Transcript of Pelosi, House Democratic Leaders, and Economists' Press Conference Following Economic Forum
Washington, D.C. - Speaker Nancy Pelosi, House Democratic Leaders, Committee Chairs and six economic experts held a press conference this afternoon in the Capitol following an economic forum. Below is a transcript:
Speaker Pelosi. Good afternoon. We just had a very instructive meeting with some leading economists about the number one subject on the minds of the American people: jobs. Jobs, jobs, jobs, and jobs. It comes at a time when, as you know, job creation is centered at addressing at underlying concerns that people have in their own homes. These are kitchen table issues that we discussed over the Speaker's table in the conference room.
I am going to introduce our experts that were here. You have their backgrounds. They are going to tell you some of their forecasts that they told us about some of the options that we may have in investments in tax policy, in budgetary overdue, on how we can create jobs in the most fiscally sound way.
I was very pleased that for the entire session of nearly four hours we were joined by our committee chairs, committees of jurisdiction that were appropriate, as well as our full House Democratic leadership. We had a very excellent exchange and I want you to hear more about it now. I am pleased that we had the benefit of the thinking of Dr. Mark Zandi, Dr. Alan Blinder, Bob Kuttner, Heather Boushey, Bill Hambrecht, and Allen Sinai. You have their backgrounds. We will hear from them now.
Mark Zandi. Thank you, Madam Speaker. I want to thank you for the opportunity, and all the House leaders, for the opportunity to be here today. I thought it was a very fruitful meeting, and I made three points in the meeting. First, I think the fiscal stimulus, the recovery package, is working. I don't think it is any accident that the recession has come to an end just about the same time that the stimulus is providing its maximum economic benefit. I think it has been very successful, most importantly the benefits to unemployed workers, as well as to help state government. I think that has been key, along with the other aspects of the stimulus.
The second point is that the recovery is still very fragile and still very tentative. I think the risks to the recovery are quite significant and the possibility of the economy slipping back into a recession next year are uncomfortably high for a number of reasons - most important of which is what is going on the job market, the fact that businesses while they are curtailing their layoffs, they have not begun to hire more aggressively. I think that is a function of a number of things, a lack of confidence, a lack of credit, and therefore I think, this gets to point number three, which is that it is very important for policy makers to remain aggressive and continue to do more, and I listed a number of things which I think would be very helpful.
Most obviously, I think extended unemployment insurance benefits should be extended through the end of 2010. Right now under the current stimulus they expire at the end of 2009, and they need to be extended. I think the first-time homebuyer tax credit should be extended into mid-next year to help support the housing market which is still incredibly fragile. I think accelerated depreciation of net operating loss carryback, which also expires at the end of this year should be extended into the 2010 and the conforming loan limits that are temporarily higher through the end of 2009 should be extended through the end of 2010. So a number of things should be extended through 2010 to make sure that the economy, the recovery is going to evolve into a self sustaining economic expansion.
And let me say this: I think our focus on the fiscal situation and deficit is very important in the long run, but I think it is also very appropriate to run a larger near term budget deficit to make sure that this economy gets out of this situation and gets on a self sustaining economic track. Thank you.
Speaker Pelosi. Thank you very much. Dr. Blinder.
Alan Blinder. I'd like to start with a short apology, which is I'm not going to run off from you, but I have an appointment across town at 1 o'clock so I have to leave in about 10 minutes. But what I want to say is this: the Congress and the Administration and the Federal Reserve have done already an enormously heavy lift in limiting what could have been a much worse economic outcome. That said, it's pretty bad as it is right now.
On the consensus forecast, I'm a little bit more optimistic than Mark. My personal view is a little bit above consensus, but that's a quibble. On the consensus forecast, the GDP is already growing, but jobs are still shrinking and are likely to shrink for a while yet and that makes it very hard for political leadership or for just economists to the extent that we talk to the public to persuade people that things are getting better because they don't look like they are getting better when jobs are a) still so scarce and b) are even shrinking rather than arising. So for that reason, despite the fact that we're looking at an absolutely horrendous long-term fiscal outlook, I, like Mark, and I think most of us around the table, believe that at least a modest, now this is where people will disagree, but at least a modest increase in the deficit is targeted very strongly on job creation. Not a scatter shot, but targeted very strongly on job creation would be appropriate.
I think this is a case where it is both good policy and good politics which you know is not always the case but in this instance it is the case. That said, we do have to be mindful of the long-run deficit problem. I have been taken recently in a number of venues to be quoting not quite correctly, paraphrasing St. Augustine who said something like, "Lord, make me chaste, but not just yet" We do need to become more chaste about the budget deficit, we do need to pay attention to the long-run fiscal hole, a lot of attention but in the short term, this is not the time to do it. 2009 and probably 2010 are not the times to do that.
One thing I spoke to the Members about knowing that it is very, very difficult to do, is to try to get some long-run commitment to greater fiscal responsibility while we are still trying to alleviate the job problem. I know this is a very, very difficult thing to do, I don't think it is quite an impossible thing to do. I think it is really quite remarkable that this many Members of the congressional leadership show up and spend several hours with the likes of us, talking seriously about the economy. This little session we're having right now notwithstanding, this was not a media event. We were behind closed doors and talking very, very frankly over a range of issues. I think that happens too little in Washington and it is a tribute to the Speaker and to the other Members that they took so much time out of their schedules to do this. I thank them.
Speaker Pelosi. Thank you, Dr. Blinder. Robert Kuttner.
Robert Kuttner. Well thank you for having us to this meeting and for calling this meeting. I think thanks to the Recovery Act and thanks to very accommodative monetary policy from the Fed, we have avoided a Great Depression but we are still at risk of a great stagnation. We have the paradox of very cheap money and very unavailable credit and the risk is that the weakness of the financial economy and the weakness of the consumer economy are going to continue dragging each other down.
I think just about everyone in the room feels there needs to be more stimulus, and not after the State of the Union Address, but very soon because otherwise, you end up with a jobless recovery for years to come. What form could that take? It could take first of all, these were my recommendations: much more aggressive mortgage relief, and this will not require additional public money. You could use something like Roosevelt's Home Owners Loan Corporation - which is the public option as it were for mortgage relief; you could use some of the recycled TARP money which is being paid back, along with the legislation that created TARP thanks to Speaker Pelosi's efforts and along with Democratic leadership explicitly authorizes mortgage relief. The current program is not doing the job; mortgage foreclosures, mortgage defaults are increasing faster than mortgage modifications and a lot of people who are suffering defaults and foreclosures don't even qualify for modifications.
The other thing I advocated in addition to direct employment was emergency fiscal relief to the states. This is not a radical idea; we could name it after Richard Nixon. The state shortfall over three years is going to be about $350 billion, the federal aid in the Recovery Act only makes up about a third of that and when states have deficits, what do they do? They lay off workers, they cut programs and they raise taxes - about the most perverse behavior you could think of in a recession like this. It would need maintenance of effort requirements, strings in the language so that the states wouldn't just go out and cut taxes and claim credit for cutting taxes while the feds picked up the burden but those are the two best pieces of medicine that I know, they would have macroeconomic benefits and direct benefits.
Last comment: you need to think about reduction of debt relative to the GDP as a 10-year project and in order to get the economy back on track, we may well need, we do need, more deficit spending now and in the next year but with a pre commitment to deficit reduction over 10 years through progressive taxation, one of the things we seem to agree on is a financial transactions tax, taxes aimed at the people who are still making out in this crisis so that the benefit can go to ordinary people and we don't have to sacrifice the recovery on the long term/short term deficit reduction. Thank you.
Speaker Pelosi. Thank you. Bill Hambrecht.
Bill Hambrecht. Thank you, Madam Speaker. We did have, I think, a very interesting and lively discussion. I thought it was appropriate to, at this juncture, kind of review our thinking on TARP because the TARP legislation was passed a year ago did contain some language from the Speaker and Barney Frank that specifically asked them to address the problems of foreclosures and getting the banks to lend again. I think we all agreed that TARP is very successful in solving the crisis of the big banks, and it did keep us from the abyss of a huge problem. But I do think the progress on mortgage foreclosures and bank lending just hasn't really been there. We discussed a number of approaches to the mortgage market; Bob mentioned some of them, I hope that debate will continue and that some real specific things could be done within the framework of TARP with the money that's already lent to TARP. And finally, I feel personally, that TARP basically favored the big banks over the small community and regional banks. They, the community banks, are the people that give out the construction loans, that give out the commercial real estate loans, basically give out the loans to small business. Small business has been the engine of job creation; I think we have to get those banks back on solid footing. I made a proposal then and now again, that again TARP money be used to help re-equify the community bank group. Thank you.
Speaker Pelosi. Thank you. Heather Boushey.
Heather Boushey. Thank you and thank you Madam Speaker. It was a very good meeting today, there was a lot of consensus on a number of issues. One of the key problems facing the country right now is the massive unemployment and not only are so many folks unemployed but so many folks who have lost their jobs are unable to get back in the workforce. The length of time people are spending out of work is at a record high, so a lot of the things I focused on today and a lot of the conversation was: how do we get those folks back to work and how do we get the long term unemployed back to work?
So a couple of the key themes that there was a lot of consensus on was extending unemployment insurance, making sure benefits don't run out at the end of the year, and also making sure that those folks who are unemployed have access to health care. Congress did the right thing in extending COBRA and providing subsidies to folks who are unemployment to help them pay for their COBRA, but I think we may have to rethink that and whether we really want to let the unemployed go back on Medicaid as was proposed the first time around.
A couple of other things, thinking about the long-term unemployed and folks who just can't get jobs right now, need to do more about job training, start thinking about public service. A couple of the groups that have been hit hardest so far are young workers and older workers. Those young folks who are just graduating from high school or college just simply aren't finding that first job. We need to make sure that we keep their skills up and give them something to do instead of just hanging out on the couch. Give them something to do so when the market comes back up, they've got skills that are fresh and they're ready to go. We also need to more to help those older workers, especially in distressed communities where their jobs may not come back anytime soon.
Finally, I want to underscore what a number of my colleagues have talked about here in terms of providing fiscal relief to the states. State employment had been one of the places where we'd seen growth in employment over the past couple of years even though things were not doing so well over all, but that's fallen back in
recent months and those budget deficits that maybe states are facing, we need to do more to help close those gaps. One thing we can do is really spend some of those funds to not only get folks employed, but to help families with the kind of support they need to keep their jobs in the areas of child care and home health aide. These are things a lot of states are cutting back on so we need to do more to help them.
Finally, I want to end with a statement about the deficit as well. I think that all of us agree that focusing on the short term deficit isn't the right thing to do, we need to make sure that we're focusing on job creation and if we don't get people back to work, that too will increase the deficit. It isn't an either or, the reality is that we need to get the economy back on track; we need to get people back to work. That will help our long term fiscal situation and then we need to be thinking about the deficit a few years out once we've got the economy back together. Thank you.
Speaker Pelosi. Thank you very much. Allen Sinai.
Allen Sinai. I don't think you all realize that this was an extraordinary session - very well run, with a lot of exchange for a fairly long period of time. Notice I am hoarse. Because I spoke a lot, I am hoarse. I think the Speaker and the Democratic leadership should be congratulated. This is the ninth, there may have been more meetings, but the ninth one I have been at that has gone on for a couple of years now. And that is really very unusual in Washington, and they are all to be congratulated for it.
We all see some sort of recovery having begun in the U.S. economy. Most people don't feel it yet, probably won't feel for quite some time. We have a recovery because, a lot because of Washington, and the emergency measures that were taken, both monetary, fiscal, to stave off what might have been a worse result.
But it is an unsatisfactory recovery, still a little out of risk are our concern, or my concern, a couple of others, is that around the consumer, around jobs. Of course if you don't have a job, you don't have money to spend. If you don't spend money, you don't create sales and get business to hire and it just is an adverse loop that needs to be dealt with. So we looked at ways to use existing policies and talked about some other policies to do more about the job situation, which if that is improved will help income of consumers and help spending and perhaps interrupt that negative loop. I think we have a big risk of the most joblessness recovery of the last couple that have been called jobless. And it is terrific for me to see Washington going to work on this early, not waiting for that 10 plus percent unemployment rate we are all talking about. In a sticky, high unemployment rate, which is the future without additional policy, in getting going measures that can prevent that from happening. I would take that the suggestion to the House Democratic leadership, to the Administration, to Republicans, whoever they are, this is what counts most for Americans. As the Speaker said, jobs, jobs. Let's get them back and going again. Thank you.
Speaker Pelosi. Thank you very much, Allen. Mr. Clyburn, our distinguished Whip.
Mr. Clyburn. Thank you very much, Madam Speaker. I just want to say that I was really, really pleased with this session we had today because I was in New York a couple of days last week, and I remember at one of the meetings I attended, we sat there at the table and we were looking up at the monitor in the room and the stock market picked up to 10,000. And someone in the room with me said, "We're back." And I thought about what I had just heard when I was home over the weekend, and what I heard is that I think gives me great hope that we can begin to move this recovery down to Main Street where it belongs. And I think that the suggestions and recommendations made by these experts here today are very, very good in both the short and long term. I look forward to working with the Speaker, the leadership, and other Members in the House and Senate to get this done.
Speaker Pelosi. Thank you very much Mr. Clyburn. I thank you all the members of the Leadership and Chairs of our Committees and especially our special guests today, for their participation in this meeting. As you see the spectrum of economists were from Mark Zandi who is an economic advisor to John McCain to Robert Kuttner -- I'm not sure where Bob fits in the spectrum but he was not an economic advisor to John McCain. In any event, it was all about people. It was all about America's families and what the public policy impact was on them and how these decisions that we're making need to be relevant to their lives and soon. And so, it is with great appreciation and respect for what they presented today that we will convey this to our colleagues and consider it as we go forward with policy making to create jobs as soon as possible for American people.
Q: From what you've heard today and before that, is your plan right now to take some or even all of the ideas given to you by these economists and to incorporate them into a kind of "stimulus two" to bring to the House floor?
Speaker Pelosi. No, that is not the plan. Some of what happened today was we heard their ideas and they heard our ideas and we saw how effective they would be in job creation and reducing the deficit. Some of these will fit comfortably within other legislation that is moving forward, some of it, for example, a number of things will be extensions of what we did in the recovery package -- unemployment insurance, COBRA, perhaps food stamps and the like, the extension of -- if Members agree. Again, we have to consider these additional steps -- that would be the extension of the first-time homeowner but it might be expanded to anytime homeowner. We've been considering for a while -- Mark Zandi talked about the net operating loss, carryback provision, accelerated depreciation, initiatives like that. There was some controversy over the issue of what is the additionality of the $3,000 job tax credit and we have to review that. So, it is not the plan to put it all in the bill and move forward because we do not have plans for an additional stimulus package, but we do have plans to stimulate the economy in the work that we are doing.
Q: Why not? Is there [inaudible.]
Speaker Pelosi. No, it's just that right now that is not what the plan is. But we do need to move quickly and some of this can -- we already passed, for example, the unemployment insurance. That is in the Senate and we hope to get that back soon. So we don't want to hold up the whole package or unemployment insurance, to create a bigger package.
Let me just put this into time for you. Nearly one year ago, or at the beginning of 2009, we passed the recovery package. What we heard across the board from our economists is that it is very positive, is it working, it has brought the great recession -- it is bringing that to an end. The lagging indicator is the job numbers and that is what we want to address. Secondly, on the 100th day of the President's term in office, the House and the Senate on the same day, passed the President's budget. It was a budget that was -- the framework was to lower taxes for the middle class, reduce the deficit, create jobs, and grow the economy around three pillars -- investments in education, energy and climate change, and health care. We have passed the climate change legislation in the House, we have passed the education bill under Congressman Miller's leadership, and now we are soon to pass the health care legislation. All of these are good for the economy, will turn it around, are job creators -- in addition to being justified as good policy in themselves.
So we are talking to these experts today in light of the big picture from what has worked, what has been successful, and where we go from here. And we have appropriations bills, we'll have Ways and Means tax considerations -- so there are different vehicles that we will use as we go forward.
Q: … [inaudible] discussion about additional appropriations spent such as infrastructure, highways. Is that something that inaudible] …
Speaker Pelosi. Mr. Oberstar has left. Mr. Oberstar made a big pitch for that. Mr. Obey was with us for a long time, for the whole time, and he has an array of initiatives that -- we have asked each of the Committee Chairs months ago to give us in their legislation, initiatives that had the most jobs created in the fastest period of time. And so he had an array of initiatives that he brought to me last night, some of which we discussed today. So of course, we would use the appropriations cycle, we will use the Ways and Means Committee and we have used the budget legislation as well as the authorizations of energy, education and health care to create jobs. Every vehicle at our disposal has to have at its core -- how it does the job it sets out to do, accomplishes its mission, and creates jobs at the same time.
I have time for one more question.
Q: Can you give us an update on the health care … [inaudible] … how close were …
Speaker Pelosi. Here's where we are. I have been in a meeting for four hours, but when I talk to the Members again today I will be talking to them about that issue of fiscal soundness, which is what we heard over and over again from our experts. They talked about how we needed to be fiscally sound, but we needed to invest in jobs. But they said in the health care bill we really have to do the job of taking down cost. We said that that was a universal message. And that is what our purpose is, is to improve quality, lower cost, expand coverage, and retain choice for those who like what they have. And in doing so, as the President has said: "Health care reform is entitlement reform and entitlement reform is essential to lowering the deficit."
And what I will show Members today is how what we are about to receive from the CBO shows how we are fiscally sound as we accomplish the purposes that I just mentioned and we will continue to work for the rest of the day on that. We are moving forward in a very positive way. The Members understand the choices that we have to make. If you have one option that saves $110 billion and another that saves $25 billion, how do you make up the sum of that difference? That is what they will hear today. They have been hearing that that will, but hopefully we will have numbers to confirm today or wait until we do have those numbers. But we are on schedule and we are very pleased that, from our standpoint, that we will have a bill passed well before Thanksgiving and hopefully in time for it to be signed and worked on with the Senate for it to be signed before Thanksgiving, but certainly this year.
Thank you all very much.