With a steady stream of attack ads, Democrat Bryan Caforio has been giving Steve Knight the business for weeks now, looking to oust the incumbent Republican from California’s 25th Congressional District seat.
But Friday, the pair merely talked business, as they faced off in a debate at the Valencia Country Club co-sponsored by the Santa Clarita Valley Chamber of Commerce and the Southland Regional Association of Realtors.
They covered a range of business-related issues, from corporate tax rates, to ways of supporting small-business growth, to Social Security, to the $15 minimum wage — in what Knight estimated was the pair’s 29th debate, in one form or another, in this hotly contested race.
“We have a system in Washington that is broken, we have people being taken advantage of by a bunch of Washington politicians … only looking out for the biggest banks and the biggest corporations,” Caforio told the 100 or so people who gathered to watch the morning mano-a-mano.
“They’re forgetting that 90 percent of our businesses are small businesses.”
One major way to address that, Caforio said, would be to change the corporate tax code to “tax companies based on their sales in the U.S. sales,” regardless of where those companies might be headquartered or produce their products.
Saying, “Our tax system is broken,” he indicated that such a change could curtail U.S. companies – such as Apple, though he did not mention Apple by name – from maintaining tax havens in countries such as Ireland. His proposal is a reverse of the current U.S. code, where a company’s taxable earnings are based on where value is created.
In the end, Caforio said, “If we transition to this, we will lower the corporate tax rate and be giving domestic companies an advantage.”
“This benefits our small businesses,” he said.
Knight, meanwhile, said simply, “We have to bring down our corporate taxes so we can be more competitive” and overall “streamline the tax code.”
He also said he supports a reduction in the capital-gains tax because it would mean “more access to capital” for businesses large and small.
“I will not vote for stuff that puts us at a competitive disadvantage,” Knight said.
On Social Security – a favored front in Caforio’s attacks, as he frequently cites Knight once saying, “I think that Social Security was a bad idea” – both candidates spoke of the need to reform a system in dire danger of running out money, by some estimates around 2030.
Caforio reiterated his opposition to the cap on Social Security payroll taxes, which now puts any income above $118,500 outside of FICA tax range. He wants no cap, a change he said would affect about seven percent of the population but go a long way toward addressing Social Security’s galloping debt.
He said he also would push “to allow the government to negotiate drug prices with drug manufacturers” under various federal health programs.
“These are easy changes we could make if Washington were not beholden to special interests,” Caforio said — adding they would be big steps toward keeping the government’s “sacred promise” to present-day seniors as well as future ones.
Knight – stepping back from his earlier “Social Security was a bad idea” quote – called the program “extremely important.” But, he warned, the program is a big factor in creating a situation where the government will soon spend more on payment of debt than on national defense.
“We have to talk about it (reforms) today,” Knight said. “If we say, ‘Everything will be OK,’ it won’t be. We’ve got to fix these problems.’’
Knight did not get into specifics Friday, but his office released a statement saying, “I believe we must honor the promises we have made to Americans who have and will pay into the system. First, I oppose making changes to benefits for anybody in or near retirement. However, we do need long-term solutions to preserve the program for our children and grandchildren.
“We need a bipartisan approach that focuses on common-sense adjustments, including slowing the growth of benefits for higher earners and modernizing the way benefits are calculated for future beneficiaries to reflect a rapidly changing economy. It is also important to remember that the more well-paying jobs we have, the easier it is for our workers to pay into the system. ‘’
On the $15 minimum wage, Caforio acknowledged it as a fait accompli in California. But he said he supports nationalizing that rate in order to keep the state competitive.
“It would drain jobs from California” if all states were not required to maintain a $15-per-hour rate, he said.
Knight called California’s gradual increase to $15 per hour “a big jump.” He said the rate “has to move, but it has to be commensurate to have the economy move.” And he warned, “If we take it too far, businesses will find a way to eliminate those jobs.”
An example, he said, was the computerized self-checkout at supermarkets and other stores.
“Those are two (lost) jobs – a cashier and a bagger,” he said.
The debate was moderated by John Musella, a Valencia public-relations executive and member of the Chamber of Commerce. Musella stepped in for the originally scheduled moderator, Hunt C. Braly, a member of Knight’s finance team. Braly said he stepped down on Wednesday of his own volition after “the Caforio campaign raised issues” about his presence. “I did not want to allow this to be an issue,” Braly told The Signal on Thursday.