President-Elect Obama Issues a Dire Warning to Congress to Pass His Economic Rescue Plan

This is a rush transcript from "The Beltway Boys", January 10, 2009, that has been edited for clarity.

MORT KONDRACKE, FOX CO-HOST: Coming up on "The Beltway Boys," President-elect Obama issues a dire warning to Congress to pass his economic rescue plan and fast!

FRED BARNES, FOX CO-HOST: Roland Burris is winning the showdown with Harry Reid and Senate Democrats.

KONDRACKE: The Mack is back. We'll tell you how John McCain is getting back in the game.

BARNES: And is Team Obama czar-happy? We'll tell you how his new cadre of counselors can do more harm than good.

KONDRACKE: That's all coming up on "The Beltway Boys" right now!


BARACK OBAMA, (D), PRESIDENT-ELECT OF THE UNITED STATES: I don't believe it's too late to change course. But it will be if we don't take dramatic action as soon as possible. If nothing is done, this recession could linger for years.


KONDRACKE: I'm Mort Kondracke.

BARNES: I'm Fred Barnes, and we're "The Beltway Boys."

KONDRACKE: The hot story is taking over. I cannot think of a single time in American history when a president, before he actually got sworn in, was so dominant in — over policy and was rolling out policy this early. You know, even in a crisis, Abraham Lincoln didn't do it before the Civil War and FDR didn't do it in the Great Depression, Ronald Reagan didn't do it before he took over in the recession.

BARNES: I get the drift.

KONDRACKE: But now, it's 7.2 percent unemployment. Everybody's scared to death of a Great Depression. That's what Hank Paulson scared George Bush with and it's clear everybody agrees we've got to do something big.

The question is what and how big and how soon and all that? Obama's saying that it's got to be done fast. He's for everything — infrastructure spending, tax cuts, energy programs, healthcare, school construction, all that kind of stuff. And he wants it all done fast. And he's talking about trillion deficits, you know. Good luck! Getting this all done that fast. Here he is though speaking on Thursday.


OBAMA: It is time to set a new course for this economy, and that change must begin now. We should have an open and honest discussion about this recovery plan in the days ahead. But I urge Congress to move as quickly as possible on behalf of the American people.


BARNES: You know, Mort, I think there's something more important than the actual size of the stimulus. It's what's in it. And that really is important. It matters. And Barack Obama said something I believe on Wednesday, maybe it was Thursday — you just watch this. I'll tell you what I think. Watch.


OBAMA: It is true that we cannot depend on government alone to create jobs or long-term growth. But in this particular moment, only government can provide the short-term boost necessary to lift us from a recession this deep and severe.


BARNES: You know, I disagree with that. I mean, I think he's wrong. It isn't only government. It's fine to build bridges and highways and a new power grid for America and maybe even make work when you're trying to winterize or modernize school buildings or so on. But the problem is what happens when you just do that you're going to wind up with a stimulus package that won't stimulate enough. You have to have tax cuts, but the right kind of tax cuts, the ones that really matter.

And I think that's when you get to the point when the ones that are the best that will produce the most bang for the buck are across-the-board, marginal-rate tax cuts on individual income and for corporations. And that provides incentives.

I would like to hear this word from Obama sometime, incentives, incentives for investment. If you don't have tons of private investment, you're just not going to recover. That was what was wrong with FDR back in the '30s. He had all this government spending for infrastructure and so on, but he raised taxes on the people who provided money for investment. I hope Obama doesn't make that mistake but it sounds like he might.

KONDRACKE: Last weekend I was — heard Jeff Immelt, who is a CEO of General Electric and a Republican, and he said that basically the private economy is stuck, especially financial services. And the only institution that can really get us out of this has the power to get us — to lead us out — and this is what Obama talked about — is the government. And they've got to be the trigger. He didn't say it was the only institution. Furthermore, he has said...

BARNES: Sounded like it to me.

KONDRACKE: No, no, no. He said that it is the leading force, and I agree with him. But, look — and Obama says, after all, 80 percent, at least 80 percent of these jobs that get created are going to be private sector jobs.

BARNES: But funded by government. The green jobs. Who's going to pay for those? It's government.

KONDRACKE: It's called pump priming, big time.

In any event, what's happening now is that there is a quite sincere — I really think that everybody is in a crisis mentality. It's quite sincere, ideological disagreement about what will work in this kind of circumstance.

I mean, the Democrats are against tax cuts. They don't think that's effective. And they're in favor of infrastructure spending as they usually are. Nancy Pelosi said something I found quite shocking, as a matter of fact. She said that — "Put me down quite clearly as you possibly can as one who wants to have those tax cuts for the wealthiest Americans repealed."

What I find shocking about that is the idea you would raise taxes on anybody in the middle of a recession. That seems crazy to me. But meantime, Republicans and you want to have maximum tax cuts, more tax cuts for wealthy people and corporations.

BARNES: And along with the infrastructure stuff as well.

KONDRACKE: OK. But a lot of fellow conservatives doubt the long-term impact of infrastructure. And I'm not saying that anybody is indulging in politics here.

Fortunately, we have Obama in a position of saying I'm open. Watch.


OBAMA: If you can show me that something's going to work, I will welcome it. If it works better than something I've proposed, I'll welcome it. What is not an option is for us to sit and engage in posturing or, you know, the standard partisan fights when the American people are out there struggling.


KONDRACKE: I hope he's listening to what I said. And Republicans and there's some — look, if I have my preference, I say only tax cuts. But, obviously, it's a Democratic administration and there's going to be a lot of infrastructure and other spending.

But Republicans have a legitimate concern. They've been expressed pretty well I think by John Boehner, the Republican leader in the House, and Mitch McConnell, the Republican leader in the Senate. Watch.


REP. JOHN BOEHNER, (R), HOUSE MINORITY LEADER: Yes, our economy needs help. But at the end of the day, how much debt are we going to pile on future generations?

SEN. MITCH MCCONNELL, (R), SENATE MINORITY LEADER: Republican senators represent 50 percent of the American population. We expect to be a part of the process. And we will be a part of the process. I think the new president respects that request of ours and thinks it's reasonable.


BARNES: Hmmm. You know, deficits, smaller deficits don't matter that much really. I don't think so. I agree with Dick Cheney saying deficits don't matter. But I think anybody believes the deficits, when they get, say, to a trillion dollars a year, as far as the eye can see, that they matter. It can weaken the dollar. It can create inflation and too much borrowing and all the things that go along with that.

Then there's the question of bipartisanship. Mort, you have said so many times — and I've agreed with you — that one of the key things that was attractive about Obama as a candidate was his pledge to change Washington. And what's his main way of doing that? Being bipartisan as president. That doesn't mean just consulting with Republicans. It means adopting some of the things they suggest.

You know, look, they're the minority. You don't have to turn over your whole stimulus package to them but you have to give them some reason — you have to give them some things in the bill so they'll have a reason to vote for it. That's what bipartisanship is.

KONDRACKE: I agree with that. I think that Obama ought to come forward in the next week with his plan and then start — start listening intently and adapting and so on.

It is worth noting on the point that you make about the deficits, which I think is quite correct, that he is saying, one, I will not create permanent government programs, that this is meant to be temporary and short-term. Secondly, that he's going to tackle the entitlement problems, Medicare and Social Security in the next budget. Now, this is a big job to do right away in the first couple months of office.


KONDRACKE: Good luck to him. You know, you can't help but wish him well.

Coming up, after closing the door on him, the Senate is now ready to seat Illinois Democrat Roland Burris. We'll tell what you caused the about-face, or if it's really about-face.



BARNES: Welcome back to the "The Beltway Boys." It's "Up and Down" time.

Down, Harry Reid. After swearing he'd block any senator appointed by embattled Governor Rod Blagojevich, the Democratic leader is quickly backtracking. Reid now says the only thing standing between Roland Burris and his Senate seat is the proper paperwork. Of course, the Supreme Court in Illinois says, you know, this paperwork's not required. But they still — I mean, the Senate Democrats still won't — I think they'll get it.

But on Harry Reid in particular, Mort, he is his own worst enemy. He doesn't just speak, he blurts. He says crazy things — we had already lost the war in Iraq, when the surge had just started.

Look, I understand why Democrats, lead by Reid, want to disassociate themselves from Rod Blagojevich. And the way they tried to do this in the beginning was they said we're not going to take his selection to replace Barack Obama in the Senate. They came up with this, I think, phony reason that the secretary of state needed to sign a piece of paper.

What really scared them though was when Bobby Rush, the congressman from Chicago, supported Roland Burris, played the race card, and said that the Senate was the last readout of plantation politics. Then they decided, well, maybe we better let Roland Burris in.

Look, this paperwork thing I think will be handled and very soon it will be Senator Roland Burris.

KONDRACKE: One key to this whole thing is that the Democrats do not think Roland Burris can hold this seat, if he takes it now, in 2010, when Obama's term is over. Reid actually called Blagojevich and tried to talk him into naming somebody else, not Burris, not Jesse Jackson, and basically not black people. It wasn't a racial thing. It was about re-election.

So the scenario that's being discussed now in Illinois, so Roland Burris takes the seat and then along about approaching 2010 — he's got this mausoleum that says "trailblazer" on it. It's got some space for him to accomplish. So now he wants U.S. senator. And the rumor is that he will be appointed by Barack Obama, the ambassador to somewhere, so that he can put ambassador on the other place on his mausoleum. And then they'll find somebody else to run in 2010.

BARNES: One more thing I forgot to mention and that's the role of Obama in this thing. He wants this thing over. It's a distraction. He wants it over. And the way to get is over is to seat Burris.


Up, Leon Panetta. President-elect Obama has tapped the former congressman to head the CIA. And despite the controversy over his apparent lack of qualifications, he will probably be confirmed overwhelmingly.

Look, Leon Panetta is a heavy weight, former White House chief of staff, estimable person, smart guy.

BARNES: Nice guy.

KONDRACKE: Nice guy. And the fact that at the age of 70 he's going to take on this big job speaks very well for his sense of public service.

What I don't get is, Obama say that is one of the reasons that Panetta's being appointed is that he couldn't keep anybody with the taint of George Bush and their policies of wiretapping and terrorist questioning and stuff like that on. And, yet, he's keeping the number-two guy and the number-three guy at the CIA. And he's putting John Brennan, who was rejected by the left and took himself out of contention for the CIA job — he's going to be the White House czar over intelligence. So Obama is having it both ways. Maybe that's pragmatism.

BARNES: Yes, I think it is pragmatism. I don't have any problem with Leon Panetta, even though he's a civilian without serious intelligence experience, taking over there. Obama needs his own person. You want a loyalist there. Certainly, Ronald Reagan did that with Bill Casey and others have done that effectively.

But one thing — and I think my friend Charles Krauthammer has pointed this out — Democrats used to say, that horrible president Bush, he has politicized the CIA. So what does Obama do? He puts a politician in there, Leon Panetta.

The truth is that the CIA has always been political. The question is whether you politicize the actual intelligence and the findings. The Bush administration, despite what Democrats said, did not do that.

KONDRACKE: Coming up, we'll tell you why President-elect Obama's cadre of so-called czars could be a recipe for disaster.


BARNES: Welcome back to the "The Beltway Boys." We are continuing with our "Ups and Downs" for the week.

Up, John McCain. The maverick burst back onto the scene this week calling out his fellow lawmakers who push pork, and proposing a plan to end earmarks once and for all.

Here's McCain Wednesday.


SEN. JOHN MCCAIN, (R), ARIZONA: There is corruption here. That's why we have former members of Congress residing in federal prison. It's not — it's just a fact, a matter of record. So we have to restore the trust and confidence in the American — for the American people and by fixing what we do. And do it in a transparent, accountable fashion, which we have not been doing in the past.


BARNES: If anybody expected John McCain to drift quietly into the night, they were sadly mistaken. I certainly didn't. I know you didn't either. This is how McCain is. It wasn't that he — I didn't think earmarks were a particularly helpful issue to him in the campaign against Barack Obama, but he certainly talked about them a lot because he really believes that earmarks are an evil, that have to be stopped and are this source of corruption where — what happens is, some congressman will accept some favor and, in return, what will he give them? Because they can do earmarks on their own. One congressman would do something in return for that. That's illegal. That's why he says a couple of Republicans have gone to jail because of that.

KONDRACKE: Yeah. Well, McCain and Russ Feingold, from Wisconsin, want to eliminate unauthorized earmarks. That means earmark projects not approved by the appropriations committees and that are sort of dropped in secretly and nobody knows about them, and all of a sudden the bridge gets built.

Right now, this is all going to be done in the open. A member of Congress who is trying to get a project for his district can still go after the project. it has to go through regular order. I think it's a great idea.


KONDRACKE: Up, czarism. Just check out the various czars that President-elect Obama has in the White House, named for the White House already, everything from an economic czar to an energy czar and a climate change czar and a regulatory czar and government performance czar and, as we mentioned, an intelligence czar. This has us process freaks worried that — who is going to make economic policy and annunciate it? Is it Larry Summers or the White House czar, economic czar or Tim Geithner, the treasury secretary?

BARNES: I know the answer to that. It's Summers.

KONDRACKE: Yes, or is it going to be the energy secretary, Carol Brown, or the energy environment czar? I suspect you're exactly right, that the person proximate to the president in the White House is going to get it.

So you know who the smartest guy in town was? Tom Daschle, who got himself named both — he is both Health and Human Services secretary and health czar in the White House.

BARNES: Very, very clever. It shows he's been around town a while. The problem with this is the czar in the White House and then the cabinet secretary is it's an invitation to internecine warfare. You know what that is, fighting among themselves. And if some cabinet secretary feels that he or she is being dissed by the White House and overruled by some czar there, where

KONDRACKE: Starts blabbing.


BARNES: You're way ahead of me. What will that person do? They'll start talking to the press. Reporters love this stuff. They like to talk about the White House fighting with the Cabinet members. and this will not help Obama.

KONDRACKE: You're right.

BARNES: Believe me, it won't.

Up, Jeb Bush. Even though he's decided not to run for the Senate in 2010, the former Florida governor will be a key player in the GOP saying, "I can play a role helping reshape the Republican Party's message. Not running does not preclude me from being involved in this process and I will be."

Of course, he will be. He's Jeb Bush. Despite his last name, he's enormously popular among Republicans. I don't think he's hated by Democrats.

And look who he is. He's a small-government conservative, a great reformer. He's pro-immigration. I think he's got a good formula for being a leader in the Republican Party. He was never going to run in 2010. He was caught by surprise when Mel Martinez, a Republican senator from Florida, said he wasn't going to run. And Bush had to say something. Well, he said he'd consider it. And now he's not doing it.

Mort, Jeb Bush will be back in electoral politics sometime, just not 2010.

KONDRACKE: Look, the Republican Party needs more than a message. What the Republican Party needs is an updated, modernized agenda, especially in this period of crisis. It needs a lot of thinking about how to adapt the Republican philosophy to a new era and then deliver the message. Jeb Bush is in a great position to do that.

And, you know where these ideas can be best put into force is not in Washington, but in the states, where governors really have responsibilities. And Jeb Bush was a good governor, great governor of Florida.

And you know what job number one is? Produce first-rate schools. It's a local responsibility. It's something the governors can get done and Jeb Bush can help tell them how to do it.

BARNES: Mort, well said.

KONDRACKE: Don't go anywhere. "The Buzz" is coming up next.


BARNES: Mort, what's "The Buzz"?

KONDRACKE: There's sad news about Jack Kemp, a great friend, a great guy, a former pro-quarterback and congressman and HUD secretary and vice presidential candidate, he's been stricken with cancer. I can't think of a person with a larger heart. So we're praying for him and his family.

BARNES: Mort, you forgot tax cuts. He's the original supply-sider. I know you think George Bush is not a compassionate conservative. Jack Kemp is the compassionate conservative. He may not be in the pro football Hall of Fame, but he's in our Hall of Fame. No question about that.

That's all for the "The Beltway Boys" this week. Join us next week when the boys will be back in town!

Watch "The Beltway Boys" Saturday at 6 p.m. ET and Sunday at 1 and 6 a.m. ET

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