Ron Paul and Robert Reich on Larry King

Show: Larry King Live
Channel: CNN
Date: 1/25/2010


Larry King: Before we get into the stimulus project as promised, CNN’s Ann Andrews reports tonight that President Obama is set to announce a three year freeze on non-security discretionary spending. That move would freeze discretionary spending at $447 billion dollars.

Joining us now to talk about that and to debate the stimulus and whether it’s actually working, is Robert Reich. He was secretary of labor in the Clinton administration, now he’s a professor of public policy at the University of California at Berkely. His most recent book is “Super Capitalism” and is out in paperback. And Representative Ron Paul of Texas, a member of the House Financial Services Committee, and the Joint Economic Committee. He’s also the author of “End the Fed”. We’ll start with you, Robert. What do you make of the freezing of the domestic programs for three years?

Robert Reich: I don’t think it makes much sense, Larry, and I’ll tell you why. The government, under the circumstances we now face, is the purchaser of last resort. Consumers are not buying. They’re still scared, for good reason. Businesses are not investing very much, they don’t want to invest if there are not enough consumers out there. So government has got to spend. This is something that a lot of people have difficulty understanding because you don’t want bigger deficits in the long term. But in the short term, government has got to spend more to get the economy moving, to get jobs so people can actually work and generate a larger economy, and therefore get the outside budget, the long term budget down. So having a freeze right now on discretionary spending and effectively saying to the world, to Wall Street, to the country, “We’re not going to do anymore deficit spending” makes absolutely no sense.

Larry King: Congressman Paul, your thoughts?

Ron Paul: Well, I don’t think Mr. Reich has too much to worry about that things are going to be frozen in Washington DC. Matter of fact, even what Obama is saying is not going to into effect for a year, and the Congress won’t let it happen. I think Mr. Reich’s sentiments are well represented in Washington […] because I actually want to see more money spent, not less. It’s just that who has the discretion to spend it; that’s the issue. When the government spends it they malinvest, they misdirect it. They can’t direct capital correctly. We don’t have our problem because there has not been enough consumption, enough spending. We had too much, we borrowed, we’re in debt. So that is not going to solve the problem. What we should have done is maybe suspend the income tax for 3 years. It would have cost us less than bailing out the big banks and all these special interests. I mean, with more money the people could make their decision on whether they should liquidate their debt or how they world investment it. And this could be a wiser choice.

Larry King: Quickly, Robert.

Robert Reich: I just want to agree with the Congressman on one point, and that is bailing out the big banks instead of helping Main Street was a version of trickledown economics, and it doesn’t work.

Larry King: Okay. We’re scheduled to discuss the stimulus, and we’ll begin by showing you an interview with Diane Sawyer that aired on ABC tonight; the president making his case for his handling of the economy. Let’s listen.

Barack Obama: We have stopped the economic contraction. The economy is growing again. And we did create or save several million jobs. That’s not my opinion, that’s the opinion of conservative economists, as well as liberal economists. But we still lost 7 million jobs, and so I understand why the American people, their attitude is not, “It could have been worse”, they’re attitude is, “how do we make sure how do we keep on getting better”. That’s what we’ll be talking about on Wednesday.

Larry King: Okay, simply put, Robert, is the stimulus working? Same question for both of you, starting with Robert.

Robert Reich: Well, I think the official unemployment rate, Larry, would be about 13% were it not for the stimulus, for all the reasons I just gave you. When everybody else has stopped spending, government is the spender of last resort. I don’t know, I can’t guarantee and nobody knows exactly what’s going to happen next year, but I think that we probably, given the fact that the states are, in effect, mounting an anti-stimulus package, because they are raising taxes and they are cutting jobs and cutting services, we’re probably going to have to rely on more from the federal government.

Larry King: Ron Paul?

Ron Paul: Well, I think it’s real hard to measure the number of jobs saved or not. I think the stimulus obviously helped Wall Street. Wall Street is doing very, very well. But to say the stimulus was the answer so just do more of it, fails to recognize that when the government spends money, it actually does help the GDP. But there’s a big difference if people get money, save money and then invest it on building cars or something, verses when the government takes the money and spends it on a make-work job or spends money on a weapons system that gets blown up overseas, or bombs blown up overseas. That raises the GDP. But right now the happiest people are at Wall Street. The very people who got bailed out and Main Street and the employment numbers […] were very unhappy. But I do think it’s a stretch to that they know exactly the number of jobs that they saved. And like you pointed out, Larry, there actually a lot. I mean, the president pointed out there are a lot less jobs available.

Larry King: Okay, we’ll pick up on that in a moment. All week on CNN is breaking down how the 787 billion dollar stimulus money is being spent. We’re calling it “The Stimulus Project”. You can get more in-depth information on all this at More with Ron Paul and Robert Reich coming up.

We’re back, talking about whether President Obama’s $787 billion stimulus is a success or failure with Robert Reich and Ron Paul. Let’s take a call from Hobart, Indiana. Hello.

Caller: Hello, Larry.

Larry King: Yeah.

Caller: Yea, my question is for the senator.

Larry King: It’s the congressman, go ahead.

Caller: President Obama spent more in the first year of his presidency than Bush spent in the last term. And to put the spending freeze on now, is he trying to act like a populist now, or is he pivoting to the right.

Ron Paul: Hahaha. Well, I think that the fact that this isn’t going to go into effect until 2011, I would say there is a little bit of politicking going on. And I just don’t believe there will be a freeze. And if they did freeze it, that will be very bad. I’m not necessarily for freeze, I want to reduce spending, I want to save tens, if not hundreds, of billions of dollars overseas and bring that money back home so that more of this money can flow into education and medicine and different things. So I want a lot of cuts, but I want the people to spend money. But when the government spends money on a job, they may create a job, but what you don’t see is you might have taken a better, more productive longer lasting job away from the productive economy. So even if you can prove there has been a couple of extra jobs, it doesn’t really solve our problem.

Larry King: Robert, are you generally optimistic in this climate?

Robert: I wish I could be optimistic, Larry. I see the extent of joblessness, the extent of misery and homelessness, or people who are worried about losing their homes or their savings. And frankly, I worry. I looked at 2011 and I say to myself, “Once the stimulus ends, as it will, and if there is a spending freeze and if the Fed does what the Fed is likely to do, and that is tighten and raise interest rates, where is the motivation going to come from? Where is the energy and where is the demand going to come from into our economy?” Because again, consumers and businesses and exports just can’t lift the economy by themselves. I wish I could be as optimistic as Ron Paul about the capacity of the country to just pull money out of national defense and bring it home and give it to consumers as tax breaks. It all sounds good, but I’ll tell you, I don’t know too many Republicans who would want to take money out of the national defense.

Larry King: Constana Macy, California. Quickly.

Caller: Yes, is it possible change the economy ultimately without getting out of these trade deals that we have: WTO and all these trade deals we have with China and the rest of the world. Do we have to get out of those?

Larry King: Ron?

Ron Paul: Well, I don’t think you have to. Some of those things we would get out of. But I think the problem with what Mr. Reich says is that the country is bankrupt; is our problem. And if I am bankrupt or somebody else is bankrupt what they do is they have to pull back, they have to quit spending, they have to work harder, they have to pay off their debt. And we have dreamed up this concoction under Keynesian economics that you don’t have to do that. You just print more money, run up more deficits, and pass it out. And everybody is going to do the right thing. So it’s the opposite thing of what Austrian free market economics teaches. They say what you should do is liquidate debt, get rid of the malinvestment, start over again, get the prices of house down, don’t prop the prices up and stimulate housing. What I see is we’re doing exactly the opposite than what we should do.

Larry King: Robert, you got 30 seconds.

Robert Reich: Ron Paul sounds like awful lot like Herbert Hoover. In 1932, Herbert Hoover and the secretary of treasury, Millen, said liquidate everything and everything will be fine. It took Franklin D. Roosevelt, and ultimately the second World War, to show everybody that Keynesianism was right. You got to spend and if you got to go into debt to get people back to work, that’s better than not doing it.

Larry King: Alright, we will call on these gentlemen. We’re out of time, guys. Robert Price and Congressman Ron Paul, I’m as sorry about this as you are, but we are.


  • longshotlouie

    A history, civics, and economics lesson all wrapped into one speech.

    Education is not negative, but a state-sponsored institute of re-education does produce a negative. You are a prime example, Sean.

    • Sean

      What? You make no sense.. Someone taking a chemistry class at a state sponsored institute will learn the same exact thing as someone taking chemistry at a privately owned institute. They will probably also use the same books.. The periodic table doesn’t change from one school to the next.. That is a prime example of how disconnected you are from the real world.

      keep hanging out in your basement, maybe you will end up like the author of conan.

      hahaha! did you actually read that article?.. why don’t you try to sum it up for me??

      • longshotlouie

        Was chemistry the subject?

        You still have much trouble focusing.

        • Sean

          I was using chemistry as an example.. Everything you learn at one school is the same as another. That goes for any subject..

          • longshotlouie

            Thank you for proving my point, yet again.

          • Sean

            Haha, i proved your point wrong.. They teach austrian economics at my school. You don’t know what you are talking about. Close you butt cheeks, because you are consistently a sloppy mess.

          • longshotlouie

            and again

        • Sean

          What is your point? Do you even know what you are talking about? Obviously not..

          • longshotlouie

            Your grace has put me in a gift-giving mood.
            Sometime in your life you will want to read an entire book.

            I offer this:
            #48 in The Modern Library’s readers poll of the 100 best nonfiction books.
            ‘The Mainspring of Human Progress’


          • Sean

            Do you really think Obama is a tyrant? If anything he has given 90% of the power he inherited back to the congress.

          • longshotlouie

            Still having trouble focusing?

    • Forest

      Ron Paul: “Terrorism and uncontrollable fear undermines our sense of well-being.”

      Uhhh, I assume he is referring to himself? My well-being is just fine. The master of histrionics himself – ‘UNCONTROLLABLE FEAR PEOPLE! LITERALLY UNCONTROLLABLE! I CANNOT FUNCTION IN SOCIETY KIND OF FEAR THAT TEARS AT OUR VERY SOULS AND REDUCES HUMANITY TO A PILE OF USELESS GOO THAT SOMEHOW STILL DEMANDS FOR AN AUTHORITARIAN DEMOCRACY!!! THE POLITICAL AND ECONOMIC RAPTURE IS COMING TOMORROW AND JEEZUS WE AREN’T READY SO LETS RIOT TODAY AND TAKE OUR COUNTRY BACK!!’ Ron must have been in his bunker murmuring to himself and watching Gone With The Wind over and over during, say… the Cuban Missile Crisis or the Cold War or Pearl Harbor or… – his lack of knowledge about contextual history relative to the present is stunning.

      “Hysterical reactions to dangers not yet seen”

      A solid summary of him and his supporters. FYI, not everyone believes in conspiracies.

      Jeezus, talk about governing by fear. And the irony is noone has probably been more afraid over the past 50 years than Ron – while the world just continues to grow and evolve.

      Must be tough getting old and forgetful I suppose, it happens when you live in the past.

      • longshotlouie


        Your handle changed, but your rhetoric is the same.
        Now if you could just get your rants to somewhat resemble reality, you might have something.

        Thx for the laughs.

        • Sean

          I think all republicans are fear based politicians.

          A lot of people criticize ron paul because he isn’t specific enough. We can’t just get rid of the fed and reduce the government and all of a sudden utopia will occur.

          • Sean

            Just look at countries in africa where the government sits back and does nothing.. Their society is boggled down by problems individuals alone can’t fix. Reducing the size of the government wont fix all of our problems. That is just foolish. I agree we should cut spending and end the wars, but that’s not going to miraculously change our entire society. We all live in our own world and in our own bubbles which are not formed by the government, but by our own independent choices.

  • Sean

    If the dollar gains more value than the reduction of home prices, than people will actually owe more money on their home. They will owe the same amount but in more valuable dollars.. That’s why inflation is beneficial to home owners. It’s the opposite. If I were to purchase a home, I would end up paying less and less for it because I would owe less valuable dollars, because of inflation.

    • What the hell?

      Try writing one intelligible sentence if possible.

    • SS

      Oh please, give me more inflation !!!!!!!


      • Sean
        • Sean

          You two obviously don’t know anything about investing or entrepreneurship. You will always be the fish at the end of the hook, the “consumer” who purchases goods to try to better yourself in one way or another. You will live that life day to day with no escape, and you wonder why you have no freedom.


          • What the hell?

            What the hell? Apparently you can peer right through the internet and see the consumption habits of your fellow posters. Amazing! You’re crazy man.

          • Forest

            Weak Dollar Illusory as Correlated Trade Shows Gains

            “For all the concern over the $1.6 trillion U.S. budget deficit and record debt load, the dollar is as valuable now as 35 years ago.”


          • Sean

            i should of known you weren’t going to get that. you aren’t very smart “what the hell?.” The only reason why people buy anything is to improve their life. Whether you buy toothpaste to prevent from being repulsive, or a candy bar for a quick smile. It’s all artificial happiness.. If you only rely on these things for comfort, than you will be sitting on the internet complaining about lost freedoms, when you are free to make any decision you please.

          • Sean

            My point is.. Don’t be foolish and let ignorance dominate every aspect of your life. It’s one thing to be a sheep, and it’s another to be a shepherd.. Don’t say something just because it’s popular. Talk about things you actually know, because knowledge comes from understanding.

          • longshotlouie



            Keynesian Apologists Are
            Fiddlin’ While Rome Burns

          • Sean

            I’m far from a sheep.. I have the most independent mind that I know of. This website is a flock and you are the runt.. I have respect for most people here, but people who say things without any substance adhering to the topic of discussion is a nuisance.

          • longshotlouie

            Were you standing on a chair and waving your arms during that last response?
            “I have the most independent mind that I know of”

            lmao, Do you not see the ridiculous in this statement?


            “This website is a flock and you are the runt”

            And yet we find you hanging with us.
            What is your motivation?


            “people who say things without any substance adhering to the topic of discussion is a nuisance.”

            Good point, get focused.

          • Sean

            There is nothing wrong with considering myself an independent thinker.

            The beautiful thing about being an independent thinker, is that I can come onto a website like this and agree with things said here.

            I was talking about liquidating assets when you tried to ridicule me and wikipedia.

            I’m tired of going around in circles with you.. Talk to me when you have an opinion on policy.

  • Sean

    The liquidation of debt could not keep up with the fall of prices which it caused. The mass effect of the stampede to liquidate increased the value of each dollar owed, relative to the value of declining asset holdings. The very effort of individuals to lessen their burden of debt effectively increased it. Paradoxically, the more the debtors paid, the more they owed. This self-aggravating process turned a 1930 recession into a 1933 great depression.

    • Sean
    • What the hell?

      Apparently you don’t know what “liquidate” means. You’re embarrassing yourself with this nonsense.

      • sean

        of course i know what liquidate means.. besides that was a quote from wikipedia that i posted 2:29.. do you know what it means to liquidate something? do you know what deflation is? please explain in your words because obviously you know better than me and wikipedia..

        • longshotlouie

          ” …. me and the wikipedia”

          That just about sums it up.


          • Sean

            Why don’t you explain longshot. LOL! tell me what you think about deflation and its effects on financing production. hahaha

            Or do you just spout things out of your rear when you try to make a point?

          • Sean
          • longshotlouie

            Even your reply filled with pretense and arrogance doesn’t motivate me to beat that old dead horse with you.

            It has been explained to you many times over the last year.
            You are here selling something that is collapsing even as you trumpet it.

            The scam is being exposed. Just like the AGW scam and the H1N1 scam, the people just are not buying your wares anymore. More scams to be exposed soon.

            Get on back to school. It’s time for your daily programming.

          • Sean

            So you don’t know.. Only a fool looks at education negatively. LOL!