Ron Paul takes caller questions on C-SPAN, covering the financial crisis, the TARP bailout, the stimulus package, the Republican party, and his ongoing efforts to spread the idea of liberty.
Source: Washington Journal
Reporter: Former presidential candidate and physician, Representative Ron Paul, of Texas’ 14th district and member of the financial service committee, our final guest this morning. Mr. Paul, I was thinking when I was listening to some of Senator Sanders’ answers that there are many areas where your views intersect. Both of you are strong critics of NAFTA, neither of you voted for the TARP program and yet your prescriptions for how to fix the economy couldn’t be more different. What do you think will work with what ails United States right now?
Ron Paul: Nothing’s going to work unless you understand how we got into the problem. A lot of people object to me saying that because they [don’t] want to do what we have to do right now. But as a physician I was always taught that you have to know what caused the disease to know how to give the treatment. And if you look at that you’ll find out that it was too much government from my viewpoint, too much spending, too much debt, too much inflation by the Federal Reserve, too much interference in the marketplace, too much price fixing of interest rates, too much propping up of certain industries like housing, and then you get a bubble. You have to understand how a bubble is formed and then you can expect, you know, the collapse of a bubble, which we as Austrian economists have predicted would happen, and it did. So therefore what you want to do is if you know if there’s a lot of pain and suffering and malinvestment and excessive debt, the treatment is you got to get rid of it. That means you have to liquidate the debt and remove all the mistakes, the malinvestment, which politically it means, take more of a hands-off position. And that, of course, nobody can do that. Politicians are trained to do stuff. But government can do things to improve things. They could lower spending, they could lower taxes, they could deregulate, they could regulate the Federal Reserve which we don’t, we could regulate the treasury when they are given $350 billion to spend. So the regulation is directed in a different manner but we’re doing exactly the opposite. We are doing more like we did in the Depression. The Federal Reserve and excessive government caused the boom of the 20s and the depression of the 30s by not allowing the correction, not allowing the treatment. The treatment is the liquidation. There is some pain with that but the pain is a result of the mistakes made previously. The question is only now do you have short-term pain that lasts for a years, or do you keep propping the bad system up and allow this pain and agony to grow and lengthen. And that’s what we’re doing and that’s why we’re in great danger now of taking a very very serious recession and turning it into a depression.
Reporter: What we are seeing in the very short period of time, the second half of the TARP, the second tranche $350 billion. The Senate price tag on the stimulus package $880 billion and news that the treasury secretary is likely to announce a large package which may include the creation of something called a bad bank. What do you see as the outcome of these measures? Where are we going with this?
Ron Paul: Ultimately, it’s the destruction of the dollar. We have a financial crisis. The financial system has collapsed because it was based on a FIAT dollar standard which came out of the break down of Bretton Woods. The Bretton Woods was established in 44, it broke down on 1971. The dollar then became the gold of the world. We were given the privileged of just putting the money so we could live beyond our means, we didn’t have to work, jobs went overseas and this, you know, created the whole bubble. But now that system has ended. The financial system has collapsed and it’s not working. And I’m sure behind the scenes, the international bankers including Bernanke are worried drastically about this and are devising a new system. But where we’re going is the destruction of the dollar because everything we do, whether it’s treasury, whether it’s the Federal Reserve, whether it’s the Congress, it all means print more money, pass it out, and that will lead to more devaluation of the dollar. The dollar now compared to the dollar that Federal Reserve inherited in the 1913s, we’re about 3 cents. And with the amount of tremendous acceleration of spending and deficits we’re going to eventually set the stage for a possible panic out of the dollar. And we have a taste of that in the 1970s but Volcker was able to revive confidence in the dollar. This go around though is much much more serious so where we’re going on the policies we have today is a probable destruction of the dollar and that’s worse than the conditions that we have today.
Reporter: So what does America look like then?
Ron Paul: It will be destined to be much poorer. Of course everybody knows we’re getting poorer now. But if you as an individual or I as an individual lived way beyond our means and borrow a lot of money, it’s easy to understand, oh, we have to quit borrowing, oh, we have to pay our debts, oh we ,have to get a job. A country has to do the same thing. We lived beyond our means, we depended on borrowing trillions of dollars overseas, which means now we have to get jobs, we have to work, we have to pay down debt. The only question is, are we going to allow the market to operate and cleanse the system and get back to work quickly, or are we going to prolong the agony by propping up — For instance, one of the goals has been to keep the prices of houses up and to stimulate housing. You don’t want to do that. We have a million too many houses. We overbuilt because people were deceived into thinking they were saving, because Federal Reserve had low interest rates. So we don’t need new houses. But we need to help the poor people to saved their money because the want the prices of houses go down and let these houses be sold. But if you keep a $100,000 house artificially higher than that then no, people aren’t going to buy it so who gets to buy them? Well, the taxpayer in general, bail them out at artificially high prices. But not only do we bail out the housing industry but we’re buying up these derivatives which have no value. That’s where these trillions of dollars are involved and that’s why we’re bailing out the financial system, not just the house owners. The house owners are going to be left behind no matter how well intended these programs are.
Reporter: Let me get the calls because everyone wants to talk to you here. George of Mt. Alabama, you’re first in the Republican line go ahead.
George: Yes, I really wanted to talk to Sanders there. But if you’d let me make a comment after I ask some questions here .
Reporter: Sir we have a lot of callers. Very quick please.
George: Well, I waited. I waited for almost an hour.
Reporter: I understand sir but very quick please.
George: Yeah, at any rate, since the Democrats have taken over, they’ve been in there 2 years and they are a monolithic voting block on all these expenses. We’re going to have a 2 trillion dollar deficit next year. We haven’t even got to the ominous bust bail for this year which is going to add more damage to the deficit. Nobody can imagine us ever having it and it’s under the Democrats since they’ve taken control for 2 years, these Neocons, and that’s what I wanted to ask Sanders which of these ten platforms in Marx’s manifesto didn’t he approve?
Reporter: Okay sir, what is the question?
George: Well here, with this deficit. That we’ll never get out of it. And then the interest on this deficit, we’ve got to pay that. That will be year after next, will be $3 trillion and a deficit on our budget.
Reporter: Thank you. We can jump in on that point. Thanks very much! Congressman Paul?
Ron Paul: Well, I think the gentleman has a few good points there, but one thing I would object to is saying that it’s all the Democrat’s fault. Yeah, they are certainly big spender and they sort of identify themselves with big spending. But part as problem, we as Republicans would have to admit these last 10 years we didn’t do very much to bring fiscal responsibility to this city here in Washington. Believe me, the spending has been bipartisan. And one reason for this is neither party will look at foreign policy and the empire that we are operating. We spend a trillion dollars a year maintaining a world empire. And all great nations have been brought to their knees because they won’t look at foreign policy, they think they can police the world and maintain an empire. The Soviets collapseed for this reason so it’s bipartisan, believe me, but your concern about these huge deficits are justified and that’s the reason I advocate less spending and a balanced budget.
Reporter: Hacketts Arkansas it is, it’s Democrats line.
Dan: Hello, my name is Dan. I think we’ve got a taxable economy and we got a non-taxable economy. We have a 3 and a half million not for profit organizations in this country. I found out that a million and a half of them brought in $309 billion last year. That’s non-taxable income. Where does all these money go? We don’t know how many of these 3 and a half million non-taxable corporations or whatever you want to call them, goes!
Reporter: Thank you.
Ron Paul: Well, I think you have a good point and I think all people should be treated equally, so if they’re doing no harm to anybody and they are not taxed. But quite frankly, the average corporation is taxable; you may be talking about foundations and all. But I would argue the case that if somebody does well because they don’t pay taxes, fine. Lower the taxes of the people who are paying taxes. That’s my whole argument, is that we should reduce spending so drastically here that we can get rid of the income tax and you don’t have to worry about who’s getting the shaft, who’s getting the bad deal and the good deal in the tax code because it’s too complicated to understand. So, we want a small government, we want a constitutional size government which means we could get rid of the income tax. We only have the income tax since the 1913. And it’s only because of the welfare system and the wars that are going on, is the reason we need this income tax. So you point out an inequity and I think that’s right, but I would equalize things by making sure that nobody has to pay taxes.
Reporter: For Congressman Ron Paul, next from Arlington, Texas. Independent line.
Tom: Good morning there, Texas Straight Talk. This is Tom Pierson from Arlington. And I hope you read a few of those 60 or 70 emails I’ve sent you. With your permission I’m going to make a statement or quote a statement that was made in 1992 and then I’m going to restate it and paraphrase.
“Any like-minded group acting in concert can steal anything they want and get away with it.” In paraphrase “Any like-minded group, including a corrupt corporatists and corrupt politicians, acting in concerted collusion can steal anything they want including a nation simply by rewriting the laws, and making one-sided laws.” If you can answer this problem, give me a little comment on that I’d be very interested to hear it.
Ron Paul: Well I think you’re talking about what happens when government gets too controlled over our lives and over the economy that the special interests move in. Even though some programs are designed to help poor people, say, to provide houses for poor people. Lo and behold, the builders and the contractors and the real estate people and everybody else seem to benefit from this, and then the poor people end up losing their mortgages. So no, once the government is involved in the redistribution of wealth, there will always be a special interest who will work to get an advantage. That is the reason you want minimal government, the role of the government ought to be to provide a sound currency, to provide freedom in the marketplace, to make sure people follow through on their contracts, nobody can commit fraud and nobody can commit violence. And then you will solve that problem of people horning in. But quite frankly, I think the person who does the most dealing is the government itself, because the government has no right to do anything that you and I can’t do. If we can’t steal from our neighbor, the government has no right to come in and take from us through a tax code, take money from productive citizen and give it to non-productive citizens. And that’s more or less exactly what the bailout is doing today. There’s still some productivity going on in this country. But so if we appropriate $800 billion like the House did yesterday, that has to come out of the pockets of the few people left that are still producing. Governments have nothing, they produce nothing, they can’t create jobs. All they can do is shuffle the cards and that’s what invites these people to come in and fight for a special benefit.
Reporter: What does the unanimity of your House colleagues suggest for the future of your party?
Ron Paul: Yeah, it’s encouraging but of course, it’s a little bit, maybe a little late. I mean, we shouldn’t have been supporting the Bush spending programs. I mean, if Bush had proposed some of these like last year, the first stimulus package. A lot of Republican maybe, certainly, not every Republican voted against it. They should have all been voting against the Republican stimulus programs too. But, the fact now that it is easier, there’s no doubt it’s easier for Republicans to be fiscal conservatives when they don’t have to deal with the budget. So we stuck together, so I would say that it’s a positive but I still believe that there is a fair amount of cynicism about there and why the base of the Republican Party didn’t turn out so well this year because they say, you guys talk conservative but what do you do? Look at what you gave us? You gave us all this debt; you expanded the Department of Education with No Child Left Behind, and prescription drug program, and Sarbanes-Oxley regulation and McCain-Feingold regulations, so that’s why they lost confidence in the Republican party. But I would say the fact that we stuck together yesterday, should give us a little encouragement, but we have a long way to go to get the confidence back of our Republican base.
Reporter: Does the race for Chairmanship of the Republican Party give you good feelings or are you concerned?
Ron Paul: Probably not too relevant.
Reporter: You haven’t been listening to the arguments made by the leaders?
Ron Paul: Yeah, I have and it was interesting. In one of the times they got together, they were asked jointly, “what are you going to do with the Ron Paul Republicans, the ones who really believe in the Constitution and sound money and looking at all these problems?” And each one answered very favorably. They said “Oh, we got to build our party.” But of course that didn’t happen, you know, a few months ago, but I think that is encouraging too. Those of us who want small government, sound money, personal liberties, a change in our foreign policy, yes we are getting more attention, and I think they now know, at least they pay lip service and they say “well, that group of individuals are credible and we should pay attention.” But all those individuals who are running, are sort of representing a status quo, but that status quo may be what we saw in the house floor yesterday. The status quo now for Republicans is to vote our convictions and vote against big spending, so like I said, I guess be some sort of encouragement.
Reporter: On the Ron Paul Republicans. We’ve learned in the past four weeks that the White House will continue to use social networking tools with the group outside the White House. But it’s all those names that they gathered during the elections that they are going to stay in touch with to help advance the policies. Yesterday, friends of Hillary Clinton announced outside group that was going to use the base. My question is, what about the Ron Paul Republicans? What are you doing to stay in touch with them and to promote the ideas that you believe are appropriate for the economy?
Ron Paul: We had a continuation of the campaign and it’s called Campaign for Liberty. And somebody said so when did that start? And I said about 30 years ago because that’s essentially what I’ve been doing since I ran for Congressman in the 70s, campaigning for liberty, because that is the driving motive I have is to explain and defend the position that individual liberty is the key to a prosperous nation. And Campaign for Liberty is a national organization now, and it does a lot of work on campuses, and the whole purpose is to present to the people a strict adherence to the Constitution, a foreign policy which was at one time advised by Republicans like Robert Taft that should be non-interventious, mind our own business, not policing the world, and no interference in internal affairs of other nations something the founders talked about. It talks about free market economics and sound money but it also talks about personal liberties. There’s no reason in the world why Republicans can’t be civil libertarians. And you know, keep the government, you know, not only out of our wallets but out of our bedrooms too. And believe me, that is a very popular program on our campuses today.
Reporter: And, do you hope to do this in a way to change the Republican Party or are you thinking about third party affiliation? That ever happens?
Ron Paul: Well, I don’t think… No! I don’t think all that in a party way. Because some of our people that worked in our campaign went to the Libertarian party, most went to the Republican Party, some ran as Democrats. I mean, we talk about this being a revolution. In a way it’s a restoration of the revolution. If it’s a true revolution, it’s an intellectual revolution. It will influence everybody. Because a lot of these views I’ve already expressed are very attractive to Liberal Democrats. They like civil liberties, and a lot of them Democrats, you know, are arguing the case that we drop too many bombs on other people and use up all our money. You know, I make the case that says that why should we be bombing these nations and then feel compelled to rebuild them. At the same time, our infrastructure is falling down. So, this is very attractive to Liberal Democrats as well as Conservative Republicans.
Reporter: Atlanta go ahead please. Republican line.
Caller: Mr. Paul, thanks for being on C-Span today and thanks C-Span for being around I really appreciate you guys. I was encouraged earlier to hear that you do support the ideas that are behind the fair tax with the repealing of the payroll taxes. I think that would be the most direct stimulus that the government could allow us. The money went straight to our pockets. And I guess you kind of already answered that question, but I would like to just say is everybody is screaming right for a bipartisanship. If the Democrats and Mr. Obama and I think if they were truly behind that, they could go ahead and split this trillion dollars that they got on the board. They can go and get 54%, 51-54% of the vote. If they can get 54% of that and allow the Republicans to take the other 46% and put that behind true stimulus to the people in the forum of a reduction of payroll taxes.
Reporter: Thank you.
Ron Paul: Yes, I think that’s good. We should reduce taxes and that’s the best place for the money to be is back in the hands of the people who are productive and they know better how to spend the money than we do. But, you mentioned cutting the payroll taxes and that’s fine. I’m for that, but you got to cut spending. And I’m not, I would support the fair tax over the current system, but I’m really not all that gung-ho about replacing the income tax with a sales tax. I’m interested in reducing spending which means, back again to foreign policy. We have to change our foreign policy so we don’t spend a trillion dollars a year overseas. But that would stimulate the economy. I mean, just think if tomorrow nobody else had to pay any more payroll taxes or an income tax. You say oh, how’s the government going to exist? Well quite frankly, we are not existing very well the way we’re going right now. We’re in a form of a bankruptcy and we’re on the verge of destroying the dollar, so I would say that we could do a lot better than we’re doing right now.
Reporter: Shelby Township, Michigan. Your question?
Caller: Hey good morning folks.
Reporter: Good morning.
Caller: Yes, the Republicans are so big at deregulation. Why stop at the financial institution and American industial. Let’s just deregulate American roads. We’ll take down stop signs and red lights. We’ll take down the lane signs. I don’t need the government to tell me how to drive. Government don’t need to tell me what lane to drive in. If we did that, our roads are run as smooth as a Republican utopia. If you want to bring the jobs back to this country, what you had to do is reinstate tariff. You increase tariff for us, it doesn’t make any sense to take jobs out of this country. The money you get from tariffs can be used to pay down the debt and then you could cut taxes that way.
Reporter: Thank you.
Ron Paul: Well, the tariff is a legal process given to us by the constitution. If you have a small uniform tariff and not a protective tariff that’s how we financed our early government, but then once again, you have to have a much smaller government. But, you know as far as regulations, I don’t think it’s a fair comparison to say that the regulations means the states then would say that 6-year old kids could drive on highways a hundred miles an hour. I mean, that I think translate into the type of regulation that we propose up here in Washington after Enron. All the individuals guilty in Enron were prosecuted under current law which was the fraud laws and they went to jail and the market took care of the value of the company. But what did the Republicans do? They immediately passed Sarbanes-Oxley which chased more businesses, if you are concerned about jobs going overseas, you don’t want Sarbanes-Oxley because that chases people overseas. People go overseas to start business because it’s so hard to start businesses here, and they go to other countries. So if you want to do that – just like yesterday, we passed this bill that says buy American only. Which you know, that sounds real good. Oh buy the steel from America for all this infrastructure. Well I don’t think we should be doing it. But if you say buy American only, what if the Americans don’t build the steel? Or what if you paid twice as much from an American company you pay from overseas. So you have unintended consequences for these well-intended ideas. That’s why you don’t want the government regulating and designing these programs to tell people how to spend their money.
Reporter: Next question comes from Vancouver, Washington. Independent line.
Caller: Congressman Paul, I appreciate your stand on civil liberties and your critique of the American empire. There’s also your critique of the private banks that comprise the Federal Reserve. However, my understanding of American history is that the average American citizen’s only recourse against giant monopoly capitalism is through the government through anti-trust legislation and regulation. So I want to ask you. Don’t you feel the slightest embarrassment that basically, you know, being a useful idiot for Wall Street? That’s the only small business people advocate policies that benefit Wall Street and these bankers?
Ron Paul: It sounds like you’re awfully close to us and you need to study the idea of monopoly a little bit more because there is good literature out there because monopolies do exist, but none of them exist unless the government gives them to us. So the government isn’t there to design the size of the business. If the business is big, it’s big for one reason in the free market. Because it provides a product at the right price. The price is low. But what you want to make sure there’s always free entry. But just because somebody, like Microsoft, because they’re big, you know, there’s an anti-trust laws passed, you know filed against Microsoft. Well, Microsoft is big because you and I, we are buying their products. But you don’t want government to come in and say how much business that Microsoft should have. But you have to have free entry. But the monopoly that you should be concerned about, and you did express concern, is the monopoly over money and credit through the Federal Reserve, which then props up the monopolies in the banks. So sure there’s a monopoly type of system in the banking system because they are licensed to do fractional reserve banking. So if you’re concerned about the bigness of the banks and protection, you have to look to the Fed, you have to look to the monetary system, you have to understand why fractional reserve system is given to us by the government, but it’s not the free market. So your concern is correct, be concerned about monopolies, but if you look deeply you’re going to find out that any true monopoly can’t exist without the protection of government.
Reporter: Englewood, Ohio, for Congressman Ron Paul.
Caller: Good morning and thank you. Sounds like Senator that you and the rest of the Senate, Republicans, some of you are going to vote for the stimulus package. Why can’t you folks up there stand like the House Republicans did yesterday and vote as a block against the stimulus package? This package is built with a lot of pork in there that has absolutely nothing to do with stimulus in the economy. It’s just something the democrats threw in there to get through packages that in the past they were not able to get through and they are simply using this built-up crisis as a way to gouge out more money out of our pocketbooks.
Ron Paul: I don’t think I can disagree with anything you said except for the fact that they are not going to let me vote today. If I went over the Senate to vote they’d kick me out because I’m not in the Senate, I’m in the House. I voted against that package yesterday and you’re right. Earlier in the program I indicated that that was a slight movement toward hope for the Republican Party that we all stuck together yesterday and voted against it. But I also complained that we should have been doing that about eight years ago, voting against all the spending, and we wouldn’t have gotten into this mess. But you’re right, exactly right, about how much of a boondoggle all this spending is and it’s nothing more than pork. And believe me, it was a little over 800, CBO estimates it over a trillion dollars. The Senate wants a bigger bill. So believe me this is going to be a much closer to 1 and a half trillion dollars before it’s all over and we don’t have the money, we’re flat out broke. The money is either going to be borrowed or printed and it’s not going to work. Because we’re taking money from the productive citizens and putting it into non-productive people, the politicians, and it hasn’t worked before, didn’t work in the Depression, made things worse so we have embarked on an incorrect course.
Reporter: Not much time left for Congressman Paul. Next call Rumson, New Jersey.
Caller: Yes, good morning. I think the American public is getting a little wise to the fact that your mantra of government is the problem is absurd today. Government has never been the problem. The problem is that people take office who aren’t willing to govern and the result of the ideology that started with the celluloid-tabloid Reagan and his supply-side economic ideology, it’s why we are in the situation we are now. The laboratories that Milton Friedman had in Venezuela, Argentina, Chile, Guatemala, Indonesia, well, it’s happening here now. You first come in and get rid of all the regulations and oversight. You destroy labor unions. You decimate the working class. It’s a corporatocracy and an oligarchy that you’ve created.
Reporter: Caller I need to jump in because we won’t have time for an answer.
Ron Paul: I don’t think we can fully discuss socialism versus freedom and you’re for socialism and I am not. But you’re mixed up about Ronald Reagan. I voted against all his budgets. See, he talked good about the marketplace but deficits skyrocketed. He expanded government. The biggest office building here in Washington DC is named after Ronald Reagan. So there’s some confusion out there about Ronald Reagan being a great capitalist. He was a friend and he was supportive and talked good, but believe me, government grew by leaps and bounds, so you don’t like what happened with Ronald Reagan it’s because the government grew just as it did under both Bushes. The government has grown because they acted like Democrats. They did exactly what you’re talking about. They expanded government, they expanded regulations, and we’re not talking about that. We’re talking about the Constitution, the rule of law, individual liberty, personal civil liberties. We’re talking about not wasting all this money overseas. You got to have a little confidence in freedom. If you have confidence in the freedom of the individual to run his own life and not be told by the government what they can do with their life, why do you want to tell everybody what to do with their money? That’s how we got into this trouble. If you like the Grand Depression, your support for what you’re talking about will take this recession and turn it into a depression because we have all the evil intervention of Herbert Hoover spending and taxing and regulating and tarrifs. And then we had Roosevelt and he expanded everything that Hoover did. So, there’s no doubt history is on our side of this argument that fascism and communism and socialism and welfarism and intervention in the bedroom and policing the world is coming to an end because we can’t afford it. The Soviet system collapsed because their government was too big. Our system is on the verge of collapse because we can’t afford this monstrous government any longer.
Reporter: That’s it for our time. Thank you very much for being here this morning.
Ron Paul: Thank you.
Reporter: Congressman Ron Paul of Texas.