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Special Report Roundtable - Aug 10

FOX News Special Report With Brit Hume

(BEGIN VIDEO CLIP)

SEN. ROBERT MENENDEZ, (D), NEW JERSEY: At the end of day we have a real concern poor borrowers who, you know, may find themselves having the dream of American homeownership turning into a nightmare.

ALEX YOUNG, EQUITY STRATEGIST: We are seeing a global repricing of risk as a result of increasing subprime mortgage delinquencies in the U.S. Investors around the world are reconsidering how much they want to charge low-quality borrower to borrow their money.

HENK POTTS, BARCLAYS ANALYST: Nervousness that we're seeing at the moment revolves around the fact that we don't know how big these problems are, who has these problems, the extent of their liability.

(END VIDEO CLIP) ANGLE: And that caused a great deal of anxiety in the financial markets this week which could have been much worse and was reminding to some of some previous stock market crashes.

Now observations from Bill Sammon, senior White House correspondent of the Washington Examiner, Mort Kondracke, executive editor of Roll Call, and syndicated columnist Charles Krauthammer, FOX News contributors all.

Charles, it feels like we managed to get through what could have been much worse. Because this was the financial markets this week, were roiled by fear of the unknown, as you heard someone say a moment ago. And those things can often get out of hand as they have in the past.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST & FOX NEWS CONTRIBUTOR: Well, where we are today after a quiet Friday, is still precarious. And the reason is because of the word you used, unknown. In the old days, meaning in the 20th century, when you have a run on credit, you would have the government put a lot of money into the banks and that would right the ship because the banks did all the lending.

But that has changed radically now. You have the private companies who do the lending and there are other people who package these mortgages, repackage them, sell them down the road, repackaged again ending up in the hands of banks, companies, hedge funds.

The thing is we don't really though today who is holding all the bad paper. And that is why when you hear about a bank in France or a hedge fund here, you wonder, is it a bank you don't know about? Is it a company that you have stock in? So everybody is very afraid because it's all hidden. And the lack of transparency which, I think, is creating the fear.

ANGLE: And that was a guy who said in earlier when you have uncertainty, the markets go downward which of course would affect everyone's 401K and everything else.

MORT KONDRACKE, EXECUTIVE DIRECTOR, ROLL CALL: Theoretically, the subprime mortgage market is a small fraction of the American economy or world economy.

ANGLE: Even the mortgage economy.

KONDRACKE: Exactly, but you don't know what is connected to what and Evan everybody is so highly leveraged. This is the most leveraged country I know of. We are leveraged to the Chinese, for our trade deficit, leveraged to the bond holders for the - for retirement funds. We are leveraged individuals are borrowing on their houses in order to consume, now the housing bust has taken place, people are running out of money. So you don't know -- I mean, this is like -- this could be worse case, like the Archduke Ferdinand gets shot in Sarajevo and World War I was the result. You don't know what's linked to what else.

BILL SAMMON, SENIOR WHITE HOUSE CORRESPONDENT, WASHINGTON EXAMINER: I think there is a little bit of hysteria over that. Leave it to the Democratic presidential candidates to race in and make an issue out of it, a populist issue. You have Hillary Clinton and other Democrats saying we need to bail out the home buyers who have purchased these mortgage that have now gone up, adjustable rate mortgages.

And president Bush is saying we don't need to do that, we don't need to reward people who took bad risks and now have to pay for them. And I think it raise as fundamental question. If a private citizens buys an overprized house on the cups of a housing bubble with a risky mortgage, knowing that that rate could go up, and then the house value goes down and the mortgage payment goes up, and he can't maid make the payment, should the American taxpayers be obligated to pay in a guy's mortgage? And I think that is where the fundamental difference between Republicans and Democrats is seen here and that's why I don't think, as long as Bush is in the White House, we are going to se that kind of a bailout.

KONDRACKE: Her billion dollar assistance package wouldn't go anywhere near covering all the defaulters in this case. What she is trying to do is to ease the process and to give people advice. And she wants to crack down on some -- some of these lenders were profiteering and were lying to their clients about what it would cost. Wouldn't let them prepay the loan.

KRAUTHAMMER: It's not only a question of justice. It is a question of the health of the economy and the collateral damage. I'm not sure how responsible Chrysler was or New York City was or the savings and loan. But sometimes -- sometimes you have got to step in, even if it is unjust, rewarding people who took unnecessary risks, in order to prevent a ripple affect and then the people who are not indulging in this get hurt as the by-standers. That is where it is not unheard of or unthinkable that you might have to a have a bailout of sort along the way to prevent a real collapse.

ANGLE: Something to soften the blow and help people to keep from foreclosing?

KONDRACKE: What the fed does is it lends money to banks that are in trouble. Doesn't give them the money.

ANGLE: We try to avoid foreclosure but not bail people out on their home mortgage.

KRAUTHAMMER: If the government does that, by stepping in, it's not a disaster.

SAMMON: I want to be bailed out next time I buy a stock and it goes down and I took a risk. I want somebody to bail me out on that.

ANGLE: All right, when we come back, some want to increase the taxes you pay for gasoline to fix aging bridges and other things. Should you pay more and for what? Back with the panel shortly. Stay tuned.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

JIM OBERSTAR, (D), MINNESOTA: If you are not prepared to invest an additional 5 cents for road reconstruction, bridge reconstruction, God help you, you haven't got a sense of future.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: If rebuilding bridges is that big a priority then we ought to prioritize that in the highway moneys that we have budgeted as opposed to helping individual Congressmen or Senators realize pet projects in their districts.

ERNEST ISTOOK, (R), FORMER OKLAHOMA REPRESENTATIVE: Almost one-fifth of the Highway Trust Fund is siphoned off by Congress for other purposes. This ranges from billions of dollars that we put into bicycle paths at the expense of collapsing bridges and the billions that goes to mass transit.

(END VIDEO CLIP)

ANGLE: We're back with our panel. This is some of the commentary this week on what happened to that bridge in Minnesota and what to do about it? Some people calling for a 5 cent increase in the gasoline tax.

Gentlemen, there are lawmakers in both parties to want to increase the gas tax, who wanted to increase the gasoline tax by about that amount for some time. Others are calling for bigger increases for other reasons. But this just in order to fix bridges. The president is resisting that, saying Congress is not spending the money it already has in a proper fashion. What do you think, Bill?

SAMMON: Well if they took the formula that they are supposed to use to allocate money for highways, we wouldn't be having to problem. What they do is the members of Transportation Committee skim some off the top before we get down to the formula and take it for earmarks and special projects and mass transit or bike paths.

People are paying 18.5 cents or of what it is per gallon federal gas tax for roads. Ok? Not for someone to take a bus or to take a train to work. And the problem with the gas tax increase -- and I remember Clinton did this last time -- he campaigned in 1992 on a middle class tax cut. He got into office said, you know what, we are going to raise taxes, not just income tax but put a nickel on federal gas tax. It's still there. They never go away. It sounds great. It is a knee jerk, well, we had a bridge collapse, let's increase gas tax, but that will be there forever. And I think that's why Bush is against that.

ANGEL: A number of states increased their taxes and the average around the country, when you add state and local taxes, is about 46 cents a gallon.

KONDRACKE: I think the gasoline -- I'm one of those who believes that the gasoline tax should be raised for lot of reasons including conservation and...

ANGLE: In fact, we reported earlier that a Representative John Dingle wants a 50 cent a gallon increase.

KONDRACKE: Gasoline in the United States is cheap by comparison to Europe. Of course even there they have clogged roads and so on. But, look, the American Society of Civil Engineers, after the bridge went down, everybody went to their 2005 report and talked about all the infrastructure that we need in country that is dilapidated, not just roads and bridges, but airports, air traffic control systems, water pipes, all that kind of stuff. It is about $1.6 trillion over a five-year period that we would have to spend to bring it up to speed. Somebody is going to have to pay for that stuff.

KRAUTHAMMER: The hypocrisy here in Oberstar's proposal is staggering because the Minnesota delegation in Congress itself, which has earmarks, pet projects for transportation, had about 140 of them, costing almost a half a billion dollars -- not a penny ended up in that bridge. And they are the people in that state who would to know what needs attending. And somehow, the Democrats accuse the president of being neglectful because he gets to this one problem bridge in Minnesota.

The fact is that they have used this money for shiny projects because you get your name put on the new bridge, not a plaque saying the rivets that it went to repair old one were made by -- funded by you. So it is really a game of people pretending it is a lack of money. It is not. It is a misdirection of money.

And it is also a problem with engineering. It's not that easy. Everybody is assuming that you look at a bridge and you know that it is about to fall down. The bridge that was in trouble had been inspected and was thought to have a life until 2020. So it is a very inexact science. The assumption that if we only -- we threw money at it we would know what to fix and in what order is incorrect.

KONDRACKE: We do know there are a lot of bridges that are defective and a lot of highways that are defective and we need more of all of them. And the idea -- the reason that we don't have them is that we have had monstrous tax cuts that Bush has put in.

KRAUTHAMMER: Please. It's being wasted on bridges in Alaska that ends up nowhere.

SAMMON: That's part of it too.

KRAUTHAMMER: That's not part of it.

(CROSSTALK)

SAMMON: ... talking about making it more expensive. I don't see how that flies politically.

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