Fox News
August 25, 2011

Hannity, Goolsbee Face Off Over Obama's Economy

Guests: Austan Goolsbee, former chairman of the Council of Economic Advisers

This is a rush transcript from "Hannity," August 25, 2011. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: And tonight, more bad news on the state of the American economy which comes as no surprise to anybody except members of the Obama administration.

Now according to the Labor Department, claims for state unemployment benefits rose by 5,000 last week, which brings the total number of Americans filing for state unemployment benefits to a whooping 417,000.

Now meanwhile, the national debt has skyrocketed $4 trillion on this president's watch. Now, that's something that the anointed one himself called unpatriotic when of course, it applied to George W. Bush back in 2008.

So, here to defend the Obama administration against these devastating economic realities, one of the architects of the president's economic policies, the former chairman of the Council of Economic Advisers. He just recently stepped down from that post. Austan Goolsbee is with us.

Sir, welcome to the program.

AUSTAN GOOLSBEE, FORMER OBAMA ECONOMIC ADVISER: Thank you, Sean.

HANNITY: I appreciate you being here. All right. Let me just start with the president, you know, saying repeatedly that the economy is recovering over a period of time. He said it again and again. Last summer was recovery summer. And let me roll the tape.

(BEGIN VIDEO CLIPS)

PRESIDENT BARACK OBAMA, JULY 29, 2010: The economy now is starting to stabilize and grow again.

OBAMA, AUGUST 17: The economy was predicted to be growing at about 3.5 percent.

OBAMA: The economy is now growing again.

OBAMA, AUGUST 15: The truth of the matter is, is that the agricultural sector in America, the cornerstone of states like Iowa, is doing very well.

(END VIDEO CLIPS)

HANNITY: Now, we've accumulated more debt than any president, a shorter period of time, under President Obama. The truth is, I have the latest Bureau of Labor Statistics, we've lost two-and-a-half million jobs since his stimulus, under Obama's plan. He said he would cut the debt in half. His administration said they would keep unemployment below eight percent. You were part of this. What went wrong?

GOOLSBEE: Well, respectfully, Sean, I would say, you are mixing up the timeframe there. In the year 2010, which is when most of the clips when the president was saying we were starting to grow again, we were growing. And over that 17 months, we added two-and-a-half million jobs.

Now, at the beginning of this year, we get earthquakes, tsunamis, revolutions in the Middle East, European financial crises. Now we got earthquakes outside of Washington, D.C. I mean, we've got a series of things that have put some heavy blows and slowed the economy back down again.

HANNITY: Well, hang on a second.

GOOLSBEE: I think it's a little -- I don't think you want to confuse something that is way down in --

(TALKING OVER EACH OTHER)

HANNITY: I read from the Bureau of Labor Statistics, the Bureau of Labor Statistics, President Barack Obama has lost 2.4 million jobs since his stimulus plan. That's the net result. He said he was going to create millions of jobs. He said he would cut the deficit in half. He said unemployment would stay below eight percent. Those were promises he made as a candidate, none of which came through.

Are you actually going to make the case that the Arab Spring and the Japanese earthquake had a more significant economic impact than say 9/11 on the economy or Katrina on the economy?

GOOLSBEE: The price of gas shooting up to $4 a gallon affected everybody...

HANNITY: Happened in the Bush years.

GOOLSBEE: -- in a very direct way. Excuse me?

HANNITY: Happened in the Bush years.

GOOLSBEE: It happened at the end of the Bush years. And then preceded the worst financial crisis in all of our lifetime. So, I don't know if that's necessarily the perfect example.

HANNITY: All right. Go ahead.

GOOLSBEE: So, we face a downturn where we lose a significant number of jobs, seven, eight, pushing up to nine million in the downturn. But let's not get into a thing where, you know, guy takes your TV up to the balcony, drops it off and says, oh, the last I saw it, it looked fine. I mean, when the president takes office, we are in the midst of what is now recognized as the worst down turn since we have had data in the 1940s.

HANNITY: But the president said, he -- the president said that before the election.

(TALKING OVER EACH OTHER)

GOOLSBEE: It's a slow slow struggle to get out of it. There's no question.

HANNITY: The president said this is the worst economy since the Great Depression. He knew what he was inheriting here. And it seems to me you blame Bush for a couple of years. He had both houses of Congress. To his credit he got his budget passed, he got his stimulus, he got his health care bill, he got the economy. He owns the economy according to David Plouffe and Debbie Wassermann Schultz. We are going to blame the tsunami, we're going to blame the Arab spring, we're going to blame George W. Bush?

Maybe should we stop, you know, blaming the fact that he spends more money than he takes in and he doesn't seem to understand how to unleash the economic free market.

GOOLSBEE: Whoa, whoa, whoa!

HANNITY: Whoa? $4 trillion in Obama debt.

GOOLSBEE: Before President Obama even became the president, when all we had were the Bush policies, the Congressional Budget Office said, we're going to have $1.3 trillion a year deficits based on just how the economy is doing. That was without any policies from President Obama.

HANNITY: $1 trillion stimulus.

GOOLSBEE: It's not fair.

HANNITY: $1 trillion stimulus. This year's deficit is 1.6.

GOOLSBEE: Over three years!

HANNITY: This year's deficit.

GOOLSBEE: Sean over three years, come on!

HANNITY: Wait a minute. This year's deficit is $1.65 trillion.

GOOLSBEE: And we're trying to get out of the worst downturn of our lifetimes. I mean, look, I'm not disputing.

HANNITY: For three years?

GOOLSBEE: Yes. Three years. Look, Sean, I'm out at this Fed conference where there are all of these international economic officials, from other countries. The consensus of the international arena is that in the data when countries come out of deep financial crises, it is a tough, messy process. Our fastest recoveries like the one under President Reagan come in circumstances where you can just go back to doing what everybody was doing before the recession began. We had a bubble that popped, Sean.

HANNITY: Reagan did the opposite. Reagan dropped the top marginal rates. Obama's pushing from tax to rich, tax to rich.

GOOLSBEE: Obama cut taxes.

HANNITY: He dropped the top marginal rates from 70 to 28 percent.

GOOLSBEE: You are getting the timing all mixed up.

HANNITY: I know, I studied Reagan. He dropped the top marginal rates.

(TALKING OVER EACH OTHER)

GOOLSBEE: The top marginal rate under Ronald Reagan was 50 percent until 1986.

HANNITY: Excuse me, he dropped it from 70 to 28 percent, that was the first bill he passed that lead to 21 million new jobs. He didn't go blaming his predecessor every day.

GOOLSBEE: That wasn't to get out of the recession, Sean.

HANNITY: It did, it worked though.

GOOLSBEE: Here's what I'm saying. We can argue about what happened two-and-a-half years ago for as long as you want. I don't believe that the lack of rules on the financial industry was the cause -- is -- the way to reduce the regulations of financial industry is the way to get the economy going again. I think it was the lack of rules that got us into this mess.

We disagree on that. Let's pick the things we agree on. There are some things we could agree on.

HANNITY: Hang on a second. Before we get there, I want to go back to President Obama in 2008, this is July 3rd, 2008. And I want to hear -- he now has hit the $4 trillion of Obama debt.

GOOLSBEE: That is before the financial crisis.

HANNITY: $4 trillion of new Obama debt. This is what he said in 2008, July 3rd, about George W. Bush and the $4 trillion that Bush accumulated not over two-and-a-half years, but over eight years. Here's what he said.

(BEGIN VIDEO CLIP FROM JULY 3, 2008)

OBAMA: The problem is, is that the way Bush has done it over the last eight years, is to take out a credit card from the Bank of China in the name of our children, driving up our national debt from $5 trillion for the first 42 presidents, number 43 added $4 trillion by his lonesome. So we now have over $9 trillion of debt that we are going to have to payback, $30,000 for every man, woman and child. That's irresponsible. It is unpatriotic.

(END VIDEO CLIP)

HANNITY: Based on his own definition. $4 trillion. He did it in two-and-a-half years.

GOOLSBEE: That was during a boom! That was during a boom! That's exactly the point!

HANNITY: Here's my question. Is he irresponsible?

GOOLSBEE: He is responsible. He is responsible.

HANNITY: Is Obama irresponsible? And is Obama unpatriotic?

GOOLSBEE: No, the Bush numbers that he is citing were during a boom. Obviously, if you go into the worst downturn in your lifetime, I'm surprised you are not giving him credit, Sean.

HANNITY: Giving him credit?

GOOLSBEE: Because at the same time, spending had to go up to deal with the crisis, he's had the lowest taxes as a share of GDP in 60 years.

HANNITY: Because he couldn't get his way, he tried to raise them. He tried to, you know, eliminate the Bush tax cuts.

GOOLSBEE: Sean, he's cut taxes for 150 million workers, the biggest middle class tax cut ever.

HANNITY: All right. Listen, all I can say is. Forget Sean Hannity and I'm a conservative. Look at his numbers on the economy, on the right track, wrong track. Faith in the government to solve the problems. Obama's personal approval ratings this week the lowest in his presidency.

The American people are judging as of this moment that his economic policies have failed. You won't acknowledge that his broken promises on cutting the deficit in half, on eight percent unemployment, on turning the economy around. You are going to say that he's been a success, that he has met his promises?

GOOLSBEE: Look, I'm saying we are laying a foundation for growth. We had a period where we were growing --

HANNITY: When will we see it?

GOOLSBEE: -- and added two-and-a-half million jobs over 2010 for the 17 months from the --

HANNITY: When are we going to see it?

GOOLSBEE: We've got to get the growth rate back up, Sean. That's what we've got to do.

HANNITY: He said if he didn't do it in three years, he would be a one-term president.

GOOLSBEE: Rather than argue about what happened three years ago, and how deep the recession is, let's talk about the things that we can agree on. Whether it is infrastructure, investment in education, free trade agreements.

HANNITY: Spending, stimulus, taxes.

GOOLSBEE: Let's cut spending. Let's have a balanced approach to get the deficit down.

HANNITY: All right. Last question.

(TALKING OVER EACH OTHER)

What is wrong with "Cut, Cap and Balance"? Why wouldn't you support "Cut, Cap and Balance," why wouldn't you support the Connie Mack Penny Plan?

GOOLSBEE: Well, if we get into the details, I think it is an extremist version of a balanced budget amendment that even the Ryan budget would not satisfy. So, I think if you start unpacking the details, it would hurt the education and the investment budgets of the country.

HANNITY: Wait a minute. Balancing our budget is extreme?

GOOLSBEE: Let's have a debate about that. Let's have a debate about that.

HANNITY: But balancing our budget is extreme?

GOOLSBEE: It is not extreme. But we've got to do that in a balanced way.

HANNITY: That 49 states have a balanced budget --

GOOLSBEE: Let's have a discussion about it. But they float bonds and issue debt while they balance the budget. So that the federal government's accounting is slightly different.

But my point is, there are things we can agree on. There are hundreds of things Sean, that you and I would disagree on. But there are five or six that we could agree to do right now that would help the economy. So let's start with those. Let's put off the argument for six months. Let's just do the stuff that we agree on right now and then let's argue about it.

HANNITY: You agree to cut taxes, I'll support you. You agree to end burdensome government regulation, I'll support you.

GOOLSBEE: I'm for that. I'm for that.

HANNITY: How much are you willing to cut the tax rates? Are you willing to eliminate the capital gains tax?

GOOLSBEE: If it would be effective.

HANNITY: All right.

GOOLSBEE: Now, the president cut -- he eliminated the capital gains tax for people starting their own businesses, or investing in small businesses because there I think the evidence is pretty good that it can be effective. In others, as long as we do this in a balanced way, I think it could work.

HANNITY: All right. Austan Goolsbee, I do give you credit. No one else in the administration would have the guts to come on this show and I appreciate it.

GOOLSBEE: Sean, any time. It's great to see you.

HANNITY: I'll hold you to that. Thank you for being with us.

GOOLSBEE: OK.

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