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March 02, 2009

Roundtable on the Economy

Special Report With Bret Baier

(BEGIN VIDEO CLIP)

PETER MORICI, ECONOMIST: Unfortunately, the Obama administration is continuing the failed policies of the Bush administration. The difference between Geithner and Paulson is like the difference between the sixth floor and the seventh floor at Goldman Sachs.

(END VIDEO CLIP)

BRET BAIER, HOST: That's economist Peter Morici talking about the bailout to AIG, the fourth bailout, really, a rescue package today -- $30 billion line of credit, adding to the $150 billion already provided by the U.S. government. This as the Dow tumbled today below 7,000 -- the lowest since 1997.

Let's bring in our panel: Fred Barnes, executive editor of The Weekly Standard, Mara Liasson, national political correspondent of National Public Radio, and syndicated columnist Charles Krauthammer.

Fred, let's start with you. Overall, the economy, where it stands and this administration's take?

FRED BARNES, EXECUTIVE EDITOR, THE WEEKLY STANDARD: The economy is terrible. And even just AIG, once you start bailouts, it's hard to stop.

But look at how the stock market reacted to that and everything else today, and still the absence of any credible bank bailout plan. We still haven't gotten one.

Look, President Obama's policies in this incredible array of new programs which he has outlined in his budget last week are going to cost a lot of money. And he's going to need a great deal of economic growth to produce the revenues to support them.

And so what is he doing? He has an anti-economic growth policy of raising taxes on exactly the people who produce economic growth: the investors. And he's raising taxes on capital, investors, entrepreneurs, innovators.

And it is incredibly anti-growth. It doesn't work. What he needs revenue-wise, what he needs tax-wise, with what he is doing to the people who would provide that money.

And look, all he has to do is look at Europe. Now, I know the people in the Obama administration dismiss this idea that we're getting like the social democracies in Western Europe, but just look at what has happened over the last 25 years. There they have high taxes, a lot of government and relatively high unemployment.

Here, we've had something quite different. We've had lower taxes. We've had less government and much lower unemployment. And what's the difference in the last 25 years? In the U.S. under Republicans and Democrats, we have created 40 million jobs. And how many in Western Europe? Approximately zero.

MARA LIASSON, NATIONAL POLITICAL CORRESPONDENT, NATIONAL PUBLIC RADIO: I agree with Fred that economic growth is the key for Obama. If he is going to pay for everything he wants to do, he has to have a growing economy.

And I think one of the problems is that he has laid out an incredibly ambitious agenda to solve a whole bunch of problems -- whether it's the lack of universal health coverage, he wants energy to be redirected to renewable sources, he want to do something about income inequality, but without having a credible plan to bail out the banks.

All they had was Tim Geithner's placeholder, that kind of outline, concept that he laid out. They can't get the markets to feel confident, that the Obama administration will go in and either let some of these companies go into bankruptcy, if that is what has to happen in some kind of managed way. And we're still waiting for the details.

Right now, it's firm by firm, company by company. It's still pretty ad hoc.

BAIER: Charles?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: I think what's really scaring the markets is a lack of confidence, obviously, in the financial system, but, b, a lack of confidence in the Obama administration.

Looking at last year, they said the Bush administration was running around with its hair on fire, bailing out here and there, without logic, without -- extremely ad hoc -- it saves a Bear Stearns and lets Lehman go down. It proposes a TARP, a rescue on the basis of purchasing toxic assets. It changes its mind. It ends up injecting the money in banks.

It's running around without a plan and yet, and yet, the system held together.

What was hoped was that there would be a new team, new people, fresh ideas, who have a year -- '08 -- in which to study and learn what went wrong and would have a plan in place. It is what Obama had said he had, they knew what to do and would do it.

It looks as if they have no idea what to do and they won't.

When Obama had his first press conference, he promised it would be a detailed plan by Geithner the next morning. There was none. The market tanked.

It looks as if this administration is entirely at sea on what to do on the principle element of our collapse -- the banks -- and they may not have any idea is what is scaring the markets. If they don't, we are all at sea.

BAIER: Mara, you were at the briefing today. Is there a sense, and every administration says that they don't come up with policy by the market, but at what point do they say we need to do something different than what we're doing, or what we're projecting?

LIASSON: I think that if they do something that's decisive and clear, the markets will feel that they know what's going on. Markets react to surprises.

And, of course, they don't want to be judged by every one-day dip in the market.

But I do think that the bank bailout plan is still a work in progress. They haven't finished it. They need to do that. Geithner basically said "I'll be back when I have details." And it's been a number of weeks, and he still hasn't come back.

KRAUTHAMMER: And remember, the election was four months ago. This administration was essentially in power, at least partially so, during the transition. It was the earliest sort of accession to power ever. You had Obama giving a speech on economics even before he was sworn in.

So they have had now, four months, and the market has gone down almost 3,000 points in that interval, and yet it still has no idea.

I agree with Mara -- any announcement, any plan, any outline, I think, will have an effect. But announcing that we will have stress tests is doing nothing.

BAIER: The DOW is down 38 percent since September of last year. Last word, Fred?

BARNES: It's down 1,400 points just in the 40 days since Obama has been president.

He has to do more than just be credible with the banks. He has to have a plan that's going to promote economic growth, not suppress it.

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