U.S. Treasury Secretary Henry Paulson sat down with Maria Bartiromo for an exclusive interview ahead of a major summit on competitiveness in Washington D.C. Thursday.
Paulson's focus: letting the world know that the U.S. is open to foreign investment.
In a wide-ranging interview (full transcript), Paulson also discussed the recent weakness of the U.S. dollar, Paulson's attempts to get China to be more receptive to U.S. exports, the continuing controversy over Sarbanes-Oxley and immigration reform.
The secretary's focus on foreign direct capital investment in the U.S. is particularly crucial in the wake of reports that fewer initial public offerings are being launched in the U.S.
“For many years, there has been a bipartisan consensus that an open economy is essential to our strength and our economic strength," Paulson told Bartiromo. "Regrettably, we’re seeing signs that this consensus is eroding here and elsewhere in the world.”
Paulson noted that foreign direct investment in the U.S. peaked in 2000 and then declined, failing to keep pace with economic growth. He believes that the “publicity” surrounding the Dubai ports incident caused many investors abroad to question whether America is really friendly to foreign investment.
Paulson says that all foreign investments in the U.S. are carefully vetted and the vast majority have no impact on security whatsoever.
Paulson describes his department’s “long-term project”: working closely with such figures as Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, in engaging countries around the world to open their economies to investment and trade.
Here's Bartiromo's complete interview in three parts.
Paulson says foreign investment in the U.S. peaked in 2000 and hasn’t kept pace with economic growth since then. “We welcome foreign investment and it’s vital to our economic strength going forward,” he says.
However, U.S. corporate taxes are now higher than many parts of the world and the cost of complying with Sarbanes Oxley also drives up the cost of doing business here. “Other countries are learning from our experience,” Paulson says. “They’re opening up. They’re reforming. They’re being very competitive with their taxes.”
China is integrated into the global economy in terms of goods and services, but its currency and financial markets are not yet set by market conditions, Paulson says. “China’s moving toward a market-driven economy and a key part of getting there is going to be to have a currency that reflects economic value and its market determined,” he says.
A strong dollar is “in our national interest,” Paulson says, and he’s advocated policies that will increase confidence in the U.S. economy. Worldwide, he says the U.S. economy remains the “most attractive overall.”
The U.S. has always been open society--open to trade, investment and immigration, Paulson says. He believes that getting immigration right will assure the nation’s future growth and competitiveness.
“The president is very focused on immigration reform for that very reason,” Paulson says. “I think that’s a very high priority of the president and it’s going to be a big bipartisan effort to get immigration reform. I think that will be very important to the competitiveness of our economy long-term,” Paulson says.