SCOTT SIMON, host:
And we're joined now by Representative Barney Frank, a Democrat from Massachusetts, who is chairman of the House Financial Services Committee.
Good morning, Mr. Frank.
Representative BARNEY FRANK (Democrat, Massachusetts; Chairman, House Financial Services Committee): Good morning.
SIMON: And you're going to give the Democratic address today that responds to President Bush's talk. Where do you agree with the president in a stimulus package and where do you depart from him?
Rep. FRANK: Well, I'll be glad to tell you and also, well, I disagree with the piece you just have, which I think, frankly, trivializes a very serious issue in ways that don't correspond to reality. We agree that a good chunk of this should be - and first of all, I (unintelligible) up to say this is a case, frankly, the president agreeing with us. On December 9th, and Nancy Pelosi convened a group of economists and businesspeople - Larry Summers, Felix Rohatyn, some business leaders - and they told us back then you better get ready to have a stimulus package because the economy is getting weak.
And so the president's initial response to all these was to say everything is going well. He's now seen some bad figures that we all have. And we have - when he made the announcement, we've been talking with people in the administration, the secretary of treasury and others, and we're ready to work this out. We agree that about $130 billion ought to be made and be available. Interestingly, that's up when Larry Summers and others were recommending this stuff, they were talking about over less than a hundred. Things have deteriorated over this and there's an increase in the amount that people are now talking about.
Secondly, we agree that a lot of it ought to be tax relief, one-time tax relief, but it ain't mostly of people who're going to spend it. You know, this notion that people are going to be, down in the Lower Manhattan, buying iPods and Italian shoes, even though that's not who's going to be doing most of it. I said, wait, that's so - they're just trivializing it with no basis.
We're talking about a lot of people are hurting in this economy and these are people who need things - clothes of their kids and other very important things that we hope to get them the money. But we do disagree with the president to some extent about who gets it. And frankly, the more economically stressed the people who get the money are, the more likely they are to spend it. So it has the double effect of being both socially relevant and also better stimulus.
But in addition, we want to do some spending as well. And here it's Professor Leahy, who's frankly off the wall, there's no danger that this is going to get out of control. This is a very disciplined agreement. There's going to be a cap of about $130 billion. Much of it will be tax relief, but some of it will be, for example, increased unemployment compensation. Unemployment is going up. There are people who are hurting, who are out of jobs. Food inflation - it's been the problem, and so there'll be some money, we hope, in food stamps.
And finally, we're looking for some way to go to some of the state and local governments who are hurting because they're losing tax revenues. Some of them are into the position, and more of them will be of laying people off and cutting back - and we'd like to avert that.
SIMON: Mr. Frank, I'd like to leave something for your - for the speech you're going to leave later this morning, so can I follow up with a question?
Rep. FRANK: Sure.
SIMON: Reading through the reports of the stimulus package this morning, I'm reading a lot of economists - I'll quote one, Bruce Bartlett, who is assistant treasury secretary in the administration of George H.W. Bush, who says in The Wall Street Journal, "look, the history of this kind of stimulus packages, if you go back to the 1970s, is that you don't need a one-time-only rebate, you need a permanent change in the tax code. And that's what gives consumers the confidence to spend it on something substantial." How do you feel about that?
Rep. FRANK: That he's a very conservative guy writing in The Wall Street Journal editorial pages, a very conservative place, who - with whom we disagree. There was a great, by the way, consensus of economists if that's the measure that says stimulus makes sense. You know, Ben Bernanke was head of the finance, the economics department at Princeton. He's now the chairman of the Council - he was chairman of the Council of Economic Advisers for Bush. He's the head of the Federal Reserve. Independently, he's longing(ph) for this stimulus package.
So the answer is no, we don't think that the kind of tax cuts that George Bush gave us a few years ago is what's needed. These are people who really don't think government has much of a role to play. A stimulus done well and quickly helps out. And, again, it's a question of who you are talking about. The Bush tax cuts went largely to wealthier people, and maybe they are the ones who are going to buy those iPods and go to Las Vegas. But we have a lot of people in this economy who have not done very well even in periods of growth, and these are people who will spend it in a fairly short order…
SIMON: And…
Rep. FRANK: And as I said - you also talk about unemployment compensation, you're talking about food stamps. You're talking about getting to people who are going to have the option of either putting it in a savings bank or buying Italian shoes.
SIMON: In a minute we have left, Mr. Frank, what about some kind of - are the rebates or stimulus or tax relief for small businesses - they might apply to upgrade equipment and hire an extra…
Rep. FRANK: Well, there's an argument. The point about the business is everybody - we are going to do this. It has to be money that's spent very quickly. We need to pass this in about a month and have it be money that's going to be available and not much after that. The president is asking for some kind of accelerated depreciation for businesses. And - well, that wouldn't be on the top of our list. If that could be worked out as something - and the president insists on this part of the deal - it could happen. In other words, you know, we both agree on individual tax relief. We want to add some additional unemployment compensation, money for food stamps and other money for (unintelligible) that we'll spend in a hurry. The president is going to probably want to add to that, or we know he wants to add to that business tax relief. And that's the elements of that package, of a 130 billion.
SIMON: Barney Frank, chairman of the House Financial Services Committee, thanks very much for being with us this morning, Mr. Frank.
Rep. FRANK: Thank you.