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REP. PAUL RYAN, R-WIS.: Thank you.
AUSTAN GOOLSBEE, FORMER CHAIRMAN OF THE PRESIDENT'S COUNCIL OF ECONOMIC ADVISORS: Thank you.
WALLACE: This week, the Obama campaign launched the attack on Mitt Romney's record at Bain Capitol and told the story of a steel mill in Kansas City that went bankrupt in 2001, laying off 750 workers. Let's take a look.
(BEGIN VIDEO CLIP)
JACK COBB, STEELWORKER: They came in and sucked the life out of us.
UNIDENTIFIED MALE: It was like watching an old friend bleed to death.
UNIDENTIFIED MALE: Bain Capital walked away with a lot of money that they made off of this planet. We view Mitt Romney as a job destroyer.
(END VIDEO CLIP)
WALLACE: And Obama deputy campaign manager Stephanie Cutter followed up with this, "The goal of Romney economics has always been about wealth creation, not job creation. It's wealth creation for a handful of investors, like Mitt Romney, not about creating jobs for everyone else."
Mr. Goolsbee, can you tell me a major CEO in this country that doesn't see the main job as creator wealth for his investors?
GOOLSBEE: I don't know the answer to that. I think that when I saw Stephanie Cutter's statement, it was in response to one of the Bain Capital partners who that said, our was job creation for the investors.
WALLACE: That is for every CEO?
GOOLSBEE: Well, this business is slightly different. And I would refer to this ad not so much as an attack, as a response. I mean, Governor Mitt Romney has been running for president really for six years and over the last six years consistently said that his main qualification to be president is his business experience. And then when there starts to be some examination of what did he do when he was running that business, they get very defensive and don't want to discuss. And I don't think --
WALLACE: But do you see anything --
GOOLSBEE: They ought to open the records and --
WALLACE: But let me just ask you, sir, do you see anything wrong with what Bain Capital did, and what lots of money, millions of dollars into this steel industry, the time when the steel was in trouble, what's wrong with that?
GOOLSBEE: Well, it depends on how they did it. And as I say, they ought to turn over the annual records of the company.
If you want to establish they did not have kind of a leverage buy out mentality of pulling the resources out of the company -- turn over the records and let the people see what the business record was. Don't just pick two or three companies that are the success stories and say look at these because that invites the ones that went wrong.
In this case, the company did horribly but the investors did great. So, I think it's a little bit different than a normal investor philosophy which if we can turn the company around in a positive way, we benefit. This was the case where they canceled the pension, they drove the company into the ground but the investors from Bain actually profited a great deal.
WALLACE: Let me follow up with Congressman Paul Ryan.
Because the Obama campaign says the point of Romney economics is to make money for Bain, to make money for their investors, even if all of the workers get wiped out. And in this particular case, with the steel mill in Kansas City, the workers and that plant went bankrupt. The 750 workers were laid off and Bain did make millions of dollars in profits.
RYAN: You know what's ironic about this, Chris, Mitt Romney was running the Olympics during this time. He wasn't even running Bain during the time period in question.
I think the individual if I'm not mistaken who was running Bain is a big Obama contributor.
But for the point, Chris, what Bain did was they used private capital to help struggling businesses. What President Obama is doing is he's gambling with taxpayer money and giving money to corporate contributors, to campaign contributors like Solyndra and he's losing taxpayer money.
So, what we have in the Obama administration is this crony capitalism, this corporate welfare where President Obama thinks it's right that we taxpayer dollars to give to private companies and take bets on these private companies. That's wrong.
What is right is a private sector that you have risked that capital. You put capital in businesses whether they're struggling or not to try and grow those businesses, some succeed, some don't. On the net, when on Mitt Romney ran Bain, they were very successful. They created thousands of jobs, great success stories.
But for the point, we don't think that the government should be in the position of picking winners or losers in the economy which is the result of the president's economics.
WALLACE: Let me --
RYAN: The result of it is, we have stagnation.
WALLACE: Let me let Mr. Goolsbee into that.
I mean, what about the argument that, you know, it's the private sector. If companies want to take a chance, they take a chance. But the government shouldn't be picking winners and losers.
GOOLSBEE: Well, that's two different arguments. The first one I actually think is a little bit cheeky because in several of these bankruptcy cases, you saw the investors profit by dumping the pension on to the government and actually getting bailouts from the government, which helped to cover the profits that were going to the investors.
On the picking of winners, it is absolutely not the Obama philosophy to try to transform the government into only picking winners. By that I think Congressman Ryan is referring to things like in the midst of the crisis deciding to save General Motors and the auto industry.
WALLACE: I think wait a minute. Without speaking for him, I think he's talking about things like Solyndra.
GOOLSBEE: Well, look, in the case of Solyndra, he's citing there that the lead investor was an Obama supporter. The second investor was a McCain supporter.
So, I mean, the argument that we should go back to stimulus from three years ago and have an argument about each and every line in the stimulus rather than ask starting from right now what does the economy need. Does it need giant tax cuts for high income people and crushing of Social Security and Medicare, or do we want a balanced plan that involves some new revenues with a 3-1 ratio of spending cuts with taxes, I think that's the relevant question that we ought to be asking.
WALLACE: I promise we're going to get into what their policies are for the future in a moment. But, Mr. Ryan, Congressman Ryan, what about this argument that Mr. Goolsbee raises, well, some of the employees ended up having their pensions picked up by the federal government?
RYAN: Well, look, this is an industry that was going down, a business that was going down. They try to rescue it. It didn't succeed. It was done when Mr. Romney was at the Olympics.
So -- but more to the point that we're trying to make, the Obama administration is putting themselves in the business of taking risk with taxpayer money by picking specific individual businesses and industries to prop up for favoritism and then to raise taxes, raise regulations, so that you actually suffocate economic growth.
We believe the genius of American free enterprise is the individual small business, the risk taker and that government should remove those barriers for success, instead of raising barriers of success, but then gives some regulatory forbearance, subsidies, tax businesses -- tax credits to specific winners that they try to pick? What happens when the government sees itself as a venture capitalist, they end up picking a lot of losers.
And we see system of crony capitalism, which is really corrupting (ph) to the system, it's not working, the economy is in stagnation right now.
Look, Chris, for every person who found a job last months, which was not a lot, three people gave up looking for a job last month. These are things we should be talking about -- who has the better vision for getting America back on track, for growing the economy. What system works? A system of entrepreneurial capitalism free entrepreneurism, or this system of high taxes, high regulations and crony capitalism --
WALLACE: Let's --
RYAN: -- which is clearly the president's philosophy.
WALLACE: You know, it's not just a question of vision, it's also a question record because of these men have served in office and have records in office. So, let's take a look at that.
Mitt Romney was governor of Massachusetts for four years, Congressman Ryan. And during that time, Massachusetts ranked 47th of the 50 states in job creation. The only reason the unemployment rate went down because so many people left the work force more than any other state in the country except Louisiana after hurricane Katrina.
Is that a record to be proud of?
RYAN: In Mitt Romney's last year alone in Massachusetts alone, 40,000 new jobs are created. Personal income, wages, went up 16 percent. Unemployment -- people went from unemployment to jobs. That went up 16 percent. The unemployment rate went down to 4.7 percent --
WALLACE: Again, sir.
WALLACE: If I may, sir -- I mean, again over the four years, 47th in job creation and unemployment rate went down because so many people were leaving the state.
RYAN: Jobs went up and he created 40,000 jobs alone as governor of Massachusetts. Wages went up in Massachusetts. People who actually went from unemployment to employment went up.
So, what we saw during Mitt Romney's tenure in Bain -- jobs created, economic growth. What we saw in Mitt Romney's tenure as governor -- job creation, economic growth and lower unemployment.
See, what we are seeing a contrast in visions. We believe in reigniting the American idea of opportunity society. The president has feverishly worked to replacing that vision with what we call a government-centered society vision, where the government sees its job as picking winners and losers in the economy that doesn't work. Many of the countries that tried this vision, it results in economic stagnation, it results in big government and big business joining in a common cause, which makes it harder for entrepreneurs to succeed and create jobs --
WALLACE: Al right. Look --
RYAN: Mitt Romney is an entrepreneur and he knows how to present the kind of conditions of growing economy has proven that.
WALLACE: Let me bring Mr. Goolsbee into this, because I think we would all agree that this is a fascinating choice in this election. There's a fundamental philosophical difference. President Obama wants to raise taxes on the wealthy and he wants to make targeted investments, more spending on things like infrastructure, energy, green energy, education, teaching. On the other hand, you got Mitt Romney who's talking about let's get government out, cut taxes, and cut regulation, cut spending, and let the private sector do it.
Briefly, Mr. Goolsbee, why is your side right and the Romney side wrong?
GOOLSBEE: Well, number one, the record as you indicated in the last question, clearly shows the Romney approach is not the correct approach. The nation was in a boom. Massachusetts was doing worst in all of the states in terms of job creation. The reason you saw jobs growing is because government jobs were rising six times faster than the national rate in Massachusetts.
There is a reason why when Governor Romney stepped down from office, he had a 36 percent approval rating by the people in his own state and that was during a boom. I believe that the reason that the Obama approach is better, it is not -- absolutely not a government-directed approach. That's not correct. The president passed hundreds of billions of dollars of tax cuts for business, for individuals, for workers.
He believes that the main driver of the economy is the middle class. It is not high income people. The Romney budget is premised on the view that absolutely premised the George Bush budget in 2000, and that is if we cut high income people's taxes by hundreds of billions and go try to crush Social Security and Medicare, we try to reduce -- as the Romney budget would -- discretionary spending, all the training, all the infrastructure, all the education, all the law enforcement, we try to get it down to 5 percent of the economy which is by far the lowest of any advanced country and the lowest it has been in almost a century in this country, that somehow that will unleash the forces of growth.
But all I would ask you to do is look at 2000 and explain to me how then it worked then. If that was a magic elixir, why did we not have phenomenal growth?
WALLACE: Wait -- I take your point and you ask a question. Give Congressman Ryan the opportunity to answer it.
RYAN: First of all, what Mitt Romney was talking about in taxes is lower everybody's tax rates across the board by closing special interest loopholes and tax shelters, which primarily go to the well- connected and the well-off. It makes so much more sense to lower our tax rates by plugging the loopholes so that they can decide, the economy can decide how to grow, so that people can keep more of their hard earned money and they can determine how to spend it, instead of sending somebody to Washington and maybe Washington will let you keep more of it if you do what Washington approves of, that's President Obama's approach.
Mitt Romney created 40,000 in just his last year in office in Massachusetts, that's pretty impressive. More to the point though, the kind of budget that Mitt Romney is talking about is one to prevent a debt crisis, save Medicare and Social Security from going bankrupt.
Unfortunately, the president's budget does none of that. Those programs are going bankrupt. He puts a new board of 15 unelected bureaucrats in charge of rationing Medicare.
And more to the point, the big thing hurting our economy is a debt crisis, and the president has done absolutely nothing to prevent this from happening, only to put more uncertainty on businesses, uncertainty on taxes, uncertainty on regulations, uncertainty on interest rates and inflation in a debt crisis which is putting a huge, chilling effect on economic growth and it's because of a fundamental lack of leadership.
Mitt Romney has proven in his life, public and private, he knows how to provide the kind of leadership --
WALLACE: OK. RYAN: -- to prevent these things from happening.
WALLACE: Let -- Mr. Goolsbee, the Democratic Senate has not passed a budget in three years. The Obama budget was up for a vote in the Senate this week, was voted down 99 to zero, and quite frankly as Congressman Ryan points out, the Obama budget does nothing about Medicare and Medicaid and all the burgeoning economic entitlement problems.
I want to put up an ad that was run by an independent super PAC on Obama's record on debt. Let's take a look.
(BEGIN VIDEO CLIP)
NARRATOR: President Obama's agenda promises so much.
PRESIDENT BARACK OBAMA: Today, I'm pledging to cut the deficit we inherited by half by the end of my first term in office.
NARRATOR: Broken, because he hasn't even come close.
(END VIDEO CLIP)
WALLACE: The fact is, Mr. Goolsbee, that under this president, the debt increased by $5 trillion or almost 50 percent.
GOOLSBEE: Look, I don't dispute that the deficit has increased. I would say two things about that. First is all objective analyst -- forget about the campaigns -- acknowledge that the vast majority of the increase and deficit, some $750 billion out of $1 trillion increase in the deficit came about from the business cycle and then the policy choices that were done on a bipartisan basis. And so, at the end of 2010, with both parties vote to extend the Bush tax cuts, everyone understood that that was going to keep the deficit large, we just decided collectively that the economy needed that.
I think for the Republicans who set in place the policies that led to an economic crisis that exploded the deficit, to now be saying, "Well, look, why is the deficit so big," it's a bit -- you know, they lit the back half of the house on fire, now, they complain the air conditioning doesn't work.
The fact is that what we must do is, as Congressman Paul Ryan knows, was on the Bowles-Simpson commission, we must cut the deficit over 10 years by about $4 trillion --
WALLACE: Wait, wait, wait.
WALLACE: Mr. Goolsbee, that commission which was appointed by the president, did take some serious steps in terms of entitlement reform and President Obama refused to endorse it?
GOOLSBEE: Absolutely not correct.
WALLACE: You're telling -- wait, wait, wait, are telling me --
WALLACE: Are you saying President Obama approved the Bowles-Simpson commission?
GOOLSBEE: The central idea of Bowles-Simpson, the central idea was a balanced plan that you would have $3 of cuts for $1 of new revenue. The reason that Congressman Ryan and Republicans -- Congressman Ryan voted against the Bowles-Simpson plan and Mitt Romney stood up and raised his hand when they asked him, would you accept a deal that had $10 of spending cuts for every $1 of new revenue -- Mitt Romney said, absolutely not. Because they had any new revenue, he would not support it.
Now, the president's budget, which is before the Congressional Budget Office, and is not -- I might add -- the thing they voted on in the Senate. The president's budget would cut $4 trillion in a balanced way with whole new --
GOOLSBEE: And with three to one spending --
WALLACE: Forgive me, sir. Let me bring in Congressman Ryan.
RYAN: Chris, first of all, this promise to cut the definite in half over his first term, that's one of the biggest promise breaks that he made.
Second of all, the Congressional Budget Office did look at the president's budget, and it has $400 billion of deficit reductions over 10 years, an average of $40 billion of actual deficit reduction in the president's budget. It absolutely -- that's according to CBO -- $1.5 trillion in net spending, the increases only to be outdone by $1.9 trillion of net tax increases. For $400 billion deficit reduction, it doesn't even come close to fixing our problem.
But for me to the point, Chris, the president has had four years to deal with this, $4 trillion deficits, four times he decided to do nothing about the debt crisis to get the debt under control. He did disavow Bowles-Simpson.
The reason I didn't vote for it is because it didn't deal with health care entitlement reform, the drivers of our debt. But I put out an alternative plan. I said, here's exactly what I would do to fix this problem and prevent a debt crisis.
That's what House Republicans proposed. The president is yet to propose a budget to fix this problem.
RYAN: The Senate hasn't voted three years on anything.
GOOLSBEE: That is factually not the case. A, I would refer --
RYAN: That's according to the CBO.
GOOLSBEE: -- to the Congressional Budget Offices' Web site to look at it for themselves. But, B, the fundamental choice here is the president putting forward an approach that says, let's address the deficit crisis in a balanced way.
GOOLSBEE: And the counter coming from the Romney campaign and in the Ryan plan itself is: let us have massive cuts, twice as big, so that we can pay for the deficit reduction and multitrillion dollars of additional tax cuts that are predominantly going to high income people. That doesn't make sense.
RYAN: Chris, revenues go up each and every year under our budget.
WALLACE: Congressman Ryan, let me ask you briefly about that because we are running out of time.
What President Obama is talking about is raising the tax rates on the wealthy up to the level they were during the Clinton years. The wealthy did just fine during the Clinton years. Why at a time when we are in trouble with debt and obviously, you say we need to cut more spending, but why not some increase in taxes on the wealthy, just up to a level when the economy was booming in the '90s?
RYAN: Two things: revenues go up each and every year under our budget because we have economic growth and we close loop holes. Second of all, tax rates are set to go up much higher than they were in the Clinton years because of all the new Obamacare taxes. The top effective marginal tax rate goes to 44.8 percent in January. The reason why we don't want to go back to those rates is because now we are in global condition.
Eight out of 10 businesses in America filed their taxes as individuals. And so, we're going to have the top tax rate on successful small businesses nearly 45 percent in January?
Look, other countries are cutting their tax rates to their business. Canada went to 15. China is at 25. Ireland at 12.5 percent.
And President Obama's intent was having the successful, small business tax rate, where most of our jobs come from, go as much as 45 percent? More to the point, all of these tax increases, they go for spending. They're not even for debt reduction.
The taxes increases in the Obama budget don't even pay for a fifth of its proposed deficit spending.
What we're saying is get economic growth by lowering tax rates but plugging loopholes, you actually more revenues into the government, but you got to deal with spending. And under the Obama budget, the debt goes up 76 percent. If we just did nothing it, the debt will go up 78 percent.
This is not leadership, it's economic stagnation. The president has punted.
We're going to lead and what we need to is clear these partisan obstacles, get new leadership in Washington so we can get the American idea ignited again, grow this economy and pay off this debt.
WALLACE: Gentlemen, we're going to have to leave there. Congressman Ryan, Mr. Goolsbee, thank you so much.
I did not think we were going to settle this today. We did not, but I think it was a very useful debate. We thank you so much for coming in, and talking about what is the central issue in this campaign. Thank you both.
RYAN: Thanks, Chris.
GOOLSBEE: Thank you.
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