Transcript: 'This Week' Economic Debate

Mar. 8, 2009 — -- ABC'S "THIS WEEK WITH GEORGE STEPHANOPOULOS"

MARCH 8, 2009

SPEAKERS: GEORGE STEPHANOPOULOS, HOST

SEN. CLAIRE MCCASKILL, D-MO.

SEN. EVAN BAYH, D-IND.

SEN. RICHARD C. SHELBY, R-ALA.

THOMAS DONOHUE, PRESIDENT, U.S. CHAMBER OF COMMERCE [*] (BEGIN VIDEO CLIP)

STEPHANOPOULOS (voice-over): Good morning, and welcome to "ThisWeek."

(UNKNOWN): I don't know how I'm going to pay my mortgage.

STEPHANOPOULOS: Economic shock.

HALL: We've never had four straight months of job loss in excessof 600,000.

(UNKNOWN): We don't have any feeling whether there's one moreshoe to fall or whether Imelda Marcos' closet is about to come down onus.

STEPHANOPOULOS: With no bottom in sight, President Obama triesto spark confidence.

PRESIDENT BARACK OBAMA: Throughout our history, we have metevery great challenge with bold action.

STEPHANOPOULOS: But is Washington meeting the economic challengeor making it worse?

(UNKNOWN): We have to show that the government can disciplineitself.

STEPHANOPOULOS: What will it take to stop this spiral?Questions this morning for Democratic Senators Evan Bayh and ClaireMcCaskill, Republican Richard Shelby, and the CEO of the U.S. Chamberof Commerce, Tom Donohue, our "This Week" debate.

Then...

RUSH LIMBAUGH, TALK SHOW HOST: Why doesn't President Obama comeon my show?

STEPHANOPOULOS: ... Rush and the White House square off. Thatand the rest of the week's politics on our roundtable with GeorgeWill, Cokie Roberts, David Brooks, and E.J. Dionne.

And, as always, the Sunday funnies.

JAY LENO, TALK SHOW HOST: We gave them $165 billion, now we'regiving them $30 billion. You know what AIG stands for? "And it'sgone"!

(END VIDEO CLIP)

ANNOUNCER: From the heart of the nation's capital, "This Week"with ABC News chief Washington correspondent George Stephanopoulos,live from the Newseum on Pennsylvania Avenue.

STEPHANOPOULOS: Hello again. In this morning's New York Times, President Obama promises to putall the pillars in place for economic recovery this year, but hispledge follows a week in which nearly all signs pointed toward arecession that could last far longer. It's an economic emergency.

How to address it is our topic this morning with four key playershere in Washington: Republican Senator Richard Shelby; Tom Donohue,CEO of the U.S. Chamber of Commerce; and Democratic Senators Evan Bayhand Claire McCaskill.

And let me begin with another headline. This is the WashingtonPost. I don't know if you guys saw it yesterday. And the headlinepretty much gets to the heart of the problem here, "Job Losses CouldDrown Stimulus."

Senator McCaskill, are we at the point where we can say now thatwe're going to actually have to do more, that it's time for a secondstimulus package?

MCCASKILL: Oh, I think it's too early for that. What you'reseeing is jobs -- job loss is always a lagging indicator. It's not aleading indicator in a recession. And we've said all along in thestimulus, besides the tax cuts, which people forget to mention, a hugechunk of tax cuts, money going right back into the pockets of theAmerican people, we're trying to keep job losses from being as great.

Even when we were debating the stimulus, we kept saying over andover again there was going to continue to be significant job loss.It's a matter of whether or not we can keep from that job loss beingas severe as it could be had we not done the stimulus.

STEPHANOPOULOS: But, Senator, by the assumptions of PresidentObama and his team are -- that we would have 8.1 percent employment --unemployment all year long, we saw that already this month. We knowit's going to get worse, at least the president has said, before itgets better, so he's not going to be able to save the 3.5 million jobshe talked about.

BAYH: Well, it's a little soon to conclude that, George. And wemay need -- need to have to recalibrate what we do as we go along asthe facts change. He did inherit one heck of a mess, and it's gottenworse over the last couple of months.

The depth of domestic problems was worse than expected. Theglobal nature of the recession, with Europe and China now struggling,was worse than we expected.

But let's give this a little time. I was with Ben Bernanke acouple of times this week. He does think that some things in thecredit markets are beginning to get better, but there is a lag betweenwhen you put policy into effect and when it actually starts having aneffect in the real world.

And the second lag, George, perhaps most important, is thepsychological one. It does take some time before things -- beforepeople realize that the substance is actually getting better. Myguess is that'll start later this year or the first part of next year,and we're moving aggressively to make sure that it does.

STEPHANOPOULOS: The question, Senator Shelby, is, what is goingto create that confidence? What is going to change the psychology ofthe markets right now? You want to...

SHELBY: I believe, if we can straighten out the banking systemand get banks lending again and get confidence in our banking system-- the American people don't trust the banks. They know -- they'renot investing in the banks. The banks aren't lending. And withoutlending, this -- this country's economy is based on credit, you know,credit to small business, medium-sized business, and that's nothappening today.

We've got to do it, and we've got to do it right. TARP certainlydidn't do it. I opposed that; a lot of people didn't. But -- but wecan't go down that road again. And what I fear is, is Paulson II orTARP II or TARP III.

STEPHANOPOULOS: Well -- well, we've seen Secretary Geithner andthe president say that now we're going to take a middle-groundapproach. They've out the beginnings of their plan on the banks. Youdon't approve of that?

SHELBY: I don't think it'll work. I think that they've got toclose some big banks. They don't want to do it. We're -- we're goingdown the same road Japan was going down.

STEPHANOPOULOS: So you're in the same place -- I had SenatorLindsey Graham on the problem a couple of weeks ago. He said we'regoing to have to close, nationalize some of the big banks.

SHELBY: I don't want to nationalize them. I think we need toclose them...

(CROSSTALK)

STEPHANOPOULOS: So when you say "close," what do you mean bythem?

SHELBY: Close -- close them down, get them out of business. Ifthey're dead, they ought to be buried. We bury the small banks; we'vegot to bury some big ones and send a strong message to the market.And I believe that people will start investing in banks. Peoplearen't...

STEPHANOPOULOS: So you're talking Citigroup?

SHELBY: Well, whatever. Citi's always been a problem child.

STEPHANOPOULOS: You're shaking your head.

DONOHUE: Well, I believe that the TARP thing had a veryimportant value, and that is, it put liquidity in the banks that letthem meet their requirements. Otherwise, they would have to be putout of business. And they're holding that money. They haven't spentit. They're waiting to find out where the floor is.

And when they get to the floor, then we'll be able -- on theeconomy, then we'll be able to figure out how to put more money backin the economy.

STEPHANOPOULOS: Is it practical to talk about closing down bigbanks?

DONOHUE: It's not practical to talk about closing a bank that isintegrated throughout the whole global economy. It is practical totalk about buying some of those assets away from those banks andholding them in an institution that would have both public and privatemoney, but it's not practical...