According to the President, the return of TARP funds by some 10 banks will lower the national debt by $68 billion and has generated a profit for taxpayers. In reality, the so-called profit from bank dividend payments adds up to a measly $1.8 billion, an amount that won’t even cover the interest on the national debt for the next two days.
Additionally, while Obama’s desire to restore the ‘pay-as-you-go’ rule (requiring Congress to only spend a dollar if it saves a dollar elsewhere) sounds like a step into the right direction, it’s much more likely that the President is simply preparing the people for an increase taxes, enabling the government to squeeze even more money out of the system.
Show: Montel Across America
Host: Montel Williams
Montel Williams: Recently on your blogger space you went off a little bit about the situation with GM and one statement kind of said “co-mingling pubic control to private businesses is known as fascism”. I know it’s crazy that you come on and I hit you with the biggest on at the top, but could you talk about what you mean by that?
Ron Paul: Well, fascism is, in the economic sense, a combination of government and big business, and a lot of time I refer to it as corporatism or crony capitalism. But it’s not free market capitalism. And I really don’t like it when we get into trouble like we’re into right now and blame free markets for it. We’ve been doing this for a long time. Most people understand that when you talk about the military-industrial complex, how big government subsidizes big corporations. So, that’s what I’m talking about. But technically, in economics they call that a form of fascism.
Montel Williams: And right now what do you think about what is going on with the President, who this morning or late last night talked about the fact that the stimulus package in some ways some of way has already come back. We’ll play this little piece, listen.
Barack Obama: Several financial institutions are set to payback $68 billion to taxpayers. It’s worth noting that in the first round of repayments from these companies, the government has actually turned a profit. This is not a sign that our troubles are over, far from it. But it is a positive sign. As this money is returned we’ll see our national debt lessened by $68 billion.
Montel Williams: Now of course, we have to understand we’re just in debt with this stimulus package worth $1.4 trillion, so $68 billion is a little debt but a very tiny debt. But at the same time, Congressman, the fact that businesses are going to start paying us back and the government is going to make a profit… is it not a good idea for a real, quick, short investment to make a little bit money of it? Just like a loan shark?
Ron Paul: When you look behind the numbers you will find out they’re not in the true sense profit. It’s not like you’re going on and investing in a good car company and making good products and making profits. It’s quite a bit different.
Montel Williams: It’s like interest on our money, but we’re going to get interest back on our cash.
Ron Paul: Yeah, and like you point out it’s very small. But what most people never think about is, what would have happened if we wouldn’t have done it? Where would that $1 trillion have gone? So if you look at the whole investment, it’s a very, very minor so-called profit. But you might ask, where would the money go if the people were allowed to allocate it and we didn’t have the government allocating the capital.
Well, it might have gone to an honest bankruptcy. Maybe General Motors would have been bankrupt a year ago and all the good assets would have been bought up and a new company would have been started, and there would have been productive job and a sound footing. But this way you don’t know what we missed out on, because we have the government spending the money. But I think there is a bit of fiction behind some of those figures.
Montel Williams: Okay, here we are, we’re sitting where we are right this minute. It is June 10th, 2009, and water has passed under this bridge. What do we do and where do we go from here, and I think one of the things you pointed out in your blog and I thought it was really pointed was the fact that we’ve been involved in Amtrak for over 40 years, and Amtrak is a losing proposition. Unless it’s brought back to a system where it’s privately owned I don’t think we’ll ever see a profit. Do you think that’s what we’re in store for with GM?
Ron Paul: Oh, sure. That’s what will happen and if you do like markets and free markets one ought to be very frustrated because we’re moving in the wrong direction. The government is buying up more and more stuff because that means it will become less efficient.
I mean, we’ve had experience in the 20th century where governments had absolute, total control of companies and products and it was a disaster. Even the railroads, you know, a lot of people ride in them, a lot of people enjoy them, but they’re highly subsidized by the people who don’t ride them and they lose money all the time and that’s probably what will happen. It’s going to be artificial. It’s not a true market economy and I just think that it’s the absolute wrong direction.
I think what will happen is we’ve dug a hole for ourselves and we keep digging and everything we do the hole just gets bigger and bigger.
Montel Williams: Well the President yesterday also said that he’s wants to try to reinstate the pay-as-you-go plan which would be a way to stop the bleeding.
Listen to this:
Barack Obama: One important step we can and must take is restoring the so called ‘pay-as-you-go’ rule or paygo. The pay as you go rule is very simple. Congress can only spend a dollar if it saves a dollar elsewhere.
Montel Williams: What do you think about that?
Ron Paul: I think that’s a good idea, I hope he is serious. But when he has talked about the budget before he talks about being concerned about inflation and debt in 2, 3, 4, 5 years from now. If he’d do it immediately and he has as much clout or more of it than the Congress has, so if we don’t pay for the bills, veto the bill, you know.
When we had a good so-called conservative in the office who was supposed to be doing this he never vetoed one bill. So, I’m not so sure that if there is money coming down the track and it’s for unemployment benefits and food stamps there is going to be any vetoes. The politics is just not there. So, it’s good talk and they have to do it in order to try to calm the troops, but I don’t think there is a serious effort.
As a matter of fact, I’ve talked about that for many years. There are some domestic programs that aren’t strictly my cup of tea or constitutional, but I wouldn’t cut them off at the knees. But I would always pay for it. We had a bill yesterday, it was a half-decent bill and it wasn’t all that expensive and they weren’t a lot of voting inside. If you’d cut out a B1 bomber or something like that and paid for it and saved a couple of dollars I’d be glad to work with that in a transition.
But if you add on, add on, add on, finally we’ll have a financial crisis and the one that we’re having right now is just the beginning of what will come if we continue to do this. So what Obama is saying is very good, but how many people in this country are going to believe it? It’s sort of like Geithner going to China and saying, “We’re going to balance the budget soon and get our house in order”. And what do those young Chinese people do? They laugh at us and I think the American people are laughing when they say, “Alright, we’re going to have paygo next month”. Sure, I don’t think anybody believes that.
Montel Williams: What if now the rest of the Congress got behind this and said, “Okay, let’s do it. That’s what you claim what you’re going to do, sir, then put up or shut up”. Will that pressure be enough to maybe see if we can at least do it a little bit?
Ron Paul: Not likely, but then there would be the second argument, “I’m all for paygo but I described mine, that is, cut someplace else, cut enough so you can cut the deficit and deal with our problems here at home”. But half the people who want paygo want higher taxes. I’m sure that’s what’s in Obama’s mind: “Well, we’re going to find a way to squeeze more money out of this system.”
The system is crumbling, it’s very weak and you can’t tax it anymore. But if those who want paygo want to raise taxes in order to pay for everything, that won’t work. From my viewpoint I think the only way you can pay for anything is to cut things out that we don’t need and, of course, you have heard me talk about all the foreign expenditures that we should work on because that should be the easiest place to cut.