SCHULTZ:  President Obama says we need to build our economy on rock solid instead of shifting sands.  OK?  Now, that‘s why his budget includes big investment like education and health care. 

Joining me for more on that is Democratic Senator Kent Conrad from North Dakota.  He‘s the chairman of the Senate Budget Committee.

Senator, what did you think of the president‘s presentation today on the economy? 

SEN. KENT CONRAD (D), NORTH DAKOTA:  I thought it was very good.  I thought it was right on point with the keys to future recovery.  That is, we have got to reduce our dependence on foreign energy, focus on excellence in education.  If we‘re not the best educated, we‘re not going to be the most powerful for very long. 

And, of course, health care reform, because that is the 800-pound gorilla.  That is what can swamp the boat for our competitive position, for our fiscal position. 

And, in addition, he talked about the need to get our debt under control, to dramatically reduce the deficit.  So I thought the president was right on target. 

SCHULTZ:  I‘m a small business guy, Senator.  You know that.  And I know that health care costs are going through the roof and whatnot.

How fast do we have to address this before the economy starts coming back?  Is it health care first and then the economy returns?  What do you think? 

CONRAD:  I think the two are very much linked.  Our competitive position is very dependent on what we do on health care.  Certainly our fiscal position is.  But, you know, there are good signs. 

The president was right.  We see it in housing.  We see it in car sales.  We see it in the credit markets. 

They have improved dramatically.  It‘s not gotten much attention, but the credit markets have improved dramatically.  They are still not where they should be. 

And, of course, you‘re right with respect to small business and the risk-taker.  They have got to have affordable capital. 

They still don‘t have what they need, and so that‘s a focus now for the Treasury and the Federal Reserve.  They‘re rolling out a program that should give much better interest rates to small business going forward, and that has to be a focus. 

SCHULTZ:  What about community banks, Senator Conrad?  What role do you think they play in all of this?  Community banks are big across rural America.  Isn‘t there going to be anything for them?

I mean, Wall Street gets it.  Why can‘t the community banks get it?

CONRAD:  You know what I think is going to happen?  I think you‘re going to see an awful lot of community banks that are relatively healthy.

They didn‘t engage in this funny money financing.  They‘re going to have a lot of opportunities come their way.  And if they have affordable capital, they are going to be part of this recovery.  In fact, I think you will see some community banks come to be the strong banks for the future in this country. 

SCHULTZ:  OK. 

Senator, I‘ve got to ask you about $634 billion for health care, because obviously this is going to help small businesses in this country.  I think it‘s vital to this recovery. 

Where is the majority of the $634 billion going to go? 

CONRAD:  Well, first of all, you know, we‘ve got to use health information technology.  That‘s a tremendous opportunity, to computerize our health records.  That reduces health care performance, that reduces costs, that prevents medical errors.  So that‘s a huge opportunity.  It costs a lot of money. 

We also know that we‘ve got to go out and do a much better job of assessing what works and what doesn‘t work.  That also costs money, at least on the front end, but it pays big dividends down the line.

And the big kahuna is better coordinating care.  Five percent of Medicare patients use 50 percent of the money.  We‘ve got to focus like a laser there.  We can better coordinate their care, save money, and get better health care outcomes. 

SCHULTZ:  Senator, great to have you on with us tonight. 

CONRAD:  Always good.

SCHULTZ:  You bet.