Fox News "Fox News Sunday" - Transcript

Interview

Fox News "Fox News Sunday" - Transcript

"FOX NEWS SUNDAY"

HOST: CHRIS WALLACE

GUESTS: LAWRENCE SUMMERS, CHIEF WHITE HOUSE ECONOMIC ADVISER; SENATOR JOHN CORNYN (R-TX); REP. CHRIS VAN HOLLEN (D-MD)

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MR. WALLACE: I'm Chris Wallace and this is "FOX News Sunday." (Intro music plays.)

President Obama uses tough talk to urge passage of an economic stimulus.

PRESIDENT BARACK OBAMA: (From videotape.) If we drag our feet and fail to act, this crisis could turn into a catastrophe.

MR. WALLACE: We'll find out where the plan stands now when we sit down with Lawrence Summers, the president's top economic advisor. Larry Summers, live, only on "FOX News Sunday."

Then, how will members of Congress resolve conflicting versions of the stimulus? We'll ask two key leaders -- from the Senate, Republican John Cornyn, and from the House, Democrat Chris Van Hollen.

Also, our Sunday Panel examines ethics and the White House -- is the Obama administration living up to its own high standards? And revealing thoughts from the president on the demands of his job.

All right now on "FOX News Sunday." (Intro music ends.)

And hello again from FOX News in Washington. In the next few days, the Senate is expected to approve its version of an economic stimulus package. Then, tough bargaining with the House over its very different plan before a final bill reaches President Obama.

For more, we're joined by the president's top economic adviser, Lawrence Summers.

Mr. Summers, welcome back to "FOX News Sunday."

MR. SUMMERS: Glad to be with you.

MR. WALLACE: The Senate has reached a tentative agreement on a stimulus package of $827 billion, which has more in tax cuts but less government spending.

How big a re-write do you expect when the two versions, the House and Senate versions, get to that conference committee?

MR. SUMMERS: Chris, we've got to begin with what's most important. The economy lost 600,000 jobs just in January, lost 3 million jobs last year. We've got to give this economy some help.

The Senate bill, the House bill, the overlap is 90-plus percent. We've got to work through the differences, find the best bill we possibly can, and get it in place as quickly as possible to contain what is a very damaging and potentially deflationary spiral. That's got to be the priority now.

So yes, let's argue vigorously; let's work through the differences. Let's make sure we scrub out any wasteful programs. Let's make sure we preserve key investments. Let's make sure we give incentives where those incentives can make a big difference.

But, you know, what's agreed between the House and Senate is, at the end of the day, much more important for preserving this economy than what's disagreed. And so if there was ever a moment to transcend politics, this is that moment.

And that's what I very much hope will take place as this legislation moves forward.

MR. WALLACE: Before we get into the specifics, and there are some not-minor differences between the two bills, is the president standing firm on his February 16th deadline, and is it realistic to expect that you can work out some sizable differences in less than a week?

MR. SUMMERS: The president believes we need this legislation absolutely as soon as we can. He believes, as Speaker Pelosi has stated, as Majority Leader Reid has stated, that the Congress has to stay here, avoid their traditional recess, until this legislation has passed.

There are too many jobs at stake. The basic economic security, the ability to meet their needs for too many families, are on the line for this to become a traditional political football.

It's got to happen, and it's got to happen very fast. And there's no reason why it can't happen very fast, with good will on all sides.

MR. WALLACE: By the February 16th deadline?

MR. SUMMERS: Well, it could happen very fast, before the congressional recess. It's not about this hour or that hour. It's about getting this done as rapidly as possible for the American people.

MR. WALLACE: All right. I want to explore some of the major differences in the House and Senate versions. And let's put them up on the screen.

The Senate bill cuts aid to the states, especially for education, by $40 billion. It cuts $5 billion for health coverage for unemployed workers, and it saves 2 billion (dollars) by phasing out payroll tax credits at lower-income levels.

The biggest difference is that in addition to the immediate economic stimulus, you were pushing -- and the House passed -- a lot of what you're calling long-term investment, what critics are calling is more government spending.

Do you want to see some of that restored in the final version?

MR. SUMMERS: We believe that there are strong elements in the Senate bill; there are some very strong elements in the House bill. And what we've got to do is take the best of both.

We believe, for example, that it is critically important at a time when too many of our kids -- you know, we say education is our most important priority. But I have visited school after school where the paint is falling off the walls. How can our kids believe us when we say that?

So we believe school modernization is an absolutely essential investment in the competitiveness in the future of our country. It's an investment --

MR. WALLACE: You want to see -- (inaudible) --

MR. SUMMERS: It's an investment that can take place quickly.

It's an investment that's labor-intensive in restoring schools and installing laboratory space that our kids need to compete. That's a place where we think there's a very important investment to be made.

Is there the capacity to scrub this bill? Are there expenditures in the bill that probably aren't the highest priority? I'm not going to tell you that every item is the highest priority.

And the president really wants this not to be done the traditional Washington way. That's why he said no earmarks. That's why he's vowed transparency and accountability on every project.

And I'm sure there are improvements that can be made by taking resources out of certain investments where they've been inserted. That's why we have a complex legislative process in this country, so that bills do get honed and perfected along the way.

But let's not focus -- and we do that much too often in Washington -- we focus on the bit of difference or we focus on where the political fight is.

Ninety percent of these bills are essentially overlapping. There isn't a lot of disagreement that they create 3 million-and-some jobs. Let's work it out, get moving, start preserving those jobs.

MR. WALLACE: Last month you set what you called three principles for what we needed in an economic stimulus package. You said it had to be timely, it had to be targeted, and it had to be temporary.

But there are critics from both sides who say that these plans fail on all three points. The Congressional Budget Office says only 64 percent of the House plan actually gets out into the economy in the next two years.

So how is that timely?

MR. SUMMERS: Well, if you look at the effects of it, even if some of the money is spent with a delay, the hiring begins even before the government's in a position to reimburse somebody for the completion of a road project or a bridge project.

And I'll tell you, Chris, looking at where the economic forecasts are right now, I think this economy's still going to need some support two years from now. And so I think the idea that not 100 percent of it spends out in the next two years is actually a prudent one.

But we can quibble and hassle about the numbers. There's a variety of efforts underway to accelerate the process of disbursements for infrastructure investment, for example.

And so I can assure you that at the end of the day, the figure will be more than 64 percent.

MR. WALLACE: Clinton budget director Alice Rivlin says that much of this program, in both bills, is social spending that has nothing to do with immediate economic stimulus -- maybe legitimate social spending, but social spending.

So how is that targeted?

MR. SUMMERS: You know, it's interesting. Alice Rivlin's one of the most respected voices in this town, and she had some concerns about the bill. But if you read this morning's Washington Post, she made clear that what she thinks is important now is that it pass as rapidly as possible.

What's social spending? Some people think that giving support to enable a low- or middle-income family to send their kid to college is a kind of social support. I don't.

I think it's a very valuable function that lays the groundwork for the future --

MR. WALLACE: (Inaudible.) It's not economic stimulus, Mr. Summers.

MR. SUMMERS: It's not, if you prevent a family from selling its house to send their kid to college and keep that house off the market and from depressing the community? I think that's economic stimulus.

If you enable that family to avoid cutting back on expenditures, that's economic stimulus. And I have kids myself in college, and I can tell you that if you put money in their pockets, it's very unlikely to be saved and it's very likely to be spent. And that's stimulus, as well.

MR. WALLACE: Anyone getting unemployment benefits would be eligible for Medicaid. The House plan doubles the budget for the Department of Education over two years.

Aren't you creating a permanent expansion of government that will be anything but temporary?

MR. SUMMERS: You have to look overall at the whole program and the vast majority of it is investments that are setting the groundwork for our future prosperity, or they're responses to a counter-cyclical situation.

Look, there is a lot more money for health insurance for people who are laid off, and you know why that is? It's because there are a lot more people who are being laid off. And so we need to spend a lot more money on health insurance for -- (inaudible) -- people who are laid off.

MR. WALLACE: But the question is, are you -- let me, if I may --

(Cross talk.)

MR. WALLACE: The question is, are you creating a new government baseline of spending, and we're going to be at that level from now on? At the end of these two years, we're not going to go back down; we're going to have government programs at that level?

MR. SUMMERS: But I think I was just responding to -- responding, Chris, when I said that the reason there's a big increase in spending for health insurance is because we've got many, many more people who are being laid off.

And so no, it will not be permanently in the budget, because at some point we will work --

MR. WALLACE: How about doubling the education --

MR. SUMMERS: We will work through this recession, and then the spending will come down.

MR. WALLACE: How about doubling the education budget?

MR. SUMMERS: The president's been very clear that the support for education is temporary support to prevent teachers from being laid off.

We are having unprecedented pressure on budgets of communities -- laying off cops, laying off teachers. Giving them help so that those things don't have to happen --

We're not going to be in this situation permanently, and so these programs aren't going to be necessary permanently.

So these are directly responsive to what is a crucial problem for our country in terms of the recession.

MR. WALLACE: The administration has come up with a plan for what's called TARP II, the second half of the financial rescue plan. Instead of starting a government bad bank for toxic assets, you're going to offer incentives for private investors to buy up these securities.

Do you really believe, regardless of the incentives you give, that the private market will pick up these assets?

MR. SUMMERS: You know, it's been very interesting. We've received a whole variety of proposals from private investment firms, from private investors, for how private capital can be part of the solution to this problem.

It can't all be private capital; we can't just say, private sector, please invest -- not given the size of the financial mess that we inherited.

But with the right kinds of government guarantees, with the right kinds of financing --

You know, the type of thing that you've already seen is the actions that the Federal Reserve started taking some months ago to purchase mortgage-backed securities, that have brought mortgages -- brought mortgage rates down considerably.

With the right strategic approaches, Secretary Geithner believes that we can bring in substantial private capital. And that's something we all ought to be able to agree on, that where we can catalyze private capital, that's a better route to solving this problem than government resources.

But I don't want to mislead people. We are inheriting the worst financial system since the Depression. We're inheriting a situation that when people go back and study major banking crises a quarter century from now, the one that America developed in 2007 and 2008 is going to be one of those crises.

So we're not going to solve it in a day or a week. We're not going to solve it without public resources. But we are going to solve it by being as effective and strategic as we possibly can in the use of public money so as to catalyze and spur private investment.

MR. WALLACE: Finally, let's talk about Larry Summers. You are the president's top economic adviser at the White House. Timothy Geithner's at Treasury; Paul Volcker is head of the Economic Advisory Board.

And there's been some criticism there are too many chefs. Who is the president's top man on the economy?

MR. SUMMERS: The president's top man on the economy is the president. He listens to advice from all of us, and he sets his direction. He thinks about both the narrow economic issues and, frankly, the much broader interests of where the country needs to be four years from now, where it needs to be 40 years from now.

And he gives us all the direction that we, using whatever technical skills we possess, try to implement.

MR. WALLACE: As I read a number of stories, preparing for this interview, several words -- forgive me -- kept coming up: overbearing, abrasive, not always politic in what you say.

How do you plead?

MR. SUMMERS: Oh, I just plead that I'm someone who's trying to help this president, who shares my opinions but also works very hard to make sure that he gets access to the best opinions that there are out there.

And I think a high degree of intensity is needed on all of our parts, if we're going to address what is a very serious financial crisis.

MR. WALLACE: So when people say you're trying to be a kinder, gentler Larry Summers?

MR. SUMMERS: Look, this isn't about my personality. This isn't about anybody's personality. This is about 3.5 million people who have lost their jobs within a little over a year.

This is about a serious economic crisis, and we just all need to focus -- not on each other. We all need to focus on a problem that is immense and demands immediate energy and demands all of our efforts. And that's what the president is insisting we do.

MR. WALLACE: But let me just ask you about it in one aspect where it may affect policy.

There is some concern among some observers that you are so sure you are right that you're going to push your ideas and not be the honest broker so that everybody's ideas --

MR. SUMMERS: You know, this president's made it very clear that he's got zero tolerance, that he values everybody's advice, but he doesn't value anybody's advice to exclude other advice. And that's the rules that we're all playing.

That's why the president didn't want to have his advice just come from all of us who are working on his economic team at OMB, at the Treasury, at the National Economic Council, but has established a group of people -- business and labor economists and practitioners, people who voted for him, people who probably didn't vote for him -- to make sure that he's got all the best advice, chaired by Paul Volcker, who has immense experience and worked through the worst previous economic crisis that the country's had.

MR. WALLACE: Mr. Summers, I want to thank you, thank you for coming in today, and please come back to give us an update as you try to work through this mess.

MR. SUMMERS: Thanks very much for having me.

MR. WALLACE: Up next, we'll hear from two critics of the Senate plan -- Republican Senator John Cornyn and House Democrat Chris Van Hollen, who supports a very different package.

Back in a moment.

(Announcements.)

MR. WALLACE: After Senate Democrats pass their stimulus plan, they will still have to work out big differences with House Democrats.

Joining us now to discuss where the debate in Congress goes next, Congressman Chris Van Hollen of Maryland, head of the Democrats' Campaign Committee in the House, and Senator John Cornyn from Texas, head of the Republican Campaign Committee in the Senate.

And gentlemen, welcome back to "FOX News Sunday."

REP. VAN HOLLEN: (Inaudible.)

SEN. CORNYN: Good to be with you.

MR. WALLACE: Senator Cornyn, let's start with you. The Senate version of the plan cuts $83 billion in spending. It has billions more in tax cuts. Those both seem to be Republican priorities. Why can't you support it?

SEN. CORNYN: Well, first of all, it's important to understand, Chris, this is not an economic document. This is a political document drawn up by Speaker Pelosi and Democrats in the House. Didn't have a single Republican vote.

And it still represents 1.1 or so trillion dollars of spending, including the interest on the debt. And, of course, this is a debt our children and grandchildren are going to pay.

I don't think we have any confidence it will actually work, either, other than to create a deficit, actually crowd out private investment, as the Congressional Budget Office has said, in the longer term.

And so I think having three Republicans potentially support it in the Senate out of 535 members of Congress is hardily a bipartisan effort. I think it's a disappointment; surely must be for President Obama.

MR. WALLACE: President Obama said this week that failure to pass a package will turn crisis into a catastrophe. If Congress doesn't pass any plan, if the Republicans have their way, won't that in fact be very damaging for the economy and wouldn't it be a terrible setback for a president a month into office?

SEN. CORNYN: Well, I fully expect this bill to pass, with almost exclusively Democratic support. But as the Congressional Budget Office has said, in the longer term, actually this could crowd out private investment. It could hurt the economy.

And I just have to say that in the New Deal, with Secretary Morgenthau -- was famously quoted as saying we tried spending and it didn't work in the New Deal. And I don't know that we have any confidence -- I certainly don't -- that this will actually work now -- to spend a lot of money we don't have for things we don't need in a stimulus package.

MR. WALLACE: Congressman Van Hollen, as we discussed with Larry Summers a moment ago, there are big differences between the House and Senate version. He was trying to minimize them, but there are sizable differences -- billions less for education and health care, billions more for tax cuts.

Will House Democrats accept the Senate version?

REP. VAN HOLLEN: Well, there are big differences between the two bills in the areas of education and some other areas. But what unites the House and Senate bills is much greater than what divides them.

They're about 800 billion dollars-plus, both pieces of legislation, a combination of tax relief and investment in the economy.

One of the problems right now is the private -- there is no private investment in the economy. Credit lines are frozen; people can't get those loans. The government needs to take action now. It needs to make these investments.

And while there are differences that will be worked out, this is not the time to draw any lines in the sand. I don't think anyone's going to say if I don't get my way with this provision in the House bill I'm not going to accept the package.

The priority has to be getting something done and getting it done now. We just saw 600,000 Americans lose their jobs in January. This is not the time for delay.

MR. WALLACE: But one of the points that Larry Summers made, it was one of the few areas he specifically talked about, was construction or renovation of classrooms as something that creates jobs and also upgrades education. It creates a different atmosphere in a classroom.

Are there specific things that the Senate took out that you want to see restored?

REP. VAN HOLLEN: Well, sure. There are provisions relating to classroom construction. I mean, that not is only good for schools, but it puts people back to work.

There are a number of provisions with regard to energy efficiency and renewable energy investments, trying to upgrade the federal fleet, trying to upgrade federal buildings and make them more fuel efficient with respect -- and energy efficient.

So there's a lot that we think, in the House bill, we should have in the final package.

Having said that, we are not in the business of drawing lines in the sand, because we believe the overriding priority right now is to get something done.

MR. WALLACE: But let me ask you about one issue in terms of what's going to happen in the conference committee this week.

You passed it in the House by 56 votes. It looks like in the Senate they're going to pass it by one or two votes, very little cushion.

Just as a matter of practical politics, don't you have to meet Senate Democrats more than halfway?

REP. VAN HOLLEN: Well, I think, as Larry Summers said, we're going to be looking for the balance between the two bills and we're going to try and take the best ideas in both -- listen to what the economists have to say and make the best decisions as to what will boost the economy.

But for the reasons you said, we are not going to be -- in a position where it's take it or leave it, it's our way or the highway. Because the priority, as President Obama has said, is to get something done.

And while there are differences between the House proposal and the Senate proposal, those differences pale in comparison to the fact that we want to get something done.

And unfortunately, in the House and the Senate, the Republican leadership apparently doesn't want to move quickly to get something done.

MR. WALLACE: Senator Cornyn, let's turn to TARP II, the second half of the financial bailout. You voted against releasing the second half, the $350 billion.

We're now hearing how the Obama administration plans to spend that money: They're going to inject billions more into new banks. They're going to give private investors incentive to buy up some of these toxic assets. There's going to be more strings attached.

Are you more supportive when you hear the ideas they have?

SEN. CORNYN: Well, I voted for the original economic rescue package because on a bipartisan basis we were told the economy was going to melt down unless we did so. But I was disappointed at the lack of transparency and accountability.

And frankly, even the prior administration used those funds for purposes that Congress did not authorize -- for example, the Big Three auto manufacturers were bailed out when the Senate expressly declined to authorize that.

But I -- you know, here we go spending more money again, after we are going to vote, I assume, to pass on a partisan basis largely a $1.1 trillion spending package. There's also the omnibus appropriation bill from last year that remains in the pipeline. And it's just spending, as far as the eye can see.

What I really think we ought to focus on initially is housing. Let's fix housing first. While this bill has a very important tax credit that Senator Johnny Isakson and others have championed, it does virtually nothing else to fix the very -- what caused the problem in the first place, which was the decline in housing.

And I think that should be our focus on this so-called stimulus bill, not just spending on social programs and racking up more debt.

MR. WALLACE: And staying, Congressman Van Hollen, though, on TARP II, the second half of this financial bailout money, I think Senator Cornyn is right. There was a widespread feeling in the country that an awful lot of this -- the first half, the first 350 billion (dollars) was wasted, that it didn't do what you all voted for it to do to free up the credit market.

Do you see anything in what you're hearing out of the Obama White House that's going to fix that?

REP. VAN HOLLEN: Well, I do. You're going to see a lot more transparency. You're going to see a lot more accountability. The president just announced the other day limitations on bonuses so that CEOs of financial institutions that are getting this taxpayer money can't be rewarding themselves with these big, huge bonuses.

There's going to be a lot more transparency throughout the process, and I think you're going to hear Secretary Geithner tomorrow unveil a plan that addresses the housing issue.

One of the most neglected parts of the TARP approach under the Bush administration was that they neglected the housing component. So I'm looking forward to what Secretary Geithner has to say on that issue going forward tomorrow.

MR. WALLACE: As I said, you are the chairman of the House Democratic and Senate Republican Campaign Committees, and I want you to look at a poll that's out this week.

It shows that the public approves of President Obama by a wide margin.

It supports Democrats in Congress much more narrowly, and it disapproves of congressional Republicans almost two to one.

Senator Cornyn, isn't there considerable risk to Republicans to be seen as voting almost unanimously against the president's economic stimulus plan when he is seen by the public as making such a big effort to be bipartisan?

SEN. CORNYN: Well, the president has done a good job reaching out to Republicans, and he has said he wants to approach this crisis, like other problems the country has, on a bipartisan basis. That's good, and we're willing to work with him on that.

But this bill is not the president's bipartisan plan. It's Nancy Pelosi's plan, and she said, we won the election; we're writing the bill. And that's what happened in the House. And I think every Republican suggestion that's been offered during the course -- almost without exception -- has been defeated along a party-line vote.

So this is -- I don't think Harry Reid and Nancy Pelosi actually got the memo from the president when it comes to bipartisan cooperation. That's why you're seeing this outcome.

MR. WALLACE: Congressman Van Hollen, as head of the Democratic Campaign Committee in the House, are you going to go after Republicans for voting almost unanimously -- in the case of the House, unanimously -- against the president's economic stimulus?

REP. VAN HOLLEN: Well, we're certainly going to hold people accountable for their votes and explain to the American people what the consequences are. When you've got millions of Americans losing their jobs, it's hard to defend the position that you don't want to get the economy moving again.

I think the American people see a huge disconnect. When President Bush came before the Congress and asked for $700 billion for big Wall Street firms, you saw the Republican leadership salute and turn on a dime and provide that money -- $700 billion for Wall Street.

But when President Obama has come up and said we want $800 billion for the American people and turn the economy around, you've got them dragging their feet. And I think that's why you see the numbers that you do.

MR. WALLACE: We've got about a minute left, and I'd like you to share it equally.

Senator Cornyn, we now learn that the Obama administration is going to have the director of the Census Bureau report not only to the Commerce secretary, but also to the White House. What's wrong with that?

SEN. CORNYN: Well, ordinarily this has been something that the Commerce secretary's done. And I think it ought to be done on a competent, as much as possible non-partisan, basis.

And to shift it to the White House to me just politicizes the Census, which is not something we should be doing.

MR. WALLACE: And what's the danger, briefly, of politicizing the Census?

SEN. CORNYN: Well, because of course, that determines who gets what congressional districts. States like Texas are going to get probably at least three new congressional districts, based on the reapportionment. And then, of course, in drawing those lines, redistricting within states. It's all based on those Census figures.

So if you cook the figures up front, I think it distorts that process going forward and undermines the concept of one-person-one- vote.

MR. WALLACE: And very briefly, Congressman Van Hollen, I mean, why not leave it in the Commerce Department?

REP. VAN HOLLEN: Look, I think the issue, at the end of the day we should all agree, is that we want the facts and accuracy in the count.

And it seems to me that the more eyes taking a look at this, the better. It's going to be all on the Internet in terms of how the process is done. This administration has a huge commitment to transparency.

So I think, at the end of the day, it matters less exactly what the reporting mechanism is than that we get the facts and the count right.

MR. WALLACE: Congressman Van Hollen, Senator Cornyn, thank you both. Thanks for coming in.

(Cross talk.)

MR. WALLACE: And we'll see how things go this week.

REP. VAN HOLLEN: Thank you.

END.

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