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MADDOW: Joining us now is Democratic Congressman Barney Frank of Massachusetts, the ranking Democrat on the House Financial Services Committee. Congressman Frank, thanks very much for your time tonight. I appreciate it.
REP. BARNEY FRANK (D), MASSACHUSETTS: Welcome, thank you.
MADDOW: When we spoke on Friday right after we learned about the downgrade, you said taking Standard & Poor`s seriously is not something rational people ought to do, the market tanked today -- but did not follow S&P`s advice. Everybody bought U.S. treasury bonds.
What explains that?
FRANK: Well, the market is, to a certain extent, a hall of mirrors. Reality gets displaced by people`s perception of reality, and I`m not surprised. I said that people shouldn`t pay attention to Standard &
Poor`s. And, you know, the rating agencies presumably bring to the table specialized knowledge. Where they were supposed to be doing that with mortgage-backed securities, they screwed it up badly. They admit -- they just told people this was wonderful stuff when it was crap and didn`t check it.
But with U.S. budget, they have no special expertise, everybody knows everything. So, I am disappointed but not surprised. But the key, Rachel, I think is we have to figure out what do we do from here? You`re right, we`ve got to get some jobs, and we have to deal with the debt. And it`s one way to do it.
We are today spending $140 billion a year approximately on Afghanistan and Iraq to no good purpose. Iraq was always a mistake in my judgment, Afghanistan started out with a reasonable possibility. It has now
deteriorated. We continue to defend Western Europe against non-existent threats.
I want America to be very strong and able to defend itself, but I don`t want us to take on the job of policing every political dispute everywhere in the world. We can reduce our military spending by $250 billion a year, $140 billion from the Iraq and Afghanistan wars and over $100 billion in Western Europe and Japan and other wealthy nations and bring that money home.
We could use half of it to bring down the deficit and half of it to produce jobs. You know, there are today 600,000 fewer local employees, public works employees, people who shovel the snow, collect garbage,
firefighters, teachers, police officers, because we`ve sent that money overseas in ways that is usual.
I want to do things overseas that will help fight poverty and fight AIDS, but I think, now, we have to say to our friends on the other side who say, oh, we must cut spending, don`t tell me to tell a 78-year-old woman
living on $19,000 a year that she gets no cost of living, but you`re going to continue to pour money into Karzai`s coffers.
So I think at this point we ought to say, OK, I agree complete with your analysis of how we got here, but now, we can say to some of those people who helped us get here, OK, let`s bring a couple of hundred billion
dollars home that was spent overseas in unconstructive ways and that` what we need to get jobs. That`s instead of putting the money into Kandahar, and Kabul, and Baghdad, where it`s not being used well. Let`s bring it back, to put it into our cities, put it into highway construction, put it into people back to work here.
MADDOW: There`s been a lot of coverage recently speaking this year about an emerging split among Republicans on that, the issue of defense spending, and whether or not the Pentagon might be a place where they could think they could some cuts.
There`s actually been less coverage of whether or not Democrats are unified around that idea.
How much support do you feel you have from the White House and from other congressional Democrats?
FRANK: Well, from the White House, I`m worried about that.
On the congressional Democrats, I offered an amendment to cut by a substantial amount the increase to the Pentagon. I would have liked to do all of it. But I want to test it out.
Democrats voted with me on that amendment 154 to 54. The Republicans voted heavily against it, but we did get about 60 or 70.
Ron Paul has been very good on this, and some other Republicans.
But my problem is the president, and I strongly support him and I will, but I`m appalled to read that he is thinking about exceeding to an Iraqi request that we stay in Iraq longer than George Bush wanted to. And
Leon Panetta, who is a great liberal and concerned about the budget when he was in Congress, has now bought into that notion that more and more is important to the Pentagon, even if he goes beyond our legitimate defense needs. And he said the other day, and I was very disappointed and wrote to the president, say it isn`t so, Joe, or Barack.
He said let`s cut entitlements and let`s not cut the military.
Now, there`s also revenue. Let`s be very clear what we`re talking about, taxes. Let`s not call it revenue. It`s raising taxes.
I want to go back to the Clinton tax cut -- tax rates for people in the top 2 percent. Here`s what we are proposing: if you make more than $250,000 a year in taxable income, after all your legitimate deductions, if
you`re making more than $250,000 in taxable income, for every $1,000 additional you make, I want to tax you $30 -- $30 on every $1,000 above $250,000. If we do that, we pull out of Iraq and Afghanistan, we can start on a better path of reducing the deficit, then we have to do restraints elsewhere, we don`t have to cut old ladies living on $19,000. We don`t have to make people who stood on their feet hard all their lives work a few more years.
You know, the irony is, we are subsidizing the military budgets of Western Europe -- none of them pay anything like the percentage of their gross domestic product to the military that we do so that they can give
their people better health care and better retirement and better benefits altogether.
So -- but the answer is, yes, some of the Tea Party people, you know, maybe it`s a stopped clock theory. You know, the stopped clock is right twice a day. They -- many of them do correctly perceive this against the
establishment Republicans, John McCain, Dick Cheney position.
So, I`ve -- we`ve been making progress, but this is our moment. If we cannot at this point when we`re told we`re in a crisis, when the stock market is tanking, when we are unfairly being downgraded by S&P the fact is that it`s out there, when there`s this panic about the need to make substantial deficit reductions, to continue to spend over $100 billion a year in the corruption of Afghanistan and Iraq, and deny that to debt
reduction and job creation here is a definition of stupidity.
MADDOW: Congressman Barney Frank of Massachusetts, everybody thinks that you are so far on the left of the Democratic Caucus -- you would say stuff that would never appeal to Republicans, and every time you`re on the show, you talk about things that would appeal to Republicans. I appreciate you.
FRANK: I`m working with several Republicans and I will continue to do it. I`ll hang out with anybody if I can get something done right.
MADDOW: Congressman Barney Frank, thank you, sir. Appreciate it.
We will be right back.
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