Indiana Senator Mike Braun joined me this morning to discuss why liability protection and tort reform are central to economic recovery:

Audio:

Transcript:

HH: I’m joined by United States Senator Michael Braun from the great state of Indiana. Good morning, Senator. It’s great to have you. I hope you and your family are well.

MB: Doing fine, Hugh. And good to be on your show again.

HH: The big headline this morning, Senator, that I began with was from the Wall Street Journal – global stocks follow U.S. higher on Coronavirus vaccine hopes. It’s about Moderna, of course, and their great news on a vaccine and the hundred-plus other companies working on a vaccine. Maybe the economy will be back sooner than we thought. But I think the Senate has to resolve the liability for businesses, schools and not for profits before we really reopen the economy. Do you agree?

MB: You know, I think that what we saw with the stock market is not only on the vaccine, but the reopening of the economy, which has been going on kind of behind the scenes in places where people weren’t buying the one size fits all general lockdown. But when it comes to how the vaccine and the entrepreneurial kind of efforts behind it are taking place, I knew that that was going to be a driver back when I spoke to a CEO from one of the pharmaceutical companies in Indiana. And he told me that this whole focus on testing, which has dominated, and when you’re stating the obvious, that tells me that you need to go a little deeper into the argument. He said they only had the genome four months ago, that he’s never seen the flurry of activity within his industry not only on the vaccine, but therapeutics and testing. I think all of that is starting to be understood by the general public, which gets it better than most people think, and that’s what’s driving the current optimism. All of this knowing that this is a tricky virus, and that there are going to be some ups and downs along the way. But you know, I think the market is probably feeling about the way the average American is on this one. We knew a one size fits all was not appropriate. Upstate New York was different from New York City. County by county, state by state across this country, I think that has been kind of the feeling on the street. A lot of that is starting to be ingrained in how people are looking at this point forward.

HH: I also believe, Senator, I’d like to get your input on this. The American people have intuited that there are categories of risk, and that one of the categories of risk involves overlapping Venn diagrams of age, obesity, heart disease. Thank God children are generally, there have been a few cases, 100 cases or so, where the virus has attacked children with an inflammatory syndrome.

MB: Right.

HH: But thank goodness it hasn’t, but that they have intuited who is at risk and who is not, and they are not willing to accept shutdown if they do not believe that there is risk. Is that your agreement? Do you agree with me on how the American people are assessing this?

MB: Let’s talk about risk in general. As a Main Street entrepreneur, that ability to size up risk and take it fairly often while you’re mitigating it is a differentiator between so many businesses that get into a rut, don’t keep moving into the future in a way, because Hugh, even if things are going well today in a business, you know that there’s going to be risk along the way, and things are going to change. And you’ve got to be adapting to it. So yes, I think again, Main Street has figured that out. They know that we maybe should have worked harder on protecting the most vulnerable, nursing homes, the caregivers out there in the trenches. But it definitely didn’t make sense to take the approach we’ve really used to this point. And I think that’s welling up. So yes, risk is something that is part of life.

HH: Now risk mitigation that the Senate is involved in, and Leader McConnell has repeatedly said, is we can’t expect businesses to go forth and reopen if the Plaintiff’s lawyer is going to be the first person through the door. Do you agree with Leader McConnell on this?

MB: I do, but that comes within a tricky dynamic. And the bargaining chip is $3.3 trillion. So when I got here, hundreds of billions were the big denomination. Now, it’s different. So we, when we’re talking about doing what every small, medium and large business is talking about, worried about in trying to be entrepreneurial, agile and getting the economy started, it is a nation of frivolous lawsuits. But that won’t come across the finish line unless there’s a hefty price tag. Pelosi’s starting at $3.3 trillion. Many of us that are fiscal conservatives are going to have trouble paying any price for something that should be something we do anyway, so we’ll have to see how that plays out.

HH: Now the cash for cannabis bill is stupid, and I think everybody looked at the Pelosi bill, I think it just hurt every Democrat in the country, because it’s such a stupid bill to spend that much money on stupid things like cannabis. However, some states have been badly crippled by the loss of income tax, sales tax, property tax. People just aren’t paying their taxes. They’re on the bring because of shutdown. And I understand some aid for some states might be useful. Is there a deal there, because I must tell you, you probably have heard this, Senator Braun, my friends in the restaurant industry say not only are they down on the floor and bleeding out, they can’t get up until they get tort reform protection from plaintiffs lawyers. They can’t open their door. It’s not possible.

MB: So the way I think it’s going to come down is if the price tag is too high that the Democrats are going to try to extract, and they’re not willing to do something that targets state aid in a way that’s independent of the fiscal problems that some of the states like California, New York, Illinois, New Jersey that don’t live their life like Indiana does with rainy day funds and balanced budgets, that’s a possibility. In other words, it would have to account for what states in general need, maybe putting more flexibility into what we’ve given them already. But if they’re wanting, which I think it was $1 trillion of that $3.3 trillion, it’s going to be hard in the context of you’re going to get a lot of moderate Republicans starting to squirm there where generally it’s only a few of us that are true fiscal conservatives that make the hard votes and toe the line on that issue.

HH: Well, I understand that, but I want to speak for the small restauranteur out there, and I know you’ve heard from them.

MB: Yeah.

HH: They absolutely have got to have liability protection or their businesses are gone. So the bargain chip the Democrats have is a big bargaining chip, isn’t it? I mean, the reality check is America is crushed if we don’t get plaintiffs lawyers protection, because they are vultures.

MB: In general, everything you say, because I’ve had a business for 37 years, is the case. And we started little, got locations in 40 states. It’s bad in every state. The one kind of mitigator there would be that I believe most of the red states will put liability protection in place. So even if the feds don’t do it, I’m nearly certain that’ll happen in a lot of the states, and that could be a differentiator for people again to see and hold your state governments accountable. Why wouldn’t New York, why wouldn’t California, why wouldn’t Illinois do it? I’m feeling real good that a state like Indiana will do that even if the feds don’t.

HH: Oh, let me push back on that argument, though, Senator.

MB: Okay.

HH: J.C. Penny went bankrupt yesterday. They may be a red state company, but they’ve got a lot of stores in blue states that all just lost their employees. A restaurant chain may be in 50 different states, and that maybe have been founded in Georgia and have got restaurants all over the place. But if they close their stores in blue states, they’ll go bankrupt no matter how red state oriented they are. I don’t think it’s a red state/blue state problem. I think it’s a problem of businesses which are national receiving a national protection, not a state by state protection, but preemption on this issue or they won’t get back in the game in the red states.

MB: No, I’d agree with it. The larger the companies are the broader you are geographically, that wouldn’t help them. I think it will for Main Street entrepreneurs, smaller ones in red states. But it’s going to come down to that dynamic – how much are we willing to pay for it through the wish list of everything else Pelosi wants, because there’s no argument about it. We need to do something, and it needs to be done more broadly like loser pays, some of the other things that would reform frivolous lawsuits, because it is a significant cost on every business’ P&L, and it’s become ingrained into the way you do business. It’s kind of standard operating procedure. And yes, this is just bringing it to the surface, and I hope we can get it done. I hope Pelosi relents on some of this other stuff, and maybe we can get it across the finish line.

HH: Yeah, it’s just so stupid. Is there any ability to give states the authority to use a bankruptcy code chapter, because they really do need to discharge some of these crazy contracts with their retiree population?

MB: Well, Hugh, here’s how it’s going to play out in my mind. If the smart restart doesn’t occur and broadly across the country, there are going to be bankruptcies that start cascading in a way that we’ve never seen before. And that’ll include state and local governments. And sadly, that’ll be the way this thing works if we stick with this kind of plan of locking down one size fits all too much further into the future.

HH: I agree with you, Senator Braun. Good luck in getting people to talk common sense up there dealing with Speaker Pelosi. I don’t know how much the possibility there is of that. Good to talk with you, Senator.

End of interview.