Ron Paul was interviewed on Fox Business this Saturday. He talks about the stimulus package and the dirty tricks surrounding its passage.
Channel: Fox Business
Show: Your Questions, Your Money Live
Ron Paul: Our greatest export has been the dollar and of course our productivity has gone down over the years, so yes they have served their interest in the short term, and they have served our interest. But ultimately they will give in because otherwise Americans wouldn’t have to work anymore. I mean why worry about it, we’ll just, if 9 trillion dollars has stimulated the economy and they’re still buying our debt that’s great, 20 trillion dollars, you know, it will end. Nobody knows when that will come, it might be with maybe something happening in international affairs or military affairs and maybe a major crisis that we can’t handle, then people will lose confidence in us as being the super power.
Anchorwoman: Congressman, who is or was worse on spending: the current administration or the last one? Because you’re fair to spread the blame around.
Ron Paul: Well this one hasn’t had enough time. I mean at the rate they’re going they might be able to surpass the last one but I put a lot of blame on the last administration. But I date it back a little bit further. I date it back to the last 20, 28 years and Republicans have had the presidency 20 of those years and there’s never been one bill vetoed. But the Democrats are big spenders, but if you look at the 8 years with Clinton, the spending wasn’t growing quite as fast and the budget was in better shape, so to say that this is all the Democrats’ fault is wrong. All I can say is that the Republicans are doing a much better job in opposition than they were when they were in charge.
Anchorman: Hang on there, we’re getting an email. Kathy from Michigan writes in wondering, “Why couldn’t the stimulus debt be offered to the American people over the next few years like a war bond? We’re paying for it in taxes anyway, why not earn the interest?” You want to take that Congressman?
Ron Paul: Well, I don’t think they would buy it, I certainly wouldn’t buy that. Yes to some degree they do, people do park their money in short term treasuries so they’re participating in that but eventually interest rates will go up and inflation will come back and people will lose confidence. But the more important question is, “Why would anybody want to endorse this process?” Because if you take good money out of your pocket and give it to the government to do bad things, that undermines the market, it props up bad debt, props up prices of houses that shouldn’t be propped up to buy illiquid assets and interfering contracts that’s a double wage. You took it out of productive use and put it into destructive use, so that would be a very bad plan. But in a way the American people are allowed to buy their debt as of now at least to some degree.
Anchorwoman: Yeah and then there’s social security as well, which is essentially, we’re loaning money to the US government.
Ron Paul: Yeah, there’ no real fun there. I mean that’s all been consumed.
Anchorwoman: We hope we get our money back from Uncle Sam. On the phone is William from Texas, your home state. What is your question for Congressman Ron Paul, William?
William Yes Ron Paul, I want to know about, they’re saying strengthen the economy about the natural gas drilling, and even the oil rigs has really slowed down. Is there anything in this thing that’s planned for that or something in the future for us? I’ve been working on this rigs for years and even third party and in small towns like Abilene, Azle, Brown, Dallas Fort Worth, it make their living and the towns that live off of natural gas drilling, is there any chance that there’s going to be a back up or are we going to rely on our own instead of third countries?
Ron Paul: Well, the truth is I don’t know and if it made any sense probably not; there’s probably more money for windmills which would not be as productive as natural gas or maybe nuclear, but the whole thing is how the marketplace anyway. One of the reasons why I don’t know the details of this is the bill I watch very carefully to find out the minute the bill became available to me and that was, you know, after midnight on Thursday night, so I didn’t stay up all night and then we voted a few hours after that. There was never a hard copy written up for anybody, and even the copies that were available on the House floor still had pencil marks on them which were part of the final copy of it. So it was an atrocious way to legislate.
Anchorman: Congressman, Congressman. I want to stop you right there for a second. I’m just absolutely appalled that we’re talking about 800 billion dollars of our money and you’re the second Congressperson who’s come on today in this show alone.
Anchorwoman: No the third!
Anchorman: You said, there was no opportunity to read this bill. What am I missing? Why would this pass now? Why wouldn’t we just take a time out?
Ron Paul: Well, I think that of course gave a lot of ammunition for the Republicans to generally vote for these things that Bush had proposed that they have good reason to vote against it. No, the process is horrible and it’s generally this way, this was just that much worse; the PATRIOT Act was done the same way, nobody would have read on that before they voted on that either, and that was a very serious piece of legislation. But this unfortunately is the way it works; it’s done on purpose. The other thing that really upset me was one of the banking institutions sent us, my office, 120 pages of the bill; they had access to it before I was allowed to have access to it. I’m on [the Financial Services Committee of Congress], and they farm this out, so liberals farm it out to their group, conservatives farm it out to their groups and actually I don’t believe there were more than 20 members of the House and Senate that really had much input into this bill.
Anchorwoman: Congressman, I need to correct myself. We’ve had three Congressmen on who didn’t read the bill in its entirety but two of them said, mentioned that they were both Republican. Congressman, one quick thing before we go to a break, I want to know what you think about those additional pay restrictions that were put in the Senate that could be, I guess really regarding bonuses for the financial institutions taking government money but it looks like they are retroactive back to the original TARP. Your response to that?
Ron Paul: Well this is an example of impossible correct thing to do, because government shouldn’t be involved. They shouldn’t give out the money; they shouldn’t try to micromanage. But once they do, they may assume the right and privilege to micromanage and that is now, the Congress will act as the car czar and tell people how much they’re supposed to make. But from the market viewpoint, the last thing in the world you’ll ever want is the government to dictate wages and salaries and incentives. It will make it more certain that these programs won’t work, but you know, the only answer for me is “Don’t give them the money and don’t try to micromanage industry.”
Anchorwoman: Too late. Congressman, hey, stay right there, we have to take a quick break. Congressman Ron Paul is going to be back with us. We’re going to be taking more of your questions and we’ll have a lot more answers for you. So keep your calls and emails coming, we have an ultra panel sitting here and they’re fired up. We’ll be right back.
Welcome back to “Your Questions, Your Money.” Happy Valentine’s Day by the way. Give us a call at 877-249-9626. We have Gerri Detweiler, credit adviser with credit.com; Liz Pulliam Weston, author of “Easy Money” and a personal finance columnist; John Rutledge, Chairman of Rutledge Capital, if you heard murmuring that was John.
John Rutledge: Snickering.
Anchorwoman: Snickering, doing a little Yosemite Sam under his breath. And Mark Lieberman, senior columnist with Fox Business and on the phone is Congressman Ron Paul. We want to get to an email. One email arrived and said “Congressman Paul, how much of an impact is our massive foreign policy impacting our current financial blows?”
Ron Paul: Well I think it’s major, and if you look at history, it’s always the foreign policy that brings great nations to their knees. And I think that’s what’s happening to us because to manage our foreign policy today, it literally involves about a trillion dollars a year when you look at every expense, and nobody pays any attention to that, most people endorse it. This administration won’t change our foreign policy from the last administration and that is a major burden, because when you think of these hundreds of billions of dollars being spent overseas, that’s all money taken out of our own economy. And there’s a great, major fallacy, economic fallacy that war ends depressions, and people said that World War II would finally end our depression, which is total nonsense. War is always an economic burden to the people, so this type of foreign policy we have is a major contributor to our economic crisis we have today.
Anchorman: Representative, we have another one of your constituents here on the phone. On the phone is Tommy from Texas. Sir, what’s your question?
Tommy: Yes, the other day Senator Hutchison, she was voicing her opinions on the forming of bad bank and for bad loans. And I was just wondering the view point of the panel when it comes to forming bad banks.
Ron Paul: I think that we have one already and it’s called the Federal Reserve System, and they’ve committed literally trillions of dollars buying up bad assets. We don’t need another bad bank. Here we have a proposal to draw the bad bank to buy out bad assets from bad bankers and drop them all on good citizens. So I think it’s a very bad idea.
Anchorman: Congressman Paul, the RTC, Resolution Trust Corporation actually worked? Did it work or did it not?
Ron Paul: In the 30s.
Anchorwoman: No, in the…
Ron Paul: Oh you mean in the… Oh yeah I would think so. One half of it is, there was you know, the buying up of the bad assets and in a way it worked because the inflationary process at the time was able to revive the bubble. We’ve been able to revive the bubble quite a few times since 1971, but that doesn’t justify its existence. But there was a cause and I think there was what 500 billion dollars, but what you don’t measure is who lost on that, somebody gained but somebody also lost. We had to have tremendous inflation, people had to pay higher prices, and we had people lose their jobs, but they’re invisible so nobody, it doesn’t count. But you look at just the project of resolving that debt, even though the other argument is that debt would have been resolved by leaving it alone, and just allowing it to be liquidated. So this was just transferring the penalty from one group to another.
Mark Lieberman: Well RTC took over the entire bank; it was a lot cleaner process, I mean than what is being proposed today because we will never know exactly what’s left. When you say we have a pile of bad loans here, and we’re giving them over to this bad bank, well how do we know that the loans haven’t been given over for our own good?
Ron Paul: Well that’s the whole reason that a bureaucrat and a politician is never going to be able to figure out. Only a market can sort that out. Some are good and some are bad, so the last thing you want are hire bureaucrats to try to sort this out and buy up assets and hopefully in 10 years they might have a little bit of value. The people who have their own money and risking their own money have to make these decisions, not politicians and bureaucrats who are using your money and my money.
Anchorman: Alright. Well thank you again Ron Paul, Congressman from Texas. We’ll take in more of your questions when we return and in the next hour, we’ll be focusing on questions about small businesses. So start sending the emails now, we’ll be right back.