CNBC Interview - Transcript
CNBC INTERVIEW WITH REP. XAVIER BECERRA (D-CA) AND REP. MARSHA BLACKBURN (R-TN)
SUBJECT: ECONOMIC BAILOUT INTERVIEWERS: STEVE LIESMAN, SUE HERERA
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MS. HERERA: As we mentioned, there's an awful lot going on in Capitol Hill, of course, the discussions continue about the TARP and the use of that second tier of funds. Also, the issue is coming up of expanding the State Children's Health Insurance Program this week.
Joining us now to talk about all of that is Xavier Becerra, he's the Democrat from California who was the vice chair of the House Democratic Caucus and Representative Marsha Blackburn, Republican from Tennessee who is also the deputy whip.
Nice to have you both with us. Thank you so much for joining us.
REP. BLACKBURN: Good to be with you.
REP. BECERRA: Thanks, Sue.
MS. HERERA: Representative Becerra, let me start with you. The SCHIP initiative -- how, if indeed that is put through, how does that impact the overall Obama agenda to really kind of reform health care in this country? Does it have an impact? Does it not? How would it fit into the overall plan?
REP. BECERRA: It has an impact beyond the issue of health care, first and foremost, to give 11 million children an opportunity to have access to a doctor or to a hospital is critical and now more than ever with families losing their jobs and their homes, we can't afford to allow more kids to fall through those cracks of health care. And so when we talk about health care reform for President-elect Obama, it's not just extending it, it's making it possible for folks who are suffering through economic times to be able to hold onto a few things.
MS. HERERA: The previous price tag was $35 billion over five years to be paid for by taxes on things like cigarettes. Does that change? What do you anticipate this price tag would be?
REP. BECERRA: Things have changed some because every year, things become more expensive, and so we have to make sure that we adjust the bill so that it could adapt to today's times, but remember as well that this is part stimulus. If you keep a child able to go to a doctor or to a hospital, there is an economic impact in that regard and so we know that not only will we help in terms of the health care of children, but in terms of helping the economy as well.
MS. HERERA: Steve?
MR. LIESMAN: Ms. Blackburn, I guess the definition of stimulus is being, sort of greatly expanded these days. What is your take on whether or not that is actually stimulus? And overall, the kind of stimulus ideas that are floating around, actually floating is too soft a word, I guess, landing like a ton of bricks on Congress these days.
REP. BLACKBURN: Well, you're exactly right, and when we talk about the SCHIP bill, what you're talking about is expanding taxes on the middle class, whether that is done through health care taxes or whether it is done through tobacco taxes.
There has to be a pay for at some point in time. Now, when we look at the overall stimulus package, what we know is Plan A, the Paulson plan didn't work and now we know that there were not the appropriate guidelines if you will, there were not the accountabilities in place that will tell people whether or not that did work or how well it worked.
So now they're talking about Plan B, which is the Obama stimulus and they've lumped SCHIP into this and you're talking about taking a $10.7 trillion debt, which is where we were as of January 3rd and you're talking about adding on top of that. At some point, we are going to get to the point where our -- we're already going to be at 52 percent of GDP for our debt, if Obama pushes his stimulus.
MR. LIESMAN: Representative Becerra --
REP. BLACKBURN: That's historic levels.
MR. LIESMAN: I want to understand something --
REP. BLACKBURN: So where do we hit the tipping point?
MR. LIESMAN: Okay. I wanted to ask something, Representative Becerra on this issue of the Barney Frank bill now before Congress when it comes to reforming the TARP and the letter yesterday from the man who will be the head of the National Economic Council, Larry Summers. Is the administration and the Democrats in Congress, are they aligned on how TARP should be reformed? Or are there two competing ideas, one from Congress and one from the administration?
REP. BECERRA: I think there's a very clear, consistent message coming from the Obama -- future administration and from this Congress. We must have accountability. The way Secretary Paulson has administered the TARP money, some $300 billion plus and the way that there was a lack of available means to try to provide that oversight will not be the course of action in the future. Both the Obama administration to come and this Congress are determined to make sure we make the changes we need to in any subsequent TARP funding --
REP. BLACKBURN: Let's get these numbers right.
REP. BECERRA: To make sure that accountability is provided for, but we shouldn't tag President-elect Obama --
REP. BLACKBURN: Let's get these numbers right. It was more than $350 billion.
REP. BECERRA: The sins of previous administrations -- Barack Obama had nothing to do with how Henry Paulson administered the TARP funding.
MS. HERERA: Congresswoman Blackburn, I know you want to make a comment on the numbers --
REP. BLACKBURN: Yes, I do.
MS. HERERA: But also -- could you address the issue of whether or not the revisions that Mr. Summers put in his letter and suggested should be put into the new TARP plan, whether or not they will be, ultimately, too punitive and keep financial institutions from applying for TARP, if, indeed, you cap not only compensation, but also the ability of banks to pay dividends to shareholders?
MR. LIESMAN: And make them retroactive.
REP. BLACKBURN: Right. And I think what we have to do is go back and look at how much money has been spent.
When you look at the $323 (billion) that was spent prior to September when TARP was put in place and we have spent $350 (billion) of that, you're talking about $700 (billion), nearly $700 billion that is out the door. That's Plan A. Plan B that Obama is asking for is enormous. It is bigger than the $700 billion. We're hearing numbers over $1 trillion. So maybe that doesn't even leave room for a Plan C.
Now, to come back --
REP. BECERRA: Marsha, you're mixing apples and oranges --
REP. BLACKBURN: To come back and say, no, I'm not mixing apples and oranges --
MR. LIESMAN: Congresswoman Blackburn, hold on one second --
REP. BLACKBURN: It is taxpayer money --
MR. LIESMAN: Hold on. When we talk about the TARP that was allocated, it's some $323 (billion) or most of the $350 (billion) on the one hand. I'm just a little lost as to how you're talking about an additional $350 (billion) already having been allocated.
REP. BLACKBURN: Go back --
REP. BECERRA: It hasn't been --
MR. LIESMAN: From the TARP.
REP. BLACKBURN: Go back -- no, I'm talking about what was spent. When you go back to March and you look at Bear and Fannie and Freddie and Indy and AIG and then --
MS. HERERA: But that's technically separate from the TARP funds --
REP. BLACKBURN: But it's all part of the debt.
MS. HERERA: Obviously, it is all part of the taxpayer money that's being committed --
REP. BLACKBURN: That's right. That's right.
MS. HERERA: Congressman Becerra, there is a lot of controversy right now over whether or not making the new requirements on the TARP retroactive will in essence keep institutions from either going into the TARP if they need help or as Chairman Barney Frank told us on "Power Lunch" last week, they can give the money back, certainly, but then they're not covered under the TARP.
Are these new requirements too punitive in your opinion?
REP. BECERRA: If you're asking me, I'd say, look, if the banks are asking for this money, then they have to prove that they've spent it wisely. It's not their money nor it is our money, it's the taxpayers' money and the taxpayers are entitled to know that we will be accountable for the way the money is led out and spent by the banks.
If the banks are not willing to at least tell us how they spent it, then they shouldn't get it.
MS. HERERA: I'm not talking about that aspect. I'm talking about the inability then of banks to pay out dividends in some cases and the fact that, retroactively, it would cap CEO compensation and there is a lot of talk on Wall Street and we saw the banks stock sell off yesterday about the fact that some of the institutions that may legitimately need TARP help would exit the TARP, give the money back and you would have vulnerable financial institutions outside of the TARP.
REP. BECERRA: Sue, this is a strange conversation. If there's a logic here that the banks need the money, then it's hard to believe that they can continue to pay excessive executive compensation if they're in need of taxpayer bailout money, the same time if they're in need of this money, how can they afford to pay out dividends, which means they've got extra money to pay out the shareholders on the shares that they own? They either need the money and, therefore, have to be frugal everywhere else, including executive compensation or dividends or they don't need the money and they're free to go ahead and pay their executives what they wish and put out whatever amount of dividends they want to their shareholders. But you can't have it both ways.
The American public demand accountability. The American public expects that their taxpayer dollars will be spent wisely and so the banks have to either come forward and say we need it --
REP. BLACKBURN: Yeah, you know --
MR. LIESMAN: Very quickly please, if you could on this issue of retroactivity, whether or not it ought to be retroactive to those who already taking the money.
REP. BLACKBURN: Well, and it shows specifically that things were not put in place at the front end of this, the accountabilities were not there, and indeed, the banks that got the money did not use it for liquidity and did not use it to address the credit issues that Main Street America is facing and the American people --
REP. BECERRA: Agree.
REP. BLACKBURN: And the American people have had their fill of this and they do want to see some transparency. They do want to see some accountability, you know, it's going to be tough to do it retroactive, but I certainly wish we could go back and do a lot of this over and that's why I voted no the first time around.
MS. HERERA: Well, at least we got you agreeing on a couple points. Thank you both very much for joining us.
REP. BLACKBURN: Thank you.
REP. BECERRA: Thank you very much.
MS. HERERA: Thank you.