This is a rush transcript of "Special Report With Brit Hume" from November 24, 2008. This copy may not be in its final form and may be updated.
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SEN. BARACK OBAMA U.S. PRESIDENT-ELECT: I sought leaders who could offer both sound judgment and fresh thinking, both a depth of experience and a wealth of bold new ideas, and, most of all, who share my fundamental belief that we cannot have a thriving Wall Street without a thriving Main Street.
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BRIT HUME, HOST: So Barack Obama made it official today that the people you have been hearing about for several days now who are to be the head players on his economic team are, indeed, who we said.
Larry Summers will be the head of his economic policy council in the White House, Tim Geithner, the current head of the New York Fed, will be the Treasury Secretary nominee, and Christine Romer will be the head of the council of economic advisors in the White House.
Some thoughts on all this now from Fred Barnes, Executive Editor of The Weekly Standard, Morton M. Kondracke, the Executive Editor of Roll Call, and the syndicated columnist Charles Krauthammer, all are FOX new contributors.
He said they offer a depth of experience, which I think we would all probably agree is the case, a wealth of bold new ideas—Charles, really?
CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Well, Summers is known as a guy with bold ideas, often impolitic ideas, which is why I think having him in the White House is exactly the right place.
He is a brilliant economist who often engages in thought experiments. I think that will actually appeal to the new president who is intellectually active and curious and nimble. I think it's a great pairing.
And it's good that on the outside, the face of the administration in treasury will be Geithner, who is more of a public face, who is more presentable, and more, I think, reassuring in public—less, eccentrically brilliant and audaciously so, as Summers is, to his own regret.
We know at Harvard he produced a thought experiment in the middle of a speech about women's achievements, and it cost him his job.
So I think it is an excellent team.
Geithner, of course, is the shadow of Paulson. He has been involved in every action over the last eight or nine months. So this is essentially the ultimate in continuity, which is what I think is reassuring the markets.
MORT KONDRACKE, EXECUTIVE EDITOR, ROLL CALL: Well, and, you know, Obama also said today he was going to get the best minds in America to work on these problems. And, by everybody's acknowledgement, I think, this is about as high of an IQ group as you could possibly assemble.
And they're basically centrist Democrats. Melanie Barnes is a exception who was named today. She is a liberal who used to work on Senator Kennedy's judiciary committee staff.
HUME: She was named to head the domestic policy council, which is obviously important, but will not be the controlling influence on economic policy.
KONDRACKE: He shoehorned in healthcare as part of the solution to our economic problems.
But, fundamentally, it is this team that you have been talking about. And they are basically centrist Democrats. And they believe in Keynesianism.
But they also, as Geithner has been involved, as Charles said, in all of the stuff that Paulson has been doing, and maybe can go beyond what Paulson has been doing. I assume that he will into areas, like mortgage — bolstering the mortgage market, and so on, which the administration has been reluctant to do.
Another thing they could possibly do is change the mark to market rule, which is causing a cascade of the bad —
HUME: But the Treasury Department can't do that?
KONDRACKE: No, but they should name a SEC Chairman.
HUME: Let's talk about the people he did name-Fred?
FRED BARNES, EXECUTIVE EDITOR, THE WEEKLY STANDARD: I thought they were pretty impressive.
It's clear who is going to be in charge, and that's Larry Summers. He understood, having been at the Treasury Department, that if you have a strong figure there with the national economic council at the White House, that person will be much stronger than the treasury secretary.
As it turned out when Bob Rubin had that job and Lloyd Benson was the treasury secretary, obviously Rubin was the guy, the biggest economic influence, and then went to Treasury, and Larry Summers succeeded him at Treasury. So Summers is going to be the big guy.
Here is what I was struck about the whole press conference Obama had today, and that was the sense of urgency on his part. All of a sudden this urgency to name these guys to talk about what he is going to do.
I went back and looked at two other things where he talked to the press. One was that press conference three days after the election, and then there was the "60 Minutes" interview a week ago yesterday, and there wasn't that urgency there.
Back in the press conference, he said my transition team will be monitoring the economy. Today he said they will be briefing me on a daily basis about what's going on.
And the other thing that was interesting is he opened the door to not raise taxes on people over $250,000. It's a door that will be —
HUME: Immediately?
BARNES: Well, in the next two years.
HUME: Right.
OBAMA: It will be a door that's very hard to close, particularly when he said in one of these interviews, I think it was the "60 Minute" one, that the deficit doesn't matter next year or even the year after.
So I don't think — I think he's going to wait for the Bush tax cuts to expire.
HUME: What do you think of this urgency, Charles?
KRAUTHAMMER: What happened in the market last week-on Tuesday Paulson appeared before Congress, and he said I'm only spending half of the money, and I already spent it, so I'm out of here.
The market went nuts. The banks' stocks collapsed in two days, the biggest drop in two days in the S&P since 1933, which was not a good year.
HUME: Percentage drop.
KRAUTHAMMER: Exactly.
And what happened then on Friday, you got a bit of urgency on the part of Obama. He named his secretary, at least it was leaked, which led to a rise in the market, and again today.
What Obama has indicated is that he is going to be working with the Paulson team right now —
HUME: He wouldn't say that.
KRAUTHAMMER: But that's what is understood.
HUME: He did get the bridge to the Paulson team in the person of Geithner.
(CROSSTALK)
KONDRACKE: They were following the FDR model. Remember he said there is one president at a time. There are two presidents now.
BARNES: No, no, there is really only one de facto president and we finally have accepted that, that it's Obama.
He didn't use the excuse that he used before. Twice in that press conference he said there is only one president at a time, and he meant Bush. He didn't say that again.
HUME: So another issue raised by the Obama news conference—does America need another $700 billion stimulus package? The panel weighs in next.
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OBAMA: We have to make sure that the stimulus is significant enough that it really gives a jolt to the economy, that it is putting people back to work, that it is making investments, that it is restoring some confidence in the business community, that, in fact, their products and services are going to have customers.
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HUME: This appears to be a jumbo version of a concept that has been tried time and again during economic downturns, and that is a wave of government spending, much of it on public works projects, bridges, roads, and the like, for the purpose, it is said, of stimulating economic activity, restoring demand in the marketplace, so that, as you heard Obama say, businesses and so forth can believe that there will be demand for their products.
This, though, is on a scale we have never seen before at any time. The track record of such stimulus packages is mixed, at best, but here we go—Charles?
KRAUTHAMMER: Well, what's interesting-
HUME: Why so big?
KRAUTHAMMER: Because it looks as if the economy will contract by about five percent in this quarter, which is an enormous contraction. And the markets are tanking and everybody is scared.
I think the president will have a lot of leeway. You have a conservative economist like Martin Feldstein over at Harvard who is also in favor of a package roughly of this size. He says the economy needs a stimulus.
Conservatives want to have it arguably as a tax cut mostly. Liberals want to have it mostly as spending, but liberals won the election, so that's how it's going to be.
What is ironic is everybody had assumed in the middle of the campaign that because of our crisis there wouldn't be any of the funds Obama needs to enact the vast programs he's promising.
In fact, ironically, it will end up the opposite. Because of the fear and because of the need and consensus for a stimulus, he is going to have almost a trillion at his disposal on inauguration day, which can jump start his initiatives—green energy, schools, hospitals, et cetera.
HUME: How much of that has to do with stimulus, Mort?
KONDRACKE: Well, some of it is going to be immediate money in people's hands. And then there is unemployment assistance—
HUME: Unemployment assistance? That's not a stimulus. That's just palliative relief.
KONDRACKE: Well, theoretically it is money that people will go out and spend immediately. They may t not do it. That's the theoretical problem.
This is going to be a long and deep recession, not a shallow one and short one. Therefore infrastructure programs can make a difference because they take time to play out. But there are—
HUME: In other words, the recession might not end too fast for them?
KONDRACKE: No-look, if the recession is going to last two years, and if you can get infrastructure programs up and running, you will have something at the end of the day. The bridges and roads need to be rebuilt anyway. The schools need to be rebuilt anyway.
Instead of a doing it over a ten-year period, do begin to do it over a two-year period, and you put people to work who are otherwise on the dole.
So that's the idea. This is a Keynesian moment.
The Republicans had their chance. They did supply-side economics, and look where we are now. Now the Democrats have a chance. They're going to try do it their way.
Do I know it's going to work? I do not know. And for sure, they ought not raise taxes. I think that Obama made a big mistake by not just saying that we're not going to raise taxes until the end of the Bush — until the Bush tax cuts expire. That would give confidence to the market, along with, as I said, this mark to market rule.
BARNES: Mort knows a lot more about recessions than I do. He knows this one will be long and deep. Well, all I can say is maybe it is and maybe it isn't.
But, Brit, you said the record is mixed about dealing with recession-
HUME: At best.
BARNES: At best. But remember when it worked. Remember what Ronald Reagan did. He cut taxes, even something that was phased in, and led to an enormous recovery in 1983 and 1984.
HUME: That was the enactment of the program he ran on.
BARNES: His tax plan, and he cut spending.
HUME: Bush did the same thing.
BARNES: Bush did, but not quite as deep as Reagan did.
But that worked. What didn't work was what was in the New Deal, which is what seems to be what Democrats are talking about now.
Obama said in this press conference three or four times that there is a consensus among conservative and liberal economists on the size of the package but not on the contents.
I mean, what Mort talks about, all those things, they will help in the short run, and they can reduce joblessness, but they doesn't deal with the causes. They deal with the symptoms.
And the only way to deal with the causes is with tax cuts— reducing the capital gains rate, more depreciation, cutting the corporate rate, which is 35 percent, one of the highest in the world, would help enormously. You can do those over the next two years. But Democrats don't like that idea.
HUME: That's it for the panel.
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