For bailout, Congress is in the details
Senate Banking Committee Chairman Christopher Dodd, D-Conn., left, and Joint Economic Committee Co-Chair Charles Schummer, D-N.Y., talk after a short meeting in Dodd's Capitol Hill office on Monday. The senators met to hash out the details of the a $700 billion bailout for Wall Street.
TEXT OF INTERVIEW
KAI RYSSDAL: For months this story played out this way. Whatever Hank Paulson and Ben Bernanke wanted to happen, happened. As of today, though, Congress is in on the game. And that's gonna change things. Maya MacGuineas is the president of the Committee for a Responsible Federal Budget.
Maya, what do you think is going to happen with this plan?
MAYA MACGUINEAS: Well, in the end I think this bill is going to move through Congress really quickly. Nobody wants to be the person who they can point the finger at and say, you know, "You held up the bill at a time when financial markets are screaming for help. But I do think there are a lot of changes that members of Congress would like to see. And, frankly, they want to flex a little bit of muscle and show that this isn't completely the Treasury package, but they still have some say in the matter. So I think the types of things that we're most likely to see are the issue of CEO compensation -- a lot of politicians don't think it's right for CEOs to be walking away with millions of dollars when this kind of bailout package is in play. And I think we're also likely to see other areas of fiscal stimulus brought into the bill, whether it's help for mortgage relief or other things to kinda keep the economy moving as weakness permeates through the whole economy.
RYSSDAL: Secretary Paulson went up to the hill with a bill that I think was about two-and-a-half, three pages long. Chris Dodd, the chairman of the Senate Banking Committee, has a version that's about 44 pages long. What are we not including in these packages which will eventually be tacked on?
MACGUINEAS: We're not including two things. We're not including a real understanding of how we got into this mess. And so, making sure that the response is targeted to the real problems. But we're also not seeing a lot of, kind of, economic help for other sectors of the economy. So, as we see continued job losses, we see continued problems in the housing market, there are going to be cries to make sure that the people who are affected there are helped out.
RYSSDAL: I gather by what you just said that you don't think we're done with bailout packages here.
MACGUINEAS: Once there's a train that's moving, Congress wants to be a part of that train. And if this bill moves as quickly as it's likely to, there will be a lot of people who still have ideas for good ways to spend the government's money. Also, we can't forget it's an election year and people want to put promises out there and bring voters over to their side. So there are going to be a lot of prize for different ways that they think they could spend government money and ultimately help the economy and taxpayers.
RYSSDAL: $700 billion is obviously a crazy amount of money. What's that going to do to the rest of the economy. And if we borrow that much to spend that much, what's that going to mean?
MACGUINEAS: This is a huge amount of money. This is more than the entire budget deficit for this coming year. And we are already in a position where we have budget deficits as far as we can look into the future. So what this means is that interest rates could go up. It's going to have an effect on our currency. We have to bump up our debt limit. And the real problem is, are people going to want to keep lending money to the United States when we seem to have an unlimited appetite for borrowing. It's going to call into question a lot of the promises that both Senators McCain and Obama have put out on the campaign trail. There's really not room to be talking about increasing the budget deficit right now. We need to think about belt tightening through all sectors of the economy. But how do you do that without making any economic slowdown that we're encountering worse than it already is?
RYSSDAL: Secretary Paulson has said he really wants this thing done this week. Congress wants to get out of town to go home and campaign for the elections. What are the hazards, though, of doing something so monumental so quickly?
MACGUINEAS: There's no question that we will look back and say, "That was a record amount of time to spend $700 billion" -- or whatever the amount of money turns out to be. And mistakes will be made. It may be necessary right now, but it's certainly going to be something we look back on and say, "Wasn't there a way for government to be more out in front of these issues so that when the time comes to get involved, we can do so with more thought having gone into it.
RYSSDAL: Maya MacGuineas is the president of the Committee for a Responsible Federal Budget. Maya, thanks a lot for your time.
MACGUINEAS: Thank you, very much.