President Obama: I know there is a criticism out there that my administration has been spending with reckless abandon, pushing a liberal social agenda while mortgaging our children’s future. The worst thing that we could do in a recession is to try to cut government spending at the same time as families and business around the world are cutting back on their spending.
News Anchor: President Obama spoke to his critics directly earlier today saying the last thing the government should be doing during a recession is cutting back on spending and one of the critics of the president has been Republican Congressman Ron Paul. He joins us now live on the phone from Jackson, Texas. Thank you so much for joining us, sir.
Ron Paul: Thank you, good to be with you.
News Anchor: Let me get your thoughts on what you heard today from the president saying that they got a plan, they have seen some success, but are not out of the woods yet.
Ron Paul: Boy, that’s for sure. I think that we haven’t even come close to having a policy that might get us out of the woods because we’re doing exactly what got us into the problem; we’re spending more, regulating more, having new programs, printing more money and they’re trying to re-inflate the bubble. And it’s the bubble that was the problem in the first place. And he assured us today that he is never going to let this happen again, never have another bubble and everything he said today, he was pushing, you know, inflating the financial bubble. He even talked about how fractional reserve banking contributes to the bubble. So, I don’t think people can be very hopeful that this is going to solve our problem.
News Anchor: Well, let me look at some of the spending. You got the president just yesterday announcing the 2000 transportation project, he says, funded by the stimulus. He also talked about government sector layoffs that were canceled, as a result some of the police departments have been able to keep on officers, and just yesterday Goldman Sacks reported surprising profits saying that because of the help they received they might be able to pay back the TARP funds they got from the government.
Ron Paul: But the problem is that nobody in Washington (a bureaucrat or a politician) is smart enough to know how to allocate capital. So if you take that and if you see a so called benefit you don’t know where that money might have gone elsewhere. It might have gone into something productive. So, nobody knows whether building a highway is the most productive thing to do. Maybe the most productive thing to do is to save the money and build a plant or to build a steel plant or something.
News Anchor: So since no one knows, why not try?
Ron Paul: Why not try capitalism is what I’m saying. Why not try freedom and let the market work? We haven’t allowed it to work for so many decades. But they’re falling in the same trap like in the 1930s. They’re blaming capitalism and free market choices for this problem and that’s why we can’t expect it to work, because he claims that… you know… the worst thing we did in the depression and all these other times was we didn’t send enough money and that’s what prolonged the depression. But …
News Anchor: But wasn’t it the spending for the war that ended it?
Ron Paul: Pardon me?
News Anchor: But wasn’t it the spending for the war that helped this country during the depression?
Ron Paul: No, that’s not true because at the end of the 1930s when the war was starting it put people to work, but they were still very, very poor and they had rationing. I remember those days, and the economy was very weak and here at home the people were suffering and there were shortages. The depression ended after the war, after the war taxes were cut by one third, spending was cut by two thirds and he’s claiming never cut spending. The end of the depression came with cutting spending and cutting taxes.
News Anchor: Congressman, let me get this in real quick this was this Gallup poll of Americans asking who they were confident in right now to fix this economy. 71% said President Obama, 51% said the Democratic leadership, 38% say Republican leadership. You bring up the war and getting people back to work. The president said more job losses and foreclosure on the way, but even with that bleak outlook, and you hit hard with the jobs issue, it looks like Americans still have confidence in this president over the Republican party.
Ron Paul: Well, of course, that doesn’t prove a whole lot because they had a lot of confidence in Roosevelt and he prolonged the depression so I don’t think that’s very much of an argument at all. The only thing it changes things is not personalities. It has to be economic policies and the ideas of freedom and free choices and sound money and the Federal Reserve. If we don’t talk about that we can’t solve the problems.
You just can’t keep inflating an economy through the creation of new money and credit. That’s how we got into the mess, that’s how the bubble was created. It finally collapsed, the market is saying you have to have a correction. Individuals have corrections and he admitted it. The people who are out there, they’re tightening their belts, they’re looking for jobs, they’re working hard and they’re saving their money. That’s what a country has to do as well. You can’t start a war to get out of a depression. That scares the living daylights out of me.
News Anchor: I know there is a lot more to talk about here and I wish we could continue but we’re out of time. Thank you for making time for us today.
Ron Paul: Thank you.