'This Week' Transcript: Economic Roundtable

Feb. 1, 2009 — -- ABC'S "THIS WEEK WITH GEORGE STEPHANOPOULOS"FEBRUARY 1, 2009

GEORGE STEPHANOPOULOS, HOSTERIC SCHMIDT, CEO, GOOGLEFRED SMITH, CEO, FEDEXREP. BARNEY FRANK, D-MASS.SEN. JIM DEMINT, R-S.C.

STEPHANOPOULOS: Good morning, and welcome to "This Week."

The economy dives.

OBAMA: This is a continuing disaster for America's workingfamilies.

STEPHANOPOULOS: In the headlines this week, 5 million joblessclaims, more than 100,000 jobs lost, the weakest economy since 1982.But does President Obama have the right fix?

(UNKNOWN): A trillion dollars is a terrible thing to waste.

STEPHANOPOULOS: That debate this morning on a special economicroundtable, with two of the country's leading CEOs and two members ofCongress at the center of the action.

Then, will a faltering economy weaken us abroad? An in-depthlook at that challenge and all the week's politics with George Will,Martha Raddatz, David Sanger of the New York Times, and Bob Woodwardof the Washington Post.

And, as always, the Sunday funnies.

JAY LENO, TALK SHOW HOST: Starbucks announced today they'relaying off 1,000 workers and could close more stores. Yes, they say,by the year end, experts predict we could be down to just twoStarbucks on every corner.

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.

(END VIDEO CLIP)

STEPHANOPOULOS: Hello again.

The lead story in today's New York Times magazine says that, forthe first time in more than 70 years, the epicenter of the Americaneconomy is not Wall Street, not Silicon Valley, not the industrialMidwest, but right here in Washington.

No doubt that's a debatable proposition, but there's also noquestion that the decisions made by President Obama and Congress inthese next few days and weeks will determine how and when the countryrecovers from our worst recession in memory.

We've assembled a plugged-in and opinionated panel this morningto debate those decisions. I'm joined by Republican Senator JimDeMint of South Carolina, Fred Smith, the chairman and CEO of FederalExpress, Congressman Barney Frank, the chairman of the House FinancialServices Committee, and Eric Schmidt, the CEO of Google.

Welcome to all of you. And we do have a lot to cover this week.

And, Senator DeMint, let me begin with the stimulus package,because I think you've called the president's plan the worst plansince the 16th Amendment paved the way for the income tax. But pollsshow that a majority of Americans actually support what thepresident's trying to do. What are they missing?

DEMINT: Well, I think all of us support the fact that we need todo something. And all of us believe that the way to move our economyforward and protect jobs is to infuse more money so that consumershave more to spend, businesses have more to invest, buy capitalequipment.

But there are two ways to do that, George. One is for thegovernment to take it out of the private sector through taxes and thendecide where it's going to go through political manipulation, asthey've done in the House. The other is just to leave more money inthe private sector for consumers to spend and businesses to invest.

And that's the American way. And that's -- that's the approachwe're pushing. Unemployment is...

STEPHANOPOULOS: All tax cuts? No increases of spending of anykind? Yet more economists say that investments -- the right kind ofinvestments create more jobs than tax cuts.

DEMINT: Well, I'm not sure what economists you're talking to,but we've met with a lot of them over the last week. You can lookback in history, and leaving more money in the economy through taxcuts is the way that works. And government spending is -- you can seelittle bumps.

But this plan is a spending plan. It's not a stimulus plan.It's temporary, and it's wasteful. And a lot of the spending is goingto end up being permanent, George.

So we have to decide if we want to be a free-market economy andlet -- and let the money stay there or if we want to be a government-directed economy, which is where we're headed with this plan.

STEPHANOPOULOS: You voted for the package?

FRANK: I did. And the -- I regret Senator DeMint saying thatthis is the American way. Let's -- let's just agree that we're allAmericans here, Jim, and that nobody's got the American way versuspresumably the non-American way.

And as far as spending versus tax cuts, I think we need to fixsome highways and bridges. I never saw a tax cut fix a bridge. Inever saw a tax cut give us more public transportation. The fact is,we need a mix.

We need -- and I think we've suffered from an extremism in thiscountry in the past of relying only on private-sector activity andhaving too little government. It's possible to have too muchgovernment, no question. But it's possible to have too little. And some parts of this stimulus -- extending unemploymentbenefits, helping with food stamps -- you know, we have two purposeshere. One is to stimulate the overall economy. The other is to go tothe aid of some people who, through no fault of their own, have beendamaged. You can't just look at the aggregates.

I think we've gotten in trouble by looking only at theaggregates. If the GDP goes up but income inequality greatlyincreases and a lot of average workers are feeling put upon, it's aproblem.

But I want to see some improvement in our transportationstructure. I'd like to see some improvement in education. We havestate governments laying people off, cities being told they're goingto have to lay off firefighters. A tax cut isn't going to keep thecity of New Bedford...

STEPHANOPOULOS: Those are all the broad...

FRANK: ... from laying off firefighters.

STEPHANOPOULOS: You mentioned a lot of the programs, yet one ofthe criticisms the House plan has gotten is it also includes a lot ofspending for things that don't seem to be stimulative, contraception,things like that.

FRANK: Well, you have some -- well, one, I thought,contraception was out of the bill. I guess the people resented thefact that it was out of the bill.

There is some money now I guess to fight sexually transmitteddiseases. Those are jobs. By the way, very few people volunteer tofight sexually transmitted diseases. They get paid to do it.

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

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

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

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

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