention to a lot of different moving parts. You have to assimilate a lot of different pieces of information coming in all at once. I had to make sense of it and then make decisions.
PBN: How did you come to live in Rhode Island?
RILEY: I was in the World Trade Center attacks. I was commuting through the [city], as I often did, on that morning, and the plane had apparently just hit. … I ended up standing 100 feet from the Trade Center towers when they collapsed. I got caught in the rubble with a friend. I didn’t get home for a day.
I decided along with my partners to sell my business. I sold it for a fraction of its worth … and then I came up to Rhode Island and visited some friends. They showed us property around the state, and I decided to move my family up here in early 2003. … In 2005 I started a new business here in Rhode Island. I had never run a hedge fund before. I started that here.
PBN: From reviewing your campaign website, I see you’ve never held an elective office before. Why are you aiming for a congressional seat, rather than, say, the state legislature?
RILEY: You’re saying I shouldn’t start with Congress, that I should be a lifetime officeholder before I go for Congress. I’m not very fond of that. It hasn’t produced good results. … I think we should have people like the original founders thought, people that come out of the private sector. They bring different backgrounds and different tools and different assets to the table. They don’t go in there because they know Roberts Rules of Order; they go in there because they know how to get something done. That’s what we need in Congress.
PBN: You have The Riley Plan for fixing the economy. A freshman congressman can only do so much to change things. Does your plan involve working with others, or do you feel that going your own way, no matter the outcome, is the best way to serve the people in your district?
RILEY: People often ask that, in good spirit, but it’s actually kind of a trick question: What does any one of 435 people, where you have to have a majority vote, actually do? They don’t convince these other 218 people, and nobody thinks that.
If I were in Congress, for example, whatever the subject were, I would look to the people who knew the most about that subject, and who could help the process and the debate. Remember, I’m a trader, and not only a trader, but I’ve started other businesses as well. What you do is you come to agreements all along the way; you compromise all along the way. When you’re starting businesses, when you’re making trades, there are two sides that have to come to an agreement. I have no problem doing that.
I don’t care what side they’re on, but I do have a specific policy and a viewpoint. I’m a free-market capitalist, and if the other side is a socialist or not a free-market capitalist, we’re unlikely to come to an agreement. … Social Security and Medicare are part of The Riley Plan. I’ve talked about how much federal land we have, with all the various drilling rights and mining rights that are part of that, and how the potential dollars are assets of the American people that could be placed into the government to help pay for Social Security and Medicare or anything else. That’s not a tax. Everybody else who talks about supporting Medicare and Social Security talks about a tax.
PBN: When economic planners talk about fixing Rhode Island’s jobs crisis, they usually say their goal is boosting the “knowledge economy.” But bringing high-tech or bio-tech companies to the state won’t help most of the state’s unemployed, who don’t have the skills for those jobs. What can Congress do to help idle blue-collar workers?
RILEY: Blue-collar workers have to do it themselves. On Wall Street 95 percent of our people on the trading floor were put out of business. What did they do? Did they look for the state to come down and hand them a manufacturing job or a new job for traders? No, they figured out where they had to be and what they had to do to work, and they did that. If you’re a blue-collar worker and you need to find some other career, there are plenty of places. We’ve already devoted a lot of money to job retraining. And there are companies that will retrain you as well. It really is about the individual getting up and getting back on his feet and getting something done.
PBN: One of your ads makes the claim that the incumbent is responsible for high prices at the gas pump. What can a congressman – or any elected official – do to reduce prices that are set on the world market?
RILEY: He’s one of several congressmen who are responsible. If you want lower gas prices, you have to create more supply, and the United States has a tremendous amount of supply that we’re not touching. I don’t know what that reason is, but I think it has something to do with the fact that environmentalists are weighing very heavily over decisions that are being made in the White House and in Congress. I think we should be developing our fossil fuel resources. I think we should be selling drilling rights.
We should also be developing alternative fuels, and we are, wind, solar, whatever. But I don’t think they should be subsidized by the government. There is already a tremendous incentive in the marketplace for the guy who finds a way to harness energy that comes from wind. You don’t think he’s going to get rich?
PBN: The partisan gridlock in Washington has become an issue in this year’s election. Do you think that gridlock is a problem?
RILEY: Gridlock’s a problem when there are really pressing issues in the forefront. Right now, with the economic conditions we have, and the fragile nature of what’s happening in the world, gridlock is horrible. If everything were OK economically, and gridlock was over something like a social issue, it wouldn’t matter, but gridlock now is horrible.
Part of the reason, I believe, is that in 2008 everyone agreed that we were in the worst economic crisis since the 1920s, and what did we do with that time? We spent two years jamming a health bill down the other party’s throat, without a single vote. That’s not bipartisan. That’s not working together.
Not only did it cause gridlock, it ignored the worst economic crisis in history, so now we have the worst recovery in U.S. history. So this time gridlock was really bad, and further gridlock may be critically bad
PBN: You’ve made taxes an issue in your campaign. Given the size of the budget deficits at both the state and federal levels, which approach do you advocate for dealing with them – increasing revenue, cutting spending or a combination of the two – and why?
RILEY: It’s interesting that you ask a question in such a way. I don’t know why the choice of cutting spending and cutting taxes wasn’t given. There are a lot of us who believe – I’m one of them – that it’s very simple and clear that if you cut my taxes as an individual I’ll have more money in my pocket, and I’ll spend more in the economy and the private sector will grow, creating more revenue. So a cut in taxes can actually increase revenue. … I talk about lowering taxes because I think it’s good to have more money in the economy in the private sector and less with the government.
Secondly, if we simplify the tax code, we’ll have less cheating by politicians trying to give somebody a favor in the tax code. Down in Washington, D.C., that’s the name of the game. A lot of money circulates through you doing favors in the tax code.
Third thing is, we lose $400 billion to $500 billion a year that we don’t collect because the tax code is so complicated.
Now the last part: There was a comment when the Republicans were debating over the last year that I really disagree with. They had a bunch of Republicans on stage. They asked them, if you could get $10 in spending cuts for just $1 in an increased tax, would you accept that deal? All the Republicans refused that deal, and I think that’s just crazy. If you can get $10 in cuts because you accede you can raise taxes by $1, I’d do that in a heartbeat. That’s the difference between somebody who’ll compromise and somebody who won’t.
PBN: One issue you’ve focused on is regulation of the fishing industry. Are there problems with the national regulation of the industry? Do you feel that the fishing industry is being hurt by current and proposed regulations?
RILEY: I know a lot of fishermen down in Galilee and they feel they’ve been totally put out of business though regulation by the government. They’re very concerned about intrusion by government through NOAA (National Oceanic and Atmospheric Administration), through the various regulations they have happened – fish catch share and allocations – and they’re very disturbed by the intrusion of government. I believe them. I believe that government is out to get them out of business. I don’t know why they want to do that, I don’t know the reasoning behind that, but I suspect again it has to do with environmentalism. I suspect again it is actually a movement to change industry on the basis of some sort of social belief.
PBN: The argument is that the stock has to be protected so there will be fishing tomorrow.
RILEY: Don’t you think they’ll be fishing tomorrow? You think our 15 fishermen down there are affecting [the fish stock]? •
Join PBN and two panels of successful female executives, business owners and entrepreneurs as we delve into what women should do to advance their careers, and become leaders in the corporate world and their own enterprises.
PBN's annual Book of Lists has been an essential resource for the local business community for almost 30 years. The Book of Lists features a wealth of company rankings from a variety of fields and industries, including banking, health care, real estate, law, hospitality, education, not-for-profits, technology and many more.