ROBERT SIEGEL, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
MELISSA BLOCK, host:
And I'm Melissa Block.
Tomorrow, voters head to presidential caucuses in Nevada. It'll be the first significant test of where Hispanic voters are leaning. The Republican candidates have nearly ignored the state in favor of South Carolina. The GOP holds it primary there tomorrow.
The Democratic contest in Nevada is fierce and tight. Polls suggest a close race between Barack Obama, John Edwards and Hillary Clinton. The economy has been a big topic. All the candidates have proposed economic stimulus packages.
Earlier today, Senator Clinton spoke with us by phone from Las Vegas.
SIEGEL: Senator Clinton, welcome to the program, first of all.
Senator HILLARY CLINTON (Democrat, New York; Presidential Candidate): Thank you so much, Robert. It's good to be with you.
SIEGEL: President Bush is proposing tax rebates to stimulate the economy, but is not saying today who should get them or how much. What do you say?
Sen. CLINTON: Well, according to the press reports, they indicate that President Bush is going to be releasing his economic stimulus plan, but that it will shortchange 50 million Americans, who most need the economic shot in the arm because of the way it, apparently, is going to be structured.
Now, I will wait, like all of us, to hear exactly what he proposes. But obviously, I'm going to continue to push hard for what I think we need, because for the White House to propose spending over $100 billion to jumpstart the economy but not including the 50 million families who are struggling the most, is not the best answer, in my opinion.
SIEGEL: Who are the 50 million American families who are struggling the most?
Sen. CLINTON: These are lower income senior citizens living on fixed incomes or under enormous financial stress. This would be, disproportionately, African-American and Hispanic families, who have, on average, lower incomes than white families and would therefore not be even paying taxes. These are people who are eligible for the earned income tax credit. But as, again, what the press report suggests is that this rebate would leave out these 50 million people who are, you know, struggling to pay their energy bills or their prescription drug bills or their health care bills or their rent or their mortgage payment.
SIEGEL: You've proposed also sending $30 billion in federal funds to the states to help them fight mortgage foreclosures. And I'd like you to answer the argument that Mike Huckabee raised in this program a while ago about moral hazard.
He said, if you are a taxpayer and you have responsibly made financial decisions, should you be made to involuntarily pay your house payment and that of your neighbor who bought more house than he could afford even though you acted prudently. What do you say to that?
Sen. CLINTON: Well, I would say three things. First, we have a crisis, so I think we have to stop the bleeding. Certainly, there is enough blame to go around from, you know, the big Wall Street banks that are now laying people off and taking these big write-downs to people who may have bought more house or assumed more debt than they should've in the first place.
But I think we have to recognize that the weakening housing market actually impacts everybody. It's not just those who got in over their head; it's the neighbors and the community who are going to have vacant homes in their midst and it's the communities that won't have the property tax base.
I believe that, you know, if we have a moratorium on foreclosures for 90 days, a lot of people who can stay in their homes, paying the rate they're paying now, would be a lot better off and so would their neighbors and so would the economy than to continue to increase their interest rates, which will force them into foreclosure and losing their homes with all of the adverse consequences.
I also believe that if we froze interest rates for five years, that would have a stimulative effect on the economy. Because right now, we've got the Federal Reserve trying to cut interest rates, while we know that for millions of Americans, their interest rates left untouched for their home mortgages will continue to rise which will, I believe, continue to undermine the economy and further depress the housing market and the housing values across the country. So…
SIEGEL: But what do you say to someone…
Sen. CLINTON: There is a moral hazard, but there's also a very severe moral and economic hazard from standing by and watching this further deteriorate.
SIEGEL: But what do you say to someone who says you're going to freeze somebody's mortgage rate at some pre-reset level. That's the very mortgage rate that I wouldn't buy a house with. I didn't buy with that because I could see it was going to adjust upwards. Why are you paying his - why are you helping that guy out?
Sen. CLINTON: Well, because number one, a lot of the people who were put into these subprime mortgages could have had and should have had conventional fixed rate mortgages. A lot of them actually were catapulted into higher interest rates for trying to do the right thing - something called a pre-payment penalty. In other words, you know, you stick an extra 50 or $100 in the mortgage check, you actually trigger a higher interest rate. And I have to tell you, Robert, I wouldn't have known that in the hundreds of pages of fine print that a lot of mortgage documents represent.
We also know that the investment firms and the bankers, as I told them on December 5th on Wall Street, created these very complex instruments. They packaged into jumbo investment vehicles, you know, millions of home mortgages, and then sold them to investors in Shanghai or Berlin or Hong Kong, with the net result that, you know, I think everybody has egg on their face. And everybody's going to have to give a little. But why should the brunt of this crisis fall on the backs of people who thought they were doing the right thing.
SIEGEL: Let me ask you about something else, though. You have a mailing ad in Nevada now that reiterates the claim that Senator Obama's proposal to increase social security taxes amounts to a trillion dollar tax increase.
Those taxes are now capped at incomes at 97,500. He has said, people who make over 200 to 250,000 can afford to pay more in payroll tax. Do you agree with that? And can you actually sort out the finances of social security without either cutting benefits, raising the retirement age or raising that cap on social security taxes?
Sen. CLINTON: Well, Robert, I think that you've stated one of the many positions that Senator Obama has put forward when it comes to Social Security that's confusing. But on many interviews, in many different settings, he has said, lift the cap.
SIEGEL: But in terms of your own position, is lifting the cap totally off the table? Does that…
Sen. CLINTON: But let me just clarify here. What I have said is there are two conditions to any bipartisan process that I would approve off and push forward. Number one, I will not raise taxes on middle class and working families. Payroll tax is a huge percent of the income of a lot of people…
SIEGEL: And does that include raising the cap? Does that include raising the cap above 97,500?
Sen. CLINTON: It includes lifting the cap completely the way that Senator Obama has, on many occasions, advocated. In fact, it would be a tax increase for school superintendents, for fire department lieutenants, for police captains. You go down and look at people who, in the high-wage areas - like New York, like L.A. and other places, even here where I'm talking to you from, Las Vegas - these are not rich people. It would be 2,000, 3,000 more out of their paycheck.
I will not approve of that. We don't have a crisis in Social Security. We have long-term challenges that I believe can be met with relatively minor adjustments, as long as they are progressive and not imposing further burdens on people who should not be asked to bear the brunt.
SIEGEL: But to paraphrase the first President Bush, you're not saying, read my lips: no new social security taxes?
Sen. CLINTON: I'm not saying anything, and I'm not paraphrasing anybody because at the end of the day, we've got to all hold hands here and make a decision that we can live with that will actually fix the problem. That's what I'm going to do.
SIEGEL: Senator Clinton, thank you very much for talking with us today.
Sen. CLINTON: Great to talk to you. Thanks, Robert. Bye-bye.
SIEGEL: Senator Hillary Clinton spoke to us from Las Vegas.