This afternoon, Ron Paul participated in Judge Napolitano’s new online show “Freedom Watch”, joining Peter Schiff, Cody Willard, Lew Rockwell, Tracy Byrnes and Steve Moore in a refreshing discussion about the latest economic and political developments, including the impact of the stimulus package and the dirty tactics surrounding its passage. Thanks to LibertyMaven for recording the show and putting it up on Youtube.
Channel: Fox News Strategy Room (online only)
Show: Freedom Watch
Host: Judge Andrew Napolitano
Andrew Napolitano: It’s Wednesday, it’s 2:00 Eastern, 11:00 on the West Coast and that means Foxnews.com Freedom Watch. Welcome to this strategy room session for the next hour we will analyze what the government has done to, for, and with your freedom. We will do so with my colleagues Tracy Byrnes from the Fox Business Network, Peter Schiff who is one of the great defenders of the free market in our modern day and who is the president of Euro Pacific Capital, my good buddy Cody Willard who is the host of happy hour the only live cable television show broadcast from a bar and joining us in this hour my good friend and one of the staunchest defenders of the constitution in anybody in the government today, Congressman Ron Paul who joins us by telephone. Congressman Paul, welcome here.
Ron Paul: Thank you, good to be with you again.
Andrew Napolitano: Did anybody read or did anybody had an opportunity to read the 1000 page stimulus package and as Peter Schiff points out the only thing it has stimulated so far is the price of gold. Have anybody ever had the chance to read it before you were forced to vote on it?
Ron Paul: Oh yeah, certainly. The 20 people who wrote it, the 10 in the house and the 10 in the senate who were involved. And actually a lot of other people read it too because they e-mailed to me and told me they had copies that I couldn’t get. The lobbyist got hold of it. If you are conservative or have conservative friends or liberal working on this thing, they send it to your liberal friends. And the banking industry sent my staff 130 pages of the bill and I had no access to it. So no, I think your question really is did any members of congress really read that bill it was over 1000 pages. No they did not. They didn’t have the chance, it did become available til 12:30 after midnight the night before and there were no hard copies and the hard copies that were sitting on the desk, they had several copies there. There were still a lot of handwritings up and down the edges which they considered still the official documents that would eventually be printed.
Andrew Napolitano: Before we get to Peter and Cody and Tracy, who I know will would to interact with you as well. Just on the mechanics, how does it come about that things can be put in there which were never articulated on the floor of the house or on the floor of the senate like 33 million for American Samoan compensate for no minimum wage? There are little things that members of congress wanted as favors to them or certain precede constituencies like retroactive caps on executive compensation for deals with banks that are already cut. How do those things physically become law?
Ron Paul: Well, if it gets in the conference report it becomes law, the conference which is departed very secretive they used to never even have those in the conference that is the final version and only a few people participate in the conference. But they can put things in, technically the conference was set up like if the senate had a proposal for 10 million and a half or 5 million, they would split the difference and that would be what the conference did. But now the conference, they have done this for years this is nothing new it’s just business as usual, they used the conference for putting in the controversial things and like for instance, the increase in the national debt was buried in there. We’ve never, in either of the house or the senate bill, so we raised the national debt by $787 billion the same amount that the bill was for. So that is ongoing it’s unfortunately the way they legislate in Washington. But even back in the 80’s when prior to duty in Washington I would complain about this but it’s just government out of control and special interest control the fact that the special interest and the lobbyists can get the bill and review it before the members of congress and I’m sitting there and I’m telling myself, you get that and tell me exactly what we have access to the bill and it’s available to outsiders and that’s who runs the show in Washington. It’s very deceptive to think that members of congress either care or know or could participate even if they wanted to.
Andrew Napolitano: Do you think that this bill was in the works long before the market crisis that Peter Schiff predicted became apparent to the rest of us in September? Do you think that the bill was an effort to get the camel’s nose under the tent in order to make it more natural for the Federal government to regulate things like medical records, health care and health treatment?
Ron Paul: Yeah, those programs are always […] in this case the democrats, you know, the opportunity it sort of reminds me about the patriot act. All that stuff that have been turned before when crisis comes along oh it’s an opportunity! Even Ronny Manuel, you know, who said that Ronald Gauntley the other day don’t ever let an emergency go to waste. So they use the atmosphere for this co-purpose to get the things that they want. I think most of those programs they know themselves, have very little to do with the immediate problem. If they understood any economics at all they would realize that they’re not solving the problem at all. Every time they come up with a new package the market goes down and like what Peter says gold turns up. It’s a stimulus package from the big government and nothing else.
Andrew Napolitano: Cody?
Cody Willard: Ron Paul it’s a real thrill to talk to you again. Representative Paul, I should say thank you so much for letting me and I guess there’s the question. I actually read through several hundred pages out of that thousand pages that finally got done and I couldn’t follow, in reference to prior laws that you need to forget certain paragraphs of and substitute $30 million to replace $5 million in paragraph F and what I guess, I start to look at is the complexities of it all…
Ron Paul: You have no idea, you have to have the code sitting by and know what the current code says because what they might do is they will strike line ABC, 3 lines here and insert this. So it has no meaning unless you have the original code. So I am quite convinced that when you look at the staff there’s probably no one person that knew the entire bill. There were group of staffs and work on certain section but there is very very…
Cody Willard: Can I call on that…
Andrew Napolitano: Let me tell you this. This is the trick that the government uses all the time. You are talking to one of the few people that’s read the Patriot Act. It’s only 315 pages long but it takes 25 or 30 hours to read because you have to have the full U.S. code in front of you since much of it consists of a technical modification and statutes that are in it.
Peter Schiff: So the whole thing is so ridiculous. They should have, they should be, you can’t pass a bill that you can’t write in one sheet of paper. How can people vote for stuff when they obviously have no idea what they’re voting for?
Tracy Byrnes: No, but I have to be a panelist and not a reporter now because my opinion of this, this is the audacity of crap. Like the nerve that these guys have to sit there and say, oh by the way I want to throw this in. Oh by the way, I need extra money for the census. Oh by the way, we need a grant for elderly nutrition services including meals on wheels. Oh by the way, I think we should throw some money in for tribal law enforcement. What the heck is that? Tribal law enforcement. Here we go. Mississippi river and tributary construction. It is crap on top of crap on top of crap. And I will argue that this $787 billion crap is completely unnecessary if Tim Geithner had come out of the gate with a plan that would have been enough to free up credit, got the markets moving and capitalism would have reign supreme. This audacity of crap would not have been necessary.
Cody Willard: I want to go back to Representative Paul if I could and you know, I guess 2 things we’re highlighting here is really all we want is the government to enforce a contract law. We’ve been playing by the rules here. We simply want those rules enforced and not this anarchy that we seem to be on the slippery slope of. And Rep. Paul, I guess the question is the magnitude of this. That’s what I come back to. This is so, the size, the trillion of dollars that we’re talking about here, off and on every other week that the government is confiscating. Have you ever seen anything like this?
Ron Paul: No, I mean this is the biggest and the worst ever. Of course we have the biggest bubble and we see panic that they have to do something. You know, in the middle of this is some good news because…
Andrew Napolitano: What praise the good news Congressman Paul?
Ron Paul: The good news is that they are going to collapse the dollar system and they have to give up. You just can’t pay bills by printing money. That comes to an end so the empire will come to an end and the domestic spending will come to an end.
Tracy Byrnes: How is that good news sir?
Ron Paul: And we’ll have to start over. The bad news is, are we going to get into something worse or will we be able to salvage it and restore some confidence in our constitution. That is really the only question. They don’t realize how quickly they are destroying the whole system. The dollar system is what is at stake now. The financial system has been destroyed. The dollar system, people would still use dollars, but I don’t think for a lot longer.
Andrew Napolitano: Let me remind those of us that are visiting with us that you could email us at firstname.lastname@example.org and at the last 15 minute of the show, when we go to the freedom watch section, what money is the government taking from you? What junkets of members of congress taken? What bills did they enact? What money did they waste? What freedom did they deny you? We will read your emails.
I was given a speech in Kansas and I told this to Congressman Paul and in the audience were some members of congress, I won’t mention their names. And I was telling them the things the government can now do to violate the 4th amendment in the Patriot Act. And two of them came to me and were terrified and said, are didn’t know this was in the Patriot Act until you told us. And then I asked them a question that I already know the answer to. Well did you read the Patriot Act before you voted? And then they said no! And I said what did you read? And they said an executive summary prepared by the justice department to which I said what do you expect would be in there?
Peter Schiff: Well they just put a name on that, like the Patriot Act…
Andrew Napolitano: A nice sounding name.
Peter Schiff: Well, it sounds patriotic. No one wants to- whenever there’s a government bill it’s usually the title of the opposite. It’s the opposite of what the title implies.
Andrew Napolitano: What should we call the Stimulus Act.
Peter Schiff: Depressant. The economic depressant. But you know, it’s not just the deport that Tracy points out. It’s the entire bill. The whole thing is misguided and we shouldn’t have any of it.
Cody Willard: It’s not a stimulus package, it’s a stimulus package because it doesn’t stimulate the economy it simulate the economy.
Peter Schiff: The way you stimulate the economy is to shrink the government. The government interferes with the economy. The government acts a suppressant to the economic activity. It undermines the free market. We need a smaller government not a bigger government.
Tracy Byrnes: May I say that aside from Ron Paul ISA Demint, those are the few that come to mind that actually I think can articulate and understand what’s going on. When these people were voted in, they were voted in probably for very silly reasons. They were not voted in to handle the biggest financial crisis ever so we have a lot of incompetency down there and we’re handing them Wall Street, we’re handing them CEO paper, we’re handing very very… Unemployment rates that we haven’t seen and they don’t know what to do with it.
Andrew Napolitano: We are not handing this to them they are grabbing it. Not withstanding the fact that the constitution by its plain language and ordinary simple understanding restrains it.
Congressman Paul, was the free market argument ever made? Did anybody in the congress ever say very simply, hey guys and gals how are you going to pay for this? Even John McCain not necessarily a friend of the free market called this a generational theft not shift. Theft! You’re stealing from our children to waste their money today. Were these arguments ever made?
Ron Paul: Yeah, I have to concede there were some arguments made on house floor by Republican members but it’s a little too late. They wick it up and say some of the very things that we’re saying but they knew they didn’t have the votes, they weren’t responsible for getting the bills passed, they didn’t have to count out to George Bush and all of a sudden they all stuck together and they voted against it and they said some very good things but, but, you know, on the early part of last year we had the first $100 billion that was back when $100 billion didn’t mean much you know. They passed $100 billion but that was the first stimulus package and that was George Bush’s. Now, not all of them but almost all of them probably have voted for. That’s the problem is, I think many times they know better but politics get involved and partisanship and so many other things.
Andrew Napolitano: Do you know of any governors or mayors like perhaps Bobby Jindal of Louisiana who has already said I don’t want your money because I don’t want the strings that come with it?
Ron Paul: Yeah, how about Mark Sanford from South Carolina?
Andrew Napolitano: Same thing.
Ron Paul: Mark Sanford is very good, matter of fact, he might have even attended some of your meetings, judge, when he came to Washington because he was part of my liberty’s caucus. He’s a very good example.
Andrew Napolitano: One of the worse aspects of the depressant bill is the discretionary spending that Barack Obama and Tim Geithner now have. What is your worst fear as to what they’ll do with that? I mean they can literally spend it the way Henk caused and spent the TARP with no accountability without even reporting to anybody how they are spending it.
Peter Schiff: Well the biggest problem is not even where they are spending it just that they are spending it. I mean that’s the problem. They have to borrow this money or print the money in order to spend it when the last thing we need now is spending. We got ourselves into this mess because we spent too much money. The solution isn’t to find a way to spend more. The solution is to stop spending. That’s what the market is trying to do. That’s what the credit crunches is all about. The market is trying to rein in the spending. It’s trying to rein in the consumer credit. That’s the good thing. The government doesn’t like that. The government wants to get back to the bubble. The government thinks they could recreate the conditions that led to the problem but they are going to create a bigger problem which Congressman Paul is talking about which is going to be the collapse of our money, the value of our dollar. And then when the government can’t borrow anymore, what good is all their stimulus checks when they all bounce? When you can’t buy anything with them because there’s no value left in our money?
Andrew Napolitano: Tracy.
Tracy Byrnes: I still come back to the capability issue I mean look at Tim Geithner now. Not only does he have to solve the banking crisis, they’re throwing the autos at him as well. He’s on the auto czar team or whatever. There are not enough smart people down there. You know, if we were voting today, would we vote the same people in? And I think not. I think you’d want to know if they had an MBA on their resume, if they have Wall Street experience.
Peter Schiff: But this is not their job. They should not be making these decisions.
Tracy Byrnes: Agreed, agreed. But we’re in it. We’re in it. The speaker has been turned on, do you know how difficult it is to turn the speaker off now?
Peter Schiff: The reason that the free market works is because individual entrepreneurs make decision to make a profit. The government doesn’t work anymore.
Tracy Byrnes: I am saying the capitalist going but we started this mess and these are not the people to fix it. They started this mess.
Peter Schiff: But the government can never fix this mess.
Cody Willard: And on that very note, on Tracy’s note about the fact that we should basically vote out everybody who is in office. I do think there is a slow but actually accelerating and potentially huge uprising against the 2 party fraternity/political system in this country. I see it on the blogs, I see it on my show, I am hearing more and more people in discussing they will never vote for a Republican who has been in office, again.
Peter Schiff: What we need is for the courts to butt into it and restrain the government!
Andrew Napolitano: One of the reasons that these gatherings exist with so many people logging on to us every Wednesday, morning or afternoon depending upon where you happen to be. One of the things that I found most offensive about this Congressman Paul and I suggest that this must have come from the conference committee because I didn’t hear a debate, I didn’t hear the President talk about it, I didn’t hear Mrs. Milowski talk about it, I didn’t hear Harry Reid talk about it, I didn’t hear you or Jim Demint rail against it so they must have snuck it in on the cover of the darkness. Is the caps an executive compensation for companies that have already received federal money. This is not like, here’s a billion dollars take it under these conditions. This is we loan you a billion dollars or we bought a billion dollars of your stock 6 months ago, we now want to impose this retroactive condition on you for having taken a billion 6 months ago. Where did that come from?
Ron Paul: I don’t know exactly there was a little bit of discussion before the final version but you’re right. I don’t believe it was in either the senate bill or the house bill, but it was snuck in in the conference and that’s how just like how things get in there. And that is how they play havok with the whole program.
Peter Schiff: Did the government do a good job with Entrac? Did they run anything effectively? How can they run the arms?
Tracy Byrnes: Can I say they just shove themselves in the foot with the CEO pay. No with the CEO pay.
Andrew Napolitano: This must drive you crazy because these are the most incompetent people in the country, trying to run a business and they’re saying you can run the business better by not going out and getting the best talent.
Tracy Byrnes: It drives me insane because there are no counts down there, there are no number crunchers as a former number cruncher accounting dork, it drives me nuts. You know what they shut themselves in the foot.
Cody Willard: Former dork?
Tracy Byrnes: Former. Continual dork. Ok, first, judge. Now we’re going to take pay in restricted stock well do you know what that means? My payroll expense now as a major corporation just went downhill. Yipee! My expenses just went down because I’m going to pay everybody in restricted stock and you know what? I ain’t going to report the restricted stock until its exercisable. So now bam! Company’s payroll expenses just gone down that means the other side of the balance sheet, all the good stuff just went up. So they indirectly hurt them and all they have to do Lloyd Blank find and say, don’t call me a senior exec anymore, I want to be a junior guy and he’s millions and millions of dollars of guy.
Peter Schiff: It will drive the people from the mailroom. They’re the top guy.
Tracy Byrnes: It’s stupid.
Andrew Napolitano: What will happen as a practical matter, Peter Schiff. What will happen to banks and other entities that call themselves banks that receive TARP funds or any entities that receive federal money as to which the FEDS will now say retroactively, Madam Chief Executive, Mister Chief Executive, your pay has been lowered to this. Where will that person go?
Peter Schiff: Well, a lot of them might quit. But I mean, the one thing you need to know for sure any company that is getting government money; don’t be a shareholder because they’re never going to make a profit. They are now basically like government entities like government departments. They are going to be run in perpetual losses to benefit the employees of the companies. But the owners of the companies or the people who think they own the company are never going to […] it.
Tracy Byrnes: They can also argue that they are gonna want to pay this crap back faster.
Cody Willard: They are never going to.
Andrew Napolitano: I want you to make the argument that they have no incentives to pay this money back.
Cody Willard: Because they are now perpetual bureaucracies. They can kill you. Look at GM, look at Chrysler, look at Bank of America, look at […]. The stocks are already telling you this. Since GM has taken money and went from 10 to 2. since Bank of America took money they […] from 20-2. Guys, think about it this way. Would you rather use a private bathroom or a public bathroom? The government can’t even run public toilets. It’s not going to be able to run the public banking system.
Peter Schiff: And the big problem is what happens is, they end up subsidizing these inefficient companies and they divert resources that could’ve been better used by more productive companies that could create the jobs in the future.
Cody Willard: Peter, you are competing against companies that are getting their […]
Peter Schiff: I know I mean I’m like […]
Tracy Byrnes: I disagree. I disagree. Companies like Goldman Sachs, Morgan Stanley, they’re going to pay that money back. You watch!
Andrew Napolitano: Congressman Paul, do members of congress have conversations like we’re having now about the practical human effect of a private corporation getting into bed with the Federal government?
Ron Paul: Oh a dozen or so would understand it and have discussions like that but most of them sort of like the idea, the liberals who are in charge right now that’s their goal because they don’t really believe in private property and that if people are smart enough to run things, they don’t believe that the profit motive really work so only they would know what to do and what salary should be paid and what labor should cost so they really are close to socialism without being called socialists.
Andrew Napolitano: I don’t want to pick necessarily on Senator Graham but he did say over the weekend, and I don’t know how he meant this, I don’t know if he meant it that this is what the liberals want or this is what we all have to confront when he said that nationalization of banks is on the table. Now this is one of the most awful things that they can even contemplate. What does a so-called conservative republican from South Carolina mean by saying that?
Ron Paul: Well it means it tells you something about him and I think people should remember that. They should look at Jim Demint and also Mark Sanford who is from South Carolina who knows much better but Lindsey Graham does not represent the free market and as I close on this statement I have to excuse myself because I have another call coming in but I want to thank everybody for having me on today.
Andrew Napolitano: Thank you Congressman Paul it was a pleasure.
Peter Schiff: It also means the constitution is off the table.
Andrew Napolitano: It means the constitution is off the table. The argument against the retroactive application of salary caps is such a very basic one it is quite simply a taking. It’s literally the government taking something without just compensation. I would think that as low as the court would be to stop the stimulus because judges don’t like to get involved in politics. Stopping the retroactive salary cap would be very easy for the Federal judge to do. A first year law student can make the order.
Peter Schiff: All the member but these companies took the government money. The government gave the money so they’re just taking back.
Andrew Napolitano: But the condition was with the time they took it.
Tracy Byrnes: Exactly. Maybe they would’ve taken the money.
Cody Willard: The laws that existed for the government to give them money didn’t exist when they give it to them either so I’ve been writing for months they created anarchy. They can. They created anarchy. We no longer have rule of law in this country, we no longer have private property.
Andrew Napolitano: The reason- Here’s why you’re both right. Because the constitution is very clear as to what the government can do and can’t do but those who have taken the oath to uphold it simply do not comply with the oath. They have read the constitution, don’t care about it or spend most of their time trying to avoid it.
Peter Schiff: Because the judiciaries totally obligated their responsibilities. They let them get away with it. That whole branch of government is basically disappearing.
Tracy Byrnes: It’s almost a morality issue. It’s like my kid, I say to my kid you clean your room you get to go out and play. And then I say he cleans his room yeah now you can clean your sister’s room then you can go out and play and I keep adding, adding and adding and the poor kid never sees the light of day.
Cody Willard: That’s what it feels like, doesn’t it?
Tracy Byrnes: Yes!
Andrew Napolitano: The history of constitutional law from Lincoln’s time to the present particularly from FDR’s time to the present is that federal government finding ways to evade the constitution and the federal judiciary going along with it that is the demise of our constitution.
Cody Willard: How do we get this done?
Tracy Byrnes: So it’s the judiciary system.
Andrew Napolitano: You have to hope that judges who have true fidelity to the constitution of which there are few also have the courage to say to the federal government, to say to the executive branch, that it shall not pass. Steve Moore from the Wall Street Journal. Steve welcome back to the Freedom Watch.
Steve Moore: Hey it’s great to be back with you guys.
Andrew Napolitano: Is Steve with us?
Steve Moore: I am here.
Tracy Byrnes: Judge I think I have to go since it’s 12:30.
Andrew Napolitano: Steve Moore, are you with us?
Steve Moore: Can you see me?
Andrew Napolitano: Okay. Try that again please. How are you doing? Can you hear me now?
Steve Moore: I can hear you.
Andrew Napolitano: Alright Steve we got you loud and clear. Tracy Byrnes is leaving us, Congressman Paul has left us. Steve Moore from the Wall Street Journal has until next Wednesday Tracy before Steve joins us just to remind you you can email us at email@example.com.
Andrew Napolitano: Has Lew Rockwell joined us? Lew are you here?
Lew Rockwell: It’s great to be with you.
Andrew Napolitano: Lew Rockwell who runs Lewrockwell.com and is the founder and chief executive officer of the Mises Institute in Auburn, Alabama joins us as well. We have just finished talking about the stimulus. We just finished talking about why no one considers the fact that the stimulus is going to have to be paid back. Why no one takes into account the constitutional violations. We want to focus in a little bit now on the automobile industry on GM and Chrysler. In just by way of a little bit of background and I’ll go to you Lew and then Steve then the rest of us will question you on it. The congress having no regard for the constitution gave President Bush and Secretary Paulson a checkbook with $700 billion in it and then the big 3 came to the congress and said we want $17 billion of our own and the house voted $14 billion and the senate voted nothing. In the finds of the senate and the ignorance of the house, President Bush told Henry Paulson to give $14 billion to General Motors and it only lasted 3 months. Lew Rockwell are you surprised that they are back for more tin cup in hand?
Lew Rockwell: No, you know, I remember back when they were asking for this money initially, General Motors was losing $4,000 on every car it sold. Now that’s a market signal. They’ll go out of business and they should have gotten out of business and I hope to goodness they go out of business now rather than they get this additional bail-out. Or I must say I’m not optimistic, I’m afraid the government would keep them in existence for the UAW reasons and for, because of special interest reasons and all the people who are involved in General Motors. But, for the sake of the American people, for General Motors and Chrysler unless they can stay in business on their own two feet need to go bankrupt and we need to get rid of them. Unless somebody come in there and reorganize them whether it’s Toyota or somebody who knows actually how to make cars and sell cars that people want to buy.
Andrew Napolitano: Before we continue with you Lew, thank you. Before we get to Steve Moore what is our time period Trace?
Trace Gallagher: We got about 2 minutes.
Andrew Napolitano: Okay in about 2 minutes we’re going to be live on the Fox News Channel which Trace Gallagher and I are going to talk about more nonsense that came down from the federal court today by lighting the constitution. Before we do that, Steve, what is President Obama want to give these car companies today of over and above what George Bush gave them on Christmas Eve?
Steve Moore: Well, you know judge this is exactly what I was worried about when the first bail-out came around which is this is becoming tin cup in hand very soon for more and we are seeing that right now. The point is that they might be asking for as much as $100 billion when this is all said and done and at what point do we stop throwing good money after bad? You know there are only about 40 or 50,000 workers left at some of these auto companies so it’s not as if most of the jobs have already been lost, I don’t see the sense in continuing to throw dollars at these companies. I think bankruptcy is the right option. Let them organize themselves maybe the big 3 will become big 1 but it’s better to have 1 profitable company than 3 that are losing money.
Andrew Napolitano: Lew, if the government, taking our tax dollars from us by force and putting it into companies where we as consumers wouldn’t buy the product and as investors wouldn’t buy the stock!
Steve Moore: Well, judge you know…
Lew Rockwell: It reminds me of why I call the Federal government a gang of thieves at large. It’s just an act of theft. They are taking money from people, we are already pool in this country, all of us the average Americans, and they are making us poorer still to keep losers in existence who make far more money than the average American. It’s of course nothing but a crime, one of many crimes being committed by the government but it’s definitely a crime that has to be stop.
Andrew Napolitano: Before we get to Steve, how close are we to your time?
Trace Gallagher: Still at commercial break.
Andrew Napolitano: Okay Steve, you wanted to respond to the government forcing our dollars.
Steve Moore: I was just going to make one other point. You know that quote stimulus bill that they pass to authorize somewhere near a billion dollars for the federal government to actually directly purchase new cars for federal bureaucrats to drive around in. Now think about that and the context of- first we give them you know, tens of billions of dollars in bail-out money and then we actually, the only people who want to buy their cars is the government themselves so we’re subsidizing them twice. Once through the appropriations process and once through buying all of their cars.
Peter Schiff: Why would they need new cars? The government should be shrinking, they should be cutting cost; put them on buses.
Cody Willard: Look at the average minimum wage in New Mexico vs. in Michigan and it’s at 10 times. These blue collars in Michigan make $55 an hour, in New Mexico $6 an hour.
Andrew Napolitano: Trace Gallagher, we’re ready for you.
Trace Gallagher: Almost. Yeah, we’re standing by. Go ahead judge. Oh I got to jump in again sorry guys we are live now. The best thing that happened to Wednesdays in so long is right here. It’s the strategy room hosted by the senior judicial and analyst judge Andrew Napolitano. He’s going to be here every Wednesday from 2:00 to 3:00 East Coast time. We thought we pop in because the judge is clearly talking about a lot of things but Gitmo is one of those. Judge, one more ruling as Patty is saying to her audience, one more rule in coming down today from appeal’s court showing that they want to close down Geithmal but it’s not that easy.
Andrew Napolitano: It’s not that easy in part because the justice department, the Obama justice department has made some arguments interestingly similar to what the Bush justice department did even though president Obama wants to do something different that President Bush. The Supreme Court said in the case of Bumadin, just the name of the person that sued, that these people in Geithmal have the right to a trial and if there’s no evidence against them, you have to let them go. And then the federal judge appointed by George W. Bush looked at the evidence against the 17 of them and the government said we have no evidence against the 17 of them, let them go. But in appeal’s court today said, you know what since we don’t know where they’re going to go and what they’ll do once they’ll get there. Even though there’s no evidence against them and there’s no charges against them you can keep them locked up!
Trace Gallagher: Judge, who is the microphone holder?
Andrew Napolitano: The microphone holder is the very expensive microphone holder, the great Peter Schiff the economist who predicted. The only major economist in the country who predicted the downfall in September.
Trace Gallagher: So Peter, maybe we should get the judge and Peter’s vote on the stimulus. We go the housing, quickly I want to know, quickly I’m going to take the microphone back because we only have one. I want to know your take judge, and your take, what your viewers are saying about today’s housing stimulus?
Peter Schiff: Well, it’s the exact wrong thing at the wrong time. We don’t need to stimulate housing demand, we don’t need to prop up housing prices. We have to let home prices fall, they’re too expensive. We have to allow our country to rebuild its savings so we have our money to invest. The last thing we need is to try to stimulate the very behavior and the very activity that we are now suffering from.
Trace Gallagher: Seems to me like kind of consensus judge?
Andrew Napolitano: We have Lew Rockwell on the phone, Steve Moore from the Wall Street Journal, we have Cody Willard from the Fox business network, all of us arguing the government has somehow forgotten that the trillion it authorized in borrowing it’s going to have to pay back and how can it think that it can solve a problem caused by too much borrowing and too much spending by more borrowing and spending!
Trace Gallagher: Cody Willard, by the way, the host of Happy Hour 5:00 East coast time every day on the Fox business network. Cody, what’s the analysis coming from your end?
Cody Willard: Viewers without a doubt are speaking out and new phrase I’ve seen and hearing from them is it’s not a stimulus package, it’s a simulus package because it doesn’t stimulate the economy it simulates an economy and that is, it’s a joke. It’s a bad reality.
Trace Gallagher: This is like a baton. You know the Olympics when they pass the baton, now we pass the microphone. Judge, the hot topic today of course is Roland Burris.
Andrew Napolitano: Oh boy.
Trace Gallagher: You would know this very well. Roland Burris, 4 different versions of his story and none of them quite jive.
Andrew Napolitano: I read the 110 pages because you asked me to, of Roland Burris’s testimony before the senate impeachment committee that ultimately recommended the impeachment of Governor Blagojevich and because the questions to him were inartful and his answers were rambling. In my opinion, he was highly deceptive and highly misleading but I do not believe that he committed perjury because they didn’t have prosecutors questioning him directly did you or did you not and he managed by his evasive answers to change the subject. So silence and evasion is not perjury. Politically he’s in hot water but legally I don’t think he is.
Trace Gallagher: So yeah, exactly, there’s political damage but legally not so much. Gentleman thank you all Patty Ann back to you.
Andrew Napolitano: Trace, thank you so much for coming up here. He ran up 14 floors. Thank you very much. Steve Moore, I think you wanted a way in on some comments on Lew Rockwell had made about what we can expect a government wants to do for the automobile makers.
Steve Moore: Well actually I wanted to response to something I think it was Peter who said about the housing industry. We ought to remember that there is no industry in America today that even comes close to being as overly subsidized as housing so why do we continue to pour more and more and more taxpayer dollars into the housing industry. I think the housing bubble was created by overinvestment through the mortgage tax deduction, Fannie Mae, Freddie Mac, all of these benefits that the housing sector gets. Throwing more money at the sector makes absolutely no sense.
Cody Willard: I think the housing sector is another phrase for keeping it unaffordable.
Peter Schiff: Exactly. Maintaining high home price, it’s the same way they’re doing with college tuitions. Government’s in the job of making college expensive so the people have to go deep into debt to afford the experience. If it wasn’t for the government, college would be affordable.
Andrew Napolitano: Lew Rockwell, Congressman Paul, with whom in a prior life for each of it you have an opportunity to work together on Capitol Hill reminded us that the simulus bill or the depressant bill as my two colleagues here want to call it, arrived on their desk about noon and they have to vote about 12:15 and it’s over a thousand pages long.
Cody Willard: Of law.
Andrew Napolitano: Of law! Absolutely, there were many things in there that many members of congress didn’t know were there until members of the press found it and exposed two days later after the congress had voted for it. Are you surprised the government is still operating this way?
Lew Rockwell: No, it’s the way the TARP bailout worked. There’s a hysteria, you have to pass it, have to pass it, you have to get it […]; it turns out of course that President Obama should go and take a 4 day vacation before he signed it. It wasn’t quite so urgent. It’s a fraud and as well as an economic crime. It’s going to be probably months before we realize everything that’s in the bill that every special interest in Washington was in the room. No American taxpayers of course, but all the special interest is there in order to write this bill to benefit themselves, of this bill and this is the way the government will operate.
Peter Schiff: And the bigger problem Lew is going to be…
Lew Rockwell: It won’t be appropriate anymore in the constitutional sense it’s the very very different America.
Peter Schiff: And the big problem is going to be, 6 months from now when the Economy is in worse shape now in part because of this bill. What are we going to get? An even bigger bill they’re going to come back and say the stimulus wasn’t big enough. It’s a good thing we’ve had it because it would be even worse now we need even more. We’re going to keep digging this whole thing.
Andrew Napolitano: Let me tell you about the mindset of certain people on Wall Street who of course like the free market when the money is flowing but like corporate welfare when they can get it. This morning on Fox and friends a show of which I have a fair amount of affiliation between 6 and 9 Eastern on the Fox News Channel. The CFO of General Motors told one of my colleagues, well if you don’t give us the $17 billion we need now, you, meaning the Federal government, will be paying for our bankruptcy. And the legal fees and the bankruptcy cost will be over $100 billion. Now, how have we gotten into the point where the CFO of a publicly treated corporation is suggesting that it would be normal and naturally for the taxpayers to pay for their bankruptcy? A condition that they and they alone have caused, Lew Rockwell.
Lew Rockwell: Well, you know, they also are so arrogant whether it’s the guys on Wall Street who wanted the bail-out or whether it’s GM or the others, they are unbelievably arrogant and they kick us on the teeth. So of course, Peter Schiff is exactly right we take much worse economic times partly because of this so-called stimulus bill. Because of what the Federal Reserve has done to us ever since Alan Greenspan turned monetary stick on high back in 2002. They have built us the biggest bubble in the history of the world and now we got the biggest buzz and so we have to act. We have to do exactly the opposite of everything the government is doing so because they are making everything worse with their monetary policies, hyperinflation and with their, although we don’t have the prices going up yet, although we will and with all these bailouts all these subsidies. They’re making, what they’re doing is they’re making the American people poorer and poorer. As they get richer.
Peter Schiff: Well, the price of gold is going up so that’s a good indicator.
Andrew Napolitano: Steve Moore, you have been preaching this stuff at the Wall Street Journal. Lew Rockwell has lewrockwell.com which gets incredible number of hits. Cody Willard at the Fox Business Network, Peter Schiff wherever anybody can listen to him because what he says is so precious and I work at the Fox news channel and also at the Fox business network. Are we shoveling against the tide? Is it just a dozen or so of us who believe in the free market? Steve Moore?
Steve Moore: What free market? There isn’t any free market left. I mean it really is distressing. You know, to Lew Rockwell’s point, he’s right that there is a lot of arrogance in the big three CEO statements but there’s also a lot of sense of entitlement. These CEOs and these workers think they are entitled to a government bailout, to taxpayer dollars and we’ve really become a nation of industries that have become looters when they just feel free to pick the pockets of the taxpayers every time they get in trouble. One thing he is right about because of dumb government policies, the Federal taxpayers is on the hook for about $50 billion of the pensions through the pension benefit guaranteed corporation. We are screwed either way.
Peter Schiff: It’s not the taxpayer. No one’s raising taxes. The government is either borrowing this money or printing it, so it’s the people who are foolish enough to buy the government bonds who are going to suffer, or American citizens who have savings.
Cody Willard: Guys, I will say this. We have been sitting here talking about that we’re going to get another multi-trillion dollars confiscation of wealth bill. Coming down the pipe, win the economy, gets worse partly because of this one. I’ve been saying we have to actually pre-empt their pre-emptivity. So how about this guys, everybody go march on your local town hall April fool’s day and just get a little bit of local coverage on it and speak up against this stuff. There is a tide out there rising up against this we see the tipping point here.
Peter Schiff: I was watching, Bernanke today was making a speech and he was assuring us that there’s absolutely no sign of inflation and that he’s not worried about all the money that he is printing. There’s not going to be any inflation.
Cody Willard: How about deflation?
Peter Schiff: This is the same guy who told us that the housing market was sound, that sub-primer’s contained, that the fundamental’s of the economy- he has been wrong at everything he’s ever said. Now he comes out and assures us that there is no inflation.
Cody Willard: What he’s doing right now. How bad are his policies going to impact us five years from today.
Peter Schiff: It’s not going to take that long. It’s a disaster.
Andrew Napolitano: Let me tell you what my greatest fear five years from now and I’d like Lew Rockwell to weigh in on this. And if there’s anything word worse than the S word for socialism is the N word for the nationalization and before you joined us Lew, I think you’re in California today. We recounted that two Republicans not known for their devotion to the free market but not known wide-eyed liberals, John McCain and Lindsey Graham has said that “nationalization must be on the table”. What the heck are they talking about? If the government can’t run the post office, can’t run the Entrac, can’t keep a public washroom clean, do they really think they can nationalize banks like in Sweden?
Lew Rockwell: Well, but they can loot. They know how to loot and that’s what this is about. It’s about looting the average guy for the benefit of the bank. And I know that now in Greenspan they quoted in financial times today. It’s totally endorsing nationalization of the banks and they heroically refer to him as the high priest of laissez faire. Well, Alan maybe he was a laissez faire guy back when he was an associative of Ayn Rand but he’s no laissez faire guy now he’s a big government man.
Cody Willard: That’s the worst part of this.
Lew Rockwell: He’s of all the people who brought on this is after, he bears the most responsibility and now he’s advocating a Soviet style measure that I must say isn’t sounding.
Cody Willard: That’s the worst part of this. This free market, there are these socialist/communist like Alan Greenspan and basically most of the Republicans in power pretend that they are actually aren’t that and they claim the title free market when it’s convenient and they give free market a bad name.
Peter Schiff: Absolutely. Absolutely. In fact now he’s even trying to say, Greenspan is trying to say, he was wrong in putting his faith in the free market. What he was wrong was in his manipulation of the money supply. He should’ve put his faith in the free market and yet he should have kept interest rates high not bail everybody out.
Andrew Napolitano: Steve Moore, my colleague at the Fox News Channel. Charles Crada were also a syndicated columnist out of the Washington Post opined yesterday and I don’t know where he got the figures from it. Let’s assume they are accurate for the sake of this argument that we are approaching the point where 1/3 of gross domestic product at some point passes through the hands of the government. Is there some point north of 1/3 where we will officially be a socialist country?
Steve Moore: Well, he got those numbers from me because I was the one who put them together, you know. Just to give you a context on this. Throughout the post World War II period about 20% of Federal Gross domestic product went to the Federal Government. This past year it was 25% and this year it would be about 33%. When you add state and local government spending that brings us to about 40% and to put that in context, Germany and France and Sweden are close to 50%, so we are 80% of the way they are towards a kind of socialistic European style socialism.
Cody Willard: Add in some of the guarantees, I mean you know, when we start to looking at the guarantees on Fannie/Freddie $5 trillion in debt, another trillion on the banks outside of TARP. How do you account for that total and when are we talking- I actually wrote the other day on foxbusiness.com and on marketwatch.com that we’re over 70% of GDP when we start including all of that.
Steve Moore: Well, you’re right. If you would include all of those guarantees and I calculate about $16 trillion of debt and mortgages and pensions and things like that are now guaranteed payment by the federal government. So you know, you’re exactly right. It’s probably close to over 100% of GDP when you take into account all of the guarantees and insurance.
Peter Schiff: They are guaranteeing things they can never pay. What are the reasons that some of these Wall Street firms went broke is because they wrote credit default so much, and now they can’t pay. Well now the government is making the same mistake. Obviously they can’t possibly ensure all the debt that they’ve ensured. It’s impossible, all they can do is destroy the money.
Andrew Napolitano: Lew Rockwell, does anybody in the government understand this or are we the only ones who worry about it?
Lew Rockwell: Well, the government understands what is good for the government. Yeah they understand it. They understand they’re ripping us off. You know, what Franz Pick said so many years ago about Federal Treasuries being certificates of guaranteed expropriation. That’s about all we can expect from the Federal government now, more expropriation, and one thing we can do besides fighting this ideologically I’ll just say is: buy gold. As long as you get dollars and people won’t respect your dollars for gold, buy gold.
Andrew Napolitano: Somebody writes. Ethan Cox writes this, grass roots are pushing Schiff to run for the Senate next year. Did you know that?
Peter Schiff: Yes, I know that.
Andrew Napolitano: Well the question is, will you? I don’t know if they mean will me or will Cody or Lew Rockwell or Steve Moore. But they do ask if we’re interested in it but I’d probably be miserable there Lew, wouldn’t you?
Lew Rockwell: Well, not for me but I’d be fond to have Peter do it.
Andrew Napolitano: It’d be great to have you in there.
Cody Willard: In all seriousness, Peter. I get that a lot of that from readers on spoke-up.com, on my facebook page, asking if there’s potential for a presidential ticket with you and Ron Paul in 2012-2016.
Peter Schiff: Look, I mean that would be a stretch, to think that. I’m not a political guy.
Cody Willard: How about the treasury? Would you head up the treasury if someone asked you to?
Peter Schiff: Well, look, a lot of these departments say: “Would you head the Federal Reserve?” I would just dismantle it.
Cody Willard: That’s right. Would you dismantle the treasury too?
Peter Schiff: You know, I don’t know if I’m right for the Senate. I mean it’s not my intention to run for Senate. I know there are some people that are toying with the idea, because […]
Andrew Napolitano: It sounds pretty good to me.
Peter Schiff: It’s not my intention to run for Senate.
Andrew Napolitano: Tony from Indiana asks this. Does the stimulus violate the 10th amendment to the constitution? Oh my God, let me count the ways. That is the government’s, after the 2nd, that is the government’s least favorite amendment. The Federal government’s least favorite amendment to the constitution. The use to the commerce law is virtually invicerated, wiping out the 10th amendment from the constitution.
Steve Moore: Can I take that one on Judge?
Andrew Napolitano: Yes, Steve.
Steve Moore: Because this is one of my pet peeves, I call them the forgotten 9th and 10th amendments, which basically say that all powers that are not exclusively and explicitly given to the Federal government are reserved for the states and the people and those have become the two amendments that the congress has thrown out the window. This stimulus bill basically makes states subservient to the Federal government when it’s supposed to be the opposite that the Federal government is supposed to be the creation of the states.
Andrew Napolitano: Who said the following: “The states created the Federal government, the Federal government didn’t create the states.” Ronald Reagan and his first inaugural address. It sounds like Jefferson. It was a reason as Reagan but nobody follows that anymore except the people at this table.
Cody Willard: Well and the people in the Republican Party say they do and that’s again part of the problem. They have embraced, and not that Reagan was a true embracer of a private property too.
Peter Schiff: And you know, the constitution is a very short document unlike the stimulus bill. And the Article 1, I think in the section 8, they grant the few powers to the Federal government is very small. Think of all the things that the Federal government does now, none of that stuff is authorized.
Andrew Napolitano: Let me just give the panel a couple of statistics which George Shutz, my producer, and our researchers which what we call the brain around here which is the great researches we have here have gotten for us. Thank you very much for the brain room. Since we were on last Wednesday, just 7 days ago, 4 banks have failed and overtaken by the FDIC. Now I never heard of these. Pinnacle Bank in Beaverton, Oregon. Coinbelt Bank and Trust in Pittsfield, Illinois, Riverside Bank in Cape Coral, Florida, and Sherman Canny Bank in Loup City, Nebraska. The FDIS estimates that it has spent $329 million to bailout the depositors of this bank. Since we have last met, Congressman John Tanner, a democrat of Tennessee, chairman of the house delegations NATO parliamentary committee took his wife and 13 lawmakers and their wives on a 9-day joint starting at NATO’s headquarters in Brussels, next stop is the city of light in Paris. Congresswoman and speaker of the house Nancy Pelosi of course flew in the speaker’s private jet directly to Rome where after a public audience of 150,000 she had a private audience with the Holy Father who promptly reminded her that life begins at conception and ends at natural death and all office-holders, Catholic or not have an obligation to comply with that truism. I wonder what she thought when the Pope said that to her. Lew Rockwell?
Lew Rockwell: Well I hope she decided to repent and change her ways. I don’t think so but I’d be glad to see it.
Andrew Napolitano: Steve, four bank failures in a week. Good, bad, surprising? $340 million taxpayer dollars used to bailout those depositors should we worry about this?
Steve Moore: Well, you know, what we have essentially done is shovel money into a leak, you know shovel water into a leaky bucket and so, you got a lot of these banks, Judge, that are worth less now. Their net worth is less than the amount of money that the Federal government has put into them. I mean Citibank is a good example, right Peter? I mean we put something like $75 billion into Citibank and today its net capitalization value is..
Cody Willard: The difference is. In this case, the FDIC is doing what his actual charter is it’s insuring depositors. The difference with city groups, we are bailing out shareholders and then there are lenders.
Peter Schiff: But remember too one of the basic problems and one of the reasons the banks are in so much trouble is because we have the FDIC in the first place.
Cody Willard: Amen to that.
Peter Schiff: The FDIC takes the risk out of opening up a bank account. So therefore the depositors when they put their money in the bank they couldn’t care less what the bank does with it. And so the bank does all these risky loans because the people don’t care because the bank goes under from those risky loans.
Cody Willard: They’re insured.
Peter Schiff: Right. So in the mean time the depositors say look, take whatever risks you want because I want a high interest rate and if you go broke the government is going to give me the money. We shouldn’t even have an FDIC but because we have one, we’re going to have far more bank failures during the entire great depression. During all the years of depression. Only 2% of the money on deposit was lost at banks due to failures. We’re going to lose so much more money now because way more banks are going to fail and the FDIC is broke. There’s no money there so they got to print it.
Andrew Napolitano: Lew Rockwell, where does the FDIC get its money from as if I need to ask?
Lew Rockwell: Well it gets it from the fees from the banks but of course where it’s actually going to get it when the big banks start to go down. We start to have hundreds or more bank failures. They will get it from the printing press. The Federal Reserve is going to print it for them the way the Federal government gets the rest of its money, because as Peter and everybody else is pointing out, they are not raising taxes they are borrowing and […]
Andrew Napolitano: With all the TARP. All the so-called stimuli and all the TARP and the latest nonsense that the president signed into law yesterday and the attitude from the CFO of General Motors this morning on the Fox News Channel have further engendered into our society the idea that the government will prevent us from failing. We will reward you when you fail-
Cody Willard: Buy stocks now hurry!
Andrew Napolitano: -and punish you when you succeed. Are we going to raise, Steve Moore, a generation of young people who would come of age thinking that the government will keep them from failing?
Peter Schiff: It will fall apart long before it gets broken.
Cody Willard: The Federal government has become essentially a security blanket and a safety net for every person. Peter Schiff put it so well last week. I keep stealing your line on this Peter but it’s so true that we should be a nation of the survival of the fittest and now we’re a nation where the government insures the survival of the unfittest.
Andrew Napolitano: I mention, one trip you know there was all these problems with Senator Burris of Illinois. I think it was the Wall Street Journal or one of the newspapers trying to get a comment out of Senator Dick Durbin, the other senator from Illinois. They couldn’t find him because he was asleep at a hotel in Greece where he is leading a half dozen senators and their spouses.
Cody Willard: They are passing the stimulus bill, he’s in Greece.
Peter Schiff: On some kind of a fact-finding mission to Greece. Now what does the senate need to know about Greece that they have to spend a couple of hundred thousand dollars to fly there.
Cody Willard: I’ll bet you anything they spent a couple of thousand dollars of taxpayer money to send him to Greece so he could meet with someone who actually was lobbying for more of their own welfare dollars so they could donate it to him later and he can […]. It’s a wonderful vicious cycle.
Andrew Napolitano: Lew Rockwell is it sad that we actually laugh at this kind of and expect this kind of gross waste of taxpayer dollars that he had to be awakened in a hotel in Greece?
Lew Rockwell: It’s a rip-off though I might say I don’t mind Durbin going to Greece, I mind him coming back.
Cody Willard: Ouch.
Andrew Napolitano: Alright. Nicely put. How bad was this week in American history, in terms of the amount of money that’s borrow and spent?
Peter Schiff: What do we get this week? They passed the stimulus and now they got this new housing bill. And so I mean this is a disaster for America. For the freedom, for the constitution, for the economy.
Cody Willard: Relative to the last 6 weeks, how bad is it?
Peter Schiff: I think it’s pretty bad and you know also, look at the breakout you could see what’s happening to the price of gold. You could see what’s happening to the stock market going down. As I said we talked last time the dollars now worth less than 8 ounces of gold. Last week it was worth 8 and 1/2. It’s losing value every week.
Andrew Napolitano: Steve Moore, how bad has the government caused us to become since the last we’ve met last Wednesday?
Steve Moore: Well, you know, as Peter just said, every single day is a new bailout for some industry or some homeowner and you know, the Federal government can’t bailout all of us. We now have a situation this year where the Federal government will borrow more money than the Federal government for the first 200 years of existence. These are unchartered territories. We don’t know what’s going to happen because no country, at least the United States have never borrowed this much money before.
Peter Schiff: Complete collapse. The currency is going to collapse, the economy is going to collapse.
Steve Moore: I hope you’re wrong, Peter.
Andrew Napolitano: We only have about 90 seconds left. Lew Rockwell this is your first of many Wednesdays with us but since last Wednesday how bad have things sunk?
Lew Rockwell: Well, they are making us poor and that’s exactly the way to think of it. Every American who is not on the government payroll is being made poor with the benefit of the ruling class. These government employees and bureaucrats and the corporate executives who are also in the payroll will all be far wealthier than the rest of us. So we are being ripped off more and more.
Andrew Napolitano: The government agreed since the last we met to borrow a trillion dollars in the simulus package. Have they ever wasted more money in the single week as far as you know?
Cody Willard: Maybe with some of the guarantees they cut over the last 6 months. They might have, I’ve been saying that because of the stimulus package on top of TARP and all these confiscation of wealth, the market is eventually going to hit. The Dow is going to hit 6000 and I’ve been saying this for about 6 months I still think, I want to get balls in it every time they do another confiscation they’re taking another thousand points or so off.
Andrew Napolitano: If you want to see this episode on the internet. Our friend Mark Gallagher over at libertymaven.com will have this episode on his sight in a few hours. This is freedom watch. Until next Wednesday, 2 PM Eastern 11 AM on the West Coast. Stay free. Thank you guys.
Cody Willard and Peter Schiff: Thank you judge.