Republican senator jeff flake held a town hall in arizona and took questions on various issues including trade, tax reform, Border Security and stability in u. S. Politics. This is just under one hour. [applause] thank you mike. Good morning. This mic does not work very well. [indiscernible] i dont think any of them are working all that well. Ok, all right, we will get it before the event starts today. Senators, obviously a lot going on in washington right now. You have a new book out, conscience of a conservative, a rejection of destructive politics and a return to principle. Lets talk about that. The book echoes a number of comments Barry Goldwater made it in a similar book years ago. Maybe you could talk little bit about that book . Thank you. Barry goldwater [no audio] [protesters yelling] i just want to know, are you in favor of the environment or not we will have the opportunity for questions from the audience later. [indiscernible] i mean, i am just trying to find out. You dont support Climate Change . I apologize for that. Kinds no worry. It may not be the first or the last one today, i am sure. Book,n talking about the Barry Goldwater in 1960 felt like the conservative moment in the movement in the Republican Party had been compromised by the new deal and he felt like there had to be a manifesto put out for conservatives to follow. So he wrote conscience of a conservative at that time. This book i wrote is very much an homage to senator goldwater and also because i am concerned about where we are today. I am concerned that the party is going down a populist route, and populism is called populism for a reason. It may be popular, you may win elections that way but it is not a governing philosophy. I am concerned by this intense nationalism and antifree trade and arizona benefits significantly from free trade. Nafta has been good for arizona, obviously it needs to be modernized but it needs to be continued, not abandoned. I am concerned that the party might go there, and the, half of the book is on what the subtitle is, the rejection of destructive politics. I am a conservative i am just not in a bad mood about it [laughter] sen. Flake i think it is something that is an affirmative, positive philosophy. Not built on anger or hatred. I am concerned about where the party might be going there as well, if we follow the lead of some individuals who would give in to that kind of destructive behavior. So i would like to address that quite a bit in the book. It talks about going back growing up where i did, so snowflake is the center of the universe, [laughter] sen. Flake i am sure the eclipse will be most prominent there as well i grew up with a great example, my father, being the mayor of the city, doing Public Service, Judicial Advisory Council for this date, uncle that were in politics, jake flake from snowflake who was a beloved speaker of the house, and also another who was eager of the house and state president. They found ways to work across the aisle while governing in arizona and do it in a collegial manner, looking for compromise. And i feel like we are losing some of that in this shirts versus skins, winner take all, winners and losers type of environment. It is a beak concern of mine and i address it in the book. It is a big concern of mine and i address it in the book. Mike you address it very well. There is a quote in the atlantic a while back where it says maybe you were too nice to be a senator you certainly have a Stellar Service record and it shows that you can be nice and be a conservative too. Sen. Flake i hope so mike so try not to be a grumpy conservative, we appreciate it. You have been a strong supporter of free trade, please talk about that. It is very important to the southern part of the United States and to the whole country. Clearly some of your directions have broken with the administration and are different, can you talk about that . Sen. Flake overall, trade has been extremely important for the state of arizona. We are a border state and we take advantage of that. Well have 19 billion in trade with mexico, last year. That is something we should be proud of and seeks to expand, and i am proud of the chamber of commerce, all of the folks who have pushed this. The people of arizona understand, i think, better than others days, the valley and importance of trade. In this country we are just 5 of the world population, less than 5 , less than 20 of the worlds economic output and shrinking, not because of our economy shrinking but because the developing world is growing faster. We cannot grow economically, we cannot have a better standard of living or quality of life if we shun trade and if we build barriers to trade. So i am very concerned about where we are going, the rejection of the Transpacific Partnership or the tpp which was a big mistake which will haunt us for a long time. As we speak, the other parties to the tpp, the other 11 countries are seeking to do deals amongst themselves and they will leave us behind. The International Supply chains are set, once they are set it is tough to break back in. We all know how that works. I am concerned not only on the economic front but also on the geopolitical front as well, rejecting the agreement means particularly for those countries in southeast asia, we want them to be in our trade orbit, not just in chinas. We are giving them no option, and they are looking elsewhere for trade partnerships. We have to get away from the idea that we are the only game in town, we are not. We can harness free trade, make it to our benefit as it has been over the past couple of decades, several decades. But if we reject this trade agreement, the administration has said they want to go forward with bilateral trade agreement. Great do them bilateral trade agreements usually grow up to be multilateral trade agreements in this day and age, but we cannot reject multilateral trade agreements. Prior to nafta, our total trade with mexico was between 50 billion and 60 billion per year, 25 years ago. Now, it is over 500 billion per year. The administration seems to fixate on the trade deficit we have of about 50 billion. Well, take it if you are trading nearly 600 billion with a trade deficit, particularly when it has to do with the energy sector, it is not as detrimental as some people paint it as. We need to move forward from this rhetoric from the pet the president s campaign which was to reject nafta and has evolved to lets renegotiate it. I hope it means let us modernize it, let us make it better and stronger for all three countries involved. The reason for negotiation, moving forward, i am encouraged as are my colleagues who want free trade. Mike you spoke out about that pretty well in your book. If we create a vacuum, someone will be waiting there to fill it. Sen. Flake to that point, just after the election i was down in mexicos 80, a preplanned trip the trip took on more urgency after the election. The mexican senate, while i was down there, was working on the tpp that we had just rejected. Their efforts were moot in that regard but at the same time the russian and chinese president s were both in southern america telling these countries that would have been part of the tpp that we are here. It says something about us being left behind if we do not aggressively look for these trade agreements. Mike great, thank you. Let us talk about something that is closer to home. You grew up in a ranching family in arizona, so you know very well that water is important and is the lifeblood of arizona. You sit on the committee for energy, and we appreciate your support for srp there we are talk about your efforts to preserve what are in arizona . Sen. Flake i appreciate the question, thank you for all that you do there. It has been wonderful to fly over Northern Arizona when i fly from back east and a. C. L. Of the when i fly from back east and ice he all of the greenery i see all of the greenery. When i get over to my parents house and our ranch, i always see myself on a horse, writing riding mile after mile after mile. I never remember it being as green as it is right now, it is gorgeous, and we are benefiting from a wet monsoon. Having said that, in the winter last year, particularly in the sierra nevada, there was a drought issue for arizona. Reprieveven a little and theard to lake mead water there. Water is the lifeblood of arizona. Arizona has planned very well, better than other western states because of the foresight of those who came before us. The people i mentioned, who worked on the ground water code, the republicans and democrats who came together in the 1980s and required eight 100 year supply of water for development to happen. We are in better shape here in arizona and the key is to make sure that kind of planning continues. Which is why it has been great to work with senator mccain and other members of the delegation is it with the governor and his water advisers and they what are the priorities for arizona . We did this for arizona a couple of years ago, and my efforts and senator mccains in particular have been in tandem with arizonas priorities, and we try to make sure that voluntary arrangement to leave water behind the dam in lake mead by Arizona Water users would be honored by the federal government. To make sure the water did not disappear down some canal in california. They have a bigger delegation than we have. [laughter] sen. Flake so we are always concerned about that. We got a agreement from the department of interior to make sure the voluntary water arrangements would be cast in stone or honored. That was done in an appropriation bill and we will have to do the same thing again this year, but i believe we can do it. We have to make sure that one, the Colorado River that we have a Drought Contingency Plan that involves a lot of other water users obviously. And other states, so, these are important things. Just as important is to make sure that every drop of water that falls on the state is captured and we make use it make use of it. Srp has done a lot of work on this project, nature conservancy, showing us that as long as we have a watershed, with traditionally the Ponderosa Pine forest in the north, they are about 20 to 50 trees or acre, they were, now they are around 200 on average. In the a lot of straws ground. For fires. Fuel course of about 16 about 20 oflost our northern forests. It has terrible consequences in terms of this watershed that is so important to arizona. And srp obviously knows a lot about that. When we have the sediment falling into the reservoirs it has costs to municipalities and others. These are the things you are working on a lot . Mike thank you, you cannot talk about water without talking about the watershed and the conditions, the effect that the fires have been causing it with respect to water quality. I appreciate all of your efforts on that. You cannot have a successful, you cannot manage a successful watershed control without having a process that is more developed than what we have right now. That threat, we have a lot of sen. Flake thats right. We have a lot of force out there we have a lot of forests out there and there is no way to manage it, they need to partner with our industry, and the problem was prior to the previous fire, the industry was gone. Growing up, we always had a paper mill, we had timber industries, a lot of activity in the forest in terms of reducing the fuel load. But that all went, and that was partly the reason that the fire was so devastating. We knew we had to get private industry back after that fire. We started these stewardship contracts. It worked well with the administration. We were able to bring it back about 135 Million Dollars to the industry. The srps were involved with the other uses fornd products. St the difficulty has been to get the federal bureaucracy to move quick enough to prep this acreage. We have a lot of acreage ready now, the problem is just getting it prepped and ready for private industry to go back in. It has been an ongoing process that senator mccain of myself work on a lot. We tend to Work Together on that to have better leverage. We meet with chief tidwell of the Forest Service frequently in washington to make sure they are prioritizing arizona. Weve had some good results. We have an initiative. We have about 500,000 acres ready to go. We have had some problems with the contractor but we are working through that. Hopefully this year we will do as much as 50,000 acres and if we can continue at that pace, we will actually make some progress. Mike we appreciate your support on that issue. Lets talk about tax reform. It takes a lot of leadership and commitment to get a piece of legislation through in an environment like today. Can you talk about your direction here . Sen. Flake we have got to lower our rate if we want to be competitive globally. We talked about the importance of trade, but if we want to be competitive globally, we have got to have a lower tax rate. That is priority one. Every proposal we have seen has lowered the corporate rate. I am pleased that the houses abandoning its efforts on the border adjustment tax. I think anything that smacks of a tariff is not good in this environment. We should not be putting up new barriers to trade. We are moving away from that. That is a good thing. I know secretary mnuchin has been calling senators. It looks as if the administration will be pushing for traditional lowertherate, broadenthebase kind of reform. Woulds certainly what i like to see. Doubt. Heavy lift, no they come and they lobby hard. It is not going to be easy by any stretch but i think when you compare to health care, it is different. Health care is personal to individuals and families in a way that tax reform is not. Tax reform, like i said, it will no doubt be tough but we are got to do it. We in Congress Need a victory here. When you look at what it has done, the economy, hiring, the unemployment rate, i think it is baked in that we are going to do tax reform and if we do not come through, it is going to be a big blow to the economy. We are feeling the pressure on this. Mike you mentioned health care. Lets talk about that. Clearly, there has been a lot of controversy over the strategy replacing affordable care. Talk about your direction and path forward. Sen. Flake this morning in arizona, about 200,000 families or individuals woke up without health insurance. They will have paid the fine to the federal government. More than 183,000 people will have paid the fine but they cannot afford the insurance. So they paid the fine and still do not have any entrance. You have an even greater number that has insurance on the exchange, the obamacare exchange, but nobody can afford to use it. When i go to the gym in the morning, like i did this morning, inevitably on the treadmill next to me somebody will come up in give me their obamacare horror story about how they had insurance and lost it. [chuckling] sen. Flake or, heres what their deductible is. I have a friend who said he is paying 1500 in premiums every month. When you totaled the deductibles for his family, it goes to nearly and combined with a premium he pays more than 30,000 outofpocket before the first insurance dollar kicks in. That is just not a situation that can continue. Looking out in his room, im sure many of you have similar issues. Small business in particular is hit hard. Those of you who i mean 70 of arizonas still covered by traditional employer insurance for Small Businesses and contractors are really hit hard. Arizona has that issue. We are kind of ground zero for the failure of the exchange. 14 of 15 counties have one insurer. In every county in arizona, the average premium for a family of four is more costly than their mortgage. In a couple of counties, it is double the cost for their mortgage. That is not sustainable. It is really not. And arizona is obviously an expansion states of more than 28 of the population is covered by our version of medicaid. In some counties, it is up over 60 . So, that is important to her to arizona as well, and how we deal with that. Sustainable. Be always been,has pull the rug out from under those people who have insurance now. That is what obamacare did in a big way. A lot of people lost their insurance when obamacare came along. We do not want to repeat that. Those are picked up insurance on the exchange, you cannot pull the rug on the medicare expansion. You cant pull the rug out from them either. You have to make that system sustainable. Dont take insurance away from people 11 now and make sure the system we have is sustainable. When you look at the medicaid expansion, some of it is medical inflation plus one or two, depending on the population. We have to find way to make that sustainable for the longterm. I wouldve hoped we could have kept the reform effort alive. We were not able to. But, i hope we can. Senator mccain has pushed for it over and over his entire career, get back to regular order. Lets put this back in the health committee. Have them work out a fix. That is where we are now. Mike this does not seem to be an environment where compromise and regular order prevail very easily. How do we get there from here . Sen. Flake we dont have a choice. That is what i was talking about in the book. The biggest by far is our looming debt and deficit. We have a debt of 20 trillion dollars. We have a deficit that is about six hundred billion dollars now. Over the next decade, we will get back over 1 trillion a year. That is not sustainable. At some point i fear the Financial Markets will wake up one morning and they will have already decided were not just a good bet. When that happens, it takes decades, generations, to grow out of it. Other countries japan, greece, others are finding that out. I do not want to be in that situation. I want to fix this kind of thing before we get there and you can only do that if you work across the aisle. [chuckling] sen. Flake it happened when republicans, democrats, sat down together and said lets share the Political Risk because one party, when that Party Controls both chambers in the white house whether it is republican as it is now or democrat, that party will never take the chance because midterm elections are never more than two years away and the party will never do on its own and so i think with this vitriol we have in this inability to compromise, it is in my view, as a conservative, it is