MSNBC "HARDBALL WITH CHRIS MATTHEWS" INTERVIEW WITH REP. BARNEY FRANK (D-MA); REP. DARRELL ISSA (R-CA)
INTERVIEWER: CHRIS MATTHEWS
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MR. MATTHEWS: Let's start with the really big news today, the Obama budget and what it says about his new America.
Democratic Congressman Barney Frank chairs the Financial Services Committee. He's going to join us right now.
Congressman Frank, what do you make of this big shift back to -- away from Bushism, if you will, away from tax cuts for people that make more than a quarter-million a year, and to begin to fund health care especially?
REP. FRANK: Well, I think it's what people voted for. There was no secret that this was going to happen. John McCain kept predicting that if Obama won, this would happen. And I think Obama felt an obligation to make an honest man out of John McCain, or to keep him an honest one; John's always been pretty honest.
What's happened is this, Chris. This extreme conservative philosophy has basically said, "Look, here's how you get a good country. You don't tax capital. You don't regulate capital, and you don't restrict" -- (5-second audio break). We are in the worst economic situation after a very prolonged period of Republican rule. They've had the presidency for eight years, both houses of Congress for six of the eight, and the results have been a disaster.
And what you have now is us saying, "No, that didn't work." We are big believers in the private sector. Of course the private sector is the engine to create wealth. But we also know, as Franklin Roosevelt knew and as others have known, that the private sector works best when it's got a set of rules and a cooperative set of arrangements with the public sector.
And let's just take health care. The biggest single economic problem Americans face today is the fact that health care goes on your job. If we did not have the health care system we have, we wouldn't have the kind of crisis we have in the automobile industry. If you could take health care off the backs of the automobile industry here, as it is off the backs of the automobile industry in Canada, Japan and Germany, you wouldn't have this crisis.
MR. MATTHEWS: Well, let me ask you about the numbers. Do you think there's enough money in the added income, the re-added income taxes of those above $250,000 a year, is there enough income up there to tax, enough taxable income to bring into the federal treasury over time to pay for the cost of a real national health care system?
REP. FRANK: Well, thanks to the incompetence of the way the financial system has worked in deregulation, there aren't as many rich people as there used to be and they're not as rich as they used to be. But over time it will be there, but you do have to do more. And one of the things that I most liked about the president's state-of-the- nation speech, which I thought was a very good speech, very well- delivered -- even better than very good -- he talked about ending the spending on Cold War weapons.
One of the great things of inconsistency that I see, Chris, are people who worry about spending -- they brought us the Iraq war, the single biggest addition to the deficit, and unlike some other things, it's all money that we lose; we don't get any of it back. They have projected -- you know, we are now -- according to the Bush budget, we're going to spend billions of dollars to protect the Czech Republican from being attacked by Iran.
Now, I'm not a regular reader of the fatwas --
MR. MATTHEWS: (Laughs.)
REP. FRANK: Well, that's true. I don't regularly read all the fatwas that come out of Tehran, but I am not aware that they are about to declare war on the Czech Republic, and I don't see why I should spend billions of dollars to stop it.
MR. MATTHEWS: Okay, let's take a look at what House Minority Leader John Boehner of Ohio and Republican Senator Judd Gregg said about the president's budget proposal today. Here they are.
HOUSE MINORITY LEADER JOHN BOEHNER (R-OH): (From videotape.) We can't tax and spend our way to prosperity. And it's just the formula that it appears the president's budget is relying on. The era of big government is back, and Democrats are asking you to pay for it.
SENATOR JUDD GREGG (R-NH): (From videotape.) Where's the restraint in spending? You know, this budget doubles the debt of the federal government in five years, triples the debt of the federal government in 10 years, runs up obviously massive deficits over this period.
MR. MATTHEWS: Well, let's bring in right now Republican Congressman Darrell Issa to join Congressman Frank, Chairman Frank. He's the ranking Republican on the Oversight and Government Reform Committee.
Congressman Issa, I'm looking at these new numbers. I'm looking at the actual budget figures for FY '09. That's the current fiscal year, which ends at the end of September. The numbers are pretty powerful -- almost $2 trillion in receipts this current fiscal year under the new plan, almost $4 trillion in outlays -- that's actual checks being written -- and a deficit approaching $2 trillion, $1.75 (trillion).
These numbers have a World War II sound to them; in other words, the ratio of deficit to outlays, to receipts, is in that World War II category. But we don't have wage and price controls. We don't have rationing. We don't have bond drives to soak up the extra cash or whatever. So is this scary in terms of just fiscal policy, these numbers, or not?
REP. ISSA: Well, of course it's scary. What's scarier, though, is that President Obama has proposed that these budgets, these deficits created under a Democrat Congress, he's going to cut them in half over a long period of time. The fact is, the last time Republicans were in charge, even including the war, we were below $400 billion in deficit. So the president is not proposing getting to $200 billion or $100 billion. It's talking about getting below a trillion over the next few years after we double the size of the debt.
MR. MATTHEWS: Well, I think the Democratic Party calls itself the Democratic Party, not the Democrat Party. Do we have to do this every night? Why do people talk like this? Is this just fighting words to get the name wrong?
REP. ISSA: No, this isn't intended to be fighting words.
MR. MATTHEWS: They call themselves the Democratic Party. Let's just call people what they call themselves and stop the Mickey Mouse here. Save that for the stump, seriously.
REP. ISSA: Chris --
MR. MATTHEWS: Now, let's get to the issue here -- seriously. We've got a fiscal challenge.
I want to get back to Congressman Frank and to some English here.
Congressman Frank, are you worried about the size of these World War II numbers here -- again, $1.75 trillion deficit this year, a spending level of almost $4 trillion? We're almost running deficits as big as the revenue number we're bringing in.
REP. FRANK: Well, Chris, let me, first of all, come to the defense of my colleague, Mr. Issa, and the Republicanistical Party that he represents --
MR. MATTHEWS: (Laughs.)
REP. FRANK: -- and say that --
REP. ISSA: Thanks, Barney.
REP. FRANK: You're welcome, Darrell. The point is this. For him to say, "Oh, these are the Democrats' deficits" -- I have never seen people disavow their own handiwork so quickly. And I knew that born again was an important strain in our society, but born-again deficit-haters, that's a new version.
The Republican Party under George Bush inherited from Bill Clinton a much lower level of deficit. We were on track to, in fact, have surpluses. Alan Greenspan was worried, at the end of the Clinton administration, that we wouldn't have a deficit, which would make the Fed -- it would make it difficult for them to do monetary policy. They ran up these enormous deficits.
Now, it is true, they're going up now because of the legacy of the Bush administration, this terrible financial crisis, brought about, I believe, by an absence of appropriate regulation, that adds to it. If there were no plans to cut it down, it would be different. But President Obama does plan to raise taxes on the wealthy. And let's go back to 1993. I voted for the Clinton tax increase that raised the top tax rate on people, on incomes over $200,000 by 3 percent. I voted for other taxes on the wealthy.
The predictions from the Republicans were this would be economically devastating. Few predictions have been more flatly repudiated by reality. In fact, in the years after the Clinton tax cut, we had one of the best sets of economic statistics in our history.
Secondly, my Republican colleagues have continued to pump up a military budget that includes wonderful weapons that are aimed at defeating the Soviet Union, that are aimed at, as I said, defending the Czech Republic against Iran.
MR. MATTHEWS: Okay.
REP. FRANK: And if we were to cut back substantially on that amount of waste, we would still be the strongest nation in the world and reduce the deficit.
MR. MATTHEWS: Mr. Issa.
REP. ISSA: Well, I guess the Democratic Party, filled with proud Democrats, just wants to say that the previous two years under Speaker Pelosi and Harry Reid were somehow Bush's fault. Well, now suddenly it's going to not be Obama's fault.
The fact is, the projected deficits show no level of austerity. They show no peace dividend. What they do is get us to half of a record level. The truth is, the American people were disgusted with the growth in spending, the growth in deficits. They were thrilled to have lower taxes, but they didn't want lower taxes if they weren't sustainable.
Barney and I would agree on one thing, I'm sure, which is lowering taxes without controlling spending is inevitably a disaster. I'll take the blame for all of that during the six years of the eight that I've served that Republicans were in charge. But today what we're dealing with is a TARP that was passed with Democrats voting the majority of it, and with Republicans, in fact, the majority voting against it.
REP. FRANK: Well, Darrell --
MR. MATTHEWS: Congressman, that's a good point. I want Congressman Issa to address the philosophical point that you did, Mr. Frank.
REP. FRANK: Could I correct his facts, though?
MR. MATTHEWS: Go ahead, yes.
REP. FRANK: Because in the Senate, a heavy majority of Republicans voted for this. So it's true in the House, about 40 percent of the Republicans voted for the TARP and 60 (percent) against, but it was a Republican proposal from a Republican president, a Republican secretary of Treasury, and it was strongly supported by the House Republican leadership and by a great majority of Senate Republicans.
MR. MATTHEWS: Mr. Issa, let me ask you a philosophical question --
REP. ISSA: Of course.
MR. MATTHEWS: -- which Mr. Frank addressed, which is this. And I think when people are trying to figure out which party they align with these days, they're trying to deal with these priorities questions. If the Democrats are willing to come right out front and say, "Raise the taxes on better-off people back to at least where they were before," if they're even out going to the fact of not giving full deductibility for charitable contributions at the marginal rates, if they're willing to go that far in ideology in saying, "This is to pay for health care," can you say that you have an alternative way to pay for national health care or we're not going to have national health care ever again because we're not going to change the tax rates from the Bush era?
REP. ISSA: Well, first of all, if it's about health care, I believe there needs to be universal responsibility for health care, those who can afford to pay for it, including all employers need to pay for it. And I want to preserve people's individual right to choose the doctors of their choice.
Until that's been tried, I don't want to go to a single-payer system, which ultimately is the end of the road. The fact is, Barney and his party are in a position now to raise our taxes. They will raise our taxes. It's inevitable. They will raise our taxes to a greater portion of the GDP than it's ever been before, just as in my state of California, we have an 11 percent top tax rate and we still have a $40 billion deficit. The question is, will we control spending?
MR. MATTHEWS: But you were in charge of the Congress for all those years. But Congressman Issa, your party was in charge of the Congress and the presidency, both sides of the Hill, and you never produced a health care plan for the American people. So why do you say you have this alternative in mind that never seems to come out? It never emerges, this Republican plan for national health care.
REP. ISSA: Well, first of all, Mitt Romney had one which he executed on in Massachusetts. My governor, Governor Schwarzenegger, had one which he couldn't get across the finish line in a state that has two-thirds Democrats in both the assembly and the senate. But quite frankly, I came out in support of his basic concept that we shouldn't have employers cost-shifting to other employers or to taxpayers.
REP. FRANK: Could I just say, on taxes --
MR. MATTHEWS: Sure.
REP. FRANK: -- my colleague says we're going to raise your taxes. I'm going to vote to raise my taxes and Darrell Issa's taxes. His is probably a little more than mine. But I'm not going to vote to raise the taxes of well over 90 percent of the American people.
We are talking about raising the rate on incomes above $250,000. That raise happened under Bill Clinton. It helped us reduce the deficit and had no negative effect whatsoever on the economy. And I want to go back -- and I know Congressman Issa keeps avoiding this --
REP. ISSA: I avoid nothing, Barney. Nothing at all will I avoid.
REP. FRANK: You cannot talk about reducing the deficit responsibly and not keeping us from being able to do things we have to do and continue to support a military budget that's full of Cold War weapons, like the F-22, like the Osprey, a missile system to defend Poland and the Czech Republic against Iran, a greatly bloated military budget.
If you get out of Iraq more promptly than the Bush administration plan, which I think should be done, and you cut these excessive Cold War weapons, you generate a lot of revenue that can be used in part to reduce the deficit and to meet other pressing needs.
REP. ISSA: Barney, you're not --
MR. MATTHEWS: Okay, thank you --
REP. ISSA: -- you're not going to have an objection if we go through the defense budget line by line, we look at programs for the types of wars that we really believe we're unlikely to be in; you're absolutely right. On the other hand, after China shoots down its own satellite to prove it can shoot down satellites, I do believe that we need to be prepared to at least launch the technology to protect Americans.
REP. FRANK: I think we need --
REP. ISSA: I hope we can both agree on that.
REP. FRANK: We are not debating whether or not we should be the strongest nation in the world. Of course we should be and will be. We're defending by what multiple? Do we have to be five times as strong as the next one or four times? But while you say that, Darrell, the fact is that the Bush budget and the Republican majorities kept pushing that higher and higher. Democrats haven't been as good as I'd like to be. We haven't been as bad at giving the Pentagon a total blank check.
MR. MATTHEWS: Hey, thank you, Congressman Issa. Please come back again. And you can call the Democrats the Democrat Party if you want to in normal circumstances. We're in very critical times right now. Thank you very much.
REP. ISSA: Chris, you will always have my support that the Democrats are in the Democratic Party.
MR. MATTHEWS: Okay, thank you, sir. Thank you, Congressman Issa, for straightening it out.
Barney Frank, Congressman, chairman of the Banking Committee, thank you for joining us.
REP. FRANK: You're welcome.