In Thursday’s interview with Steve Gill, Ron Paul explains that common sense tells us that we can’t live on credit, how savers are being cheated, and why there should be more accountability in government spending.
Show: Steve Gill Mornings
Host: Steve Gill
Steve Gill: We have Congressman Ron Paul with us, and Congressman, I’m going to give you first the opportunity to launch a big “I told you so” because you were warning us about most of this stuff all along.
Ron Paul: Well, that is true. But, you know, nobody appreciates an individual who thumps, “I told you so, I told you so”.
Steve Gill: Yeah, but you’d like to do it, you know it.
Ron Paul: Yeah, you can do it for me then. I think the record is very clear and I don’t claim that I was all wise about it. But I watch Austrian economists and what they do and say and I understand the Austrian economic theory. So you can make projections, you can’t make projections of time. If you print a lot of money, for instance, you know it loses value. It’s really not all that complex. You can understand where financial bubbles come from and if financial bubbles exists you know they have to collapse. So, it’s not so much that we’re all knowing as much as common sense tells us, that you can’t live on credit, you have to work for what we have and if you want to increase wealth you have to work and earn it and save money and it doesn’t come out of a printing press.
Steve Gill: I think we’re going to talk about the earmarks and that piece of it, but we have done so much of the stuff, we go to do it rushed, we got to do it in a hurry. We can’t read the bill before we vote on it. The President is not keeping up with his promises of transparency, of posting legislation for 5 days before he signs it. You know, we’re doing this stuff so rushed that nobody has a clue what is even in this legislation. We saw that with the TARP.
Ron Paul: You know, this is commonplace, this is how things operate in Washington, whether it’s this economic crisis we have and the urgency as though the end of the world will come if we don’t pass this bill next week. The same thing happened after 9-11 when there was an attack on our civil liberties. They said, “If you don’t do this, you know, they’re going to blow up the world.” Or about invading Iraq, they said, “Oh, it’s urgent, urgent or you’re going to get bombed by a nuclear weapon”.
So everything is urgency and important legislation never gets read. It’s popped on us within hours before we have to vote on it and there’s such a political clamor for it and the members become frightened and they say, “You know what, if we don’t do this and this our people are going to be mad at us. They need to have this done”. But this idea of urgency and blindly doing something and thrashing out is the way the government operates, unfortunately.
Steve Gill: You know, it’s jaw-dropping to watch the amount of money that has been spent in just the first 51 days of this administration, the amount of wealth that has been wiped off the map. Is there any way to even slow this down,Congressman?. Because I know you and other are trying, but this train is going full speed right towards the cliff.
Ron Paul: I think we’ll go over the cliff and that means the dollar will be destroyed. The sentiment here is that if you bailout Wall Street with 100s of billions, the Federal Reserve has gotten involved and passed out trillions. Why not give everything you can to poor people? The psychology here is that there are no limits and people still buy dollars, we still use them, but this can’t last. The dollar financial system has collapsed. That’s why a lot of people have lost a lot of money.
But you just can’t keep bailing out the world system and keep it going by just creating more money. So, we’re over the cliff and going over the cliff means the destruction of the dollar. And it goes quickly. The financial system seems to have shocked a lot of people that it collapsed so quickly, but that’s the way it usually works.
The end of a currency comes quickly too. It’s very, very rapid. You can destroy it over a period of 20 or 30 years, but it might take one or two years for it to finally go completely. And that’s what we’re working on. I wished we had more help here and more common sense, but the political pressure is pretty great. People want to be taken care of, there’s the idea that there’s a safety net out there and government has to act and you need to tell the people what they need to do is to start saving and the government needs to do less and maybe we should get rid of the income tax and a few other things like that and say go to work, save some money and pay off your bills. Nope. People want free food and free medical care, it’s like they’re moving to socialized medicine. In the midst of this crisis they’re trying to fund trillions of dollars for free medical care.
Steve Gill: You mentioned health care, you mentioned medicine. Nobody wants to take the tough cure of saying, “We got to work”.
Ron Paul: They’ve been conditioned rather well, because for the last 20 years or so basically capital came from the Federal Reserve. Capital is supposed to come from us working, living within our means, if we have money left over we save it and somebody else uses it, or you invest it yourself. But we have lived way beyond our means, we borrowed money and used it for consumption. There was actually zero savings. But where did the money come from? Well, the Fed would create it out of thin air and put it into the banking system and people would say, “Oh, that’s capital”. Therefore, they thought that capital came with no strings attached and it was for free. But it only lasts to a certain degree. You can fool the system for a while, but that all came to an end.
Steve Gill: It seems dangerous to me in this new economic Obamanomics that we are actually punishing capital investment and risk-taking at a time that we need more of it than ever.
Ron Paul: You know, we tax it, you know, and that’s the punishment and that’s why it won’t work like it’s supposed to. What about the whole idea of encouraging people to save? Well, if you have been frugal and if you didn’t extend yourself and you didn’t get involved in this mess in the stock market, and if you have couple of hundred thousand of in your CDs, what are you making, 1% or something? At the same time, if the market set the interest rates they might be making 6% or 7% or 8%.
So people are being cheated. It’s a system that’s very corrupt and very destructive and reality is setting in. But I don’t think there is enough understanding yet here in Washington because we continue to do the wrong things.
Steve Gill: You’ve mentioned, and we aired that clip just moments ago, that part of our problem… and this is not to be misunderstood that you’re suddenly somehow for earmarks and pork-barrel spending… but you’re for accountability. And that at least in the earmark process we know where the money is going and where it can be spent.
What we’ve seen in TARP, what we’ve seen in the stimulus package, quickly as these communities are now reselling their stimulus money, is we’ve got no accountability. As bad as earmarks may be, they’re better than a blank check.
Ron Paul: Yeah, and I think I’ve come to the conclusion to defending earmarks in that sense isn’t all that easy because earmarks have a stigma attached, and rightfully so because they have been so abused. And if you vote against all the spending bills, of course, you vote against all earmarks. But the principle is, should Congress designate how each dollar be spent? And that is my position.
So if you talk about designation, maybe it doesn’t arouse this fear that you’re being corrupted if you earmark something. But we should designate everything and I think you mentioned earlier this whole idea that the TARP funds had no designations and it went overseas. I mean, that’s derelict of duty by the members of Congress. So we need to at least earmark it or designate it rather than just giving it to the administration. The one thing that people have to realize is that if anybody votes against an earmark, nothing happens to the budget. That money is still spent.
Steve Gill: Which is really the bigger problem, that’s the bigger problem. We’re going to spend this money no matter what. That’s the mindset in Washington. Maybe we ought to spend less.
Ron Paul: Well, that’s the real solution but people say, “Well, if you vote against a bridge in the United States, you know what, the bridge may be built in Iraq”. That doesn’t solve our problems.
Steve Gill: Or they might spend it somewhere else. Have you got a few more minutes, Congressman?
Ron Paul: Yes.
Steve Gill: There’s a difference in pork-barrel spending and earmark spending. And we have Congressman Ron Paul of Texas with us as we’re trying to sort this out.
Ron Paul: Yea, I think there are two things going on here. One is the overall spending and almost all of it, as far as I am concerned, is unconstitutional or wasteful and that’s why I vote against all the appropriation bills.
The other one concerns the whole earmark and designation process which is, who gets to decide where the money is spent. My argument is the Congress should do that so that’s why I say, If you’re going to spend it then you should designate exactly where it is going, rather than allowing the executive branch to make those decisions. Then they carry all the political clout and then they wheel and deal with members of Congress. It’s sort of the line item veto giving it to the executive branch, and if you don’t do what they want and vote for their projects then they won’t allow some of the money to go to your district.
I want the control to be in the Congress, but the truth is most of it could be categorized as pork. You know, even in the highway system, technically, all the highway funds should be just kept in those states and the states pay for their own highways rather than coming up here and making a round-trip. Education funds are the same way, why make these round-trips and then fight to get this money back? So that’s why I just argue the case that money should all be left at home, but if it comes here then the Congress has a responsibility to designate how it should be spent.
Steve Gill: And that’s the big problem with the stimulus plan; so much of it comes with so many strings attached. Let me ask you a last question because I know you got to run to an appointment. Is there any way to stop this and turn this tide before the 2010 elections, or we’re just going to have to hunker down and know that bad things are going to continue to come.
Ron Paul: Well, in a way, we don’t want it to end before then because if it did that means it’s collapsed. We don’t have the votes here to come to our sense and do the right thing so I’m afraid it’s going to end with a calamity which is a dollar collapse.
So, let’s just hope that we limp along and educate a lot more people and get a few more members up here to make the correct decisions. Right now all they think they have to do is spend more money, borrow more money, run up an even higher debt and print more money. That’s how we got into the trouble, it can’t possibly be the solution.
Steve Gill: Congressman, keep up the great work, thanks for being with us and we’ll get you back again soon.