CQ TODAY ONLINE NEWS
Feb. 8, 2009 – 11:34 a.m.

CQ Transcript: Sens. McCain, Conrad on CBS ‘Face the Nation’

CQ Transcriptswire

[*] SCHIEFFER: Good morning again. Senator John McCain is with us in the studio this morning for, I believe, his 68th appearance on “Face the Nation,” which is more appearances than any other single person.

You passed up Bob Dole, last year, to hold that dubious honor.

(LAUGHTER)

I want to start here, Senator. Welcome back.

MCCAIN: Thank you, bob.

SCHIEFFER: Steve Holland of the Associated Press wrote a little piece, the other day, that -- that caught my attention. It said, when Al Gore lost his run for president, he went to Europe and grew a beard. The first George Bush was knighted and started parachuting out of airplanes. Bob Dole made Viagra ads.

(LAUGHTER)

And you just went back to work in the Senate. How are you doing?

MCCAIN: Fine. And I think the best cure for defeat is, as tough as it may be, is to get back in the arena.

I love what we do in the Senate. I’m honored to serve. I’m honored to represent the people of Arizona and have some voice in major challenges and crises that we face, both at home and abroad.

So, best cure, and I’m happy to be back. And I’m happy to be back on this program.

SCHIEFFER: Well, you have emerged as the main opponent, I think, of the Senate -- of the president’s economic recovery plan, at least the version that came up in Senate.

You offered another plan about half the size of this one. It was defeated on a straight party-line vote. But I want to ask you, now that you have made your point, do you intend to support this plan?

Because I think economists on all sides of this say something has got to be done, here.

MCCAIN: Well, I can’t, Bob. And I can’t because I think it’s the greatest transfer of not only spending but authority and responsibility to government.

I think it’s a massive -- it’s much larger than any measure that was taken during the Great Depression. I think it has policy changes in it which are fundamentally bad for America.

For example, there are “buy America” provisions. That’s -- that’s protectionism. It didn’t work at any time in our history.

But most of all, because I think this can only be described as generational theft. What we are doing is amassing multi-trillions of dollars.

If you look at what is going to be announced Monday or Tuesday, a new TARP. We’ve already spent $700 billion in another...

(CROSSTALK)

SCHIEFFER: In aid to banks?

MCCAIN: Yes. Then we’re going to have a supplemental to pay for the war. We’re going to have what we call a continuing resolution, another $400 billion.

We’re going to have, already, a $1.2 trillion deficit, by estimates. And it’s just begun. We’re going to -- we’re going to amass the largest debt in the history of this country, by any measurement. And we’re going to ask our kids and grandkids to pay for it.

So I thought we needed -- I know we’re in trouble. I know America needs a stimulus. We need tax cuts. We need to spend money on infrastructure and on other programs that will immediately put people to work. But this is not it.

And one small example, and then I’ll stop. We had another vote, and we got 44 votes, on a trigger, on a trigger that said that, once we have GDP growth for two quarters -- in other words, the economy recovers -- that we will stop the spending and we’ll put America on a path to a balanced budget.

That was rejected. And why is that?

Because we’re putting into permanency massive spending programs and massive responsibilities taken over by the federal government from the private sector.

SCHIEFFER: Let me just ask you this. You’re against this. You don’t like this approach. But do you think that it will help?

MCCAIN: I think that it may help a bit. The Congressional Budget Office said that it will create, by the end of next year, between 1.3 million and 3.9 billion -- million jobs. Now, that’s the Congressional Budget Office, an objective organization.

That is -- if it’s -- if it’s 3.9 million jobs, that’s $200,000- some per job. And if it creates 1.3 million jobs, then that’s $600,000 per job.

But more importantly, the Congressional Budget Office says that, because of the crowding out -- in other words, the debt we are going to have to pay off -- you will see, by later years, an actual decrease in our economy. We don’t want to do that to future generations of Americans.

SCHIEFFER: Economists on all sides of this seem to be saying, it is not so much the size or the composition of this stimulus package, that that is less important than the timing, that even a flawed package would be better than nothing.

Would you concede that’s right?

MCCAIN: There’s some economists -- many economists, Marty Feldstein, for example, who said we need a stimulus but not this stimulus. There’s a large body of economists who agree. And I agree with them. We need a stimulus. And I thought it would be around $400 billion -- a group of us, all Republicans -- thought it would be around $420 billion, and balanced tax cuts and spending.

And by the way, this agreement is not bipartisan. I’ve been in bipartisan agreements, many. This is three Republican senators. Every Republican congressman voted against it in the House, plus Democrats. And all but three Republicans stayed together on this. That’s not bipartisanship. That’s just picking off a couple of senators.

SCHIEFFER: What has to happen to this bill?

If the Senate will pass it, basically, in the form it’s in now, it will go to this conference committee, where House and Senate negotiators will reconcile it with what the House has passed.

Really, when you go to the totals -- we have a little graphic, here -- and you look at it, it’s not so different, when it comes to money, as you can see in this graphic.

But there are differences. They’ve taken out a lot of aid to the states. They’ve taken out a lot of money for school construction, for example.

What do you think has to happen to get it passed and -- and to get some Republican votes?

Because the president keeps saying he thinks it’s very important to have as many Republicans as he can get. So far he hasn’t gotten any. What should he do?

MCCAIN: Well, I think, from the beginning, when the speaker of the House said, “We won, so we’re writing the bill,” that set the stage.

It was put through both House and Senate without serious fundamental, at the beginning, discussions and negotiations with Republicans.

Democrats staffers, as we speak, started last night -- and, by the way, we just got the bill last night at 11 o’clock, 778 pages.

They’re negotiating now. They will come up with a bill. But, unfortunately, Republicans will not be involved in the negotiations. And I -- and I regret that.

And in interest of full disclosure, that’s the way the Bush administration, when we Republicans were in charge -- that’s the way we did business. But I thought we were going to have change. And that change meant we work together.

This is a setback. This is a setback for all Americans, in my view, because we promised, all of us, that we would work in a more bipartisan, inclusive fashion. And that’s certainly not been the case for this bill. And I regret that deeply.

SCHIEFFER: All right. Well, Senator McCain, welcome back. And I hope we’ll see you again through the year.

MCCAIN: Thanks for having me.

SCHIEFFER: In a minute, we’ll get a Democratic side to this, in one minute.

(COMMERCIAL BREAK)

SCHIEFFER: And we’re joined now by the chairman of the Senate Budget Committee, Democrat Kent Conrad .

Senator, thank you for coming this morning. What’s your response to what Senator McCain just said? Because he made some pretty legitimate points, quite frankly.

CONRAD: Yes, absolutely. Look, so much of this is eye of the beholder, but let me be very clear. It is absolutely essential for this country that we have a significant economic recovery package.

This economy is falling away from us. You saw increase in joblessness 600,000 people last month. The economy is contracting at a rate of 4 percent. We think that will accelerate. We think in this quarter the economy will be reduced by perhaps as much as 5 percent. That means millions of additional Americans will lose their jobs if we fail to act, and act effectively.

SCHIEFFER: You may well be one of those appointed to go to conference on this when the Senate and the House try to reconcile the differences in the two bills. Clearly, members of the Senate of your own party are going to try to put some things back in this bill, like, for one thing I would guess, some of this aid that’s going to states, some of this $20 billion that’s been set aside for schools and school construction.

How’s that going to go? What are you going to have to do there to get something -- do you think -- I guess I would ask you this question -- do you think you can get any Republican support? There was no Republican support in the House.

CONRAD: I think it is possible, although I think most of them have made a political calculation that it’s better to be in opposition. And you can see that on a political basis because, look, this economy is in desperately serious shape. It is going to get worse before it gets better. So they will be able to argue this package was ineffective.

But here’s the reality, the economic reality. If there is a failure to give a significant boost to this economy, this crisis will only deepen and become far more serious.

Look, the fiscal system alone is going to require hundreds of billions of dollars more. The best estimates before the Budget Committee is that there have been in the range of $4 trillion in losses across the globe in terms of the fiscal system.

And unless that is dealt with and dealt with promptly and dealt with in a way that is fully effective, we could enter a far more serious downturn. A deflationary spiral could begin like we saw in the Great Depression. That would be a disaster.

SCHIEFFER: Senator McCain makes it a point that some of this is not going to stimulate the economy. And basically what he’s saying -- and these are my words, not his -- is that some of this is just the pet projects that Democrats have been trying to write into law for a long, long time. And while they may be good things, they will not help get this economy going again. How -- how do you respond to those allegations?

CONRAD: You know, Senator Lindsey Graham and I offered an amendment to take out some of these things that have less stimulative effect in favor of addressing the housing crisis, which must be addressed, because unless we have a healthy housing market and housing and fiscal situation has stabilized, we can’t have recovery.

But, look, in economic terms, in economic terms, stimulus is stimulus. If you put more money into the economy to offset this falling demand -- remember what’s happening here. The economy is contracting.

And consumers don’t have the money to put in to offset those losses. Companies don’t. The only one that does is the taxpayer of the United States. We are going to have to come forward and put up money to offset this falling demand. If we don’t, we could enter a deflationary spiral that would be devastating.

SCHIEFFER: Are you willing right now -- and I know you don’t want to negotiate before the negotiations start -- but will Senate delegates to the conference committee, will they be willing to put, perhaps, or at -- listen to the House Democrats who say, “Let’s put some of these things back in that you took out”?

CONRAD: Yes. And, look, I was part of the group that performed some of this surgery. We reduced this package by $107 billion. I had amendments to reallocate money, to take it out of lower-priority areas, put it in higher-priority areas, like the housing crisis.

I’m very much hopeful that, in this conference committee to work out the differences between the House and the Senate, that we can improve it. You know, 80 percent of this package will be effective in the first two years. That means 20 percent will not. I think we’ve got to focus like that.

SCHIEFFER: You think that people will see an impact in this immediately?

CONRAD: Well, some of the things you will see very quickly. And that’s really a key to stimulus. Most of the economists have said what is absolutely critical is that this be temporary in nature so that we get money into the economic bloodstream, but at the same time we don’t add to the long-term deficit and debt. That is, you don’t take steps that have permanent effect.

Unfortunately, there are items still here that have long-range effect well beyond the time that we expect this downturn to -- to continue. So I think we could improve this package.

SCHIEFFER: All right. Senator Conrad, thank you.

And we’ll be back with the White House take on all of this in just a moment.

(COMMERCIAL BREAK)

SCHIEFFER: And we’re back now with Christina Romer, the head of the President’s Council on Economic Advisers, who is making her first appearance on “Face the Nation,” Senator McCain here for the 68th time. So we hope that some day you’ll have been here 68 times.

ROMER: Well, it’s a pleasure to be here.

SCHIEFFER: So here we are. The president has put his economic plan out there. The House passed one version. The Senate passed one about the same in dollars, but with some different emphasis.

What now? What do you think is going to happen here? And is the president willing to negotiate a little bit when this thing gets to conference? Because it looks like it’s going to pass the Senate, but will we see him take a more active role in this?

ROMER: Well, I think that the crucial thing that has to happen is we have to get this plan through Congress and signed and out there to help the American people, because as the numbers that came out last Friday showed, the American economy is very sick and, by all indications, getting sicker, right? We lost 600,000 jobs just in the month of January.

So, absolutely, this is priority one. And the president is looking forward to working with Congress and making sure we get a bill out absolutely as fast as possible.

SCHIEFFER: Now, the other thing that’s going to happen this week is that the secretary of the treasury, Mr. Geithner, is going to release his plans on how to use this TARP money, this so-called TARP money. Now, as I understand it, he’s going to be talking about money that the Congress appropriated last year, is that right?

ROMER: Absolutely.

SCHIEFFER: And is he going to be asking for more? Because some people are saying even that’s not going to be enough. And I guess he’s got $350 billion now to figure out what to do with to shore up banks.

ROMER: Well, certainly one of the key things that we know is, as important as the stimulus package is, the financial rescue is also important. We also in the administration are committed to -- to working with the housing problem and helping those millions of Americans facing foreclosure.

So it’s going to be a range of proposals. And, absolutely, dealing with our financial system is -- is very high on the list.

ROMER: And as you pointed out, Secretary Geithner is going to be announcing this week how we’re going to use that money effectively.

I think the American people do have a -- have a certain lack of confidence in how the money had been used in the last administration. And now that there’s a new administration in -- in office, we’re committed to using it effectively.

SCHIEFFER: We were told he would announce this tomorrow, but now it may be put off until Tuesday?

ROMER: I think we’re -- we’re still working out the actual timing. I think the crucial thing is, both these things need to get done. We need to get the stimulus package through. And we do know that any package to get the economy healthy is going to be more effective if we get the banks healthy, because we’ve got to get them lending again.

SCHIEFFER: One of the things we’re hearing is that there may be as much as $50 billion in there to help on foreclosures, people that have problems with their mortgages. Can you confirm that?

ROMER: Yes, certainly. The director of the NEC, Larry Summers, actually put that number out quite a while ago to say that we were absolutely committed to dealing with the housing problem and, as the president mentioned so often during the campaign, the -- the crisis that’s facing American families in terms of the millions of people at risk of -- of foreclosure.

SCHIEFFER: Do you believe that the stimulus funds that have already been distributed, do you think that worked? Because a lot of people say, “I don’t see any difference. I’m not sure if it worked or not.” We keep hearing these reports that maybe the government doesn’t even know where some of this money went.

ROMER: I share the same skepticism or sort of disappointment that the American people share of how that first $350 billion was put in. And I think one of the biggest problems is, we don’t know a lot about what happened.

And one of the things that President Obama has made so clear is that this time around, now that we’re in charge, he wants complete transparency. He wants a full accounting. And I think that’s going to restore the confidence of the American people and it’s going to make it more effective. SCHIEFFER: This economic recovery plan that we’ve seen -- the House passed one version, and it looks like the Senate is going to pass one that’s a little bit different -- how do we know that’s going to work?

Because as I listen to these economists on both sides -- some say, “This works,” others say, “That works” -- there seems to be no overall consensus on what works. When would you think we’d be able to see some effect when this stimulus package passes?

ROMER: Well, I think there are two things to say. One, I think there is more consensus that it’s going to work than -- than maybe your description would lead us to believe.

I think economists actually throughout the sort of ideological spectrum, I think, are -- are agreeing that the kind of program we’re talking about, this well-balanced program, a bold, big program, it’s going to be very effective.

You know, the president gave us as a crucial sort of marker any plan that comes out has to create between 3 million and 4 million jobs. And one of the things that I’ve found very reassuring is sort of forecasters across the spectrum, from Mark Zandi at Economy.com to macroeconomic advisers to our own estimates, all say that the programs that we’re looking at are going to do what -- what the president said we needed to do.

SCHIEFFER: The -- the Senate, of course, took out a lot of the money that was going to states, that the states, of course, obviously are saying, “We need that money back.” Do you think that that’s going to be put back in this? And would -- would -- if it was added, would that be something the White House would go along with?

ROMER: Certainly, you know, we’re pleased that something is coming out of the Senate and that we’re going to be getting a bill into conference we hope next week. I think what the particular parameters look like, we’re -- we’re monitoring and waiting to see.

I think the important thing -- you were right. One of the things about that state fiscal relief is it does get out the door quickly. It is something that we think creates jobs quickly.

And so, as we’re thinking about the -- the final package, one of the things I’d be looking for was, if that’s out, is something else in that will -- will serve that...

(CROSSTALK)

SCHIEFFER: How bad would it be if this whole thing went down?

ROMER: I think it would be -- the word the president used was catastrophic. I think we can’t -- you know, the numbers that are coming out that I certainly have been watching since I joined the transition are, quite frankly, truly frightening. And I think all of the estimates, if we don’t do something, are that this could be very, very serious. And as Senator Conrad mentioned, the fear of deflation, the spiraling out of control, that’s the thing that’s in the back of my mind. So, you know, the point of optimism is, I feel very strongly it’s in our hands, that if we can get this package through, we can turn it around and be back on the road to growth.

SCHIEFFER: All right. Thank you so much, Doctor.

And I’ll be back with a final word in just a moment.

SCHIEFFER: Finally today, this is not a commentary. It is a collection of facts: 598,000 jobs were lost in January. That’s the largest loss in 13 consecutive months of decline.

Since December of 2007, 3.6 million jobs have been lost, half of them in the last four months. More than 11.5 million people are now unemployed. Unemployment stands at 7.6 percent.

The underemployed -- that is, those who have given up looking for work and those who are working part-time because they can’t find full- time jobs -- now stands at 21.7 million people.

More than 13.5 million Americans now owe more than their homes are worth. Retirement accounts have lost more than $2 trillion in a year. The global economy is getting worse, which will make it harder to sell American goods abroad, and the banking system is a mess.

The following is also not a commentary. It is a true-false test. The process is underway, but in light of those numbers you just heard, wouldn’t it be better for all of us and for them, as a matter of fact, if Congress, Democrats and Republicans, now put less emphasis on partisan games from here on in and more emphasis on trying to resolve all of the above?

That’s our broadcast. We’ll see you next week right here on “Face the Nation.”

END

.ETX

Feb 08, 2009 11:08 ET .EOF

CBS’S “FACE THE NATION”

FEBRUARY 8, 2009

SPEAKERS: BOB SCHIEFFER, HOST

SEN. JOHN MCCAIN, R-ARIZ.

SEN. KENT CONRAD, D-N.D.

CHRISTINA D. ROMER, DIRECTOR, COUNCIL OF ECONOMIC ADVISERS