The following is a rush transcript of the March 22, 2009, edition of "FOX News Sunday With Chris Wallace." This copy may not be in its final form and may be updated.
CHRIS WALLACE, HOST: Joining us from New York is Democratic congressman Charles Rangel, chairman of the powerful House Ways and Means Committee, which writes all tax measures, and from Tuscaloosa, Alabama, Senator Richard Shelby, the top Republican on the Banking Committee.
Gentlemen, the Treasury Department will announce plans tomorrow for private investors to partner up with the government to by up toxic assets.
Congressman Rangel, after that bill you sponsored last week to tax bonuses at 90 percent, and also the way that AIG was attacked on Capitol Hill, why would any private company want to do business with the government?
REP. CHARLES RANGEL, D-N.Y.: Well, it may allow them to understand what the American people feel about their method of compensation. You know, this is an entirely different world that they live in. They have no idea of the sensitivity of people losing their jobs, their health care, their homes.
And it's time now — and I think the president made it abundantly clear that we have to level the playing field so that people understand the — what happens, the results of some of their problems with greed.
WALLACE: So real quickly, Congressman, are you saying that if one of these private companies that didn't receive any government bailout partners up with the government, starts buying these toxic assets, and they end up giving these multi-million-dollar bonuses, that you may come back and want to tax them?
RANGEL: Well, I want you to make it abundantly clear that what the private sector does in terms of rewarding people that even if it appears on the outside that they don't deserve these type of reward or bonuses, as they call them — we'll take another look at that.
But the truth of the matter is you don't do it with taxpayers' money, and that's where the House of Representatives is coming from under direction of Nancy Pelosi. She says get our money, the taxpayers' money, back.
WALLACE: Senator Shelby, do you think that the — a 90 percent tax on bonuses or the 70 percent tax that's up before the Senate — that those kinds of taxes could conceivably scare off the private investors that the government wants to team up with to buy these toxic assets?
SEN. RICHARD SHELBY, R-ALA.: It's possible. And what I think we have to be careful with is unintended consequences in legislation that Congressman Rangel authored and that passed the House.
I think that we need to pause and think this out and see what the effect of this would be. Nobody wants to award taxpayers' money to people who have caused institutions to fail. We're all against that.
But who put this in motion? You know, TARP and then the stimulus language put it in motion to where they could do it. We got — lost the signal. We have no signal now.
WALLACE: Can you hear me, Senator Shelby?
SHELBY: The phone buzzed and now it's gone.
WALLACE: Congressman Rangel, let me ask you, just stepping back for a moment, do you support the basic idea of this public-private partnership, where the government would team up with private investors, but government ends up putting up most of the money and taking most of the risk?
RANGEL: No, I don't approve. But I don't think we have a lot of choices. This is a very complex financial crisis that we find ourselves in. And I'm really surprised that we have to go to people that come from the fiscal families that caused this problem to try to help us to get out of it.
When Secretary Paulson came to us, he didn't give any explanation about what he was going to do. He said if we didn't invest taxpayers' money into these large financial institutions, the economic sky would fall.
And so here we find ourselves in a dilemma in having to follow, to some extent, the direction which economists, working with these people, are telling us that we have to do.
It doesn't make sense to a guy in the street, but we've got to give this president, who's only been in office a couple of months, an opportunity to get us out of it.
WALLACE: Congressman Rangel, let me continue with you and maybe explain to the audience we're having some technical difficulties with Senator Shelby. When we get him back up, we'll start talking to him again.
Congressman Rangel, you initially opposed the idea of going after AIG and using the tax code to do so. Let me put it up on the screen. You said last Tuesday, "It's difficult for me to think of the code as a political weapon," but just a day later, you sponsored the 90 percent tax. Why the flip, Congressman?
RANGEL: It wasn't a flip. And it wasn't an opposition. I feel now as I did then. To use the tax code in what may appear to be a penalty to taxpayers I think is wrong.
And when we were told that we just had to make the taxpayers good — on the other hand, we had to make certain that the American people felt good. We as a government have the responsibility to make certain that people have confidence in government. And the taxpayer did not have confidence in the system.
So when you weigh what options did we have — did we have the criminal court system? Could they be indicted? Did we have bankruptcy? And it wasn't an easy decision that the members of the Ways and Means Committee made.
We finally decided if on one side these people can have complete disregard of the integrity of the fiscal system in the United States of America, the pain that it has caused Americans who lose their retirement funds, their homes, their dignity, taking their kids out of college, we didn't have any problem in reaching the conclusion that this was our only option, so it wasn't a flip-flop.
It had nothing to do with AIG. It had everything to do with the integrity of the tax system.
WALLACE: Congressman, after the House passed your bill, the 90 percent tax, you went after AIG and you said this. Let's put it up on the screen. "AIG executives have gotten away with murder in what they've done to our communities."
But, Congressman, over the years you've received $110,000 in campaign contributions from AIG. Just last year you were trying to get $10 million from AIG for a school that is named in your honor at a time that you were supporting a tax bill that ended up saving AIG millions.
You seem to have changed your tune about the company.
RANGEL: That — that is just not so. First of all, as relates to the election system, I would hope that we would go to public financing of all offices.
But I think if you take a look not just at Rangel but Republicans and Democrats in terms of contributions that we receive, including the Republican Campaign Committee, the Republican Senate Committee, that you would find that I did not receive any more than most of the senior members of the House and the Senate.
Having said that, I sent out to all of the foundations an opportunity for them to meet with the officials of the City College of New York for them to contribute to a school that would try to support people going into public service as opposed to people just going to Wall Street and the private sector.
And the fact that they looked it over and didn't give a nickel to it certainly did not influence my opinion about AIG. And it wasn't just AIG that this thing is geared after. Anybody who's received $5 billion of taxpayers' money and received bonuses and that's been over $250,000 will be the target.So I think it's more popular for you to talk about AIG since they were the most open violators of the public trust, but I want you to know that my bill and my thinking goes far beyond that. It goes to the American people and the integrity of the tax system.
And nobody has ever accused me, except a reporter, of wrongdoing. And that's going to be looked at and dismissed.
WALLACE: Senator Shelby — and we now have Senator Shelby back.
And thank you, sir. We apologize for the technical difficulties.
SHELBY: Thank you.
WALLACE: Back in January, you voted to confirm Timothy Geithner as treasury secretary. Do you still have confidence in him?
SHELBY: Oh, I — my confidence is waning every day. I said competence brings confidence to anything. I don't see a lot of things positively thus far that Timothy Geithner's been involved in.
And then we saw what happened last week, dealing with the bonuses. You know, nobody wanted to claim responsibility for the language in the stimulus bill that grandfathered the bonuses in at AIG.
Now we know it came from Treasury. There's a lot of questions to be asked. I'm not a — I'm not feeling real good about Treasury's role or the specific role of Tim Geithner at the moment.
WALLACE: Do you think he should step down?
SHELBY: Well, I said last week he works for the president, and I can tell you what, if he keeps going down this road, I think that he won't last long. I think he's probably on shaky grounds now, at least with the Congress and a lot of the American people.
WALLACE: And let me ask you, just following up on that, Senator Shelby, what do you think would happen if he were to step down and we didn't have any treasury secretary in the middle of this financial crisis for several months?
SHELBY: Well, I think that somebody would step up to the plate. They would have to. The question is, is Geithner the man for the job. A lot of people question that. I had reservations about him all along.
You know, he was the one that presided over the New York Fed as the regulator of the big banks for five years as they got in deep trouble. So I think the jury is really out on him, although the president says he's got a lot of confidence in him.
I don't know if he's looking for — looking at his resume or looking to stay on, but he's going to have to do a 180-degree turnaround, I believe, to be a successful treasury secretary.
WALLACE: Gentlemen, we're running out of time, and I'm going to ask you both for quick answers to this question. We saw the CBO estimate that the deficits from the Obama budget are much bigger, $2.3 trillion bigger, than the White House projects.
Senator Shelby, should President Obama scale back his budget given those new numbers?
SHELBY: Absolutely. He's going to have to. We're on a — on the fast road to financial destruction, and I see a 20 billion — a $20 trillion deficit in the few years to come.
WALLACE: Congressman Rangel, you've got to be troubled by these CBO numbers.
RANGEL: I am more impressed with the fact that Obama is looking for a better educated and a healthy — a stronger workforce going into a new green economy, that this has to show that America can get off the ground with the deficit and move to where we were under the Clinton administration, drawing a strong surplus.
The only way for us to get out of this is to change our way of living in this country, and that's the direction in which the Obama budget is going, and I strongly support it.
WALLACE: Finally, Congressman Rangel, the House Ethics Committee, as you pointed out, has been investigating since September your failure to pay taxes on rent from a beach house you have in the Dominican Republic, the question that you have several apartments in New York City at below-market rent rates.
Without going into all the details, the question I think a lot of people have is you're the chairman of the House Ways and Means Committee that writes all the tax law. How can you have problems paying your taxes?
RANGEL: Just because a reporter from the New York Times has a problem with me doesn't mean that the Congress and the country has a problem. And every reporter, including you, would pick up without any facts, without any investigation — indeed, suggest don't go into the facts — because one of your colleagues in the press said it.
Nobody outside the press has made any accusations, and I have asked the House Republicans and Democrats to review it in order to have it dismissed. So you can tell the story over and over and over again, but it has no merit and it has no facts.
WALLACE: But the House Ethics Committee has been investigating this for six months and still hasn't reached a judgment, still hasn't cleared you. I guess one of the questions I have is, is it that complicated that it should take the House Ethics Committee six months to investigate this?
RANGEL: Maybe your question should be how long has the Congress been in session during those six months. If you take in consideration the Christmas holidays, you take in consideration the fact that we've had other national holidays, the fact that members have not been in Congress each and every day to look at it — if I'm satisfied, and there has been no accusations coming from the Congress, I would think that the press ought to be fair enough to wait to see whether or not their colleagues have any substantive charge to make. I mean, that's fairness.
WALLACE: Well, we're always fair and balanced here, Congressman Rangel.
RANGEL: Oh, yeah, I forgot I was — I forgot I was on channel five.
WALLACE: Well, Fox. That's right. But thank you.
WALLACE: Thank you very much, Congressman Rangel.
And thank you, Senator Shelby. We apologize...
SHELBY: Thank you.
WALLACE: ... to you for the technical difficulties.
But we want to thank you both for coming in today and talking with us.
SHELBY: Thank you.
RANGEL: Thank you.
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