What do you think? Leave a respectful comment.

GOP Congressman: Restrained Spending Buoys U.S. Economy

Gwen Ifill gets a Republican view on President Obama's latest economic proposals from Illinois congressman Peter Roskam.

Read the Full Transcript


    Now, for a Republican view of the president's speech and his proposals, we turn to Illinois Congressman Peter Roskam. He serves as a Republican deputy whip and is helping to shape the Republican policy agenda for the fall elections.

    Welcome, Congressman.


    Thank you.


    We just heard Secretary Geithner say that, but for the actions of the Obama administration, things would be much, much worse; we would — might perhaps be heading toward a depression.

    Do you disagree with that?


    I do. I think that is an overstatement. I think, in fairness to the president, he inherited a difficult economic situation. There's no doubt about that. Secretary Geithner was sort of arguing in the alternative. He was referring in some cases to the actions that took place in fall of 2008, with the intervention of the TARP, and then some to stimulus argument.

    But I think, ultimately, we will never know where the economy would have been. But we do know where the economy is right now. And the economy is at a place that the administration told us we would never see. Secretary Geithner and other members of the administration said that unemployment would peak at 8 percent, just declaratively, if only the stimulus bill would be passed.

    And to use the secretary's own words, a minute ago, he said that now President Obama has put forth the smartest, most sensible policies. Well, we have seen that rhetoric before, and it's clearly underperformed. And I think the American public and I know a whole host of businesses in my district are interested in a different pathway.


    One of the policies the president is — was — was selling today out in Ohio was this notion that the Bush era tax cuts should end right now, something even some of his advisers have disagreed with him on.

    What is your view on that?


    Well, Peter Orszag, who is his budget chief who is leaving, and also Dr. Christina Romer, as you pointed out, who heads up his — is the chairman of his Council of Economic Advisers, have both essentially said raising taxes at this point isn't helpful.

    And where I disagree with the president is the notion of, somehow, not extending the '01 and '03 tax cuts for everybody along the line, the president is basically saying, well, we're going to do the class-envy play. And I say, ultimately, you know, you look at 94 percent of small businesses that file under the individual tax rate, this is going to have an adverse impact on them.

    So, I just don't think that the president's approach so far has created the environment where companies want to get in and invest. And I think he would be well served and we all would be well served if he changed his position and said we're going to extend those and make them more predictable for everybody.


    Well, what Peter Orszag said was, they should be extended for two years and then ended, correct?


    Yes, that's right. That's right.


    But you talk about the class-envy play. The president has also proposed kind of a — they're not using the word stimulus, but additional spending, for tax credits for business. That doesn't balance this out, in your view?


    Well, think about it from the president's point of view. He is actually arguing in the alternative. On the one hand, he's saying that putting more business — more money in the part of business' hands through the expensing and through the research and development tax credit, making that permanent, that's a good thing.

    But, then, by the same token, why in the very same bill would you then take — take tax dollars away from the very entities that you're trying to induce to go further and more robustly into the marketplace?

    I think the president's approach is internally inconsistent. If you want to create predictability, which is what I'm hearing from small businesses in my district, then make the tax cuts permanent, get control on the spending

    side, which actually has an adverse impact on long-term economic growth — and that's from testimony before President Obama's own debt commission — do those types of things, and signal to the marketplace that you're serious about a restrained government, instead of an expansive government.

    We have seen where expansive government leads. It leads to a nagging unemployment rate of about 10 percent.


    So, a couple of things the president and his advisers have been saying in past days about the economy. One is that, by continuing these tax cuts, you're putting the economy in a $700 billion hole.

    That number keeps coming back. We heard Secretary Geithner say it. And they also said that what the Republicans want to do is hold middle-class tax cuts hostage.

    Your chance to respond.


    Well, we don't — no, we certainly don't want to hold middle-class tax cuts hostage. In fact, we're strong advocates of middle-class tax cuts and for tax cuts for those that are in the lower end of the economic spectrum.

    But this argument that you mentioned a minute ago is actually coming from an administration and a congressional majority and a secretary of the treasury that have guided our pathway to tripling our national debt in 10 years.

    You know, nondiscretionary, nondefense spending under President Obama and Speaker Pelosi and Majority Leader Reid have — have gone up 84 percent. Now, those types of numbers are staggering. But I just think it's ironic that the very group that has been pushing the outer edge of the envelope from a spending point of view are now sort of wringing their hands, saying, this costs too much.

    And only in Washington, D.C., can you come up with a mentality that says that allowing individuals and companies who have earned money to keep their money is a cost. I just don't think it's selling right now.


    Let's talk about solutions for a moment. We have — you have also heard the president go around the country and say, you know, Republicans, if I told them the sky was blue, they would tell me that it wasn't, that they only are the party of no.

    What are your solutions?


    Well, I think we're clearly not the party of no. In fact, there was an alternative to the stimulus that was offered back in the beginning of 2009 that, using, again, Dr. Christina Romer's own peer-reviewed research, would have created twice the jobs at half the cost.

    There was an alternative to the health care plan that would have brought costs down. There was an alternative to cap and trade as it relates to energy, a better budget and so forth. But that's all in the past.

    Moving forward, what are our ideas? First and foremost, create predictability within the marketplace. All of this ambiguity has created so much tension, that businesses, and small business in particular, which is the real job creator, is saying, you know what, I'm going to sit still. I don't know what the ground rules are, and I want to know what the ground rules are moving forward.

    So, our idea — we talked about it — is to make the tax cuts permanent, first and foremost, secondly, get control on the regulatory side. I was in a meeting today with health — with a business not five miles from this studio in northChicago.

    And they have said: We don't know how much health care is going to cost us next year, and, as a result, we're reluctant to bring new people on, because we don't know what the regulations are going to lead to.

    And then, finally, from a spending point of view — and I referenced this a second ago — spending that is out of control actually has a drag on the economy. A University of Maryland researcher recently testified before the

    president's commission and said, once you get above 90 percent on the debt-to-GDP ratio, once you trigger that number, then it costs you a million jobs a year.

    Well, we're now at a 93 percent debt-to-GDP ratio. So, John Boehner is correct when he's making the argument that, when you restrain spending, actually, that has a buoyancy to the economy.

    So, in a nutshell, those would be the things that we would concentrate on, first and foremost, not just moving on, on a bigger spending agenda.


    Well, let's separate that out a bit. You talked about two things generally there. One is job creation and how you do that. And this president has one theory about it. You have another. And the other is deficit concerns. Let's separate them out. We know what the complaints are.

    But how do you — what would you do that would be different from what the president is talking about doing? There's a lot on which you — there's some on which you agree, I imagine.


    Yes, I think so. I mean, we have seen what the president's plan has brought us. I mean, we have — so, let's be clear about that. There's really nobody, I mean, except for Secretary Geithner, that is saying that the economy has this really solid footing right now.

    Most people are looking at the economy, and they're feeling very, very tepid about it and very concerned. So, we — we know that the borrow-and-spend mythology that says we're going to create prosperity that way, that's a falsehood.

    Now, the problem is, in my view, President Obama and his leadership has basically said, we're going to continue on that pathway, in some ways.

    So, I don't think you can borrow anymore, without getting right on the edge of a Greek debt crisis. Now, as it relates to the deficit question…


    What can you do? What can you do? I guess I'm trying to get past the ways in which the secretary is wrong…


    From a jobs point of view?


    … on the ways in which you would fix it.


    Well, from a jobs point of view, I would go back to creating certainty in the marketplace through tax policy, through restraining spending that actually, as I have argued, has a buoyant effect on the economy, when it's under control, and then, finally, bringing more predictability as it relates to health care.

    Think, for example, for the impact that the health care bill has on the economy. We were told throughout the debate that this was going to bend the cost curve. We all remember that sort of language. But, ultimately, it turned out not to be true.

    The Congressional Budget Office, a whole host of other third-party and nonpartisan groups have looked at this and said, actually, health care costs are going to be going up.

    That's not the direction that we need to be going in this country. And, unfortunately, not withstanding the president's rhetoric and sort of the full campaign mode that he's in right now, the reality is that businesses are looking out at this environment and largely looking at anti-business rhetoric that seems to be coming from Washington, D.C.

    I think we can change that fairly quickly. I'm not saying it's easy. I'm not saying it's simplistic, but I am saying it is straightforward.


    Congressman Peter Roskam of Illinois, Republican, thank you so much.


    Thank you.