This is a partial transcript from The O'Reilly Factor, January 7, 2002. Click here to order the complete transcript.
BILL O'REILLY, HOST: In the Unresolved Problems segment tonight, the recession. It's not that boring, and it is important, sadly. The Factor was one of the first TV news programs to tell you America was in a recession in the fall of 2000. We accurately analyzed Alan Greenspan's folly in keeping interest rates high for no reason.
That caused corporations to cut spending and the dominoes eventually fell. Now, can anybody in Washington get us out of the recession? We have two opposing points of view.
First, from Boston, former secretary of labor under President Clinton, Robert Reich. And from Washington, Bruce Bartlett, a senior fellow at the National Center for Policy Analysis.
Now, gentlemen, as I told you in the break, I don't believe Tom Daschle or President Bush has any clue about economics. They don't know what they're talking about. It's all political Ping-Pong, and we're not interested in that here.
Mr. Bartlett, we are interested in getting out of this recession. How would you do it?
BRUCE BARTLETT, NATIONAL CENTER FOR POLICY ANALYSIS: Well, in all honesty, I think that we've passed the bottom of the recession. I think we're moving upwards right now. And I think the real question is, do we really want to put in stimulus packages or, or, or, or adopt policies that only make sense if we're going to have an extended recession, or do we want to start thinking about the long term? How do we make sure that the economic recovery is...
O'REILLY: Well, tell me how we...
(CROSSTALK)
BARTLETT: ... is sustained for as long...
O'REILLY: ... do it.
BARTLETT: ... as possible.
O'REILLY: Tell me how we do it.
BARTLETT: Well, the economy takes care of itself...
O'REILLY: So you just sit...
BARTLETT: ... and...
O'REILLY: ... on your hands and don't do anything?
BARTLETT: No, I think we should have done something a couple of months ago...
O'REILLY: Nowowo (UNINTELLIGIBLE), I mean, we didn't, we didn't...
BARTLETT: ... at some point...
O'REILLY: ... because of politics. Now, what would you do now, nothing?
BARTLETT: I would be looking at the long term. I'd be thinking about, how do we make sure that when we -- when the recovery does come, that it last as long...
O'REILLY: Yes, but I'm looking for...
BARTLETT: ... as possible?
O'REILLY: ... I'm looking for specifics, Mr. Bartlett. You got any?
BARTLETT: Well, the first -- one thing we could do is, the president could make sure that he has two, he now has two openings on the Federal Reserve Board. He needs to appoint two new people who will make sure that they don't raise interest rates as soon as the, the, the unemployment rate starts to decline...
O'REILLY: All right. And then, and (UNINTELLIGIBLE) he -- they should also be very tough guys who can beat up Alan Greenspan. All right.
What do you think, Dr. Reich? How do we get out of this recession?
ROBERT REICH, FORMER LABOR SECRETARY: Well, first of all, I wish I could be as optimistic as Bruce is. The recession may not have bottomed out. A lot of people are hurting. Unemployment is heading north. We've got to do something.
Number one, this is an idea that I first floated on The O'Reilly Factor, and you agreed with me, Bill, and I wish it was already implemented. We ought to exempt the first $10,000 of income for one year from the Social Security payroll FICA tax. Now, this would put money directly into people's pockets. You could do it tomorrow in terms of changing the withholding...
O'REILLY: Yes, but then you're going to get...
(CROSSTALK)
REICH: ... it would make people...
O'REILLY: ... you're going to get screaming deficit, deficit, deficit...
REICH: No, no, no. Look it, we all -- with that $1.3 trillion long-term tax cut that the Bush administration has already enacted, that's the big deficit killer. That's going to, that's going to create problems in the long term for us in terms of Social Security and everything else. I'm talking about right now for the next year, getting us...
O'REILLY: All right. No socialist, no FICA...
REICH: ... going, getting us out of recession...
O'REILLY: ... $10,000.
REICH: ... that's idea number one.
O'REILLY: OK.
REICH: Let me give you idea number two.
O'REILLY: All right.
REICH: Idea number two, the Federal Reserve Board has got to continue to cut interest rates. We're not out of the woods yet. And the Fed ought to cut another -- at least another 50 basis points.
O'REILLY: Yes, but that doesn't mean anything to anybody, and working Americans, they don't care, it's down to 1 percent now, and the banks are lowering the mortgage rates any lower. The banks are keeping them where they want to keep them. So what good is that going to do?
REICH: Well, then go back -- well, there are two things, Bill. The reason that long-term interest rates are high is because capital markets are not stupid. They see that huge $1.3 trillion long-term tax cut that the Bush administration already shoved through Congress, and the capital market says, How are we going to possibly, possibly finance Social Security, how are we going to avoid...
O'REILLY: Well, I know how to do it. But...
REICH: ... inflation (UNINTELLIGIBLE)...
O'REILLY: ... I'm going to give Mr. Bart...
REICH: Now, wait a minute, wait, wait, wait, wait, wait, wait.
O'REILLY: Go ahead.
REICH: So capital markets are saying, Over the long term, we're going to have inflation. So long-term interest rates are still going to be...
O'REILLY: All right. I disagree there...
REICH: ... (UNINTELLIGIBLE) high...
O'REILLY: ... I think the capital markets are saying, Enough's enough, we're going to charge what we want, and we don't care.
REICH: Well, you like my first idea...
O'REILLY: Mr. Bartlett...
(CROSSTALK)
REICH: ... right?
O'REILLY: What -- I like your first idea, yes.
Mr. Bartlett, you reply to Dr. Reich.
BARTLETT: I think that the idea of some kind of payroll tax holiday really is not nearly as easy to implement as Bob says...
O'REILLY: Why not, (UNINTELLIGIBLE) Congress would have to do to be would be...
BARTLETT: Because -- well, because the people...
O'REILLY: ... (UNINTELLIGIBLE).
BARTLETT: ... the payroll professionals, the American Payroll Association, people like this, say it will take them six months to implement something like this...
O'REILLY: Why?
BARTLETT: Why? You'll have to ask them...
O'REILLY: I'm not going to, I mean, just pass it...
BARTLETT: ... they're the ones who are in charge of the payroll system.
O'REILLY: ... Congress passes, it, bang, you know, the employers do it, and that's that. That would at least give people some money to play with.
But look, you guys are both making a fundamental mistake. The way to get the capital markets under control in the recession, confidence, consumer confidence back is what you need, you need consumer confidence and you need corporate spending. Those are the two things. Is to cut the waste in government, with 50 cents on the dollar, every dollar, being wasted now and no attempt to do that, that's why the capital markets, doctor, are staying so high. They know that the feds are going...
REICH: (UNINTELLIGIBLE)...
O'REILLY: ... to continue to waste money like crazy.
REICH: ... there, there, there, there is always a lot of waste in government, particularly, I mean, you talk about waste, you know as well as I do what goes on in the military. You're talking about...
O'REILLY: Not going to sell out with the war.
REICH: ... all kinds of solid gold, everything else. Now, now, we are asking, and in fact the Defense Department is in the process of asking and getting ready for a $20 billion defense increase next year...
O'REILLY: Yes, and they're going to get it.
REICH: ... now, nobody's -- they're going to get it because, of course, everybody is concerned...
O'REILLY: That's right.
REICH: ... appropriately about what's going on with terrorism. So we're going to have a replay of what we had in the 1980s. You remember, we called it military Keynesianisn. Ronald Reagan spent a lot on the military and we cut taxes. And what did we have at the end of the 1980s? We had a budget mess. We had a recession.
We in the Clinton administration had to spend years cleaning up that mess.
O'REILLY: Well, you in the Clinton administration lucked out, because the economy was so good and you got so much money from the tax sales, from capital gains tax, that you were able to raise the revenue that flows in.
REICH: No, I fear that this is deja vu, as Yogi Berra said, deja vu all over again. We're going to have another repeat of the 1980s, spending...
O'REILLY: Not if they do it...
REICH: ... and tax cuts, and we are going to...
O'REILLY: ... not if they discipline the spending.
REICH: ... end up with (UNINTELLIGIBLE) this recession, I wish I could say, I wish I could be upbeat, but I fear that this recession is going to continue because of this kind of spending and tax cutting.
O'REILLY: All right, how about this? How about giving the corporations a tax cut, all right? if they hire people, and if they invest in their own infrastructure, Mr. Bartlett, how about that?
BARTLETT: I think -- I think...
O'REILLY: Now, that would, that would...
(CROSSTALK)
BARTLETT: ... that would be a very good idea.
O'REILLY: ... give an incentive for corporations to hire people and start to spend again. Why not that?
BARTLETT: I think that would be an excellent suggestion. I think if you look at the data, you'll see that the reason we had this slowdown isn't because consumers weren't spending. They've been...
O'REILLY: Yes, it's because of the...
BARTLETT: ... spending like crazy...
O'REILLY: ... corporation stuff.
BARTLETT: That's right, corporate investment...
O'REILLY: Right, because of Alan Greenspan...
BARTLETT: ... dropped like a rock.
O'REILLY: ... who has to be beaten to a pulp. And you should do that, doctor, you should go down there and give him a couple of these, because he still hasn't explained his screw up, and yeah, you're right, he's cutting interest rates to the bare bone right now, but again, nobody's watching the spending.
You know, you big Democrats want to spend, spend, spend...
REICH: Oh, (UNINTELLIGIBLE) we're talking about...
(CROSSTALK)
O'REILLY: ... you got to have somebody watching all that.
REICH: ... military spending. The...
O'REILLY: Well, I (UNINTELLIGIBLE) watch it...
REICH: ... (UNINTELLIGIBLE)...
O'REILLY: ... across the board.
REICH: Wait a minute, Bill O'Reilly. Who wants to do the big military spending? Everybody does, but it's being led by the Republicans, just like in the 1980s.
O'REILLY: Aaah, everybody's on board that military spending jihad now because of the terrorism. Nobody's going to go against that.
REICH: That's right, and that is the big spending. The only other big spending we're talking about is...
O'REILLY: Oh, come on! The entitlement spending...
(CROSSTALK)
REICH: ... 10, 15 years from now...
O'REILLY: ... in this country's crazy.
REICH: ... when you and I have to retire -- when you and I retire, Bill, we want Social Security to be there...
O'REILLY: I don't.
REICH: ... and there is -- and you...
O'REILLY: I'm giving mine back. I'm giving my Social Security back.
REICH: Well, you can afford to do that, some of us can't afford it.
O'REILLY: Then maybe I can, but I made it on my own. And I'm giving that Social Security back. You know why?
REICH: Give it to me.
O'REILLY: I don't want it. I made it on my own...
REICH: (UNINTELLIGIBLE) to me.
O'REILLY: ... I don't need the government sending me checks, OK?
REICH: Well, (UNINTELLIGIBLE)...
O'REILLY: And if everybody had my attitude...
REICH: ... I will gladly...
(CROSSTALK)
O'REILLY: ... we wouldn't be in this mess.
REICH: ... I will gladly accept your Social Security...
O'REILLY: I'm not giving it to you...
REICH: ... benefits.
O'REILLY: ... because you don't deserve it.
All right, gentlemen, I don't think we're out of the recession with those ideas, but I do think...
REICH: (UNINTELLIGIBLE) now, now, you and I agreed on (UNINTELLIGIBLE)...
O'REILLY: We -- I agree on it...
(CROSSTALK)
REICH: ... (UNINTELLIGIBLE)...
O'REILLY: ... give the mon -- give the 10 grand back...
REICH: ... and we have stayed in agreement (UNINTELLIGIBLE)...
O'REILLY: ... for a year, I'm with you on that one, and I'm with you on the corporate tax if you hire and spend on infrastructure.
OK, always good to see you guys, thank you.
REICH: All right.
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