MR. KERNEN: The House takes up the president's economic recovery plan this morning. Here now with a First on CNBC preview, Representative Paul Ryan, ranking member of the Budget Committee.
Good morning, congressman.
REP. RYAN: Good morning, guys. Good morning, Becky.
MS. QUICK: Good morning.
MR. KERNEN: Guys, it's Carl and Joe --
MS. QUICK: Well, I'm not a guy.
REP. RYAN: Okay, good morning, Joe, good morning, Carl, good morning, Becky.
MS. QUICK: Thank you, congressman.
MR. KERNEN: Thank you, congressman. I feel a little bit better. What's wrong with this stimulus? We keep trying to figure it out. A stimulus means stimulate.
REP. RYAN: How much time do you have?
MR. KERNEN: We've got to spend. We've got to spend. Come on, there's no demand from the private sector, congressman, so the government is going to step up and supply that demand.
REP. RYAN: Okay. Let's assume I buy into this demand side argument, which actually I would argue with. Most of the spending doesn't even occur until 2011 and beyond. So even if you were a committed Keynesian, this bill doesn't pass the test.
MR. KERNEN: What does that mean most of it? How much?
REP. RYAN: Okay. According to the CBO, 7.3 percent gets spent in 2009, 37 percent gets spent in 2010 and the rest of it gets spent afterwards.
MR. KERNEN: Okay.
REP. RYAN: The rebate checks flow out fast and it makes the statistics look a little bit better, but the kind of spending that the demand siders tell us to do is infrastructure, infrastructure is six percent of this bill.
So the kind of spending that's in here is a bunch of pork stuff. It's a laundry list of special interest spending. It's a 1,000-page bill. We got it at 11 o'clock last night. It spends $800 billion and you add interest costs to it, that's another $350 billion, we're shoveling more than $1 trillion out the door in about eight hours' notice after seeing the bill and this is not a stimulus package, it is a big spending bill.
So, look, I don't know a member of Congress who does not think we need an efficient and effective fiscal response. We all do. We've all proposed alternatives, not this one. This one won't work and my fear is that we're going to make matters worse. We're all going into the credit markets, the U.S., all these other countries at the same time. We're going in the credit markets and we're going to be borrowing something like six times more than we ever have in a single year in the history of this country at a time when all these other nations are doing the same thing.
What do you think that's going to do to the yield curve? What do you think that's going to do to our monetary pressures?
And so I just think that we're going to buy ourselves more problems by doing this borrowing and spending and even under the Keynesian rubric, this isn't the right kind of spending and it's not timely spending.
MR. QUINTANILLA: Have you heard, congressman, the latest take by Stephen Colbert playing off of the president's book, The Audacity Of Hope, that the Republicans are now the audacity of nope?
REP. RYAN: I've heard that, but that belies the fact that we've been offering alternatives, and that the alternative we brought to the floor using Christina Romer's own methodology, the president's top economist, using her own methodology, our bill would have created twice the amount of jobs for half the cost, a $400 billion of tax incentives for businesses, entrepreneurs, start-up companies and families and created 6.2 million jobs using her methodology.
So we think we've come to the table with good ideas that are better, but more to the point, if you want bipartisanship, you've got to have collaboration and every attempt we made at trying to improve this bill, at having input in this bill was rejected on party line votes. Look, the Democrats have it all, they can run it all. It is completely their prerogative. They've chosen to freeze us out of this process that is completely their right.
So how do you expect bipartisanship though if you deny collaboration? And we simply think we could have done better. We think this is a big, missed opportunity to pass the kind of fiscal stimulus we need that would actually produce jobs in this economy, instead, we believe this is going to do more harm than good at the end of the day.
MR. KERNEN: All right. How will be that clear do you think? When and how? So it's probably not going to work to help that much and the down side is going to be in the dollar? Is it going to be in all of the above?
REP. RYAN: All of the above. I think it's going to be -- our borrowing costs are going to go up. I think the yield curve is going to send us some interesting signals. I think we're once out of the deflationary woods, we're going to have some inflationary problems and I think at the end of the day we're still going to have stagnation. I worry about stagflation at the end of the day here, I mean, I don't think we're going to have the Jimmy Carter levels, you know, stuff, but stagflation is a term, we're going to probably start talking about it again.
I worry about the misery index once we're out of these deflationary problems. Right now, deflation is the problem, but with all this spending, you know, that's the problem and we're going into the credit markets when everybody else is and that's going to create problems for us, and I just don't think buying $600 million worth of new cars and golf carts for federal bureaucrats is really going to turn this economy around. Sending people less than $10 a week in a rebate check, hoping they go to Best Buy and buy something from China is going to turn the economy around, you know, all of this pork -- there's more money in arts and culture in this bill than there is to help small businesses keep their employees and buy new plants and equipment.
So, to me, the priorities are all wrong and that's the problem here.
MR. KERNEN: You know, congressman, I remember when -- maybe it was president-elect, but I was gratified and heartened to hear that we're going to have stimulus, but we're going to do it right, we're not going to waste money, we're going to watch all of our pennies and we're going to make sure we do all these things correctly. Now, he's a smart guy and a well-intentioned guy -- what you're describing doesn't seem like it could happen? How did it happen?
REP. RYAN: I think what happened was instead of having Larry Summers and Peter Orszag write this bill, which would have been a better bill, more economic fundamentals in place, he let Nancy Pelosi write the bill.
MR. KERNEN: Why?
REP. RYAN: I think he just deferred, he just got in office, the guy has only been on the jobs a few weeks. He just deferred to congressional Democrats. He let them write the bill and what happens when you open something like this to a bunch of members of Congress who have eight years of pent up spending demand from their pet special interest groups; they just throw all that money in.
And so you let the congressional Democrats write a bill, which it's basically an omnibus spending bill and call it stimulus and then they're just driving it through. So the mistake the president made is he actually didn't lead into --
MR. QUINTANILLA: Well, the president said in his news conference that what he set out initially is pretty much what Congress set back.
REP. RYAN: That's not my understanding.
MR. KERNEN: And you'd be disappointed if it was?
REP. RYAN: I'd be very disappointed if that was the case.
MR. QUINTANILLA: Because it's easier, congressman, for House Republicans and Senate Republicans to go after Reid and Pelosi whose approval numbers are a fraction of the president's numbers. You don't want to take on the president --
REP. RYAN: I don't care about politics --
MR. QUINTANILLA: Because his approval on stimulus is 67 percent and yours is 30 percent.
REP. RYAN: Carl, I don't care about politics; I care about turning this economy around. We're losing -- the unemployment rate in Rock County, Wisconsin is 8.5 percent right now. I don't care who gets credit or who gets blamed; I want this to work and this isn't going to work. That's the problem.
MR. KERNEN: All right, congressman. We switch hats sometimes; I give Carl one to wear. That was Carl, that's what we're here for.
MR. QUINTANILLA: To keep people guessing.
MR. KERNEN: To keep people guessing. A lot of people were mad at Carl yesterday because he was such a huge Republican, a lot of people writing in. We like to get it from both sides.
REP. RYAN: I'm all for it.
MR. KERNEN: And we loved having you on, congressman, and hope to see you again soon in studio or from wherever.
REP. RYAN: Great. Thanks.
MR. KERNEN: All right. See you.