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MR. GRIFFETH: The Senate has been voting on amendments to its version of the stimulus package. They just voted a little while ago on one on the buy American issue which we'll get to in a moment. The big question is, can they vote on the whole thing by Friday, as Senate Majority Leader Harry Reid said he wants to happen, so they can meet the president's deadline to have this done by the middle of this month? Some negotiating tonight. Joining us, Senator Ron Wyden, a Democrat from Oregon, and we've got Senator Tom Coburn, a Republican from Oklahoma.
And gentlemen, thank you so much for your time. I know you've been busy tonight with these votes.
SEN. WYDEN: Thank you.
SEN. COBURN: Glad to be with you.
MR. GRIFFETH: Senator Wyden, we heard just a moment ago you had voted on this amendment on buy American, softening a bit to have it comply with current trade pacts that are out there right now. How does this stand on this? Are you in favor of the buy-American clause?
SEN. WYDEN: I'm in favor of what Chairman Baucus and our efforts in the Finance Committee have been all about, that is to try to stimulate the economy, create more good-paying jobs, but we don't want to make mistakes in this area that would discourage American exports. Good-paying exports are a key opportunity for our economy. I think we struck a reasonable balance.
MR. GRIFFETH: Senator Coburn, you okay with it?
SEN. COBURN: No, I'm not. President Obama last night said there shouldn't be anything related to that issue in this bill. And perception is very important with our trading partners. And this is not going to go down well. It's going to be swallowed hard. It's going to create hard feelings, and it's going to create a response by them to do something firmer, exactly what we don't want to do. We don't want to get into issues that will create a trade divergence as we all try to climb out of this recession.
SEN. WYDEN: I just don't see that. I'm one of the Senate's free traders. I've consistently voted for these trade agreements, whether they've been offered by Democratic presidents or Republican presidents. But I think with Chairman Baucus' work here, we've struck a reasonable balance. This is not a punitive approach. This is not a one-size-fits-all approach. We take steps to make sure that every area where it makes sense we use American products that help create good-paying jobs. We don't do anything to discourage exports. And as somebody who has been considered one of the Senate's free traders, I think this is a reasonable approach.
MS. BOORSTIN: Now, Senator Coburn, you've said you can't mandate buy American, and you've been very critical of a lot of different elements of the stimulus package. What are some of the things you would want changed in the plan before you would vote for it?
SEN. COBURN: Well, a couple of things. Let me go back and answer one other question on that. All you have to do is listen to what the rest of the world is saying about this buy American. Look, we have great patriotism in this country. Without this clause, everybody is going to do everything they can to buy American. There is no reason to inflame the situation and take a risk in terms of starting a trade war. And that's why it's wrong.
MR. GRIFFETH: Don't you think our trade partners understand, though, sir, that we're in extraordinary times right now, which call for extraordinary measures. And this is only a temporary fix, not a long-term strategy by the United States.
SEN. COBURN: Yeah, that's exactly what they said about the Smoot-Holly treaty, too.
MR. GRASSO: Senator Wyden, I have a quick question for you. What I'm concerned with is the resurrection of class warfare that we see on a daily basis. I'm in the markets. I trade in the markets. And the money managers that I speak with are afraid of the public lynching that's going on for their creativity that's been going on, for their added wealth that they've added to the markets. We have to remember, everybody owns stocks, 100 million people in this country own stocks, from pension funds to mutual funds. So it's not Main Street against Wall Street. If Wall Street succeeds, so does Main Street. They're one in the same. Are you nervous about a class warfare resurrecting here?
SEN. WYDEN: This bill isn't a class warfare bill. And we've worked very hard on some key tax provisions to ensure it's not. For example, one area that I feel strongly about is Chuck Grassley, the Republican senator from Iowa, he's worked with a group of us Democrats to provide relief from the alternative minimum tax. This is a crushing tax. This is a tax that does more to discourage investment, does more to harm people's ability to succeed than any other. We've provided real relief here.
John Thune and I, he's the Republican senator from South Dakota, are using tax credit bonds in infrastructure. So we can continue to improve this bill, but all you have to do is look at my background. I'm the author of the fair flat tax. It gives everybody an opportunity to succeed in this country. I've never been a class warfare guy. I want to give everybody a chance to get ahead.
MS. BOORSTIN: Senator Coburn, you said that only 10 percent of this bill is actually a stimulus. What's your response to Senator Wyden?
SEN. COBURN: Well, I'll stand by what I said. If you go through it line by line in this bill, less than 10 percent is going to be truly stimulative. And let me tell you where I get that number. We just spent $160 billion in April, 12 percent of that was effective in stimulating the economy. We charted that $160 billion to our grandkids. That was a direct tax refund.
The things that we're going to do on the short term to send money back to people is not going to be spent. You know, you're talking about $10 a paycheck. What's going to happen is they're going to do the same thing. Families are making choices today. They're looking at their entire budget, and they're saying, what are our priorities? We better pay off debt or we better save money.
So when we have a stimulus that we think is going to cause increased consumer demand which is what we need, we need increased demand now, we do it in a way that's not going to create it. All we did was borrow money from our kids again and not get the desired effect.
MR. GRASSO: Senator Coburn, can I just follow up? Why aren't we talking more about cuts in marginal tax rates? All the studies have been done. We've seen that marginal tax rate cuts are instant in GDP. Why isn't there more of that? I know your background and these days showing up for work you must have to take some Dramamine. So I'm assuming that you're not happy with this. But I think we've got to push more on marginal tax rate reductions.
SEN. COBURN: We do. And the McCain alternative you're going to see tomorrow has a lower corporate tax rate. It cuts the marginal tax rate, especially on the lowest income in this country. We need to make sure people can say, what am I going to have out of my paycheck? Twelve months from now, 18 months from now, 24 months from now that's how you're going to give people confidence back and spending the money that they actually take into their pocket.
MR. GRIFFETH: Senator Wyden, your body language speaks volumes right now.
SEN. WYDEN: Obviously, the tax you make on that extra dollar you earn is critical. That's why I've got this fair flat tax legislation that would allow us to clean out a lot of the clutter, hold down rates and give everybody a chance to get ahead. I just don't --
MR. GRIFFETH: But what about a temporary fix right now in the confines of a stimulus package that could help people right now?
SEN. WYDEN: I don't think we can get what's really needed in the tax area, which is permanent tax relief which holds down rates for everybody, over the space of a few weeks. We've tried to take some practical steps. That's why I've been a champ in terms of trying to hold down the alternative minimum tax which is a crushing tax. There are incentives that reward people for work. Your point is spot on with respect to marginal tax rates. I think we can do that as part of tax reform.
But right now, you've got to look at the areas like infrastructure, for example. Let's look at the energy production tax credit. There's an example of how you have to earn the credit. You don't get the credit unless you produce energy.
MR. GRIFFETH: And Senator Coburn, the so-called McCain alternative, as you're positioning it here, the price tag is about $450 billion which is roughly half the value of the bills that are being discussed in the Senate and was passed by the House last week. This is a 10 (trillion dollar) to $14 trillion economy. Can $450 billion really jump-start it?
SEN. COBURN: Well, none of it can jump-start it until you fix the mortgage problem and the housing prices and the liquidity crisis that our banking system is --
MR. GRIFFETH: Does the McCain alternative do that?
SEN. COBURN: Well, we have another bill that's going to be coming out that will solve the mortgage and housing problem. And both those amendments will be introduced tomorrow.
MR. GRIFFETH: Do we have too many bills coming out while Rome is burning? Are we spending too much time on too many bills when we should be talking about the ones that are on the table right now?
SEN. WYDEN: No. What we ought to be doing is looking for the best areas that will encourage growth and investment. For example, I think Democrats and Republicans are going to work together, again, to try to help home buyers. We can expand the credit for people who are looking to get into the housing market. So you add up the alternative minimum tax, that's something that's going to help middle-class people get back into the market. The energy production credit, these kinds of areas are areas that suggest using the tax code. We can encourage growth.
SEN. COBURN: Let me make one last point. This bill is a $1.2 trillion bill when you add the interest costs into it. Less than 150 billion (dollars) is in any way stimulative. Why not have a bill that's much smaller than that where it's all stimulative? That's what Senator McCain is going to offer tomorrow. When it's seen, people will say, yes, it is.
MS. BOORSTIN: And Senator Wyden, just to address the housing issue, you mentioned some methods to stimulate future housing growth, but what about the current housing crisis and all the foreclosures and the bad debt there?
SEN. WYDEN: I want to help responsible borrowers, responsible homeowners get some relief. That's going to be part of foreclosure legislation. I think clearly, until financial institutions have to disclose a true measure of their liabilities, you can never solve a problem unless you can dimension it, we're not going to be able to get our arms around it. But in terms of this stimulus, expanding the tax credits for people who want to get into a home at a critical time is an area where you can use the tax code to encourage growth.
MR. GRIFFETH: All right. Senator Wyden and Senator Coburn, thank you so much for your time tonight, gentlemen.