While many observers assume that the battle to replace retiring U.S. Sen. Herb Kohl this November will eventually come down to Tommy vs. Tammy, Eric Hovde is not backing down from the challenge posed by those two longtime Wisconsin pols.
The Republican businessman declared his candidacy for the soon-to-be-open seat earlier this month, citing a government that was “broken” and “addicted to spending.” Fiscal discipline is a familiar talking point these days, but Hovde, a former financial advisor and the current CEO of Hovde Properties, LLC, believes he is more than qualified to lead the charge.
Not only does he have the usual sharp words for big government, he’s also taking on big business, and the crony capitalism he says prevails on Wall Street. In September 2008, for example, he wrote a Washington Post op-ed excoriating Wall Street insiders for their role in the financial meltdown.
We spoke with Hovde recently about his campaign, how his business experience qualifies him for the Senate, and what he would do to address the country’s spiraling national debt.
You have said that the economic challenges facing America amount to a moral crisis. Could you expand on that?
What I mean by that is it is morally and ethically wrong what we are doing to our future generations. Our Founding Fathers wrote extensively about this, particularly Thomas Jefferson, and he has a long, beautiful quote. It says, “Then I say the earth belongs to each of these generations during its course, fully and in its own right. The second generation receives it clear of the debts and encumbrance of the first, the third of the second, and so on. For if the first could charge it with debt, then the earth would belong to the dead and not to the living generation. Then, no generation can contract debts greater than may be paid during the course of its own existence.”
So, to summarize that, what we are doing is we are destroying the livelihoods of our kids and grandkids, and that is a moral crisis, a moral mistake, because if we can’t live within our means, we’re setting up our next generation for failure, and it’s profoundly sad to me, because our parents’ generation left us better off than they were left. Their parents’ generation left them better off, and here, because we can’t control our spending and live within our means, we’re harming our kids and grandkids, and that’s why I said it’s a moral crisis.
As a businessman you obviously have some experience with living within your means. So the next question is, how do you think your business experience helps you as a candidate, and how would it help you as a senator?
Well, I’ll say it this way. If I don’t adhere to a budget in my business, I’m going to be out of business very quickly. If I don’t know how to manage my business well, and stop waste and fraud and know how to manage personnel and a top line and a bottom line, I’m going to be out of business quickly. Sadly, if you look at what’s happened, because we’ve had a series of career politicians that never have had to do that and have their financial livelihood at stake, we have career politicians that simply raise your taxes if they don’t have to adhere to a budget. So now we have the highest corporate tax rates in the world now that Japan dropped theirs, and at the same time we now have 100% debt-to-GDP and we’re borrowing almost 40 cents on every dollar we spend. So as a private-sector businessperson, that’s appalling. If I managed myself that way, I wouldn’t last a month.
You’ve spoken a lot about corruption on Wall Street and the size of the national debt, and those are big cornerstones of your campaign. Specifically, though, if you were elected, what would you do to attack these problems?
Well, immediately, I would propose taking the budget back to 2006 levels, and then I would start a ground-up analysis on every single department. We have 1,300 departments in the federal government; so many of them overlap each other and actually compete against each other.
Why do I say go back to the 2006 baseline budget? Real simple. That is right before all this crazy spending went off the charts, before the financial collapse. So I would immediately focus on the budgetary issues, and I think for once, this federal government, just like any big business that becomes too chaotic and too cumbersome and not properly managed, you need a bottom-up analysis across the board of every single department, how the money’s being spent, what’s the purpose of the agency, to really attack this. So that’s on one hand.
On the other hand, we have a government that is massively regulating the whole system, and not using the free markets to work. I’ll give you an example. Dodd-Frank – a disastrous piece of legislation. There are some pieces that are okay in it, but in large part, a horrible piece of legislation. All they did was embed “too big to fail” into the system. Okay, one of our problems with the financial crisis is we had entities that were too big to fail. You cannot have free market capitalism without failure. … There are so many things that could have been done that would have reduced the financial risk, held Wall Street a lot more accountable, instead of creating an over 1,000-page monstrosity that frankly just embeds the security and power for these big Wall Street banks. At the same time, by the way, you’ve got 420 community banks that have already failed that didn’t create the problem.
So you do think Wall Street bears responsibility, too, and it just has too cozy a relationship with government.
Oh, absolutely. I call it crony capitalism, where the well connected and the people who have money they can pour into congressmen’s and senators’ reelection campaigns get the laws written for themselves.
What other issues are driving your campaign right now?
I think our tax code is a disaster. Most Americans don’t understand tax policy; most Americans can’t fill out their own tax forms. Small and medium-sized businesses are taxed typically at the highest corporate tax rate, and as I said, we have the highest corporate tax rate in the world now that Japan dropped theirs. We’ve got a higher tax rate than China, than France, than Sweden. So here we have our small and medium-sized businesses getting taxed at the highest rate in the world, and yet big mega-businesses that have their corporate welfare loopholes built into the system are taxed at half that.
So my belief is we’ve got to scrap the tax code and tax system. Every American should be able to understand and fill out their own taxes. There should be very few deductions, and tax rates should come down meaningfully. And that way you make the tax code fair for everybody, everybody understands it, and it’s not a system that’s designed for politicians to get contributions and for big business to create their own form of corporate welfare.
In the primary you’ll be facing Tommy Thompson, and if you win that, you’ll likely face Tammy Baldwin, both of whom are considered strong candidates with high name recognition. How can you hope to gain a foothold in this race?
By working hard and getting out there and sharing my message. And frankly, you made the comment that they’re both very strong candidates. I don’t think so at all. I have not heard anybody say, “Oh, I’m excited about Tommy or Tammy.” I haven’t heard one person. In fact, I think the American public are tired of career politicians. I think they’re tired of the whole political game. Albert Einstein had that famous quote, and I’ve used this a few times, “What is the definition of insanity? Doing the same thing over and over again and expecting different results.” Well, that’s what we’re doing by electing these career politicians over and over again.
Of course, everyone tries to sound like a populist and tries to sound like they’re against corruption on Wall Street. Do you think you can get that message out and seem genuine to people?
I hope so. I’ve been talking about it for a decade. Television interviews that go back, that you can pull up online. I wrote an op-ed piece for The Washington Post back in 2008 calling out the culprits. This has been a message of mine for a long time, and I think other people have finally figured it out and they’re tired of it. So, look, I wish I could go on with a nice private-sector life and that the economy was doing well and we didn’t have these problems. But the simple fact is, I’ve watched our economic system and political system become corrupted over the last 15-plus years, and as I said, you can spend all your time yelling at the television set and getting madder, or you can get involved and try to make a difference.
Anything else you’d like to add?
The only other thing I would say is to people in the business community, if you’ve never thought of running for office, but you’re like me, upset about where this country is going, please get involved. We need you. This country needs people who have business and economic skills to turn this country around.
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