'Meet the Press' transcript for Feb. 1, 2009

MR. DAVID GREGORY:  Our issues this Sunday:  From bad to worse, the U.S. economy shrinks at its fastest pace in nearly 27 years and the number of unemployed Americans reaches a record high as more major U.S. companies lay off thousands of workers.

(Videotape)

PRES. BARACK OBAMA:  This isn't just an economic concept, this is a continuing disaster for America's working families.

(End videotape)

MR. GREGORY:  But on Capitol Hill, no bipartisan support for a solution as the economic stimulus bill passes the House without a single Republican vote. Now this critical debate moves to the Senate.  Will President Obama attract Republican support there?  Our guests:  two senators who will debate the package this week, a member of the Banking Committee, Republican Senator Kay Bailey Hutchison of Texas; and a member of the Finance Committee, Democratic Senator John Kerry of Massachusetts.

Then, the other trillion-dollar question:  What should government do about America's struggling banks and crumbling housing market?  Will taxpayers be called on to provide yet more bailout money?  The hard sell for rescuing America's financial industries and why it matters.  Insights and analysis from our economic roundtable:  anchor of CNBC's "Street Signs" and co-anchor of CNBC's "Squawk on the Street," Erin Burnett; president and CEO of Forbes, editor in chief of Forbes magazine and a GOP presidential candidate in 2000, Steve Forbes; and chief economist of moodyseconomy.com and the author of "Financial Shock:  A 360-Degree Look at the Subprime Mortgage Implosion and How to Avoid the Next Financial Crisis," Mark Zandi.

But first, the debate on the president's stimulus package moves to the Senate, and with us this morning, Republican Senator Kay Bailey Hutchison and Democratic Senator John Kerry.

Welcome to both of you, back to MEET THE PRESS.

SEN. JOHN KERRY (D-MA):  Glad to be here.

MR. GREGORY:  So here's where we stand.  The House bill for the stimulus, it now moves to the Senate, looks like this.  Here is a breakdown.  Total of $819 billion:  the spending side is the bigger of the two, $544 billion; tax cuts about a third at $275 billion.  After it passed with no Republican votes, President Obama said this:

(Videotape, Friday)

PRES. OBAMA:  I'm pleased that the House has acted with the urgency necessary in passing this plan.  I hope we can strengthen it further in the Senate.

(End videotape)

MR. GREGORY:  So, Senator Kerry, how does he do that?

SEN. KERRY:  Well, we're going to have an open process in the Senate. Starting tomorrow there will be amendments.  We will bring amendments ourselves, I know we're planning one with respect to transit, water, various infrastructure investments.  And I think we're going to add, frankly, to that ability to get money into the economy and put people to work immediately.  We have to create jobs, David.  I mean, the key focus of the senators is jobs. And we want to create those jobs as fast as we can, put as much money out, and I think we're at about 75 percent of this money will now go out in the first 18 months.  That's good.

But we also have to invest in long-term job creation.  So there's money in here to create 10,000 libraries, laboratories, classrooms.  There's money in here to help get the Internet out, broadband, into communities that hadn't been able to afford it--which incidentally was a plan of President Bush's in 2004, but never implemented.  So if we can do these things, we can make our economy more competitive.  But the most important thing is that we act.

One final comment.  Not only must we do this component of, of spending and creating immediate jobs, we have to have a sufficient safety net to help people who are hurting at the lower end; food stamps, extended unemployment benefit, all of those things are critical.  And we need to fix the banking structure, fix the rules of the road, fix the, the question of the capitalization of banks and finally, housing.  Housing has to be a component of this.

MR. GREGORY:  But are you suggesting that the way you strengthen it is you make that target on creating jobs bigger, you have more of a focus on that than the House version?

SEN. KERRY:  Yes.  I think we can do better with respect to some of the immediate expenditures.  For jobs we could expand--for instance, we could do better, I think, on the energy grid.  We could modernize faster, do some more to put people to work in those sectors.  So I think that we could hopefully find common agreement about some ways to create jobs out there.

MR. GREGORY:  Senator Hutchison, this is what the Concord Coalition, a bipartisan group, said about the stimulus plan thus far:  "Tax cuts or public spending increases that are intended to stimulate demand in the short term should be `timely, targeted and temporary' to maximize the economic bang for the buck.  Policies that are not likely to generate much additional, immediate consumer and business spending do not constitute effective stimulus and should not be considered in the context of `emergency' legislation." Does this bill have to be reworked as it gets into the Senate?

SEN. KAY BAILEY HUTCHISON (R-TX):  You know, David, that's the key point.  I think we need to take a look at the big picture and really look at what this bill does, and the amount of it.  Eight hundred billion dollars, we're talking about basically a trillion when you add the interest, on top of a $10 trillion debt.  We need to look at the enormity of it.  And everyone agrees that we need stimulus.  We do.  But when we're talking about redoing this bill, if we're talking about just adding more, I think we will be wasting a lot of money and adding to the debt.  My focus would be on more infrastructure; I agree with Senator Kerry and others.  For instance, military construction, that is one of the points that we have $7 billion out of 800 billion in this bill.  It's something that we're going to do anyway.  I think we could have a policy of looking at the spending for infrastructure that is going to be needed, but we move it up, rather than things that might be temporary or create temporary jobs that wouldn't lead to a future.  Military spending, military construction, those are going to be jobs in America.  And we can look at the five-year plan that the Department of Defense already has and let's just move up everything that is ready right now.

On the other hand, on tax cuts, I think tax cuts should be strong, I think they should be a lot and I think they should be something that will have an impact.

MR. GREGORY:  Right.

SEN. HUTCHISON:  Five hundred dollars a person hasn't worked.  We've got to do something that makes business want to create jobs.

MR. GREGORY:  All right, I want to come back to taxes in just a minute, because it's an important debate.  But I want to stick on the spending side of this, $544 billion.  Ron Brownstein wrote this in his column in the National Journal:  "In normal times, Congress might never enlarge so many programs at once.  But as with Reagan's tax cut, the crisis-induced demand for action may suspend the normal laws of political gravity--and allow Democrats to redirect federal priorities as boldly as Reagan did.  `This is a once-in-a-25-year opportunity to [implement] a lot of our agenda,' a top House Democratic aide says."

Senator Kerry, why couldn't the Obama team be accused in the same way that the Bush White House was criticized after 9/11, when in a crisis atmosphere the Bush administration, in the view of its critics, rammed through legislation that were priorities for them after 9/11 that maybe they didn't get all the consultation on, maybe they didn't get all the agreement on?

SEN. KERRY:  It happens, David.  And, and I think this is coincidence, but it happens that in this particular circumstance, where our economy is in a crisis as unprecedented as anything since the Great Depression--I mean, the dynamics of what are happening now are complicated, enormous, and they're going to be very, very difficult to fix quickly.  Given that, it's inevitable that something like rapid broadband expansion into communities that can't afford it, which has been a Democratic priority, is going to dovetail with creating jobs.  Likewise, we've been pressing for years--we've had a $1.6 trillion infrastructure deficit in America.  Many of us have been fighting for years to get high-speed rail, to, to, to fix community schools.  We have, we have--you know, I think 50 percent--most of the schools in America about 50 years old.

MR. GREGORY:  Mm-hmm.

SEN. KERRY:  They desperately need modern laboratories so our kids learn properly, so we can compete in the--in, in, in the future global economy. Those are things that dovetail.  But none of them...

MR. GREGORY:  But if...

SEN. KERRY:  But let me just finish.  They will, all of them, be put to the test of a vote on the floor of the United States Senate to open debate.  None of this is being done behind closed doors.  None of this is a secret.  In fact, we accepted representative--Republican Representative Eric Cantor's suggestion that the entire bill be put on the Internet.  Everybody can go look at every provision in it.  We've accepted Republican proposals.  Arlen Specter's going to put in $12 billion for NIH.  One of the largest increases in the bill is the Alternative Minimum Tax fix.  That came with the advocacy of Chuck Grassley, Republican Finance ranking member.  So there's a bipartisan effort here.  I think those priorities happen to dovetail with what we need to do to put America back to work.  But this is unprecedented.

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