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Mika Brzezinski: Joining the table is Republican president candidate and Texas Congressman, Ron Paul. It’s good to have you on the show, sir. And Pulitzer Prize winning associate editor at the Washington Post, Bob Woodward, it’s good to see you. We were at Chris Matthew’s party last night, and Bob gave us the topics.
Joe Scarborough: He gave us the topics. He said, “You know, it’s the opposite. Usually the shows call you up and say these are the things you want to be talking about, three minutes here”.
Mika Brzezinski: Exactly, there’s a little framework of questions put together by a 23 year old producer.
Joe Scarborough: We just sort of wake up and look at the papers and say, … but Bob, last night, was ready with a laser focus on the super committee, so it’s a perfect matchup here because we’ve got Ron Paul.
Mika Brzezinski: We brought him here for you.
Joe Scarborough: A guy who has been warning about the debt, and Ron, let’s start. Before we talk about America’s debt, let’s start with Greece’s debt. It looks like a deal was made, now the Greeks seem to be rebelling against it, once again proving they don’t want to live within their means. What does it mean for the rest of us?
Ron Paul: We all face the same problem, nobody wants to admit the truth. The world is bankrupt, the system is bankrupt, it’s not viable, and we’re facing the same consequences because we spend way beyond our means and nobody wants to cut a nickel. I mean, all this talk is just talk, there aren’t any cuts. Even the proposed cuts are cuts in the future, 5 or 10 years out. So I think that if you live beyond your means, you have to live within your means, and that means you have to cut back and that’s not acceptable because too many people have become too dependent. And they’ve been taught for many, many decades that deficits really don’t matter, and this Keynesian idea that it’s always the consumer who drives the economy, which I don’t buy into. Which means that the demand is that the consumer spends more money to stimulate the economy. Well, they’re broke and they don’t have jobs and they have too many credit cards, so that can’t be the solution.
Joe Scarborough: You know, Bob, the problem is this: even if the super-committee were to succeed by the low standards that we all have set for it (cutting 4 trillion dollars) now, a decade ago 4 trillion dollars would have been significant. Now, 4 trillion dollars doesn’t even pay for what we’ve spent over the last 4 years.
Bob Woodward: And they’re not even going to go there.
Joe Scarborough: And they’re not even going to go there.
Bob Woodward: They’re talking about 1.2 trillion dollars, as the Congressman points out, over 10 years. So that’s, maybe a 100 billion dollars a year. And if you get into the weeds on some of this, which I’m trying to do to answer the question, ‘How is the economy being managed and what is the nature of the jeopardy we’re in?’ Take something, you remember this from your days in Congress; farm subsidies. Okay, they talked and they said, “We can cut 29 billion dollars in farm subsidies”, and the Republicans say, “Okay, that’s a great idea, let’s do it”. And then the White House comes in and says, “No, let’s only cut farm subsidies 2% of that for rich farmers”. And so you’re talking night and day, and they’re not together on this, and you go through item after item and it gets blown up and they don’t agree on even a small bite.
Joe Scarborough: You know, one and a half trillion dollars, if that’s what they’re talking about cutting, Ron, over a decade, is such a joke, considering that last Christmas the President and the Republican Congress agreed to a plan that raised the deficit immediately, or the national debt, by an additional trillion dollars. Nobody is serious on Capitol Hill, what’s happened?
Ron Paul: Well, I don’t think you can accuse me of not being serious.
Joe Scarborough: Well, when I say nobody is serious…
Ron Paul: I think it’s so dangerous and so bad, and we’re facing something the world has never faced before, that my token effort to start off with, would be to cut a trillion dollars of real cuts in 1 year, and I think it would be helpful. And I argue this because of what we did after World War II. We cut spending by 60% and we cut taxes by 30% and we sent 10 million people into the workforce, and guess what, it finally ended the depression. People went back to work again because the changes occurred, the debt had been liquidated and we were ready to go back to work again. So you just can’t solve the problem of spending and debt with more spending and debt and the printing of money, it’s absurd and they are not changing their mind.
Bob Woodward: And the word that’s not being used here, which is the word in Greece, “Austerity”. And here everyone is talking about, “Oh, this is manageable”. It’s like when they talk about Iraq of Afghanistan and say, “Hard, but not hopeless”. But again, when you go into the numbers, time and time again, there is no agreement on the smallest things. Now, I think the campaign next year is going to get down to presidential leadership; can you manage the economy, does somebody have their hands on the steering wheel? And I think the sense people have now is, “There are no hands, or 20 hands, on the steering wheel”. And somebody has got to come up and say, “This is the plan, let’s face it”. And the public voters are not going to like the word “Austerity” but that’s where we’re headed.
Mika Brzezinski: I don’t disagree with you at all. Sam Stein, I wonder though, if that person, whoever that person is who has to say that, has to also say, “We are not going to get back to where we were”, that this is going to be a long process and unemployment is probably going to last for this-long or this-long and this is what we’re going to have to do to reboot? Who has the guts to say that, that there’s not a lot of hope in our current situation, of rectifying it to back before the bubble bursts?
Sam Stein: I would argue that, and to a certain extent he’s being criticized for it, President Obama has gone on and said this is going to be a long slog and that the economy that we once had, which was manufacturing-based, largely, was not going to be the economy that we have in the future. Let me just add a few data points to this because I think it’s worthwhile to note that, in addition to the 1.2 trillion dollars that the super-committee wants to cut, they did achieve about a 900 to a trillion dollars in cuts as part of the debt-ceiling deal in August. And, in addition to that, there is supposed to be – now we have to wait and see for this – another 1 trillion dollars in savings from drawing down the war. Those still don’t get to the crux of the matter, which is that we have a huge rising healthcare costs problem in this country. But one of the ways to solve it is not simply just to cut, which is valid, but to get people back to work so that we can actually increase the tax base in this country. And one of the questions is how do you get people back to work, and does government people a role in that? Now I know where you stand on that, government probably should not play a role. But I’m wondering, in the interim, for you, would there be anything that you would be proud of supporting the government actually doing to stimulate some job growth to actually expand the tax base?
Ron Paul: The government does have a role, they ought to give us sound money, they ought to give us market interest rates, and they ought to let us spend the money. I don’t talk in terms of austerity and sacrifice because I tell the people I was with that it’s not a sacrifice for you to get your freedom back and get the market back and get you to keep your money and get you to spend your money. The people who have to sacrifice and give up are the people who have been living off the government and living off the tax payers, they don’t need any more bailouts. So it’s not a sacrifice.
Sam Stein: What can the government do, between now and let’s say 3 months, to maybe get some jobs back, is there anything that the government can do?
Ron Paul: The only thing you can do is to show the people that you’re going to change the direction of the country. But it’s not a budgetary problem, it is a philosophy problem. You can’t cut nickels and dimes from the militarism and the military budget unless you change the foreign policy. You can’t cut entitlements unless you give up on the principle of entitlement. So we have to decide whether we want to live within the confines of the constitution, or we want to continue to do what we’ve been doing, which means that the pie is shrinking and the demands are growing and the anger is increasing.
Bob Woodward: But no one really wants to bite the bullet on this. I mean, you’re talking numbers of 900 billion dollars or 1 trillion dollars cut here and so forth. If you really follow the numbers and get beyond the smoke and mirrors, a lot of those numbers are rounding errors. I mean, we now have an annual deficit of 1.6 trillion dollars, that’s in 1 year. And if you go out and say, “Well, let’s cut a little less than that in 10 years”, ….
Joe Scarborough: Those were budget caps that were set. So, Ron, it seems to be that this is your time, this should be your time as a presidential candidate. I’ve been talking about deficits and the debt since 1994 and I’ve been talking about it non-stop. But you were talking about it before I came to Congress, you’ve been talking about it after I left Congress, you’ve been talking about this for 20, 25 years. I always go back to your quote, it was actually in September of 2003, when you predicted – it’s frightening, Bob – exactly what was going to happen with Fannie and Freddy and the banks. He said this is going to create a housing bubble, it’s going to be a housing bubble that’s going to spread a virus in the entire economy, across the entire world, and when it pops, we’re in big trouble. So you’ve been predicting this coming debt crisis, why do people not come out on the campaign trail?
Ron Paul: Oh, people I talk to. The other day I had 1,200 people come out at the University of Iowa and they were enthusiastic about it. So I just think that the time has changed. You say, “Well, if this is true and they’re coming my way, why am I not at the top?” I’ll tell you what, we have a solid base, the country has changed, it’s dramatically different compared to 4 years ago. Right, just think of the success with the Federal Reserve. Bernanke has to come before the people at press conferences, they’re on the defensive now. 65% of American people say we need to know how they’re passing out this credit, 15 trillion dollars worth of credit they deal out, they’re bigger than the Congress. 5 trillion dollars went to foreigners.
Joe Scarborough: Bob, you know about transparency, you know Ron has obviously been focused on the Fed for a very long time. It is extraordinary the power the Fed chairmen have behind closed doors. How did we get to a position where one of the most powerful people in the world is able act, I won’t say with impunity, but certainly without the most basic democratic checks?
Bob Woodward: Well, it’s all about money and following that money.
Joe Scarborough: By the way, does that arrangement that the Fed chief has so much power and they want to work in secret bother you?
Bob Woodward: Certainly, but there’s more and more transparency, as we know, and right now there’s not much they can do because we effectively have 0% interest rates. So their lever is gone, as you well know. So, in a sense, they’re reduced to pronouncements and press conferences and quantitative easing and so forth, which is something that is not the old interest rate- lever which really has an impact or can have an impact on the economy.
Mika Brzezinski: So Congressman, why is Herman Cain at the top of the polls?
Ron Paul: I think he’s gotten some very big show. The week where is really soared, he won a straw vote in Florida and he was on the news constantly and people felt, “Oh wow, look at that”. That same week I won a straw vote in California, and I got zero coverage.
Joe Scarborough: Why is that?
Ron Paul: I think I’m attacking the status quo like never before, I mean, the whole entitlement system. And I think there’s a lot more support out there for what I’m talking about than they realized, and they’re not going to give me a boost because I’m challenging the whole banking system, the military-industrial complex, the welfare state, our foreign policy. I want to go back to following strictly the constitution. It’s not in the cards right now, except the growing number of people is very significant. So the movement is in our direction because of this failure. You talk about the failure of the Fed, this is significant, they don’t have any cards left to play, this whole economy has no cards left to play. So this is going to be reversed, this economy is going to go to the dogs.
Bob Woodward: So are you the candidate of austerity, are you going out and saying …
Ron Paul: Well, I never said that, I’m the candidate of liberty where people have energy and incentives.
Bob Woodward: But to get there, we’re going to have a real long drought of austerity, aren’t we?
Ron Paul: No, no. The records show that when you do it, it only takes about a year. You should look at the 1921 depression, as well as what my example was of World War II. We cut it, and in a year everybody is back to work; 10 million people; 60% cut in the deficit.
Bob Woodward: You don’t want to have the campaign slogan, “Midnight in America”, you want to talk about what?
Ron Paul: The people that come to my rallies are enthusiastic, they say, “This is the most positive thing we’ve ever heard”. You know why? Because we are admitting the truth and saying there’s something seriously wrong, we have to make a difference. Because if you’re in total denial and we continue to lie to ourselves, there’s no hope. It’s sort of like getting better from cancer not admitting you have it and taking a medication. But the medication isn’t nearly as bad as they’d like to paint it to be. So it’s not a sacrifice, liberty is not a sacrifice.
Joe Scarborough: Let’s go from budget to Afghanistan, something we talk about around this table all the time. Bob, you’ve talked about it a good bit. Congressman, obviously you’ve been very concerned for a very long time with America’s ever-expanding the military state. The White House is now talking about looking into possibly drawing down in Afghanistan quicker. Can you explain why we are still in Afghanistan after a decade?
Ron Paul: There’s no sane reason for us to be there. And this drawing down in Iraq is a complete farce, they’re not drawing down. We have an embassy there that is the biggest I the world, it’s a fort for 17,000 people to be, they’re going to be contractors. We may take a few troops out and spread them around, they are going to put more troops in Kuwait, we are not vacating anything. So as long as we’re there, believe me, there is going to be incentive to kill us.
Sam Stein: Can I ask you something on that, because I’ve been to a bunch of these speeches on the trail, and usually when you get to the foreign policy section of your speech you’ll see half the crowd cheer you wildly, they go nuts. And then you see the other half of the crowd star booing. And I’m wondering if you could talk a little bit about Republican politics, with respect to foreign policy specifically, and look at the past 10 years starting with the rise of the neo-conservative link and where the Republican Party stands now, as a unit, with respect to foreign policy?
Ron Paul: I think what you’re saying is a strictly Republican meeting.
Sam Stein: Yea.
Ron Paul: See, but if I go to a campus, it’s 95%. These young people who bearing the burden and inheriting the debt, have to fight these wars. And the military, guess what, I get more money from active military duty personal, twice as much as all the other candidates, they’re sick and tired of it.
Joe Scarborough: Did you want to know, Bob, in the 2008 campaign, while you have neo-cons trashing Ron Paul because he said bring the troops home, in the last campaign and in this campaign, military members and their families gave, easily, more to Ron than anybody else because they understand the strain better than some politician or somebody in the think-tank in Washington DC. But this is a readiness issue, we’re stretching and it is expanding, ever expanding.
Bob Woodward: But at the same time, I think you have to give credit to President Obama on this, he is drawing down. Now, the question is, and lots of other Republicans say he may be doing that too fast in Iraq, that he needs some troops there as an insurance policy, and there’s a certain rational there. But the White House is on the Pentagon on spending, on getting troops out of Afghanistan and Iraq. But you’re right, Joe, we’re not taking the flag down, and no President wants to.
Joe Scarborough: We are spending 2 million dollars a week in Afghanistan. And you’re talking about college campuses, I have yet to find people outside of Washington DC, Ron, that think it makes sense for us to spend 2 billion dollars a week in Afghanistan a decade later.
Ron Paul: No, it absolutely makes no sense, and there’s no money, we’re in this huge deficit. And if we can’t cut the occupation of these countries, there’s no hope for us, let me tell you that, there’s just no hope for us. We better be willing to do it, we have to change the policy. If the design is to police the world and nation-build and solidify everybody’s borderlines, believe me, we’re doomed because we’re doing exactly what the Soviets did. We need to change our attitude, take care of our people at home. How do you get medical care at home if you’re spending all this money bombing people and then rebuilding their countries, it’s insane.
Bob Woodward: The rationale for staying in Afghanistan is to keep Al-Qaida from coming back into Afghanistan, and, as we know, Al-Qaida is has had a bad couple of years and they are going back into Afghanistan.
Ron Paul: They’re in Iraq now, they weren’t there when we went to war. So we’re only giving incentive to the Al-Qaida.
Bob Woodward: And they’re in Pakistan, you’re right.
Mika Brzezinski: Congressman Ron Paul, it was very good to have you on the set, please come back.
Joe Scarborough: Thank you, Ron, great to see you. Good luck.