4. Japanese Stimulus
RCP: Many Republicans pointed to the failed 1990s Japanese stimulus in their argument against the Democrats. As the only U.S. Senator to have written a novel set in Japan, the only one to have lived and taught there, you're uniquely suited to comment on the Japanese analogy. So why do you think the Japanese stimulus failed, and why do you think this stimulus will work?
Webb: It's very interesting because actually in September as we were debating what the TARP package was going to look like, I had dinner with the Japanese ambassador. We had a long discussion about Japan's lost decade and their bubble burst, and his strongest piece of advice was you have to get money into the system fast. That the greatest mistake that was made in Japan was that they were too cautious putting money into the system. That it was done in increments, so that it actually ended up prolonging their problems.
I took that into account. I was very skeptical about the TARP. And I think that the points that we waged on the TARP -- some of them came home afterward because we gave so much discretion to one individual -- the Secretary of the Treasury -- who turned around and used the money in a way that wasn't the way that he said he was going to use it. We would be much better off today, I think, if he had used the money the way he said that he would -- unclogged the banking system, take these assets out of the banking system so that they could achieve their eventual value. And I think they would and they will.
But the point that you raise -- I think the Japanese would probably have a pretty strong majority supporting the idea of putting a lot of money in up front, get this thing going.