CQ Transcript: Obama Campaign Advisers Hold News Teleconference on the Economy | CQ Transcriptswire
In Brief - All can be done under existing laws:
- Jump start job creation.
- Financial relief for families.
- Help for homeowners.
- Addressing the financial crisis.
SPEAKERS: JASON FURMAN, OBAMA CAMPAIGN ECONOMIC POLICY DIRECTOR
BILL BURTON, OBAMA CAMPAIGN SPOKESMAN
[*] BURTON: Hi there. Thank you so much for joining the call today. This is Bill Burton with the Obama campaign. A lot of you probably just watched John McCain ’s speech, which was markedly different from the one that he and his advisers had telegraphed about having new ideas for the economy, apparently thinking it was more important to give a speech about where he stood in the polls and what the state of the race was.
But here to talk about Senator Obama’s rescue plan -- economic rescue plan for the middle class is Jason Furman, our director of economic policy here at the campaign.
Jason, you want to talk about it?
FURMAN: Sure. Thank you, Bill.
And I’ll just be brief and then go on to your questions.
Today, Senator Obama is laying out a comprehensive four-part economic rescue plan for the middle class.
Over the course of this campaign Barack Obama has laid out a set of very specific policies that will grow our middle class, strengthen our economy; many of them directed at the immediate crisis facing families, a crisis that didn’t begin, you know, one month ago, but began certainly the beginning of this year, when we started losing jobs, or even eight years ago when income for typical families started falling.
What he’s doing today is bringing all those policies together into a comprehensive four-part plan and adding several new and important policies to each of the areas of those plans to reflect recent economic developments.
What’s important about this plan as a whole is that to the greatest extent possible it either relies on authority that the government already has under the laws, including the financial rescue passed two weeks ago, or could be almost immediately implemented, for example, in a lame-duck session of Congress.
So these are all immediate ideas that we could do right away.
Obviously, it’s very important to do things like health reform, a new energy plan, tax reform, education. But, obviously, all of that is what we would wait for 2009 to do.
So, to go through the four parts of the plan, the first part is jump starting job creation, something that Congress was not able to make a serious -- was not able to accomplish before it left town.
The big new policy here is a new jobs tax credit. For every net new job you add in 2009 or 2010, you would get a $3,000 tax credit per worker that you add.
So this is a tax cut for companies that create jobs in America, as opposed to the across-the-board tax cut that Senator McCain is proposing, which would include oil companies, companies that create jobs elsewhere.
FURMAN: In addition, that builds on the other plans that he’s had before, including a tax cut for small businesses, investments in rebuilding our roads, repairing our schools, that would save a million jobs.
And he’d like Congress -- the administration to fast-track the $25 billion in loan guarantees for auto industry. He’d like Congress to pass the other $25 billion that he had asked for before. And finally thinks we should not be taking any options off the table in addressing this vital sector of our economy.
The second part of the plan is relief for families.
The big new policy here is that you would be able to withdraw $10,000, penalty-free, from your IRA or your 401(k) in 2008 or 2009, to give families the flexibility to help them through the hard times.
This complements an idea that Senator McCain came out with last week, and that Barack Obama likes and supports as well, of letting families delay withdrawals from their retirement accounts at age 70 and a half -- so more flexibility. If you don’t want to be forced -- you won’t be forced to withdraw at 70 and a half, and you’ll be able to withdraw earlier if you need to, without penalty.
In addition, another new idea here is making unemployment insurance benefits -- suspending the taxes on those temporarily, in addition to extending those benefits.
And, finally, for family relief, one of the most important ideas is one he’s been talking about for some time, which is a tax cut for 95 percent of workers and their families. We could base this on income in 2007, the returns that were already filed in April, and send the checks out very quickly for that rebate.
The third area of the plan is help homeowners.
And here there’s a big contrast with John McCain, who has a plan that would basically require going back and creating new legislation to take out the taxpayer protections in the recent financial rescue plan that prevented that $700 billion from being overspent on a mortgage plan of the type that he laid out and the windfall profits for banks.
FURMAN: So instead of a plan that would require going back and amending the law to give a windfall to banks, Barack Obama wants, to the greatest extent possible, to use the existing authority we have under both the Dodd-Frank legislation that passed over the summer and the financial rescue that passed two weeks ago -- wants to move forward vigorously on both of those.
And in the meantime -- and this is a new idea -- thinks that any institution accessing that facility should have a 90-day moratorium on foreclosures for households that are making a good-faith effort to make their payments -- are likely to qualify for restructuring. And are not -- you know, speculators are living in their homes.
These programs are going to take some time to work their way into the system so we should have a 90-day moratorium on the part of those institutions who want to be able to access this facility.
Finally, the last area of the plan is addressing our financial crisis.
And some of the most important ideas are supporting capital injections to recapitalize our banking facilities. He supports Secretary Paulson’s move there, and would like to see it happen much more aggressively. That’s something that Senator McCain has not addressed, even though it’s one of the most important policy developments over the last year.
He thinks we may need to go further and extend broader guarantees of liabilities within our banking system and deposits. If that becomes necessary, we should be prepared to do it.
And finally, the new ideas here are to extend a lending facility to states and local governments similar to the one that we have right now to corporations to unfreeze the credit markets in other areas by buying things like securitized student loans, credit card debt and auto loans. And these complement his plans that he announced last week to expand lending for small business.
So the concept on the financial crisis is not only to address the financial crisis head on, more aggressively, but also to make sure that it doesn’t take a collateral toll on our small businesses, on our states and localities, and on particular markets of importance to consumers like auto loans, consumer loans and student loans.
FURMAN: So, in summary, a four-part plan: jobs, relief for families, help for homeowners, fixing our financial system, all of which could be implemented under the authority we have today or legislation that could be passed relatively quickly.
BURTON: Well, thanks for that, Jason.
With that, we’ll take some questions.
QUESTION: I have two questions.
BURTON: Hi. Thanks for joining.
QUESTION: Thanks.
For Mr. Furman, my question is if Senator Obama has already a name or names for secretary of treasury, and if he will be willing to keep Secretary Paulson for a transitional period of time after January?
FURMAN: You know, Barack Obama is committed to having a treasury secretary who has both, you know, an outstanding understanding of financial markets and the financial crisis we face but can also help him implement the types of broader ideas that we’re talking about today that will create jobs, provide relief for families and help homeowners.
And he’s going to look for a superbly qualified treasury secretary to match the extremely challenging times we face today.
BURTON: And I would just add that, right now we’re pretty singularly focused on Election Day and not so much on potential Cabinet appointments.
QUESTION: Jason, I came on a minute or two late, so I don’t know if you addressed this, but what is the senator’s -- what was his reaction to the House effort to have a job creation infrastructure program? I think they had a $61 billion program. Did he support that? Did he think that was sufficient? And what would he like to see in that general area in terms of specific numbers?
FURMAN: I don’t think he has seen the details of the House package. Obviously, in spirit it’s similar to some of the ideas that he’s outlined and has long been championing in terms of infrastructure, state fiscal relief, and rebates, all three of which he’s been talking about for months and months.
I’m not familiar with the details of those. You know, what he’s putting out is his specific proposal to deal with this problem.
QUESTION: Jason, I wanted to ask a little -- in a little more detail about the automotive industry portions of the plan, and specifically the -- your mention that -- that nothing should be off the table in terms of dealing with that sector.
Have the events of the last -- over the weekend, with talks between GM and Chrysler and some of the other things that are going in the industry, made Senator Obama any more concerned about the possibility that one of those companies might go under? And would he advocate stepping in to avoid the bankruptcy or liquidation of one of the -- the domestic carmakers?
FURMAN: Right.
I mean, I think the -- you know, what I said before answers that question.
Clearly, the situation facing the auto industry -- you know, Senator Obama appreciates the seriousness of the issue facing the auto industry as well as the small and medium-size suppliers that depend on it for their jobs. And we passed $25 billion loan guarantees, but they’re not moving forward very quickly. They should be fast-tracked and happening much more quickly. We should do the second $25 billion.
And finally, in answer to your question, we need to keep all the options on the table for helping them weather the financial crisis and helping them to move forward, partnering with us to retool, develop new battery technologies and produce the next generation of fuel- efficient cars here in America.
QUESTION: Couple questions.
One, when you said above that you support -- you’d like to see it happen much more aggressively when you were talking about, you know, supporting the move that Paulson is making towards capital injections into companies, can you be a little more specific in terms of how they do that or how broadly they do that or any more specifics you can talk about there?
And then, the other thing is, if you could also just stress -- one of the things we’re looking at is -- obviously we’ve seen a series of moves over the course of the last several months where things that were kind of completely off the table, as the situation has gotten worse, they’ve gone ahead and done them; including the discussion of the injection of capital, which, you know, a couple ago, they were saying they didn’t need to do.
Are there further things that you think they’re still not considering doing that really do need to be done to kind of fully put an end to this crisis?
FURMAN: Yes.
And on the capital injections question: I realize it’s a somewhat technical issue that not everyone in this country is following on a day-to-day basis. But it’s absolutely critical to whether our financial institutions have an adequate, you know, resource base from which they’re able to lend, expand the economy and create jobs. And it’s actually quite stunning that Senator McCain has not taken a position, as far as I can tell, on the issues. And Secretary Paulson’s announced it.
I’m thinking of a little bit of Barack Obama ’s history on it. On Thursday, September 8, before Secretary Paulson even went to Congress to tell them he had a plan coming, Barack Obama identified three issues that were important in a plan: liquidity, capital and helping homeowners.
Since then, he’s frequently talked about, in addition to buying troubled assets, we’re going to have to worry about recapitalizing the financial system; something, for example, the day it passed the Senate, in his Senate statement talked about the importance of that, and then has reiterated that last week.
In terms of the actual mechanics, that obviously becomes, you know very technical issue, and he’s not going to, you know, try to, you know, preempt, you know, the treasury’s exercise of that, except to say that it’s something he’s been talking about for weeks. It’s good they’ve finally gotten around to it. But they need to move, you know, very quickly to make sure it actually happens.
In terms of the second question in terms of other steps, there’s two sets of other steps. One are things that -- you know, if the financial crisis gets worse, the next step would be a broader set of guarantees, whether that’s to all deposits or to a broader set of liabilities within the banking system, including things like overnight loans.
FURMAN: That’s not where we are yet. That’s not, you know, what we need to do today. But that’s something we need to be prepared to do, if necessary, and have the types of contingency plans that people should be working on.
The second thing, in terms of the financial system, is, you know, in addition to addressing the problems at our financial institution, we need to make sure those credit problems don’t radiate out throughout the economy.
The commercial paper facility that the Fed set up is effective for some of our larger corporations, but we need to do things for smaller businesses by expanding SBA guarantee problems and emergency loan programs, and then the new policy he’s calling for today for our state and local governments, to give them access to an emergency lending facility as well.
QUESTION: Good morning, Jason.
FURMAN: Morning.
QUESTION: Two technical questions and one overall question.
The two technical questions: Have you scored -- meaning the cost of these four new proposals? And can you separate for us which can be undertaken with executive authority and which would require legislation? Those are the technical ones.
And the more broader question is, the market’s picking up this morning. Does Senator Obama believe the finance minister meeting over the weekend and some of the announcements from Treasury in the last 48 to 72 hours have begun to respond to what he has been calling for pretty consistently, which is coordinated and clearly articulated policies to address the credit crisis?
FURMAN: OK, let me take all of those.
In terms of cost, the emergency economic plan he announced on August 1st had two parts. It had $50 billion for infrastructure and states, and then it had a set of rebates paid for by a windfall profits tax on oil companies.
He is still committed to a windfall profits tax on oil companies, but at this state in our budget projections, given the changing outlook for oil prices, we’re not assuming that that raises any revenue. If oil prices go back up, it would raise revenue. We’re not assuming it.
So that means the estimate today of the plan he had announced over the summer would be $115 billion.
FURMAN: The new elements he’s adding today would cost -- would add another $60 billion to that, bringing the package as a whole to $175 billion, which would be over two years. And it’s designed as economic stimulus.
So he’s committed to paying for of his medium to long-term proposals, bringing down the deficit over four years and over eight years. But our biggest priority, next year, is to avoid a very deep recession, which, by the way, would also, you know, swell our budget deficit enormously.
In terms of the breakdown of what could be done right away, versus -- under existing authority, versus new legislation, basically, almost everything in the financial part of the plan could be done under existing law, with the exception of the protections for small businesses, which would require new legislation.
Almost everything to create good jobs in America, provide relief for struggling families, would require new laws. You could, for example, suspend the requirement to withdraw money at 70 and a half. We believe the secretary of the treasury has the authority to do that administratively.
And then for homeowners, there’s quite a lot you can do under current law. We passed two very robust laws on that issue. The 90- day moratorium is something that we would basically, you know, ask institutions to do in exchange for accessing that money. But some other elements there would really help, in terms of the law, including reforming our bankruptcy code.
Oh, I’m sorry -- the last -- you had one more question, which I didn’t answer, I realize.
He is, you know, encouraged that the Treasury has come around to capital injections. I think they need to move, you know, much more quickly to actually implement it.
I’m glad to see the beginnings of international coordination, but that needs to, you know, continue and accelerate with more tangible, coordinated steps.
QUESTION: I just wanted to check with -- with regards to this proposal, how exactly would it impact energy companies and also energy infrastructure? If you could talk about that for a second.
FURMAN: Senator Obama has a lot of proposals, you know, related to his energy plan, which is something that, you know, as president -- next year, is something he would do. And that’s -- this call, though, and his policy’s focused on what he wants to do right away for the immediate crisis.
And the only piece that is coming to mind related to energy, is part of the second part of the plan, the relief for families, he’d have funds to counteract high heating costs this winter, which would be, you know, supplementing the recently passed LIHEAP funding increase. And that would be part of his overall $25 billion state fiscal release package.
QUESTION: Hey, Jason, two questions.
One, can you explain in a little bit more detail how your fourth proposal would work, this facility for lending for state and municipal governments?
And secondly, is the senator -- actually, does he favor having a lame-duck session to pass some of this legislation? Is he calling for that?
FURMAN: You know, he’s calling for this to happen as quickly as possible. And it’s certainly something that could be done in a -- in a lame-duck session of Congress
In terms of the credit facility for states and localities, the way the one works for corporations is the Fed is buying commercial paper directly from issuers and there’s certain restrictions on who’s able to access it. And you can’t, for example, use it to borrow more money than you had over the summer, and it’s for short-term paper.
For states and localities, it would also be focused on short-term debt. So for example, like California, which knows it has tax revenues that are coming in a month, but needs money to meet payroll over the course of the month until it gets those tax revenues, will issue short-term paper in order to make it through that time. That’s something that is freezing up and getting hard to do.
He’d like to see the Fed and the Treasury work together to design a facility modeled on the commercial paper one. The Fed should determine whether it has sufficient legal authority to establish such a facility. There’s some controversy among lawyers over that question right now. And the -- you know, if they’re not able to, then should fast-track legislation with Treasury and Congress to do it.
QUESTION: I’m curious as to whether or not, considering all of the situation -- you know, with the bailout bill and these proposals -- whether or not he’s going to be able to keep his promise to cut taxes for 95 percent of American families.
FURMAN: Senator Obama believes he can’t afford not to keep his promise to cut taxes for 95 percent of workers and their families. That’s part of his economic plan in the short-run.
This plan today has a down payment in it based on your 2007 income and tax returns to get the economy going again. And it’s also part of relieving the squeeze on middle-class families, which has played a role, and you know, been one contributing factor to the rising foreclosures, rising indebtedness and set of problems that brought us to this financial crisis today.
QUESTION: How’s he going to pay for all this?
FURMAN: He’s -- his tax cuts are paid for as part of his overall economic plan, which rolls back tax cuts for families making over $250,000 a year, closes corporate loopholes and tax breaks for companies that send jobs overseas, and cuts government spending, including ending the war in Iraq responsibly, cutting over payments to insurers Medicare, a whole range of other things.
And those are all very important long-run economic policies. And that’s what, you know, as president, he would do next year.
The focus of today is on the immediate actions and temporary actions we could take to address the crisis facing our middle-class families.
QUESTION: Two quick questions.
And one is, by your earlier answer about the lame-duck session, I assume you have not spoken to Speaker Pelosi about -- about calling one into place. Is that fair to say?
FURMAN: What he wants is this to be done as quickly as possible, and he’s putting out his set of ideas and would like to see it move as quickly as possible. But he’s also very focused on the campaign and the day-to-day election and, you know, the exact mechanics of -- this isn’t going to become the law of the land in the next three weeks. That’s why as many of these steps as possible are administrative and don’t require a new law.
But he’s very focused, you know, on putting out these ideas and then would like to see them implemented.
BURTON: All right. Well, thank you, everyone, for joining the call. If you have any further questions, please send them my way.
Thanks, Jason.
FURMAN: Thank you.
