'This Week' Transcript: Economic Roundtable

FRANK: And if all you do is construction, you're providing employment to one sector of the economy, but not others. But, yes, we are telling the city of New Bedford, which I represent, that if we give them money, if we pick up a bigger share of Medicaid through government spending, then we'll lay off firefighters, then we'll lay off police officers and health workers. And I don't see how a tax cut is going to keep firefighters at work in New Bedford.

STEPHANOPOULOS: Mr. Smith, your company depends a lot on -- on a healthy infrastructure in this country. And it does -- we -- estimates I've seen are about a $2.2 trillion gap between what we have and what we need.

SMITH: No question about it. The -- the infrastructure of the country has been underfunded for a long time. It certainly would be a wise thing to -- to invest in all kinds of infrastructure, including advanced electrical grids, or I.T., and electrify the short-haul personal transportation system.

But in -- in our view, after you take care of the folks who have been adversely affected by the economy -- I agree with Chairman Franks on that -- you've got to understand that the reason we've gotten into this problem is because for years the tax code has favored the financial sector to the detriment of the industrial sector. And by industrial sector, I'm talking about big service companies like FedEx, manufacturers, I.T. companies, agriculture, mining.

When interest is deductible, the government is subsidizing speculation and debt, where capital investment is taxed cumulatively -- and if there were one thing that in the tax code that could be changed that I'd recommend to Senator DeMint and Chairman Franks, it would be to allow industrial companies to write off or expense capital investment and software when the investment is made.

STEPHANOPOULOS: That was not included in the president's plan. Do you agree with that?

SCHMIDT: I do. The business community needs action now. There's a sense that things are getting worse. People are saying the March quarter or the June quarter are going to be particularly difficult in business. It's time for government action.

There are plenty of cases where directed spending does help things to happen more quickly. The stimulus package is -- most of the money, actually, goes to reasonably short-term things in education, state relief, various other things that help people in the very short term.

Some combination of all that money has got to get out now to get people going again.

STEPHANOPOULOS: One of the most controversial aspects of this new plan are so-called buy-America provisions. The House bill, I think, requires that iron and steel be bought from the United States. The Senate bill may expand on all of that.

The administration appears to be of two minds. Watch this.

(BEGIN VIDEO CLIP)

BIDEN: I think it's legitimate to have some portions of buy- American in it.

GIBBS: The administration is reviewing that provision. It understands all of the concerns that have been heard not only in this room, but in newspapers produced both up north and down south.

(END VIDEO CLIP)

STEPHANOPOULOS: Hasn't reached a final decision.

FRANK: Looks like one-and-a-half a mind.

STEPHANOPOULOS: One-and-a-half mind. That's sort of -- they're trying to figure out where they're going to be.

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