Transcript: 'This Week' Economic Debate

Sens. McCaskill, Bayh, Shelby and the Chamber of Commerce's Thomas Donohue.

ByABC News
March 8, 2009, 6:54 AM


MARCH 8, 2009






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.


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"!


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...


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...

MCCASKILL: And as a matter of confidence, I think it's importantfor us to point out that there's two kinds of banks that we're talkingabout here. The -- the commercial banks, the small, local banks,they're fine, and people need to realize that. Your local bank isloaning money; it is operating as it always had.

It may be suffering in its stock prices because of what's goingon in the stock market, but they are doing a great job. In fact, mostof the commercial banks, the local banks, have loaned more money inthe fourth quarter of last year than they had the fourth quarter theprevious year.

STEPHANOPOULOS: But what do you do with these big banks, thesefew big banks that are in big trouble?

MCCASKILL: Well, I think -- I think a plan has been laid out. Ithink -- and now they're -- what they're doing is they're doing thisevaluation to look at the strength and the weaknesses of each of thesebanks so we know what's there, and then they're going to have thosecapital asset funds available to help them stay liquid, the big banks.

But I think this is a matter of continuing to look aggressivelyat how we can help without wasting taxpayer money.

BAYH: George, the real problem here is this whole concept of toobig to fail. Some of these institutions -- and you can put some ofthe big three automotive companies in the same category -- if theywere to go down, the problem is, it's not just them. They take --it's called, you know, collateral damage, a whole lot, hundreds ofthousands of blue-collar working men and women, other smallerfinancial institutions who were not involved in these bad decision-makings, they'd all pay the price, too.

STEPHANOPOULOS: So you can't close down the big banks?

BAYH: Well, what we have to do is stabilize them for the timebeing to avoid the collateral damage, put into effect regulation tomake sure that this does not happen again, and if institutions aregoing to get, quote, "too big to fail" so that the taxpayers will haveto come in, maybe they have to operate under a different set of rules.

STEPHANOPOULOS: And what -- go ahead.

SHELBY: George, subsidization of anything for very long neverworks. You don't stop. The automobile business, those companies,Chrysler, Ford, and General Motors, they're in deep trouble. We knowthat. I've suggested they go into Chapter 11. That's where theybelong. And they could reorganize. We could get, you know, money inplace for them. We could do it if they did it and did it right.Short of that, the UAW will run those companies and run them into theground.

DONOHUE: Now, I can get pretty close to that issue. We need todo something -- I'm not sure all three of those companies -- and I'dlike to see the three end up being two -- but if there are going to beany resolution here, General Motors has to be willing to be very, verytough and take the big step, if they have to. Otherwise, they're notgoing to get any place with their unions or be able to deal with thefranchise rules in the states on the dealers.

This is an issue which I believe that all of us have a similarview about. I don't think it's exactly the same when you startlooking at the banks.

The senator's right in the long term. We have to take some ofthese really toxic banks and straighten them out. This senator isexactly right that 90 percent of the banks in the country are doing agreat job. The only thing is, 25 million small businesses can't gettheir money from banks.

We have to get the asset back -- lenders back in business. Wehave to put individuals in the position to do what they've alwaysdone, is to lend to small companies. Those guys create the jobs.

STEPHANOPOULOS: Let me bring this back to the issue at the top,the congressional agenda right now, spending bill more than $400billion, more than 8,000 earmarks. Senator Bayh, you're one of twoDemocrats who's come out unequivocally against this bill, in partbecause of the earmarks, in part because of the size.

Do you think that you're going to be able to prevail? SenatorReid could not get the 60 votes he needed on Thursday.

BAYH: I think ultimately they'll get the votes to pass the bill,George, but I think there are substantive and perceptional problemswith this bill. Substantively, the deficit is over $1 trillion. Ournational debt is going up more than $1 million per minute. We have toborrow most of this money from abroad, which weakens our country.

I think this is a time to show that we can economize, do betterthan across-the-board increases that are many times the rate ofinflation. So that's my substantive problem.

For example, if we were just to continue last year's levels ofspending for the remainder of this year, we'd save $250 billion overthe course of the next 10 years to help solve our long-term deficitproblems.

The perceptual problem, which I think is just as great, is that,at a time when many Americans are having to tighten their belts, manybusinesses are having to make tough decisions, it looks as if Congressis just on auto pilot, immune -- immune from the problems that mostpeople face.

BAYH: That undermines confidence in the system. I think we needto keep faith with the American people and show we can do what they doeveryday.

STEPHANOPOULOS: Senator Shelby, you're one of the fewRepublicans who's actually for this bill. Why is he wrong?

SHELBY: Well, I think he's wrong for two reasons. We differ onsome things, agree on others.

First of all, this is -- these are a compilation of nineappropriations bills. A lot of people voted for a stimulus bill, aTARP. That's $1.5 trillion. Now they say, "Oh, we'd better not votefor a $400 billion bill to fund the government." I think we ought tofund the government and move on.

Are there some things in this bill that I don't like, I wouldn'tvote for if I could? I voted for amendments, you know, to knockthings out of it, sure.

But, overall, I think it's -- it's -- we need to get it behindus, and I think we will.

STEPHANOPOULOS: Now, Senator McCaskill, you are an unequivocalopponent of earmarks. You've asked for zero earmarks. You voted tostrip them out, yet you're supporting this bill. I don't quiteunderstand that.

MCCASKILL: Well, I have done everything I can possibly do toreject the process of funding -- funding projects through earmarks. Ivote against earmarks when I get the chance, as long as we're votingagainst all of them, and I've dropped another bill to reform theprocess even further this week.

But I don't think I can sit on the sidelines on every budget,though, because I've got to tell you, George, you talk about a habitthat's deeply ingrained and a culture that's very hard to get rid of,these guys love these earmarks. They love the ability to have thepower, you know, to pick out projects to fund.

And, you know, some of the earmarked projects are great, but theprocess, I think, is fundamentally flawed. That's why Evan and I werethe only two Democrats that voted to strip every single one of themout. And as long as we have a chance to keep reforming it, I think weneed to keep moving forward and get the government funded. BAYH: And just one distinction from what Richard said. The TARPvote was about stabilizing the financial system at a moment of crisislast September or October, when the economy, according to the chairmanof the Fed, was about to collapse. And hopefully we're going to getmost of that money paid back.

The stimulus bill, the job-creating bill, that was focused or wassupposed to be focused like a laser on stabilizing the economy at atime when you pointed out in the headlines, it is in terrible straits.This is just general government spending, and it's increasing manytimes the rate of inflation.

What are we, as members of Congress, going to do to sacrifice, toshow the American people that, in the long run, there is some fiscaldiscipline around this town if we can't keep restraints into place forjust one year? What does that say to the marketplace?

So I think this is an important part of re-instilling confidenceand, frankly, helping the president, who wants to get the deficit downand wants to remove these earmarks.

STEPHANOPOULOS: Senator Shelby, you have more earmarks in thatbill than just about 40 other senators. Can you defend the process?

SHELBY: Absolutely. I can defend every earmark. Every one ofmy earmarks have been released to the press. Every one has -- has, Ithink, been vetted in the committee and publicly in my state.

I don't want an earmark that has no merit, but I do believe thatwe ought to have the power to appropriate things with merit. Andthat's what I -- that's one of the reasons I'm voting for this bill.

MCCASKILL: Yes, I think it's important to point out that a lotof the senators that stood up with righteous indignation on thestimulus bill, talking about earmarks in the bill and earmarks in thebill, are back two weeks later for a huge chunk of earmarks.

And this is an equal-opportunity sin, George, as you pointed out.The -- every single member of Republican leadership is participatingfully in the earmark process.

So what I hope people quit doing is using earmarks as a partisanfight, because it is not partisan. It's about...

STEPHANOPOULOS: Although Senator Shelby is consistent, to befair. He's consistent that he's for earmarks and he's for the bill.

MCCASKILL: He is. He is. He is. He's a loyal appropriator.

SHELBY: And not only that, I'll tell you, the stimulus bill wasloaded with earmarks. There was one coming out of Illinois, $2billion...

MCCASKILL: That was competitively -- that was competitivelydone, George.

SHELBY: Oh, yes. Nobody believes that now.

MCCASKILL: But it was. It was a five-year...


SHELBY: It was competitively done because the president wantedit, and he's the biggest earmarker of all.


SHELBY: Bush was the biggest earmarker. All of them areearmarkers.


DONOHUE: If we talked as much about jobs as we talk aboutearmarks, we'd be better off.

STEPHANOPOULOS: Well, I actually want to move to health careright now, because you were part of a health care summit this weekthat President Obama convened. Here's President Obama speaking atthat summit.


OBAMA: Nothing is harder in politics than doing something nowthat costs money in order to gain benefits 20 years from now. It's --it's the single hardest thing to do in politics, and that's part ofthe reason why health care reform has consistently broken down.


STEPHANOPOULOS: And, Mr. Donohue, you were at this summit.There's been something of an evolution at the Chamber of Commerce.You were at the summit saying you support the president's goals. Youbelieve we can get something done this year.

DONOHUE: Well, what I did say is, in comparison to the previousbig debates on health care, all of the parties are somewhere else.For the longest period of time, you knew where big business, smallbusiness, the docs, the hospitals, now they're all over the place, andthey are for a very simple reason, is that health care has become notonly very expensive, but very complicated and very much driven moreand more by the government, who are, you know, engaged with 45 percentof paying for what's going on in the health care business.

So I do believe there is a sentiment, a willingness to listen andwillingness to see what we can work out here. Of course, you know,that'll fall part at one point when everybody finds out where theircar happens to be parked.

But we're going to participate in this debate and listen. Thereare things we all agree to. We have to do wellness. I mean, what'sgoing on with young people in this country is crazy. We have to doI.T. It's the only industry, 60...

STEPHANOPOULOS: Information technology.

DONOHUE: Yes, 16 percent of the economy, and it's the onlyindustry that basically doesn't use it. We have to do things aboutgetting those people covered who are not.

You know, everybody talks about 49 million not covered. A thirdof them could be covered tomorrow if we took them by the hand anddown, signed them into the programs that are available. A third ofthem can't be covered, and we have to do something about that. Sothere are many things we can find common ground on.

STEPHANOPOULOS: But does that mean, for example, that businessis ready to sign on to a requirement to provide health care to alltheir employees?

DONOHUE: Well, I don't know that that's going to come apart --around at this time. See, there is a basic issue that's morefundamental, as we look at health care, as we look at CO-2, as we lookat what we're doing in labor. We're trying to hold this economytogether.

This president, who we need to make sure he succeeds -- I mean,this country has to succeed -- but he wants to put more things one ontop of the other faster than I think we can assimilate it.

I'm prepared to bring the business community to a legitimatediscussion on health care. I'm prepared to bring them to a discussionon CO-2. But if we jam all this stuff at once, if you look at what'sgoing up on regulation, on taxes, on costs, you see that job numberand those job pictures, it'll be worse. So let's do it in an orderlyfashion.

STEPHANOPOULOS: Senator McCaskill, he does bring up an importantpoint on revenues and -- and -- and timing here. And from what Icould tell this week in my reporting, talking to Republicans andDemocrats on Capitol Hill, it was almost impossible to find anyone whowould support the president's plans to pay for this health care byshaving the deductions for wealthy Americans.

MCCASKILL: But he gets credit for saying he's going to pay forit and laying out a plan to pay for it. I mean, we did Medicare D.And -- and -- and Bush lobbied for it and gleefully signed it into lawwith not any way of paying for it, no means test, billions of dollarsinto the pockets of the pharmaceutical companies and the insurancecompanies without a second thought of public money.

So I think the fact that this president is showing the disciplineto say, first of all, we're going to have an honest budget, no morecooking the books. We're going to put all of this stuff on the budgetso the American people know how serious the problem is. And the factthat's committed to paying for the way we get health care reform...

STEPHANOPOULOS: But can you sign on to the plan, for example, toshave the deductions for wealthy Americans to pay for this?

MCCASKILL: I mean, it's -- we're talking about somebody whomakes $4 million a year, instead of getting a $350 deduction on $1,000contribution, getting a $280 deduction on $1,000 contribution. Doesthat really sound like something really tough?

DONOHUE: Well, that's a -- that's a fundamentally differentissue than the question that George asked about the tax rates. Theissue of shaving the deduction for people that are at this time, inthis economy, from people that are putting money, willingly andvoluntarily, into the needs of others is not going to fly. It's deadon arrival.

STEPHANOPOULOS: You agree with that?

BAYH: Well, first, I think the president is confronted with alot of these simultaneously because the world has confronted him withthem. He didn't ask to have to deal with the recession and the globalwarming and the health care crisis. He's been confronted with that,so he has to deal with a lot of these things.

With regard to budgeting, I think Claire's right. At least --remember Vice President Cheney, George, said deficits didn't matter?And they pretty quickly took the largest budget surplus in history andturned it into the largest deficit. Now we have a president who wantsto get the deficit down.

I think we need to go through a progression on health care,first, look for ways to -- to economize within the health care system.By just looking at the way we practice medicine in different parts ofthe country, there's a lot of money to be saved. That's number one.

Secondly, maybe there are some other parts of the budget that wecan economize to help pay for some of this. That's why I'm opposingthe omnibus, $250 billion over 10 years? That's real money by justtightening our belts for one year.

And then, finally, the issue of revenues may have to beaddressed, but I think you have to do that last, not first. And thequestion is, do we extend with additional tax cuts to the mostaffluent among us? Perhaps that's something that has to be...


STEPHANOPOULOS: But you said do it last, not first. If youdon't have the reserve fund in there, can you really make the upfrontinvestments you need to make in health care, for example, building onwhat the president did in the stimulus package on informationtechnology?

BAYH: By that, George, I mean, the president was right to putthat issue on the table, but I think we as Congress first have to seewhat else can be done to get the revenue and then only raise the issueof whether you raise taxes last, not first.

STEPHANOPOULOS: What can you and your Republicans colleaguessign on to here?

SHELBY: Well, I -- I think that what we've got to do isstraighten up the economy first. We've got to go to banking. Thatwill help. If we take on all these programs, this country is going tobe in one heck of an economic mess.

STEPHANOPOULOS: So put off any discussion of health care thisyear?


SHELBY: Well, I think we can discuss it, but how are we going tofund it?

STEPHANOPOULOS: So you're for no -- no revenue increase? Thepresident says he's not going to have the revenue increases until2011, but you're saying not even debate it now?

SHELBY: Well, I think we're going to debate it. We debate itevery day. But we should be careful in what we're doing. Let's donot push this economy and the jobs losses even further down.

STEPHANOPOULOS: How -- how do you address this question, SenatorMcCaskill, of scale -- and both Mr. Donohue and Senator Shelby havetalked about -- and -- and priorities? You say the president didn'tchoose to put himself in this position, but is it -- is it appropriateat this point to scale back and say, "First things first. Let's focuson the banks. Let's focus on this job situation"?

MCCASKILL: I think the American people fundamentally understandthat he's focusing on the economy first and foremost. I think thereis some confusion. You know, things happen quickly. Obviously, theTARP situation was an emergency and it was everyone -- frankly, it wasa remarkable moment when I saw the candidates for both parties cometogether on that, realizing we had a crisis of liquidity that -- and,you know, I think he's going to continue to focus on the economy.

On the other hand, George, as -- as Evan said, he's a greatcommunicator. And I think the American people know that if we keepdelaying the health care discussion, if we keep delaying the cap-and-trade discussion and -- and the discussion about our environment andglobal warming, that that is a very, very bad thing for ourgrandchildren. And, also, we have to keep focused on deficitreduction.

But what you're seeing is a president that's not afraid to takeon all these issues that he knows the American people want reform,they want reform on this. So it's tough. We've got to communicateclearly. We've got to make sure that we bring the American peoplewith us, but I think we've got the right communicator to do it.

BAYH: He's got to try and do two things simultaneously, George,first, be an idealist, look at the problems that face the country andpropose bold changes to deal with those. He's doing that. But at theend of the day, he also has to be a pragmatist, and you can't insiston more than the system can deliver, although you push for all that itcan deliver.

And my sense of this president is that he's a very practicalperson. He wants results. And at the end of the day, that's whatwe'll deliver.

SHELBY: I think we have to be careful, not overload the economy.Our thrust should be turning the economy around, and we do thatthrough banks, getting people back to work.

STEPHANOPOULOS: Another issue that's going to come up before theend of this year -- and we only have a couple of minutes left -- Mr.Donohue, you're going to spend about $10 million, I've read, to try todefeat this Employee Free Choice Act, which would give union -- unionsthe ability to organize at a plant if they could a majority of thepeople at the plant to sign up.

And, Senator McCaskill, let me bring you in on this. Is thereanything you can say, you believe, right now, that'll convince Mr.Donohue to back off that? And do you have the votes to get this donethis year?

MCCASKILL: I'm not sure that we have the votes, and I have nohope of backing Mr. Donohue off. I would say that I think it would befair that we have a secret ballot for decertification of unions.Right now, businesses can go with a card check.

There is no secret ballot to get rid of a union, but there is arequirement of -- of that for people to be able to organize. And tome, that seems unfair. Let's -- let's -- what's good for the goose isgood for the gander. Let's put people on a level playing field andhave both businesses have to have a secret ballot to decertify. Untilthey do that, I'm not sure they've got a lot of room to complaint.

STEPHANOPOULOS: You get the last word.

DONOHUE: That is another -- the loss of the secret ballot andthe 16 other issues that labor unions want is another weight on thiseconomy. What we need is a defibrillator that shocks this economyback into private -- positive action.

This president, this Congress, and the business community have totalk about positive things and a bright future. We need to stopletting everybody watch the president and all of us talk this economyinto the can. Watch the market. The market goes down; liquidity goesdown. We have a real challenge here, and we ought to seize it.

STEPHANOPOULOS: I'm afraid that's all we have time for today.Sorry, Senator. Thank you all very much for a great discussion.


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