Channel: Bloomberg TV
Female News Anchor: Well, Fed Chairman Ben Bernanke’s comments today before the Senate Budget Committee earlier foreshadowed tougher oversight for certain financial institutions.
Male News Anchor: But according to our next guest the solution to today’s economic crisis is actually for the government to get out of the way. Joining us now from Capitol Hill is Congressman Ron Paul, Republican representative from Texas. Congressman Paul is a member of the House Financial Services Committee and Joint Economic Committee, and Congressman, thanks for coming on the show.
Let me ask you first about the budget, as we’ve just finished watching the Treasury Secretary get grilled for about three hours on the budget. What’s your take on where we’re headed with this kind of a budget, and what can be done about it?
Ron Paul: For a government that’s totally broke, I can hardly see that these are reasonable requests to spend trillions and trillions of dollars more in the biggest budget effort. At the same time the deficit is huge. We are currently running a deficit of 1.5 trillion dollars. It makes no sense. We should be cutting spending, we should be trying to live within our means and not just spend our way out of recession. It was brought upon us by too much spending, too much borrowing and too much printing-press money.
Female News Anchor: Is it at all encouraging, though, to you that after this initial stimulus spending according to Obama and his administration, he does hope to cut that budget down to 500 billion and change.
Ron Paul: I don’t know how anybody could talk that way with a straight face. And they do. The President did, and the members of Congress did. I don’t know whether they brainwash themselves or what, but the odds of cutting the deficit in half by stimulating by running up a deficit of 1 or 2 trillion dollars is beyond me. That is just fodder for the markets thinking that you people in the markets are going to believe it and its going to help the markets recover. So it’s a fairytale, it’s just silliness.
Male News Anchor: Congressman, what do you say to people who respond that we need to bailout AIG? You know the counter-party risk is too great and if you were to let an institution like this fail it would be, as David Malpast told me, absolutely calamitous.
Ron Paul: I think they are wrong. I think there would be problems, but they are making the problems that much worse. I think it’s immoral. Why take money from productive people who save money and give it to people who are non-productive? It’s unconstitutional. There is no authority for us to transfer wealth like this. And, besides, it’s totally impractical. It won’t do any good whatsoever and it means more deficits and more pressure on the Fed to create more money, and that’s where our problem is.
Female News Anchor: Bernanke was furious when asked about the AIG situation. Does that, perhaps, set a precedence that we won’t we something like this happen?
Ron Paul: Well, let’s hope so. Maybe it will finally be something that Bernanke and I can agree on. No, I think it is going to continue, the pressure is so strong. Politicians and bureaucrats and central bankers cannot take their hands off, they feel compelled to do something, even though doing less would be a lot better.
We should lower taxes, lower spending, and get out of the way. We have too many houses and the housing prices got too high. The correction is: lower the prices of housing and don’t stimulate housing. But they are doing the opposite. They want to keep the prices high and interfere with contracts and bailout the weak borrowers. You can’t find a solution that way, that’s why the markets don’t react positively. They know a lot more than the politicians and the central bankers do. We in politics and those in the central bank pretend that we know, but we can’t know and that’s why the market is rejecting our proposals.
Male News Anchor: Although the voters might reject you if you don’t save them from losing their houses and losing their jobs. Isn’t that a concern?
Ron Paul: Well, it is. But understand that it’s only about 8% of the people that might lose their houses. And besides, the money so far, the trillions of dollars that we have invested hasn’t helped those people yet, and they don’t trust that it will. So they are very leery about this. It has bailed out some financial people and people kept getting bonuses, some of the bank executives kept getting bonuses. So there is no reason to trust what we tell them. Now we are going to bailout the little guy and the guy who holds the mortgages at the expense of the people that have been paying their mortgages. So they are not very happy and they are not going to be satisfied with this because it wont solve the problem.
Male News Anchor: Alright, Congressman Paul, I appreciate your time. Ron Paul joining us from Washington DC. Now, speaking of Washington DC, a big part of President Obama’s energy policy is going green.