'This Week' Transcript: Economic Roundtable

Google's Eric Schmidt, FedEx CEO Fred Smith, Rep. Barney Frank & Sen. Jim DeMint

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.

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 theMarch quarter or the June quarter are going to be particularlydifficult in business. It's time for government action.

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

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

STEPHANOPOULOS: One of the most controversial aspects of thisnew plan are so-called buy-America provisions. The House bill, Ithink, 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. Itunderstands all of the concerns that have been heard not only in thisroom, 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'retrying to figure out where they're going to be.

And I want to bring this to you, Mr. Smith, because I know you'rea strong opponent of these buy-America provisions. Yet when you'vegot the industrial Midwest at 45 percent capacity, 40 percent of thepeople working in steel companies and other manufacturers laid off,why isn't this the right thing to do?

SMITH: Well, the reason it's not the right thing to do is thatthe growth of global trade has been enormously beneficial to theUnited States. The problem with trade is that the benefits arediffused and the pain is localized. But the benefits of having aglobal economy have created an export sector in this country thatprovides our highest-paying jobs.

So you listed there the companies and the people that have beenadversely affected. That's why I started off by saying the firstthing that the Congress should do is take care of those people who aredislocated, but there are lots of people who are dislocated because oftechnology.

And I was growing up, there were a lot of people that weretelephone operators. Those jobs all went away. You don't have thesame argument about the loss of those kinds of jobs. It's only whenit comes to trade.

If the Congress passes this buy-American provision, I can assureyou -- and we operate in 220-some-odd countries around the world andare a huge part of the import-export infrastructure of the UnitedStates, we will get retaliation, and it will be American jobs at risk.

FRANK: Well, I -- I -- let me just say, by the way, on the taxcode, if I could. I would very much like to see that. And I thinkyou can do that in a revenue-neutral way.

I voted to raise the tax on so-called carried interest for hedgefunds. And I think we have undertaxed some of the financialmanipulation, and I would be for a package that would shift that. SoI appreciate it, and I think it can be done in -- in a way that --that is not going to increase the deficit and is stimulative.

FRANK: Beyond that, ideally, I agree with Mr. Smith, but peopleneed to understand, I don't think there has ever been in Americanhistory -- certainly not in my memory -- a greater split between theopinion of people you would describe as the elites in the economy andthe academy, et cetera, and the average American.

The fact is that the average American feels that, even when therewas growth, he and she wasn't getting a piece of it. And I appreciateyou saying, Fred, that we need to take care of the people dislocated,but you have to broaden it.

I will tell you, I believe, until you get a better social safetynet, actions that you're not going to like are going to continue. Andlet me give you an example.

We were passing a bill in the House to say that we want verydifferent rules on the TARP program, the -- the economic rescueprogram. And Congresswoman Sue Myrick, a Republican from NorthCarolina, offered an amendment that said no country -- no companyreceiving any financial help under this can do any outsourcing ofcustomer service.

And that passed unanimously. Nobody wanted to vote on it; nobodywanted to vote against it.

I understand the logic there. And I just read in Great Britainthere were riots now because the British workers are saying, "Don'thave Italian workers," violating European Union rules.

But until the country does a better job of -- and you've said itvery well. There's localized pain, diffused benefits. Until yourelieve the localized pain better, the average American will blockthings like trade, like outsourcing that you think we ought to do.

STEPHANOPOULOS: Is that a bargain you could sign on to?

SMITH: Yes, but do it for a period of time. Somehow thegovernment only does permanent things. This whole stimulus discussionis about a two-year period. Let's get the government, the one sourceof real liquidity, to help people get going again.

America's an amazing country. We have tremendous innovation. Wehave all sorts of new ideas, people just waiting to get new productsout. Their customers are not buying, because they cannot get loans.They're getting laid off. Let's get that behind us. You'd much rather be in America than, for example, in Europe,where it will take 10 years to work this through. We can do this veryquickly, get to the other side of this, and get back to business.

STEPHANOPOULOS: Do we have a deal here?

DEMINT: Well, the quickest way to -- to get money in the economyis not to take it out in the first place. And it's interesting, as wetalk, like buy-American. We all -- we all want to buy American.

But then we have the highest corporate tax rate in the world.We've got a regulatory system that makes us less competitive. So we-- we actually put these people out of work, ship jobs overseas withbad policy, and then we want to put our hand up and stop our importsfrom coming in.

And this is a government-managed economy which doesn't work.It's inefficient. We obviously have to help people. But the quickestway to get a stimulus is -- is not to be taking so much money out ofthe economy, for particularly what Fred is -- is saying.

If we could expense -- if companies like FedEx could expensebuying an airplane immediately, instead of over a number of years, alot of companies would make those capital equipment purchases nowrather than waiting.

And so it really comes down to a basic argument: Do you want agovernment-directed plan or do you want the free markets to work?

FRANK: Well, yes, I do want -- I want highways. I want bettermedical care for people laid off. This notion -- and the one thing Iwould most disagree with is you say we overregulated. It was thecomplete absence of regulation in the financial area that led to thecrisis we're in today.

DEMINT: It was bad policy.

FRANK: Jim, can I please?

DEMINT: OK, sure.

FRANK: The policy was, yes, to put no restrictions on peopleoutside the banking system who are extending themselves in thefinancial area into instruments which they couldn't back up. It waseven within the banking system, letting people go with things thatwere off the balance sheet.

The complete absence of regulation in the financial area has, Ithink, been a disaster. And I think we're back to where we were whenTheodore Roosevelt and Woodrow Wilson stepped in or FranklinRoosevelt.

But beyond that, the notion that everything is solved by a taxcut, of course there are sensible tax policies you could have. Butthere are public needs we have in this society...

DEMINT: Sure.

FRANK: ... that cannot be accomplished by a tax cut. No tax cutbuilds a road. No tax cut puts a cop on the street. No tax cuteducates a child in -- in the way that it ought to be done.

So this -- only tax cuts, at a time when I think we have adeficiency in some areas that are important for the quality of ourlife is a big disagreement.

DEMINT: But, George, we -- we have programs. I mean, we'rereauthorizing our highway bill this year.

FRANK: At too low a level.

DEMINT: And -- well -- well, let's talk about making it a higherlevel, but let's don't say it's a stimulus when it's a governmentspending plan. And all of these things, the needs in our society,education, these are things we debate every year.

FRANK: Spending can be stimulus. I don't understand what youthink stimulus is.

(CROSSTALK)

DEMINT: But this is the largest spending bill in history, andwe're trying to call it a stimulus when it's just doing the thingsthat...

FRANK: Well, let me tell you what I think is the largest...

DEMINT: ... you wanted to do anyway.

FRANK: The largest spending bill in history is going to turn outto be the war in Iraq. And one of the things, if we're going to talkabout spending, I don't -- I have a problem when we leave out thatextraordinarily expensive, damaging war in Iraq, which has caused muchmore harm than good, in my judgment.

And I don't understand why, from some of my conservative friends,building a road, building a school, helping somebody get health care,that's -- that's wasteful spending, but that war in Iraq, which isgoing to cost us over $1 trillion before we're through -- yes, I wishwe hadn't have done that. We'd have been in a lot better shapefiscally.

STEPHANOPOULOS: That is a whole another show, so I'm going to...

(CROSSTALK)

FRANK: That's the problem. The problem is that we look atspending and say, "Oh, don't spend on highways. Don't spend on healthcare. But let's build Cold War weapons to defeat the Soviet Unionwhen we don't need them. Let's have hundreds and hundreds of billionsof dollars going to the military without a check." Unlesseverything's on the table, then you're going to have adisproportionate hit in some places.

STEPHANOPOULOS: There is also about $1 trillion to be spent onthe banks, maybe even more, coming up in the next several weeks. Andone of the hot-button issues there -- and you talk about this populistanger -- has been over whether the bankers are benefiting at theexpense of the taxpayers.

And Senator Claire McCaskill took to the floor of the Senate thisweek. She wants -- she has a new proposal. She's heard about these$18 billion in bonuses on Wall Street last week and says, if any bankis going to get federal money, they should make sure that no bankergets paid more than the president of the United States.

(BEGIN VIDEO CLIP)

MCCASKILL: They don't get it. These people are idiots. Youcan't use taxpayer money to pay out $18 billion in bonuses. Shouldthese people be making more than the president of the United States?Not really, should they?

(END VIDEO CLIP)

STEPHANOPOULOS: Mr. Smith, you actually took a pay cut inDecember. You announced a 20 percent pay cut because of theperformance of FedEx over the last year, because of the tough economictimes.

And I wonder, number one, what do you think of the bonusstructure now on Wall Street? And, number two, does Senator McCaskillhave a point?

SMITH: Well, I -- I think the -- the compensation structure onWall Street is basically built on -- on bonuses, much more so than inthe industrial sector. As I understand it, the average bonus in that$18 billion is about $100,000 a year. The bonuses on Wall Street aredown about 44 percent.

So certainly up at the very top of the pyramid, people may begetting more than the president of the United States. But I think youhave to go into the -- to the detail there.

Now, when you take government money, then obviously the Congresshas the right to put any kind of restrictions that it wants on -- onthe government money. I don't think anybody would -- would arguethat.

But it's a little bit, I think, an exaggeration to say that allthe money is going to -- you know, the top few people on Wall Street.There are a lot of middle-level folks that -- that live on -- on thosebonuses. And the lack of those bonuses, probably the biggest peopleare getting hit are the state treasuries of the state of New York andthe city of New York, so...

STEPHANOPOULOS: He brings in (inaudible) but to what extent haveCEOs brought this on -- brought this anger on themselves?

SCHMIDT: It's a judgment issue. And, you know, when you'reasking for the government, you need to moderate your behavior. Ithink people understand that.

We're in this for the long term. And in the businesses that I'mfamiliar with, people are primarily compensated with stocks. Stocksare down. Stocks will eventually return. People will make money thatway. That's a much better way to compensate people.

STEPHANOPOULOS: And that's -- one of the things they'reconsidering, I hear, as the president tries to roll out this newfinancial rescue plan, that the compensation should be in stock. Andalso some talk -- although it's very difficult to do -- of trying toget back some of these bonuses?

FRANK: Well, the clawback, yes. You -- you should have future-- we put this into the bill that we passed last year. And theproblem is not just the amounts of money. And Fred Smith makes a goodpoint. Don't lump every bonus in together.

Now, maybe they would be better off with straight salaries ratherthan bonuses, but it's true that some people at the working level,bonuses there are different than bonuses at the -- at the top level.

And, you know, but here's the problem we have. We have this --we're all familiar with the -- with the concept of collateral damage,which is in the wars you don't want me to talk about, but where youwant to kill some bad guys and tragically some good people get hurt.

We have the reverse problem in trying to restore the creditsystem. It's called collateral benefit. We need to restore thecredit system. Eric talked about this. The only way -- but you can'tcreate a whole new banking system de novo.

So the only way you can help the banking system get back intocredit is to do some things that will probably provide some collateralbenefit to people, people don't like. And what they shouldn't do ismake it worse for us.

DEMINT: But, look...

FRANK: There's one other point, though, I want to make, and thatis, it's not simply the dollars we're talking about. And this is,again -- Fred made a good distinction between the non-financial andfinancial parts -- the problem in the financial area in particular hasbeen a perverse incentive in the -- in the compensation structure.

It's not just the dollars. But you had top decision-makers beingtold that, if they made a bet and it paid off, they got money. But ifthey made a bet and it lost, they didn't lose any money. It was a"heads, I win, tails, I break even," and that incentivizes more risk-taking than is in the interest of the economy.

SCHMIDT: I'm sure this stuff is going to get fixed by -- by youguys, because you're working very hard on it...

DEMINT: I wouldn't count on it.

SCHMIDT: And, by the way, you guys need to get this thing fixed.What we need is very simple. We need some form of a jobs program,something that causes jobs to get created, and we need credit to get-- get going again. That's what we should be talking about as acountry.

(CROSSTALK)

SCHMIDT: And we can debate exactly how to do it, but get itgoing now.

FRANK: Well, excuse me. You (inaudible) it's called democracy,Eric. I'm sorry, but it's inevitable.

Secondly, the point I'm making is this, and I think Fredunderstood it. There is so much anger now on the part of the averagecitizen who's lost his -- you know, and the problem with traders (ph),and this is one difference we have with Europe. Americans will losetheir health care, most of them, if they lose their job. We've gotto, I think, fix that situation.

FRANK: I think we need to break the nexus between health careand employment from the standpoint of an efficient economy, as well asa fair one. But until you cannot get some of what you want in thecredit area -- the jobs area is different -- but in the credit area,if you -- if you do not do things simultaneously to alleviate theanger, the American voter is not going to let you do it.

DEMINT: We can take $1 trillion out of the economy and we'resaying we might create 3 million jobs. If we leave it in the economy,the economists at the Heritage Foundation said we create 18 millionjobs.

I mean, this is something we know. And it actually -- Eric, toyour point, it happens much quicker. When we don't take it out,there's an immediate jolt to the economy. But if we take -- we knowonly half of this $1 trillion is actually going to be spent over thenext two years.

SCHMIDT: I'm worried -- I'm worried that tax cuts alone -- taxcuts won't work because -- won't be sufficient because people are notpaying any taxes because they're not making any money. The stimulusbill has tax credits in it...

FRANK: How many roads are going to be built by a tax cut? Howmany police stations?

(CROSSTALK)

DEMINT: We're building roads now. And...

(CROSSTALK)

FRANK: If you think...

DEMINT: The Democrats control Congress. If you want to spendmore for roads, let's do it.

FRANK: Excuse me, no, that's -- that's...

DEMINT: But let's don't call it an economic stimulus package.

FRANK: ... an inaccuracy. First of all...

DEMINT: Only 5 percent of this bill goes to roads andinfrastructure, and you're trying to tell the American people this isan infrastructure bill. It's... (CROSSTALK)

FRANK: No, I am not trying to do that. You will check thetranscript. You will find I haven't.

I also think it's helpful if you don't have policemen andfirefighters laid off in New Bedford. That's jobs that would be lostthat won't be lost.

I also disagree that we're taking money, quote, "out of theeconomy" if we improve public transportation, if we improve highways.That's your concept. You're taking money out of the economy if youmake sure a bridge doesn't fall down. I think you keep people out ofthe water. You're not taking money out of the economy.

STEPHANOPOULOS: And on the -- on the issue of credit, there's --it's a separate question. The president is going to probably have tocome forward and ask for potentially hundreds of billions of dollarsmore for the banks. Is that something you can support?

DEMINT: Well, we're calling these Wall Street guys idiots fortheir bonuses. I think maybe the real question about intelligencecomes from the politicians who are giving these guys money.

A lot has to sort out in the market here. We're rewardingfailure by bailing out the worst of the banks instead of rewardingsuccess. The first round of TARP did not support lending, which wasits whole point. We've got to loosen up the credit markets.

I'm not convinced the guys from Wall Street who are runningTreasury know how to do it. They know how wealth is traded, but theydon't know how it's created on Main Street.

So, obviously, we need to loosen up credit, but what we've beendoing hasn't been working. And if government spending, Barney, gotour economy going, we would have the best economy in the world. Wehave never...

(CROSSTALK)

FRANK: Spending on Iraq was never going to do that. Can I justsay, too -- we're talking -- I agree that, under the Bushadministration, you introduced...

DEMINT: Bush is gone.

FRANK: Excuse me, Jim. You talked about Democrats andRepublicans.

DEMINT: I have not.

FRANK: He's gone, and it is a mistake to assume that the Obamaadministration hasn't learned from the mistakes of the Bushadministration. I believe they're going to do it very differently.

I agree that Secretary Paulson, whom I generally admired, made amistake in not pushing them to do more lending. I think you're goingto see the Obama administration, having learned from that, push formuch more lending. There are going to be some real rules in there.

SCHMIDT: But you could just publish -- you could just publishwhat people are doing, and we could figure out where the money'sgoing. All you have to do is put these things on Web sites.

FRANK: They are going to be.

SCHMIDT: One of the ways -- in fact, one of the issues with TARPwas it wasn't generally known where the money went. If we simply --as part of your work got every single dollar and where it went, wecould prove whether your argument is right or your argument is right.

DEMINT: But you assume we can actually track that stuff.

(CROSSTALK)

FRANK: Excuse me. Can I just say, first of all, our guys -- Iwould say, putting on a Web site, you're not entirely disinterested...

SCHMIDT: Of course.

FRANK: ... but that's OK. Fred might want us to mail them toeverybody, deliver them -- deliver them in a package. But the pointis, we're going to do that.

In fact, the new inspector general, who was set up -- we've setup a special inspector general. Confirmation was delayed in theSenate. And Mr. Barofsky is now about to demand of every recipient ofTARP, past and future, that they do exactly what you say and that wewill publish on our Web site.

So there was -- I agree. It was not -- I think it was better tohave had it than not, but it is going to be done.

SCHMIDT: But my point is, you could change -- you could changethe way we...

(CROSSTALK)

FRANK: I'm saying we're doing it.

(CROSSTALK)

SCHMIDT: ... change the way...

FRANK: Did I not agree with you?

SCHMIDT: Yes.

(LAUGHTER)

FRANK: We're doing it.

SCHMIDT: Chairman, the fact of the matter is, that if thegovernment simply told everybody what you all were doing...

(CROSSTALK)

SCHMIDT: ... and then people could track it and figure outwhether it's actually working...

(CROSSTALK)

FRANK: But we are going to do that.

SCHMIDT: ... we could get through these classic fights that youall have.

STEPHANOPOULOS: As you know...

FRANK: Well, no, I differ -- differ with you on that. Please.Let's not obviate democracy. There are legitimate differentphilosophical differences between Jim DeMint and myself. Please don'ttreat them as some sideshow.

STEPHANOPOULOS: And we will hear -- we will hear more aboutthe...

FRANK: They're important to democracy.

STEPHANOPOULOS: We're going to hear more about them this week.We only just have a few seconds left. I just want to ask you quickly.We learned this week that President Obama's nominee for the Departmentof Health and Human Services, Senator Tom Daschle, has had to payabout $128,000 in back taxes. Is that disqualifying to you?

DEMINT: It may be. I -- I want to find out more about it.

But it's disheartening, obviously. I mean, people are strugglingto pay taxes on a very small amount of income. And when he's got thishuge amount of -- you know, I can see now why liberals don't mind ifthe tax rate goes up, because they're not going to pay it anyway.

And so, yes, it frustrates me. It did with our Treasury nominee.But we need to look at it. And I would just -- I wish they would justsay, "Hey, our tax code is just incomprehensible. We need to changeit."

STEPHANOPOULOS: You got that last plug in. Gentlemen, thank youall very much. It was a great discussion.

END

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