MR. GREGORY: So back then during the campaign when Senator McCain talked about the strong fundamentals of the economy, it was then-candidate Obama and his team that roundly criticized McCain, saying he was out of touch, he didn't get it, he didn't understand how bad the economy was. And yet now the president's talking about the strong fundamentals of the economy. So what's different between then, the campaign, and now, except for the fact that the economy's gotten dramatically worse?
DR. ROMER: I think when the president says he's focusing on fundamentals, what he means is, is we're focusing on, on fixing the fundamentals; that we've always said we're not looking at the ups and downs of the stock market, we're looking for those crucial indicators: when are jobs turning around, when are sales turning around, when do we see consumers coming to life? That's the kind of thing that--certainly that I'm looking at in terms of when's the economy going to be doing better and, and when can we see some hope.
MR. GREGORY: Are the fundamentals of this economy sound?
DR. ROMER: Well, of course the fundamentals are sound in the sense that the American workers are sound, we have a good capital stock, we have good technology. We know that, that temporarily we're in a mess, right? We've seen huge job loss, we've seen very large falls in GDP. So certainly in the short run we're in a, in a bad situation.
MR. GREGORY: All right, but then what's different between now and then, when the economy was in even better shape than it, it is now, when McCain was saying the fundamentals were strong and then-candidate Obama criticized him?
DR. ROMER: I think--again, I think what, what we're saying is that the, you know, where we are today is obviously not good. We have a plan in place to get to a good place. I think that's the crucial--a fundamentally crucial difference, is to make sure that you have put in place all of the comprehensive programs that'll get us back to those fundamentals.
The other thing I think is so important, the president has actually said in terms of fundamentals, we need to make changes. That's why he's focusing on energy, education, getting the budget deficit under control, precisely because he said...
MR. GREGORY: Right.
DR. ROMER: ...when we get through this thing, we want to be in a better place.
MR. GREGORY: But perhaps Senator McCain was right when he said the fundamentals of the economy were strong, because you have President Obama saying roughly the same thing now?
DR. ROMER: I really think you're misinterpreting the president. I think the key thing that the president was saying is we have our eyes on the fundamentals, that is why we're concerned about.
Now I have to step in here and point out that John King tried to make a similar case today on his show State of the Nation which is a perfect example of Villager group think. I don't know how someone who purports to be a journalist can't understand the difference between the word sound and the word strong. John McCain was claiming that the economy was just fine and in point of fact didn't even acknowledge the recession we were in until the Bush Administration announced last Septemeber that we had been in a recession since the previous December. Then Senator Obama had been talking about the sorry state of our economy for months before that announcement and he hasn't suddenly said everything was fine. I thought Dr. Romer did a great job of not only setting the record straight but also calling Gregory out for misrepresenting what President Obama said.
MR. GREGORY: But there are, there are economists, like liberal economist and columnist Paul Krugman, who say it's not premature at all if you look at the facts. This is what he wrote on Monday: "Many economists, myself included, actually argued that the [stimulus] plan was too small and too cautious. The latest data confirm these worries--and suggest that the Obama administration's economic policies are already falling behind the curve. To see how bad the numbers are, consider this: The administration's budget proposals, released less than two weeks ago, assumed an average unemployment rate of 8.1 percent for the whole of this year. In reality, unemployment hit that level in February--and it's rising fast. ... As a result, Mr. Obama's promise that his plan will create or save 3.5 million jobs by the end of 2010 looks underwhelming, to say the least. ... Three point five million jobs almost two years from now isn't enough in the face of an economy that has already lost 4.4 million jobs, and is losing 600,000 more each month."
DR. ROMER: I think the crucial thing to realize is that the fiscal stimulus that we've done is not the only thing that we've done. I love one of Secretary's Geithner's comments, is there's more fiscal stimulus in economic rescue than in stimulus, right? That we now that if we get, for example, our banks lending again, that's very good for spending. People can do investment, people can buy cars. And so it's not as though the stimulus package has to carry the whole weight. Likewise, our housing plan. One of the things that that does is allow a lot of people who hadn't been able to refinance to get the lower mortgage rates that have come about, and that's like a tax cut for them. Mark Zandi has estimated something like $30 billion of extra spending coming out of that. So I think if, if stimulus were the only thing carrying the lift...
MR. GREGORY: Mm-hmm.
DR. ROMER: ...Paul Krugman might be right. But to realize we've got a much more comprehensive plan.
Funny how David Gregory never found the occasion to quote Dr Krugman until AFTER the stimulus was passed. I seem to recall that the only point of view he ever put forth was of the economists who wanted the stimulus bill to be smaller back when, you know, it might have actually counted with public opinion. But again Romer has the facts on her side and she is more than willing to enlighten Gregory.
MR. GREGORY: I want to ask you about a few items in the news. One is health care, the administration signaling that the president is now open to taxing employer health benefits for employees. This was something that John McCain proposed in the election and President, then-candidate Obama was opposed to it. Is he changing his view?
DR. ROMER: He is still opposed to it. He certainly was very critical and very skeptical of it. It is certainly not in our proposal. And we have proposed other ways to, to deal with health care and to fund it. And so no, it is not something that he supports.
MR. GREGORY: So the reports about him now considering this being open to it are wrong?
DR. ROMER: He--his, his, his skepticism from the campaign absolutely is, is still there.
MR. GREGORY: So he's opposed to it. It's off the table.
DR. ROMER: He is absolutely opposed to it and skeptical and...
MR. GREGORY: You're not saying it's off the table.
DR. ROMER: I, I'm not going to say one way or the other that...
MR. GREGORY: But he, he might consider it, in other words?
DR. ROMER: I think what he has said from the beginning is there are no such thing as Democratic and Republican ideas, there are just good ideas. He will listen to good ideas. This is not one that he has, has ever supported.
MR. GREGORY: OK, but he's not ruling it out.
I don't know how much clearer Dr. Romer would have had to have been. This is classic David Gregory though. He wants to present a negative point of view so he tries to make sure that he casts doubt all the way to the end. Dr Romer literally said "He is still opposed to it" but was that enough for Gregory? Of course not. Look at how many follow up questions he asked to this one question just so he could say in the end it wasn't off of the table. Funny how on the one hand he wants Dr. Romer to declare something definitive and on the other hand if she had he would be complaining that President Obama wasn't bipartisan enough. Go figure.
MR. GREGORY: Small business. There's a proposal that the administration is reportedly thinking about specifically targeted towards helping small businesses. Can you describe it?
DR. ROMER: Absolutely. We know that small businesses are the engine of growth in the economy, and we absolutely want to do things to help them. There are already a lot of things to help them in the recovery package, and some of what will be coming out are the things that were in the recovery package: increasing the SBA loan guarantees, lowering fees. But we also know that, that we've talked to a lot of small business owners, and one of the trouble they're having is just community banks don't want to lend to them because the secondary market in SBA loans has virtually disappeared. So one of the things we'll be...
MR. GREGORY: The secondary market, where most of the lending takes place, about 40 percent of lending takes place in the country.
DR. ROMER: Absolutely. And where, you know, banks go and they sell those SBA loans off their books, and then they can go back and make more of them.
MR. GREGORY: Mm-hmm.
DR. ROMER: And that market has just been frozen. And one of the things we'll be announcing is a program to get that market cleared and, and working again.
MR. GREGORY: And how will you do it?
DR. ROMER: Basically the government will go in and step up and, and buy those loans if, if there aren't private investors to do it, to get them...
MR. GREGORY: How much money? How much money will the government pump into the market?
DR. ROMER: I think that's all going to be announced tomorrow. I don't want to take all the thunder away. But it is a significant amount. It is--we want to, to, to demonstrate a genuine commitment.
MR. GREGORY: Right.
DR. ROMER: Because we know we're doing a lot of help for banks, we're doing a lot of help for homeowners. Small business people need it, too.
Now here is where it gets interesting because the running Republican rhetoric is that President Obama isn't doing enough for small businesses. But Dr. Romer pretty effectively blows that argument out of the water. Once again its easy because the facts are on her side. But you would think that Gregory would know all these things since he is supposedly a journalist.
MR. GREGORY: Most economists believe that until the financial system is shored up, until these distressed assets are removed from these banks' balance sheets, stimulus won't work and the economy won't recover. And yet the administration has yet to provide a detailed blueprint about how they're going to remove these assets. What's taking so long and what is the plan?
DR. ROMER: All right, so there are two things to say. One is I don't agree with the idea that you--that, that stimulus can't do anything until the financial rescue is done. I think in truth, those things go parallel. And if you think back to the Great Depression, it's actually--getting the real economy going was the main thing that, that helped to make--bring the banks around.
MR. GREGORY: But didn't FDR first shore up confidence? The bank holiday was what he did first before he got to fiscal stimulus.
DR. ROMER: Actually, you know, a crucial thing--when he did the bank holiday, it took the next two years to actually clean up the banks, that we actually did not get the things really cleaned up until 1935. And that a big part of that cleanup was he managed to turn around the real economy. We saw employment growing again, GDP growing again, and that inherently helps your financial system. On the financial rescue, again I got to say we've already done a tremendous amount, right? Just last week the, the consumer and business loan initiative got into place, that's going to be crucial for getting, again, those secondary credit markets going. We're in the middle of the stress test, right?
MR. GREGORY: Right.
DR. ROMER: We're doing, we're doing almost the equivalent of what Roosevelt did with the bank holiday, right. He shut it down, he checked all the books. Well, we didn't shut the banking system down, but we're checking all the books.
I just love when guests come on and correct David Gregory. It makes him look like the clown he really is and it also goes to kill some zombie Republican lies. Thank you Dr. Romer for your performance today.
On to Eric Cantor. If you can spot a straight answer to any question that Gregory asks please feel free to let me know.
MR. GREGORY: It sounds like the administration is going to announce tomorrow that they'll provide at, at least $10 billion to try to unfreeze the credit market for--specifically for small business. Are you aware of the, of their plan, and do you support it?
REP. CANTOR: Well, you know, David, I've read the same reports that many people are reading about the announcement tomorrow. I think the, the crux of the issue is the only credit markets that are working, by and large, are the credit markets where the government has stepped in to guarantee the issuance of the debt. We've got to get credit markets flowing again, get private capital into the system. And the problem has been there's a lack of confidence, because this administration has not come forward with a plan on how to take these impaired assets out of the markets.
MR. GREGORY: OK. Well, let's talk about that. Because on the one hand, you're, you're really concerned about how much spending is in this budget, how much spending was in the stimulus. And you were opposed to the stimulus and you sound like you're opposed to this budget, as well. What would you do to get these impaired assets off the books? You know that the budget calls for $750 billion of additional spending to help recapitalize the banks, to absorb some of the losses if they're going to provide financing to private equity to come in and buy those assets. What would you do?
REP. CANTOR: David, the, the, the difficulty is, as you have suggested, is trying to evaluate these assets and put a value on the assets underlying these toxic securities. That has always been the problem. This administration has, has had since November, after they were elected into office, to come up with a plan.
MR. GREGORY: Right. Well, it was the Bush administration that started it and couldn't figure out how to evaluate the assets, either.
REP. CANTOR: That, that is correct. But the difficulty is that we don't see Treasury Department now going in and doing the difficult work. If they were to come out and announce that blueprint to say, "Hey, we are going to divide the banks up into three: those that are healthy, those that are impaired and those that, frankly, cannot survive." And then they--if they would announce that there would be some type of RTC-like plan to take these assets off the books and off--and out of the market, you would, I think, begin to see some confidence come back on, on Wall Street.
MR. GREGORY: All right, but you just said that you want private equity to come back into the credit market, and private equity might do that if there's incentive to do that, if the government provides the financing for them to buy some of these distressed assets. My question to you: You're complaining about too much spending, how much are you willing to spend to buy these assets? Because they may be impaired at a level of at least $2 trillion.
REP. CANTOR: Right. Well, there, there's no question. Once you take these assets off the books, then you're going to have a hole on the balance sheets of the financial institutions that you're going to have to address. But if you recall back when the bailout was passed initially, House Republicans had a plan. What we did is said we need to have more protection for taxpayers, we've got to have the investors that hold these assets play a part and put some more skin in the game. And so we came up with an insurance guarantee plan which essentially allowed you to leverage the ability to have a government guarantee, have the investor pay for that guarantee and not have all the taxpayer dollars flow out. And what we're seeing now is what's working in the credit markets is exactly that. The FDIC and others has guaranteed the issuance of debt for some of these institutions, and that's how the commercial paper market has come back a little bit.
MR. GREGORY: Are you willing to vote for more money to capitalize the banks and to, in, in essence, absorb the losses if these assets continue to go down? How much are you willing to vote for?
REP. CANTOR: David, if you're talking about a TARP 3, we've got a long way to go. I think it goes back to the fact that this administration has not put out its plan as to how we're going to be accountable for those dollars spent.
MR. GREGORY: Mm-hmm.
REP. CANTOR: You just heard Dr. Romer, you know, have some difficulty explaining how some of the dollars are spent. You've not seen them come out with a blueprint on what to do with these toxic assets and what the structure is going to be so investors can know their exposure. Again, at the end of the day we want the debt markets to work again because the only way that the financial institution in the, in this country will survive is to get private capital back into the game.
MR. GREGORY: Are you going to vote for the president's budget?
REP. CANTOR: Listen, the budget process, as you know, David, is one that has just begun on Capitol Hill. There is a lot of, I think, reticence to embrace his budget on both sides of the aisle. This budget, frankly, doesn't have the focus that we need right now in this economy. The focus should be, job one, fixing this banking system and trying to get jobs created again.
MR. GREGORY: Right. But the, but the budget says there's $750 billion to help capitalize the banks. You, you have not offered a figure on what you think is necessary to do that, other than saying you got to do something to get private capital in.
REP. CANTOR: David, David, the Republicans will have a plan. We had a stimulus plan. You know, part of the problem with being in the minority is, David, that sometimes your colleagues in the press don't want to cover the ideas that the minority has. We had a plan on the stimulus. It was, it was tailored to small business tax relief. It was focused on what a stimulus plan should be, which is the preservation, protection and creation of jobs. And what we see in this president's budget is, is a lack of that kind of focus. I mean, what we're talking about with him is, is trying to address the energy situation, the health care situation. And you heard Dr. Romer here just today say if we can look long term, these short-term problems will just fix themselves. Well, that's not true. When you sit here and advocate long term, an energy tax and a tax that some have some have said will amount to about $3,000 per household of four, that means everybody that pays an electric bill will have an additional tax, everybody that pays a gas bill will have a tax, everybody that buys anything manufactured in this country will essentially have an $800 per man, woman and child tax. How is that something that will help create jobs in this economy? Again, they're trying to do entirely too much and not focus on the job at hand, which is to get these credit markets working again and have small business create jobs again.
I counted six straight forward questions from David Gregory that Eric Cantor didn't even come close to answering.
1. Are you aware of the, of their plan, and do you support it?
2. You know that the budget calls for $750 billion of additional spending to help recapitalize the banks, to absorb some of the losses if they're going to provide financing to private equity to come in and buy those assets. What would you do?
3. You're complaining about too much spending, how much are you willing to spend to buy these assets? Because they may be impaired at a level of at least $2 trillion.
4. Are you willing to vote for more money to capitalize the banks and to, in, in essence, absorb the losses if these assets continue to go down? How much are you willing to vote for?
5. Are you going to vote for the president's budget?
6. You, you have not offered a figure on what you think is necessary to do that, other than saying you got to do something to get private capital in.
That last one of course is more of a statement than a question but it was an opportunity for Eric Cantor to give a figure on how much the Republicans would be willing to spend to bring private capital back in to the market. Of course just like the rest of the questions Cantor doesn't even attempt to address it and instead he talks about a mythical plan that the Republicans had that nobody has seen and goes into attack mode. Did you notice how Gregory just allowed his answers to stand though without any follow ups unlike the segment with Dr. Romer?
MR. GREGORY: Where was all the concern about fiscal conservatism and reining in spending from you and your Republican colleagues during the Bush years?
REP. CANTOR: Well, well, listen, David, if you're asking could we have done better, absolutely. If you're asking us did we blow it in terms of restoring fiscal sanity into this system, absolutely. But that doesn't give now the Democrats in power in this town to go in and repeat the mistakes that perhaps we may have committed in the past. You know, you look at this budget, how can it be that they claim that they're balancing the budget when they are doubling the debt, when they are increasing the deficit to record levels of a trillion, seven hundred billion dollars this year? How is it that, that that is a fiscally sane plan? We've got to remember...
MR. GREGORY: Did you oppose President Bush's budgets that increased the deficit or the debt?
REP. CANTOR: Well, David, we were in a time where I think the priority then was to make sure that we could deliver the money for our troops. And I joined along with Democrats on, on the other side of the aisle as well as my colleagues on mine to say the most important thing we needed to do at the time was to support the efforts of our military to insure our national security.
MR. GREGORY: So it was OK to, to support deficit spending at wartime, but it's not OK now during an economic crisis, when Warren Buffett calls that the equivalent of Pearl Harbor?
REP. CANTOR: Listen, I, I, I--there is no question that priority one has to be to restore the confidence in this economy, and, and we must do that which we have to do. But when you're talking about the type of budget--and look, look, over the last 50 days we have passed the stimulus bill, we have passed the omnibus spending bill. And it is striking to see the lack of change in that bill, the type of waste and pork barrel spending, the earmarks that exist in that bill. You've got that train from Disneyland to Las Vegas, you have, you know, you have other things like the, the money that goes to remove pig, pig odor.
MR. GREGORY: All right.
REP. CANTOR: I mean, come on.
MR. GREGORY: How many earmarks have you supported...
REP. CANTOR: Well...
MR. GREGORY: ...in the time in Congress?
REP. CANTOR: Well, I mean, I...
MR. GREGORY: Because Democrats provide data saying that you voted for more than 46,000 earmarks. Is that wrong?
REP. CANTOR: Well, in terms of the votes and the budgets in the past, clearly. But I for one, along with our leader, John Boehner, have said we ought to all embrace a moratorium on earmarks so we can get the process working again.
MR. GREGORY: Mm-hmm.
REP. CANTOR: And we're looking to President Obama. You know, he did promise, he said he'd come to Washington to get rid of the pork barrel spending. We saw him sign the omnibus spending bill without doing anything of the sort. And what I would say to him is we will work hard to sustain his veto if he will, you know, keep--deliver on his promise that he made. We'll work to help sustain his veto on these pork barrel spending bills. And frankly, if he wants to look at some of the things that he's already signed into law, we'll work as well with him to try and rescind some of those expenditures.
MR. GREGORY: But, but isn't the problem in the, in the public's mind, Republicans are calling for things now that they didn't actually do during the Bush years? And you look at some of the polling, here's our recent NBC News/Wall Street Journal poll: Which party would do a better job of getting the U.S. out of a recession? It's the Democrats that have, by a 48 to 20 percent margin, the advantage in terms of people's confidence. What do you do to change that as the minority party?
REP. CANTOR: Well, I mean, listen, as the minority party, I think part of our job is to be the honest opposition. And we also, I think, are charged with the task of bringing President Obama back to the center. That's what bipartisanship is about and, frankly, that's what the solutions are going to be about going forward. And what we see is very troubling given the last 50 days and the direction of the ideology of this administration and, frankly, of Speaker Pelosi and others in Congress. We've seen the failure of that ideology in the '70s in Great Britain, in the '80s in France. We, we understand in this country, I believe, that we're about free markets, we're about individual freedoms, and that is what our goal is. And when you apply that to the budget that we're going to be discussing over the next couple weeks, we've got a job to do. I mean, because I don't think that the American people are going to embrace this budget. I think you've seen the news reports that the administration now is on an all-out campaign to beef up the support for their budget. If it was a sane budget, I don't think you'd have to have some kind of multitiered campaign plan to get people behind it. It'd sell itself.
MR. GREGORY: Final point. You, you've mentioned that priority one needs to be fixing the financial system in this country. There's been a debate touched off this week about whether the financial press has done enough to sound the alarm prior to this bubble bursting, about how dangerous the financial system was. As a member of Congress, do you think you did something adequate to raise the alarm about what was happening on Wall Street in the financial system?
REP. CANTOR: David, I think there's a lot of blame to go around everywhere: regulators, members of Congress, the administration, the prior administration. All of us, I think, can, can take some of that blame. The press, always. But you know, at, at the end of the day it's about going forward. And I think what we're going to have to do is understand that there was so much risk out there in our system, and the old regulatory structure that we have in place just did not provide the transparency of that risk to the investors. And that's what we're going to have to improve and act quickly on, because part of this is about making sure this doesn't happen again.
Eric Cantor is great at avoiding answering the question that is asked and of course Gregory isn't really following up hard with him but I want to point out a blatant contradiction in what Cantor said today that Gregory didn't even attempt to point out.
First he said
REP. CANTOR: Well, I mean, listen, as the minority party, I think part of our job is to be the honest opposition.
Then he turned around and repeated the thoroughly debunked everywhere but FoxNews cannard about the stimulus bill this time attributing it to the omnibus bill.
You've got that train from Disneyland to Las Vegas
I guess when you lie as much as Cantor and his colleagues do you are sure to get your lies crossed up sooner or later.
Now if you think its just Eric Cantor who doesn't have any answers or alternatives to President Obama's plan then you should check out Senate Minority Leader Mitch McConnell this morning on "This Week with George Stephanopolous".
And that dovetails with House Minority Leader John Boehner's statement that the GOP shouldn't even consider themselves as legislators and instead just focus on winning messaging wars. It has got to be really hard to support such a sorry ass party at this point. I mean seriously, how much do you have to just disregard reality in order to be a Republican these days? Not even David Gregory is going to be able to save their asses come election time next year.
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